Clock Is Ticking for FedEx’s Board as Founder Nears Age Limit
(Bloomberg) -- FedEx Corp. will lose a board member next month when one of its directors hits the mandatory retirement age of 75. Next in line: founder Fred Smith.
If the board doesn’t take action, the courier’s chairman and chief executive officer will be out as a director in about a year. FedEx already has changed its rules once to accommodate the inexorable march of time, though. And there probably won’t be much investor resistance if the company boosts the age limit again or creates an allowance for Smith, said headhunter Scott Simmons.
“No shareholder is going to say, ‘No, we want Fred out,’ ” according to Simmons, a managing director of Chicago-based Crist|Kolder Associates. “I don’t think anyone would say it’s time for him to step aside.’’
James Barksdale, who has served on the FedEx board for 18 years, must step down before the company’s annual meeting on Sept. 24. The company’s bylaws require a director to retire immediately before the annual meeting during the calendar year in which he or she turns 75.
In 2015 the board increased its maximum age by three years as Smith neared what at the time was the limit of 72. FedEx could bump up the limit again or eliminate the age limit just for Smith, Simmons said.
“They may make a special exception without fearing the precedent,” he said. “I think the precedent fear would be if it’s just Joe the outside director who they’d like to keep around a little bit more. That’s where you could get some hand-wringing.’’
Smith, a former Marine, founded FedEx in 1971 as a small air-freight company and has built it into a logistics business with a market value of $65 billion. Simmons likened Smith’s sway in the company to that of Warren Buffett, 87, at Berkshire Hathaway Inc.
FedEx doesn’t have mandatory retirement for executives, so if the board stands pat, Smith could step down as chairman but remain CEO. Theoretically.
“I cannot envision that scenario at all: not in the case when you have a founder, chairman and CEO who is so prevalent within the company’s history,’’ Simmons said.
It’s up to the board’s governance committee, which is composed of independent directors, to recommend any changes to the retirement policy, according to FedEx spokesman Patrick Fitzgerald. He didn’t say where the board stands on Smith’s status.
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