Relative Total Shareowner Return RTSR is the total return on an investment in UPS stock (stock price appreciation plus dividends). Total return is compared with the total return on the stock ofan investment in the companies in the Index at the beginning of the performance period. Following the completion of the performance period, the Committee will certify the Company’s RTSR and the payout modifier for that performance period, if any, as follows: | | | | | | RTSR Percentile Rank Relative to Index | Payout Modifier | Above 75th percentile | +20% | Between 25th and 75th percentile | None | Below 25th percentile | -20% |
20202021 LTIP Award Payout
The 20202021 LTIP award payout was determined following the completion of the Company’s 20222023 fiscal year. The performance metrics for the 20202021 LTIP award were adjusted earnings per share and adjusted free cash flow, each evaluated independently and equally weighted. The final payout was subject to modification based on RTSR. For the 2020 LTIP award, which was granted in the first quarter of 2020, the Committee considered the economic impact and uncertainty resulting from the coronavirus pandemic, including the challenges around longer-term forecasting. After discussions with management and the Committee’s independent compensation consultant, the Committee bifurcated the performance period for the 2020 LTIP award into two separate performance periods.
In February 2020, the Committee approved performance goals for a one-year period from January 1, 2020 through December 31, 2020 (the “2020 performance period”), and in March 2021 the Committee approved performance goals for a two-year period from January 1, 2021 through December 31, 2022 (the “2021-2022 performance period”), with the 2020 performance period accounting for 20% of the overall award and the 2021-2022 performance period accounting for 80% of the overall award. Performance targets and actual results for the completed performance period for the 20202021 LTIP award are set out below. RPUs awardedearned under the 20202021 LTIP are considered earned and vested and are settled in shares of class A common stock.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 LTIP Metrics | | Adjusted Earnings Per Share | | Adjusted Free Cash Flow | | RTSR | Year | Threshold | Target | Maximum | Actual | | Threshold | Target | Maximum | Actual | | Actual | 2021 | 3.4% | 8.4% | 13.6% | 47.4% | | $17,369 | $24,813 | $32,257 | $25,181 | | 27th | 2022 | 9.0% | 6.7% | | | 2023 | 13.2% | (32.1)% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 LTIP Metrics | | Adjusted Earnings Per Share(1) | | Adjusted Free Cash Flow(2) | | RTSR | Year | Threshold | Target | Maximum | Actual | | Threshold | Target | Maximum | Actual | | Actual | 2020 | $1.56 | $4.72 | $6.28 | $8.16 | | $2,653 | $3,790 | $4,927 | $7,668 | | 92nd | 2021 | 2.9% | 8.7% | 11.6% | 47.4% | | $11,327 | $16,182 | $21,037 | $19,927 | | 45th | 2022 | 6.7% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 LTIP Final Results | Performance Period | Adjusted EPS Payout | Adjusted FCF Payout | Performance Payout (Avg) | RTSR Modifier | Result | | Weighting | | Payout | 2020 | 200% | 200% | 200% | + 20% | 220% | x | 20% | = | 44% | 2021-2022 | 141% | 177% | 159% | 0% | 159% | x | 80% | = | 127% | Final Payout | | | | | | | | | 171% |
(1)For 2021-2022, growth in adjusted earnings per share is measured annually, with payout maximized if growth of at least 11.6% is achieved in that year. The final result is an average of the outcomes within the performance period. This method may result in a higher or lower payout than a compound growth calculation, depending upon performance in each of the individual years.
(2)For 2021-2022, adjusted free cash flow is measured on a cumulative basis. | | | | | | | | | | | | | | | | | | 2021 LTIP Final Results | Performance Period | Adjusted EPS Payout | Adjusted FCF Payout | Performance Payout (Avg) | RTSR Modifier | Final Payout | 2021-2023 | 91% | 104% | 98% | —% | 98% |
Stock Option Program and 20222023 Stock Option Awards Stock option awards create a direct link between Company performance and shareowner value, as well as provide retention value. Stock option awards generally vest 20% per year over five years and expire ten years from the date of grant. Beyond vesting periods, we do not impose additional holding period requirements. Stock option awards generally require continued employment during the vesting period. Unvested stock options vest automatically upon termination of employment due to death, disability or retirement. Stock option awards are | | | | | | | | | 40 | | Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
also subject to the UPS Key Employee Severance Plan as discussed under “Potential Payments Upon Termination or Change in Control”. Grants do not include DEUs or reload features. The number of stock options granted to the NEOs in 20222023 is shown in the “Grants of Plan-Based Awards” table.
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| | | Employment Transition Awards, Retention Arrangements and Recognition Awards |
Generally, we do not pay discretionary bonuses in cash or stock, or make other discretionary payments, to our executives. In recent periods, however, to attract and retain senior executive talent, the Committee approved certain limited payments to external executives hiredhires to the Company’s Executive Leadership Team. A portion of thethese payments to the external hires was made to compensate the executives for compensation forfeited at their prior employers and transition them into our incentive programs. Any of these payments impacting 2023 compensation are described below. In addition, in connection with the hiring of Carol Tomé as CEO in 2020, the Committee provided certain incentives to various executive officers in order to help ensure the retention of their services through a transition period. Bala Subramanian joined the Company in July 2022 as Chief Digital and Technology Officer. The Committee, working with FW Cook and considering benchmarkingmarket compensation data and internal pay equity factors, approved his compensation package described below. Under the terms of his employment offer letter, Bala wasis entitled to: (i) a RSU grant valued at $3,000,000, vesting 50% in July 2023 and 50% in July 2024; (ii) cash transition payments of $250,000 in each of August 2022, January 2023, July 2023 and January 2024; (iii) a RPU grant valued at $1,000,000, vesting in December 2023, with the actual payout determined based on the Company’s performance under its 2021 LTIP program; and (iv) a prorated 2022 LTIP award. Payments are subject to his continued employment through the applicable vesting or payment dates, or termination without cause. Further, in 2021 the Committee granted Kate Gutmann a special award valued at $350,000 in recognition of her extraordinary contributions and performance during 2020. This award consisted of $175,000 $175,000 in RSUs which vest as follows: 25 percent on March 25, 2022; 25 percent on March 25, 2023; and 50 percent on March 25, 2024; and a stock option award with a grant date fair value of $175,000 which vests 20% per year over five years beginning on March 25, 2022, provided generally that she remains an employee through the applicable vesting dates.
In connection with our 2020 CEO transition, we entered into retention arrangements with each of Nando Cesarone and Kate Gutmann. The Committee initially intended that these agreements contain both performance and time vesting components, and that the performance components be different than the metrics under our MIP and LTIP programs. Due to the uncertainty created by the coronavirus pandemic and the importance of the retention agreements to the Company, the Committee ultimately determined that the awards would only be time based. Nando and Kate each received RSUs valued at $3.0 million which generally vestvested as follows: 25% on May 13, 2021, 25% on May 13, 2022 and 50% on May 13, 2023, provided they remain employed through the applicable vesting date.2023. These agreements contain customary non-competition, non-solicitation and non-disclosure covenants in favor of the Company. Under the terms of his 2019 employment offer letter, Brian Newman was entitled to: (i) a grant of RSUs with a value of $5,500,000, which vested in March 2020; (ii) a performance-based cash award with a target value of $3,000,000, payable in equal installments in March 2021 and March 2022, with the actual payout equal to the Company’s LTIP payout percentage based on the Company’s performance under the LTIP for periods ending December 31, 2020 and December 31, 2021, respectively; and (iii) a cash transition payment of $600,000 paid in March 2020.
The benefits and perquisites provided to our NEOs are not a material part of executive compensation and are largely limited to those offered to our employees generally, or that we otherwise believe are necessary or appropriate to attract and retain executive talent. We believe certain perquisites help facilitate our NEOs’ ability to carry out their responsibilities, maximize working time and minimize distractions. Additional information on these benefits can be found in the following program descriptions. UPS 401(k) Savings Plan The UPS 401(k) Savings Plan is open to all U.S.-based employees who are not subject to a collective bargaining agreement and who are not eligible to participate in another savings plan sponsored by UPS or one of its subsidiaries. We generally match 50% of up to 5%6% of eligible pay contributed to the UPS 401(k) Savings Plan for eligible employees hired on or before December 31, 2007, 100% of up to 3.5% of eligible pay contributed to the plan for eligible employees hired on or after January 1, 2008, and 50% of up to 6% of eligible pay contributed to the plan for employees hired on or after July 1, 2016.employees. The match is paid in shares of class A common stock. For newly eligible plan participantsquarterly according to the participant's pre-tax investment elections on or after July 1, 2016, wefile with the record keeper. We also generally provide a Retirement Contributionan annual contribution based on years of service and expressed as a percentage of eligible compensation (5% for 0-4 years, 6% for 5-9 years, 7% for 10-14 years and 8% for 15 or more years). For employees who were hired prior to 2008 and are participants in the Final Average Compensation (FAC) formula of the UPS Retirement Plan, we generally make an annual transition contribution of 5% of eligible compensation for plan years 2023-2027, which will increase to 7% beginning in 2028.
Qualified and Non-Qualified Pension Plans Certain executive officers are eligible to participate in our qualified retirement program, the UPS Retirement Plan. Benefits payable under the plan are subject to the maximum compensation limits and the annual benefit limits for a tax-qualified defined benefit plan as established by the Internal Revenue Service. Amounts exceeding these limits are paid pursuant to the UPS Excess Coordinating Benefit Plan, which is a non-qualified restoration plan designed to replace the benefits limited under the tax-qualified plan. Without the Excess Coordinating Benefit Plan, the executive officers would receive a lower benefit as a percent of final average earnings than the benefit received by other participants in the UPS Retirement Plan. In accordance with the terms of the Excess Coordinating Benefit Plan, following a participant’s retirement, the Company pays an amount equal to the Social Security and Medicare taxes due on the present value of the benefits provided under the plan. Financial Planning Services Our executive officers are eligible for a financial services benefit. The Company reimburses fees from financial and tax service providers up to $15,000 per year, including the cost of personal excess liability insurance coverage. Executive Health Services Our executive officers are eligible for certain executive health services benefits, including comprehensive physical examinations. UPS’s business continuity is best facilitated by avoiding any prolonged or unexpected absences by members of its senior management team. | | | Other Compensation and Governance Policies |
Stock Ownership Guidelines | | | | | | CEO | = 8x annual salary | Other Executive Officers | = 5x annual salary | Directors | = 5x annual retainer |
Our stock ownership guidelines apply to executive officers and members of the board. Shares of class A common stock (excluding any pledged shares), deferred units and vested and unvested RSUs and RPUs awarded under our equity incentive plans are considered owned for purposes of calculating ownership. Executive officers and directors are expected to reach target ownership within five years of the date that the executive officer or director became subject to the guideline. As of December 31, 2022,2023, all of the NEOs who have been subject to the guidelines for at least five years exceeded their target stock ownership. In addition, all non-employee directors who have been subject to the guidelines for at least five years exceeded their target stock ownership. RSUs are required to be held by non-employee directors until separation from the board. Hedging and Pledging Policies We prohibit our executive officers and directors from hedging their ownership in UPS stock. Specifically, they are prohibited from purchasing or selling derivative securities relating to UPS stock and from purchasing financial instruments that are designed to hedge or offset any decrease in the market value of UPS securities. Additionally, we prohibit our directors and executive officers from entering into pledges of UPS securities, including using UPS securities as collateral for a loan and holding UPS securities in margin accounts. Furthermore, our employees, officers and directors are prohibited from engaging in short sales of UPS stock. Incentive-Based Compensation Clawback PoliciesPolicy Our incentiveWe have adopted an incentive-based compensation plans contain clawback provisions applicable to all outstanding awards. Ifpolicy that complies with NYSE requirements. This policy provides for the Committee determines that financial results used to determinerecovery of the amount of any award are materially restated, and thaterroneously awarded incentive-based compensation received by executive officers when the Company is required to prepare an executive officer engagedaccounting restatement, subject to limited exceptions in fraud or intentional misconduct, the Committee is entitled to seek repayment or recovery of the award from that executive officer. In connectionaccordance with the SEC’s recent rulemaking related to clawback policies, we expect to review and consider changes to our clawback provisions.NYSE requirements.
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Employment and Severance Arrangements; Change in Control Payments UPS has created a culture where long tenure for executives is the norm. Consequently, weWe do not enter into agreements providing for the continuation of employment, or separate change in control agreements with any of our executive officers, including our NEOs, or other U.S.-based non-union employees.
However, in recent periods, to attract and retain senior executive talent and in furtherance of the board’s succession planning efforts, we have entered into various employment offer letters, transition agreements, retention arrangements and non-compete agreements in favor of UPS. These arrangements may provide for compensation to an executive, but do not guarantee an employment term; employment is on an at-will basis. Some of the agreements were designed to compensate the | | | | | | | | | 46 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
individuals for compensation forfeited at their prior employers, to transition them into our incentive programs or to provide consideration for their agreement not to compete with UPS following their potential separation. In addition, retention arrangements are intended to incentivize those individuals to maintain their employment with UPS. To the extent any agreements entered into with any of the NEOs contain ongoing obligations of the Company, those agreements are described below. Subramanian Employment Offer LettersLetter In connection with his appointment as Chief Digital and Technology Officer, on May 24, 2022, the Company entered into an employment offer letter with Bala Subramanian providing for: (i) an annual base salary of $725,000 (subject to future increase); (ii) a MIP award target for 2022 of 130% of base salary; (iii) an LTIP program award target of 450% of base salary (his final 2022 LTIP award payout will be prorated based on his July 2022 start date); (iv) a stock option grant target of 50% of base salary (commencing in 2023); (v) an initial grant of RSUs valued at $3,000,000, which generally vests 50% in July 2023 and 50% in July 2024; (vi) cash transition payments of $250,000 in each of August 2022, January 2023, July 2023 and January 2024; and (vii) an initial RPU grant valued at $1,000,000, generally vesting in December 2023, with the final number of RPUs subject to performance under the 2021 LTIP award. Payments are subject to his continued employment through the applicable vesting or payment dates, or termination without cause. Certain of these amounts are subject to repayment on a prorated basis if he is terminated for cause within 36 months following his July 2022 start date. In connection with her appointment as Chief Executive Officer, on March 11, 2020, the Company entered into an employment offer letter with Carol Tomé which set out the terms of her initial compensation as previously disclosed. In connection with his appointment as Chief Financial Officer, on August 7, 2019, the Company entered into an employment offer letter with Brian Newman which set out the terms of his initial compensation as previously disclosed.
Protective Covenant Agreements Bala Subramanian, Carol Tomé and Brian NewmanEach of our NEOs have entered into protective covenant agreements with the Company, which protect UPS’s confidential information and include non-competition and non-solicitation covenants in favor of UPS. In the event that either Carol or Brian is terminated without cause, the Company is obligated to make separation payments equal to two years’ salary if it elects to enforce the post-termination non-compete covenants.
Under the terms of retention arrangements with Nando Cesarone and Kate Gutmann, each entered into customary non-competition, non-solicitation and
non-disclosure agreements in favor of the Company. If either of them is terminated without cause or resigns for “good reason”, their RSU awards will continue to vest on the schedule above.
Key Employee Severance Plan In May 2022, the Committee approved theThe UPS Key Employee Severance Plan (the “Plan”). The Plan provides for severance compensation and benefits upon certain terminations of employment of key employees, including the NEOs. The severance protections under the Plan replace cash severance benefits (if any) to which a participating employee would have otherwise been entitled under their protective covenant agreements.
The Plan in general provides that if the Company terminates a participant’s employment other than due to “Cause,” “Disability Termination,” or death (a “Qualifying Termination”), the Company will pay: (i) an amount in cash equal to a pro-rata portion of the individual’s annual performance incentive award under the MIP that would have been earned for the year of termination, based on actual performance for the full performance period, with the pro-rata portion calculated based on the number of months during which the individual was employed by the Company during the applicable year; (ii) an amount in cash equal to one times (or, for the CEO, two times) the sum of the participant’s annual base salary plus the participant’s target MIP performance award in effect as of the termination date; (iii) ifan amount in cash equal to the participant timely and properly elects continuation coverage underportion of the participant’s monthly Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), payment of the portion of their monthly COBRA premium for the participant and the participant’s dependents thatto the extent it exceeds the premiums paid by the participant for such coverage immediately prior to termination for up to 18times the number of months following termination, or, in certain circumstances, an equivalent benefit (subject to certain tax-based limitations);the participant’s applicable COBRA period; and (iv) career counseling services up to $20,000 (or, for the CEO, up to $30,000). In addition, with respect to options held by retirement eligible employees, and RPUs granted under the MIP or LTIP, in each case granted on or after the effective date of the Plan, a participant who experiences a Qualifying Termination will generally be entitled to the same treatment that would apply in the event of “retirement” under the terms of such awards. With respect to stock options granted to a participant on or after the effective date of the Plan, such stock options (to the extent the participant is not retirement eligible and that are vested as of the date of the Qualifying Termination) will remain exercisable until the earlier of the first anniversary of the termination date and the original expiration date of the stock options.
Change in Control All outstanding equity awards that are continued or assumed by a successor entity in connection with a change in control require a “double trigger” for
vesting to accelerate; that is, they also require a qualifying termination of employment prior to any acceleration of vesting. Equity Grant Practices Grants of awards to executive officers under our equity incentive programs are approved by the Committee. Grants are typically made at preestablished Committee meeting dates or in connection with a new hire or promotion, and irrespective of the timing of any financial announcement. Stock options have an exercise price equal to the NYSE closing market price on the date of grant. | | | Consideration of Previous “Say on Pay” Voting Results |
Our shareowners vote annually, on an advisory basis, to approve the compensation of our NEOs as set out in the Compensation Discussion and Analysis section and in the compensation tables and accompanying narrative disclosure in the Proxy Statement. See “Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation.” In the most recent advisory vote to approve NEO compensation, taken at the 20222023 Annual Meeting of Shareowners, nearly 92% of votes cast approved our NEO compensation.
The Committee carefully considered the results of this vote as well as many other factors in determining the structure and operation of our executive compensation programs. In addition, we regularly engage with our stakeholders, including on executive compensation matters. We use the results of these engagements to inform board and Committee discussions on our executive compensation policies and programs. | | | | | | | | | 4844 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
20222023 Summary Compensation Table
The following table sets forth the compensation of our NEOs. | Name and Principal Position | Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | Carol Tomé Chief Executive Officer | Carol Tomé Chief Executive Officer | 2022 | 1,466,250 | — | 15,046,968 | 1,228,547 | 1,035,932 | — | 187,504 | 18,965,201 | Carol Tomé Chief Executive Officer | 2023 | 1,509,713 | — | 18,916,192 | 1,358,762 | 1,509,713 | — | 95,671 | 23,390,051 | 2021 | 1,336,251 | — | 23,670,426 | 1,125,023 | 1,397,139 | — | 92,054 | 27,620,893 | 2022 | 1,466,250 | — | 15,046,968 | 1,228,547 | 1,035,932 | — | 187,504 | 18,965,201 | 2020 | 729,169 | — | 1,833,812 | 1,125,010 | — | 84,919 | 3,772,910 | 2021 | 1,336,251 | — | 23,670,426 | 1,125,023 | 1,397,139 | — | 92,054 | 27,620,893 | Brian Newman Chief Financial Officer | Brian Newman Chief Financial Officer | 2022 | 784,377 | — | 5,563,543 | 382,755 | 364,363 | — | 94,203 | 7,189,241 | Brian Newman Chief Financial Officer | 2023 | 831,626 | — | 5,551,095 | 406,692 | 481,692 | — | 70,965 | 7,342,070 | 2021 | 760,764 | — | 10,934,230 | 373,401 | 3,128,793 | — | 56,690 | 15,253,878 | 2022 | 784,377 | — | 5,563,543 | 382,755 | 364,363 | — | 94,203 | 7,189,241 | 2020 | 741,321 | 600,000 | 991,596 | 362,505 | 2,555,238 | — | 96,784 | 5,347,444 | 2021 | 760,764 | — | 10,934,230 | 373,401 | 3,128,793 | — | 56,690 | 15,253,878 | Nando Cesarone President U.S. and UPS Airline | Nando Cesarone President U.S. and UPS Airline | 2022 | 768,042 | — | 4,348,893 | 351,117 | 364,278 | — | 107,812 | 5,940,142 | Nando Cesarone President U.S. and UPS Airline | 2023 | 840,254 | — | 4,686,065 | 407,924 | 487,837 | — | 99,161 | 6,521,241 | 2021 | 683,361 | — | 7,218,244 | 313,487 | 475,914 | — | 98,089 | 8,789,095 | 2022 | 768,042 | — | 4,348,893 | 351,117 | 364,278 | — | 107,812 | 5,940,142 | 2020 | 606,495 | — | 3,699,097 | 163,548 | 357,008 | — | 60,728 | 4,886,876 | 2021 | 683,361 | — | 7,218,244 | 313,487 | 475,914 | — | 98,089 | 8,789,095 | Kate Gutmann President International, Healthcare and Supply Chain Solutions | Kate Gutmann President International, Healthcare and Supply Chain Solutions | 2022 | 781,197 | — | 4,674,444 | 377,426 | 364,278 | — | 20,676 | 6,218,021 | Kate Gutmann President International, Healthcare and Supply Chain Solutions | 2023 | 840,254 | — | 4,686,065 | 407,924 | 487,837 | 3,786,483 | 152,958 | 10,361,521 | 2021 | 745,803 | — | 6,659,398 | 390,681 | 511,579 | 48,547 | 19,690 | 8,375,698 | 2022 | 781,197 | — | 4,674,444 | 377,426 | 364,278 | — | 20,676 | 6,218,021 | 2020 | 688,896 | — | 3,664,545 | 179,714 | 409,344 | 354,807 | 19,322 | 5,316,628 | 2021 | 745,803 | — | 6,659,398 | 390,681 | 511,579 | 48,547 | 19,690 | 8,375,698 | | Bala Subramanian Chief Digital and Technology Officer | Bala Subramanian Chief Digital and Technology Officer | 2022 | 330,853 | 250,000(7) | 6,928,392 | — | 932 | 7,510,177 | | | Bala Subramanian Chief Digital and Technology Officer | 2023 | 766,622 | 500,000 | 4,139,164 | 373,540 | 444,566 | — | 76,370 | 6,300,262 | Bala Subramanian Chief Digital and Technology Officer | | 2022 | 330,853 | 250,000 | 6,928,392 | — | 932 | 7,510,177 | |
(1)Represents the salary earned during the portion of the year that the executive was employed. (2)See “Employment and Severance Arrangements; Change in Control Payments” in the Compensation Discussion and Analysis for a description of cash transition payments made in connection with Bala Subramanian’s hiring. (3)Represents the aggregate grant date fair value for stock awards computed in accordance with FASB ASC Topic 718. These awards include LTIP RPUs, MIP RPUs, and the awards described above under “Employment Transition Awards, Retention Arrangements and Recognition Awards.” Information about the assumptions used to value these awards can be found in Note 13 “Stock-Based Compensation” in our 20222023 Annual Report on Form 10-K. The amounts reported for these awards may not represent the amounts that the individuals will actually receive. The amounts received, if any, ultimately will depend on Company performance and the change in our stock price over time. An overview of the features of these awards can be found in the “Compensation Discussion and Analysis.” In accordance with SEC rules, we also are required to disclose the grant date fair value for awards with performance conditions assuming maximum performance. The grant date fair value for the 20222023 LTIP RPU awards, assuming maximum performance, is as follows: Tomé — $26,955,496;$37,057,333; Newman — $9,956,640;$10,608,930; Cesarone — $7,473,062;$8,706,275; Gutmann — $8,032,806;$8,706,275; and Subramanian - $6,334,038. The grant date fair value for the performance-based component of Bala Subramanian’s equity award made in connection with his employment offer letter, assuming maximum performance, is $2,308,131.$7,972,319. (3)(4)Represents the aggregate grant date fair value for option awards granted in the applicable year, computed in accordance with FASB ASC Topic 718. The assumptions used to value these awards can be found in Note 13 “Stock-Based Compensation” in our 20222023 Annual Report on Form 10-K. The amounts reported for these awards may not represent the amounts that the individuals will actually receive. The amounts received, if any, ultimately will depend on the change in our stock price over time. An overview of the features of these awards can be found in the “Compensation Discussion and Analysis” section.
(4)(5)Represents the cash portion of the MIP performance incentiveaward. Beginning with the 2023 MIP award, and the entire MIP ownership incentive award.award is payable in cash. Also, for Brian Newman in 2021, represents the cash portion of the performance-based cash award granted under his employment offer letter.
(5)(6)Represents an estimate of the annual increase in the actuarial present value of the NEO’s accrued benefit under our retirement plans for the applicable year, assuming retirement at age 60 (or current age, if later). The actuarial present value of Kate Gutmann’s accrued benefit under our retirement plans decreasedincreased by $536,476$3,786,483 between the measurement date used for 20212022 and the measurement date used for 2022.2023. See “Executive Compensation — 20222023 Pension Benefits” for additional information, including assumptions used in this calculation. The change in pension value can be impacted by a number of factors, including additional credited service, changes in amounts of compensation covered by the benefit formula, plan amendments and assumption changes.
(6)(7)All other compensation consisted of the following:
| Name | Name | 401(k) Plan Retirement Contributions(a) ($) | Restoration Savings Plan Contributions(b) ($) | 401(k) Plan Match ($) | Life Insurance Premiums ($) | Financial Planning Services ($) | Healthcare Benefits ($) | Other (c) ($) | Total ($) | Name | 401(k) Plan Retirement Contributions(a) ($) | Restoration Savings Plan Contributions(b) ($) | 401(k) Plan Match ($) | Life Insurance Premiums ($) | Financial Planning Services ($) | Healthcare Benefits ($) | Total ($) | Carol Tomé | Carol Tomé | 14,500 | 120,713 | 9,150 | 21,584 | 15,000 | 5,549 | 1,008 | 187,504 | Carol Tomé | 16,500 | 24,627 | 9,900 | 22,246 | 15,000 | 7,398 | 95,671 | Brian Newman | Brian Newman | 14,500 | 48,633 | 9,150 | 2,027 | 14,344 | 5,549 | — | 94,203 | Brian Newman | 16,500 | 18,134 | 9,900 | 4,033 | 15,000 | 7,398 | 70,965 | Nando Cesarone | Nando Cesarone | 23,200 | 53,277 | 9,150 | 1,982 | 14,654 | 5,549 | — | 107,812 | Nando Cesarone | 26,400 | 38,318 | 9,900 | 2,181 | 14,964 | 7,398 | 99,161 | Kate Gutmann | Kate Gutmann | — | 7,625 | 2,018 | 5,484 | 5,549 | — | 20,676 | Kate Gutmann | 26,400 | 99,555 | 9,900 | 4,078 | 5,627 | 7,398 | 152,958 | Bala Subramanian | Bala Subramanian | — | 932 | — | 932 | Bala Subramanian | 16,500 | 34,930 | 9,900 | 1,978 | 5,664 | 7,398 | 76,370 |
(a)For plan participants hired after July 1, 2016, we generally provide aIncludes retirement contributioncontributions based on years of service.service, as described on page 41. (b)For plan participants hired after July 1, 2016, benefitsBenefits payable under the UPS 401(k) Savings Plan are subject to the maximum compensation limits and the annual benefit limits for a tax-qualified defined contribution plan as established by the Internal Revenue Service. Amounts exceeding these limits are paid pursuant to the UPS Restoration Savings Plan. (c)From time For Kate Gutmann, also includes a transition contribution into the UPS Restoration Savings Plan, as described on page 41. For all NEOs other than Kate Gutmann and Bala Subramanian, amounts reflect actual Company contributions after giving effect to time, when it is in the best interests ofreductions offsetting excess contributions made by the Company executive officers may be allowed or encouraged to bring a spouse to Company sponsored events. In such event, the incremental cost to the Company for spousal attendance is treatedin prior years as compensation to the executive officer. Amounts in this column represent such cost.(7) See “Employmentfollows: Tomé — $69,750; Newman — $21,996; and Severance Arrangements; Change in Control Payments” in the Compensation Discussion and Analysis for a description of cash transition payments made in connection with Bala Subramanian’s hiring.Cesarone — $17,810.
| | | | | | | | | 5046 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
20222023 Grants of Plan-Based Awards
The following table provides information about plan-based awards granted during 20222023 to each of the NEOs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grant Date | Committee Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | Name | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | Carol Tomé | — | — | — | 1,000,000 | 1,666,667 | | — | — | — | — | — | — | — | 3/23/2022 | — | — | — | — | | — | 53,117 | 116,857 | — | — | — | 12,252,498 | 3/23/2022 | — | — | — | — | | — | — | — | — | 25,357 | 214.58 | 1,228,547 | 2/9/2022 | — | — | — | — | | — | — | — | 12,416 | — | — | 2,794,469 | Brian Newman | — | — | — | 342,633 | 1,666,667 | | — | — | — | — | — | — | — | 3/23/2022 | — | — | — | — | | — | 19,620 | 43,164 | — | — | — | 4,525,745 | 3/23/2022 | — | — | — | — | | — | — | — | — | 7,900 | 214.58 | 382,755 | 2/9/2022 | — | — | — | — | | — | — | — | 4,611 | — | — | 1,037,798 | Nando Cesarone | — | — | — | 342,333 | 1,666,667 | | — | — | — | — | — | — | — | 3/23/2022 | — | — | — | — | | — | 14,726 | 32,397 | — | — | — | 3,396,846 | 3/23/2022 | — | — | — | — | | — | — | — | — | 7,247 | 214.58 | 351,117 | 2/9/2022 | — | — | — | — | | — | — | — | 4,230 | — | — | 952,046 | Kate Gutmann | — | — | — | 342,333 | 1,666,667 | | — | — | — | — | — | — | — | 3/23/2022 | — | — | — | — | | — | 15,829 | 34,824 | — | — | — | 3,651,275 | 3/23/2022 | — | — | — | — | | — | — | — | — | 7,790 | 214.58 | 377,426 | 2/9/2022 | — | — | — | — | | — | — | — | 4,546 | — | — | 1,023,168 | Bala Subramanian | — | — | — | — | — | | — | — | — | — | — | — | — | 7/18/2022 | 6/8/2022 | — | — | — | | — | 5,554 | 12,219 | — | — | — | 1,049,151 | 9/30/2022 | 6/8/2022 | — | — | — | | — | 16,830 | 37,026 | — | — | — | 2,879,108 | 7/18/2022 | 6/8/2022 | — | — | — | | — | — | — | 16,660 | — | — | 3,000,133 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grant Date | Committee Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | Name | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | Carol Tomé | — | — | — | 3,019,425 | 10,000,000 | | — | — | — | — | — | — | — | 3/22/2023 | — | — | — | — | | — | 84,217 | 185,277 | — | — | — | 16,844,242 | 3/22/2023 | — | — | — | — | | — | — | — | — | 33,076 | 185.54 | 1,358,762 | 2/9/2023 | — | — | — | — | | — | — | — | 11,118 | — | — | 2,071,950 | Brian Newman | — | — | — | 963,384 | 10,000,000 | | — | — | — | — | — | — | — | 3/22/2023 | — | — | — | — | | — | 24,110 | 53,042 | — | — | — | 4,822,241 | 3/22/2023 | — | — | — | — | | — | — | — | — | 9,900 | 185.54 | 406,692 | 2/9/2023 | — | — | — | — | | — | — | — | 3,911 | — | — | 728,854 | Nando Cesarone | — | — | — | 975,674 | 10,000,000 | | — | — | — | — | — | — | — | 3/22/2023 | — | — | — | — | | — | 19,786 | 43,529 | — | — | — | 3,957,398 | 3/22/2023 | — | — | — | — | | — | — | — | — | 9,930 | 185.54 | 407,924 | 2/9/2023 | — | — | — | — | | — | — | — | 3,910 | — | — | 728,668 | Kate Gutmann | — | — | — | 975,674 | 10,000,000 | | — | — | — | — | — | — | — | 3/22/2023 | — | — | — | — | | — | 19,786 | 43,529 | — | — | — | 3,957,398 | 3/22/2023 | — | — | — | — | | — | — | — | — | 9,930 | 185.54 | 407,924 | 2/9/2023 | — | — | — | — | | — | — | — | 3,910 | — | — | 728,668 | Bala Subramanian | — | — | — | 889,133 | 10,000,000 | | — | — | — | — | — | — | — | 3/22/2023 | — | — | — | — | | — | 18,118 | 39,860 | — | — | — | 3,623,781 | 3/22/2023 | — | — | — | — | | — | — | — | — | 9,093 | 185.54 | 373,540 | | 2/9/2023 | — | — | — | — | | — | — | — | 2,766 | — | — | 515,383 |
(1)Reflects, as applicable, the target and maximum values of the cash portion of the 20222023 MIP award for each NEO. A participant’s first MIP award is paid entirely in vested class A stock. The potential payments for the MIP award are performance-based and therefore at risk. (2)Potential number of RPUs that could be earned under the 20222023 LTIP if the target or maximum performance goals are attained. Bala Subramanian’s potential number of RPUs that could be earned under the 2022 LTIP have been prorated based on his start date. For Bala, also includes a one-time grant of LTIP RPUs made in connection with his hiring, with the final payout subject to Company performance under the 2021 LTIP Award. (3)For NEOs other than Bala Subramanian, represents the number of RPUs or shares of class A stock granted in 20222023 pursuant to the 20212022 MIP. For Bala Subramanian, represents an initial grant of RSUs made in connection with his hiring, which generally vests in equal increments on July 18, 2023 and 2024, provided he remains an employee through the applicable vesting dates. (4)Represents stock options granted under the Stock Option program in 2022. Bala Subramanian did not receive a Stock Option Award in 2022 based on his July 2022 start date.2023. (5)Grant date fair value under FASB ASC Topic 718 of the LTIP RPUs, MIP RPUs, and stock options, and the initial awards to Bala Subramanian, as applicable, granted to each of the NEOs in 2022.2023. Fair values are calculated using the NYSE closing price of UPS stock on the date of grant for RPUs and RSUs, and the Black-Scholes option pricing model for stock options. The grant date fair value of the units granted under the 20222023 LTIP, and under the performance-based initial RPU grant for Bala Subramanian, which have performance conditions, are computed based on the probable outcome of the performance conditions. There can be no assurance that any value will ever be realized.
20222023 Outstanding Equity Awards at Fiscal Year-End
The following table shows the number of shares covered by exercisable options, unexercisable options, and unvested RSUs and RPUs held by the NEOs on December 31, 2022.2023. | | | Option Awards | | Stock Awards | | Option Awards | | Stock Awards | Name | Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | Carol Tomé | Carol Tomé | 40,504 | 60,757 | 99.28 | 6/1/2020 | 6/1/2030 | | — | Carol Tomé | 60,756 | 40,505 | 99.28 | 6/1/2020 | 6/1/2030 | | — | | | 9,523 | 38,096 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | 19,047 | 28,572 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | 5,071 | | | 5,071 | 20,286 | 214.58 | 3/23/2022 | 3/23/2032 | | — | — | | | — | 25,357 | 214.58 | 3/23/2022 | 3/23/2032 | | — | | — | 33,076 | 185.54 | 3/22/2023 | 3/22/2033 | | — | | — | | 12,813 | 2,227,438 | 115,460 | 20,071,566 | | — | | | — | — | | — | — | 143,348 | 22,538,606 | Brian Newman | Brian Newman | 12,154 | 18,232 | 105.54 | 2/12/2020 | 2/12/2030 | | — | Brian Newman | 18,231 | 12,155 | 105.54 | 2/12/2020 | 2/12/2030 | | — | | | 3,161 | 12,644 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | 6,322 | 9,483 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | 1,580 | | | 1,580 | 6,320 | 214.58 | 3/23/2022 | 3/23/2032 | | — | — | | | — | 7,900 | 214,58 | 3/23/2022 | 3/23/2032 | | — | | — | | 4,758 | 827,216 | 46,488 | 8,081,474 | | — | | | — | | | — | | — | | — | — | 45,742 | 7,192,015 | Nando Cesarone | Nando Cesarone | 735 | — | 106.87 | 3/1/2017 | 3/1/2027 | | — | Nando Cesarone | 757 | — | 106.43 | 3/1/2018 | 3/1/2028 | | — | — | | | 756 | 757 | 106.43 | 3/1/2018 | 3/1/2028 | | — | | 633 | — | 104.45 | 3/22/2018 | 3/22/2028 | | — | | | 633 | 104.45 | 3/22/2018 | 3/22/2028 | | — | | 1,691 | 1,692 | 111.80 | 2/14/2019 | 2/14/2029 | | — | | | 1,692 | 3,383 | 111.80 | 2/14/2019 | 2/14/2029 | | — | | 2,742 | 5,484 | 105.54 | 2/12/2020 | 2/12/2030 | | — | | | 2,742 | 8,226 | 105.54 | 2/12/2020 | 2/12/2030 | | — | | 2,654 | 7,962 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | | 2,653 | 10,616 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | 1,449 | 5,798 | 214.58 | 3/23/2022 | 3/23/2032 | | — | | | — | 7,247 | 214.58 | 3/23/2022 | 3/23/2032 | | — | | — | 9,930 | 185.54 | 3/22/2023 | 3/22/2033 | | — | | | — | | 22,173 | 3,854,628 | 33,214 | 5,773,922 | | — | — | | — | 36,073 | 5,671,758 | Kate Gutmann | Kate Gutmann | 8,066 | 2,017 | 106.43 | 3/1/2018 | 3/1/2028 | | — | Kate Gutmann | 10,083 | — | 106.43 | 3/1/2018 | 3/1/2028 | | — | | | 5,822 | 3,882 | 111.80 | 2/14/2019 | 2/14/2029 | | — | | 7,763 | 1,941 | 111.80 | 2/14/2019 | 2/14/2029 | | — | | | 6,025 | 9,039 | 105.54 | 2/12/2020 | 2/12/2030 | | — | | 9,038 | 6,026 | 105.54 | 2/12/2020 | 2/12/2030 | | — | | | 1,825 | 7,304 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | 3,651 | 5,478 | 165.66 | 2/10/2021 | 2/10/2031 | | — | | | 1,331 | 5,326 | 163.25 | 3/25/2021 | 3/25/2031 | | — | | 2,662 | 3,995 | 163.25 | 3/25/2021 | 3/25/2031 | | — | | — | 7,790 | 214.58 | 3/23/2022 | 3/23/2032 | | — | | 1,558 | | | 1,558 | 6,232 | 214.58 | 3/23/2022 | 3/23/2032 | | — | — | | — | | | — | 9,930 | 185.54 | 3/22/2023 | 3/22/2033 | | — | — | | | — | | 24,335 | 4,230,472 | 32,385 | 5,629,808 | | — | | 585 | 91,990 | 37,248 | 5,856,503 | Bala Subramanian | Bala Subramanian | — | | 16,925 | 2,942,190 | 22,636 | 3,935,042 | | — | | | — | | | — | | — | | 8,794 | 1,382,640 | 36,311 | 5,709,179 |
(1)Stock options generally vest over a five-year period with 20% of the option vesting at each anniversary date of the grant. All options expire ten years from the date of grant. Under the terms of our equity incentive plans, unvested stock options become fully vested on the retirement date for the NEOs if they meet certain service requirements. (2)Unvested stock awards in this column include: (a) RPUs granted as part of the MIP in 2018 that vest over a five-year period with approximately 20% of the award vesting on January 15 of each year; (b) RPUs granted as part of the 2021 MIP which vest one year after the grant date; (c) the initial grant of RSUs made to Bala Subramanian in connection with his hiring, which vests 50% on each of July 18, 2023 and 2024; (d) the 2020 special grants of RSUs to Nando Cesarone and Kate Gutmann, which generally vest as follows: 25% on May 13, 2021, 25% on May 13, 2022 and 50% on May 13, 2023,; and (e)(b) the 2021 special grant of RSUs to Kate Gutmann which generally vest as follows: 25% on March 25, 2022; 25% on March 25, 2023; and 50% on March 25, 2024. Values are rounded to the closest unit. (3)Market value based on NYSE closing price of the class B common stock on the last trading day of the year of $173.84.$157.23. (4)Represents the potential units to be earned under the 20212022 and 20222023 LTIP awards, and any DEUs allocated since the grants were made, at target performance level. For the 2023 LTIP award, which has a performance period ending December 31, 2025, the maximum number of RPUs that could be earned is as follows: Tomé — 190,841; Newman — 54,635; Cesarone — 44,836; Gutmann — 44,836; and Subramanian - 41,056. For the 2022 LTIP award, which has a performance period ending December 31, 2024, the maximum number of RPUs that could be earned is as follows: Tomé — 119,847;124,524; Newman — 44,268;45,998; Cesarone — 33,227;34,525; Gutmann — 35,715;37,110; and Subramanian - 37,369. For the 2021 LTIP award, which has a performance period ending December 31, 2023 (and was granted to NEOs other than Bala Subramanian), the maximum number of RPUs that could be earned is as follows: Tomé — 134,165; Newman — 58,005; Cesarone — 39,844; and Gutmann — 35,532. For Bala Subramanian, also includes the target number of RPUs that could be earned under the initial grant of RPUs made in connection with his hiring, with the actual payout based on Company performance under the 2021 LTIP. The maximum number of RPUs that could be earned in connection with this award is 12,430.38,828. | | | | | | | | | 5248 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
20222023 Option Exercises and Stock Vested
The following table sets forth the subject number of shares and corresponding value realized during 20222023 regarding options that were exercised, and restricted stock units and restricted performance units that vested, for each NEO. | | | Option Awards | | Stock Awards | | Option Awards | | Stock Awards | Name | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | Carol Tomé | Carol Tomé | — | | 109,934 | 19,110,927 | Carol Tomé | — | | 74,910 | 12,130,696 | Brian Newman | Brian Newman | — | | 56,597 | 10,084,523 | Brian Newman | — | | 31,606 | 5,100,301 | Nando Cesarone | Nando Cesarone | 7,129 | 878,894 | | 46,193 | 8,272,992 | Nando Cesarone | 9,211 | 606,910 | | 40,772 | 6,733,113 | Kate Gutmann | Kate Gutmann | 27,501 | 2,807,919 | | 44,410 | 8,054,814 | Kate Gutmann | — | | 39,385 | 6,532,216 | Bala Subramanian | Bala Subramanian | — | | — | Bala Subramanian | — | | 14,372 | 2,495,307 |
(1)Consists of: the 2021 MIP RPUs that vested on February 10, 2022; the 2022 MIPLTIP RPUs that vested on December 31, 2022; the 2020 LTIP RPUs at target that vested on December 31, 2022;2023; and the portion of special RSUs awarded in prior years to Nando Cesarone, and Kate Gutmann and Bala Subramanian that vested in 2022.2023. Vested RPUs and RSUs are distributed to participants in an equivalent number of shares of class A common stock. (2)Based on the NYSE closing price of the class B common stock on the applicable vesting date. 20222023 Pension Benefits
The following table quantifies the pension benefits expected to be paid to each NEO from the UPS Retirement Plan and the UPS Excess Coordinating Benefit Plan as of December 31, 2022.2023. The terms of each are described below. | Name | Name | Plan Name | Number of Years Credited Service (#)(2) | Present Value of Accumulated Benefit ($)(3) | Payments During Last Fiscal Year ($) | Name | Plan Name | Number of Years Credited Service (#)(2) | Present Value of Accumulated Benefit ($)(3) | Payments During Last Fiscal Year ($) | Carol Tomé(1) | Carol Tomé(1) | UPS Retirement Plan | — | Carol Tomé(1) | UPS Retirement Plan | — | | | UPS Excess Coordinating Benefit Plan | — | | UPS Excess Coordinating Benefit Plan | — | | | Total | — | | Total |
| — | Brian Newman(1) | Brian Newman(1) | UPS Retirement Plan | — | Brian Newman(1) | UPS Retirement Plan | — | | | UPS Excess Coordinating Benefit Plan | — | | UPS Excess Coordinating Benefit Plan | — | | | Total | — | | Total |
| — | Nando Cesarone(1) | Nando Cesarone(1) | UPS Retirement Plan | — | Nando Cesarone(1) | UPS Retirement Plan | — | | | UPS Excess Coordinating Benefit Plan | — | | UPS Excess Coordinating Benefit Plan | — | | | Total | — | | Total |
| — | Kate Gutmann | Kate Gutmann | UPS Retirement Plan | 33.0 | 1,265,887 | — | Kate Gutmann | UPS Retirement Plan | 33.0 | 1,415,730 | — | | | UPS Excess Coordinating Benefit Plan | — | | UPS Excess Coordinating Benefit Plan | 33.0 | 3,636,640 | — | | | Total | — | 1,265,887 | — | | Total |
| 5,052,370 | — | Bala Subramanian(1) | Bala Subramanian(1) | UPS Retirement Plan | — | Bala Subramanian(1) | UPS Retirement Plan | — | — | — | | UPS Excess Coordinating Benefit Plan | — | | Total | — | | UPS Excess Coordinating Benefit Plan | | | UPS Excess Coordinating Benefit Plan | — | | Total | | | Total |
| — |
(1)Not eligible to participate in the UPS Retirement Plan or the UPS Excess Coordinating Benefit Plan. (2)Represents years of service as of December 31, 20222023 for all plans. (3)Represents the total discounted value of the monthly lifetime benefit earned at December 31, 2022,2023, assuming the individual continues in service and retires at age 60 or at the executive’s actual age, if later. The present value is not the monthly or annual lifetime benefit that would be paid to the individual. The present values are based on discount rates of 5.71%5.33% and 6.07%5.79% for the UPS Retirement Plan and UPS Excess Coordinating Benefit Plan, respectively, at December 31, 2022.2023. The present values assume no pre-retirement mortality and utilize the Pri-2012 healthy mortality table with adjusted mortality improvement after 2012 (no collar for the UPS Retirement Plan and white collar for the UPS Excess Coordinating Benefit Plan), with mortality improvements after 2012 using the MP-2021 projection scale adjusted to converge to 0.5% in 20272028 on the SOA Retirement Plan’s Experience Committee model.
The UPS Retirement Plan is non-contributory and includes substantially all eligible employees of participating domestic subsidiaries who are not members of a collective bargaining unit, as well as certain employees covered by a collective bargaining agreement. The UPS Retirement Plan was closed to new entrants as of July 1, 2016. UPS also sponsors a non-qualified defined benefit plan, the UPS Excess Coordinating Benefit Plan, for non-union employees whose pay and benefits in the qualified plan are limited by the Internal Revenue Service. An employee must be at least age 55 with 10 years of service to be eligible to participate in this plan. In the year that an individual first becomes eligible to participate in the UPS Excess Coordinating Benefit Plan, there is an increase for the participant for that year equal to the full present value of the participant’s accrued benefit in the plan. In accordance with the terms of the Excess Coordinating Benefit Plan, following a participant’s retirement, the Company pays an amount equal to the Social Security and Medicare taxes due on the present value of the benefits provided under the plan. The UPS Retirement Plan and UPS Excess Coordinating Benefit Plan provide monthly lifetime benefits to participants and their eligible beneficiaries based on final average compensation at retirement, years of service with UPS and age at retirement. Participants may choose to receive a reduced benefit payable in the form of an annuity that is equivalent to the single lifetime benefit. The plans provide monthly benefits based on the results from up to four benefit formulas. Participants receive the largest benefit from among the applicable benefit formulas. For Kate Gutmann the formula that results in the largest benefit is called the “grandfathered integrated formula.” This formula provides retirement income equal to 58.33% of final average compensation, offset by a portion of the Social Security benefit. A participant with less than 35 years of benefit service receives a proportionately lesser amount. Participants earn benefit service for the time they work as an eligible UPS employee. For purposes of the formulas, compensation includes salary and an eligible portion of the MIP award. The average final compensation for each participant in the plans is the average covered compensation of the participant during the five highest consecutive years out of the last ten full calendar years of service. Benefits payable under the UPS Retirement Plan are subject to the maximum compensation limits and the annual benefit limits for a tax-qualified defined benefit plan as prescribed and adjusted from time to time by the Internal Revenue Service. Eligible amounts exceeding these limits will be paid from the UPS Excess Coordinating Benefit Plan. Under this plan, participants receive the benefit in the form of a life annuity. The plans permit participants with 25 or more years of benefit service to retire as early as age 55 with only a limited reduction in the amount of their monthly benefits. NEOs eligible to retire at age 60 receive unreduced benefits from the plans. In addition, the plans allow participants with ten years or more of service to retire at age 55 with a larger reduction in the amount of their benefit. These plans froze accruals after December 31, 2022. | | | | | | | | | 5450 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
20222023 Non-Qualified Deferred Compensation
The following table shows the executive and Company contributions or credits, earnings and account balances for the NEOs in the UPS Deferred Compensation Plan and UPS Restoration Savings Plan for 2022.2023. | Name | Name | Plan Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) | Name | Plan Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) | Carol Tomé | Carol Tomé | UPS Deferred Compensation Plan | 1,877,493 | — | (711,503) | — | 5,605,549 | Carol Tomé | UPS Deferred Compensation Plan | 1,538,596 | — | 773,789 | — | 7,917,934 | | | UPS Restoration Savings Plan | — | 120,713 | (12,274) | — | 144,160 | | UPS Restoration Savings Plan | — | 47,218 | 7,536 | — | 198,914 | | Outstanding Non-employee Director RSU Awards | — | (882,020) | — | 4,528,835 | | Outstanding Non-employee Director RSU Awards | | | Outstanding Non-employee Director RSU Awards | — | (272,536) | — | 4,256,299 | Brian Newman | Brian Newman | UPS Restoration Savings Plan | — | 48,633 | (5,977) | — | 54,776 | Brian Newman | UPS Restoration Savings Plan | — | 25,120 | 5,392 | — | 85,288 | Nando Cesarone | Nando Cesarone | UPS Restoration Savings Plan | — | 53,277 | (12,991) | — | 89,473 | Nando Cesarone | UPS Restoration Savings Plan | — | 42,069 | 10,598 | — | 142,140 | Kate Gutmann | Kate Gutmann | UPS Deferred Compensation Plan | — | (94,041) | — | 467,849 | Kate Gutmann | UPS Deferred Compensation Plan | — | — | (13,872) | — | 453,977 | Bala Subramanian | Bala Subramanian | | — | Bala Subramanian | UPS Restoration Savings Plan | — | 7,300 | 721 | — | 8,021 |
(1)Amounts are also included in the “Salary” column of the 20222023 Summary Compensation Table. (2)Company credits to the UPS Restoration Savings Plan, which amounts are also disclosed in the “All Other Compensation” column of the 20222023 Summary Compensation Table. (3)No amounts in this column are reported in the 20222023 Summary Compensation Table. (4)Certain amounts in this column represent salary, bonus or stock options contributed by the NEO to the plans in prior years as follows: Tomé — $2,351,438;$4,228,931; Newman – $0; Cesarone — $0; Gutmann — $118,149; and Subramanian - $0.
The deferred compensation vehicles in the UPS Deferred Compensation Plan and the UPS Restoration Savings Plan are described below. Not all of the NEOs participate in each feature of the UPS Deferred Compensation Plan. Prior to December 31, 2004, contributions could be deferred from executive officers’ monthly salary and from their half-month bonus. Also prior to December 31, 2004, non-employee directors could defer retainer and meeting fees quarterly. Assets from the discontinued UPS Retirement Plan for Outside Directors were transferred to the 2004 and Before Salary Deferral Feature in 2003. No contributions were permitted after December 31, 2004, except as described below.
After December 31, 2004, executive officers may defer 1% to 35% of their monthly salary and 1% to 100% of the cash portion of the MIP award. They may also defer excess pre-tax contributions if the UPS 401(k) Savings Plan fails the annual average deferral percentage test. Non-employee directors may defer retainer fees quarterly. Elections are made annually for the following calendar year. | | | Stock Option Deferral Feature |
Assets are invested solely in shares of UPS stock. Non-qualified or incentive stock options which vested prior to December 31, 2004 were deferrable during the annual enrollment period for the following calendar year. Participants deferred receipt of UPS stock that would otherwise be taxable upon the exercise of the stock option. The shares received upon exercise of these options are deferred into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as “deferred compensation obligations” in the shareowners’ equity section of the balance sheet. No deferrals of stock options were permitted after December 31, 2004. As a result of the requirements applicable to non-qualified deferred compensation arrangements under Section 409A of the Internal Revenue Code and related guidance, deferral of stock options is no longer offered under the UPS Deferred Compensation Plan for options that vested after December 31, 2004.
| | | Withdrawals and Distributions under the UPS Deferred Compensation Plan |
For the 2004 and Before Salary Deferral Feature, participants may elect to receive the funds in a lump sum or up to a 10-year installment (of 120 monthly payments), subject to restrictions if the balance is less than $20,000. For the 2005 and Beyond Salary Deferral Feature, participants may elect to receive funds in a lump sum or up to a 10 year installment (120 monthly payments), subject to restrictions if the balance, plus the total balance in any other account which must be aggregated with the 2005 and Beyond Salary Deferral Account under Section 409A of the Internal Revenue Code, is less than the Internal Revenue Code Section 402(g) annual limit in effect for qualified 401(k) plans on the date the participant becomes eligible for a distribution. For the Stock Option Deferral Feature, participants may elect to receive shares in a lump sum or up to 10 annual installments, subject to restrictions if the balance is less than $20,000. The distribution of shares will occur pro-rata based on the type of stock options (non-qualified or incentive) that were originally deferred. The distribution election under the 2005 and Beyond Salary Deferral Feature may be changed one time only, but may be changed more frequently under the 2004 and Before Salary Deferral Feature and the Stock Option Deferral Feature. Hardship distributions are permitted under all three features of the UPS Deferred Compensation Plan. Withdrawals are not permitted under the 2005 and Beyond Salary Deferral Feature, but withdrawals are permitted for 100% of the account under the 2004 and Before Salary Deferral Feature and Stock Option Deferral Feature. However, withdrawals will result in a forfeiture of 10% of the participant’s total account balances. No Company contributions are made to any of the three features of the UPS Deferred Compensation Plan. The aggregate balances shown in the table above represent amounts that the NEOs have earned but elected to defer, plus earnings (or less losses). There are no above-market or preferential earnings in the UPS Deferred Compensation Plan. The investment options mirror those in the UPS 401(k) Savings Plan. Dividends earned on shares of UPS stock in the UPS Deferred Compensation Plan are earned at the same rate as all other class A and class B shares of common stock. Dividends are added to the participant’s deferred compensation balance. Deferral elections made under the UPS Deferred Compensation Plan are irrevocable once made. | | | UPS Restoration Savings Plan |
Benefits payable under the UPS 401(k) Savings Plan are subject to the maximum compensation limits and the annual benefit limits for a tax-qualified defined contribution plan as established by the Internal Revenue Service. Amounts exceeding these limits are paid pursuant to the UPS Restoration Savings Plan, which is a non-qualified restoration plan designed to replace the benefits limited under the tax-qualified plan. Without the UPS Restoration Savings Plan, executive officers would receive a lower benefit as a percent of eligible compensation than the benefit received by other participants in the UPS Savings Plan.
| | | | | | | | | 5652 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
Potential Payments on Termination or Change in Control UPS has created a culture where long tenure for executives is the norm. As a result, executiveExecutive officers serve without employment contracts, as do most of our other U.S.-based non-union employees.
In connection with each of Carol Tomé’s, Brian Newman’s and Bala Subramanian’s hiring, we entered into protective covenant agreements with them which protect UPS’s confidential information and include non-competition and non-solicitation covenants in favor of UPS. For Brian and Carol, if either of their employment is terminated without “cause”, then the Company is obligated to pay their base salary for up to 24 months if it elects to enforce the post-termination covenants. We have also entered into retention arrangements and similar protective covenant agreements with Nando Cesarone and Kate Gutmann that provide for the continued vesting of their 2020 special RSU retention grants in the event they are terminated without cause or resign for “good reason”.
In May 2022, the Committee approved theThe UPS Key Employee Severance Plan (the “Severance Plan”). The Severance Plan provides for severance compensation and benefits upon certain terminations of employment of key employees, including the NEOs. The severance protections under the Severance Plan replace cash severance benefits (if any) to which a participating employee would have otherwise been entitled under their protective covenant agreements (as described above).
The Severance Plan in general provides that if the Company terminates the employment of a participant other than due to “Cause,” “Disability Termination,” or death (a “Qualifying Termination”), the Company will pay: (i) an amount in cash equal to a pro-rata portion of the individual’s annual performance incentive award under the MIP that would have been earned for the year of termination, based on actual performance for the full performance period, with the pro-rata portion calculated based on the number of months during which the individual was employed by the Company during the applicable year; (ii) an amount in cash equal to one times (or, for the CEO, two times) the sum of the participant’s annual base salary plus the participant’s target MIP performance award in effect as of the termination date; (iii) ifan amount in cash equal to the participant timely and properly elects continuation coverage underportion of the participant’s monthly Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), payment of the portion of their monthly COBRA premium for the participant and the participant’s dependents thatto the extent it exceeds the premiums paid by the participant for such coverage immediately prior to termination for up to 18times the number of months following termination, or, in certain circumstances, an equivalent benefit (subject to certain tax-based limitations);the participant’s applicable COBRA period; and (iv) career counseling services up to $20,000 (or, for the CEO up to $30,000). In addition, with respect to options held by retirement eligible employees, and RPUs granted under the MIP or LTIP, in each case granted on or after the effective date of the Severance Plan, a participant who experiences a Qualifying Termination will generally be entitled to the same treatment that would apply in the event of “retirement” under the terms of such awards. With respect to stock options granted to a participant on or after the effective date of the Severance Plan, such stock options (to the extent the participant is not retirement eligible and that are vested as of the date of the Qualifying Termination) will remain exercisable until the earlier of the first anniversary of the termination date and the original expiration date of the stock options. For terminations of employment not governed by retention arrangements or awards made prior to the effective date of the Severance Plan, our equity incentive plans and related documents contain provisions that affect outstanding awards to all plan participants, including the NEOs, in the event of a participant’s death, disability, retirement, or a change in control (as defined below) of the Company. Upon a participant’s death, disability or retirement: •Options will immediately vest, and remain exercisable until the tenth anniversary of the date of grant; •Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will immediately vest. In the case of a participant’s death, shares (or cash, as applicable) attributable to the number of restricted shares, RSUs or RPUs will be transferred to the participant’s estate within 90 days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the number of restricted shares, RSUs or RPUs will be transferred to the participant on the same schedule as if they had remained employed; and •Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions shall be deemed earned on a prorated basis for the number of months worked during the performance period. In the case of a participant’s death, shares (or cash, as applicable) attributable to the prorated number of restricted shares, RSUs or RPUs calculated at target performance level will be transferred to the participant’s estate within 90 days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the prorated number of restricted shares, RSUs or RPUs calculated based on actual performance results for the full performance period will be transferred to the participant following the end of the performance period.
Upon a change in control, if the successor company does not continue, assume or substitute other grants for outstanding awards, or upon a change in control followed by a termination of the grantee’s employment by UPS without cause or by the grantee for good reason: •Options will immediately vest and become exercisable; •Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will immediately vest; and •Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions will be deemed earned to the extent that actual achievement of the applicable performance conditions can be determined, or on a prorated basis for the portion of the performance period completed prior to the change in control or qualifying termination, based on target or actual performance.
| | | Other Outstanding Awards; No Tax Gross-Ups |
Any other awards which may be outstanding would vest and be paid generally as described above (except, where applicable, timing of payment generally will be tied to such change in control, rather than termination or resignation). We do not provide for the payment of tax gross-ups on outstanding awards.
| | | | | | | | | 58 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
The following table shows the potential payments to the NEOs upon a termination of employment under various circumstances. In preparing the table, we assumedcircumstances, assuming the event occurred on December 30, 2022.29, 2023. The closing price per share of our class B common stock on the NYSE on the last trading day of 20222023 was $173.84.$157.23. The actual amounts to be paid under any of the scenarios can only be determined at the time of such NEO’s separation from the Company. | Name | Name | Separation Pay(1) ($) | Accelerated/Continued Vesting of Equity Awards(2) ($) | Total ($) | Name | Separation Pay(1) ($) | Accelerated/Continued Vesting of Equity Awards(2) ($) | Benefits(3) | Total ($) | Carol Tomé | Carol Tomé | | Carol Tomé | | | | Termination (voluntary or involuntary for cause) | Termination (voluntary or involuntary for cause) | — | Termination (voluntary or involuntary for cause) | — | Termination (involuntary without cause) | Termination (involuntary without cause) | 9,000,000 | — | 9,000,000 | Termination (involuntary without cause) | 9,077,593 | 4,546,358 | — | 13,623,951 | Change in Control (with qualifying termination) | Change in Control (with qualifying termination) | 9,000,000 | 17,293,446 | 26,293,446 | Change in Control (with qualifying termination) | 9,058,276 | 12,826,644 | — | 21,884,920 | Retirement | Retirement | — | 17,293,446 | Retirement | — | 12,826,644 | — | 12,826,644 | Death | Death | — | 17,293,446 | Death | — | 12,826,644 | — | 12,826,644 | Disability | Disability | — | 17,293,446 | Disability | — | 12,826,644 | — | 12,826,644 | Brian Newman | Brian Newman | | Brian Newman | | | | Termination (voluntary or involuntary for cause) | Termination (voluntary or involuntary for cause) | — | Termination (voluntary or involuntary for cause) | — | Termination (involuntary without cause) | Termination (involuntary without cause) | 1,818,592 | — | 1,818,592 | Termination (involuntary without cause) | 1,830,471 | 1,301,550 | — | 3,132,021 | Change in Control (with qualifying termination) | Change in Control (with qualifying termination) | 1,818,592 | 6,397,536 | 8,216,128 | Change in Control (with qualifying termination) | 1,801,110 | 4,121,418 | — | 5,922,528 | Retirement | Retirement | — | Retirement | — | Death | Death | — | 6,397,536 | Death | — | 4,121,418 | — | 4,121,418 | Disability | Disability | — | 6,397,536 | Disability | — | 4,121,418 | — | 4,121,418 | Nando Cesarone | Nando Cesarone | | Nando Cesarone | | | | Termination (voluntary or involuntary for cause) | Termination (voluntary or involuntary for cause) | — | Termination (voluntary or involuntary for cause) | — | Termination (involuntary without cause) | Termination (involuntary without cause) | 1,817,000 | 3,095,764 | 4,912,764 | Termination (involuntary without cause) | 1,851,556 | 1,068,116 | — | 2,919,672 | Change in Control (with qualifying termination) | Change in Control (with qualifying termination) | 1,817,000 | 7,782,250 | 9,599,250 | Change in Control (with qualifying termination) | 1,824,086 | 3,073,392 | — | 4,897,478 | Retirement | Retirement | — | Retirement | — | Death | Death | — | 7,782,250 | Death | — | 3,073,392 | — | 3,073,392 | Disability | Disability | — | 7,782,250 | Disability | — | 3,073,392 | — | 3,073,392 | Kate Gutmann | Kate Gutmann | | | | Kate Gutmann | | | | Termination (voluntary or involuntary for cause) | Termination (voluntary or involuntary for cause) | — | Termination (voluntary or involuntary for cause) | — | Termination (involuntary without cause) | Termination (involuntary without cause) | 1,817,000 | 3,242,333 | 5,059,333 | Termination (involuntary without cause) | 1,852,857 | 1,160,106 | — | 3,012,963 | Change in Control (with qualifying termination) | Change in Control (with qualifying termination) | 1,817,000 | 7,980,706 | 9,797,706 | Change in Control (with qualifying termination) | 1,824,086 | 3,327,874 | — | 5,151,960 | Retirement | Retirement | — | Retirement | — | 3,327,874 | 840,748 | 4,168,622 | Death | Death | — | 8,153,289 | Death | — | 3,327,874 | — | 3,327,874 | Disability | Disability | — | 8,153,289 | Disability | — | 3,327,874 | — | 3,327,874 | Bala Subramanian | Bala Subramanian | | Termination (voluntary or involuntary for cause) | Termination (voluntary or involuntary for cause) | — | Termination (voluntary or involuntary for cause) | | Termination (voluntary or involuntary for cause) | | — | Termination (involuntary without cause) | Termination (involuntary without cause) | 1,667,500 | 4,581,270 | 6,248,770 | Termination (involuntary without cause) | 1,691,924 | 4,210,684 | — | 5,902,608 | Change in Control (with qualifying termination) | Change in Control (with qualifying termination) | 1,667,500 | 4,581,270 | 6,248,770 | Change in Control (with qualifying termination) | 1,662,292 | 4,210,684 | — | 5,872,976 | Retirement | Retirement | — | Retirement | — | Death | Death | — | 4,581,270 | 4,581,270 | Death | — | 4,210,684 | — | 4,210,684 | Disability | Disability | — | 4,581,270 | 4,581,270 | Disability | — | 4,210,684 | — | 4,210,684 |
(1)Represents the benefits under the UPS Key Employee Severance Plan. For Carol Tomé, represents two times her annual base salary and two times her target MIP award (200% of base salary). For the other NEOs, represents one times their annual base salary and a sum equallingequaling their target MIP awards (130%(115% of base salary). (2)Represents the value of accelerated or continued vesting of stock options and RPUs in accordance with the terms of our equity incentive plans and the applicable award certificates. Also includes the 20212022 and 20222023 LTIP awards calculated at target. The performance measurement period for the 2021 LTIP award ends December 31, 2023, and performance measurement period for the 2022 LTIP award ends December 31, 2024.2024, and the performance measurement period for the 2023 LTIP award ends December 31, 2025. With respect to Nando Cesarone and Kate Gutmann, includes the continued vesting of the one-time RSU awards to each as described in “Employment Transition Awards, Retention Arrangements and Recognition Awards” above. | | | | | | | | | 54 | | 59Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
(3)Represents the actuarial present value of the incremental non-qualified amounts payable upon change in control, early retirement, death and disability from the UPS Excess Coordinating Benefit Plan. For information about the UPS Excess Coordinating Benefit Plan, see the Pension Benefits table and related narrative. The same assumptions were used to calculate the present value of the amounts in the table that were used for the Pension Benefits table except that benefits are assumed to be payable immediately as of December 31, 2023 (or age 55 if later) instead of age 60. Only individuals eligible for early retirement (age 55 with 10 years of service) who are not yet age 60 will have an early retirement value in the table. The previous table does not include payments and benefits to the extent they are generally provided on a non-discriminatory basis to salaried employees not subject to a collective bargaining agreement upon termination of employment. These include: •Life insurance upon death in the amount of 12 times the employee’s monthly base salary, with a December 30, 202229, 2023 maximum benefit payable of $1 million; •A death benefit in the amount of three times the employee’s monthly salary; •Disability benefits; and •Accrued vacation amounts. The tables also do not include amounts to which the executives would be entitled to receive that are already described in the compensation tables that appear earlier in this Proxy Statement, including: •The value of equity awards that are already vested; •Amounts payable under defined benefit pension plans;plans (except as described above with respect to Kate Gutmann); and •Amounts previously deferred into the deferred compensation plan.
| | | Definition of a Change in Control |
A change in control as defined in our equity incentive compensation plans is generally deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied: •The consummation of a reorganization, merger, share exchange or consolidation, in each case, where persons who were shareowners of UPS immediately prior to such reorganization, merger, share exchange or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power of the reorganized, merged, surviving or consolidated company’s then outstanding securities entitled to vote generally in the election of directors in substantially the same proportions as immediately prior to the transaction; or a liquidation or dissolution of UPS or the sale of substantially all of UPS’s assets; or •Individuals who, as of any date (the “Beginning Date”), constitute the Board of Directors (the “Incumbent Board”) and who, as of the end of the two-year period beginning on such Beginning Date, cease for any reason to constitute at least a majority of the Board of Directors, provided that any person becoming a director subsequent to the Beginning Date whose election, or nomination for election by UPS’s shareowners, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of UPS, as such terms are used under applicable SEC rules and requirements) shall be considered as though such person were a member of the Incumbent Board. | | | | | | | | | | 60 | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement55 |
Equity Compensation Plans The following table sets forth information as of December 31, 20222023 concerning shares of our common stock authorized for issuance under our equity compensation plans. | Plan category | Plan category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($)(b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | Plan category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($)(b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | Equity compensation plans approved by security holders(1) | Equity compensation plans approved by security holders(1) | 8,771,515 | 19.98 | 24,341,714(2) | Equity compensation plans approved by security holders(1) | 6,433,685 | 127.91 | 19,816,746(2) | Equity compensation plans not approved by security holders | Equity compensation plans not approved by security holders | — | N/A | — | Equity compensation plans not approved by security holders | — | N/A | — | Total | Total | 8,771,515 | 19.98 | 24,341,714 | Total | 6,433,685 | 127.91 | 19,816,746 |
(1)Includes all equity incentive compensation plans and the Discounted Employee Stock Purchase Plan, each of which has been approved by our shareowners. Effective with the approval of the 2021 Omnibus Incentive Compensation Plan (the “2021 Plan”) in May 2021, no additional securities may be issued under prior equity incentive compensation plans. Awards that do not entitle the holder to receive or purchase shares and awards that are settled in cash are not counted against the aggregate number of shares available for awards under the 2021 Plan. Awards that are subject to performance conditions are reported at the maximum performance level, which may overstate the dilution associated with such awards. (2)In addition to grants of options, warrants or rights, this number includes up to 13,889,47210,034,871 shares of common stock or other stock-based awards that may be issued under the 2021 Plan, and up to 10,452,2429,781,875 shares of common stock that may be issued under the Discounted Employee Stock Purchase Plan. This number does not include shares under prior equity incentive compensation plans because no new awards may be made under those plans. | | | | | | | | | 56 | | 61Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
Median Employee to CEO Pay Ratio As required by Item 402(u) of Regulation S-K, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. For purposes of this disclosure, the 20222023 annual total compensation of the median compensated employee was $52,144;$53,669; our CEO’s 20222023 annual total compensation was $18,977,605,$23,402,885, and the ratio of these amounts was 364-to-one. 436-to-one. Our CEO’s 20222023 annual total compensation was different from the amount included in the 20222023 Summary Compensation Table “Total” column. Amounts related to healthcare benefits, which are available generally to all salaried employees of the Company, are included in the annual total compensation amounts above. The CEO’s and median employee’s Company-paid healthcare benefit amounts were $12,404$12,834 and $5,937$6,178 respectively. For the CEO, this amount is not included in the 20222023 Summary Compensation Table, as permitted by SEC regulations. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. As permitted by SEC rules, for our 2022 pay ratio reported above, we used a median employee whose compensation most closely aligned with the prior year median compensated employee, who is no longer employed by the company. We believe there has been no change in our employee population or employee compensation arrangements that would significantly impact our pay ratio disclosure. For these purposes, we identified the median compensated employee from our employee population as of October 1, 2020,2023, using total taxable wages (Form W-2 Box 1 or equivalent) paid to our employees in fiscal year 2020.2023. We determined our total workforce as of October 1, 20202023 to consist of 547,857485,504 employees. During the fiscal year 2023, UPS acquired Happy Returns and MNX Global Logistics. These entities employed 326 and 791 employees, respectively. As permitted by SEC rules, under the 5% “De Minimis Exemption,” we excluded 26,36822,994 non-U.S. employees, or 4.8%4.7% of our total workforce. As a result of these exclusions, our median compensated employee was identified from an employee population of 521,489462,510 employees. The excluded countries and their employee populations were as follows: Argentina (242(202 employees), Australia (486(500 employees), Austria (185(214 employees), Bahrain (28 employees), Belarus (23(30 employees), Belgium (1,008(1,157 employees), Brazil (692(1,502 employees), Chile (113 employees), Colombia (1,064(357 employees), Costa Rica (343(379 employees), Czech Republic (453Czechia (566 employees), Denmark (531(565 employees), Dominican Republic (116(87 employees), Ecuador (65(269 employees), Egypt (29(20 employees), El Salvador (30(4 employees), Finland (187(184 employees), Greece (143(160 employees), Guam (2 employees)(1 employee), Guatemala (73(54 employees), Honduras (39(6 employees), Hong Kong (1,013(803 employees), Hungary (417(498 employees), Indonesia (159(114 employees), Ireland (1,133(883 employees), Italy (1,279(1,748 employees), Jamaica (4(3 employees), Japan (644(622 employees), Jersey (1 employee), Kazakhstan (36 employees), Kuwait (54(38 employees), Luxembourg (11(13 employees), Macau (2 employees), Malaysia (302 employees), Mexico (2,489(251 employees), Morocco (60(65 employees), New Zealand (27(43 employees), Nicaragua (25(18 employees), Nigeria (288(222 employees), Norway (105(100 employees), Pakistan (59(50 employees), Panama (32 employees), Peru (77(167 employees), Philippines (1,470(1,305 employees), Portugal (195(280 employees), Puerto Rico (442 employees), Romania (142(122 employees), Russia (571(5 employees), South Korea (522 employees), Singapore (1,219(1,055 employees), Slovakia (18(29 employees), Slovenia (51(58 employees), South Africa (277 employees), South Korea (558(260 employees), Spain (1,314(1,548 employees), Sweden (938(935 employees), Switzerland (703(759 employees), Taiwan (970(872 employees), Thailand (473(436 employees), Turkey (1,992 employees), Ukraine (89 employees), United Arab Emirates (532(1,548 employees), U.S. Virgin Islands (10 employees), Ukraine (106 employees), United Arab Emirates (442 employees), and Vietnam (336(330 employees).
| | | | | | | | | | 62 | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement57 |
Pay Versus Performance As required by Item 402(v) of Regulation S-K, we are providing the following table and related disclosures. | Year(1) | Year(1) | Summary Comp Table Total for First CEO ($) | Summary Comp Table Total for Second CEO ($) | Comp Actually Paid to First CEO ($) | Comp Actually Paid to Second CEO ($) | Average Summary Comp Table Total for Non-CEO Named Executive Officers ($) | Average Comp Actually Paid to Non-CEO Named Executive Officers ($) | Value of Initial Fixed td00 Investment Based on: | Net Income (millions) ($) | Adjusted Operating Profit(3) (millions) ($) | Year(1) | Summary Comp Table Total for First CEO ($) | Summary Comp Table Total for Second CEO ($) | Comp Actually Paid to First CEO ($) | Comp Actually Paid to Second CEO ($) | Average Summary Comp Table Total for Non-CEO Named Executive Officers ($) | Average Comp Actually Paid to Non-CEO Named Executive Officers ($) | Value of Initial Fixed td00 Investment Based on: | Net Income (millions) ($) | Adjusted Operating Profit(3) (millions) ($) | Total Shareholder Return ($) | Peer Group(2) Total Shareholder Return ($) | Total Shareholder Return ($) | Peer Group(2) Total Shareholder Return ($) | 2023 | | 2022 | 2022 | N/A | 18,965,201 | N/A | 13,072,062 | 6,714,395 | 5,141,166 | 162.33 | 131.11 | 11,548 | 13,853 | | 2021 | 2021 | N/A | 27,620,893 | N/A | 43,250,361 | 10,489,120 | 19,573,719 | 193.56 | 152.83 | 12,890 | 13,144 | | 2020 | 2020 | 5,842,130 | 3,772,910 | 37,662,113 | 13,337,679 | 5,454,192 | 11,181,872 | 147.28 | 118.18 | 1,343 | 8,718 | |
(1)In both 2023 and 2022, Carol Tomé was the CEO and the Non-CEO NEOs were Brian Newman, Nando Cesarone, Kate Gutmann and Bala Subramanian; in 2021, Carol Tomé was the CEO and the Non-CEO NEOs were Brian Newman, Scott Price, Nando Cesarone and Kate Gutmann; and in 2020 the CEOs were David Abney (First CEO) and Carol Tomé (Second CEO), and the Non-CEO NEOs were Brian Newman, Nando Cesarone, Kate Gutmann, Juan Perez and George Willis. (2)Our peer group is represented by the Dow Jones Transportation Average. (3)Determined by referenceIn accordance with SEC rules, we are required to include in the above table the most important financial performance measure (not otherwise required to be disclosed in the table) used to link compensation actually paid to our publicly reported adjusted operating profitnamed executive officers for 2023 to Company performance. We consider this measure to be Adjusted Operating Profit, which is calculated by excluding the following items from Operating Profit determined in accordance with GAAP: for 2023, one-time compensation representing a payment to certain U.S.-based non-union part-time supervisors, goodwill and other asset impairment charges, and transformation and other adjustments; for 2022, a one-time non-cash expense related to stock-based awards that were accelerated to fully vest in 2022 in connection with a change in incentive compensation program design, a one-time non-cash charge reflecting a reduction in the estimated residual value of fully-depreciated MD-11 aircraft, and transformation and other adjustments; and for each of 2022, 2021 and 2020.2020, transformation and other adjustments. | CEO SCT Total to CAP Reconciliation | CEO SCT Total to CAP Reconciliation | | CEO SCT Total to CAP Reconciliation | | CEO SCT Total to CAP Reconciliation | | Year | Year | Summary Compensation Table Total for CEO ($) | Deductions from SCT Total(1) ($) | Additions to SCT Total(2) ($) | Compensation Actually Paid ($) | | Year | | Year | | 2023 | | 2023 | | 2023 | | 2022 | 2022 | 18,965,201 | 16,275,515 | 10,382,376 | 13,072,062 | | 2022 | | 2022 | | 2021 | | 2021 | | 2021 | 2021 | 27,620,893 | 24,795,449 | 40,424,917 | 43,250,361 | | 2020(3) | 2020(3) | 3,772,910 | 2,958,822 | 12,523,591 | 13,337,679 | | 5,842,130 | 3,192,625 | 35,012,608 | 37,662,113 | | 2020(3) | | | 5,842,130 | | 5,842,130 | |
(1)Represents the grant-date fair value of stock awards granted during the year (2022:(2023: $18,916,192, 2022: $15,046,968, 2021: $23,670,426, 2020: Carol Tomé $1,833,812 and David Abney $1,411,585), the grant-date fair value of option awards granted during the year (2022:(2023: $1,358,762, 2022: $1,228,547, 2021: $1,125,023, 2020: Carol Tomé $1,125,010 and David Abney $1,153,237) and the aggregate change in the actuarial present value of accumulated benefits under pension plans (2022:(2023: $—, 2022: $—, 2021: $—, 2020: Carol Tomé $— and David Abney $627,803). (2)Represents the service cost for defined benefit pension plans (2022:(2023: $—, 2022: $—, 2021: $—, 2020: Carol Tomé $— and David Abney $234,743) and the value of equity awards calculated using the required methodology for determining CAP, as further detailed in the table below. (3)In 2020 the CEOs were Carol Tomé (first row) and David Abney (second row). | | | | | | | | | | | | | | | | | | | CEO Equity Component of CAP | | | Year | Year End Fair Value of Equity Awards Granted in the Year ($) | Year over Year Change in Fair Value of Outstanding Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustments ($) | | 2022 | 12,805,107 | (5,289,424) | — | 2,866,693 | 10,382,376 | | 2021 | 33,072,440 | 6,256,043 | — | 1,096,434 | 40,424,917 | | 2020(1) | 12,523,591 | — | — | — | 12,523,591 | | 9,170,268 | 14,290,966 | — | 11,316,631 | 34,777,865 | |
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| | | | | | | | | | | | | | | | | | | CEO Equity Component of CAP | | | Year | Year End Fair Value of Equity Awards Granted in the Year ($) | Change in Fair Value from Prior Year End to Year End of Outstanding Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Change in Fair Value from Prior Year End to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustments ($) | | 2023 | 14,112,488 | (3,170,240) | 2,071,950 | (957,691) | 12,056,507 | | 2022 | 12,805,107 | (5,289,424) | — | 2,866,693 | 10,382,376 | | 2021 | 33,072,440 | 6,256,043 | — | 1,096,434 | 40,424,917 | | 2020(1) | 12,523,591 | — | — | — | 12,523,591 | | 9,170,268 | 14,290,966 | — | 11,316,631 | 34,777,865 | |
(1)In 2020 the CEOs were Carol Tomé (first row) and David Abney (second row). •Stock awards issued under the Management Incentive Plan are valued at the New York Stock Exchange (“NYSE”) closing price of UPS Class B stock at each applicable date. •Outstanding stock awards issued under the Long-Term Incentive Plan are valued using a Monte Carlo model at each reporting date with performance outcomes assumed to be at target. Long-Term Incentive Plan awards that vest during the period are valued using actual performance outcomes and the NYSE closing price of UPS Class B stock on the vesting date. •Option awards are valued using a Black-Scholes option pricing model that reflects the award’s exercise price relative to the NYSE closing price of UPS Class B common stock at each valuation date. •Stock award valuations include reinvested dividends where applicable.
| Average Other NEOs SCT Total to CAP Reconciliation | Average Other NEOs SCT Total to CAP Reconciliation | | Average Other NEOs SCT Total to CAP Reconciliation | | Average Other NEOs SCT Total to CAP Reconciliation | | Year | Year | Summary Compensation Table Total for Other NEOs ($) | Deductions from SCT Total(1) ($) | Additions to SCT Total(2) ($) | Compensation Actually Paid ($) | | Year | | Year | | 2023 | | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | 2022 | 6,714,395 | 5,656,643 | 4,083,413 | 5,141,166 | | 2021 | 2021 | 10,489,120 | 8,564,070 | 17,648,669 | 19,573,719 | | 2021 | | 2021 | | 2020 | 2020 | 5,454,192 | 3,897,928 | 9,625,608 | 11,181,872 | | 2020 | | 2020 | |
(1)Represents the average grant date fair value of stock awards granted during the year (2022:(2023: $4,765,597, 2022: $5,378,818, 2021: $8,200,584, 2020: $3,369,684), the average grant date fair value of option awards granted during the year (2022:(2023: $399,020, 2022: $277,825, 2021: $351,349, 2020: $210,297) and the average aggregate change in the actuarial present value of accumulated benefits under pension plans (2022:(2023: $946,621, 2022: $—, 2021: $12,137, 2020: $317,948). (2)Represents the average service cost for defined benefit pension plans (2022:(2023: $—, 2022: $44,219, 2021: $40,127, 2020: $65,084) and the value of equity awards calculated using the required methodology for determining CAP, as further detailed in the table below.
| Average Other NEOs Equity Component of CAP | Average Other NEOs Equity Component of CAP | | | Average Other NEOs Equity Component of CAP | | Average Other NEOs Equity Component of CAP | | Year | Year | Year End Fair Value of Equity Awards Granted in the Year ($) | Year over Year Change in Fair Value of Outstanding Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustments ($) | | Year | | Year | | 2023 | | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | 2022 | 4,841,329 | (1,551,105) | — | 748,969 | 4,039,194 | | 2021 | 2021 | 12,120,687 | 2,762,650 | — | 2,725,205 | 17,608,542 | | 2021 | | 2021 | | 2020 | 2020 | 6,340,480 | 1,480,751 | 120,414 | 1,618,878 | 9,560,524 | | 2020 | | 2020 | |
•Stock awards issued under the Management Incentive Plan are valued at the NYSE closing price of UPS Class B stock at each applicable date. •Outstanding stock awards issued under the Long-Term Incentive Plan are valued using a Monte Carlo model at each reporting date with performance outcomes assumed to be at target. Long-Term Incentive Plan awards that vest during the period are valued using actual performance outcomes and the NYSE closing price of UPS Class B stock on the vesting date. •Option awards are valued using a Black-Scholes option pricing model that reflects the award’s exercise price relative to the NYSE closing price of UPS Class B common stock at each valuation date. •Stock award valuations include reinvested dividends where applicable.
The following table lists the financial performance measures that we believe represent the most important financial performance measures we use to link compensation actually paid to our NEOs for fiscal 20222023 to our performance.
| | | | Tabular List | | Adjusted operating profit | | Revenue growth | | Adjusted return on invested capital | | Adjusted earnings per share growth | | Adjusted free cash flow | |
| | | | | | | | | 6460 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
Proposal 2 — Advisory Vote to Approve Named Executive Officer Compensation | | | | What am I voting on? Whether you approve, on an advisory basis, the compensation of the NEOs as disclosed in this Proxy Statement. Board’s Recommendation: Vote FOR this proposal. Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy. | |
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the Exchange Act, shareowners may vote, on an advisory basis, to approve the 20222023 compensation paid to our NEOs as disclosed in this Proxy Statement (“say on pay”). We currently conduct say on pay votes annually. We expect that the next say on pay vote will occur at our 20242025 Annual Meeting of Shareowners. Pay for performance and alignment with the long-term interests of our shareowners are key principles of our compensation programs. NEO compensation reflects the following: •encouraging executive decision-making that is aligned with the long-term interests of our shareowners; •tying a significant portion of executive pay to Company performance over a multi-year period; •promoting UPS’s long-standing culture of owner-management; and •balancing shorter and longer-term performance metrics to encourage the efficient management of our business and minimizing excessive risk-taking. Although this vote is non-binding, the Compensation and Human Capital Committee and the board value your views and will consider the voting results. If there is a significant negative vote, we expect that we will consult directly with significant shareowners to better understand their concerns. The Compensation and Human Capital Committee and the board would consider feedback obtained through this process in making future compensation decisions. In accordance with the Dodd-Frank Act, this vote does not overrule any decisions by the board, will not create or imply any change to or any additional fiduciary duties of the board and will not restrict or limit the ability of shareowners generally to make proposals for inclusion in proxy materials related to executive compensation. Shareowners are being asked to approve the following resolution: “RESOLVED, that the shareowners approve, on an advisory basis, the compensation of the NEOs, as described in the Compensation Discussion and Analysis section and in the compensation tables and accompanying narrative disclosures in the Company’s Proxy Statement for the 20232024 Annual Meeting of Shareowners.” | | | | | | | | | 6662 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
Proposal 3 — Advisory Vote on the Frequency of Future Advisory Votes to Approve Named Executive Officer Compensation
| | | | | | | | | | | | | | | | What am I voting on? The frequency of future advisory votes on the compensation of the NEOs as described in the applicable proxy statement.
Board’s recommendation: Vote for a frequency of EVERY YEAR.
Vote required: Approval by a majority of the voting power of the shares present in person or by proxy.
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In accordance with the Dodd-Frank Act and Section 14A of the Exchange Act, in addition to providing shareowners with the opportunity to cast an advisory vote to approve the compensation of our NEOs, the Company this year is providing shareowners with the ability to cast an advisory vote to approve whether the advisory vote on NEO compensation should be held every year (annual), every two years (biennial), or every three years (triennial). For this proposal, shareowners can indicate whether they would prefer that we hold future advisory votes to approve NEO compensation every year, every two years, every three years, or they may abstain from voting on this proposal. At the Company’s most recent vote in 2017 on the frequency of advisory votes to approve NEO compensation, shareowners approved a triennial voting frequency. However, in light of developing trends in corporate governance, in 2020, we began to voluntarily provide shareowners an annual
opportunity to vote to approve such compensation. We continue to believe that an annual vote to approve NEO compensation is appropriate.
Although the vote is non-binding, the board and the Compensation and Human Capital Committee will review the voting results in making a decision as to the policy to be adopted by the board on the frequency of future advisory votes to approve NEO compensation.
In accordance with the Dodd-Frank Act, this vote does not overrule any decisions by the board, will not create or imply any change to or any additional fiduciary duties of the board and will not restrict or limit the ability of shareowners in general to make proposals for inclusion in proxy materials related to executive compensation.
| | | Ownership of Our Securities |
Securities Ownership of Certain Beneficial Owners and Management The following table sets forth information as to each person known to us to be the beneficial owner of more than five percent of either our class A or class B common stock, based on SEC filings by such persons. Class A shares are entitled to ten votes per share and class B shares are entitled to one vote per share on each matter acted upon at the Annual Meeting. Class A shares are held by current and former employees and are not publicly traded. As of March 1, 20232024 there were 134,119,136 125,478,056 outstanding shares of class A common stock and 722,802,470727,841,749 outstanding shares of class B common stock. | Name and address | Name and address | Number of Shares of Class B Stock Beneficially Owned | Percent of Class B Stock | Name and address | Number of Shares of Class B Stock Beneficially Owned | Percent of Class B Stock | BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 57,900,388 | 8.0% | BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 54,283,579 | 6.4% | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 67,566,426 | 9.3% | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 67,218,177 | 7.9% |
(1)AccordingAccording to a Schedule 13G/A filed with the SEC on February 3, 2023,January 26, 2024, BlackRock, Inc. has sole voting power with respect to 52,261,57449,199,159 shares and sole dispositive power with respect to 57,900,388all 54,283,579 shares. (2)According to a Schedule 13G/A filed with the SEC on February 9, 2023,13, 2024, The Vanguard Group has shared voting power with respect to 1,083,417918,229 shares, sole dispositive power with respect to 64,399,61064,027,901 shares and shared dispositive power with respect to 3,166,8163,190,276 shares. The following table sets forth the beneficial ownership of our class A and class B common stock as of March 1, 20232024 by each of our NEOs, each of our directors, and all of our executiveexecutive officers and directors as a group. Ownership is calculated in accordance with SEC rules and regulations. | | | Number of Shares Beneficially Owned(1) | Total Shares Beneficially Owned(4) | | Number of Shares Beneficially Owned(1) | Total Shares Beneficially Owned(4) | | | Class A Shares(2)(3) | Class B Shares | | Class A Shares(2)(3) | Class B Shares | Named Executive Officers | Named Executive Officers | | | Carol Tomé | Carol Tomé | 310,987 | 13,036 | 324,023 | | Carol Tomé | | Carol Tomé | | Brian Newman | | Brian Newman | | Brian Newman | Brian Newman | 58,994 | 25,000 | 83,994 | | Nando Cesarone | Nando Cesarone | 56,622 | 1 | 56,623 | | Nando Cesarone | | Nando Cesarone | | Kate Gutmann | | Kate Gutmann | | Kate Gutmann | Kate Gutmann | 108,085 | — | | 108,085 | | Bala Subramanian | Bala Subramanian | 2,114 | — | | 2,114 | | Bala Subramanian | | Bala Subramanian | | Non-Employee Directors | | Non-Employee Directors | | Non-Employee Directors | Non-Employee Directors | | Rodney Adkins | Rodney Adkins | 18,069 | — | | 18,069 | | Rodney Adkins | | Rodney Adkins | | Eva Boratto | | Eva Boratto | | Eva Boratto | Eva Boratto | 2,728 | — | | 2,728 | | Michael Burns | Michael Burns | 34,802 | — | | 34,802 | | Michael Burns | | Michael Burns | | Wayne Hewett | | Wayne Hewett | | Wayne Hewett | Wayne Hewett | 2,728 | 873 | 3,601 | | Angela Hwang | Angela Hwang | 3,078 | — | | 3,078 | | Angela Hwang | | Angela Hwang | | Kate Johnson | | Kate Johnson | | Kate Johnson | Kate Johnson | 2,414 | — | | 2,414 | | William Johnson | William Johnson | 32,104 | 160 | 32,264 | | Ann Livermore | 57,558 | — | | 57,558 | | William Johnson | | William Johnson | | Franck Moison | | Franck Moison | | Franck Moison | Franck Moison | 9,938 | — | | 9,938 | | Christiana Smith Shi | Christiana Smith Shi | 8,018 | — | | 8,018 | | Christiana Smith Shi | | Christiana Smith Shi | | Russell Stokes | | Russell Stokes | | Russell Stokes | Russell Stokes | 2,414 | 400 | 2,814 | | Kevin Warsh | Kevin Warsh | 20,167 | — | | 20,167 | | Executive Officers and Directors as a Group (21 persons) | 962,838 | | 44,820 | | 1,007,658 | | (5) | Kevin Warsh | | Kevin Warsh | | Executive Officers and Directors as a Group (20 persons) | | Executive Officers and Directors as a Group (20 persons) | | Executive Officers and Directors as a Group (20 persons) | | 1,059,749 | | 39,465 | | 1,099,214 | | (5) |
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(1)Includes shares for which the named person or group has sole voting or investment power or has shared voting or investment power with his or her spouse. (2)Includes class A shares that may be acquired through April 30, 20232024 upon the conversion of RSUs following a separation from the Board of Directors, including 26,05227,071 RSUs held by Carol Tomé in connection with her prior service as a non-employee director. (3)Includes class A shares that may be acquired through stock options exercisable through April 30, 20232024 as follows: Tomé – 174,237;207,313; Newman – 26,133;38,931; Cesarone – 9,293;20,449; Gutmann – 34,755;68,357; Subramanian - 0;1,818; and directors and executive officers as a group — 348,409.429,901. (4)All directors and executive officers individually and as a group held less than one percent of outstanding shares of each of class A and class B common stock outstanding as of March 1, 2023.2024. Assumes that all options exercisable through April 30, 20232024 and owned by the named individual are exercised, and that shares acquirable under RSUs through April 30, 20232024 are so acquired. The total number of shares outstanding used in calculating this percentage for each individual person also assumes that none of the options owned by other named individuals are exercised and that none of the shares acquirable under the RSUs held by other named individual are so acquired. (5)Includes 280585 RSUs and RPUs for executive officers and directors as a group that vest and convert to class A common stock prior to April 30, 2023.2024. Directors hold vested equity interests that, in accordance with SEC reporting rules, are not reported in the table aboveabove because the individual does not have the right to acquire beneficial ownership of the underlying shares within 60 days of March 1, 2023.2024. These equity interests represent additional financial interests in UPS that are subject to the same market risks as ownership of our common stock. For Carol Tomé and Ann Livermore,, represents 1,336 and 2,8271,389 phantom stock units, respectively;units; and for Michael Burns, Wayne Hewett, Franck Moison and Kevin Warsh, represents deferred non-employee director retainer fees allocated to 5,470, 1,203, 7595,685, 1,250, 1,334 and 9,33210,449 shares of UPS common stock, respectively, within the UPS Deferred Compensation Plan. Phantom stock units were granted to non-employee directors pursuant to a deferred compensation program previously provided to non-employee directors. Carol’s phantom stock units were awarded during her prior service as a non-employee director. Dividends paid on UPS common stock are credited to the director’s phantom stock unit balance. Upon termination of the individual’s service as a director, amounts represented by phantom stock units will be distributed in cash over a time period elected by the recipient. Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own beneficially more than 10% of either our class A or class B common stock to file reports of ownership and changes in ownership of such stock with the Securities and Exchange Commission. To our knowledge, for 20222023 each of our directors and executive officers complied with all applicable Section 16(a) filing requirements, except for two Formsthe late filing in of one Form 4 for Franck Moison, botheach of which reported separate transactions. The two Forms 4 were filedour then-executive officers, relating to a single equity grant made in March 2023, that was late due to a Company administrative error.
| | | | | | | | | 64 | | 69Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
Proposal 43 — Ratification of Auditors | | | | What am I voting on? Ratify the Audit Committee’s (as used in this Audit Committee Matters section, the “Committee”) appointment of Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for 2023.2024. Board’s Recommendation: Vote FOR the ratification of the appointment of Deloitte as our independent registered public accounting firm for 2023.2024. Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.proxy and entitled to vote on the proposal. | |
Deloitte has been our independent auditor since we became a publicly traded company in 1999. Prior to 1999, Deloitte served as the independent auditor of our privately held parent company since 1969. Deloitte audited our 20222023 consolidated financial statements and our internal control over financial reporting. The Committee appointed Deloitte as our independent registered public accounting firm for the year ending December 31, 2023.2024. The board recommends that shareowners ratify Deloitte’s appointment. Although shareowner ratification is not required, the board believes that seeking ratification is a good corporate governance practice. If not ratified, the Committee will reconsider Deloitte’s appointment. Even if ratified, the Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of UPS and its shareowners. A Deloitte representative is expected to attend the Annual Meeting, will have the opportunity to make a statement if desired, and be available to respond to appropriate shareowner questions. Additional information about the Committee, Deloitte’s appointment and fees, and other related matters follows. Audit Committee Report Roles and Responsibilities. The Committee’s key responsibilities are described in its charter. The charter is reviewed annually and was most recently approved by the board in 20222023 and is available on the governance section of the UPS Investor Relations website at www.investors.ups.com. Pursuant to its charter, the Committee’s purposes, duties and responsibilities include: •assisting the board in discharging its responsibilities relating to the Company’s accounting, reporting and financial practices; •overseeing the Company’s accounting and financial reporting processes, including reviewing earnings or annual report press releases, overseeing the integrity of financial statements and evaluating major financial risks; •having sole authority to appoint, oversee, determine the compensation of and terminate the Company’s independent registered public accounting firm; and •overseeing the Company’s disclosure controls and internal controls, compliance with legal and regulatory requirements, and Code of Business Conduct. Management has primary responsibility for preparing the Company’s financial statements and establishing effective internal control over financial reporting. Deloitte is responsible for auditing those financial statements and the Company’s internal control over financial reporting and expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on the effectiveness of internal control over financial reporting based on criteria established by the Committee of Sponsoring Organizations of the Treadway Commission. The Committee appoints the independent registered public accounting firm, approves the terms of the audit engagement, and reviews and approves Deloitte’s fees. In this context, the Committee discussed the terms of Deloitte’s 20232024 audit engagement, the audit’s overall scope and plan, and the other matters required to be
discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Committee asked Deloitte questions relating to such matters. | | | | | | | | | 70 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
Financial Statement Oversight. The Committee met with management and Deloitte to review and discuss the Company’s audited financial statements and internal control over financial reporting. The Committee discussed with management and Deloitte the critical accounting policies applied by the Company in the preparation of its financial statements, the quality, and not just the acceptability, of the accounting principles utilized, the reasonableness of significant accounting judgments, and the clarity of disclosures in the financial statements. The Committee also reviewed and discussed the Company’s enhanced assessment and oversight of the effects of COVID-19 on internal controls and financial reporting. The Committee regularly met with Deloitte and UPS’s internal auditors, in each case with and without other members of management present, to discuss the results of their respective examinations, the evaluations of the Company’s internal control and the overall quality and integrity of the Company’s financial reporting. Internal Audit Oversight. The Committee reviewed UPS’s internal audit plan and the performance, responsibilities, charter, budget and staffing of UPS’s internal audit function. Compliance and Ethics Oversight. The Committee met with members of management to discuss the Company’s legal and ethical compliance programs. The Committee also oversaw compliance with procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing and other federal securities law matters, including confidential and anonymous submissions of these complaints. Auditor Independence. Deloitte provided the Committee with the written disclosures and the letter required by the PCAOB regarding Deloitte’s communications with the Committee concerning independence. The Committee discussed Deloitte’s independence with the firm and considered whether Deloitte’s provision of non-audit services was compatible with their independence. Pre-approvals. The Committee requires the pre-approval of all audit and non-audit services provided by Deloitte. The Committee reviewed and pre-approved all fees paid to Deloitte. Committee Assessment of Deloitte. The Committee, along with management and the Company’s internal auditors, reviewed Deloitte’s 20222023 performance. The Committee considered the continued independence, objectivity and professional skepticism of Deloitte, the length of time that Deloitte has served as the Company’s independent auditors, the breadth and complexity of the business and its global footprint. The Committee also considered external data and management’s perception of Deloitte’s auditing qualification and experience, the quantity and quality of Deloitte’s staff, Deloitte’s fees, the communication and interaction with the Deloitte team over the course of the prior year, PCAOB reports on Deloitte, and the potential impact of changing independent registered public accounting firms. The Committee determined that Deloitte can provide both the necessary expertise and has a similar global footprint to effectively audit UPS worldwide. The Committee also considered the efficiencies resulting from Deloitte’s deep understanding of our business, Deloitte’s focus on independence, their quality control policies, the quality and efficiency of the work performed, and the quality of discussions and feedback sessions. Additionally, the Committee is involved in the selection of the new partner-in-charge of the audit engagement when there is a rotation required under applicable rules. Based on the results of its review, the Committee concluded that Deloitte is independent and that it is in the best interests of UPS and its shareowners to appoint Deloitte to serve as the Company’s independent registered accounting firm for 2023.2024. The board recommends that shareowners ratify this appointment. Furthermore, the Committee recommended to the Board of Directors that the audited financial statements be included in UPS’s Annual Report on Form 10-K for the year ended December 31, 20222023 for filing with the SEC. The Audit Committee Eva Boratto, Chair
Michael Burns
Wayne Hewett
Angela Hwang
| | | | | | | | | 66 | | 71Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
Principal Accounting Firm Fees The Committee, with the ratification of the shareowners, engaged Deloitte to perform the annual audits of the Company’s financial statements for each of the fiscal years ended December 31, 20222023 and 2021.2022. The aggregate fees billed to us for the fiscal years ended December 31, 20222023 and 20212022 by Deloitte, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates are listed in the table:
| | | | | | | | | | | | | | | | 2022 | 2021 | Audit Fees(1) | $ | 17,969,000 | | $ | 20,246,000 | | Audit-Related Fees(2) | $ | 1,977,000 | | $ | 1,491,000 | | Total Audit and Audit-Related Fees | $ | 19,946,000 | | $ | 21,737,000 | | Tax Fees(3) | $ | 65,000 | | $ | 128,000 | | All Other Fees(4) | $ | 80,000 | | $ | — | | Total Fees | $ | 20,091,000 | | $ | 21,865,000 | |
| | | | | | | | | | | | | | | | 2023 | 2022 | Audit Fees(1) | $ | 20,228,000 | | $ | 17,969,000 | | Audit-Related Fees(2) | $ | 1,615,000 | | $ | 1,977,000 | | Total Audit and Audit-Related Fees | $ | 21,843,000 | | $ | 19,946,000 | | Tax Fees(3) | $ | 98,000 | | $ | 65,000 | | All Other Fees(4) | $ | 6,000 | | $ | 80,000 | | Total Fees | $ | 21,947,000 | | $ | 20,091,000 | |
(1)Fees for professional services performed by Deloitte for the audit of our annual financial statements and review of financial statements included in our Form 10-Q filings, internal control attestation procedures, statutory audits of foreign subsidiary financial statements and other services that are normally provided in connection with statutory and regulatory filings or engagements. (2)Fees for assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review of our financial statements. This includes employee benefit plan and compensation plan audits, independent service auditors’ reports, attestation procedures related to securities offerings, and other attestations by Deloitte.attestations. (3)Fees for professional services performed by Deloitte with respect to tax compliance work and tax planning and advice services. This includes review of original and amended tax returns for the Company and its consolidated subsidiaries, refund claims, and payment planning and tax audit assistance. (4)Fees for professional services performed by Deloitte with respect to assessmentsassessment of climate reporting readiness.readiness and financial systems implementation assistance, and subscription fees to the Deloitte online accounting research platform. | | | Services Provided by Deloitte |
All services provided by Deloitte are permissible under applicable laws and regulations. The Committee has established a policy requiring the pre-approval of all audit and non-audit services performed by Deloitte in order to help assure that the provision of such services does not impair Deloitte’s independence. Proposed services may be pre-approved through the application of detailed policies and procedures (“general pre-approval”) or by specific review of each service (“specific pre-approval”). Unless a type of service to be provided by Deloitte has received general pre-approval, it requires specific pre-approval by the Committee. Any proposed services exceeding pre-approved cost levels also require specific approval by the Committee. The Audit, Audit-Related, Tax and All Other services that have received general pre-approval of the Committee, and those services that are prohibited, are described in the policy along with the corresponding cost levels. The term of any general pre-approval is twelve months from the date of pre-approval, unless otherwise stated. The Committee annually reviews and pre-approves the services that may be provided by Deloitte without obtaining specific pre-approval and may revise the list from time to time based on subsequent determinations. The Committee has delegated to its Chair the authority to pre-approve certain permitted services between the Committee’s regularly scheduled meetings, and the Chair must report any pre-approval decisions to the Committee at its next scheduled meeting for review by the Committee. The policy prohibits the Committee from delegating its responsibilities to management for pre-approving Deloitte’s permitted services.
| | | | | | | | | | 72 | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement67 |
In accordance with SEC rules, we have set forth below shareowner proposals and the shareowner proponents’ supporting statements. The board’s response to each proposal and voting recommendation are also set forth below. The board recommends a vote against each proposal because it does not believe the proposals will drive or create long-term shareowner value. Each shareowner proposal will be voted on at our Annual Meeting only if properly presented at the meeting. The Company is not responsible for any inaccuracies contained in the proposals. Proposal 54 — Shareowner Proposal to Reduce the Voting Power of Class A Stock from 10 Votes Per Share to One Vote Per Share What am I voting on? Whether you want the board to take steps to reduce the voting power of the Company’s class A stock from 10 votes per share to one vote per share. Board’s Recommendation: Vote AGAINST this proposal because: •The proposal is not in the best interests of the Company or its shareowners •UPS’s capital structure is unique and does not present risks inherent in typical dual-class structures
•UPS’s dual-classcapital structure does not concentrate voting power or provide any holder a level of control. Class A shares are held by more than 155,000 owners, and management, collectively, holds less than 1% of the voting power of our stock •UPS’s dual-classcapital structure does not entrench management or the board. There is no controlling founder or family, and we regularly refresh management and the board •UPS’s governance documents provide additional safeguards against traditional dual-class concerns, including a de facto “sunset” provision on outstanding shares. Transfers of Class A shares are limited, resulting in conversion to Class B shares upon most transfers, and voting restrictions apply upon the acquisition ofapplicable to a significant voting block •UPS’s capital structure has contributed to its long-term success •Eliminating this structure will not further improve UPS’s corporate governance or financial performance Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.proxy and entitled to vote on the proposal. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, has advised us that he intends to submit the proposal set forth below for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary. Proposal 5 —4 - Equal Voting Rights for Each Shareholder
Shareholders request that our Board of Directors take steps to ensure that all of our company’scompany's outstanding stock has an equal one-vote per share in each shareholder voting situation. This would encompass all practicable steps including encouragement and negotiation with current and future shareholders, who have more than one-vote per share, to request that they relinquish, for the common good of all shareholders, any preexisting rights, if necessary. This proposal is not intended to unnecessarily limit our Board’sBoard's judgment in crafting the requested change in accordance with applicable laws and existing contracts. This proposal is important because certain shares have super-sized voting power with 10-votes per share compared to only one-vote per share for other shareholders. Corporate governance advocates have suggested a 7-year transition to equal voting rights for each share. | | | | | | | | | 68 | | Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
In spite of lopsided shares having 10-times more voting power, support for this UPS proposal topic has steadily grown from 21% in 2013 to 32%33% in 2022.2023. With stock having 10-times more voting power UPS takes our shareholder money but does not give us in return an equal voice in our company’scompany's management.
Without a voice, shareholders cannot hold management accountable. It is important to continue to vote for this proposal to block UPS management from finding creative ways to further reduce their money at risk at UPS while maintaining the same control. Plus, with the UPS shareholder-unfriendly brand of corporate governance, we had no right to call a special meeting or act by written consent. And we were restricted by provisions mandating an undemocratic 80%-vote in order to make a certain improvements to our corporate governance. This undemocratic 80% vote requirement translates into a wellwell over a 100% vote requirement from the shares that typicaltypically vote at the annual meeting. And in spite of insider UPS shares having super voting power 5 UPS directors each received more than 140 million against votes in 2023. This compares to 9 UPS directors each receiving less than 10 million against votes. Please vote yes: Equal Voting Rights for Each Shareholder — Proposal 5 4UPS has a unique employee ownership culture that has helped it grow and thrive. Current and former employees have been significantimportant shareowners of the Company since well before the Company’s IPO in 1999. UPS founder Jim Casey fostered this culture and an ownership mindset by urging his partners to run their departments like their own small business. The Company’s capital structure was developed and implemented in connection with the IPO in order to help ensure employees, who would own only a small portion of the number of shares outstanding, continued to feel like owners as contemplated by Jim Casey. This connection remains true today. Our ownership structure includes class A and class B common stock. The class A shares are issued as incentive compensation and held by current and former UPS employees and their families in order to further our culture and ownership mindset. The Company’s class B shares are publicly traded. This structure provides a significant incentive for our employees to take actions and make decisions that help facilitate UPS’s long-term success, resulting in aligned interests among all shareowners. The structure also significantly enhances employee and retiree engagement.engagement, while not exposing class B shareholders to financial or other risk. UPS’s capital structure is unique and does not present risks inherent in typical dual-class structures The board strongly disagrees with this proposal’s characterization of UPS’s capital structure. Some companies maintain multiple classesAs described below, UPS’s unique capital structure does not present any of stock to concentratethe risks that typically accompany dual-class capital structures, such as concentrated voting power withwithin a limited number of people (such as company founders) who have interests that may not align with other shareowners. Others embed the structure to promoteshareowners, promotion of managerial entrenchment or provideprovision for disparate financial returns. As described below,In fact, UPS’s uniquegovernance provisions overlaying our capital structure does not presentare designed to limit any of those risks.these potential negative consequences. UPS’s dual-class structure does not concentrate voting power or provide any holder a level of control; provisions of UPS’s governance documents would preventlimit voting power in the event of vote concentration Dual-class structures are typically designed to protectconcentrate voting control in an individual or small group. UPS’s dual-class structure does not have this design or effect. The class A shares are widely held byissued and held; there are approximately 155,000157,000 current and former employees who own the shares, from employees in our operations to executive officers. No single holder or group of holders owns any significant voting bloc.block. Our executive officers and directors, collectively, hold less than 1% of theour total voting power of our class A and class B common stock.power. As a result, no founders, executive officers and directors, or other holders, are able to exercise control or any significant influence over voting decisions. In addition,To further reduce any risk of any concentration of voting power and contrary to most dual-class structures, UPS’s certificate of incorporation (the “Certificate”) also contains provisions that would limit voting rights in the event of a concentration of ownership. Specifically, the voting power of any shareholder, whether the holder of class A or class B common stock, is curtailed if that holder controlledcontrols over 25% of UPS’s outstanding voting power.
UPS’s dual-class structure doesactual governance practices do not entrench management or the board In many instances, dual-class capital structures have the purpose or effect of entrenching management or the board. UPS maintains robust corporate governance practices typical of more traditional capital structures, and its capital structure is not used to entrench management or the board.for entrenchment purposes. The board regularly reviews and considers succession planning issues. Our CEO has served in that role only since June 2020, and we addedmaintain an independent board chair at that time.chair. Also, since 2020, we have added five new board members, all of whom are diverse, and had four board members retire. In addition, during that time we added threefive new Executive Leadership Team members, - allthree of whom are diverse, - and had fiveseven leave the Company. UPS’s governance documents provide additional safeguards against traditional dual-class concerns, includingcapital structure has an effective “sunset” exercised through both governance documents and corporate practice; no disparate financial treatment is allowed UPS’s Certificate contains a number of provisions that provide additional safeguards against traditional dual-class concerns. For example, the Certificate contains provisions that provide an effective “sunset” provision on outstanding class A shares. This is accomplished through significant transfer restrictions; in most cases class A share transfers require or result in the conversion of those shares to class B shares. Further, the Company’s recent pay mix redesign - which has resulted in an averagethe effect of reducing the number of class A shares issued each year - will accelerate this reduction. As a result, the average annual decline in the number of outstanding shares of class A common stock of 3.4%has been 3% per year since the Company went public. This decline in the number and percentage of shares of class A common stock is expected to accelerate in future | | | | | | | | | 74 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
years. Generally, class A shares convert to class B shares upon a sale or transfer (unless transferred by an employee to a spouse or child). As described above, the Certificate also contains provisions that would limit the voting power of any class A or class B common shareholder, if that holder controlled over 25% of UPS’s outstanding voting power. These governance principles run counter to the traditional notions of dual-class structures. In addition, the Certificate generally requires equal economic treatment of the class A and class B common stock, ensuring that holders of one class would not receive disparate economic or financial treatment as a result of the different voting rights.
UPS’s capital structure has contributed to its long-term success The provisions underlying UPS’s dual-class capital structure do not impact management’s pursuit of long-term growth strategies, and avoid the drawbacks associated with excessive emphasis on the short-term. Management runs our Company with a sense of purpose by focusing on sustainable value creation benefiting all the Company’s stakeholders. In this regard, the interests of all UPS shareowners are aligned. The interests of employees, who hold class A shares, go beyond UPS’s current stock price and include operating the Company with a broader focus, which is important to our long-term success. Our growth and achievements have been bolstered by the commitmentengagement our capital structure has inspired in our employees and retirees. This capital structure allows management to pursue long-term growth strategies and avoid the drawbacks associated with excessive emphasis on the short-term. Management is able to run the Company with a sense of purpose by focusing on sustainable value creation benefiting all the Company’s stakeholders. In this regard, the interests of all UPS shareowners are aligned.
Eliminating this structure will not further improve UPS’s corporate governance or financial performance UPS already maintains robust corporate governance practices, eliminating a riskand our corporate structure and practices do not present risks typically associated with dual-class structures. Other than our CEO, all UPS director nominees are independent. All UPS directors are elected annually by a majority of votes cast in uncontested director elections, only independent directors serve on the board’s Audit, Compensation and Human Capital, Nominating and Corporate Governance and Risk Committees, and we have an independent Board Chair. Our board consists of an appropriate mix of newer and longer-tenured directors. In recent periods, the board has voluntarily adopted a number of corporate governance principles aligned with marketplace developments. These include voluntarily adopting an annual say on pay vote,increasing disclosures around lobbying and participation in the political process, specifically assigning human capital oversight responsibilities to the Compensation and Human Capital Committee, assigning environmental sustainability oversight responsibilities to the Nominating and Corporate Governance Committee, and adding to the Company’s proxy statement and sustainability reports gender and ethnicity information for employees and directors. ChangingFor the capital structure is unnecessary
Theforegoing reasons, the board believes that UPS’s current capital structure does not present governance risks and continues to be in the best interests of the Company and its stakeholders. Shareowners have agreed with this assessment when they rejected similar proposals every year since 2013.
The board recommends that shareowners vote AGAINST this proposal.
Proposal 6 — Shareowner Proposal Requesting the Adoption of Independently Verified Science-Based Greenhouse Gas Emissions Reduction Targets in Line with the Paris Climate Agreement
What am I voting on? Whether you want to require the Company to adopt greenhouse gas emissions reduction targets different from those already announced by the Company.
Board’s Recommendation: Vote AGAINST this proposal because:
•UPS’s sustainability goals include a plan to become carbon neutral across Scope 1, 2 and 3 emissions in our global operations by 2050
•Our strategy includes addressing airline fuel emissions and the electrification of our delivery fleet
•At this time we do not believe there exist any scalable solutions for aircraft to achieve a science-based target by 2030 or 2035, as would be required to be in line with the Paris Agreement’s goal
•UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress
•UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.
Green Century Capital Management, Inc., 114 State Street, Suite 200, Boston, MA 02109 and Trillium Asset Management LLC, Two Financial Center, 60 South Street, Suite 1100, Boston, MA 02111, have advised us that they intend to submit the proposal set forth below on behalf of the Trillium ESG Global Equity Fund and the Green Century Balanced Fund for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary.
Whereas: In 2018, the Intergovernmental Panel on Climate Change updated the goals of the 2015 Paris Agreement to advise that net carbon emissions must fall 45 percent by 2030 and reach net zero by 2050 to limit warming below 1.5 degrees Celsius, thereby preventing the worst consequences of climate change.
Climate change poses risks to United Parcel Service (UPS). Exceeding 1.5 degrees is predicted to increase sea level rise, severe heat waves, floods, and
hurricanes which may lead to shipping delays, including from washed out roadways,1 deterioration of bridge infrastructure,2 and buckling3 and flooding of airport runways.4 Shipping delays related to unpredictable weather cost US trucking companies $8.5 billion5 and global air cargo companies $1 billion,6 annually. By 2050, projections show heat waves costing the US economy $500 billion annually in lost labor productivity,7 and extreme heat has already led to the tragic deaths of several UPS drivers.8
As an integrated freight and logistics company, UPS contributes significantly to climate change. The transportation sector is the largest source of U.S. greenhouse gas emissions.9 Internal combustion engine medium and heavy-duty vehicles have significant adverse health impacts that disproportionately affect low-income communities and communities of color.10
1https://19january2017snapshot.epa.gov/climate-impacts/climate-impacts-transportation_.html
2https://www.climatelinks.org/sites/default/files/asset/document/BRIDGES_PRIMER_CCA_ENGINEERING_DESIGN.pdf
3https://www.upi.com/Top_News/World-News/2022/07/18/eu-runways-melt-britain-paris-parks-open-heat-wave-europe/1791658170654/
4https://19january2017snapshot.epa.gov/climate-impacts/climate-impacts-transportation_.html
5https://rosap.ntl.bts.gov/view/dot/3384
6https://www.tomorrow.io/blog/the-air-freight-industry-has-a-billion-dollar-weather-question-and-the-answer-is-now/
7https://www.atlanticcouncil.org/wp-content/uploads/2021/08/Extreme-Heat-Report-2021.pdf
8https://www.nytimes.com/2022/08/20/business/ups-postal-workers-heat-stroke-deaths.html
9https://www.eia.gov/totalenergy/data/monthly/pdf/flow/fossil-fuel-spaghettichart-2021.pdf
10https://www.washingtonpost.com/climate-solutions/2020/06/29/climate-change-racism/
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Whereas peers FedEx and Amazon have set goals for electric vehicle procurement, UPS’s goals for its ground fleet rely on alternative fuel, which unnecessarily prolongs potential emissions and bolsters fossil fuel infrastructure.11
While UPS has announced a goal to achieve carbon neutrality in its operations by 2050 and a 50 percent reduction in emissions per small package delivered by 2035, UPS has not set a goal that covers its scope 3 emissions, which represent 54 percent of its overall footprint.12 Additionally, shareholders do not know whether UPS plans on achieving net zero through actual emissions reductions or through the purchase of carbon offsets.
Given the risks climate change poses to the economy, environment, employees, and other stakeholders, proponents believe UPS has a responsibility to its investors and stakeholders to adopt greenhouse gas reduction goals aligned with a 1.5 degrees scenario. Independently verified, science-based goals covering
scopes 1-3 would provide shareholders with objective assurance that UPS is doing its part to reduce emissions in a comprehensive and timely manner. Peer DHL and 46 other air freight transportation and logistics companies have committed to set targets via the Science Based Targets Initiative (SBTi).
Resolved: Shareholders request that UPS adopt independently verified short and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to attain appropriate emissions reductions prior to 2030, in line with the Paris Agreement’s goal of limiting global temperature rise to 1.5 degrees Celsius.
Supporting Statement: We recommend, at management’s discretion, consideration of approaches used by advisory groups such as SBTi.
11https://www.sightline.org/2021/03/09/the-four-fatal-flaws-of-renewable-natural-gas/
12https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2021%20UPS%20GRI%20Report.pdf
UPS supports global efforts to mitigate the impact of climate change. Sustainability is an inherent part of UPS’s overall business and operating strategy. We take a comprehensive, global approach to reducing energy use and GHG emissions within our network, as well as major portions of our value chain. As a global leader in logistics and supply chain solutions, we transport packages, facilitate international trade, and apply advanced technology to efficiently manage the world of business. In this role, we have both a responsibility and an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating shipments and otherwise reducing carbon intensity.
UPS’s sustainability goals include a plan to become carbon neutral across Scope 1, 2 and 3 emissions in our global operations by 2050
In 2021, we announced ambitious sustainability goals as a part of our strategy, including a commitment to become carbon-neutral across our global operations by 2050, including Scope 1, 2 and 3 emissions. We also developed medium-term goals designed to help us achieve carbon neutrality, including adopting interim targets to reduce carbon emissions per package by 50% against a 2020 baseline; and to have 100% renewable electricity powering our facilities and use of 30% sustainable aviation fuel by 2035. Our sustainability goals, and progress towards achieving them, are further detailed in our annual sustainability disclosures.
Our strategy includes addressing airline fuel emissions and the electrification of our delivery fleet
UPS continues to transform its delivery fleet, and has made significant strides to this end. In 2022, aircraft fuel made up 66% of our total Scope 1 and Scope 2 GHG emissions. Our Fuel Analytics and Sustainability Group continuously evaluates opportunities to further reduce our emissions in this area, including accelerating efforts to reduce the carbon intensity of our fleet. We take a disciplined approach to emissions reductions in this area. We currently have one of the youngest, most fuel-efficient fleets in the industry. When appropriate, we make capital investments in newer, more fuel-efficient aircraft. In addition, we look for opportunities to retrofit older aircraft to further increase efficiency with the goal of lowering our carbon footprint.
As it relates to ground vehicles, we take a “rolling laboratory” approach of evaluating potential solutions in our network. We test prototypes on the road, collaborating with manufacturers, government agencies and other stakeholders to test feasibility, and evaluate appropriate investment opportunities. UPS’s fleet of more than 15,600 alternative fuel and advanced technology vehicles includes all-electric, hybrid electric, hydraulic hybrid, ethanol, compressed natural gas (CNG), liquefied natural gas (LNG) and propane vehicles.
UPS has evaluated the feasibility of adopting targets verified by the Science Based Targets Initiative
In developing our emissions reductions goals, we evaluated the potential adoption of targets verified by the Science Based Targets Initiative (“SBTi”). At this time, we do not believe there exist scalable solutions for aircraft or heavy-duty vehicles in the transportation sector that would allow us to achieve 2030 and 2035 targets as would be required by the SBTi. The primary decarbonization path for the aviation sector is sustainable aviation fuel (“SAF”), which is limited in supply, availability and economic feasibility. Additional innovation in this area is needed. To that end, we continue to work with fuel producers, customers, and industry peers to collaborate on bringing scale to the SAF market.
UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress
Each year, UPS reports company-wide emissions and tracks and discloses progress towards our emissions-reductions targets. We publish comprehensive sustainability related disclosures showcasing our commitment to our investors, our customers, our employees and the communities in which we operate. These include disclosures under the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) frameworks. UPS’s sustainability disclosures are extensive, targeted, and inclusive of Scope 1, 2, and 3 GHG emissions. We believe these disclosures provide stakeholders the information they need to assess our sustainability efforts and progress.
UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner
We believe everyone shares responsibility to improve energy efficiency and reduce GHG emissions. UPS supports global efforts to mitigate the impact of
climate change. Our optimized global smart logistics network, combined with our global GHG strategy, helps improve our efficiency and reduce our environmental impact. We will continue to take a fiscally responsible approach based on sound engineering principles to decarbonize our global operations. This technology and innovation driven strategy includes:
•Maintaining a leadership role in decarbonizing the transportation and logistics industries;
•Implementing operational improvements through technology to create overall network and delivery efficiencies beyond miles/fuel;
•Expanding our fleet of alternative fuel and advanced technology vehicles to reduce the proportion of conventional fuels we use;
•Supporting the testing and development of alternative air solutions, including electric aircraft and the use of SAF;
•Reducing conventional and increasing renewable energy use in our facilities;
•Providing customers with services that help them reduce their environmental impact; and
•Helping increase supplier awareness about GHG emissions and how to reduce them.
Adopting additional goals is unnecessary
The board believes the adoption of additional goals requested by this proposal is unnecessary given the Company’s ongoing efforts in this area and information that is already publicly available. Therefore, approval of this proposal would not result in an efficient use of resources or materially alter the Company’s efforts to reduce its emissions.
For these reasons, the board recommends that shareowners vote AGAINST this proposal.
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What am I voting on? Whether you want to require the board to prepare a report on integrating GHG emissions reductions targets into the performance goals, metrics and vesting conditions applicable to senior executives under UPS’s incentive compensation plans.
Board’s Recommendation: Vote AGAINST this proposal because:
•Commissioning this report is misguided and impracticable
•UPS provides transparency through comprehensive sustainability disclosures
•The Compensation and Human Capital Committee carefully considers the appropriate metrics for the Company’s incentive compensation programs
•UPS is committed to reducing our carbon footprint for the benefit of all stakeholders
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.
Zevin Asset Management, LLC, 2 Oliver Street, Suite 806, Boston, MA 02109, has advised us that they intend to submit the proposal set forth below on behalf of Ellen Sarkisian for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary.
RESOLVED: Shareholders request the United Parcel Service (UPS or the Company) Board Compensation Committee prepare a report assessing the feasibility of integrating the UPS’ committed GHG emissions targets, goals, and other relevant sustainability measures, (as determined by the Board) into the performance goals, metrics, and vesting conditions applicable to senior executives under the UPS' compensation incentive plans. GHG emissions targets are defined as those goals and targets disclosed by the company in its proxy statement and other public documents. Sustainability measures are defined as the environmental and related considerations, and related financial impacts, that are integrated into long term corporate strategy.
WHEREAS: UPS has announced a goal to achieve carbon neutrality in its operations by 2050 and a 50% reduction in emissions per small package delivered by 2035. However, UPS has not set a goal that covers its Scope 3 emissions, which represent 54% of its overall footprint. Additionally, shareholders do not know if UPS plans on achieving net zero through actual emissions reductions or through the purchase of carbon offsets.
We believe that alignment of a corporate climate transition strategy with executive compensation metrics and incentives can increase the likelihood of UPS achieving a timely climate transition.
Achievement of a climate strategy that supports UPS’ overall corporate strategy helps to protect long-term shareholder value.
A review of UPS' compensation structure for senior executives did not identify meaningful linkages between reducing GHG emissions and executive compensation. While compensation structures, especially for equity grants, are understandably linked primarily to shareholder returns, we believe these returns are impacted by the success of the Company in achieving its emissions targets and goals.
The achievement of the Company's committed carbon reduction targets is intended as an integral element of the success of overall corporate strategy. UPS has not committed to setting independently verified, science-based goals covering Scopes 1-3, which would provide shareholders with objective assurance that UPS is strategically reducing emissions in a comprehensive and timely manner.
Peer DHL and 46 other air freight transportation and logistics companies have committed to setting targets via the Science-Based Targets Initiative (SBTi). Chevron Corp., Marathon Petroleum Corp., and other Scope 3-intensive companies in recent years have tied executive compensation to reductions in their GHG emissions.1
SUPPORTING STATEMENT: Examples of approaches to linkages between GHG emissions reductions targets and compensation structures that the board could consider include:
•Design quantitative climate-related metrics with measurable payout or long-term incentive components
1 https://news.bloomberglaw.com/esg/executive-pay-tied-to-esg-goals-grows-as-investors-demand-action
•Adding a vesting requirement for a portion of performance equity grants that vest upon the achievement of interim GHG emissions targets
•The interim targets would provide a pathway to the achievement of overall, longer-term targets
•The interim period could align with typical equity grant vesting cycle
•Adding a requirement for the achievement of one-year interim GHG emissions targets to the annual bonus plan
•Adding similar short- or longer-term compensation goals to other, related, material ESG-related targets.
As a global leader in logistics and supply chain solutions, we transport packages, facilitate international trade, and apply advanced technology to efficiently manage the world of business. In this role, we know we have both a responsibility and an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating shipments and otherwise reducing carbon intensity.
UPS currently takes a comprehensive, global approach to reducing energy use and GHG emissions within our network, as well as major portions of our value chain. As a result, UPS’s senior executives are currently effectively managing for sustainability as a component of our long-term strategic goals. Integrating specific sustainability metrics into incentive compensation plans will not impact sustainability performance or long-term shareowner value at UPS.
This proposal mischaracterizes UPS’s sustainability goals; our plan is to become carbon neutral across Scope 1, 2 and 3 emissions in our global operations by 2050
The proposal incorrectly states that “UPS has not set a goal that covers its Scope 3 emissions...” In 2021, we announced ambitious sustainability goals as a part of our overall strategy, including a commitment to become carbon-neutral across our global operations by 2050, including Scope 1, 2 and 3 emissions. We also developed medium-term goals designed to help us achieve carbon neutrality, including adopting interim targets to reduce carbon emissions per package by 50% against a 2020 baseline; and to have 100% renewable electricity powering our facilities and use of 30% sustainable aviation fuel by 2035. Our sustainability goals, and progress towards achieving them, are further detailed in our annual sustainability disclosures.
Sustainability performance is already a component of executive incentive compensation
Sustainability is an inherent part of UPS’s overall business and operating strategy. We recognize that the efficiency of our global logistics network drives both business success and environmental impact. Our executive incentive compensation programs are designed to motivate towards the achievement of key performance metrics that support our long-term goals, including GHG emissions reductions.
Each year, the Compensation and Human Capital Committee, working closing with its independent consultant, seeks to optimize UPS’s profitability and growth through appropriate incentives which are consistent with our goals and link incentive compensation with Company performance. This approach aligns the interests of executives with those of our shareowners, promotes individual performance and encourages teamwork.
Payouts under the Company’s annual incentive program are subject to the achievement of key business objectives and at-risk based on Company performance. Payouts under the Company’s long-term incentive program are subject to achievement of performance metrics over a three-year period that support our long-term strategy. The Committee believes that the selected metrics are appropriate and in the best interest of the Company and its shareowners, and properly motivate executives. The Committee does not believe that introducing additional sustainability metrics into the executive compensation programs will impact performance or is appropriate at this time.
UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress
Approval of this proposal also would not impact UPS disclosure around GHG emissions reductions. Each year, UPS reports company-wide emissions and tracks and discloses progress towards our emissions-reductions targets. We publish comprehensive sustainability related disclosures showcasing our commitment to our investors, our customers, our employees and the communities in which we operate. These include disclosures under the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) frameworks. UPS’s sustainability disclosures are extensive, targeted, and inclusive of Scope 1, 2, and 3 GHG emissions. We believe these disclosures provide stakeholders appropriate information to assess our sustainability efforts and progress.
UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner
Approval of the proposal also would not impact our goal to reduce our carbon footprint. Through our goals, UPS supports global efforts to mitigate the
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impact of climate change. Our optimized global smart logistics network, combined with our global GHG strategy, helps improve our efficiency and reduce our environmental impact. We will continue to take a fiscally responsible approach based on sound engineering principles to decarbonize our global operations. This technology and innovation driven strategy includes:
•Maintaining a leadership role in decarbonizing the transportation and logistics industries;
•Implementing operational improvements through technology to create overall network and delivery efficiencies beyond miles/fuel;
•Expanding our fleet of alternative fuel and advanced technology vehicles to reduce the proportion of conventional fuels we use;
•Supporting the testing and development of alternative air solutions, including electric aircraft and the use of SAF;
•Reducing conventional and increasing renewable energy use in our facilities;
•Providing customers with services that help them reduce their environmental impact; and
•Helping increase supplier awareness about GHG emissions and how to reduce them.
UPS is widely recognized for its sustainability practices
Approval of the proposal also would not significantly impact our sustainability practices. UPS is committed to sustainable business practices, including transparent sustainability reporting. We published our first Corporate Sustainability Report in 2003, and we continue to lead the way with the adoption of new sustainability reporting standards. We have been repeatedly recognized for our sustainability leadership, including the following:
•Presented with the U.S. Environmental Protection Agency (EPA) SmartWay Excellence award in 2020, 2018, 2016, 2015, 2009 and 2008. The award recognizes outstanding environmental performance and leadership.
•Named to the “Civic 50” by Points of Light for being one of the most community-minded companies in the nation for the third time.
•Inducted into the Climate Leadership Hall of Fame at the Climate Leadership Awards for work in response to climate change.
•Named to CNBC and JUST Capital’s annual JUST 100 corporate leadership list. The list recognizes companies in the U.S. on environmental, social and governance issues.
The Compensation and Human Capital Committee carefully considers the appropriate metrics for the Company’s incentive compensation programs
The Committee works carefully with their independent advisors to set appropriate metrics for the Company’s incentive compensation programs. The Committee seeks to optimize the profitability and growth of our company through annual and long-term incentives which are consistent with our goals, and which link the senior executive compensation to the value of our common stock. This approach aligns the interests of senior executives more closely with those of our shareowners, promotes excellence in individual performance, and encourages teamwork among our employees.
Preparing an additional report is unnecessary
Integrating sustainability metrics into the process will not improve the already close alignment between senior executives and our shareowners’ interests. Therefore, approval of this proposal would not result in an efficient use of resources or materially alter the Company’s efforts to reduce its emissions.
For these reasons, the board recommends that shareowners vote AGAINST this proposal.
Proposal 85 — Shareowner Proposal Requesting the Board Prepare a Report on How the Company is Addressing the Impact of its Climate Change Strategy on Relevant Stakeholders Consistent with the “Just Transition” GuidelinesRisks Arising From Voluntary Carbon-Reduction Commitments
What am I voting on? Whether you want the boardCompany to be required to prepare aan additional report on howanalyzing the Company is addressing the impact of its climate change strategy on relevant stakeholders consistent with the “Just Transition” guidelines of the International Labor Organization and indicators of the World Benchmarking Association.risks arising from voluntary carbon-reduction commitments. Board’s Recommendation: Vote AGAINST this proposal because: •UPS already provides significant transparency, including comprehensive sustainability disclosures with regular updates on our progress, •UPS is committed to reducing our carbon footprint for the benefit of all stakeholders
•UPS is committed to maintaining open and honest dialogon risks and opportunities associated with our stakeholder and delivering positive social impact
•UPS continues to actively invest in talent recruitment and employee developmentemissions reductions efforts
•The UPS board provides independenteffective oversight of UPS’s human capital managementstrategy, which includes risks and economic, environmentalopportunities associated with emissions reductions efforts •Management’s execution of our strategy is grounded in a fiscally responsible approach using sound engineering principles •Management engages with key stakeholders to provide appropriate periodic updates on risks and social sustainability risksopportunities Vote Required:Approval by a majority of the voting power of the shares present in person or by proxy.proxy and entitled to vote on the proposal. The International Brotherhood of Teamsters, 925 Louisiana Avenue,National Center for Public Policy Research, 2005 Massachusetts Ave. NW, Washington, DC 20001,20036 has advised us that they intend to submit the proposal set forth below for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary. Reduce Company Greenwashing Risk Resolved:Whereas: Shareholders requestmust protect our assets against potentially unfulfillable Company ESG promises, including the Board of Directors prepare a report disclosing how United Parcel Service, Inc. ("UPS"extent to which the Company can reduce Scope 1, 2, and 3 greenhouse gas (GHG) emissions.
The Securities and Exchange Commission (SEC) has taken enforcement actions related to Environmental, Social, Governance (ESG) issues or statements by companies who misrepresent or engage in fraud related to ESG efforts.1 In 2021, the "Company") is addressingSEC created the impact of its climate change strategy on relevant stakeholders, including but not limited to its employees, workersClimate and ESG Task Force in its supply chain, and communities in which it operates, consistent with the "Just Transition" guidelinesDivision of Enforcement.2 The focus of the International Labor OrganizationTask Force is "to identify any material gaps or misstatements" in disclosure of climate risks and indicators of the World Benchmarking Association. The report should be prepared at reasonable cost, omit proprietary information,analyze "compliance issues relating to investment advisers' and be available to investors.funds' ESG strategies."3 Supporting Statement: The Task Force has taken numerous enforcement actions including charging Goldman Sachs Asset Management for policies and procedures failures related to ESG investments, resulting in a $4 million penalty,At4 and charging DWS Investment Management Americas Inc. in part for misstatements regarding its ESG investment process that resulted in an overall $25 million in penalties.5
The SEC has proposed to require companies to disclose information about their Scope 1 and 2 emissions, and to require them to disclose Scope 3 emissions "if material or if the 2021 UN Climate Change Conference,registrant has set a GHG emissions target or goal that includes Scope 3 emissions.”6 The Environmental Protection Agency defines Scope 3 emissions as, "the result of activities from assets not owned or controlled by the United Statesreporting organization, but that the organization indirectly affects in its value chain."7Put differently, "Scope 3 emissions for one organization are the scope 1 and other governments agreed2 emissions of another organization."8 This means that Scope 3 emissions are already counted as another entity's emissions, and are external to the Just Transition Declaration, which aligns with the "Just Transition" guidelines in the International Labor Organization's Guidelines for a just transition towards environmentally sustainable economiesreporting company, such as product use and societies for all. The latter states an environmentally sustainable future requires "anticipating impacts on employment, adequate and sustainable social protection for job losses and displacement, skills development and social dialogue." (https://how employees commute.9 www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/documents/publication/wcms_432859.pdf) Those guidelines emphasize the "pivotal role" of employers "in bringing about social, economic and environmental sustainability with decent work and social inclusion."
The World Benchmarking Association's indicators include discrete, time-based indicators, including those tied to developing a just transition plan through consultation with affected stakeholders; mitigating the negative social impacts of the carbon transition on workers and communities; establishing a clear process for identifying job dislocation risks for workers and communities; and developing plans to retain and reskill workers for an inclusive workforce. (See1 https://assets.worldbenchmarkingalliance.org/app/uploads/2021/07/Just-Transition-Methodology.pdf.)www.sec.gov/securities-topics/enforcement-task-force-focused-climate-esg-issues
In 2021, UPS announced its goal of becoming carbon-neutral across by 2050. This is laudable; however, UPS fails to disclose how this will be achieved in a manner consistent with a just transition, despite the potentially profound impact on employees and communities. A 2022 study by the World Benchmarking Alliance scored UPS at just 0.6/20 for its just transition indicator disclosure and called on the Company to increase reporting. (See2 https://www.worldbenchmarkingalliance.org/publication/transport/companies/united-parcel-service-ups/)www.sec.gov/news/press-release/2021-42
The challenges confronting a just transition strategy at UPS could not be clearer than when the company,3 https://www.sec.gov/news/press-release/2021-42; https://www.sec.gov/securities-topics/enforcement-task‑force-focused-climate-esg-issues
4 https://www.sec.gov/news/press-release/2022-209 5 https://www.sec.gov/news/press-release/2023-194 6 https://www.sec.gov/news/press-release/2022-46 7 https://www.epa.gov/climateleadership/scope-3-inventory-guidance 8 https://www.epa.gov/climateleadership/scope-3-inventory-guidance 9 https://www.epa.gov/climateleadership/scope-3-inventory-guidance | | | | | | | | | | 82 | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement71 |
in touting the sustainability benefits of route optimization technologies, states that "the greenest mile is the one not driven or flown."
There are also questions about the role UPS accordsVoluntary commitments to automation in achieving itsreduce carbon goals, even though such technologiesemissions create unnecessary risk displacing or down-skilling jobs. These efforts include deploying warehouse robotics and investments or partnerships with companies developing self-driving technologies and those working towards drone delivery.
Commenting on such initiatives at the 2021 shareholder meeting, CEO Carol Tomé concluded by saying "there's a lot going on here. We've got a real commitment to reducing our carbon footprint."
With route efficiency and automation seemingly core to UPS' climate-strategy, there is an urgent need for the Company because of the lack of scientific consensus over the ability to developachieve net zero emissions.
In August 2023, the Global Climate Intelligence Group asserted, "There is no climate emergency."10 The declaration includes 1,609 signatories and "oppose[s] the harmful and unrealistic net-zero CO2 policy proposed for 2050.”11 A June 2023 study by the Energy Policy Research Foundation found that net zero advocates have misconstrued the International Energy Agency's position on new oil and gas investment and that it has made questionable assumptions and milestones for NZE about government policies, energy and carbon prices, behavioral changes, economic growth, and technology maturity.12 Supporting Statement: UPS voluntarily reports on Scope 1, 2 and 3 emissions and makes voluntary commitments to reduce them.13 UPS does so even though it has failed to report on its evaluation of the technological or financial feasibility of such commitments. Given the SEC's climate and ESG enforcement actions, the Company must exercise caution and provide transparency about such commitments. Resolved: Shareholders request the Company produce a just transition plan to ensure its actions are fair and equitable to affected workers and communities. report analyzing the risks arising from voluntary carbon-reduction commitments.UPS supports global efforts to mitigate the impact of climate change. Sustainability is an inherent part of UPS’s overall business and operating strategy. Westrategy, and we take a comprehensive, global approach to reducing energy use and GHG emissions within our network, as well as major portions of our value chain. UPS takes a fiscally responsible approach utilizing sound engineering principles in the execution of our strategy. The UPS board provides effective oversight of UPS’s strategic risks and opportunities. Management’s day-to-day execution of our strategic objectives involves a multi-layered approach facilitated by an understanding of our business, the macroeconomic environment and the associated risks and opportunities. We report publicly on risks and opportunities associated with our approach and progress toward our goals on a regular basis. As a global leader in logistics and supply chain solutions, we transport packages, facilitate international trade, and apply advanced technology to efficiently manage the world of business. In this role, we have both a responsibility and an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating shipments and otherwise reducing carbon intensity. As UPS transitions to decarbonize our network, we understand there will be potential opportunities and challenges, and are committed to work with all of our stakeholders on this journey, including actively investing in our employees and communities and openly engaging with all stakeholders. The board’s oversight of human capital management and economic, environmental and social sustainability risks helps identify and mitigate those risks and foster our continued progress in those regards. We do not believeresult, the requested report would not significantly alter the mix of information available.
UPS alreadyis committed to reducing our carbon footprint for the benefit of all stakeholders, and provides transparency, includingtransparent, comprehensive sustainability disclosures with regular updates on our progress UPS is committed to sustainable business practices and transparent sustainability reporting. We published our first Corporate Sustainability Report in 2003, and we continue to evaluate the adoption of new sustainability reporting standards.2003. Each year, UPS reports company-wide emissions and tracks and discloses progress towards our emissions-reductions targets. Wewe publish comprehensive sustainability related disclosures showcasing our commitment to our investors, our customers, our employees and the communities in which we operate. These include disclosures under the Global Reporting Initiative (GRI)(“GRI”) and the Carbon Disclosure Project (CDP) frameworks. UPS’s sustainability disclosures are extensive, targeted,(“CDP”) frameworks, as well as an annual Social Impact Report which highlights our efforts to empower resilient, just and inclusive of Scope 1, 2, and 3 GHG emissions.safe communities. We believe these disclosures provide stakeholders the information they need to assess our sustainability efforts and progress. UPS is committed to reducing our carbon footprint for the benefit of all stakeholders
We believe everyone shares responsibility to improve energy efficiency and reduce GHG emissions and we Additional material issues are committed to reducing our carbon footprint for the benefit of all stakeholders. We are focused on five levers to achieve carbon neutrality by 2050:
•Efficiency and innovation – Our GHG emissions strategy includes improving our operational efficiency and reducing fuel consumption. Our actions resulted in a 14 percent reduction in CO2e per package from 2010 to 2020. Starting from the base year of 2020, we have set a goal to reduce CO2e per package delivered by an additional 50 percent by 2035.
•Increasing SAF procurement – In achieving carbon neutrality by 2050, in air transportation we are committing to source 30 percent aviation fuel from sustainable sources. At the current time, SAF supply remains limited, and it has not reached economies of scale, making it cost prohibitive for wide adoption. Over the next several years, UPS will continue to work within the industry, including with fuel producers, customers, and peers to accelerate the commercial availability, scale, cost, and competitiveness shift to SAF.
•Fleet electrification – A key part of our carbon reduction strategy involves electrifying our package delivery cars (class 4 to 6). We are collaborating with vehicle manufacturers to develop vehicle concepts to UPS specifications. We continue to move forward in R&D and testing other alternative fuels and technologiesdiscussed in our “Rolling Laboratory.”
•Renewable / biofuel interval solutions – Not only are we working on fleet electrification, but we are also using alternative fuels in ground operations, which also serves as a bridging solution that will contribute to carbon reductions as we transition our fleet to zero-emission tailpipe vehicles.
•Renewable electricity transformation – Renewable electricity for our facility load and electric fleet will be acquired overperiodic filings with the next decade.
UPS is committed to maintaining open and honest dialogue with our stakeholders and delivering positive social impact
We consider stakeholder engagement an essential aspect of our corporate governance. As UPS transitions to decarbonize our network, we understand there will be potential opportunities and challenges, and are committed to work with all of our stakeholders on this journey. Maintaining open and honest dialogue with our stakeholders is an important component of our corporate culture, and we are committed to engaging with all of our stakeholders on key environmental issues.
As one of the world’s largest private employers, we communicate frequently with our employees and their unions at many levels of the Company to promote all parties working toward positive results for our employees and other major stakeholders. UPS also works with organized labor on key environmental issues. For several years, we have served on the Corporate Advisory Board of the Blue-Green Alliance, a group of labor and environmental organizations, to discuss emerging environmental issues and solutions, including how our climate change strategy will impact our employees and workers in the Company’s supply chain.
We keep delivering social impact through our charitable giving, delivering HELP where it’s needed most, focused on Health and humanitarian relief, Equity and economic empowerment, Local engagement through volunteerism and Planet protection. An important commitment to support our engagement in the communities we serve includes UPSers volunteering 30 million hours by 2030.
UPS continues to actively invest in talent recruitment and employee development
UPS employees are motivated, high-performing people, and they represent a meaningful competitive advantage for the Company. We believe it is critical to recruit the best people and keep them for the long term — an especially important aim amid changes to our industry, our customers and the world’s transportation infrastructure.
Central to our Employee Value Position is our investment in the careers of our employees through the Education Assistance Program. UPS helps our employees finance their education through one of the more generous tuition reimbursement programs in the marketplace. As an important recruiting and retention tool, students can use up to $25,000 for their education and attend school while working part-time or full-time at UPS.
We also intently focus on helping employees sharpen the skills needed to excel in their roles and achieve their long-term career goals. We offer our employees a range of continuous training and talent development opportunities, and those offerings combine experience, exposure, and education for employees throughout our organization. Employees create
individualized development plans and collaborate with their managers to determine the most beneficial training programs and development opportunities to meet their unique goals. Additionally, self-development opportunities are available around the clock through our extensive online library in UPS University, our enterprise-wide learning management system and component of our global talent management system.SEC.
The UPS board provides independenteffective oversight of UPS’s human capitalstrategy, which includes risks and opportunities associated with emissions reductions efforts The board's oversight responsibilities include strategic planning, risk management and economic,financial reporting. This includes oversight of climate-related matters as a part of the Company’s overall business strategy. The board considers climate-related risks and opportunities in numerous ways, including through its standing committees. The board’s Risk Committee, consisting entirely of independent directors, is responsible for oversight of management’s identification and evaluation of enterprise risks, including the Company’s climate-related risks. Economic, environmental and social sustainability risks Our board is responsible, directly and through the Compensation and Human Capital Committee, for oversight of human capital matters, which responsibility it executes through a variety of methods and processes. Management provides regular updates and leads discussions with the board and its committees around human capital, technology initiatives impacting the workforce, health and safety matters, employee survey results related to culture and other matters, hiring and retention, employee demographics, labor relations and contract negotiations, compensation and benefits, succession planning and employee training initiatives. This is part of the broader framework that guides how we attract, retain and develop a workforce that aligns with our values and strategies.
Our board is also responsible for oversight of economic, environmental and social sustainability matters, whichopportunities are considered as part of our comprehensive enterprise risk management program. Under our enterprise risk management process, risks, including climate-related, are identified, prioritized and assigned an owner, who is responsible for developing mitigation plans. The Risk Committee reviews these items on a regular basis.
10 https://clintel.org/wp-content/uploads/2023/08/wcd-version-081423.pdf 11 https://clintel.org/wp-content/uploads/2023/08/WCD-version-081423.pdf 12 https://assets.realclear.com/files/2023/06/2205_a_critical_assessment_of_the_ieas_net_zero_scenario_esg_and_the_cessation_of_investment_in_new_oil_and_gas_fields.pdf 13 https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2020_UPS_TCFD_Report_081921.pdf | | | | | | | | | 72 | | Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
The board’s Nominating and Corporate Governance Committee, also consisting entirely of independent directors, has additional oversight responsibility for environmental risks and opportunities. This committee receives regular updates and discusses the Company’s progress towards its sustainability-related goals as well as the associated risks and opportunities, with feedback from these discussions shared with the full Board. The board’s Audit Committee, consisting entirely of independent directors, is responsible for overseeing the annual engagement of the independent third party that provides assurance on the Company’s annual sustainability report. The board delegates authority for day-to-day management of the Company and its operations, including those related to climate matters, to the Executive Leadership Team. The board and its committees regularly reviewsreceive updates from management regarding the effectiveness of ourpolicies and procedures, progress regarding targets, risks and opportunities, global compliance standards and other priority climate-related topics. The Company’s Chief Corporate Affairs and Sustainability Officer (the “CCASO”), who is a member of the Executive Leadership Team and a direct report to the CEO, is responsible for leading climate-related discussions with the board. The CCASO reports quarterly to the Nominating and Corporate Governance Committee and regularly to the full board on climate-related matters. Additionally, efforts to monitor, assess and manage climate-related risks are supported across the Executive Leadership Team. For example, the CFO co-chairs the Company’s Sustainability Council with the CCASO. The CCASO also serves on the Company’s executive officer level risk management and due diligence processes relatedcommittee, which meets quarterly to material sustainability topics, and oversees management’s developmentreview the Company’s enterprise risk strategy, including climate-related risks. Management’s execution of our values, strategiesstrategy is grounded in a fiscally responsible approach using sound engineering principles We approach sustainable development holistically so that our cross-functional sustainability initiatives align with our Customer First, People Led, Innovation Driven strategy. This strategy is guiding us towards our goals of carbon neutrality by 2050 and policies relatedimproving the well-being of one billion lives by 2040.We offer our customers a number of sustainable solutions to economic,help them measure and manage the carbon emissions in their supply chain, as well as design more sustainable packaging, including UPS carbon impact analysis, UPS carbon neutral shipping, supply chain optimization analyses, UPS co-innovation workshops, an Eco Responsible packaging program and Packsize on-demand packaging. A component of UPS's short, medium- and long-term strategy is to evaluate and implement new technologies to improve efficiency and maintain one of the most efficient air and ground fleets in our industry in a manner that balances risks and opportunities. This is accomplished through our “Rolling Laboratory” approach. Through this approach UPS works with manufacturers, government agencies and other stakeholders around the world to pilot projects before determining whether and how new vehicles and technologies are ready for commercial deployment. Under this approach, Alternate fuel vehicles or advanced technologies adopted by UPS must meet the following criteria:(1) the fuel/technology must be safe; (2) it must have a reliable fueling infrastructure; (3) the supply of vehicles and parts must be predictable; (4) there must be a measurable improvement in emissions and/or fuel savings; and (5) it must be economically viable in terms of initial purchase price, maintenance costs and reliability and adapt to our fleet use characteristics. As a result, UPS undertakes multiple initiatives simultaneously to reduce risk. The Company is currently focused on five key levers to decarbonize our business: network efficiency and innovation; increasing sustainable aviation fuel availability; renewable/biofuel solutions; fleet electrification; and renewable electricity transformation. We report on our progress on initiatives on a regular basis both internally and externally. Management engagement with key stakeholders supplements our other disclosures As discussed elsewhere in this Proxy Statement, maintaining open and ongoing dialogs with key stakeholders is an important component of our corporate culture. In addition to information available in our written reports, our management team participates in numerous investor meetings throughout the year to discuss our business, strategy, including our emissions reductions targets, and financial results. In addition, each year we undertake a stakeholder outreach program in which we discuss, among other things progress on our environmental sustainability journey. This includes discussions with key stockholders, UPS retirees and social impacts. We believeother stakeholders. This year we contacted holders of over 47% of our class B common stock as a part of this program. Engagement provides us with the board’s oversight of these matters helps identifyopportunity to appropriately update stakeholders on recent accomplishments, risks and mitigate human capitalopportunities, and to receive feedback on our efforts. Similarly, it provides us with an opportunity to discuss how management and economic, environmental and social sustainability risks, includingbelieves its actions are aligned with long-term value creation. For the risks posed byforegoing reasons, the Company’s climate change strategy. Preparing an additional report is unnecessary
The board believes producing this report is unnecessary, not an efficient use of resources and will only serve to benefit the limited interests of a small group of shareowners.
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Proposal 9 — Shareowner Proposal Requesting the Board Prepare a Report on Risks or Costs Caused by State Policies Restricting Reproductive Rights
What am I voting on? Whether you want to require the board to publish a report on the risks or costs caused by state policies restricting reproductive healthcare rights and the strategies UPS may use to mitigate these risks.
Board’s Recommendation: Vote AGAINST this proposal because:
•UPS offers industry-leading compensation and benefits to employees, including multiple benefits focused on our employees’ health and wellness
•UPS is committed to a positive and supportive workplace environment for women
•We encourage UPSers to exercise their right to vote and inform their elected officials of their views on issues through the democratic process
•Preparing another report, of the nature requested by the proposal, will not drive or create long-term shareowner value
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.
Arjuna Capital, 13 Elm Street, Manchester, MA 01944, has advised us that it intends to submit the proposal set forth below on behalf of Sara Frankel, for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary.
Access to Reproductive Care
Companies must navigate a patchwork of state laws with respect to the provision of reproductive health care. In recent decades, states have passed more than 600 laws restricting abortion access, and twelve states now ban most abortions. Other states have enacted legislation that protects these rights.
United Parcel Service, Inc. ("UPS") employs nearly 93,000 female employees and has significant operations in states where reproductive rights are severely limited. These employees face challenges accessing reproductive healthcare, including abortion services, for themselves or family members.
Employers, as well as employees, bear the cost of restricted access to reproductive health care. Women who cannot access abortion are three times more likely to leave the workforce than women who are able to access abortion when needed, and four times as likely to slip into poverty (bit.ly/37qrmMw). The Institute for Women's Policy Research estimates that state-level abortion restrictions may annually keep more than 500,000 women aged 15 to 44 out of the workforce. These factors may harm UPS's ability to meet the diversity goals in its 2021 Global Reporting Initiative report (bit.ly/3Al0U2i), with negative consequences to performance, brand and reputation.
UPS may find it more difficult to recruit employees to states that have outlawed abortion (bit.ly/3Ctj3Zl). According to a 2022 survey commissioned by Lean In, strong majorities of women under 40, regardless of political affiliation, would prefer to work for a company that supports abortion access (Forbes, 8.2.22). In addition, a 2022 Harris Poll found that in the wake of the Dobbs decision, 69 percent of employees aged 18 to 34 want more clarity and transparency about their organization's policies and benefits for reproductive healthcare (https://bit.ly/3OqENNL).
Surveys have consistently shown that a majority of Americans wanted to keep the Roe v. Wade framework intact. In a 2021 survey of U.S. consumers, 64 percent said employers should ensure that employees have access to reproductive health care and 42 percent would be more likely to buy from a brand that publicly supports reproductive health care (bit.ly/3nmzd2U).
Resolved: Shareholders request that the UPS Board of Directors issue a public report prior to December 31, 2023, omitting confidential information and at reasonable expense, detailing any known and potential risks or costs to the company caused by enacted or proposed state policies severely restricting reproductive rights, and detailing any strategies beyond litigation and legal compliance that the company may deploy to minimize or mitigate these risks.
Supporting Statement: Shareholders recommend that the report evaluate any risks and costs to the company associated with new laws and legislation severely restricting reproductive rights, and similar
restrictive laws proposed or enacted in other states. In its discretion, the board's analysis may include any effects on employee hiring, retention, and productivity, and decisions regarding closure or expansion of operations in states proposing or
enacting restrictive laws and strategies such as any public policy advocacy by the company, related political contributions policies, and human resources or educational strategies.
UPS’s commitment to customer service is dependent on our employees, who are integral to our success. Central to that commitment is making UPS a great place for women to start and grow in their careers. UPS offers industry-leading compensation and benefits to our employees, including health and wellness benefits.
UPS offers industry-leading compensation and benefits to employees
Our success depends on our ability to serve our customers. UPS is a global company that provides industry-leading compensation and benefits in order to attract, develop and retain qualified employees. To assist with employee recruitment and retention, we review the competitiveness of our employee value proposition, including benefits and pay, and the range of continuous training, talent development and promotional opportunities we offer. Our benefit plans comply with all local, state and federal laws.
Benefits provided to our employees typically include:
•Health Benefits: (1) comprehensive coverage, including medical, dental and vision care, (2) life insurance and supplemental life insurance, (3) disability coverage, (4) work-life balance programs, (5) wellness programs and (6) an employee assistance program.
•Financial Benefits: (1) retirement plans, (2) a discounted employee stock purchase plan, (3) paid time off, and (4) education assistance.
UPS is committed to a positive and supportive workplace environment for women
We believe UPS is a great place to work, including for women. And UPS is committed to building a more inclusive and equitable company, and we have made attracting and retaining women in our workforce a priority. Our focus on diversity, equity and inclusion in our operations and management is also reflected in the composition of our Board of Directors, which consists of 46% women and our Executive Leadership Team, which consists of 33% women. In addition, our commitment to continued progress of women globally is shown through our aspirational goal of 30% women representation in full-time management positions globally by 2025. We are focused on the pathway to achieve our intended results, including through updates and discussions around human capital transformation efforts, employee survey results related to culture and other matters, hiring and
retention, employee demographics, succession planning and other employee initiatives.
UPS also demonstrates its commitment to equity and inclusion by supporting economic growth for women, including funding for women-centered programs and sponsorships. From campaigns that uplift women-owned businesses to investment in community partnerships and increased representation in company management, UPS is focused on driving greater gender equity. For example, the UPS Women Exporters Program helped women entrepreneurs around the world to trade across borders, overcome challenges and forge new futures by expanding their businesses to global markets, and since 2021, have trained over 2,200 women to integrate their small businesses into the global economy. Additionally, UPS’s robust talent and succession planning process supports the development of a diverse talent pipeline for leadership and other critical roles.
We also sponsor employee Business Resource Groups (BRGs). The BRG program started as a pilot in 19 UPS locations in 2006 with Women’s Leadership Development (WLD) and has grown into nearly 200 chapters worldwide across 11 categories, including WLD, Women in Operations, Future Leaders and Parents and Caregivers. Each BRG is supported by advisors and senior management sponsors.
As a result of these efforts, UPS has been recognized by a number of industry-leading external organizations, including being ranked #22 on the 2022 Break the ceiling touch the sky® 101 Best Global Companies for Women in Leadership Index, being awarded “2022 Top Company for Women to Work for In Transportation” by the Women in Trucking Association, and being named in 2022 by Newsweek as one of America’s Greatest Workplaces for Diversity.
We encourage UPSers to exercise their right to vote and inform their elected officials of their views on issues through the democratic process
UPS is subject to extensive regulation at the federal, state and local levels. While there are many regulatory issues that impact our business, as a logistics company, we are focused on fair taxation, commercially reasonable regulation, expansive trade, and a level playing field with competitors. UPS also works to advance the interests of our employees when they intersect with our business operations.
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We believe that we have a responsibility to our shareowners, employees and other stakeholders to engage in the political process. Helping legislators understand private sector issues enables them to better craft policies that create jobs and improve the economy.
We also encourage UPSers to exercise their right to vote and inform their elected officials of their views on all issues through the democratic process.
Producing the requested report is unnecessary and will not drive or create long-term shareowner value
We believe that the proposal, which requests a report on “any known and any potential risks and costs” resulting from “enacted or proposed state policies,” is framed so broadly that it would be extremely difficult for any company operating in all 50 states and
globally to create a document that would be useful for our shareowners, employees and other stakeholders. UPS is focused on complying with applicable laws and regulations, surveying the competitive landscape and remaining responsive to employees’ needs. UPS will continue to evaluate employee benefits as part of our overall human capital strategy. The Board therefore believes the requested report is unnecessary and that approval of this proposal would not result in an efficient use of resources and would only serve to benefit the limited interests of a small group of shareowners.
For these reasons, the board recommends that shareowners vote AGAINST this proposal.
Proposal 106 — Shareowner Proposal Requesting the Board Prepare aan Annual Report on the Impact of the Company’s DE&I Policies on Civil Rights, Non-DiscriminationDiversity, Equity and Returns to Merit, and the Company’s BusinessInclusion What am I voting on? Whether you want the boardCompany to commissionbe required to prepare an audit analyzing the impacts of the Company’sadditional report on diversity, equity and inclusion policies on civil rights, non-discrimination and returns to merit, and the impact of those issues on the Company’s business.inclusion. Board’s Recommendation: Vote AGAINST this proposal because: •UPS has taken significant steps to develop and maintain a diverse and inclusive workforce •UPS’s commitment to diversity is reflected in our workforce demographics •UPS already provides investors with significant diversity and inclusion datainformation •UPS has consistently been named a top company for diversity, equity, and inclusion •The board provides independent oversight of UPS’s human capital management Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.proxy and entitled to vote on the proposal. The National Center for Public Policy Research, 2005 Massachusetts Ave. NW, Washington, DC 20036As You Sow, 2020 Milvia St. Suite 500, Berkeley, CA 94704, has advised us that they intendit intends to submit the proposal set forth below for consideration at the Annual Meeting.Meeting on behalf of the Marguerite Casey Foundation and Mack Street 2016 Trust. Share ownership will be promptly provided upon request to the UPS Corporate Secretary.
Resolved: Shareholders of therequest that United Parcel Service Inc.inc. ("UPS") report to shareholders on the Company") request that the Board of Directors commission an audit analyzing the impactseffectiveness of the Company's Equity, Diversity & Inclusion policies on civil rights, non-discriminationdiversity, equity, and returns to merit, and the impacts of those issues on the Company's business.inclusion efforts. The audit may, in the Board's discretion,report should be conducted by an independent and unbiased third party with input from civil rights organizations, public-interest litigation groups, employees and shareholders of a wide spectrum of viewpoints and perspectives. A report on the audit, prepareddone at reasonable cost and omitting confidential orexpense, exclude proprietary information, should be publicly disclosedand provide transparency on the Company's website.outcomes, using quantitative metrics for workforce diversity, hiring, promotion, and retention of employees, including data by gender, race, and ethnicity. Supporting Statement:Under Quantitative data is sought so that investors can assess and compare the guiseeffectiveness of ESG, corporations have allocated significant resourcescompanies' diversity, equity, and inclusion programs. attention towards implementing social justice into workplace practices and hiring. Across the political spectrum, all agreeIt is advised that employee success shouldthis content be fostered and that no employees should face discrimination, but thereprovided through UPS's existing sustainability reporting infrastructure. An independent report specific to this topic is much disagreement about what non-discrimination means.not requested.
ManyWhereas: As of the date of the filing of this proposal, UPS had not yet shared sufficient hiring, promotion or retention data to allow investors to determine the effectiveness of its diversity and inclusion programs.
Of public American companies, — including Bank of America, American Express, Verizon, Pfizer,UPS is the second largest employer who has not agreed to provide any hiring, promotion, or retention data by their employees' race or ethnicity. Large employers that provide, or have committed to provide, more inclusion factor data than UPS include, but are not limited to: Alphabet, Boeing, Comcast, CVS Health, Gap, General Motors, General Dynamics, Honeywell International, IBM, McDonald's, Microsoft, Procter & Gamble, Raytheon, Union Pacific, Walt Disney, and even UPS itselfWalmart. As You Sow and Whistle Stop Capital released research in November 20231 — have adopted Equity, Diversity & Inclusion programs, trainingsthat reviewed over 4,500 EEO-1 reports, which show corporate workforce diversity. The data shows a positive correlation between manager diversity and officers that seek to establish racial and social "equity." But in practice, what "equity" really means is the distribution of pay and authority on the basis of race, sex, orientation and ethnic categories rather than by merit.2corporate performance. Additional research includes: Where adopted, such programs have raised significant objections, includingHiring: Studies conducted by economists at the concernUniversity of Chicago and UC Berkeley found that “discriminating companies tend to be less profitable,” stating “it is costly for firms to discriminate against productive workers.”2 Promotion: Without equitable promotional practices, companies will be unable to build the programsnecessary employee pipelines for diverse management. Women and practices themselvesemployees of color experience "a broken rung" in their careers; for every 100 men who are deeply racist, sexist, otherwise discriminatory, and potentially in violationpromoted, only 87 women are. Whereas women of color comprise 18 percent of the Civil Rights Actentry-level workforce and only 6 percent of 1964.executives.3
AndRetention: Retention rates indicate if employees believe a company represents their best opportunity. Morgan Stanley has found that by devaluing merit, corporations have sacrificed employee competenceretention above industry average can indicate a competitive advantage and moral — and therefore productivity — to the altarhigher levels of "diversity."future profitability.4
1https:https///www.city-journal.org/bank-of-america-racial-reeducation-program; https://www.city-journal.org/verizon-critical-race-theory-training; https://nypost.com/2021/08/11/american-express-tells-its-workers-capitalism-is-racist/;https://www.foxbusiness.com/politics/cvs-inclusion-training-critical-race-theory; https://www.foxbusiness.com/politics/pfizer-race-hiring-systemic-racism-gender-equity; https://about.ups.com/ae/en/social-impact/diversity-equity-and-inclusion.html; https://about.ups.com/us/en/our-company/leadership/darrell-ford.htmlwww.asyousow.org/report-page/2023-positive-relationships-linking-workforce-diversitv-and-financial-performance 2https://www.sec.gov/Archives/edgar/data/1048911/000120677421002182/fdx3894361-def14a.htm#StockholderProposals88; https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/www.nytimes.com/2021/asyousownike051421-14a8-incoming.pdf;https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2021/nyscrfamazon012521-14a8-incoming.pdf;https://www.sec.gov/Archives/edgar/data/1666700/000119312521079533/d108785ddef14a.htm#rom108785_5807/29/business/economv/hiring-racial-discrimination.html 3https://www.americanexperiment.org/survey-says-americans-oppose-critical-race-theory/;www.mckinsey.com/featured-insights/diversitv-and-inclusion/women-in-the-workplace 4https://www.newsweek.com/majority-americans-hold-negative-view-critical-race-theory-amid-controversy-1601337;https://www.newsweek.com/coca-cola-facing-backlash-says-less-white-learning-plan-was-about-workplace-inclusion-1570875;https://nypost.com/2021/08/11/american-express-tells-its-workers-capitalism-is-racist/; https://www.city-journal.org/verizon-critical-race-theory-trainingwww.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf, p. 2 | | | | | | | | | 8874 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
These practices create massive reputational, legalUPS itself says: "UPS views diversity, equity and financial risk. Ifinclusion (DEI") as an imperative that enables the Company is, in the name of so-called "equity," committing illegal or unconscionable discrimination againstto attract, develop and retain talented employees, deemed "non-diverse," then the Company will suffer in myriad ways — all of them both unforgivablefoster innovation, and avoidable.
In developing the auditbring strength and report, the Company should consult civil-rightsstability to businesses and public-interest law groups, but it must not compound error with bias by relying only on left-leaning organizations. It must consult groups across the spectrum of viewpoints, including right-leaning civil-rights groups representing people of color — such as the Woodson Center4 or Project 21communities."5 —
UPS is called on to provide data that allows investors to access how effectively its human capital management systems are meeting the business imperative to provide a diverse, inclusive and groups that defend the rights and liberties of all Americans. Similarly, when including employees in the audit, the Company must allow employees to speak freely and confidentially without fear of reprisal or disfavor. Too many employers have established company stances that themselves chill contributions from employees who disagree with the company's asserted positions, and then have pretended that the employees who have been empowered by the companies' partisan positioning represent the true and only voice of all employees. This by itself creates a deeply hostile workplace for some groups of employees, and is both immoral and likely illegal.
4https://woodsoncenter.org
5https://nationalcenter.org/project-21/equitable workforce.
Throughout our history, UPS ishas transformed from messengers on bicycles to a people-lednationwide package delivery company guided byto a strong purpose. UPS’s values are rootedworldwide network of approximately 500,000 UPS employees. We believe in creating an inclusive and equitable environment that represents a broad spectrum of diverse backgrounds and stakeholders. By leveraging diversity equitywith respect to gender, age, ethnicity, skills and other factors, and creating inclusive environments, we believe we can improve organizational effectiveness, cultivate innovation and drive growth. We work closely with our customers, communities, suppliers and employees to advance a culture that embraces diversity and inclusion, (DEI) that thrives inside and outside our organization. We are committed to developingfosters open participation from those with different ideas and maintaining a diverse and inclusive workforce and we value the contributions of all our people and encourage everyone to bring their unique perspectives, backgrounds, talents and skills to work every day. We believe thatperspectives. Producing an additional special report as requested in the proposal carries a divisive political tone and suggests that we incorporate views of specific special-interest groups into the requested report – neither of which we support or believe would be beneficial to creating a diverse and inclusive workforce. Therefore, conducting the audit requested by this shareowner proposal on the impact of UPS’s DEI efforts on civil rights is unnecessary, not an efficient use of resources, and therefore not in the best interests of the Company or its shareowners. UPS has taken significant steps to develop and maintain a diverse and inclusive workforce As one of the world’s largest employers, UPS employs people across all cultures, backgrounds, lifestyles and experiences. We provide opportunities for employees to connect, network and learn from others outside of normal work teams and with different backgrounds and experiences to further our goals. We accomplish this through employee training programs and a commitment to employee Business Resource Groups (BRGs)(“BRGs”). OurUPS's global BRGs foster a strong culture of diversity and inclusion at the Company and include almostnearly 200 chapters worldwidein 34 countries with more than 15,000 members. We support BRGs across 11 categories: African American, Asian, Hispanic/Latino, Focus on Abilities, LGBT & Allies, Future Leaders,Millennial, Multicultural, Parents & Caregivers, Veterans, Women in Operations, and Women’s Leadership Development. Each BRG is supported byAll BRGs have executive sponsors and advisors andamong senior management sponsors.and sponsors among local management who support their strategy and growth. BRG executive sponsors help connect BRGs with people at the highest levels of UPS, so the BRGs can best align their objectives with those of the Company. BRGs at UPS make significant contributions to growing the business, developing our people and supporting the communities we serve. Our Chief Human Resources Officer also serves as the Chief DEI Officer, a position on the Company’s Executive Leadership Team reporting directly to our CEO. Our Chief DEI Officer regularly reports directly to the Board of Directors on, among other things, progress towards our goals. The Chief DEI Officer also engages with UPS suppliers, customers and other external partners to encourage the adoption of more proactive DEI efforts.efforts in these areas. UPS’s commitment to diversity is reflected in our workforce demographics and DEI aspirational goals Starting from the most senior levels at UPS, our commitment to diversity and inclusion is evident: •Board of Directors – – 46%42% of our directors are women;women and 31%33% are non-whitenon-white; 100% of the directors who have joined our board since 2020 are diverse •Executive Leadership Team – – 33% of our Executive Leadership Team members are women;women and 33%22% are non-white •Management – – as disclosed in our most recent SustainabilityGRI Report, 37%while 22% of our workforce is composed of women, 38% of our entry level management positions, and 26% of our senior and middle management positions, are held by women; in addition, 50%49% of our entry level management positions, and 34%38% of senior and middle management positions, are held by non-white employeesemployees. Our commitment towards building a more diverse and inclusive environment is also evidenced by our recently adopted and disclosed DEI goals:
•30% women in full-time management globally by 2025; and
•40% ethnically diverse full-time management in the U.S. by 2025.
We publicly report on our progress towards these goals in our annual sustainability reports.
UPS already provides investors with significant DEIdiversity and inclusion data UPS currently discloses all materialsignificant diversity and inclusion information in connection with its DEI efforts. In recent periods,for investors. For example, we began voluntarily publicly disclosingannually disclose our consolidated EEO-1 report, that we file with the EEOC, which contains prior year gender, racial and ethnic composition of our US workforce by EEO-1 job category. We also provide regular updates on developmentsinclude race and gender information for our board nominees in our DEIProxy Statement, and publicly disclose progress towards our women and ethnic diversity in management aspirational goals. We provide additional information about our diversity and inclusion efforts and goals in our annual sustainability reports, on our corporate website and elsewhere.GRI Reports. We believe these disclosures provide investors with necessary and appropriate information to determine the effectiveness of our human capital management efforts. 5https://www.sec.gov/ix?doc=/Archives/edgar/data/1090727/000109072723000015/ups-20230320.htm
UPS has consistently been named a top company for DEIits diversity and inclusion efforts We further believe the effectiveness and appropriateness of our efforts in the DEIthis area have been validated through our receipt of numerous awards, including: •UPS was recognized by Forbes in 2023 as one of America’s Best Employers for Veterans; •Carol Tomé was recognized by the Diversity and Leadership Conference as a 2023 Top 50 CEO for Diversity; •UPS was named as One of America’s Greatest Workplaces 2023 For Diversity; •UPS was recognized by Forbes as one of the Best Workplaces for Women; •UPS was named as a Top Companyby Black Enterprise to its Best Companies for Women to Work for in Transportation by the Women in Trucking Association;Diversity, Equity and Inclusion list; •UPS was named by Supply Chain as one of the top 10 companies committed to implementing diversity, equity and inclusion initiatives in recruitment and partnership; •UPS was ranked #22 on the 2022 Break the ceiling touch the sky® 101 Best Global Companies for Women in Leadership Index; •UPS was named as one of the best places to work for LGBTQ employees, scoring a 100% on the Human Rights Campaign Foundation’s 2022 Corporate Equality Index; and •UPS was listed as a 20222023 Best Place to Work on Disability: IN’s Disability Equality Index. The board provides effective, independent oversight of UPS’s human capital management Our Board of Directors,board is responsible, directly and through the board’s Compensation and Human Capital Committee, is responsible for oversight of human capital matters. Effective oversight is accomplished through a variety of methods and processes includingManagement provides regular updates and leads discussions with the board and its committees around human capital, transformation efforts, technology initiatives impacting the workforce, health and safety matters, employee survey results related to culture and other matters, hiring and retention, employee demographics, labor relations and contract negotiations, compensation and benefits, succession planning and employee training initiatives. In addition, the Compensation and Human Capital Committee charter was recently expanded to include oversight responsibility for performance and talent management, diversity, equity and inclusion, work culture and employee development and retention. We believe the board’s oversight of these matters helps identify and mitigate exposure to labor and human capital management risks, and is part of the broader framework that guides how we attract, retain and develop a workforce that aligns with our values and strategies. Producing another report is unnecessary and inefficient
We believe our existing diversity and inclusion practices, and significant disclosures, provide meaningful information that allows investors to determine the effectiveness of our human capital management policies related to workplace diversity. Therefore, approval of this proposal would not result in an efficient use of resources and will only serve to benefit the limited interests of a small group of shareowners.resources. As a result, the board recommends that shareowners vote AGAINST this proposal. | | | | | | | | | 9076 | | Notice of Annual Meeting of Shareowners and 20232024 Proxy Statement |
Proposal 11 — Shareowner Proposal Requesting the Board Prepare an Annual Report on Diversity and Inclusion
What am I voting on? Whether you want to require the board to prepare an additional report on diversity and inclusion.
Board’s Recommendation: Vote AGAINST this proposal because:
•UPS has taken significant steps to develop and maintain a diverse and inclusive workforce
•UPS’s commitment to diversity is reflected in our DEI goals and our workforce demographics
•UPS already provides investors with significant DEI information
•UPS has consistently been named a top company for diversity, equity, and inclusion
•The board provides independent oversight of UPS’s human capital management
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.
As You Sow, 2020 Milvia St. Suite 500, Berkeley, CA 94704, has advised us that it intends to submit the proposal set forth below for consideration at the Annual Meeting on behalf of Myra K. Young, along with co-proponents whose names addresses and share ownership will be promptly provided upon request to the UPS Corporate Secretary.
Resolved: Shareholders request that United Parcel Service Inc. (“UPS”) report to shareholders on the effectiveness of the Company’s diversity, equity, and inclusion efforts. The report should be done at reasonable expense, exclude proprietary information, and provide transparency on outcomes, using quantitative metrics for hiring, retention, and promotion of employees, including data by gender, race, and ethnicity.
Supporting Statement: Quantitative data is sought so investors can assess and compare the effectiveness of companies’ diversity, equity, and inclusion programs.
Whereas: UPS has not shared sufficient quantitative hiring, retention, and promotion data to allow investors to determine the effectiveness of its human capital management programs.
Between September 2020 and September 2022, S&P 100 companies increased by 298 percent their release of hiring rate data by gender, race, and ethnicity; retention rate data by 481 percent; and promotion rate data by 300 percent.1 Companies that release, or have committed to release, more inclusion data than UPS include Boeing, McDonald's, Procter & Gamble, Union Pacific, and Wal-Mart.
Numerous studies have pointed to the benefits of a diverse workforce. Their findings include:
•There is a positive association between diversity in management and cash flow, net profit, revenue, and return on equity.2
•The 20 most diverse companies had an average annual five year stock return that was 5.8 percentage points higher than the 20 least diverse companies.3
Similar to how an income statement pairs with a balance sheet, hiring, promotion, and retention rate data show how well a company manages its workforce diversity. Without this data, investors are unable to assess the effectiveness of a company's human capital management program.
Companies should look to hire the best talent. However, Black and Latino applicants face hiring challenges. Results of a meta-analysis of 24 field experiments found that, with identical resumes, White applicants received an average of 36 percent more callbacks than Black applicants and 24 percent more callbacks than Latino applicants.4
Promotion rates show how well diverse talent is nurtured at a company. Unfortunately, women and employees of color experience "a broken rung" in their careers; for every 100 men who are promoted, only 86 women are. Women of color are particularly impacted, comprising 17 percent of the entry-level workforce and only four percent of executives.5
1https://www.asyousow.org/our-work/social-justice/workplace-equity
2https://www.asyousow.org/report-pages/workplace-diversity-and-financial-performance
3https://www.wsj.com/articles/the-business-case-for-more-diversity-11572091200
4https://hbr.org/2017/10/hiring-discrimination-against-black-americans-hasnt-declined-in-25-years
5https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2021.pdf
Retention rates show whether employees choose to remain at a company. Morgan Stanley has found that employee retention above industry average can indicate a competitive advantage and higher levels of future profitability.6 Companies with high employee satisfaction have also been linked to annualized outperformance of over two percent.7
In 2020 and 2021, over 35 percent of UPS' investors voted in favor of increased diversity and inclusion data disclosure. The Company has not yet meaningfully increased its reporting. Investors have reason to be concerned as UPS has faced allegations of race, age and gender discrimination.
6https://www.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf
7https://www.institutionalinvestor.com/article/b1tx0zzdhhnf5x/Want-to-Pick-the-Best-Stocks-Pick-the-Happiest-Companies?utm_medium=emaiI&utm_campaign=The%20Essential%2011%20100721&utm_content=The%20Essential%2011%20 100721%2OCID_eb103a9e15359075f72a85f7ff534c79&utm_source=CampaignMonitorEmail&utm_term=Want%20to%20Pick% 20the%20Best%20Stocks%20Pick%20the%20Happiest%20Companies
UPS views diversity, equity and inclusion (’DEI”) as an imperative that enables the Company to attract, develop and retain talented employees, foster innovation, and bring strength and stability to businesses and communities. With more than half a million employees around the world, UPS believes it has a unique opportunity to effect positive change in the world through a DEI commitment as a business imperative. We are creating an inclusive and equitable environment that brings together a broad spectrum of backgrounds, cultures and stakeholders. Leveraging diverse perspectives and creating inclusive environments improves our organizational effectiveness, cultivates innovation, and drives growth. We work closely with our customers, communities, suppliers and employees to advance a culture that embraces DEI and fosters open participation from those with different ideas and perspectives. Producing an additional special report as requested in the proposal on UPS’s DEI efforts is unnecessary, not an efficient use of resources, and therefore not in the best interests of the Company or its shareowners.
UPS has taken significant steps to develop and maintain a diverse and inclusive workforce
As one of the world’s largest employers, UPS employs people across all cultures, backgrounds, lifestyles and experiences. We provide opportunities for employees to connect, network and learn from others outside of normal work teams and with different backgrounds and experiences to further our goals. We accomplish this through employee training programs and a commitment to employee Business Resource Groups (BRGs). Our BRGs include almost 200 chapters worldwide across 11 categories: African American, Asian, Hispanic/Latino, Focus on Abilities, LGBT & Allies, Millennial, Multicultural, Parents & Caregivers, Veterans, Women in Operations, and Women’s Leadership Development. Each BRG is supported by
advisors and senior management sponsors. Our Chief Human Resources Officer also serves as the Chief DEI Officer, a position on the Company’s Executive Leadership Team reporting directly to our CEO. Our Chief DEI Officer regularly reports directly to the Board of Directors on, among other things, progress towards our goals. The Chief DEI Officer also engages with UPS suppliers, customers and other external partners to encourage the adoption of more proactive DEI efforts.
UPS’s commitment to diversity is reflected in our workforce demographics and DEI aspirational goals
Starting from the most senior levels at UPS, our commitment to diversity and inclusion is evident:
•Board of Directors – 46% of our directors are women; and 31% are non-white
•Executive Leadership Team – 33% of our Executive Leadership Team members are women; and 33% are non-white
•Management – as disclosed in our most recent Sustainability Report, 37% of our entry level management positions, and 26% of our senior and middle management positions, are held by women; in addition, 50% of our entry level management positions, and 34% of senior and middle management positions, are held by non-white employees
Our commitment towards building a more diverse and inclusive environment is also evidenced by our recently adopted and disclosed DEI goals:
•30% women in full-time management globally by 2025; and
•40% ethnically diverse full-time management in the U.S. by 2025.
We publicly report on our progress towards these goals in our annual sustainability reports.
| | | | | | | | | 92 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
UPS already provides investors with significant DEI data
UPS currently discloses all material information in connection with its DEI efforts. In recent periods, we began voluntarily publicly disclosing our consolidated EEO-1 report that we file with the EEOC, which contains prior year gender, racial and ethnic composition of our US workforce by EEO-1 job category. We also provide regular updates on developments in our DEI efforts and goals in our annual sustainability reports, on our corporate website and elsewhere. We believe these disclosures provide investors with necessary and appropriate information to determine the effectiveness of our human capital management efforts.
UPS has consistently been named a top company for DEI
We further believe the effectiveness of our efforts in the DEI area have been validated through our receipt of numerous awards, including:
•Carol Tomé was recognized by the Diversity and Leadership Conference as a 2023 Top 50 CEO for Diversity;
•UPS was named as One of America’s Greatest Workplaces 2023 For Diversity;
•UPS was recognized by Forbes as one of the Best Workplaces for Women;
•UPS was named as a Top Company for Women to Work for in Transportation by the Women in Trucking Association;
•UPS was named by Supply Chain as one of the top 10 companies committed to implementing diversity, equity and inclusion initiatives in recruitment and partnership;
•UPS was ranked #22 on the 2022 Break the ceiling touch the sky® 101 Best Global Companies for Women in Leadership Index;
•UPS was named as one of the best places to work for LGBTQ employees, scoring a 100% on the Human Rights Campaign Foundation’s 2022 Corporate Equality Index; and
•UPS was listed as a 2022 Best Place to Work on Disability: IN’s Disability Equality Index.
The board provides effective, independent oversight of UPS’s human capital management
Our Board of Directors, directly and through the board’s Compensation and Human Capital Committee, is responsible for oversight of human capital matters. Effective oversight is accomplished through a variety of methods and processes including regular updates and discussions around human capital transformation efforts, technology initiatives impacting the workforce, health and safety matters, employee survey results related to culture and other matters, hiring and retention, employee demographics, labor relations and contract negotiations, compensation and benefits, succession planning and employee training initiatives.
In addition, the Compensation and Human Capital Committee charter was recently expanded to include oversight responsibility for performance and talent management, diversity, equity and inclusion, work culture and employee development and retention. We believe the board’s oversight of these matters helps identify and mitigate exposure to labor and human capital management risks, and is part of the broader framework that guides how we attract, retain and develop a workforce that aligns with our values and strategies.
Producing another report is unnecessary and inefficient
We believe our existing diversity and inclusion practices, and significant disclosures, provide meaningful information that allows investors to determine the effectiveness of our human capital management policies related to workplace diversity. Therefore, approval of this proposal would not result in an efficient use of resources and will only serve to benefit the limited interests of a small group of shareowners.
As a result, the board recommends that shareowners vote AGAINST this proposal.
| | | Important Information About Voting at the 20232024 Annual Meeting |
| | | What is included in the proxy materials, and why am I receiving them? |
The proxy materials for our Annual Meeting include this Proxy Statement and notice of the 20232024 Annual Meeting, as well as our 20222023 Annual Report. If you received paper copies of these materials, you also received a proxy card or voting instruction form. We began distributing the Proxy Statement, Annual Meeting notice and proxy card, and Notice of Internet Availability of Proxy Materials (the “Notice”) on March 20, 2023.18, 2024. When you vote, you appoint each of Carol Tomé and Norman M. Brothers, Jr. to vote your shares at the Annual Meeting as you have instructed them. If a matter that is not on the form of proxy is voted on, then you appoint them to vote your shares in accordance with their best judgment. This allows your shares to be voted whether or not you attend the Annual Meeting. | | | Why did some shareowners receive a Notice of Internet Availability of Proxy Materials while others received a printed set of proxy materials? |
We may furnish our proxy materials to requesting shareowners over the Internet, rather than by mailing printed copies, so long as we send them a Notice. The Notice explains how to access and review the Proxy Statement and Annual Report and vote over the Internet at www.proxyvote.com. If you received the Notice and would like to receive printed proxy materials, follow the instructions in the Notice. If you received printed proxy materials, you won’t receive the Notice, but you may still access our proxy materials and submit your proxy over the Internet at www.proxyvote.com. | | | Can I receive future proxy materials and annual reports electronically? |
Yes. This Proxy Statement and the 20222023 Annual Report are available on our investor relations website at www.investors. ups.com.www.investors.ups.com. Instead of receiving a Notice or paper copies of the proxy materials in the mail, shareowners can elect to receive emails that provide links to our future annual reports and proxy materials on the Internet. Opting to receive your proxy materials electronically will reduce costs and the environmental impact of our annual meetings and will give you an automatic link to the proxy voting site. If you are a shareowner of record and wish to enroll in the electronic proxy delivery service for future meetings, you may do so by going to www.icsdelivery.com/ups and following the prompts. If you hold class B shares through a bank or broker, please refer to your voting instruction form, the Notice or other information provided by your bank or broker for instructions on how to elect this option. Holders of our class A common stock and our class B common stock at the close of business on March 9, 20235, 2024 are entitled to vote. This is the “Record Date.” You must use your 16-digit control number found on your proxy card, voting instruction form or the Notice of Internet Availability you previously received to participate in the meeting and vote. A list of shareowners entitled to vote at the Annual Meeting will be accessible during regular business hours for ten days prior to the meeting at our principal place of business, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328. | | | | | | | | | 94 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
| | | To how many votes is each share of common stock entitled? |
Holders of class A common stock are entitled to 10 votes per share. Holders of class B common stock are entitledentitled to one vote per share. On the Record Date, there were 133,389,907125,210,605 shares of our class A common stock and 723,298,982727,925,905 shares of our class B common stock outstanding and entitled to vote. The voting rights of any shareowner or group of shareowners, other than any of our employee benefit plans, that beneficially owns shares representing more than 25% of our voting power are limited so that the shareowner or group may cast only one one-hundredth of a vote with respect to each vote in excess of 25% of the outstanding voting power.
| | | How do I vote before the Annual Meeting? |
Shareowners of record may vote as described below: •Online. You can vote in advance of the Annual Meeting via the Internet at www.proxyvote.com. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on May 3, 2023.1, 2024. •By Telephone. If you received a proxy card by mail, the toll-free telephone number is noted on your proxy card. Telephone voting is available 24 hours a day at 1-800-690-6903 and will be accessible until 11:59 p.m. Eastern Time on May 3, 2023.1, 2024. •By Mail. If you received a proxy card by mail and choose to vote in advance by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope. If you hold class A shares in the UPS Stock Fund in the UPS 401(k) Savings Plan, you may vote your shares through the Internet, by telephone, or by mail as if you were a registered shareowner. To allow sufficient time for voting by the Plan trustee, your voting instructions must be received by 11:59 Eastern Time on May 1, 2023.April 29, 2024. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance. If you vote through the Internet or by telephone, you do not need to return your proxy card. The method you use to vote in advance will not limit your right to vote online during the Annual Meeting.Meeting. | | | | BENEFICIAL SHAREOWNER VOTING OPTIONS If you are a beneficial owner, you will receive instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted. Many of these institutions offer telephone and Internet voting. If your voting instruction form or Notice indicates that you may vote these shares through www.proxyvote.com, you will need the 16-digit control number indicated on that form or Notice. If you did not receive a 16-digit control number, please contact your bank, broker or other nominee at least five days before the Annual Meeting and obtain a legal proxy to be able to participate in or vote at the Annual Meeting. | |
| | | Can I revoke my proxy or change my vote? |
Shareowners of record may revoke their proxy or change their vote at any time before the polls close at the Annual Meeting by: •submitting a subsequent proxy through the Internet, by telephone or by mail with a later date; •sending a written notice to our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328; or •voting online during the Annual Meeting using the 16-digit code. If you hold class B shares through a bank or broker, please refer to your proxy card, the Notice or other information forwarded by your bank or broker to see how you can revoke your proxy and change your vote before the Annual Meeting. Beneficial shareowners that attend the Annual Meeting using the 16-digit code they received as described below will also be able to change their vote by voting online at any time before the polls close at the Annual Meeting. | | | How many votes do you need to hold the Annual Meeting? |
The presence, online or by proxy, of the holders of a majority of the votes entitled to be cast at the Annual Meeting will constitute a quorum. A quorum is necessary to hold the Annual Meeting and conduct business. If a quorum is not present, the Annual Meeting may be adjourned from time to time until a quorum is present.
| | | What happens if I do not provide voting instructions or if a nominee is unable to stand for election? |
If you sign and return a proxy but do not provide voting instructions, your shares will be voted as recommended by the board. If a director nominee is unable to stand for election, the board may either reduce the number of directors that serve on the board or designate a substitute nominee. If the board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee. | | | | | | | | | 78 | | Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
| | | Will my shares be voted if I do not vote through the Internet, by telephone or by signing and returning my proxy card? |
If you are a shareowner of record and you do not vote, then your shares will not count in deciding the matters presented for shareowner consideration at the Annual Meeting. If your class A shares are held in the UPS Stock Fund in the UPS 401(k) Savings Plan and you do not vote by 11:59 p.m. Eastern Time on May 1, 2023,April 29, 2024, then the Plan trustee will vote your shares for each proposal in the same proportion as the shares held by the Plan for which voting instructions were received. If your class B shares are held in street name through a bank or broker, your bank or broker must vote according to specific instructions they receive from you. If brokers do not receive specific instructions, brokers may in some cases vote the shares in their discretion. But they are not permitted to vote on certain proposals and may elect not to vote on any of the proposals without your voting instructions. If you do not provide voting instructions and the broker elects to vote your shares on some but not all matters, it will result in a "broker non-vote" for the matters on which the broker votes. Abstentions occur when you provide voting instructions but instruct the broker to abstain from voting on a particular matter. Broker non-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum. We encourage you to provide instructions to your bank or brokerage firm by voting your proxy so that your shares will be voted at the Annual Meeting in accordance with your wishes. | | | What is the vote required for each proposal to pass, and what is the effect of abstentions and broker non-votes on each of the proposals? |
Our Bylaws provide for majority voting in uncontested director elections. Therefore, a nominee will only be elected if the number of votes cast for the nominee’s election is greater than the number of votes cast against that nominee. See “Corporate Governance – Majority Voting and Director Resignation Policy” for an explanation of what would happen if more votes are cast against a nominee than for the nominee. Abstentions are not considered votes cast for or against the nominee. For each other proposal to pass, in accordance with our Bylaws, the proposal must receive the affirmative vote of a majority of the voting power of the shares present in person or by proxy at the Annual Meeting and entitled to vote.vote on such proposal. The following table summarizes the votes required for each proposal to pass and the effect of abstentions and broker non-votes on each proposal. | | | | | | | | | | | | | | | Proposal Number | Item | Vote Required for Approval | Abstentions | Uninstructed shares | 1. | Election of 12 directors | Majority of votes cast | No effect | No effect | 2. | Advisory vote to approve NEO compensation | Majority of the voting power of the shares represented at the meeting and entitled to vote on the proposal | Same as a vote against | No effect | 3. | Advisory vote on the frequencyRatification of future advisory votes to approve NEO compensationindependent registered public accounting firm | Majority of the voting power of the shares represented at the meeting and entitled to vote on the proposal | Same as a vote against | No effect | No effect | 4. - 6. | Ratification of independent registered public accounting firmShareowner proposals | Majority of the voting power of the shares represented at the meeting | Same as a and entitled to vote against | No effect | 5. - 11. | Shareowner proposals | Majority ofon the voting power of the shares represented at the meetingproposal | Same as a vote against | No effect |
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| | | How do I attend and vote at the Annual Meeting? |
The Annual Meeting will take place on May 4, 2023,2, 2024, at 8:00 a.m. Eastern Time. There will not be a physical location for the Annual Meeting, and you will not be able to attend in person. You or your proxyholder can participate vote and examine our list of shareowners entitled to vote at the Annual Meeting by visiting www.virtualshareholdermeeting.com/UPS2023UPS2024 and entering the 16-digit control number included in your Notice, on your proxy card, or on the instructions that accompanied your proxy materials. If you are a beneficial shareowner, see the information relating to beneficial shareowners above under “How do I vote before the Annual Meeting” for obtaining your 16-digit control number. You may begin to log into the meeting platform at 7:45 a.m. Eastern Time on Thursday, May 4, 2023.2, 2024.
| | | How can I submit a question at or prior to the Annual Meeting? |
If you wish to submit a question prior to the Annual Meeting, you may do so by visiting proxyvote.com and entering your 16-digit control number, then clicking “Submit a Question for Management.” We have designed the format of the Annual Meeting so that shareowners will have the same rights and opportunities as they would have had at a physical meeting. To this end, shareowners will be able to submit questions during the Annual Meeting. If you wish to submit a question during the Annual Meeting, you may do so by logging into www.virtualshareholdermeeting.com/UPS2023UPS2024 with your 16-digit control number, as described above under “How do I attend and vote at the Annual Meeting?” We will answer questions and address comments relevant to meeting matters that comply with the meeting rules of conduct during the Annual Meeting, subject to time constraints. We will summarize multiple questions submitted on the same topic. We will make every effort to respond to all appropriate questions during the meeting, as time permits. If there are matters of individual concern to a shareowner and not of general concern to all shareowners, or if a question posed was not otherwise answered, we provide an opportunity for shareowners to contact us separately at www.investors.ups.com. | | | What if I have technical difficulties or trouble accessing the virtual Annual Meeting? |
For help with technical difficulties on the meeting day you can call 1-800-586-1548 (toll free) or 303-562-9288 (international) for assistance. Technical support will be available starting at 7:00 a.m. Eastern Time and until the meeting has finished. | | | What does it mean if I receive more than one Notice, proxy card or voting instruction form? |
This means that your shares are registered in different names or are held in more than one account. To ensure that all shares are voted, please vote each account by using one of the voting methods as described above. | | | When and where will I be able to find the voting results? |
You can find the official results of the voting at the Annual Meeting in our Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If the official results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment as soon as they become available. | | | | | | | | | 80 | | 97Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
| | | Other Information for Shareowners |
Solicitation of Proxies We will pay our costs of soliciting proxies. Directors, officers and other employees, acting without special compensation, may solicit proxies by mail, email, in person or by telephone. We will reimburse brokers, fiduciaries, custodians and other nominees for out-of-pocket expenses incurred in sending our proxy materials and Notice to, and obtaining voting instructions relating to the proxy materials and Notice from, shareowners. In addition, we have retained Georgeson, Inc. to assist in the solicitation of proxies for the Annual Meeting at a fee of approximately $16,000 plus associated costs and expenses. Eliminating Duplicative Proxy Materials We have adopted a procedure approved by the SEC called “householding” under which multiple shareowners who share the same last name and address and do not participate in electronic delivery will receive only one copy of the annual proxy materials or Notice unless we receive contrary instructions from one or more of the shareowners. If you wish to opt out of householding and continue to receive multiple copies of the proxy materials or Notice at the same address, or if you have previously opted out and wish to participate in householding, you may do so by notifying us in writing or by telephone at: UPS Investor Relations, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, (404) 828-6059, and we will promptly deliver the requested materials. You also may request additional copies of the proxy materials or Notice by notifying us in writing or by telephone at the same address or telephone number. Submission of Shareowner Proposals and Director Nominations | | | Proposals for Inclusion in the Proxy Statement for the 20242025 Annual Meeting |
Shareowners who, in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, wish to present proposals for inclusion in the proxy materials to be distributed in connection with the 20242025 Annual Meeting of Shareowners must submit their proposals so that they are received by our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, or via email to investor@ups.com, no later than 6:00 p.m. Eastern Time on November 21, 2023.18, 2024. Any proposal will need to comply with SEC regulations regarding the inclusion of shareowner proposals in Company-sponsored proxy material. As the rules of the SEC make clear, simply submitting a proposal does not guarantee its inclusion.
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| | | Director Nominations for Inclusion in the Proxy Statement for the 20242025 Annual Meeting |
Shareowner notice of the intent to use proxy access must be delivered to the Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328 not later than the close of business on the 120th day, nor earlier than the 6:00 p.m. Eastern Time on the 150th day, prior to the first anniversary of the date the definitive proxy statement was first released to shareowners in connection with the preceding year’s annual meeting of shareowners; provided, however, that in the event the annual meeting is more than 30 days before or after the anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, to be timely, the notice must be so delivered not earlier than the close of business on the 150th day prior to such annual meeting, and not later than the close of business on the later of the 120th day prior to such annual meeting, or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. Therefore, any notice of the intent to use proxy access must be delivered to our Corporate Secretary no later than 6:00 p.m. Eastern Time on November 21, 202318, 2024 and no earlier than 6:00 p.m. Eastern Time on October 22, 2023.19, 2024. However, if the date of our 20242025 Annual Meeting occurs more than 30 days before or 30 days after May 4, 2024,2, 2025, the anniversary of the 20232024 Annual Meeting, a shareowner notice will be timely if it is delivered to our Corporate Secretary by the later of (a) the close of business on the 120th day prior
to the date of the 20242025 Annual Meeting and (b) the 10th day following the day on which we first make a public announcement of the date of the 20242025 Annual Meeting. As our Bylaws make clear, simply submitting a nomination does not guarantee its inclusion. | | | Other Proposals or Director Nominations for Presentation at the 20242025 Annual Meeting |
Shareowners who wish to propose business or nominate persons for election to the Board of Directors at the 20242025 Annual Meeting of Shareowners, and the proposal or nomination is not intended to be included in our 20242025 proxy statement, must provide a notice of shareowner business or nomination in accordance with Article II, Section 10 of our Bylaws.Bylaws (which includes information required under Rule 14a-19 under the Securities Exchange Act of 1934). In order to be properly brought before the 20242025 Annual Meeting of Shareowners, Article II, Section 10 of our Bylaws requires that a notice of a matter the shareowner wishes to present (other than a matter brought pursuant to Rule 14a-8), or the person or persons the shareowner wishes to nominate as a director (other than through proxy access), must be received by our Corporate Secretary not later than the close of business on the 90th day, nor earlier than the close of business on the 150th day, prior to the first anniversary of the preceding year’s annual meeting. Therefore, any notice intended to be given for a proposal or nomination not intended to be included in our 20242025 proxy materials must be received by our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328 no later than 6:00 p.m. Eastern Time on February 4, 2024,1, 2025, and no earlier than the close of business6:00 p.m. Eastern Time on December 6, 2023.3, 2024. However, if the date of our 20232025 Annual Meeting occurs more than 30 days before or 30 days after May 4, 2024,2, 2025, the anniversary of the 20232024 Annual Meeting, a shareowner notice will be timely if it is delivered to our Corporate Secretary by the later of (a) the close of business on the 90th day prior to the date of the 20242025 Annual Meeting and (b) the 10th day following the day on which we first make a public announcement of the date of the 20242025 Annual Meeting.
To be in proper form, a shareowner’s notice must be a proper subject for shareowner action at the Annual Meeting and must include the specified information concerning the proposal or nominee as described in Article II, Section 10 of our Bylaws. Our Bylaws are available on the governance page of our investor relations website at www.investors.ups.com. In addition to satisfying the deadlines under the advance notice procedures of our Bylaws, a shareowner who intends to solicit proxies pursuant to Rule 14a-19 in support of nominees submitted under these advance notice provisions of the Bylaws must provide notice to the Secretary of the Company regarding such intent no later than March 5, 2024. 20222023 Annual Report on Form 10-K
A copy of our 20222023 Annual Report on Form 10-K, including financial statements, as filed with the SEC may be obtained without charge upon written request to: Corporate Secretary, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328. It is also available on our investor relations website at www.investors.ups.com.
Other Business Our Board of Directors is not aware of any business to be conducted at the Annual Meeting other than the proposals described in this Proxy Statement. Should any other matter requiring a vote of the shareowners arise, the persons named in the accompanying proxy card will vote in accordance with their best judgment. A proxy granted by a shareowner in connection with the Annual Meeting will give discretionary authority to the named proxy holders to vote on any such matters that are properly presented at the Annual Meeting, subject to SEC rules. This Proxy Statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, filed with the SEC and being made available with | | | | | | | | | 82 | | Notice of Annual Meeting of Shareowners and 2024 Proxy Statement |
this Proxy Statement, and may also be described from time to time in our future reports filed with the SEC. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations or the occurrence of unanticipated events after the date of those statements. Any standards of measurement and performance made in reference to our environmental, social, governance and other sustainability plans and goals are developing and based on assumptions, and no assurance can be given that any such plan, initiative, projection, goal, commitment, expectation, or prospect can or will be achieved. Website links included in this Proxy Statement are for convenience only. The content of any website links is not incorporated herein and does not constitute a part of this Proxy Statement.
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