| ● | the balance sheet. No deferrals of stock options were permitted after December 31, 2004. As a result of the requirements applicable to non-qualified deferred compensation arrangements under Section 409A of the Internal Revenue Code and related guidance, deferral of stock options is no longer offered under the UPS Deferred Compensation Plan for options that vested after December 31, 2004.
| | | Withdrawals and Distributions under the UPS Deferred Compensation Plan for 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. | | ● | 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. |
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 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.
| | | | | | | | |  | 51 | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
Potential Payments on Termination or Change in Control UPS has created a culture where long tenure for executives is the norm. As a result, executive officers serve without employment contracts, as do most of our other U.S.-based non-union employees. In connection with each of Carol Tomé’s, Brian Newman’s and Bala Subramanian’s hiring, we entered into a protective covenant agreementagreements with herthem which protectsprotect UPS’s confidential information and includesinclude non-competition and non-solicitation covenants in favor of UPS. If sheFor Brian and Carol, if either of their employment is terminated without “cause” prior, then the Company is obligated to June 1, 2022, then she is entitled to continued payment of herpay their base salary for up to 24 months. If her employment is terminated without “cause” after June 1, 2022, then the Company is obligated to make such payments onlymonths if it elects to enforce the post-termination covenants. In connection with the hiring of each of Brian Newman and Scott Price, we entered into similar protective covenant agreements with each of them. At December 31, 2021, these agreements also provided for the payment of two years’ base salary if they are terminated without cause, and the Company elects to enforce the post-termination covenants. Subsequent to December 31, 2021, we entered into a new agreement with Scott, described below.
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”. Our
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 applicable year; (ii) an amount in cash equal to one times (or, for the CEO, two times) the sum of the participant’s annual base salary plus the participant’s target MIP performance award in effect as of the termination date; (iii) 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 RPUs granted under the MIP or LTIP, in each case granted on or after the effective date of the Severance Plan, a participant who experiences a Qualifying Termination will generally be entitled to the same treatment that would apply in the event of “retirement” under the terms of such awards. With respect to stock options granted to a participant on or after the effective date of the Severance Plan, such stock options (to the extent 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 incentive plans and related documents contain provisions that affect outstanding awards to all plan participants, including the NEOs, in the event of a participant’s death, disability, or retirement, or a change in control (as defined below) of the Company. Upon a participant’s death, disability or retirement: | ● | •Options will immediately vest, and remain exercisable until the tenth anniversary of the date of grant; •Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will immediately vest. In the case of a participant’s death, shares (or cash, as applicable) attributable to the number of restricted shares, RSUs or RPUs will be transferred to the participant’s estate within 90 days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the number of restricted shares, RSUs or RPUs will be transferred to the participant on the same schedule as if they had remained employed; and •Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions shall be deemed earned on a prorated basis for the number of months worked during the performance period. In the case of a participant’s death, shares (or cash, as applicable) attributable to the prorated number of restricted shares, RSUs or RPUs calculated at target performance level will be transferred to the participant’s estate within 90 days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the prorated number of restricted shares, RSUs or RPUs calculated based on actual performance results for the full performance period will be transferred to the participant following the end of the performance period. | | | | | | | | | | ● | Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will immediately vest. In the case of a participant’s death, shares (or cash, as applicable) attributable to the number of restricted shares, RSUs or RPUs will be transferred to the participant’s estate within 90 days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the number of restricted shares, RSUs or RPUs will be transferred to the participant on the same schedule as if they had remained employed; and | | ● | Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions shall be deemed earned on a prorated basis for the number of months worked during the performance period. In the case of a participant’s death, shares (or cash, as applicable) attributable to the prorated number of restricted shares, RSUs or RPUs calculated at target performance level will be transferred to the participant’s estate within 90 days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the prorated number of restricted shares, RSUs or RPUs calculated based on actual performance results for the full performance period will be transferred to the participant following the end of the performance period.57 |
Upon a change in control, if the successor company does not continue, assume or substitute other grants for outstanding awards, or upon a change in control followed by a termination of the grantee’s employment by UPS without cause or by the grantee for good reason: | ● | •Options will immediately vest and become exercisable; •Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will immediately vest; and •Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions will be deemed earned to the extent that actual achievement of the applicable performance conditions can be determined, or on a prorated basis for the portion of the performance period completed prior to the change in control or qualifying termination, based on target or actual performance. | | | | ● | Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will immediately vest; and | | ● | Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions will be deemed earned to the extent that actual achievement of the applicable performance conditions can be determined, or on a prorated basis for the portion of the performance period completed prior to the change in control or qualifying termination, based on target or actual performance.Other Outstanding Awards; No Tax Gross-Ups |
Other Outstanding Awards; No Tax Gross-Ups
Any other awards which may be outstanding would vest and be paid generally as described above (except, where applicable, timing of payment generally will be tied to such change in control, rather than termination or resignation). We do not provide for the payment of tax gross-ups on outstanding awards.
52 | | | | | | | | | | 58 | | Notice of Annual Meeting of Shareowners and 20222023 Proxy Statement |
The following table shows the potential payments to the NEOs upon a termination of employment under various circumstances. In preparing the table, we assumed the event occurred on December 31, 2021.30, 2022. The closing price per share of our class B common stock on the NYSE on December 31, 2021the last trading day of 2022 was $214.34.$173.84. The actual amounts to be paid under any of the scenarios can only be determined at the time of such NEO’s separation from the Company. In accordance with applicable SEC requirements, we disclose in this table
| | | | | | | | | | | | | Name | Separation Pay(1) ($) | 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 potential payments and benefits that Scott Price would have received in connection with the indicated events if they had occurred on December 31, 2021. However, we also disclose below the table the actual payments and benefits to which Scott is or will be entitled under the Price Separation Agreement.| Name | | Separation
Pay(1)
($) | | Accelerated
Vesting of Equity
Awards(2)
($) | | Total
($) | | Carol Tomé | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | Termination (involuntary without cause) | | 2,730,000 | | — | | 2,730,000 | | Change in Control (with qualifying termination) | | — | | 50,228,603 | | 50,228,603 | | Retirement | | — | | 50,228,603 | | 50,228,603 | | Death | | — | | 50,228,603 | | 50,228,603 | | Disability | | — | | 50,228,603 | | 50,228,603 | | Brian Newman | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | Termination (involuntary without cause) | | 3,030,864 | | — | | 3,030,864 | | Change in Control (with qualifying termination) | | — | | 19,862,728 | | 19,862,728 | | Retirement | | — | | 19,862,728 | | 19,862,728 | | Death | | 1,500,000 | | 19,862,728 | | 21,362,728 | | Disability | | 1,500,000 | | 19,862,728 | | 21,362,728 | | Scott Price | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | Termination (involuntary without cause) | | 1,376,832 | | 1,516,639 | | 2,893,471 | | Change in Control (with qualifying termination) | | — | | 18,519,370 | | 18,519,370 | | Retirement | | — | | 17,002,731 | | 17,002,731 | | Death | | — | | 18,519,370 | | 18,519,370 | | Disability | | — | | 17,002,731 | | 17,002,731 | | Nando Cesarone | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | Termination (involuntary without cause) | | — | | 5,548,241 | | 5,548,241 | | Change in Control (with qualifying termination) | | — | | 19,053,555 | | 19,053,555 | | Retirement | | — | | 13,505,315 | | 13,505,315 | | Death | | — | | 19,053,555 | | 19,053,555 | | Disability | | — | | 13,505,315 | | 13,505,315 | | Kate Gutmann | | | | | | | | Termination (voluntary or involuntary for cause) | | — | | — | | — | | Termination (involuntary without cause) | | — | | 5,781,494 | | 5,781,494 | | Change in Control (with qualifying termination) | | — | | 19,279,786 | | 19,279,786 | | Retirement | | — | | 13,498,292 | | 13,498,292 | | Death | | — | | 19,279,786 | | 19,279,786 | | Disability | | — | | 13,498,292 | | 13,498,292 |
(1) | For Brian Newman, includes payment of his performance-based cash award (see “Employment Transition Awards, Retention Arrangements and Recognition Awards” above). The final portion of this award was paid in March 2022. For Brian Newman and Scott Price, separation pay consisting of 24 month’s base salary, would only be payable if the Company elects to enforce the post-termination non-compete covenants. | (2) | 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 vesting of stock options and RPUs in accordance with the terms of our equity incentive plans and the applicable award certificates. Also includes the 2020 and 2021 LTIP awards calculated at target. The performance measurement period for the 2020 LTIP award ends December 31, 2022, and performance measurement period for the 2021 LTIP award ends December 31, 2023. With respect to Scott Price, 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. |
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Separation Arrangement with Scott Price
The Company has entered into the Price Separation Agreement, pursuant to which Scott Price is retiring from the Company on March 31, 2022, and under which the Company will provide certain severance compensation and benefits to Scott in lieu of any benefits under Scott’s protective covenant agreement. The Price Separation Agreement provides that Scott will receive, in addition to certain accrued compensation and benefits, a lump sum cash severance payment equal to $912,151.20, representing (A) one-year of base salary and (B) a pro-rata portion of Scott’s target award under the 2022 MIP. In addition, Scott’s equity awards outstanding as of the separation date will be treated as follows:
| (1) | 4,089 RPUs granted to Scott in 2022 with respect to the 2021 MIP will vest in full immediately following the retirement date; | | (2) | each RPU award granted under the LTIP will remain eligible to vest on a pro-rata basis, subject to actual performance for the full applicable performance period. Such pro-rata target opportunities consist of 24,759 RPUs with respect to the 2020 LTIP award, and 7,645 RPUs with respect to the 2021 LTIP award ; and | | (3) | Scott’s outstanding stock options (to the extent vested) will remain exercisable for 90 days following the separation date. |
The estimated aggregate value of the 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 described above is approximately $7,502,231 based oncalculated at target. The performance measurement period for the closing price2021 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 class B common stock on March 1, 2022one-time RSU awards to each as described in “Employment Transition Awards, Retention Arrangements and assumes that the LTIP RPU awards will be earned at the target level.
The Price Separation Agreement includes certain customary protective covenants in favor of the Company, including confidentiality, employee and customer non-solicitation, non-competition, and non-disparagement provisions.
Other Amounts
Recognition Awards” above.
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, 2021 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, 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 as defined in our equity incentive compensation plans is generally deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied: | ● | •The consummation of a reorganization, merger, share exchange or consolidation, in each case, where persons who were shareowners of UPS immediately prior to such reorganization, merger, share exchange or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power of the reorganized, merged, surviving or consolidated company’s then outstanding securities entitled to vote generally in the election of directors in substantially the same proportions as immediately prior to the transaction; or a liquidation or dissolution of UPS or the sale of substantially all of UPS’s assets; or •Individuals who, as of any date (the “Beginning Date”), constitute the Board of Directors (the “Incumbent Board”) and who, as of the end of the two-year period beginning on such Beginning Date, cease for any reason to constitute at least a majority of the Board of Directors, provided that any person becoming a director subsequent to the Beginning Date whose election, or nomination for election by UPS’s shareowners, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of UPS, as such terms are used under applicable SEC rules and requirements) shall be considered as though such person were a member of the Incumbent Board. | | | | | | | | | | 60 | ● | Individuals who, as of any date (the “Beginning Date”), constitute the Board of Directors (the “Incumbent Board”) and who, as of the end of the two-year period beginning on such Beginning Date, cease for any reason to constitute at least a majority of the Board of Directors, provided that any person becoming a director subsequent to the Beginning Date whose election, or nomination for election by UPS’s shareowners, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of UPS, as such terms are used under applicable SEC rules and requirements) shall be considered as though such person were a member of the Incumbent Board. |
| | | 54 | | Notice of Annual Meeting of Shareowners and 20222023 Proxy Statement |
Equity Compensation Plans The following table sets forth information as of December 31, 20212022 concerning shares of our common stock authorized for issuance under 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) | | 10,644,164 | | 17.01 | | 29,926,374 | (2) | | Equity compensation plans not approved by security holders | | — | | N/A | | — | | | Total | | 10,644,164 | | 17.01 | | 29,926,374 | |
(1) | | | | | | | | | | | | | | 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. | | | | | | | | | (2) | In addition to grants of options, warrants or rights, this number includes up to 18,855,155 shares of common stock or other stock-based awards that may be issued under the 2021 Plan, and up to 11,071,219 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. | 61 |
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 2021
For purposes of this disclosure, the 2022 annual total compensation of the median compensated employee was $50,379;$52,144; our CEO’s 2021 annual total compensation as required to be determined by GAAP and included in the 2021 Summary Compensation Table was $27,632,142. As required by GAAP, the CEO’s 2021 annual total compensation included in the 2021 Summary Compensation Table includes both 100% of the target value of the 2021 LTIP award and 80% of the target value of the 2020 LTIP award. We believe a more representative CEO annual total compensation should exclude the 80% of the target value of the 2020 LTIP award, in which case our CEO’s 20212022 annual total compensation was $15,219,669,$18,977,605, and the ratio of CEO compensation to that of the median compensated employee would be 302-to-one. Including all of the CEO’s annual total compensation as required by GAAP results in a ratio of CEO compensation to that of the median compensation employee of 548-to-one.these amounts was 364-to-one. Our CEO’s 20212022 annual total compensation was different from the amount included in the 20212022 Summary Compensation Table total“Total” column. Amounts related to healthcare benefits, which are available generally to all salaried employees of the Company, are included in the annual total compensation amounts above. The CEO’s and median employee’s Company-paid healthcare benefit amounts were $11,249$12,404 and $5,449$5,937 respectively. For the CEO, this amount is not included in the 2021 Summary Compensation Table or the Supplemental 20212022 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 20212022 pay ratio reported above, we used the samea median employee that we used for our 2020 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. For these purposes, we identified the median compensated employee from our employee population as of October 1, 2020, using total taxable wages (Form W-2 Box 1 or equivalent) paid to our employees in fiscal year 2020. We determined our total workforce as of October 1, 2020 to consist of 547,857 employees. As permitted by SEC rules, under the 5% “De Minimis Exemption,” we excluded 26,368 non-U.S. employees, or 4.8% of our total workforce. As a result of these exclusions, our median compensated employee was identified from an employee population of 521,489 employees. | | | 55 |
Table of Contents
The excluded countries and their employee populations were as follows: Argentina (242 employees), Australia (486 employees), Austria (185 employees), Bahrain (28 employees), Belarus (23 employees), Belgium (1,008 employees), Brazil (692 employees), Chile (113 employees), Colombia (1,064 employees), Costa Rica (343 employees), Czech Republic (453 employees), Denmark (531 employees), Dominican Republic (116 employees), Ecuador (65 employees), Egypt (29 employees), El Salvador (30 employees), Finland (187 employees), Greece (143 employees), Guam (2 employees), Guatemala (73 employees), Honduras (39 employees), Hong Kong (1,013 employees), Hungary (417 employees), Indonesia (159 employees), Ireland (1,133 employees), Italy (1,279 employees), Jamaica (4 employees), Japan (644 employees), Kazakhstan (36 employees), Kuwait (54 employees), Luxembourg (11 employees), Macau (2 employees), Malaysia (302 employees), Mexico (2,489 employees), Morocco (60 employees), New Zealand (27 employees), Nicaragua (25 employees), Nigeria (288 employees), Norway (105 employees), Pakistan (59 employees), Panama (32 employees), Peru (77 employees), Philippines (1,470 employees), Portugal (195 employees), Puerto Rico (442 employees), Romania (142 employees), Russia (571 employees), Singapore (1,219 employees), Slovakia (18 employees), Slovenia (51 employees), South Africa (277 employees), South Korea (558 employees), Spain (1,314 employees), Sweden (938 employees), Switzerland (703 employees), Taiwan (970 employees), Thailand (473 employees), Turkey (1,992 employees), Ukraine (89 employees), United Arab Emirates (532 employees), U.S. Virgin Islands (10 employees), and Vietnam (336 employees).
| | | | | | | | | | 62 | | Notice of Annual Meeting of Shareowners and 2023 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 | |
| | | | | | | | | | 64 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
Proposal 2 — Advisory Vote to Approve Named Executive Officer Compensation
| | | | What am I voting on? Whether you approve, on an advisory basis, the compensation of the NEOs as disclosed in this Proxy Statement.
Board’s Recommendation: Vote FOR this proposal.
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy. | |
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the Exchange Act, shareowners may vote, on an advisory basis, to approve the 20212022 compensation paid to our NEOs as disclosed in this proxy statementProxy Statement (“say on pay”). We currently conduct say on pay votes annually. We expect that the next say on pay vote will occur at our 20232024 Annual Meeting of Shareowners. Pay for performance and alignment with the long-term interests of our shareowners are key principles of our compensation programs. NEO compensation reflects the following: | ● | encouraging executive decision-making that is aligned with the long-term interests of our shareowners; | | ● | tying a significant portion of executive pay to Company performance over a multi-year period; | | ● | promoting UPS’s long-standing culture of owner-management; and | | ● | balancing shorter- and longer-term performance metrics to encourage the efficient management of our business and minimizing excessive risk-taking. |
•encouraging executive decision-making that is aligned with the long-term interests of our shareowners; •tying a significant portion of executive pay to Company performance over a multi-year period; •promoting UPS’s long-standing culture of owner-management; and •balancing shorter and longer-term performance metrics to encourage the efficient management of our business and minimizing excessive risk-taking. Although this vote is non-binding, the Compensation and Human Capital Committee and the board value your views and will consider the voting results. If there is a significant negative vote, we expect that we will consult directly with significant shareowners to better understand their concerns. The Compensation and Human Capital Committee and the board would consider feedback obtained through this process in making future compensation decisions. In accordance with the Dodd-Frank Act, this vote does not overrule any decisions by the board, will not create or imply any change to or any additional fiduciary duties of the board and will not restrict or limit the ability of shareowners generally to make proposals for inclusion in proxy materials related to executive compensation. Shareowners are being asked to approve the following resolution: “RESOLVED, that the shareowners approve, on an advisory basis, the compensation of the NEOs, as described in the Compensation Discussion and Analysis section and in the compensation tables and accompanying narrative disclosuredisclosures in the Company’s Proxy Statement for the 20222023 Annual Meeting of Shareowners.” 56 | | | | | | | | | | 66 | | Notice of Annual Meeting of Shareowners and 20222023 Proxy Statement |
Proposal 3 — Advisory Vote on the Frequency of ContentsOwnershipFuture Advisory Votes to Approve Named Executive Officer Compensation
| | | | | | | | | | | | | | | | What am I voting on? The frequency of future advisory votes on the compensation of the NEOs as described in the applicable proxy statement. Board’s recommendation: Vote for a frequency of EVERY YEAR. Vote required: Approval by a majority of the voting power of the shares present in person or by proxy. |
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In accordance with the Dodd-Frank Act and Section 14A of Our SecuritiesOwnershipthe Exchange Act, in addition to providing shareowners with the opportunity to cast an advisory vote to approve the compensation of Our Securities
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, 20222023 there were 137,653,301 134,119,136 outstanding shares of class A common stock and 733,368,173722,802,470 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 | | 52,091,461 | | 7.1% | The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355 | | 64,571,614 | | 8.8% |
(1) | According to a Schedule 13G filed with the SEC on February 3, 2022, BlackRock, Inc. has sole voting power with respect to 45,322,087 shares and sole dispositive power with respect to 52,091,461 shares. | (2) | According to a Schedule 13G/A filed with the SEC on February 10, 2022, The Vanguard Group has shared voting power with respect to 1,235,041 shares, sole dispositive power with respect to 61,493,614 shares and shared dispositive power with respect to 3,078,000 shares. |
| | | | | | | | | | 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, 2022,2023 by each of our NEOs, each of our directors, and all of our current executiveexecutive officers and directors as a group. Ownership is calculated in accordance with SEC rules and regulations.| | | Number of Shares
Beneficially
Owned(1)(2) | | Total Shares
Beneficially
Owned(5) | | | | | Class A Shares(3)(4) | | Class B Shares | | | Named Executive Officers | | | | | | | | | Carol Tomé | | 184,968 | | 13,036 | | 198,004 | | | Brian Newman | | 44,974 | | — | | 44,974 | | | Scott Price | | 70,204 | | 38,305 | | 108,509 | | | Nando Cesarone | | 39,082 | | 1 | | 39,083 | | | Kate Gutmann | | 147,144 | | — | | 147,144 | | | Non-Employee Directors | | | | | | | | | Rodney Adkins | | 16,543 | | — | | 16,543 | | | Eva Boratto | | 1,677 | | — | | 1,677 | | | Michael Burns | | 32,907 | | — | | 32,907 | | | Wayne Hewett | | 1,677 | | 873 | | 2,550 | | | Angela Hwang | | 2,017 | | — | | 2,017 | | | Kate Johnson | | 1,373 | | — | | 1,373 | | | William Johnson | | 29,757 | | 160 | | 29,917 | | | Ann Livermore | | 55,663 | | — | | 55,663 | | | Franck Moison | | 8,664 | | — | | 8,664 | | | Christiana Smith Shi | | 6,804 | | — | | 6,804 | | | Russell Stokes | | 1,373 | | 400 | | 1,773 | | | Kevin Warsh | | 18,576 | | — | | 18,576 | | | Current Executive Officers and Directors as a Group (24 persons) | | 1 ,023,059 | | 60,444 | | 1,083,503 | (6) |
| | | | | | | | | | | | | | | | | 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) |
| | | | | | | | | | 57 | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
(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 Contents(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 1,083 shares pledged by all current executive officers as a group, which were pledged prior to the 2014 adoption of a policy prohibiting pledges of UPS stock. None of our directors have pledged any shares of UPS stock. Shares pledged are not counted for purposes of compliance with our stock ownership guidelines. All executive officers that have pledged shares comply with our stock ownership guidelines after excluding the shares subject to pledge. | (3) | Includes class A shares that may be acquired through April 30, 2022 upon the conversion of RSUs following separation from the UPS Board of Directors, including 25,244 RSUs held by Carol Tomé in connection with her service as a non-employee director. | (4) | Includes class A shares that may be acquired through stock options exercisable through April 30, 2022 as follows: Tomé – 148,880; Newman – 15,315; Price – 36,568; Cesarone – 7,087; Gutmann – 49,239; and all current directors and executive officers as a group — 435,196. | (5) | 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, 2022. Assumes that all options exercisable through April 30, 2022 and owned by the named individual are exercised, and that shares acquirable under RSUs through April 30, 2022 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. | (6) | Includes 271 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 30, 2022. Our directors hold vested equity instruments 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, 2022. 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 1,295 and 2,740 phantom stock units, respectively; and for Michael Burns, Wayne Hewett and Kevin Warsh, represents deferred non-employee director retainer fees allocated to 5,302, 704 and 8,434 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 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 SECTIONRSUs 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) REPORTSReports 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 20212022 each of our directors and executive officers complied with all applicable Section 16(a) filing requirements, except for one Formtwo Forms 4 to reportfor Franck Moison, both of which reported separate transactions. The two separate transactions for Russell Stokes, whichForms 4 were filed late due to ana Company administrative error.
58 | | Notice of Annual Meeting of Shareowners and 2022 Proxy Statement | | | | | | | | | 69 |
Proposal 34 — 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 2022.2023. Board’s Recommendation: Vote FOR the ratification of the appointment of Deloitte as our independent registered public accounting firm for 2022.
2023. 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 company in 1999. Prior to 1999, Deloitte served as the independent auditor of our privately held parent company since 1969. Deloitte audited our 20212022 consolidated financial statements and our internal control over financial reporting. The Committee appointed Deloitte as our independent registered public accounting firm for the year ending December 31, 2022.2023. The board recommends that shareholdersshareowners ratify Deloitte’s appointment. Although shareholdershareowner ratification is not required, the board believes that seeking ratification is a good corporate governance practice. If not ratified, the Committee will reconsider Deloitte’s appointment. Even if ratified, the Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of UPS and its shareowners. A Deloitte representative is expected to attend the Annual Meeting and be available to respond to appropriate shareholdershareowner questions. Additional information about the Committee, Deloitte’s appointment and fees, and other related matters follows.
Roles and Responsibilities. The Committee’s key responsibilities are described in its charter. The charter is reviewed annually and was most recently approved by the board in 20212022 and is available on the governance section of the UPS Investor Relations website at www.investors.ups.com. Pursuant to its charter, the Committee’s purposes, duties and responsibilities include: | ● | assisting the board in discharging its responsibilities relating to 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. |
•assisting the board in discharging its responsibilities relating to the Company’s accounting, reporting and financial practices; •overseeing the Company’s accounting and financial reporting processes, including reviewing earnings or annual report press releases, overseeing the integrity of financial statements and evaluating major financial risks; •having sole authority to appoint, oversee, determine the compensation of and terminate the Company’s independent registered public accounting firm; and •overseeing the Company’s disclosure controls and internal controls, compliance with legal and regulatory requirements, and Code of Business Conduct. Management has primary responsibility for preparing the Company’s financial statements and establishing effective internal control over financial reporting. Deloitte is responsible for auditing those financial statements and the Company’s internal control over financial reporting and expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles (“GAAP”) and on the effectiveness of internal control over financial reporting based on criteria established by the Committee of Sponsoring Organizations of the Treadway Commission. The Committee appoints the independent registered public accounting firm, approves the terms of the audit engagement, and reviews and approves Deloitte’s fees. In this context, the Committee discussed the terms of Deloitte’s 20222023 audit engagement, the audit’s overall scope and plan, and the other matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Committee asked Deloitte questions relating to such matters.
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Financial Statement Oversight. The Committee met with management and Deloitte to review and discuss the Company’s audited financial statements and internal control over financial reporting. The Committee discussed with management and Deloitte the critical accounting policies applied by the Company in the preparation of its financial statements, the quality, and not just the acceptability, of the accounting principles utilized, the reasonableness of significant accounting judgments, and the clarity of disclosures in the financial statements. The Committee also reviewed and discussed the Company’s enhanced assessment and oversight of the effects of COVID-19 on internal controls and financial reporting. | | | 59 |
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The Committee regularly met with Deloitte and UPS’s internal auditors, in each case with and without other members of management present, to discuss the results of their respective examinations, the evaluations of the Company’s internal control and the overall quality and integrity of the Company’s financial reporting.
Internal Audit Oversight. The Committee reviewed UPS’s internal audit plan and the performance, responsibilities, charter, budget and staffing of UPS’s internal audit function.
Compliance and Ethics Oversight. The Committee met with members of management to discuss the Company’s legal and ethical compliance programs. The Committee also oversaw compliance with procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing and other federal securities law matters, including confidential and anonymous submissions of these complaints.
Auditor Independence. Deloitte provided the Committee with the written disclosures and the letter required by the PCAOB regarding Deloitte’s communications with the Committee concerning independence. The Committee discussed Deloitte’s independence with the firm and considered whether Deloitte’s provision of non-audit services was compatible with their independence.
Pre-approvals. The Committee requires the pre-approval of all audit and non-audit services provided by Deloitte. The Committee reviewed and pre-approved all fees paid to Deloitte.
Committee Assessment of Deloitte. The Committee, along with management and the Company’s internal auditors, reviewed Deloitte’s 20212022 performance. The Committee considered the continued independence, objectivity and professional skepticism of Deloitte, the length of time that Deloitte has served as the Company’s independent auditors, the breadth and complexity of the business and its global footprint. The Committee also considered external data and management’s perception of Deloitte’s auditing qualification and experience, the quantity and quality of Deloitte’s staff, Deloitte’s fees, the communication and interaction with the Deloitte team over the course of the prior year, PCAOB reports on Deloitte, and the potential impact of changing independent registered public accounting firms. The Committee determined that Deloitte can provide both the necessary expertise and has a similar global footprint to effectively audit UPS worldwide. The Committee also considered the efficiencies resulting from Deloitte’s deep understanding of our business, Deloitte’s focus on independence, their quality control policies, the quality and efficiency of the work performed, and the quality of discussions and feedback sessions. Additionally, the Committee is involved in the selection of the new partner-in-charge of the audit engagement when there is a rotation required under applicable rules. Based on the results of its review, the Committee concluded that Deloitte is independent and that it is in the best interests of UPS and its shareowners to appoint Deloitte to serve as the Company’s independent registered accounting firm for 2022.2023. The board recommends that shareowners ratify this appointment. Furthermore, the Committee recommended to the Board of Directors that the audited financial statements be included in UPS’s Annual Report on Form 10-K for the year ended December 31, 20212022 for filing with the SEC. Eva Boratto, Chair
Michael Burns
Wayne Hewett
Angela Hwang
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Principal Accounting Firm Fees The Committee, with the ratification of the shareowners, engaged Deloitte to perform the annual audits of the Company’s financial statements for each of the fiscal years ended December 31, 20212022 and 2020.2021. The aggregate fees billed to us for the fiscal years ended December 31, 20212022 and 20202021 by Deloitte, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates are below:| | | 2021 | | 2020 | | Audit Fees(1) | | $ | 20,246,000 | | $ | 18,404,000 | | Audit-Related Fees(2) | | $ | 1,491,000 | | $ | 1,130,000 | | Total Audit and Audit-Related Fees | | $ | 21,737,000 | | $ | 19,534,000 | | Tax Fees(3) | | $ | 128,000 | | $ | 271,000 | | All Other Fees | | $ | — | | $ | — | | Total Fees | | $ | 21,865,000 | | $ | 19,805,000 |
(1) | listed in the table:
| | | | | | | | | | | | | | | | | 2022 | 2021 | Audit Fees(1) | $ | 17,969,000 | | $ | 20,246,000 | | Audit-Related Fees(2) | $ | 1,977,000 | | $ | 1,491,000 | | | Total Audit and Audit-Related Fees | $ | 19,946,000 | | $ | 21,737,000 | | Tax Fees(3) | $ | 65,000 | | $ | 128,000 | | All Other Fees(4) | $ | 80,000 | | $ | — | | | Total Fees | $ | 20,091,000 | | $ | 21,865,000 | |
(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. | | | (2) | Fees for assurance and related services performedServices Provided 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 Committee has established a policy requiring the pre-approval of all audit and non-audit services performed by Deloitte in order to help assure that the provision of such services does not impair Deloitte’s independence. Proposed services may be pre-approved through the application of detailed policies and procedures (“general pre-approval”) or by specific review of each service (“specific pre-approval”). Unless a type of service to be provided by Deloitte has received general pre-approval, it requires specific pre-approval by the Committee. Any proposed services exceeding pre-approved cost levels also requiresrequire specific approval by the Committee. The Audit, Audit-Related, Tax and All Other services that have received general pre-approval of the Committee, and those services that are prohibited, are described in the policy along with the corresponding cost levels. The term of any general pre-approval is twelve months from the date of pre-approval, unless otherwise stated. The Committee annually reviews and pre-approves the services that may be provided by Deloitte without obtaining specific pre-approval and may revise the list from time to time based on subsequent determinations. The Committee has delegated to its Chair the authority to pre-approve certain permitted services between the Committee’s regularly scheduled meetings, and the Chair must report any pre-approval decisions to the Committee at its next scheduled meeting for review by the Committee. The policy prohibits the Committee from delegating its responsibilities to management for pre-approving Deloitte’s permitted services.
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In accordance with SEC rules, we have set forth below shareowner proposals and the shareowner proponents’ supporting statements. The board’s response to each proposal and voting recommendation are also set forth below. The board recommends a vote against each proposal because it does not believe the proposals will drive or create long-term shareowner value. Each shareowner proposal will be voted on at our Annual Meeting only if properly presented at the meeting. The Company is not responsible for any inaccuracies contained in the proposals.
Proposal 45 — Shareowner Proposal Requestingto Reduce the Board Prepare an Annual Report on Lobbying ActivitiesVoting Power of Class A Stock from 10 Votes Per Share to One Vote Per Share What am I voting on?Whether you want to require the board to prepare an annual report on UPS lobbying activities.take steps to reduce the voting power of the Company’s class A stock from 10 votes per share to one vote per share. Board’s Recommendation:Vote AGAINSTthis proposal because: | ● | UPS already provides significant disclosures and is transparent and accountable with respect to lobbying and political activities | | | | | ● | 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 |
•The proposal is not in the best interests of the Company or its shareowners •UPS’s capital structure is unique and does not present risks inherent in typical dual-class structures •UPS’s dual-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
Boston Trust Walden Company, One Beacon Street, Boston, MA 02108,
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, has advised us that they, along with co-proponents whose names, addresses and sharehe intends to submit the proposal set forth below for consideration at the Annual Meeting. Share ownership will be promptly provided upon oral or written request to the UPS Corporate Secretary,Secretary. Proposal 5 — Equal Voting Rights for Each Shareholder 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 only 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 UPS 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 consent. And we were restricted by provisions mandating an undemocratic 80%-vote in order to make a certain improvements to our corporate governance. This undemocratic 80% vote requirement translates into a well over a 100% vote requirement from the shares that typical vote at the annual meeting. Please vote yes: Equal Voting Rights for Each Shareholder — Proposal 5 UPS has a unique employee ownership culture that has helped it grow and thrive. Current and former employees have been significant shareowners of the Company since well before the Company’s IPO in 1999. UPS founder Jim Casey fostered this culture and an ownership mindset by urging his partners to run their departments like their own small business. The Company’s capital structure was developed and implemented in connection with the IPO in order to help ensure employees, who would own only a small portion of the number of shares outstanding, continued to feel like owners as contemplated by Jim Casey. This connection remains true today. Our ownership structure includes class A and class B common stock. The class A shares are issued as incentive compensation and held by current and former UPS employees and their families in order to further our culture and ownership mindset. The Company’s class B shares are publicly traded. This structure provides a significant incentive for our employees to take actions and make decisions that help facilitate UPS’s long-term success, resulting in aligned interests among all shareowners. The structure also significantly enhances employee and retiree engagement. UPS’s capital structure is unique and does not present risks inherent in typical dual-class structures The board strongly disagrees with this proposal’s characterization of UPS’s capital structure. Some companies maintain multiple classes of stock to concentrate voting power with a limited number of people (such as company founders) who have interests that may not align with other shareowners. 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 does 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 an individual or small group. UPS’s class A shares are widely held by approximately 155,000 current and former employees, from employees in our operations to executive officers. No single holder or group of holders owns any significant voting bloc. Our executive officers and directors, collectively, hold less than 1% of the total voting power of our class A and class B common stock. 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 UPS’s corporate governance or financial performance UPS already maintains robust corporate governance practices, eliminating a risk typically associated with dual-class structures. Other than our CEO, all UPS director nominees are independent. All UPS directors are elected annually by a majority of votes cast in uncontested director elections, only independent directors serve on the board’s Audit, Compensation and Human Capital, Nominating and Corporate Governance and Risk Committees, and we have an independent Board Chair. Our board consists of an appropriate mix of newer and longer-tenured directors. In recent periods, the board has voluntarily adopted a number of corporate governance principles aligned with marketplace developments. These include voluntarily adopting an annual say on pay vote, assigning human capital oversight responsibilities to the Compensation Committee and adding to the Company’s proxy statement and sustainability reports gender and ethnicity information for employees and directors. Changing the capital structure is unnecessary The board believes that UPS’s current capital structure continues to be in the best interests of the Company and its stakeholders. Shareowners have agreed with this assessment when they rejected similar proposals every year since 2013. The board recommends that shareowners vote AGAINST this proposal.
Proposal 6 — Shareowner Proposal Requesting the Adoption of Independently Verified Science-Based Greenhouse Gas Emissions Reduction Targets in Line with the Paris Climate Agreement What am I voting on? Whether you want to require the Company to adopt greenhouse gas emissions reduction targets different from those already announced by the Company. Board’s Recommendation: Vote AGAINST this proposal because: •UPS’s sustainability goals include a plan to become carbon neutral across Scope 1, 2 and 3 emissions in our global operations by 2050 •Our strategy includes addressing airline fuel emissions and the electrification of our delivery fleet •At this time we do not believe there exist any scalable solutions for aircraft to achieve a science-based target by 2030 or 2035, as would be required to be in line with the Paris Agreement’s goal •UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress •UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy. Green Century Capital Management, Inc., 114 State Street, Suite 200, Boston, MA 02109 and Trillium Asset Management LLC, Two Financial Center, 60 South Street, Suite 1100, Boston, MA 02111, have advised us that they intend to submit the proposal set forth below on behalf of the Trillium ESG Global Equity Fund and the Green Century Balanced Fund for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary. Whereas: In 2018, the Intergovernmental Panel on Climate Change updated the goals of the 2015 Paris Agreement to advise that net carbon emissions must fall 45 percent by 2030 and reach net zero by 2050 to limit warming below 1.5 degrees Celsius, thereby preventing the worst consequences of climate change. Climate change poses risks to United Parcel Service (UPS). Exceeding 1.5 degrees is predicted to increase sea level rise, severe heat waves, floods, and hurricanes which may lead to shipping delays, including from washed out roadways,1 deterioration of bridge infrastructure,2 and buckling3 and flooding of airport runways.4 Shipping delays related to unpredictable weather cost US trucking companies $8.5 billion5 and global air cargo companies $1 billion,6 annually. By 2050, projections show heat waves costing the US economy $500 billion annually in lost labor productivity,7 and extreme heat has already led to the tragic deaths of several UPS drivers.8 As an integrated freight and logistics company, UPS contributes significantly to climate change. The transportation sector is the largest source of U.S. greenhouse gas emissions.9 Internal combustion engine medium and heavy-duty vehicles have significant adverse health impacts that disproportionately affect low-income communities and communities of color.10 1https://19january2017snapshot.epa.gov/climate-impacts/climate-impacts-transportation_.html 2https://www.climatelinks.org/sites/default/files/asset/document/BRIDGES_PRIMER_CCA_ENGINEERING_DESIGN.pdf 3https://www.upi.com/Top_News/World-News/2022/07/18/eu-runways-melt-britain-paris-parks-open-heat-wave-europe/1791658170654/ 4https://19january2017snapshot.epa.gov/climate-impacts/climate-impacts-transportation_.html 5https://rosap.ntl.bts.gov/view/dot/3384 6https://www.tomorrow.io/blog/the-air-freight-industry-has-a-billion-dollar-weather-question-and-the-answer-is-now/ 7https://www.atlanticcouncil.org/wp-content/uploads/2021/08/Extreme-Heat-Report-2021.pdf 8https://www.nytimes.com/2022/08/20/business/ups-postal-workers-heat-stroke-deaths.html 9https://www.eia.gov/totalenergy/data/monthly/pdf/flow/fossil-fuel-spaghettichart-2021.pdf 10https://www.washingtonpost.com/climate-solutions/2020/06/29/climate-change-racism/ | | | | | | | | | | 76 | | Notice of Annual Meeting of Shareowners and 2023 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 While UPS has announced a goal to achieve carbon neutrality in its operations by 2050 and a 50 percent reduction in emissions per small package delivered by 2035, UPS has not set a goal that covers its scope 3 emissions, which represent 54 percent of its overall footprint.12 Additionally, shareholders do not know whether UPS plans on achieving net zero through actual emissions reductions or through the purchase of carbon offsets. Given the risks climate change poses to the economy, environment, employees, and other stakeholders, proponents believe UPS has a responsibility to its investors and stakeholders to adopt greenhouse gas reduction goals aligned with a 1.5 degrees scenario. Independently verified, science-based goals covering scopes 1-3 would provide shareholders with objective assurance that UPS is doing its part to reduce emissions in a comprehensive and timely manner. Peer DHL and 46 other air freight transportation and logistics companies have committed to set targets via the Science Based Targets Initiative (SBTi). Resolved: Shareholders request that UPS adopt independently verified short and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to attain appropriate emissions reductions prior to 2030, in line with the Paris Agreement’s goal of limiting global temperature rise to 1.5 degrees Celsius. Supporting Statement: We recommend, at management’s discretion, consideration of approaches used by advisory groups such as SBTi. 11https://www.sightline.org/2021/03/09/the-four-fatal-flaws-of-renewable-natural-gas/ 12https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2021%20UPS%20GRI%20Report.pdf UPS supports global efforts to mitigate the impact of climate change. Sustainability is an inherent part of UPS’s overall business and operating strategy. We take a comprehensive, global approach to reducing energy use and GHG emissions within our network, as well as major portions of our value chain. As a global leader in logistics and supply chain solutions, we transport packages, facilitate international trade, and apply advanced technology to efficiently manage the world of business. In this role, we have both a responsibility and an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating shipments and otherwise reducing carbon intensity. UPS’s sustainability goals include a plan to become carbon neutral across Scope 1, 2 and 3 emissions in our global operations by 2050 In 2021, we announced ambitious sustainability goals as a part of our strategy, including a commitment to become carbon-neutral across our global operations by 2050, including Scope 1, 2 and 3 emissions. We also developed medium-term goals designed to help us achieve carbon neutrality, including adopting interim targets to reduce carbon emissions per package by 50% against a 2020 baseline; and to have 100% renewable electricity powering our facilities and use of 30% sustainable aviation fuel by 2035. Our sustainability goals, and progress towards achieving them, are further detailed in our annual sustainability disclosures. Our strategy includes addressing airline fuel emissions and the electrification of our delivery fleet UPS continues to transform its delivery fleet, and has made significant strides to this end. In 2022, aircraft fuel made up 66% of our total Scope 1 and Scope 2 GHG emissions. Our Fuel Analytics and Sustainability Group continuously evaluates opportunities to further reduce our emissions in this area, including accelerating efforts to reduce the carbon intensity of our fleet. We take a disciplined approach to emissions reductions in this area. We currently have one of the youngest, most fuel-efficient fleets in the industry. When appropriate, we make capital investments in newer, more fuel-efficient aircraft. In addition, we look for opportunities to retrofit older aircraft to further increase efficiency with the goal of lowering our carbon footprint. As it relates to ground vehicles, we take a “rolling laboratory” approach of evaluating potential solutions in our network. We test prototypes on the road, collaborating with manufacturers, government agencies and other stakeholders to test feasibility, and evaluate appropriate investment opportunities. UPS’s fleet of more than 15,600 alternative fuel and advanced technology vehicles includes all-electric, hybrid electric, hydraulic hybrid, ethanol, compressed natural gas (CNG), liquefied natural gas (LNG) and propane vehicles.
UPS has evaluated the feasibility of adopting targets verified by the Science Based Targets Initiative In developing our emissions reductions goals, we evaluated the potential adoption of targets verified by the Science Based Targets Initiative (“SBTi”). At this time, we do not believe there exist scalable solutions for aircraft or heavy-duty vehicles in the transportation sector that would allow us to achieve 2030 and 2035 targets as would be required by the SBTi. The primary decarbonization path for the aviation sector is sustainable aviation fuel (“SAF”), which is limited in supply, availability and economic feasibility. Additional innovation in this area is needed. To that end, we continue to work with fuel producers, customers, and industry peers to collaborate on bringing scale to the SAF market. UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress Each year, UPS reports company-wide emissions and tracks and discloses progress towards our emissions-reductions targets. We publish comprehensive sustainability related disclosures showcasing our commitment to our investors, our customers, our employees and the communities in which we operate. These include disclosures under the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) frameworks. UPS’s sustainability disclosures are extensive, targeted, and inclusive of Scope 1, 2, and 3 GHG emissions. We believe these disclosures provide stakeholders the information they need to assess our sustainability efforts and progress. UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner We believe everyone shares responsibility to improve energy efficiency and reduce GHG emissions. UPS supports global efforts to mitigate the impact of climate change. Our optimized global smart logistics network, combined with our global GHG strategy, helps improve our efficiency and reduce our environmental impact. We will continue to take a fiscally responsible approach based on sound engineering principles to decarbonize our global operations. This technology and innovation driven strategy includes: •Maintaining a leadership role in decarbonizing the transportation and logistics industries; •Implementing operational improvements through technology to create overall network and delivery efficiencies beyond miles/fuel; •Expanding our fleet of alternative fuel and advanced technology vehicles to reduce the proportion of conventional fuels we use; •Supporting the testing and development of alternative air solutions, including electric aircraft and the use of SAF; •Reducing conventional and increasing renewable energy use in our facilities; •Providing customers with services that help them reduce their environmental impact; and •Helping increase supplier awareness about GHG emissions and how to reduce them. Adopting additional goals is unnecessary The board believes the adoption of additional goals requested by this proposal is unnecessary given the Company’s ongoing efforts in this area and information that is already publicly available. Therefore, approval of this proposal would not result in an efficient use of resources or materially alter the Company’s efforts to reduce its emissions. For these reasons, the board recommends that shareowners vote AGAINST this proposal.
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What am I voting on? Whether you want to require the board to prepare a report on integrating GHG emissions reductions targets into the performance goals, metrics and vesting conditions applicable to senior executives under UPS’s incentive compensation plans. Board’s Recommendation: Vote AGAINST this proposal because: •Commissioning this report is misguided and impracticable •UPS provides transparency through comprehensive sustainability disclosures •The Compensation and Human Capital Committee carefully considers the appropriate metrics for the Company’s incentive compensation programs •UPS is committed to reducing our carbon footprint for the benefit of all stakeholders Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy. Zevin Asset Management, LLC, 2 Oliver Street, Suite 806, Boston, MA 02109, has advised us that they intend to submit the proposal set forth below on behalf of Ellen Sarkisian for consideration at the Annual Meeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary. RESOLVED: Shareholders request the United Parcel Service (UPS or the Company) Board Compensation Committee prepare a report assessing the feasibility of integrating the UPS’ committed GHG emissions targets, goals, and other relevant sustainability measures, (as determined by the Board) into the performance goals, metrics, and vesting conditions applicable to senior executives under the UPS' compensation incentive plans. GHG emissions targets are defined as those goals and targets disclosed by the company in its proxy statement and other public documents. Sustainability measures are defined as the environmental and related considerations, and related financial impacts, that are integrated into long term corporate strategy. WHEREAS: UPS has announced a goal to achieve carbon neutrality in its operations by 2050 and a 50% reduction in emissions per small package delivered by 2035. However, UPS has not set a goal that covers its Scope 3 emissions, which represent 54% of its overall footprint. Additionally, shareholders do not know if UPS plans on achieving net zero through actual emissions reductions or through the purchase of carbon offsets. We believe that alignment of a corporate climate transition strategy with executive compensation metrics and incentives can increase the likelihood of UPS achieving a timely climate transition. Achievement of a climate strategy that supports UPS’ overall corporate strategy helps to protect long-term shareholder value. A review of UPS' compensation structure for senior executives did not identify meaningful linkages between reducing GHG emissions and executive compensation. While compensation structures, especially for equity grants, are understandably linked primarily to shareholder returns, we believe these returns are impacted by the success of the Company in achieving its emissions targets and goals. The achievement of the Company's committed carbon reduction targets is intended as an integral element of the success of overall corporate strategy. UPS has not committed to setting independently verified, science-based goals covering Scopes 1-3, which would provide shareholders with objective assurance that UPS is strategically reducing emissions in a comprehensive and timely manner. Peer DHL and 46 other air freight transportation and logistics companies have committed to setting targets via the Science-Based Targets Initiative (SBTi). Chevron Corp., Marathon Petroleum Corp., and other Scope 3-intensive companies in recent years have tied executive compensation to reductions in their GHG emissions.1 SUPPORTING STATEMENT: Examples of approaches to linkages between GHG emissions reductions targets and compensation structures that the board could consider include: •Design quantitative climate-related metrics with measurable payout or long-term incentive components 1 https://news.bloomberglaw.com/esg/executive-pay-tied-to-esg-goals-grows-as-investors-demand-action
•Adding a vesting requirement for a portion of performance equity grants that vest upon the achievement of interim GHG emissions targets •The interim targets would provide a pathway to the achievement of overall, longer-term targets •The interim period could align with typical equity grant vesting cycle •Adding a requirement for the achievement of one-year interim GHG emissions targets to the annual bonus plan •Adding similar short- or longer-term compensation goals to other, related, material ESG-related targets. As a global leader in logistics and supply chain solutions, we transport packages, facilitate international trade, and apply advanced technology to efficiently manage the world of business. In this role, we know we have both a responsibility and an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating shipments and otherwise reducing carbon intensity. UPS currently takes a comprehensive, global approach to reducing energy use and GHG emissions within our network, as well as major portions of our value chain. As a result, UPS’s senior executives are currently effectively managing for sustainability as a component of our long-term strategic goals. Integrating specific sustainability metrics into incentive compensation plans will not impact sustainability performance or long-term shareowner value at UPS. This proposal mischaracterizes UPS’s sustainability goals; our plan is to become carbon neutral across Scope 1, 2 and 3 emissions in our global operations by 2050 The proposal incorrectly states that “UPS has not set a goal that covers its Scope 3 emissions...” In 2021, we announced ambitious sustainability goals as a part of our overall strategy, including a commitment to become carbon-neutral across our global operations by 2050, including Scope 1, 2 and 3 emissions. We also developed medium-term goals designed to help us achieve carbon neutrality, including adopting interim targets to reduce carbon emissions per package by 50% against a 2020 baseline; and to have 100% renewable electricity powering our facilities and use of 30% sustainable aviation fuel by 2035. Our sustainability goals, and progress towards achieving them, are further detailed in our annual sustainability disclosures. Sustainability performance is already a component of executive incentive compensation Sustainability is an inherent part of UPS’s overall business and operating strategy. We recognize that the efficiency of our global logistics network drives both business success and environmental impact. Our executive incentive compensation programs are designed to motivate towards the achievement of key performance metrics that support our long-term goals, including GHG emissions reductions. Each year, the Compensation and Human Capital Committee, working closing with its independent consultant, seeks to optimize UPS’s profitability and growth through appropriate incentives which are consistent with our goals and link incentive compensation with Company performance. This approach aligns the interests of executives with those of our shareowners, promotes individual performance and encourages teamwork. Payouts under the Company’s annual incentive program are subject to the achievement of key business objectives and at-risk based on Company performance. Payouts under the Company’s long-term incentive program are subject to achievement of performance metrics over a three-year period that support our long-term strategy. The Committee believes that the selected metrics are appropriate and in the best interest of the Company and its shareowners, and properly motivate executives. The Committee does not believe that introducing additional sustainability metrics into the executive compensation programs will impact performance or is appropriate at this time. UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress Approval of this proposal also would not impact UPS disclosure around GHG emissions reductions. Each year, UPS reports company-wide emissions and tracks and discloses progress towards our emissions-reductions targets. We publish comprehensive sustainability related disclosures showcasing our commitment to our investors, our customers, our employees and the communities in which we operate. These include disclosures under the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) frameworks. UPS’s sustainability disclosures are extensive, targeted, and inclusive of Scope 1, 2, and 3 GHG emissions. We believe these disclosures provide stakeholders appropriate information to assess our sustainability efforts and progress. UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner Approval of the proposal also would not impact our goal to reduce our carbon footprint. Through our goals, UPS supports global efforts to mitigate the | | | | | | | | | | 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. Whereas, we believe in full disclosure of UPS’s lobbying activities and expenditures Share ownership will be promptly provided upon request to assess whether its lobbying is consistent with UPS’s expressed goals and in the best interests of shareowners.
UPS Corporate Secretary. Resolved:the shareowners of UPS Shareholders request the Board of Directors prepare a report updated annually, disclosing: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, | 1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. | | | | | | | | 82 | | | | 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. | | | | | 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.
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in touting the sustainability benefits of ContentsShareowner Proposals
Shareowner’s Supporting Statement
We encourage transparencyroute 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 UPS’s use of fundsachieving 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 lobby. 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 spent $68.1 million from 2010 – 2019 on federal lobbying. This does not include state lobbying, where UPS also lobbies but disclosure is uneven or absent. For example, UPS had at least 122 lobbyists in 29 states in 2019 (followthemoney.org) and spent $1.7 million on lobbying in California from 2010 – 2019.UPS sits on the board of the Chamber of Commerce, which has spent over $1.6 billion lobbying since 1998, and belongs to the Business Roundtable (BRT), which spent over $43 million on lobbying for 2018 and 2019. 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 the American Legislative Exchange Council (ALEC). UPS’s ALEC membership continues to draw scrutiny (https://www.prwatch. org/news/2020/05/13583/groups-call-alec%E2%80%99s-corporate-funders-cut-ties-over-its-coronavirus-lobbying). Over 110 companies have left ALEC, including ExxonMobil, Home Depot and Pepsi.
We are concerned that UPS’s seeming contradictions in public policy advocacy and limits in disclosure present reputational risks. For example, UPS signed the BRT Statement on the Purpose of the Corporation advocating socially responsible conduct, yet also attended the ALEC annual conference. (https://readsludge.com/2019/08/27/these-ceos-promised-to-be-socially-responsible-but-their-companies-are-pushing-alecs-right-wing-agenda/). And UPS strongly supports global efforts to mitigate the impact of climate change, yet the Chamber opposed the Paris climate accord. UPS uses the Global Reporting Initiative for sustainability reporting yet fails to report “any differences between its lobbying positions and any stated policies, goals, or other public positions” under Standard 415.
We urge UPS to expand its lobbying disclosure.
Responsechange. Sustainability is an inherent part of UPS’s Board
Thisoverall 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 is unnecessary and would be an inefficient use of Company resources. UPS already provides extensive disclosures regarding lobbying and political activities and is transparent and accountable. In addition, the board of directors provides effective independent oversight of the Company’s lobbying and political activities. Preparing an additional special report beyond UPS’s current disclosures would not significantly alter the mix of information already publicly available. Additionally, UPS’s shareowners have rejected this proposal each year since 2012. UPS already provides significanttransparency, 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 transparentcommitted to reducing our carbon footprint for the benefit of all stakeholders We believe everyone shares responsibility to improve energy efficiency and accountablereduce 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 complieswill 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 applicableof 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 disclosingthe 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 lobbying activitiestransparency 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 some cases, goes beyond what is required. The following examples demonstrate 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 political transparencycustomer 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 accountability: | ● | UPS provides significant disclosures about political spending: UPS publishes semi-annual reports disclosing the amounts and recipients, if any, of federal and state political contributions and expenditures made with corporate funds in the United States. UPS also discloses payments, if any, 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. UPS did not make any federal or state contributions or non-deductible political payments to covered trade associations during 2021. | | | | | ● | 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 at www.investors.ups.com. The reports provide information about expenditures for the quarter, describe the specific legislation that was 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 as required. |
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 consistently 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 a top companyin 2022 by Newsweek as one of America’s Greatest Workplaces for political transparencyDiversity. We encourage UPSers to exercise their right to vote and accountabilityIn 2021, forinform their elected officials of their views on issues through the eleventh straight year, 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. A copy of the ranking can be found at https://www.politicalaccountability.net/cpa-zicklin-index/.
UPS protects and promotes shareowner value by participating in the politicaldemocratic 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, includingprocess. 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 lobbying activities. the democratic process. Producing the requested report is unnecessary and will not drive or create long-term shareowner value We understandbelieve that individual stakeholders may disagree with certain positions expressed by various organizations. In fact, given the variety of business issuesproposal, 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 which many trade associationsall 50 states and globally to create a document that would be useful for our shareowners, employees and other groups are engaged, we do not necessarily agreestakeholders. UPS is focused on complying with all positions taken by every organization in which we are a member. However, we | | | 63 |
Tableapplicable laws and regulations, surveying the competitive landscape and remaining responsive to employees’ needs. UPS will continue to evaluate employee benefits as part of Contents
generally believe that our membership in various organizations allows us to better advance UPS positions. In circumstances where we disagree with a policy position, we weighoverall human capital strategy. The Board therefore believes 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
UPS’s Chief Corporate Affairs Officer regularly reports to 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.
Furthermore, UPS’s decision-making process for lobbying activities is transparent. UPS’s Public Affairs department works 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.
Preparing an additionalrequested report is unnecessary
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. Therefore, approval of this proposal would not result in an efficient use of resources and willwould 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.
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Proposal 510 — Shareowner Proposal Requesting the Board Prepare a Report on the AlignmentImpact of Lobbying Activities with the Paris Climate AgreementCompany’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 to require the board to prepare a reportcommission 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 alignment of UPS lobbying activities with the Paris Climate Agreement and how UPS plans to mitigate risks presented by any misalignment.Company’s business. Board’s Recommendation:Vote AGAINSTthis proposal because: | ● | UPS has recently adopted and published ambitious goals to reduce GHG emissions and achieve carbon neutrality by 2050 | | | | | ● | UPS already provides comprehensive and detailed annual sustainability disclosures | | | | | ● | UPS also already provides significant lobbying and political disclosures, and is transparent and accountable | | | | | ● | The board provides independent oversight of UPS’s lobbying |
•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.Shareowner Proposal
Mercy Investment Services, Inc., 2039 North Geyer Road, St. Louis, Missouri 63131-3332, has advised us that, 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.
Resolved: Shareholders of United Parcel Service (“UPS”) request that the Board of Directors conduct an evaluation and issue a report within the next year (at reasonable cost, omitting proprietary information) describing if, and how, UPS’s lobbying activities (direct and through trade associations and social welfare and nonprofit organizations) align with the Paris Climate Agreement’s goal of limiting average global warming to well below 2 degrees Celsius and how the company plans to mitigate risks presented by any misalignment.
Shareowner’s Supporting Statement
According to the annual “Emissions Gap Report” issued by the United Nations Environment Programme (November 26, 2019), critical gaps remain between the commitments national governments have made and the actions required to prevent the worst effects of climate change. Companies have an important and constructive role to play in enabling policymakers to close these gaps.
Corporate lobbying activities that are inconsistent with meeting the goals of the Paris Agreement present regulatory, reputational, and legal risks to companies and investors and to the entire economy. Delays in implementation of the Paris Agreement increases the physical risks of climate change, poses a systemic risk to economic stability, and introduces uncertainty and volatility into our portfolios; Paris-aligned climate lobbying by companies and trade associations help to mitigate these risks.
As investors, we view fulfillment of the Paris Agreement’s goal—to hold the increase in the global average temperature to “well below” 2°C above preindustrial levels, and to pursue efforts to limit the temperature increase to 1.5°C — as an imperative. Of particular concern are trade associations that speak for business but, unfortunately, often present forceful obstacles to progress in addressing the climate crisis.
In 2020 and 2021, seven companies received shareholder resolutions urging their boards to publish evaluations of their climate lobbying efforts; six of those resolutions received a majority vote, demonstrating a tremendous show of investor interest in this issue. Numerous companies in both the U.S. and Europe have produced or agreed to issue reports evaluating their lobbying programs in the past two years.
We commend UPS for recently setting a Paris-aligned Net Zero emissions goal and a concrete plan to implement it. We believe a company should carefully evaluate whether its public policy advocacy advances or undercuts the goals of the Paris Agreement.
UPS presently provides insufficient information to help investors understand if or how UPS works to ensure that its lobbying activities, directly, in the company’s name, and indirectly, through membership organizations and trade associations, align with the Paris Agreement’s goals, and what management and the board do to address any misalignments found.
UPS is an active member of the American Legislative Exchange Council (ALEC), which frequently takes negative positions on climate change. UPS does not disclose what actions they take when an organization like ALEC contradicts UPS’s own climate positions. Similarly, UPS does not disclose how they engage major trade associations, such as the U.S. Chamber of Commerce, on climate lobbying activities.
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Response of UPS’s Board
UPS has recently adopted and disclosed comprehensive GHG reduction goals and already provides extensive sustainability and lobbying related disclosures. In addition, the Board of Directors provides effective oversight of the Company’s lobbying activities, and its sustainability goals and practices. As a result, preparing this requested report is unnecessary and would be an inefficient use of Company resources.
UPS has recently adopted and published ambitious goals to reduce GHG emissions and achieve carbon neutrality by 2050, including interim targets
UPS strives to be a good steward of the environment and is highly motivated to meet the Company’s ambitious sustainability goals. In 2021, we announced our new ESG strategy, including a commitment to become carbon-neutral across our global operations by 2050, including Scope 1, 2 and 3 emissions. We also developed and disclosed medium-term goals designed to help us achieve carbon neutrality. As part of this strategy, UPS intends to work with industry participants to accelerate the shift to sustainable aviation fuel (SAF). Our robust sustainability goals, and current progress towards achieving them, are further detailed in our corporate sustainability disclosures.
UPS already provides comprehensive and detailed annual sustainability disclosures
UPS already reports company-wide emissions and tracks and discloses target progress annually. Each year, we publish comprehensive sustainability related disclosures showcasing our commitments to our customers, our employees and the communities in which we operate. This includes disclosures under the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) frameworks. We believe these disclosures provide shareowners the information they need to assess the Company’s sustainability efforts and progress.
UPS already provides significant political and lobbying disclosures, and 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, if any, of federal and state political contributions and expenditures made with corporate funds in the United States. UPS also discloses payments, if any, 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. UPS did not make any federal or state contributions or non-deductible political payments to covered trade associations during 2021. | | | | | ● | 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 at www.investors.ups.com. The reports provide information about expenditures for the quarter, describe the specific legislation that was 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. |
The board provides independent oversight of UPS’s sustainability efforts and lobbying activities
UPS’s Chief Corporate Affairs Officer regularly reports to the Nominating and Corporate Governance Committee regarding UPS’s sustainability efforts and lobbying activities. The board monitors UPS’s memberships in trade associations and other tax-exempt organizations that engage in lobbying, including on climate related matters. Furthermore, UPS’s decision-making processNational Center for lobbying activities, and its sustainability journey, is transparent. UPS’s Public Affairs department works with senior management on furthering business objectives and on protecting and enhancing long-term shareowner value.
Preparing an additional report is unnecessary
The board believes UPS’s sustainability goals are robust, and its policies and practices are transparent. Approval of this proposal is unnecessary given the information that is already publicly available. 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.
For these reasons, the board recommends that shareowners vote AGAINST this proposal.
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Shareowner Proposals
Proposal 6 — Shareowner Proposal to Reduce the Voting Power of Class A Stock from 10 Votes Per Share to One Vote Per Share
What am I voting on? Whether you want the board to take steps to reduce the voting power of the Company’s class A stock from 10 votes per share to one vote per share.
Board’s Recommendation: Vote AGAINST this proposal because:
| ● | UPS’s capital structurePolicy Research, 2005 Massachusetts Ave. NW, Washington, DC 20036 has contributed to its long-term success | | | | | ● | UPS’s capital structure is unique and does not present the concerns inherent in typical dual-class structures | | | | | ● | UPS’s dual-class structure does not concentrate voting power or provide any 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. Transfers of Class A shares are limited, resulting in conversions, and voting restrictions would apply upon the acquisition of a significant block of shares | | | | | ● | 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 intends to submit the proposal set forth below for consideration at the Annual Meeting.
Proposal 6 — 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 weakling 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 29% in 2021.
With stock having 10-times more voting power UPS takes our shareholder money but does not give us in return an equal voice in our company’s management. Without a voice, shareholders cannot hold management accountable. It is important to continue to vote for this proposal to block UPS management from finding creative ways to further reduce their money at risk at UPS while maintaining the same control.
Plus, with the UPS shareholder-unfriendly brand of corporate governance, we had no right to call a special meeting or act by written consent. And we were restricted by provisions mandating an undemocratic 80%-vote in order to make a certain improvements to our corporate governance. This undemocratic 80% vote requirement translates into a well over a 100% vote requirement from the shares that typical vote at the annual meeting.
And to top bad things off our management recommended that they get a 3-year holiday on a shareholder vote on management pay. The vast majority of Fortune 500 companies have an annual shareholder vote on management 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. Zynga said its old multi-class share system 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.
Please vote yes: Equal Voting Rights for Each Shareholder — Proposal 6
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Response of UPS’s Board
UPS has a unique employee ownership culture that has helped it grow and thrive. Current and former employees have been significant shareowners of the Company since its founding in 1907. UPS founder Jim Casey fostered this culture by urging his partners to run their departments like their own small business.
The Company’s capital 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 held by current and former UPS employees and their families, many of whom owned UPS shares before the Company’s initial public offering. The Company’s class B shares are publicly traded. This structure provides a significant incentive for our employees to take actions and make decisions that help facilitate UPS’s long-term success, resulting in aligned interests among all shareholders. The structure also significantly enhances employee and retiree engagement.
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 leads to long-term success. We owe our growth and achievements, to a significant degree, to 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 short-term goals. 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.
UPS’s capital structure is unique and does not present concerns inherent in typical dual-class structures
The board strongly disagrees with this proposal’s characterization of UPS’s capital structure. Some companies maintain multiple classes of stock to concentrate voting power with a limited number of people (such as company founders) who have interests that may not align with other shareowners. Others embed the structure to promote managerial entrenchment or provide for disparate financial returns. None of those concerns are present at UPS.
UPS’s dual-class structure does not concentrate voting power or provide any level of control
UPS’s dual-class structure is unique in that the class A shares are widely held by approximately 155,000 current and former employees, from hourly employees to executive officers. Our executive officers and directors, collectively, hold less than 1% of the total voting power of our class A and class B common stock. As a result, UPS executive officers and directors are not able to exercise control or any significant influence over voting decisions, and do not have any level of control.
UPS’s dual-class structure does not entrench management or the board
UPS’s 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, since 2020, we have added five new board members and had four board members retire.
UPS’s governance documents provide additional safeguards against traditional dual-class concerns
UPS’s certificate of incorporation (the “Certificate”) contains a number of provisions intended to protect class B shareholders. Generally, class A shares convert to class B shares upon sale or transfer (unless transferred by an employee to a spouse or child), which over time has resulted, and is expected to continue to result, in a decline in outstanding shares of the class A stock, with the average annual decline of 3.4% per year since the Company went public. For example, as of March 1, 2021, class A common stock represented 17.0% of all outstanding shares of common stock, and as of March 1, 2022, represented 15.8% of all outstanding shares of common stock. 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. 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 treatment as a result of different voting rights.
Eliminating this structure will not further improve UPS’s corporate governance or financial performance
UPS already maintains robust corporate governance practices. We provide shareowners with an annual opportunity to vote on management pay (say on pay vote). Other than our CEO, all UPS director nominees are independent. All UPS directors are elected annually by a majority of votes cast in uncontested director elections, only independent directors serve on the board’s Audit, Compensation and Human Capital, Nominating and Corporate Governance and Risk Committees, and we have an independent Board Chair. Our board consists of 46% female directors, 31% ethnically diverse directors, and contains an appropriate mix of newer and longer-tenured directors.
Changing the capital structure is unnecessary
The board believes that UPS’s current capital structure continues to be in the best interests of the Company and its stakeholders. Shareowners have agreed with this assessment when they rejected similar proposals every year since 2013.
The board recommends that shareowners vote AGAINST this proposal.
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Shareowner Proposals
Proposal 7 — Shareowner Proposal Requesting the Adoption of Independently Verified Science-Based Greenhouse Gas Emissions Reduction Targets
What am I voting on? Whether you want to require the board to agree to alternative greenhouse gas emissions reduction targets.
Board’s Recommendation: Vote AGAINST this proposal because:
| ● | UPS’s ESG goals include a plan to become carbon neutral across our global operations, including our airline, by 2050 | | | | | ● | Our strategy includes addressing airline fuel emissions and the electrification of our delivery fleet | | | | | ● | UPS provides transparency, including comprehensive sustainability disclosures with regular updates on our progress | | | | | ● | UPS is committed to continuing to reduce our carbon footprint in a comprehensive and responsible manner |
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy.
Shareowner Proposal
Green Century Capital Management, Inc., 114 State Street, Suite 200, Boston, MA 02109, Trillium Asset Management LLC, Two Financial Center, 60 South Street, Suite 1100, Boston, MA 02111, and Zevin Asset Management, LLC, 2 Oliver Street, Suite 806, Boston, MA 02109, have advised us that they intend to submit the proposal set forth below for consideration at the Annual Meeting on behalfMeeting. Share ownership will be promptly provided upon request to the UPS Corporate Secretary.
Resolved: Shareholders of the Green Century Balanced Fund, United Parcel Service, Inc. ("the James T. Campen Trust,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 John Hancockimpacts 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, Large Cap Core Fund.Whereas: In 2018,corporations have allocated significant resources and
attention towards implementing social justice into workplace practices and hiring. Across the Intergovernmental Panelpolitical 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 Climate Change evaluated the goalsbasis 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 2015 Paris AgreementCivil Rights Act of 1964.3 And that by devaluing merit, corporations have sacrificed employee competence and advised that net carbon emissions must fall 45% by 2030moral — and reach net zero by 2050 in order to limit warming below 1.5 degrees Celsius and prevent the worst consequences of climate change. However, in 2020, the UN reported the world is “way off-track” from achieving these goals.1Exceeding 1.5 degrees Celsius presents riskstherefore productivity — to the global economy and investors: up to 10%altar of total global economic value is projected to be lost by 2050 under current emissions trajectories. A warming climate is associated with supply chain disruptions, reduced resource availability, lost production, political instability, reduced worker efficiency, and adverse health impacts that disproportionally affect low-income communities and communities of color."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 2Additionally, particulate matter emissions from heavy-duty diesel vehicles pollute communities of color at significantly higher rates than white communities.https://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 3While 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, shareholders do not know if UPS plans on achieving net zero through actual emissions reductions or through the purchase of carbon offsets. In order to assure shareholders that its goals align with the Paris Agreement, UPS should set a science-based target verified by the Science Based Targets Initiative (SBTi), which requires annual disclosure of emissions.
Whereas peers like FedEx and Amazon have set goals for procurement of electric vehicles, UPS’ goals for its ground fleet rely on alternative fuel, which unnecessarily prolongs potential emissions and bolsters fossil fuel infrastructure.4 UPS’ current emissions reduction goals do not include Scope 3 emissions, which, according to UPS’ 2020 TCFD report, constitute 57% of its total.5
Given the impact of climate change on the economy, the environment, and human systems, and UPS’s contribution to it, proponents believe the UPS board and management have a responsibility to its investors and stakeholders to adopt GHG goals aligned with a 1.5 degree scenario and to outline a clear plan that demonstrates accountability. Independently verified, science-based goals covering Scopes 1-3 would provide shareholders with objective assurance that UPS is doing its part to reduce emissions in a comprehensive and timely manner.
Resolved: Shareholders request that UPS adopt independently verified short, medium, and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to attain appropriate emissions reductions prior to 2030, in line with the Paris Agreement’s goal of maintaining global temperature rise at 1.5 degrees Celsius.
https://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 1 | https://library.wmo.int/doc_num.php?explnum_id=10211 | | | | | | | | 288 | https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe-risk/expertise-publication-economics-of-climate-change.html | 3 | https://www.nytimes.com/2021/04/28/climate/air-pollution-minorities.html | 4 | https://www.sightline.org/2021/03/09/the-four-fatal-flaws-of-renewable-natural-gas/ | 5 | https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2020_UPS_TCFD_Report_081921.pdf |
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Supporting Statement: In assessing targets, we recommend, at management’s discretion:
| ● | Consideration of approaches used by advisory groups such as the Science Based Targets initiative; | | | | | ● | Disclosing these targets to investors at least 180 days prior to the next annual meeting. |
Response of UPS’s Board
UPS supports global efforts to mitigate the impact of climate change. Sustainability is an inherent part of UPS’s strategy and business operations. We take a comprehensive, global approach to reducing energy use and GHG emissions within our networks, 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 an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating multiple shipments and otherwise reducing carbon intensity.
UPS’s ESG goals include a plan to become carbon neutral across our global operations, including our airline, by 2050
UPS effectively manages to meet the Company’s ambitious sustainability goals. In 2021, we announced our new ESG 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 within our small package operations by 50% against a 2020 baseline; to be fully powered by renewable electricity in our facilities; and to fuel 30% of our global air fleet using sustainable sources by 2035. Our robust sustainability goals, and current progress towards achieving them, are further detailed in our corporate sustainability disclosures.
Our strategy includes addressing airline fuel emissions, the electrification of our delivery fleet, and includes Scope 3 emissions
UPS takes seriously the need to transform our delivery fleet and has already made significant strides to this end. In developing our strategy, we evaluated the adoption of science-based targets. We determined that there are no scalable solutions for aircraft or heavy-duty vehicles at this time to achieve a science-based target by 2030 or 2035. The primary decarbonization path for the aviation sector is SAF, and more innovation is needed. In order to achieve our 30% SAF by 2035 goal, we are engaging with airline industry and non-governmental organizations to evaluate the availability and commercial feasibility of SAF.
In 2020, aircraft fuel made up 61% 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 currently have one of the youngest, most fuel-efficient fleets in the industry. We take a disciplined approach to emissions reductions. When appropriate, we make capital investments in newer, more fuel-efficient aircraft. We recently announced the purchase of 19 new freighter aircraft, which will make our fleet more efficient and reliable. In addition, we look for opportunities to retrofit older aircraft to further increase efficiency with the goal of lowering our carbon footprint.
Additionally, UPS’s fleet of more than 13,300 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. We continue to expand this specialized fleet, having placed an order for 125 Tesla all-electric semi-trucks, and having announced a commitment to purchase up to 10,000 electric vehicles from Arrival, which are expected to be delivered beginning in 2022. Along with these commitments, and as part of UPS’s continued efforts to build an integrated fleet of electric vehicles, our venture capital arm, UPS Ventures, evaluates investments to allow us to collaborate and support the development of EV technologies.
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 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), the Carbon Disclosure Project (CDP), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) frameworks. UPS’s sustainability disclosures are extensive, targeted, and inclusive of Scope 1, Scope 2, and Scope 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. This technology and innovation driven strategy includes the following:
| ● | Maintaining a leadership role in decarbonizing the transportation and logistics industries; | | | | | ● | Operational improvements through technology to create overall network and delivery efficiencies beyond miles/fuel that reduce our GHG footprint; | | | |
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Shareowner Proposals
| ● | Expanding our fleet of alternative fuel and advanced technology vehicles, known as our Rolling Laboratory, in order to reduce the proportion of conventional fuels we use; | | | | | ● | Supporting the testing and development of alternative air solutions, including drone delivery 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. |
The board believes this proposal is unnecessary given the information that is already publicly available. 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.
For these reasons, the board recommends that shareowners vote AGAINST this proposal.
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Proposal 8 — Shareowner Proposal Requesting a Report on Balancing Climate Measures and Financial Returns
What am I voting on? Whether you want to require the board to publish a report on UPS decisions regarding GHG emissions reductions in light of financial performance and environmental costs and risks of climate change.
Board’s Recommendation: Vote AGAINST this proposal because:
| ● | Commissioning this report is misguided and impracticable | | ● | UPS already provides transparency, including comprehensive sustainability disclosures with regular updates on our progress | | ● | UPS continues to demonstrate our commitment 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.
Shareowner Proposal
Myra K. Young, 9295 Yorkship Court Elk Grove, CA 95758, has advised us that she intends to submit the proposal set forth below for consideration at the Annual Meeting.
ITEM 8: Report on balancing climate measures
These practices create massive reputational, legal and financial returnsRESOLVED, shareholders ask the board to commission and publish a report on (1) the extent (if any) to which Company decisions involving greenhouse-gas emissions reduction prioritize Company financial performance over the environmental costs and risks of climate change and (2) the manner in which any consequent environmental costs and risks threaten returns of diversified shareholders who rely on a stable and productive economy.
Supporting Statement:
In 2020, the Company announced a roadmap to carbon neutrality in 2050. The Company has established the following specific goals:
| ● | 25 percent renewable electricity for facilities | | ● | 40 percent alternative fuel purchases as a percent of total ground fuel |
| ● | 30 percent sustainable aviation fuel | | ● | 100 percent renewable electricity for facilities | | ● | 50 percent reduction in carbon dioxide per package delivered for global small packages.1 |
These goals do not appear consistent with the consensus on measures necessary to keep global warming below disastrous levels. More consistent measures could include:
| ● | Meeting a 1.5-degree Celsius Science-Based Target standard | | ● | Achieving a 50 percent reduction in greenhouse-gas emissions by 2030 | | ● | Committing to purchasing only electric light-duty vehicles by 2025 |
The gap between the Company’s declared goals and “Paris alignment” may be due to the Company’s decision only to address the risk of climate change to the enterprise, rather than addressing the risks the Company poses to the environment: while the Company identifies climate change as having “inherently high risk to the organization,” 2 the public documents that discuss the Company’s climate stance disclose no consideration of climate change’s broad environmental stakes such as:
| ● | Halving GDP growth by the end of the century3 | | ● | Having “broad implications for macroeconomic performance, including inflation, interest rates, balance of payments, productivity, wealth, and gross domestic product (GDP) growth”4 | | ● | Shrinking the world economy by 3 percent by 2050.5 | | | |
1 | https://investors.ups.com/_assets/ups/files/pages/ups/db/1149/description/UPS+ESG+Strategy+June+2021.pdf | 2 | https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2020_UPS_TCFD_Report_081921.pdf | 3 | https://www.cftc.gov/sites/default/files/2020-09/9-9-20%20Report%20of%20the%20Subcommittee%20on%20Climate- Related%20Market%20Risk% 20%20Managing%20Climate%20Risk%20in%20the%20U.S.%20Financial%20System%20for%20posting.pdf | 4 | Id. | 5 | https://www.eiu.com/n/global-economy-will-be-3-percent-smaller-by-2050-due-to-lack-of-climate-resilience. | | |
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Shareowner Proposals
Lowered GDP will directly reduce returns to diversified investors,6 and a warming planet may create serious disruption costs that further threaten financial markets.7 By adopting a slower pace of mitigation,risk. If the Company is, able to increase its margins and financial performance. But improved Company financial performance that comes atin the expensename of the environment and the economy is a bad trade for most Company shareholders, who are diversified and rely on broad economic growth to achieve their financial objectives.
This proposal asks for a report that analyzes the climate trade-offsso-called "equity," committing illegal or unconscionable discrimination against employees deemed "non-diverse," then the Company makes between financial returnwill suffer in myriad ways — all of them both unforgivable and avoidable.
In developing the global economy,audit and how those trade-offs affect diversified shareholders. Such a report, would not require precision: identifying areas where the Company is choosing not to accelerate decarbonization and analyzing how such choices manifest as costs or risks to diversified portfolios would help determine whether and when the Company should prioritize Paris alignment over financial returns.Please vote for: Reportconsult civil-rights and public-interest law groups, but it must not compound error with bias by relying only on balancing climate measuresleft-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 Center
4 or Project 215 — and financial returnsgroups 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 – Proposal 8Responseneither of UPS’s Board
UPS supports global effortswhich we support or believe would be beneficial to mitigatecreating a diverse and inclusive workforce. Therefore, conducting the audit requested by this shareowner proposal on the impact of climate change. Sustainability is an inherent part of UPS’s strategy and business operations. We believe that seeking to maximize shareholder value necessarily takes into account the interests of all stakeholders and our decarbonizationDEI efforts call for multi-year capital deployment based on effective solutions.
We take a comprehensive, global approach to reducing energy use and GHG emissions within our networks, 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 an opportunity to reduce GHG emissions throughout the supply chains of many businesses, including by efficiently consolidating multiple shipments and otherwise reducing carbon intensity.
Commissioning this report is misguided and impracticable
Commissioning a report to extrapolate the extent to which Company decisions involving GHG emissions reductions prioritize financial performance over environmental costs and climate change risks and impact the global economy and overall market returns of diversified investors is misguided and impracticable. Among other things, it would require a variety of assumptions and estimates, and would necessarily be limited in quantifying the impact of one aspect of the Company’s operations on the global economy or on shareowners worldwide who hold diversified portfolios.
UPS already provides transparency, including comprehensive sustainability disclosures with regular updates on our progress
We disagree with the proponent’s assertion that the Company’s current sustainability reporting efforts are insufficient in this regard, or that they “only [ ] address the risk of climate change to the enterprise.” 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 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), the Carbon Disclosure Project (CDP), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) frameworks. UPS’s sustainability disclosures are extensive, targeted, and inclusive of Scope 1, 2, and 3 GHG emissions.
In light of the wealth of macroeconomic information and expertise presently available, we do not believe the requested report would significantly alter the mix of information available. Therefore, producing yet another report discussing the Company’s sustainability practicescivil rights is unnecessary, not an efficient use of resources and not in the best interests of the Company or its shareowners.
UPS continues to demonstrate our commitment to reducing our carbon footprint for the benefit of all stakeholders
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. This technology and innovation driven strategy includes the following:
| ● | Maintaining a leadership role in decarbonizing the transportation and logistics industries; | | ● | Operational improvements through technology to create overall network and delivery efficiencies beyond miles/fuel that reduce our GHG footprint; |
6 Ibid n. 2.
7 Supra, n.3
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| ● | Expanding our fleet of alternative fuel and advanced technology vehicles, known as our Rolling Laboratory, in order to reduce the proportion of conventional fuels we use; | | ● | Supporting the testing and development of alternative air solutions, including drone delivery 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. |
Preparing an additional report is unnecessary
For all of the foregoing reasons, 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.
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Shareowner Proposals
Proposal 9 — 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 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.
Shareowner Proposal
As You Sow, 2020 Milvia St. Suite 500, Berkeley, CA 94704, and Booth Investments, LLC, has advised us that they intend to submit the proposal set forth below for consideration at the Annual Meeting on behalf of Booth Investments, LLC.
Whereas: Numerous studies by respected organizations such as The Wall Street Journal, Credit Suisse, Morgan Stanley, McKinsey, and BCG have pointed to the material benefits of a diverse workforce.
Companies should look to hire the best talent. However, Black and Latino applicants face recruitment challenges. Results of a meta-analysis study of 24 field experiments, dating back to 1990, found that, with identical resumes, White applicants receive an average of 36 percent more callbacks than Black applicants and 24 percent more callbacks than Latino applicants.”1
Promotion rates show how well diverse talent is nurtured at a company. Women and non-White employees experience “a broken rung” in their careers. For every 100 men who are promoted, only 86 women are promoted. Non-White women are particularly impacted, comprising 17 percent of the entry level workforce and only 4 percent of executives.2 Employees with the potential for advancement have a higher retention rate.3
Morgan Stanley has found that: “Employee retention that is above industry peer averages can indicate the presence of competitive advantage. This advantage may lead to higher levels of future profitability than past financial performance would indicate.”4 Companies with high employee satisfaction have also been linked to annualized outperformance of over two percent.5
The United Parcel Service Inc. (“UPS”) Board has stated, “UPS views diversity, equity, and inclusion as a strategic imperative that enables the company to attract and retain talented employees, foster innovation to enhance customer service, and bring strength and stability to businesses and communities.”6
However, UPS has released only retention and recruitment rates by gender. It has not shared sufficient recruitment, retention, or promotion data by race and ethnicity to allow investors to determine the effectiveness of its human capital management programs.
Between September 2020 and September 2021, the number of S&P 100 companies releasing recruitment rate data by gender, race and ethnicity increased by 234 percent, companies releasing retention rate data increased by 79 percent, and companies releasing promotion rate data increased by 379 percent.
Alaska Air Group, Boeing, Norfolk Southern Corp., and Uber all release more inclusion-focused data than UPS does. UPS is increasingly a laggard in its decision to continue to withhold these data sets. UPS’ Investors may wish to be particularly vigilant in their assessment of diversity programs at UPS, as the company has faced a number of allegations of discrimination on the basis of race and religion.
1 | https://hbr.org/2017/10/hiring-discrimination-against-black-americans-hasnt-declined-in-25-years | 2 | https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2021.pdf | 3 | https://www.benefitspro.com/2019/04/17/promotions-play-a-key-role-in-employee-turnover/?slreturn=20210926165506 | 4 | https://www.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf | 5 | https://www.institutionalinvestor.com/article/b1tx0zzdhhnf5x/Want-to-Pick-the-Best-Stocks-Pick-the-Happiest-Companies?utm_medium=email&utm_campaign=The%20Essential%20II%20100721&utm_content=The%20Essential%20II%20100721%20CID_eb103a9e15359075f72a85f7ff534c79&utm_ source=CampaignMonitorEmail&utm_term=Want%20to%20Pick%20the%20Best%20Stocks%20Pick%20the%20Happiest%20Companies | 6 | https://www.sec.gov/Archives/edgar/data/1090727/000120677421000883/ups3861781-def14a.htm |
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Resolved: Shareholders request that UPS report to shareholders on the effectiveness of the Company’s diversity, equity, and inclusion efforts. The reporting should be done at reasonable expense, exclude proprietary information, and address outcomes using quantitative metrics for recruitment, retention, and promotion of employees, including data by gender, race, and ethnicity.
Supporting Statement: Quantitative data is sought so that investors can assess, understand, and compare the effectiveness of companies’ diversity, equity, and inclusion programs and apply this analysis to investors’ portfolio management and securities’ selection process.
Response of UPS’s Board
UPS is a global company - and is becoming even more so as much of the world’s economic and population growth continues to occur in emerging markets. With more than half a million employees around the world, UPS has a unique opportunity to effect positive change in the world through a commitment to diversity, equity and inclusion (DEI). We work closely with our customers, communities, suppliers and employees to advance a culture that embraces diversity, cultivates equity and inclusion, and fosters open participation from those with different ideas and perspectives. UPS views DEI as an imperative that enables the Company to attract and retain talented employees, foster innovation, and bring strength and stability to businesses and communities. Producing an additional special report 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. One of the ways we doexperiences to further our goals. We accomplish this is through providing unconscious biasemployee training programs and professionalism training for employees. We also sponsora commitment to employee hubs known as 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 more than Our BRGs include almost 200 chapters worldwide across 11 categories: African American, Asian, Hispanic/Latino, Focus on Abilities, LGBT & Allies, Millennial,Future Leaders, Multicultural, Parents & Caregivers, Veterans, Women in Operations, Working Parents, and WLD.Women’s Leadership Development. Each BRG is supported by advisors and senior management sponsors.
We have
Our Chief Human Resources Officer also createdserves as the role of Chief Diversity, Equity and InclusionDEI Officer, a position on the company’sCompany’s Executive Leadership Team reporting directly to our CEO. This role is a significant step forward for UPSOur Chief DEI Officer regularly reports directly to build a more inclusive and equitable environment by furthering UPS’s programs and initiatives that infusethe Board of Directors on, among other things, progress towards our goals. The Chief DEI into all aspects of the Company, and tracking and communicating progress toward DEI goals. This roleOfficer 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 Our focus on diversity and inclusion is not “corporate puffery” as suggested by this proposal. 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 – 40% of our Executive Leadership Team members are women; and 30% are non-white, after giving effect to announced retirements | | ● | Management •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 |
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 to continued progress for representation oftowards building a more diverse and inclusive environment is also evidenced by our recently adopted and disclosed DEI goals: •30% women globally is shown through our newly developed goal of 28% women representation in full-time management positions,globally by 2022.2025; 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 diversity and inclusionDEI data The workforce statistics described above are reported annually
UPS currently discloses all material information in our Sustainability Report.connection with its DEI efforts. In addition,recent periods, we began voluntarily publicly disclosedisclosing 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 our investors with thenecessary and appropriate information needed to determine the effectiveness of our human capital management policies related to workplace diversity.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 has received numerous accolades recognizing our DEI efforts, including: | ● | For the sixth year in a row, UPS has been named to Forbes and JUST Capital’s annual JUST 100 corporate leadership list. UPS earned a ranking of No. 45 overall and No. 2 in Transportation | | | |
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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. Table of Contents
Shareowner Proposals
| ● | UPS was named to OMNIKAL’s Omni50 Award, which is the top 50 U.S. corporations who are awarding the most business to entrepreneurs from the growing culturally diverse marketplace | | ● | 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 |
The board provides effective, independent oversight of UPS’s human capital management Our boardBoard of Directors, directly and through the board’s Compensation and Human Capital Committee, is responsible for oversight of human capital matters, which responsibility it executesmatters. Effective oversight is accomplished through a variety of methods and processes. The board’s oversight of these matters helps identify and mitigate 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.Management providesprocesses including regular updates and leads discussions with the board and its committees around human capital transformation efforts, technology initiatives impacting the workforce, health and safety matters, employee survey results related to culture and other matters, hiring and retention, employee demographics, labor relations and contract negotiations, compensation and benefits, succession planning and employee training initiatives.
In 2021,addition, the board delegatedCompensation and Human Capital Committee charter was recently expanded to include oversight responsibility for oversight of performance and talent management, diversity, equity and inclusion, work culture and employee development and retentionretention. We believe the board’s oversight of these matters helps identify and mitigate exposure to the Compensationlabor and Human Capital Committee. The Committee provides regular updates to the board on these matters. This oversight helps foster the Company’s continued progress and focus on human capital matters.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 AGAINSTthis proposal.
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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 ContentsImportant Information About VotingUPS’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 2022 Annual Meeting What 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 includedsought 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 proxy materials,world through a DEI commitment as a business imperative. We are creating an inclusive and why am I receiving them?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? |
The proxy materials for our Annual Meeting include this Proxy Statement and notice of the 20222023 Annual Meeting, as well as our 20212022 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 21, 2022.20, 2023. When you vote, you appoint each of Carol Tomé and Norman M. Brothers, Jr. to vote your shares at the Annual Meeting as you have instructed them. If a matter that is not on the form of proxy is voted on, then you appoint them to vote your shares in accordance with their best judgment. This allows your shares to be voted whether or not you attend the Annual Meeting. Why did some shareowners receive a Notice of Internet Availability of Proxy Materials while others received a printed set of proxy materials?
| | | | Why did some shareowners receive a Notice of Internet Availability of Proxy Materials while others received a printed set of proxy materials? |
We may furnish our proxy materials to requesting shareowners over the Internet, rather than by mailing printed copies, so long as we send them a Notice. The Notice explains how to access and review the Proxy Statement and Annual Report and vote over the Internet at www.proxyvote.com. If you received the Notice and would like to receive printed proxy materials, follow the instructions in the Notice. If you received printed proxy materials, you won’t receive the Notice, but you may still access our proxy materials and submit your proxy over the Internet at www.proxyvote.com. Can I receive future proxy materials and annual reports electronically?
| | | | Can I receive future proxy materials and annual reports electronically? |
Yes. This Proxy Statement and the 20212022 Annual Report are available on our investor relations website at 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 9, 20222023 are entitled to vote. This is the “Record Date.” You must use your 16-digit control number found on your proxy card, voting instruction form or the Notice of Internet Availability you previously received to participate in the meeting and vote. A list of shareowners entitled to vote at the Annual Meeting will be available in electronic form at www.virtualshareholdermeeting. com/UPS2022 during the Annual Meeting on May 5, 2022. It will also be accessible during regular business hours for ten days prior to the meeting at our principal place of business, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328. To how many votes is each share of common stock entitled?
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| | | | 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 137,663,128133,389,907 shares of our class A common stock and 733,439,141723,298,982 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. 78 | | Notice of | How do I vote before the Annual Meeting of Shareowners and 2022 Proxy StatementMeeting? |
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Important Information About Voting at the 2022 Annual Meeting
How do I vote before the Annual Meeting?
Shareowners of record may vote as described below: | ● | Online. You can vote in advance of the Annual Meeting via the Internet at www.proxyvote.com. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on May 4, 2022. | | ● | 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 4, 2022. | | ● | 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 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 2, 2022.1, 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 online during the Annual Meeting.Meeting. BENEFICIAL SHAREOWNER VOTING OPTIONS
If you are a beneficial owner, you will receive instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted. Many of these institutions offer telephone and Internet voting. If your voting instruction form or Notice indicates that you may vote these shares through www.proxyvote.com, you will need the 16-digit control number indicated on that form or Notice. If you did not receive a 16-digit control number, please contact your bank, broker or other nominee at least five days before the Annual Meeting and obtain a legal proxy to be able to participate in or vote at the Annual Meeting.
| | | | BENEFICIAL SHAREOWNER VOTING OPTIONS If you are a beneficial owner, you will receive instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted. Many of these institutions offer telephone and Internet voting. If your voting instruction form or Notice indicates that you may vote these shares through www.proxyvote.com, you will need the 16-digit control number indicated on that form or Notice. If you did not receive a 16-digit control number, please contact your bank, broker or other nominee at least five days before the Annual Meeting and obtain a legal proxy to be able to participate in or vote at the Annual Meeting. | |
Can I revoke my proxy or change my vote?
| | | | Can I revoke my proxy or change my vote? |
Shareowners of record may revoke their proxy or change their vote at any time before the polls close at the Annual Meeting by: | ● | submitting a subsequent proxy through the Internet, by telephone or by mail with a later date; | | ● | sending a written notice to our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328; or | | ● | voting online during the Annual Meeting using the 16-digit code. |
•submitting a subsequent proxy through the Internet, by telephone or by mail with a later date; •sending a written notice to our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328; or •voting online during the Annual Meeting using the 16-digit code. If you hold class B shares through a bank or broker, please refer to your proxy card, the Notice or other information forwarded by your bank or broker to see how you can revoke your proxy and change your vote before the Annual Meeting. Beneficial shareowners that attend the Annual Meeting using the 16-digit code they received as described below will also be able to change their vote by voting online at any time before the polls close at the Annual Meeting. How many votes do you need to hold the Annual Meeting?
| | | | How many votes do you need to hold the Annual Meeting? |
The presence, online or by proxy, of the holders of a majority of the votes entitled to be cast at the Annual Meeting will constitute a quorum. A quorum is necessary to hold the Annual Meeting and conduct business. If a quorum is not present, online, 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. Will my shares be voted if I do not vote through the Internet, by telephone or by signing and returning my proxy card?
| | | | Will my shares be voted if I do not vote through the Internet, by telephone or by signing and returning my proxy card? |
If you are a shareowner of record and you do not vote, then your shares will not count in deciding the matters presented for shareowner consideration at the Annual Meeting. If your class A shares are held in the UPS Stock Fund in the UPS 401(k) Savings Plan and you do not vote by 11:59 p.m. Eastern Time on May 2, 2022,1, 2023, then the Plan trustee will vote your shares | | | 79 |
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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. ProposalNumber | | Item | | Votes Required for
Approval | | Abstentions | | Uninstructed
shares | | | | | | | 1.Proposal Number | Item | Vote Required for Approval | Abstentions | Uninstructed shares | | 1. | Election of 1312 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 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 represented at the meeting | No effect | Same as votes against | | Discretionary voting by broker permittedNo effect | 4. - 9. | Ratification of independent registered public accounting firm | Shareowner proposals | | Majority of the voting power of the shares represented at the meeting | | Same as votesa vote against | | No effect | | 5. - 11. | Shareowner proposals | Majority of the voting power of the shares represented at the meeting | Same as a vote against | No effect |
How do I attend and vote at the Annual Meeting?
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| | | | How do I attend and vote at the Annual Meeting? |
The Annual Meeting will take place on May 5, 2022,4, 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. You or your proxyholder can participate, vote and examine our list of shareowners entitled to vote at the Annual Meeting by visiting www.virtualshareholdermeeting.com/UPS2022UPS2023 and entering the 16-digit control number included in your Notice, on your proxy card, or on the instructions that accompanied your proxy materials. If you are a beneficial shareowner, see the information relating to beneficial shareowners above under “How do I vote before the Annual Meeting” for obtaining your 16-digit control number. You may begin to log into the meeting platform at 7:45 a.m. Eastern Time on Thursday, May 5, 2022.How can I submit a question at or prior to the Annual Meeting?
4, 2023. | | | | How can I submit a question at or prior to the Annual Meeting? |
If you wish to submit a question prior to the Annual Meeting, you may do so by visiting proxyvote.com and entering your 16-digit control number, then clicking “Submit a Question for Management.” We have designed the format of the Annual Meeting so that shareowners will have the same rights and opportunities as they would have had at a physical meeting. To this end, shareowners will be able to submit questions during the Annual Meeting. If you wish to submit a question during the Annual Meeting, you may do so by logging into www.virtualshareholdermeeting.com/UPS2022UPS2023 with your 16-digit control number, as described above under “How do I attend and vote at the Annual Meeting?” We will answer questions and address comments relevant to meeting matters that comply with the meeting rules of conduct during the Annual Meeting, subject to time constraints. We will summarize multiple questions submitted on the same topic. We will make every effort to respond to all appropriate questions during the meeting, as time permits. 80 | | Notice of Annual Meeting of Shareowners and 2022 Proxy Statement |
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Important Information About Voting at the 2022 Annual Meeting
If there are matters of individual concern to a shareowner and not of general concern to all shareowners, or if a question posed was not otherwise answered, we provide an opportunity for shareowners to contact us separately after the Annual Meeting at www.investors.ups.com. What if I have technical difficulties or trouble accessing the virtual Annual Meeting?
| | | | What if I have technical difficulties or trouble accessing the virtual Annual Meeting? |
For help with technical difficulties on the meeting day you can call 1-800-586-1548 (toll free) or 303-562-9288 (international) for assistance. Technical support will be available starting at 7:00 a.m. Eastern Time and until the meeting has finished. What does it mean if I receive more than one Notice, proxy card or voting instruction form?
| | | | 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. | | | | | | | | | | 81 | 97 |
| | | | 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 and Notice to, and obtaining voting instructions relating to the proxy materials and Notice from, shareowners. In addition, we have retained Georgeson, Inc. to assist in the solicitation of proxies for the Annual Meeting at a fee of approximately $16,000 plus associated costs and expenses.
Eliminating Duplicative Proxy Materials We have adopted a procedure approved by the SEC called “householding” under which multiple shareowners who share the same last name and address and do not participate in electronic delivery will receive only one copy of the annual proxy materials or Notice unless we receive contrary instructions from one or more of the shareowners. If you wish to opt out of householding and continue to receive multiple copies of the proxy materials or Notice at the same address, or if you have previously opted out and wish to participate in householding, you may do so by notifying us in writing or by telephone at: UPS Investor Relations, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, (404) 828-6059, and we will promptly deliver the requested materials. You also may request additional copies of the proxy materials or Notice by notifying us in writing or by telephone at the same address or telephone number.
Submission of Shareowner Proposals and Director Nominations Proposals for Inclusion in the Proxy Statement for the 2023 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 20232024 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 6:00 p.m. Eastern Time on November 21, 2022.2023. 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. Director Nominations for Inclusion in the Proxy Statement for the 2023 Annual Meeting
| | | | | | | | | | 98 | | Notice of Annual Meeting of Shareowners and 2023 Proxy Statement |
| | | | 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 to the Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328 not later than the close of business on the 120th day, nor earlier than the 6:00 p.m. Eastern Time on the 150th day, prior to the first anniversary of the date the definitive proxy statement was first released to shareowners in connection with the preceding year’s annual meeting of shareowners; provided, however, that in the event the annual meeting is more than 30 days before or after the anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, to be timely, the notice must be so delivered not earlier than the close of business on the 150th day prior to such annual meeting, and not later than the close of business on the later of the 120th day prior to such annual meeting, or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. Therefore, any notice of the intent to use proxy access must be delivered to our Corporate Secretary no later than 6:00 p.m. Eastern Time on November 21, 20222023 and no earlier than 6:00 p.m. Eastern Time on October 22, 2022.2023. However, if the date of our 20232024 Annual Meeting occurs more than 30 days before or 30 days after May 5, 2023,4, 2024, the anniversary of the 20222023 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 20232024 Annual Meeting and (b) the 10th day following the day on which we first make a public announcement of the date of the 20232024 Annual Meeting. As our Bylaws make clear, simply submitting a nomination does not guarantee its inclusion. 82 | | Notice of | Other Proposals or Director Nominations for Presentation at the 2024 Annual Meeting of Shareowners and 2022 Proxy Statement |
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Other Information for Shareowners
Other Proposals or Director Nominations for Presentation at the 2023 Annual Meeting
Shareowners who wish to propose business or nominate persons for election to the Board of Directors at the 20232024 Annual Meeting of Shareowners, and the proposal or nomination is not intended to be included in our 20232024 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 20232024 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 20232024 proxy materials must be received by our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328 no later than 6:00 p.m. Eastern Time on February 4, 2023,2024, and no earlier than the close of business on December 6, 2022. 2023. However, if the date of our 2023 Annual Meeting occurs more than 30 days before or 30 days after May 5, 2023,4, 2024, the anniversary of the 20222023 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 20232024 Annual Meeting and (b) the 10th day following the day on which we first make a public announcement of the date of the 20232024 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 6, 2023.20215, 2024.
2022 Annual Report on Form 10-K A copy of our 20212022 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. This proxy statementProxy Statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the SEC and being made available with this proxy statement,Proxy Statement, and may also be described from time to time in our future reports filed with the SEC. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations or the occurrence of unanticipated events after the date of those statements. Any standards of measurement and performance made in reference to our environmental, social, governance and other sustainability plans and goals are developing and based on assumptions, and no assurance can be given that any such plan, initiative, projection, goal, commitment, expectation, or prospect can or will be achieved. Website links included in this Proxy Statement are for convenience only. The content of any website links is not incorporated herein and does not constitute a part of this Proxy Statement. | | | 83 |
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ANNUAL MEETING OF SHAREOWNERS
Thursday, May 5, 2022, 8:00 a.m. Eastern Time
www.virtualshareholdermeeting.com/UPS2022
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UNITED PARCEL SERVICE, INC.
INVESTOR RELATIONS B1F7
55 GLENLAKE PARKWAY, N.E.
ATLANTA, GA 30328
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VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on May 4, 2022. 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 2, 2022. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/UPS2022
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
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 4, 2022. 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 2, 2022. Have your proxy card in hand when you call and follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you vote by Internet or phone, you do not need to return this card.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK:
| D71215-P70092-Z82103 | | KEEP THIS PORTION FOR YOUR RECORDS | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
| UNITED PARCEL SERVICE, INC. | | | | | | The board of directors recommends you vote FOR all 13 director nominees. | | | | | | 1. | To elect 13 directors nominated by the board of directors to serve until the 2023 annual meeting of shareowners or their earlier resignation, removal or retirement. | | | | | | | Nominees: | | For | Against | Abstain | | | 1a) | Carol B. Tomé | | o | o | o | | | | | | | | | | | 1b) | Rodney C. Adkins | | o | o | o | | | | | | | | | | | 1c) | Eva C. Boratto | | o | o | o | | | | | | | | | | | 1d) | Michael J. Burns | | o | o | o | | | | | | | | | | | 1e) | Wayne M. Hewett | | o | o | o | | | | | | | | | | | 1f) | Angela Hwang | | o | o | o | | | | | | | | | | | 1g) | Kate E. Johnson | | o | o | o | | | | | | | | | | | 1h) | William R. Johnson | | o | o | o | | | | | | | | | | | 1i) | Ann M. Livermore | | o | o | o | | | | | | | | | | | 1j) | Franck J. Moison | | o | o | o | | | | | | | | | | | 1k) | Christiana Smith Shi | | o | o | o | | | | | | | | | | | 1l) | Russell Stokes | | o | o | o | | | | | | | | | | | 1m) | Kevin Warsh | | o | o | o | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The board of directors recommends you vote FOR the following proposals: | For | Against | Abstain | | | | | | | | | 2. | To approve on an advisory basis named executive officer compensation. | o | o | o | | | | | | | | 3. | To ratify the appointment of Deloitte & Touche LLP as UPS’s independent registered public accounting firm for the year ending December 31, 2022. | o | o | o | | | | | | | | The board of directors recommends you vote AGAINST the following proposals: | | | | | | | | | | | 4. | To prepare an annual report on lobbying activities. | o | o | o | | | | | | | | 5. | To prepare a report on alignment of lobbying activities with the Paris Climate Agreement. | o | o | o | | | | | | | | 6. | To reduce the voting power of UPS class A stock from 10 votes per share to one vote per share. | o | o | o | | | | | | | | 7. | To require adoption of independently verified science-based greenhouse gas emissions reduction targets. | o | o | o | | | | | | | | 8. | To prepare a report on balancing climate measures and financial returns. | o | o | o | | | | | | | | 9. | To prepare an annual report assessing UPS’s diversity and inclusion. | o | o | o | | | | | | | | In their discretion upon such other matters as may properly come before the meeting or any adjournments or postponements thereof. | | | | | | | | | | |
| 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. | |
| | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | |
| | | | | | | | | Signature (Joint Owners) | Date | |
Table of Contents
Annual Meeting of Shareowners
Thursday, May 5, 2022, 8:00 a.m. Eastern Time
The meeting will be held online at:
www.virtualshareholdermeeting.com/UPS2022
You or your proxyholder can participate, vote and examine a list of shareowners at the
Virtual Annual Meeting by entering your unique control number.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
UNITED PARCEL SERVICE, INC.
This proxy is solicited by the Board of Directors
for the Annual Meeting of Shareowners to be held on May 5, 2022
I hereby appoint CAROL B. TOMÉ 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 9, 2022, at the Annual Meeting of Shareowners of United Parcel Service, Inc. to be held online at www.virtualshareholdermeeting.com/UPS2022 on May 5, 2022, 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 2, 2022 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)
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NEOs generally participate in the same plans as other employees.
