FedEx founder's son to take reins at courier's express unit

This move boosts speculation that Mr Richard Smith, son of FedEx founder and CEO Fred Smith, may be in line for the company's top job. PHOTO: REUTERS

MEMPHIS (BLOOMBERG) - FedEx said Mr Richard Smith, son of founder and chief executive officer Fred Smith, will take over leadership of the FedEx Express division later this year, boosting speculation the younger Smith may be in line eventually for the company's top job.

Mr Richard Smith will succeed Mr Donald Colleran, 66, who is retiring after an almost 40-year career at FedEx, the Memphis-based company said on Thursday (March 10) in a statement.

Mr Smith, 44, currently regional president of the Americas and executive vice-president of global support, will become president and CEO-elect of FedEx Express on April 1 before assuming full duties on Sept 1.

His elevation may come as a surprise to some FedEx watchers and suggests a top role for him when his father eventually retires. The 77-year-old has been saying for at least two years that he is nearing the end of his four-decade tenure as CEO.

The elder Smith, who is also chairman, has recommended chief operating officer Raj Subramaniam as his successor. In FedEx's last full fiscal year, FedEx Express made up a bit more than 50 per cent of sales.

"With the outstanding executive management team we have in place to execute our strategy, including leaders like Richard, I am confident in the future of FedEx," Mr Subramaniam said in the statement.

FedEx was little changed after the close of regular trading in New York.

Mr Fred Smith has been overhauling his company and top management over the last couple of years to stem declining profit margins.

E-commerce packages, which are more costly to handle than commercial deliveries, have become the majority of deliveries and hold the most promise for growth. Mr Smith's changes, such as moving to seven-day service and focusing on small businesses, were designed to shift FedEx from being geared towards commercial deliveries.

"The elevation of (Richard) Smith to be president of FedEx Express makes a succession plan a little more interesting," said Mr Lee Klaskow, a Bloomberg Intelligence analyst. "We still see Raj as the clear No. 2 at least in the near term."

The changes at FedEx have also churned at management as well. Mr Henry Maier stepped down as chief of FedEx's ground unit in July and was replaced by Mr John Smith, who is not related to the founder and ran the company's freight unit. Mr Lance Moll took over at the freight arm.

Mr Subramaniam has had a quick rise through FedEx ranks. He went from being named chief of marketing and communications in 2017 to becoming the head of FedEx's Express unit two years later. Less than two months on the job at Express, the company then appointed Mr Subramaniam as chief operating officer after the abrupt departure of then COO David Bronczek. A month later in March 2019, Mr Colleran was named as chief of FedEx Express.

In a December 2019 interview, Mr Fred Smith said he has a formal succession plan that involves having two position-ready successors for 40 of the top executive jobs, including CEO. He has recommended to the FedEx board that Mr Subramaniam become CEO if he steps down from the position. That succession plan has not changed, according to a FedEx spokesman.

Mr Richard Smith joined the company in 2005 and worked his way up to the No. 2 executive at FedEx Express.

He played active roles in transporting personal protective equipment to the United States when the Covid-19 pandemic first hit two years ago as well as the vaccine roll-out at the end of 2020.

Mr Smith, who was born in Memphis where FedEx is headquartered, earned an undergraduate degree from George Washington University and a law degree from the University of Mississippi, according to FedEx's website.

The move increases the chances that he could challenge Mr Subramaniam down the road as Mr Fred Smith's successor, Bloomberg's Mr Klaskow said.

Mr Fred Smith is the largest shareholder of FedEx, with a stake of about 7.3 per cent, according to data compiled by Bloomberg. Still, the younger Smith would have to elevate his profile and build investor confidence to have a shot at the top job, Mr Klaskow said.

"Maybe by running one of its larger businesses, he might have that opportunity," Mr Klaskow said. "At the end of the day, investors just don't know him that well."

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