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FedEx cuts pay for top execs

FedEx Corp.  reported its second quarter earnings results today, with revenue up 1% percent from the previous year. It also announced pay cuts for top executives.

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.

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