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FedEx May Be Leaving Clues To A Managerial Succession Plan

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FedEx May Be Leaving Clues To A Managerial Succession Plan

UBS analyst Thomas Wadewitz believes the recent management changes in FedEx Corporation (NYSE: FDX) is an indication of a logical managerial succession plan. However, the analyst has not changed his Buy rating nor the price target of $215 on the company's shares.

On Monday, the company revealed the retirement of Michael Glenn as its executive vice president for market development and corporate communications — effective December 31. The transportation firm indicated that David Bronczek, CEO of FedEx Express, would become president and chief operations officer of FedEx from January 1, 2018. He would also become the revenue management committee chairman from January replacing Glenn.

The brokerage viewed this development as a pointer to the possibility of Bronczek succeeding Fred Smith as the CEO of the transport service provider.

Related Link: Barclays Reiterates FedEx As A Top Pick Following Q1 Results

As far as the replacement for Glenn, Wadewitz does not see the company filling up the position immediately. He pointed out that the management rejig in the unit with Rob Carter, current CEO of FedEx Services, would become the sole CEO of the unit. Other two key persons, Rajesh Subramanian and Donald Colleran, would join the strategic management committee.

In a research note, the brokerage said, "Although these adjustments point to a potential FedEx Corp. CEO succession plan, our sense is that Mr. Smith may continue to lead the company in the CEO role at least through completion of the integration of TNT Express; and thereafter as Chairman. Last year the mandatory retirement age for FedEx's Board was extended to 75 from 72. Fred Smith is currently 72 years old, and Dave Bronczek is 62 years old."

The stock was seen trading at $176.90, up 0.89 percent on the day, at time of publication.

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Latest Ratings for FDX

DateFirmActionFromTo
Sep 2020Deutsche BankUpgradesHoldBuy
Sep 2020StifelUpgradesHoldBuy
Sep 2020UBSMaintainsBuy

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