Shares of FedEx (FDX) - Get Report fell Friday after the delivery giant said it was chopping the pay of founder and CEO Fred Smith and drawing down its credit line by $1.5 billion as it deals with the coronavirus pandemic.
Smith’s salary will drop 91% for the six months that began April 1, the company said in a regulatory filing.
As for the credit facility drawdown, FedEx said it acted “to increase our cash position to preserve financial flexibility in light of disrupted access to commercial paper markets and current uncertainty in the global financial markets resulting from the Covid-19 pandemic.”
The company still has $1.86 billion available under existing credit agreements.
FedEx said it expects to benefit from provisions of the $2 trillion fiscal stimulus package and future government relief programs.
“In addition, we are eligible to participate in certain government grant, loan, loan guarantee and investment programs,” the company said.
“The Covid-19 pandemic and resulting significantly weaker global economic conditions have negatively impacted our results of operations and are expected to continue to impact our business, results of operations, cash flows and liquidity,” FedEx said.
On the bright side, while FedEx’s business-to-business demand has dimmed globally from the pandemic, in the U.S. “demand for FedEx Ground residential delivery services has increased, due to sharp increases in e-commerce volume” following the pandemic, the company said.
Unfortunately for FedEx, though, “the shift in mix is expected to negatively impact margins and operating results.”
At last check, FedEx shares traded at $111.42, down 4.48%. The stock has fallen 28% over the last three months.