In the midst of the CCP virus outbreak, one CEO has taken a noteworthy step for the benefit of the giant delivery service company. FedEx founder and chairman Fred Smith has taken a 91 percent reduction in his base salary for the next six months to help the company.
The Memphis Business Journal reported that independent members of the board of directors from FedEx had approved Smith’s salary reduction in a meeting on April 2. According to the report, the CEO will be given a reduced salary, which started on April 1 and will be in effect until the end of September 2020.
Owner-operator Steve Hengels delivers FedEx Ground items on Oct. 1, 2002, in Park Ridge, Illinois. (Tim Boyle/Getty Images)
A U.S Securities and Exchanges Commission (SEC) document filed by the corporation details the salary reduction. Smith’s pay is to go from US$115,402 to US$10,728 per month. However, due to taxation, charitable donations, and other deductions, his net salary will effectively be $1 for each pay period.
This made for a massive decrease from 2019 when Smith’s basic salary stood at around $1.4 million. The business journal reports that according to the delivery giant’s most recent proxy statement—along with other compensations received—the CEO’s total pay for the period of last year was nearly $16 million.
FedEx Corporation Chairman, President, and CEO Frederick Smith. (Chip Somodevilla/Getty Images)
In the same SEC regulatory filing, FedEx stated that it intends to draw out $1.5 billion—which represents the corporation’s entire credit line. The company explained the move was to secure its “cash position” better and to “preserve financial flexibility in light of disrupted access to commercial paper markets and the current uncertainty in the global financial markets resulting from the Covid-19 pandemic,” according to The Street.
In addition to the credit line, the company has also stated that it believes itself to be eligible for specific grants and relief efforts currently put in place by the U.S. government.
“The Covid-19 pandemic and resulting significantly weaker global economic conditions have negatively impacted our results of operations and are expected to continue to impact our business, results of operations, cash flows, and liquidity,” FedEx stated.
A FedEx worker unloads packages from his delivery truck on March 31, 2020, in Washington. (Drew Angerer/Getty Images)
However, it’s not all bad news, though, as certain parts of the economy have seen a slight increase in the wake of the CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus. While the business-to-business side of the corporation has seen a decrease as a result of European and U.S. shutdowns, residential delivery service has increased.
“Demand for FedEx Ground residential delivery services has increased, due to sharp increases in e-commerce volume,” the company said. However, “the shift in mix is expected to negatively impact margins and operating results,” the company further added.
A cleaning crew wearing protective clothing (PPE) takes disinfecting equipment into the Life Care Center on March 12, 2020, in Kirkland, Washington. (John Moore/Getty Images)
While the CCP virus pandemic has been battering the worldwide economic markets over the last few weeks, FedEx is taking some extraordinary measures to keep a stable position in a very unstable situation. According to a statement the company sent to Local 14 News, the company wrote, “In this uncertain business environment, we’re taking proactive steps to best position FedEx for our employees, customers and shareholders. The debt offering and the Chairman’s voluntary salary reduction will help mitigate the impacts of COVID-19 on FedEx.”
