* For an explanation of the different approaches used by the AFL-CIO and the U.S. Securities and Exchange Commission to calculate total compensation, click here.

Job Security for FedEx CEO, Insecurity for Workers

Frederick Smith, chairman, president and chief executive officer of FedEx Corp, isn’t reticent about his opposition to the Employee Free Choice Act.[1] “I think the opposition to card-check is so broad and so deep in American industry that all we can do is to say we do not think that is good public policy,” Smith told securities analysts in a earnings’ conference call last December.[2]

But while Smith receives a generous salary, assurance of a severance if the company gets bought, perquisites and a traditional pension—these are benefits that FedEx workers can only dream about. Because FedEx classifies drivers for FedEx Ground as independent contractors, the company can fire them at will and is not legally required to provide them with such basic benefits as overtime pay or expense reimbursements.[3]

When Jean Capobianco, a FedEx Ground driver, took time off for cancer surgery, she was fired. “Company officials said they were free to terminate her because in FedEx’s view she was an independent contractor and therefore not protected by the Americans with Disability Act.”[4]

Smith and other FedEx executive officers don’t have to worry if they lose their jobs. They have a “Management Retention Agreement” that outlines a three-year employment agreement following a merger or acquisition. Smith stands to receive a $26.6 million golden parachute as well as outplacement assistance if he loses his job or is demoted after a merger or acquisition of the company.[5] Fewer than 15 percent of working Americans have employment contracts.[6]

Smith also receives lavish perquisites typical of corporate executives. In the fiscal year ended May 31, 2008, he received $51,959 in unreimbursed personal use of FedEx’s corporate aircraft, $595,875 in security services and equipment, $ 64,620 in tax preparation services, $30,673 in financial counseling services and $10,661 for personal use of company cars.[7]

Union contracts would provide employees with job security that thousands of FedEx workers are denied. FedEx Ground drivers are required to pay for their own delivery trucks, as well as for the insurance, repairs, gas and tires that they need to do their jobs.[8] By arguing that the drivers are independent contractors, not employees, FedEx also maintains that they can’t unionize.[9] 

One of the key reasons workers form unions is to negotiate for improved employee benefits. In the case of FedEx drivers, just getting basic benefits would be a big improvement. Fewer than half of all nonunion workers receive employer-provided health and retirement plans, compared with 80 percent of all union members. In case of injury or illness, 62 percent of union members receive disability benefits, compared with just 35 percent of nonunion members.[10]

Smith receives the Cadillac-equivalent of these benefits. The present value of his pension benefits for 36 years of service totals more than $27 million.[11] Smith and other FedEx executives also receive $1.5 million in life insurance and disability insurance equal to 60 percent of the executive’s monthly earnings less $10,000.[12] Finally, FedEx provides its executives with annual physical examinations “so they can focus on producing superior financial returns for our shareowners.”[13]