Fedex (FDX) Economic Moat Analysis50

Evidence

Following our one FedEx consolidation on June 1, 2024, Federal Express operates a unified, fully integrated air-ground express network under the respected FedEx brand.

MD&A / General: integrated air-ground network · Filed 18/12/2025

and Canada. Through Network 2.0, we continue to consolidate our sortation facilities and equipment, reduce pickup-and-delivery routes, and optimize our enterprise linehaul network by moving beyond discrete collaboration to an end-to-end optimized network.

Notes / Network 2.0: facility, equipment, route, and linehaul consolidation · Filed 20/07/2026

We have implemented Network 2.0 optimization in approximately 410 locations in the U.S.

Notes / Network 2.0: implemented locations · Filed 20/07/2026

Our ongoing network transformation, combined with a focus on structural cost reduction, enabled us to achieve over $1 billion in transformation-related savings.

Executive Compensation / Compensation Discussion and Analysis: reported transformation savings · Filed 17/08/2026

The following table presents segment information for the years ended May 31, 2026, May 31, 2025, and May 31, 2024 (in millions): 2026 2025 2024 Federal Express segment: Revenue $ 82,273 $ 75,304 $ 74,663 Operating expenses: Salaries and employee benefits 27,465 25,091 24,606 Purchased transportation 21,812 19,974 19,330 Rentals and landing fees 4,153 3,939 3,863 Depreciation and amortization 3,799 3,722 3,754 Fuel 3,565 3,316 4,137 Maintenance and repairs 2,906 2,799 2,848 Asset impairment charges 23 21 157 Separation and other costs 92 — — Business optimization costs 303 384 251 Intercompany allocations (charges) (853) (791) (684) Other 13,096 11,964 11,582 Total operating expenses 76,361 70,419 69,844 Operating income $ 5,912 $ 4,885 $ 4,819 -106- FEDEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2026 2025 2024 FedEx Freight segment: Revenue $ 8,795 $ 8,892 $ 9,429 Operating expenses: Salaries and employee benefits 3,991 3,865 3,923 Purchased transportation 807 807 877 Rentals 301 287 280 Depreciation and amortization 450 416 404 Fuel 485 457 571 Maintenance and repairs 314 332 330 Separation and other costs 492 — — Intercompany allocations (charges) 561 573 543 Other 778 666 680 Total operating expenses 8,179 7,403 7,608 Operating income $ 616 $ 1,489 $ 1,821 2026 2025 2024 Reconciliation of segment revenue: Total Federal Express and FedEx Freight revenue $ 91,068 $ 84,196 $ 84,092 Other revenues(1) 3,652 3,730 3,601 Total consolidated revenue $ 94,720 $ 87,926 $ 87,693 Reconciliation of segment operating income to income before income taxes: Total Federal Express and FedEx Freight operating income $ 6,528 $ 6,374 $ 6,640 Other operating loss(1) (1,065) (1,157) (1,081) Operating income 5,463 5,217 5,559 Interest, net (533) (426) (375) Other retirement plans, net 885 713 722 Other, net(2) (22) (63) (70) Total other (expense) income 330 224 277 Income before income taxes $ 5,793 $ 5,441 $ 5,836 (1)Revenue and operating loss from segments below the quantitative thresholds are attributable to operating segments contained within “Corporate, other, and eliminations.”

Notes / Business Segments: three-year revenue and operating income · Filed 20/07/2026

We face intense competition. The transportation and business services markets are both highly competitive and sensitive to price and service, especially in periods of little or no macroeconomic growth.

Risk Factors / Competition: price and service sensitivity · Filed 20/07/2026

We also compete with regional transportation providers that operate smaller and less capital-intensive transportation networks and startup companies that combine technology with flexible labor solutions such as crowdsourcing to focus on local market needs.

Risk Factors / Competition: smaller regional and startup networks · Filed 20/07/2026

For example, Amazon has established a network of hubs, aircraft, and vehicles, recently began offering an LTL freight service for inbound shipments to its distribution facilities, and recently began offering its internal delivery capabilities broadly to third parties.

Risk Factors / Competition: Amazon infrastructure and third-party expansion · Filed 20/07/2026

-91- FEDEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of future minimum lease payments under non-cancelable operating and finance leases with an initial or remaining term in excess of one year at May 31, 2026 is as follows (in millions): Aircraft and Related Equipment Facilities and Other Total Operating Leases Finance Leases Total Leases 2027 $ 130 $ 3,130 $ 3,260 $ 233 $ 3,493 2028 119 2,882 3,001 543 3,544 2029 112 2,469 2,581 218 2,799 2030 103 2,104 2,207 201 2,408 2031 103 1,733 1,836 110 1,946 Thereafter 296 7,845 8,141 609 8,750 Total lease payments 863 20,163 21,026 1,914 22,940 Less imputed interest (138) (3,659) (3,797) (400) (4,197) Present value of lease liability $ 725 $ 16,504 $ 17,229 $ 1,514 $ 18,743 While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

Notes / Leases: noncancelable future lease payments · Filed 20/07/2026

Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.

Notes / Commitments: limited ability to delay aircraft expenditures · Filed 20/07/2026

Revenue increased approximately 8% in fiscal 2026 primarily due to improved base yields for our package services, increased U.S.

Compensation Discussion and Analysis / Fiscal 2026 results: revenue growth and improved package base yields · Filed 17/08/2026

domestic package volumes, higher fuel surcharges and favorable exchange rates, partially offset by lower shipments at FedEx Freight.

Compensation Discussion and Analysis / Fiscal 2026 results: domestic package volume growth and other revenue drivers · Filed 17/08/2026

(“FedEx Logistics”). Operating Expenses The following table compares operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the periods ended February 28, 2026 and 2025: Three Months Ended Percent Nine Months Ended Percent 2026 2025 Change 2026 2025 Change Operating expenses: Salaries and employee benefits $ 8,819 $ 7,879 12 $ 25,276 $ 23,543 7 Purchased transportation 6,084 5,634 8 17,457 16,409 6 Rentals and landing fees 1,235 1,178 5 3,638 3,507 4 Depreciation and amortization 1,112 1,066 4 3,272 3,207 2 Fuel 856 889 (4) 2,618 2,911 (10) Maintenance and repairs 771 783 (2) 2,503 2,443 2 Separation and other costs 202 5 NM 460 5 NM Business optimization costs 65 179 (64) 162 633 (74) Other 3,508 3,255 8 10,415 9,624 8 Total operating expenses 22,652 20,868 9 65,801 62,282 6 Operating income $ 1,348 $ 1,292 4 $ 3,912 $ 3,424 14 Percent of Revenue Three Months Ended Nine Months Ended 2026 2025 2026 2025 Operating expenses: Salaries and employee benefits 36.7 % 35.6 % 36.3 % 35.8 % Purchased transportation 25.4 25.4 25.0 25.0 Rentals and landing fees 5.2 5.3 5.2 5.3 Depreciation and amortization 4.6 4.8 4.7 4.9 Fuel 3.6 4.0 3.8 4.4 Maintenance and repairs 3.2 3.6 3.6 3.7 Separation and other costs 0.8 — 0.7 — Business optimization costs 0.3 0.8 0.2 1.0 Other 14.6 14.7 14.9 14.7 Total operating expenses 94.4 94.2 94.4 94.8 Operating margin 5.6 % 5.8 % 5.6 % 5.2 % Salaries and employee benefits expense increased 12% in the third quarter and 7% in the nine months of 2026 primarily driven by higher variable incentive compensation, wage rates, and employee benefit expenses, and unfavorable exchange rate impacts.

MD&A / Operating Expenses: quarterly and nine-month margins and cost drivers · Filed 19/03/2026

We continue to execute on our revenue quality strategy through surcharge management and optimizing our customer and service mix, and aligning our cost base with demand.

MD&A / Outlook: surcharge management and customer and service mix · Filed 19/03/2026

We include estimated amounts of revenue, which may be reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Notes / Revenue Recognition: incentives and other contract provisions · Filed 20/07/2026

-6- Table of Contents FEDEX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN MILLIONS) Nine Months Ended February 28, 2026 February 28, 2025 Operating Activities: Net income $ 2,836 $ 2,444 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 3,272 3,207 Provision for uncollectible accounts 694 382 Other noncash items including leases and deferred income taxes 2,197 2,353 Stock-based compensation 136 116 Separation and other costs, net of payments 129 4 Business optimization costs, net of payments (129) 114 Changes in assets and liabilities: Receivables (1,090) (692) Other assets (241) (68) Accounts payable and other liabilities (2,144) (3,387) Other, net — 44 Cash provided by operating activities 5,660 4,517 Investing Activities: Capital expenditures (2,335) (2,582) Purchase of investments (427) (197) Proceeds from sale of investments 254 77 Proceeds from asset dispositions and other investing activities, net 73 42 Cash used in investing activities (2,435) (2,660) Financing Activities: Proceeds from debt issuances 4,689 — Principal payments on debt (714) (89) Proceeds from stock issuances 774 472 Dividends paid (1,028) (1,008) Purchases of common stock (796) (2,517) Other (49) (30) Cash provided by (used in) financing activities 2,876 (3,172) Effect of exchange rate changes on cash 85 (51) Net increase (decrease) in cash, cash equivalents, and restricted cash 6,186 (1,366) Cash, cash equivalents, and restricted cash at beginning of period 5,502 6,501 Cash, cash equivalents, and restricted cash at end of period $ 11,688 $ 5,135 The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows: nine months ended February 28, 2026 · Filed 19/03/2026

In the fourth quarter of 2026, we made the decision to permanently retire from service 10 aircraft, resulting in a noncash impairment charge of $23 million ($18 million, net of tax, or $0.08 per diluted share).

MD&A / Asset Impairment Charges: actual aircraft retirements · Filed 20/07/2026

The Company also successfully completed the separation of FedEx Freight into an independent, publicly traded company.

Chairman and Lead Independent Director letter: completed Freight separation · Filed 17/08/2026

This transaction resulted from a strategic review initiated by the Board nearly two years earlier and was completed on time and on budget.

Chairman and Lead Independent Director letter: reported separation timing and budget · Filed 17/08/2026

Vesting Stock options and restricted stock granted to executive officers in fiscal 2026 vest ratably over four years beginning on the first anniversary of the grant date.

Compensation Discussion and Analysis / Vesting: executive equity awards · Filed 17/08/2026

The table below sets forth the target value and number of restricted stock awards awarded on June 26, 2025, and the target value and number of performance stock units awarded on September 29, 2025 to the named executive officers pursuant to the Equity Incentive Industry Leadership Program: ​ ​ ​ ​ RESTRICTED STOCK ​ ​ PERFORMANCE STOCK UNITS ​ ​ NAME ​ ​ TARGET VALUE ($) ​ ​ NUMBER OF SHARES ​ ​ TARGET VALUE ($) ​ ​ TARGET NUMBER OF SHARES ​ ​ R.

Compensation Discussion and Analysis: actual restricted stock and PSU award dates · Filed 17/08/2026

​ The payout for the PSUs will be determined based on the number of basis points by which fiscal 2028 adjusted consolidated operating margin (excluding the FedEx Freight segment, if applicable) exceeds fiscal 2025 adjusted consolidated operating margin (excluding the FedEx Freight segment), as follows: ​ PAYOUT ​ ​ ADJUSTED CONSOLIDATED OPERATING MARGIN IMPROVEMENT ​ ​ 0% ​ ​ Less than 100 basis points ​ ​ 25% (Threshold Payout) ​ ​ 100 basis points ​ ​ 50% ​ ​ 200 basis points ​ ​ 100% (Target Payout) ​ ​ 300 basis points ​ ​ 150% (Maximum Payout) ​ ​ Greater than or equal to 400 basis points ​ The PSUs will conditionally vest on December 31, 2028 subject to the achievement of the performance metric discussed above and accrue dividend equivalent rights that are reinvested in additional PSUs.

Compensation Discussion and Analysis: PSU performance thresholds and conditional vesting · Filed 17/08/2026

Return on invested capital (“ROIC”) was selected as a financial metric for the FY24-FY26, FY25-FY27, and FY26-FY28 LTI plans (the “Active LTI Plans”).

Appendix C: ROIC metric in active long-term incentive plans · Filed 17/08/2026

Beginning in fiscal 2024, the impact of stock repurchases in excess of that which offset dilution from equity awards was not excluded from EPS for LTI plan purposes.

Appendix C: treatment of repurchase effects in incentive EPS · Filed 17/08/2026

​ NAME AND PRINCIPAL POSITION ​ ​ YEAR ​ ​ SALARY ($) ​ ​ BONUS ($)(1) ​ ​ STOCK AWARDS ($)(2) ​ ​ OPTION AWARDS ($)(2) ​ ​ NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(3) ​ ​ CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(4) ​ ​ ALL OTHER COMPENSATION ($)(5) ​ ​ TOTAL ($) ​ ​ Rajesh Subramaniam President and Chief Executive Officer (Principal Executive Officer) ​ ​ ​ ​ 2026 ​ ​ ​ ​ ​ 1,550,000 ​ ​ ​ ​ ​ 1,900,000 ​ ​ ​ ​ ​ 6,731,364 ​ ​ ​ ​ ​ 3,715,062 ​ ​ ​ ​ ​ 10,593,500 ​ ​ ​ ​ ​ 516,026 ​ ​ ​ ​ ​ 2,548,066 ​ ​ ​ ​ ​ 27,554,018 ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ 1,483,333 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,252,030 ​ ​ ​ ​ ​ 3,712,832 ​ ​ ​ ​ ​ 3,422,321 ​ ​ ​ ​ ​ 386,862 ​ ​ ​ ​ ​ 1,616,313 ​ ​ ​ ​ ​ 12,873,691 ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ 1,400,000 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,251,868 ​ ​ ​ ​ ​ 3,712,797 ​ ​ ​ ​ ​ 3,112,760 ​ ​ ​ ​ ​ 247,803 ​ ​ ​ ​ ​ 1,657,279 ​ ​ ​ ​ ​ 12,382,507 ​ ​ ​ John W.

Summary Compensation Table: CEO compensation for fiscal 2024–2026 · Filed 17/08/2026

The Board is committed to good corporate governance practices and believes that this proposal should be evaluated in the context of such commitment, which is evidenced by the following practices: Annual director elections; ​ Majority voting standard for election of directors in uncontested elections; ​ 75% of Board members are independent directors (9 of 12); ​ Separate Chairman of the Board and CEO, and Lead Independent Director; ​ No supermajority vote requirements; ​ Proxy access right; ​ No stockholder rights plan; and ​ Proactive year-round engagement with stockholders, providing them the opportunity to raise important matters outside the annual meeting process.

Stockholder Proposals / Board response: existing governance practices · Filed 17/08/2026

Board and Compensation and HR Committee approved an Executive Severance Plan, effective July 20, 2026, which will apply to future executive officer separations.

Stockholder engagement: severance plan approved effective July 20, 2026 · Filed 17/08/2026

domestic package volumes and favorable exchange rates, partially offset by international export volume decreases due to ongoing effects of global trade policies, and the expiration of our contract with the USPS.

MD&A / Revenue: international export volume decline and USPS contract expiration · Filed 18/12/2025

As discussed elsewhere in this proxy statement, on June 1, 2026 we completed the Spin-Off.

Summary Compensation Table introduction: June 1, 2026 completed spin-off · Filed 17/08/2026

Publication history

Sources

• filing-1 · Filed 20/07/2026
• filing-2 · Filed 19/03/2026
• filing-3 · Filed 17/08/2026
• filing-4 · Filed 21/07/2025
• filing-5 · Filed 15/07/2024
• filing-6 · Filed 18/12/2025