While his company is busy shipping more than 15 million packages a day, Jeff Lewis is in charge of delivering something else: a comfortable retirement for FedEx’s hundreds of thousands of employees.
Lewis is the Staff Vice President for Retirement Investments at FedEx, overseeing all of the investment managers for the corporation's defined benefit (DB) and defined contribution (DC) plans. It’s no small task given not only the sheer number of employees, but also the geographical footprint of the company, which delivers to more than 220 countries and territories around the world.
PGIM recently spoke with Lewis from FedEx’s corporate headquarters in Memphis to get his take on some of the major challenges he comes across in his role, his thoughts on the DC regulatory climate, the role of ESG and diversity in today’s investment environment, and plenty more.
How did you get involved in the finance industry?
It was what I’d call a traditional but maybe not so traditional path. Early in my career I did a summer equity research internship during business school, and ended up at Goldman Sachs in their Private Wealth arm. But right after 9/11, I took a break from the finance industry for several years. After that, I knew I still liked finance and that I liked analytics, but I didn’t want to be on the sell-side anymore. So, I took a job within FedEx’s finance group at one of our operating companies. I was always reluctant to take a job at a large company because I was worried about just being a cog in the machine, but one thing I discovered early on was that I really liked FedEx. Then, after the financial crisis in 2008, I found out we had a role open in our retirement investments group and I’ve been leading it since 2009.
What would you says is the biggest challenge in your role?
I’m less concerned about day-to-day movements than I am about thinking how we are going to be better two, three, even five years down the road. But the biggest concern, broadly speaking, is how do we protect the funded status of the pension plan in such a low-rate environment, and making sure we have the right structure in our DC plan. The other thing is maintaining consistency in our international plans over time. We operate in dozens of countries and we have large plans in some of those jurisdictions.
You were recently in attendance at one of PGIM’s events from our ‘Best Ideas’ series to discuss the importance of generating income within defined contribution plans. Can you talk about where you currently see the industry on that front?
We’re fortunate at FedEx that our DB plan is still open, so we know that if an employee spends some amount of time at the company, he or she either gets a lump-sum payout or can annuitize that. So we produce income through the pension, which takes a little of the pressure off. That being said, we spend a decent amount of time thinking about what we can do for our participants in the decumulation phase. And to be fair, I don’t think the industry is there yet. Part of it is regulatory – we don’t have a safe harbor for annuities, so that’s off the table for now. We think a combination of target date funds, income fund options and providing participants with some sort of advice service is the right way to go. We think it gives the majority of our participants a good sense of what he or she can do.
What role does inclusion and diversity play in your business?
What I try to look for is diversity of thought. We really emphasize that we want discussion and debate, and people who think differently. Everyone on my team has different perspectives, and we all approach problems differently. It’s not just the CIO saying, ‘OK, here are your marching orders, go do this.’ It’s more about identifying the best solution by putting our collective thoughts together, because we all have diverse experiences and backgrounds.
Jeff Lewis, CFA
Staff Vice President – Retirement Investments, FedEx Corp.
B.A. in Economics and History, Dartmouth College
MBA, University of North Carolina at Chapel Hill
Bolton Investment Group, Goldman Sachs
Environmental, social and governance (ESG) factors have become a much more prominent piece of the investment landscape in recent years. What has your experience been in that area?
ESG is something that has really come up on our radar recently. For starters, at the company level we are asked all the time how we are doing. We’re a fossil-fuel-intensive business; planes don’t fly on solar power. But we also really see it in our non-U.S. plans in that you have certain jurisdictions where you have to write ESG criteria into the investment policy statement. We’ve taken a jurisdiction by jurisdiction view about how intensively we currently focus on it, and we may consider putting in an ESG option in our 401k plans sometime in the future.
I would also say we’re really trying to understand exactly what ESG means. It means different things to different people – we want to consider it, but it also has to make investment sense. A lot of times we see people throw out ESG metrics, but it might not work from an investment perspective. You start with the investment rationale and then you add on an ESG overlay. But it’s thought of a lot differently around the world.
At PGIM, we are very focused on long-termism. How do you think about your business from that perspective?
We try to do much of our work on the front end. We have a fairly concentrated manager roster for a plan that is about $25 billion. We really do pride ourselves on having long-term relationships with our investment managers. We’ve had some of them with us since 1996 – obviously they have to perform and keep performing, but we really look to hire managers that will be with us not just next year, but 15 years down the road.
We also very rarely shift our strategic asset allocation. We review things on an annual basis to be certain we’re doing what we believe to be correct, and we may change small parts under the hood, but we’re very focused on getting things right on the front end. It’s a credit to our investment board, where we’ve had very little turnover. We don’t have to educate new people every three or four years, and we meet monthly so there’s a lot of focus on our plans.
The relationship between the U.S. and China has been a major focus of investors lately. Any thoughts on that?
At FedEx we see the benefits of trade for our customers every day. FedEx Express launched its international delivery service to China in 1984, and we have a long history of serving the China market. We would like to see more trade between the U.S. and China, not less, and we hope both parties can agree on a framework that addresses the outstanding issues and sets the relationship on a more positive footing going forward. We are long-time advocates for increased global trade and are committed to lowering trade barriers around the world so our customers can reach new markets and grow their businesses.
What worries keep you up at night?
Funded status of the plan is our first priority. The second thing is whether our sectors and our managers are behaving as we expect. We’re monitoring our managers regularly, but we’re not an invasive asset allocator, and we do pretty good dashboarding with our plans. The key metrics we look at are our funded status, funded status volatility, rate of return, contributions versus benefit payments and projected risks in the portfolios.
Your job no doubt keeps you busy. What do you like to do to unwind outside of the office?
The short answer is whatever my children are doing. My son plays competitive soccer and I think the next 10 weekends are tied up with that. It’s also important to me that I give back to the community, which has been ingrained in me going back to high school. I sit on some nonprofit boards, both as a member or in a leadership position, and my wife does too. So we’re active in the community and active with our children. Occasionally we even get to go on a vacation!
More About Vantage Point
PGIM’s Vantage Point Series is written for C-level executives and is intended to offer a glimpse into the issues that are important to these decision makers. The stories look at the challenges facing CIOs and the industry trends they see as most vital, along with a broader range of topics relevant to institutional investors. For more information about the series, or to be featured in an upcoming installment, please contact IRG.