UPS

Annual Meeting of Shareholders

Thursday, May 10, 2018 8:00 a.m. Eastern Time, The Hotel du Pont, Wilmington, Delaware

Proxy Statement Summary

This summary highlights information contained elsewhere in this Proxy Statement.

Corporate Governance

Following is a brief overview of some of our corporate governance policies and practices:

  • Qualifying shareowners are permitted to include director nominees in the Proxy Statement (“proxy access”);

  • We contacted holders of over 40% of our class B common stock last year to discuss our executive compensation programs and corporate governance practices;

  • The board has a Risk Committee comprised entirely of independent board members that is responsible for assisting in overseeing management’s identification and evaluation of enterprise risks, including risk associated with cyber-security;

  • We have a highly engaged lead director with significant oversight responsibilities;

  • All of our directors are independent, other than our CEO;

  • We provide for majority voting in uncontested director elections;

  • All directors are elected annually;

  • Independent directors meet regularly without management;

  • The board conducts an in depth review of company strategy on an annual basis;

  • The board and each board committee conduct evaluations annually; and

  • Acting as a full board and through each independent board committee, the board is fully engaged in the Company’s strategic planning process.

The UPS Board

Our board is responsible for the oversight and success of our company. Beyond a broad range of skills and experiences, we seek to maintain an optimal mix of newer directors, who bring fresh perspectives, and longer-tenured directors, who have contributed to developing our strategy over time, and have acquired an in-depth understanding of our global organization. A majority of non-management directors ensures robust debate and challenged opinions in the boardroom, while diversity of gender, age and ethnicity contributes to a diverse range of views.

The board believes that the 2018 nominees are of an appropriate composition to effectively oversee and constructively challenge the performance of management in the execution of our strategy.

As a group, our director nominees have the skills and experience to oversee a global organization

*includes experience with issues accompanying a large workforce, healthcare industry experience, and ecommerce expertise

Each year, the Nominating and Corporate Governance Committee assesses the skills and experience necessary for our board to function effectively, and considers where additional expertise may be needed.

We believe that as a group, our 13 director nominees bring the requisite skills and experience to ensure the overall effectiveness of our Board.

Our board has been meaningfully refreshed since 2010 with 7 new independent directors joining, and 5 retiring

In February 2018, Christiana Smith Shi was recruited to the UPS board, demonstrating the board’s commitment to refreshment with highly-qualified independent nominees

The board recognizes that it continually needs to monitor and improve the effectiveness of our directors. This is achieved through an annual detailed evaluation process, that provides for quantitative ratings in key areas of board performance.

The board comprises individuals with deep experience and knowledge of UPS, complemented by the fresh perspective of newer directors. Together, our directors work effectively as a team, and are highly focused on UPS’s success.

Our Chairman and CEO provides strong leadership and is supported – and constructively challenged – by an independent board

While our current CEO serves as Chairman of the Board, the UPS Board benefits from the oversight of 12 independent directors, including an engaged lead independent director; William “Bill” Johnson has served in this role since 2016.

We believe that diversity in our boardroom supports UPS’s continued success and advantage

Gender Diversity

Overall Diversity

Age Diversity

Election of Directors

The table below provides summary information about our 13 director nominees. For more information see page 21.

Name Age Director
Since
Occupation Committee(s) Other Public
Company
Boards
Independent Directors
Rodney C. Adkins 59 2013 Former Senior Vice President of Corporate Strategy, International Business Machines
  • Risk (Chair)
  • Compensation
4
Michael J. Burns 66 2005 Former Chairman, Chief Executive Officer and President, Dana Corporation
  • Audit
0
William R. Johnson* 69 2009 Former Chairman, President and Chief Executive Officer, H.J. Heinz Company
  • Nominating and Corporate Governance (Chair)
  • Executive
1
Candace Kendle 71 2011 Co-founder and Former Chairman and Chief Executive Officer, Kendle International Inc.
  • Audit
1
Ann M. Livermore 59 1997 Former Executive Vice President, Hewlett-Packard Company
  • Compensation (Chair)
  • Risk
  • Executive
2
Rudy H.P. Markham 72 2007 Former Financial Director, Unilever
  • Audit
2
Franck J. Moison 64 2017 Vice Chairman, Colgate-Palmolive Company
  • Nominating and Corporate Governance
  • Risk
1
Clark T. Randt, Jr. 72 2010 Former U.S. Ambassador to the People’s Republic of China
  • Compensation
  • Nominating and Corporate Governance
3
Christiana Smith Shi 58 2018 Former President, Direct-to-Consumer, Nike, Inc.
  • Compensation
  • Risk
2
John T. Stankey 55 2014 Senior Executive Vice President AT&T/Time Warner Integration
  • Nominating and Corporate Governance
  • Risk
0
Carol B. Tomé 61 2003 Chief Financial Officer and Executive Vice President — Corporate Services, The Home Depot, Inc.
  • Audit (Chair)
0
Kevin Warsh 47 2012 Former Member of the Board of Governors of the Federal Reserve System, Distinguished Visiting Fellow, Hoover Institution, Stanford University
  • Compensation
  • Nominating and Corporate Governance
0
Non-Independent Director     
David P. Abney  62  2014 Chairman and Chief Executive Officer, United Parcel Service, Inc.
  •  Executive (Chair)
0

* Lead Independent Director

Executive Compensation

The table below provides summary executive compensation information. For more information see page 30.

2017 Compensation Actions

Key 2017 compensation decisions for our Named Executive Officers (“NEOs”) include:

  • Most total direct compensation is performance-based and is considered “at risk” (86% for the NEOs as a group and 90%for the CEO). See page 31;

  • The 2017 MIP Awards, based on Company and individual performance during the year ending December 31, 2017, were earned at below target for all NEOs except James Barber. See page 34;

  • As a result of the annual performance review process, base salaries were increased by an average of 3.0%. See page 33; and

  • The 2015 LTIP awards, which had three-year performance goals ending in 2017, were earned at 86% of target based on revenue growth, operating return on invested capital and relative total shareowner return. See page 38.

Compensation Practices

A significant portion of executive compensation is tied to company performance over a multi-year period. This aligns executive decision-making with the long-term interests of our shareowners. We also have a long-standing owner-manager culture. The compensation and governance practices that support these principles include:

  • We do not have employment agreements with named executive officers;

  • We do not have separate change in control or severance agreements with named executive officers;

  • We do not provide tax gross-ups to executive officers with respect to equity awards;

  • Our compensation practices provide a balanced mix of cash and equity, annual and longer-term incentives, and performance metrics which mitigate excessive risk-taking;

  • Our Incentive Compensation Plan includes a clawback provision that permits us to recover awards granted to executive officers;

  • Our Incentive Compensation Plan requires a “double trigger” — both a change in control and a termination of employment — to accelerate the vesting of awards that are continued or assumed by the successor entity;

  • Our robust stock ownership guidelines include a target ownership of eight times annual salary for the Chief Executive Officer and five times annual salary for other executive officers;

  • Executive officers and directors are prohibited from hedging their ownership in UPS stock. Executive officers and directors are also prohibited from entering into future pledges of UPS stock;

  • Our long-term incentive performance awards include three-year performance goals for (1) revenue growth, (2) operating return on invested capital and (3) relative total shareowner return (“TSR”); and

  • Our annual equity awards vest 20% per year over a five-year period.

Ratification of the Appointment of the Independent Registered Public Accounting Firm

The Board of Directors has appointed Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018. The board recommends that you ratify the appointment. Summary information about the fees billed to us by Deloitte & Touche LLP during the fiscal years ended December 31, 2017 and 2016 is below. For more information, see page 62.

  2017 2016
Fees Billed:    
Audit Fees $14,608,000  $14,493,000
Audit-Related Fees $  1,234,000  $  1,380,000
Tax Fees $     720,000  $     592,000
Total $16,562,000  $16,465,000

Shareowner Proposals

The board recommends you vote AGAINST the shareowner proposals (1) requiring an annual report on lobbying activities, (2) reducing the voting power of our class A stock and (3) calling for the incorporation of sustainability metrics into executive compensation. More information about the proposals is available starting on page 65.