FedEx Corp. said on Friday it would slash its chief executive officer's pay and draw down $1.5 billion from a credit facility as parcel delivery services take a hit from coronavirus-led lockdowns across the globe.
The Memphis, Tennessee-based company also plans to tap debt markets to bolster its reserves as the pandemic compounds its own troubles, including integration issues with its TNT Express acquisition, higher costs related to launching Sunday home delivery and the loss of Amazon.com Inc as a customer.
The company said its board had approved a 91% reduction in CEO Frederick Smith's base salary for the six-month period from April 1 to Sept. 30. His base salary was $1.4 million in 2019, according to a filing with the Securities and Exchange Commission. Including other compensation, including stock options and other incentives, his total compensation was nearly $16 million.
FedEx and larger rival United Parcel Service have asked the U.S. Treasury to move quickly to release billions of dollars in government grants and loans to support the sector amid falling demand.
FedEx said on Friday it currently has about $1.86 billion available under its existing credit agreements for future borrowings.
Although the parcel company has seen an increase in residential delivery services due to a sharp rise in e-commerce volumes amid the coronavirus crisis, the company said it expects its profitability to be hit as a result of lower margins on such deliveries.