FedEx cuts pay for top execs

The company reported revenue of $9.54 billion, compared to $9.45 billion during the same period last year. It reported operating income of $784 million, up from $783 million a year ago; an operating margin of 8.2%, down from 8.3% the previous year; and a total net income of $493 million, up 3% from last year's $479 million.

Also, the Memphis-based shipper said it was implementing cost cutting measures by instituting pay reductions for its management.

President and CEO Fred Smith will take a 20% pay cut, while other FedEx senior executives will have their salaries reduced 7.5% to 10%. Remaining US salaried exempt personnel will see their earnings trimmed 5%, and also will forgo 2009 merit increases.

The company also is suspending 401(k) company match contributions effective February 1, for a minimum of one year.

These measures are projected to reduce spending by $200 million through fiscal year 2009 and another $600 million through fiscal year 2010, FedEx said.

“Our financial performance is increasingly being challenged by some of the worst economic conditions in the company's 35-year operating history,” said Smith, in a statement. “However, with the decline in shipping trends during our second quarter and the expectation that economic conditions will remain very difficult through calendar 2009, we are taking additional actions necessary to help offset weak demand, protect our business and minimize the loss of jobs.”

Total combined average daily package volume in the FedEx Express and FedEx Ground segments was down 2% year over year, the company said, as the weak economy reduced demand for shipping services.