Document:

Ex-10.38

 

Exhibit 10.38

Compensation
Arrangements with Named Executive Officers

Base
Salaries

     The following table sets forth the fiscal 2008 annual base salaries of FedEx’s named executive
officers, other than Daniel J. Sullivan, who retired as FedEx Ground’s President and Chief
Executive Officer on December 31, 2006:

	 	 	 	 	 
	Name and	 	 
	Current Position	 	Base Salary
	Frederick W. Smith 
	 	$	1,434,840	 
	Chairman, President and

Chief Executive Officer
	 	 	 	 
	 
	 	 	 	 
	Alan B. Graf, Jr.
	 	$	902,784	 
	Executive Vice President and

Chief Financial Officer
	 	 	 	 
	 
	 	 	 	 
	David J. Bronczek 
	 	$	942,756	 
	President and Chief Executive Officer –

FedEx Express
	 	 	 	 
	 
	 	 	 	 
	T. Michael Glenn
	 	$	802,188	 
	Executive Vice President,

Market Development and

Corporate Communications
	 	 	 	 
	 
	 	 	 	 
	Robert B. Carter 
	 	$	736,596	 
	Executive Vice President,

FedEx Information Services and

Chief Information Officer
	 	 	 	 

     
Mr. Smith’s annual base salary was increased by 2.5%. Each
other named executive officer’s annual base salary was increased
by 3.5%. Mr. Smith’s new base salary is effective as of
July 16, 2007. The new base salaries of the other
named executive officers are effective as of July 1, 2007.

FY2008 Annual Incentive Compensation Plans

     Chairman, President and Chief Executive Officer

     Frederick W. Smith’s fiscal 2008 annual bonus will be determined by the achievement of
corporate objectives for consolidated pre-tax income for fiscal 2008. The Compensation Committee
may adjust Mr. Smith’s bonus amount upward or downward based on its consideration of several
factors, including: FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite
Index, the Dow Jones Transportation Average and the Dow Jones Industrial Average; FedEx’s revenue
and operating income growth relative to competitors;

 

 

FedEx’s cash flow; FedEx’s return on invested capital; FedEx’s U.S. and international revenue
market share; FedEx’s reputation rankings by various publications and surveys; and the Compensation
Committee’s assessment of the quality and effectiveness of Mr. Smith’s leadership during fiscal
2008. None of these factors will be given any particular weight by the Compensation Committee in
determining whether to adjust Mr. Smith’s bonus amount. Mr. Smith’s annual bonus target for fiscal
2008 is 130% of his base salary, with a maximum payout of 300% of his target bonus.

     Non-CEO Named Executive Officers

     Messrs. Graf, Glenn and Carter participate in the fiscal 2008 annual incentive cash bonus plan
for headquarters employees. Under this plan, the annual bonus target for each executive is 90% of
his base salary, with a maximum payout of 240% of the target bonus. A threshold payout of
up to 30% of the target bonus is based on the achievement of individual objectives established at
the beginning of the fiscal year for each executive. Mr. Smith will determine the achievement
level of each executive’s individual objectives at the conclusion of fiscal 2008. The balance of
the bonus payout is based on FedEx’s consolidated pre-tax income for fiscal 2008 and ranges, on a
sliding scale, from a minimum amount if the plan’s pre-established consolidated pre-tax income
threshold is achieved up to a maximum amount if such financial performance goal is substantially
exceeded.

     Mr. Bronczek participates in the fiscal 2008 annual incentive cash bonus plan sponsored by the
FedEx Express segment. Mr. Bronczek’s target annual bonus is 100% of his base salary, with a
maximum payout of 240% of his target bonus. A threshold payout of up to 30% of the target bonus is
based on his achievement of individual objectives established at the beginning of the fiscal year.
Mr. Smith will determine the achievement level of Mr. Bronczek’s individual objectives at the
conclusion of fiscal 2008. The balance of the bonus payout is based on FedEx’s consolidated
pre-tax income for fiscal 2008 and ranges, on a sliding scale, from a minimum amount if the plan’s
pre-established consolidated pre-tax income threshold is achieved up to a maximum amount if such
financial performance goal is substantially exceeded.

Long-Term Incentive Cash Bonus Program

     The Compensation Committee has established long-term performance bonus plans for the
three-fiscal-year periods 2006 through 2008, 2007 through 2009 and 2008 through 2010, providing
long-term cash bonus opportunities to members of upper management,
including the named executive officers,
for fiscal 2008, 2009 and 2010, respectively, if certain aggregate earnings-per-share goals
established by the Compensation Committee are achieved with respect to those periods. No amounts
can be earned for the fiscal 2006 through 2008, 2007 through 2009 and 2008 through 2010 plans until
2008, 2009 and 2010, respectively, because achievement of the earnings-per-share goals can only be
determined following the conclusion of the applicable three-fiscal-year period.

     The following table sets forth estimates of the possible future payouts to each of FedEx’s
named executive officers under FedEx’s long-term performance cash bonus plans. Mr. Sullivan, who
retired on December 31, 2006, is eligible for payouts under the fiscal 2006 through 2008

2

 

and 2007 through 2009 plans based on the proportion of the applicable three-fiscal-year period
during which he was employed.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Estimated Future Payouts
	 	 	Performance	 	Threshold	 	Target	 	Maximum
	Name	 	Period	 	($)	 	($)	 	($)
	Frederick W. Smith
	 	FY2006 – FY2008	 	 	625,500	 	 	 	2,500,000	 	 	 	3,750,000	 
	 
	 	FY2007 – FY2009	 	 	875,000	 	 	 	3,500,000	 	 	 	5,250,000	 
	 
	 	FY2008 – FY2010	 	 	875,000	 	 	 	3,500,000	 	 	 	5,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Alan B. Graf, Jr.
	 	FY2006 – FY2008	 	 	187,500	 	 	 	750,000	 	 	 	1,125,000	 
	 
	 	FY2007 – FY2009	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	FY2008 – FY2010	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	David J. Bronczek
	 	FY2006 – FY2008	 	 	250,000	 	 	 	1,000,000	 	 	 	1,500,000	 
	 
	 	FY2007 – FY2009	 	 	375,000	 	 	 	1,500,000	 	 	 	2,250,000	 
	 
	 	FY2008 – FY2010	 	 	375,000	 	 	 	1,500,000	 	 	 	2,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	T. Michael Glenn
	 	FY2006 – FY2008	 	 	187,500	 	 	 	750,000	 	 	 	1,125,000	 
	 
	 	FY2007 – FY2009	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	FY2008 – FY2010	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert B. Carter
	 	FY2006 – FY2008	 	 	187,500	 	 	 	750,000	 	 	 	1,125,000	 
	 
	 	FY2007 – FY2009	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	FY2008 – FY2010	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Daniel J. Sullivan
	 	FY2006 – FY2008	 	 	92,167	 	 	 	368,666	 	 	 	553,000	 
	 
	 	FY2007 – FY2009	 	 	48,333	 	 	 	193,333	 	 	 	290,000	 

     The estimated individual future payouts set forth in the table above are set dollar amounts
ranging from threshold amounts, if the earnings-per-share goal achieved is less than target, up to
maximum amounts, if the plan goal is substantially exceeded. There can be no assurance that the
estimated future payouts shown in this table will be achieved.

Other Arrangements

     FedEx’s named executive officers are eligible to receive certain other annual compensation,
including certain perquisites and other personal benefits, such as personal use of corporate
aircraft, security services and equipment (pursuant to FedEx’s executive security procedures) and
tax return preparation and financial counseling services.

     In addition, FedEx’s named executive officers receive tax reimbursement payments relating to
restricted stock awards, certain business-related use of corporate aircraft and certain
perquisites.

3Ex-10.39

 

Exhibit 10.39

Compensation Arrangements with Outside Directors

     Beginning in July 2007, non-management (outside) directors will be paid:

	 	•	 	a quarterly retainer of $19,375;
	 
	 	•	 	$2,000 for each in-person Board meeting attended;
	 
	 	•	 	$1,500 for each telephonic Board meeting attended;
	 
	 	•	 	$2,000 for each in-person committee meeting attended; and
	 
	 	•	 	$1,500 for each telephonic committee meeting attended.

Directors who attend an in-person Board or committee meeting telephonically will be paid 75% of the
applicable in-person meeting fee.

     Committee chairpersons of the Compensation, Nominating & Governance and Information Technology
Oversight Committees will be paid an additional annual fee of $12,500. The Audit Committee
chairperson will be paid an additional annual fee of $20,000. Each outside director who is elected
at FedEx’s 2007 annual meeting will receive a stock option for 4,400 shares of FedEx common stock on
the date of the 2007 annual meeting. Any outside director appointed to the Board after the 2007
annual meeting will receive a stock option for 4,400 shares of FedEx common stock upon his or her
appointment.Ex-10.46

 

Exhibit 10.46

FedEx Corporation

Policy on Personal Use of Corporate Aircraft

Purpose

FedEx Corporation (together with its subsidiaries, “FedEx”) maintains a fleet of corporate aircraft
that is used primarily for business travel by FedEx employees. The purpose of this policy is to
set forth guidelines and procedures regarding personal use of FedEx corporate aircraft.

Definitions

For purposes of this policy, travel on FedEx corporate aircraft is categorized as either:

	 	•	 	Business: travel by a FedEx employee that is reasonable and necessary in the
conduct of FedEx’s business and directly attributable thereto;
	 
	 	•	 	Business-related: travel by a FedEx employee’s spouse or adult guest(s) who
accompanies the employee on a business trip for the primary purpose of assisting the employee
with the business purpose of the trip; or
	 
	 	•	 	Personal: travel by a FedEx officer or an officer’s family members or guests that
is not business or business-related. In all cases, travel by children on corporate aircraft
is to be categorized as personal (except with respect to children who are FedEx employees on
business travel).

In addition, the terms set forth below shall have the following meanings:

	 	•	 	CEO: FedEx Corporation’s Chairman, President and Chief Executive Officer.
	 
	 	•	 	CFO: FedEx Corporation’s Executive Vice President and Chief Financial Officer.
	 
	 	•	 	Code: the Internal Revenue Code of 1986, as amended to date and as may hereafter
be amended, and the regulations promulgated thereunder.
	 
	 	•	 	Corporate Aviation: the Corporate Aviation Department of FedEx Express.
	 
	 	•	 	General Counsel: FedEx Corporation’s Executive Vice President, General Counsel and
Secretary.
	 
	 	•	 	SMC: the FedEx Corporation Strategic Management Committee.

Permitted Personal Use of Corporate Aircraft

CEO: Pursuant to FedEx’s executive security policy, the CEO is required to use FedEx
corporate aircraft for personal, as well as business, travel. The CEO’s family and guests may also
use FedEx corporate aircraft for personal travel. The CEO will not be charged any costs, taxes or
fees pursuant to this policy for personal travel by his family members or guests who accompany him
when his travel is categorized as business.

 

 

Other Officers: Any other FedEx officer and his or her family and guests may use FedEx
corporate aircraft for personal travel.

Others: Except as set forth above, no personal travel on FedEx corporate aircraft will be
permitted by any person who is not an officer of FedEx. Notwithstanding the foregoing, each of the
CEO, the General Counsel and the CFO shall have the authority, in his or her sole discretion, to
grant waivers of this restriction on a case-by-case basis in extraordinary circumstances.

Priority of Use

The use of FedEx corporate aircraft by FedEx officers is subject to the priority guidelines issued
from time to time by Corporate Aviation.

Categorization of Travel

Procedures

At the time an officer schedules a flight, he or she must advise Corporate Aviation, with respect
to himself or herself and/or each family member or guest, whether their travel is business,
business-related or personal. If a trip has both a business or business-related purpose and a
personal purpose, the travel category will be based on its primary purpose. Corporate Aviation
will enter this information into the aircraft passenger authorization form and the officer must
verify this information and sign the passenger authorization form before or during the flight.

In addition, a time-share agreement executed by the officer must be on file with Corporate Aviation
prior to personal corporate aircraft travel by that officer or his or her family or guests.

Corporate Aviation will make all regulatory filings that may be required in connection with
personal travel on FedEx corporate aircraft.

Service by FedEx Officers on an External Board

If the CEO and General Counsel approve an officer’s service on the board of an unaffiliated company
or organization (including a not-for-profit organization), travel on FedEx corporate aircraft to
such company’s or organization’s board and shareholder meetings will be categorized as business for
purposes of this policy. Travel to other board or shareholder meetings will be categorized as
personal.

Examples

The following are examples of proper trip categorizations:

	 	•	 	An officer flies on a corporate aircraft to attend a business meeting. The officer’s
flight should be categorized as business travel.
	 
	 	•	 	The officer’s spouse accompanies the officer on the trip. The primary purpose of the
spouse’s trip is to meet and interact with customers. The spouse’s travel should be
categorized as business-related. If the primary purpose of the spouse’s trip is personal,
however, the spouse’s travel should be categorized as personal.

2

 

	 	•	 	An officer’s child (who is not a FedEx employee on business travel) accompanies the
officer to a business meeting. The officer’s travel should be categorized as business. The
child’s travel should be categorized as personal.
	 
	 	•	 	An SMC member flies on a corporate aircraft to attend a business meeting and other
officers and a non-officer guest accompany him on the flight for personal reasons. The SMC
member’s flight should be categorized as business travel. The other passengers’ travel
should be categorized as personal.

Charges for Personal Travel

Following any personal travel on FedEx corporate aircraft by an officer or his or her family
members or guests (other than personal travel by the CEO’s family members or guests who accompany
the CEO when his travel is categorized as business), FedEx will send an invoice to the officer in
the amount of two times the cost of fuel for such trip, plus applicable passenger ticket taxes and
fees. The invoice will also include two times the fuel costs associated with any deadhead flights
that may be required as a result of such personal travel. Payment is due to FedEx no later than
fifteen (15) calendar days following receipt of the invoice by the officer.

Notwithstanding the foregoing, if persons on business travel occupy 50% or more of the total
available seats on an aircraft, no payment will be required by an officer with respect to any
person on that flight whose travel is categorized as personal.

Except with respect to the CEO’s family members and guests who accompany the CEO when his travel is
categorized as business, if a flight includes multiple travelers and persons on business travel
occupy less than 50% of the total available seats on the aircraft, the fuel costs for those
passengers who are traveling personally will be allocated based on the total number of passengers.
For instance, if a flight includes twelve passengers, each passenger traveling personally will be
allocated 1/12 of the fuel cost for such flight, multiplied by two, plus applicable passenger
ticket taxes and fees.

Reports

Every SMC member who uses corporate aircraft for personal travel during the fiscal year will
receive a monthly report of his or her usage. The report will include amounts invoiced to and paid
by the executive for personal aircraft travel, as well as the cumulative aggregate incremental cost
of such travel for the year.

Imputed Income and Tax Reimbursements

Under current Internal Revenue Service requirements, imputed income is calculated per Standard
Industrial Fare Levels (“SIFLs”) as periodically published by the U.S. Department of
Transportation. SIFL rates roughly approximate the cost of a first-class passenger airline ticket
for similar travel. FedEx will impute income to officers for personal and business-related travel
on corporate aircraft as required by the Code to the extent that the SIFL value for all such travel
during the twelve-month period from December 1 through November 30 exceeds the officer’s aggregate
fuel payments for such period pursuant to this policy.

3

 

Because the CEO is required to use corporate aircraft for all personal travel, he will be imputed
income at “safe harbor” SIFL rates as provided under the Code. In addition, FedEx will tax-protect
the CEO for (i.e., make a tax reimbursement payment relating to) his imputed income for his
personal travel and for the personal travel of his family members and guests who travel with him.
The CEO will not be tax-protected, however, with respect to personal travel by his family members
and guests who do not travel with him.

SMC members will be tax-protected for imputed income from business-related travel by their spouses
and adult guests.

Other FedEx officers and employees will be tax-protected for their imputed income from
business-related travel of their spouses and adult guests if an SMC member approves, in advance,
the trip and the tax reimbursement, and such approval is provided to the FedEx Tax Department on a
timely basis.

Except as set forth above, FedEx will not provide tax protection for imputed income relating to
personal or business-related travel on corporate aircraft.

Other

All usage of FedEx corporate aircraft must be in accordance with all applicable laws, rules and
regulations. Situations not specifically discussed in this policy should be addressed in
accordance with the intent and spirit of the policy. Any questions should be directed to the
General Counsel or her designees.

Amended May 25, 2007

4

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