Chief Financial Officer Alan B. Graf Jr. told analysts on a conference call that the company was not yet certain of the economy’s trajectory during 2010 so Fedex had decided to take preliminary steps to reinstitute the compensation-related programs.
“It (dropping the match) was a shock absorber coming down to help protect the shareholders from a cash flow and earnings standpoint,” Graf said. “We need to reinvest back in that program. We are only putting half of it back up for now, as we wait and see on the strength and continuing strength of the economic improvement.”
Graf said the company was confident that its cost-cutting efforts will allow it to be able to fund the benefit programs’ return.
“You just have to take all these things together as we continue to manage them and there’s base salaries, there’s merit increases, and then there’s the compensation associated with bonus programs and with the 401(k) and they will be increasing our cost of labor but we believe that we will be able to get that back and more in productivity with our new lower cost structure and redesigned networks,” Graf noted.
The move by
FedEx comes as employers around the country reinstate their matching
contributions that had been cut as the economy spiraled down and pressured
companies’ earnings and cash flow (see Kodak Reinstates 401(k) Match ).
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