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                                                                   EXHIBIT 10.87



                         FEDERAL EXPRESS CORPORATION
                    RETIREMENT PLAN FOR OUTSIDE DIRECTORS








                             RESTATED AND FROZEN
                        EFFECTIVE AS OF JULY 14, 1997



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     1. Purpose and Description. Federal Express Corporation, a Delaware
corporation (the "Company"), established, effective July 17, 1989, the Federal
Express Corporation Retirement Plan for Outside Directors (the "Plan") in order
to attract, retain and motivate directors who are not also employees of the
Company ("Outside Directors" or, individually, an "Outside Director") to serve
on the Company's Board of Directors (the "Board"). The Plan was subsequently
amended effective September 1, 1993, to extend the maximum period of benefit
payments from 10 to 15 years. At its July 1997 meeting, the Board determined
that the purpose of the Plan as described above could be better served by other
means. Consequently, the Board froze the Plan's benefits, effective July 14,
1997, (the "Freeze Date") and restated the Plan, amending (among other matters)
the Plan's vesting schedule and defining a "Year of Service" for Plan purposes.
No further benefits shall accrue under the Plan subsequent to the Freeze Date.

The Plan is not intended to be an employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 or to be a
qualified plan under Section 401(a) of the Internal Revenue Code of 1986.
Benefits provided by the Plan shall be payable out of the assets of the Company
as a general, unsecured obligation of the Company.

     2. Retirement Benefit. An Outside Director who was a member of the Board on
the Freeze Date shall be entitled to a retirement benefit commencing as of the
first day of the fiscal quarter of the Company next following the later of the
date of termination of his or her directorship on the Board or the date such
director attains age 60. Such benefit shall be an annual amount, payable
thereafter in quarterly installments for the number of years determined by
reference to the following schedule:


<TABLE>
<CAPTION>
                  YEARS OF SERVICE AS AN  DURATION OF PENSION
                    OUTSIDE DIRECTOR      PAYMENTS IN YEARS
                          <S>                     <C>

                            1-10                  10
                            11                    11
                            12                    12
                            13                    13
                            14                    14
                          15 or more              15
</TABLE>


equal to a percentage of the Fiscal Year 1998 Retainer Fee, hereinafter defined,
set forth in the schedule below according to such director's number of Years of
Service, hereinafter defined, on the Board as an Outside Director:


<TABLE>
<CAPTION>
                        Years of Service       Percentage        
                        ----------------       ----------        
                               <S>                <C>            
                                                                 
                               1                  10%            
                               2                  20%            
                               3                  30%            
</TABLE>




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<TABLE>
                            <S>              <C>  
                                4             40% 
                                5             50% 
                                6             60% 
                                7             70% 
                                8             80% 
                                9             90% 
                            10 or more       100% 
</TABLE>

     For the purposes of the Plan, "Fiscal Year 1998 Retainer Fee" shall mean
$40,000, the annual retainer fee being paid to Outside Directors during the
Company's 1998 fiscal year for serving on the Board (exclusive of fees paid for
attending Board or Board committee meetings and excluding the annual fee paid
for serving as chairperson of a Board committee).

For purposes of the Plan, "Year of Service" shall mean each full and each
partial fiscal year of the Company during which the Outside Director served on
the Board. For all purposes of the Plan, the Years of Service of each Outside
Director, as of the Freeze Date, are shown in the following schedule:


<TABLE>
                          <S>                     <C>
                          Allen, Robert H.        15+
                          Baker, Howard H., Jr.   10
                          Cox, Robert L.           5
                          DeNunzio, Ralph D.      15+
                          Estrin, Judith L.       10
                          Greer, Philip           15+
                          Hyde, J. R., III        15+
                          Manatt, Charles T.       9
                          Mitchell, George J.      4
                          Smart, Jackson W., Jr.  15+
                          Smith, Joshua I.         9
                          Walsh, Paul S.           2
                          Willmott, Peter S.      15
</TABLE>


     3. Death Benefit.

        (a) Pre-Retirement Death. If an Outside Director's directorship on the
Board is terminated by reason of his or her death and if, at the time of death,
such director could have retired from the Board and become entitled to the
retirement benefit provided under paragraph 2 above, such director's surviving
spouse shall be entitled to a death benefit commencing as of the first day of
the fiscal quarter of the Company next following the later of the date of the
director's death or the date that such director would have attained age 60. Such
death benefit shall be an annual amount, payable thereafter in quarterly
installments for the number of years determined by reference to the first
schedule in paragraph 2, equal to a percentage of the Fiscal Year 1998 Retainer
Fee determined pursuant to the second schedule




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in paragraph 2 above according to such deceased director's number of Years of
Service on the Board as an Outside Director.

        (b) Post-Retirement Death. In the event of the death of a former Outside
Director who, at the time of his or her death, was receiving installment
payments of the retirement benefit provided pursuant to paragraph 2 above, such
director's surviving spouse shall be entitled to receive as a death benefit the
remaining unpaid installments of such retirement benefit which shall be payable
at the same time and for the same period as such remaining installments would
have been paid to the deceased director.

     No death benefits shall be payable under this Plan in respect of a deceased
director or former director who is not survived by his or her spouse or who,
prior to death, had received a cash-out distribution of a retirement benefit
pursuant to paragraph 4 hereof.

     4. Cash-Out Distribution Option. Each Outside Director as of the Freeze
Date or the spouse of a deceased Outside Director may, at his or her option,
elect to receive a cash-out distribution of the benefit provided by the Plan.
Such cash-out distribution shall be an amount equal to the lump-sum present
value of the undistributed installments of such benefit at the time of such
election, computed on the basis of the discount rate then used by the Company in
determining the present-value equivalency of a deferred pension benefit under
the Company's defined benefit pension plan covering employees generally. A
cash-out distribution of a retirement or death benefit under the Plan shall,
when made to the person entitled thereto, constitute full satisfaction of the
Company's obligation to pay such benefit.

     5. Administration. The Plan shall be administered by the Compensation
Committee of the Board (the "Committee"), which shall have full power and
authority to interpret the provisions of the Plan and determine eligibility for
benefits, to determine all questions arising in the administration of the Plan,
to adopt such rules, regulations and procedures which it deems necessary for the
administration of the Plan and to recommend any modifications, changes or
amendments to the Plan to the full Board. The determinations of the Committee
with respect to the Plan shall be binding upon all persons having an interest in
the Plan.

     6. Non-Assignability of Benefits.  Benefits under this Plan shall not be
assignable or transferable in any manner, nor shall they be subject to
garnishment, attachment or other legal process.

     7. Effect. Neither the establishment of the Plan or any modification
thereof, nor the creation of any account on the books of the Company, nor the
payment of any benefit hereunder shall be construed as giving to any Outside
Director or other person any legal or equitable rights against the Company, any
officer or employee thereof or the Committee except as herein provided.

     8. Amendment and Termination. The Board may at any time amend or terminate
this Plan. However, no amendment or termination shall alter or impair 




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benefits accrued under the Plan at the time of such amendment or termination.
The version of the Plan in existence at the time that an Outside Director
terminates his or her membership on the Board shall control, in all respects,
the benefit payable from this Plan without regard to earlier or later versions
of the Plan unless such later version specifically provides otherwise.

This Plan shall terminate without the need of further action of the Board upon
the final payment of all benefits payable under its terms.


       AUTHORIZED BY THE BOARD OF DIRECTORS the 14th day of July 1997.




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