FedEx executives announced terms Tuesday, Dec. 4, of an employee buyout expected to run from June 2013 through May 2014.
Employees in the Corporate, Express, Services and TechConnect divisions of FedEx in the U.S. with at least five years of continuous service at FedEx as of Nov. 30 will get buyout packets. Preference would go to those with the most seniority in their section if more employees in a section accept the offer than there are slots.
FedEx spokesman Glen Brandow said the company is not offering any numbers yet on how many employees it hopes will take the buyout or a dollar figure the company hopes to realize from the voluntary buyouts.
The employees eligible get the packets with the terms in February and have until April 1 to make their decisions.
Key terms include four weeks of base salary for every year of service with a cap at two years of base pay.
And the offer will include a $25,000 health care credit that can be used over five years including for insurance premiums.
The buyouts would take effect in three phases starting in the year that begins in June 2013 with FedEx management assessing how many take the terms in each phase and each work group and then adjusting accordingly.
There is not a fallback position that would revert to automatic layoffs if enough people don’t take the buyouts.
FedEx executives said in October that the buyout will cost the company approximately $600 million which would be split over two fiscal years. That was also when FedEx founder and CEO Fred Smith told investors that the company has set a goal of increasing its profitability by $1.7 billion a year. Most of that will come from reductions in FedEx Express.
The oldest division of FedEx, Express has been hit hard by the rise in jet fuel prices that have dramatically changed the nature of passenger airline business.
In the case of FedEx, those changes combined with customers who have been shifting over several years away from air delivery of goods. As that shift broadened into a slow down in economic growth in Europe and Asia this year, the FedEx front office reacted with the profitability goal at the annual investors day in October.