• | 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 options that vested after December 31, 2004. |
Withdrawals
For the 2004 and DistributionsBefore 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• | 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. |
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.• | 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
| | | | 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 amount of 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.
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Potential Payments on Termination or Change in Control We have not entered into any agreements with our executive officers that provide for continuation of employment of an executive. Our Compensation Committee believes that
UPS has created a culture where long tenure for executives is the norm. As a result, executive officers serve without employment contracts, as do most of our other U.S.-based non-union employees. In connection with the hiring of each of Carol Tomé’s, Brian Newman, Scott PriceNewman’s and Kevin Warren,Bala Subramanian’s hiring, we entered into protective covenant agreements with eachthem which protect UPS’s confidential information and include non-competition and non-solicitation covenants in favor of them which,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 the 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 first two years of employment, provide for separation payapplicable year; (ii) an amount in cash equal to one times (or, for the CEO, two years’ salary. 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) if the participant timely and properly elects continuation coverage under the 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 that exceeds the premiums paid by the participant for such coverage immediately prior to termination for up to 18 months following termination, or, in certain circumstances, an equivalent benefit (subject to certain tax-based limitations); and (iv) career counseling services up to $20,000 (or, for the CEO up to $30,000). In addition, with respect to Scott and Kevin only,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 they are terminated without cause during the first two years of employment their protective covenant agreements provide for (ii) continued vesting of their one-time RSU grants, and (iii) with respect to Kevin Warren, the payment of any unpaid transition payments (see “Employment Transition Payments” described above). In the event any of them are terminated without cause after the first two years of employment, the Company is obligated to make such payments and continue vesting such grants if it elects to enforce post-termination non-compete covenants connected to those agreements.Furthermore,“retirement” under the terms of their offer letters, each is entitled to continue to vest in the one-time RSU awards granted to them in the event any of them are terminated without cause.such awards. With respect to Brian Newman and Kevin Warren only, in the event they are terminated without cause, their offer letters provide that they will continuestock options granted to vest in their cash transition payments; and with respect to Brian Newman only, he will continue to vest in his performance-based cash award. Termination for cause will result in the loss of these payments.
The equity awards granted between May 7, 2009 and May 2, 2012 were made pursuant to the 2009 Plan; equity awards granteda participant on or after May 3, 2012 were made pursuant to the 2012 Plan;effective date of the Severance Plan, such stock options (to the extent 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 the Severance Plan, our equity awards granted on or after May 7, 2015 were made pursuant to the 2015 Plan; and equity awards granted on or after January 1, 2018 were made pursuant to the 2018 Plan. Theincentive plans and the related award certificatesdocuments 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 and a participant’s retirement, death or disability. 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 disability: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. • | Options will become immediately exercisable; | | | | | | | | | | • | Restrictions imposed on shares of restricted stock, RSUs or RPUs that are not performance-based lapse; and | | | • | Target payout opportunities attainable under all outstanding awards of performance-based restricted stock, RSUs and RPUs are deemed to have been fully earned for the applicable performance periods. Payment of an award (in cash or stock, as applicable) is made to the participant based upon an assumed achievement of all relevant targeted performance goals and the length of time within the applicable performance period which has elapsed. | | 57 |
In the event of a change in control, if the successor company continues, assumes or substitutes other grants for outstanding awards, and within two years following the change in control the participant is terminated by the successor without cause or the participant resigns for good reason, then:
• | Options will become immediately exercisable as of the termination or resignation; | | | • | Restrictions imposed on restricted stock or RSUs that are not performance-based will lapse; and | | | • | Performance-based awards will vest with respect to each performance measurement tranche completed during the performance period prior to the termination or resignation (or, if the performance period is not divided into separate performance measurement tranches, proportionately based on the portion of the performance period completed prior to such resignation or termination). | | |
In the event of
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 casegrantee’s employment by UPS without cause or by the grantee for good reason: •Options will immediately vest and become exercisable; •Shares of a dissolutionrestricted stock, RSUs or liquidationRPUs that are no longer subject to performance conditions will immediately vest; and •Shares of UPS, then optionsrestricted stock, RSUs and RPUs that are still subject to performance conditions will be fully vested and exercisable anddeemed earned to the Compensation Committee will either giveextent that actual achievement of the applicable performance conditions can be determined, or on a participant a reasonable opportunityprorated basis for the portion of the performance period completed prior to exercise the option before the transaction resulting in the change in control or pay the participant the difference between the exercise price for the option and the consideration provided toqualifying termination, based on target or actual performance. | | | | Other Outstanding Awards; No Tax Gross-Ups |
Any other similarly situated shareowners.
Other Outstanding Awards
Otherawards which may be outstanding awards willwould vest and be paid generally as described in the bullet points above (except, where applicable, timing of payment generally will be tied to such change in control, rather
than termination or resignation). Our 1999 Incentive Compensation plan provided for tax gross-ups upon a change in control in certain situations. However, all awards made under the 1999 Plan have already vested and are not subject to the change in control provisions. The 2018 Plan, 2015 Plan, 2012 Plan and 2009 PlanWe do not provide for the payment of tax gross-ups.
gross-ups on outstanding awards.
52 | | | | | | | | | | 58 | | Notice of Annual Meeting of Shareowners and 20202023 Proxy Statement |
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The following table shows the potential payments to the NEOs upon a termination of employment under various circumstances. In preparing the table, we assumed the event occurred on December 31, 2019.30, 2022. The closing price per share of our class B common stock on the NYSE on December 31, 2019the last trading day of 2022 was $117.06.$173.84. The actual amounts to be paid under any of the scenarios can only be determined at the time of such NEO’s separation from the Company. | Name | | Separation Pay(1)
($) | | Accelerated
Vesting of Equity
Awards(2)
($) | | Benefits(3)
($) | | Total
($) | | David P. Abney | | | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | — | | Termination (involuntary without cause) | | — | | — | | — | | — | | Change in Control (with termination) | | — | | 26,452,124 | | — | | 26,452,124 | | Retirement | | — | | 26,452,124 | | — | | 26,452,124 | | Death | | — | | 26,452,124 | | — | | 26,452,124 | | Disability | | — | | 26,452,124 | | — | | 26,452,124 | | Brian O. Newman | | | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | — | | Termination (involuntary without cause) | | 1,450,008 | | 5,295,959 | | — | | 6,745,967 | | Change in Control (with termination) | | — | | 5,295,959 | | — | | 5,295,959 | | Retirement | | — | | 5,295,959 | | — | | 5,295,959 | | Death | | — | | 5,295,959 | | — | | 5,295,959 | | Disability | | — | | 5,295,959 | | — | | 5,295,959 | | Richard N. Peretz | | | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | — | | Termination (involuntary without cause) | | — | | — | | — | | — | | Change in Control (with termination) | | — | | 7,428,849 | | — | | 7,428,849 | | Retirement | | — | | 7,428,849 | | 201,229 | | 7,630,078 | | Death | | — | | 7,428,849 | | — | | 7,428,849 | | Disability | | — | | 7,428,849 | | — | | 7,428,849 | | James J. Barber, Jr. | | | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | — | | Termination (involuntary without cause) | | — | | — | | — | | — | | Change in Control (with termination) | | — | | 11,778,202 | | — | | 11,778,202 | | Retirement | | — | | 11,778,202 | | 89,657 | | 11,867,859 | | Death | | — | | 11,778,202 | | — | | 11,778,202 | | Disability | | — | | 11,778,202 | | — | | 11,778,202 | | Scott A. Price | | | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | — | | Termination (involuntary without cause) | | 1,273,080 | | 2,353,293 | | — | | 3,626,373 | | Change in Control (with termination) | | — | | 8,737,933 | | — | | 8,737,933 | | Retirement | | — | | 8,737,933 | | — | | 8,737,933 | | Death | | — | | 8,737,933 | | — | | 8,737,933 | | Disability | | — | | 8,737,933 | | — | | 8,737,933 | | Kevin M. Warren | | | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | — | | Termination (involuntary without cause) | | 1,986,000 | | 2,042,615 | | — | | 4,028,615 | | Change in Control (with termination) | | — | | 4,451,005 | | — | | 4,451,005 | | Retirement | | — | | 4,451,005 | | — | | 4,451,005 | | Death | | — | | 4,451,005 | | — | | 4,451,005 | | Disability | | — | | 4,451,005 | | — | | 4,451,005 |
| | | | | | | | | | | | | Name | Separation Pay(1) ($) | Accelerated/Continued Vesting of Equity Awards(2) ($) | Total ($) | | Carol Tomé | | | | | Termination (voluntary or involuntary for cause) | — | — | — | | Termination (involuntary without cause) | 9,000,000 | — | 9,000,000 | | Change in Control (with qualifying termination) | 9,000,000 | 17,293,446 | 26,293,446 | | Retirement | — | 17,293,446 | 17,293,446 | | Death | — | 17,293,446 | 17,293,446 | | Disability | — | 17,293,446 | 17,293,446 | | Brian Newman | | | | | Termination (voluntary or involuntary for cause) | — | — | — | | Termination (involuntary without cause) | 1,818,592 | — | 1,818,592 | | Change in Control (with qualifying termination) | 1,818,592 | 6,397,536 | 8,216,128 | | Retirement | — | — | — | | Death | — | 6,397,536 | 6,397,536 | | Disability | — | 6,397,536 | 6,397,536 | | Nando Cesarone | | | | | Termination (voluntary or involuntary for cause) | — | — | — | | Termination (involuntary without cause) | 1,817,000 | 3,095,764 | 4,912,764 | | Change in Control (with qualifying termination) | 1,817,000 | 7,782,250 | 9,599,250 | | Retirement | — | — | — | | Death | — | 7,782,250 | 7,782,250 | | Disability | — | 7,782,250 | 7,782,250 | | Kate Gutmann | | | | | Termination (voluntary or involuntary for cause) | — | — | — | | Termination (involuntary without cause) | 1,817,000 | 3,242,333 | 5,059,333 | | Change in Control (with qualifying termination) | 1,817,000 | 7,980,706 | 9,797,706 | | Retirement | — | — | — | | Death | — | 8,153,289 | 8,153,289 | | Disability | — | 8,153,289 | 8,153,289 | | Bala Subramanian | | | | | Termination (voluntary or involuntary for cause) | — | — | — | | Termination (involuntary without cause) | 1,667,500 | 4,581,270 | 6,248,770 | | Change in Control (with qualifying termination) | 1,667,500 | 4,581,270 | 6,248,770 | | Retirement | — | — | — | | Death | — | 4,581,270 | 4,581,270 | | Disability | — | 4,581,270 | 4,581,270 |
(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 equalling their target MIP awards (130% 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 2021 and 2022 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. 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. (1) | Represents the value of separation pay, and with respect to Kevin Warren and Brian Newman, the payment of unpaid cash transition payments and unpaid performance-based cash award as applicable (see “Employment Transition Payments” above). | | | | | | | | | | 59 |
| | | (2) | Represents the value of accelerated vesting of stock options and RPUs in accordance with the terms of the 2009 Plan, the 2012 Plan, the 2015 Plan, the 2018 Plan and the applicable award certificates. Also includes the 2018 and 2019 LTIP awards calculated at target. The performance measurement period for the 2018 LTIP award ends December 31, 2020, and performance measurement period for the 2019 LTIP award ends December 31, 2021. With respect to Brian Newman, Scott Price and Kevin Warren, includes the continued vesting of the one-time RSU awards to each as described in “Employment Transition Payments” above. |
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(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 this table that were used for the Pension Benefits table except that benefits are assumed to be payable immediately as of December 31, 2019 (or age 55 if later) instead of as of age 60. Only individuals eligible for early retirement (55 with 10 years of service) who are not yet age 60 will have an early retirement value in the table. |
Other Amounts
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 31, 2019 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. |
•Life insurance upon death in the amount of 12 times the employee’s monthly base salary, with a December 30, 2022 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,Proxy Statement, including: • | •The value of equity awards that are already vested; •Amounts payable under defined benefit pension plans; and •Amounts previously deferred into the deferred compensation plan.
| | | • | Amounts payable under defined benefit pension plans; and | • | Amounts previously deferred into the deferred compensation plan.Definition of a Change in Control |
Definition of a Change in Control
A change in control of the Company as defined in the 2018 Planour 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 in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)applicable SEC rules and requirements) shall be considered as though such person were a member of the Incumbent Board.
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Equity Compensation Plans The following table sets forth information as of December 31, 20192022 concerning shares of our common stock authorized for issuance under all of our equity compensation plans. | 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) | | 17,203,002 | | 8.88 | | 25,147,765 | (2) | | Equity compensation plans not approved by security holders | | — | | N/A | | — | | | Total | | 17,203,002 | | 8.88 | | 25,147,765 | |
(1) | Includes the 1999 Plan, the 2009 Plan, the 2012 Plan, the 2015 Plan, the 2018 Plan and the Discounted Employee Stock Purchase Plan, each of which has been approved by our shareowners. Effective with the approval of the 2018 Plan in May 2018, no additional securities may be issued under the 1999 Plan, the 2009 Plan, the 2012 Plan or the 2015 Plan. 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 2018 Plan. |
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| | | | | | | | | | | | | 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) | 8,771,515 | 19.98 | 24,341,714(2) | | Equity compensation plans not approved by security holders | — | N/A | — | | Total | 8,771,515 | 19.98 | 24,341,714 |
(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 13,889,472 shares of common stock or other stock-based awards that may be issued under the 2021 Plan, and up to 10,452,242 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. Table of Contents
(2) | In addition to grants of options, warrants or rights, this number includes up to 12,423,652 shares of common stock or other stock-based awards that may be issued under the 2018 Plan, and up to 12,724,113 shares of common stock that may be issued under the Discounted Employee Stock Purchase Plan. This number does not include shares under the 1999 Plan, the 2009 Plan, the 2012 Plan or the 2015 Plan because no new awards may be made under those plans. |
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. The
For purposes of this disclosure, the 2022 annual total compensation of the median compensated employee was $74,395;$52,144; our CEO’s 2022 annual total compensation was $18,040,841,$18,977,605, and the ratio of these amounts was 243-to-one.Items364-to-one.
Our CEO’s 2022 annual total compensation was different from the amount included in the 2022 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 numbersamounts above. The CEO’s and median employee’s Company-paid healthcare benefit amounts were $9,917$12,404 and $4,842$5,937 respectively. For the CEO, this amount is not included in the 2022 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 20192022 pay ratio reported above, we used the samea median employee that we used for our 2017 pay ratio, as wewhose 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, including as a result of the acquisitions described below.disclosure. For these purposes, we identified the median compensated employee from our employee population as of October 1, 2017,2020, using total taxable wages (Form W-2 Box 1 or equivalent) paid to our employees in fiscal year 2017.2020. We determined our total workforce as of October 1, 20172020 to consist of 466,707547,857 employees. During the fiscal year 2017, UPS purchased Zone Solutions, LLC and Freightex Ltd. These companies employed 14 and 133 employees respectively. Also, asAs permitted by SEC rules, under the 5% “De Minimis Exemption,” we excluded 22,90926,368 non-U.S. employees, or 4.9%4.8% of our total workforce. As a result of these exclusions, our median compensated employee was identified from an employee population of 443,651521,489 employees. The excluded countries and their employee populations arewere as follows: Albania (1 employee), Argentina (243(242 employees), Australia (430(486 employees), Austria (190(185 employees), Bahrain (28 employees), Belarus (23 employees), Barbados (12 employees), Belarus (30 employees), Belgium (1,208 employees), Bolivia (4(1,008 employees), Brazil (772(692 employees), Chile (184(113 employees), Colombia (478(1,064 employees), Costa Rica (272(343 employees), Czech Republic (457(453 employees), Denmark (590(531 employees), Dominican Republic (135(116 employees), Ecuador (85(65 employees), Egypt (36(29 employees), El Salvador (34(30 employees), Finland (205(187 employees), Greece (138(143 employees), Guam (1 employee)(2 employees), Guatemala (82(73 employees), Honduras (48(39 employees), Hong Kong (1,117(1,013 employees), Hungary (377 employees), India (1,924(417 employees), Indonesia (182(159 employees), Ireland (857(1,133 employees), Italy (1,258(1,279 employees), Jamaica (8(4 employees), Japan (660(644 employees), Kazakhstan (39(36 employees), Kenya (1 employee), Kuwait (47(54 employees), Luxembourg (6(11 employees), Macau (24(2 employees), Malaysia (512(302 employees), Mexico (2,489 employees), Morocco (61 employees), Nepal (2(60 employees), New Zealand (27 employees), Nicaragua (25 employees), Nigeria (288 employees), Norway (105 employees), Pakistan (59 employees), Panama (32 employees), Nicaragua (43 employees), Nigeria (352 employees), Norway (107 employees), Pakistan (68 employees), Panama (39 employees), Peru (93(77 employees), Philippines (1,236(1,470 employees), Portugal (182(195 employees), Puerto Rico (475(442 employees), Romania (158(142 employees), Russia (553(571 employees), Singapore (1,108(1,219 employees), Slovakia (29(18 employees), Slovenia (48(51 employees), South Africa (326(277 employees), South Korea (510(558 employees), Spain (1,242 employees), Sri Lanka (8(1,314 employees), Sweden (991(938 employees), Switzerland (478(703 employees), Taiwan (873(970 employees), Thailand (465(473 employees), Uganda (1 employee)Turkey (1,992 employees), Ukraine (90(89 employees), United Arab Emirates (379(532 employees), Uruguay (13U.S. Virgin Islands (10 employees), Venezuela (6and Vietnam (336 employees), Vietnam (259 employees), Virgin Islands (12 employees).
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Table of Contents
Ownership of Our Securities
Securities Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of December 31, 2019 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 have ten votes per share and class B shares have one vote per share on each matter acted upon. Class A shares are held by current and former employees and are not publicly traded. As of February 24, 2020 there were 156,203,673 outstanding shares of class A common stock and 702,308,157 outstanding shares of class B common 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 | | 44,176,915 | | 6.3 | % | | New York, NY 10055 | | | | | | | The Vanguard Group(2) | | | | | | | 100 Vanguard Blvd. | | 56,561,755 | | 8.1 | % | | Malvern, PA 19355 | | | | | |
(1) | According to a Schedule 13G/A filed with the SEC on February 6, 2020, BlackRock Inc. has sole voting power with respect to 37,287,237 shares and sole dispositive power with respect to 44,176,915 shares. | | | | | | | | (2)62 | According to a Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group has sole voting power with respect to 1,081,326 shares, shared voting power with respect to 188,901 shares, sole dispositive power with respect to 55,351,627 shares and shared dispositive power with respect to 1,210,128 shares. |
The following table sets forth the beneficial ownership of our class A and class B common stock as of February 24, 2020 by each of our NEOs, each of our directors, and all of our current executive officers and directors as a group. Ownership is calculated in accordance with SEC rules and regulations.
| | | Number of Shares
Beneficially
Owned(1)(2) | | Additional Shares in Which
the Beneficial Owner Has or
Participates in the Voting or | | Total
Shares
Beneficially | | | | Class A Shares(3)(4) | | Class B Shares | | Investment Power(5) | | Owned(6) | | Named Executive Officers | | | | | | | | | | | | | David P. Abney | | 724,021 | | | 1,452 | | 3,460,520 | (7) | | 4,185,993 | (7) | | Brian O. Newman | | 46,440 | (8) | | — | | — | | | 46,440 | (8) | | Richard N. Peretz | | 115,300 | | | — | | — | | | 115,300 | | | James J. Barber, Jr. | | 166,364 | | | 75 | | — | | | 166,439 | | | Scott A. Price | | 84,448 | | | — | | — | | | 84,448 | | | Kevin M. Warren | | 42,169 | | | — | | — | | | 42,169 | | | Non-Employee Directors | | | | | | | | | | | | | Rodney C. Adkins | | 12,999 | | | — | | — | | | 12,999 | | | Michael J. Burns | | 28,753 | | | — | | — | | | 28,753 | | | William R. Johnson | | 24,963 | | | 160 | | — | | | 25,123 | | | Ann M. Livermore | | 51,509 | | | — | | — | | | 51,509 | | | Rudy H.P. Markham | | 25,422 | | | — | | — | | | 25,422 | | | Franck J. Moison | | 5,539 | | | — | | — | | | 5,539 | | | Clark T. Randt, Jr. | | 20,020 | | | — | | — | | | 20,020 | | | Christiana Smith Shi | | 3,777 | | | — | | — | | | 3,777 | | | John T. Stankey | | 10,322 | | | — | | — | | | 10,322 | | | Carol B. Tomé | | 29,452 | | | 2,936 | | — | | | 32,388 | | | Kevin Warsh | | 14,925 | | | — | | — | | | 14,925 | | | Current Executive Officers and Directors as a Group (22 persons) | | 1,433,937 | | | 4,549 | | 3,460,520 | (7) | | 4,899,006 | (7)(9) |
56 | | Notice of Annual Meeting of Shareowners and 20202023 Proxy Statement |
Pay Versus Performance As required by Item 402(v) of Regulation S-K, we are providing the following table and related disclosures. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 $100 Investment Based on: | Net Income (millions) ($) | Adjusted Operating Profit(3) (millions) ($) | Total Shareholder Return ($) | Peer Group(2) Total Shareholder Return ($) | | 2022 | N/A | 18,965,201 | N/A | 13,072,062 | 6,714,395 | 5,141,166 | 162.33 | 131.11 | 11,548 | 13,853 | | | 2021 | N/A | 27,620,893 | N/A | 43,250,361 | 10,489,120 | 19,573,719 | 193.56 | 152.83 | 12,890 | 13,144 | | | 2020 | 5,842,130 | 3,772,910 | 37,662,113 | 13,337,679 | 5,454,192 | 11,181,872 | 147.28 | 118.18 | 1,343 | 8,718 | |
(1)In 2022, Carol Tomé was the CEO and the Non-CEO NEOs were Brian Newman, Nando Cesarone, Kate Gutmann and Bala Subramanian; in 2021, Carol Tomé was the CEO and the Non-CEO NEOs were Brian Newman, Scott Price, Nando Cesarone and Kate Gutmann; and in 2020 the CEOs were David Abney (First CEO) and Carol Tomé (Second CEO), and the Non-CEO NEOs were Brian Newman, Nando Cesarone, Kate Gutmann, Juan Perez and George Willis. (2)Our peer group is represented by the Dow Jones Transportation Average. (3)Determined by reference to our publicly reported adjusted operating profit for each of 2022, 2021 and 2020. | | | | | | | | | | | | | | | | | CEO SCT Total to CAP Reconciliation | | | Year | Summary Compensation Table Total for CEO ($) | Deductions from SCT Total(1) ($) | Additions to SCT Total(2) ($) | Compensation Actually Paid ($) | | | 2022 | 18,965,201 | 16,275,515 | 10,382,376 | 13,072,062 | | | 2021 | 27,620,893 | 24,795,449 | 40,424,917 | 43,250,361 | | 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 | |
(1)Represents the grant-date fair value of stock awards granted during the year (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: $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: $—, 2021: $—, 2020: Carol Tomé $— and David Abney $627,803). (2)Represents the service cost for defined benefit pension plans (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 | |
(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 | | | Year | Summary Compensation Table Total for Other NEOs ($) | Deductions from SCT Total(1) ($) | Additions to SCT Total(2) ($) | Compensation Actually Paid ($) | | | 2022 | 6,714,395 | 5,656,643 | 4,083,413 | 5,141,166 | | | 2021 | 10,489,120 | 8,564,070 | 17,648,669 | 19,573,719 | | | 2020 | 5,454,192 | 3,897,928 | 9,625,608 | 11,181,872 | |
(1)Represents the average grant date fair value of stock awards granted during the year (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: $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: $—, 2021: $12,137, 2020: $317,948). (2)Represents the average service cost for defined benefit pension plans (2022: $44,219, 2021: $40,127, 2020: $65,084) and the value of equity awards calculated using the required methodology for determining CAP, as further detailed in the table below.
| | | | | | | | | | | | | | | | | | | | Average Other NEOs Equity Component of CAP | | | | Year | Year End Fair Value of Equity Awards Granted in the Year
($) | 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 | 4,841,329 | (1,551,105) | — | 748,969 | 4,039,194 | | | 2021 | 12,120,687 | 2,762,650 | — | 2,725,205 | 17,608,542 | | | 2020 | 6,340,480 | 1,480,751 | 120,414 | 1,618,878 | 9,560,524 | |
•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 2022 to our performance.
| | | | | Tabular List | | | Adjusted operating profit | | | Revenue growth | | | Adjusted return on invested capital | | | Adjusted earnings per share growth | | | Adjusted free cash flow | |
Table of Contents
(1) | Includes shares for which the named person has sole voting or investment power or has shared voting or investment power with his or her spouse. Includes shares held by immediate family members as follows: Abney — 26,500; Newman – 0; Peretz — 220; Barber — 0; Price — 0; Warren — 0; and all current executive officers and directors as a group — 26,500. Each named individual disclaims all beneficial ownership of the shares held by immediate family members. | (2) | Includes shares pledged prior to the 2014 adoption of a policy prohibiting our executive officers and directors from entering into pledges of their UPS stock. The aggregate number of shares pledged by executive officers and directors as a group represents significantly less than 1% of our issued and outstanding shares of common stock. Pledged shares are as follows: Barber — 14,490; and all current executive officers and directors as a group — 1,764. Shares pledged are not counted for purposes of compliance with our stock ownership guidelines. All of the executive officers that had existing pledges comply with our stock ownership guidelines after excluding the shares subject to pledge. None of our directors have pledged any shares of UPS stock. | (3) | Includes class A shares that may be acquired by directors upon the conversion of RSUs following separation from the UPS Board of Directors. These RSUs are also reported in the additional ownership table below. | (4) | Includes class A shares that may be acquired through stock options exercisable through April 24, 2020 as follows: Abney — 414,090; Newman – 0; Peretz — 71,752; Barber — 100,599; Price — 65,218; Warren — 26,524; and all current directors and executive officers as a group — 641,269. | (5) | None of the individuals listed, nor members of their immediate families, has any direct ownership rights in the shares in this column. See footnotes 7 and 8. | (6) | All current 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 February 24, 2020. Assumes that all options exercisable and RSUs through April 24, 2020 owned by the named individual are exercised. The total number of shares outstanding used in calculating this percentage also assumes that none of the options owned by other named individuals are exercised. | (7) | Includes 3,444,484 class A shares and 16,036 class B shares owned by the Annie E. Casey Foundation, Inc., which are considered under SEC rules to be beneficially owned by David Abney because he serves on the Board of Trustees. | (8) | Includes 45,241 RSUs that vest and convert to class A common stock prior to April 24, 2020. | (9) | Includes 46,973 RSUs and RPUs for all current executive officers and directors as a group that vest and convert to class A common stock prior to April 24, 2020. |
Additional Ownership
Our directors and executive officers hold equity instruments that, in accordance with SEC reporting rules, are not reported in the beneficial ownership table above (with the exception of RSUs for directors) because the named persons do not have the right to acquire beneficial ownership of the underlying shares of common
stock within 60 days of February 24, 2020. These equity interests represent additional financial interests in UPS that are subject to the same market risk as ownership of our common stock. The number of shares of class A common stock to which these equity instruments are equivalent as of February 24, 2020 is as follows.
| | | Restricted
Stock Units(1) | | Phantom
Stock Units(2) | | Restricted
Performance
Units(3) | | Stock
Option
Deferral
Shares(4) | | Other
Deferred
Compensation
Plan Shares(5) | | Total | | Named Executive Officers | | | | | | | | | | | | | | David P. Abney | | — | | — | | 20,111 | | 20,262 | | — | | 40,373 | | Brian O. Newman | | — | | — | | — | | — | | — | | — | | Richard N. Peretz | | — | | — | | 6,753 | | 8,015 | | — | | 14,768 | | James J. Barber, Jr. | | — | | — | | 5,567 | | 4,624 | | — | | 10,191 | | Scott A. Price | | 13,402 | | — | | 2,426 | | — | | 150 | | 15,978 | | Kevin M. Warren | | 8,726 | | — | | 2,330 | | — | | 139 | | 11,195 | | Non-Employee Directors | | | | | | | | | | | | | | Rodney C. Adkins | | 12,999 | | — | | — | | — | | — | | 12,999 | | Michael J. Burns | | 23,905 | | — | | — | | — | | 5,023 | | 28,928 | | William R. Johnson | | 24,963 | | — | | — | | — | | — | | 24,963 | | Ann M. Livermore | | 23,905 | | 2,595 | | — | | — | | — | | 26,500 | | Rudy H.P. Markham | | 23,905 | | — | | — | | — | | — | | 23,905 | | Franck J. Moison | | 5,539 | | — | | — | | — | | — | | 5,539 | | Clark T. Randt, Jr. | | 20,020 | | — | | — | | — | | — | | 20,020 | | Christiana Smith Shi | | 3,777 | | — | | — | | — | | — | | 3,777 | | John T. Stankey | | 10,322 | | — | | — | | — | | — | | 10,322 | | Carol B. Tomé | | 23,905 | | 1,227 | | — | | — | | — | | 25,132 | | Kevin Warsh | | 14,925 | | — | | — | | — | | 6,690 | | 21,615 |
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Table of Contents
(1) | Bookkeeping units, the value of each of which corresponds to one share of UPS class B common stock. RSUs are granted to non-employee directors on an annual basis. Dividends paid on UPS common stock are added to the director’s RSU balance. Upon termination of the individual’s service as a director, the RSUs convert to class A shares. RSUs for directors are also reported in the previous table and are counted toward the total shares beneficially owned. | | | | | | | | (2)64 | Bookkeeping units, the value of each of which corresponds to one share of UPS class B common stock. Phantom stock units were granted to non-employee directors pursuant to a deferred compensation program previously provided to non-employee directors. Dividends paid on UPS common stock are added 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. | (3) | Bookkeeping units, the value of each of which corresponds to one share of UPS class B common stock. We grant RPUs under the MIP and the LTIP award program. | (4) | Shares held for the individual in a rabbi trust within the UPS Deferred Compensation Plan. Each individual elected to defer the receipt of these shares rather than acquiring them directly upon the exercise of a stock option. | (5) | Includes non-employee directors’ retainer fees that have been deferred and allocated to UPS common stock within the UPS Deferred Compensation Plan. Also includes Company credits under the UPS Restoration Savings Plan that are allocated to UPS common stock. See Non-Qualified Deferred Compensation table above for more information. |
58 | | Notice of Annual Meeting of Shareowners and 20202023 Proxy Statement |
Table of Contents
Proposal 2 — Advisory Vote onto 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. | | VotingBoard’s Recommendation:Our Board of Directors recommends that shareowners voteVote FORthis proposal. | | Vote Required:The proposal must be approvedApproval by a majority of the voting power of the shares present in person or by proxy. | |
Pay that reflects performance and alignment of pay with the long-term interests of our shareowners are key principles that underlie our compensation programs.
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 have the opportunity tomay vote, on an advisory basis, to approve the compensation of our NEOs. This is often referred to as a “say on pay” vote and provides you, as a shareowner, with the ability to cast a vote with respect to our 2019 executive compensation programs and policies and the2022 compensation paid to theour NEOs as disclosed in this proxy statement through the following resolution:“RESOLVED,Proxy Statement (“say on pay”). We currently conduct say on pay votes annually. We expect that the shareowners approve,next say 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 disclosure in the Company’s Proxy Statement for the 2020pay vote will occur at our 2024 Annual Meeting of Shareowners.”
As discussed in
Pay for performance and alignment with the Compensation Discussion and Analysis section, the compensation paid tolong-term interests of our NEOs reflects the followingshareowners are key principles of our compensation program: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. | • | 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 | | | | | • | using a balance of short- and long-term performance metrics to encourage the efficient management of our business and minimize excessive risk-taking. |
Although this vote is non-binding, the Compensation and Human Capital Committee and the board value our shareowners’your views and will consider the voting results. To the extentIf there is a significant negative vote, we expect that we will consult directly with significant shareowners to better understand the concerns that influenced the vote. As they currently do, thetheir concerns. The Compensation and Human Capital Committee and the board would consider the constructive feedback obtained through this process in making decisions about future compensation arrangements for our NEOs. The next say on pay vote is expected to occur at the 2021 Annual Meeting.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.
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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 2023 Annual Meeting of Shareowners.” | | | | | | | | | | 66 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
Table of Contents
Audit Committee Matters
Proposal 3 — RatificationAdvisory Vote on the Frequency of AuditorsFuture Advisory Votes to Approve Named Executive Officer Compensation
| | | | | | | | | | | | | | | | What am I voting on?Shareowners are being asked to ratify The frequency of future advisory votes on the Audit Committee’s appointment of Deloitte & Touche LLP to serve as our independent registered public accounting firm for 2020.Voting Recommendation:Our Board of Directors recommends that shareowners voteFORthe ratificationcompensation of the appointmentNEOs as described in the applicable proxy statement.
Board’s recommendation: Vote for a frequency of Deloitte & Touche LLP as our independent registered public accounting firm for 2020.
EVERY YEAR. Vote Required:The proposal must be approvedrequired: Approval by a majority of the voting power of the shares present in person or by proxy. |
|
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, 2023 there were 134,119,136 outstanding shares of class A common stock and 722,802,470 outstanding shares of class B common 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 | 57,900,388 | 8.0% | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 67,566,426 | 9.3% |
(1)According to a Schedule 13G/A filed with the SEC on February 3, 2023, BlackRock, Inc. has sole voting power with respect to 52,261,574 shares and sole dispositive power with respect to 57,900,388 shares. (2)According to a Schedule 13G/A filed with the SEC on February 9, 2023, The Vanguard Group has shared voting power with respect to 1,083,417 shares, sole dispositive power with respect to 64,399,610 shares and shared dispositive power with respect to 3,166,816 shares. The following table sets forth the beneficial ownership of our class A and class B common stock as of March 1, 2023 by each of our NEOs, each of our directors, and all of our executive 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) | | | Class A Shares(2)(3) | Class B Shares | | Named Executive Officers | | | | | | Carol Tomé | 310,987 | 13,036 | 324,023 | | | Brian Newman | 58,994 | 25,000 | 83,994 | | | Nando Cesarone | 56,622 | 1 | 56,623 | | | Kate Gutmann | 108,085 | — | | 108,085 | | | Bala Subramanian | 2,114 | — | | 2,114 | | | Non-Employee Directors | | | | | | Rodney Adkins | 18,069 | — | | 18,069 | | | Eva Boratto | 2,728 | — | | 2,728 | | | Michael Burns | 34,802 | — | | 34,802 | | | Wayne Hewett | 2,728 | 873 | 3,601 | | | Angela Hwang | 3,078 | — | | 3,078 | | | Kate Johnson | 2,414 | — | | 2,414 | | | William Johnson | 32,104 | 160 | 32,264 | | | Ann Livermore | 57,558 | — | | 57,558 | | | Franck Moison | 9,938 | — | | 9,938 | | | Christiana Smith Shi | 8,018 | — | | 8,018 | | | Russell Stokes | 2,414 | 400 | 2,814 | | | Kevin Warsh | 20,167 | — | | 20,167 | | | Executive Officers and Directors as a Group (21 persons) | 962,838 | | 44,820 | | 1,007,658 | | (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, 2023 upon the conversion of RSUs following a separation from the Board of Directors, including 26,052 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, 2023 as follows: Tomé – 174,237; Newman – 26,133; Cesarone – 9,293; Gutmann – 34,755; Subramanian - 0; and directors and executive officers as a group — 348,409. (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. Assumes that all options exercisable through April 30, 2023 and owned by the named individual are exercised, and that shares acquirable under RSUs through April 30, 2023 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 280 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. Directors hold vested equity interests that, in accordance with SEC reporting rules, are not reported in the table above because the individual does not have the right to acquire beneficial ownership of the underlying shares within 60 days of March 1, 2023. 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 2,827 phantom stock units, respectively; and for Michael Burns, Wayne Hewett, Franck Moison and Kevin Warsh, represents deferred non-employee director retainer fees allocated to 5,470, 1,203, 759 and 9,332 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 2022 each of our directors and executive officers complied with all applicable Section 16(a) filing requirements, except for two Forms 4 for Franck Moison, both of which reported separate transactions. The two Forms 4 were filed late due to a Company administrative error.
Proposal 4 — 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. Board’s Recommendation: Vote FOR the ratification of the appointment of Deloitte as our independent registered public accounting firm for2023. Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy. | |
Deloitte has been our independent auditor since we became a publicly-traded entitypublicly traded company in 1999. Prior to becoming a publicly-traded entity,1999, Deloitte also served as the independent auditor of our privately held parent company since 1969. Deloitte audited our 20192022 consolidated financial statements and our internal control over financial reporting. As discussed below, our Audit The Committee considers Deloitte to be well qualified and has appointed Deloitte as our independent registered public accounting firm for the year ending December 31, 2020.This proposal asks you to2023. The board recommends that shareowners ratify the appointment of Deloitte as our independent registered public accounting firm for 2020.Deloitte’s appointment. Although we areshareowner ratification is not required, to obtain suchthe board believes that seeking ratification from our shareowners, the Board of Directors believes it is sound
a good corporate governance practice to do so.practice. If the appointment of Deloitte is not ratified, the Audit Committee will reconsider theDeloitte’s appointment. Even if the appointment of Deloitte is ratified, the Audit 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 of Deloitte is expected to be atattend the Annual Meeting will have the opportunity to make a statement and is expected to be available to respond to appropriate questions by shareowners. The following sections provide additionalshareowner questions. Additional information about our the Committee, Deloitte’s appointment and fees, and other related matters follows. Audit Committee its selection of Deloitte, Deloitte’s fees and related matters.Report
Report of the Audit Committee
Roles and Responsibilities.The Committee’s key responsibilities of the Audit Committee are set forthdescribed in its charter. The charter whichis reviewed annually and was most recently approved by the board in 2022 and is available on the governance section of the UPS Investor Relations website at www.investors.ups.com. Pursuant to its charter, the Audit Committee’s purposes, duties and responsibilities include: | • | assisting the board in discharging its responsibilities relating to the accounting, reporting and financial practices of UPS; | | | | | • | overseeing the accounting and financial reporting processes, including reviewing earnings or annual report press releases, overseeing the integrity of UPS’s 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 systems of disclosure controls and internal controls, the Company’s compliance with legal and regulatory requirements as well as the Company’s Code of Business Conduct. |
•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 UPS’sthe Company’s financial statements and establishing effective internal control over financial reporting. Deloitte is responsible for auditing those financial statements and UPS’sthe Company’s internal control over financial reporting and expressing an opinion on the conformity of UPS’sthe Company’s audited financial statements with generally accepted accounting principles and on the effectiveness of UPS’s internal control over financial reporting based on criteria established by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee is responsible for appointingappoints the independent registered public accounting firm, understandingapproves the terms of the audit engagement, negotiating the fees for the audit engagement and approving the terms of the audit engagement.reviews and approves Deloitte’s fees. In this context, the Audit Committee discussed with Deloitte the terms of theDeloitte’s 2023 audit engagement, the audit’s overall scope and plan, for the audit, and the other matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee had the opportunity to askasked Deloitte questions relating to such matters.
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Committee Oversight of Financial Statements.Statement Oversight. The Audit Committee met with management and Deloitte to review and discuss the Company’s audited financial statements and the Company’s internal control over financial reporting. The Audit Committee discussed with management and Deloitte the critical accounting policies applied by UPSthe 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 Audit 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. Additionally, the Internal Audit Oversight. The Committee reviewed UPS’s internal audit plan and the performance, responsibilities, charter, budget and staffing of UPS’s internal auditors.audit function. Compliance and Ethics Oversight. The Audit Committee met with members of management to discuss the Company’s legal and ethical compliance programs. The Audit Committee also oversaw compliance with and procedures for UPS’sthe 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 has provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accountants’Deloitte’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Deloitte that firm’s independence. The Audit Committee alsodiscussed Deloitte’s independence with the firm and considered whether Deloitte’s provision of non-audit services to UPS was compatible with the independence of the independent registered public accountants.their independence. Pre-approvals. The Audit Committee has established a policy, discussed below, requiringrequires the pre-approval of all audit and non-audit services provided to UPS by Deloitte. The Audit Committee reviewed and pre-approved all fees paid to Deloitte. These fees are described in the next section of this proxy statement.
Committee Assessment of Deloitte.In addition, as in prior years, the AuditThe Committee, along with management and UPS’sthe Company’s internal auditors, reviewed Deloitte’s 2019 performance as part of its consideration of whether to appoint Deloitte as UPS’s independent registered public accounting firm for 2020 and to recommend to the board that shareowners ratify this appointment. As part of this review, the Audit2022 performance. The Committee considered the continued independence, objectivity and professional skepticism of Deloitte. The Audit Committee also considered, among other things,Deloitte, the length of time that Deloitte has served as UPS’sthe Company’s independent auditors, the breadth and complexity of UPS’sthe business and its global footprint and the resulting demands placed on its auditing firm in terms of expertise in UPS’s business,footprint. The Committee also considered external data and management’s perception relating to the depth and breadth of Deloitte’s auditing qualification and experience, the quantity and quality of Deloitte’s staff, and global reach, the appropriateness of 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 our independent registered public accounting firm.
firms. The Audit Committee recognized the ability ofdetermined that Deloitte tocan provide both the necessary expertise to audit UPS’s business and the matchinghas a similar global footprint to effectively audit UPS worldwide, as well asworldwide. The Committee also considered the efficiencies to UPS resulting from Deloitte’s long-standing and deep understanding of our business. The Audit Committee also considered the policies that Deloitte follows with respect to rotation of its key audit personnel, so that there is a new partner-in-charge at least every five years. The Audit 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. Additionally, the Audit Committee consideredbusiness, 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 Audit 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 UPS’sthe Company’s independent registered accounting firm for 2020. Consequently, the Audit Committee has appointed Deloitte as UPS’s independent auditors for 2020, and the2023. The board is recommendingrecommends that UPS’s shareowners ratify this appointment. Recommendation.Based on
Furthermore, the review and the discussions described above, the Audit 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, 20192022 for filing with the SEC. The Audit Committee Carol B. Tomé, Chair*
Eva Boratto, Chair
Michael J. Burns
John T. Stankey
Wayne Hewett
Angela Hwang
* Carol Tomé participated in the Audit Committee’s consideration of the matters reflected above during her service on the Audit Committee. Rudy Markham subsequently replaced Carol as a member and Chair of the Audit Committee in March 2020 in connection with our previously described leadership transitions.
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Principal Accounting Firm Fees The Audit Committee, with the ratification of the shareowners, engaged Deloitte to perform the annual auditaudits of the Company’s financial statements for each of the fiscal yearyears ended December 31, 2019.2022 and 2021. The aggregate fees billed to us for the fiscal years ended December 31, 20192022 and 20182021 by Deloitte, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates are below:| | | 2019 | | | 2018 | | Audit Fees(1) | | $ | 16,464,000 | | | $ | 14,558,000 | | Audit-Related Fees(2) | | $ | 1,266,000 | | | $ | 968,000 | | Total Audit and Audit-Related Fees | | $ | 17,730,000 | | | $ | 15,526,000 | | Tax Fees(3) | | $ | 631,000 | | | $ | 825,000 | | All Other Fees | | $ | — | | | $ | — | | Total Fees | | $ | 18,361,000 | | | $ | 16,351,000 |
| | | | | | | | | | | | | | | | | 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 | |
(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. (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 assessments of climate reporting readiness. (1) | Fees for professional services performed | | Services Provided 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. | | | (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. |
Services Provided by Deloitte
All services provided by Deloitte are permissible under applicable laws and regulations. The Audit 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 Audit Committee. Any proposed services exceeding pre-approved cost levels also requiresrequire specific approval by the Audit 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 Audit Committee has delegated to its Chair the authority to pre-approve certain permitted services between the Audit Committee’s regularly scheduled meetings, and the Chair must report any pre-approval decisions to the Audit Committee at its next scheduled meeting for review by the Audit Committee. The policy prohibits the Audit Committee from delegating its responsibilities to management for pre-approving Deloitte’s permitted services.
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Shareowner Proposals
In accordance with SEC rules, we have set forth below certain shareowner proposals along with the supporting statements ofand the shareowner proponents.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 is required towill be voted on at our Annual Meeting only if properly presented.presented at the meeting. The Company is not responsible for any inaccuracies they may contain.Proposal 4 — Shareowner Proposal Requesting the Board Prepare an Annual Report on Lobbying Activities
What am I voting on?Whether you want to require the board to prepare an annual report on UPS lobbying activities.
Voting Recommendation:Our board of directors recommends that shareowners voteAGAINSTthis proposal because:
| • | UPS is transparent and accountable with respect to lobbying and political activities, including providing significant disclosures | | | | | • | UPS has consistently been named a top company for political transparency and accountability | | | | | • | UPS protects and promotes shareowner value by participating in the political process | | | | | • | The board provides independent oversight of UPS’s lobbying and political activities | | | | | • | Additional lobbying disclosure is unnecessary |
Vote Required:The proposal must be approved by a majority of the voting power of the shares present in person or by proxy.
Shareowner Proposal
Walden Asset Management, One Beacon Street, Boston, MA 02108, has advised us that it is the holder of at least 272,000 shares of our class B common stock and that it, along with co-proponents whose names, addresses and share ownership will be promptly provided upon oral or written request to the UPS Corporate Secretary, intends to submit the proposal set forth below for consideration at the Annual Meeting.
Whereas,we believe in full disclosure of UPS’s lobbying activities and expenditures to assess whether its lobbying is consistent with UPS’s expressed goals andcontained in the best interests of shareowners.
Resolved:the shareholders of UPS request the Board prepare a report, updated annually, disclosing:
| 1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. | | | | | 2. | Payments by UPS used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
proposals. | 3. | UPS’s membership in and payments to any tax-exempt organization that writes and endorses model legislation. | | | | | 4. | Description of management’s and the Board’s decision making process and oversight for making payments described in sections 2 and 3 above. |
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which UPS is a member.
“Direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.
The report shall be presented to the Nominating and Corporate Governance Committee and posted on UPS’s website.
Shareowner’s Supporting Statement
We encourage transparency in UPS’s use of funds to lobby. We appreciate UPS’ website disclosure on political contributions, but UPS’s lobbying payments through trade associations remain secret.
UPS spent $60.7 million from 2010 - 2018 on federal lobbying. This does not include state lobbying, where UPS also lobbies but disclosure is uneven or absent. One study found UPS spent $1,587,609 lobbying in six states from 2012 - 2015 (Sustainable Investments Institute,February 2017).
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UPS sits on the board of the Chamber of Commerce, which has spent over $1.5 billion lobbying since 1998, and belongs to the Business Roundtable, which is lobbying against shareholder rights to file resolutions. UPS does not disclose its memberships in, or payments to trade associations, or the amounts for lobbying.
And UPS does not disclose its membership in tax-exempt organizations that write and endorse model legislation, such as sitting on the Private Enterprise Advisory Council of the American Legislative Exchange Council (ALEC). UPS’s ALEC membership has drawn press scrutiny (“UPS and Pfizer’s Dirty Little Secret,”Washington Post, December 5, 2017). Over 110 companies have left ALEC, including ExxonMobil, Home Depot, Pepsi and Walmart.
We believe UPS’s lack of trade association disclosure presents reputational risks. For example, UPS strongly supports efforts to mitigate the impact of climate change, yet the Chamber opposed the Paris climate accord. UPS uses the Global Reporting Initiative (GRI) for sustainability reporting, yet currently fails to report “any differences between its lobbying positions and any stated policies, goals, or other public positions” under GRI Standard 415.
We urge UPS to expand its lobbying disclosure.
Response of UPS’s Board
This requested report is unnecessary because of UPS’s already extensive disclosures regarding lobbying and political activities, the oversight provided by the board of directors, and the Company’s existing policies. Preparing an additional special report beyond UPS’s current voluntary and mandatory disclosures is not an efficient use of resources. Additionally, UPS’s shareowners previously rejected this proposal in 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019.
UPS is transparent and accountable
UPS complies with all applicable laws with respect to disclosing political and lobbying activities and, in some cases, goes beyond what is required. The following examples demonstrate UPS’s commitment to political transparency and accountability:
| • | UPS provides significant disclosures about political spending:UPS publishes semi-annual reports disclosing the amounts and recipients of any federal and state political contributions and expenditures made with corporate funds in the United States. UPS also discloses any payments to trade associations that receive $50,000 or more from the Company and that use a portion of the payment for political expenditures pursuant to 26 U.S.C. § 162(e)(1) (B). These reports can be found at www.investors.ups.com. As disclosed in our most recent report, UPS did not make any federal or state contributions or non-deductible political payments to covered trade associations during the July 1 – December 31, 2019 time period. | | | | | • | UPS provides detailed information about lobbying activities:UPS files publicly available federal Lobbying Disclosure Act Reports each quarter. Links to these reports can be found on UPS’s web site at www.investors.ups.com. The reports provide information about expenditures for the quarter, describe the specific pieces of legislation that were the topic of communications, and identify the employees who lobbied on UPS’s behalf. UPS files similar periodic reports with state agencies reflecting state lobbying activities. |
UPS has consistently been named a top company for political transparency and accountability
The Center for Political Accountability Zicklin Index of Corporate Political Accountability and Disclosure ranked UPS among the top of S&P 500 companies for political transparency and accountability in 2019. This is the ninth year in a row that UPS was named as one of the top companies. A copy of the 2019 ranking can be found at www.politicalaccountability.net.
UPS protects and promotes shareowner value by participating in the political process
UPS’s business is subject to extensive regulation at the federal, state and local levels. We believe that we have a responsibility to our shareowners and employees to be engaged in the political process, including lobbying activities. We understand that individual shareowners may disagree with one or more positions expressed by certain organizations. In fact, given the variety of business issues in which many trade associations and other groups are engaged, we do not necessarily agree with all positions taken by every organization in which we are a member. In these circumstances, we weigh the utility of continued membership against the consequences of differing positions or opinions.
The Board provides independent oversight of UPS’s lobbying and political activities
The President of UPS’s Public Affairs department regularly reports to the Board of Directors and the Nominating and Corporate Governance Committee regarding UPS’s lobbying and political activities. In addition, the Nominating and Corporate Governance Committee, which is composed entirely of independent directors, reviews and approves UPS’s semi-annual political contribution report.
The board also monitors UPS’s memberships in trade associations and other tax exempt organizations that engage in lobbying. UPS must often decide whether to participate in a variety of trade associations and other tax exempt organizations. The Company may participate when involvement is consistent with specific UPS business objectives. These decisions are subject to board oversight and are regularly reviewed by the Nominating and Corporate Governance Committee.
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Furthermore, UPS’s decision-making process for lobbying activities is transparent. UPS’s Public Affairs department works with senior management on furthering business objectives and on protecting and enhancing long-term shareowner value. This is accomplished by focused involvement at all levels of government. Moreover, the UPS Public Affairs department must approve all lobbying activities and any payments to trade associations or other tax-exempt organizations that engage in lobbying activities.
Additional lobbying disclosure is unnecessary
UPS participates in the political process in accordance with good corporate governance practices. The board believes UPS’s lobbying activities are transparent, and the approval of this proposal is unnecessary given the information that is already publicly available. In addition, approval of this proposal is 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 5 — 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. Voting
Board’s Recommendation:Our board of directors recommends that you vote Vote AGAINSTthis proposal because: | • | UPS’s ownership structure has contributed to its long-term success | | • | UPS’s dual-class structure is unique in that class A shares are widely held by over 155,000 class A shareowners, and there is no concentration of voting power | | • | Elimination of this structure will not improve the corporate governance or the long-term financial performance of UPS |
Vote Required:
•The proposal must be approvedis 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-class 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-class 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 of 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. Shareowner Proposal
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, has advised us that he is the holder of not less than 50 shares of our class B common stock and 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 — Equal Voting Rights for Each Shareholder RESOLVED:
Shareholders request that our Board of Directors take steps to ensure that all of our company’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’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 the weaklingonly one-vote per share for other shareholders. Corporate governance advocates have suggested a 7-year transition to equal voting rights for each share. In spite of lopsided shares having 10-times more voting power, support for this proposal topic has steadily grown from 21% in 2013 to 32% in 2022. With stock having 10-times more voting power our companyUPS takes our shareholder money but does not give us in return an equal voice in our company’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 were restricted by provisions mandating an undemocratic 80%-vote in order to make a certain improvements to our corporate governance. Plus inThis undemocratic 80% vote requirement translates into a 5-year period our stock showed little gain: $109 to $116.And to top bad things off our management recommendedw
ell over a 100% vote requirement from the shares that they get a 3-year holiday on a shareholdertypical vote on their executive pay. The vast majority of Fortune 500 companies recommended anat the annual vote on executive pay. Excellent corporate governance is a cost-effective way to improve company stock performance.As an example for UPS, social and mobile-game maker Zynga announced moving to a single-class share structure in 2018. At Zynga Class C shares had 70-votes per share and Class B shares had 7-votes a share while Class A shares had one-vote per share.
Zynga executives said that a single-class share structure simplifies the company’s stock structure and gives parity to shareholders. In its 2018 annual report, Zynga said its old multi-class share system could limit the ability of its other stockholders to influence the company and could negatively impact its share price.
Corporate governance advocates as well as many investors and index managers have pushed back on the UPS-type dual-class structures. S&P Dow Jones Indices said that companies with multiple classes of shares would be barred from entering its flagship S&P 500 index.
meeting. Please vote yes:Equal Voting Rights for Each Shareholder — Proposal 5
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Table of Contents
Response of UPS’s Board
UPS has a unique employee ownership culture that has helped it grow and thrive over the last 113 years.thrive. Current and former employees and their families have been significant shareowners of the Company since its foundingwell before the Company’s IPO in 1907. This culture was instilled in the Company by1999. UPS founder Jim Casey who always urgedfostered this culture and an ownership mindset by urging his partners to run their centers and departments like their own small business. Our employee ownership culture creates a significant incentive for our employees The Company’s capital structure was developed and implemented in connection with the IPO in order to help facilitate UPS’s long-term success.The Company’s currentensure 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 which has been in place since UPS became a public company in 1999, 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 many of whom owned UPS shares before the Company’s initial public offering.in order to further our culture and ownership mindset. The Company’s class B shares are publicly traded. “The basic principle which I believe has contributed more than any other This structure provides a significant incentive for our employees to the building of our business as it exists today…is the ownership of our company by the people employed in it.”
Jim Casey, UPS Plant Managers Conference, 1955
take actions and make decisions that help facilitate UPS’s ownership structure has contributed to its long-term success, Our ownership resulting in aligned interests among all shareowners. The structure allows the Company to pursue long-term growth strategiesalso significantly enhances employee and avoid the drawbacks associated with excessive emphasis on short-term goals. In this regard, the interests of UPS employees and class B shareowners are aligned. Management is able to run the Company with a sense of purpose by focusing on sustainable value creation that benefits all of the Company’s constituents. We believe that the benefits of our ownership structure are reflected in various financial metrics used to measure UPS, especially when compared with our competitors.
retiree engagement. Our class A shareowners’ interests go well beyond UPS’s current stock price and focus on the long-term success of the Company. Since its humble beginnings in 1907, UPS has become the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry and the premier provider of global supply chain management solutions. We owe our success, to a significant degree, to the commitment our ownership structure inspires in our employee owners.
UPS’s dual-classcapital structure is unique and does not present risks inherent in that class A shares are widely held, and ownership is not concentrated in any one holder or a few holders
typical dual-class structures The board strongly disagrees with this proposal’s characterization of UPS’s ownershipcapital structure. Some companies maintain multiple classes of stock in order to concentrate voting power with a limited number of people (such as company founders) who have unique interests that may not necessarily align with those of other shareowners. In contrast, Others embed the structure to promote managerial entrenchment or provide for disparate financial returns. As described below, UPS’s unique capital structure does not present any of those risks. UPS’s dual-class structure is uniquedoes not concentrate voting power or provide any holder a level of control; provisions of UPS’s governance documents would prevent voting power concentration Dual-class structures are typically designed to protect voting control in that thean individual or small group. UPS’s class A shares are widely held by approximately 155,000 current and former employees, from hourly employees in our operations to executive officers. No single holder or group of holders owns any significant voting bloc. Our current executive officers and directors, collectively, hold less than 1% of the total voting power of our class A and class B common stock.Elimination 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, UPS’s certificate of incorporation (the “Certificate”) also contains provisions that would limit the voting power of any shareholder, whether the holder of class A or class B common stock, if that holder controlled over 25% of UPS’s outstanding voting power. UPS’s dual-class structure does not entrench management or the board UPS maintains robust corporate governance practices, and its capital structure is not used to entrench management or the board. The board regularly reviews and considers succession planning issues. Our CEO has served in that role only since June 2020, and we added an independent board chair at that time. Also, since 2020, we have added five new board members and had four board members retire. In addition, during that time we added three new Executive Leadership Team members - all of whom are diverse - and had five leave the Company. UPS’s governance documents provide additional safeguards against traditional dual-class concerns, including an effective “sunset” 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 which has resulted in an average annual decline in the number of outstanding shares of class A common stock of 3.4% 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 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 commitment 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 theUPS’s corporate governance or the long-term financial performance of the CompanyUPS’s ownership structure should be considered in light of our strong
UPS already maintains robust corporate governance practices, as discussed beginning on page 10 of this proxy statement. All but twoeliminating a risk typically associated with dual-class structures. Other than our CEO, all UPS director nominees are independent, allindependent. 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, Committee, Compensation Committee,and Human Capital, Nominating and Corporate Governance Committee and Risk Committee,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 strong lead independent director. In addition, as partnumber of our ongoing commitment to strong corporate governance practices, the board regularly reviews and updates the Company’s governance policies and practices, including the recent voluntary adoption ofprinciples aligned with marketplace developments. These include voluntarily adopting an annual say on pay votingvote, assigning human capital oversight responsibilities to the Compensation Committee and aadding to the Company’s proxy access bylaw.Forstatement and sustainability reports gender and ethnicity information for employees and directors.
Changing the reasons discussed above, thecapital structure is unnecessary The board believes that UPS’s ownershipcurrent capital structure continues to be in the best interests of the Company and its shareowners. Elimination of this structure will not improve the corporate governance or the long-term financial performance of the Company. The board also believes that our shareownersstakeholders. Shareowners have agreed with this assessment when they rejected similar proposals in 2013, 2014, 2015, 2016, 2017, 2018 and 2019.every year since 2013.
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The board recommends that shareowners vote AGAINST this proposal.
Table of Contents
Proposal 6 — Shareowner Proposal Requesting that the Company Prepare a Report on How it Plans to Reduce its Total Contribution toAdoption of Independently Verified Science-Based Greenhouse Gas Emissions Reduction Targets in Line with the Paris Climate ChangeAgreementWhat am I voting on?Whether you want to require the Company to prepareadopt 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 report on how it plansplan to reduce its total contributionbecome 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 climate change and align its operationsachieve a science-based target by 2030 or 2035, as would be required to be in line with the Paris Agreement.Voting Recommendation:Our Board of Directors recommends that you voteAGAINSTthis proposal because:
| • | UPS already publishes a comprehensive and detailed annual sustainability report | | • | UPS is widely recognized for its sustainability practices | | • | UPS has already adopted and published ambitious goals to reduce GHG emissions | | • | UPS is taking steps to address our airline fuel emissions |
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:The proposal must be approved Approval by a majority of the voting power of the shares present in person or by proxy. Shareowner Proposal
Green Century Capital Management, Inc., 114 State Street, Suite 200, Boston, MA 02109 and Trillium Asset Management LLC, 721 NW Ninth Ave, Suite 250, Portland, OR 97209 and Zevin Asset Management, LLC, 2 OliverTwo Financial Center, 60 South Street, Suite 806,1100, Boston, MA 02109,02111, 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 on behalf ofMeeting. Share ownership will be promptly provided upon request to the Trillium P21 Global Equity Fund, holder of 40,000, shares of our class B common stock, the Sundance Family Foundation, holder of 32 shares of our class B common stock, Mayberry, LLC, holder of 130 shares of our class B common stock, Persephone, LLC, holder of 87 shares of our class B common stock, and the Richard Voelbel Rev Trust dtd 2/21/08, holder of 85 shares of our class B common stock.Whereas:UPS Corporate Secretary.
Whereas: In 2018, the Intergovernmental Panel on Climate Change advisedupdated 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.The Fourth National Climate Assessment report (2018) finds that with continued growth in emissions, “annual losses in some U.S. economic sectors are projected to reach hundreds of billions of dollars by 2100.”
Climate change impacts presentposes risks to investors. A warmingUnited 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 is associated with increased supply chain disruptions, reduced resource availability, lost production, commodity price volatility, infrastructure damage, political instability, and reduced worker efficiency, among other factors that can disrupt company operations.change. The U.S. Energy Information Administration identifies the transportation sector asis the largest producersource of U.S. greenhouse gas (GHG) emissionsemissions. 9 Internal combustion engine medium and its emissions are steadily increasing.heavy-duty vehicles have significant adverse health impacts that disproportionately affect low-income communities and communities of color.10 While UPS has implemented various initiatives to improve efficiency and reduce emissions, its total emissions have increased nearly thirteen percent since 2015. UPS does not have a goal to reduce absolute emissions from its airline which accounts for nearly 60 percent of UPS’s total emissions. UPS has not stated an intention to align its total carbon footprint with the goals of the 2015 Paris Climate Agreement — the landmark effort to limit global temperature increases to well below 1https://19january2017snapshot.epa.gov/climate-impacts/climate-impacts-transportation_.html
2 degrees Celsius, ideally striving for 1.5 degrees above pre-industrial levels.More than 690 leading companies, including UPS’s peer DHL Group, have committed to reduce their emissions in line with the goals of the Paris Agreement. Amazon plans to purchase 100,000 electric delivery vehicles by 2030 as part of its ambition to achieve the Paris goals ten years early.
Ramping up the scale, pace, and rigor of climate-related efforts may help unlock opportunities for growth as major business customers are increasingly demanding environmental accountability from suppliers. It may also help prepare UPS for future carbon-related regulations.
Given the impact of climate change on the economy, the environment, and human systems, and the short amount of time in which to address it, proponents believe UPS has a clear responsibility to its investors and stakeholders to clearly account for whether, and how, it plans to reduce its ongoing climate contributions.
Resolved: Shareholders request UPS issue a report, at reasonable cost and omitting proprietary information, describing if, and how, it plans to reduce its total contribution to climate change and align its operations with the Paris Agreement’s goal of maintaining global temperature increases well below 2 degrees Celsius.
https://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/ 68 | | | | | | | | | | 76 | | Notice of Annual Meeting of Shareowners and 20202023 Proxy Statement |
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 TableWhile 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 ContentsSupporting Statement: Inits overall footprint.12 Additionally, shareholders do not know whether UPS plans on achieving net zero through actual emissions reductions or through the report,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 seek information, amongwith objective assurance that UPS is doing its part to reduce emissions in a comprehensive and timely manner. Peer DHL and 46 other issues at boardair freight transportation and management discretion, onlogistics companies have committed to set targets via the relative benefits and drawbacks of integrating the following actions:Science Based Targets Initiative (SBTi). Adopting overall short-, medium-,Resolved: Shareholders request that UPS adopt independently verified short and long-term absolute GHGscience-based greenhouse gas emissions reduction targets, for the Company’sinclusive of emissions from its full carbon footprint, including its airline, alignedvalue 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;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 | • | Increasing the scale, pace, and rigor of initiatives aimed at reducing the carbon intensity | Response of UPS’s services and operations; | | • | Increasing investments in renewable energy resources.Board |
Response of UPS’s Board
UPS supports global efforts to mitigate the impact of climate change. Sustainability is an inherent part of UPS’s strategyoverall business and business operations.operating strategy. We take a comprehensive, global approach to reducing energy use and GHG emissions within our networks,network, as well as major portions of our value chain. As a global leader in logistics and supply chain solutions, we transport packages, and freight, facilitate international trade, and apply advanced technology to efficiently manage the world of business. In this role, we have theboth a responsibility and an opportunity to reduce GHG emissions forthroughout the supply chains of many businesses.“At UPS, we’re choosing to create a future that is connected, sustainable,businesses, including by efficiently consolidating shipments and inclusive.”
David Abney, UPS 2018 Corporate Sustainability Report
UPS already publishes a comprehensive and detailed annual sustainability report
UPS is committed to sustainable business practices and 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. UPS’s annual Corporate Sustainability Report, available at www.ups.com/sustainabilityreport, is comprehensive and already provides shareowners the information they need to assess the Company’s sustainability efforts. This inclusive report chronicles otherwise reducing carbon intensity.
UPS’s sustainability strategy, performance, initiatives,goals include a plan to become carbon neutral across Scope 1, 2 and engagements. We also present data3 emissions in accordance with the Global Reporting Initiative (“GRI”) Standards Comprehensive level. Producing another report around the Company’sour global operations by 2050 In 2021, we announced ambitious sustainability practices is unnecessary, not an efficient use of resources, and not in the best interests of the Company or its shareowners. UPS is widely recognized for its sustainability practices
We have been repeatedly and widely recognized for our sustainability leadership. Some of the accomplishments in this area that we are most proud of include:
| • | Listed on the Dow Jones Sustainability World Index for the seventh consecutive year and the Dow Jones Sustainability North America Index for the 15th straight year; and | | • | Barron’s annual list of the 100 most sustainable companies ranked UPS as No. 5 in the industrials segment and 18th overall. |
We have already adopted and published ambitious goals to reduce GHG emissions
UPS’s senior executives effectively manage for sustainability and are highly motivated to meet the Company’s sustainability goals. In fact, after we achieved manyas a part of our previous sustainability goals with a 2016 target date, we set more challenging goals around topics including the environment, our workforce, and communities.
Achieving these new goals –strategy, including a goalcommitment to reduce our absolute GHG emissions by 12%become carbon-neutral across our global ground operations by 2025 – will not be easy.2050, including Scope 1, 2 and 3 emissions. We are pushing ourselves with longer-term targets that support our sustainability vision and reinforce our commitment to create innovative solutions for global sustainability challenges. We have established three targets to accelerate the use of renewable energy across our fleet and facilities and intend to invest additional resourcesalso developed medium-term goals designed to help us meet these targets:
| • | source 25% of total electricity needs from renewable sources by 2025; | | • | source 40% of ground fuel from low carbon or alternative fuels by 2025; and | | • | expand our rolling laboratory – 25% of annual vehicle purchases by 2020 will be alternative fuel and advanced technology vehicles. |
It is also importantachieve carbon neutrality, including adopting interim targets to note that these ambitiousreduce 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, were set at a time whenand progress towards achieving them, are further detailed in our carbon footprint would be expected to increase due to the rapid growth in e-commerce volume, which is requiring us to expand our physical network around the world. And we continue to evaluate longer-term GHG emission reduction projects beyond 2025, including projects that will address challenges associated with ourannual sustainability disclosures.
Our strategy includes addressing airline fuel emissions.
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emissions and the electrification of our delivery fleet Table of Contents
We are taking stepsUPS continues to address our airline fuel emissions
UPS is actively engaged with airline industrytransform its delivery fleet, and non-governmental organizationshas made significant strides to evaluate the availability and commercial feasibility of sustainable aviation fuel. Looking beyond 2025, we are evaluating adopting additional, enterprise-wide short-, medium- and long-term emission reduction targets that will result in additional GHG reductions, including targets related to our airline fuel emissions.
this end. In 2018, airline2022, aircraft fuel made up 59%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 with fuel-efficient aircraft, and our existing older models have been retrofitted toindustry. When appropriate, we make them more efficient, all to have a lower carbon footprint. We continue to make significant capital investments in new,newer, more fuel-efficient aircraft. For example,In addition, we have been addressing growing U.S.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 international demandother 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 takingthe 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 Boeing 747-8 freighter jets. The new winggoals requested by this proposal is unnecessary given the Company’s ongoing efforts in this area and engine design oninformation that is already publicly available. Therefore, approval of this proposal would not result in an efficient use of resources or materially alter the 747-8 reduces fuel consumption and carbon emissions by 16 percent overCompany’s efforts to reduce its emissions. For these reasons, the 747-400F. The aircraft also operates 52 percent below the International Civil Aviation Organization’s nitrous oxide limits and is 30 percent quieter than other jumbo cargo jets.Adding these freighters will progressively increase our ability to optimize our air network, opening up more capacity as we reassign equipment to operations across the world. UPS also lowers flight speeds, reduces weight where possible, optimizes flight paths, washes aircraft engines regularly and uses technology to increase precision of aircraft departures, arrivals and taxi times.
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 | | | | | | | | | | 80 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
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 8 — 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” Guidelines What am I voting on? Whether you want the board to prepare a report on how 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. Board’s Recommendation: Vote AGAINST this proposal because: •UPS already provides 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 dialog with our stakeholder and delivering positive social impact •UPS continues to actively invest in talent recruitment and employee development •The board provides independent oversight of UPS’s human capital management and economic, environmental and social sustainability risks Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy. The International Brotherhood of Teamsters, 925 Louisiana Avenue, NW, Washington, DC 20001, 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. Resolved: Shareholders request the Board of Directors prepare a report disclosing how United Parcel Service, Inc. ("UPS" or the "Company") is addressing the impact of its climate change strategy on relevant stakeholders, including but not limited to its employees, workers in its supply chain, and communities in which it operates, consistent with the "Just Transition" guidelines of the International Labor Organization and indicators of the World Benchmarking Association. The report should be prepared at reasonable cost, omit proprietary information, and be available to investors. Supporting Statement: At the 2021 UN Climate Change Conference, the United States and other governments agreed 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 economies 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:// 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. (See https://assets.worldbenchmarkingalliance.org/app/uploads/2021/07/Just-Transition-Methodology.pdf.) 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. (See https://www.worldbenchmarkingalliance.org/publication/transport/companies/united-parcel-service-ups/) The challenges confronting a just transition strategy at UPS could not be clearer than when the company, | | | | | | | | | | 82 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
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 accords to automation in achieving its carbon goals, even though such technologies 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 to develop a just transition plan to ensure its actions are fair and equitable to affected workers and communities. 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. 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 believe the requested report would significantly alter the mix of information available. UPS already provides transparency, including 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. 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 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 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 technologies 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 over 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. The board provides independent oversight of UPS’s human capital management and 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, which are considered as part of our comprehensive enterprise risk management program. The board regularly reviews the effectiveness of our risk management and due diligence processes related to material sustainability topics, and oversees management’s development of our values, strategies and policies related to economic, environmental and social impacts. We believe the board’s oversight of these matters helps identify and mitigate human capital management and economic, environmental and social sustainability risks, including the risks posed by 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. For these reasons, the board recommends that shareowners vote AGAINST this proposal. | | | | | | | | | | 84 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
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. | | | | | | | | | | 86 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
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 10 — Shareowner Proposal Requesting the Board Prepare a Report on the Impact of the Company’s DE&I Policies on Civil Rights, Non-Discrimination and Returns to Merit, and the Company’s Business What am I voting on? Whether you want the board to commission an audit analyzing the impacts of the Company’s 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. 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 data •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. The National Center for Public Policy Research, 2005 Massachusetts Ave. NW, Washington, DC 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. Resolved: Shareholders of the United Parcel Service, Inc. ("the Company") request that the Board of Directors commission an audit analyzing the impacts of the Company's Equity, Diversity & Inclusion policies on civil rights, non-discrimination and returns to merit, and the impacts of those issues on the Company's business. The audit may, in the Board's discretion, 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, prepared at reasonable cost and omitting confidential or proprietary information, should be publicly disclosed on the Company's website. Supporting Statement: Under the guise of ESG, corporations have allocated significant resources and attention towards implementing social justice into workplace practices and hiring. Across the political spectrum, all agree that employee success should be fostered and that no employees should face discrimination, but there is much disagreement about what non-discrimination means. Many companies — including Bank of America, American Express, Verizon, Pfizer, CVS and even UPS itself1 — have adopted Equity, Diversity & Inclusion programs, trainings 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.2 Where adopted, such programs have raised significant objections, including the concern that the programs and practices themselves are deeply racist, sexist, otherwise discriminatory, and potentially in violation of the Civil Rights Act of 1964.3 And that by devaluing merit, corporations have sacrificed employee competence and moral — and therefore productivity — to the altar of "diversity." 1https://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.html 2https://www.sec.gov/Archives/edgar/data/1048911/000120677421002182/fdx3894361-def14a.htm#StockholderProposals88; https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2021/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_58 3https://www.americanexperiment.org/survey-says-americans-oppose-critical-race-theory/;https://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-training | | | | | | | | | | 88 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
These practices create massive reputational, legal and financial risk. If the Company is, in the name of so-called "equity," committing illegal or unconscionable discrimination against employees deemed "non-diverse," then the Company will suffer in myriad ways — all of them both unforgivable and avoidable. In developing the audit and report, the Company should consult civil-rights 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 215 — 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/ UPS is a people-led company guided by a strong purpose. UPS’s values are rooted in diversity, equity and inclusion (DEI) that thrives inside and outside our organization. We are committed to developing 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 that 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 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, Future Leaders, 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. 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. | | | | | | | | | | 90 | | Notice of Annual Meeting of Shareowners and 2023 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 2023 Annual Meeting |
| | | | What is included in the proxy materials, and why am I receiving them? |
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Important Information About Voting at the 2020 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 20202023 Annual Meeting, as well as our 20192022 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, 2020.2023. When you vote, you appoint each of David P. AbneyCarol 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?
| | | | Why did some shareowners receive a Notice of Internet Availability of Proxy Materials while others received a printed set of proxy materials? |
We are allowed tomay 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 will notwon’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?
| | | | Can I receive future proxy materials and annual reports electronically? |
Yes. This Proxy Statement and the 20192022 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.
Who is entitled to vote?
Holders of our class A common stock and our class B common stock at the close of business on March 16, 20209, 2023 are entitled to vote. This is referred to as 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 available in electronic form at the Annual Meeting on May 14, 2020 and will be accessible in electronic formduring regular business hours for ten days prior to the meeting at our principal place of business, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, and at the offices of Morris, Nichols, Arsht & Tunnell, 1201 North Market Street, Wilmington, Delaware 19899, between the hours of 9:00 a.m. and 5:00 p.m. 30328.
To how many votes is each share of common stock entitled?
| | | | | | | | | | 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 155,905,943133,389,907 shares of our class A common stock and 702,540,740723,298,982 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.
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| | | | How do I vote before the Annual Meeting? |
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How do I vote?
If you hold class B shares through a bank or broker, please refer to your voting instruction form, the Notice or other information forwarded by your bank or broker to see which voting options are available to you.
Shareowners of record may vote as described below: | • | In Person.You may vote in person if you attend the Annual Meeting. Each shareowner may appoint only one proxy holder or representative to attend the meeting on his or her behalf. | | | | | • | Through the Internet. 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 13, 2020. | | | | | • | 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 13, 2020. | | | | | • | 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. |
•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. •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. •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 or in person at the Annual Meeting 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 11, 2020.1, 2023. 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 atonline during the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares through a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the bank, broker or other holder of record to be able to vote at the Annual Meeting.. | | | | BENEFICIAL SHAREOWNERSSHAREOWNER 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?
| | | | 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 in person at the Annual Meeting. |
•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.
How many votes do you need to holdvote before the Annual Meeting?
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, in persononline 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?
| | | | 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. 72 | | Notice of Annual Meeting of Shareowners and 2020 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? |
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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 of class A shares or class B shares 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 11, 2020,1, 2023, then the Plan trustee will vote your shares for each proposal in the same proportion as the shares held underby 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 class B shares under certain limited circumstances ifvoting instructions. If you do not provide voting instructions beforeand the Annual Meeting. These circumstances include voting your shares on “routine matters” as defined by NYSE rules relatedbroker elects to voting by banks and brokers, such as the ratification of the appointment of our independent registered public accounting firm described in this Proxy Statement. With respect to this proposal, therefore, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted.
The remaining proposals aresome but not considered “routine matters” under NYSE rules relating to voting by banks and brokers. Whenall matters, it will result in a proposal is not a routine matter and"broker non-vote" for the brokerage firm has not receivedmatters on which the broker votes. Abstentions occur when you provide voting instructions but instruct the brokerage firm cannot vote the sharesbroker to abstain from voting on that proposal. Shares that banks and brokerage firms are not authorized to vote are called “broker non-votes.”a particular matter. Broker non-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum but not for determining the number of shares voted for or against a non-routine matter.
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 uninstructed shares on each of the proposals?
| | | | 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. The following table summarizes the votes required for each proposal to pass and the effect of abstentions and uninstructed sharesbroker non-votes on each proposal.
Proposal
Number | | Item | | Votes Required for
Approval | | Abstentions | | Uninstructed
shares | | | | | | | 1.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 on executiveto approve NEO compensation | | Majority of the voting power of the shares present in person or by proxy | represented at the meeting | Same as votesa vote against | | No effect | | 3. | Advisory vote on the frequency of future advisory votes to approve NEO compensation | Ratification of independent registered public accounting firm | | Majority of the voting power of the shares present in person or by proxyrepresented at the meeting | No effect | Same as votes against | | Discretionary voting by broker permittedNo effect | 4. - 6. | Ratification of independent registered public accounting firm | Shareowner proposals | | Majority of the voting power of the shares present in person or by proxy | represented at the meeting | Same as votesa vote against | | No effect |
| 73Shareowner proposals |
| Majority of the voting power of the shares represented at the meeting | Same as a vote against | No effect |
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What
| | | How do I need to bring to attend and vote at the Annual Meeting? |
The Annual Meeting will take place on May 4, 2023, 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?person. You need proofor your proxyholder can participate, vote and examine our list of shareowners entitled to vote at the Annual Meeting by visiting www.virtualshareholdermeeting.com/UPS2023 and entering the 16-digit control number included in your share ownership (such as a recent brokerage statement Notice, on your proxy card, or a letter fromon the instructions that accompanied your broker showing that you owned shares of United Parcel Service, Inc. common stock as of the Record Date) and a form of government-issued photo identification.proxy materials. If you are a beneficial shareowner, see the information relating to beneficial shareowners above under “How do not have proof of ownership and valid photo identification,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.
| | | | How can I submit a question at or prior to the Annual Meeting? |
If you may not be admittedwish to submit a question prior to the Annual Meeting. All bags, briefcasesMeeting, you may do so by visiting proxyvote.com and packagesentering 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 held at registration and will not be allowed inable to submit questions during the Annual Meeting.
Could emerging developments regarding the coronavirus affect our ability to hold an in-person Annual Meeting?
We are closely monitoring the coronavirus situation and if we determine that holding an in-person Annual Meeting could pose a risk to the health and safety of our shareowners, employees, or directors, UPS may decide instead to hold a Virtual Annual Meeting. If we decideyou wish to use that format, we will makesubmit a public announcement as soon as practicable prior toquestion during the meeting.
In the event we make arrangements to hold a Virtual Annual Meeting, to attend and participate in the Virtual Annual Meeting, shareowners will need to access the live audio webcast of the meeting. Toyou may do so shareowners of record will need to visitby logging into www.virtualshareholdermeeting.com/UPS2020 and use theirUPS2023 with your 16-digit control number, provided in as described above under “How do I attend and vote at
the NoticeAnnual 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 proxy card to log in to this website, and beneficial owners of shares held in street name will need to follow the instructions provided to them in the Notice, voting instruction form or other information provided by the broker, bank or other nominee that holds their shares. We would encourageif a question posed was not otherwise answered, we provide an opportunity for shareowners to log in to this website and access the webcast before the Virtual Annual Meeting’s start time. Further instructionscontact 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 how to attend, participate in and vote at the Virtual Annual Meeting, including how to demonstrate your ownership of our common stock as of the record date, are available at www.virtualshareholdermeeting.com/UPS2020. Please note you will only be able to participate in the meeting using this website if UPS decides to hold a Virtual Annual Meeting, instead of holding an in-person Annual Meeting in Delaware.
What does it mean if I receive more than one Notice, proxy cardday you can call 1-800-586-1548 (toll free) or voting instruction form?
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?
| | | | 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.
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| | | | Other Information for Shareowners |
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Other Information for Shareowners
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 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 $10,000$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 Rule 14a-8 Proposals for Inclusion in the Proxy Statement for the 2021 Annual Meeting
| | | | Proposals for Inclusion in the Proxy Statement for the 2024 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 20212024 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 no later than the close of business6:00 p.m. Eastern Time on November 20, 2020.21, 2023. 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.
Proxy Access Director Nominations for Inclusion in the Proxy Statement for the 2021 Annual Meeting
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| | | | Director Nominations for Inclusion in the Proxy Statement for the 2024 Annual Meeting |
Shareowner notice of the intent to use proxy access must be delivered by a shareowner 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 close of business6:00 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 the close of business6:00 p.m. Eastern Time on November 20, 202021, 2023 and no earlier than the close of business6:00 p.m. Eastern Time on October 21, 2020.22, 2023. However, if the date of our 20212024 Annual Meeting occurs more than 30 days before or 30 days after May 14, 2021,4, 2024, the anniversary of the 20202023 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 20212024 Annual Meeting and (b) the 10th day following the day on which we first make a public announcement of the date of the 20212024 Annual Meeting. As our Bylaws make clear, simply submitting a nomination does not guarantee its inclusion.
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| | | | Other Proposals or Director Nominations for Presentation at the 2024 Annual Meeting |
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Other Proposals or Director Nominations for Presentation at the 2021 Annual Meeting
Shareowners who wish to propose business or nominate persons for election to the Board of Directors at the 20212024 Annual Meeting of Shareowners, and the proposal or nomination is not intended to be included in our 20212024 proxy materials,statement, must provide a notice of shareowner business or nomination in accordance with Article II, Section 10 of our Bylaws. In order to be properly brought before the 20212024 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 20212024 proxy materials must be received by our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328 no later than the close of business6:00 p.m. Eastern Time on February 13, 2021,4, 2024, and no earlier than the close of business on December 15, 2020.6, 2023. However, if the date of our 20212023 Annual Meeting occurs more than 30 days before or 30 days after May 14, 2021,4, 2024, the anniversary of the 20202023 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 20212024 Annual Meeting and (b) the 10th day following the day on which we first make a public announcement of the date of the 20212024 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 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.
2019
2022 Annual Report on Form 10-K A copy of our 20192022 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.
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.
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TableThis Proxy Statement contains “forward-looking statements” within the meaning of Contents
| ANNUAL MEETING OF SHAREOWNERS | | | | | | Thursday, May 14, 2020, 8:00 a.m. Eastern Time | | | | | | Hotel du Pont
11th and Market Streets
Wilmington, Delaware 19801 |
Tablethe Private Securities Litigation Reform Act of Contents
 UNITED PARCEL SERVICE, INC.
INVESTOR RELATIONS B1F7
55 GLENLAKE PARKWAY, N.E.
ATLANTA, GA 30328
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VIEW MATERIALS & VOTE
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VOTE BY INTERNET -www.proxyvote.com1995. Statements other than those of current or scanhistorical 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 QR Barcode above
Usesafe harbor provisions of the Internetfederal securities laws pursuant to transmit your voting instructionsSection 27A of the Securities Act of 1933 and for electronic deliverySection 21E of information. Vote by 11:59 P.M. Eastern Time on May 13, 2020. Shares held in the UPS Stock Fund in the UPS 401(k) Savings Plan must be voted by 11:59 P.M. Eastern Time on May 11, 2020. Have your proxy card in hand when you access the websiteSecurities Exchange Act of 1934. Such statements relate to our intent, belief and follow the instructions to obtain your recordscurrent expectations about our strategic direction, prospects and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on May 13, 2020. Shares held in the UPS Stock Fund in the UPS 401(k) Savings Plan must be voted by 11:59 P.M. Eastern Time on May 11, 2020. Have your proxy card in hand when you callfuture results, and follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope providedgive our current expectations or return it to United Parcel Service, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE SHAREOWNER COMMUNICATIONS
If you would like to reduce the mailing costs incurred by United Parcel Service, Inc., you can consent to receiving allforecasts of future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote by Internet and, when prompted, indicate your agreement to receive or access shareowner communications electronically in the future.
If you vote by Internet or phone, youevents; they do not needrelate strictly to return this card.
historical or current facts.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | E97308-P33026-Z76327 | KEEP THIS PORTION FOR YOUR RECORDS | DETACH AND RETURN THIS PORTION ONLY | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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 UNITED PARCEL SERVICE, INC.
| | | | | | | | | | | | | | The board of directors recommends you voteFOR all 12 director nominees.
| | | | | | | 1. | | To elect 12 directors nominated by the board of directors to serve until the 2021 annual meeting of shareowners or their earlier resignation, removal or retirement. | | | | | | | | | Nominees: | | For | | Against | | Abstain | | | | | | | | | | | | 1a) | | David P. Abney | | o | | o | | o | | | | | | | | | | | | | | 1b) | | Rodney C. Adkins | | o | | o | | o | | | | | | | | | | | | | | 1c) | | Michael J. Burns | | o | | o | | o | | | | | | | | | | | | | | 1d) | | William R. Johnson | | o | | o | | o | | | | | | | | | | | | | | 1e) | | Ann M. Livermore | | o | | o | | o | | | | | | | | | | | | | | 1f) | | Rudy H.P. Markham | | o | | o | | o | | | | | | | | | | | | | | 1g) | | Franck J. Moison | | o | | o | | o | | | | | | | | | | | | | | 1h) | | Clark T. Randt, Jr. | | o | | o | | o | | | | | | | | | | | | | | 1i) | | Christiana Smith Shi | | o | | o | | o | | | | | | | | | | | | | | 1j) | | John T. Stankey | | o | | o | | o | | | | | | | | | | | | | | 1k) | | Carol B. Tomé | | o | | o | | o | | | | | | | | | | | | | | 1l) | | Kevin M. Warsh | | o | | o | | o | | | | | | | | | | | | | | | | | | | | | | |
The board of directors recommends you voteFOR the following proposal: | | | | For | | Against | | Abstain | | 2. | | Approve on an advisory basis a resolution on executive compensation. | | o | | o | | o | | | | | | | | | | | | The board of directors recommends you voteFOR the following proposal: | | | | | | | | 3. | | To ratify the appointment of Deloitte & Touche LLP as UPS’s independent registered public accounting firm for the year ending December 31, 2020. | | o | | o | | o | | The board of directors recommends you voteAGAINST the following proposal: | | | | | | | | 4. | | To prepare an annual report on lobbying activities. | | o | | o | | o | | The board of directors recommends you voteAGAINST the following proposal: | | | | | | | | 5. | | To reduce the voting power of class A stock from 10 votes per share to one vote per share. | | o | | o | | o | | | | | | | | | | The board of directors recommends you voteAGAINST the following proposal: | | | | | | | | | | | | | | | | 6. | | To prepare a report on reducing UPS’s total contribution to climate change. | | o | | o | | o | | | | | | | | | | In their discretion upon such other matters as may properly come before the meeting or any adjournments or postponements thereof. | | | | | | | | | | | | | | Yes | | No | | | | Please indicate if you plan to attend this meeting.* | | | | o | | o | | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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| | | Signature [PLEASE SIGN WITHIN BOX] | Date | |
| | | Signature (Joint Owners) | Date | |
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risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” in our Annual Meeting of Shareowners* Thursday, May 14, 2020, 8:00 a.m. (Eastern Time)
Hotel du Pont
11th and Market Streets
Wilmington, Delaware 19801
Important Notice Regarding the Availability of Proxy MaterialsReport on Form 10-K for the Annual Meeting:
The Noticeyear ended December 31, 2022, filed with the SEC and being made available with this Proxy Statement, and Annual Reportmay 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 available at www.proxyvote.com.
*Dependingreasonable as and when made. However, caution should be taken not to place undue reliance on concerns aboutany such forward-looking statements because such statements speak only as of the coronavirus,date when made. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations or COVID-19, we might hold a Virtual Annual Meeting insteadthe occurrence of holdingunanticipated events after the meetingdate of those statements.
Any standards of measurement and performance made in Delaware.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 Company would publicly announce a determination to hold a Virtual Annual Meeting in a press release available atwww.investors.ups.com as soon as practicable before the meeting. In that event, the 2020 Annual Meeting would be conducted solely virtually, at the above date and time, via live audio webcast. You or your proxyholder could participate, vote and examine a listcontent of stockholders at the Virtual Annual Meeting by visitingwww.virtualshareholdermeeting.com/UPS2020 and using your 16 digit control number, but only if the meetingany website links is not held in Delaware.UNITED PARCEL SERVICE, INC.
This proxy is solicited by the Boardincorporated herein and does not constitute a part of Directors
for the Annual Meeting of Shareowners to be held on May 14, 2020
I hereby appoint DAVID P. ABNEY and NORMAN M. BROTHERS, JR., or either of them, with power of substitution, as attorneys and proxies to vote all of the shares of stock outstanding in my name as of March 16, 2020, at the Annual Meeting of Shareowners of United Parcel Service, Inc. to be held at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801, on May 14, 2020, and at any or all adjournments or postponements thereof, as stated on the reverse side and with discretionary authority on all other matters that properly come before the meeting.If this proxy is signed and returned but no direction is made, this proxy will be voted as the Board of Directors recommends and in the discretion of the proxies on all other matters that may properly come before the meeting.
If my shares are held in the UPS Stock Fund in the UPS 401(k) Savings Plan, I direct the Trustee to vote the stock in the manner stated on the reverse side.If this proxy is signed and returned but no direction is made, the Trustee will vote the shares as the Board of Directors recommends and in the discretion of the Trustee on all other matters that may properly come before the meeting. If this card is not returned by 11:59 P.M. Eastern Time on May 11, 2020 or is returned unsigned, then the Trustee will vote the shares in the same proportion as the shares for which voting instructions are received from other participants. The results of the voting will be held in strict confidence by the Trustee.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
Proxy Statement.
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NEOs generally participate in the same plans as other employees.
