TEAMSTERS CALL FOR INDEPENDENT BOARD CHAIR AT FEDEX; URGE INVESTOR SUPPORT

Teamsters Cite FedEx’s Poor Performance, Oversight Failures

The International Brotherhood of Teamsters today asked shareholders of FedEx Corporation to support the union’s proposal for an independent board chairman at FedEx’s upcoming annual meeting.

In a letter to shareholders, Teamsters General Secretary-Treasurer C. Thomas Keegel said that Frederick W. Smith’s dual role as chairman and chief executive of FedEx has resulted in a CEO-dominated board incapable of providing the rigorous, independent oversight of management that investors require. FedEx’s annual meeting will be September 28 in Memphis, Tennessee.

“FedEx’s lack of independent board leadership, compromised board independence and effectiveness, chronic poor performance, excessive executive pay, and questionable business strategies underscore the urgent need for an independent chairman to lead FedEx’s board in holding management accountable and providing strategic oversight and guidance,” Keegel said.

FedEx has significantly underperformed in the trucking and shipping industries, the S&P 500 Index, and compared to direct competitor United Parcel Service Inc. on a one-year, three-year, and five-year total shareholder returns basis, according to data from The Corporate Library (TCL), a leading provider of independent corporate governance research and analysis. Meanwhile, Smith has raked in exorbitant pay, accruing more than $84 million over the past three fiscal years while shareholder value has fallen by 50.2 percent. Profits made on the exercise of stock option grants with no performance hurdles make up the bulk of Smith’s pay.

The letter also raised concerns that Smith’s controlling influence on a board that includes potentially conflicted and over-extended directors has led the board to rubber stamp an unlawful and unsustainable business model at the company’s second-highest revenue generating business segment, FedEx Ground, which has exposed the company to staggering legal and financial risks.

The FedEx Ground business model, which relies on the misclassification of employee drivers as “independent contractors,” has allowed FedEx to evade expenses like payroll taxes, overtime pay and benefits. Numerous state courts and government agencies have found that FedEx Ground’s contractor model is a sham and are looking to collect the money owed to workers and states. According to an August 2008 Bloomberg article, the pre-tax liability from unpaid payroll taxes alone could reach as high as $2.5 billion.

“Many FedEx shareholders have already joined our call for independent board leadership, with 34 percent of the vote by shareholders supporting the Teamsters’ independent board chairman proposal in 2008,” Keegel said. “We believe that now, more than ever, an independent chairman is necessary for the company to successfully navigate the extraordinary legal, regulatory, reputation- and recession-related challenges facing FedEx.”

FedEx Says Soft Demand To Continue Into 2010

FedEx Corporation said that it's bracing for soft demand for shipping services to continue into 2010, warning that it may be forced to take more cost-cutting actions if the economy deteriorates next year, Dow Jones reported.

FedEx, considered an economic bellwether, noted that it has taken a number of steps this year to bring its services in line with reduced demand, including laying off some employees and grounding some older aircraft.

But the company warned that "additional actions will be necessary to reduce the size of our networks" if the economy continues to decline in 2010.”

Still, FedEx said in the outlook that it won't take any action that hurts its ability to provide high-quality service. It pegged its 2010 capital-spending budget at about $2.6 billion, although it said it will reduce the budget if conditions worsen.

FedEx said 2010 revenue will be hurt by lower yields stemming from reduced fuel surcharges and a competitive pricing environment.

It said it expects volume growth in 2010 at its FedEx Ground unit due to market-share gains, but flat volume at its premium FedEx Express unit. It forecast a drop in shipments at its less-than-truckload unit due to industry overcapacity in the segment. 10k Statement..........

FedEx's Boeing 777 order may hinge on labor law

FedEx said it may not buy 30 more Boeing 777 freighters if a federal law is changed to make it easier for its employees to join a union.

Following through on those orders and options, with a list price of $7.7 billion, depends on FedEx employees continuing to be under the Railway Labor Act, the company said.

That law, which covers FedEx workers because the company was founded as an airline, requires a national vote if employees want union representation.

Legislation approved by a U.S. House panel March 5 would make it easier for drivers of Memphis, Tenn.-based FedEx to vote locally to join unions, by placing the company under the National Labor Relations Act.

FedEx's larger rival, United Parcel Service, backs the proposed change, saying it would even the playing field. About half of UPS' employees belong to the Teamsters union, while FedEx's only unionized group is its pilots.

The Teamsters have been trying to win representation of FedEx drivers for years.

"If the regulatory and congressional environment remains hostile, there is virtual uncertainty over how we'd proceed," FedEx spokesman Maury Lane said Tuesday.

The change would "stymie competition and create an economic roadblock to recovery," he said.

"FedEx is an important Boeing customer and we understand the company's concerns about the proposed legislation," said Boeing spokesman Jim Proulx.

Boeing hasn't taken a position on the provision that would affect FedEx workers, he said.

FedEx Cuts Workers' Retirement Compensation While CEO Rakes in Multimillion-Dollar Pension

More Drastic Cuts in Workforce Compensation Fuels Drive for Teamster Representation

FedEx Corp. today announced drastic cuts in pay and deferred compensation for most of its U.S. workforce. Salaried U.S. FedEx employees will take permanent 5 percent to 10 percent base salary reductions while FedEx founder, Chief Executive and Chairman Fred Smith will take a permanent 20 percent reduction in base salary.

According to company statements, hourly employees will not see base wages impacted in this round of cost controls.

"The FedEx workers that have made this company a household name and deliver the profits will now shoulder more insecurity for their futures," said Teamster General President Jim Hoffa. "At the busiest time of their delivery season, the company is delivering nothing but coal for its workforce."

More dramatically for hourly employees, bonus compensation and the company's 401(k) matching contribution will cease for 2009. This unilateral decision to stop 401(k) matches closely follows the June 2008 capping of FedEx Express employees' defined benefit pension. In announcing the end of the defined benefit plan in 2007 FedEx said, "Planning and saving for retirement is a partnership between FedEx and its employees, and we are committed to helping our employees enjoy a financially sound future."

Apparently, that "partnership" is no longer part of the corporation's future.
Although garnering headlines for his salary adjustment, Smith meanwhile retains $26,411,752 accrued under the FedEx Retirement Parity Pension Plan and $1,164,464 under the Employees' Pension Plan. Additionally, Smith's $1.4 million salary only comprised 13 percent of the $10.9 million that he raked in for 2008. In fact, 55 percent of Smith's 2008 pay was in stock options not tied to any performance goals.

As of May 31, Smith also held currently exercisable, in-the-money options worth $24.9 million, based on yesterday's closing stock price. In the past two years alone, he's exercised options worth more than $60 million. FedEx has not clarified if the company's variable compensation changes will affect Smith's outstanding, exercisable options or if FedEx will suspend option grants for 2009.

"FedEx workers have seen their wages stagnate, their health care costs go up and their retirement benefits go down or go away entirely while FedEx has pocketed millions in profits in good times," said Teamsters Vice President At Large and Package Division Director Ken Hall. "Many FedEx workers already see Teamster representation as a way to secure their future and these drastic measures will convince more of the value of a Teamster contract."

The difference in pay and compensation between management and workers is one factor leading FedEx workers to seek Teamster representation. The broken "Purple Promises" on wages and retirement benefits were the subject of a public Blue Ribbon Commission hearing on Dec. 16, jointly sponsored by the Teamsters, the Los Angeles County Federation of Labor, and Clergy and Laity for Economic Justice/Los Angeles (CLUE LA).

Blue Ribbon Commission members U.S. Rep. Linda Sanchez, Los Angeles City Councilman Bill Rosendahl and United Methodist Church (Los Angeles) Bishop Mary Ann Swenson heard testimony from a number of FedEx workers on their deteriorating work conditions and struggles to hold onto the middle class life.

"I could afford to retire at age 62 under the defined benefit pension plan but with the stroke of a pen, and with little warning and no input or discussion from employees, FedEx changed our retirement plans," said Dan Forrand, a 15-year veteran aircraft maintenance technician from FedEx Express in Los Angeles.

Now, as the economy suffers and FedEx Express employees' retirement security is in greater jeopardy, FedEx has pulled a bait and switch more drastic than even Forrand knew on Tuesday.

Forrand's statement and other testimony and questions are archived online at www.fedxmx.com. Additional information is at www.FedExWatch.com.

Los Angeles FedEx Workers Testify Before Blue Ribbon Commission Panel

Workers Struggling to Stay in Middle Class Hope to Join Teamsters

FedEx workers in Los Angeles testified today before a Blue Ribbon Commission panel that they are on the verge of slipping from the middle class because of dwindling benefits, higher out-of-pocket medical costs and an overall decline in workplace conditions.

The Blue Ribbon Commission hearing is co-sponsored by: the International Brotherhood of Teamsters; the Los Angeles County Federation of Labor, AFL-CIO; and Clergy and Laity United for Economic Justice (CLUE). Economic experts, clergy members and workers discussed ways to help the workers remain in the middle class and remedy the anti-union situation they are battling. The commissioners on the panel are: U.S. Rep. Linda Sanchez (D-CA); Los Angeles City Councilman Bill Rosendahl; and Bishop Mary Ann Swenson of the United Methodist Church, Los Angeles area.

The workers said they hope to form a union with the Teamsters to gain a good contract that would guarantee them job security, better wages and benefits. But they said those efforts have created an anti-union backlash at many workplaces, with the company holding anti-union mandatory meetings, distributing anti-union literature, showing anti-union videos at work and engaging in many acts of intimidation.

"Pro-union employees are followed into restrooms by managers who look over stalls," said Rudy Hernandez, a 20-year FedEx employee who currently is a FedEx Freight driver. "Dispatchers tell drivers if they vote the union in, FedEx will close down this terminal."

But despite all the anti-union activities, Hernandez and four FedEx Express aviation mechanics testified that they remain committed to forming a union with the Teamsters.
Dan Forrand, a Senior Aviation Mechanic Technician at FedEx Express, said he planned to retire when he turned 62. But when FedEx changed its defined benefit pension plan to a cash balance plan on June 1, Forrand knew he would have to work longer to recoup financial losses.

"I've calculated that I'll lose about $230,000 that I would have accrued under the defined benefit plan," Forrand said. "I am worried that I am slipping out of the middle class."

Economic experts and clergy members voiced their support for these workers and discussed ways to remedy their situation.

"The bottom line: without a union, FedEx mechanics have no job security," said Jon Zerolnick, Senior Research Analyst for the Los Angeles Alliance for a New Economy (LAANE). "Currently their jobs can be outsourced and hours cut -- and lives are seriously impacted -- at the whim of management. They need a union to protect jobs."

"As members of the Los Angeles clergy community, we hear these stories of struggle every day," said Pastor Bridie C. Roberts of CLUE LA. "These workers need the help of everyone to keep themselves and their families in the middle class."

Over the last few years, FedEx workers have taken a look at Teamster strength in their industry. The Teamsters represent about 240,000 full-time and part-time workers at UPS and 12,600 at UPS Freight. The UPS and UPS Freight workers are benefiting from strong contracts that guarantee them wage increases, job security, good health coverage and a pension plan that cannot be taken away. FedEx workers have no contract.

The Los Angeles County Federation of Labor, AFL-CIO, is focused on promoting a voice for workers so they can remain in the middle class, or move themselves out of poverty, by joining a union. The federation believes that in educating and mobilizing workers to be politically active they can create and sustain healthy communities.

CLUE was formed with the purpose of organizing the religious community to support low-wage workers in their struggles for a living wage, health benefits, respect, and a voice in the corporate and political decisions which affect them. CLUE LA is an interfaith association of more than 600 religious leaders throughout Los Angeles County who come together to respond to the crisis of the working poor.

Thousands of layoffs by DHL, ABX Air hit Wilmington, Ohio

As hard times go, this is about as hard as it gets. The single-biggest employer in these parts is laying off about 7,500 men and women.
In a town of fewer than 13,000 people. In the midst of the worst financial crisis in generations.

"It's going to test us," says Mayor David Raizk. "The numbers are frightening."

Those numbers came in a Nov. 10 announcement by Deutsche Post World Net, the German owner of package-delivery company DHL. After investing five years and nearly $9 billion, DHL is abandoning its ill-starred effort to compete in the United States with FedEx and UPS. Winding down its U.S. business will eliminate 9,500 DHL positions around the country plus thousands more here at the company's local partner, ABX Air.

DHL, which has long struggled in the U.S., said in May that ABX would likely lose business that supported thousands of workers. But the global financial crisis magnified shareholder pressure on DHL's German owner and accelerated the erosion at the No. 3 company in a three-company market, triggering DHL's exodus. Exposure to bankrupt investment bank Lehman Bros. blew a $450 million hole in third-quarter earnings at the German giant's banking subsidiary, while DHL's customers grew tightfisted amid the spreading economic malaise. Full Story Here.......

FedEx Agrees to Pay $26.8 Million to Settle Drivers Lawsuit

FedEx Corp. has agreed to pay $26.8 million to settle a California lawsuit over whether some drivers were independent contractors or employees.

The agreement, presented in a hearing Friday, requires court approval.

In 2007, the California Appeals Court affirmed a 2004 district court ruling that about 200 drivers who operated in the state six to 10 years ago were employees and therefore entitled to business-expense reimbursement.