- The stock price of FedEx (NYSE: FDX) increased by over 11% during intraday trading today. This is why.
The stock price of FedEx (NYSE: FDX) increased by over 11% during intraday trading today. Investors are responding positively to FedEx announcing a series of long-planned business and corporate governance actions consistent with the company’s efforts to drive long-term value creation for all stakeholders.
Following a detailed review, the FedEx Board of Directors declared a quarterly cash dividend of $1.15 per share on its common stock. And this represents a $0.40 per share, or 53%, increase from the previous dividend of $0.75. This dividend is payable on July 11, 2022, to stockholders of record as of the close of business on June 27, 2022.
Executive Compensation Program Enhancements
FedEx also announced that its cash-based long-term incentive (LTI) program for fiscal 2023 through 2025 includes an additional performance metric tied to FedEx’s total shareholder return (TSR) relative to a broad market index. And the LTI program also includes a capital expenditures as a percentage of revenue (CapEx/Revenue) performance metric.
The CapEx/Revenue target metric in the new LTI program is lower than in prior years to align with FedEx’s capital plans for fiscal years 2023 through 2025, and FedEx expects to further lower its capital intensity in subsequent years. These changes are specifically designed to make management compensation more directly tied to delivering outstanding TSR and long-term value creation.
FedEx is also adding 2 highly qualified independent directors, Amy Lane and Jim Vena, to its Board effective immediately. These appointments were made in connection with a cooperation agreement with the D. E. Shaw group. And a third independent director mutually agreed upon by the Company and the D. E. Shaw group will be added to the Board at a later date.
With the addition of these directors and the anticipated retirement of Dr. Shirley Ann Jackson at the expiration of her term due to the mandatory retirement provision of the company’s corporate governance guidelines, the FedEx Board is going to comprise of 14 directors, 12 of whom will be independent, following the company’s 2022 Annual Meeting of Stockholders.
Plus FedEx also announced that the Board’s Audit Committee has been renamed the Audit and Finance Committee. And in addition to its current responsibilities of overseeing financial, compliance, risk management, and environmental, social, and governance (ESG) disclosures, will be responsible for reviewing the Company’s financial affairs, including capital structure, allocation, and returns. And R. Brad Martin will continue to Chair the committee, and Amy Lane, Marvin R. Ellison, Kimberly A. Jabal, Joshua Cooper Ramo, and Jim Vena currently serve as members of the committee.
“Through decades of investments, innovation, and expertise, we have built a global portfolio that serves as the foundation of our competitive advantage. Our focus is to build on this foundation and continue creating long-term value for our stockholders.”
“We are pleased to welcome Amy and Jim to the FedEx Board. They both possess skills and experience that will be valuable to the Board as we oversee the execution of our strategy and financial objectives. We appreciate the collaboration with the D. E. Shaw group, a long-time FedEx stockholder, with whom we have maintained an ongoing and constructive dialogue in reaching this agreement.”
— Raj Subramaniam, FedEx Corp. President and Chief Executive Officer
“The increased dividend we announced today is the culmination of our Board’s thoughtful efforts over many months to ensure that our capital allocation strategy reflects our confidence in the trajectory of the business and increases returns for our stockholders. We look forward to sharing more detail on our strategy and long-term objectives at our investor day later this month.”
— Michael Lenz, FedEx Executive Vice President and Chief Financial Officer
“We are appreciative of the constructive approach taken by Raj and the FedEx Board of Directors. We believe that today’s Board enhancements and changes to the executive compensation program position the company well to deliver on its plan to drive significant value for all stockholders. We look forward to the Company further detailing its plans to enhance stockholder value at the investor day later this month.”
— Michael O’Mary, Managing Director at the D. E. Shaw group
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