The Teamsters union is calling on FedEx (FDX) shareholders to reject Founder and Chief Executive Fred Smith's $54 million pay package, a media report says.
The package-delivery giant gave the executive stock options after scrapping a cash bonus in the wake of the COVID-19 pandemic. It then reinstated the bonus and left the option award intact, the union said, according to Reuters.
Shares of the Memphis company at last check were down 0.6% at $265.62.
Smith in June 2020 was given an option award "for motivation and retention purposes" after FedEx canceled a $3.4 million cash bonus for him, citing uncertainty around the COVID-19 pandemic, Reuters reported.
The options were valued at $6.4 million at the end of May, the close of FedEx's fiscal year. They'd more than doubled in value since Smith received them, Reuters reported.
As business accelerated during the pandemic, FedEx reinstated Smith's $3.4 million cash bonus in December, but also allowed him to keep the special stock options.
The Teamsters said in a statement that granting Smith, and the rest of the executive team, special equity awards in lieu of participating in the annual incentive compensation plan, only to reinstate the bonus plan midway through the year, "amounted to double-dipping."
"Allowing double-dipping for any executive is objectionable enough, but granting a special option award, purportedly for retention and incentive purposes to the company’s founder alongside a large, regular option award – is beyond the pale," the union said.
The Teamsters are bargaining on behalf of FedEx employees at a freight facility and the union has invested in FedEx through a pension and benefit fund.
Smith also accepted a 91% cut in his annual salary from April 1 to Sept. 30, 2020.
A FedEx spokesperson said in an email that the company was in its so-called "quiet period" and was limited in its comments.
The spokesperson noted a portion of the executive compensation section from the company's proxy statement, which said "annual and long-term incentive payments and stock options continue to represent a significant portion of our executive compensation program."
"This variable compensation is “at risk” and directly dependent upon the achievement of corporate financial-performance goals or stock price appreciation," the statement added.
"The COVID-19 pandemic impacted the timing and mix of certain elements of executive compensation in fiscal 2021, resulting in a mix more heavily weighted to long-term compensation."
In June, FedEx beat analysts’ fourth-quarter forecasts but said cost pressures related to higher prices for fuel and labor could weigh on future earnings.