Good morning, ladies and gentlemen, and welcome to the Annual Stockholders' Meeting of FedEx Corporation. My name is Frederick Wallace Smith. I'm Chairman of the Board and the Chief Executive of the business. We appreciate the interest of the stockholders who have come to the meeting and we thank you for being here. This meeting is being webcast live.
Also, I would like to welcome our stockholders who have joined us via the webcast. Let me begin by introducing the other members of our Board of Directors. As I call each of your names, would you please stand and be recognized. John Edwardson, Marvin Ellison, Tricia Griffith, Chris Inglis, Kim Jabal, Doctor. Shirley Jackson, Brad Martin, Joshua Raimo, Susan Schwab, David Steiner and Paul Walsh.
Joining me on the stage is Mark Allen, Mark R. Allen, our Executive Vice President, General Counsel and Corporate Secretary, who will act as Secretary of the meeting and Cassandra Shed, Relationship Manager of Computershare Trust Company, our transfer agent who has been appointed and duly sworn as Inspector of Election. Representatives of Ernst and Young are also present and available to answer appropriate questions that you may have of them as auditors of the company's fiscal year 2019 financial statements. As each of you entered the meeting room this morning, you were given a copy of the agenda and the annual meeting guidelines. The meeting will be conducted in accordance with the agenda and guidelines.
If you've not received copies of the agenda and guidelines, please raise your hand and copies will be brought to you. I'll now call the meeting to order. Mr. Allen will report on the giving of notice for the meeting and the presence of a quorum.
Thank you, Mr. Chairman. I have a complete list of the holders of record of the company's common stock at the close of business on July 29, 2019, who are entitled to vote at this meeting. The list is arranged in alphabetical order and indicates the number of shares held by each stockholder. It was prepared and certified by Computershare Trust Company, the company's transfer agent for the common stock.
I've also received an affidavit of a representative of Computershare, which states that on August 12, 2019, a notice regarding the Internet availability of proxy materials or the notice of return envelope were mailed to the shareholders of record as of July 29, 2019. A tabulation of the proxies received from stockholders indicates that
a majority of the shares outstanding on the record date are represented at this meeting and a quorum is present. Thank you, Mr. Allen. A copy of the affidavit will be filed with the records of this meeting. The polls for each proposal are now open at 8:0:3 a.
M. Central Time on 23 September 2019. The proposals to be considered today are listed on the agenda and in the proxy materials previously distributed. If you've already submitted your proxy, your shares will be voted accordingly. If there is any stockholder present who has not yet voted and wishes to do so, please hold up your hand so we may distribute Nobody here?
I need to go through that then. All right. If you're voting by ballot, please mark your choices for each item of business and return the ballot to a FedEx representative when you're finished. If you are a beneficial owner with a legal proxy, please return the legal proxy with your ballot. The audience will have the opportunity to ask any questions related to these proposals after all the proposals have been presented.
Please defer any questions or comments related to the proposals until such time. If you have any proposals that are not directly related to the proposals if you have any questions that are not related to the proposals, you'll have the opportunity to ask them at the conclusion of the meeting. The first matter to be taken up is the election of directors. 12 directors are to be elected today. A nominee will be elected to the Board of Directors if the number of votes cast for such nominees election exceeds the number of votes cast against such nominees election.
If elected, each nominee will serve as a Director until the 2020 Annual Meeting and until his or her successor is duly elected and qualified. The nominees are as follows: John A. Edwardson, Marvin R. Ellison, Susan Patricia Griffith, John C. Chris Inglis, Kimberly A.
Jabal, Shirley Ann Jackson R. Brad Martin Joshua Cooper Raimo Susan C. Schwab Frederick W. Smith, David P. Steiner and Paul S.
Walsh. So next item of business is to is the proposal to approve on a nonbinding basis an advisory resolution on named executive officer compensation as follows: Resolve that the compensation paid to FedEx named executive officers as disclosed in the company's proxy statement for the 2019 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the accompanying compensation tables and the related narrative discussion is hereby approved. The next item of business is the ratification of the appointment of Ernst and Young LLP as the independent registered public accounting firm of the company for the fiscal year. I'm sorry, I made an error. I'm not going through with this one.
This is the 4th one, of the company for the fiscal year ending May 31, 2020. The 3rd item of business, which I should have read before the Ernst and Young issue, is the proposal to approve the FedEx Corporation 2019 Omnibus Stock Incentive Plan. The next item of business is the consideration of a stockholder proposal regarding a lobbying activity and expenditure report. And I will now ask a qualified representative of the proponent to present the proposal. Please limit the presentation of your proposal to 3 minutes.
Prior to doing so, we'd appreciate your identifying yourself and provide the number of shares you represent. Is there someone that wants to put this there we go. All right, sir.
Good morning. I'm Dan Willett representing the Teamsters General Fund, owner of 176 shares of our company stock. Our resolution calls for a greater disclosure of our company spending on direct and indirect lobbying. We call for a report to be presented to the Nominating and Governance Committee and posted on our company's website. In the company's response to our resolution on money paid to trade associations, our company states that it only pays dues or sponsors events.
We believe that trade associations are primarily funded with dues and fundraising events. Our resolution asks for those amounts to be disclosed. Our company also states that membership in trade associations comes with an understanding that a trade association may take some positions that our company disagrees with. Whether our company disagrees with 10% or 50% of the positions taken by a trade association it joins and continues to pay is just the kind of decision that deserves more transparency. Please vote for Proposal 5.
Thank you.
Thank you, sir. The last item of business is the consideration of a stockholder proposal regarding employee representation on the Board of Directors. I'll now ask a qualified representative of the proponent to present the proposal. Again, please limit the presentation to 3 minutes, identify yourself and provide the number of shares you represent.
Good morning. My name is Abigail Shaw of Northstar Asset Management, a socially responsible investment firm based in Boston and the beneficial owner of 40,351 shares of FedEx common stock. I'm here to present Resolution Number 6. Employee engagement and satisfaction are crucial to our company's success. Competition in our industry, faster delivery to customers, 7 days per week with fewer errors has increased strain on employees throughout our industry.
We believe that allowing an encouraging representation on the board by non management, non executive employees is one way to ensure that employees, our most crucial resource, remain fully engaged in the long term of our company and will help to ensure operational excellence. Given FedEx's poor financial performance over the past 5 quarters, we are extremely concerned that FedEx management may turn to draconian cuts to hard won employee benefits such as domestic partner benefits without adequate consideration of how such a move would directly affect employees and lower overall morale. Our employees are the lifeblood of the company. Without their dedication to fast, efficient deliveries, it would be impossible to weather the current global economic turmoil or to recover from our past year of financial weakness. But we know that our CEO, Mr.
Fred Smith, agrees that employees are critically important contributors to our company. Recently, the Business Roundtable, an association of CEOs of which Mr. Smith is a member, affirmed employees as stakeholders. In August 2019, the Business Roundtable announced a commitment to all stakeholders and named Investing in our employees as the second priority just behind a commitment to customers. But competition in our industry is becoming This increased pressure on an industry that is dependent on happy productive employees poses a real risk to our business.
Our company is dependent on all of our employees to deliver the services that we profit from. Because of that, management or Board decisions that don't include careful consideration of the full breadth of employee talent and compensation, especially in a time of stagnant performance is a disservice to shareholders. We request that there be board seats available for non management employees at FedEx. We urge shareholders to vote for proxy item number 6. Thank you.
Thank you. Now ladies and gentlemen, I'd like to open the floor to any discussion regarding these proposals. Any questions or comments relating to any of the proposals should be made at this time, not during the general question and answer period following the conclusion of the meeting. Please remember, questions or statements that are irrelevant to the business of the company or repetitious of questions or statements made by other stockholders will not be permitted. If there are any questions or comments not directly related to these proposals, please defer them until after the conclusion of the meeting.
The audience will be given the opportunity to ask general questions at that time. Any discussion of these proposals, ladies and gentlemen, or questions or any sort? All right, sir.
The Teamsters General Fund, owner of 176 shares have concerns and issues regarding executive compensation. We urge shareholders to vote against proposal 2.
Anything else? Okay. I believe that concludes discussions on these proposals. We will now have the Inspector of Election give a report on the preliminary voting results. First, have all stockholders who receive ballots mark them and turn them in?
I don't think there was anybody that got me. Well, there was one. Right, good. You're the head of the meeting here. If you still have a ballot, please raise your hand.
There he is. Somebody's going to hear it. There they come. So that we can pick it up. Anybody else?
All right. We now seem to have all the ballots. So I hereby declare the polls closed at 0814 am Central Time on 23 September 2019. I'll now ask the Inspector of Election to report on the preliminary voting results for each of these proposals.
Mr. Chairman, there are present at this meeting in person or by proxy 225,350,000,300 and of the company's common stock out of a total of 260,866,352 shares outstanding and entitled to vote. With respect to proposal 1, the election of directors, each director nominee received more votes cast for such nominees election than against such nominees election. With respect to proposal 2, the advisory resolution to approve named executive officer compensation, a majority of the shares present in person or represented by proxy and entitled to have been voted in favor of this proposal. With respect to proposal 3, approval of the FedEx Corporation 2019 Omnibus Stock Incentive Plan, a majority of the shares present in person or represented by proxy and entitled to vote have voted in favor of this proposal.
With respect to proposal 4, ratification of the appointment of the independent registered public accounting firm, a majority of the shares present in person or represented by proxy and entitled to vote have voted in favor of this proposal. With respect to proposals 56, a majority of the shares present in person or represented by proxy and entitled to vote have voted against these proposals.
Thank you, Ms. Sheb. To summarize the voting results, each of the Director nominees has been duly elected to serve as a director of the company. The advisory resolution to approve named executive officer compensation has been approved. The FedEx Corporation 2019 Omnibus Stock Incentive Plan has been approved.
The appointment of Ernst and Young LLP as the independent registered public accounting firm of the company for fiscal year 2020 has been ratified and none of the stockholder proposals have been adopted. Please note that the voting results announced by Ms. Shed are preliminary. Final voting results will be included in a Form 8 ks filed with the Securities and Exchange Commission following the meeting. Now ladies and gentlemen, that concludes the official business portion of the meeting.
There being no further business, the meeting is hereby adjourned. Next, we will show a brief video that provides detail about FedEx's broad portfolio. I will then conclude with some brief remarks followed by a question and answer session.
It's a new day, a day like any other, a day of possibilities, a day of challenges. Today, a medical firm needs their custom designed cranial implants to arrive in the U. S. In time for urgent surgeries. An internationally renowned exhibit needs to transport the largest collection of King Tut treasures ever on display outside of Egypt.
An East Coast seafood supplier needs to expand beyond their area without compromising quality and freshness. A maker of premium cycling wheels and components needs a way to fill large orders from distributors across the country. A local dog groomer wants to keep their business looking as sharp and fetching as their customers. A passionate coffee roaster needs to provide online customers with the same farm fresh taste they brew in their cafe. It's a new day.
People, small businesses and enterprises around the globe looking for better ways to connect and make a difference. And the one thing they all have in common is who they choose to help them do it. FedEx. Connecting people with goods, services, ideas and technologies that create opportunities, providing customers around the world with a unique portfolio of business, logistics and shipping solutions, serving 220 countries and territories, linking 99% of global GDP, moving 15,000,000 shipments each business day through 5,000 facilities, Over 1,000 miles of conveyor belts using nearly 180,000 vehicles with support from 12,000 marketing and sales team members, making it easier for customers to access new markets, new answers, new possibilities. Beginning with FedEx Express, the largest integrated express transportation company reliably serving customers around the world.
An innovative network and infrastructure with 240,000 team each business day. Over 1600 flights through over 3 FedEx service to help monitor their shipments, Stryker CMF can get their life changing plates, screws and implants for patients awaiting surgery into the hands of surgeons faster. Then there's FedEx Logistics, offering air cargo, ocean freight, customs brokerage, trade and advisory services, return solutions and stay competitive. So the King Tut, Treasures of the Golden Pharoah exhibition can safely transport 150 Egyptian treasures, a £31,000 shipment over 7,500 miles from Cairo to California. FedEx Ground is helping fuel the rise of e commerce with affordable, fast home and business to business delivery in the U.
S. And Canada. Featuring FedEx home delivery with standard Saturday service, 115,000 team members moving 9,000,000 packages each business day using over 65,000 vehicles. So Island Creek Oysters can harvest their oysters in Massachusetts today and get them to a chef in New York City tomorrow, keeping their seafood fresh and improving their direct to chef delivery service. FedEx Freight, from FedEx Freight Economy to FedEx Freight Priority helps simplify the biggest shipments, moving more cargo by weight than any other FedEx company and offering the fastest published transit times of any national LTL service.
45,000 team members moving every business day. So Head Cycling can race to fill orders from distributors more efficiently, sending up to 50 boxes in a single shipment, saving time and money. FedEx Office, with 2,000 locations and over 14,000 team members, make shipping, printing, custom packing and copy services easy and convenient for any business. Offering FedEx Express, FedEx Ground Shipping and FedEx Same Day City Courier Service within more than 20 metro areas in the U. S.
So Bubly Paws can print what they need quickly, consistently and affordably from vinyl signs to service boards to postcards and banners, helping them attract more customers. To meet the increasing demand for new delivery options, FedEx continues to expand its convenience network, The hold at location service consisting of over 10,000 locations and growing. With 80% of people in the U. S. Within 5 miles of a FedEx hold location, FedEx is giving customers more choices and control by connecting online shopping with on-site convenience.
FedEx Services helps create customized solutions for FedEx e commerce, website integration, global supply chains and more, helping to coordinate FedEx sales, marketing, communications, IT and customer service support. So Devosion can ship and track every online order with the same commitment they put into their coffee to keep beans farm fresh until the moment they're brewed. Because something wonderful happens when you connect people and possibilities. Innovation soars. Jobs are created.
Trade thrives. Communities grow. Lives are improved. Investing in fuel efficient planes and vehicles and by continuing to push the boundaries of innovation, taking advantage of lives through education, skills training and job placement assistance by leveraging our resources when and where they're needed different backgrounds of all our team members and promoting a culture of diversity and inclusion, and by working to make every FedEx experience an outstanding experience every single day. All help to explain why FedEx is consistently named 1 of the best companies in the world to work for and one of the world's most admired brands.
Because at the end of the day, we know we're delivering more than just a package. We're delivering hope, joy, dreams, peace of mind, growth, human connections, possibilities. And tomorrow, we'll do it all over again.
The video you just saw details the broad portfolio of FedEx, some of which I'll cover more fully in a moment. But let me begin by thanking the hundreds of thousands of FedEx teammates around the world who work every day, as you saw in that film, to keep our purple promise. Simply stated, I will make every FedEx experience outstanding. When our strategic management committee presented the FY 2020 business plan to our Board of Directors last spring, we identified 3 significant challenges to increasing earnings this fiscal year, consistent with our long stated goals. Beginning in the fall of 2018, it had become clear that global trade disputes were adversely affecting manufacturing in Europe and Asia, thereby slowing international shipping demand.
Our TNT integration was facing its most important phase, leading to the integration of European ground operations by the end of FY 2020. And 3, we plan to add capabilities to enhance our services for the rapidly growing e commerce market, which we expect to grow in the United States from 50,000,000 to 100,000,000 packages per day by 2026. These shipments will be destined increasingly to residences and 1 in 4 packages we forecast will be short distance deliveries. Over the summer, these challenges increased somewhat due to the decision to not renew our largest Amazon contracts and deepening trade disputes. While the Amazon contracts represented only a small portion of our revenues, the nature of our business is such that near term profits will be adversely affected since the last bit of volume in our business has significant flow through to the bottom line.
We've closed additional business to replace this traffic, which is being onboarded, and we are taking out significant costs, which were unique to Amazon's requirements. I mentioned trade disputes a moment ago. I'd like to give you context about the macroeconomic environment in which we are operating as a result. Comparing to where we were in June, our overall outlook for U. S.
Economic growth is down 20 basis points, currently at 2.3% for real GDP. Our outlook has changed despite consumer driven growth of 2% in the U. S. In quarter 2 of calendar year 2019. This change is because the industrial sector remains sluggish due to an inventory buildup and increased geopolitical trade tensions.
This slide shows that U. S. Manufacturing PMI has been very weak this year. Given that, our industrial production outlook is down 70 basis points from June currently at 0.9%. From a global perspective, economic growth has decreased as the developed world outside the U.
S. Seeks weaker growth and both domestic and external factors weigh on emerging markets. In Europe, ongoing decline in Germany's industrial sector is a drag on growth, while uncertainty over Brexit is impacting not just the United Kingdom, but its major trading partners as well. Growth in Italy remains weak. And as you can see on this slide, Eurozone Manufacturing, PMI, has been signaling contraction for most of the year.
In Asia, Chinese industrial production growth hit a 10 year low in July and exports remain weak. And more broadly, all major exporting economies have been affected by the slowdown in trade. Quarter 2 calendar year 2019 global trade volumes declined year over year, which is the first decline since calendar year 2,009. We believe a 0 tariff, 0 subsidy global trade environment is the most powerful economic growth engine there is and will continue to push for policies that stimulate rather than depress global trade. While the forces I just detailed are difficult to predict and obviously outside of our control, we're taking deliberate actions in key areas to help lessen the impact of those forces, while simultaneously building out a forward thinking portfolio of solutions for our customers.
To help mitigate global headwinds, we're taking steps to reduce capacity, especially in our intercontinental network and overall directional cost our Express business. We'll retire 20 MD-ten ten aircraft over the current and next fiscal year and are highly likely to retire the remaining 10 A310 aircraft in our fleet this year. In addition, we will be parking the equivalent capacity of 7 MD-eleven aircraft this fiscal year. After peak season, we'll take action to reduce our intercontinental flights to better match supply to demand. We've already decreased U.
S. Domestic flight hours, and we'll be aggressively looking for additional opportunities. Our Express team is intensely focused on overall cost reduction, including deferring non critical hiring and limiting discretionary spending with benefits to be realized in the coming quarters. With respect to how we continue to evolve and build on our portfolio of solutions for our customers, we're working hard to complete the TNT integration. We've improved FedEx intra European economy parcel shipment transit times and are well on our way to achieving full ground interoperability in our pickup and delivery networks in Europe by the end of May calendar 2020.
Flowing intercontinental packages into the combined European ground network allows us to improve service while simultaneously reducing our cost to serve. This will help us accelerate growth into Europe from all around the world. The Asia Europe lane, which remains the largest intercontinental trade lane, is particularly important in this regard, and we expect to gain share in this lane in the months years to come. Shifting to e commerce. While the backbone of FedEx is the B2B business, business to business business, our unmatched ground and express line haul and sort network carry both B2B and B2C Commerce with great efficiency.
The slide behind me gives you a clear indication of why we're so focused on e commerce. In the U. S, more than 90% of incremental domestic parcel volume from 2018 to 2026 is expected to come from e commerce. We're very proud of the rapid innovation we've brought to e commerce in the last 3 years, and you can expect more in the months ahead. You can see on this chart that more than 50% of the U.
S. Domestic e commerce market is our addressable growth market with a CAGR, a compounded annual growth rate of 12%. As the e commerce market grows, so does the market for returns, up 35% since 2015. Packages dropped off at our retail locations result in a higher pickup density and drive greater operational efficiency, making FedEx even more competitive in the returns market. To lead in e commerce, we've launched or announced: 1, FedEx Extra Hours from the Express Company, which provides nightly pickup with delivery the next business day 2, in sourcing FedEx SmartPost packages for FedEx Ground delivery by peak 2020 3, expanding the FedEx Ground oversized package network to approximately 100 facilities by peak 2020 4, new return services and thousands of additional pickup and shipping points, including $8,000 general on-site locations in less dense areas 5, FedEx Freight Direct for heavy and hard to handle items requiring delivery over the threshold, a $10,000,000,000 market.
6, Roxo, the FedEx same day bot, who has recently been in the 3 test markets of Memphis, Tennessee Plano, Texas and Manchester, New Hampshire And finally, FedEx Ground 6 and newly announced 7 day delivery making every day a FedEx delivery day. We're already faster than the competition by at least one day in 26% of origin and destination lanes, And this will move further up the chain in terms of speed advantage in the months years to come. FedEx can handle millions of additional shipments generated by these new offerings without adding significant additional sortation capacity. It should be noted a large amount of ground growth will be short haul Zone 1 that will be lower yield, but with improved margin due to increasing density and minimal line haul cost. Our service capabilities and costs will be industry leading in this segment.
We believe by the end of FY 2020 next May, we will have significantly repositioned FedEx for strong future earnings. As the slide behind me shows, the market is changing as volumes are moving out of the United States Postal Service and we are in sourcing more. Assuming no recessions, we'll continue the initiatives announced in May June with confident optimism about FedEx's long term future competitive position and industry leadership. The next slide shows the significant correlation among our 3 core operating companies. Our ability to bundle express, ground and freight services is essential to success in our competitive ecosphere.
FedEx Office and FedEx Logistics also provide important value added services to our portfolio against our major competitors we face every day. Innovation, customer value and profitable future growth are driving every decision we make in the focus areas I've described, and they drive every decision we make at FedEx. I'd like to thank you for your time today. And with that, I'll open up the floor to any questions you might have. Seeing no questions, I will hereby adjourn the meeting, and thank you very