1,500 Fedex employees took buyouts in 2019
They were part of costcutting programs after poor quarterly results
Roughly 1,500 Fedex employees in the U.S. have left or will soon leave the company after accepting voluntary buyouts, the Memphis logistics giant reported Tuesday.
Fedex said in its annual report that about 85 percent of the employees who took the cash buyouts left the company on May 31, the end of its fiscal year. The remainder will be leaving the company during 2020, Fedex said.
The company said previously the buyouts, announced in December, would center on Fedex Express and Fed Ex Services employees.
The severance payment is “calculated based on four weeks of gross base salary for every year of continuous service up to a maximum payment of two years of pay,” according to the annual report.
“Approximately $220 million was paid under this (buyout) program during 2019,” Fedex said.
The buyouts, whose numbers were previously disclosed by CFO Alan Graf in June’s earnings call, were part of cost-cutting programs revealed last year following disappointing quarterly results. Fedex also limited hiring and cut discretionary spending.
The programs cost Fedex $320 million over the 2019 fiscal year. Graf said in June it will lead to $240 million in savings during fiscal year 2020.
When the buyouts were announced, Fedex said it would cost up to $575 million but save up to $275 million in fiscal 2020. Fedex was able to reach its savings goal using less severance by eliminating STORY STOCKS open jobs, Graf said.
It’s not the first time Fedex ran a voluntary buyout program. In 2013, 3,600 Fedex Express and Fedex Services employees took buyouts, The Commercial Appeal reported at the time. A similar program in 2004 eliminated 3,600 jobs.
Fedex did not immediately respond to a request for comment about how many Memphis-area employees took the 2019 buyouts.
Fedex: Amazon ‘may be considered’ competitor
Fedex’s 2019 annual report also saw the company acknowledge Amazon’s expanding logistics capabilities.
Like in its 2018 report, Fedex said Amazon is implementing in-house delivery methods and having independent contractors deliver goods. But Fedex said this year that high-volume shippers such as Amazon “may be considered competitors,” an upgrade from “may become competitors” in 2018.
“For example, Amazon.com is investing significant capital to establish a network of hubs, aircraft and vehicles,” Fedex said in its filing Tuesday.
Fedex added in its filing that if Amazon further develops its in-house logistics capabilities, “it will reduce our revenue and could negatively impact our financial condition and results of operations.”
Outside of regulatory filings, Fedex executives have publicly downplayed the Amazon threat, pointing to its massive global delivery network far beyond the e-commerce titan’s current abilities.
Max Garland covers Fedex, logistics and health care for The Commercial Appeal. Reach him at max.garland @commercialappeal.com or 901-5292651 and on Twitter @Maxgarland Types.