Report of the Compensation Committee of the Board of Directors

The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors, and the Board approved, that the Compensation Discussion and Analysis be included in this proxy statement and in FedEx’s Annual Report on Form 10-K for the fiscal year ended May 31, 2018.

Compensation Committee Members

PAUL S. WALSH Chairman

MARVIN R. ELLISON

JOHN C. (“CHRIS”) INGLIS

SHIRLEY ANN JACKSON

SUSAN C. SCHWAB

Compensation Discussion and Analysis

In this section we discuss and analyze the compensation of our principal executive and financial officers and our three other most highly compensated executive officers for the fiscal year ended May 31, 2018. For additional information regarding compensation of the named executive officers, see “— Summary Compensation Table” and other compensation-related tables and disclosure below.

32

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

During fiscal 2018, we continued to focus on finding ways to improve efficiency and rationalize capacity, improving on our already high levels of service, and continuing to invest in critical, long-term projects (including the integration of TNT Express) as part of our global strategy to position the company for stronger growth. Although our after-tax financial performance improved during fiscal 2018, adjusted consolidated operating income was below our aggressive target objective under our fiscal 2018 AIC program. Accordingly, and consistent with our pay-for-performance philosophy, the payouts under our AIC program were below target. Maximum payouts were earned in fiscal 2018 by all participants, including the named executive officers, under our long-term incentive compensation (“LTI”) program, which is tied to financial performance over a three-year period (fiscal 2016 through fiscal 2018 for the FY2016–FY2018 LTI plan).

The following table details key compensation highlights of the last five fiscal years.

COMPENSATION HIGHLIGHTS

FY2014		FY2015		FY2016		FY2017		FY2018
► AIC plan paid below target ► FY2012-FY2014 LTI plan paid above target		► AIC plan paid below target ► No FY2013-FY2015 LTI plan payout		► AIC plan paid below target (slightly below target payout for FedEx Express CEO) ► FY2014-FY2016 LTI plan paid at maximum		► AIC plan paid below target ► FY2015-FY2017 LTI plan paid at maximum		► AIC plan paid below target ► FY2016-FY2018 LTI plan paid at maximum

PHILOSOPHY

FedEx is consistently ranked among the world’s most admired and trusted employers and respected brands. Maintaining this reputation and continuing to position FedEx for future success requires high caliber talent to protect and grow the company in support of our mission of producing superior financial returns for our shareowners. We design our executive compensation program to provide a competitive and internally equitable compensation and benefits package that reflects individual and company performance, job complexity, and strategic value of the position while ensuring long-term retention and motivation.

Each of the named executive officers is a longstanding member of our management, and our Chairman of the Board and Chief Executive Officer, Frederick W. Smith, founded the company and pioneered the express transportation industry over 45 years ago. As a result, our named executive officers are especially knowledgeable about our business and our industry and thus particularly valuable to the company and our shareowners.

As with tenure, position and level of responsibility are important factors in the compensation of any FedEx employee, including our named executive officers. There are internal salary ranges for each level, and annual target bonus percentages, long-term bonus amounts, and the number of stock options and restricted shares awarded are all closely tied to management level and responsibilities. For instance, our Chief Financial Officer, General Counsel and Chief Information Officer have the same salary range and annual target bonus percentages and receive the same long-term bonus and the same number of options and restricted shares in the annual grant.

Table of Contents

Our executive compensation is, in large measure, highly variable and linked to the above goals and the performance of the FedEx stock price over time.

34

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

COMMITMENT TO RETAIN AND ATTRACT

FedEx is widely acknowledged as one of the world’s most admired and respected companies, and it is our people — our greatest asset — who have earned FedEx its strong reputation. Because FedEx operates a global enterprise in a highly challenging business environment, we compete for talented management with some of the largest companies in the world — in our industry and in others. Our global recognition and reputation for excellence in management and leadership make our people attractive targets for other companies, and our key employees are aggressively recruited. To prevent loss of our managerial talent, we seek to provide an overall compensation program that is competitive with all types of companies and continues to retain and attract outstanding people to conduct our business. Each element of compensation is intended to fulfill this important obligation.

MARKET REFERENCING

Because retention is imperative and tenure and management level are determinative factors, we use external survey data solely as a market reference point to assess the competitiveness of our compensation programs. The target compensation levels of our named executive officers are not designed to correspond to a specific percentile of compensation in those surveys. Instead, our analysis considers multiple market reference points for the analyzed positions, rather than referring to a specific percentile.

For the fiscal 2018 executive compensation review, we considered survey data published by two major consulting firms engaged by the company: Willis Towers Watson and Aon Hewitt. Each consulting firm provided target compensation data for general industry companies (excluding financial services companies) in its respective database with annual revenues between $25 billion and $100 billion. These companies are listed on Appendix B hereto.

General industry is the appropriate comparison category because our executives are recruited by and from businesses outside of FedEx’s industry peer group. Moreover, our industry peer group does not provide a sufficient number of companies that are of a comparable size to FedEx. Using a robust data sample (111 companies for fiscal 2018) mitigates the impact of outliers, year-over-year volatility of compensation levels and the risk of selection bias, and increases the likelihood of comparing with companies with executive officer positions similar to ours. Because the annual revenues of these companies vary significantly, each consulting firm used regression analysis to allow for the inclusion of data from a large number of both larger and smaller companies. The data results provided by each firm were then averaged to arrive at blended market compensation data for general industry executives.

As part of the fiscal 2018 analysis, we modified the valuation methodology used for long-term incentive components to more closely align with the methodology used for Summary Compensation Table reporting. This change is reflected in the components of total direct compensation (“TDC”) discussed below.

When we evaluate the elements of compensation of our executive officers in light of the referenced survey data, we consider TDC as illustrated below:

ELEMENTS OF TDC

TDC includes AIC at target ( i.e. , assuming achievement of all objectives) and all long-term components at target. Tax payments on restricted stock awards are included in TDC.

Other elements of compensation of the named executive officers (such as perquisites and retirement benefits) are not included in TDC, consistent with our referenced survey information. Accordingly, these other elements are not referenced against survey data, and decisions as to these other elements do not influence decisions as to the elements of compensation that are included in TDC. These other elements of compensation, however, are reviewed and approved by the Compensation Committee.

While we may reference our target executive compensation levels against the survey group of companies, we do not compare our AIC and LTI financial-performance goals against these companies or any other group of companies. Rather, as discussed below, our AIC and LTI financial-performance goals are based upon our internal business objectives which, when set each year, represent aggressive but achievable goals. Accordingly, the relationship between our financial performance and the financial performance of the survey companies does not affect the relationship between our executive compensation and the executive compensation of that group in a given year.

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

PAY FOR PERFORMANCE

Our executive compensation program is intended not only to retain and attract highly qualified and effective managers, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of shareowners and appropriately reward them for doing so. Accordingly, we believe that there should be a strong relationship between pay and corporate performance (both financial results and stock price), and our executive compensation program reflects this belief. In particular, AIC payments, LTI payments and stock options represent a significant portion of our executive compensation program, as shown by the chart below, and this variable compensation is “at risk” and directly dependent upon the achievement of corporate financial-performance goals and stock price appreciation:

The following chart illustrates for each named executive officer the allocation of fiscal 2018 target TDC between base salary and incentive and equity-oriented compensation elements (the restricted stock value includes the related tax payment):

FISCAL 2018 TARGET TDC COMPONENTS

We believe that long-term performance is the most important measure of our success, as we manage FedEx’s operations and business for the long-term benefit of our shareowners. Accordingly, not only is our executive compensation program weighted towards variable, at-risk pay components, but we also emphasize incentives that are dependent upon long-term corporate performance and stock price appreciation. These long-term incentives include LTI cash compensation and equity awards (stock options and restricted stock), which comprise a significant portion of an executive officer’s total compensation. These incentives are designed to motivate and reward our executive officers for achieving long-term corporate financial-performance goals and maximizing long-term shareowner value.

36

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

The following chart illustrates for each named executive officer the allocation of fiscal 2018 target TDC between short-term components — base salary and AIC — and long-term incentives — LTI, stock options and restricted stock, including the related tax payment:

FISCAL 2018 SHORT-TERM VS. LONG-TERM COMPENSATION

We include target AIC and LTI payouts in TDC, so the actual compensation paid out in a given year may vary widely from target levels because compensation earned under the AIC and LTI programs is variable and commensurate with the level of achievement of financial-performance goals. When we fall short of our business objectives, payments under these variable programs decrease correspondingly. Conversely, when we achieve superior results, we reward our executives accordingly under the terms of these programs. As noted above, the fiscal 2018 AIC plan paid below target while the FY2016-FY2018 LTI plan paid at maximum (150% of target).

ALIGN MANAGEMENT AND SHAREOWNER INTERESTS

We award stock options and restricted stock to create and maintain a long-term economic stake in the company for the officers, thereby aligning their interests with the interests of our shareowners.

In addition, as discussed above, payout under our LTI program is dependent upon achievement of a pre-established aggregate EPS goal for a three-fiscal-year period. EPS was selected as the financial measure for the LTI plan because growth in our EPS strongly correlates to long-term stock price appreciation.

The following graph illustrates the relationship between FedEx’s EPS growth and stock price appreciation (based on the fiscal year-end stock price and adjusted for stock splits) from 1978 to 2018:

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Stock Ownership Goal for Senior Officers

In order to encourage significant stock ownership by FedEx’s senior management, including the named executive officers, and to further align their interests with the interests of our shareowners, the Board of Directors has adopted a stock ownership goal for senior officers, which is included in FedEx’s Corporate Governance Guidelines. With respect to our executive officers, the goal is that within five years after being appointed to his or her position, each officer own FedEx shares valued at the following multiple of his or her annual base salary:

For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock options are not. Until the ownership goal is met, the officer is encouraged to retain “net profit shares” resulting from the exercise of stock options. Net profit shares are the shares remaining after payment of the option exercise price and taxes owed upon the exercise of options. As of July 30, 2018, each executive officer exceeded the stock ownership goal.

Policy Against Hedging and Pledging Transactions

In addition, we have adopted comprehensive and detailed policies (the FedEx Securities Manual) that regulate trading by our insiders, including the named executive officers and Board members. The Securities Manual includes information regarding quiet periods and explains when transactions in FedEx stock are permitted. The Securities Manual and our Corporate Governance Guidelines also set forth certain types of transactions that are prohibited. Specifically, (1) publicly traded (or exchange-traded) options, such as puts, calls and other derivative securities, (2) short sales, including “sales against the box,” and (3) hedging or monetization transactions designed to limit the financial risk of ownership, including prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar transactions, are prohibited. The Securities Manual and our Corporate Governance Guidelines also prohibit margin accounts and pledges; however, our Lead Independent Director and General Counsel, acting together, may grant an exception to the prohibition against holding FedEx securities in a margin account or pledging FedEx securities on a case-by-case basis to any member of the Board of Directors or the Chairman of the Board and Chief Executive Officer if he or she clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities.

Based upon this criterion, such an exception has been granted with respect to the shares that are disclosed in this proxy statement as having been pledged as security by Frederick W. Smith, FedEx’s Chairman of the Board and Chief Executive Officer, and Frederick Smith Enterprise Company, Inc. (”Enterprise”). See “Stock Ownership — Directors and Executive Officers.” With respect to the shares pledged by Mr. Smith and Enterprise as of July 30, 2018:

38

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

We have an active shareowner engagement program in which we meet regularly with our largest shareowners. During these discussions, none of our largest shareowners have raised any concerns regarding Mr. Smith’s pledged shares.

No other FedEx executive officer or Board member currently holds FedEx securities that are pledged pursuant to a margin account, loan or otherwise.

RESTRICTED STOCK PROGRAM

FedEx’s restricted stock program has been in place for over 25 years and has encouraged FedEx executives to own and retain company stock. Although none of our largest shareowners have raised any concerns to us regarding our restricted stock program, during fiscal 2018 the Compensation Committee again reviewed our restricted stock program and, for all of the following reasons, determined that it continues to be appropriate for FedEx.

By facilitating the ownership of FedEx shares by our executives, we strengthen the alignment of their interests with those of our investors. When granting restricted stock, FedEx first determines the total target value of the award and then approves the delivery of that value in two components: restricted shares and cash payment of taxes due. Therefore, the total target value of the award is the same as it would be if there were no tax payments. In particular, because the amount of the tax payment is included in the calculation of the target value of the restricted stock award, the officers receive fewer shares in each award than they would in the absence of the tax payment: fewer by an amount equal in value to the tax payment.

This methodology prevents the need for an officer to make a disposition of FedEx stock to cover the tax consequences of a restricted stock award and dilute his or her interest in FedEx. Conversely, absent the tax payment, the number of shares received in each award would be larger by an amount equal in value to the forgone tax payment, thereby having a dilutive effect on our shareowners’ equity interest in FedEx. While SEC disclosure rules require that these payments be included with tax reimbursement payments and reported as “other compensation” in the Summary Compensation Table, we do not believe these payments are “tax gross-ups” in the traditional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients. The following chart illustrates this principle, using the target value for the fiscal year 2018 restricted stock awards granted to our Chief Financial Officer and Chief Information Officer (as in previous years, Mr. Smith did not receive a restricted stock award in fiscal 2018):

TARGET VALUE OF RESTRICTED STOCK AWARD

Not only is the value to the officer, as well as the cost to the company, generally the same as it would be otherwise, but this practice uses fewer shares of stock to arrive at the same benefit and has proved extremely successful in retaining executives and enabling them to retain their shares. During fiscal 2014, we broadened our restricted stock program to include certain lower-level officers and high-performing managers and individual contributors. We also make tax payments as part of restricted stock awards to these individuals. In sum, we strongly believe that our restricted stock program is effectively designed and is aligned with the best interests of our shareowners.

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Role of the Compensation Committee, its Compensation Consultant and the Chairman of the Board and Chief Executive Officer

Our Board of Directors is responsible for the compensation of our executive management. The purpose of the Board’s Compensation Committee, which is composed solely of independent directors, is to help discharge this responsibility by, among other things:

The Compensation Committee may form and delegate authority to any subcommittee as it deems appropriate or advisable in accordance with the terms of its written charter. To date, however, the Committee has not formed or delegated authority to any subcommittee.

In furtherance of the Compensation Committee’s responsibility, the Committee has engaged Steven Hall & Partners (the “consultant”) to assist the Committee in evaluating FedEx’s executive compensation, including during fiscal 2018. In connection with this engagement, the consultant reports directly and exclusively to the Committee. The consultant participates in Committee meetings, reviews Committee materials and provides advice to the Committee upon its request. For example, the consultant: updates the Committee on trends and issues in executive compensation and comments on the competitiveness and reasonableness of FedEx’s executive compensation program; assists the Committee in the development and review of FedEx’s AIC and LTI programs, including commenting on performance measures and the goal-setting process; and reviews and provides advice to the Committee for its consideration in reviewing compensation-related proxy statement disclosure, including this Compensation Discussion and Analysis, and on any new equity compensation plans or plan amendments proposed for adoption.

Other than services provided to the Compensation Committee, the consultant does not perform any services for FedEx. Additionally, the consultant has robust policies and procedures in place to prevent conflicts of interest; the fees received by the consultant from FedEx in the consultant’s most recently completed fiscal year represented less than 5% of the consultant’s revenues; neither the consultant nor any adviser of the consultant had a business or personal relationship with any member of the Compensation Committee or any executive officer of FedEx during fiscal 2018; and no adviser of the consultant directly owns, or directly owned during fiscal 2018, any FedEx stock. Accordingly, the Compensation Committee has determined the consultant to be independent from the company and that no conflicts of interest exist related to the consultant’s services provided to the Committee. Compensation Committee pre-approval is required for any services to be provided to the company by the Committee’s independent compensation consultant. This ensures that the consultant maintains the highest level of independence from the company, in both appearance and fact.

40

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

The Chairman of the Board and Chief Executive Officer, who attends most meetings of the Compensation Committee by invitation of the Committee’s chairman, assists the Committee in determining the compensation of all other executive officers by, among other things:

The other executive officers do not have a role in determining their own compensation, other than discussing their annual individual performance objectives and results achieved with the Chairman of the Board and Chief Executive Officer or the President and Chief Operating Officer, as applicable.

Compensation Elements and Fiscal 2018 Amounts

BASE SALARY

Our primary objective with respect to the base salary levels of our executive officers is to provide sufficient fixed cash income to retain and attract these highly marketable executives in a competitive market for executive talent. The base salaries of our executive officers are reviewed and adjusted (if appropriate) at least annually to reflect, among other things, economic conditions, TDC for comparable positions from the executive compensation survey data discussed above, the tenure of the officers, and the base salaries of the officers relative to one another, as well as the internal salary ranges for the officer’s level.

Effective in October 2017, Mr. Smith’s annual base salary was increased by 2%, and each other named executive officer’s annual base salary was increased by 3%. Additionally, effective in June 2018, the base salaries of Messrs. Graf, Bronczek and Cunningham were increased by 10%, 5% and 15%, respectively, in connection with our annual executive compensation review. Effective in October 2018, Mr. Smith’s annual base salary will be increased by 2.5% and the annual base salaries of Messrs. Graf, Bronczek, Carter and Cunningham will be increased by 3%. As a result, effective in October 2018, the base salaries of FedEx’s named executive officers will be as follows:

CASH PAYMENTS UNDER AIC PROGRAM

The primary objective of our AIC program is to motivate our people to achieve our annual financial goals and other business objectives and reward them accordingly. The program generally provides an annual cash bonus opportunity to many of our salaried employees on an enterprise-wide basis, including the named executive officers, at the conclusion of each fiscal year. The payout opportunity is based upon the achievement of financial performance objectives that apply equally to all plan participants, as well as individual performance objectives as described below.

For fiscal 2018, the AIC plan for all plan participants, including the named executive officers, had one company financial-performance measure — adjusted consolidated operating income (this measure excluded certain items that did not reflect the company’s core business performance, as described in detail below). This measure was chosen as

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

the financial-performance metric in order to further motivate management to improve the company’s overall financial performance. Participants’ payouts under the fiscal 2018 AIC plan also were based on the achievement of individual performance objectives. The AIC payout amount for Mr. Smith was not based on individual performance objectives, but was subject to adjustment by the independent Board members based on his annual performance evaluation, as described below.

Target AIC payouts are established as a percentage of the executive officer’s base salary actually paid during the fiscal year. Payouts above target levels are based exclusively upon the company’s financial performance. Accordingly, the executive officer receives above-target payouts only if the company exceeds the AIC target objective for annual financial performance.

AIC objectives for company annual financial performance are typically based upon our business plan for the fiscal year, which is reviewed and approved by the Board of Directors and which reflects, among other things, the risks and opportunities identified in connection with our enterprise risk management process. Consistent with our long-term focus and in order to discourage unnecessary and excessive risk-taking, we measure performance against our business plan, rather than a fixed growth rate or an average of growth rates from prior years, to account for short-term economic and competitive conditions and anticipated strategic investments that may have adverse short-term profit implications. We address year-over-year improvement targets through our LTI plans, as discussed below.

When the fiscal 2018 AIC plan was approved by the Board of Directors in June 2017, the adjusted consolidated operating income target objective under the plan was the same as the fiscal 2018 business plan objective for adjusted consolidated operating income (excluding, in each case, fiscal 2018 TNT Express integration expenses (including any restructuring charges at TNT Express) and the mark-to-market retirement plans accounting adjustments (“MTM Adjustment”) (the fiscal 2018 MTM Adjustment includes certain other pension adjustments)). On May 31, 2018, the Board of Directors, upon the recommendation of the Compensation Committee, approved a modification to the target objective under the fiscal 2018 AIC plan so that the target objective was lower than the corresponding business plan objective for adjusted consolidated operating income. This action, among other things, minimized the financial impact of the NotPetya cyberattack for all participants in the plan.

The fiscal 2018 AIC plan also provided a minimum funding level of 50% of the target amount, independent of the company's financial performance. This means that at least 50% of the target AIC funding amount would have been available for payout even if the adjusted consolidated operating income target objective under the plan was not achieved. However, the actual payout for each plan participant, including the non-CEO named executive officers, depended on the achievement level of his or her individual performance objectives. The AIC payout amount for Mr. Smith was not based on individual performance objectives, but was subject to adjustment by the independent Board members based on his annual performance evaluation, as described below.

The fiscal 2018 AIC target payouts for the named executive officers, as a percentage of base salary, were as follows:

The maximum fiscal 2018 AIC payout opportunity for each named executive officer was 200% of his target bonus.

Chairman of the Board and Chief Executive Officer

Mr. Smith’s fiscal 2018 AIC payout was based on the achievement of corporate objectives for adjusted consolidated operating income, as described above. Mr. Smith’s minimum AIC payout opportunity was zero, as a result of the independent directors’ ability to adjust his bonus amount downward based on his annual performance evaluation, as described below.

Mr. Smith’s target AIC payout is set as a percentage of his base salary, and his maximum AIC payout is set as a multiple of the target payout. The independent members of the Board of Directors, upon the recommendation of the Compensation Committee, approve these percentages. The actual AIC payout ranges on a sliding scale based upon the performance of the company against our company financial-performance goals.

42

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

In addition, the independent Board members, upon the recommendation of the Compensation Committee, may adjust this amount upward or downward, or may determine that no AIC payout is justified, based on their annual evaluation of Mr. Smith’s performance. When performing this evaluation, the Compensation Committee and the independent Board members consider many factors, including the quality and effectiveness of Mr. Smith’s leadership, the execution of key strategic initiatives and the following corporate performance measures:

None of these factors is given any particular weight in determining whether to adjust Mr. Smith’s bonus amount.

Non-CEO Named Executive Officers

The fiscal 2018 AIC payout opportunity for each of Messrs. Graf, Bronczek, Carter and Cunningham was based on the achievement of corporate objectives for adjusted consolidated operating income, as described above. The minimum AIC payout opportunity for each of the non-CEO named executive officers was zero, as a result of Mr. Smith’s ability (with respect to Messrs. Graf, Bronczek and Carter) and Mr. Bronczek's ability (with respect to Mr. Cunningham) to adjust the officer’s bonus amount downward based on his achievement of individual performance objectives, as described below.

The target AIC payout for each non-CEO named executive officer is set as a percentage of the executive’s base salary, and the maximum AIC payout is set as a multiple of the target payout. The actual AIC payout ranges on a sliding scale based upon the performance of the individual and the company against the objectives.

Mr. Smith and Mr. Bronczek may adjust the applicable officer’s bonus amount based on the achievement of individual performance objectives established at the beginning of the fiscal year. Individual performance objectives for the non-CEO named executive officers vary by management level and by operating segment and include (but are not limited to):

Individual performance objectives are designed to further the company’s business objectives. Achievement of individual performance objectives is generally within each officer’s control or scope of responsibility, and the objectives are intended to be achieved with an appropriate level of effort and effective leadership by the officer. The achievement level of each non-CEO named executive officer’s individual performance objectives is based on Mr. Smith’s or Mr. Bronczek’s evaluation (as applicable) at the conclusion of the fiscal year, which is reviewed by the Compensation Committee.

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Adjustments to Operating Income for Fiscal 2018 AIC Plan Purposes

FedEx’s fiscal 2018 consolidated operating income was impacted by several items that did not reflect core business performance. In order to ensure that payouts under the AIC plan accurately reflected the company’s core financial performance, the Board of Directors, upon the recommendation of the Compensation Committee, designed the fiscal 2018 AIC plan to exclude, or approved adjustments to exclude, the following items from fiscal 2018 consolidated operating income for purposes of the fiscal 2018 AIC plan:

Fiscal 2018 AIC Performance and Payouts

As noted above, the adjusted consolidated operating income target objective under the fiscal 2018 AIC program, as adopted in June 2017, was the same as the corresponding fiscal 2018 business plan objective. In May 2018, the Board approved lowering the AIC plan target objective below the corresponding business plan objective for adjusted consolidated operating income, which minimized the effect of the NotPetya cyberattack for all plan participants. Notwithstanding this adjustment, the fiscal 2018 AIC plan target objective for adjusted consolidated operating income was higher than the target objective for adjusted consolidated operating income under the company's fiscal 2017 AIC plan of $5.421 billion.

The following table presents the threshold, target and maximum objectives (if applicable) for adjusted consolidated operating income under our fiscal 2018 AIC program, and our actual adjusted consolidated operating income for fiscal 2018 (in millions):

Based upon below-target adjusted consolidated operating income performance, and each non-CEO named executive officer’s achievement of individual performance objectives, payouts to the named executive officers under the fiscal 2018 AIC program were as follows (compared to the target payout opportunities):

The independent members of the Board of Directors, upon the recommendation of the Compensation Committee, exercised their discretion (as described above) to reduce the amount of Mr. Smith’s fiscal 2018 AIC payout from $1,800,175, the formulaic amount resulting solely from the achievement of company financial performance objectives under the fiscal 2018 AIC program, to $1,656,161. This decision was based upon below-business-plan achievement for fiscal 2018 adjusted consolidated operating income.

44

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Fiscal 2019 AIC Plan Design

In order to continue motivating management to improve the company’s overall financial performance, the performance measure for all participants in the fiscal 2019 AIC plan is adjusted consolidated operating income. In order to ensure that payouts under the fiscal 2019 AIC plan accurately reflect the company’s core financial performance, the Board of Directors, upon the recommendation of the Compensation Committee, has approved excluding the impact of fiscal 2019 TNT Express integration expenses (including any restructuring charges at TNT Express) from fiscal 2019 consolidated operating income for purposes of the plan. The adjusted consolidated operating income target objective under the fiscal 2019 AIC program is lower than the fiscal 2019 business plan objective for adjusted consolidated operating income (the target and business plan objectives for consolidated operating income exclude fiscal 2019 TNT Express integration expenses).

Adjusted consolidated operating income performance that exceeds the fiscal 2019 business plan objective will result in an above-target payout opportunity, up to the maximum payout amount. The maximum payout opportunity under the plan is 200% of the target amount. The plan also provides for a minimum funding level of 50% of the target amount, independent of the company's financial performance. This means that at least 50% of the target AIC funding amount will be available for payout if the adjusted consolidated operating income target objective under the plan is not achieved. However, the actual payout for plan participants, including the non-CEO named executive officers, depends on the achievement level of their respective individual performance objectives. The AIC payout amount for the Chairman and CEO is not based on individual performance objectives, but may be adjusted by the independent Board members based on their annual evaluation of his performance, as described above.

The fiscal 2019 AIC payout opportunity for each of Messrs. Smith, Graf, Bronczek, Carter and Cunningham will be based on the achievement of corporate objectives for adjusted consolidated operating income, as described above. The minimum payout opportunity under the plan for Mr. Smith will be zero, as a result of the independent directors’ ability to adjust Mr. Smith’s bonus amount downward based on his annual performance evaluation, as described above. The minimum payout opportunity for each non-CEO named executive officer also will be zero, as a result of Mr. Smith’s and Mr. Bronczek's ability to adjust each applicable officer’s payout amount downward based on his achievement of individual performance objectives established at the beginning of the fiscal year. Mr. Smith or Mr. Bronczek, as applicable, will determine the achievement level of the officer’s individual objectives at the conclusion of fiscal 2019.

The fiscal 2019 AIC target payouts for the named executive officers, as a percentage of their respective base salary actually paid during fiscal 2019, are as follows:

The maximum fiscal 2019 AIC payout opportunity for each named executive officer will be 200% of his target bonus.

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

LTI PAYOUT OPPORTUNITY
(as a percentage of target)

As illustrated by the above chart, the LTI program provides for:

Mark-to-Market Retirement Plans Accounting and Other Adjustments to EPS for LTI Plan Purposes

The Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of certain items from fiscal 2016, fiscal 2017 and fiscal 2018 EPS for purposes of FedEx’s FY2016–FY2018, FY2017–FY2019 and FY2018–FY2020 LTI plans, and for establishing the base-year EPS for the FY2017–FY2019, FY2018–FY2020 and FY2019-FY2021 LTI plans, as applicable. In particular, because the MTM Adjustment is not reflective of core business performance, the Board previously determined that the MTM Adjustment will be excluded from EPS calculations under all LTI plans, beginning with the FY2016–FY2018 LTI plan.

In addition to the MTM Adjustment, fiscal 2016 EPS was adjusted for purposes of the applicable plans to exclude: (i) expenses incurred in connection with the settlement of and certain expected losses relating to independent contractor litigation matters involving FedEx Ground, net of recognized immaterial insurance recovery; (ii) expenses related to the settlement of a U.S. Customs and Border Protection matter involving FedEx Trade Networks, net of recognized immaterial insurance recovery; (iii) expenses associated with the acquisition, financing and integration of TNT Express, net of any tax impact, and TNT Express’s fiscal 2016 financial results; and (iv) the favorable income tax benefit from an internal corporate legal entity restructuring to facilitate the integration of FedEx Express and TNT Express.

Similarly, in addition to the MTM Adjustment, fiscal 2017 EPS was adjusted for purposes of the applicable plans to exclude: (i) fiscal 2017 TNT Express integration expenses (including any restructuring charges at TNT Express); (ii) expenses related to the settlement of and certain expected losses relating to independent contractor litigation matters involving FedEx Ground; and (iii) charges accrued in connection with pending U.S. Customs and Border Protection matters involving FedEx Trade Networks.

Fiscal 2018 EPS was also adjusted for purposes of the applicable plans to exclude, in addition to the MTM Adjustment: (i) fiscal 2018 TNT Express integration expenses (including any restructuring charges at TNT Express); (ii) expenses in connection with certain pending U.S. Customs Border and Protection matters involving FedEx Trade Networks; (iii) the cost of accelerated 2018 annual pay increases for certain hourly team members to April 2018 from October 2018, following the passage of the TCJA; (iv) goodwill and other asset impairment charges at FedEx Supply Chain; and (v) the provisional benefit from the remeasurement of the company’s net U.S. deferred tax liability following the passage of the TCJA.

46

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

As a result, adjusted fiscal 2016 EPS of $10.60, rather than reported fiscal 2016 EPS of $6.51, is being used for purposes of the FY2016–FY2018 LTI plan (as described in more detail below, adjusted fiscal 2016 EPS of $10.80 is further adjusted to $10.60 for this plan to account for the effect of stock repurchases). Adjusted fiscal 2016 EPS of $10.80 is the base-year EPS for the FY2017–FY2019 LTI plan. Additionally, adjusted fiscal 2017 EPS of $12.02, rather than reported fiscal 2017 EPS of $11.07, is being used for purposes of the FY2016–FY2018 and FY2017–FY2019 LTI plans (as described in more detail below, adjusted fiscal 2017 EPS of $12.09 is further adjusted to $12.02 for these plans to account for the effect of stock repurchases). Adjusted fiscal 2017 EPS of $12.09 is the base-year EPS for the FY2018–FY2020 LTI plan. Finally, adjusted fiscal 2018 EPS of $15.47, rather than reported fiscal 2018 EPS of $16.79, is being used for purposes of the FY2016–FY2018, FY2017–FY2019 and FY2018-FY2020 LTI plans and is the base year EPS for the FY2019-FY2021 LTI plan. The Board of Directors, upon the recommendation of the Compensation Committee, determined that, by excluding these items, payouts, if any, under these plans will more accurately reflect FedEx’s core financial performance in fiscal 2016, fiscal 2017 and fiscal 2018, as applicable. See Appendix C for a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures.

For the same reason, the Board of Directors, upon the recommendation of the Compensation Committee, has also approved the exclusion of TNT Express integration expenses (including any restructuring charges at TNT Express) from fiscal 2019 and 2020 EPS for purposes of the FY2017-FY2019, FY2018-FY2020 and FY2019-FY2021 LTI plans, as applicable.

Stock Repurchase Program-Related Adjustments to EPS for LTI Plan Purposes

During fiscal 2016 and fiscal 2017, the company repurchased 18.2 million shares and 3.0 million shares, respectively, as part of our stock repurchase program. Because the positive impact on EPS resulting from these stock repurchases did not reflect core business performance, the Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of the impact of the stock repurchases (net of interest expense on debt issued to fund a portion of the stock repurchase programs) on fiscal 2016 EPS for purposes of the FY2016–FY2018 LTI plan and fiscal 2017 EPS for purposes of the FY2016–FY2018 and FY2017-FY2019 LTI plans.

As a result, adjusted fiscal 2016 EPS of $10.60, rather than adjusted fiscal 2016 EPS of $10.80 (as further discussed above), is being used for purposes of the FY2016–FY2018 LTI plans. Additionally, adjusted fiscal 2017 EPS of $12.02, rather than adjusted fiscal 2017 EPS of $12.09 (as further discussed above), is being used for purposes of the FY2016–FY2018 and FY2017-FY2019 LTI plans. See Appendix C for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

During fiscal 2018, the company’s stock repurchases approximately offset dilution arising from the grant of equity awards throughout the year. As a result, no adjustments were made to fiscal 2018 earnings for LTI plan purposes due to stock repurchases.

Fiscal 2018 LTI Performance and Payouts

Typically, the base-year number over which the three-year average annual EPS growth rate goals are measured for an LTI plan is the final full-year EPS of the preceding fiscal year. For the FY2016–FY2018 LTI plan, however, the base-year year number is $8.87, not fiscal 2015 EPS of $3.65. For purposes of establishing the base-year EPS for the FY2016-FY2018 LTI Plan, fiscal 2015 EPS was adjusted to exclude: (i) the net impact of the company’s adoption of mark-to-market accounting for its defined benefit pension and other postretirement plans, including the impact of lowering the expected return on plan assets assumption from 7.75% to 6.5% in the presentation of segment results for all prior periods; (ii) aircraft impairment and related charges; and (iii) a charge to increase the legal reserve associated with the settlement of a legal matter at FedEx Ground to the amount of the settlement. The Board of Directors, upon the recommendation of the Compensation Committee, determined that, by excluding these items, any payouts under the FY2016-FY2018 LTI plan would more accurately reflect FedEx’s core financial performance.

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

The following table presents the aggregate EPS threshold (minimum), target and maximum under our FY2016–FY2018 LTI plan, which was established by the Board of Directors in 2015, and our actual adjusted aggregate EPS under the plan for the three-year period ended May 31, 2018:

Performance Measure			Threshold		Target		Maximum
FY2016–FY2018 Aggregate Adjusted EPS

Based upon this above-target performance, we made the following LTI payouts to the named executive officers under the FY2016–FY2018 LTI plan — as illustrated by the following table (compared to the threshold, target and maximum payout opportunities):

LTI Payout Opportunities

The Board of Directors has established LTI plans for the three-fiscal-year periods 2017 through 2019, 2018 through 2020 and 2019 through 2021, providing cash payment opportunities upon the conclusion of fiscal 2019, 2020 and 2021, respectively, if certain EPS goals are achieved with respect to those periods.

Typically, the base-year number over which the three-year average annual EPS growth rate goals are measured for an LTI plan is the final full-year EPS of the preceding fiscal year. However, the base-year EPS amounts over which the three-year average annual EPS growth rate goals will be measured for the FY2017-FY2019, FY2018-FY2020 and FY2019-FY2021 LTI plans are $10.80, $12.09 and $15.47, respectively (as discussed above).

As described above, adjusted fiscal 2017 EPS of $12.02 (which excludes the $0.07 net impact of stock repurchases) is being used for purposes of the FY2017-FY2019 LTI plan. Additionally, adjusted fiscal 2018 EPS of $15.47 is being used for purposes of the FY2017-FY2019 and FY2018-FY2020 LTI plans. The following table presents the aggregate EPS thresholds, targets and maximums under the FY2017-FY2019 and FY2018-FY2020 LTI plans and our progress toward these goals as of May 31, 2018:

48

2018 PROXY STATEMENT

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

The following table sets forth the potential threshold, target and maximum payouts for the named executive officers under the FY2017–FY2019, FY2018-FY2020 and FY2019-FY2021 LTI plans.

			Potential Future Payouts
Name	Performance Period		Threshold ($)		Target ($)		Maximum ($)
F.W. Smith	FY2017–FY2019		1,150,000		4,600,000		6,900,000
	FY2018–FY2020		1,150,000		4,600,000		6,900,000
	FY2019–FY2021		1,150,000		4,600,000		6,900,000
A.B. Graf, Jr.	FY2017–FY2019		343,750		1,375,000		2,062,500
	FY2018–FY2020		343,750		1,375,000		2,062,500
	FY2019–FY2021		343,750		1,375,000		2,062,500
D.J. Bronczek (1)	FY2017–FY2019		491,667		1,966,667		2,950,000
	FY2018–FY2020		518,750		2,075,000		3,112,500
	FY2019–FY2021		518,750		2,075,000		3,112,500
R.B. Carter	FY2017–FY2019		343,750		1,375,000		2,062,500
	FY2018–FY2020		343,750		1,375,000		2,062,500
	FY2019–FY2021		343,750		1,375,000		2,062,500
D.L. Cunningham, Jr. (2)	FY2017–FY2019		360,417		1,441,667		2,162,500
	FY2018–FY2020		437,500		1,750,000		2,625,000
	FY2019–FY2021		437,500		1,750,000		2,625,000

(1)	Mr. Bronczek’s payout opportunities under the FY2017–FY2019 LTI plan are prorated based on the applicable fiscal years during which he served as President and CEO of FedEx Express (fiscal 2017) and President and Chief Operating Officer of FedEx (fiscal 2018 and 2019).
(2)	Mr. Cunningham’s payout opportunities under the FY2017–FY2019 LTI plan are prorated based on the applicable fiscal years during which he served as Executive Vice President and Chief Operating Officer of FedEx Express (fiscal 2017) and President and CEO of FedEx Express (fiscal 2018 and 2019).

RETENTION AWARDS FOR CHIEF FINANCIAL OFFICER

On July 17, 2017, the Board of Directors, upon the recommendation of the Compensation Committee, approved a performance-based cash award for Mr. Graf. The award has a target value of $574,661 that is tied to the achievement of a fiscal 2020 EPS goal (excluding the MTM Adjustment and TNT Express integration expenses (including any restructuring charges at TNT Express) and subject to any adjustments that may be approved by the Board, upon the recommendation of the Compensation Committee). The cash award will be paid in its entirety if the fiscal 2020 EPS goal is met or exceeded. If fiscal 2020 EPS is less than 80% of the goal, no cash award will be paid. If fiscal 2020 EPS is between 80% and 100% of the goal, the Chairman of the Board will determine the actual award paid (but in no event will it exceed $574,661). To remain eligible for the award, Mr. Graf must remain FedEx’s Chief Financial Officer through the end of fiscal 2020. In the event of death or permanent disability prior to the end of fiscal 2020, payment will be made in accordance with the timing and payout criteria described above. On July 17, 2017, Mr. Graf was also granted a restricted stock award of 1,785 shares with a four-year ratable vesting period.

LONG-TERM EQUITY INCENTIVES — STOCK OPTIONS AND RESTRICTED STOCK

Our primary objective in providing long-term equity incentives to executive officers is to further align their interests with those of our shareowners by facilitating significant ownership of FedEx stock by the officers. This creates a direct link between their compensation and long-term shareowner return.

Amount

Stock options and restricted stock are generally granted to executive officers on an annual basis. As discussed above, an officer’s position and level of responsibility are the primary factors that determine the number of options and shares of restricted stock awarded to the officer in the annual grant. For instance, FedEx’s Chief Financial Officer, General Counsel and Chief Information Officer receive the same number of options and restricted shares in the annual grant.

WWW.FEDEX.COM	49

---

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

The number of stock options and restricted shares awarded at each management level can vary from year to year. In determining how many options and shares of restricted stock should be awarded at each level, the Compensation Committee may consider:

►	Target TDC levels and referenced survey data — as discussed above, we include the total target value of all equity-based awards (including tax payments for restricted stock awards) in our calculation of target TDC, and in evaluating the fiscal 2018 target TDC levels for our named executive officers, we referred to multiple market reference points for comparable positions in the referenced surveys;
►	The total number of shares then available to be granted; and
►	Potential shareowner dilution. As of July 30, 2018, the total number of shares underlying options and shares of restricted stock outstanding or available for future grant under our equity compensation plans represented 9.7% of the sum of shares outstanding plus the shares underlying options outstanding or available for future grant plus shares of restricted stock available for future grant.

Other factors that the Compensation Committee may consider, especially with respect to special grants outside of the annual-grant framework, include the promotion of an officer or the desire to retain a valued executive or recognize a particular officer’s contributions, like the restricted stock award described above granted to Mr. Graf on July 17, 2017. None of these factors is given any particular weight and the specific factors used may vary among individual executives.

Timing

In selecting dates for awarding equity-based compensation, we do not consider, nor have we ever considered, the price of FedEx’s common stock or the timing of the release of material, non-public information about the company. Stock option and restricted stock awards are generally made to executive officers on an annual basis according to a pre-established schedule.

When the Compensation Committee approves a special grant outside of the annual-grant framework, such grants are made at a regularly scheduled meeting and the grant date of the awards is the approval date or the next business day, if the meeting does not fall on a business day. If the grant is made in connection with the promotion of an individual or the election of an officer, the grant date may be the effective date of the individual’s promotion or the officer’s election, if such effective date is after the approval date.

Pricing

The exercise price of stock options granted under our equity incentive plans is equal to the fair market value of FedEx’s common stock on the date of grant. Under the terms of our equity incentive plans, the fair market value on the grant date is defined as the average of the high and low trading prices of FedEx’s common stock on the New York Stock Exchange (”NYSE”) on that day. We believe this methodology is the most equitable method for determining the exercise price of our stock option awards given the intra-day price volatility often shown by our stock.

Vesting

Stock options and restricted stock granted to executive officers generally vest ratably over four years beginning on the first anniversary of the grant date. This four-year vesting period is intended to further encourage the retention of the executive officers, since unvested stock options are forfeited upon termination of the officer’s employment for any reason other than death or permanent disability and unvested restricted stock is forfeited upon termination of the officer’s employment for any reason other than death, permanent disability or retirement.

Tax Payments for Restricted Stock Awards

As discussed previously, FedEx pays the taxes resulting from a restricted stock award on behalf of the recipient. This prevents the need for the officer to sell a portion of a stock award to pay the corresponding tax obligation and thus encourages and facilitates FedEx stock ownership by our officers, thereby further aligning their interests with those of our shareowners. The total target value of the award is the same as it would be if there were no tax payments.

50

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Voting and Dividend Rights on Restricted Stock

Holders of restricted shares are entitled to vote and receive any dividends on such shares. The dividend rights are included in the computation of the value of the restricted stock award for purposes of determining the recipient’s target TDC.

Fiscal 2018 Awards

On June 12, 2017, the named executive officers were granted stock option and restricted stock awards as follows (Mr. Graf also received a restricted stock grant on July 17, 2017, as described above, which is included in the table below):

Name	Number of Stock Options		Number of Shares of Restricted Stock
F.W. Smith	139,080		0
A.B. Graf, Jr.	17,260		4,860
D.J. Bronczek	29,495		4,685
R.B. Carter	17,260		3,075
D.L. Cunningham, Jr.	22,435		3,970

As in previous years, at the request of Mr. Smith and in light of his significant stock ownership, the Compensation Committee did not award him any restricted stock. Instead, his equity awards were in the form of stock options, which will yield value to him only if the stock price increases from the date of grant.

The target value of stock options and restricted stock awarded in fiscal 2018 to each named executive officer remained substantially the same compared to the fiscal 2017 target value. The amount reported for restricted stock awards in the Summary Compensation Table reflects the average of the high and low prices of FedEx common stock on the NYSE on the grant date, which may vary from the stock price assumption used when determining the target grant levels.

PERQUISITES, TAX PAYMENTS AND OTHER ANNUAL COMPENSATION

FedEx’s named executive officers receive certain other annual compensation, including:

►	certain perquisites, such as personal use of corporate aircraft (though officers are required to reimburse FedEx for substantially all of the incremental cost to FedEx of such usage), security services and equipment, tax return preparation and financial counseling services, umbrella insurance, physical examinations, travel privileges on certain airline partners, salary continuation benefits for short-term disability and supplemental long-term disability benefits;
►	group term life insurance and 401(k) company-matching contributions; and
►	tax payments relating to restricted stock awards (as discussed above) and certain business-related use of corporate and commercial aircraft.

We provide this other compensation to enhance the competitiveness of our executive compensation program and to increase the productivity (corporate aircraft travel, professional assistance with tax return preparation and financial planning), safety (security services and equipment) and health (annual physical examinations) of our executives so they can focus on producing superior financial returns for our shareowners. Our tax payments relating to restricted stock awards are a component of the total target value of the restricted stock grant. As a result, the total target value of the award is the same as it would be if there were no tax payments and there is no dilutive effect on our shareowners’ equity interest in FedEx. The Compensation Committee reviews and approves each of these elements of compensation, and all of the independent directors approve each element as it relates to Mr. Smith. The Committee also reviews and approves FedEx’s policies and procedures regarding perquisites and other personal benefits and tax payments, including:

►	FedEx’s written policy setting forth guidelines and procedures regarding personal use of FedEx corporate aircraft; and
►	FedEx’s executive security procedures.

WWW.FEDEX.COM	51

---

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

FedEx’s executive security procedures, which prescribe the level of personal security to be provided to the Chairman of the Board and Chief Executive Officer and other executive officers, are based on bona fide business-related security concerns and are an integral part of FedEx’s overall risk management and security program. These procedures have been assessed by an independent security consulting firm, and deemed necessary and appropriate for the protection of the officers and their families given the history of direct security threats against FedEx executives and the likelihood of additional threats against the officers. The security services and equipment provided to FedEx executive officers may be viewed as conveying personal benefits to the executives and, as a result, their values must be reported in the Summary Compensation Table.

With respect to Mr. Smith, consistent with FedEx’s executive security procedures, the Board of Directors requires him to use FedEx corporate aircraft for all travel, including personal travel. In addition, FedEx provides certain physical and personal security services for Mr. Smith, including on-site residential security at his primary residence. The Board of Directors believes that Mr. Smith’s personal safety and security are of the utmost importance to FedEx and its shareowners and, therefore, the costs associated with such security are appropriate and necessary business expenses.

POST-EMPLOYMENT COMPENSATION

While none of FedEx’s named executive officers has an employment agreement, they are entitled to receive certain payments and benefits upon termination of employment or a change of control of FedEx, including:

►	Retirement benefits under FedEx’s 401(k) and pension plans, including a tax-qualified, defined contribution 401(k) retirement savings plan called the FedEx Corporation Retirement Savings Plan, a tax-qualified, defined benefit pension plan called the FedEx Corporation Employees’ Pension Plan, and a supplemental non-tax-qualified plan called the FedEx Corporation Retirement Parity Pension Plan — which is designed to provide to the executives the benefits that otherwise would be paid under the tax-qualified pension plan but for certain limits under United States tax laws;
►	Accelerated vesting of restricted stock upon the executive’s retirement (at or after age 60), death or permanent disability or a change of control of FedEx;
►	Accelerated vesting of stock options upon the executive’s death or permanent disability or a change of control of FedEx; and
►	Lump sum cash payments and post-employment insurance coverage under their Management Retention Agreements with FedEx (the “MRAs”) upon a qualifying termination of the executive after a change of control of FedEx. The MRAs, as well as the accelerated vesting of equity awards upon a change of control of FedEx, are intended to secure the executives’ continued services in the event of any threat or occurrence of a change of control, which further aligns their interests with those of our shareowners when evaluating any such potential transaction.

The Compensation Committee approves and recommends Board approval of all plans, agreements and arrangements that provide for these payments and benefits.

Risks Arising from Compensation Policies and Practices

Management has conducted an in-depth risk assessment of FedEx’s compensation policies and practices and concluded they do not create risks that are reasonably likely to have a material adverse effect on the company. The Compensation Committee has reviewed and concurred with management’s conclusion. The risk assessment process included, among other things, a review of (i) all key incentive compensation plans to ensure that they are aligned with our pay-for-performance philosophy and include performance metrics that meet and support corporate goals, and (ii) the overall compensation mix to ensure an appropriate balance between fixed and variable pay components and between short-term and long-term incentives. The objective of the process was to identify any compensation plans and practices that may encourage employees to take unnecessary risks that could threaten the company. No such plans or practices were identified.

52

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code limits the income tax deduction by FedEx for compensation paid to the Chief Executive Officer and the three other highest-paid executive officers (other than the Chief Financial Officer) to $1,000,000 per year. Section 162(m) exempts qualifying performance-based compensation with respect to taxable years beginning on or before December 31, 2017 and payable pursuant to a binding written agreement in effect on November 2, 2017. As a result, performance-based awards that are deductible in fiscal 2018 and performance-based awards outstanding on November 2, 2017 or awarded thereafter pursuant to a binding written agreement can be exempt from the deduction limit if applicable requirements are met.

►	Neither Mr. Smith’s nor Mr. Bronczek’s base salary is designed to meet the requirements of Section 162(m) and, therefore, is subject to the $1,000,000 deductibility limit.
►	FedEx’s equity compensation plans satisfy the requirements of Section 162(m) with respect to stock options, but not with respect to restricted stock awards. Accordingly, compensation recognized by the four highest-paid executive officers (excluding Mr. Graf) in connection with stock options is fully deductible in fiscal 2018, but compensation with respect to restricted stock awards is subject to the $1,000,000 deductibility limit.
►	FedEx’s AIC and LTI plans do not meet all of the conditions for qualification under Section 162(m). Compensation received by the four highest-paid executive officers (excluding Mr. Graf) under each of these plans is subject, therefore, to the $1,000,000 deductibility limit.

We do not require all of our compensation programs to be fully deductible under Section 162(m) because doing so would restrict our discretion and flexibility in designing competitive compensation programs to promote varying corporate goals. We believe that our Board of Directors should be free to make compensation decisions to further and promote the best interests of our shareowners, rather than to qualify for corporate tax deductions. Particularly in light of the repeal of the performance-based compensation exception to Section 162(m), we expect our Compensation Committee and Board of Directors to continue approving compensation that is not deductible for income tax purposes. In fiscal 2018, we incurred approximately $6.25 million of additional tax expense as a result of the Section 162(m) deductibility limit for compensation paid to Mr. Smith and the three other highest-paid executive officers (other than Mr. Graf).

As a result of the TCJA, beginning in fiscal 2019, the 162(m) limitation will apply to the Chief Executive Officer and Chief Financial Officer along with the three other highest paid employees for all qualified performance-based compensation. Their covered employee status also becomes permanent, which means that all future amounts paid or incurred with respect to that individual or beneficiaries would be subject to the $1,000,000 per year limit. Also beginning in fiscal 2019, qualified performance-based compensation will no longer be excluded from the limitation.

WWW.FEDEX.COM	53

---

Table of Contents

EXECUTIVE COMPENSATION – SUMMARY COMPENSATION TABLE

Summary Compensation Table

In this section, we provide certain tabular and narrative information regarding the compensation of our principal executive and financial officers and our three other most highly compensated executive officers for the fiscal year ended May 31, 2018, and for each of the previous two fiscal years (except as noted).

Name and Principal Position		Year		Salary ($)		Bonus ($) (1)		Stock Awards ($) (2)		Option Awards ($) (2)		Non-Equity Incentive Plan Compensation ($) (3)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (4)		All Other Compensation ($) (5)		Total ($)
FREDERICK W. SMITH Chairman and Chief Executive Officer (Principal Executive Officer)		2018		1,342,212		0		0		7,134,484		7,656,161		—		532,541		16,665,398
		2017		1,311,688		0		0		6,564,913		7,215,948		—		513,048		15,605,597
		2016		1,279,632		0		0		7,572,908		7,360,950		—		543,543		16,757,033
ALAN B. GRAF, JR. Executive Vice President and Chief Financial Officer (Principal Financial Officer)		2018		976,920		0		1,019,453		885,398		2,735,889		—		894,874		6,512,534
		2017		948,468		0		591,851		814,678		2,531,468		—		630,587		5,517,052
		2016		920,840		0		623,829		914,898		2,409,351		—		600,087		5,469,005
DAVID J. BRONCZEK President and Chief Operating Officer		2018		1,122,016		75,000		971,224		1,513,026		3,775,774		—		789,951		8,246,991
		2017		1,023,280		75,000		763,626		1,058,850		3,176,694		—		702,997		6,800,447
		2016		960,936		0		803,745		1,213,197		3,201,327		—		722,645		6,901,850
ROBERT B. CARTER Executive Vice President, FedEx Information Services and Chief Information Officer		2018		825,616		0		637,463		885,398		2,472,299		816,295		638,434		6,275,505
		2017		801,564		0		591,851		814,678		2,312,023		785,840		592,757		5,898,713
		2016		778,216		0		623,829		914,898		2,277,809		562,045		588,897		5,745,694
DAVID L. CUNNINGHAM, JR. (6) President and Chief Executive Officer, FedEx Express		2018		721,184		62,500		823,001		1,150,864		2,219,783		303,560		695,683		5,976,575

(1)	The amounts reported in this column reflect promotional bonuses received by Mr. Bronczek and Mr. Cunningham that were paid in fiscal 2017 and fiscal 2018.
(2)	The amounts reported in these columns reflect the aggregate grant date fair value of restricted stock and option awards granted to the named executive officer during each year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. These amounts reflect our calculation of the value of these awards on the grant date and do not necessarily correspond to the actual value that may ultimately be realized by the officer.
	The fair value of restricted stock awards is equal to the fair market value of FedEx’s common stock (the average of the high and low prices of the stock on the NYSE) on the date of grant multiplied by the number of shares awarded.
	For accounting purposes, we use the Black-Scholes option pricing model to calculate the grant date fair value of stock options. Assumptions used in the calculation of the amounts in the “Option Awards” column are included in note 10 to our audited consolidated financial statements for the fiscal year ended May 31, 2018, included in our Annual Report on Form 10-K for fiscal 2018. See the “Grants of Plan-Based Awards During Fiscal 2018” table for information regarding restricted stock and option awards to the named executive officers during fiscal 2018.

54

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – SUMMARY COMPENSATION TABLE

(3)

Reflects cash payouts, if any, under FedEx’s fiscal 2018, 2017 and 2016 AIC plans and FY16–FY18, FY15–FY17 and FY14–FY16 LTI plans, as follows (for further discussion of the fiscal 2018 AIC plan and the FY16–FY18 LTI plan, see “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Cash Payments Under AIC Program” and “— Cash Payments Under LTI Program” above):

Name	Year		AIC Payout ($)		LTI Payout ($)		Total Non-Equity Incentive Plan Compensation ($)
F.W. Smith	2018		1,656,161		6,000,000		7,656,161
	2017		1,215,948		6,000,000		7,215,948
	2016		1,360,950		6,000,000		7,360,950
A.B. Graf, Jr.	2018		935,889		1,800,000		2,735,889
	2017		731,468		1,800,000		2,531,468
	2016		609,351		1,800,000		2,409,351
D.J. Bronczek	2018		1,238,274		2,537,500		3,775,774
	2017		926,694		2,250,000		3,176,694
	2016		951,327		2,250,000		3,201,327
R.B. Carter	2018		672,299		1,800,000		2,472,299
	2017		512,023		1,800,000		2,312,023
	2016		477,809		1,800,000		2,277,809
D.L. Cunningham, Jr.	2018		744,783		1,475,000		2,219,783

(4)

Reflects the actuarial increase in the present value of the named executive officer’s benefits under the Pension Plan and the Parity Plan (as each such term is defined under “— Fiscal 2018 Pension Benefits — Overview of Pension Plans”). The present value of the benefits under the Pension Plan and Parity Plan for Messrs. Smith, Graf and Bronczek decreased as follows: (a) between fiscal 2018 and 2017 — $495,708, $110,555 and $156,754, respectively; (b) between fiscal 2016 and 2017 — $479,543, $116,057 and $165,154, respectively; and (c) between fiscal 2015 and 2016 — $784,178, $97,207 and $167,856, respectively. The amounts in the table and this footnote were determined using assumptions ( e.g. , for interest rates and mortality rates) consistent with those used in the audited consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended May 31, 2018. See “— Fiscal 2018 Pension Benefits” below.

(5)

Includes:

►	the aggregate incremental cost to FedEx of providing perquisites and other personal benefits;
►	group term life insurance premiums paid by FedEx;
►	company-matching contributions under FedEx’s tax-qualified, defined contribution 401(k) retirement savings plan called the FedEx Corporation Retirement Savings Plan (the “401(k) Plan”); and
►	tax payments relating to restricted stock awards and certain business-related use of corporate and commercial aircraft. FedEx pays the taxes resulting from a restricted stock award on behalf of the recipient to prevent the need for the officer to sell a portion of a stock award to pay the corresponding tax obligation. While SEC disclosure rules require that these payments be included with tax reimbursement payments and reported as “other compensation” in the Summary Compensation Table, we do not believe these payments are “tax gross-ups” in the traditional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients. See “— Compensation Discussion and Analysis — Compensation Objectives and Design-Related Features — Restricted Stock Program” above.

WWW.FEDEX.COM	55

---

Table of Contents

EXECUTIVE COMPENSATION – SUMMARY COMPENSATION TABLE

The following table shows the amounts included for each such item:

Name	Year		Perquisites and Other Personal Benefits ($) (a)		Life Insurance Premiums ($)		Company Contributions Under 401(k) Plan ($)		Tax Reimbursement Payments ($) (a)		Other ($)		Total ($)
F.W. Smith	2018		521,078		1,807		9,656		0		—		532,541
	2017		500,777		3,060		9,211		0		—		513,048
	2016		531,742		3,060		8,741		0		—		543,543
A.B. Graf, Jr.	2018		108,870		2,740		9,484		773,780		—		894,874
	2017		169,003		3,060		9,300		449,224		—		630,587
	2016		114,058		3,060		9,473		473,496		—		600,087
D.J. Bronczek	2018		37,547		2,740		12,491		737,173		—		789,951
	2017		113,294		3,060		7,040		579,603		—		702,997
	2016		100,321		3,060		9,210		610,054		—		722,645
R.B. Carter	2018		133,527		2,740		9,629		492,538		—		638,434
	2017		127,473		3,060		9,206		453,018		—		592,757
	2016		100,792		3,060		9,307		475,738		—		588,897
D.L. Cunningham, Jr.	2018		53,837		2,740		11,663		627,443		—		695,683

(a)	See the following two tables for additional details regarding the amounts included in each item.
During fiscal 2018, 2017, and 2016, unless otherwise noted below, FedEx provided the following perquisites and other personal benefits to the named executive officers:

►

Personal use of corporate aircraft: FedEx maintains a fleet of corporate aircraft that is used primarily for business travel by FedEx employees. FedEx has a written policy that sets forth guidelines and procedures regarding personal use of FedEx corporate aircraft. The policy requires officers to pay FedEx two times the cost of fuel for personal trips, plus applicable passenger ticket taxes and fees. These payments are intended to approximate the incremental cost to FedEx of personal corporate aircraft usage.

►	Mr. Smith is not required to pay FedEx for any travel on corporate aircraft by his family members or guests when they are accompanying him and he is on business travel. Mr. Smith is required to pay FedEx, however, for any personal travel by him and any personal travel by his family members or guests when they are accompanying him and he is on personal travel or when they are traveling without him.
►	Compensation is included in the table above for personal corporate aircraft travel (which for this purpose includes travel to attend a board or stockholder meeting of an outside company or organization for which the officer serves as a director or trustee) by a named executive officer and his family members and guests to the extent, if any, that the aggregate incremental cost to FedEx of all such travel exceeds the amount the officer paid FedEx for such travel. The incremental cost to FedEx of personal use of corporate aircraft is calculated based on the variable operating cost to FedEx, which includes the cost of fuel, aircraft maintenance, crew travel, landing fees, ramp fees and other smaller variable costs. Because FedEx corporate aircraft are used primarily for business travel, fixed costs that do not change based on usage, such as pilots’ salaries and purchase and lease costs, are excluded from this calculation.
►	In addition, when an aircraft is already flying to a destination for business purposes and the officers or their family members or guests ride along on the aircraft for personal travel, there is no additional variable operating cost to FedEx associated with the additional passengers, and thus no compensation is included in the table above for such personal travel. With the exception of Mr. Smith, the officer is still required to pay FedEx for such personal travel if persons on business travel occupy less than 50% of the total available seats on the aircraft. The amount of such payment is a pro rata portion (based on the total number of passengers) of the fuel cost for the flight, multiplied by two, plus applicable passenger ticket taxes and fees.
►	For tax purposes, income is imputed to each named executive officer for personal travel and “business-related” travel (travel by the officer’s spouse or adult guest who accompanies the officer on a business trip for the primary purpose of assisting the officer with the business purpose of the trip) for the excess, if any, of the Standard Industrial Fare Level (SIFL) value of all such flights during a calendar year over the aggregate fuel payments made by the officer during that calendar year. The Board of Directors and the FedEx executive security procedures require Mr. Smith to use FedEx corporate aircraft for all travel, including personal travel. Accordingly, FedEx reimburses Mr. Smith for taxes relating to any imputed income for his personal travel and the personal travel of his family members and guests when they are accompanying him (no such reimbursement payments have been made during the last three fiscal years). FedEx reimburses the other named executive officers for taxes relating to imputed income for business-related travel.

56

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – SUMMARY COMPENSATION TABLE

►	Security services and equipment: Pursuant to FedEx’s executive security procedures, the named executive officers are provided security services and equipment. To the extent the services and equipment are provided by third parties ( e.g. , out-of-town transportation and other security-related expenses and home security system installation, maintenance and monitoring), we have included in the table above the amounts paid by FedEx for such services and equipment. For Mr. Smith, these amounts totaled $146,856, $28,661 and $34,938 for fiscal 2018, 2017, and 2016, respectively. The amount for fiscal 2018 includes costs for replacing outdated systems at Mr. Smith’s primary residence. To the extent the security services are provided by FedEx employees, we have included amounts representing: (a) the number of hours of service provided to the officer by each such employee multiplied by (b) the total hourly compensation cost of the employee (including, among other things, pension and other benefit costs). For Mr. Smith, these amounts totaled $198,304, $240,374 and $262,731 for fiscal 2018, 2017, and 2016, respectively. For additional information regarding executive security services provided to Mr. Smith, see “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Perquisites, Tax Payments and Other Annual Compensation” above.
►	Tax return preparation services: FedEx requires officers to have their income tax returns prepared by a qualified third party (other than our independent registered public accounting firm) and pays all reasonable and customary costs for such services.
►	Financial counseling services: FedEx reimburses officers for certain financial counseling services, subject to various caps.
►	Umbrella insurance premiums: FedEx pays umbrella insurance premiums on behalf of officers.
►	Physical examinations: FedEx pays for officers to have comprehensive annual physical examinations.
►	Travel Privileges: FedEx provides certain executive officers and their spouses with travel privileges on certain airline partners. There is a small per-trip ticketing fee incurred by FedEx in connection with these privileges. FedEx reimburses an executive officer for taxes relating to imputed income for business-related travel.
►	Supplemental Disability Benefits: FedEx provides executive officers with salary continuation benefits for short-term disability (100% of base salary for 28 weeks) and supplemental long-term disability benefits. Both benefit programs are self-funded ( i.e. , no premiums are paid to a third-party insurer) and thus there is no incremental cost to FedEx to provide these benefit programs.

In addition, during fiscal 2018 certain payments were made with respect to Mr. Cunningham’s prior overseas service on behalf of the company.

The following table shows the amounts (the aggregate incremental cost to FedEx) included in the perquisites and other personal benefits column in the table above for each such item:

Name	Year		Personal Use of Corporate Aircraft ($) (a)		Security Services and Equipment ($)		Tax Return Preparation Services ($)		Financial Counseling Services ($)		Umbrella Insurance Premiums ($)		Other ($) (b)		Total ($)
F.W. Smith	2018		77,293		345,160		46,005		50,000		2,620		0		521,078
	2017		134,281		269,035		44,854		50,000		2,607		0		500,777
	2016		135,226		297,669		46,240		50,000		2,607		0		531,742
A.B. Graf, Jr.	2018		62,965		32,744		8,062		2,479		2,620		0		108,870
	2017		133,916		11,441		8,891		12,148		2,607		0		169,003
	2016		76,748		11,242		9,212		14,249		2,607		0		114,058
D.J. Bronczek	2018		20,093		7,446		7,100		0		2,620		288		37,547
	2017		55,114		11,483		14,200		29,578		2,607		312		113,294
	2016		71,754		25,696		0		0		2,607		264		100,321
R.B. Carter	2018		21,803		61,809		9,700		37,355		2,620		240		133,527
	2017		20,221		86,806		3,250		14,445		2,607		144		127,473
	2016		25,836		57,442		2,850		12,033		2,607		24		100,792
D.L. Cunningham, Jr.	2018		0		30,548		1,500		18,596		2,620		573		53,837

(a)

The amounts shown include the following amounts for use of corporate aircraft to attend board or stockholder meetings of outside companies or organizations for which the officers serve as directors for fiscal 2018: Mr. Graf — $53,158 and Mr. Carter — $18,031; for fiscal 2017: Mr. Graf — $101,164 and Mr. Carter — $19,486; and for fiscal 2016: Mr. Graf — $54,835. The entire amount shown for Mr. Carter for fiscal 2016 represents use of corporate aircraft to attend board or stockholder meetings of outside companies or organizations for which he serves as a director.

(b)

For fiscal 2018, 2017, and 2016, includes physical examinations and/or ticketing fees for airline travel privileges; and for fiscal 2018, includes certain payments relating to Mr. Cunningham’s prior overseas service on behalf of the company.

WWW.FEDEX.COM	57

---

Table of Contents

EXECUTIVE COMPENSATION – SUMMARY COMPENSATION TABLE

The following table shows the tax payments relating to the items listed, which are included in the table:

Name	Year		Restricted Stock ($)		Business- Related Use of Corporate and Commercial Aircraft ($)		Other ($)		Total ($)
F.W. Smith	2018		0		0		—		0
	2017		0		0		—		0
	2016		0		0		—		0
A.B. Graf, Jr.	2018		773,780		0		—		773,780
	2017		449,224		0		—		449,224
	2016		473,496		0		—		473,496
D.J. Bronczek	2018		737,173		0		—		737,173
	2017		579,603		0		—		579,603
	2016		610,054		0		—		610,054
R.B. Carter	2018		483,844		8,694		—		492,538
	2017		449,224		3,794		—		453,018
	2016		473,496		2,242		—		475,738
D.L. Cunningham, Jr.	2018		624,670		2,773		—		627,443

(6)	Mr. Cunningham was not a named executive officer in fiscal 2017 or 2016. Accordingly, the table includes Mr. Cunningham’s compensation only for fiscal 2018.

58

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – GRANTS OF PLAN-BASED AWARDS DURING FISCAL 2018

Grants of Plan-Based Awards During Fiscal 2018

The following table sets forth information regarding grants of plan-based awards made to the named executive officers during the fiscal year ended May 31, 2018:

Name		Type of Plan/Award		Grant Date		Approval Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards						All-Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh) (1)		Closing Price on Grant Date ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($) (2)
								Threshold ($)		Target ($)		Maximum ($)
F.W. Smith		Stock Option (3)		06/12/2017		06/11/2017										139,080		207.305		209.12		7,134,484
		FY18 AIC (4)						0		1,879,097		3,758,194
		FY18–FY20 LTI (5)						1,150,000		4,600,000		6,900,000
A.B. Graf, Jr.		Restricted Stock (6)		06/12/2017		06/11/2017								3,075								637,463
		Restricted Stock (6)		07/17/2017		07/16/2017								1,785								381,990
		Stock Option (3)		06/12/2017		06/11/2017										17,260		207.305		209.12		885,398
		FY18 AIC (4)						0		976,920		1,953,840
		FY18–FY20 LTI (5)						343,750		1,375,000		2,062,500
		Retention Award (7)						0		574,661		574,661
D.J. Bronczek		Restricted Stock (6)		06/12/2017		06/11/2017								4,685								971,224
		Stock Option (3)		06/12/2017		06/11/2017										29,495		207.305		209.12		1,513,026
		FY18 AIC (4)						0		1,346,419		2,692,838
		FY18–FY20 LTI (5)						518,750		2,075,000		3,112,500
R.B. Carter		Restricted Stock (6)		06/12/2017		06/11/2017								3,075								637,463
		Stock Option (3)		06/12/2017		06/11/2017										17,260		207.305		209.12		885,398
		FY18 AIC (4)						0		825,616		1,651,232
		FY18–FY20 LTI (5)						343,750		1,375,000		2,062,500
D.L. Cunningham, Jr.		Restricted Stock (6)		06/12/2017		06/11/2017								3,970								823,001
		Stock Option (3)		06/12/2017		06/11/2017										22,435		207.305		209.12		1,150,864
		FY18 AIC (4)						0		793,302		1,586,604
		FY18–FY20 LTI (5)						437,500		1,750,000		2,625,000

(1)	The exercise price of the options is the fair market value of FedEx’s common stock (the average of the high and low prices of the stock on the NYSE) on the grant date.
(2)	Represents the grant date fair value of each equity-based award, computed in accordance with FASB ASC Topic 718. See note 2 to the Summary Compensation Table for information regarding the assumptions used in the calculation of these amounts.
(3)	Stock options granted to the named executive officers generally vest ratably over four years beginning on the first anniversary of the grant date. The options may not be transferred in any manner other than by will or the laws of descent and distribution and may be exercised during the lifetime of the optionee only by the optionee. See “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Long-Term Equity Incentives — Stock Options and Restricted Stock” above for further discussion of stock option awards.
(4)	In June 2017, the Board of Directors, upon the recommendation of the Compensation Committee, established this annual performance cash compensation plan, which provided a cash payment opportunity to the named executive officers at the conclusion of fiscal 2018. Payment amounts were based upon the achievement of company financial-performance goals for fiscal 2018 and, for the non-CEO named executive officers, the achievement of individual performance objectives. The AIC payout amount for Mr. Smith was subject to adjustment by the independent Board members. See “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Cash Payments Under AIC Program” above for further discussion of this plan, including actual payment amounts.
(5)	The Board of Directors, upon the recommendation of the Compensation Committee, established this long-term performance cash compensation plan in June 2017. The plan provides a long-term cash payment opportunity to the named executive officers at the conclusion of fiscal 2020 if FedEx achieves an aggregate earnings-per-share goal established by the Board with respect to the three-fiscal-year period 2018 through 2020. No amounts can be earned under the plan until 2020 because achievement of the earnings-per-share goal can only be determined following the conclusion of the three-fiscal-year period. The estimated individual future payouts under the plan are set dollar amounts ranging from threshold (minimum) amounts, if the earnings-per-share goal achieved is less than target, up to maximum amounts, if the plan goal is substantially exceeded. There is no assurance that these estimated future payouts will be achieved. See “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Cash Payments Under LTI Program” above for further discussion of this plan.

WWW.FEDEX.COM

59

---

Table of Contents

EXECUTIVE COMPENSATION – GRANTS OF PLAN-BASED AWARDS DURING FISCAL 2018

(6)

Shares of restricted stock awarded to the named executive officers generally vest ratably over four years beginning on the first anniversary of the grant date. Holders of restricted shares are entitled to vote such shares and receive any dividends paid on FedEx common stock. FedEx pays the taxes resulting from a restricted stock award on behalf of the recipient (these tax payments are included in the “All Other Compensation” column in the Summary Compensation Table). See “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Long-Term Equity Incentives — Stock Options and Restricted Stock” and "— Retention Awards for Chief Financial Officer" above for further discussion of restricted stock awards.

(7)

In July 2017, the Board of Directors, upon the recommendation of the Compensation Committee, approved a performance-based cash award for Mr. Graf that is tied to the achievement of a fiscal 2020 EPS goal. The award is payable following the completion of the company’s 2020 fiscal year. See “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2018 Amounts — Retention Awards for Chief Financial Officer” above for further discussion of this award.

Outstanding Equity Awards at End of Fiscal 2018

The following table sets forth for each named executive officer certain information about unexercised stock options and unvested shares of restricted stock held at the end of the fiscal year ended May 31, 2018:

Name		Option Awards									Stock Awards
		Number of Securities Underlying Unexercised Options (#)		Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#) (a)			Market Value of Shares or Units of Stock That Have Not Vested ($) (b)
		Exercisable		Unexercisable (a)
F.W. Smith		271,750		—			56.3100		06/08/2019
		195,500		—			78.1900		06/07/2020
		176,100		—			89.1050		06/06/2021
		198,675		—			85.2550		06/04/2022
		203,780		—			96.8650		06/03/2023
		119,613		39,872	(1)		143.5450		06/09/2024
		66,260		66,260	(2)		180.8200		06/08/2025
		39,052		117,158	(3)		162.8200		06/06/2026
		—		139,080	(4)		207.3050		06/12/2027
A.B. Graf, Jr.		34,580		—			56.3100		06/08/2019
		23,100		—			78.1900		06/07/2020
		21,480		—			89.1050		06/06/2021
		24,235		—			85.2550		06/04/2022
		24,620		—			96.8650		06/03/2023
		14,452		4,818	(5)		143.5450		06/09/2024
		8,005		8,005	(6)		180.8200		06/08/2025
		4,846		14,539	(7)		162.8200		06/06/2026
		—		17,260	(8)		207.3050		06/12/2027
											10,309	(9)		2,568,178
D.J. Bronczek		30,775		—			78.1900		06/07/2020
		28,450		—			89.1050		06/06/2021
		32,100		—			85.2550		06/04/2022
		32,640		—			96.8650		06/03/2023
		19,158		6,387	(10)		143.5450		06/09/2024
		10,615		10,615	(11)		180.8200		06/08/2025
		6,298		18,897	(12)		162.8200		06/06/2026
		—		29,495	(13)		207.3050		06/12/2027
											11,710	(14)		2,917,195

60

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2018

Name		Option Awards									Stock Awards
		Number of Securities Underlying Unexercised Options (#)		Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#) (a)			Market Value of Shares or Units of Stock That Have Not Vested ($) (b)
		Exercisable		Unexercisable (a)
R.B. Carter		23,100		—			78.1900		06/07/2020
		21,480		—			89.1050		06/06/2021
		24,235		—			85.2550		06/04/2022
		24,620		—			96.8650		06/03/2023
		14,452		4,818	(15)		143.5450		06/09/2024
		8,005		8,005	(16)		180.8200		06/08/2025
		4,846		14,539	(17)		162.8200		06/06/2026
		—		17,260	(18)		207.3050		06/12/2027
											8,524	(19)		2,123,499
D.L. Cunningham, Jr.		11,150		—			89.1050		06/06/2021
		12,580		—			85.2550		06/04/2022
		12,805		—			96.8650		06/03/2023
		7,518		2,507	(20)		143.5450		06/09/2024
		5,577		5,578	(21)		180.8200		06/08/2025
		3,306		9,919	(22)		162.8200		06/06/2026
		—		22,435	(23)		207.3050		06/12/2027		7,471	(24)		1,861,176

(a)	The following table sets forth the vesting dates of the options and restricted stock included in these columns:

				Date		Number						Date		Number
F.W. Smith		(1)		06/09/2018		39,872		A.B. Graf, Jr.		(5)		06/09/2018		4,818
		(2)		06/08/2018		33,130				(6)		06/08/2018		4,002
				06/08/2019		33,130						06/08/2019		4,003
		(3)		06/06/2018		39,053				(7)		06/06/2018		4,846
				06/06/2019		39,052						06/06/2019		4,846
				06/06/2020		39,053						06/06/2020		4,847
		(4)		06/12/2018		34,770				(8)		06/12/2018		4,315
				06/12/2019		34,770						06/12/2019		4,315
				06/12/2020		34,770						06/12/2020		4,315
				06/12/2021		34,770						06/12/2021		4,315
										(9)		06/06/2018		909
												06/08/2018		862
												06/09/2018		997
												06/12/2018		768
												07/17/2018		446
												06/06/2019		909
												06/08/2019		863
												06/12/2019		769
												07/17/2019		446
												06/06/2020		909
												06/12/2020		769
												07/17/2020		446
												06/12/2021		769
												07/17/2021		447

WWW.FEDEX.COM

61

---

Table of Contents

EXECUTIVE COMPENSATION – OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2018

				Date		Number						Date		Number
D.J. Bronczek		(10)		06/09/2018		6,387		R.B. Carter		(15)		06/09/2018		4,818
		(11)		06/08/2018		5,307				(16)		06/08/2018		4,002
				06/08/2019		5,308						06/08/2019		4,003
		(12)		06/06/2018		6,299				(17)		06/06/2018		4,846
				06/06/2019		6,299						06/06/2019		4,846
				06/06/2020		6,299						06/06/2020		4,847
		(13)		06/12/2018		7,373				(18)		06/12/2018		4,315
				06/12/2019		7,374						06/12/2019		4,315
				06/12/2020		7,374						06/12/2020		4,315
				06/12/2021		7,374						06/12/2021		4,315
		(14)		06/06/2018		1,173				(19)		06/06/2018		909
				06/08/2018		1,111						06/08/2018		862
				06/09/2018		1,284						06/09/2018		997
				06/12/2018		1,171						06/12/2018		768
				06/06/2019		1,172						06/06/2019		909
				06/08/2019		1,112						06/08/2019		863
				06/12/2019		1,171						06/12/2019		769
				06/06/2020		1,173						06/06/2020		909
				06/12/2020		1,171						06/12/2020		769
				06/12/2021		1,172						06/12/2021		769
D.L. Cunningham, Jr.		(20)		06/09/2018		2,507
		(21)		06/08/2018		2,789
				06/08/2019		2,789
		(22)		06/06/2018		3,306
				06/06/2019		3,306
				06/06/2020		3,307
		(23)		06/12/2018		5,608
				06/12/2019		5,609
				06/12/2020		5,609
				06/12/2021		5,609
		(24)		06/06/2018		628
				06/08/2018		595
				06/09/2018		428
				06/12/2018		992
				06/06/2019		627
				06/08/2019		595
				06/12/2019		993
				06/06/2020		628
				06/12/2020		992
				06/12/2021		993

(b)	Computed by multiplying the closing market price of FedEx’s common stock on May 31, 2018 (which was $249.12) by the number of shares.

62

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2018

Option Exercises and Stock Vested During Fiscal 2018

The following table sets forth for each named executive officer certain information about stock options that were exercised and restricted stock that vested during the fiscal year ended May 31, 2018:

Name		Option Awards				Stock Awards
		Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($) (1)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($) (2)
F.W. Smith		204,150		33,541,378		0		0
A.B. Graf, Jr.		24,100		3,822,573		4,197		855,536
D.J. Bronczek		47,656		9,452,203		5,410		1,102,797
R.B. Carter		24,100		2,894,330		4,197		855,536
D.L. Cunningham, Jr.		16,166		2,106,752		2,263		461,467

(1)

If the shares were sold immediately upon exercise, the value realized on exercise of the option is the difference between the actual sales price and the exercise price of the option. Otherwise, the value realized is the difference between the fair market value of FedEx’s common stock (the average of the high and low prices of the stock on the New York Stock Exchange) on the date of exercise and the exercise price of the option.

(2)

Represents the fair market value of the shares on the vesting date.

Fiscal 2018 Pension Benefits

The following table sets forth for each named executive officer the present value of accumulated benefits at May 31, 2018, under FedEx’s defined benefit pension plans. For information regarding benefits triggered by retirement under our stock option and restricted stock plans, see “— Potential Payments Upon Termination or Change of Control” below.

Name		Plan Name		Number of Years Credited Service (#)		Present Value of Accumulated Benefit ($) (1)		Payments During Fiscal 2018 ($)
F.W. Smith		FedEx Corporation Employees’ Pension Plan		46		1,134,202		108,591	(2)
		FedEx Corporation Retirement Parity Pension Plan		46		25,044,117		0
A.B. Graf, Jr.		FedEx Corporation Employees’ Pension Plan		38		1,724,424		0
		FedEx Corporation Retirement Parity Pension Plan		38		13,680,769		0
D.J. Bronczek		FedEx Corporation Employees’ Pension Plan		42		1,874,216		0
		FedEx Corporation Retirement Parity Pension Plan		42		17,649,432		0
R.B. Carter		FedEx Corporation Employees’ Pension Plan		25		1,266,405		0
		FedEx Corporation Retirement Parity Pension Plan		25		7,588,120		0
D.L. Cunningham, Jr.		FedEx Corporation Employees’ Pension Plan		36		1,646,130		0
		FedEx Corporation Retirement Parity Pension Plan		36		4,343,478		0

(1)

These amounts were determined using assumptions (e.g., for interest rates and mortality rates) consistent with those used in the audited consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended May 31, 2018. The benefits are expressed as lump sum amounts, even though the benefits using the traditional pension benefit formula under the Pension Plan (as defined below) are generally not payable as a lump sum distribution (only $5,000 or less may be distributed as a lump sum under the traditional pension benefit formula under the Pension Plan). The benefits using the Portable Pension Account formula under the Pension Plan may be paid as a lump sum. The present value of the Pension Plan traditional pension benefit is equal to the single life annuity payable at the normal retirement date (age 60), or June 1, 2018, if the officer is past normal retirement age, converted based on an interest rate of 4.269% and the RP2014 mortality table with the MP2016 generational mortality improvement scale (as adjusted for purposes of the Pension Plan and Parity Plan (as defined below)) discounted to May 31, 2018, using an interest rate of 4.269%. The present value of the Parity Plan traditional pension benefit is equal to the single life annuity payable at the normal retirement age, or June 1, 2018, if the officer is past normal retirement age, converted based on an interest rate of 3% for lump sums paid through May 31, 2019, 3.5% for lump sums paid between June 1, 2019 and May 31, 2020, and 4% for lump sums paid on and after June 1, 2020, and the 1994 Group Annuity Reserving Table and discounted to May 31, 2018, using an interest rate of 4.269%. The present value of the Portable Pension Account (discussed below) is equal to the officer’s account balance at May 31, 2018, projected to the normal retirement date, if applicable, based on an interest rate of 4% (compounded quarterly) and discounted to May 31, 2018, using an interest rate of 4.269%.

(2)

In accordance with the terms of the Pension Plan, Mr. Smith was required to commence receiving his Pension Plan benefits during fiscal 2016.

WWW.FEDEX.COM

63

---

Table of Contents

EXECUTIVE COMPENSATION – FISCAL 2018 PENSION BENEFITS

Overview of Pension Plans

FedEx maintains a tax-qualified, defined benefit pension plan called the FedEx Corporation Employees’ Pension Plan (the “Pension Plan”). For fiscal 2018, the maximum compensation limit under a tax-qualified pension plan was $270,000. The Internal Revenue Code also limits the maximum annual benefits that may be accrued under a tax-qualified, defined benefit pension plan. In order to provide 100% of the benefits that would otherwise be denied certain management-level participants in the Pension Plan due to these limitations, FedEx also maintains a supplemental, non-tax-qualified plan called the FedEx Corporation Retirement Parity Pension Plan (the “Parity Plan”). Benefits under the Parity Plan are general, unsecured obligations of FedEx.

Effective May 31, 2003, FedEx amended the Pension Plan and the Parity Plan to add a cash balance feature, which is called the Portable Pension Account. Eligible employees as of May 31, 2003 had the option to make a one-time election to accrue future pension benefits under either the cash balance formula or the traditional pension benefit formula. In either case, employees retained all benefits previously accrued under the traditional pension benefit formula and continued to receive the benefit of future compensation increases on benefits accrued as of May 31, 2003. Eligible employees hired after May 31, 2003 accrue benefits exclusively under the Portable Pension Account.

Beginning June 1, 2008, eligible employees who participate in the Pension Plan and the Parity Plan, including the named executive officers, accrue all future pension benefits under the Portable Pension Account. In addition, benefits previously accrued under the Pension Plan and the Parity Plan using the traditional pension benefit formula were capped as of May 31, 2008, and those benefits will be payable beginning at retirement. Effective June 1, 2008, each participant in the Pension Plan and the Parity Plan who was age 40 or older on that date and who has an accrued traditional pension benefit will receive a transition compensation credit, as described in more detail below. Employees who elected in 2003 to accrue future benefits under the Portable Pension Account will continue to accrue benefits under that formula.

The named executive officers also participate in the 401(k) Plan. The annual matching company contribution under the 401(k) Plan is a maximum of 3.5% of eligible earnings.

In order to provide 100% of the benefits that would otherwise be limited due to certain limitations imposed by United States tax laws, Parity Plan participants, including the named executive officers, receive additional Portable Pension Account compensation credits equal to 3.5% of any eligible earnings above the maximum compensation limit for tax-qualified plans.

Normal retirement age for the majority of participants, including the named executive officers, under the Pension Plan and the Parity Plan is age 60. However, for benefits accrued after January 31, 2016, the normal retirement age is age 62. The traditional pension benefit under the Pension Plan for a participant who retires between the ages of 55 and 60 will be reduced by 3% for each year the participant receives his or her benefit prior to age 60.

Traditional Pension Benefit

Under the traditional pension benefit formula, the Pension Plan and the Parity Plan provide 2% of the average of the five calendar years (three calendar years for the Parity Plan) of highest earnings during employment multiplied by years of credited service for benefit accrual up to 25 years. Eligible compensation for the traditional pension benefit under the Pension Plan and the Parity Plan for the named executive officers includes salary and annual incentive compensation.

A named executive officer’s capped accrued traditional pension benefit was calculated using his years of credited service as of either May 31, 2003 or May 31, 2008, depending on whether he chose to accrue future benefits under the cash balance formula or the traditional pension benefit formula in 2003, and his eligible earnings history as of May 31, 2008.

64

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – FISCAL 2018 PENSION BENEFITS

Portable Pension Account

The benefit under the Portable Pension Account is expressed as a notional cash balance account. For each plan year in which a participant is credited with a year of service, compensation credits are added based on the participant’s age and years of service as of the end of the prior plan year and the participant’s eligible compensation for the prior calendar year based on the following table:

Age + Service on May 31		Compensation Credit
Less than 55		5	%
55 – 64		6	%
65 – 74		7	%
75 or over		8	%

On May 31, 2017, the sum of age plus years of service for the named executive officers was as follows: Mr. Smith — 117; Mr. Graf — 100; Mr. Bronczek — 103; Mr. Carter — 81; and Mr. Cunningham — 90. Eligible compensation under the Portable Pension Account feature for the named executive officers includes salary and annual incentive compensation. Messrs. Smith, Graf and Bronczek elected the Portable Pension Account feature on June 1, 2003. Messrs. Carter and Cunningham began accruing benefits under the Portable Pension Account on June 1, 2008.

Transition compensation credits are an additional compensation credit percentage to be granted to participants in the Pension Plan and the Parity Plan who were age 40 or older on June 1, 2008, and who have an accrued benefit under the traditional pension benefit formula. For each plan year in which an eligible participant is credited with a year of service, transition compensation credits will be added based on the participant’s age and years of service as of the end of the prior plan year and the participant’s eligible compensation for the prior calendar year based on the following table:

Age + Service on May 31		Transition Compensation Credit*
Less than 55		2	%
55 – 64		3	%
65 – 74		4	%
75 or over		5	%

*	For years of credited service over 25, transition compensation credits are 2% per year.

An eligible participant will receive transition compensation credits for five years (through May 31, 2013) or until he or she has 25 years of credited service, whichever is longer. For participants with 25 or more years of service, transition compensation credits are 2% per year and ceased as of May 31, 2013. An eligible participant’s first transition compensation credit was added to his or her Portable Pension Account as of May 31, 2009.

Interest credits are added to a participant’s Portable Pension Account benefit as of the end of each fiscal quarter (August 31, November 30, February 28 and May 31) after a participant accrues his or her first compensation credit. The May 31 interest credit is added prior to the May 31 compensation credit or transition compensation credit (or additional compensation credit under the Parity Plan). Interest credits are based on the Portable Pension Account notional balance and a quarterly interest-crediting factor, which is equal to the greater of (a) 1/4 of the one-year Treasury constant maturities rate for April of the preceding plan year plus 0.25% and (b) 1% (1/4 of 4%). Interest credits will continue to be added until the last day of the month before plan benefits are distributed. The quarterly interest-crediting factor for each of the plan years ended May 31, 2017 and 2018 was 1%.

WWW.FEDEX.COM	65

---

Table of Contents

EXECUTIVE COMPENSATION – FISCAL 2018 PENSION BENEFITS

Lump-Sum Distribution

Upon a participant’s retirement, the vested traditional pension benefit under the Pension Plan is payable as a monthly annuity. Upon a participant’s retirement or other termination of employment, an amount equal to the vested Portable Pension Account notional balance under the Pension Plan is payable to the participant in the form of a lump-sum payment or an annuity.

All Parity Plan benefits are paid as a single lump-sum distribution as follows:

►	For the portion of the benefit accrued under the Portable Pension Account formula, the lump-sum benefit will be paid six months following the date of the participant’s termination of employment; and
►	For the portion of the benefit accrued under the traditional pension benefit formula, the lump-sum benefit will be paid the later of the date the participant turns age 55 or six months following the date of the participant’s termination of employment.

Potential Payments Upon Termination or Change of Control

This section provides information regarding payments and benefits to the named executive officers that would be triggered by termination of the officer’s employment (including resignation, or voluntary termination; severance, or involuntary termination; and retirement) or a change of control of FedEx.

Each of the named executive officers is an at-will employee and, as such, does not have an employment contract. In addition, if the officer’s employment terminates for any reason other than retirement, death or permanent disability, any unvested stock options are automatically terminated and any unvested shares of restricted stock are automatically forfeited. Accordingly, there are no payments or benefits that are triggered by any termination event (including resignation and severance) other than retirement, death or permanent disability, or in connection with a change of control of FedEx.

Benefits Triggered by Retirement, Death or Permanent Disability — Stock Option and Restricted Stock Plans

RETIREMENT

When an employee retires:

►	if retirement occurs at or after age 60, all restrictions applicable to the restricted shares held by the employee lapse on the date of retirement;
►	if retirement occurs at or after age 55, but before age 60, the restrictions applicable to restricted shares held by the employee continue until the earlier of the specified expiration of the restriction period, the employee’s permanent disability or the employee’s death; and
►	all of the employee’s unvested stock options terminate.

For information regarding retirement benefits under our pension plans, see “— Fiscal 2018 Pension Benefits” above.

DEATH OR PERMANENT DISABILITY

When an employee dies or becomes permanently disabled:

►	all restrictions applicable to the restricted shares held by the employee immediately lapse; and
►	all of the employee’s unvested stock options immediately vest.

The following table quantifies for each named executive officer the value of his unvested restricted shares and stock options, the vesting of which would be accelerated upon death or permanent disability (assuming the officer died or became permanently disabled on May 31, 2018):

66

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

Benefits Triggered by Death or Permanent Disability

Name		Value of Unvested Restricted Shares ($) (1)		Value of Unvested Stock Options ($) (2)		Total ($)
F.W. Smith		0		24,661,410		24,661,410
A.B. Graf, Jr.		2,568,178		3,031,844		5,600,022
D.J. Bronczek		2,917,195		4,263,457		7,180,652
R.B. Carter		2,123,499		3,031,844		5,155,343
D.L. Cunningham, Jr.		1,861,176		2,439,783		4,300,959

(1)	Computed by multiplying the closing market price per share of FedEx’s common stock on May 31, 2018 (which was $249.12) by the number of unvested shares of restricted stock held by the officer as of May 31, 2018.
(2)	Represents the difference between the closing market price per share of FedEx’s common stock on May 31, 2018 (which was $249.12) and the exercise price of each unvested option held by the officer as of May 31, 2018.

In addition, FedEx provides each named executive officer with:

►	$1,500,000 of group term life insurance coverage;
►	$500,000 of business travel accident insurance coverage for death or certain injuries suffered as a result of an accident while traveling on company business; and
►	A supplemental long-term disability program, with a monthly benefit equal to 60% of the officer’s basic monthly earnings (provided the officer continues to meet the definition of disability, these benefits generally continue until age 65).

Benefits Triggered by Change of Control or Termination after Change of Control — Stock Option and Restricted Stock Plans and Management Retention Agreements

STOCK OPTION AND RESTRICTED STOCK PLANS

Our 2010 Omnibus Stock Incentive Plan provides that, in the event of a change of control (as defined in the plan), each holder of an unexpired option has the right to exercise such option without regard to the date such option would first be exercisable. The plan also provides that, in the event of a change of control (as defined in the plan), depending on the change of control event, either (i) the restricted shares will be canceled and FedEx shall make a cash payment to each holder in an amount equal to the product of the highest price per share received by the holders of FedEx’s common stock in connection with the change of control multiplied by the number of restricted shares held or (ii) the restrictions applicable to any such shares will immediately lapse.

Under FedEx’s 2010 Omnibus Stock Incentive Plan, our Compensation Committee may exercise its discretion to provide for a treatment different than described above with respect to any particular stock option or restricted stock award, as set forth in the related award agreement. To date, such discretion has not been exercised.

The following table quantifies for each named executive officer the value of his unvested restricted shares and stock options, the vesting of which would be accelerated upon a change of control (assuming that the change of control occurred on May 31, 2018, and that the highest price per share received by FedEx’s stockholders in connection with the change of control was the closing market price on May 31, 2018, which was $249.12):

WWW.FEDEX.COM

67

---

Table of Contents

EXECUTIVE COMPENSATION – POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

Benefits Triggered by Change of Control ⁽¹⁾

Name		Value of Unvested Restricted Shares ($) (2)		Value of Unvested Stock Options ($) (3)		Total ($)
F.W. Smith		0		24,661,410		24,661,410
A.B. Graf, Jr.		2,568,178		3,031,844		5,600,022
D.J. Bronczek		2,917,195		4,263,457		7,180,652
R.B. Carter		2,123,499		3,031,844		5,155,343
D.L. Cunningham, Jr.		1,861,176		2,439,783		4,300,959

(1)	As discussed below, the officer is also entitled under his MRA (as defined below) to a two-year employment agreement upon a change of control and certain guaranteed compensation and benefits during the term of the two-year employment period.
(2)	Computed by multiplying the closing market price per share of FedEx’s common stock on May 31, 2018 (which was $249.12) by the number of unvested shares of restricted stock held by the officer as of May 31, 2018.
(3)	Represents the difference between the closing market price per share of FedEx’s common stock on May 31, 2018 (which was $249.12) and the exercise price of each unvested option (if the exercise price of the option was less than such market price) held by the officer as of May 31, 2018.

MANAGEMENT RETENTION AGREEMENTS

FedEx has entered into Management Retention Agreements (“MRAs”) with each of its executive officers, including the named executive officers. The purpose of the MRAs is to secure the executives’ continued services in the event of any threat or occurrence of a change of control (as defined in the MRAs; such term has the same meaning as used in FedEx’s equity compensation plans). The terms and conditions of the MRAs with the named executive officers are summarized below.

Term

Each MRA renews annually for consecutive one-year terms, unless FedEx gives at least thirty days’, but not more than ninety days’, prior notice that the agreement will not be extended. The non-extension notice may not be given at any time when the Board of Directors has knowledge that any person has taken steps reasonably calculated to effect a change of control of FedEx.

Employment Period

Upon a change of control, the MRA immediately establishes a two-year employment agreement with the executive officer. During the employment period, the officer’s position (including status, offices, titles and reporting relationships), authority, duties and responsibilities may not be materially diminished.

Compensation

During the two-year employment period, the executive officer receives base salary (no less than his or her highest base salary over the twelve-month period prior to the change of control) and is guaranteed the same annual incentive compensation opportunities as in effect during the 90-day period immediately prior to the change of control. The executive officer also receives incentive (including long-term performance bonus) and retirement plan benefits, expense reimbursement, fringe benefits, office and staff support, welfare plan benefits and vacation benefits. These benefits must be no less than the benefits the officer had during the 90-day period immediately prior to the change of control.

Termination

The MRA terminates immediately upon the executive officer’s death, voluntary termination or retirement. FedEx may terminate the MRA for disability, as determined in accordance with the procedures under FedEx’s long-term disability benefits plan. Once disability is established, he or she receives 180 days’ prior notice of termination. During the employment period, FedEx also may terminate the officer’s employment for “cause” (which includes any act of dishonesty by the officer intended to result in substantial personal enrichment, the conviction of the officer of a felony and certain material violations by the officer of his or her obligations under the MRA).

68

2018 PROXY STATEMENT

---

Table of Contents

EXECUTIVE COMPENSATION – POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

Benefits for Qualifying Termination

A “qualifying termination” is a termination of the executive’s employment by FedEx other than for cause, disability or death or by the officer for “good reason” (principally relating to a material diminution in the officer’s authority, duties or responsibilities or a material failure by FedEx to compensate the officer as provided in the MRA).

In the event of a qualifying termination, the executive officer will receive a lump sum cash payment equal to two times his or her base salary (the highest annual rate in effect during the twelve-month period prior to the date of termination) plus two times target annual incentive compensation. The payments will be made to the officer on the date that is six months after his or her date of termination (or, if earlier than the end of such six-month period, within 30 days following the date of the executive’s death). In addition, the executive officer will receive 18 months of continued coverage of medical, dental and vision benefits.

An executive officer’s benefits under the MRA will be reduced to the largest amount that would result in none of the MRA payments being subject to any excise tax. If the Internal Revenue Service otherwise determines that any MRA benefits are subject to excise taxes, the executive officer is required to repay FedEx the minimum amount necessary so that no excise taxes are payable.

In exchange for these benefits, the executive officer has agreed that, for the one-year period following his or her termination, he or she will not own, manage, operate, control or be employed by any enterprise that competes with FedEx or any of its affiliates.

The following table quantifies for each named executive officer the payments and benefits under his MRA triggered by a qualifying termination of the officer immediately following a change of control (assuming that the change of control and qualifying termination occurred on May 31, 2018, and that the highest price per share received by FedEx’s stockholders in connection with the change of control was the closing market price of FedEx’s common stock on May 31, 2018, which was $249.12):

Payments and Benefits Triggered by Qualifying Termination after Change of Control

Name		Lump Sum Cash Payment — 2x Base Salary and 2x Target Annual Bonus ($)		Health Benefits ($)		Total ($)
F.W. Smith		6,460,282		67,039		6,527,321
A.B. Graf, Jr.		3,926,832		47,778		3,974,610
D.J. Bronczek		4,958,870		45,546		5,004,416
R.B. Carter		3,318,656		38,438		3,357,094
D.L. Cunningham, Jr.		3,043,116		34,679		3,077,795

WWW.FEDEX.COM	69

---

Table of Contents

EXECUTIVE COMPENSATION – CEO PAY RATIO

CEO Pay Ratio

In accordance with Item 402(u) of Regulation S-K (the “pay ratio rule”), we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. This ratio is a reasonable estimate calculated in a manner consistent with the pay ratio rule and is based on our employee and payroll records and the methodology described below. The pay ratio rule allows companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations when calculating the ratio. Our reported ratio may not be comparable to those reported by other companies due to differences in industry, business models, scope of international operations and scale, as well as the different estimates, assumptions and methodologies applied by other companies in calculating their ratios.

Considered Population

We determined our median employee as of March 1, 2018, which is within the last three months of our fiscal year as required by the pay ratio rule. As of that date, we employed approximately 422,888 employees worldwide (other than our CEO), including full-time, part-time, seasonal and temporary employees. As permitted by the pay ratio rule, in determining our median employee, we excluded approximately 3.7% of our total employee population or approximately 15,471 employees outside of the U.S. from the following countries and territories: Argentina (310); Aruba (13); Austria (314); Bahamas (25); Bahrain (123); Barbados (37); Bermuda (25); Botswana (21); British Virgin Islands (6); Bulgaria (171); Cayman Islands (16); Colombia (241); Costa Rica (49); Curacao (14); Cyprus (78); Czech Republic (574); Denmark (487); Dominican Republic (84); Egypt (114); Estonia (63); Fiji (38); Finland (218); French West Indies (7); Greece (248); Grenada (6); Guadeloupe (8); Guam (14); Guatemala (42); Hungary (330); Indonesia (648); Ireland (288); Israel (185); Jamaica (50); Jordan (16); Kenya (38); Kuwait (145); Latvia (76); Lithuania (115); Luxembourg (53); Macau (10); Malawi (31); Namibia (44); New Zealand (253); Norway (171); Panama (90); Peru (25); Philippines (746); Portugal (369); Puerto Rico (462); Romania (422); Russia (663); Saint Kitts and Nevis (9); Saint Lucia (8); Saint Martin (10); Saint Vincent and the Grenadines (6); Slovakia (183); Slovenia (104); South Africa (1,100); South Korea (1,144); Swaziland (10); Sweden (707); Switzerland (1,035); Trinidad and Tobago (46); Turks and Caicos Islands (7); Turkey (805); Ukraine (148); United Arab Emirates (870); United States Virgin Islands (17); Uruguay (34); Venezuela (61); Vietnam (461); and Zambia (130). As a result, an aggregate employee population of approximately 407,417 was considered (the “considered population”) in determining our median employee.

The considered population does not include approximately 229 individuals who became FedEx employees after March 1, 2018, as a result of our acquisition of P2P Mailing Limited. These employees are excluded from the considered population in accordance with an exemption under the pay ratio rule for acquisitions completed in the relevant fiscal year.

Identifying our Median Employee

We selected annual taxable wages as the consistently applied compensation measure used to identify our median employee, which is a permissible approach even though this definition is defined differently across jurisdictions. For employees outside the U.S., we applied a reasonable estimate to determine taxable wages by consistently adjusting each non-U.S. employee’s annual pay rate upward to include additional elements of taxable compensation. From the considered population, we used statistical sampling to collect additional data for a group of employees (the “median population”) who were paid within a range of 5% above or below what we estimated to be our median taxable wage amount. We reviewed recent historical taxable wage data of the median population and selected employees within the median population with consistent taxable wages over the past three years. We calculated fiscal 2018 total compensation for each of the selected employees using the methodology for calculating our CEO’s fiscal 2018 total compensation as set forth in the Summary Compensation Table. We then identified an employee from this group, who is reasonably representative of our workforce and whose wage is a reasonable estimate of the median wage at our organization as the median employee.

Based upon the estimates, assumptions, and methodology described above, the fiscal 2018 annual total compensation of our CEO was $16,676,709 (including $11,311 in employer-provided health benefits not included in the Summary Compensation Table), the fiscal 2018 annual total compensation of our median employee was $50,017 (including $12,399 in employer-provided health benefits), and the ratio of these amounts was 333:1.

70

2018 PROXY STATEMENT

---

Table of Contents

Audit Matters

PROPOSAL 3

Ratification of the Appointment of the Independent
Registered Public Accounting Firm

Vote Required For Ratification

The Audit Committee is responsible for selecting FedEx’s independent registered public accounting firm. Accordingly, stockholder approval is not required to appoint Ernst & Young as FedEx’s independent registered public accounting firm for fiscal year 2019. The Board of Directors believes, however, that submitting the appointment of Ernst & Young to the stockholders for ratification is a matter of good corporate governance. If the stockholders do not ratify the appointment, the Audit Committee will review its future selection of the independent registered public accounting firm.

The ratification of the appointment of Ernst & Young as FedEx’s independent registered public accounting firm requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote.

Your Board of Directors recommends that you vote “FOR” this proposal.

Appointment of Independent Registered Public Accounting Firm

Ernst & Young LLP audited FedEx’s annual financial statements for the fiscal year ended May 31, 2018, and FedEx’s internal control over financial reporting as of May 31, 2018. The Audit Committee has appointed Ernst & Young to be FedEx’s independent registered public accounting firm for the fiscal year ending May 31, 2019.

Ernst & Young has been FedEx’s external auditor continuously since 2002. The members of the Audit Committee and the Board of Directors believe that the continued retention of Ernst & Young to serve as FedEx’s independent registered public accounting firm is in the best interests of the company and our stockholders.

The stockholders are asked to ratify this appointment at the annual meeting. Representatives of Ernst & Young will be present at the meeting to respond to appropriate questions and to make a statement if they so desire.

Policies Regarding Independent Auditor

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm, including the audit fee negotiations associated with the retention of the firm. Additionally, in conjunction with the mandated rotation of the independent registered public accounting firm’s lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of any new lead engagement partner. To help ensure the independence of the independent registered public accounting firm, the Audit Committee has adopted two policies: the Policy on Engagement of Independent Auditor; and the Policy on Hiring Certain Employees and Partners of the Independent Auditor.

WWW.FEDEX.COM	71

---

Table of Contents

AUDIT MATTERS – POLICIES REGARDING INDEPENDENT AUDITOR

Pursuant to the Policy on Engagement of Independent Auditor, the Audit Committee preapproves all audit services and non-audit services to be provided to FedEx by its independent registered public accounting firm. The Audit Committee may delegate to one or more of its members the authority to grant the required approvals, provided that any exercise of such authority is reported at the next Audit Committee meeting.

The Audit Committee may preapprove for up to one year in advance the provision of particular types of permissible routine and recurring audit-related, tax and other non-audit services, in each case described in reasonable detail and subject to a specific annual monetary limit also approved by the Audit Committee. The Audit Committee must be informed about each such service that is actually provided. In cases where a service is not covered by one of those approvals, the service must be specifically preapproved by the Audit Committee no earlier than one year prior to the commencement of the service.

Each audit or non-audit service that is approved by the Audit Committee (excluding tax services performed in the ordinary course of FedEx’s business and excluding other services for which the aggregate fees are expected to be less than $50,000) will be reflected in a written engagement letter or writing specifying the services to be performed and the cost of such services, which will be signed by either a member of the Audit Committee or by an officer of FedEx authorized by the Audit Committee to sign on behalf of FedEx.

The Audit Committee will not approve any prohibited non-audit service or any non-audit service that individually or in the aggregate may impair, in the Audit Committee’s opinion, the independence of the independent registered public accounting firm.

In addition, the policy provides that FedEx’s independent registered public accounting firm may not provide any services, including financial counseling and tax services, to any FedEx officer, Audit Committee member or FedEx managing director (or its equivalent) in the Finance department or to any immediate family member of any such person. The Policy on Engagement of Independent Auditor is available in the Governance & Citizenship section under “Policies and Guidelines” of the Investor Relations page of our website at http://investors.fedex.com .

Pursuant to the Policy on Hiring Certain Employees and Partners of the Independent Auditor, FedEx will not hire a person who is concurrently a partner or other professional employee of the independent registered public accounting firm or, in certain cases, an immediate family member of such a person. Additionally, FedEx will not hire a former partner or professional employee of the independent registered public accounting firm in an accounting role or a financial reporting oversight role if he or she remains in a position to influence the independent registered public accounting firm’s operations or policies, has capital balances in the independent registered public accounting firm or maintains certain other financial arrangements with the independent registered public accounting firm. FedEx will not hire a former member of the independent registered public accounting firm’s audit engagement team (with certain exceptions) in a financial reporting oversight role without waiting for a required “cooling-off” period to elapse.

FedEx’s Executive Vice President and Chief Financial Officer must preapprove any hire who was employed during the preceding three years by the independent registered public accounting firm, and report at least annually all such hires to the Audit Committee.