FedEx's Smith: Christmas 'Has Been Canceled'
FedEx chief executive Fred Smith stopped by The Post this afternoon for a chat with reporters and editors. Smith, a 10-percent owner of Washington's NFL team and whose company name adorns the stadium, was in town last night for the game against the Dallas Cowboys.
Smith, who founded Memphis's FedEx in 1971, touched on a number of topics during the hour-long talk. Here are some highlights:
-- "The economy is extremely weak. Christmas, as far as we can tell, has more or less been canceled."
-- The compensation of FedEx managers, including Smith's, is pegged to corporate profit. Last year, none of the execs got bonuses. That saved the company "hundreds of millions of dollars," he said.
-- FedEx has plans to convert its fuel-burning delivery vans to plug-in electric vehicles. Already, he said, FedEx has some 200 hybrid vans.
-- "You can slice it any way you want, but the reality is we would not be in Iraq and probably not Afghanistan if it were not for the country's dependence on oil."
-- FedEx is "like the plumbing to industrial America."
-- If he could change the one thing that he believes would help American businesses, it would be U.S. corporate tax policy. If the corporate tax rate could be lowered to, say, 25 percent, the U.S. could be more competitive with the rest of the world.
Further, he said, he would like to be able to allow faster write-offs. Smith gave the example of FedEx buying a 777 airplane from Boeing. That's a seven-year writedown, Smith said. "The best way to mitigate risk is to allow a company to get that money back quicker."
-- "I have never seen what the value is of the private-equity business."
-- He is no fan of mark-to-market accounting, which requires a company to value its assets at what they would fetch for sale on the market right now. Many financial institution balance sheets are sick right now because they are carrying troubled assets, such as mortgage-backed securities, for which no market exists. Therefore, they must record their value at fire-sale prices, hammering their books. Many would like to see the end of mark-to-market accounting.
"It is an ill-advised accounting convention and it came about because accountants got the devil sued out of them over Enron and other companies," Smith said.
To replace mark-to-market, Smith said, companies should value their assets on the intrinsic value of their underlying cash flow.
-- The next Energy Secretary should have a background in electricity, Smith said, possibly having run a utility.
By the way, here is a fascinating and entertaining video of air traffic controllers trying to beat a severe thunderstorm while guiding as many FedEx planes into the Memphis airport as possible. Watch them land the planes right up until the last minute and then park the remaining planes until the storm passes. And here is the entire U.S. showing the FedEx "anthill effect."
-- Frank Ahrens
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