FedEx Bets Big on Employees With Tax Benefit

In the wake of the U.S. Tax Cuts and Jobs Act, many companies are using their tax benefit to invest in employees in the United States, and now FedEx Corp. (NYSE: FDX) is joining in too. The big names already pledging to invest in the United States include JPMorgan, Apple and Lowe’s. At this rate, even more companies will be looking to contribute as earnings season goes on.

As for FedEx, the company announced that it was committing more than $3.2 billion in wage increases, bonuses, pension funding and expanded U.S. Capital investment.

Keep in mind that the firm currently has a market cap of roughly $72 billion, making this investment roughly 4% of the total cap.

FedEx plans to offer over $200 million in increased compensation, about two-thirds of which will go to hourly team members, by advancing 2018 annual pay increases by six months to April 1 from the normal October date. The remainder will fund increases in performance-based incentive plans for salaried personnel.

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The company also plans a voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains — what management believes — one of the best-funded retirement programs in the country.

Finally, FedEx is investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub also will be modernized and enlarged in a major program the details of which will be announced later this spring.

Shares of FedEx traded at $267.45 Friday morning, with a consensus analyst price target of $282.65 and a 52-week range of $182.89 to $274.66.

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