N O T I C E O F A N N U A L M E E T I N G
(cid:31)(cid:30)(cid:31)(cid:29) of Shareowners and
P r ox y St a t e m e n t
2 0 2 3 A N N U A L R E P O R T O N F O R M 1 0 - K
Thursday, May 2, 2024 | 8:00 a.m. Eastern Time
www.virtualshareholdermeeting.com/UPS2024
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, GA 30328
March 18, 2024
Dear Fellow Shareowners:
At the beginning of the year, I said 2023 was going to be a year of resiliency, and that turned out to be true. We faced
challenging external business conditions that led to declining volume, revenue and operating profit in all lines of our
business. I’m proud of the efforts of our nearly 500,000 employees for navigating through these challenges.
Throughout 2023, we operated with speed and agility, controlled what we could control, and stayed on strategy. Here
are some highlights from the year:
• Delivered excellent service to our customers around the globe, anchored by the best on-time performance of any
carrier in the U.S. for the sixth year in a row.
• Grew small and medium-sized business (SMB) penetration to 28.6% of total U.S. volume, driven by continued
expansion of DAP, our Digital Access Program, and the convenience of The UPS Store.
• Generated $10 billion in healthcare revenue across our three business segments; topped 17 million square feet of
healthcare-compliant distribution space and acquired MNX Global Logistics, expanding our cold chain capabilities.
• Delivered a win-win-win labor agreement for our Teamster employees with a wage and benefit compounded
annual growth rate increase of 3.3% over the five-year life of the contract, providing certainty for UPS and
our customers.
• Completed phase one of Smart Package Smart Facility, our RFID solution, in more than 1,000 buildings in the U.S.,
reducing misloads by 67%.
• Acquired Happy Returns, enhancing our no-box, no-label, consolidated returns capabilities.
• Generated $91 billion in consolidated revenue with a consolidated adjusted operating profit margin of 10.9%*.
• Generated $5.3 billion in free cash flow* and repaid $2.4 billion of long-term debt.
• Returned $7.6 billion to shareowners, consisting of $5.4 billion in cash dividends and $2.25 billion in
share repurchases.
CUSTOMER FIRST, PEOPLE LED,
INNOVATION DRIVEN
Customer First is about reducing friction in the customer experience and meeting customer needs. While we
experienced some volume diversion during our Teamster labor negotiation, our commitment to service allowed us to
win back and win new volume following the ratification of the contract. In 2023, we continued to build new solutions
for shippers and recipients. For example, we launched Hyperlocal, a data driven solution that leverages our U.S.
facilities to provide select customers with a fast, next-day delivery option, and enables UPS to capture new profitable
B2C and B2B volume. We also expanded Delivery Photo, providing 92% of our global residential stops a photo that
shows exactly where the package was delivered, providing peace of mind to recipients and reducing “where’s my
package” calls. Customer First is also about growing in the most attractive parts of the market, like SMBs, certain
enterprise customers, healthcare and international. In terms of SMBs, DAP is a competitive strength and SMB growth
driver that generated $2.9 billion in global revenue in 2023. Additionally, returns continue to be a growth area for
UPS. To accelerate that growth, we acquired Happy Returns and quickly made it available in over 5,000 The UPS Store
locations, making returns even more convenient for consumers and merchants. Looking at healthcare, our strategic
objective is to become the number one complex healthcare logistics provider in the world, and we are making bold
moves to get there. For example, our acquisition of MNX Global Logistics enables us to reach new customers and new
healthcare markets, like the radio-pharmaceuticals sector, with global time-critical and cold chain solutions. We see
significant opportunity for complex healthcare and expect to continue to grow in healthcare over the next few years.
We track progress in Customer First by improvements in our Net Promoter Score (NPS). In the U.S., we finished the year
with a NPS of 44 and moved closer toward our target NPS of 50.
Moving to People Led, we are focused on the employee experience and making UPS a great place to work. In
September, our five-year labor agreement with the Teamsters was fully ratified with overwhelming support from our
union-represented employees. This win-win-win agreement continues to reward our employees with the best pay and
benefits in our industry, which helps us attract and retain talent and provide industry-leading service to our customers.
Further, UPS retained the flexibility we need to stay competitive, serve our customers and keep our business strong. We
measure our progress in People Led by how likely an employee is to recommend others to work at UPS. In 2023, 65%
said they would recommend employment at UPS to family and friends, an improvement of 14 percentage points over
the past five years. Our goal is for Likelihood to Recommend to reach 80% or higher.
Lastly, Innovation Driven is about driving more productivity from the assets we own. Throughout 2023, productivity
initiatives like Total Service Plan enabled greater agility to match network capacity with changing volume levels.
Additionally, our Network Planning Tools (NPT), which use AI and machine learning, enabled us to adjust load planning,
scheduling and volume flows across the network based on real-time data. This technology is powerful, and NPT can
do in an afternoon what used to take a team of UPS engineers months to do. We also more closely aligned our digital
businesses, including Roadie, Ware2Go, Delivery Solutions and UPS Capital as we adopt a bolder approach to digital
commerce. We are accelerating new solutions to meet the needs of our customers and expanding our addressable
market to drive profitable growth. One example of a recent innovation is UPS Capital’s Delivery Defense, which uses
predictive analytics to enable merchants to assess the level of delivery risk associated with addresses. We measure
Innovation Driven by delivering high returns on invested capital, and in 2023, we delivered an adjusted return on
invested capital* of 21.9%.
LOOKING AHEAD
After a difficult year, we exited 2023 with some momentum, but momentum is not enough. We are making bold moves
to right size our company for the future under an initiative we call “Fit to Serve.” We are exploring strategic alternatives
for our truckload brokerage business known as Coyote. We are leaning into growth in the most attractive parts of the
market and are continuing to drive efficiency across our integrated network. We expect market conditions to settle
down in 2024 and that, coupled with our initiatives, gives us confidence that we will reverse the negative trends we
experienced in 2023.
To wrap up, I want to encourage all shareowners to vote your shares at our Annual Meeting in May. This is your
opportunity to share your views with us. We listen and take your feedback into account as we seek to grow our
business, further improve governance and create long-term shareowner value. As we approach the Annual Meeting, I
encourage you to contact us with any questions or feedback at 404-828-6059.
I’ll leave you with a quote from our founder, Jim Casey, “Our horizon is as distant as our mind’s eye wishes it to be.”
UPS is stronger than ever. We are writing the next chapter of the UPS story and we believe our best days are ahead
of us.
We thank you for your support.
Carol B. Tomé
Chief Executive Officer
*See reconciliation of Non-GAAP financial measures on page A1.
Notice of 2024 Annual Meeting
of Shareowners and Proxy Statement
Thursday, May 02, 2024
8:00 a.m. Eastern Time
www.virtualshareholdermeeting.com/UPS2024
Table of Contents
Board Chair Letter
Notice of Annual Meeting
Proxy Statement Summary
Corporate Governance
Selecting Director Nominees
Board Leadership Structure
Executive Sessions of Independent Directors
Board and Committee Evaluations
Board Refreshment and Succession
Board Oversight of Strategic Planning
Management Development and
Succession Planning
Risk Oversight
Stakeholder Engagement
Political Engagement
Sustainability
Human Capital Management
Majority Voting and Director Resignation Policy
Board Meetings and Attendance
Code of Business Conduct
Conflicts of Interest and Related
Person Transactions
Transactions in Company Stock
Corporate Governance Guidelines and
Committee Charters
Communicating with the Board of Directors
Our Board of Directors
Proposal 1 — Director Elections
Director Nominee Skills, Experience and Diversity
Director Nominee Biographical Information
Director Independence
Committees of the Board of Directors
Director Compensation
Executive Compensation
Compensation Committee Report
Compensation Discussion and Analysis
2023 Summary Compensation Table
2023 Grants of Plan-Based Awards
2023 Outstanding Equity Awards at Fiscal Year-End
2023 Option Exercises and Stock Vested
2023 Pension Benefits
2023 Non-Qualified Deferred Compensation
Potential Payments on Termination or
Change in Control
Equity Compensation Plans
Median Employee to CEO Pay Ratio
Pay Versus Performance
Proposal 2 — Advisory Vote to Approve Named
Executive Officer Compensation
4
5
7
10
10
11
11
12
13
13
13
14
15
16
17
17
19
19
19
19
20
20
20
21
21
22
23
29
30
31
32
32
33
45
47
48
49
49
51
53
56
57
58
62
Ownership of Our Securities
Securities Ownership of Certain Beneficial Owners
and Management
Delinquent Section 16(a) Reports
Audit Committee Matters
Proposal 3 — Ratification of Auditors
Audit Committee Report
Principal Accounting Firm Fees
Shareowner Proposals
Proposal 4 — Reduce the Voting Power of Class A
Stock from 10 Votes Per Share to One Vote
Per Share
Proposal 5 — Report on the Risks Arising From
Voluntary Carbon-Reduction Commitments
Proposal 6 — Annual Report on Diversity, Equity
and Inclusion
Important Information About Voting at the
2024 Annual Meeting
Other Information for Shareowners
Solicitation of Proxies
Eliminating Duplicative Proxy Materials
Submission of Shareowner Proposals and
Director Nominations
2023 Annual Report on Form 10-K
Other Business
63
63
64
65
65
65
67
68
68
71
74
77
81
81
81
81
82
82
3
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, GA 30328
March 18, 2024
Dear Fellow Shareowners,
It is my pleasure to invite you to attend the 2024 UPS Annual Meeting of Shareowners. We
encourage you to attend the meeting and to share your views about our Company.
I am honored to serve as board chair and to help facilitate the effective oversight of our
Company’s strategy and risks. Your board is highly engaged and has a productive working
relationship with management. Each director brings a diverse set of skills and perspectives to
the boardroom which, taken together, contributes to the successful execution of our
responsibilities. We remain focused on creating long-term value for all stakeholders.
In 2023, our Company faced significant headwinds, including economic pressures, increasing
geopolitical tensions, high inflation, changing consumer shopping behaviors, trade lane shifts
and our union contract negotiations. Despite these uncertainties, we were still able to return
over $7.6 billion to shareowners in 2023 through dividends and share repurchases, and we
have established a new baseline for growth.
The board recognizes management’s many achievements during such a challenging year.
Management continued to make progress against the Company’s strategy, including investing
back in the business to drive productivity and future growth, executing strategic acquisitions
and remaining focused on premium markets, including small and medium-sized businesses,
healthcare, and international growth. The Company once again provided best-in-class service,
successfully managed our best-in-class network and strategically expanded its service offerings.
In addition, the Company entered into a “win-win-win” labor contract that provides meaningful
labor certainty.
In closing, I want to encourage all my fellow shareowners to vote. As we approach the Annual
Meeting, please contact us with any questions or feedback at 404-828-6059.
On behalf of the entire Board of Directors, thank you for your continued support.
William Johnson
UPS Board Chair
4
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Notice of Annual Meeting
UNITED PARCEL SERVICE, INC.
55 Glenlake Parkway, N.E., Atlanta, Georgia 30328
Date and Time: May 2, 2024, 8:00 a.m. Eastern Time
Place: The United Parcel Service, Inc. 2024 Annual Meeting of shareowners will be held online
via webcast at www.virtualshareholdermeeting.com/UPS2024.
Record Date: March 5, 2024
Distribution Date: A Notice of Internet Availability of Proxy Materials or the Proxy Statement
is first being sent to shareowners on March 18, 2024.
Voting: Holders of class A common stock are entitled to 10 votes per share on each matter to
be acted upon; holders of class B common stock are entitled to one vote per share on each
matter to be acted upon. Your vote is important. Please vote as soon as possible
through the Internet, by telephone or by signing and returning your proxy card (if
you received a paper copy of the proxy card). Your voting options are described on
the Notice of Internet Availability of Proxy Materials, voting instruction form and/or
proxy card. Brokers are not permitted to vote on certain proposals and may not vote
on any of the proposals unless you provide voting instructions. Voting your shares
will help to ensure that your interests are represented at the meeting.
Attending the Meeting: You or your proxy holder can participate, vote and ask questions at
the meeting by visiting www.virtualshareholdermeeting.com/UPS2024 and using your 16-digit
control number found on your proxy card, voting instruction form or Notice of Internet
Availability of Proxy Materials. Shareowners who do not receive a 16-digit control number
should consult their voting instruction form or Notice of Internet Availability of Proxy Materials
and may need to request a legal proxy from their bank, broker or other nominee in advance of
the meeting in order to participate. For more information, see page 77.
Important Notice Regarding the Availability of Proxy Materials for the Shareowner
Meeting to be Held on May 2, 2024: The Proxy Statement and our 2023 Annual Report
are available at www.proxyvote.com. Questions? Call 404-828-6059 (option 2).
By order of the Board of Directors
Norman M. Brothers, Jr.
Secretary
Atlanta, Georgia
March 18, 2024
5
Items of Business
UNITED PARCEL SERVICE, INC.
2024 Annual Meeting of Shareowners
Voting Choices
Recommendations Page
Board Voting
Company Proposals:
1. Elect 12 director nominees
named in the Proxy
Statement to serve until the
2025 Annual Meeting and
until their respective
successors are elected and
qualified
• Vote for all nominees
• Vote against all nominees
• Vote for some nominees
and against others
• Abstain from voting on one
or more nominees
FOR
EACH
NOMINEE
21
2. Advisory vote to approve
named executive officer
compensation
• Vote for the proposal
• Vote against the proposal
• Abstain from voting on the
FOR
62
3. Ratify the appointment of
Deloitte & Touche LLP as our
independent registered
public accounting firm for
2024
Shareowner Proposals:
4. - 6. Advisory votes on 3
shareowner proposals,
only if properly
presented
proposal
• Vote for ratification
• Vote against ratification
• Abstain from voting on the
proposal
FOR
65
• Vote for each proposal
• Vote against each proposal
• Abstain from voting on one
or more proposals
AGAINST
EACH
PROPOSAL
68
6
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Proxy Statement
UNITED PARCEL SERVICE, INC.
55 Glenlake Parkway, N.E., Atlanta, Georgia 30328
This Proxy Statement contains important information about the 2024 Annual Meeting of Shareowners (the
“Annual Meeting”). We are providing these proxy materials to you because our Board of Directors is soliciting
your proxy to vote your shares at the Annual Meeting. The Annual Meeting will be held online via webcast on
May 2, 2024, at 8:00 a.m. Eastern Time, at www.virtualshareholdermeeting.com/UPS2024. Shareowners can
participate, ask questions and vote during the meeting through this website.
All properly executed written proxies, and all properly completed proxies submitted through the Internet or by
telephone, that are delivered pursuant to this solicitation will be voted at the Annual Meeting in accordance with
the directions given in the proxy, unless the proxy is revoked prior to the completion of voting at the Annual
Meeting. Only owners of record of shares of the Company’s common stock as of the close of business on March
5, 2024 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting (or any adjournment or
postponement of the Annual Meeting). We are first mailing this Proxy Statement on or about March 18, 2024.
Proxy Statement Summary
The following summary highlights key information contained elsewhere in this Proxy Statement.
Corporate Governance
Some of our key governance policies and practices include:
• An independent board; all our directors are independent, other than our Chief Executive Officer (“CEO”);
an independent Board Chair who is highly engaged and experienced;
• A diverse board, with 42% of the board being female and 33% of the board being ethnically diverse;
• Executive sessions of our independent directors held at each board meeting;
• Annual elections for all directors; majority voting in uncontested director elections;
• Full board engagement in the strategic planning process, including an in-depth annual strategy review and
overseeing progress throughout the year;
• A Risk Committee consisting entirely of independent members that is responsible for oversight of
enterprise risks, including cybersecurity risks;
• Regular evaluations of governance policies and practices, making changes when appropriate; including
recently delegating additional cybersecurity oversight responsibilities to the Risk Committee, delegating
environmental sustainability oversight responsibilities to the Nominating and Corporate Governance
Committee, delegating additional human capital oversight responsibilities to the Compensation and
Human Capital Committee, and adopting a director overboarding policy;
• Regular engagement with stakeholders on environmental, social and governance (“ESG”) matters;
during this proxy season management contacted holders of over 47% of our class B common stock to discuss
our sustainability goals and initiatives, commitments to diversity and inclusion, and executive
compensation matters;
• Annual board and committee self-evaluations, including one-on-one director discussions with the
independent Board Chair;
• Comprehensive director orientation and education program;
• Robust stock ownership guidelines, including a target ownership of eight times annual salary for the
CEO, five times annual salary for other executive officers and five times the annual retainer for
directors; and
• Restrictions on executive officers and directors hedging or pledging their ownership in UPS stock.
7
2024 Director Nominees
Highlights
92% Independent
61.6 years Average age
8.9 years Average tenure
42% Female
33% Ethnically diverse
Summary information about our director nominees is below. As a group, we believe our 12 director nominees
have the appropriate skills and experience to effectively oversee and constructively challenge management’s
performance in the execution of our strategy. For more information about our director nominees see page 21.
Name
Independent Directors
Rodney Adkins
Director
Since
Principal Occupation
Committee(s)
2013
Former Senior Vice President, International
Business Machines Corporation
– Risk (Chair)
– Compensation and
Human Capital
– Executive
Eva Boratto
2020
Chief Financial Officer, Bath & Body Works, Inc.
– Audit (Chair)
Michael Burns
2005
Former Chairman, President and Chief Executive
Officer, Dana Incorporated
– Audit
Wayne Hewett
2020
Senior Advisor to Permira
– Audit
Angela Hwang
2020
Former Chief Commercial Officer and President,
Pfizer Biopharmaceuticals Business, Pfizer, Inc.
– Audit
Kate Johnson
2020
President and Chief Executive Officer, Lumen
Technologies, Inc.
– Nominating and
Corporate Governance
William Johnson(1)
2009
Former Chairman, President and Chief Executive
Officer, H.J. Heinz Company
– Nominating and Corporate
Governance (Chair)
– Risk
– Executive
Franck Moison
2017
Former Vice Chairman, Colgate-Palmolive
Company
– Nominating and
Corporate Governance
Christiana Smith Shi
2018
Former President, Direct-to-Consumer, Nike, Inc. – Compensation and
– Risk
Human Capital (Chair)
– Risk
Russell Stokes
2020
President and Chief Executive Officer,
Commercial Engines and Services, GE Aerospace
– Compensation and
Human Capital
Kevin Warsh
2012
Former Member of the Board of Governors of the
Federal Reserve System, Distinguished Visiting
Fellow, Hoover Institution, Stanford University
– Nominating and Corporate
Governance
– Compensation and
Human Capital
– Nominating and Corporate
Governance
Non-Independent Director
Carol Tomé
2003
UPS Chief Executive Officer
– Executive (Chair)
(1) Independent Board Chair
8
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Executive Compensation
Compensation Practices
A significant portion of executive compensation is at-risk and tied to Company performance. This helps align
executive decision-making with the long-term interests of our shareowners. We also have a longstanding owner-
manager culture. Compensation practices that support these principles include:
• A balanced mix of cash and equity, providing a degree of financial certainty and appropriate incentives to
retain and motivate executives;
• Performance incentive equity awards which vest over multiple years, furthering both retention and
incentive goals;
• Multiple distinct goals for annual and long-term performance incentive awards, avoiding overemphasis on
any one metric and mitigating excessive risk-taking;
• Long-term performance incentive awards with a three-year performance period;
• Stock option awards that vest over a five-year period and only provide value if our stock price increases;
• Clawback policy that applies to all of our executive officers;
• Incentive compensation plan awards require a “double trigger” — both a change in control and a
termination of employment or a failure to continue, assume or substitute the award — to accelerate
vesting; and
• No tax gross-ups on equity awards or golden parachute excise taxes.
2023 Compensation Actions
Key 2023 compensation decisions affecting our executive officers included:
• Most total direct compensation was performance-based or considered “at risk” (93% for the CEO and
86% for all other named executive officers (“NEOs”) as a group), page 34;
• Base salary increases as a result of the annual salary review process and pay mix redesign, page 36;
• Pay mix redesign to better align annual incentive pay with market practices, improve the competitiveness
of base salaries and simplify compensation design, page 36;
• A bifurcated performance period for the annual incentive awards in light of continued economic
uncertainty and our then-labor uncertainty; beginning with the 2024 performance period, the Compensation
and Human Capital Committee has returned to annual goal setting for annual incentive awards, page 37;
• Annual incentive awards were earned and paid below target, page 37; and
• Previously granted 2021 Long-Term Incentive Performance (“LTIP”) awards, which had three-year
performance goals ending in 2023, were earned and paid below target, page 40.
Say on Pay Vote
We maintain executive compensation programs that support the long-term interests of our shareowners. We
provide shareowners the opportunity to vote annually, on an advisory basis, to approve the compensation of our
NEOs, as described in the Compensation Discussion and Analysis section and in the compensation tables and
accompanying narrative disclosure in this Proxy Statement. For more information, see page 62.
The board recommends you vote FOR the advisory vote to approve NEO compensation.
Ratify the Appointment of the Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP as our independent
registered public accounting firm for the year ending December 31, 2024. The board recommends you vote FOR
the ratification of the appointment of Deloitte & Touche LLP. For more information, see page 65.
Shareowner Proposals
For the reasons described in this Proxy Statement, the board recommends you vote AGAINST the shareowner
proposals. Information about these proposals starts on page 68.
9
Corporate Governance
The Board of Directors is accountable to shareowners and operates within a governance structure that we
believe provides appropriate checks and balances to create long-term value. The board’s responsibilities include:
• Establishing an appropriate corporate governance structure;
• Supporting and overseeing management in setting long-term strategic goals and applicable measures of
value-creation;
• Providing oversight on the identification and management of materials risks;
• Establishing appropriate executive compensation structures; and
• Monitoring business issues that have the potential to significantly impact the Company’s long-term value.
We regularly review and update our corporate governance policies and practices in response to the evolving
needs of our business, shareowner and other stakeholder feedback, regulatory changes, and other corporate
developments. Following is an overview of our corporate governance structure and processes, including key
aspects of our board operations.
Selecting Director Nominees
Maintaining a board of individuals independent of management, with the appropriate skills and experience, and
of the highest personal character, integrity and ethical standards, is critical to the proper functioning of the
board. The Nominating and Corporate Governance Committee seeks to promote diversity in the boardroom with
respect to gender, age, ethnicity, skills, experience, perspectives, and other factors. Our directors’
biographies beginning on page 21 highlight factors that the board considered when nominating these individuals.
Nomination Process
1.
Board Composition Review
The board’s annual self-evaluation helps the Nominating and Corporate Governance Committee
identify needs by assessing areas where additional diversity, perspectives, expertise, skills or
experience may be desired. The Nominating and Corporate Governance Committee also conducts
regular in-depth board composition reviews.
2.
Candidate Identification
The Nominating and Corporate Governance Committee uses a variety of sources to identify a diverse
pool of potential candidates. Sources include board members, members of management, independent
consultants and shareowner recommendations. Prospective candidates are evaluated after taking into
account feedback from consultants, management and board members, candidate background and
qualification reviews, and open discussions between the Nominating and Corporate Governance
Committee and the full board. This process allows for active and ongoing consideration of potential
directors with a focus on long-term Company strategy.
3.
Shortlisted Candidates
The Nominating and Corporate Governance Committee maintains a diverse list of potential
director candidates according to desired skills, experiences and backgrounds. The list is
reviewed at each Nominating and Corporate Governance Committee meeting and updated as
appropriate. Each candidate is evaluated to ensure that existing and planned future commitments
would not materially interfere with expected board responsibilities.
4.
Recommendation, Nomination and Election
Candidates recommended by the Nominating and Corporate Governance Committee and approved by
the board are nominated for election. Directors are elected annually.
Result: 5 new independent directors added since 2020; 42% director refreshment since 2020.
10
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Shareowner Recommendations
Shareowner recommended director candidates are considered on the same basis as recommendations from other
sources. Shareowners can recommend a candidate by writing to the UPS Corporate Secretary, 55 Glenlake
Parkway, N.E., Atlanta, Georgia 30328. Submissions must contain the prospective candidate’s name and a
detailed description of the experience, qualifications, attributes and skills that make the individual a suitable
director candidate.
Board Leadership Structure
Based on the periodic evaluation and recommendation of the Nominating and Corporate Governance Committee,
the board determines the most appropriate board leadership structure, including who should serve as Board
Chair, and whether the roles of Board Chair and CEO should be separated or combined. In making this
determination, the board evaluates a number of factors, including professional experience, operational
responsibilities and corporate governance developments.
In October 2020, in connection with Carol Tomé’s election as CEO, the board determined that it was in the best
interests of the Company to enable Carol to focus on leading the Company, and separated the roles of Board
Chair and CEO. Bill Johnson, who had been serving as our independent Lead Director, was appointed
Board Chair.
Bill has served on our board since 2009 and served as independent Lead Director from 2016 until October 2020.
He has deep institutional knowledge of the Company and provides strong continuity of leadership. He devotes
significant time to understanding our business and communicating with the CEO, and other directors, between
meetings. He draws on his extensive knowledge of our business, industry, strategic priorities and competitive
developments to set the board’s agendas in collaboration with the CEO, and he seeks to ensure that board
meetings are productive and interactions with the directors facilitate a useful exchange of viewpoints. Bill’s value
to the board is underscored by the board’s decision to extend his tenure beyond the board’s mandatory
retirement age of 75; in connection with our director nomination process, the board determined to grant Bill a
one-year waiver from that requirement so that he can continue to lead the board.
Carol is available to all directors between meetings and meets regularly with the Board Chair, and with the
directors individually and as a group, to receive feedback from the board. Bill’s collaboration with Carol allows
the board to focus attention on the issues of greatest importance to the Company and its shareowners and our
CEO to focus primarily on leading the Company.
Furthermore, all the members of each of the Audit Committee, the Compensation and Human Capital
Committee, the Nominating and Corporate Governance Committee and the Risk Committee are independent.
Each committee is led by a chairperson who sets the meeting agendas and reports to the full board on the
committee’s work. Additionally, the independent directors meet in executive session without management
present at each board meeting, as described below.
Executive Sessions of Independent Directors
Directors hold executive sessions without management present at each regular board meeting. The Board Chair
determines the agenda and presides at each session. The Board Chair generally invites the CEO to join a portion
of the executive session to receive feedback from the board and when deemed appropriate otherwise. In
addition, throughout the year the Board Chair meets individually with each director to discuss issues that are
important to the board and to solicit and provide further feedback.
11
Board and Committee Evaluations
The board’s performance is critical to our long-term success and the protection of stakeholders’ interests. The
board employs both an ongoing informal and a formal annual process to evaluate its performance and the
contributions of individual directors to the successful execution of the board’s obligations. The Board Chair
frequently considers the performance of the board and the board’s committees and has informal discussions
about individual director contributions to the board. The Board Chair shares feedback from these discussions
with the full board and with individual board members. In addition, during 2023 the Board Chair met individually
with each director to discuss overall board effectiveness and performance, individual director time commitments
and potential 2024 board agenda items.
Formal Evaluation Process
1.
Detailed Formal Annual Evaluation Process
The Board of Directors, Audit Committee, Compensation and Human Capital Committee, Nominating
and Corporate Governance Committee, and Risk Committee each conduct an annual self-assessment.
The Nominating and Corporate Governance Committee oversees the annual board assessment
process and the implementation of the annual committee self-assessments.
2.
Questionnaires
All board and committee members complete a detailed confidential questionnaire each year. The
questionnaire provides for quantitative ratings in key areas, including overall board effectiveness,
meeting effectiveness, access to information, information format, board committee structure, access
to management, succession planning, meeting dialogue, communication with the CEO, operational
reporting, financial oversight, capital structure and financing, capital spending, long-term strategic
planning, risk oversight, crisis management and time management. The questionnaire also allows
directors to provide written feedback and make detailed anonymous comments. In 2023, the
Company engaged a new, independent third party to administer and report on the evaluations.
3.
Review
The results of the committee self-assessments are reviewed by each committee and discussed with
the full board. The Nominating and Corporate Governance Committee Chair reviews the results of
committee self-assessments and discusses the responses with the chairs of the other board
committees as appropriate. The Nominating and Corporate Governance Committee Chair also reviews
and discusses the board evaluation results with the full board.
4.
Follow-up
Matters requiring follow-up are addressed by the Nominating and Corporate Governance Committee
Chair or the chairs of the other committees as appropriate.
Result:
Feedback from these evaluations has led to several improvements in board functionality in recent
periods, including changes to the format and delivery of board meeting materials, board meeting
agendas and recurring topics, strategic planning and oversight, director recruitment practices and
orientation, allocation of responsibilities among the board’s committees and succession planning.
12
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Board Refreshment and Succession
8.9 years nominee average tenure
Newer directors (< 5 years)
Medium-tenured directors (5-10 years)
Longer-tenured directors (> 10 years)
The Nominating and Corporate Governance Committee regularly evaluates board composition and necessary
skills as our business evolves over time. We seek a balance of knowledge and experience that comes from
longer-term board service with new ideas and perspectives that can come from newer directors. Since 2020, we
have added five new directors, and have had four directors retire. The average tenure of the director nominees
reflects an appropriate balance between different perspectives brought by newer and long-serving directors.
Board Oversight of Strategic Planning
The board’s responsibilities include oversight of strategic planning. Effective oversight requires a high level of
constructive engagement between management and the board. The board leverages its substantial experience
and expertise and is fully engaged in the Company’s strategic planning process. Management develops and
prioritizes strategic plans on an annual basis. Management then reviews these plans with the board on an annual
basis, along with the Company’s challenges, opportunities, industry dynamics, and legal, regulatory and
governance developments, and other significant strategic matters.
Management provides the board comprehensive updates throughout the year regarding progress on the
Company’s strategic plans. Management also provides regular updates regarding the achievement of the
Company’s financial and other goals. In addition, the CEO communicates regularly with the board on important
business opportunities, financial and operational performance matters, risks and other developments such as
sustainability, human capital, labor and customer relations, both during and outside the regular board
meeting cycle.
Management Development and Succession Planning
Succession planning and talent development are important at all levels within our organization. The board
oversees management’s emergency and long-term succession plans at the executive officer level, most
importantly the CEO position. The board annually reviews succession plans for senior management including the
CEO, all in the context of the Company’s overall business strategy and with a focus on risk management. More
broadly, the board and the Compensation and Human Capital Committee are regularly updated on key talent
indicators for the overall workforce, including diversity, recruiting and development programs.
The board’s succession planning activities are ongoing and strategic and are supported by board committees and
independent third-party consultants as needed. In addition, the CEO annually provides an assessment to the
board of senior leaders and their potential to succeed at key senior management positions. As a part of this
process, potential leaders interact with board members through formal presentations and during informal events.
We also utilize a formal director engagement program in which directors meet with individual executive officers,
visit Company operations, participate in employee events and receive in-depth subject matter updates outside of
the regular board meeting process. These additional engagements encourage the ongoing exchange of ideas and
information between directors and management, facilitate the board’s oversight responsibilities, and support
management development and succession planning efforts.
13
Risk Oversight
Board of Directors
Risk management oversight is an essential board responsibility. The board regularly discusses our most
significant risks and how these risks are being managed. The Company’s enterprise risk management process is
designed to identify potential events that may affect the achievement of the Company’s objectives or have a
material adverse effect on the Company. The board reviews periodic assessments from this process and
participates in the Company’s annual enterprise risk survey. The board has delegated to its standing committees
specific risk oversight responsibilities as set out below and receives regular reports from the committees on
appropriate areas of risk management.
Risk Committee
Oversees management’s
identification and evaluation
of strategic enterprise risks,
including risks associated with
intellectual property,
operations, privacy,
technology, information
security, cybersecurity and
cyber incident response, and
business continuity.
Audit Committee
Oversees policies with
respect to financial risk
assessment, including
guidelines to govern the
process by which major
financial and accounting
risk assessment and
management is
undertaken.
Compensation and Human
Capital Committee
Considers risks
associated with
compensation policies
and practices, with
respect to both
executive compensation
and compensation
generally, and
considers other human
capital risks.
Nominating and Corporate
Governance Committee
Considers risks related to
succession planning,
political contributions and
lobbying, sustainability
and stakeholder
engagement matters,
among others.
The Company’s Chief Legal and Compliance Officer, Chief Digital and Technology Officer, Chief Information
Security Officer, and Vice President of Compliance and Internal Audit each meet individually with the Risk
Committee on a regular basis. The Chair of the Risk Committee also meets frequently with the Chief Digital and
Technology Officer between meetings.
The Risk Committee updates the board annually on the Company’s enterprise risk management survey and risk
assessment results. The board provides feedback to the Company about significant enterprise risks and assesses
the Company’s identification of its most significant risk areas. The Risk Committee also coordinates with the
Audit Committee, including through periodic joint meetings, to enable the Audit Committee to perform its risk
related responsibilities. The Risk Committee oversees the Company’s approach to cybersecurity risk assessment
and mitigation by, among other things:
• reviewing the Company’s cybersecurity insurance program;
• reviewing at least annually the Company’s cybersecurity budget;
• discussing the results of various internal cybersecurity audits and periodic independent third-party
assessments of the Company’s cybersecurity programs;
• being briefed on cybersecurity matters by outside experts; and
• receiving regular updates from the Company’s Chief Information Security Officer (“CISO”) and others on
cybersecurity risks, operational metrics, compliance and regulatory developments, training programs, risk
mitigation activities, key projects and industry developments.
The Company's Chief Legal and Compliance Officer, Chief Digital and Technology Officer, CISO and Vice
President of Compliance and Internal Audit participate in Risk Committee meetings and meet individually with
the Risk Committee on a periodic basis to discuss and address relevant matters, including the Company’s
approach to cybersecurity risk assessment and mitigation.
The Audit Committee has additional risk assessment and risk oversight responsibilities, specifically with respect
to financial risk assessment. The Chief Legal and Compliance Officer, CEO, Chief Financial Officer and Vice
President of Compliance and Internal Audit each meet individually with the Audit Committee on a regular basis.
In addition, the Company’s Chief Legal and Compliance Officer reports directly to our CEO, providing visibility
into the Company’s risk profile. The board believes that the work undertaken by its committees, together with
the work of the full board and the Company’s senior management, enables effective oversight of the Company’s
management of risk.
14
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Stakeholder Engagement
Maintaining open and ongoing dialogs with key stakeholders is an important component of our corporate culture.
Our management team participates in numerous investor meetings throughout the year to discuss our business,
strategy and financial results. This includes in-person, telephone and webcast conferences, as well as key
site visits.
In addition, each year we undertake an ESG stakeholder outreach program in which we discuss progress on our
ESG journey. This year we contacted holders of over 47% of our class B common stock as a part of this
program. Engagement provides us with the opportunity to understand issues of significant importance to
stakeholders and to receive feedback on our practices and disclosures. Similarly, it provides us with an
opportunity to discuss how management believes its actions are aligned with long-term value creation.
We also proactively correspond with other key stakeholders throughout the year. We share feedback from our
financial and ESG engagements with the board, the Compensation and Human Capital Committee, and the
Nominating and Corporate Governance Committee as appropriate.
We consider the views of our shareowners and
other stakeholders when evaluating our ESG
policies and practices; for example, in recent
years we have:
The Compensation and Human Capital Committee
considers shareowner feedback, along with the
market information and analysis provided by its
independent compensation consultant, when
making decisions about our executive
compensation programs. We have:
• Announced a number of environmental, social
and human capital goals, including a carbon
neutral by 2050 goal;
• Accelerated our sustainability reporting;
• Increased disclosures around individual director
• Updated the peer group for executive and
director compensation market comparisons;
• Enhanced the competitiveness of our
performance-based annual
compensation program;
racial, ethnic and gender diversity;
• Eliminated single-trigger equity vesting following
• Increased our commitments to diversity, equity
a change in control;
and inclusion, volunteerism and
charitable giving;
• Separated the Board Chair and CEO roles;
• Appointed an independent Board Chair;
• Increased board diversity;
• Expanded reporting on lobbying activities;
• Added relative total shareowner return as a
component of our Long-Term Incentive
Plan awards;
• Reevaluated performance metrics under
incentive compensation plans for proper design
to incent towards long-term Company
value creation;
• Revised the Risk Committee charter to
• Provided additional detail around the
specifically identify cybersecurity
oversight responsibilities;
• Revised the Nominating and Corporate
Governance Committee charter to include
oversight of environmental sustainability matters
and risks; and
• Revised the Compensation and Human Capital
Committee charter to include oversight of
performance and talent management, diversity,
equity and inclusion, work culture and employee
development and retention.
performance measures used for our annual and
long-term incentive plans;
• Adopted a mandatory incentive compensation
clawback policy applicable to executive officers;
• Approved the return to a single, annual goal
setting process for annual incentive program
design; and
• Added an individual payout cap to our annual
incentive plan.
15
Political Engagement
Overview
Responsible participation in the political process is important to our success and the protection and creation of
shareowner value. We participate in this process in accordance with good corporate governance practices. Our
Political Engagement Policy (“policy”) is summarized below and is available at www.investors.ups.com. In
addition, as a component of our ongoing governance evaluation process, we recently expanded our reporting
around lobbying and trade association memberships.
• The Nominating and Corporate Governance Committee oversees the policy;
• Corporate political contributions are restricted;
• We publish a semi-annual political engagement report on our investor relations website; and
• Eligible employees can make political contributions through a Company-sponsored political action committee
(“UPSPAC”). UPSPAC is organized and operated on a voluntary, nonpartisan basis and is registered with the
Federal Election Commission.
Oversight and Processes
Political contributions are made in a legal, ethical and transparent manner that best represents the interests of
stakeholders. Political and lobbying activities require prior approval of the UPS Public Affairs department and are
subject to review (and in some cases prior approval) by the Nominating and Corporate Governance Committee.
Senior management works with Public Affairs on furthering our business objectives and protecting and enhancing
shareowner value. The Chief Corporate Affairs and Sustainability Officer reviews political and lobbying activities
and regularly reports to the board and the Nominating and Corporate Governance Committee.
Lobbying and Trade Associations
Public Affairs coordinates our lobbying activities, including engagements with federal, state, and local
governments. UPS is also a member of a variety of trade associations that engage in lobbying. Lobbying
activities require prior approval of Public Affairs.
The Nominating and Corporate Governance Committee regularly reviews UPS’s participation in trade associations
that engage in lobbying to determine if our involvement is consistent with UPS business objectives and whether
participation exposes the Company to excessive risk.
Lobbying activities are governed by comprehensive policies and practices designed to facilitate compliance with
laws and regulations, including those relating to the lobbying of government officials, the duty to track and
report lobbying activities, and the obligation to treat lobbying costs and expenses as nondeductible for
tax purposes.
Political Activity Transparency
We believe in transparency in our political activities. We publish semi-annual political engagement reports, which
are reviewed and approved by the Nominating and Corporate Governance Committee. The reports provide:
• Amounts and recipients of any federal and state Company political contributions in the U.S. (if any such
expenditures are made);
• The names of trade associations that receive $50,000 or more and that use a portion of the payment for
political contributions; and
• The names of trade associations or other organizations that draft model legislation that received $25,000 or
more in membership dues from UPS in a given year, and the percentage of dues used for lobbying purposes.
These disclosures were recently added as a governance enhancement based on stakeholder feedback.
Our most recent report is available on our investor relations website at www.investors.ups.com. We also publicly
file a federal Lobbying Disclosure Act Report each quarter, providing information on activities associated with
influencing legislation through communications with any member or employee of a legislative body, or with any
covered executive branch official. This report discloses expenditures for the quarter, describes the specific pieces
of legislation that were the topic of communications, and identifies the individuals who lobbied on behalf of UPS.
We file similar publicly available periodic reports with state agencies reflecting state lobbying activities.
16
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Sustainability
We are the world’s premier package delivery company and a leading provider of global supply chain
management solutions. We offer a broad range of industry-leading products and services through our extensive
global presence. Our services include transportation and delivery, distribution, contract logistics, ocean freight,
air freight, customs brokerage and insurance.
We operate one of the largest airlines and one of the largest fleets of alternative fuel vehicles under a global UPS
brand that stands for quality and reliability. We deliver packages each business day for approximately 1.6 million
shipping customers to 10.2 million delivery recipients in over 200 countries and territories. In 2023, we delivered
an average of 22.3 million packages per day, totaling 5.7 billion packages during the year. Our success depends
on economic stability, global trade and a society that welcomes opportunity. We understand the importance of
acting responsibly as a business, an employer and a corporate citizen.
The board considers key economic, environmental and social sustainability risks and opportunities as part of its
involvement in and oversight of UPS’s strategic planning. The board also regularly reviews the effectiveness of
our risk management and due diligence processes related to material sustainability topics. In executing its
responsibilities, the board recently delegated oversight of environmental sustainability matters to the Nominating
and Corporate Governance Committee. The Nominating and Corporate Governance Committee monitors the
development, implementation, and progress of the Company’s environmental sustainability goals and regularly
reports on those matters to the board. Authority for day-to-day management of sustainability matters has been
delegated to management. Our Chief Corporate Affairs and Sustainability Officer reports directly to the
Company’s CEO and regularly reports to the board regarding sustainability strategies, priorities, goals and
performance. In addition, the board is regularly briefed on issues of concern for customers, unions, employees,
retirees, investors, governmental entities and other stakeholders. For additional information on board oversight,
see page 14.
Each year we publish corporate sustainability reports showcasing the goals, recent achievements and challenges
of our commitment to balancing the economic, environmental and social aspects of our business. In response to
stakeholder interest, we have recently accelerated the timing of these reports to provide stakeholders with more
current information in advance of our Annual Meeting. These reports are available at https://about.ups.com/us/
en/social-impact/reporting.html. Our sustainability goals are aspirational and may change. Statements regarding
our goals are not guarantees or promises that they will be met.
Human Capital Management
Our success is dependent upon our people, working together with a common purpose. As we seek to capture
new opportunities and pursue growth, we believe that transforming the UPS employee experience is foundational
to our success. This requires a thoughtful balance between the culture we have cultivated over the years and the
new perspectives we need to take the business into the future. We believe that UPS employees are among the
most motivated and highest-performing in the industry, and provide us a competitive advantage. To assist with
employee recruitment and retention, we continue to review the competitiveness of our employee value
proposition, including benefits and pay, training, talent development and promotion opportunities.
We have approximately 500,000 employees (excluding temporary seasonal employees), of which 414,000 are in
the U.S. and 86,000 are located internationally. Our global workforce includes approximately 85,000
management employees (42% of whom are part-time) and 415,000 hourly employees (48% of whom are part-
time). More than 70% of our U.S. employees are represented by unions, primarily those employees handling or
transporting packages. Many of these employees are employed under a national master agreement and various
supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters
("Teamsters"). In the third quarter of 2023, the Teamsters fully ratified a new national master agreement that
expires July 31, 2028. In addition, approximately 3,300 of our pilots are represented by the Independent Pilots
Association (“IPA”). Our agreement with the IPA becomes amendable September 1, 2025.
17
Oversight and management
We seek to create an inclusive and equitable environment that brings together a broad spectrum of
backgrounds, cultures and stakeholders. We believe leveraging diverse perspectives and creating inclusive
environments improves our organizational effectiveness, cultivates innovation, and drives growth.
Our board, directly and through the 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 has been 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.
Total rewards
We offer competitive compensation and benefits. In addition, our long history of employee stock ownership
aligns the interests of our management team with shareowners. In the U.S., benefits provided to our non-union
employees typically include:
• comprehensive health insurance coverage;
• life insurance;
• short- and long-term disability coverage;
• child/elder care spending accounts;
• work-life balance programs;
• an employee assistance program; and
• a discounted employee stock purchase plan.
We invest in our people by offering a range of other benefits, such as paid time off, retirement plans, and
education assistance. In the U.S., these other benefits are generally provided to non-union employees without
regard to full-time or part-time status.
Employee health and safety
We seek to provide industry-leading employee health, safety and wellness programs across our workforce. UPS's
Comprehensive Health and Safety Program ("CHSP") is an occupational health and safety system tailored to our
varied operational environments. Our CHSP covers a wide array of roles, from package handling to
administration, and spans geographical boundaries to include sorting facilities, mobile logistics, administrative
offices, and other locations worldwide. UPS conducts audits to assess specific risks and hazards, including
equipment safety, workplace environment, and emergency response protocols. We monitor our safety
performance through various measurable targets, including lost time injury frequency and the number of
recorded auto accidents.
Collective bargaining
We bargain in good faith with the unions that represent our employees. We frequently engage union leaders at
the national level and at local chapters throughout the U.S. We participate in works councils and associations
outside the U.S., which allows us to respond to emerging issues abroad. This work helps our operations to build
and maintain productive relationships with our employees. For additional information on the union membership
of our employees, see “Human Capital Management” above.
18
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Majority Voting and Director Resignation Policy
Our Bylaws provide for majority voting in uncontested director elections. The number of votes cast for a nominee
must exceed the number of votes cast against that person. Any incumbent director who does not receive a
majority of the votes cast must offer to resign from the board.
In such an event, the Nominating and Corporate Governance Committee will recommend to the board whether
to accept or reject the director’s offer to resign after considering all relevant factors. The board will act on the
recommendation within 90 days following certification of the election results after considering all
relevant information.
Any director who offers to resign must recuse himself or herself from the board vote, unless the number of
independent directors who were successful incumbents is fewer than three. The board will promptly disclose its
decision regarding any director’s offer to resign, including its reasoning. If the board determines to accept a
director’s offer to resign, the Nominating and Corporate Governance Committee will recommend whether and
when to fill such vacancy or whether to reduce the size of the board.
Board Meetings and Attendance
The board held seven meetings during 2023. Also during 2023, the Audit Committee met nine times, the
Compensation and Human Capital Committee met six times, the Nominating and Corporate Governance
Committee met four times and the Risk Committee met four times (including a joint meeting with the Audit
Committee). Prior to meetings, the Board Chair and the committee chairs work with management to determine
and prepare agendas for the meetings.
Board meetings generally occur over two days. Board committees generally meet on the first day, followed by
the board meeting. The second day typically consists of reports from each committee chair to the full board,
additional presentations by internal business leaders or others with expertise in various subject matters, and an
executive session consisting of only independent board members.
All directors attended at least 75% of the total number of board and any committee meetings of which he or she
was a member in 2023. Our directors are expected to attend each annual shareowner meeting, and all directors
attended the 2023 Annual Meeting. The independent directors met in executive session at all board meetings
held in 2023.
Code of Business Conduct
We are committed to conducting our business in accordance with the highest ethical principles. Our Code of
Business Conduct is applicable to anyone who represents UPS, including our directors, executive officers and all
other employees and agents of UPS. A copy of our Code of Business Conduct is available on our investor
relations website at www.investors.ups.com.
Conflicts of Interest and Related Person Transactions
Our Audit Committee is responsible for overseeing our Code of Business Conduct, which includes policies
regarding conflicts of interest. The Code requires employees and directors to avoid conflicts of interest, defined
as situations where the person’s private interests conflict, or may appear to conflict, with the interests of UPS.
We maintain a written related person transactions policy that applies to any transaction or series of transactions
in which: (1) the Company or any of its subsidiaries is a participant; (2) any “related person” (executive officer,
director, greater than 5% beneficial owner of the Company’s common stock, or an immediate family member of
any of the foregoing) has or will have a material direct or indirect interest; and (3) the aggregate amount
involved since the beginning of the Company’s last completed fiscal year will exceed or may reasonably be
expected to exceed $100,000.
The policy provides that related person transactions that may arise during the year are subject to the Audit
Committee’s reasonable prior approval. If advance approval of a related person transaction is not possible, then
the transaction will be considered and, if deemed appropriate, ratified no later than the Audit Committee’s next
regularly scheduled meeting. In determining whether to approve or ratify a transaction, the Audit Committee will
19
consider, among other factors it deems appropriate, whether the transaction is on terms no less favorable than
terms generally available to an unaffiliated third-party under the same or similar circumstance, the extent of the
related person’s interest in the transaction, whether the transaction would impair independence of a non-
employee director and whether there is a business reason for UPS to enter into the transaction. A copy of the
policy is available on our investor relations website at www.investors.ups.com. The Company did not engage in
any related person transactions since January 1, 2023 that require disclosure in this Proxy Statement or under
the Company’s policy.
At least annually, each director and executive officer completes a questionnaire in which they are required to
disclose any business relationships that may give rise to a conflict of interest, including transactions where UPS
is involved and where an executive officer, a director or a related person has a direct or indirect material
interest. We also review the Company’s financial systems and any related person transactions to identify
potential conflicts of interest. The Nominating and Corporate Governance Committee reviews a summary of this
information and makes recommendations to the Board of Directors regarding each board
member’s independence.
We have immaterial ordinary course of business transactions and relationships with companies with which our
directors are associated. The Nominating and Corporate Governance Committee reviewed the transactions and
relationships that occurred since January 1, 2023 and believes they were entered into on terms that are both
reasonable and competitive and did not affect director independence. Additional transactions and relationships of
this nature may be expected to take place in the ordinary course of business in the future.
Transactions in Company Stock
We prohibit our executive officers and directors from hedging or pledging their ownership in UPS stock.
Specifically, they are prohibited from purchasing or selling derivative securities relating to UPS stock and from
purchasing financial instruments that are designed to hedge or offset any decrease in the market value of UPS
securities. Furthermore, our employees, officers and directors are prohibited from engaging in short sales of
UPS stock.
Corporate Governance Guidelines and Committee Charters
Our Corporate Governance Guidelines and the charters for each of the board’s committees are available on our
investor relations website at www.investors.ups.com. Each committee reviews its charter annually. In addition,
the Nominating and Corporate Governance Committee reviews our Corporate Governance Guidelines annually
and recommends any changes to the board for approval. When amending our committee charters or Corporate
Governance Guidelines, we consider current governance trends and best practices, changes in regulatory
requirements, advice from outside sources and input from stakeholders.
Communicating with the Board of Directors
Stakeholders may communicate directly with the board, with the non-management directors as a group, or with
any specific director, by writing to the UPS Corporate Secretary, 55 Glenlake Parkway, N.E., Atlanta, Georgia
30328. Please specify to whom your letter should be directed. After review by the Corporate Secretary,
appropriate communications will be forwarded to the addressee. Advertisements, solicitations for business,
requests for employment, requests for contributions, matters that may be better addressed by management or
other inappropriate materials will not be forwarded.
20
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Our Board of Directors
Proposal 1 — Director Elections
What am I voting on? Election of each of the 12 named director nominees to hold office until the 2025
Annual Meeting and until their respective successors are elected and qualified.
Board’s Recommendation: Vote FOR the election of each nominee.
Vote Required: A director will be elected if the number of votes cast for that director exceeds the number of
votes cast against that director.
The board has nominated the individuals named below for election as directors at the Annual Meeting. All
nominees were elected by shareowners at our last Annual Meeting. If elected, all nominees are expected to
serve until the next Annual Meeting and until their respective successors are elected and qualified. If any
nominee is unable to serve as a director, the board may reduce the number of directors that serve on the board
or choose a substitute nominee. Any nominee who is currently a director, and for whom more votes are cast
against than are cast for, must offer to resign from the board.
As a group, our director nominees, all of whom are currently directors, effectively oversee and constructively
challenge management’s performance in the execution of our strategy. Our directors’ broad professional skills
and experiences contribute to a wide range of perspectives in the boardroom. The Nominating and Corporate
Governance Committee regularly assesses the skills and experience necessary for our board to function
effectively and considers where additional expertise may be needed.
Diversity with respect to gender, age, ethnicity, skills, experience, perspectives, and other factors is a key
consideration when identifying and recommending director nominees. Diversity in our boardroom supports UPS’s
continued success. While we do not have a formal policy on board diversity, our Corporate Governance
Guidelines emphasize diversity, and the Nominating and Corporate Governance Committee actively considers
and assesses diversity in recruitment and nominations of director candidates through periodic board
composition evaluations.
Our Corporate Governance Guidelines provide that an individual should not be eligible for nomination or election
as a director of the Company after he or she reaches the age of 75 (the “retirement age requirement”). After
taking into account the value our Board Chair Bill Johnson provides to the board through, among other things,
his tenure, leadership roles, extensive knowledge of our business, industry, strategic priorities and competitive
developments he uses to set the board’s agendas in collaboration with the CEO, and his relationships with our
executives, the board (other than Bill) determined it was in the best interests of the Company and its
shareowners to grant Bill a one-year waiver from the retirement age requirement so that he can continue to lead
the board.
Biographical information about the director nominees appears below, including information about the experience,
qualifications, attributes, and skills considered by our Nominating and Corporate Governance Committee and
board in determining that the nominee should serve as a director, and director demographics. For additional
information about how we identify and evaluate nominees for director, see page 10.
21
Director Nominee Skills, Experience and Diversity
Highlights
92% Independent
61.6 years Average age
8.9 years Average tenure
42% Female
33% Ethnically diverse
R . A d kin s
E. B o ratto
M . B u r n s
W . H e w ett
A . H
w a n g
K. J o h n s o n
W . J o h n s o n
ois o n
F. M
C. S
m ith S hi
R . S to k e s
m é
C. T o
a rs h
K. W
Skills and Experience /
Attributes
CEO
CFO
Consumer / Retail
Digital Technology
l
Geopolitical Risk
Global / International
Healthcare
Human Capital
Management
Operational
Risk / Compliance /
Government
Sales / Marketing
Small and Medium-
Sized Businesses
Supply Chain
Management
Technology /
Technology Strategy
Other Public Company
Board Service
Race / Ethnicity
Asian / Asian
American
Black / African
American
White
Gender
Female
Male
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
22
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Director Nominee Biographical Information
Carol Tomé
UPS Chief Executive Officer
Age: 67
Board Committee
Director since 2003
Executive (Chair)
Career
Carol was appointed UPS’s Chief Executive Officer effective June 2020. As CEO, Carol has primary
responsibility for managing the Company’s day-to-day operations, and for developing and communicating our
strategy. She was Chief Financial Officer of The Home Depot, Inc., one of the world’s largest retailers, from
2001; and Executive Vice President Corporate Services from 2007 until her retirement in 2019. At The Home
Depot, she provided leadership in the areas of real estate, financial services and strategic business
development. Her corporate finance duties included financial reporting and operations, financial planning and
analysis, internal audit, investor relations, treasury and tax. She previously served as Senior Vice President
Finance and Accounting and Treasurer from 2000 until 2001; and from 1995 until 2000 she served as Vice
President and Treasurer. Carol serves on the Board of Directors of Verizon Communications, Inc. and served
on the Board of Directors of Cisco Systems, Inc. until 2020.
Reasons for election
Carol has a thorough understanding of our strategies and operations as a result of serving as Chief Executive
Officer, and from her extensive experience gained from serving on the board and as Chair of the Audit
Committee prior to becoming Chief Executive Officer. She has an in-depth knowledge of logistics and has
broad experience in corporate finance and risk and compliance gained throughout her career at The Home
Depot. She brings the experience of having served as Chief Financial Officer of a complex, multi-national
business with a large, labor intensive workforce. Carol also has experience with strategic business
development, including e-commerce strategy.
Rodney Adkins
Former Senior Vice President, International Business Machines Corporation
Age: 65
Board Committees
Director since 2013
Risk (Chair)
Compensation and Human Capital
Executive
Career
Rod is President of 3RAM Group LLC, a private company specializing in capital investments, business
consulting and property management services. Prior to that role, Rod served as IBM’s Senior Vice President of
Corporate Strategy before retiring in 2014. Rod was previously IBM’s Senior Vice President, Systems and
Technology Group, a position he held since 2009, and senior vice president of STG development and
manufacturing, a position he held since 2007. In his over 30-year career with IBM, a multinational technology
company, Rod held several other development and management roles, including general management
positions for the PC Company, UNIX Systems and Pervasive Computing. Rod currently serves as non-
executive Chairman of Avnet, Inc., in addition to serving on the Boards of Directors of PayPal Holdings, Inc.
and W.W. Grainger, Inc. He retired from the Board of Directors of PPL Corporation in 2019.
Reasons for election
As a senior executive of a public technology company, Rod gained a broad range of experience, including in
emerging technologies and services, global business operations, and supply chain management. He remains a
recognized leader in technology and technology strategy. Rod devotes significant time and attention to his
roles as a board member and Risk Committee Chair. In addition, the board benefits from Rod’s experience
serving as a director of other publicly traded companies.
23
Eva Boratto
Chief Financial Officer, Bath & Body Works, Inc.
Age: 57
Board Committee
Director since 2020
Audit (Chair)
Career
Eva has served as the Chief Financial Officer of Bath & Body Works, Inc., a leader in personal care and home
fragrances, since August 2023. She previously served as the Chief Financial Officer for Opentrons Labworks,
Inc., a privately held life sciences company, from February 2022 until July 2023.
Eva served as Executive Vice President and Chief Financial Officer for CVS Health Corporation, a diversified
health services company, from 2018 until her retirement in 2021. In this role, Eva was responsible for all
aspects of the company’s financial strategy and operations, including accounting and financial reporting,
investor relations, mergers and acquisitions, treasury and capital planning, investments, risk management,
tax, budgeting and planning, and procurement. Prior to this role, from 2017 to 2018, Eva was Executive Vice
President, Controller and Chief Accounting Officer for CVS Health. She served as Senior Vice President and
Chief Accounting Officer of CVS Health from 2013 to 2017. Eva joined the company in 2010 and served as
Senior Vice President for pharmacy benefit management finance until 2013.
Reasons for election
Eva brings to the board extensive corporate finance experience gained throughout her career as a Chief
Financial Officer at multiple companies. She also brings the experience of having served as a senior executive
at a complex healthcare business with a large workforce and extensive retail presence, and at a smaller,
growth oriented business, including deep knowledge of financial reporting and accounting standards. Eva also
provides the board with the benefits of her experience with strategic risk management matters.
Michael Burns
Former Chairman, Chief Executive Officer and President, Dana Incorporated
Age: 72
Board Committee
Director since 2005
Audit
Career
Mike was the Chairman, President and Chief Executive Officer of Dana Incorporated, a global manufacturer of
technology driveline, sealing and thermal-management products, from 2004 until his retirement in 2008. He
joined Dana Incorporated in 2004 after 34 years with General Motors Company. During his tenure at General
Motors, Mike held various positions of increasing responsibility, including serving as President of General
Motors Europe AG from 1998 to 2004.
Reasons for election
Mike has years of senior leadership experience gained while managing large, complex businesses and leading
an international organization that operated in a highly competitive industry. He also has experience in design,
engineering, manufacturing, and sales and distribution. Mike also brings deep knowledge of technology and
the supply of components and services to major vehicle manufacturers.
24
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Wayne Hewett
Senior Advisor to Permira
Age: 59
Board Committee
Director since 2020
Audit
Career
Since 2018, Wayne has served as a senior advisor to Permira, a global private equity firm. As a part of his role
at Permira, Wayne serves in the following capacities at Permira Funds private portfolio companies: Non-
Executive Chairman of Cambrex Corporation, a leading contract developer and manufacturer of active
pharmaceutical ingredients, since 2020; director of Lytx, a telematics solutions provider, since 2021; as lead
director of Hexion Chemicals, a specialty chemicals and performance materials manufacturer, since 2023; and
as Non-Executive Chairman of Quotient Sciences, a drug development accelerator, since 2023.
Wayne served as Chief Executive Officer and as a member of the Board of Directors of Klöckner Pentaplast
Group, a leading supplier of plastic films for pharmaceutical, medical devices, food and other specialty
applications, from 2015 to 2017. He also served as President and as a member of the Board of Directors, of
Platform Specialty Products Corporation during 2015, and as President, Chief Executive Officer and as a
member of the Board of Directors of Arysta LifeScience Corporation from 2010 to 2015. Arysta was acquired
in 2015 by Platform Specialty Products Corporation. Prior to joining Arysta, he served as a senior consultant to
GenNx360, a private equity firm focused on sponsoring buyouts of middle market companies. He also spent
over two decades at General Electric Company, serving in a variety of executive roles. Wayne currently serves
on the Boards of Directors of The Home Depot, Inc. and Wells Fargo, Inc.
Reasons for election
Wayne has extensive experience in general management, finance, supply chain, operational and international
matters gained through serving in various executive roles. He has significant experience executing company-
wide initiatives across large organizations, developing proprietary products, optimizing supply chains, and
using emerging technologies to provide new products and services. He brings insights on business operations
and risk management through his senior management roles. In addition, Wayne has valuable experience
serving as a director of other publicly traded companies.
Angela Hwang
Former Chief Commercial Officer and President, Pfizer Biopharmaceuticals Business, Pfizer, Inc.
Age: 58
Board Committee
Director since 2020
Audit
Career
Angela serves as an advisor to Pfizer, Inc., a multinational pharmaceutical and biotechnology company, as
that company undertakes changes in its commercial organization following the completion of an acquisition.
She was a member of Pfizer’s Executive Team from 2018 to 2023 and served as Chief Commercial Officer and
President of Pfizer’s Global Biopharmaceuticals Business from 2019 to 2023. In this role, Angela led Pfizer’s
entire commercial business which included six different businesses reaching patients in more than
185 countries.
During 2018 she served as Group President, Pfizer Essential Health; and from 2016 to 2018 she was Global
President Pfizer Inflammation and Immunology. From 1997 until that time, Angela served in various roles with
increasing responsibility across all geographies and therapeutic areas, including senior roles in Pfizer Vaccines,
Primary Care, and Emerging Markets.
Angela sits on the board of advisors of the Cornell Johnson School of Management.
Reasons for election
Angela has significant expertise in the healthcare sector and in managing large complex businesses, including
supply chain management and logistics. She also has experience in emerging markets gained through her
work across many geographies. Angela is also a strong advocate for women’s leadership and sustainable
global health equity.
25
Kate Johnson
President and Chief Executive Officer, Lumen Technologies, Inc.
Age: 56
Board Committees
Director since 2020
Nominating and Corporate Governance
Risk
Career
Kate has served as President, CEO and a member of the board of directors of Lumen Technologies, Inc., a
multinational technology company that integrates network assets, cloud connectivity, security solutions and
voice and collaboration tools into one platform for businesses, since November 2022. Previously, Kate served
as President of Microsoft U.S., a division of Microsoft Corporation, from 2017 until 2021. She had responsibility
for Microsoft’s U.S. activities, including growing the company’s solutions, services, and support revenues.
Prior to Microsoft, she held various senior positions with GE, including Executive Vice President and Chief
Commercial Officer GE Digital, from 2016 to 2017; Chief Executive Officer, GE Intelligent Platforms Software
from 2015 to 2016; and Vice President and Chief Commercial Officer, from 2013 to 2015.
Reasons for election
Kate has significant public company leadership experience, including CEO experience and experience leading
businesses within large companies undergoing transformation, large systems companies, and technology
companies. The board benefits from her strong commercial orientation, strategic experience and
technical acumen.
William Johnson
Former Chairman, President and Chief Executive Officer, H.J. Heinz Company
Age: 75
Board Committees
Director since 2009
Board Chair since 2020
Lead Director 2016 – 2020
Nominating and Corporate Governance (Chair)
Executive
Career
Bill currently serves as UPS’s Board Chair, and previously served as Chairman, President and Chief Executive
Officer of H.J. Heinz Company, a global packaged foods manufacturer, from 2000 until his retirement in 2013.
He became President and Chief Operating Officer of H.J. Heinz in 1996, and assumed the position of President
and Chief Executive Officer in 1998. Bill serves on the Board of Directors of Sovos Brands, Inc. and he
previously served on the Board of Directors of PepsiCo, Inc. until 2020.
Reasons for election
Bill has significant senior management experience gained through his years of service as the Chairman and
Chief Executive Officer of H.J. Heinz, a corporation with significant international operations and a large, labor
intensive workforce. He also has deep experience in operations, marketing, brand development and logistics.
He served as our lead independent director from 2016 to 2020, and he has served as our independent Board
Chair since 2020, during which time he has gained significant knowledge and expertise about our board
functions, operations, business and strategy.
26
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Franck Moison
Former Vice Chairman, Colgate-Palmolive Company
Age: 70
Board Committees
Director since 2017
Nominating and Corporate Governance
Risk
Career
Franck was Vice Chairman of the Colgate-Palmolive Company, a global consumer products company, from
2016 until his retirement in 2018. He led Colgate-Palmolive’s operations in Asia, South Pacific and Latin
America, and he also led Global Business Development. Previously, he was Chief Operating Officer of
Emerging Markets from 2010 until 2016, and he was given additional responsibility for Business Development
in 2013. Beginning in 1978, Franck served in various management positions with Colgate-Palmolive, including
President, Global Marketing, Global Supply Chain & R&D from 2007 to 2010; and President, Western Europe,
Central Europe and South Pacific from 2005 to 2007. He serves on the Boards of Directors of Hanes Brands,
Inc. and SES-imagotag in France. He is the Chairman of the International Advisory Board of the EDHEC
Business School (Paris, London, Singapore) and is a member of the International Board of the McDonough
School of Business at Georgetown University.
Reasons for election
Franck brings to the board extensive experience as a senior executive at a large international business. He has
deep expertise in consumer product innovation, strategic marketing, acquisitions, and emerging market
business development. He is a highly accomplished marketing and operating executive in the global consumer
products industry. In addition, the board benefits from his extensive international board experience.
Christiana Smith Shi
Former President of Direct-to-Consumer, Nike, Inc.
Age: 64
Board Committees
Director since 2018
Compensation and Human Capital (Chair)
Risk
Career
Christiana is the founder and principal at Lovejoy Advisors, LLC, an advisory services firm that assists clients
with digitally transforming consumer and retail businesses. She was the President, Direct-to-Consumer, for
Nike, Inc., a global apparel company, from 2013 until 2016. From 2012 through 2013, she was Nike’s Vice
President and General Manager, Global Digital Commerce. She joined Nike in 2010 as Vice President and Chief
Operating Officer, Global Direct-to-Consumer. Prior to joining Nike, Christiana spent 24 years at global
management consulting firm McKinsey & Company, the last ten as a senior partner. She began her career at
Merrill Lynch & Company in 1981 and served in various trading, institutional sales and investment banking
roles. Christiana also serves on the Board of Directors of Columbia Sportswear Company. She served on the
Boards of Directors of Williams-Sonoma, Inc. until 2019 and Mondelēz International, Inc. until 2023.
Reasons for election
Christiana brings to the board substantial experience in digital commerce, global retail operations and helping
companies with transformative change. She also provides strong supply chain and cost management expertise
in the global consumer industry. She gained experience advising senior executives at consumer companies
across North America, Europe, Latin America and Asia on leadership and strategy, and provides extensive
public company board experience.
27
Russell Stokes
President and Chief Executive Officer Commercial Engines and Services, GE Aerospace
Age: 52
Board Committees
Director since 2020
Compensation and Human Capital
Nominating and Corporate Governance
Career
Russell is President and Chief Executive Officer, Commercial Engines and Services, GE Aerospace, a world-
leading provider of jet engines, components and integrated systems for commercial and military aircraft, and
a provider of services to support these offerings. He has served in these roles since July 2022 and is
responsible for an industry-leading portfolio of engines and services. Russell previously served as President
and CEO of GE Aviation Services from 2020 until 2022, where he was responsible for commercial growth,
operating performance and customer experience across its global Overhaul and Repair footprint. Prior to this
role, Russell was president and CEO of GE Power Portfolio from 2019 to 2020, GE Power from 2017 to 2019,
GE Energy Connections from 2015 to 2017, and GE Transportation from 2013 to 2015. He has held other
senior roles at GE Transportation and GE Aviation. Russell joined GE in 1997 as part of GE’s Financial
Management Program.
Reasons for election
During his more than 25-year career at GE, Russell has gained deep finance and operating experience through
navigating multiple industries, business segments, and market cycles. He brings to the board extensive
experience in transforming businesses by moving complex business issues into focused, targeted actions for
improvement. He also provides experience in developing solutions and technology required to successfully
implement business strategies.
Kevin Warsh
Former Member of the Board of Governors of the Federal Reserve System, Distinguished Visiting Fellow,
Hoover Institution, Stanford University
Age: 53
Board Committees
Director since 2012
Compensation and Human Capital
Nominating and Corporate Governance
Career
Kevin serves as the Shepard Family Distinguished Visiting Fellow in Economics at Stanford University’s Hoover
Institution, a public policy think tank, and as a Dean’s Visiting Scholar and lecturer at Stanford’s Graduate
School of Business. He also serves as partner at Duquesne Family Office LLC and is a member of the Group of
Thirty (G30) and the Panel of Economic Advisers of the Congressional Budget Office (CBO). He was a member
of the Board of Governors of the Federal Reserve from 2006 until 2011. From 2002 until 2006, Kevin served
at the White House as President George W. Bush’s special assistant for economic policy and as executive
secretary of the National Economic Council. Kevin was previously employed by Morgan Stanley & Co.,
eventually serving as vice president and executive director of the Mergers and Acquisitions department. He
also serves on the Board of Directors of Coupang, Inc.
Reasons for election
Kevin offers the board extensive experience in understanding and analyzing the economic environment, the
financial marketplace and monetary policy. He has a deep understanding of the global economic and business
environment. Kevin also provides the experience of working in the private sector for a leading investment
bank gained during his tenure at Morgan Stanley & Co.
28
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Director Independence
Having a significant majority of non-management independent directors encourages robust debate and
challenged opinions in the boardroom. Our Corporate Governance Guidelines include director independence
standards consistent with the New York Stock Exchange (“NYSE”) listing standards. Our Corporate Governance
Guidelines are available on the governance section of our investor relations website at www.investors.ups.com.
The board has evaluated each director’s independence and considered whether there were any relevant
relationships between UPS and each director, or any member of his or her immediate family. The board also
examined whether there were any relationships between UPS and organizations where a director is or was a
partner, principal shareowner or executive officer.
Specifically, the board evaluated certain ordinary course business transactions and relationships between UPS
and the organizations that currently or in the prior year employed Eva Boratto, Mike Burns, Wayne Hewett,
Angela Hwang, Kate Johnson, Russell Stokes and Kevin Warsh, or their immediate family members, as an
executive officer. The board also evaluated the ordinary course business transactions and relationships between
UPS and any organizations where Rod Adkins, Wayne Hewett, Christiana Smith Shi and Kevin Warsh, or their
immediate family members, were a partner or principal shareowner. In each case, no such transactions
exceeded the thresholds in UPS’s Corporate Governance Guidelines. The board determined that none of these
transactions or relationships were material to the Company, the individuals or the organizations with which they
were associated.
The board has determined that each director nominee, other than our CEO, Carol Tomé, is independent. All
members of the Audit Committee, Compensation and Human Capital Committee, Nominating and Corporate
Governance Committee and Risk Committee are independent, and all members of the Audit Committee and the
Compensation and Human Capital Committee meet the additional independence criteria applicable to directors
serving on these committees under New York Stock Exchange listing standards.
29
Committees of the Board of Directors
The board has four committees composed entirely of independent directors as defined by the NYSE and by our
director independence standards. Information about each of these committees is provided below. The board also
has an Executive Committee that may exercise all powers of the Board of Directors in the management of our
business and affairs, except for those powers expressly reserved to the board under Delaware law or otherwise
limited by the board. Carol Tomé is the Chair, and Rod Adkins and Bill Johnson also serve on the
Executive Committee.
Audit Committee(1)
Eva Boratto, Chair
Michael Burns
Wayne Hewett
Angela Hwang
Compensation and Human
Capital Committee(2)
Nominating and Corporate
Governance Committee
Risk Committee
Christiana Smith Shi, Chair
Rodney Adkins
Russell Stokes
Kevin Warsh
William Johnson, Chair
Kate Johnson
Franck Moison
Russell Stokes
Kevin Warsh
Rodney Adkins, Chair
Kate Johnson
Franck Moison
Christiana Smith Shi
Meetings in 2023: 9
Meetings in 2023: 6
Meetings in 2023: 4
Meetings in 2023: 4
Primary Responsibilities
Primary Responsibilities
Primary Responsibilities
Primary Responsibilities
• Assisting the board in
• Assisting the board in
• Addressing succession
• Overseeing
discharging its
responsibilities relating to
our accounting, reporting
and financial practices
• Overseeing our accounting
discharging its
responsibilities with
respect to compensation
of our senior
executive officers
and financial
reporting processes
• Overseeing the integrity of
our financial statements,
our systems of disclosure
controls and
internal controls
• Overseeing the
performance of our
internal audit function
• Engaging and overseeing
the performance of our
independent accountants
• Overseeing compliance
with legal and regulatory
requirements as well as
our Code of
Business Conduct
• Discussing with
management policies with
respect to financial
risk assessment
• Reviewing and approving
corporate goals and
objectives relevant to the
compensation of our CEO
• Evaluating the
CEO’s performance
• Overseeing the
evaluation of risks
associated with our
compensation strategy
and programs
• Overseeing any outside
consultants retained to
advise the Committee
• Recommending to the
board the compensation
for non-management
directors
• Overseeing performance
and talent management,
diversity, equity and
inclusion, work culture
and employee
development
and retention
planning
• Assisting the board in
identifying and screening
qualified director
candidates, including
shareowner
submitted candidates
• Recommending
candidates for election or
reelection, or to fill
vacancies, on the board
• Aiding in attracting
qualified candidates to
serve on the board
• Recommending corporate
governance principles,
including the structure,
composition and
functioning of the board
and all board
committees, the
delegation of authority to
subcommittees, board
oversight of management
actions and reporting
duties of management
• Overseeing relevant
environmental
sustainability matters
and risks
management’s
identification and
evaluation of
enterprise risks
• Overseeing and reviewing
with management the
Company’s risk
governance framework
• Overseeing risk
identification, tolerance,
assessment and
management practices
for strategic enterprise
risks, including
cybersecurity risks and
cyber incident response
• Reviewing approaches to
risk assessment and
mitigation strategies in
coordination with the
board and other
board committees
• Communicating with the
Audit Committee to
enable the Audit
Committee to perform its
statutory, regulatory, and
other responsibilities with
respect to oversight of
risk assessment and
risk management
(1) All members of the Audit Committee have been designated by the Board of Directors as audit committee financial experts. Each
member of the Audit Committee meets the independence requirements of the NYSE and Securities and Exchange Commission
(“SEC”) rules and regulations applicable to audit committee members, and each is financially literate.
(2) Each member of the Compensation and Human Capital Committee meets the NYSE’s independence requirements applicable to
compensation committee members. In addition, each member is a non-employee director as defined in Rule 16b-3 under the
Securities Exchange Act of 1934. None of the members is or was during 2023 an employee or former employee of UPS, and none
had any direct or indirect material interest in or relationship with UPS outside of his or her position as a non-employee director. The
Compensation and Human Capital Committee may delegate its responsibilities to subcommittees of one or more directors as it may
deem appropriate. For information regarding the role of our executive officers and the committee’s independent compensation
consultant in determining or recommending the amount or form of executive and director compensation (as applicable), please see
the Compensation Discussion and Analysis section and the Director Compensation section below in this Proxy Statement.
Compensation Committee Interlocks and Insider Participation: None of our executive officers serves or served during 2023 as
a member of a board of directors or compensation committee of any entity that has one or more executive officers who serve on our
Board of Directors or Compensation and Human Capital Committee.
30
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Director Compensation
The Compensation and Human Capital Committee of the Board of Directors evaluates director compensation with
the assistance of its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”).
For service in 2023, our non-employee directors each received a cash retainer of $116,250 and a restricted stock
unit (“RSU”) award valued at $180,000. Equity compensation links director pay to the value of Company stock
and aligns the interests of directors with long-term shareowners. Directors are also reimbursed for board
related expenses.
To reflect the additional responsibilities and time commitment associated with various board leadership positions,
our independent Board Chair received an additional cash retainer of $160,000 and an additional RSU award
valued at $70,000. The chairs of the Compensation and Human Capital, Nominating and Corporate Governance
and Risk Committees each received an additional cash retainer of $20,000, and the Chair of the Audit Committee
received an additional cash retainer of $25,000. Our CEO does not receive any compensation for board service.
Cash retainers are paid on a quarterly basis. Non-employee directors may defer retainers by participating in the
UPS Deferred Compensation Plan, but the Company does not make any contributions to this plan. There are no
preferential or above-market earnings on amounts invested in the UPS Deferred Compensation Plan.
RSUs are fully vested on the date of grant and are required to be held by the director until he or she separates
from the board, at which time the RSUs convert to shares of class A common stock. Dividends earned on shares
underlying RSUs are deemed reinvested in additional units at each dividend payable date and are subject to the
same terms as the original grant. This holding period requirement increases the strength of alignment of
directors’ interests with those of our long-term shareowners. Following a review of Company peer group and
broader industry practices, and to improve the competitiveness of non-employee director compensation, in
August 2023, the Board increased non-employee director annual cash retainers to $120,000 and increased the
annual RSU award value to $185,000, placing total director pay approximately 5% below the peer group median.
2023 Director Compensation and Outstanding Stock Awards
The following tables set forth the cash compensation paid to individuals who served as directors in 2023 (other
than our CEO) and the aggregate value of stock awards granted to those persons in 2023, as well as outstanding
director equity awards held as of December 31, 2023, except as described below.
2023 Director Compensation
Name
Rodney Adkins(2)
Eva Boratto(2)
Michael Burns
Wayne Hewett
Angela Hwang
Kate Johnson
William Johnson(2)(3)
Ann Livermore(4)
Franck Moison
Christiana Smith Shi(2)
Russell Stokes
Kevin Warsh
Fees Earned
or Paid
in Cash
($)
136,250
141,250
116,250
116,250
116,250
116,250
296,250
67,500
116,250
126,250
116,250
116,250
Stock
Awards
($)(1)
179,875
179,875
179,875
179,875
179,875
179,875
249,884
—
179,875
179,875
179,875
179,875
Total
($)
316,125
321,125
296,125
296,125
296,125
296,125
546,134
67,500
296,125
306,125
296,125
296,125
Outstanding Director Stock Awards
(as of December 31, 2023)
Stock Awards
Restricted
Stock Units
(#)
Phantom
Stock Units
(#)
19,844
3,904
32,194
3,904
4,268
3,577
34,845
—
11,396
9,401
3,577
22,025
27,071
—
—
—
—
—
—
—
2,939
—
—
—
—
1,389
Name
Rodney Adkins
Eva Boratto
Michael Burns
Wayne Hewett
Angela Hwang
Kate Johnson
William Johnson
Ann Livermore(4)(6)
Franck Moison
Christiana Smith Shi
Russell Stokes
Kevin Warsh
Carol Tomé(5)(6)
(1) The values of stock awards in this column represent the grant date fair value of RSUs granted in 2023, computed in accordance with
Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. RSUs are fully vested on the date
of grant and are settled in shares of class A common stock upon the director’s separation from service from UPS.
(2) Includes cash compensation for committee chair service.
(3) Includes cash compensation and stock awards for independent board chair service.
(4) Ann Livermore retired from the board on May 4, 2023. Information is as of such date. All outstanding RSUs converted into shares of
class A common stock upon such retirement.
(5) Only includes outstanding stock awards that were granted while serving as an independent director.
(6) Phantom stock units were granted to non-employee directors pursuant to a deferred compensation program previously provided to
non-employee directors. Upon termination, amounts represented by phantom stock units will be distributed in cash over a time
period elected by the recipient.
31
Executive Compensation
Compensation Committee Report
The Compensation and Human Capital Committee (as used in this Executive Compensation section, the
“Committee”) is responsible for setting the principles that guide compensation decision-making, establishing the
performance goals under our executive compensation plans and programs, and approving compensation for the
executive officers. The Committee is also responsible for overseeing performance and talent management,
diversity, equity and inclusion, work culture and employee development and retention.
We are focused on maintaining an executive compensation program that supports the long-term interests of the
Company’s shareowners. We align the interests of our executive officers with those of all shareowners by linking
a significant portion of compensation to Company performance and shareowner returns. The Company’s
programs are also designed to attract, retain, and motivate executives who make substantial contributions to the
Company’s performance by allowing them to share in the Company’s success.
Our significant efforts in 2023 included adopting an incentive compensation clawback policy applicable to
executive officers in the event of a Company financial restatement, developing and implementing an appropriate
executive compensation structure and performance goals in a challenging economic environment including
Company labor uncertainty, and updating the pay mix for executive officers through structural changes to the
annual incentive program to make this program more competitive. With the assistance of our independent
compensation consultant and taking into account recent stakeholder feedback and market developments, we
also reevaluated the performance metrics on which incentive compensation payouts would be based in order to
maximize long-term value. In addition, beginning with the 2024 performance period, the Committee has
returned to annual goal setting for annual incentive awards.
Also during 2023, the Committee continued to execute on its human capital oversight responsibilities, including
supporting succession planning efforts at the senior management level, overseeing progress towards the
Company’s diversity in management goals, and monitoring employee recruitment and retention efforts.
We have reviewed the Compensation Discussion and Analysis and discussed it with management. Based on our
review and discussions, we recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in the 2024 Proxy Statement and incorporated by reference in the Annual Report on Form
10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission.
The following Compensation Discussion and Analysis describes the Committee’s principles, strategy and
programs regarding 2023 executive compensation.
The Compensation and Human Capital Committee
Christiana Smith Shi, Chair
Rodney Adkins
Russell Stokes
Kevin Warsh
32
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Compensation Discussion and Analysis
UPS’s executive compensation principles, strategy and programs for 2023 are described below. This section
explains how and why the Committee made its 2023 compensation decisions for our executive officers, including
details regarding the following Named Executive Officers (“NEOs”):
Named Executive Officer
Title
Carol Tomé
Brian Newman
Nando Cesarone
Kate Gutmann
Bala Subramanian
Chief Executive Officer
Chief Financial Officer
President U.S. and UPS Airline
President International, Healthcare and Supply Chain Solutions
Chief Digital and Technology Officer
Executive Compensation Strategy
UPS’s executive compensation programs are designed to drive organizational performance by tying a significant
portion of pay to Company performance; attract, retain and motivate by competitively and fairly compensating
our executive officers; encourage long-term stock ownership and careers with UPS; and align the interests of our
executives to long-term value creation.
We believe it is appropriate to have a clear link between variable pay and operational and financial performance.
We seek to develop performance metrics aligned with the Company’s strategy and business model. Long-term
incentive awards vest over timeframes aligned with the delivery of long-term shareowner value.
Key Elements of UPS Executive Compensation
Total target direct compensation (generally, base salary and annual and long-term incentives, but excluding any
special awards) for our NEOs in 2023 consisted of the following key elements.
Total Target
Direct
Compensation
Base Salary
• Fixed cash compensation
• Designed to provide an appropriate level of financial certainty
Annual Incentive Awards
• Subject to achievement of key business objectives for the year
• Payout is “at risk” based on Company performance
Stock Option Awards
• Further aligns shareowner and employee interests
• Motivates toward sustained stock price increase
• Multi-year vesting provides retention incentive
Long-term Incentive Performance Awards
• Payout is subject to achievement of performance metrics over a three-year period
• Supports long-term strategy
• Motivates and rewards achievement of long-term goals
• Acts as a retention mechanism
33
Target Direct Compensation
A substantial majority of NEO total target direct compensation is “at risk” and subject to the achievement of
annual or long-term performance goals and/or continued employment with UPS. The charts below highlight the
elements of our CEO and an average of other NEOs’ target direct compensation for 2023.
CEO Target Direct Compensation
Other NEOs Target Direct Compensation
7%
Base Salary
14%
14%
Annual
Performance-Based
Incentives
79%
Long-Term
Equity Incentives
16%
70%
93% “at R i
s
”
k
86% “at R i
s
”
k
Other Elements of Compensation
Benefits
ü NEOs generally participate in
the same plans as other
employees.
Perquisites
ü Limited in nature; we believe
benefits to the Company
outweigh the costs.
ü Includes medical, dental and
ü Includes financial planning and
disability plans.
ü See further details on page 41.
executive health services that
facilitate the NEOs’ ability to
carry out responsibilities,
maximize working time and
minimize distractions.
ü Considered necessary or
appropriate to attract and
retain executive talent.
ü See further details on page 41.
Retirement Programs
ü NEOs and most non-union U.S.
employees participate in the
same qualified plans with the
same formulas.
ü Includes non-qualified and
qualified pension, retirement
savings and deferred
compensation plans.
ü See further details on page 41.
34
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Roles and Responsibilities
The Committee is responsible for setting the principles that guide compensation decision-making, establishing
performance goals under our executive compensation plans and programs, and approving compensation for the
executive officers. The Committee may engage the services of outside advisors and other consultants. In 2023,
the Committee retained FW Cook to act as its independent compensation advisor. FW Cook reported directly to
the Committee and provided no additional services to UPS. The following table summarizes the key roles and
responsibilities in the executive compensation decision-making process.
Participant and Roles
The Committee
• develops principles underpinning executive compensation
• sets performance goals upon which incentive payouts are based
• evaluates the CEO’s performance
• reviews the CEO’s performance assessment of other executive officers
• reviews and approves incentive and other compensation of the executive officers
• reviews and approves the design of other benefit plans for executive officers
• oversees the risk evaluation associated with our compensation strategy and programs
• considers whether to engage any compensation consultant, and evaluates their independence
• reviews and discusses the Compensation Discussion and Analysis with management
• recommends to the board the inclusion of the Compensation Discussion and Analysis in the Proxy Statement
• approves the inclusion of the Committee’s report on executive compensation in the Proxy Statement
Independent Members of the Board of Directors
• review the Committee’s assessment of the CEO’s performance
• complete a separate evaluation of the CEO’s performance
• approve the Compensation Discussion and Analysis for inclusion in the Proxy Statement
Independent Compensation Consultant
• serves as a resource for market data on pay practices and trends
• provides independent advice to the Committee
• provides competitive analysis and advice related to outside director compensation
• reviews the Compensation Discussion and Analysis
• conducts an annual risk assessment of the Company’s compensation programs
Executive Officers
• the CEO makes compensation recommendations to the Committee for the other executive officers
• the CEO and CFO recommend performance goals under incentive compensation plans and provide an
assessment as to whether performance goals were achieved
Compensation Consultant Independence
In November 2023, the Committee reviewed FW Cook’s independence and evaluated any potential conflicts of
interest. The Committee evaluated all relevant factors, including: (1) other services provided to UPS by FW Cook
(if any); (2) fees paid by UPS as a percentage of FW Cook’s total revenue; (3) policies or procedures maintained
by FW Cook that are designed to prevent a conflict of interest; (4) any business or personal relationships
between the individual consultants involved in the engagement and a member of the Committee; (5) any
Company stock owned by the individual consultants involved in the engagement; and (6) any business or
personal relationships between UPS executive officers and FW Cook or the individual consultants involved in the
engagement. After evaluating these factors, the Committee concluded that FW Cook was independent, and that
the engagement of FW Cook did not raise any conflict of interest.
35
Peer Group and Market Data Utilization
In determining compensation targets and payouts, the Committee evaluates, among other things, pay practices
and compensation levels at a peer group of companies. In addition to peer group analyses, the Committee
considers other market data, including general compensation survey data from comparably sized companies.
Compensation is not targeted to a particular percentile within that peer group or otherwise.
With assistance from its independent compensation consultant, the Committee evaluates the peer group
annually to determine if the companies included in the group are the most appropriate comparators for
measuring the success of our executives in delivering shareowner value. The Committee seeks to select a
compensation peer group that is aligned with the Company’s business strategy and focus. Quantitative
considerations consist of historical revenue, operating income and free cash flow, as well as total shareholder
return. Other more general considerations include market capitalization, percentage of foreign sales, capital
intensity, operating margins and size of employee population.
Following a comprehensive reevaluation and revisions to the peer group in 2021, the compensation peer group
consists of the following:
AT&T, Inc.
The Boeing Company
Caterpillar Inc.
Cisco Systems, Inc.
Comcast Corporation
Deere & Company
FedEx Corporation
McDonald’s Corp.
The Home Depot, Inc.
PepsiCo, Inc.
Intel Corporation
Johnson & Johnson
The Procter & Gamble Company
Target Corp.
Lockheed Martin Corporation
Walmart, Inc.
Lowe’s Companies, Inc.
Internal Compensation Comparisons and Annual Performance Reviews
The Committee also generally considers the compensation differentials between executive officers and other UPS
positions, and the additional responsibilities of the CEO compared to other executive officers. Internal
comparisons help ensure that executive officer compensation is reasonable when compared to that of
direct reports.
The CEO assesses the performance of all other executive officers each year and provides feedback to the
Committee. In addition, the Committee evaluates the CEO’s performance on an annual basis. The Committee
Chair discusses the results of this evaluation with the full board (other than the CEO) in an executive session. As
part of this evaluation, the board considers the CEO’s strategic vision and leadership, execution of UPS’s
business strategy, and achievement of business goals. Other factors include the CEO’s ability to make long-term
decisions that create a competitive advantage, and overall effectiveness as a leader.
Base Salary
Base salaries provide our NEOs with a fixed level of cash compensation and are designed to provide an
appropriate level of financial certainty. The Committee considers several factors in determining NEOs’ annual
base salaries, including Company and individual performance, scope of responsibility, leadership, market data
and internal compensation comparisons. Taking all of those factors into account, in March 2023, the Committee
determined not to increase the CEO’s base salary, but to make market-based adjustments to her incentive
compensation targets as discussed below. The Committee approved increases of between 3.0% and 4.0% for
the other NEOs. Additionally, as a component of the pay mix redesign approved in November 2022 and
discussed below under “Management Incentive Program - Annual Awards Overview”, further base salary
adjustments for each NEO of less than 3.5% were made effective beginning in January 2023.
36
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Management Incentive Program - Annual Awards Overview
The UPS Management Incentive Program (“MIP”) motivates management by aligning pay with annual Company
performance. This is accomplished by linking payouts to the achievement of pre-established metrics and
individual performance.
Annual MIP award opportunities are provided as a percentage of base salary. MIP awards are considered fully at
risk based on Company performance and subject to a maximum payout of the lesser of $10 million or 200% of
target for each NEO.
MIP payouts are determined by the Committee taking into consideration:
• actual performance compared to MIP targets (described below);
• the MIP payout as a percent of target to non-executive officer MIP participants; and
• the overall business environment and economic trends.
Based on an evaluation of our incentive compensation plan structure with the assistance of FW Cook, in
November 2022, the Committee approved changes to the overall pay mix for MIP participants, including the
NEOs (“pay mix redesign”). These changes resulted in better alignment of annual incentive pay with market
practices, improved the competitiveness of base salaries and simplified compensation design.
Changes included the following, all of which were effective beginning with the 2023 MIP award:
• MIP awards are now paid in cash, unless a participant elects to receive the award in shares; previously MIP
awards were generally paid two-thirds in restricted performance units (“RPUs”) and one-third in cash;
• Ownership incentive portions of MIP awards, which were tied to an individual’s UPS equity ownership, were
discontinued, with a generally equivalent value incorporated into base salary adjustments; and
• MIP award targets as a percentage of base salary were reduced from 130% to 115% for NEOs (other than
the CEO) to account for increases in base salaries; the CEO’s award target was maintained at 200% of base
salary following an evaluation of market-competitive incentives.
2023 MIP Awards
After taking into account the challenging economic environment including Company labor uncertainty, as well as
the effectiveness of similar approaches in recent years, in the first quarter of 2023 the Committee determined it
remained appropriate to bifurcate the performance period for the 2023 MIP award into two six-month
performance periods (January through June 2023 and July through December 2023), with each performance
period accounting for 50% of the overall award.
Beginning with the 2024 performance period, the Committee has returned to full-year goal setting for MIP
awards. The Committee approved the following financial performance metrics for the NEOs’ 2023 MIP awards
as follows:
• Revenue (weighted 20%), which was considered important to generating profits and maintaining our long-
term competitive positioning and viability through 2023.
• Adjusted Operating Profit (weighted 40%), which is determined by reference to our publicly reported
adjusted operating profit for 2023. This metric is directly impacted by our effectiveness in achieving our
targets in other key performance elements, including volume and revenue growth and operating leverage.
• Adjusted Return on Invested Capital (“ROIC”) (weighted 40%), which is calculated as the trailing twelve
months of adjusted operating income divided by the average of current assets, current liabilities, goodwill,
intangible assets, net property, plant and equipment, other assets, and operating lease right-of-use assets.
We consider ROIC to be a useful measure for evaluating the effectiveness and efficiency of our long-term
capital investments. ROIC is calculated by reference to our publicly reported adjusted operating profit.
The Committee approved financial performance goals after discussing with management and its independent
compensation consultant expected financial performance and the other risks described above. The goals for the
first performance period were set in in the first quarter of 2023 and the goals for the second performance period
were set in the third quarter 2023, in each case without a threshold and with a maximum payout of the lesser of
$10 million or 200% of target.
37
The goals approved by the Committee, and the performance results, were as follows (dollars in millions):
2023 MIP Financial Performance Metrics
Revenue
Adjusted Operating Profit(1)
Adjusted ROIC(1)
(1) Non-GAAP financial measures. See footnote on page 40.
First
Half
2023
Goal
$47,247
$5,918
28.6%
First
Half
2023
Actual
$44,988
$5,452
27.4%
Second
Half
2023
Goal
$48,123
$5,473
24.7%
Second
Half
2023
Actual
$46,044
$4,418
21.9%
The Committee maintains discretion to adjust awards earned under the MIP up (but not above the maximum
amount for each NEO) or down based on its qualitative assessment of each NEO’s individual performance and
other business factors. The Committee approved the following MIP award payouts for each NEO.
Name
Carol Tomé
Brian Newman
Nando Cesarone
Kate Gutmann
Bala Subramanian
Incentive
Target
(% Base Salary)
200
Incentive
Target Value
($)
3,019,425
Payout Factor
(%)
50%
115
115
115
115
963,384
975,674
975,674
889,133
50%
50%
50%
50%
Total 2023
MIP Award
Payout
($)
1,509,713
481,692
487,837
487,837
444,567
Long-Term Incentive Awards
Our two long-term incentive programs, the Long-Term Incentive Performance (“LTIP”) program and the Stock
Option program, provide participants with equity-based incentives that reward performance over a multi-year
period and serve as a retention mechanism. Overlapping LTIP performance cycles incentivize sustained financial
performance. The Stock Option program rewards stock price appreciation, which is directly linked to shareowner
returns. A summary of these two programs follows:
Program
LTIP
Performance Measures and/or
Value Proposition for 2023
Awards
Adjusted Earnings Per Share Growth
Payment Form and Program
Type
If earned, RPUs are settled in stock
Adjusted Free Cash Flow
Relative Total Shareowner Return as a
modifier
If earned, RPUs generally vest at
the end of the three-year
performance period
Stock Option
Value increases or decreases with
stock price
Value recognized only if stock price
appreciates
Stock options generally vest 20%
per year over five years and have
a ten-year term
Program Objectives
Supports long-term
operating plan and
business strategy
Significant link to
shareowner interests
Significant link to
shareowner interests
Enhance stock
ownership and
shareowner alignment
Total Long-Term Equity Incentive Award Target Values
Long-term equity incentive award target values are determined based on internal pay comparison considerations
and market data regarding total compensation for comparable positions at similarly situated companies.
Differences in the target award values are based on levels of responsibility among the NEOs. In connection with
the Committee’s March 2023 evaluation of CEO target total direct compensation as described above, the
Committee determined it was appropriate to increase the CEO’s LTIP target opportunity from 835% to 1,035%.
38
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
The LTIP target opportunity and Stock Option award value granted to eligible NEOs in 2023, expressed as a
percentage of base salary, is shown below.
Name
Carol Tomé
Brian Newman
Nando Cesarone
Kate Gutmann
Bala Subramanian
LTIP Program Overview
LTIP Target
RPU Value
(% Base Salary)
Option
Value
(% Base Salary)
Total
Value
(% Base Salary)
1,035
550
450
450
450
90
50
50
50
50
1,125
600
500
500
500
The LTIP program strengthens the performance-based component of executive compensation, promotes longer-
term focus, enhances retention of key talent, and aligns the interests of shareowners with the incentive
compensation opportunity for executives. Approximately 500 members of our senior management team,
including the NEOs, participate in this program. The program combines internal and external relative business
performance measures with the goal of motivating and rewarding management for operational and financial
success, while helping to align with shareowner interests and returns.
Participants receive a target award of RPUs at the beginning of the three-year performance period. The number
of RPUs that NEOs can earn is shown in the “Grants of Plan-Based Awards” table. The actual number of RPUs
that NEOs earn is determined following the completion of the performance period and is based on achievement
of the performance measures described below. Dividends payable on shares underlying participants’ RPUs are
allocated in the form of dividend equivalent units (“DEUs”). DEUs are subject to the same conditions as the
underlying award. Awards that vest are settled in shares of class A common stock. Special vesting rules apply to
terminations subject to the UPS Key Employee Severance Plan or terminations by reason of death, disability or
retirement during the performance period. These special vesting rules are discussed under “Potential Payments
Upon Termination or Change in Control.”
The performance measures selected by the Committee for the 2023 LTIP awards were adjusted earnings per
share and adjusted free cash flow, each to be evaluated independently and weighted equally in determining the
final payout percentage. The payout percentage for the LTIP award will be subject to modification based on the
Company’s relative total shareowner return (“RTSR”) as a percentile rank relative to the total shareholder return
of the companies listed on the Standard & Poor’s 500 Composite Index (the “Index”) during that same period.
The maximum LTIP award that can be earned is 220% of target. A description of each performance measure and
the operation of the RTSR modifier follows.
Adjusted Earnings Per Share1
Adjusted earnings per share measures our success in increasing profitability. At the beginning of the January 1,
2023 performance period, the Committee established adjusted earnings per share targets for the three-year
performance period taking into account the challenging economic environment, including Company labor
uncertainty, that added complexity and uncertainty to long-term forecasting at the time. Adjusted earnings per
share is determined by dividing the Company’s adjusted net income available to common shareowners by the
diluted weighted average shares outstanding during the performance period. For this purpose, adjusted net
income is determined by reference to our publicly reported adjusted net income. The adjusted earnings per
share target for 2023 is the projected adjusted earnings per share for that year. The adjusted earnings per share
growth target for the remainder of the performance period is the projected average annual adjusted earnings per
share growth during each of the remaining years in the performance period. The actual adjusted earnings per
share growth for each applicable year will be compared to the target and assigned a payout percentage; the
average of the three payout percentages will be used to calculate the final payout percentage under this metric.
Following the completion of the applicable performance period, the Committee will certify (i) the actual adjusted
earnings per share for 2023; (ii) the actual adjusted earnings per share growth for each of the remaining years
in the performance period; (iii) the actual adjusted earnings per share growth for the applicable portion of the
performance period as compared to the target; and (iv) the final payout percentage for this metric.
39
Adjusted Free Cash Flow1
Adjusted free cash flow measures our ability to generate cash after accounting for capital expenditures. Adjusted
free cash flow is determined by reducing the Company’s cash flow from operations by capital expenditures and
proceeds from disposals of fixed assets, and adjusting for net changes in finance receivables, other investing
activities and discretionary pension contributions. The adjusted free cash flow target is the projected aggregate
adjusted free cash flow generated during the performance period. Following the completion of the applicable
performance period, the Committee will certify (i) the actual adjusted free cash flow for the performance period;
(ii) the actual adjusted free cash flow for the performance period as compared to the target; and (iii) the final
payout percentage for this metric.
(1) Non-GAAP financial measures. We believe that these non-GAAP measures are appropriate for the determination of our incentive
compensation award results because they exclude items that may not be indicative of, or are unrelated to, our underlying operations
and provide a useful baseline for analyzing trends in our underlying business. Non-GAAP financial measures should be considered in
addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial
information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be
comparable to similarly titled measures reported by other companies.
Relative Total Shareowner Return
RTSR is the total return on an investment in UPS
stock (stock price appreciation plus dividends). Total
return is compared with the total return on an
investment in the companies in the Index at the
beginning of the performance period. Following the
completion of the performance period, the Committee
will certify the Company’s RTSR and the payout
modifier for that performance period, if any,
as follows:
2021 LTIP Award Payout
RTSR Percentile Rank
Relative to Index
Above 75th percentile
Between 25th and 75th percentile
Below 25th percentile
Payout
Modifier
+20%
None
-20%
The 2021 LTIP award payout was determined following the completion of the Company’s 2023 fiscal year. The
performance metrics for the 2021 LTIP award were adjusted earnings per share and adjusted free cash flow,
each evaluated independently and equally weighted. The final payout was subject to modification based on
RTSR. Performance targets and actual results for the completed performance period for the 2021 LTIP award are
set out below. RPUs earned under the 2021 LTIP are considered vested and are settled in shares of class A
common stock.
Adjusted Earnings Per Share
Adjusted Free Cash Flow
Year
Threshold
Target Maximum Actual
Threshold
Target Maximum Actual
RTSR
Actual
2021 LTIP Metrics
2021
2022
2023
8.4%
47.4%
3.4%
9.0%
13.6%
6.7%
$17,369
$24,813
$32,257
$25,181
27th
13.2%
(32.1)%
2021 LTIP Final Results
Performance
Period
Adjusted EPS
Payout
Adjusted FCF
Payout
Performance
Payout (Avg)
RTSR Modifier
Final Payout
2021-2023
91%
104%
98%
—%
98%
Stock Option Program and 2023 Stock Option Awards
Stock option awards create a direct link between Company performance and shareowner value, as well as
provide retention value. Stock option awards generally vest 20% per year over five years and expire ten years
from the date of grant. Beyond vesting periods, we do not impose additional holding period requirements. Stock
option awards generally require continued employment during the vesting period. Unvested stock options vest
automatically upon termination of employment due to death, disability or retirement. Stock option awards are
40
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
also subject to the UPS Key Employee Severance Plan as discussed under “Potential Payments Upon Termination
or Change in Control”. Grants do not include DEUs or reload features. The number of stock options granted to
the NEOs in 2023 is shown in the “Grants of Plan-Based Awards” table.
Employment Transition Awards, Retention Arrangements and Recognition Awards
Generally, we do not pay discretionary bonuses in cash or stock, or make other discretionary payments, to our
executives. In recent periods, however, to attract and retain senior executive talent, the Committee approved
certain limited payments to external hires to the Company’s Executive Leadership Team. A portion of these
payments was made to compensate the executives for compensation forfeited at their prior employers and
transition them into our incentive programs. Any of these payments impacting 2023 compensation are described
below. In addition, in connection with the hiring of Carol Tomé as CEO in 2020, the Committee provided certain
incentives to various executive officers in order to help ensure the retention of their services through a
transition period.
Bala Subramanian joined the Company in July 2022 as Chief Digital and Technology Officer. The Committee,
working with FW Cook and considering market compensation data and internal pay equity factors, approved his
compensation package described below. Under the terms of his employment offer letter, Bala is entitled to: (i) a
RSU grant valued at $3,000,000, vesting 50% in July 2023 and 50% in July 2024; (ii) cash transition payments
of $250,000 in each of August 2022, January 2023, July 2023 and January 2024; (iii) a RPU grant valued at
$1,000,000, vesting in December 2023, with the actual payout determined based on the Company’s
performance under its 2021 LTIP program; and (iv) a prorated 2022 LTIP award. Payments are subject to his
continued employment through the applicable vesting or payment dates, or termination without cause.
Further, in 2021 the Committee granted Kate Gutmann a special award valued at $350,000 in recognition of her
extraordinary contributions and performance during 2020. This award consisted of $175,000 in RSUs which vest
as follows: 25 percent on March 25, 2022; 25 percent on March 25, 2023; and 50 percent on March 25, 2024;
and a stock option award with a grant date fair value of $175,000 which vests 20% per year over five years
beginning on March 25, 2022, provided generally that she remains an employee through the applicable
vesting dates.
In connection with our 2020 CEO transition, we entered into retention arrangements with each of Nando
Cesarone and Kate Gutmann. The Committee initially intended that these agreements contain both performance
and time vesting components, and that the performance components be different than the metrics under our
MIP and LTIP programs. Due to the uncertainty created by the coronavirus pandemic and the importance of the
retention agreements to the Company, the Committee ultimately determined that the awards would only be time
based. Nando and Kate each received RSUs valued at $3.0 million which vested as follows: 25% on
May 13, 2021, 25% on May 13, 2022 and 50% on May 13, 2023. These agreements contain customary non-
competition, non-solicitation and non-disclosure covenants in favor of the Company.
Benefits and Perquisites
The benefits and perquisites provided to our NEOs are not a material part of executive compensation and are
largely limited to those offered to our employees generally, or that we otherwise believe are necessary or
appropriate to attract and retain executive talent.
We believe certain perquisites help facilitate our NEOs’ ability to carry out their responsibilities, maximize
working time and minimize distractions. Additional information on these benefits can be found in the following
program descriptions.
UPS 401(k) Savings Plan
The UPS 401(k) Savings Plan is open to all U.S.-based employees who are not subject to a collective bargaining
agreement and who are not eligible to participate in another savings plan sponsored by UPS or one of its
subsidiaries. We generally match 50% of up to 6% of eligible pay contributed to the UPS 401(k) Savings Plan for
eligible employees. The match is paid quarterly according to the participant's pre-tax investment elections on file
with the record keeper. We also generally provide an annual contribution based on years of service and
expressed as a percentage of eligible compensation (5% for 0-4 years, 6% for 5-9 years, 7% for 10-14 years
and 8% for 15 or more years). For employees who were hired prior to 2008 and are participants in the Final
Average Compensation (FAC) formula of the UPS Retirement Plan, we generally make an annual transition
contribution of 5% of eligible compensation for plan years 2023-2027, which will increase to 7% beginning
in 2028.
41
Qualified and Non-Qualified Pension Plans
Certain executive officers are eligible to participate in our qualified retirement program, the UPS Retirement
Plan. Benefits payable under the plan are subject to the maximum compensation limits and the annual benefit
limits for a tax-qualified defined benefit plan as established by the Internal Revenue Service. Amounts exceeding
these limits are paid pursuant to the UPS Excess Coordinating Benefit Plan, which is a non-qualified restoration
plan designed to replace the benefits limited under the tax-qualified plan. Without the Excess Coordinating
Benefit Plan, the executive officers would receive a lower benefit as a percent of final average earnings than the
benefit received by other participants in the UPS Retirement Plan. In accordance with the terms of the Excess
Coordinating Benefit Plan, following a participant’s retirement, the Company pays an amount equal to the Social
Security and Medicare taxes due on the present value of the benefits provided under the plan.
Financial Planning Services
Our executive officers are eligible for a financial services benefit. The Company reimburses fees from financial
and tax service providers up to $15,000 per year, including the cost of personal excess liability
insurance coverage.
Executive Health Services
Our executive officers are eligible for certain executive health services benefits, including comprehensive
physical examinations. UPS’s business continuity is best facilitated by avoiding any prolonged or unexpected
absences by members of its senior management team.
Other Compensation and Governance Policies
Stock Ownership Guidelines
CEO
= 8x annual salary
Other Executive Officers = 5x annual salary
Directors
= 5x annual retainer
Our stock ownership guidelines apply to executive officers and members of the board. Shares of class A common
stock (excluding any pledged shares), deferred units and vested and unvested RSUs and RPUs awarded under
our equity incentive plans are considered owned for purposes of calculating ownership. Executive officers and
directors are expected to reach target ownership within five years of the date that the executive officer or
director became subject to the guideline.
As of December 31, 2023, all of the NEOs who have been subject to the guidelines for at least five years
exceeded their target stock ownership. In addition, all non-employee directors who have been subject to the
guidelines for at least five years exceeded their target stock ownership. RSUs are required to be held by non-
employee directors until separation from the board.
Hedging and Pledging Policies
We prohibit our executive officers and directors from hedging their ownership in UPS stock. Specifically, they are
prohibited from purchasing or selling derivative securities relating to UPS stock and from purchasing financial
instruments that are designed to hedge or offset any decrease in the market value of UPS securities.
Additionally, we prohibit our directors and executive officers from entering into pledges of UPS securities,
including using UPS securities as collateral for a loan and holding UPS securities in margin accounts.
Furthermore, our employees, officers and directors are prohibited from engaging in short sales of UPS stock.
Incentive-Based Compensation Clawback Policy
We have adopted an incentive-based compensation clawback policy that complies with NYSE requirements. This
policy provides for the recovery of the amount of erroneously awarded incentive-based compensation received
by executive officers when the Company is required to prepare an accounting restatement, subject to limited
exceptions in accordance with the NYSE requirements.
42
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Employment and Severance Arrangements; Change in Control Payments
We do not enter into agreements providing for the continuation of employment, or separate change in control
agreements with any of our executive officers, including our NEOs, or other U.S.-based non-union employees.
However, in recent periods, to attract and retain senior executive talent and in furtherance of the board’s
succession planning efforts, we have entered into various employment offer letters, transition agreements,
retention arrangements and non-compete agreements in favor of UPS. These arrangements may provide for
compensation to an executive, but do not guarantee an employment term; employment is on an at-will basis.
Some of the agreements were designed to compensate the individuals for compensation forfeited at their prior
employers, to transition them into our incentive programs or to provide consideration for their agreement not to
compete with UPS following their potential separation. In addition, retention arrangements are intended to
incentivize those individuals to maintain their employment with UPS. To the extent any agreements entered into
with any of the NEOs contain ongoing obligations of the Company, those agreements are described below.
Subramanian Employment Offer Letter
In connection with his appointment as Chief Digital and Technology Officer, on May 24, 2022, the Company
entered into an employment offer letter with Bala Subramanian providing for: (i) an annual base salary of
$725,000 (subject to future increase); (ii) a MIP award target for 2022 of 130% of base salary; (iii) an LTIP
program award target of 450% of base salary (his final 2022 LTIP award payout will be prorated based on his
July 2022 start date); (iv) a stock option grant target of 50% of base salary (commencing in 2023); (v) an initial
grant of RSUs valued at $3,000,000, which generally vests 50% in July 2023 and 50% in July 2024; (vi) cash
transition payments of $250,000 in each of August 2022, January 2023, July 2023 and January 2024; and (vii)
an initial RPU grant valued at $1,000,000, generally vesting in December 2023, with the final number of RPUs
subject to performance under the 2021 LTIP award. Payments are subject to his continued employment through
the applicable vesting or payment dates, or termination without cause. Certain of these amounts are subject to
repayment on a prorated basis if he is terminated for cause within 36 months following his July 2022 start date.
Protective Covenant Agreements
Each of our NEOs have entered into protective covenant agreements with the Company, which protect UPS’s
confidential information and include non-competition and non-solicitation covenants in favor of UPS. In the event
that either Carol or Brian is terminated without cause, the Company is obligated to make separation payments
equal to two years’ salary if it elects to enforce the post-termination non-compete covenants.
Key Employee Severance Plan
The UPS Key Employee Severance Plan (the “Plan”) provides for severance compensation and benefits upon
certain terminations of employment of key employees, including the NEOs. The severance protections under the
Plan replace cash severance benefits (if any) to which a participating employee would have otherwise been
entitled under their protective covenant agreements.
The Plan in general provides that if the Company terminates a participant’s employment other than due to
“Cause,” “Disability Termination,” or death (a “Qualifying Termination”), the Company will pay: (i) an amount in
cash equal to a pro-rata portion of the individual’s annual performance incentive award under the MIP that would
have been earned for the year of termination, based on actual performance for the full performance period, with
the pro-rata portion calculated based on the number of months during which the individual was employed by the
Company during the applicable year; (ii) an amount in cash equal to one times (or, for the CEO, two times) the
sum of the participant’s annual base salary plus the participant’s target MIP performance award in effect as of
the termination date; (iii) an amount in cash equal to the portion of the participant’s monthly Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) premium for the participant and the participant’s
dependents to the extent it exceeds the premiums paid by the participant for such coverage immediately prior to
termination times the number of months in the participant’s applicable COBRA period; and (iv) career counseling
services up to $20,000 (or, for the CEO, up to $30,000).
In addition, with respect to options held by retirement eligible employees, and RPUs granted under the MIP or
LTIP, in each case granted on or after the effective date of the Plan, a participant who experiences a Qualifying
Termination will generally be entitled to the same treatment that would apply in the event of “retirement” under
the terms of such awards. With respect to stock options granted to a participant on or after the effective date of
the Plan, such stock options (to the extent the participant is not retirement eligible and that are vested as of the
date of the Qualifying Termination) will remain exercisable until the earlier of the first anniversary of the
termination date and the original expiration date of the stock options.
43
Change in Control
All outstanding equity awards that are continued or assumed by a successor entity in connection with a change
in control require a “double trigger” for vesting to accelerate; that is, they also require a qualifying termination
of employment prior to any acceleration of vesting.
Equity Grant Practices
Grants of awards to executive officers under our equity incentive programs are approved by the Committee.
Grants are typically made at preestablished Committee meeting dates or in connection with a new hire or
promotion, and irrespective of the timing of any financial announcement. Stock options have an exercise price
equal to the NYSE closing market price on the date of grant.
Consideration of Previous “Say on Pay” Voting Results
Our shareowners vote annually, on an advisory basis, to approve the compensation of our NEOs as set out in the
Compensation Discussion and Analysis section and in the compensation tables and accompanying narrative
disclosure in the Proxy Statement. See “Proposal 2 – Advisory Vote to Approve Named Executive Officer
Compensation.” In the most recent advisory vote to approve NEO compensation, taken at the 2023 Annual
Meeting of Shareowners, nearly 92% of votes cast approved our NEO compensation.
The Committee carefully considered the results of this vote as well as many other factors in determining the
structure and operation of our executive compensation programs. In addition, we regularly engage with our
stakeholders, including on executive compensation matters. We use the results of these engagements to inform
board and Committee discussions on our executive compensation policies and programs.
44
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
2023 Summary Compensation Table
The following table sets forth the compensation of our NEOs.
Year
Salary
($)(1)
Bonus
($)(2)
2023 1,509,713
2022 1,466,250
2021 1,336,251
2023
831,626
2022
784,377
2021
760,764
2023
840,254
2022
768,042
2021
683,361
2023
840,254
2022
781,197
2021
745,803
—
—
—
—
—
—
—
—
—
—
—
—
Stock
Awards
($)(3)
Option
Awards
($)(4)
Non-Equity
Incentive Plan
Compensation
($)(5)
18,916,192 1,358,762
1,509,713
15,046,968 1,228,547
1,035,932
23,670,426 1,125,023
1,397,139
5,551,095
406,692
5,563,543
382,755
481,692
364,363
10,934,230
373,401
3,128,793
4,686,065
407,924
4,348,893
351,117
7,218,244
313,487
4,686,065
407,924
4,674,444
377,426
6,659,398
390,681
487,837
364,278
475,914
487,837
364,278
511,579
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(6)
—
—
—
—
—
—
—
—
—
All Other
Compensation
($)(7)
Total
($)
95,671
23,390,051
187,504
18,965,201
92,054
70,965
94,203
56,690
99,161
27,620,893
7,342,070
7,189,241
15,253,878
6,521,241
107,812
5,940,142
98,089
8,789,095
3,786,483
152,958
10,361,521
—
48,547
20,676
19,690
6,218,021
8,375,698
2023
766,622
500,000
4,139,164
373,540
444,566
2022
330,853
250,000
6,928,392
—
—
—
—
76,370
6,300,262
932
7,510,177
Name and
Principal Position
Carol Tomé
Chief Executive
Officer
Brian Newman
Chief Financial
Officer
Nando Cesarone
President U.S. and
UPS Airline
Kate Gutmann
President
International,
Healthcare and
Supply Chain
Solutions
Bala Subramanian
Chief Digital and
Technology Officer
(1) Represents the salary earned during the portion of the year that the executive was employed.
(2) See “Employment and Severance Arrangements; Change in Control Payments” in the Compensation Discussion and Analysis for a
description of cash transition payments made in connection with Bala Subramanian’s hiring.
(3) Represents the aggregate grant date fair value for stock awards computed in accordance with FASB ASC Topic 718. These awards
include LTIP RPUs, MIP RPUs, and the awards described above under “Employment Transition Awards, Retention Arrangements and
Recognition Awards.” Information about the assumptions used to value these awards can be found in Note 13 “Stock-Based
Compensation” in our 2023 Annual Report on Form 10-K. The amounts reported for these awards may not represent the amounts
that the individuals will actually receive. The amounts received, if any, ultimately will depend on Company performance and the
change in our stock price over time. An overview of the features of these awards can be found in the “Compensation Discussion
and Analysis.”
In accordance with SEC rules, we also are required to disclose the grant date fair value for awards with performance conditions
assuming maximum performance. The grant date fair value for the 2023 LTIP RPU awards, assuming maximum performance, is as
follows: Tomé — $37,057,333; Newman — $10,608,930; Cesarone — $8,706,275; Gutmann — $8,706,275; and Subramanian -
$7,972,319.
(4) Represents the aggregate grant date fair value for option awards granted in the applicable year, computed in accordance with FASB
ASC Topic 718. The assumptions used to value these awards can be found in Note 13 “Stock-Based Compensation” in our 2023
Annual Report on Form 10-K. The amounts reported for these awards may not represent the amounts that the individuals will
actually receive. The amounts received, if any, ultimately will depend on the change in our stock price over time. An overview of the
features of these awards can be found in the “Compensation Discussion and Analysis” section.
(5) Represents the cash portion of the MIP award. Beginning with the 2023 MIP award, the entire MIP award is payable in cash. Also, for
Brian Newman in 2021, represents the cash portion of the performance-based cash award granted under his employment
offer letter.
(6) Represents an estimate of the annual increase in the actuarial present value of the NEO’s accrued benefit under our retirement plans
for the applicable year, assuming retirement at age 60 (or current age, if later). The actuarial present value of Kate Gutmann’s
accrued benefit under our retirement plans increased by $3,786,483 between the measurement date used for 2022 and the
measurement date used for 2023. See “Executive Compensation — 2023 Pension Benefits” for additional information, including
assumptions used in this calculation. The change in pension value can be impacted by a number of factors, including additional
credited service, changes in amounts of compensation covered by the benefit formula, plan amendments and assumption changes.
45
(7) All other compensation consisted of the following:
Name
Carol Tomé
Brian Newman
Nando Cesarone
Kate Gutmann
Bala Subramanian
401(k) Plan
Retirement
Contributions(a)
($)
Restoration
Savings Plan
Contributions(b)
($)
16,500
16,500
26,400
26,400
16,500
24,627
18,134
38,318
99,555
34,930
401(k)
Plan
Match
($)
9,900
9,900
9,900
9,900
9,900
Life
Insurance
Premiums
($)
22,246
4,033
2,181
4,078
1,978
Financial
Planning
Services
($)
15,000
15,000
14,964
5,627
5,664
Healthcare
Benefits
($)
7,398
7,398
7,398
7,398
7,398
Total
($)
95,671
70,965
99,161
152,958
76,370
(a) Includes retirement contributions based on years of service, as described on page 41.
(b) 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. For Kate Gutmann, also includes a transition contribution into the
UPS Restoration Savings Plan, as described on page 41. For all NEOs other than Kate Gutmann and Bala Subramanian, amounts
reflect actual Company contributions after giving effect to reductions offsetting excess contributions made by the Company in
prior years as follows: Tomé — $69,750; Newman — $21,996; and Cesarone — $17,810.
46
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
2023 Grants of Plan-Based Awards
The following table provides information about plan-based awards granted during 2023 to each of the NEOs.
Name
Carol Tomé
Brian
Newman
Nando
Cesarone
Kate
Gutmann
Bala
Subramanian
Grant
Date
—
3/22/2023
3/22/2023
2/9/2023
—
3/22/2023
3/22/2023
2/9/2023
—
3/22/2023
3/22/2023
2/9/2023
—
3/22/2023
3/22/2023
2/9/2023
—
3/22/2023
3/22/2023
2/9/2023
Committee
Approval
Date
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
Threshold
($)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Target
($)
Maximum
($)
3,019,425 10,000,000
—
—
—
963,384
—
—
—
975,674
—
—
—
975,674
—
—
—
889,133
—
—
—
—
—
—
10,000,000
—
—
—
10,000,000
—
—
—
10,000,000
—
—
—
10,000,000
—
—
—
Threshold
(#)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Target
(#)
—
Maximum
(#)
—
84,217 185,277
—
—
—
24,110
—
—
—
19,786
—
—
—
19,786
—
—
—
18,118
—
—
—
—
—
53,042
—
—
—
43,529
—
—
—
43,529
—
—
—
39,860
—
—
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(3)
—
—
—
11,118
—
—
—
3,911
—
—
—
3,910
—
—
—
3,910
—
—
—
2,766
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4)
—
—
33,076
—
—
—
9,900
—
—
—
9,930
—
—
—
9,930
—
—
—
9,093
—
Exercise
or Base
Price of
Option
Awards
($/Sh)
—
—
185.54
—
—
—
185.54
—
—
—
185.54
—
—
—
185.54
—
—
—
185.54
—
Grant
Date
Fair Value
of Stock
and
Option
Awards
($)(5)
—
16,844,242
1,358,762
2,071,950
—
4,822,241
406,692
728,854
—
3,957,398
407,924
728,668
—
3,957,398
407,924
728,668
—
3,623,781
373,540
515,383
(1) Reflects, as applicable, the target and maximum values of the 2023 MIP award for each NEO. The potential payments for the
MIP award are performance-based and therefore at risk.
(2) Potential number of RPUs that could be earned under the 2023 LTIP if the target or maximum performance goals are attained.
(3) For NEOs other than Bala Subramanian, represents the number of RPUs or shares of class A stock granted in 2023 pursuant to the
2022 MIP.
(4) Represents stock options granted under the Stock Option program in 2023.
(5) Grant date fair value under FASB ASC Topic 718 of the LTIP RPUs, MIP RPUs, and stock options, as applicable, granted to each of the
NEOs in 2023. Fair values are calculated using the NYSE closing price of UPS stock on the date of grant for RPUs and RSUs, and the
Black-Scholes option pricing model for stock options. The grant date fair value of the units granted under the 2023 LTIP, which have
performance conditions, are computed based on the probable outcome of the performance conditions. There can be no assurance
that any value will ever be realized.
47
2023 Outstanding Equity Awards at Fiscal Year-End
The following table shows the number of shares covered by exercisable options, unexercisable options, and
unvested RSUs and RPUs held by the NEOs on December 31, 2023.
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)
12,155
105.54
2/12/2020 2/12/2030
Option
Exercise
Price
($)
Option
Grant
Date
Option
Expiration
Date
99.28
6/1/2020
6/1/2030
165.66
2/10/2021 2/10/2031
214.58
3/23/2022 3/23/2032
185.54
3/22/2023 3/22/2033
—
—
—
165.66
2/10/2021 2/10/2031
214.58
3/23/2022 3/23/2032
185.54
3/22/2023 3/22/2033
—
—
—
106.43
3/1/2018
3/1/2028
104.45
3/22/2018 3/22/2028
111.80
2/14/2019 2/14/2029
105.54
2/12/2020 2/12/2030
165.66
2/10/2021 2/10/2031
214.58
3/23/2022 3/23/2032
185.54
3/22/2023 3/22/2033
—
—
—
106.43
3/1/2018
3/1/2028
111.80
2/14/2019 2/14/2029
105.54
2/12/2020 2/12/2030
165.66
2/10/2021 2/10/2031
163.25
3/25/2021 3/25/2031
214.58
3/23/2022 3/23/2032
185.54
3/22/2023 3/22/2033
40,505
28,572
20,286
33,076
—
9,483
6,320
9,900
—
—
—
1,692
5,484
7,962
5,798
9,930
—
—
1,941
6,026
5,478
3,995
6,232
9,930
—
Name
Carol Tomé
Brian Newman
Nando Cesarone
60,756
19,047
5,071
—
—
18,231
6,322
1,580
—
—
757
633
1,691
2,742
2,654
1,449
—
—
Kate Gutmann
10,083
7,763
9,038
3,651
2,662
1,558
—
—
—
—
Bala Subramanian
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(4)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(3)
—
—
—
—
—
—
—
—
143,348
22,538,606
—
—
—
—
—
—
45,742
7,192,015
—
—
—
—
—
—
—
—
—
—
—
—
—
—
36,073
5,671,758
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Number of
Shares or
Units of
Stock That
Have
Not Vested
(#)(2)
Market
Value of
Shares or
Units of
Stock That
Have
Not Vested
($)(3)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
585
91,990
37,248
5,856,503
9,093
185.54
3/22/2023 3/22/2033
—
—
—
—
8,794
1,382,640
36,311
5,709,179
(1) Stock options generally vest over a five-year period with 20% of the option vesting at each anniversary date of the grant. All options
expire ten years from the date of grant. Under the terms of our equity incentive plans, unvested stock options become fully vested
on the retirement date for the NEOs if they meet certain service requirements.
(2) Unvested stock awards in this column include: (a) the initial grant of RSUs made to Bala Subramanian in connection with his hiring,
which vests 50% on each of July 18, 2023 and 2024; and (b) the 2021 special grant of RSUs to Kate Gutmann which generally vest
as follows: 25% on March 25, 2022; 25% on March 25, 2023; and 50% on March 25, 2024. Values are rounded to the closest unit.
(3) Market value based on NYSE closing price of the class B common stock on the last trading day of the year of $157.23.
(4) Represents the potential units to be earned under the 2022 and 2023 LTIP awards, and any DEUs allocated since the grants were
made, at target performance level. For the 2023 LTIP award, which has a performance period ending December 31, 2025, the
maximum number of RPUs that could be earned is as follows: Tomé — 190,841; Newman — 54,635; Cesarone — 44,836; Gutmann
— 44,836; and Subramanian - 41,056. For the 2022 LTIP award, which has a performance period ending December 31, 2024, the
maximum number of RPUs that could be earned is as follows: Tomé — 124,524; Newman — 45,998; Cesarone — 34,525; Gutmann
— 37,110; and Subramanian - 38,828.
48
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
2023 Option Exercises and Stock Vested
The following table sets forth the subject number of shares and corresponding value realized during 2023
regarding options that were exercised, and restricted stock units and restricted performance units that vested,
for each NEO.
Name
Carol Tomé
Brian Newman
Nando Cesarone
Kate Gutmann
Bala Subramanian
Option Awards
Stock Awards
Number of
Shares
Acquired
on Exercise
(#)
Value
Realized
on Exercise
($)
—
—
—
—
9,211
606,910
—
—
—
—
Number of
Shares
Acquired
on Vesting
(#)(1)
74,910
31,606
40,772
39,385
14,372
Value
Realized
on Vesting
($)(2)
12,130,696
5,100,301
6,733,113
6,532,216
2,495,307
(1) Consists of: the 2021 LTIP RPUs that vested on December 31, 2023; and the portion of special RSUs awarded in prior years to Nando
Cesarone, Kate Gutmann and Bala Subramanian that vested in 2023. Vested RPUs and RSUs are distributed to participants in an
equivalent number of shares of class A common stock.
(2) Based on the NYSE closing price of the class B common stock on the applicable vesting date.
2023 Pension Benefits
The following table quantifies the pension benefits expected to be paid to each NEO from the UPS Retirement
Plan and the UPS Excess Coordinating Benefit Plan as of December 31, 2023. The terms of each are
described below.
Name
Carol Tomé(1)
Brian Newman(1)
Nando Cesarone(1)
Kate Gutmann
Bala Subramanian(1)
Plan Name
UPS Retirement Plan
UPS Excess Coordinating Benefit Plan
Total
UPS Retirement Plan
UPS Excess Coordinating Benefit Plan
Total
UPS Retirement Plan
UPS Excess Coordinating Benefit Plan
Total
UPS Retirement Plan
UPS Excess Coordinating Benefit Plan
Total
UPS Retirement Plan
UPS Excess Coordinating Benefit Plan
Total
Number of
Years
Credited
Service
(#)(2)
—
—
—
—
—
—
33.0
33.0
—
—
Present
Value of
Accumulated
Benefit
($)(3)
—
—
—
—
—
—
—
—
—
1,415,730
3,636,640
5,052,370
—
—
—
Payments
During
Last
Fiscal
Year
($)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1) Not eligible to participate in the UPS Retirement Plan or the UPS Excess Coordinating Benefit Plan.
(2) Represents years of service as of December 31, 2023 for all plans.
(3) Represents the total discounted value of the monthly lifetime benefit earned at December 31, 2023, assuming the individual
continues in service and retires at age 60 or at the executive’s actual age, if later. The present value is not the monthly or annual
lifetime benefit that would be paid to the individual. The present values are based on discount rates of 5.33% and 5.79% for the UPS
Retirement Plan and UPS Excess Coordinating Benefit Plan, respectively, at December 31, 2023. The present values assume no pre-
retirement mortality and utilize the Pri-2012 healthy mortality table with adjusted mortality improvement after 2012 (no collar for
the UPS Retirement Plan and white collar for the UPS Excess Coordinating Benefit Plan), with mortality improvements after 2012
using the MP-2021 projection scale adjusted to converge to 0.5% in 2028 on the SOA Retirement Plan’s Experience
Committee model.
49
Pension Benefits
The UPS Retirement Plan is non-contributory and includes substantially all eligible employees of participating
domestic subsidiaries who are not members of a collective bargaining unit, as well as certain employees covered
by a collective bargaining agreement. The UPS Retirement Plan was closed to new entrants as of July 1, 2016.
UPS also sponsors a non-qualified defined benefit plan, the UPS Excess Coordinating Benefit Plan, for non-union
employees whose pay and benefits in the qualified plan are limited by the Internal Revenue Service. An
employee must be at least age 55 with 10 years of service to be eligible to participate in this plan. In the year
that an individual first becomes eligible to participate in the UPS Excess Coordinating Benefit Plan, there is an
increase for the participant for that year equal to the full present value of the participant’s accrued benefit in the
plan. In accordance with the terms of the Excess Coordinating Benefit Plan, following a participant’s retirement,
the Company pays an amount equal to the Social Security and Medicare taxes due on the present value of the
benefits provided under the plan.
The UPS Retirement Plan and UPS Excess Coordinating Benefit Plan provide monthly lifetime benefits to
participants and their eligible beneficiaries based on final average compensation at retirement, years of service
with UPS and age at retirement. Participants may choose to receive a reduced benefit payable in the form of an
annuity that is equivalent to the single lifetime benefit.
The plans provide monthly benefits based on the results from up to four benefit formulas. Participants receive
the largest benefit from among the applicable benefit formulas. For Kate Gutmann the formula that results in the
largest benefit is called the “grandfathered integrated formula.” This formula provides retirement income equal
to 58.33% of final average compensation, offset by a portion of the Social Security benefit. A participant with
less than 35 years of benefit service receives a proportionately lesser amount.
Participants earn benefit service for the time they work as an eligible UPS employee. For purposes of the
formulas, compensation includes salary and an eligible portion of the MIP award. The average final compensation
for each participant in the plans is the average covered compensation of the participant during the five highest
consecutive years out of the last ten full calendar years of service.
Benefits payable under the UPS Retirement Plan are subject to the maximum compensation limits and the
annual benefit limits for a tax-qualified defined benefit plan as prescribed and adjusted from time to time by the
Internal Revenue Service. Eligible amounts exceeding these limits will be paid from the UPS Excess Coordinating
Benefit Plan. Under this plan, participants receive the benefit in the form of a life annuity.
The plans permit participants with 25 or more years of benefit service to retire as early as age 55 with only a
limited reduction in the amount of their monthly benefits. NEOs eligible to retire at age 60 receive unreduced
benefits from the plans. In addition, the plans allow participants with ten years or more of service to retire at
age 55 with a larger reduction in the amount of their benefit. These plans froze accruals after
December 31, 2022.
50
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
2023 Non-Qualified Deferred Compensation
The following table shows the executive and Company contributions or credits, earnings and account balances
for the NEOs in the UPS Deferred Compensation Plan and UPS Restoration Savings Plan for 2023.
Name
Plan Name
Executive
Contributions
in Last FY
($)(1)
Registrant
Contributions
in Last FY
($)(2)
Aggregate
Earnings
in Last FY
($)(3)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at
Last FYE
($)(4)
Carol Tomé
UPS Deferred Compensation Plan
1,538,596
UPS Restoration Savings Plan
Outstanding Non-employee
Director RSU Awards
Brian Newman
UPS Restoration Savings Plan
Nando Cesarone
UPS Restoration Savings Plan
Kate Gutmann
UPS Deferred Compensation Plan
Bala Subramanian
UPS Restoration Savings Plan
—
—
—
—
—
—
—
47,218
773,789
7,536
—
(272,536)
25,120
42,069
—
7,300
5,392
10,598
(13,872)
721
—
—
—
—
—
—
—
7,917,934
198,914
4,256,299
85,288
142,140
453,977
8,021
(1) Amounts are also included in the “Salary” column of the 2023 Summary Compensation Table.
(2) Company credits to the UPS Restoration Savings Plan, which amounts are also disclosed in the “All Other Compensation” column of
the 2023 Summary Compensation Table.
(3) No amounts in this column are reported in the 2023 Summary Compensation Table.
(4) Certain amounts in this column represent salary, bonus or stock options contributed by the NEO to the plans in prior years as
follows: Tomé — $4,228,931; Newman – $0; Cesarone — $0; Gutmann — $118,149; and Subramanian - $0.
The deferred compensation vehicles in the UPS Deferred Compensation Plan and the UPS Restoration Savings
Plan are described below. Not all of the NEOs participate in each feature of the UPS Deferred Compensation Plan.
Salary Deferral Feature
Prior to December 31, 2004, contributions could be deferred from executive officers’ monthly salary and from
their half-month bonus. Also prior to December 31, 2004, non-employee directors could defer retainer and
meeting fees quarterly. Assets from the discontinued UPS Retirement Plan for Outside Directors were transferred
to the 2004 and Before Salary Deferral Feature in 2003. No contributions were permitted after
December 31, 2004, except as described below. After December 31, 2004, executive officers may defer 1% to
35% of their monthly salary and 1% to 100% of the cash portion of the MIP award. They may also defer excess
pre-tax contributions if the UPS 401(k) Savings Plan fails the annual average deferral percentage test. Non-
employee directors may defer retainer fees quarterly. Elections are made annually for the following
calendar year.
Stock Option Deferral Feature
Assets are invested solely in shares of UPS stock. Non-qualified or incentive stock options which vested prior to
December 31, 2004 were deferrable during the annual enrollment period for the following calendar
year. Participants deferred receipt of UPS stock that would otherwise be taxable upon the exercise of the stock
option. The shares received upon exercise of these options are deferred into a rabbi trust. The shares held in this
trust are classified as treasury stock, and the liability to participating employees is classified as “deferred
compensation obligations” in the shareowners’ equity section of the balance sheet. No deferrals of stock options
were permitted after December 31, 2004. As a result of the requirements applicable to non-qualified deferred
compensation arrangements under Section 409A of the Internal Revenue Code and related guidance, deferral of
stock options is no longer offered under the UPS Deferred Compensation Plan for options that vested after
December 31, 2004.
51
Withdrawals and Distributions under the UPS Deferred Compensation Plan
For the 2004 and Before Salary Deferral Feature, participants may elect to receive the funds in a lump sum or up
to a 10-year installment (of 120 monthly payments), subject to restrictions if the balance is less than $20,000.
For the 2005 and Beyond Salary Deferral Feature, participants may elect to receive funds in a lump sum or up to
a 10 year installment (120 monthly payments), subject to restrictions if the balance, plus the total balance in
any other account which must be aggregated with the 2005 and Beyond Salary Deferral Account under Section
409A of the Internal Revenue Code, is less than the Internal Revenue Code Section 402(g) annual limit in effect
for qualified 401(k) plans on the date the participant becomes eligible for a distribution.
For the Stock Option Deferral Feature, participants may elect to receive shares in a lump sum or up to 10 annual
installments, subject to restrictions if the balance is less than $20,000. The distribution of shares will occur pro-
rata based on the type of stock options (non-qualified or incentive) that were originally deferred.
The distribution election under the 2005 and Beyond Salary Deferral Feature may be changed one time only, but
may be changed more frequently under the 2004 and Before Salary Deferral Feature and the Stock Option
Deferral Feature. Hardship distributions are permitted under all three features of the UPS Deferred
Compensation Plan. Withdrawals are not permitted under the 2005 and Beyond Salary Deferral Feature, but
withdrawals are permitted for 100% of the account under the 2004 and Before Salary Deferral Feature and Stock
Option Deferral Feature. However, withdrawals will result in a forfeiture of 10% of the participant’s total
account balances.
No Company contributions are made to any of the three features of the UPS Deferred Compensation Plan. The
aggregate balances shown in the table above represent amounts that the NEOs have earned but elected to
defer, plus earnings (or less losses). There are no above-market or preferential earnings in the UPS Deferred
Compensation Plan. The investment options mirror those in the UPS 401(k) Savings Plan. Dividends earned on
shares of UPS stock in the UPS Deferred Compensation Plan are earned at the same rate as all other class A and
class B shares of common stock. Dividends are added to the participant’s deferred compensation balance.
Deferral elections made under the UPS Deferred Compensation Plan are irrevocable once made.
UPS Restoration Savings Plan
Benefits payable under the UPS 401(k) Savings Plan are subject to the maximum compensation limits and the
annual benefit limits for a tax-qualified defined contribution plan as established by the Internal Revenue Service.
Amounts exceeding these limits are paid pursuant to the UPS Restoration Savings Plan, which is a non-qualified
restoration plan designed to replace the benefits limited under the tax-qualified plan. Without the UPS
Restoration Savings Plan, executive officers would receive a lower benefit as a percent of eligible compensation
than the benefit received by other participants in the UPS Savings Plan.
52
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Potential Payments on Termination or Change in Control
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 protective covenant agreements with them which protect UPS’s confidential information and include non-
competition and non-solicitation covenants in favor of UPS. For Brian and Carol, if either of their employment is
terminated without “cause”, then the Company is obligated to pay their base salary for up to 24 months if it
elects to enforce the post-termination covenants.
The UPS Key Employee 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) an amount in cash equal to the portion of the
participant’s monthly Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) premium for the
participant and the participant’s dependents to the extent it exceeds the premiums paid by the participant for
such coverage immediately prior to termination times the number of months in the participant’s applicable
COBRA period; and (iv) career counseling services up to $20,000 (or, for the CEO up to $30,000).
In addition, with respect to options held by retirement eligible employees, and RPUs granted under the MIP or
LTIP, in each case granted on or after the effective date of the Severance Plan, a participant who experiences a
Qualifying Termination will generally be entitled to the same treatment that would apply in the event of
“retirement” under the terms of such awards. With respect to stock options granted to a participant on or after
the effective date of the Severance Plan, such stock options (to the extent the participant is not retirement
eligible and that are vested as of the date of the Qualifying Termination) will remain exercisable until the earlier
of the first anniversary of the termination date and the original expiration date of the stock options.
For terminations of employment not governed by retention arrangements or awards made prior to the effective
date of the Severance Plan, our equity incentive plans and related documents contain provisions that affect
outstanding awards to all plan participants, including the NEOs, in the event of a participant’s death, disability,
retirement, or a change in control (as defined below) of the Company.
Upon a participant’s death, disability or retirement:
• Options will immediately vest, and remain exercisable until the tenth anniversary of the date of grant;
• Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will
immediately vest. In the case of a participant’s death, shares (or cash, as applicable) attributable to the
number of restricted shares, RSUs or RPUs will be transferred to the participant’s estate within 90 days. In
the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the number
of restricted shares, RSUs or RPUs will be transferred to the participant on the same schedule as if they had
remained employed; and
• Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions shall be deemed
earned on a prorated basis for the number of months worked during the performance period. In the case of a
participant’s death, shares (or cash, as applicable) attributable to the prorated number of restricted shares,
RSUs or RPUs calculated at target performance level will be transferred to the participant’s estate within 90
days. In the case of a participant’s disability or retirement, shares (or cash, as applicable) attributable to the
prorated number of restricted shares, RSUs or RPUs calculated based on actual performance results for the
full performance period will be transferred to the participant following the end of the performance period.
Upon a change in control, if the successor company does not continue, assume or substitute other grants for
outstanding awards, or upon a change in control followed by a termination of the grantee’s employment by UPS
without cause or by the grantee for good reason:
• Options will immediately vest and become exercisable;
• Shares of restricted stock, RSUs or RPUs that are no longer subject to performance conditions will
immediately vest; and
• Shares of restricted stock, RSUs and RPUs that are still subject to performance conditions will be deemed
earned to the extent that actual achievement of the applicable performance conditions can be determined, or
on a prorated basis for the portion of the performance period completed prior to the change in control or
qualifying termination, based on target or actual performance.
53
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.
The following table shows the potential payments upon a termination of employment under various
circumstances, assuming the event occurred on December 29, 2023. The closing price per share of our class B
common stock on the NYSE on the last trading day of 2023 was $157.23. The actual amounts to be paid under
any of the scenarios can only be determined at the time of such NEO’s separation from the Company.
Name
Carol Tomé
Separation
Pay(1)
($)
Accelerated/
Continued
Vesting of Equity
Awards(2)
($)
Benefits(3)
Termination (voluntary or involuntary for cause)
—
—
Termination (involuntary without cause)
Change in Control (with qualifying termination)
9,077,593
4,546,358
9,058,276
12,826,644
Retirement
Death
Disability
Brian Newman
Termination (voluntary or involuntary for cause)
Termination (involuntary without cause)
Change in Control (with qualifying termination)
Retirement
Death
Disability
Nando Cesarone
Termination (voluntary or involuntary for cause)
Termination (involuntary without cause)
Change in Control (with qualifying termination)
Retirement
Death
Disability
Kate Gutmann
Termination (voluntary or involuntary for cause)
Termination (involuntary without cause)
Change in Control (with qualifying termination)
Retirement
Death
Disability
Bala Subramanian
Termination (voluntary or involuntary for cause)
Termination (involuntary without cause)
Change in Control (with qualifying termination)
Retirement
Death
Disability
—
—
—
—
12,826,644
12,826,644
12,826,644
—
1,830,471
1,301,550
1,801,110
4,121,418
—
—
—
—
—
4,121,418
4,121,418
—
1,851,556
1,068,116
1,824,086
3,073,392
—
—
—
—
—
3,073,392
3,073,392
—
1,852,857
1,160,106
1,824,086
3,327,874
—
—
—
—
3,327,874
3,327,874
3,327,874
—
1,691,924
4,210,684
1,662,292
4,210,684
—
—
—
—
4,210,684
4,210,684
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
840,748
—
—
—
—
—
—
—
—
Total
($)
—
13,623,951
21,884,920
12,826,644
12,826,644
12,826,644
—
3,132,021
5,922,528
—
4,121,418
4,121,418
—
2,919,672
4,897,478
—
3,073,392
3,073,392
—
3,012,963
5,151,960
4,168,622
3,327,874
3,327,874
—
5,902,608
5,872,976
—
4,210,684
4,210,684
(1) Represents the benefits under the UPS Key Employee Severance Plan. For Carol Tomé, represents two times her annual base salary
and two times her target MIP award (200% of base salary). For the other NEOs, represents one times their annual base salary and a
sum equaling their target MIP awards (115% of base salary).
(2) Represents the value of accelerated or continued vesting of stock options and RPUs in accordance with the terms of our equity
incentive plans and the applicable award certificates. Also includes the 2022 and 2023 LTIP awards calculated at target. The
performance measurement period for the 2022 LTIP award ends December 31, 2024, and the performance measurement period for
the 2023 LTIP award ends December 31, 2025. With respect to Nando Cesarone and Kate Gutmann, includes the continued vesting
of the one-time RSU awards to each as described in “Employment Transition Awards, Retention Arrangements and Recognition
Awards” above.
54
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
(3) Represents the actuarial present value of the incremental non-qualified amounts payable upon change in control, early retirement,
death and disability from the UPS Excess Coordinating Benefit Plan. For information about the UPS Excess Coordinating Benefit Plan,
see the Pension Benefits table and related narrative. The same assumptions were used to calculate the present value of the amounts
in the table that were used for the Pension Benefits table except that benefits are assumed to be payable immediately as of
December 31, 2023 (or age 55 if later) instead of age 60. Only individuals eligible for early retirement (age 55 with 10 years of
service) who are not yet age 60 will have an early retirement value in the table.
Other Amounts
The previous table does not include payments and benefits to the extent they are generally provided on a non-
discriminatory basis to salaried employees not subject to a collective bargaining agreement upon termination of
employment. These include:
• Life insurance upon death in the amount of 12 times the employee’s monthly base salary, with a
December 29, 2023 maximum benefit payable of $1 million;
• A death benefit in the amount of three times the employee’s monthly salary;
• Disability benefits; and
• Accrued vacation amounts.
The tables also do not include amounts to which the executives would be entitled to receive that are already
described in the compensation tables that appear earlier in this Proxy Statement, including:
• The value of equity awards that are already vested;
• Amounts payable under defined benefit pension plans (except as described above with respect to Kate
Gutmann); and
• Amounts previously deferred into the deferred compensation plan.
Definition of a Change in Control
A change in control as defined in our equity incentive compensation plans is generally deemed to have occurred
as of the first day that any one or more of the following conditions shall have been satisfied:
• The consummation of a reorganization, merger, share exchange or consolidation, in each case, where
persons who were shareowners of UPS immediately prior to such reorganization, merger, share exchange or
consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting
power of the reorganized, merged, surviving or consolidated company’s then outstanding securities entitled
to vote generally in the election of directors in substantially the same proportions as immediately prior to the
transaction; or a liquidation or dissolution of UPS or the sale of substantially all of UPS’s assets; or
• Individuals who, as of any date (the “Beginning Date”), constitute the Board of Directors (the “Incumbent
Board”) and who, as of the end of the two-year period beginning on such Beginning Date, cease for any
reason to constitute at least a majority of the Board of Directors, provided that any person becoming a
director subsequent to the Beginning Date whose election, or nomination for election by UPS’s shareowners,
was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the directors of UPS, as such terms are used
under applicable SEC rules and requirements) shall be considered as though such person were a member of
the Incumbent Board.
55
Equity Compensation Plans
The following table sets forth information as of December 31, 2023 concerning shares of our common stock
authorized for issuance under our equity compensation plans.
Plan category
Equity compensation plans approved by
security holders(1)
Equity compensation plans not approved
by security holders
Total
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)
6,433,685
—
6,433,685
127.91
N/A
127.91
19,816,746(2)
—
19,816,746
(1) Includes all equity incentive compensation plans and the Discounted Employee Stock Purchase Plan, each of which has been
approved by our shareowners. Effective with the approval of the 2021 Omnibus Incentive Compensation Plan (the “2021 Plan”) in
May 2021, no additional securities may be issued under prior equity incentive compensation plans. Awards that do not entitle the
holder to receive or purchase shares and awards that are settled in cash are not counted against the aggregate number of shares
available for awards under the 2021 Plan. Awards that are subject to performance conditions are reported at the maximum
performance level, which may overstate the dilution associated with such awards.
(2) In addition to grants of options, warrants or rights, this number includes up to 10,034,871 shares of common stock or other stock-
based awards that may be issued under the 2021 Plan, and up to 9,781,875 shares of common stock that may be issued under the
Discounted Employee Stock Purchase Plan. This number does not include shares under prior equity incentive compensation plans
because no new awards may be made under those plans.
56
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Median Employee to CEO Pay Ratio
As required by Item 402(u) of Regulation S-K, pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act, we are providing the following ratio of the annual total compensation of our CEO to the annual
total compensation of our median employee.
For purposes of this disclosure, the 2023 annual total compensation of the median compensated employee was
$53,669; our CEO’s 2023 annual total compensation was $23,402,885, and the ratio of these amounts was 436-
to-one.
Our CEO’s 2023 annual total compensation was different from the amount included in the 2023 Summary
Compensation Table “Total” column. Amounts related to healthcare benefits, which are available generally to all
salaried employees of the Company, are included in the annual total compensation amounts above. The CEO’s
and median employee’s Company-paid healthcare benefit amounts were $12,834 and $6,178 respectively. For
the CEO, this amount is not included in the 2023 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. For these purposes, we identified the
median compensated employee from our employee population as of October 1, 2023, using total taxable wages
(Form W-2 Box 1 or equivalent) paid to our employees in fiscal year 2023. We determined our total workforce as
of October 1, 2023 to consist of 485,504 employees. During the fiscal year 2023, UPS acquired Happy Returns
and MNX Global Logistics. These entities employed 326 and 791 employees, respectively. As permitted by SEC
rules, under the 5% “De Minimis Exemption,” we excluded 22,994 non-U.S. employees, or 4.7% of our total
workforce. As a result of these exclusions, our median compensated employee was identified from an employee
population of 462,510 employees.
The excluded countries and their employee populations were as follows: Argentina (202 employees), Australia
(500 employees), Austria (214 employees), Bahrain (30 employees), Belgium (1,157 employees), Brazil (1,502
employees), Chile (357 employees), Costa Rica (379 employees), Czechia (566 employees), Denmark (565
employees), Dominican Republic (87 employees), Ecuador (269 employees), Egypt (20 employees), El Salvador
(4 employees), Finland (184 employees), Greece (160 employees), Guam (1 employee), Guatemala (54
employees), Honduras (6 employees), Hong Kong (803 employees), Hungary (498 employees), Indonesia (114
employees), Ireland (883 employees), Italy (1,748 employees), Jamaica (3 employees), Japan (622 employees),
Jersey (1 employee), Kazakhstan (38 employees), Luxembourg (13 employees), Macau (2 employees), Malaysia
(251 employees), Morocco (65 employees), New Zealand (43 employees), Nicaragua (18 employees), Nigeria
(222 employees), Norway (100 employees), Pakistan (50 employees), Panama (32 employees), Peru (167
employees), Philippines (1,305 employees), Portugal (280 employees), Puerto Rico (442 employees), Romania
(122 employees), Russia (5 employees), South Korea (522 employees), Singapore (1,055 employees), Slovakia
(29 employees), Slovenia (58 employees), South Africa (260 employees), Spain (1,548 employees), Sweden
(935 employees), Switzerland (759 employees), Taiwan (872 employees), Thailand (436 employees), Turkey
(1,548 employees), U.S. Virgin Islands (10 employees), Ukraine (106 employees), United Arab Emirates (442
employees), and Vietnam (330 employees).
57
Pay Versus Performance
As required by Item 402(v) of Regulation S-K, we are providing the following table and related disclosures.
Summary
Comp
Table
Total
for First
CEO
($)
N/A
N/A
N/A
Summary
Comp
Table
Total
for
Second
CEO
($)
23,390,051
18,965,201
27,620,893
Year(1)
2023
2022
2021
Average
Summary
Comp
Table Total
for Non-
CEO
Named
Executive
Officers
($)
Average
Comp
Actually
Paid
to Non-CEO
Named
Executive
Officers
($)
Comp
Actually
Paid
to First
CEO
($)
Comp
Actually
Paid to
Second
CEO
($)
Value of Initial Fixed $100
Investment Based on:
Total
Shareholder
Return
($)
Peer Group(2)
Total
Shareholder
Return
($)
Net
Income
(millions)
($)
Adjusted
Operating
Profit(3)
(millions)
($)
N/A
N/A
N/A
15,171,604
7,631,274
4,457,788
152.66
146.74
6,708
9,873
13,072,062
6,714,395
5,141,166
162.33
131.11
11,548
13,853
43,250,361 10,489,120
19,573,719
193.56
152.83
12,890
13,144
2020
5,842,130
3,772,910 37,662,113 13,337,679
5,454,192
11,181,872
147.28
118.18
1,343
8,718
(1) In both 2023 and 2022, Carol Tomé was the CEO and the Non-CEO NEOs were Brian Newman, Nando Cesarone, Kate Gutmann and
Bala Subramanian; in 2021, Carol Tomé was the CEO and the Non-CEO NEOs were Brian Newman, Scott Price, Nando Cesarone and
Kate Gutmann; and in 2020 the CEOs were David Abney (First CEO) and Carol Tomé (Second CEO), and the Non-CEO NEOs were
Brian Newman, Nando Cesarone, Kate Gutmann, Juan Perez and George Willis.
(2) Our peer group is represented by the Dow Jones Transportation Average.
(3) In accordance with SEC rules, we are required to include in the above table the most important financial performance measure (not
otherwise required to be disclosed in the table) used to link compensation actually paid to our named executive officers for 2023 to
Company performance. We consider this measure to be Adjusted Operating Profit, which is calculated by excluding the following
items from Operating Profit determined in accordance with GAAP: for 2023, one-time compensation representing a payment to
certain U.S.-based non-union part-time supervisors, goodwill and other asset impairment charges, and transformation and other
adjustments; for 2022, a one-time non-cash expense related to stock-based awards that were accelerated to fully vest in 2022 in
connection with a change in incentive compensation program design, a one-time non-cash charge reflecting a reduction in the
estimated residual value of fully-depreciated MD-11 aircraft, and transformation and other adjustments; and for each of 2021 and
2020, transformation and other adjustments.
CEO SCT Total to CAP Reconciliation
Summary
Compensation
Table Total for
CEO
($)
23,390,051
18,965,201
27,620,893
3,772,910
5,842,130
Year
2023
2022
2021
2020(3)
Deductions from
SCT Total(1)
($)
Additions to SCT
Total(2)
($)
Compensation
Actually Paid
($)
20,274,954
16,275,515
24,795,449
2,958,822
3,192,625
12,056,507
10,382,376
40,424,917
12,523,591
35,012,608
15,171,604
13,072,062
43,250,361
13,337,679
37,662,113
(1) Represents the grant-date fair value of stock awards granted during the year (2023: $18,916,192, 2022: $15,046,968, 2021:
$23,670,426, 2020: Carol Tomé $1,833,812 and David Abney $1,411,585), the grant-date fair value of option awards granted
during the year (2023: $1,358,762, 2022: $1,228,547, 2021: $1,125,023, 2020: Carol Tomé $1,125,010 and David Abney
$1,153,237) and the aggregate change in the actuarial present value of accumulated benefits under pension plans (2023: $—, 2022:
$—, 2021: $—, 2020: Carol Tomé $— and David Abney $627,803).
(2) Represents the service cost for defined benefit pension plans (2023: $—, 2022: $—, 2021: $—, 2020: Carol Tomé $— and David
Abney $234,743) and the value of equity awards calculated using the required methodology for determining CAP, as further detailed
in the table below.
(3) In 2020 the CEOs were Carol Tomé (first row) and David Abney (second row).
58
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
CEO Equity Component of CAP
Year End Fair
Value of Equity
Awards Granted in
the Year
($)
14,112,488
12,805,107
33,072,440
12,523,591
9,170,268
Change in Fair
Value from Prior
Year End to Year
End of Outstanding
Unvested Equity
Awards Granted in
Prior Years
($)
(3,170,240)
(5,289,424)
6,256,043
—
14,290,966
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the Year
($)
2,071,950
—
—
—
—
Change in Fair
Value from Prior
Year End to
Vesting Date of
Equity Awards
Granted in Prior
Years that Vested
in the Year
($)
(957,691)
2,866,693
1,096,434
—
11,316,631
Total Equity Award
Adjustments
($)
12,056,507
10,382,376
40,424,917
12,523,591
34,777,865
Year
2023
2022
2021
2020(1)
(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
Summary
Compensation
Table Total for
Other NEOs
($)
7,631,274
6,714,395
10,489,120
5,454,192
Year
2023
2022
2021
2020
Deductions from
SCT Total(1)
($)
Additions to SCT
Total(2)
($)
6,111,238
5,656,642
8,564,070
3,897,928
2,937,752
4,083,413
17,648,669
9,625,608
Compensation
Actually Paid
($)
4,457,788
5,141,166
19,573,719
11,181,872
(1) Represents the average grant date fair value of stock awards granted during the year (2023: $4,765,597, 2022: $5,378,818, 2021:
$8,200,584, 2020: $3,369,684), the average grant date fair value of option awards granted during the year (2023: $399,020, 2022:
$277,825, 2021: $351,349, 2020: $210,297) and the average aggregate change in the actuarial present value of accumulated
benefits under pension plans (2023: $946,621, 2022: $—, 2021: $12,137, 2020: $317,948).
(2) Represents the average service cost for defined benefit pension plans (2023: $—, 2022: $44,219, 2021: $40,127, 2020: $65,084)
and the value of equity awards calculated using the required methodology for determining CAP, as further detailed in the
table below.
59
Average Other NEOs Equity Component of CAP
Year End Fair
Value of Equity
Awards Granted in
the Year
($)
3,467,543
4,841,330
12,120,687
6,340,481
Change in Fair
Value from Prior
Year End to Year
End of Outstanding
Unvested Equity
Awards Granted in
Prior Years
($)
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the Year
($)
(884,732)
(1,551,105)
2,762,650
1,480,751
546,548
—
—
120,414
Change in Fair
Value from Prior
Year End to
Vesting Date of
Equity Awards
Granted in Prior
Years that Vested
in the Year
($)
(191,607)
748,969
2,725,205
1,618,878
Total Equity Award
Adjustments
($)
2,937,752
4,039,194
17,608,542
9,560,524
Year
2023
2022
2021
2020
• Stock awards issued under the Management Incentive Plan are valued at the NYSE closing price of UPS Class B stock at each
applicable date.
• Outstanding stock awards issued under the Long-Term Incentive Plan are valued using a Monte Carlo model at each reporting date
with performance outcomes assumed to be at target. Long-Term Incentive Plan awards that vest during the period are valued using
actual performance outcomes and the NYSE closing price of UPS Class B stock on the vesting date.
• Option awards are valued using a Black-Scholes option pricing model that reflects the award’s exercise price relative to the NYSE
closing price of UPS Class B common stock at each valuation date.
• Stock award valuations include reinvested dividends where applicable.
The following table lists the financial performance measures that we believe represent the most important
financial performance measures we use to link compensation actually paid to our NEOs for fiscal 2023 to
our performance.
Tabular List
Adjusted operating profit
Revenue growth
Adjusted return on invested capital
Adjusted earnings per share growth
Adjusted free cash flow
CAP versus TSR 2020 - 2023
l
r
e
d
o
h
e
r
a
h
S
l
a
t
o
T
d
e
x
e
d
n
I
$200
$180
n
r
u
t
e
R
$160
$140
$120
$100
$38
$147.28
$13
$11
$118.18
$193.56
$43
$152.83
$20
$162.33
$152.66
$146.74
$131.11
$13
$15
$5
$4
$60
$40
$20
$0
(
$
M
i
l
l
i
o
n
s
)
C
o
m
p
e
n
s
a
t
i
o
n
A
c
t
u
a
l
l
y
P
a
d
i
2020
2021
2022
2023
PEO CAP (David Abney)
UPS TSR
PEO CAP (Carol Tomé)
2023 Peer TSR
Other NEOs’ Avg. CAP
60
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
CAP versus Net Income 2020 - 2023
$15,000
$10,000
$38
$5,000
$13
$11
$1,343
$0
$12,890
$43
$20
$11,548
$13
$5
$60
$40
$20
$0
(
$
M
i
l
l
i
o
n
s
)
P
a
d
i
C
o
m
p
e
n
s
a
t
i
o
n
A
c
t
u
a
l
l
y
$6,708
$15
$4
2020
2021
2022
2023
PEO CAP (David Abney)
Net Income
PEO CAP (Carol Tomé)
Other NEOs’ Avg. CAP
CAP versus Adjusted Operating Profit
2020 - 2023
$15,000
$10,000
$38
$5,000
$0
$8,718
$13
$11
$13,144
$43
$20
$13,853
$9,873
$13
$5
$15
$4
$60
$40
$20
$0
(
$
M
i
l
l
i
o
n
s
)
P
a
d
i
C
o
m
p
e
n
s
a
t
i
o
n
A
c
t
u
a
l
l
y
2020
2021
2022
2023
PEO CAP (David Abney)
Adjusted Operating Profit
PEO CAP (Carol Tomé)
Other NEOs’ Avg. CAP
e
m
o
c
n
I
t
e
N
)
s
n
o
i
l
l
i
M
$
(
t
i
f
o
r
P
g
n
i
t
a
r
e
p
O
d
e
t
s
u
j
d
A
)
s
n
o
i
l
l
i
M
$
(
61
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 2023
compensation paid to our NEOs as disclosed in this Proxy Statement (“say on pay”). We conduct say on pay
votes annually. We expect that the next say on pay vote will occur at our 2025 Annual Meeting of Shareowners.
Pay for performance and alignment with the long-term interests of our shareowners are key principles of our
compensation programs. NEO compensation reflects the following:
• encouraging executive decision-making that is aligned with the long-term interests of our shareowners;
• tying a significant portion of executive pay to Company performance over a multi-year period;
• promoting UPS’s long-standing culture of owner-management; and
• balancing shorter and longer-term performance metrics to encourage the efficient management of our
business and minimizing excessive risk-taking.
Although this vote is non-binding, the Compensation and Human Capital Committee and the board value your
views and will consider the voting results. If there is a significant negative vote, we expect that we will consult
directly with significant shareowners to better understand their concerns. The Compensation and Human Capital
Committee and the board would consider feedback obtained through this process in making future
compensation decisions.
In accordance with the Dodd-Frank Act, this vote does not overrule any decisions by the board, will not create or
imply any change to or any additional fiduciary duties of the board and will not restrict or limit the ability of
shareowners generally to make proposals for inclusion in proxy materials related to executive compensation.
Shareowners are being asked to approve the following resolution:
“RESOLVED, that the shareowners approve, on an advisory basis, the compensation of the NEOs, as
described in the Compensation Discussion and Analysis section and in the compensation tables and
accompanying narrative disclosures in the Company’s Proxy Statement for the 2024 Annual Meeting
of Shareowners.”
62
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
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, 2024 there were 125,478,056 outstanding shares of class A common stock and
727,841,749 outstanding shares of class B common stock.
Name and address
BlackRock, Inc.(1)
55 East 52nd Street
New York, NY 10055
The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355
Number of Shares
of Class B Stock
Beneficially Owned
Percent of
Class B
Stock
54,283,579
6.4%
67,218,177
7.9%
(1) According to a Schedule 13G/A filed with the SEC on January 26, 2024, BlackRock, Inc. has sole voting power with respect to
49,199,159 shares and sole dispositive power with respect to all 54,283,579 shares.
(2) According to a Schedule 13G/A filed with the SEC on February 13, 2024, The Vanguard Group has shared voting power with respect
to 918,229 shares, sole dispositive power with respect to 64,027,901 shares and shared dispositive power with respect to
3,190,276 shares.
The following table sets forth the beneficial ownership of our class A and class B common stock as of
March 1, 2024 by each of our NEOs, each of our directors, and all of our executive officers and directors as a
group. Ownership is calculated in accordance with SEC rules and regulations.
Named Executive Officers
Carol Tomé
Brian Newman
Nando Cesarone
Kate Gutmann
Bala Subramanian
Non-Employee Directors
Rodney Adkins
Eva Boratto
Michael Burns
Wayne Hewett
Angela Hwang
Kate Johnson
William Johnson
Franck Moison
Christiana Smith Shi
Russell Stokes
Kevin Warsh
Number of Shares
Beneficially
Owned(1)
Class A Shares(2)(3) Class B Shares
Total Shares
Beneficially
Owned(4)
386,653
88,818
67,208
163,381
12,708
19,844
3,904
37,042
3,904
4,268
3,577
34,845
11,396
9,401
3,577
22,025
13,036
25,000
1
—
—
—
—
—
868
—
—
160
—
—
400
—
399,689
113,818
67,209
163,381
12,708
19,844
3,904
37,042
4,772
4,268
3,577
35,005
11,396
9,401
3,977
22,025
Executive Officers and Directors as a Group (20 persons)
1,059,749
39,465 1,099,214 (5)
63
(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, 2024 upon the conversion of RSUs following a separation from the
Board of Directors, including 27,071 RSUs held by Carol Tomé in connection with her prior service as a non-employee director.
(3) Includes class A shares that may be acquired through stock options exercisable through April 30, 2024 as follows: Tomé – 207,313;
Newman – 38,931; Cesarone – 20,449; Gutmann – 68,357; Subramanian - 1,818; and directors and executive officers as a
group — 429,901.
(4) All directors and executive officers individually and as a group held less than one percent of outstanding shares of each of class A
and class B common stock outstanding as of March 1, 2024. Assumes that all options exercisable through April 30, 2024 and owned
by the named individual are exercised, and that shares acquirable under RSUs through April 30, 2024 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 585 RSUs and RPUs for executive officers and directors as a group that vest and convert to class A common stock prior to
April 30, 2024. 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, 2024. These equity interests represent additional financial interests in UPS that are subject to the same market risks as
ownership of our common stock. For Carol Tomé, represents 1,389 phantom stock units; and for Michael Burns, Wayne Hewett,
Franck Moison and Kevin Warsh, represents deferred non-employee director retainer fees allocated to 5,685, 1,250, 1,334 and
10,449 shares of UPS common stock, respectively, within the UPS Deferred Compensation Plan. Phantom stock units were granted to
non-employee directors pursuant to a deferred compensation program previously provided to non-employee directors. Carol’s
phantom stock units were awarded during her prior service as a non-employee director. Dividends paid on UPS common stock are
credited to the director’s phantom stock unit balance. Upon termination of the individual’s service as a director, amounts represented
by phantom stock units will be distributed in cash over a time period elected by the recipient.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who
own beneficially more than 10% of either our class A or class B common stock to file reports of ownership and
changes in ownership of such stock with the Securities and Exchange Commission. To our knowledge, for 2023
each of our directors and executive officers complied with all applicable Section 16(a) filing requirements, except
for the late filing in of one Form 4 for each of our then-executive officers, relating to a single equity grant made
in March 2023, that was late due to a Company administrative error.
64
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Audit Committee Matters
Proposal 3 — 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 2024.
Board’s Recommendation: Vote FOR the ratification of the appointment of Deloitte as our independent
registered public accounting firm for 2024.
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy and
entitled to vote on the proposal.
Deloitte has been our independent auditor since we became a publicly traded company in 1999. Prior to 1999,
Deloitte served as the independent auditor of our privately held parent company since 1969. Deloitte audited our
2023 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, 2024. The board recommends that shareowners ratify Deloitte’s appointment. Although
shareowner ratification is not required, the board believes that seeking ratification is a good corporate
governance practice. If not ratified, the Committee will reconsider Deloitte’s appointment. Even if ratified, the
Committee, in its discretion, may change the appointment at any time during the year if it determines that such
a change would be in the best interests of UPS and its shareowners.
A Deloitte representative is expected to attend the Annual Meeting, will have the opportunity to make a
statement if desired, and be available to respond to appropriate shareowner questions. Additional information
about the Committee, Deloitte’s appointment and fees, and other related matters follows.
Audit Committee Report
Roles and Responsibilities. The Committee’s key responsibilities are described in its charter. The charter is
reviewed annually and was most recently approved by the board in 2023 and is available on the governance
section of the UPS Investor Relations website at www.investors.ups.com. Pursuant to its charter, the
Committee’s purposes, duties and responsibilities include:
• assisting the board in discharging its responsibilities relating to the Company’s accounting, reporting and
financial practices;
• overseeing the Company’s accounting and financial reporting processes, including reviewing earnings or
annual report press releases, overseeing the integrity of financial statements and evaluating major
financial risks;
• having sole authority to appoint, oversee, determine the compensation of and terminate the Company’s
independent registered public accounting firm; and
• overseeing the Company’s disclosure controls and internal controls, compliance with legal and regulatory
requirements, and Code of Business Conduct.
Management has primary responsibility for preparing the Company’s financial statements and establishing
effective internal control over financial reporting. Deloitte is responsible for auditing those financial statements
and the Company’s internal control over financial reporting and expressing an opinion on the conformity of the
Company’s audited financial statements with generally accepted accounting principles and on the effectiveness of
internal control over financial reporting based on criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission.
The Committee appoints the independent registered public accounting firm, approves the terms of the audit
engagement, and reviews and approves Deloitte’s fees. In this context, the Committee discussed the terms of
Deloitte’s 2024 audit engagement, the audit’s overall scope and plan, and the other matters required to be
65
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.
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 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 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 2023 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 2024. The board recommends that shareowners ratify this appointment.
Furthermore, the Committee recommended to the Board of Directors that the audited financial statements be
included in UPS’s Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC.
The Audit Committee
Eva Boratto, Chair
Michael Burns
Wayne Hewett
Angela Hwang
66
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Principal Accounting Firm Fees
The Committee, with the ratification of the shareowners, engaged Deloitte to perform the annual audits of the
Company’s financial statements for each of the fiscal years ended December 31, 2023 and 2022. The aggregate
fees billed to us for the fiscal years ended December 31, 2023 and 2022 by Deloitte, the member firms of
Deloitte Touche Tohmatsu Limited, and their respective affiliates are listed in the table:
Audit Fees(1)
Audit-Related Fees(2)
Total Audit and Audit-Related Fees
Tax Fees(3)
All Other Fees(4)
Total Fees
2023
2022
$ 20,228,000 $ 17,969,000
$ 1,615,000 $ 1,977,000
$ 21,843,000 $ 19,946,000
$
$
98,000 $
65,000
6,000 $
80,000
$ 21,947,000 $ 20,091,000
(1) Fees for professional services performed by Deloitte for the audit of our annual financial statements and review of financial
statements included in our Form 10-Q filings, internal control attestation procedures, statutory audits of foreign subsidiary financial
statements and other services that are normally provided in connection with statutory and regulatory filings or engagements.
(2) Fees for assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review
of our financial statements. This includes employee benefit plan and compensation plan audits, independent service auditors’ reports,
attestation procedures related to securities offerings, other attestations.
(3) Fees for professional services performed by Deloitte with respect to tax compliance work and tax planning and advice services. This
includes review of original and amended tax returns for the Company and its consolidated subsidiaries, refund claims, and payment
planning and tax audit assistance.
(4) Fees for professional services performed by Deloitte with respect to assessment of climate reporting readiness and financial systems
implementation assistance, and subscription fees to the Deloitte online accounting research platform.
Services Provided by Deloitte
All services provided by Deloitte are permissible under applicable laws and regulations. The Committee has
established a policy requiring the pre-approval of all audit and non-audit services performed by Deloitte in order
to help assure that the provision of such services does not impair Deloitte’s independence.
Proposed services may be pre-approved through the application of detailed policies and procedures (“general
pre-approval”) or by specific review of each service (“specific pre-approval”). Unless a type of service to be
provided by Deloitte has received general pre-approval, it requires specific pre-approval by the Committee. Any
proposed services exceeding pre-approved cost levels also require specific approval by the Committee.
The Audit, Audit-Related, Tax and All Other services that have received general pre-approval of the Committee,
and those services that are prohibited, are described in the policy along with the corresponding cost levels. The
term of any general pre-approval is twelve months from the date of pre-approval, unless otherwise stated. The
Committee annually reviews and pre-approves the services that may be provided by Deloitte without obtaining
specific pre-approval and may revise the list from time to time based on subsequent determinations.
The Committee has delegated to its Chair the authority to pre-approve certain permitted services between the
Committee’s regularly scheduled meetings, and the Chair must report any pre-approval decisions to the
Committee at its next scheduled meeting for review by the Committee. The policy prohibits the Committee from
delegating its responsibilities to management for pre-approving Deloitte’s permitted services.
67
Shareowner Proposals
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 4 — 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 structure is unique and does not present risks inherent in typical dual-class structures
• UPS’s capital 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 capital 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 and voting restrictions applicable to a significant
voting block
• UPS’s capital structure has contributed to its long-term success
• Eliminating this structure will not further improve UPS’s corporate governance or financial performance
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy and
entitled to vote on the proposal.
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. Share ownership will be promptly
provided upon request to the UPS Corporate Secretary.
Proposal 4 - 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.
68
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
In spite of lopsided shares having 10-times more voting power, support for this UPS proposal topic has steadily
grown from 21% in 2013 to 33% in 2023.
With stock having 10-times more voting power UPS takes our shareholder money but does not give us in return
an equal voice in our company'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 typically vote at the annual meeting.
And in spite of insider UPS shares having super voting power 5 UPS directors each received more than 140
million against votes in 2023. This compares to 9 UPS directors each receiving less than 10 million against votes.
Please vote yes:
Equal Voting Rights for Each Shareholder — Proposal 4
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 important 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.
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, while not exposing class B shareholders to financial or other risk.
UPS’s capital structure is unique and does not present risks inherent in typical dual-class structures
The board strongly disagrees with this proposal’s characterization of UPS’s capital structure. As described below,
UPS’s unique capital structure does not present any of the risks that typically accompany dual-class capital
structures, such as concentrated voting power within a limited number of people (such as company founders)
who have interests that may not align with other shareowners, promotion of managerial entrenchment or
provision for disparate financial returns. In fact, UPS’s governance provisions overlaying our capital structure are
designed to limit any of these potential negative consequences.
UPS’s dual-class structure does not concentrate voting power or provide any holder a level of
control; UPS’s governance documents would limit voting power in the event of vote concentration
Dual-class structures are typically designed to concentrate voting control in an individual or small group. UPS’s
dual-class structure does not have this design or effect. The class A shares are widely issued and held; there are
approximately 157,000 current and former employees who own the shares, from employees in our operations to
executive officers. No single holder or group of holders owns any significant voting block. Our executive officers
and directors, collectively, hold less than 1% of our total voting power. As a result, no founders, executive
officers and directors, or other holders, are able to exercise control or any significant influence over
voting decisions.
To further reduce any risk of any concentration of voting power and contrary to most dual-class structures,
UPS’s certificate of incorporation (the “Certificate”) contains provisions that limit voting rights in the event of a
concentration of ownership. Specifically, the voting power of any shareholder, whether the holder of class A or
class B common stock, is curtailed if that holder controls over 25% of UPS’s outstanding voting power.
69
UPS’s actual governance practices do not entrench management or the board
In many instances, dual-class capital structures have the purpose or effect of entrenching management or the
board. UPS maintains robust corporate governance practices typical of more traditional capital structures, and its
capital structure is not used for entrenchment purposes. The board regularly reviews and considers succession
planning issues. Our CEO has served in that role only since June 2020, and we maintain an independent board
chair. Also, since 2020, we have added five new board members, all of whom are diverse, and had four board
members retire. In addition, during that time we added five new Executive Leadership Team members, three of
whom are diverse, and had seven leave the Company.
UPS’s dual-class capital structure has an effective “sunset” exercised through both governance
documents and corporate practice; no disparate financial treatment is allowed
UPS’s Certificate contains a number of provisions that provide additional safeguards against traditional dual-class
concerns. For example, the Certificate contains provisions that provide an effective “sunset” provision on
outstanding class A shares. This is accomplished through significant transfer restrictions; in most cases class A
share transfers require or result in the conversion of those shares to class B shares. Further, the Company’s
recent pay mix redesign - which has the effect of reducing the number of class A shares issued each year - will
accelerate this reduction. As a result, the average annual decline in the number of outstanding shares of class A
common stock has been 3% per year since the Company went public.
These governance principles run counter to traditional notions of dual-class structures. In addition, the
Certificate generally requires equal economic treatment of the class A and class B common stock, ensuring that
holders of one class would not receive disparate economic or financial treatment as a result of the different
voting rights.
UPS’s capital structure has contributed to its long-term success
The provisions underlying UPS’s dual-class capital structure do not impact management’s pursuit of long-term
growth strategies, and avoid the drawbacks associated with excessive emphasis on the short-term. Management
runs our Company with a sense of purpose by focusing on sustainable value creation benefiting all the
Company’s stakeholders. In this regard, the interests of all UPS shareowners are aligned.
The interests of employees, who hold class A shares, go beyond UPS’s current stock price and include operating
the Company with a broader focus, which is important to our long-term success. Our growth and achievements
have been bolstered by the engagement our capital structure has inspired in our employees and retirees.
Eliminating this structure will not further improve UPS’s corporate governance or
financial performance
UPS already maintains robust corporate governance practices, and our corporate structure and practices do not
present risks typically associated with dual-class structures. Other than our CEO, all UPS director nominees are
independent. All UPS directors are elected annually by a majority of votes cast in uncontested director elections,
only independent directors serve on the board’s Audit, Compensation and Human Capital, Nominating and
Corporate Governance and Risk Committees, and we have an independent Board Chair. Our board consists of an
appropriate mix of newer and longer-tenured directors.
In recent periods, the board has voluntarily adopted a number of corporate governance principles aligned with
marketplace developments. These include increasing disclosures around lobbying and participation in the political
process, specifically assigning human capital oversight responsibilities to the Compensation and Human Capital
Committee, assigning environmental sustainability oversight responsibilities to the Nominating and Corporate
Governance Committee, and adding to the Company’s proxy statement and sustainability reports gender and
ethnicity information for employees and directors.
For the foregoing reasons, the board believes that UPS’s current capital structure does not present governance
risks and continues to be in the best interests of the Company and its stakeholders. Shareowners have agreed
with this assessment when they rejected similar proposals every year since 2013.
The board recommends that shareowners vote AGAINST this proposal.
70
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Proposal 5 — Shareowner Proposal Requesting a Report
on the Risks Arising From Voluntary Carbon-
Reduction Commitments
What am I voting on? Whether you want the Company to be required to prepare an additional report
analyzing the risks arising from voluntary carbon-reduction commitments.
Board’s Recommendation: Vote AGAINST this proposal because:
• UPS already provides significant transparency, including comprehensive disclosures with regular updates on
our progress, and on risks and opportunities associated with our emissions reductions efforts
• The UPS board provides effective oversight of UPS’s strategy, which includes risks and opportunities
associated with emissions reductions efforts
• Management’s execution of our strategy is grounded in a fiscally responsible approach using sound
engineering principles
• Management engages with key stakeholders to provide appropriate periodic updates on risks
and opportunities
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy and
entitled to vote on the proposal.
Shareowner Proposal
The National Center for Public Policy Research, 2005 Massachusetts Ave. NW, Washington, DC 20036 has
advised us that they intend to submit the proposal set forth below for consideration at the Annual Meeting.
Share ownership will be promptly provided upon request to the UPS Corporate Secretary.
Reduce Company Greenwashing Risk
Whereas: Shareholders must protect our assets against potentially unfulfillable Company ESG promises,
including the extent to which the Company can reduce Scope 1, 2, and 3 greenhouse gas (GHG) emissions.
The Securities and Exchange Commission (SEC) has taken enforcement actions related to Environmental, Social,
Governance (ESG) issues or statements by companies who misrepresent or engage in fraud related to
ESG efforts.1
In 2021, the SEC created the Climate and ESG Task Force in its Division of Enforcement.2 The focus of the Task
Force is "to identify any material gaps or misstatements" in disclosure of climate risks and analyze "compliance
issues relating to investment advisers' and funds' ESG strategies."3
The Task Force has taken numerous enforcement actions including charging Goldman Sachs Asset Management
for policies and procedures failures related to ESG investments, resulting in a $4 million penalty,4 and charging
DWS Investment Management Americas Inc. in part for misstatements regarding its ESG investment process
that resulted in an overall $25 million in penalties.5
The SEC has proposed to require companies to disclose information about their Scope 1 and 2 emissions, and to
require them to disclose Scope 3 emissions "if material or if the registrant has set a GHG emissions target or
goal that includes Scope 3 emissions.”6
The Environmental Protection Agency defines Scope 3 emissions as, "the result of activities from assets not
owned or controlled by the reporting organization, but that the organization indirectly affects in its value chain."7
Put differently, "Scope 3 emissions for one organization are the scope 1 and 2 emissions of another
organization."8 This means that Scope 3 emissions are already counted as another entity's emissions, and are
external to the reporting company, such as product use and how employees commute.9
1 https://www.sec.gov/securities-topics/enforcement-task-force-focused-climate-esg-issues
2 https://www.sec.gov/news/press-release/2021-42
3 https://www.sec.gov/news/press-release/2021-42; https://www.sec.gov/securities-topics/enforcement-task-force-focused-climate-esg-
issues
4 https://www.sec.gov/news/press-release/2022-209
5 https://www.sec.gov/news/press-release/2023-194
6 https://www.sec.gov/news/press-release/2022-46
7 https://www.epa.gov/climateleadership/scope-3-inventory-guidance
8 https://www.epa.gov/climateleadership/scope-3-inventory-guidance
9 https://www.epa.gov/climateleadership/scope-3-inventory-guidance
71
Voluntary commitments to reduce carbon emissions create unnecessary risk for the Company because of the
lack of scientific consensus over the ability to achieve net zero emissions.
In August 2023, the Global Climate Intelligence Group asserted, "There is no climate emergency."10 The
declaration includes 1,609 signatories and "oppose[s] the harmful and unrealistic net-zero CO2 policy proposed
for 2050.”11
A June 2023 study by the Energy Policy Research Foundation found that net zero advocates have misconstrued
the International Energy Agency's position on new oil and gas investment and that it has made questionable
assumptions and milestones for NZE about government policies, energy and carbon prices, behavioral changes,
economic growth, and technology maturity.12
Supporting Statement: UPS voluntarily reports on Scope 1, 2 and 3 emissions and makes voluntary
commitments to reduce them.13 UPS does so even though it has failed to report on its evaluation of the
technological or financial feasibility of such commitments. Given the SEC's climate and ESG enforcement actions,
the Company must exercise caution and provide transparency about such commitments.
Resolved: Shareholders request the Company produce a report analyzing the risks arising from voluntary
carbon-reduction commitments.
Response of UPS’s Board
UPS supports global efforts to mitigate the impact of climate change. Sustainability is an inherent part of UPS’s
overall business and operating strategy, and we take a comprehensive, global approach to reducing energy use
and GHG emissions within our network, as well as major portions of our value chain. UPS takes a fiscally
responsible approach utilizing sound engineering principles in the execution of our strategy. The UPS board
provides effective oversight of UPS’s strategic risks and opportunities. Management’s day-to-day execution of
our strategic objectives involves a multi-layered approach facilitated by an understanding of our business, the
macroeconomic environment and the associated risks and opportunities. We report publicly on risks and
opportunities associated with our approach and progress toward our goals on a regular basis. As a result, the
requested report would not significantly alter the mix of information available.
UPS is committed to reducing our carbon footprint for the benefit of all stakeholders, and provides
transparent, 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. Each year, 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, as well as an annual Social Impact Report which highlights our efforts to
empower resilient, just and safe communities. We believe these disclosures provide stakeholders the information
they need to assess our sustainability efforts and progress. Additional material issues are discussed in our
periodic filings with the SEC.
The UPS board provides effective oversight of UPS’s strategy, which includes risks and opportunities
associated with emissions reductions efforts
The board's oversight responsibilities include strategic planning, risk management and financial reporting. This
includes oversight of climate-related matters as a part of the Company’s overall business strategy. The board
considers climate-related risks and opportunities in numerous ways, including through its standing committees.
The board’s Risk Committee, consisting entirely of independent directors, is responsible for oversight of
management’s identification and evaluation of enterprise risks, including the Company’s climate-related risks.
Economic, environmental and social sustainability risks and opportunities are considered as part of our
comprehensive enterprise risk management program. Under our enterprise risk management process, risks,
including climate-related, are identified, prioritized and assigned an owner, who is responsible for developing
mitigation plans. The Risk Committee reviews these items on a regular basis.
10 https://clintel.org/wp-content/uploads/2023/08/wcd-version-081423.pdf
11 https://clintel.org/wp-content/uploads/2023/08/WCD-version-081423.pdf
12 https://assets.realclear.com/files/2023/06/2205_a_critical_assessment_of_the_ieas_net_zero_scenario_esg_and_the_cessation_of_
investment_in_new_oil_and_gas_fields.pdf
13 https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2020_UPS_TCFD_Report_081921.pdf
72
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
The board’s Nominating and Corporate Governance Committee, also consisting entirely of independent directors,
has additional oversight responsibility for environmental risks and opportunities. This committee receives regular
updates and discusses the Company’s progress towards its sustainability-related goals as well as the associated
risks and opportunities, with feedback from these discussions shared with the full Board. The board’s Audit
Committee, consisting entirely of independent directors, is responsible for overseeing the annual engagement of
the independent third party that provides assurance on the Company’s annual sustainability report.
The board delegates authority for day-to-day management of the Company and its operations, including those
related to climate matters, to the Executive Leadership Team. The board and its committees regularly receive
updates from management regarding the effectiveness of policies and procedures, progress regarding targets,
risks and opportunities, global compliance standards and other priority climate-related topics. The Company’s
Chief Corporate Affairs and Sustainability Officer (the “CCASO”), who is a member of the Executive Leadership
Team and a direct report to the CEO, is responsible for leading climate-related discussions with the board. The
CCASO reports quarterly to the Nominating and Corporate Governance Committee and regularly to the full board
on climate-related matters.
Additionally, efforts to monitor, assess and manage climate-related risks are supported across the Executive
Leadership Team. For example, the CFO co-chairs the Company’s Sustainability Council with the CCASO. The
CCASO also serves on the Company’s executive officer level risk committee, which meets quarterly to review the
Company’s enterprise risk strategy, including climate-related risks.
Management’s execution of our strategy is grounded in a fiscally responsible approach using sound
engineering principles
We approach sustainable development holistically so that our cross-functional sustainability initiatives align with
our Customer First, People Led, Innovation Driven strategy. This strategy is guiding us towards our goals of
carbon neutrality by 2050 and improving the well-being of one billion lives by 2040. We offer our customers a
number of sustainable solutions to help them measure and manage the carbon emissions in their supply chain,
as well as design more sustainable packaging, including UPS carbon impact analysis, UPS carbon neutral
shipping, supply chain optimization analyses, UPS co-innovation workshops, an Eco Responsible packaging
program and Packsize on-demand packaging.
A component of UPS's short, medium- and long-term strategy is to evaluate and implement new technologies to
improve efficiency and maintain one of the most efficient air and ground fleets in our industry in a manner that
balances risks and opportunities. This is accomplished through our “Rolling Laboratory” approach. Through this
approach UPS works with manufacturers, government agencies and other stakeholders around the world to pilot
projects before determining whether and how new vehicles and technologies are ready for commercial
deployment. Under this approach, Alternate fuel vehicles or advanced technologies adopted by UPS must meet
the following criteria:(1) the fuel/technology must be safe; (2) it must have a reliable fueling infrastructure; (3)
the supply of vehicles and parts must be predictable; (4) there must be a measurable improvement in emissions
and/or fuel savings; and (5) it must be economically viable in terms of initial purchase price, maintenance costs
and reliability and adapt to our fleet use characteristics.
As a result, UPS undertakes multiple initiatives simultaneously to reduce risk. The Company is currently focused
on five key levers to decarbonize our business: network efficiency and innovation; increasing sustainable
aviation fuel availability; renewable/biofuel solutions; fleet electrification; and renewable electricity
transformation. We report on our progress on initiatives on a regular basis both internally and externally.
Management engagement with key stakeholders supplements our other disclosures
As discussed elsewhere in this Proxy Statement, maintaining open and ongoing dialogs with key stakeholders is
an important component of our corporate culture. In addition to information available in our written reports, our
management team participates in numerous investor meetings throughout the year to discuss our business,
strategy, including our emissions reductions targets, and financial results. In addition, each year we undertake a
stakeholder outreach program in which we discuss, among other things progress on our environmental
sustainability journey. This includes discussions with key stockholders, UPS retirees and other stakeholders. This
year we contacted holders of over 47% of our class B common stock as a part of this program. Engagement
provides us with the opportunity to appropriately update stakeholders on recent accomplishments, risks and
opportunities, and to receive feedback on our efforts. Similarly, it provides us with an opportunity to discuss how
management believes its actions are aligned with long-term value creation.
For 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.
73
Proposal 6 — Shareowner Proposal Requesting the Board
Prepare an Annual Report on Diversity, Equity and Inclusion
What am I voting on? Whether you want the Company to be required to prepare an additional report on
diversity, equity 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 provides investors with significant diversity and inclusion information
• UPS has consistently been named a top company for diversity, equity, and inclusion
• The board provides independent oversight of UPS’s human capital management
Vote Required: Approval by a majority of the voting power of the shares present in person or by proxy and
entitled to vote on the proposal.
Shareowner Proposal
As You Sow, 2020 Milvia St. Suite 500, Berkeley, CA 94704, has advised us that it intends to submit the
proposal set forth below for consideration at the Annual Meeting on behalf of the Marguerite Casey Foundation
and Mack Street 2016 Trust. 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
workforce diversity, hiring, promotion, and retention of employees, including data by gender, race, and ethnicity.
Supporting Statement: Quantitative data is sought so that investors can assess and compare the effectiveness
of companies' diversity, equity, and inclusion programs.
It is advised that this content be provided through UPS's existing sustainability reporting infrastructure. An
independent report specific to this topic is not requested.
Whereas: As of the date of the filing of this proposal, UPS had not yet shared sufficient hiring, promotion or
retention data to allow investors to determine the effectiveness of its diversity and inclusion programs.
Of public American companies, UPS is the second largest employer who has not agreed to provide any hiring,
promotion, or retention data by their employees' race or ethnicity. Large employers that provide, or have
committed to provide, more inclusion factor data than UPS include, but are not limited to: Alphabet, Boeing,
Comcast, CVS Health, Gap, General Motors, General Dynamics, Honeywell International, IBM, McDonald's,
Microsoft, Procter & Gamble, Raytheon, Union Pacific, Walt Disney, and Walmart.
As You Sow and Whistle Stop Capital released research in November 20231 that reviewed over 4,500 EEO-1
reports, which show corporate workforce diversity. The data shows a positive correlation between manager
diversity and corporate performance. Additional research includes:
Hiring: Studies conducted by economists at the University of Chicago and UC Berkeley found that “discriminating
companies tend to be less profitable,” stating “it is costly for firms to discriminate against productive workers.”2
Promotion: Without equitable promotional practices, companies will be unable to build the necessary employee
pipelines for diverse management. Women and employees of color experience "a broken rung" in their careers;
for every 100 men who are promoted, only 87 women are. Whereas women of color comprise 18 percent of the
entry-level workforce and only 6 percent of executives.3
Retention: Retention rates indicate if employees believe a company represents their best opportunity. Morgan
Stanley has found that employee retention above industry average can indicate a competitive advantage and
higher levels of future profitability.4
1 https//www.asyousow.org/report-page/2023-positive-relationships-linking-workforce-diversitv-and-financial-performance
2 https://www.nytimes.com/2021/07/29/business/economv/hiring-racial-discrimination.html
3 https://www.mckinsey.com/featured-insights/diversitv-and-inclusion/women-in-the-workplace
4 https://www.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf, p. 2
74
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
UPS itself says: "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."5
UPS is called on to provide data that allows investors to access how effectively its human capital management
systems are meeting the business imperative to provide a diverse, inclusive and equitable workforce.
Response of UPS’s Board
Throughout our history, UPS has transformed from messengers on bicycles to a nationwide package delivery
company to a worldwide network of approximately 500,000 UPS employees. We believe in creating an inclusive
and equitable environment that represents a broad spectrum of diverse backgrounds and stakeholders. By
leveraging diversity with respect to gender, age, ethnicity, skills and other factors, and creating inclusive
environments, we believe we can improve organizational effectiveness, cultivate innovation and drive growth.
We work closely with our customers, communities, suppliers and employees to advance a culture that embraces
diversity and inclusion, and fosters open participation from those with different ideas and perspectives.
Producing an additional special report as requested in the proposal 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”). UPS's
global BRGs foster a strong culture of diversity and inclusion at the Company and include nearly 200 chapters in
34 countries with more than 15,000 members. We support BRGs 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. All BRGs have executive sponsors and advisors
among senior management and sponsors among local management who support their strategy and growth. BRG
executive sponsors help connect BRGs with people at the highest levels of UPS, so the BRGs can best align their
objectives with those of the Company. BRGs at UPS make significant contributions to growing the business,
developing our people and supporting the communities we serve.
Our Chief Human Resources Officer also serves as the Chief DEI Officer, a position on the Company’s Executive
Leadership Team reporting directly to our CEO. Our Chief DEI Officer regularly reports directly to the Board of
Directors on, among other things, progress towards our goals. The Chief DEI Officer also engages with UPS
suppliers, customers and other external partners to encourage the adoption of more proactive efforts in
these areas.
UPS’s commitment to diversity is reflected in our workforce demographics
Starting from the most senior levels at UPS, our commitment to diversity and inclusion is evident:
• Board of Directors – 42% of our directors are women and 33% are non-white; 100% of the directors who
have joined our board since 2020 are diverse
• Executive Leadership Team – 33% of our Executive Leadership Team members are women and 22% are non-
white
• Management – as disclosed in our most recent GRI Report, while 22% of our workforce is composed of
women, 38% of our entry level management positions, and 26% of our senior and middle management
positions, are held by women; in addition, 49% of our entry level management positions, and 38% of senior
and middle management positions, are held by non-white employees.
UPS provides investors with significant diversity and inclusion data
UPS discloses significant diversity and inclusion information for investors. For example, we annually disclose our
consolidated EEO-1 report, which contains prior year gender, racial and ethnic composition of our US workforce
by EEO-1 job category. We also include race and gender information for our board nominees in our Proxy
Statement, and publicly disclose progress towards our women and ethnic diversity in management aspirational
goals. We provide additional information about our diversity and inclusion efforts in our annual GRI Reports. We
believe these disclosures provide investors with necessary and appropriate information to determine the
effectiveness of our human capital management efforts.
5https://www.sec.gov/ix?doc=/Archives/edgar/data/1090727/000109072723000015/ups-20230320.htm
75
UPS has consistently been named a top company for its diversity and inclusion efforts
We further believe the effectiveness and appropriateness of our efforts in this area have been validated through
our receipt of numerous awards, including:
• UPS was recognized by Forbes in 2023 as one of America’s Best Employers for Veterans;
• Carol Tomé was recognized by the Diversity and Leadership Conference as a 2023 Top 50 CEO for Diversity;
• UPS was named as One of America’s Greatest Workplaces 2023 For Diversity;
• UPS was recognized by Forbes as one of the Best Workplaces for Women;
• UPS was named by Black Enterprise to its Best Companies for Diversity, Equity and Inclusion list;
• UPS was named by Supply Chain as one of the top 10 companies committed to implementing diversity,
equity and inclusion initiatives in recruitment and partnership;
• UPS was ranked #22 on the 2022 Break the ceiling touch the sky® 101 Best Global Companies for Women in
Leadership Index;
• UPS was named as one of the best places to work for LGBTQ employees, scoring a 100% on the Human
Rights Campaign Foundation’s 2022 Corporate Equality Index; and
• UPS was listed as a 2023 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 is responsible, directly and through the Compensation and Human Capital Committee, for oversight of
human capital matters. 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.
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.
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.
As a result, the board recommends that shareowners vote AGAINST this proposal.
76
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Important Information About Voting at the
2024 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 2024 Annual Meeting,
as well as our 2023 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 18, 2024.
When you vote, you appoint each of Carol Tomé and Norman M. Brothers, Jr. to vote your shares at the Annual
Meeting as you have instructed them. If a matter that is not on the form of proxy is voted on, then you appoint
them to vote your shares in accordance with their best judgment. This allows your shares to be voted whether or
not you attend the Annual Meeting.
Why did some shareowners receive a Notice of Internet Availability of Proxy
Materials while others received a printed set of proxy materials?
We may furnish our proxy materials to requesting shareowners over the Internet, rather than by mailing printed
copies, so long as we send them a Notice. The Notice explains how to access and review the Proxy Statement
and Annual Report and vote over the Internet at www.proxyvote.com. If you received the Notice and would like
to receive printed proxy materials, follow the instructions in the Notice. If you received printed proxy materials,
you won’t receive the Notice, but you may still access our proxy materials and submit your proxy over the
Internet at www.proxyvote.com.
Can I receive future proxy materials and annual reports electronically?
Yes. This Proxy Statement and the 2023 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 5, 2024
are entitled to vote. This is the “Record Date.” You must use your 16-digit control number found on your proxy
card, voting instruction form or the Notice of Internet Availability you previously received to participate in the
meeting and vote. A list of shareowners entitled to vote at the Annual Meeting will be accessible during regular
business hours for ten days prior to the meeting at our principal place of business, 55 Glenlake Parkway, N.E.,
Atlanta, Georgia 30328.
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
entitled to one vote per share. On the Record Date, there were 125,210,605 shares of our class A common stock
and 727,925,905 shares of our class B common stock outstanding and entitled to vote.
The voting rights of any shareowner or group of shareowners, other than any of our employee benefit plans, that
beneficially owns shares representing more than 25% of our voting power are limited so that the shareowner or
group may cast only one one-hundredth of a vote with respect to each vote in excess of 25% of the outstanding
voting power.
77
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 1, 2024.
• By Telephone. If you received a proxy card by mail, the toll-free telephone number is noted on your proxy
card. Telephone voting is available 24 hours a day at 1-800-690-6903 and will be accessible until 11:59 p.m.
Eastern Time on May 1, 2024.
• By Mail. If you received a proxy card by mail and choose to vote in advance by mail, simply mark your proxy
card, date and sign it, and return it in the postage-paid envelope.
If you hold class A shares in the UPS Stock Fund in the UPS 401(k) Savings Plan, you may vote your shares
through the Internet, by telephone, or by mail as if you were a registered shareowner. To allow sufficient time
for voting by the Plan trustee, your voting instructions must be received by 11:59 Eastern Time on
April 29, 2024.
Even if you plan to attend the Annual Meeting, we encourage you to vote in advance. If you vote
through the Internet or by telephone, you do not need to return your proxy card.
The method you use to vote in advance will not limit your right to vote online during the Annual Meeting.
BENEFICIAL SHAREOWNER VOTING OPTIONS
If you are a beneficial owner, you will receive instructions from your bank, broker or other nominee that you must follow in
order for your shares to be voted. Many of these institutions offer telephone and Internet voting. If your voting instruction
form or Notice indicates that you may vote these shares through www.proxyvote.com, you will need the 16-digit control
number indicated on that form or Notice. If you did not receive a 16-digit control number, please contact your bank, broker or
other nominee at least five days before the Annual Meeting and obtain a legal proxy to be able to participate in or vote at the
Annual Meeting.
Can I revoke my proxy or change my vote?
Shareowners of record may revoke their proxy or change their vote at any time before the polls close at the
Annual Meeting by:
• submitting a subsequent proxy through the Internet, by telephone or by mail with a later date;
• sending a written notice to our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328; or
• voting online during the Annual Meeting using the 16-digit code.
If you hold class B shares through a bank or broker, please refer to your proxy card, the Notice or other
information forwarded by your bank or broker to see how you can revoke your proxy and change your vote
before the Annual Meeting. Beneficial shareowners that attend the Annual Meeting using the 16-digit code they
received as described below will also be able to change their vote by voting online at any time before the polls
close at the Annual Meeting.
How many votes do you need to hold the Annual Meeting?
The presence, online or by proxy, of the holders of a majority of the votes entitled to be cast at the Annual
Meeting will constitute a quorum. A quorum is necessary to hold the Annual Meeting and conduct business. If a
quorum is not present, the Annual Meeting may be adjourned from time to time until a quorum is present.
What happens if I do not provide voting instructions or if a nominee is unable to
stand for election?
If you sign and return a proxy but do not provide voting instructions, your shares will be voted as recommended
by the board. If a director nominee is unable to stand for election, the board may either reduce the number of
directors that serve on the board or designate a substitute nominee. If the board designates a substitute
nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted
for the substitute nominee.
78
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Will my shares be voted if I do not vote through the Internet, by telephone or by
signing and returning my proxy card?
If you are a shareowner of record and you do not vote, then your shares will not count in deciding the matters
presented for shareowner consideration at the Annual Meeting. If your class A shares are held in the UPS Stock
Fund in the UPS 401(k) Savings Plan and you do not vote by 11:59 p.m. Eastern Time on April 29, 2024, then
the Plan trustee will vote your shares for each proposal in the same proportion as the shares held by the Plan for
which voting instructions were received.
If your class B shares are held in street name through a bank or broker, your bank or broker must vote
according to specific instructions they receive from you. If brokers do not receive specific instructions, brokers
may in some cases vote the shares in their discretion. But they are not permitted to vote on certain proposals
and may elect not to vote on any of the proposals without your voting instructions. If you do not provide voting
instructions and the broker elects to vote your shares on some but not all matters, it will result in a "broker non-
vote" for the matters on which the broker votes. Abstentions occur when you provide voting instructions but
instruct the broker to abstain from voting on a particular matter. Broker non-votes that are represented at the
Annual Meeting will be counted for purposes of establishing a quorum. We encourage you to provide instructions
to your bank or brokerage firm by voting your proxy so that your shares will be voted at the Annual Meeting in
accordance with your wishes.
What is the vote required for each proposal to pass, and what is the effect of
abstentions and broker non-votes on each of the proposals?
Our Bylaws provide for majority voting in uncontested director elections. Therefore, a nominee will only be
elected if the number of votes cast for the nominee’s election is greater than the number of votes cast against
that nominee. See “Corporate Governance – Majority Voting and Director Resignation Policy” for an explanation
of what would happen if more votes are cast against a nominee than for the nominee. Abstentions are not
considered votes cast for or against the nominee. For each other proposal to pass, in accordance with our
Bylaws, the proposal must receive the affirmative vote of a majority of the voting power of the shares present in
person or by proxy at the Annual Meeting and entitled to vote on such proposal.
The following table summarizes the votes required for each proposal to pass and the effect of abstentions and
broker non-votes on each proposal.
Proposal
Number
1.
Item
Election of 12 directors
Vote Required for
Approval
Majority of votes cast
Abstentions
No effect
Uninstructed
shares
No effect
2.
3.
Advisory vote to approve NEO
compensation
Majority of the voting power of the shares
represented at the meeting and entitled to
vote on the proposal
Same as a
vote against
Ratification of independent
registered public accounting firm
Majority of the voting power of the shares
represented at the meeting and entitled to
vote on the proposal
Same as a
vote against
4. - 6.
Shareowner proposals
Majority of the voting power of the shares
represented at the meeting and entitled to
vote on the proposal
Same as a
vote against
No effect
No effect
No effect
How do I attend and vote at the Annual Meeting?
The Annual Meeting will take place on May 2, 2024, at 8:00 a.m. Eastern Time. There will not be a physical
location for the Annual Meeting, and you will not be able to attend in person. You or your proxyholder can
participate and vote by visiting www.virtualshareholdermeeting.com/UPS2024 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 2, 2024.
79
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/UPS2024 with your 16-digit control number, as described
above under “How do I attend and vote at the Annual Meeting?” We will answer questions and address
comments relevant to meeting matters that comply with the meeting rules of conduct during the Annual
Meeting, subject to time constraints. We will summarize multiple questions submitted on the same topic. We will
make every effort to respond to all appropriate questions during the meeting, as time permits.
If there are matters of individual concern to a shareowner and not of general concern to all shareowners, or if a
question posed was not otherwise answered, we provide an opportunity for shareowners to contact us separately
at www.investors.ups.com.
What if I have technical difficulties or trouble accessing the virtual Annual Meeting?
For help with technical difficulties on the meeting day you can call 1-800-586-1548 (toll free) or 303-562-9288
(international) for assistance. Technical support will be available starting at 7:00 a.m. Eastern Time and until the
meeting has finished.
What does it mean if I receive more than one Notice, proxy card or voting
instruction form?
This means that your shares are registered in different names or are held in more than one account. To ensure
that all shares are voted, please vote each account by using one of the voting methods as described above.
When and where will I be able to find the voting results?
You can find the official results of the voting at the Annual Meeting in our Current Report on Form 8-K that we
will file with the SEC within four business days after the Annual Meeting. If the official results are not available at
that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an
amendment as soon as they become available.
80
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
Other Information for Shareowners
Solicitation of Proxies
We will pay our costs of soliciting proxies. Directors, officers and other employees, acting without special
compensation, may solicit proxies by mail, email, in person or by telephone. We will reimburse brokers,
fiduciaries, custodians and other nominees for out-of-pocket expenses incurred in sending our proxy materials
and Notice to, and obtaining voting instructions relating to the proxy materials and Notice from, shareowners. In
addition, we have retained Georgeson, Inc. to assist in the solicitation of proxies for the Annual Meeting at a fee
of approximately $16,000 plus associated costs and expenses.
Eliminating Duplicative Proxy Materials
We have adopted a procedure approved by the SEC called “householding” under which multiple shareowners
who share the same last name and address and do not participate in electronic delivery will receive only one
copy of the annual proxy materials or Notice unless we receive contrary instructions from one or more of the
shareowners. If you wish to opt out of householding and continue to receive multiple copies of the proxy
materials or Notice at the same address, or if you have previously opted out and wish to participate in
householding, you may do so by notifying us in writing or by telephone at: UPS Investor Relations, 55 Glenlake
Parkway, N.E., Atlanta, Georgia 30328, (404) 828-6059, and we will promptly deliver the requested materials.
You also may request additional copies of the proxy materials or Notice by notifying us in writing or by telephone
at the same address or telephone number.
Submission of Shareowner Proposals and
Director Nominations
Proposals for Inclusion in the Proxy Statement for the 2025 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 2025 Annual Meeting of
Shareowners must submit their proposals so that they are received by our Corporate Secretary at 55 Glenlake
Parkway, N.E., Atlanta, Georgia 30328, or via email to investor@ups.com, no later than 6:00 p.m. Eastern Time
on November 18, 2024. Any proposal will need to comply with SEC regulations regarding the inclusion of
shareowner proposals in Company-sponsored proxy material. As the rules of the SEC make clear, simply
submitting a proposal does not guarantee its inclusion.
Director Nominations for Inclusion in the Proxy Statement for the 2025
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 18, 2024 and no earlier than 6:00 p.m.
Eastern Time on October 19, 2024. However, if the date of our 2025 Annual Meeting occurs more than 30 days
before or 30 days after May 2, 2025, the anniversary of the 2024 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
81
to the date of the 2025 Annual Meeting and (b) the 10th day following the day on which we first make a public
announcement of the date of the 2025 Annual Meeting. As our Bylaws make clear, simply submitting a
nomination does not guarantee its inclusion.
Other Proposals or Director Nominations for Presentation at the 2025
Annual Meeting
Shareowners who wish to propose business or nominate persons for election to the Board of Directors at the
2025 Annual Meeting of Shareowners, and the proposal or nomination is not intended to be included in our 2025
proxy statement, must provide a notice of shareowner business or nomination in accordance with Article II,
Section 10 of our Bylaws (which includes information required under Rule 14a-19 under the Securities Exchange
Act of 1934). In order to be properly brought before the 2025 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 2025 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 1, 2025, and
no earlier than 6:00 p.m. Eastern Time on December 3, 2024. However, if the date of our 2025 Annual Meeting
occurs more than 30 days before or 30 days after May 2, 2025, the anniversary of the 2024 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 2025 Annual Meeting and (b) the 10th day following the day on
which we first make a public announcement of the date of the 2025 Annual Meeting.
To be in proper form, a shareowner’s notice must be a proper subject for shareowner action at the Annual
Meeting and must include the specified information concerning the proposal or nominee as described in Article II,
Section 10 of our Bylaws. Our Bylaws are available on the governance page of our investor relations website at
www.investors.ups.com.
2023 Annual Report on Form 10-K
A copy of our 2023 Annual Report on Form 10-K, including financial statements, as filed with the SEC
may be obtained without charge upon written request to: Corporate Secretary, 55 Glenlake Parkway,
N.E., Atlanta, Georgia 30328. It is also available on our investor relations website at
www.investors.ups.com.
Other Business
Our Board of Directors is not aware of any business to be conducted at the Annual Meeting other than the
proposals described in this Proxy Statement. Should any other matter requiring a vote of the shareowners arise,
the persons named in the accompanying proxy card will vote in accordance with their best judgment. A proxy
granted by a shareowner in connection with the Annual Meeting will give discretionary authority to the named
proxy holders to vote on any such matters that are properly presented at the Annual Meeting, subject to
SEC rules.
This Proxy Statement contains “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements
accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,”
“target,” “plan” and similar terms, are intended to be forward-looking statements. Forward-looking statements
are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to our
intent, belief and current expectations about our strategic direction, prospects and future results, and give our
current expectations or forecasts of future events; they do not relate strictly to historical or current facts.
Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ
materially from our historical experience and our present expectations or anticipated results. These risks and
uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2023, filed with the SEC and being made available with
82
Notice of Annual Meeting of Shareowners and 2024 Proxy Statement
this Proxy Statement, and may also be described from time to time in our future reports filed with the SEC. You
should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on
the accuracy of predictions contained in such forward-looking statements. Management believes that these
forward-looking statements are reasonable as and when made. However, caution should be taken not to place
undue reliance on any such forward-looking statements because such statements speak only as of the date when
made. We do not undertake any obligation to update forward-looking statements to reflect events,
circumstances, changes in expectations or the occurrence of unanticipated events after the date of
those statements.
Any standards of measurement and performance made in reference to our environmental, social, governance
and other sustainability plans and goals are developing and based on assumptions, and no assurance can be
given that any such plan, initiative, projection, goal, commitment, expectation, or prospect can or will
be achieved.
Website links included in this Proxy Statement are for convenience only. The content of any website links is not
incorporated herein and does not constitute a part of this Proxy Statement.
83
ANNUAL MEETING OF SHAREOWNERS
Thursday, May 2, 2024, 8:00 a.m. Eastern Time
www.virtualshareholdermeeting.com/UPS2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-15451
____________________________________
United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
55 Glenlake Parkway, N.E Atlanta, Georgia
(Address of Principal Executive Offices)
58-2480149
(I.R.S. Employer
Identification No.)
30328
(Zip Code)
(404) 828-6000
(Registrant’s telephone number, including area code)
_______________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Class B common stock, par value $0.01 per share
1.625% Senior Notes due 2025
1% Senior Notes due 2028
1.500% Senior Notes due 2032
UPS
UPS25
UPS28
UPS32
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
_________________________________
Securities registered pursuant to Section 12(g) of the Act:
Class A common stock, par value $0.01 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
definitions of “ large accelerated filer”, “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x Accelerated filer ¨ Non-accelerated filer ¨
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The aggregate market value of the class B common stock held by non-affiliates of the registrant was $129,730,366,499 as of June 30, 2023. The registrant’s class A common stock is not
listed on a national securities exchange or traded in an organized over-the-counter market, but each share of the registrant’s class A common stock is convertible into one share of the
registrant’s class B common stock.
As of February 2, 2024, there were 125,836,384 outstanding shares of class A common stock and 726,816,677 outstanding shares of class B common stock.
Portions of the registrant’s definitive proxy statement for its annual meeting of shareowners scheduled for May 2, 2024 are incorporated by reference into Part III of this report.
DOCUMENTS INCORPORATED BY REFERENCE
UNITED PARCEL SERVICE, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
Item 1.
Business
Overview
Strategy
Competitive Strengths
Products and Services; Reporting Segments
Human Capital
Customers
Competition
Government Regulation
Where You Can Find More Information
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2.
Properties
Operating Facilities
Fleet
Item 3.
Item 4.
Legal Proceedings
Mine Safety Disclosures
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Shareowner Return Performance Graph
Item 6.
Item 7.
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
PART II
Overview
Supplemental Information - Items Affecting Comparability
U.S. Domestic Package Operations
International Package Operations
Supply Chain Solutions Operations
Consolidated Operating Expenses
Other Income and (Expense)
Income Tax Expense
Liquidity and Capital Resources
Collective Bargaining Agreements
New Accounting Pronouncements
Critical Accounting Estimates
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Principal Accountant Fees and Services
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
PART IV
1
1
1
2
2
5
6
6
6
8
10
17
17
18
18
19
19
19
20
21
22
23
23
25
29
32
35
38
41
42
43
50
50
51
57
59
132
132
134
134
135
136
136
136
136
137
137
Cautionary Statement About Forward-Looking Statements
PART I
This report and our other filings with the Securities and Exchange Commission ("SEC") contain and in the future may
contain "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.
From time to time, we also include written or oral forward-looking statements in other publicly disclosed materials. Such
statements may relate to our intent, belief, forecasts of, or current expectations about our strategic direction, prospects, future
results or future events; they do not relate strictly to historical or current facts. 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 and the future, by its very nature,
cannot be predicted with certainty.
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" and elsewhere in this report 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. 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, except as required by law.
From time to time, we expect to participate in analyst and investor conferences. Materials provided or displayed at those
conferences, such as slides and presentations, may be posted on our investor relations website at www.investors.ups.com under
the heading "Presentations" when made available. These presentations may contain new material nonpublic information about
our company and you are encouraged to monitor this site for any new posts, as we may use this mechanism as a public
announcement.
Item 1. Business
Overview
United Parcel Service, Inc. ("UPS"), founded in 1907, is the world’s premier package delivery company and a leading
provider of global supply chain management solutions. We offer a broad range of industry-leading products and services
through our extensive global presence. Our services include transportation and delivery, distribution, contract logistics, ocean
freight, airfreight, customs brokerage and insurance.
We operate one of the largest airlines and one of the largest fleets of alternative fuel vehicles under a global UPS brand.
We deliver packages each business day for approximately 1.6 million shipping customers to 10.2 million delivery recipients in
over 200 countries and territories. In 2023, we delivered an average of 22.3 million packages per day, totaling 5.7 billion
packages during the year. Total revenue in 2023 was $91.0 billion.
Strategy
Our well-defined strategy focuses on growing in the parts of our market that value our end-to-end network. We are
continuing on the journey to execute our Customer First, People Led, Innovation Driven strategy as we evolve our business to
be better and bolder.
Customer First is about anticipating and solving for the needs of our customers. We strive to help our customers seize
new opportunities, better compete and succeed by delivering the capabilities that they tell us matter the most: speed and ease.
People Led specifically focuses on how likely an employee is to recommend UPS employment to a friend or family
member. We know successful outcomes are built from a strong culture and we believe that when we take care of our people,
they take care of our customers.
1
Innovation Driven is designed to optimize the volume that flows through our network to focus on increasing value share
and to drive business growth from higher-yielding opportunities in our target markets. We continue to leverage data and
automation to deliver improvements to our network and unlock additional value for our customers through innovation.
Competitive Strengths
Our competitive strengths include:
Global Smart Logistics Network. We believe that our integrated global air and ground network is the most extensive in the
industry. We provide all types of package services (air, ground, domestic, international, commercial and residential) through a
single pickup and delivery network. Our sophisticated systems, including our RFID-enabled Smart Package, Smart Facility
technology, allow us to optimize network efficiency and asset utilization, and enhance end-to-end shipment visibility.
Global Presence. We serve more than 200 countries and territories. We have a significant presence in all of the world’s
major economies, allowing us to effectively and efficiently operate around the world.
Cutting-Edge Technologies. We are a global leader in developing technologies that help customers enhance their shipping
and logistics business processes to lower costs, improve service and increase efficiency. We offer a variety of digital tools and
capabilities that enable customers to integrate UPS functionality into their distribution channels, deepening customer
relationships. These tools allow customers to send, manage and track their shipments, and also provide their customers with
value-added data.
Broad Portfolio of Services. Our service portfolio allows customers to choose their most appropriate delivery option.
Increasingly, our customers benefit from UPS business solutions that integrate our services beyond package delivery. For
example, our supply chain services are designed to improve the efficiency and resilience of customers’ entire supply chain
management process.
Customer Relationships. We focus on building and maintaining long-term customer relationships. Value-added services
beyond package delivery, and connecting our small package, supply chain and digital services across our customer base, are
important to customer retention and growth.
Brand Equity. We have built a leading and trusted brand that stands for service quality, reliability and product innovation.
Our vehicles and the professional courtesy of our drivers are major contributors to our brand equity.
Distinctive Culture. We believe that the dedication of our employees comes in large part from our purpose-driven culture
that fosters trust, partnership and empowerment. We encourage our people to bring their unique perspectives, background,
talents and skills to work every day. Our legacy of fairness and equity is the bedrock of our culture and of our relationships with
those we serve.
Financial Strength. Our financial strength allows us to continue to pursue strategic opportunities that facilitate our growth.
This includes investing in digital technology, acquisitions, transportation equipment, facilities and employee development to
generate value for shareholders. We seek to maintain a strong credit rating to give us additional flexibility in running the
business.
Products and Services; Reporting Segments
We have two reporting segments: U.S. Domestic Package and International Package. Our remaining businesses are
reported as Supply Chain Solutions. U.S. Domestic Package and International Package are together referred to as our global
small package operations.
Global Small Package
Our global small package operations provide time-definite delivery services for express letters, documents, packages and
palletized freight via air and ground services. These services are supported by numerous shipping, visibility and billing
technologies including our Digital Access Program, which embeds our shipping solutions directly into leading e-commerce
platforms, enabling us to more broadly reach small- and medium-sized businesses and e-commerce markets.
All of our services are managed through a single, global smart logistics network. We combine all packages within this
single network, unless dictated by specific service commitments. This enables us to efficiently pick up customers’ shipments
for any services at a scheduled time each day. Our global smart logistics network provides unique operational and capital
efficiencies that also have a lesser environmental impact than single service network designs.
2
We offer same-day pickup of air and ground packages seven days a week. Our global smart logistics network offers
approximately 180,000 entry points where customers can tender packages to us at locations and times convenient to them. This
includes UPS drivers who can accept packages, UPS drop boxes, UPS Access Point locations, The UPS Store locations,
authorized shipping outlets and commercial counters, alliance locations and customer centers attached to UPS facilities.
We offer a portfolio of returns services in more than 140 countries. These services are driven by the continued growth of
e-commerce that has increased our customers' need for efficient and reliable returns, and are designed to promote efficiency and
a friction-free consumer experience. This portfolio provides a range of cost-effective label and digital returns options and a
broad network of consumer drop points. To accelerate growth of this portfolio, in the fourth quarter of 2023 we acquired Happy
Returns, a technology-focused company that is managed and reported within Supply Chain Solutions, to provide innovative
end-to-end return services and a consolidated returns solution for our enterprise retail customers.
Our global air operations hub is located in Louisville, Kentucky, and is supported by air hubs across the United States
("U.S.") and internationally. We operate international air hubs in Germany, China, Hong Kong, Canada and Florida (for Latin
America and the Caribbean). This design enables cost-effective package processing using fewer, larger and more fuel-efficient
aircraft.
U.S. Domestic Package
We are a leader in time-definite, guaranteed small package delivery services in the United States. We offer a full spectrum
of U.S. domestic air and ground package transportation services. Our U.S. ground fleet serves all business and residential zip
codes in the contiguous United States.
•
•
•
Our air portfolio offers time-definite, same-day, next-day, two-day and three-day delivery alternatives.
Our ground network enables customers to ship using our day-definite ground service. We deliver approximately 16
million ground packages per day, most within one to three business days.
UPS SurePost provides residential ground service for customers with non-urgent, lightweight residential shipments. It
offers the consistency and reliability of the UPS ground network, with final delivery often provided by the U.S. Postal
Service.
International Package
International Package consists of our small package operations in Europe, the Indian sub-continent, Middle East and
Africa (together "EMEA"), Canada and Latin America (together "Americas") and Asia. We offer a wide selection of guaranteed
day- and time-definite international shipping services, including more guaranteed time-definite express options than any other
carrier.
For international package shipments that do not require express services, UPS Worldwide Expedited offers a reliable,
deferred, guaranteed day-definite service option. For cross-border ground package delivery, we offer UPS Standard delivery
services within Europe, between the U.S. and Canada, and between the U.S. and Mexico. UPS Worldwide Express Freight is a
premium international service for urgent, palletized shipments over 150 pounds.
3
Supply Chain Solutions
Supply Chain Solutions consists of our forwarding, logistics, digital and other businesses. Serving more than 200
countries and territories, we strategically seek to provide integration across increasingly complex, specialized and fragmented
supply chains.
Forwarding
We are one of the largest U.S. domestic airfreight carriers and airfreight forwarders globally. We offer a portfolio of
guaranteed and non-guaranteed global airfreight services. Additionally, as one of the world’s leading non-vessel operating
common carriers, we provide ocean freight full container load, less-than-container load and multimodal transportation services
between most major ports around the world.
We are among the world’s largest customs brokers, measured by both the number of shipments processed annually and by
the number of dedicated brokerage employees worldwide. In addition to customs clearance services, we provide product
classification, trade management, duty drawback and consulting services.
We provide brokerage services that coordinate a fleet of less-than-truckload and truckload vehicles for shipments
requiring ground freight transportation in North America and Europe. Access to the UPS fleet, combined with a broad third-
party carrier network, enables us to create capacity solutions for customers of all sizes across industries, delivered through a
combination of people and technology. Customers can also access UPS services such as airfreight, customs brokerage and
global freight forwarding.
Logistics
Our global logistics and distribution business provides value-added fulfillment and transportation management services.
We leverage a network of facilities in over 120 countries to seek to ensure products and parts are in the right place at the right
time. We operate both multi-client and dedicated facilities across our network, many of which are strategically located near
UPS air and ground transportation hubs to support rapid delivery to business and consumer markets. We continue to invest in
the automation of our facilities to meet customer demand.
We offer world-class technology, deep expertise and a highly sophisticated suite of healthcare logistics services. With a
strategic focus on serving the unique, priority-handling needs of healthcare and life sciences customers, we continue to increase
our complex cold-chain logistics capabilities both in the U.S. and internationally. In furtherance of this strategy and to broaden
our reach and services, we recently acquired Bomi Group and MNX Global Logistics.
Digital and other Supply Chain Solutions businesses
Our digital businesses leverage technology to enable a range of on-demand services. Roadie offers customers the
convenience of same-day delivery, while Happy Returns offers innovative end-to-end return services that leverage The UPS
Store network. We also offer integrated supply chain and high-value shipment insurance solutions to both small and large
businesses through UPS Capital, as well as a range of services through our other Supply Chain Solutions businesses. We
believe these services are important to meeting customers' needs and deepening customer relationships.
4
Human Capital
Our success is dependent upon our people, working together with a common purpose. As we seek to capture new
opportunities and pursue growth, we believe that transforming the UPS employee experience is foundational to our success.
This requires a thoughtful balance between the culture we have cultivated over the years and the new perspectives we need to
take the business into the future.
We believe that UPS employees are among the most motivated and highest performing in the industry and provide us a
competitive advantage. To assist with employee recruitment and retention, we continue to review the competitiveness of our
employee value proposition, including benefits and pay, training, talent development and promotion opportunities. For
additional information on the importance of our human capital efforts, see "Risk Factors - Business and Operating Risks -
Failure to attract or retain qualified employees could materially adversely affect us" and "- Strikes, work stoppages or
slowdowns by our employees could materially adversely affect us".
We have approximately 500,000 employees (excluding temporary seasonal employees), of which 414,000 are in the U.S.
and 86,000 are located internationally. Our global workforce includes approximately 85,000 management employees (42% of
whom are part-time) and 415,000 hourly employees (48% of whom are part-time). More than 70% of our U.S. employees are
represented by unions, primarily those employees handling or transporting packages. Many of these employees are employed
under a national master agreement and various supplemental agreements with local unions affiliated with the International
Brotherhood of Teamsters ("Teamsters"). In the third quarter of 2023, the Teamsters fully ratified a new national master
agreement that expires July 31, 2028. In addition, approximately 3,300 of our pilots are represented by the Independent Pilots
Association ("IPA"). Our agreement with the IPA becomes amendable September 1, 2025.
Oversight and management
We seek to create an inclusive and equitable environment that brings together a broad spectrum of backgrounds, cultures
and stakeholders. We believe leveraging diverse perspectives and creating inclusive environments improves our organizational
effectiveness, cultivates innovation, and drives growth.
Our board, directly and through the 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 has been 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.
Additional information on our human capital efforts is contained in our annual sustainability report, which describes our
activities that support our commitment to acting responsibly and contributing to society. This report is available under the
heading "Social Impact" at www.about.ups.com.
Collective bargaining
We bargain in good faith with the unions that represent our employees. We frequently engage union leaders at the national
level and at local chapters throughout the United States. We participate in works councils and associations outside the U.S.,
which allows us to respond to emerging issues abroad. This work helps our operations to build and maintain productive
relationships with our employees. For additional information regarding employees employed under collective bargaining
agreements, see note 6 to the audited, consolidated financial statements.
5
Employee health and safety
We seek to provide industry-leading employee health, safety and wellness programs across our workforce. UPS's
Comprehensive Health and Safety Program ("CHSP") is an occupational health and safety system tailored to our varied
operational environments.
Our CHSP covers a wide array of roles, from package handling to administration, and spans geographical boundaries to
include sorting facilities, mobile logistics, administrative offices, and other locations worldwide. UPS conducts audits to assess
specific risks and hazards, including equipment safety, workplace environment, and emergency response protocols. We monitor
our safety performance through various measurable targets, including lost time injury frequency and the number of recorded
auto accidents.
Customers
Building and maintaining long-term customer relationships through superior service is a competitive strength of UPS. In
2023, we served 1.6 million shipping customers and more than 10.2 million delivery recipients daily. For the year ended
December 31, 2023, one customer, Amazon.com, Inc. and its affiliates, represented approximately 11.8% of our consolidated
revenues, substantially all of which was within our U.S. Domestic Package segment. For additional information on our
customers, see "Risk Factors - Business and Operating Risks - Changes in our relationships with any of our significant
customers, including the loss or reduction in business from one or more of them, could have a material adverse effect on us"
and note 14 to the audited, consolidated financial statements.
Competition
We offer a broad array of transportation and logistics services and compete with many local, regional, national and
international logistics providers as well as national postal services. We believe our strategy, network and competitive strengths
position us well to compete in the marketplace. For additional information on our competitive environment, see "Risk Factors -
Business and Operating Risks - Our industry is rapidly evolving. We expect to continue to face significant competition, which
could materially adversely affect us".
Government Regulation
We are subject to numerous laws and regulations in the countries in which we operate. Continued compliance with
increasingly stringent laws, regulations and policies in the U.S. and in the other countries in which we operate may result in
materially increased costs, or we could be subject to substantial fines or possible revocation of our authority to conduct our
operations.
Air Operations
The U.S. Department of Transportation ("DOT"), the Federal Aviation Administration ("FAA") and the U.S. Department
of Homeland Security, through the Transportation Security Administration ("TSA"), have primary regulatory authority over our
air transportation services.
The DOT’s authority primarily relates to economic aspects of air transportation, such as operating authority, insurance
requirements, pricing, non-competitive practices, interlocking relations and cooperative agreements. The DOT also regulates
international routes, fares, rates and practices and is authorized to investigate and take action against discriminatory treatment of
U.S. air carriers abroad. International operating rights for U.S. airlines are usually subject to bilateral agreements between the
U.S. and foreign governments or, in the absence of such agreements, by principles of reciprocity. We are also subject to current
and potential aviation, health, customs and immigration regulations imposed by governments in other countries in which we
operate, including registration and license requirements and security regulations. We have international route operating rights
granted by the DOT and we may apply for additional authorities when those operating rights are available and are required for
the efficient operation of our international network. The efficiency and flexibility of our international air transportation network
is subject to DOT and foreign government regulations and operating restrictions.
The FAA’s authority primarily relates to operational, technical and safety aspects of air transportation, including
certification, aircraft operating procedures, transportation of hazardous materials, record keeping standards and maintenance
activities and personnel. In addition, we are subject to non-U.S. government regulation of aviation rights involving non-U.S.
jurisdictions and non-U.S. customs regulation.
6
UPS's aircrew, dispatch and aircraft maintenance certification, training, programs and procedures, including aircraft
inspection and repair at periodic intervals, are approved for all aircraft and carrier operations under FAA regulations. The future
cost of changes and repairs pursuant to these programs and procedures may fluctuate according to aircraft condition, age and
the enactment of additional FAA regulatory requirements.
The TSA regulates various security aspects of air cargo transportation. Our airport and off-airport locations, as well as our
personnel, facilities and procedures involved in air cargo transportation must comply with TSA regulations.
We participate in the Civil Reserve Air Fleet ("CRAF") program. Our participation in this program allows the U.S.
Department of Defense ("DOD") to requisition specified UPS aircraft for military use during a national defense emergency. The
DOD is required to compensate us for any use of aircraft under the CRAF program. In addition, participation in the CRAF
program entitles us to bid for other U.S. Government opportunities including small package and airfreight.
Ground Operations
Our ground transportation of packages in the U.S. is subject to regulation by the DOT and its agency, the Federal Motor
Carrier Safety Administration (the "FMCSA"). Ground transportation also falls under state jurisdiction with respect to the
regulation of operations, safety and insurance. Our ground transportation of hazardous materials in the U.S. is subject to
regulation by the DOT's Pipeline and Hazardous Materials Safety Administration. We also must comply with safety and fitness
regulations promulgated by the FMCSA, including those relating to drug and alcohol testing and hours of service for drivers.
Ground transportation of packages outside of the U.S. is subject to similar regulatory schemes in the countries in which we
transport those packages.
The Postal Reorganization Act of 1970 created the U.S. Postal Service as an independent establishment of the executive
branch of the federal government, and created the Postal Rate Commission, an independent agency, to recommend postal rates.
The Postal Accountability and Enhancement Act of 2006 amended the 1970 Act to give the re-named Postal Regulatory
Commission revised oversight authority over many aspects of the U.S. Postal Service, including postal rates, product offerings
and service standards. We sometimes participate in proceedings before the Postal Regulatory Commission in an attempt to
facilitate compliance with fair competition requirements for competitive services.
Our ground operations are also subject to compliance with various cargo-security and transportation regulations issued by
the U.S. Department of Homeland Security, including regulation by the TSA in the U.S., and similar regulations issued by
foreign governments in other countries.
Customs
We are subject to the customs laws regarding the import and export of shipments in the countries in which we operate,
including those related to the filing of documents on behalf of client importers and exporters. Our activities in the U.S.,
including customs brokerage and freight forwarding, are subject to regulation by the Bureau of Customs and Border Protection,
the TSA, the U.S. Federal Maritime Commission and the DOT. Our international operations are subject to similar regulatory
structures in their respective jurisdictions.
For additional information, see "Risk Factors – Business and Operating Risks – We maintain significant physical
operations. Increases in operational security requirements impose substantial costs on us and we could be the target of an attack
or have a security breach, which could materially adversely affect us".
Environmental
We are subject to U.S. and international federal, state and local environmental laws and regulations across all of our
operations. These laws and regulations cover a variety of matters such as disclosures, operations and processes, including, but
not limited to: properly storing, handling and disposing of waste materials; appropriately managing waste water and storm
water; monitoring and maintaining the integrity of underground storage tanks; complying with laws regarding clean air,
including those governing emissions; protecting against and appropriately responding to spills and releases and communicating
the presence of reportable quantities of hazardous materials to local responders. We maintain site- and activity-specific
environmental compliance and pollution prevention programs to address our environmental responsibilities and remain
compliant. In addition, we maintain numerous programs which seek to minimize waste and prevent pollution within our
operations.
Pursuant to the Federal Aviation Act, the FAA - with the assistance of the Environmental Protection Agency - is
authorized to establish standards governing aircraft noise. Our aircraft fleet complies with current noise standards of the federal
aviation regulations. Our international operations are also subject to noise regulations in certain other countries in which we
operate.
7
For additional information, see "Risk Factors – Regulatory and Legal Risks – Increasingly stringent regulations related to
climate change, including reporting obligations, could materially increase our operating costs".
Communications and Data Protection
As we use radio and other communication facilities in our operations, we are subject to the Federal Communications Act
of 1934, as amended. In addition, the Federal Communications Commission regulates and licenses our activities pertaining to
satellite communications.
We are subject to a variety of evolving laws and regulations in the U.S. and abroad regarding privacy, cybersecurity, data
protection and data security, including the European Union General Data Protection Regulation and China's Personal
Information Protection Law. There has recently been increased regulatory and enforcement focus on data protection in the U.S.
(at both the state and federal level) and in other countries.
For additional information, see "Risk Factors – Business and Operating Risks – A significant cybersecurity incident, or
increased data protection regulations, could materially adversely affect us".
Health and Safety
We are subject to numerous federal, state and local laws and regulations governing employee health and safety, both in
the U.S. and in other countries. Compliance with changing laws and regulations from time to time, including those promulgated
by the U.S. Occupational Safety and Health Administration and state agencies, could result in materially increased operating
costs and capital expenditures, and negatively impact our ability to attract and retain employees.
For additional information on governmental regulations and their potential impact on us generally, see "Risk Factors –
Regulatory and Legal Risks".
Where You Can Find More Information
We maintain websites for business and customer matters at www.ups.com, and for investor relations matters at
www.investors.ups.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any
amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) of the Securities Exchange Act of
1934 are made available free of charge on our investor relations website under the heading "Investors - SEC Filings" as soon as
reasonably practical after we electronically file or furnish the reports to the SEC.
Our Code of Business Conduct, which applies to all of our directors, officers and employees, including our principal
executive and financial officers, our Corporate Governance Guidelines and the charters for our Audit, Compensation and
Human Capital, Risk, and Nominating and Corporate Governance Committees are also available on our investor relations
website under the heading "Investors – Sustainability – Governance Documents". In the event that we make changes in, or
provide waivers from, the provisions of the Code of Business Conduct that the SEC requires us to disclose, we intend to
disclose these events within four business days following the date of the amendment or waiver under that heading on our
investor relations website.
Our sustainability reporting, which describes our activities that support our commitment to acting responsibly and
contributing to society, is available under the heading "Social Impact" at www.about.ups.com.
We provide the addresses to our websites solely for information. We do not intend for any addresses to be active links or
to otherwise incorporate the contents of any website into this or any other report we file with the SEC.
8
Disclosures Required Pursuant to Section 13(r) of the Securities Exchange Act of 1934
We maintain robust economic sanctions compliance procedures designed to promote compliance with applicable
sanctions laws. However, it is possible that from time to time we may inadvertently pick up packages from, or deliver packages
to, individuals or entities that result in required disclosure under Section 13(r).
As a component of our compliance procedures, from time to time we undertake additional reviews of historical
transactions. Based on our most recent review, from August 2018 to the date of this filing, in addition to previously disclosed
deliveries we inadvertently delivered to: Bank Melli – 2 shipments (revenue of $18.84, loss of $3.98); the Embassy of Iran
(revenue of $7.81, loss of $0.65); Syrian Airlines (revenue of $7.70, profit of $0.72); Irasco SRL – 2 shipments (revenue of
$11.59, loss of $1.08); Stark 1 (revenue of $7.33, profit of $2.02); Fanreach (revenue of $9.74, profit of $2.76); and Wael Bazzi
(revenue of $4.74, loss of $2.29). The information provided pursuant to Section 13(r) of the Exchange Act in Item 5 of Part II
of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 is incorporated by reference herein.
We do not intend to further pick up from or deliver to these parties, and we intend to continue to implement process
improvements designed to better identify and prevent potential shipments to or from restricted parties.
9
Item 1A.
Risk Factors
Our business, financial condition and results of operations are and will remain subject to numerous risks and uncertainties.
You should carefully consider the following risk factors, which may have materially affected or could materially affect us,
including impacting our business, financial condition, results of operations, stock price, credit rating or reputation. You should
read these risk factors in conjunction with "Management’s Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 and our "Financial Statements and Supplementary Data" in Item 8. These are not the only risks we face.
We could also be affected by other unknown events, factors, uncertainties, or risks that we do not currently consider to be
material.
Business and Operating Risks
Changes in general economic conditions, in the U.S. and internationally, may adversely affect us.
We conduct operations in over 200 countries and territories. Our operations are subject to national and international
economic factors, as well as the local economic environments in which we operate. Changes in general economic conditions are
beyond our control, and it may be difficult for us to adjust our business model. For example, we are affected by industrial
production, inflation, unemployment, consumer spending and retail activity levels. We have been, and may in the future be,
materially affected by adverse developments in these aspects of the economy. We have also been, and may in the future be,
adversely impacted by changes in general economic conditions resulting from geopolitical uncertainty and/or conflicts in or
arising from the countries and regions where we operate, including the United Kingdom, the European Union, Ukraine, the
Russian Federation, the Middle East and the Trans-Pacific region. Changes in general economic conditions, or our inability to
accurately forecast these changes or mitigate the impact of these conditions on our business, could materially adversely affect
us.
Our industry is rapidly evolving. We expect to continue to face significant competition, which could materially adversely
affect us.
Our industry continues to rapidly evolve, including demands for faster deliveries, increased visibility into shipments and
development of other services. We expect to continue to face significant competition on a local, regional, national and
international basis. Competitors include the U.S. and international postal services, various motor carriers, express companies,
freight forwarders, air couriers, large transportation and e-commerce companies that continue to make significant investments
in their own logistics capabilities, some of whom are currently our customers. We also face competition from start-ups and
other smaller companies that combine technologies with flexible labor solutions such as crowdsourcing. New technologies may
also create additional sources of competition. Competitors have cost, operational and organizational structures that differ from
ours and may offer services or pricing terms that we are not willing to offer. Additionally, from time to time we have raised,
and may in the future raise, prices and our customers may not be willing to accept these higher prices. If we do not
appropriately respond to competitive pressures, including replacing any lost volume or maintaining our profitability, we could
be materially adversely affected.
Transportation market growth may further increase competition. As a result, competitors may improve their financial
capacity and strengthen their competitive positions. Business combinations could also result in competitors providing a wider
variety of services and products at competitive prices, which could also materially adversely affect us.
Changes in our relationships with any of our significant customers, including the loss or reduction in business from one or
more of them, could have a material adverse effect on us.
For the year ended December 31, 2023, one customer, Amazon.com, Inc. and its affiliates, accounted for 11.8% of our
consolidated revenues. Some of our other significant customers can account for a relatively significant portion of our revenues
in a particular quarter or year. Customer impact on our revenue and profitability can vary based on a number of factors,
including: contractual volume amounts; pricing terms; product launches; e-commerce or other industry trends, including those
related to the holiday season; business combinations and the overall growth of a customer's underlying business; as well as any
disruptions to their businesses. Customers could choose, and have in the past chosen, to divert all or a portion of their business
with us to one of our competitors, demand pricing concessions, request enhanced services that increase our costs, or develop
their own logistics capabilities. In addition, certain of our significant customer contracts include termination rights of either
party upon the occurrence of certain events or without cause upon advance notice to the other party. If all or a portion of our
business relationships with one or more significant customers were to terminate or significantly change, this could materially
adversely affect us.
10
Failure to attract or retain qualified employees could materially adversely affect us.
We depend on the skills and continued service of our large workforce. We also regularly hire a large number of part-time
and seasonal workers. We must be able to attract, develop and retain a large and diverse global workforce. If we are unable to
hire, properly train or retain qualified employees, we could experience higher labor costs, reduced revenues, further increased
workers' compensation and automobile liability claims costs, regulatory noncompliance, customer losses and diminution of our
brand value or company culture, which could materially adversely affect us. Our ability to control labor costs has in the past
been, and is expected to continue to be, subject to numerous factors, including labor-related contractual obligations, turnover,
training costs, regulatory changes, market pressures, inflation, unemployment levels and healthcare and other benefit costs.
In addition, we strive to lower our cost to serve, including labor costs, through various strategic initiatives. Our inability to
continue to retain experienced and motivated employees through the execution of these initiatives may also materially adversely
affect us.
Strikes, work stoppages or slowdowns by our employees could materially adversely affect us.
Many of our U.S. employees are employed under a national master agreement and various supplemental agreements with
local unions affiliated with the International Brotherhood of Teamsters (the "Teamsters"). In the third quarter of 2023, a new
national master agreement with the Teamsters, which runs through July 31, 2028, was ratified. Our airline pilots, airline
mechanics, ground mechanics and certain other employees are employed under other collective bargaining agreements. In
addition, some of our international employees are employed under collective bargaining or similar agreements. Other
employees may choose to organize in the future. Actual or threatened strikes, work stoppages or slowdowns by our employees
could adversely affect our ability to meet our customers' needs. As a result, customers have reduced, and in the future may
reduce, their business or stop doing business with us if they believe that such actions or threatened actions may adversely affect
our ability to provide services. We may permanently lose customers if we are unable to provide uninterrupted service, and this
could materially adversely affect us. The terms of collective bargaining agreements also may affect our competitive position
and results of operations. Furthermore, our actions or responses to any such negotiations, labor disputes, strikes or work
stoppages could negatively impact how our brand is perceived and our reputation and have adverse effects on our business,
including our results of operations.
We maintain significant physical operations. Increases in operational security requirements impose substantial costs on us
and we could be the target of an attack or have a security breach, which could materially adversely affect us.
As a result of concerns about global terrorism and homeland security, various governments have adopted and may adopt
additional heightened security requirements, resulting in significantly increased operating costs. Regulatory and legislative
requirements may change periodically in response to evolving threats. We cannot determine the effect that any new
requirements will have on our operations, cost structure or operating results, and new rules or other future security requirements
may significantly increase our operating costs and reduce operating efficiencies. Regardless of our compliance with security
requirements or our own security measures, we could also be the target of an attack or security breaches could occur, which
could materially adversely affect one or more of our operations, or our business.
A significant cybersecurity incident, or increased data protection regulations, could materially adversely affect us.
We rely on information technology networks and systems and other operational technologies, including the internet and a
number of internally-developed systems and applications, as well as certain technology systems from third-party vendors
(collectively referred to as "IT") to operate our business. For example, we rely on these technologies to receive package level
information in advance of the physical receipt of packages, to move and track packages through our operations, to efficiently
plan deliveries, to execute billing processes, and to track and report financial and operational data. Our franchise locations and
subsidiaries also rely on IT systems to manage their business processes and activities.
IT and other systems (ours, as well as those of our franchisees, acquired businesses, and third-party service providers)
have been and will continue in the future to be susceptible to damage, disruptions and shutdowns due to programming errors,
defects or other vulnerabilities, power outages, hardware failures, misconfigurations, computer viruses, cyber-attacks,
encryption caused by ransomware or malware attacks, exfiltration of data, attacks by foreign governments, state-sponsored
actors, or criminal groups, theft, misconduct by employees or other insiders, telecommunications failures, misuse, human errors
or other catastrophic events. In recent periods, the frequency and sophistication of cyber-attacks have increased and are
expected to continue to increase, including as a result of state-sponsored cybersecurity attacks during periods of geopolitical
conflict, such as the ongoing conflicts in Ukraine and the Middle East. In addition, the rapid evolution and increased adoption
of artificial intelligence technologies may intensify our cybersecurity risks. Accordingly, we may be unable to anticipate these
techniques or to implement adequate measures to recognize, detect or prevent the occurrence of any of the events described
11
above. In addition, our security processes, protocols and standards may not prove to be sufficient, effective or may not be
complied with, either intentionally or inadvertently. To date, we have not experienced a material cybersecurity incident.
However, cybersecurity incidents have in the past and may in the future expose us, our customers, franchisees, service
providers or others, to loss, disclosure or misuse of proprietary information and sensitive or confidential data or result in
disruptions to our operations or those of our customers, franchisees, service providers or others. For example, cyber criminals
have in the past gained access, and are expected to continue to try to gain access to customer accounts. The type of activity
includes fraudulently diverting and misappropriating items being transported in our network, fraudulently charging shipment
fees to customer or franchisee accounts, and fraudulently sending text messages to recipients purporting to be from UPS. The
occurrence of any of the events described above could result in material disruptions in our business, the loss of existing or
potential customers, damage to our brand and reputation, additional regulatory scrutiny, litigation and other potential material
liability. We also may not discover the occurrence of any of the events described above for a significant period of time after the
event occurs.
We utilize and interact with the IT networks and systems of third parties for many aspects of our business, including
related to our customers, franchisees and service providers such as cloud service providers and third-party delivery services.
These third parties have access to information we maintain about our company, operations, customers, employees and vendors,
or operating systems that are critical to or can significantly impact our business operations. These third parties are subject to
risks described above, and other risks, that could damage, disrupt or close down their networks or systems. Security processes,
protocols and standards that we implement and contractual provisions requiring security measures that we impose on such third
parties may not be sufficient or effective at preventing such events or may not be adhered to. These events have in the past and
could in the future result in unauthorized access to, or disruptions or denials of access to, misuse or disclosure of, information or
systems that are important to us, including proprietary information, sensitive or confidential data, and other information about
our operations, customers, employees and suppliers, including personal information.
We have invested and expect to continue to invest in IT security initiatives, IT risk management and disaster recovery
capabilities. The costs and operational consequences of implementing, maintaining and enhancing further data or system
protection measures could increase significantly to overcome increasingly frequent, complex and sophisticated cyber threats
and regulatory requirements.
In addition, our customers’ confidence in our ability to protect data and systems and to provide services consistent with
their expectations could be impacted, further disrupting our operations. While we maintain cyber insurance, we cannot be
certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on
economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
Although to date we are unaware of any material data breach or cybersecurity incident, including an information system
disruption, we cannot provide any assurances that such material events and impacts will not occur in the future. Our efforts to
deter, identify, mitigate and/or eliminate future breaches or cybersecurity incidents may require significant additional effort and
expense and may not be successful.
In addition, there has recently been heightened regulatory and enforcement focus relating to the collection, use, retention,
transfer, and processing of personal data in the U.S. (at both the state and federal level) and internationally, including the EU’s
General Data Protection Regulation, the California Privacy Rights Act, the Virginia Consumer Data Protection Act, and other
similar laws that have been or are expected to be enacted by other jurisdictions. In addition, China and certain other
jurisdictions have enacted more stringent data localization requirements. An actual or alleged failure to comply with applicable
data protection laws, regulations, or other data protection standards has in the past and may in the future expose us to litigation,
fines, sanctions, or other penalties, which could harm our reputation and adversely affect our business, results of operations, and
financial condition. The regulatory environment is increasingly challenging, based on discretionary factors, and difficult to
predict. Consequently, compliance with applicable regulations in the various jurisdictions in which we do business may present
material obligations and risks to our business, including significantly expanded compliance burdens, costs, and enforcement
risks which are expected to increase over time; require us to make extensive system or operational changes; or adversely affect
the cost or attractiveness of the services we offer.
12
Failure to maintain our brand image and corporate reputation could materially adversely affect us.
Our success depends in part on our ability to maintain the image of the UPS brand and our reputation. Service quality
issues, actual or perceived, could tarnish the image of our brand and may cause customers not to use UPS services. Also,
adverse publicity or public sentiment surrounding labor relations, environmental, sustainability and governance concerns,
physical or cyber security matters, political activities and similar matters, or attempts to connect our company to such issues,
either in the U.S. or elsewhere, could materially adversely affect us. For example, damage to our reputation or loss of brand
equity could require the allocation of resources to rebuild our reputation and restore the value of our brand. The proliferation of
social media may increase the likelihood, speed, and magnitude of negative brand events.
Global climate change could materially adversely affect us.
The effects of climate change present financial and operational risks to our business, both directly and indirectly. We have
made public statements regarding our intended reduction of carbon emissions, including our goal to achieve carbon neutrality in
our global operations by 2050 and our other short- and mid-term environmental sustainability goals.
Our ability to meet our goals will depend in part on significant technological advancements with respect to the
development and availability of reliable, affordable and sustainable alternative solutions that are outside of our control,
including sustainable aviation fuel and alternative fuel vehicles. While we remain committed to being responsive to the effects
of climate change and reducing our carbon footprint, there can be no assurances that our goals and strategic plans to achieve
those goals will be successful, that the costs related to climate transition will not be higher than expected, that the necessary
technological advancements will occur in the timeframe we expect, or at all, that the severity of and or the pace of negative
climate-related effects will not accelerate faster than expected, or that proposed regulation or deregulation related to climate
change will not have a negative competitive impact, any one of which could have a material adverse effect on our capital
expenditures or other expenses, revenue or results of operations.
Furthermore, methodologies for reporting climate-related information may change and previously reported information
may be adjusted to reflect new reporting protocols or regulations, improvements in the availability and quality of third-party
data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances. Our
processes and controls for reporting climate-related information across our operations are evolving along with multiple
disparate standards for identifying, measuring and reporting sustainability metrics, including disclosures that may be required
by the SEC, European and other regulators, and such standards may change over time, which could result in significant
revisions to our current goals, reported progress in achieving such goals, or our ability to achieve such goals in the future.
Changes in regulation or technology impacting our business could require us to write down the carrying value of assets, which
could result in material impairment charges.
Moreover, we may determine that it is in our best interests to prioritize other business, social, governance or sustainable
investments over the achievement of our current goals based on economic, regulatory or social factors, business strategy or
other factors. If we do not meet these goals or there is perception that we failed to meet these goals, then, in addition to
regulatory and legal risks related to compliance, we could incur adverse publicity and reaction, which could adversely impact
our reputation, and in turn adversely impact our results of operations.
Severe weather or other natural or man-made disasters could materially adversely affect us.
Weather conditions or other natural or man-made disasters and the increased severity or frequency thereof (including as a
result of climate change), including storms, floods, fires, earthquakes, rising temperatures, epidemics, pandemics, conflicts,
civil or political unrest, or terrorist attacks, have in the past and may in the future disrupt our business. Customers may reduce
shipments, supply chains may be disrupted, demand may be negatively impacted or our costs to operate our business may
increase, any of which could have a material adverse effect on us. Any such event affecting one of our major facilities could
result in a significant interruption in or disruption of our business. A potential result of climate change is more frequent or more
severe weather events or natural disasters. To the extent such weather events or natural disasters do become more frequent or
severe, disruptions to our business and those of our customers and costs to repair damaged facilities or maintain or resume
operations could increase. Furthermore, climate change may reduce the availability or increase the cost of insurance for these
negative impacts of natural disasters and adverse weather conditions by contributing to an increase in the incidence and severity
of such natural disasters.
13
Economic, political, or social developments and other risks associated with international operations could materially
adversely affect us.
We have significant international operations and, as a result, we are exposed to changing economic, political and social
developments in a number of countries, all of which are beyond our control. Emerging markets are often more volatile than
those in other countries, and any broad-based downturn in these markets could reduce our revenues and materially adversely
affect our business, financial condition and results of operations. We are subject to many laws governing our international
operations, including those that prohibit improper payments to government officials and commercial customers, govern our
environmental impact or labor matters, and restrict where we can do business, our shipments to certain countries and the
information that we can provide to non-U.S. governments. Our failure to manage and anticipate these and other risks associated
with our international operations could materially adversely affect us.
Our inability to effectively integrate any acquired businesses and realize the anticipated benefits of any acquisitions, joint
ventures, strategic alliances or dispositions could materially adversely affect us.
From time to time we acquire businesses, form joint ventures and strategic alliances, and dispose of operations. Whether
we realize the anticipated benefits from these transactions depends, in part, upon successful integration between the businesses
involved, the performance of the underlying operations, capabilities or technologies and the management of the acquired
operations. Accordingly, our financial results could be materially adversely affected by our failure to effectively integrate
acquired operations, unanticipated performance or other issues or transaction-related charges.
Financial Risks
Changing fuel and energy prices, including gasoline, diesel and jet fuel, and interruptions in supplies of these commodities
could materially adversely affect us.
Fuel and energy costs have a significant impact on our operations. We require significant quantities of fuel for our aircraft
and delivery vehicles and are exposed to the risks associated with variations in the market price for petroleum products,
including gasoline, diesel and jet fuel. We seek to mitigate our exposure to changing fuel prices through our pricing strategy
and may utilize hedging transactions from time to time. There can be no assurance that this strategy will be effective. If we are
unable to maintain or increase our fuel surcharges, higher fuel costs could materially adversely impact our operating results.
Even if we are able to offset changes in fuel costs with surcharges, high fuel surcharges have in the past, and may in the future
result in a shift from our higher-yielding products to lower-yielding products or an overall reduction in volume, revenue and
profitability. Moreover, we could experience a disruption in energy supplies as a result of new or increased regulation, war or
other conflicts, weather-related events or natural disasters, actions by producers (including as part of their own sustainability
efforts) or other factors beyond our control, which could have a material adverse effect on us.
Changes in foreign currency exchange rates or interest rates may have a material adverse effect on us.
We conduct business in a number of countries, with a significant portion of our revenue derived from operations outside
the United States. Our international operations are affected by changes in the exchange rates for local currencies, in particular
the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar.
We are exposed to changes in interest rates, primarily on our short-term debt and that portion of our long-term debt that
carries floating interest rates. Additionally, changes in interest rates impact the valuation of our pension and postretirement
benefit obligations and the related costs recognized in the statements of consolidated income. The impact of changes in interest
rates on our pension and postretirement benefit obligations and costs, and on our debt, is discussed further in Part I, "Item 7 -
Critical Accounting Estimates," and Part II, "Item 7A - Quantitative and Qualitative Disclosures about Market Risk",
respectively, of this report.
We monitor and manage foreign currency exchange rate and interest rate exposures, and use derivative instruments to
mitigate the impact of changes in these rates on our financial condition and results of operations; however, changes in foreign
currency exchange rates and interest rates cannot always be predicted or effectively hedged, and may have a material adverse
effect on us.
14
Our business requires significant capital and other investments; if we do not accurately forecast our future investment
needs, we could be materially adversely affected.
Our business requires significant capital investments, including in aircraft, vehicles, technology, facilities and sortation
and other equipment. In addition to forecasting our capital investment requirements, we adjust other elements of our operations
and cost structure in response to economic and regulatory conditions. These investments support both our existing business and
anticipated growth. Forecasting amounts, types and timing of investments involves many factors which are subject to
uncertainty and may be beyond our control, such as general economic trends, revenues, profitability, changes in governmental
regulation and competition. If we do not accurately forecast our future capital investment needs, we could under- or over-invest,
or have excess capacity or insufficient capacity, any of which could negatively affect our revenues and profitability.
Employee health and retiree health and pension benefit costs represent a significant expense to us; further cost increases
could materially adversely affect us.
Our employee health, retiree health and pension benefit expenses are significant. In recent years, we have experienced
increases in some of these costs, in particular, ongoing increases in healthcare costs in excess of the rate of inflation and
historically low discount rates that we use to value our company-sponsored defined benefit plan obligations. Increasing
healthcare costs, volatility in investment returns and discount rates, as well as changes in laws, regulations and assumptions
used to calculate retiree health and pension benefit expenses, may materially adversely affect our business, financial condition,
or results of operations, and have required, and may in the future require significant contributions to our benefit plans. Our
national master agreement with the Teamsters includes provisions that are designed to mitigate certain healthcare expenses, but
there can be no assurance that our efforts will be successful or that these efforts will not materially adversely affect us.
We participate in various trustee-managed multiemployer pension and health and welfare plans for employees covered
under collective bargaining agreements. As part of the overall collective bargaining process for wage and benefit levels, we
have agreed to contribute certain amounts to the multiemployer benefit plans during the contract period. The multiemployer
benefit plans set benefit levels and are responsible for benefit delivery to participants. Future contribution amounts to
multiemployer benefit plans will be determined through collective bargaining. However, in future collective bargaining
negotiations, we could agree to make significantly higher future contributions to one or more of these plans. At this time, we are
unable to determine the amount of additional future contributions, if any, or whether any material adverse effect on us could
result from our participation in these plans.
In addition to our ongoing multiemployer pension plan obligations, we may have an obligation in the future to pay
significant coordinating benefits previously earned by UPS employees in the Central States Pension Fund (the "CSPF"). For
additional information on our potential liabilities related to the CSPF, see note 5 to the audited, consolidated financial
statements.
Insurance and claims expense could materially adversely affect us.
We have a combination of both self-insurance and high-deductible insurance programs for the risks arising out of our
business and operations, including claims exposure resulting from cargo loss, personal injury, property damage, aircraft and
related liabilities, business interruption and workers' compensation. Self-insured workers' compensation, automobile and
general liabilities are determined using actuarial estimates of the aggregate liability for claims incurred and an estimate of
incurred but not reported claims, on an undiscounted basis. Our accruals for insurance reserves reflect certain actuarial
assumptions and management judgments, which are subject to a high degree of variability. If the number, severity or cost of
claims for which we retain risk continues to increase, our financial condition and results of operations could be materially
adversely affected. If we lose our ability to, or decide not to, self-insure these risks, our insurance cost could materially increase
and we may find it difficult to obtain adequate levels of insurance coverage.
15
Changes in markets and our business plans have resulted, and may in the future result, in substantial impairments of the
carrying value of our assets, thereby reducing our net income.
We regularly assess the carrying values of our assets relative to their estimated fair values. If the carrying value of an asset
exceeds its estimated fair value, we may be required to incur charges to reduce the carrying value thereof. The determination of
fair value is dependent on a significant number of estimates and assumptions that could be impacted by a variety of factors,
including changes in business strategy, revenue, expenses, government regulations, including regulation related to climate
change, costs of capital and economic or market conditions. The use of different estimates or assumptions could also result in
different estimates of fair value. Our estimates of fair value have resulted from time to time, and may in the future result, in
substantial impairments of our assets. For example, during the year ended December 31, 2023, as a result of a number of factors
including changes in business strategy and challenging macroeconomic conditions such as increases in the risk-free interest rate
and volatility of the stock prices of market comparables, we incurred impairment charges of $125 and $111 million in respect of
goodwill and indefinite-lived intangible assets, respectively. In addition, we have been and may be required in the future to
recognize increased depreciation and amortization charges if we determine the useful lives or salvage values of our assets are
less than we originally estimated. Such changes have in the past, and may in the future, reduce our net income.
We may have significant additional tax liabilities that could materially adversely affect us.
We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining
our worldwide provision for income taxes. There are many transactions and calculations where the ultimate tax determination is
uncertain.
We are regularly under audit by tax authorities in many jurisdictions. Economic and political pressures to increase tax
revenue may make resolving tax disputes more difficult. The final determination of tax audits and any related litigation could be
materially different from our historical income tax provisions and accruals. In addition, changes in U.S. federal and state or
international tax laws, other fundamental law changes currently being considered by many countries, and changes in taxing
jurisdictions’ administrative interpretations, decisions, policies and positions may materially adversely impact our tax expense
and cash flows.
Regulatory and Legal Risks
Increasingly complex and stringent laws, regulations and policies could materially increase our operating costs.
We are subject to complex and stringent aviation, transportation, environmental, security, labor, employment, safety,
privacy, disclosure and data protection and other governmental laws, regulations and policies, both in the U.S. and
internationally. In addition, we are impacted by laws, regulations and policies that affect global trade, including tariff and trade
policies, export requirements, embargoes, sanctions, taxes, monetary policies and other restrictions and charges. Trade
discussions and arrangements between the U.S. and various of its trading partners are fluid, and existing and future trade
agreements are, and are expected to continue to be, subject to a number of uncertainties, including the imposition of new tariffs
or adjustments and changes to the products covered by existing tariffs. The impact of new laws, regulations and policies or
decisions or interpretations by authorities applying those laws and regulations, cannot be predicted. Compliance with any new
laws, regulations or policies may increase our operating costs or require significant capital expenditures. Any failure to comply
with applicable laws, regulations or policies in the U.S. or other countries could result in substantial fines or possible revocation
of our authority to conduct our operations, which could materially adversely affect us.
Increasingly stringent regulations related to climate change, including reporting obligations, could materially increase our
operating costs.
Regulation and required disclosures of greenhouse gas ("GHG") emissions and related matters exposes us to potentially
significant new taxes, fees, disclosure and compliance obligations and other costs. Compliance with such regulation, and any
increased or additional regulation, or the associated costs is further complicated by the fact that various countries and regions
may adopt different approaches to climate change regulation and disclosures.
For example, the Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA"), a global, market-
based emissions offset program to encourage carbon-neutral growth began a voluntary pilot phase in 2021, with mandatory
participation scheduled to begin in 2027. The International Civil Aviation Organization, which adopted CORSIA, continues to
develop details regarding implementation, but compliance with CORSIA is expected to increase our operating costs, potentially
significantly.
16
In the U.S., Congress has considered but, to date, not passed various bills that would regulate GHG emissions.
Nevertheless, we believe some form of federal climate change legislation is possible in the future. Even in the absence of such
legislation, the Environmental Protection Agency could determine to regulate GHG emissions, especially aircraft or diesel
engine emissions, and this could impose substantial costs on us.
In addition, the impact that participation in the Paris Climate Accords may have on future U.S. policy regarding GHG
emissions, on CORSIA and on other GHG regulation remains uncertain. The extent to which other countries implement that
accord could also have a material adverse effect on us.
Increased regulation relating to GHG emissions in the U.S. or abroad, especially aircraft or diesel engine emissions, could,
among other things, increase the cost of fuel and other energy we purchase and the capital costs associated with updating or
replacing our aircraft or vehicles prematurely. We cannot predict the impact any future regulation will have on our cost
structure or our operating results. It is likely that such regulation could significantly increase our operating costs and that we
may not be willing or able to pass such costs along to our customers. Moreover, even without such regulation, increased
awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies in the airline and
transportation industries could harm our reputation and reduce customer demand for our services, especially our air services.
Furthermore, many countries, as well as U.S. states, in which we operate or are subject to regulation have adopted, or are
expected to adopt, additional requirements relating to the disclosure of GHG emissions and related matters. In many cases these
requirements differ and may conflict from country to country. Compliance with these disclosure requirements may increase our
operating costs or require significant management time and attention. Any failure to comply with applicable disclosure
regulations in the U.S. (at either the federal or state level) or other countries could result in substantial fines or other penalties,
which could materially adversely affect us.
We may be subject to various claims and lawsuits that could result in significant expenditures which may materially
adversely affect us.
The nature of our business exposes us to the potential for various claims and litigation related to labor and employment,
personal injury, property damage, business practices, environmental liability and other matters. Any material litigation or a
catastrophic accident or series of accidents could result in significant expenditures and have a material adverse effect on us.
Item 1B.
Unresolved Staff Comments
None.
Information About Our Executive Officers
For information about our executive officers, see Part III, "Item 10. Directors, Executive Officers and Corporate
Governance".
Item 1C.
Cybersecurity
The Board regularly discusses our most significant risks and how these risks are being managed. The Board has appointed
a Risk Committee, consisting entirely of independent directors, whose responsibilities include assisting the Board in overseeing
management’s identification and evaluation of strategic enterprise risks, including risks associated with privacy, technology,
information security, cybersecurity and cyber incident response and business continuity. The Risk Committee regularly updates
the Board on these activities.
The Risk Committee oversees the Company’s approach to cybersecurity risk assessment and mitigation by, among other
things, (i) reviewing the Company’s cybersecurity insurance program, (ii) reviewing the Company’s cybersecurity budget, (iii)
discussing the results of various internal cybersecurity audits and periodic independent third-party assessments of the
Company’s cybersecurity programs, (iv) being briefed on cybersecurity matters by outside experts, and (v) receiving regular
updates from the Company’s Chief Information Security Officer (“CISO”) and others on cybersecurity risks, operational
metrics, compliance and regulatory developments, training programs, risk mitigation activities, key projects and industry
developments. The Company's Chief Legal and Compliance Officer ("CLCO"), Chief Digital and Technology Officer
("CDTO"), CISO and Vice President of Compliance and Internal Audit participate in Risk Committee meetings and meet
individually with the Risk Committee on a periodic basis to discuss and address relevant matters, including the Company’s
approach to cybersecurity risk assessment and mitigation. The CISO reports to the CDTO, who in turn reports to the Chief
Executive Officer ("CEO"). The CISO has more than thirty years of IT experience, has served many years in various
information security management roles and has multiple cybersecurity certifications.
17
The Company maintains an enterprise risk management process designed to identify potential events that may affect the
achievement of the Company's objectives or have a material adverse effect on the Company. Cybersecurity is among the risks
considered as a part of this process. The Company's management, including the CISO, also participates on the Company's
Information Security & Privacy Governance Council (“ISPGC”). The ISPGC meets periodically to consider information
security and privacy matters.
The Company utilizes various technical and qualitative processes to assist in identifying, assessing and managing
cybersecurity risks. The Company's processes include periodic discussions and risk reviews with management and, depending
on facts and circumstances, may include internal audits, third-party assessments, post-remediation reviews, engagements with
independent third-party service providers and key governmental agencies, regular employee training, an incident response plan
and backup and recovery plans. Our periodic engagements with independent third-party service providers are designed to
provide qualitative and technical cybersecurity assessments. The Company has a corporate-level cybersecurity team, led by the
CISO, that, among other responsibilities, receives and reviews reports regarding potential threats, trends and remediation
strategies. The cybersecurity team evaluates threat intelligence and information obtained from various sources, including
internal, public or private sources, government agencies and external consultants. Certain of the Company's subsidiaries have
separate cybersecurity teams that, along with the corporate-level cybersecurity team, play a role in the Company's efforts to
monitor, identify, assess and manage cybersecurity risks.
We interact with the information technology networks and systems of third parties for many aspects of our business. We
consider and evaluate cybersecurity risks associated with the use of independent third-party service providers. To help UPS
understand and mitigate potential cybersecurity risks, we generally utilize measures such as vendor risk assessments, periodic
technical assessments of third-party vendors' controls and contracts governing the use of and access to our data and compliance
with our security requirements.
We maintain an Incident Response Plan that includes processes and procedures for reviewing and responding to
cybersecurity incidents. We periodically test our readiness to respond to a cybersecurity incident through various scenario-
based drills. The Incident Response Plan includes processes for escalation to the CISO, the Executive Leadership Team,
including the CEO, the Risk Committee and the Board, and a process for consideration of whether a cybersecurity incident is
material and may require disclosure in SEC filings.
For additional information on cybersecurity risks and the impact they may have on our business strategy, results of
operations or financial condition see "Risk Factors – Business and Operating Risks – A significant cybersecurity incident, or
increased data protection regulations, could materially adversely affect us".
Item 2. Properties
Operating Facilities
We own our corporate headquarters in Atlanta, Georgia and our information technology headquarters, located in
Parsippany, New Jersey. Our primary information technology operations are consolidated in an owned facility in New Jersey
and we own a backup facility in Georgia.
We own or lease over 1,000 package operating facilities in the U.S., with approximately 90 million square feet of floor
space. These facilities have vehicles and drivers stationed for the pickup and delivery of packages, and capacity to sort and
transfer packages. Our larger facilities also service our vehicles and equipment, and employ specialized mechanical equipment
for the sorting and handling of packages. We own or lease approximately 800 facilities in our international package operations,
with approximately 21 million square feet of floor space.
Our aircraft are operated in a hub and spoke pattern in the U.S., with our principal air hub, Worldport, located in
Louisville, Kentucky. Our major air hub in Europe is located in Germany, and in Asia we operate two major air hubs in China
and one in Hong Kong.
We own or lease more than 600 facilities, with approximately 46 million square feet of floor space, which support our
freight forwarding and logistics operations. This includes approximately 17 million square feet of healthcare-compliant
warehousing. We own and operate a logistics campus consisting of approximately 4 million square feet in Louisville, Kentucky.
We also own a number of ancillary properties that support our global operations.
18
Fleet
Aircraft
The following table shows information about our aircraft fleet as of December 31, 2023:
Description
Boeing 757-200
Boeing 767-300
Boeing 767-300BCF
Boeing 767-300BDSF
Airbus A300-600
Boeing MD-11 (1)
Boeing 747-400F
Boeing 747-400BCF
Boeing 747-8F
Other
UPS Owned and/or
Operated
Charters & Leases
Operated by Others
On Order
Under Option
75
78
6
4
52
38
11
2
28
—
—
—
—
—
—
—
—
—
—
269
—
21
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
—
Total
—
(1) Two of the MD-11 aircraft shown above have been retired from operational use as of December 31, 2023. We anticipate retiring an additional nine of these
294
269
23
aircraft during 2024.
Vehicles
We operate a global ground fleet of approximately 135,000 package cars, vans, tractors and motorcycles, including more
than 17,000 alternative fuel and advanced technology vehicles.
Item 3. Legal Proceedings
See note 10 to the audited, consolidated financial statements for a discussion of judicial proceedings and other matters
arising from the conduct of our business activities.
Item 4. Mine Safety Disclosures
Not applicable.
19
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our class A common stock is not listed on a national securities exchange or traded in an organized over-the-counter
market, but each share of our class A common stock is convertible into one share of our class B common stock. Our class B
common stock is listed on the New York Stock Exchange under the symbol “UPS”.
As of February 2, 2024, there were 157,276 and 19,971 shareowners of record of class A and class B common stock,
respectively.
Our practice has been to pay dividends on a quarterly basis. The declaration of dividends is subject to the discretion of the
Board of Directors and will depend on various factors, including our net income, financial condition, cash requirements, future
prospects and other relevant factors.
On January 25, 2024, our Board declared a dividend of $1.63 per share, which is payable on March 8, 2024 to
shareowners of record on February 20, 2024.
In August 2021, the Board of Directors approved a share repurchase authorization of $5.0 billion of class A and class B
common stock. During the year ended December 31, 2023, we repurchased 0.5 million shares of class B common stock for
$0.1 billion under this authorization.
In January 2023, the Board of Directors terminated this authorization and approved a new share repurchase authorization
for $5.0 billion of class A and class B common stock. During the year ended December 31, 2023, we repurchased 12.3 million
shares of class B common stock for $2.2 billion under this authorization. We did not repurchase any shares during the fourth
quarter of 2023 and do not anticipate repurchasing any shares in 2024. As of December 31, 2023, we had $2.8 billion available
under our share repurchase authorization.
For additional information on our share repurchase activities, see note 12 to the audited, consolidated financial statements.
20
Shareowner Return Performance Graph
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with
the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or
Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates such
information by reference into such filing.
The following graph shows a five-year comparison of cumulative total shareowners’ returns for our class B common
stock, the Standard & Poor’s 500 Index and the Dow Jones Transportation Average. The comparison of the total cumulative
return on investment, which is the change in the stock price plus reinvested dividends for each of the quarterly periods, assumes
that $100 was invested on December 31, 2018 in the Standard & Poor’s 500 Index, the Dow Jones Transportation Average and
our class B common stock.
Comparison of Five-Year Cumulative Total Return
$275
$250
$225
$200
$175
$150
$125
$100
$75
2018
2019
UPS
2020
2021
2022
2023
S&P 500
Dow Jones Transports
United Parcel Service, Inc.
Standard & Poor’s 500 Index
Dow Jones Transportation Average
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
$
$
$
100.00 $
125.49 $
184.83 $
242.91 $
203.72 $
191.59
100.00 $
132.61 $
157.00 $
202.02 $
165.40 $
169.87
100.00 $
121.65 $
143.76 $
185.91 $
159.48 $
178.50
For information regarding our equity compensation plans, see Item 12 of this report.
21
Item 6. [Reserved]
22
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We continue to focus on executing our strategy of Customer First, People Led and Innovation Driven by making it
quicker and easier for customers to do business with us. We continue to enhance customer engagement through combining our
network with digital capabilities and to invest in the most attractive parts of the market, including healthcare, Asia trade lanes
and small- and medium-sized businesses ("SMBs").
In furtherance of our strategy, during 2023 we acquired MNX Global Logistics, a global time-critical and temperature-
sensitive logistics provider, and Happy Returns, a technology-focused company that provides innovative end-to-end return
services. We opened our state-of-the-art UPS Velocity fulfillment center in the U.S. and announced plans to build a new air hub
in Hong Kong. These initiatives, together with continued growth in our Digital Access Program and deployment of our Smart
Package Smart Facility technology within U.S. small package operations, are intended to allow us to reach new markets and
customers, and better serve our current customer base.
During the year, macroeconomic headwinds, including inflationary pressures and changes in consumer behavior, together
with volume diversion resulting from our labor negotiations with the International Brotherhood of Teamsters ("Teamsters"),
contributed to volume declines in our U.S. small package business. Internationally, the challenging macroeconomic
environment, coupled with geopolitical tensions, drove a decline in demand for our small package services in Europe and Asia.
Our freight forwarding businesses, including truckload brokerage, were negatively impacted by soft demand and market
overcapacity. We expect global economic conditions to improve gradually during 2024, and therefore expect volume and
revenue growth to increase in the second half of the year.
In the third quarter of 2023, our Teamsters employees ratified a new national master agreement. Under the agreement,
wage and benefit rates, combined with all other contract provisions, will increase union cost at a 3.3% compounded annual
growth rate over the five-year term of the contract, with the majority of the increase in the first and fifth years. We experienced
higher year-over-year labor costs in the second half of the year as a result of these contractual increases, which we expect to
persist through the first half of 2024.
Faced with a challenging external environment, we remain focused on our strategy. We are taking action intended to
right-size our business for the future and focus on key enablers of growth. These moves include exploring strategic alternatives
for our truckload brokerage business and reducing headcount through our "fit to serve" initiative to create a more efficient
operating model and enhance responsiveness to changing market dynamics.
We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as
our global small package operations. Our remaining businesses are reported as Supply Chain Solutions.
23
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Highlights of our results for the years ended December 31, 2023 and 2022, which are discussed in more detail in the
sections that follow, include:
Revenue (in millions)
Operating Expenses (in millions)
Operating Profit (in millions)
Operating Margin
Net Income (in millions)
Basic Earnings Per Share
Diluted Earnings Per Share
Operating Days
Average Daily Package Volume (in thousands)
Year Ended December 31,
Change
2023
2022
$
%
$
$
$
$
$
90,958
$
100,338
$
81,817
87,244
9,141
$
13,094
$
10.0 %
13.0 %
6,708
7.81
7.80
$
$
$
254
22,290
$
$
$
11,548
13.26
13.20
255
24,291
(9,380)
(5,427)
(3,953)
(4,840)
(5.45)
(5.40)
Average Revenue Per Piece
$
13.62
$
13.38
$
0.24
(9.3) %
(6.2) %
(30.2) %
(41.9) %
(41.1) %
(40.9) %
(8.2) %
1.8 %
•
•
Revenue and average daily package volume in our global small package operations decreased for the year, with
declines in both commercial and residential shipments across all of our products. These declines were primarily the
result of the macroeconomic conditions and union labor-related uncertainties described above, as well as reductions in
fuel and demand-related surcharges.
Operating expenses decreased for the year, driven by a reduction in purchased transportation in Supply Chain
Solutions and reductions in fuel expense in our small package operations, as well as the impact of our ongoing
productivity initiatives and reductions in operating costs; these reductions were partially offset by U.S. Domestic
Package segment wage rate increases in the second half of 2023 due to the new Teamsters contract.
•
Operating profit and operating margin decreased, as revenue declines were greater than operating expense reductions.
• We reported net income of $6.7 billion and diluted earnings per share of $7.80. Adjusted diluted earnings per share
were $8.78 after adjusting for the after-tax impacts of:
◦
◦
◦
◦
defined benefit pension and postretirement medical benefit plan mark-to-market loss outside of a 10%
corridor of $274 million, or $0.32 per diluted share;
Transformation Strategy Costs of $333 million, or $0.39 per diluted share;
goodwill and asset impairment charges of $193 million, or $0.22 per diluted share; and
a one-time compensation payment of $46 million, or $0.05 per diluted share.
In the U.S. Domestic Package segment, revenue declines for the year were driven by lower volume, a shift in product mix,
and lower fuel and demand-related surcharges. These were somewhat offset by revenue per piece growth due to increases in
base rates and changes in customer mix. Expenses decreased for the year, primarily due to declines in fuel prices and reductions
in purchased transportation. Higher direct union labor costs were offset by a reduction in hours and lower management
compensation expense.
In our International Package segment, revenue declines for the year were driven by lower volume and declines in fuel and
demand-related surcharges. These were partially offset by the impact of base rate increases. Expenses decreased year over year,
driven by lower fuel and third-party transportation expense as a result of volume declines and lower fuel prices.
In Supply Chain Solutions, revenue decreases for the year were driven by volume and market rate declines in Forwarding.
Expenses decreased for the year, primarily due to a reduction in purchased transportation in Forwarding.
2022 compared to 2021
See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's
Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on
February 21, 2023.
24
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Supplemental Information - Items Affecting Comparability
We supplement the reporting of our financial information determined under generally accepted accounting principles in
the United States ("GAAP") with certain non-GAAP financial measures.
Adjusted financial measures should be considered in addition to, and not as an alternative for, our reported results
prepared in accordance with GAAP. Our adjusted financial measures do not represent a comprehensive basis of accounting and
therefore may not be comparable to similarly titled measures reported by other companies.
Adjusted amounts reflect the following (in millions):
Non-GAAP Adjustments
Operating Expenses:
One-Time Compensation Payment
Transformation Strategy Costs
Goodwill and Asset Impairment Charges
Incentive Compensation Program Design Changes
Long-Lived Asset Estimated Residual Value Changes
Total Adjustments to Operating Expenses
Other Income and (Expense):
Defined Benefit Pension and Postretirement Medical Plan (Gains) and Losses
Total Adjustments to Other Income and (Expense)
Total Adjustments to Income Before Income Taxes
Income Tax (Benefit) Expense:
One-Time Compensation Payment
Transformation Strategy Costs
Goodwill and Asset Impairment Charges
Incentive Compensation Program Design Changes
Long-Lived Asset Estimated Residual Value Changes
Defined Benefit Pension and Postretirement Medical Plan (Gains) and Losses
Total Adjustments to Income Tax Expense
Total Adjustments to Net Income
Year Ended December 31,
2023
2022
$
61 $
435
236
—
—
732 $
—
178
—
505
76
759
$
$
$
$
$
$
$
359 $
359 $
(1,061)
(1,061)
1,091 $
(302)
(15) $
(102)
(43)
—
—
(85)
(245) $
—
(36)
—
(121)
(18)
255
80
846 $
(222)
These items have been excluded from the following discussions of "adjusted" results. The income tax impacts of these
items are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal
jurisdiction and various U.S. state and non-U.S. jurisdictions, by the tax-deductible adjustments. The blended average effective
income tax rates for the years ended December 31, 2023 and 2022 were 22.5% and 26.5%, respectively.
25
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
One-Time Compensation Payment
During 2023, we made a one-time payment to certain U.S.-based, non-union part-time supervisors following the
ratification of our labor agreement with the Teamsters. We do not expect this or similar payments to recur. We supplement the
presentation of our operating profit, operating margin, income before income taxes, net income and earnings per share with
non-GAAP measures that exclude the impact of this payment. We believe excluding the impact of this one-time payment better
enables users of our financial statements to view and evaluate underlying business performance from the same perspective as
management.
Transformation Charges, and Goodwill and Asset Impairment Charges
We supplement the presentation of our operating profit, operating margin, income before income taxes, net income and
earnings per share with non-GAAP measures that exclude the impact of charges related to transformation activities, and
goodwill and asset impairment charges. We believe excluding the impact of these charges better enables users of our financial
statements to view and evaluate underlying business performance from the perspective of management. We do not consider
these costs when evaluating the operating performance of our business units, making decisions to allocate resources or in
determining incentive compensation awards. For more information regarding transformation activities, see note 18 to the
audited, consolidated financial statements. For more information regarding goodwill and asset impairment charges, see note 1
and note 7.
Incentive Compensation Program Design Changes
During 2022, we completed certain structural changes to the design of our incentive compensation programs that resulted
in a one-time, non-cash charge in connection with the accelerated vesting of certain equity incentive awards that we do not
expect to repeat. We supplement the presentation of our operating profit, operating margin, income before income taxes, net
income and earnings per share with non-GAAP measures that exclude the impact of these changes. We believe excluding the
impacts of such changes allows users of our financial statements to identify underlying growth trends in compensation and
benefits expense. For more information regarding incentive compensation program design changes, see note 13 to the audited,
consolidated financial statements.
Long-lived Asset Estimated Residual Value Changes
During 2022, we determined to retire six of our existing MD-11 aircraft from operational use in 2023. In connection
therewith, we reduced the estimated residual value of our MD-11 fleet, incurring a one-time, non-cash charge on our fully-
depreciated aircraft. This charge was allocated between our U.S. Domestic Package and International Package segments. We
supplement the presentation of our operating profit, operating margin, income before income taxes, net income and earnings per
share with non-GAAP measures that exclude the impact of this charge. We believe excluding the impact of this charge better
enables users of our financial statements to understand the ongoing cost associated with our long-lived assets. For more
information regarding residual values, see note 4 to the audited, consolidated financial statements.
Foreign Currency Exchange Rate Changes and Hedging Activities
We supplement the reporting of revenue, revenue per piece and operating profit with adjusted measures that exclude the
period over period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral
revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth
trends in our products and results. We evaluate the performance of International Package and Supply Chain Solutions on this
currency-neutral basis.
Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S.
Dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period
local currency revenue, revenue per piece and operating profit. The derived amounts are then multiplied by the average foreign
currency exchange rates used to translate the comparable results for each month in the prior year period (including the period
over period impact of foreign currency hedging activities). The difference between the current period reported U.S. Dollar
revenue, revenue per piece and operating profit and the derived current period U.S. Dollar revenue, revenue per piece and
operating profit is the period-over-period impact of currency fluctuations.
26
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Defined Benefit Pension and Postretirement Medical Plan Gains and Losses
We incur certain employment-related expenses associated with pension and postretirement medical benefits. These
pension and postretirement medical benefits costs for company-sponsored defined benefit plans are calculated using various
actuarial assumptions and methodologies, including discount rates, expected returns on plan assets, healthcare cost trend rates,
inflation, compensation increase rates, mortality rates and coordination of benefits with plans not sponsored by UPS. Actuarial
assumptions are reviewed on an annual basis, unless circumstances require an interim remeasurement of any of our plans.
We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor
(defined as 10% of the greater of the fair value of plan assets or the plan's projected benefit obligation), as well as gains and
losses resulting from plan curtailments and settlements, for our defined benefit pension and postretirement medical plans
immediately as part of Investment income and other in the statements of consolidated income. We supplement the presentation
of our income before income taxes, net income and earnings per share with adjusted measures that exclude the impact of these
gains and losses and the related income tax effects. We believe excluding these defined benefit pension and postretirement
medical plan gains and losses provides important supplemental information by removing the volatility associated with plan
amendments and short-term changes in market interest rates, equity values and similar factors.
The remeasurement of our defined benefit pension and postretirement medical plans' assets and liabilities resulted in a loss
of $0.4 billion and a gain of $1.1 billion for the years ended December 31, 2023 and 2022, respectively. The table below shows
the amounts associated with each component of the loss and gain, as well as the weighted-average actuarial assumptions used to
determine our net periodic benefit cost, for each year:
Components of defined benefit plan gain (loss) (in millions):
Discount rates
Return on assets
Demographic and other assumption changes
Total mark-to-market gain (loss)
Curtailment and settlement gain (loss)
Total defined benefit plan gain (loss)
Weighted-average actuarial assumptions:
Expected rate of return on plan assets used in determining net periodic benefit cost
Actual rate of return on plan assets
Discount rate used in determining net periodic benefit cost
Discount rate at measurement date
Year Ended December 31,
2023
2022
$
(384)
$
37
(4)
(351)
(8)
$
(359)
$
5,210
(4,130)
(53)
1,027
34
1,061
Year Ended December 31,
2023
2022
6.99 %
6.64 %
5.77 %
5.40 %
5.83 %
(24.11) %
3.11 %
5.77 %
The pre-tax defined benefit plan gains and losses for the years ended December 31, 2023 and 2022 consisted of the
following:
2023 - $0.4 billion pre-tax defined benefit plan loss:
•
•
•
Discount Rates ($384 million pre-tax loss): The weighted-average discount rate for our pension and postretirement
medical plans decreased from 5.77% as of December 31, 2022 to 5.40% as of December 31, 2023, primarily due to a
decrease in credit spreads on AA-rated corporate bonds in 2023.
Return on Assets ($37 million pre-tax gain): The actual rate of return on plan assets in certain of our international
pension plans was higher than our expected rate of return, primarily due to strong global equity market performance.
Demographic and Other Assumption Changes ($4 million pre-tax loss): This loss was due to differences between
actual and estimated participant data and demographic factors, including healthcare cost trends, compensation rate
increases and rates of termination, retirement and mortality.
27
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
2022 - $1.1 billion pre-tax defined benefit plan gain:
•
•
•
Discount Rates ($5.2 billion pre-tax gain): The weighted-average discount rate for our pension and postretirement
medical plans increased from 3.11% as of December 31, 2021 to 5.77% as of December 31, 2022, primarily due to an
increase in U.S. treasury yields as well as an increase in credit spreads on AA-rated corporate bonds in 2022.
Return on Assets ($4.1 billion pre-tax loss): The actual rate of return on plan assets was lower than our expected rate of
return, primarily due to weaker global equity and U.S. bond market performance.
Demographic and Other Assumption Changes ($0.1 billion pre-tax loss): This loss was due to differences between
actual and estimated participant data and demographic factors, including healthcare cost trends, compensation rate
increases and rates of termination, retirement and mortality.
Expense Allocations
Certain operating expenses are allocated between our operating segments using activity-based costing methods. These
activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed
to each segment. Changes in these estimates directly impact the amount of expense allocated to each segment and therefore the
operating profit of each reporting segment. Our allocation methodologies are refined periodically, as necessary, to reflect
changes in our businesses. There were no significant changes to our allocation methodologies for 2023 relative to 2022.
28
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
U.S. Domestic Package
Average Daily Package Volume (in thousands):
Next Day Air
Deferred
Ground
Total Average Daily Package Volume
Average Revenue Per Piece:
Next Day Air
Deferred
Ground
Total Average Revenue Per Piece
Operating Days in Period
Revenue (in millions):
Next Day Air
Deferred
Ground
Total Revenue
Operating Expenses (in millions):
Operating Expenses
One-Time Compensation Payment
Transformation Strategy Costs
Incentive Compensation Program Design Changes
Long-Lived Asset Estimated Residual Value Changes
Adjusted Operating Expenses
Operating Profit (in millions) and Operating Margin:
Operating Profit
Adjusted Operating Profit
Operating Margin
Adjusted Operating Margin
Revenue
Year Ended December 31,
Change
2023
2022
$
%
1,757
1,224
16,049
19,030
22.17
16.38
11.03
12.40
254
9,894
5,093
44,971
1,992
1,553
17,242
20,787
21.06
15.07
10.81
12.11
255
$
$
$
$
$
10,699
$
5,968
47,542
59,958
$
64,209
$
1.11
1.31
0.22
0.29
(805)
(875)
(2,571)
(4,251)
54,882
$
57,212
$
(2,330)
(61)
(266)
—
—
—
(121)
(431)
(25)
(61)
(145)
431
25
54,555
$
56,635
$
(2,080)
5,076
5,403
$
$
6,997
7,574
$
$
(1,921)
(2,171)
8.5 %
9.0 %
10.9 %
11.8 %
$
$
$
$
$
$
$
$
(11.8) %
(21.2) %
(6.9) %
(8.5) %
5.3 %
8.7 %
2.0 %
2.4 %
(7.5) %
(14.7) %
(5.4) %
(6.6) %
(4.1) %
N/A
119.8 %
(100.0) %
(100.0) %
(3.7) %
(27.5) %
(28.7) %
The change in revenue was due to the following factors:
Revenue Change Drivers:
2023 vs. 2022
Volume
Rates /
Product Mix
Fuel
Surcharge
Total Revenue
Change
(8.0) %
3.0 %
(1.6) %
(6.6) %
Revenue was also negatively impacted by having one less operating day in 2023 compared to 2022.
29
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Volume
Average daily volume decreased, with reductions in both residential and commercial volume. Challenging external
conditions, including inflationary pressures and changes in consumer spending behavior contributed to overall volume declines.
Also contributing to the decline was diverted volume associated with our labor negotiations with the Teamsters. Following
ratification of the Teamsters contract in the third quarter of 2023, we regained approximately 60% of diverted U.S. volume and
gained volume from new customers. We anticipate overall year-over-year volume growth rates will be flat in the first half of
2024, with moderate growth expected in the second half of the year dependent upon improving macroeconomic conditions.
Business-to-consumer volume declined 9.3% during the year, driven by changes in consumer spending behavior, as well
as the impact of our labor negotiations with the Teamsters. Business-to-consumer volume declines from SMBs were less than
those from our large customers, which was partially due to continued growth in our Digital Access Program. Volume from our
largest customer declined for the year as planned under our contract terms.
Business-to-business volume declined 7.2%, primarily as a result of declines from large customers in industry sectors that
are sensitive to the macroeconomic factors discussed above. Uncertainty around our Teamsters contract also negatively
impacted volume, primarily during the first nine months of the year. Average daily returns volume increased slightly during the
year, benefiting from our acquisition of Happy Returns during the fourth quarter.
Within our Air products, average daily volume decreases were driven by continued execution under the contract terms
with our largest customer as planned, as well as by other customers making cost trade-offs and utilizing the enhanced speed in
our ground network. We expect moderate volume decreases in 2024 as we continue to execute contract terms with our largest
customer.
Ground residential and Ground commercial average daily volume decreases of 7.1% and 6.7%, respectively, were
primarily attributable to volume declines from a number of large customers due to the factors discussed above. We expect
volume growth in 2024 to be aligned with overall market growth.
Rates and Product Mix
In December 2022, we implemented an average 6.9% net increase in base and accessorial rates for our Air and Ground
products. Revenue per piece in Air and Ground products increased for the full year, driven by base rate increases and other
pricing actions, and favorable changes in customer mix. A shift in product mix, declines in fuel and demand-related surcharges,
and a reduction in average billable weight per piece slightly offset these increases.
We anticipate moderate revenue per piece growth in 2024 as we continue to execute on pricing initiatives within our
strategy.
Fuel Surcharges
We apply a fuel surcharge on our domestic air and ground services that adjusts weekly. Our air fuel surcharge is based on
the U.S. Department of Energy's ("DOE") Gulf Coast spot price for a gallon of kerosene-type fuel, and our ground fuel
surcharge is based on the DOE's On-Highway Diesel Fuel price.
In 2023, fuel surcharge revenue decreased $1.0 billion, driven by reductions in price per gallon and the impact of lower
volumes. Based on current commodity market forecasts, we anticipate a further decline in fuel prices will be offset in part by
higher surcharge modifiers.
30
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Operating Expenses
Operating expenses and adjusted operating expenses decreased year over year. The costs of operating our integrated air
and ground network decreased $1.5 billion, our pickup and delivery costs decreased $641 million and our package sorting costs
decreased $216 million. In addition to the impact of one less operating day in 2023, the overall decrease in operating expenses
was primarily due to:
•
•
•
Lower compensation expense due to a reduction in direct labor hours resulting from volume declines, as well as the
impact of incentive compensation program design changes implemented in the fourth quarter of 2022 and reductions in
management headcount. These decreases were partially offset by the impact of the first-year contractual rate increase
under our Teamsters contract that became effective August 1.
A reduction in purchased transportation costs, resulting from lower volumes and a reduction in ground volume handled
by third-party carriers, as well as the impact of continued strategic initiatives.
Lower fuel expense driven by lower volumes and decreases in the price of jet fuel, diesel and gasoline.
These decreases were slightly offset by an increase of $259 million in other operating costs.
Notwithstanding the factors discussed above, total cost per piece increased 5.2% for the year and adjusted cost per piece
increased 5.7%, driven by overall reductions in volume while maintaining industry leading service levels. We anticipate that the
cost per piece growth rate will remain elevated in the first half of 2024 due to Teamsters contractual wage-rate impacts.
Operating Profit and Margin
As a result of the factors described above, operating profit decreased $1.9 billion, with operating margin decreasing 240
basis points to 8.5%. Adjusted operating profit decreased $2.2 billion, with adjusted operating margin decreasing 280 basis
points to 9.0%.
31
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
International Package
Year Ended December 31,
Change
2023
2022
$
%
Average Daily Package Volume (in thousands):
Domestic
Export
Total Average Daily Package Volume
Average Revenue Per Piece:
Domestic
Export
Total Average Revenue Per Piece
Operating Days in Period
Revenue (in millions):
Domestic
Export
Cargo & Other
Total Revenue
Operating Expenses (in millions):
Operating Expenses
Incentive Compensation Program Design Changes
Long-Lived Asset Estimated Residual Value Changes
Transformation Strategy Costs
Adjusted Operating Expenses
Operating Profit (in millions) and Operating Margin:
Operating Profit
Adjusted Operating Profit
Operating Margin
Adjusted Operating Margin
1,591
1,669
3,260
1,759
1,745
3,504
$
$
7.78
$
7.46
$
33.03
20.71
254
$
34.48
20.91
255
$
$
3,144
$
3,346
$
$
$
$
$
$
14,003
684
15,341
1,011
17,831
$
19,698
$
14,600
$
15,372
$
—
—
(51)
(30)
(51)
(12)
14,549
$
15,279
$
3,231
3,282
$
$
18.1 %
18.4 %
4,326
4,419
22.0 %
22.4 %
Currency Translation Benefit / (Cost)—(in millions)*:
Revenue
Operating Expenses
Operating Profit
*
Net of currency hedging; amount represents the change compared to the prior year.
Revenue
The change in revenue was due to the following:
(9.6) %
(4.4) %
(7.0) %
4.3 %
(4.2) %
(1.0) %
(6.0) %
(8.7) %
(32.3) %
(9.5) %
(5.0) %
(100.0) %
(100.0) %
325.0 %
(4.8) %
(25.3) %
(25.7) %
0.32
(1.45)
(0.20)
(202)
(1,338)
(327)
(1,867)
(772)
30
51
(39)
(730)
(1,095)
(1,137)
(111)
(22)
(133)
$
$
$
$
Revenue Change Drivers:
2023 vs. 2022
Volume
Rates /
Product Mix
Fuel
Surcharges
Currency
Total Revenue
Change
(7.3) %
1.1 %
(2.7) %
(0.6) %
(9.5) %
32
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Volume
Average daily volume decreased for both domestic and export products. Business-to-consumer volume decreased 10.0%,
as geopolitical tensions and global macroeconomic headwinds, including persistent inflation and high interest rates, negatively
impacted consumer demand. These factors, coupled with higher U.S. inventory levels, also negatively impacted business-to-
business volume, driving a decrease of 5.8%. Volume from both large customers and SMBs declined, driven by declines in the
retail, technology and manufacturing sectors. We expect year-over-year volume growth to be relatively flat in the first half of
2024 and to improve in the second half of the year, dependent on an improvement in global macroeconomic conditions.
Export volume decreased for the year, driven by declines on intra-Europe and Asia trade lanes that were slightly offset by
volume growth in the Americas. Volume on intra-Europe and Asia trade lanes was negatively impacted by overall economic
conditions, with Asia to U.S. volumes also impacted by higher inventory levels in the United States. Growth in the Americas
was driven by transborder volume to and from the United States.
Our premium products experienced a volume decline of 10.6%, primarily from our Transborder and Worldwide Express
Saver products. These declines resulted from shifts in customer product preferences, macroeconomic conditions and lower
import demand from U.S. consumers. Volume in our non-premium products decreased 1.9%, driven by declines in our
Transborder Standard product in Europe and our Worldwide Expedited product. These declines were the result of
macroeconomic conditions described above.
Domestic volume declines were largest in Europe and Canada, resulting from an overall reduction in customer demand for
all of the reasons discussed above.
Rates and Product Mix
In December 2022, we implemented an average 6.9% net increase in base and accessorial rates for international shipments
originating in the United States. Rate changes for shipments originating outside the U.S. are made throughout the year and vary
by geographic market.
Total revenue per piece decreased 1.0%, primarily due to declines in fuel and demand-related surcharges, as well as
unfavorable currency movements during the first half of the year. Base rate increases and favorable shifts in customer and
product mix largely offset these declines. Excluding the impact of currency, revenue per piece decreased 0.3%. We expect
overall revenue per piece to decline in 2024 driven by a continued shift to non-premium products as the challenging economic
outlook persists.
Export revenue per piece decreased 4.2%, driven by declines in our Worldwide products. These declines were slightly
offset by base rate increases. Excluding the impact of currency, export revenue per piece decreased 3.7%.
Domestic revenue per piece increased 4.3%, primarily due to base rate increases and favorable shifts in customer mix.
These were slightly offset by unfavorable currency movements in the first half of the year. Excluding the impact of currency,
domestic revenue per piece increased 5.2%.
Fuel Surcharges
The fuel surcharge we apply to international air services originating inside or outside the U.S. is largely indexed to the
DOE's Gulf Coast spot price for a gallon of kerosene-type jet fuel. The fuel surcharges for ground services originating outside
the U.S. are indexed to fuel prices in the region or country where the shipment originates.
Total international fuel surcharge revenue decreased by $532 million, driven primarily by a decrease in the fuel price per
gallon and the impact of volume declines. Based on current commodity pricing forecasts, we anticipate a decline in fuel prices
to impact fuel surcharge revenue negatively in the first half of 2024.
33
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Operating Expenses
Operating expenses, and adjusted operating expenses, decreased year over year. This was primarily due to a reduction of
$730 million in the cost of operating our integrated international air and ground network, driven by lower fuel prices and
reductions in air charters and aircraft block hours as a result of lower volumes. We expect fuel prices to further decrease in the
first half of 2024.
Operating Profit and Margin
As a result of the factors described above, operating profit decreased $1.1 billion, with operating margin decreasing 390
basis points to 18.1%. Adjusted operating profit decreased $1.1 billion and adjusted operating margin decreased 400 basis
points to 18.4%.
Uncertainty around increased geopolitical tensions continued to impact volumes in our International Package segment in
2023. Substantially all of our operations in Russia and Belarus were suspended in 2022 and we subsequently commenced
liquidation of our Small Package and Forwarding and Logistics subsidiaries in these countries. We expect to complete this
process during 2024. Substantially all of our operations in Ukraine remain indefinitely suspended. These actions have not had,
and are not expected to have, a material impact on us.
34
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Supply Chain Solutions
Revenue (in millions):
Forwarding
Logistics
Other
Total Revenue
Operating Expenses (in millions):
Operating Expenses
Transformation Strategy Costs
Goodwill and Asset Impairment Charges
Incentive Compensation Program Design Changes
Adjusted Operating Expenses
Operating Profit (in millions) and Operating Margins:
Operating Profit
Adjusted Operating Profit
Operating Margin
Adjusted Operating Margin
Currency Translation Benefit / (Cost)—(in millions)*:
Revenue
Operating Expenses
Operating Profit
*
Amount represents the change compared to the prior year.
Adjustments to Operating Expenses (in millions):
Transformation Strategy Costs
Forwarding
Logistics
Other
Total Transformation Strategy Costs
Goodwill and Asset Impairment Charges
Forwarding
Other
Total Goodwill and Asset Impairment Charges
Incentive Compensation Program Design Changes
Forwarding
Logistics
Total Incentive Compensation Program Design Changes
Total Adjustments to Operating Expenses
Year Ended December 31,
Change
2023
2022
$
%
(38.1) %
10.8 %
(20.1) %
(19.9) %
(15.9) %
162.2 %
N/A
(100.0) %
(17.8) %
(52.9) %
(36.1) %
$
5,534
5,927
1,708
8,943
5,351
2,137
$
(3,409)
576
(429)
13,169
$
16,431
$
(3,262)
12,335
$
14,660
$
(2,325)
(118)
(236)
—
(45)
—
(44)
(73)
(236)
44
11,981
$
14,571
$
(2,590)
834
$
1,188
6.3 %
9.0 %
1,771
1,860
10.8 %
11.3 %
$
$
$
(937)
(672)
(9)
18
9
Year Ended December 31,
Change
2023
2022
$
%
68 $
18 $
48
2
23
4
118 $
45 $
119 $
117
236 $
— $
—
— $
354 $
— $
— $
— $
22 $
22
44 $
89 $
50
25
(2)
73
119
117
236
(22)
(22)
(44)
265
277.8 %
108.7 %
(50.0) %
162.2 %
N/A
N/A
N/A
(100.0) %
(100.0) %
(100.0) %
297.8 %
$
$
$
$
$
$
$
$
$
$
$
$
35
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Revenue
Total revenue within Supply Chain Solutions decreased for the year, primarily due to lower revenue and volumes across
our forwarding businesses. The declines in forwarding and certain of our other businesses more than offset the impact of
revenue growth in logistics and our digital businesses.
Forwarding revenue was impacted by the following:
•
•
•
International airfreight revenue decreased approximately $1.2 billion. Market rates declined during the year as
customer demand remained weak and capacity continued to outpace demand. As a result, Asia export lanes
experienced significant pressure during the first half of the year. Year-over-year revenue declines began to moderate in
the fourth quarter and we experienced volume growth on Asia export lanes. We expect limited improvements in 2024,
primarily from the continued volume growth in Asia.
Revenue in our truckload brokerage business decreased $1.3 billion due to declines in volume and market rates. We
focused on revenue quality initiatives for this business during the year and, as a result, were able to grow volume from
SMBs. We intend to explore strategic alternatives for this business in 2024.
The remaining reduction in revenue was attributable to declines in ocean freight forwarding, driven by lower market
rates. While volume in this business also declined for the year, we experienced year-over-year growth during the
second half of the year. We anticipate ocean freight forwarding revenue will remain challenged in 2024 as market
overcapacity continues to adversely impact rates.
Within our Logistics businesses, healthcare logistics revenue increased $439 million, primarily due to the acquisition of
Bomi Group in the fourth quarter of 2022. Additionally, we experienced growth within our other healthcare operations.
Revenue in mail services increased $130 million as a result of volume growth, rate increases and a favorable shift in product
characteristics. The impact of acquiring MNX Global Logistics during the fourth quarter of 2023 was largely offset by declines
in our distribution and post sales operations. We expect growth within our Logistics businesses to continue into 2024.
Within our other Supply Chain Solutions businesses, we experienced higher revenue from our digital businesses,
including the acquisition of Happy Returns during the fourth quarter of 2023. We anticipate continued growth in these
businesses during 2024 as we continue to execute on our strategy. Growth in our digital businesses was more than offset by a
reduction of $386 million in transition services provided to the acquirer of UPS Freight. We expect to complete the work
associated with these transition services arrangements during the first half of 2024. Revenue was also negatively impacted by
$155 million due to lower volumes from our service contracts with the U.S. Postal Service.
Operating Expenses
Total operating expenses and total adjusted operating expenses for Supply Chain Solutions decreased for the year.
Forwarding operating expenses decreased $2.7 billion, including charges of $119 million related to impairments of
goodwill and an indefinite-lived trade name. On an adjusted basis, operating expenses decreased $2.8 billion, driven by a
reduction in purchased transportation expense as a result of lower market rates and volume declines. Overall, we expect market
conditions will improve during 2024, leading to increases in our purchased transportation costs, particularly for airfreight.
Logistics operating expenses increased $532 million primarily due to the acquisitions of Bomi Group and MNX Global
Logistics.
Within our other Supply Chain Solutions businesses, operating expense increases in our digital businesses, including
Happy Returns, were more than offset by reductions in other businesses. In total, operating expenses decreased $176 million,
including goodwill impairment charges of $117 million. On an adjusted basis, operating expenses decreased $295 million
driven by a reduction of $363 million in costs incurred to procure transportation for, and provide transition services to, the
acquirer of UPS Freight. We expect these costs to be further reduced, although not significantly, as we complete the obligations
under these agreements during the first half of 2024. Transportation costs related to our contracts with the U.S. Postal Service
also decreased for the year as a result of lower volumes.
36
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Operating Profit and Margin
As a result of the factors described above, total operating profit decreased $937 million, with operating margin decreasing
450 basis points to 6.3%. On an adjusted basis, operating profit decreased $672 million and operating margin decreased 230
basis points to 9.0%.
37
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Consolidated Operating Expenses
Year Ended December 31,
Change
2023
2022
$
%
Operating Expenses (in millions):
Compensation and benefits
Transformation Strategy Costs
One-Time Compensation Payment
Incentive Compensation Program Design Changes
$
47,088 $
47,720 $
(337)
(61)
—
(46)
—
(505)
Adjusted Compensation and benefits
46,690
47,169
Repairs and maintenance
Depreciation and amortization
Purchased transportation
Fuel
Other occupancy
Other expenses
Total Other expenses
Transformation Strategy Costs
Long-Lived Asset Estimated Residual Value Changes
Goodwill and Asset Impairment Charges
Adjusted Total Other expenses
Total Operating Expenses
Adjusted Total Operating Expenses
Currency (Benefit) / Cost - (in millions)*
2,828
3,366
13,651
4,775
2,019
8,090
34,729
(98)
—
(236)
2,884
3,188
17,675
6,018
1,844
7,915
39,524
(132)
(76)
—
$
$
$
34,395 $
39,316 $
81,817 $
81,085 $
87,244 $
86,485 $
*
Amount represents the change in currency translation compared to the prior year.
(632)
(291)
(61)
505
(479)
(56)
178
(4,024)
(1,243)
175
175
(4,795)
34
76
(236)
(4,921)
(5,427)
(5,400)
4
(1.3) %
632.6 %
N/A
(100.0) %
(1.0) %
(1.9) %
5.6 %
(22.8) %
(20.7) %
9.5 %
2.2 %
(12.1) %
(25.8) %
(100.0) %
N/A
(12.5) %
(6.2) %
(6.2) %
Year Ended December 31,
Change
2023
2022
$
%
Adjustments to Operating Expenses (in millions):
Transformation Strategy Costs
Compensation
Benefits
Other expenses
Total Transformation Strategy Costs
Incentive Compensation Program Design Changes
Compensation
One-Time Compensation Payment
Benefits
Long-Lived Asset Estimated Residual Value Changes
Depreciation and amortization
Goodwill and Asset Impairment Charges
Other expenses
Total Adjustments to Operating Expenses
19 $
36 $
318
98
10
132
435 $
178 $
(17)
308
(34)
257
(47.2) %
N/M
(25.8) %
144.4 %
—
61
—
505
(505)
(100.0) %
—
76
61
N/A
(76)
(100.0) %
236 $
732 $
— $
759 $
236
(27)
N/A
(3.6) %
$
$
$
$
38
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Compensation and Benefits
Total compensation and benefits and adjusted total compensation and benefits decreased in 2023 compared to 2022.
Compensation costs decreased $1.2 billion. On an adjusted basis, compensation costs decreased $676 million. The principal
factors impacting the change were:
• Management compensation decreased $1.2 billion, including the effect of a 2022 one-time charge related to incentive
compensation program design changes. Adjusted management compensation decreased $639 million, driven by lower
incentive compensation accruals and lower overall headcount.
•
•
•
•
•
The acquisition of Bomi Group in the fourth quarter of 2022 and the acquisitions of MNX Global Logistics and Happy
Returns in the fourth quarter of 2023 resulted in additional compensation cost of $116 million within Supply Chain
Solutions.
Reductions in U.S. direct labor hours due to volume declines and lower administrative headcount resulted in a
reduction in compensation cost of $1.2 billion that was offset by an increase of $1.3 billion due to contractual wage
rate increases for our Teamsters workforce. We expect wage rate growth on a year-over-year basis to continue through
the first half of 2024 as a result of the new Teamsters contract.
Benefits costs increased $566 million and increased $197 million on an adjusted basis, primarily due to:
Other benefits costs increased $348 million, driven by employee separation costs of $303 million as we reduced
headcount to create a more efficient operating model and enhance responsiveness to changing market dynamics. In
addition, we made a one-time payment of $52 million to certain U.S.-based, non-union part-time supervisors following
the ratification of our labor agreement with the Teamsters. On an adjusted basis, other benefits costs decreased $6
million.
Health and welfare costs increased $294 million, driven by increased contributions to multiemployer plans as a result
of contractually-mandated rate increases. Costs related to Company-sponsored health and welfare plans increased $51
million due to claims experience and medical cost inflation, partially offset by lower overall headcount.
Accruals for paid time off, payroll taxes and other costs increased $250 million, including payroll taxes associated with
the one-time payment discussed above. On an adjusted basis, these accruals increased $240 million, primarily due to
contractual wage growth.
• Workers' compensation expense increased $61 million due to adverse claims trends, partially offset by the impact from
a reduction in hours worked.
Partially offsetting these increases, pension and other postretirement benefits expense decreased $392 million, primarily
impacted by:
•
•
A reduction of $887 million in the cost of Company-sponsored defined benefit plans, driven by a reduction in service
cost due to higher discount rates and the cessation of accruals for future service in the UPS Retirement Plan.
An expense increase of $445 million for the UPS 401(k) Savings Plan, primarily due to the impact of replacement
contributions for the UPS Retirement Plan.
Repairs and Maintenance
The decrease in repairs and maintenance expense was primarily due to a reduction in aircraft engine maintenance as the
declines in volume we experienced in 2023 resulted in the temporary idling of certain aircraft to better match capacity with
demand. Based on current volume projections, we anticipate that certain aircraft may be temporarily idled for periods during
2024, resulting in a further reduction in maintenance expense.
The reduction in aircraft engine maintenance was partially offset by increases in the cost of materials and supplies and an
increase in routine repairs to buildings and facilities. We expect these trends to continue in 2024 due to ongoing facility
maintenance programs.
39
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Depreciation and Amortization
We incurred higher depreciation expense during 2023, primarily as a result of new facilities coming into service. We
incurred higher amortization expense on capitalized software investments in support of our strategic initiatives, as well as on
intangible assets due to the addition of assets arising from the acquisitions of Bomi Group in the fourth quarter of 2022 and
MNX Global Logistics and Happy Returns in the fourth quarter of 2023. We expect to incur higher depreciation and
amortization expense in 2024 as a result of our recent acquisitions and our continuing investments in network enhancement
projects and other technology initiatives.
Purchased Transportation
The decrease in purchased transportation expense charged to us by third-party air, ocean and ground carriers was
primarily attributable to:
Supply Chain Solutions expense decreased $2.8 billion resulting from volume declines and a reduction in market rates
paid for services in our forwarding businesses. These impacts were slightly offset by expense increases in our logistics
operations due to business growth, third-party rate increases in our mail services business and the impact of
acquisitions.
U.S. Domestic Package expense decreased $783 million, driven by reduced utilization of third-party ground carriers as
a result of volume declines and network optimization initiatives.
International Package expense decreased $382 million, primarily due to a reduction in air charters and ground
transportation expense as a result of volume declines. These decreases were partially offset by unfavorable currency
movements during the year.
•
•
•
Fuel
The decrease in fuel expense was driven by lower prices for jet fuel, diesel and gasoline and the impact of lower volumes.
Market prices, and the manner in which we purchase fuel, influence our costs. The majority of our fuel purchases utilize index-
based pricing formulas plus or minus a fixed locational/supplier differential. While many of the indices are correlated, each
index may respond differently to changes in underlying prices, which in turn can drive variability in our costs. Based on current
commodity market forecasts, we anticipate a decline in fuel prices in the first half of 2024.
Other Occupancy
The increase in other occupancy expense was primarily the result of leased operating facilities coming into service,
increases in rental rates due to market demand and inflationary pressures, and higher utility costs. We expect market factors
may continue to increase rent and utility costs in 2024.
Other Expenses
Other expenses increased $176 million for the year, driven by goodwill impairment charges of $125 million in certain
Supply Chain Solutions reporting units and a $111 million indefinite-lived trade name impairment charge in our truckload
brokerage business. On an adjusted basis, other expenses decreased $25 million. This was primarily attributable to the
following:
•
•
•
•
•
•
Reductions in vehicle lease expense of $144 million due to volume declines.
Gains on the sale of surplus real estate of $98 million.
A reduction of $74 million in costs incurred under the transition service agreements with the acquirer of UPS Freight
as we reach the termination of these agreements in the first half of 2024.
These reductions were largely offset by:
Purchases of supplies for our Smart Package Smart Facility initiative, which increased costs $109 million.
An increase of $85 million in commissions paid for certain online shipments.
An increase of $78 million in hosted software application fees and other technology costs in support of ongoing
investments in our digital transformation.
40
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Other Income and (Expense)
The following table sets forth investment income and other and interest expense for the years ended December 31, 2023
and 2022 (in millions):
Investment Income and Other
Defined Benefit Pension and Postretirement Medical Plan
(Gains) and Losses
Adjusted Investment Income and Other
Interest Expense
Total Other Income and (Expense)
Adjusted Other Income and (Expense)
Investment Income and Other
Year Ended December 31,
Change
2023
2022
$
%
217 $
2,435 $
(2,218)
(91.1) %
359
(1,061)
576 $
1,374 $
(785)
(568) $
(209) $
(704)
1,731 $
670 $
1,420
(798)
(81)
(2,299)
(879)
N/A
(58.1) %
11.5 %
N/A
N/A
$
$
$
$
Investment income and other decreased $2.2 billion. Remeasurements of our defined benefit plans resulted in a $359
million mark-to-market loss in 2023 compared to a $1.1 billion gain in 2022. Excluding the impact of these remeasurements,
adjusted investment income and other decreased $798 million, driven by a reduction in other pension income. Expected returns
on pension assets decreased, primarily due to a lower asset base resulting from negative returns in 2022, while pension interest
cost increased as a result of higher discount rates and ongoing plan growth. The reduction in other pension income was partially
offset by higher yields on invested balances.
Interest Expense
Interest expense increased due to higher effective interest rates on floating rate debt. The impact of higher average
outstanding debt balances was largely offset by additional capitalization of interest.
41
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Income Tax Expense
The following table sets forth income tax expense and our effective tax rate for the years ended December 31, 2023 and
2022 (in millions):
Income Tax Expense:
Income Tax Impact of:
One-Time Compensation Payment
Transformation Strategy Costs
Goodwill and Asset Impairment Charges
Incentive Compensation Program Design Changes
Long-Lived Asset Estimated Residual Value Changes
Defined Benefit Pension and Postretirement Medical Plan
(Gains) and Losses
Year Ended December 31,
Change
2023
2022
$
%
$
1,865
$
3,277
$
(1,412)
(43.1) %
15
102
43
—
—
85
—
36
—
121
18
(255)
15
66
43
(121)
(18)
340
N/A
183.3 %
N/A
(100.0) %
(100.0) %
N/A
(34.0) %
Adjusted Income Tax Expense
$
2,110
$
3,197
$
(1,087)
Effective Tax Rate
Adjusted Effective Tax Rate
21.8 %
21.8 %
22.1 %
22.0 %
For additional information on income tax expense and our effective tax rate, see note 15 to the audited, consolidated
financial statements.
42
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
We deploy a disciplined and balanced approach to capital allocation, including returns to shareowners through dividends
and share repurchases. As of December 31, 2023, we had $6.1 billion in cash, cash equivalents, restricted cash and marketable
securities. We believe that these positions, expected cash from operations, access to commercial paper programs and capital
markets and other available liquidity options will be adequate to fund our material short- and long-term cash requirements,
including our business operations, planned capital expenditures, anticipated pension contributions, potential acquisitions, debt
obligations and planned shareowner returns. We regularly evaluate opportunities to optimize our capital structure, including
through issuances of debt to refinance existing debt and to fund operations.
Cash Flows From Operating Activities
The following is a summary of the significant sources (uses) of cash from operating activities (in millions):
Net income
Non-cash operating activities(1)
Pension and postretirement medical benefit plan contributions (company-sponsored plans)
Hedge margin receivables and payables
Income tax receivables and payables
Changes in working capital and other non-current assets and liabilities
Other operating activities
Net cash from operating activities
2023
2022
$
6,708 $
5,437
(1,393)
(444)
(294)
366
(142)
11,548
5,261
(2,342)
274
154
(797)
6
$
10,238 $
14,104
(1) Represents depreciation and amortization, gains and losses on derivative transactions and foreign currency exchange, deferred income taxes, allowances for
expected credit losses, pension and postretirement medical benefit plan (income) expense, stock compensation expense, changes in casualty self-insurance
reserves, goodwill and other asset impairment charges and other non-cash items.
Net cash from operating activities decreased $3.9 billion in 2023, primarily due to the reduction in net income. It was also
impacted by:
•
•
•
•
A decrease in our hedge margin collateral position due to changes in the fair value of derivative contracts used in our
foreign currency hedging program.
A payment of $323 million in 2023 for employer payroll taxes that were deferred under the Coronavirus Aid,
Recovery and Economic Security Act in 2020, compared to a payment of $234 million in 2022.
A decrease in income taxes payable, primarily due to changes in our uncertain tax positions.
These factors were partially offset by:
A decrease in contributions to our company-sponsored, defined benefit pension and postretirement medical plans. We
made discretionary contributions to our qualified U.S. pension plans of $1.2 billion in 2023 compared to $1.9 billion in
2022.
• Working capital benefited primarily from the timing of group welfare plan contributions and other compensation-
related items.
Cash payments for income taxes were $2.0 and $2.6 billion for the years ended December 31, 2023 and 2022,
respectively, with the decrease corresponding to the reduction in net income.
43
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As of December 31, 2023, approximately $1.9 billion of our total worldwide holdings of cash, cash equivalents and
marketable securities were held by foreign subsidiaries. The amount of cash, cash equivalents and marketable securities held by
our U.S. and foreign subsidiaries fluctuates throughout the year due to a variety of factors, including the timing of cash receipts
and disbursements in the normal course of business. Cash provided by operating activities in the U.S. continues to be our
primary source of funds to finance domestic operating needs, capital expenditures, share repurchases, pension contributions and
dividend payments to shareowners. All cash, cash equivalents and marketable securities held by foreign subsidiaries are
generally available for distribution to the U.S. without any U.S. federal income taxes. Any such distributions may be subject to
foreign withholding and U.S. state taxes. When amounts earned by foreign subsidiaries are expected to be indefinitely
reinvested, no accrual for taxes is provided. As of December 31, 2023, we had $37 million of restricted cash related to certain
tax and regulatory matters and acquisitions.
44
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash Flows From Investing Activities
Our primary sources (uses) of cash from investing activities for the years ended December 31, 2023 and 2022 were as
follows (in millions):
Net cash used in investing activities
Capital Expenditures:
Buildings, facilities and plant equipment
Aircraft and parts
Vehicles
Information technology
Total Capital Expenditures(1):
$
$
2023
2022
(7,133)
$
(7,472)
(2,211)
$
(585)
(1,485)
(877)
(1,708)
(1,267)
(1,067)
(727)
$
(5,158)
$
(4,769)
Capital Expenditures as a % of revenue
5.7 %
4.8 %
Other Investing Activities:
Proceeds from disposals of businesses, property, plant and equipment
Net (purchases)/sales and maturities of marketable securities
Acquisitions, net of cash acquired
Other investing activities
$
$
$
$
193
(820)
(1,329)
(19)
$
$
$
$
12
(1,651)
(755)
(309)
(1)
In addition to capital expenditures of $5.2 and $4.8 billion for the years ended December 31, 2023 and 2022, respectively, there were principal repayments
of finance lease obligations of $126 and $149 million, respectively. These are included in cash flows from financing activities.
We have commitments for the purchase of aircraft, vehicles, equipment and real estate to provide for the replacement and
enhancement of existing capacity and targeted growth. Future capital spending will depend on a variety of factors, including
economic and industry conditions. Our current investment program anticipates investments in technology initiatives and
enhanced network capabilities, including over $1.0 billion of projects to support our environmental sustainability goals in 2024.
It also provides for maintenance of buildings, facilities and equipment and replacement of certain aircraft within our fleet. We
currently expect our capital expenditures will be approximately $4.5 billion in 2024, of which approximately 50 percent will be
allocated to network enhancement projects and other technology initiatives.
Total capital expenditures increased in 2023 compared to 2022 as a result of:
•
•
•
•
Spending on buildings, facilities and plant equipment increased due to network enhancements, capacity expansion
projects and facility maintenance.
Vehicles expenditures increased, driven by the timing and availability of vehicle replacements and continuing
investments in our network.
Information technology expenditures increased as a result of continuing investments in our digital capabilities and
network automation.
Aircraft expenditures decreased as a result of lower payments on open aircraft orders and final delivery of aircraft.
Proceeds from the disposal of businesses, property, plant and equipment were higher in 2023 relative to 2022, primarily
due to the sale of surplus real estate during 2023.
Net purchases of marketable securities increased in 2023 due to a shift to longer duration investments. During the first
quarter of 2024, we anticipate liquidating our portfolio of marketable securities to provide additional resources for our short-
term and strategic operating needs.
45
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash paid for acquisitions in 2023 was primarily attributable to the acquisitions of MNX Global Logistics and Happy
Returns, and the purchase of development areas for The UPS Store. In 2022, we acquired Bomi Group and Delivery Solutions,
as well as the purchase of development areas for The UPS Store. Cash used in other investing activities decreased, primarily
due to our 2022 investment of $252 million in the parent company of CommerceHub, Inc. and changes in other non-current
investments.
46
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash Flows From Financing Activities
Our primary sources (uses) of cash for financing activities were as follows (amounts in millions, except per share data):
Net cash used in financing activities
Share Repurchases:
Cash paid to repurchase shares
Number of shares repurchased
Shares outstanding at year end
Dividends:
Dividends declared per share
Cash paid for dividends
Borrowings:
Net borrowings (repayments) of debt principal
Other Financing Activities:
Cash received for common stock issuances
Other financing activities
Capitalization:
Total debt outstanding at year end
Total shareowners’ equity at year end
Total capitalization
2023
2022
(5,534) $
(11,185)
(2,250) $
(12.8)
853
(3,500)
(19.0)
859
6.48 $
6.08
(5,372) $
(5,114)
2,272 $
(2,304)
248 $
(432) $
262
(529)
22,264 $
17,314
39,578 $
19,662
19,803
39,465
$
$
$
$
$
$
$
$
$
We repurchased 12.8 and 19.0 million shares of class B common stock for $2.3 and $3.5 billion under our stock
repurchase program for the years ended December 31, 2023 and 2022, respectively. We do not anticipate repurchasing any
shares in 2024. For additional information on our share repurchase activities, see note 12 to the audited, consolidated financial
statements.
For the years ended December 31, 2023 and 2022, dividends reported within shareowners' equity include $239 and $249
million, respectively, of non-cash dividends that were settled in shares of class A common stock.
The declaration of dividends is subject to the discretion of the Board and will depend on various factors, including our net
income, financial condition, cash requirements, future prospects and other relevant factors. We paid quarterly cash dividends of
$1.62 and $1.52 per share in 2023 and 2022, respectively. In the first quarter of 2024, we declared a quarterly cash dividend of
$1.63 per share.
Issuances of debt in 2023 consisted of borrowings under our commercial paper program and fixed- and floating-rate
senior notes. The principal balances of the senior notes are as follows:
•
•
•
$900 million 4.875% senior notes;
$1.1 billion 5.050% senior notes; and
$529 million floating rate senior notes.
There were no issuances of debt in 2022.
Repayments of debt in 2023 included $23 million of debt assumed in the Bomi Group acquisition, scheduled principal
payments on our finance lease obligations and reductions in our commercial paper balances. We also repaid the following
senior notes at maturity:
•
•
•
$1.0 billion 2.500% senior notes;
€700 million 0.375% senior notes; and
$500 million floating rate senior notes.
47
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Repayments of debt in 2022 included scheduled principal payments on our finance lease obligations and repayment of
senior notes at maturity as follows:
•
•
•
$1.0 billion 2.450% senior notes;
$600 million 2.350% senior notes; and
$400 million floating rate senior notes.
The amount of commercial paper outstanding fluctuates based on daily liquidity needs. The following is a summary of our
commercial paper program (in millions):
2023
USD
Total
Outstanding balance
at year end ($)
Average balance
outstanding ($)
Average interest rate
$
$
2,172 $
2,172
417
5.45 %
As of December 31, 2023, we had no outstanding balances under our European commercial paper program. We had no
outstanding balances under our U.S. or European commercial paper programs as of December 31, 2022.
We have $1.5 billion of fixed- and floating-rate senior notes that mature in 2024. We intend to repay or refinance these
amounts when due. We consider the overall fixed and floating interest rate mix of our portfolio and the related overall cost of
borrowing when planning for future issuances and non-scheduled repayments of debt.
The cash received from common stock issuances in both 2023 and 2022 resulted from activity within the UPS 401(k)
Savings Plan and our employee stock purchase plan.
Other financing activities included cash used to repurchase shares to satisfy tax withholding obligations on vested
employee stock awards. Cash outflows for this purpose were $402 and $516 million for the years ended December 31, 2023 and
2022, respectively. The decrease was due to changes in required repurchase amounts.
Except as disclosed in note 9 to the audited, consolidated financial statements, we do not have guarantees or other off-
balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on our
financial condition or liquidity.
Sources of Credit
See note 9 to the audited, consolidated financial statements for a discussion of our available credit and our debt covenants.
48
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Contractual Commitments
We have material cash requirements for known contractual obligations and commitments in the form of finance leases,
operating leases, debt obligations, purchase commitments and certain other liabilities that are disclosed in the notes to the
audited, consolidated financial statements and discussed below. We expect to fund these obligations and other discretionary
payments, including expected returns to shareowners, primarily through cash from operations.
We anticipate making discretionary contributions to our company-sponsored U.S. defined benefit pension and
postretirement medical benefit plans of approximately $1.3 billion in 2024, which are included within Expected employer
contributions to plan trusts shown in note 5 to the audited, consolidated financial statements. There are currently no anticipated
required minimum cash contributions to our qualified U.S. pension plans in 2024. The amount of any minimum funding
requirement, as applicable, for these plans could change significantly in future periods depending on many factors, including
plan asset returns, discount rates, other actuarial assumptions, changes to pension plan funding regulations and the discretionary
contributions that we make. Actual contributions made in future years could materially differ and consequently required
minimum contributions beyond 2024 cannot be reasonably estimated. We expect contributions to the UPS 401(k) Savings Plan
to be approximately $670 million in 2024.
As discussed in note 6 to the audited, consolidated financial statements, we are not currently subject to any surcharges or
minimum contributions outside of our agreed-upon contractual rates with respect to the multiemployer pension and health and
welfare plans in which we participate. Contribution rates to these multiemployer pension and health and welfare plans are
established through the collective bargaining process.
We have outstanding letters of credit and surety bonds that are discussed in note 9 to the audited, consolidated financial
statements. Additionally, we have $1.5 billion of fixed- and floating-rate senior notes that mature in 2024. We intend to repay
or refinance these amounts when due. Estimated future interest payments on our outstanding debt total approximately $14.7
billion. This amount was calculated using the contractual interest payments due on our fixed- and variable-rate debt based on
interest rates as of December 31, 2023. For debt denominated in a foreign currency, the U.S. Dollar equivalent principal amount
of the debt at the end of the year was used as the basis to project future interest payments.
Annual principal payments on our long-term debt, and purchase commitments for certain capital expenditures are also set
out in note 9 to the audited, consolidated financial statements. Included within these purchase commitments are firm
commitments to purchase 21 new Boeing 767-300 aircraft to be delivered between 2024 and 2026 and two used Boeing 747-8F
aircraft to be delivered in 2024. Additionally, we anticipate purchasing approximately 3,000 alternative fuel vehicles in 2024.
In addition to purchase commitments, we have other contractual agreements including equipment rentals, software
licensing and commodity contracts.
Our finance lease obligations, including purchase options that are reasonably certain to be exercised, relate primarily to
leases on aircraft and real estate. These obligations, together with our obligations under operating leases are set out in note 11 to
the audited, consolidated financial statements.
Under provisions of the Tax Cuts and Jobs Act, we elected to pay a one-time transition tax on certain unrepatriated
earnings of foreign subsidiaries over eight years. The remaining balance will be paid between 2024 and 2026. Additionally, we
have uncertain tax positions that are further discussed in note 15 to the audited, consolidated financial statements.
As discussed in note 1 to the audited, consolidated financial statements, as of December 31, 2023, we had a restricted cash
balance related to certain tax and regulatory matters in Italy. We anticipate this balance will increase by approximately $61
million in 2024.
Contingencies
See note 5 and note 15 to the audited, consolidated financial statements for a discussion of pension-related matters and
income-tax-related matters, respectively. See note 10 for a discussion of judicial proceedings and other matters arising from the
conduct of our business activities.
49
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Collective Bargaining Agreements
Status of Collective Bargaining Agreements
See note 6 to the audited, consolidated financial statements for a discussion of the status of collective bargaining
agreements and "Risk Factors - Business and Operating Risks - Strikes, work stoppages or slowdowns by our employees could
materially adversely affect us" in Part I, Item 1A of this report.
Multiemployer Benefit Plans
We contribute to a number of multiemployer pension and health and welfare plans under the terms of collective
bargaining agreements that cover our union-represented employees. These agreements set forth the annual contribution rate
increases for the plans that we participate in.
New Accounting Pronouncements
Recently Adopted Accounting Standards
See note 1 to the audited, consolidated financial statements for a discussion of recently adopted accounting standards.
Accounting Standards Issued But Not Yet Effective
See note 1 to the audited, consolidated financial statements for a discussion of accounting standards issued, but not yet
effective.
50
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Critical Accounting Estimates
The amounts of assets, liabilities, revenue and expenses reported in our financial statements are affected by estimates and
judgments that are necessary to comply with GAAP. We base our estimates and judgments on prior experience, current trends,
various other assumptions and third-party input that we consider reasonable to our circumstances. Actual results could differ
materially from our estimates, which would affect the related amounts reported in our consolidated financial statements. While
estimates and judgments are applied in arriving at many reported amounts, we believe that the following critical accounting
estimates involve a higher degree of judgment and complexity.
Contingencies
From time to time, we are involved in various judicial proceedings and other matters arising from the conduct of our
business that result in exposure to various contingent liabilities. The events that may impact our contingent liabilities are often
unique and generally are not predictable. At the time a contingency is identified, we consider all relevant facts as part of our
evaluation. We apply judgment when establishing a range of reasonably possible losses arising from contingencies. Our
judgment is influenced by our understanding of currently available information and potential outcomes of these actions,
including the advice from our internal counsel, external counsel and other senior management.
We accrue amounts associated with judicial proceedings and other contingencies when and to the extent a loss becomes
probable and can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a
range of potential losses; however, when there appears to be a range of equally possible losses, our accrual is at the low end of
this range. The likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a
reasonable estimate of the loss or a range of potential losses may not be practicable based on the information available.
Additionally, events may arise that were not anticipated and, as a result, the outcome of a contingency may result in a loss that
differs materially from our previously estimated liability. Except as disclosed in note 10 to the audited, consolidated financial
statements, contingent losses that were probable and estimable were not material to our financial position or results of
operations as of, or for the year ended, December 31, 2023. In addition, we have certain contingent liabilities that have not been
recognized as of, or for the year ended, December 31, 2023, because a loss was not reasonably estimable. Contingent
obligations relating to income taxes and self-insurance are discussed below.
Goodwill and Intangible Asset Impairments
We test goodwill and indefinite-lived intangible assets for impairment annually as of July 1, or more frequently if
circumstances require. We assess goodwill for impairment at the reporting unit level. The determination of reporting units
requires judgment, and if we changed the definition of our reporting units, it is possible that we would have reached different
conclusions when performing our impairment tests. Changes in our management structure or business acquisitions may result in
changes to our reporting units.
We initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is
less than its carrying amount. If the qualitative assessment is not conclusive, or at our election, we quantitatively assess the fair
value of a reporting unit to test goodwill for impairment. This assessment uses a combination of income and market approaches
to develop an estimate of reporting unit fair value. These approaches consider both entity-specific and observable market
information under the fair value hierarchy in ASC Topic 820 and changes in, or additions to, available information may affect
the assumptions we use in estimating fair value.
•
The income approach uses a discounted cash flow (“DCF”) model, which requires us to make a number of significant
assumptions to produce an estimate of future cash flows. These assumptions include projections of future revenue,
costs, capital expenditures, working capital and the cost of capital. During periods of time in which macroeconomic
conditions are uncertain or volatile, these assumptions are subject to a greater degree of uncertainty. We are also
required to make assumptions relating to our overall business and operating strategy, and the regulatory and market
environment. Changes in any of our assumptions could significantly impact the fair value of one or more of our
reporting units. The projections that we use in our DCF model are updated annually, or more often if necessary, and
will change over time based on the historical performance and changing business conditions for each of our reporting
units.
51
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
•
The market approach uses observable market data of comparable public companies to estimate fair value utilizing
financial metrics (such as enterprise value to net sales). We apply judgment to select appropriate comparison
companies based on the business operations, size and operating results of our reporting units. Changes to our selection
of comparable companies or market multiples may result in changes to the estimates of fair value of our reporting
units.
In 2023, we performed our annual goodwill impairment testing using both qualitative and quantitative methods. In
developing our valuation assumptions underlying the quantitative annual impairment testing, we determined that the cost of
capital for our Roadie and Delivery Solutions reporting units had increased, driven by increases in the risk-free interest rate and
volatility of the stock prices of market comparables. The results of our testing using these assumptions indicated that the
carrying values of our Roadie and Delivery Solutions reporting units exceeded their estimated fair values. As a result, during
the third quarter of 2023 we recorded and disclosed goodwill impairment charges of $56 million related to Roadie and $61
million related to Delivery Solutions. The Delivery Solutions impairment represented all of the goodwill associated with this
reporting unit. These charges are included within Other expenses in the statement of consolidated income. We did not incur any
goodwill impairment charges in 2022 or 2021.
We test the indefinite-lived Coyote trade name associated with our truckload brokerage business for impairment in
accordance with GAAP using the relief from royalty method. This valuation approach requires that we make a number of
assumptions to estimate fair value, including projections of future revenues, market royalty rates, tax rates, discount rates and
other relevant variables. The projections we use in the model are updated annually, or more often if necessary, and will change
over time based on historical performance and changing business conditions.
Our annual testing as of July 1 indicated that the fair value of the Coyote trade name was in excess of its carrying value,
although the excess was less than 10 percent. Since the annual testing date, our truckload brokerage business continued to be
negatively impacted by market conditions, which resulted in revenue declines. In response, during the fourth quarter of 2023,
we began to evaluate strategic alternatives for this business. As a result, we tested the Coyote trade name for impairment as of
December 31, 2023, using forecasts that reflected updated market conditions and our evaluation of strategic alternatives related
to this business. Based on the results of this testing, we concluded that the carrying value of the Coyote trade name exceeded its
estimated fair value and recorded an impairment charge of $111 million. The revised carrying value of this trade name as of
December 31, 2023 was $89 million.
Our trade name valuation estimate remains sensitive to further changes in assumptions, including business performance,
royalty rates and the cost of capital. A decrease of 10 percent in forecasted cash flows, a decrease of 40 basis points in our
selected royalty rate or an increase of 100 basis points in the cost of capital would each result in an incremental impairment
charge of $10 million. We continue to monitor the impact of business performance, our determination of strategic alternatives
and external factors on the valuation assumptions for this trade name.
In connection with matters resulting in the Coyote trade name impairment, we also tested the goodwill associated with this
reporting unit for impairment as of December 31, 2023 using the updated forecasts of future cash flows described above. While
this interim test did not indicate an impairment, we continue to monitor this reporting unit and may be required to perform
additional interim tests in future periods as facts and circumstances evolve. The goodwill associated with this reporting unit as
of December 31, 2023 was $482 million.
Within our consolidated goodwill balance of $4.9 billion as of December 31, 2023, approximately $0.9 billion was
represented by certain reporting units within Supply Chain Solutions, including Coyote and Roadie, that have a limited excess
of fair value as of the most recent valuation. If the cost of capital were increased by 100 basis points or our projected cash flows
were reduced by 10 percent, it is reasonably possible that these reporting units would be impaired. We continue to monitor all
of our reporting units between annual testing dates.
Our finite-lived intangible assets are amortized over their estimated useful lives. These assets are tested for impairment as
part of asset groups that may include other long-lived assets. See "Critical Accounting Estimates – Depreciation, Residual
Value and Impairment of Property, Plant and Equipment" for a discussion of estimates impacting asset groups. In addition, a
reduction in expected useful life, or a decision to sell or abandon an intangible asset before the end of its useful life, may
increase amortization expense, which could have a material impact on our results of operations. See note 7 to the audited,
consolidated financial statements for a discussion of finite-lived intangible asset impairments.
52
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Self-Insurance Accruals
We base self-insurance reserves on actuarial estimates, which are determined with the assistance of a third-party actuary
through a complex process that includes the application of various actuarial methods and assumptions. The process incorporates
actual loss experience and judgments about expected future development based on historical experience, recent and projected
trends in claim frequency and severity, changes in the level of risk retained under our programs and changes in claims handling
practices, among other factors.
Workers' compensation, automobile liability and general liability insurance claims may take a number of years to resolve.
Consequently, actuarial estimates are required to project the ultimate cost that will be incurred to resolve a claim. Several
factors can affect the actual cost, or severity, of a claim, including:
•
•
•
•
•
Risk retention limits;
Length of time a claim remains open;
Trends in healthcare costs;
Results of any related litigation; and
Changes in legislation.
Furthermore, claims may emerge in future years for events that occurred in a prior policy period at a rate that differs from
actuarial projections. All these factors can result in revisions to actuarial projections and produce a material difference between
estimated and actual operating results.
Due to the complexity and inherent uncertainty associated with the estimation of our workers’ compensation, automobile
and general claims liabilities, the third-party actuary develops a range of expected losses. We believe our estimated reserves for
such claims are adequate; however, actual experience in claims frequency and/or severity of claims could materially differ from
our estimates and affect our results of operations.
We also sponsor several health and welfare insurance plans for our employees. Liabilities and expenses related to these
plans are based on estimates of the number of employees and eligible dependents covered under the plans, global health events,
anticipated utilization by participants and overall trends in medical costs and inflation. We believe our estimates are reasonable
and appropriate. Actual experience may differ materially from these estimates and, therefore, produce a material difference
between estimated and actual operating results.
Self-insurance reserves as of December 31, 2023 and 2022 were as follows (in millions):
Current self-insurance reserves
Non-current self-insurance reserves(1)
Total self-insurance reserves
(1)
Included within Other Non-Current Liabilities in our consolidated balance sheets.
2023
2022
$
$
1,320 $
1,626
2,946 $
1,069
1,818
2,887
Our total reserves related to prior year claims increased by $39 million in 2023 and decreased by $5 million in 2022 as a
result of changes in estimated claim costs. A five percent deterioration or improvement in both the assumed claim severity and
claim frequency rates used to estimate our self-insurance reserves would result in an increase or a decrease, respectively, of
approximately $300 million in our reserves and expenses as of, and for the year ended, December 31, 2023.
53
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pension and Other Postretirement Medical Benefits
Our pension and postretirement medical benefit costs are calculated using various actuarial assumptions and
methodologies. These assumptions include discount rates, healthcare cost trend rates, inflation, compensation increases,
expected returns on plan assets, mortality rates, regulatory requirements and other factors. The assumptions utilized in recording
the obligations under our plans represent our best estimates. We believe that they are reasonable based on historical experience
and performance, as well as factors that might cause future expectations to differ from past trends.
Differences in actual experience or changes in assumptions may affect our pension and postretirement medical benefit
obligations and future expenses. The primary factors contributing to actuarial gains and losses each year are:
•
•
•
•
•
Changes in the discount rate used to value pension and postretirement medical benefit obligations as of the
measurement date;
Differences between expected and actual returns on plan assets;
Changes in demographic assumptions, including mortality;
Differences in participant experience from demographic assumptions; and
Changes in coordinating benefits with plans not sponsored by UPS.
We recognize changes in the fair value of plan assets and net actuarial gains or losses in excess of a corridor (defined as
10% of the greater of the fair value of plan assets or the plans' projected benefit obligations) immediately within income upon
remeasurement of a plan. Other components of pension expense (referred to as "net periodic benefit cost"), primarily service
and interest costs and the expected return on plan assets, are reported on a quarterly basis.
The following sensitivity analysis shows the impact of a 25 basis point change in the assumed discount rate and return on
assets for our pension and postretirement benefit plans, and the resulting increase (decrease) in our obligations and expense as
of, and for the year ended, December 31, 2023 (in millions):
Pension Plans
Discount Rate:
25 Basis Point
Increase
25 Basis Point
Decrease
Effect on ongoing net periodic benefit cost
$
(15) $
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
Effect on projected benefit obligation
Return on Assets:
Effect on ongoing net periodic benefit cost(1)
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor(2)
Postretirement Medical Benefit Plans
Discount Rate:
Effect on ongoing net periodic benefit cost
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
Effect on accumulated postretirement benefit obligation
Healthcare Cost Trend Rate:
Effect on ongoing net periodic benefit cost
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
$
$
(423)
(1,550)
(108)
(54) $
2 $
—
(34)
1
—
Effect on accumulated postretirement benefit obligation
$
9 $
(1) Amount calculated based on 25 basis point increase / decrease in the expected return on assets.
(2) Amount calculated based on 25 basis point increase / decrease in the actual return on assets.
16
697
1,636
108
54
(2)
—
39
(1)
—
(10)
Refer to note 5 to the audited, consolidated financial statements for information on our potential liability for coordinating
benefits related to the Central States Pension Fund.
54
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Depreciation, Residual Value and Impairment of Property, Plant and Equipment
As of December 31, 2023, we had $36.9 billion of net property, plant and equipment, the most significant category of
which was aircraft. In accounting for property, plant and equipment, we make estimates of the expected useful lives and
residual values to arrive at depreciation expense. We evaluate the useful lives of our property, plant and equipment based on our
usage, maintenance and replacement policies, and taking into account physical and economic factors that may affect the useful
lives of the assets. A reduction in expected useful life, or a decision to sell or abandon a long-lived asset before the end of its
useful life, may increase depreciation expense. Our accounting policy for property, plant and equipment is set out in note 1 to
the audited, consolidated financial statements.
We monitor our long-lived assets for indicators of impairment which may include, but are not limited to, a significant
change in the extent to which an asset is utilized and operating or cash flow losses associated with the use of the asset. If
circumstances are present that indicate the carrying value of our long-lived assets may not be recoverable, we perform
impairment testing at the asset group level.
Asset groups represent the lowest level at which independent cash flows can be identified. Determining asset groups
requires judgment and changes in the way asset groups are defined could have a material impact on the results of impairment
testing. We perform recoverability testing by comparing the undiscounted cash flows of the asset group to its carrying value. If
the carrying amount of the asset group is determined not to be recoverable, a write-down to fair value is recorded. Fair values
are determined based on quoted market values, discounted cash flows or external appraisals, as appropriate. Details of long-
lived asset impairments are included in note 4 to the audited, consolidated financial statements.
In estimating the useful lives and expected residual values of aircraft, we consider actual experience with the same or
similar aircraft types, multi-year volume projections for our air products and the types of aircraft required to efficiently operate
our network. Adverse changes in volume could result in our current aircraft capacity exceeding projected demand, which may
result in temporary idling of aircraft to better match capacity with demand. Temporarily idled assets are classified as held-and-
used, and we continue to record depreciation expense for these assets. As a result of the reduction in volumes experienced
during 2023, we temporarily idled nine aircraft for an average of approximately five months. As of December 31, 2023 all of
these aircraft had re-entered operational service. Based on current volume projections, we anticipate that certain aircraft may be
temporarily idled during part of 2024. Over a longer period, continued adverse changes in volume forecasts could lead to an
excess of aircraft, resulting in an impairment charge or reduction in expected useful life that may result in increased
depreciation expense.
Revisions to estimates of useful lives and residual values could also be caused by changes to our maintenance programs,
governmental regulations, operational intentions, or market prices for new and used aircraft of the same or similar types. We
periodically evaluate our estimates and assumptions, and adjust them, as necessary, on a prospective basis through depreciation
expense. In 2022, we reduced the estimated residual value of our MD-11 aircraft and associated engines to zero based on
updated operational plans for these aircraft and our expectations for their eventual disposal. In connection with this change in
estimate, in 2022 we recorded a one-time depreciation charge to adjust the residual value of our fully-depreciated MD-11
aircraft. Refer to note 4 to the audited, consolidated financial statements for information on the impact to our results of
operations.
Fair Value Measurements
In the normal course of business, we hold and issue financial instruments that contain elements of market risk, including
derivatives, marketable securities and debt. Certain of these financial instruments are required to be recorded at fair value,
principally derivatives, marketable securities and certain other investments. These financial instruments are measured and
reported at fair value on a recurring basis based upon a fair value hierarchy (Levels 1, 2 and 3). Fair values are based on listed
market prices (Level 1), when such prices are available. To the extent that listed market prices are not available, fair value is
determined based on other relevant factors, including dealer price quotations (Level 2). If listed market prices or other relevant
factors are not available, inputs are developed from unobservable data reflecting our own assumptions and include situations
where there is little or no market activity for the asset or liability (Level 3). Certain financial instruments, including over-the-
counter derivative instruments, are valued using pricing models that consider, among other factors, contractual and market
prices, correlations, time value, credit spreads and yield curve volatility factors. Changes in the fixed income, foreign currency
exchange and commodity markets will impact our estimates of fair value in the future, potentially affecting our results of
55
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
operations. Further information on our accounting policies relating to fair value measurements can be found in note 1 to the
audited, consolidated financial statements.
As of December 31, 2023, the majority of our financial instruments were categorized as either Level 1 or Level 2. Refer to
notes 3, 9 and 17 to the audited, consolidated financial statements for further information on these instruments. A quantitative
sensitivity analysis of our exposure to changes in commodity prices, foreign currency exchange rates and interest rates is
presented in the Quantitative and Qualitative Disclosures about Market Risk section of this report.
Our pension and postretirement plan assets include investments in hedge funds, as well as private debt, private equity and
real estate funds, which are primarily measured using net asset value ("NAV") as a practical expedient for fair value, as
appropriate. These investments were valued at $9.9 billion as of December 31, 2023. In order to estimate NAV, we evaluate
audited and unaudited financial reports from fund managers and make adjustments for investment activity between the date of
the financial reports and December 31. These investments are not actively traded, and their values can only be estimated using
these assumptions. If our estimates of activity changed, this could have a material impact on the reported value of these
investments and on the return on assets that we report. Refer to note 5 to the audited, consolidated financial statements for
further information on our pension and postretirement plan assets.
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, including property, plant and
equipment, goodwill and intangible assets. These assets are subject to fair value adjustments in certain circumstances, such as
when there is evidence of an impairment or when an asset or disposal group is classified as held for sale.
In accounting for business acquisitions, we allocate the fair value of purchase consideration to the assets acquired and
liabilities assumed based on their estimated fair values. Estimating the fair value of assets acquired and liabilities assumed
requires judgment, especially with respect to identified intangible assets as there may be limited or no observable transactions
within the market, requiring us to develop internal models to estimate fair value. For example, estimating the fair value of
identified intangible assets may require us to develop valuation assumptions, including but not limited to, future expected cash
flows from these assets, synergies and the cost of capital. Certain inputs require us to determine assumptions that are reflective
of a market participant view of fair value. Changes in any of these assumptions may materially impact the amount we recognize
for identifiable assets and liabilities, in addition to the residual amount allocated to goodwill.
Income Taxes
We make certain estimates and judgments in determining income tax expense within our financial statements. These
estimates and judgments occur in the calculation of income by legal entity and jurisdiction, tax credits, benefits and deductions,
and in the calculation of deferred tax assets and liabilities arising from timing differences in the recognition of revenue and
expense for tax and financial statement purposes, as well as tax, interest and penalties related to uncertain tax positions.
Significant changes in these estimates may result in an increase or decrease to our tax expense in a subsequent period.
We assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we increase our
provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be
recoverable. We believe that we will ultimately recover a substantial majority of the deferred tax assets recorded in our
consolidated balance sheets. However, should there be a change in our ability to recover our deferred tax assets, our tax
provision would increase in the period in which we determined that the recovery was not likely.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We
recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be
sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position
meets the recognition threshold, the second step requires us to estimate and measure the largest amount of tax benefit that is
more likely than not to be realized upon ultimate settlement. The difference between the amount of recognizable tax benefit and
the total amount of tax benefit from positions filed or to be filed with the tax authorities is recorded as a liability for uncertain
tax benefits. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various
possible outcomes. We reevaluate uncertain tax positions quarterly based on factors including, but not limited to, changes in
facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Such a change in
recognition or measurement could result in the recognition of a tax benefit or additional tax expense. In 2023, we recognized a
net tax benefit of $102 million following resolution of certain global tax audits.
56
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk from changes in certain commodity prices, foreign currency exchange rates, interest rates
and equity prices. All of these market risks arise in the normal course of business, as we do not engage in speculative trading
activities. In order to manage the risk arising from these exposures, we may utilize a variety of commodity, foreign currency
exchange rate and interest rate forward contracts, options and swaps. A discussion of our accounting policy for derivative
instruments is provided in note 1 to the audited, consolidated financial statements.
Commodity Price Risk
We are exposed to changes in the prices of refined fuels, principally jet-A, diesel and unleaded gasoline, as well as
changes in the price of natural gas and other alternative fuels. Currently, the fuel surcharges that we apply to our domestic and
international package services are the primary means of reducing the risk of adverse fuel price changes. In order to mitigate the
impact of fuel surcharges imposed on us by outside carriers, we regularly adjust the rates we charge for our freight brokerage
services. The majority of our fuel purchases utilize index-based pricing formulas plus or minus a fixed locational/supplier
differential. While many of the indices are correlated, each index may respond differently to changes in underlying prices,
which in turn can drive variability in our costs. Because of this, our operating results may be affected should the market price of
fuel suddenly change by a significant amount or change by amounts that do not result in an adjustment in our fuel surcharges,
which can significantly affect our results either positively or negatively in the short-term. As of December 31, 2023 and 2022,
we had no commodity contracts outstanding.
Foreign Currency Exchange Rate Risk
We have foreign currency risks related to our revenue, operating expenses and financing transactions in currencies other
than the local currencies in which we operate. We are exposed to currency risk from the potential changes in functional
currency values of our foreign currency-denominated assets, liabilities and cash flows. Our most significant foreign currency
exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We may use
forward contracts as well as a combination of purchased and written options to hedge forecasted cash flow currency exposures.
These derivative instruments generally cover forecasted foreign currency exposures for periods of 3 to 36 months. We may also
utilize forward contracts to hedge portions of our anticipated cash settlements of intercompany transactions and interest
payments on certain debt subject to foreign currency remeasurement.
Interest Rate Risk
We have issued debt instruments and have debt associated with finance leases that accrue expense at fixed and floating
rates of interest. We may use interest rate swaps as part of our program to manage the fixed and floating interest rate mix of our
total debt portfolio and related overall cost of borrowing. We may also utilize forward starting swaps and similar instruments to
lock in all or a portion of the borrowing cost of anticipated debt issuances. These instruments subject us to risk resulting from
changes in short-term interest rates.
We are also subject to interest rate risk with respect to our defined benefit pension and postretirement medical benefit plan
obligations, as changes in interest rates will effectively increase or decrease the obligations associated with these plans. This
will result in changes to the amount of pension and postretirement benefit expense recognized in future periods and may also
result in us being required to make contributions to the plans.
We hold investments in debt securities, as well as cash-equivalent instruments, some of which accrue income at variable
rates of interest.
57
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sensitivity Analysis
The following analysis provides quantitative information regarding our exposure to foreign currency exchange rate risk,
interest rate risk and equity price risk embedded in our existing financial instruments. We utilize valuation models to evaluate
the sensitivity of the fair value of financial instruments with exposure to market risk that assume instantaneous, parallel shifts in
exchange rates, interest rate yield curves and commodity and equity prices. For options and instruments with non-linear returns,
models appropriate to the instrument are utilized to determine the impact of market shifts.
There are certain limitations inherent in the sensitivity analyses presented, primarily due to the assumption that foreign
currency exchange rates change in a parallel fashion and that interest rates change instantaneously. In addition, the analyses are
unable to reflect the complex market reactions that normally would arise from the market shifts modeled. While this is our best
estimate of the impact of the specified scenarios, these estimates should not be viewed as forecasts. We adjust the fixed and
floating interest rate mix of our interest-rate-sensitive assets and liabilities in response to changes in market conditions.
Additionally, changes in the fair value of foreign currency derivatives and commodity derivatives are offset by changes in the
cash flows of the underlying hedged foreign currency and commodity transactions.
(in millions)
Change in Fair Value:
Currency Derivatives(1)
Change in Annual Interest Expense:
Variable Rate Debt(2)
Change in Annual Interest Income:
Marketable Securities(3)
Shock-Test Result as of
December 31,
2023
2022
$
$
$
(649) $
(770)
41 $
1 $
18
1
(1) The potential change in fair value from a hypothetical 10% weakening of the U.S. Dollar against foreign currency exchange rates across all maturities.
(2) The potential change in annual interest expense resulting from a hypothetical 100 basis point increase in short-term interest rates, applied to our variable
rate debt.
(3) The potential change in interest income resulting from a hypothetical 100 basis point increase in short-term interest rates, applied to our variable rate
investment holdings.
The sensitivity of our defined benefit pension and postretirement benefit plan obligations to changes in interest rates is
discussed in "Critical Accounting Estimates - Pension and Other Postretirement Medical Benefits".
58
Item 8. Financial Statements and Supplementary Data
Table of Contents
Report of Independent Registered Public Accounting Firm (PCAOB ID No.
Consolidated Balance Sheets
Statements of Consolidated Income
Statements of Consolidated Comprehensive Income (Loss)
Statements of Consolidated Cash Flows
Notes to Consolidated Financial Statements
34)
Note 1—Summary of Accounting Policies
Note 2—Revenue Recognition
Note 3—Marketable Securities and Non-Current Investments
Note 4—Property, Plant and Equipment
Note 5—Company-Sponsored Employee Benefit Plans
Note 6—Multiemployer Employee Benefit Plans
Note 7—Goodwill and Intangible Assets
Note 8—Acquisitions
Note 9—Debt and Financing Arrangements
Note 10—Legal Proceedings and Contingencies
Note 11—Leases
Note 12—Shareowners’ Equity
Note 13—Stock-Based Compensation
Note 14—Segment and Geographic Information
Note 15—Income Taxes
Note 16—Earnings Per Share
Note 17—Derivative Instruments and Risk Management
Note 18—Transformation Strategy Costs
60
63
64
64
65
66
66
73
76
79
80
91
95
98
101
106
107
110
114
118
121
126
127
131
59
Report of Independent Registered Public Accounting Firm
To the Shareowners and Board of Directors of
United Parcel Service, Inc.
Atlanta, Georgia
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of United Parcel Service, Inc. and subsidiaries (the
"Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, and
cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as
the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States
of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 20, 2024, expressed an unqualified opinion on the Company's internal
control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken
as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
60
Valuation of U.S. hedge fund, private debt, private equity and real estate investments — Refer to Note 5, Company-
Sponsored Employee Benefit Plans (Fair Value Measurements), to the financial statements
Critical Audit Matter Description
The Company’s U.S. pension and postretirement medical benefit plans (the "U.S. Plans") held hedge fund, private debt,
private equity and real estate investments valued at $9.9 billion as of December 31, 2023.
The Company determines the reported values of the U.S. Plans’ investments in hedge, private debt, private equity and real
estate funds primarily based on the estimated net asset value ("NAV") of the fund. In order to estimate NAV, the Company
evaluates audited and unaudited financial reports from fund managers, and makes adjustments, as appropriate, for investment
activity between the date of the financial reports and December 31. These investments are not actively traded, and their values
can only be estimated using these subjective assumptions.
Auditing the estimated NAV of these hedge fund, private debt, private equity and real estate investments requires a high
degree of auditor judgment and subjectivity to evaluate the completeness, reliability and relevance of the inputs used by
management.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the inputs used by management to estimate the NAV of the U.S. Plans’ hedge fund,
private debt, private equity and real estate investments included the following, among others:
• We tested the effectiveness of controls, including those related to the reliability of values reported by fund managers,
the relevance of asset class benchmark returns, and the completeness and accuracy of unobservable inputs related to
the underlying assets of the funds.
•
For certain investments, we confirmed directly with the respective fund manager its preliminary estimate of the fund’s
NAV as of December 31, 2023.
• We evaluated the Company’s historical ability to accurately estimate NAV for these funds by comparing each fund’s
recorded valuation as of its prior fiscal year end to the NAV per the audited fund financial statements (which are
received in arrears of the Company’s reporting timetable).
Revenue — Refer to Note 2, Revenue Recognition, to the financial statements
Critical Audit Matter Description
Approximately 86 percent of the Company’s revenues are from its global small package operations that provide time-
definite delivery services for express letters, documents, small packages and palletized freight via air and ground services. The
Company’s global small package revenues are comprised of a significant volume of low-dollar transactions sourced from
systems that were primarily developed by the Company. The processing of transactions, including the recording of them, is
highly automated and based on contractual terms with the Company’s customers.
Auditing global small package revenue required a significant extent of effort and the involvement of professionals with
expertise in information technology ("IT") necessary for us to identify, test, and evaluate the Company’s systems, software
applications, and automated controls.
61
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the Company’s systems to process global small package revenue transactions included the
following, among others:
• With the assistance of our IT specialists, we:
–
–
Identified the significant systems used to process global small package revenue transactions and tested the
effectiveness of the general IT controls over each of these systems, including testing of user access controls,
change management controls, and IT operations controls.
Tested the effectiveness of system interface controls and automated controls within the global small package
revenue stream, as well as the controls designed to ensure the accuracy and completeness of revenue.
• We tested the effectiveness of controls over the relevant global small package revenue business processes, including
those in place to reconcile the various systems to the Company’s general ledger.
• We performed analytical procedures to evaluate the Company’s recorded revenue and evaluate trends.
•
For a sample of customers, we read the Company’s contract with the customer and evaluated the Company’s pattern of
revenue recognition for the customer. In addition, we evaluated the accuracy of the Company’s recorded global small
package revenue for a sample of customer invoices.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 20, 2024
We have served as the Company's auditor since 1969.
62
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
ASSETS
Current Assets:
Cash and cash equivalents
Marketable securities
Accounts receivable
Less: Allowance for credit losses
Accounts receivable, net
Other current assets
Total Current Assets
Property, Plant and Equipment, Net
Operating Lease Right-Of-Use Assets
Goodwill
Intangible Assets, Net
Deferred Income Tax Assets
Other Non-Current Assets
Total Assets
LIABILITIES AND SHAREOWNERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases
Current maturities of operating leases
Accounts payable
Accrued wages and withholdings
Self-insurance reserves
Accrued group welfare and retirement plan contributions
Other current liabilities
Total Current Liabilities
Long-Term Debt and Finance Leases
Non-Current Operating Leases
Pension and Postretirement Benefit Obligations
Deferred Income Tax Liabilities
Other Non-Current Liabilities
Shareowners’ Equity:
Class A common stock (127 and 134 shares issued in 2023 and 2022, respectively)
Class B common stock (726 and 725 shares issued in 2023 and 2022, respectively)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Deferred compensation obligations
Less: Treasury stock (0.2 in 2023 and 2022)
Total Equity for Controlling Interests
Noncontrolling Interests
Total Shareowners’ Equity
Total Liabilities and Shareowners’ Equity
See notes to audited, consolidated financial statements.
63
December 31,
2023
2022
$
$
$
$
3,206 $
2,866
11,342
(126)
11,216
2,125
19,413
36,945
4,308
4,872
3,305
126
1,888
70,857 $
3,348 $
709
6,340
3,224
1,320
1,479
1,256
17,676
18,916
3,756
6,159
3,772
3,264
2
7
—
21,055
(3,758)
9
(9)
17,306
8
17,314
70,857 $
5,602
1,993
12,729
(146)
12,583
2,039
22,217
34,719
3,755
4,223
2,796
139
3,275
71,124
2,341
621
7,515
4,049
1,069
1,078
1,467
18,140
17,321
3,238
4,807
4,302
3,513
2
7
—
21,326
(1,549)
13
(13)
19,786
17
19,803
71,124
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In millions, except per share amounts)
Revenue
Operating Expenses:
Compensation and benefits
Repairs and maintenance
Depreciation and amortization
Purchased transportation
Fuel
Other occupancy
Other expenses
Total Operating Expenses
Operating Profit
Other Income and (Expense):
Investment income and other
Interest expense
Total Other Income and (Expense)
Income Before Income Taxes
Income Tax Expense
Net Income
Basic Earnings Per Share
Diluted Earnings Per Share
Years Ended December 31,
2023
2022
2021
$
90,958 $
100,338 $
97,287
47,088
2,828
3,366
13,651
4,775
2,019
8,090
81,817
9,141
47,720
2,884
3,188
17,675
6,018
1,844
7,915
87,244
13,094
217
(785)
(568)
8,573
1,865
2,435
(704)
1,731
14,825
3,277
$
$
$
6,708 $
11,548 $
7.81 $
7.80 $
13.26 $
13.20 $
46,640
2,769
2,953
19,079
3,847
1,719
7,470
84,477
12,810
4,479
(694)
3,785
16,595
3,705
12,890
14.75
14.68
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
(In millions)
Net Income
Years Ended December 31,
2023
2022
2021
$
6,708 $
11,548 $
12,890
Change in foreign currency translation adjustment, net of tax
Change in unrealized gain (loss) on marketable securities, net of tax
Change in unrealized gain (loss) on cash flow hedges, net of tax
Change in unrecognized pension and postretirement benefit costs, net of tax
198
9
(243)
(2,173)
(284)
(10)
184
1,839
Comprehensive Income (Loss)
$
4,499 $
13,277 $
(181)
(7)
206
3,817
16,725
See notes to audited, consolidated financial statements.
64
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions)
Years Ended December 31,
2022
2021
2023
Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash from operating activities:
$
6,708 $ 11,548 $ 12,890
Depreciation and amortization
Pension and postretirement benefit (income) expense
Pension and postretirement benefit contributions
Self-insurance reserves
Deferred tax (benefit) expense
Stock compensation expense
Other (gains) losses
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable
Other assets
Accounts payable
Accrued wages and withholdings
Other liabilities
Other operating activities
Net cash from operating activities
Cash Flows From Investing Activities:
Capital expenditures
Proceeds from disposal of businesses, property, plant and equipment
Purchases of marketable securities
Sales and maturities of marketable securities
Acquisitions, net of cash acquired
Other investing activities
Net cash used in investing activities
Cash Flows From Financing Activities:
Net change in short-term debt
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchases of common stock
Issuances of common stock
Dividends
Other financing activities
Net cash used in financing activities
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash
Cash, Cash Equivalents and Restricted Cash:
Beginning of period
End of period
Cash Paid During the Period For:
Interest (net of amount capitalized)
Income taxes (net of refunds)
See notes to audited, consolidated financial statements.
65
3,366
1,330
(1,393)
57
199
220
265
1,256
87
(1,377)
(296)
(42)
(142)
10,238
(5,158)
193
(3,521)
2,701
(1,329)
(19)
(7,133)
1,272
3,429
(2,429)
(2,250)
248
(5,372)
(432)
(5,534)
33
(2,396)
3,188
(129)
(2,342)
(20)
531
1,568
123
(322)
117
34
(189)
(9)
6
14,104
(4,769)
12
(1,906)
255
(755)
(309)
(7,472)
—
—
(2,304)
(3,500)
262
(5,114)
(529)
(11,185)
(100)
(4,653)
2,953
(2,456)
(576)
178
1,645
878
137
(2,147)
312
1,265
(245)
151
22
15,007
(4,194)
872
(312)
366
(602)
52
(3,818)
—
—
(2,773)
(500)
251
(3,437)
(364)
(6,823)
(21)
4,345
5,602
3,206 $
10,255
5,910
5,602 $ 10,255
762 $
1,976 $
721 $
2,574 $
697
1,869
$
$
$
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
Basis of Financial Statements and Business Activities
The accompanying consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States ("GAAP"), and include the accounts of United Parcel Service, Inc., and all of its
consolidated subsidiaries (collectively "UPS" or the "Company"). All intercompany balances and transactions have been
eliminated.
We provide transportation services, primarily domestic and international letter and package delivery. Through our Supply
Chain Solutions subsidiaries, we are also a global provider of transportation, logistics and related services.
In 2023, we reclassified certain operating expenses to better align with the manner in which we manage our operations.
Substantially all of these costs were previously classified within operating expenses as Other expenses and have now been
classified within operating expenses as Repairs and maintenance in the statements of consolidated income. The remaining line
items within operating expenses impacted by this reclassification were inconsequential. As a result, the statements of
consolidated income give effect to this reclassification as follows:
•
•
Other expenses decreased by $381, $356 and $301 million for 2023, 2022 and 2021, respectively.
Repairs and maintenance increased by $363, $369 and $326 million for 2023, 2022 and 2021, respectively.
The reclassification had no impact on our reported revenue, operating profit, net income, or any internal performance
measure on which management is compensated.
Use of Estimates
The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingencies.
Estimates have been prepared on the basis of the most current and best information, and actual results could differ materially
from those estimates.
Revenue Recognition
United States ("U.S.") Domestic Package and International Package Operations: Revenue is recognized over time as we
perform the services in the contract.
Forwarding: Freight forwarding revenue, including truckload brokerage revenue, and expenses related to the
transportation of freight are recognized over time as we perform the services. Customs brokerage revenue is recognized upon
completing documents necessary for customs entry purposes.
Logistics: In our Logistics business we have a right to consideration from customers in an amount that corresponds
directly with the value to the customers of our performance completed to date, and as such we recognize revenue in the amount
to which we have a right to invoice the customer.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments that are readily convertible into cash. We consider
securities with maturities of three months or less and insignificant credit risk, when purchased, to be cash equivalents. The
carrying amount of these securities approximates fair value because of the short-term maturity of these instruments. As of
December 31, 2023, we had $37 million of restricted cash related to certain tax and regulatory matters and acquisitions. We had
no restricted cash as of December 31, 2022.
66
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marketable Securities and Non-Current Investments
Debt securities are classified as either trading or available-for-sale securities and are carried at fair value. Unrealized gains
and losses on trading securities are reported as Investment income and other on the statements of consolidated income.
Unrealized gains and losses on available-for-sale securities are reported within other comprehensive income, a separate
component of shareowners’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion
of discounts to maturity. Such amortization and accretion is included in Investment income and other, together with interest and
dividends. The cost of securities sold is based on the specific identification method; realized gains and losses resulting from
such sales are included in Investment income and other.
We periodically review our available-for-sale investments for indications of other-than-temporary impairment considering
many factors, including the extent and duration to which a security’s fair value has been less than its cost, overall economic and
market conditions and the financial condition and specific prospects for the issuer. Impairment of available-for-sale securities
results in a charge to income when a market decline below cost is other-than-temporary, which includes consideration of
whether we have both the intent and ability to hold such securities for the time necessary to recover the cost basis. If a decline
in fair value is determined to be the result of a credit loss, then the decrease is recognized in income through an allowance for
credit losses.
Investments in equity securities through which we exercise significant influence but do not have control over the investee
are accounted for under the equity method. We record the investment at cost and subsequently increase or decrease the carrying
amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the
investee. Gains and losses from equity method investments are reported in Investment income and other on the statements of
consolidated income. We record dividends or other equity distributions as reductions of the carrying value of the investment.
Equity method investments are included within Other Non-Current Assets in our consolidated balance sheets.
Inventories
Fuel and other materials and supplies are recognized as inventory when purchased, and then charged to expense when
used in our operations. Jet fuel, diesel and unleaded gasoline inventories are valued at the lower of average cost or net realizable
value. Total inventories were $935 and $889 million as of December 31, 2023 and 2022, respectively, and are included in Other
current assets in our consolidated balance sheets.
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation. We evaluate the useful lives of our
property, plant and equipment based on our usage, maintenance and replacement policies, and taking into account physical and
economic factors that may affect the useful lives of the assets.
Depreciation and amortization are provided by the straight-line method over the estimated useful lives of the assets, which
are as follows:
•
•
•
•
•
•
Aircraft: 7 to 40 years, based on aircraft type and original aircraft manufacture date
Buildings: 10 to 40 years
Leasehold Improvements: lesser of asset useful life or lease term
Plant Equipment: 3 to 20 years
Technology Equipment: 3 to 10 years
Vehicles: 5 to 15 years
Routine maintenance and repairs are generally charged to expense as incurred. For substantially all of our aircraft, the
costs of major airframe and engine overhauls, as well as routine maintenance and repairs, are charged to expense as incurred.
Interest incurred during the construction of property, plant and equipment is capitalized until the underlying assets are
placed in service, at which time amortization of the capitalized interest begins, straight-line, over the estimated useful lives of
the related assets. Capitalized interest was $118 and $60 million for the years ended December 31, 2023 and 2022, respectively.
67
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We monitor our property, plant and equipment for any indicators that the carrying value of the assets may not be
recoverable, at which time we review long-lived assets for impairment based on undiscounted future cash flows. If the carrying
amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based
on quoted market values, discounted cash flows or external appraisals, as appropriate. We test long-lived assets for impairment
at the asset group level, which is the lowest level at which independent cash flows can be identified. Refer to note 4 for a
discussion of impairments of property, plant and equipment.
Leases
We recognize a right-of-use ("ROU") asset and lease obligation for all leases greater than twelve months, including
reasonably certain renewal or purchase options. Some of our leases contain both lease and non-lease components, which we
have elected to treat as a single lease component. Lease costs for short-term leases are recognized on a straight-line basis over
the lease term.
Certain of our leases contain future payments that are dependent on an index or rate, such as the consumer price index.
We initially measure the lease obligation and ROU asset using the index or rate at the commencement date. In subsequent
periods, lease payments dependent on an index or rate are not remeasured. Rather, changes to payments due to a change in an
index or rate are recognized in our statements of consolidated income in the period of the change.
When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is
not readily determinable for substantially all of our leases. For these leases, we use an estimate of our incremental borrowing
rate to discount lease payments based on information available at lease commencement. The incremental borrowing rate is
derived using multiple inputs including our credit rating, the impact of full collateralization, lease term and denominated
currency.
Goodwill and Intangible Assets
Costs of purchased businesses in excess of net identifiable assets acquired (goodwill) and indefinite-lived intangible assets
are tested for impairment at least annually, unless changes in circumstances indicate an impairment may have occurred between
annual tests. We complete our annual goodwill impairment evaluation as of July 1 on a reporting unit basis.
In assessing goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that
the fair value of a reporting unit is less than its carrying amount. We consider several factors, including macroeconomic
conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management,
strategy or customers and relevant reporting unit-specific events such as a change in the carrying amount of net assets, a more
likely than not expectation of selling or disposing of all, or a portion of, a reporting unit, and the testing for recoverability of a
significant asset group within a reporting unit. If this qualitative assessment results in a conclusion that it is more likely than not
that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.
If the qualitative assessment is not conclusive, or if we elect to bypass the qualitative test, we quantitatively assess the fair
value of a reporting unit to test goodwill for impairment. We assess the fair value of a reporting unit using a combination of
discounted cash flow modeling and observable valuation multiples for comparable companies. Our estimates are developed
using assumptions that we believe are consistent with how a market participant would value our reporting units. If the carrying
amount of a reporting unit exceeds the reporting unit’s fair value, we record the excess amount as goodwill impairment, not to
exceed the total amount of goodwill allocated to the reporting unit.
When performing impairment tests of indefinite-lived intangible assets, we use a combination of income- and market-
based approaches to estimate fair value. If the carrying value of the indefinite-lived asset exceeds its estimated fair value, an
impairment charge is recognized for the amount by which the carrying amount of the asset exceeds its fair value.
Finite-lived intangible assets, including trademarks, licenses, patents, customer lists, non-compete agreements and
franchise rights are amortized on a straight-line basis over their estimated useful lives, which range from 1 to 21 years.
Capitalized software is generally amortized over 7 years. Finite-lived intangible assets are assessed for impairment as part of
asset groups whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
68
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assets Held for Sale
We classify long-lived assets or disposal groups as held for sale in the period when all of the following conditions have
been met:
•
•
•
•
•
•
we have approved and committed to a plan to sell the assets or disposal group;
the asset or disposal group is available for immediate sale in its present condition;
an active program to locate a buyer and other actions required to complete the sale have been initiated;
the sale of the asset or disposal group is probable and expected to be completed within one year;
the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair
value; and
it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value
or fair value less any costs to sell and recognize any loss in the period in which the held for sale criteria are met. Gains are not
recognized until the date of sale. We cease depreciation and amortization of a long-lived asset, or assets within a disposal group,
upon their designation as held for sale and subsequently assess fair value less any costs to sell at each reporting date until the
asset or disposal group is no longer classified as held for sale.
Supplier Finance Programs
As part of our working capital management, certain financial institutions offer a Supply Chain Finance ("SCF") program
to certain of our suppliers. We agree to commercial terms with our suppliers, including prices, quantities and payment terms,
regardless of whether the supplier elects to participate in the SCF program. Suppliers issue invoices to us based on the agreed-
upon contractual terms. If they participate in the SCF program, our suppliers, at their sole discretion, determine which invoices,
if any, to sell to the financial institutions. Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on
our payment terms. No guarantees are provided by us under the SCF program. We have no economic interest in a supplier’s
decision to participate, and we have no direct financial relationship with the financial institutions, as it relates to the SCF
program.
Amounts due to our suppliers that participate in the SCF program are included in Accounts payable in our consolidated
balance sheets. As of December 31, 2023 and 2022, suppliers sold $504 and $806 million, respectively, of our outstanding
payment obligations to participating institutions. A rollforward of obligations confirmed and paid during the year is presented
below (in millions):
Confirmed obligations outstanding at the beginning of the year
Invoices confirmed during the year
Confirmed invoices paid during the year
Confirmed obligations outstanding at the end of the year
Self-Insurance Accruals
2023
806
2,428
(2,730)
504
$
$
We self-insure costs associated with workers' compensation claims, automobile liability, health and welfare and general
business liabilities, up to certain limits. Self-insurance reserves are established for estimates of the losses we will ultimately
incur on reported claims, as well as estimates of claims that have been incurred but not yet reported. The expected ultimate cost
for claims incurred is estimated based upon historical loss experience and judgments about the present and expected levels of
cost per claim. Trends in actual experience are a significant factor in the determination of our reserves.
In the fourth quarter of 2023, we transferred a portion of our workers' compensation liability related to policy years 2001
through 2006 and policy year 2017 to a third-party insurer. We paid $151 million to transfer a portfolio of claims for which we
carried reserves of $153 million, recognizing a pre-tax gain of $2 million that was recorded in Other expenses in the statement
of consolidated income for the year ended December 31, 2023.
69
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2022, we transferred a portion of our workers' compensation liability related to policy years 2007 through 2016 to a
third-party insurer. We paid $341 million to transfer a portfolio of claims for which we carried reserves of $332 million,
recognizing a pre-tax loss of $9 million that was recorded in Other expenses in the statement of consolidated income for the
year ended December 31, 2022.
We also sponsor a number of health and welfare insurance plans for our employees. Liabilities and expenses related to
these plans are based on estimates of the number of employees and eligible dependents covered under the plans, global health
events, anticipated medical usage by participants and overall trends in medical costs and inflation.
Pension and Postretirement Benefits
We incur certain employment-related expenses associated with company-sponsored defined benefit pension and
postretirement medical benefits. These expenses are calculated using various actuarial assumptions and methodologies,
including discount rates, expected returns on plan assets, healthcare cost trend rates, inflation, compensation increase rates,
mortality rates and coordination of benefits with plans not sponsored by UPS. Actuarial assumptions are reviewed on an annual
basis, unless circumstances require an interim measurement of any of our plans.
We recognize changes in the fair value of plan assets and net actuarial gains or losses in excess of a corridor (defined as
10% of the greater of the fair value of plan assets or the plan's projected benefit obligation) in Investment income and other
upon remeasurement of a plan. The remaining components of pension expense, primarily service and interest costs and the
expected return on plan assets, are recorded ratably on a quarterly basis.
We recognize expense for required contributions to defined contribution plans quarterly, and we recognize a liability for
any contributions due and unpaid within Accrued group welfare and retirement plan contributions.
We participate in a number of trustee-managed multiemployer pension and health and welfare plans for employees
covered under collective bargaining agreements. Our contributions to these plans are determined in accordance with the
respective collective bargaining agreements. We recognize expense for the contractually required contribution for each period,
and we recognize a liability for any contributions due and unpaid within Accrued group welfare and retirement plan
contributions.
Income Taxes
Income taxes are accounted for on an asset and liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements
or tax returns. In estimating future tax consequences, we generally consider all expected future events other than proposed
changes in the tax law or rates. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not
be realized. Our current accounting policy for releasing income tax effects from other comprehensive income is based on a
portfolio approach.
We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the
position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined
that the position meets the recognition threshold, the second step requires us to estimate and measure the largest amount of tax
benefit that is more likely than not to be realized upon ultimate settlement. The difference between the amount of recognizable
tax benefit and the total amount of tax benefit from positions filed or to be filed with the tax authorities is recorded as a liability
for uncertain tax benefits. It is inherently difficult and subjective to estimate such amounts, as we have to determine the
probability of various possible outcomes. We reevaluate uncertain tax positions on a quarterly basis. This evaluation is based on
factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit
and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an
additional charge to the tax provision.
Foreign Currency Translation and Remeasurement
We translate the results of operations of our foreign subsidiaries using average exchange rates for each period, whereas
balance sheet accounts are translated using exchange rates at the end of each period. Balance sheet currency translation
adjustments are recorded in other comprehensive income. Pre-tax foreign currency transaction gains (losses) from
remeasurement, net of hedging, included in Investment income and other were $(53), $72 and $(36) million in 2023, 2022 and
2021, respectively.
70
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock-Based Compensation
Share-based awards are measured based on their fair values and expensed over the period during which an employee is
required to provide service in exchange for the award (the vesting period), less estimated forfeitures. We have issued employee
share-based awards under various incentive compensation plans that contain vesting conditions, including service conditions,
where the awards cliff vest after one or three years or vest ratably over periods up to five years (the "nominal vesting period")
or at the date the employee retires (as defined by the plan), if earlier. As of December 31, 2023, we have no outstanding share-
based awards cliff vesting after one year. See note 13 for further discussion of our share-based awards. Compensation cost is
generally recognized immediately for awards granted to retirement-eligible employees, or over the period from the grant date to
the date retirement eligibility is achieved, if that is expected to occur during the nominal vesting period. We estimate forfeiture
rates based on historical rates of forfeitures for awards with similar characteristics, historical and projected rates of employee
turnover and the nature and terms of the vesting conditions of the awards. We reevaluate our forfeiture rates on an annual basis.
Fair Value Measurements
Our financial assets and liabilities measured at fair value on a recurring basis have been categorized based upon a fair
value hierarchy. Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 inputs are based
on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that
are observable, such as interest rates and yield curves. Level 3 inputs are developed from unobservable data reflecting our own
assumptions, and include situations where there is little or no market activity for the asset or liability.
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, including property, plant,
and equipment, goodwill and intangible assets. These assets are subject to fair value adjustments in certain circumstances, such
as when there is an impairment.
For business acquisitions, we allocate the fair value of purchase consideration to the tangible assets acquired, liabilities
assumed and identified intangible assets based on their estimated fair values. The excess of the fair value of purchase
consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. During the measurement
period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed,
with the corresponding offset to goodwill. Following the conclusion of the measurement period, any subsequent adjustments are
recorded to earnings.
Derivative Instruments
We recognize all derivative instruments as assets or liabilities in our consolidated balance sheets at fair value. The
accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as
part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are
designated and qualify as hedging instruments, we designate the derivative as a cash flow hedge, a fair value hedge or a hedge
of a net investment in a foreign operation based upon the exposure being hedged.
•
•
•
A cash flow hedge refers to hedging the exposure to variability in expected future cash flows that is attributable to a
particular risk. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the
derivative instrument is reported as a component of other comprehensive income, and reclassified into earnings in the
period during which the hedged transaction affects earnings.
A fair value hedge refers to hedging the exposure to changes in the fair value of an existing asset or liability that is
attributable to a particular risk. For derivative instruments that are designated and qualify as fair value hedges, the gain
or loss on the derivative instrument is recognized in earnings during the current period, together with the gain or loss
on the hedged item.
A net investment hedge refers to the use of cross currency swaps, forward contracts or foreign-currency-denominated
debt to hedge portions of net investments in foreign operations. For instruments that meet the hedge accounting
requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in the foreign currency
translation adjustment within other comprehensive income, and are recorded in the income statement when the hedged
item affects earnings.
71
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Adoption of New Accounting Standards
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2020-04, Reference Rate Reform (Topic 848), and in December 2022 subsequently issued ASU 2022-06, to temporarily ease
the potential burden in accounting for reference rate reform. The standard provides optional expedients and exceptions for
applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform and can generally
be applied through December 31, 2024. As of December 31, 2023, we have transitioned our affected debt instruments and
contracts to an alternative reference rate, the Secured Overnight Financing Rate ("SOFR"), which was adopted in accordance
with recommendations of the Alternative Reference Rates Committee. We did not elect to apply the practical expedients
provided under Topic 848 to these transitions, but we will continue to assess transactions for any potential impact during 2024.
In September 2022, the FASB issued an ASU to enhance the disclosure of supplier finance programs. This ASU did not
affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs.
We adopted the requirements of this ASU as of January 1, 2023. It did not have a material impact on our consolidated financial
position, results of operations, cash flows or internal controls.
Other accounting pronouncements adopted during the periods covered by the consolidated financial statements did not
have a material impact on our consolidated financial position, results of operations, cash flows or internal controls.
Accounting Standards Issued But Not Yet Effective
In November 2023, the FASB issued an ASU on segment reporting, which will require new disclosures including relating
to significant segment expenses and additional qualitative information including how segment measures are used by
management. The standard becomes effective for us beginning with our 2024 annual reporting for both annual and interim
periods. We are evaluating the impact of this ASU on our disclosures. We will be required to define significant segment
expense categories and we anticipate providing additional qualitative information in accordance with this ASU. We do not
expect this ASU to have a significant impact on our consolidated financial position, results of operations or cash flows.
In December 2023, the FASB issued an ASU to enhance tax-related disclosures. This update will require more
standardized categories for tax rate reconciliation and additional detail for significant tax items. It will also require a breakdown
of income taxes paid by jurisdiction exceeding 5% of total taxes and remove certain disclosure requirements for unremitted
foreign earnings and uncertain tax positions. The standard becomes effective for us in the first quarter of 2025. We are
evaluating its impact on our financial statements, disclosures and internal controls but do not expect this ASU to have a
significant impact on our consolidated financial position, results of operations, cash flows or internal controls.
Other accounting pronouncements issued, but not effective until after December 31, 2023, are not expected to have a
material impact on our consolidated financial position, results of operations, cash flows or internal controls.
72
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. REVENUE RECOGNITION
Revenue Recognition
Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages
and freight ("transportation services"). These services may be carried out by or arranged by us and generally occur over a short
period of time. Additionally, we provide value-added logistics services to customers through our global network of company-
owned and leased distribution centers and field stocking locations.
Disaggregation of Revenue
Revenue:
Next Day Air
Deferred
Ground
U.S. Domestic Package
Domestic
Export
Cargo & Other
International Package
Forwarding
Logistics
Freight
Other
Supply Chain Solutions
Consolidated revenue
Year Ended December 31,
2023
2022
2021
$
$
$
$
$
$
$
9,894 $
10,699 $
5,093
44,971
5,968
47,542
59,958 $
64,209 $
3,144 $
3,346 $
14,003
684
15,341
1,011
10,009
5,846
44,462
60,317
3,690
15,012
839
17,831 $
19,698 $
19,541
5,534 $
8,943 $
5,927
—
1,708
5,351
—
2,137
9,872
4,767
1,064
1,726
13,169 $
16,431 $
17,429
90,958 $
100,338 $
97,287
We account for a contract when both parties have approved the contract and are committed to perform their obligations,
the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of
consideration is probable.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the basis
of revenue recognition. The vast majority of our contracts with customers are for transportation services that include only one
performance obligation; the transportation services themselves. If a contract contains more than one performance obligation, we
allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of
the services underlying each performance obligation.
In certain business units, such as Logistics, we sell customized, customer-specific solutions in which we integrate a
complex set of tasks and components into a single capability that is accounted for as one performance obligation.
Satisfaction of Performance Obligations
We generally recognize revenue over time as we perform services in the contract because our customers receive the
benefit of our services as goods are transported from one location to another. Further, if we were unable to complete delivery to
the final location, those services would not need to be re-performed.
73
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We recognize revenue based on the extent of progress towards completion of our services. We use the cost-to-cost
measure of progress for our package delivery contracts because it best depicts the benefit received by the customer, which
occurs as we incur costs on our contracts. Under this measure, the extent of progress towards completion is measured based on
the ratio of costs incurred to date to the total estimated costs at completion of the service. Revenues, including ancillary or
accessorial fees and reductions for estimated customer incentives, are recorded proportionally as costs are incurred. Costs to
fulfill include labor and other direct costs and an allocation of indirect costs.
For our freight forwarding contracts, an output method of progress based on time-in-transit is utilized as the timing of
costs incurred does not best depict the benefit to the customer. In our Logistics business we have a right to consideration from
customers in an amount that corresponds directly with the value to the customers of our performance completed to date;
therefore we recognize revenue in the amount to which we have a right to invoice the customer.
Variable Consideration
Our contracts commonly contain customer incentives, guaranteed service refunds or other provisions that can either
increase or decrease the rates paid for services. These variable amounts are generally dependent upon achievement of certain
incentive tiers or performance metrics. We record revenue, which may be reduced by incentives or other contract provisions, to
the extent it is probable that a significant reversal of cumulative amounts recognized will not occur when the uncertainty
associated with the variable consideration is resolved. Our estimates of revenue are based on an assessment of anticipated
customer spending and all information (historical, current and forecasted) that is reasonably available to us.
Contract Modifications
Contracts are often modified to account for changes in the rates we charge our customers or to add additional, distinct
services. We consider contract modifications to exist when the modification either creates new, or changes the existing,
enforceable rights and obligations. Contract modifications that add distinct goods or services are treated as separate contracts.
Contract modifications that do not add distinct goods or services typically change the price of existing services. These contract
modifications are accounted for prospectively as the remaining performance obligations are distinct.
Payment Terms
Under the typical payment terms of our customer contracts, customers pay at periodic intervals, which are generally seven
days within our U.S. Domestic Package business, for shipments included on invoices received. Invoices are generated each
week on the week-ending day, which is Saturday for the majority of our U.S. Domestic Package business, but could be another
day depending on the business unit or the specific agreement with the customer. It is not customary business practice to extend
payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within our
contracts with customers.
Principal vs. Agent Considerations
In our transportation businesses, we may utilize independent contractors and third-party carriers to perform transportation
services. We have determined that all our major businesses act as principal rather than agent within their revenue arrangements.
Consequently, revenue and the associated purchased transportation costs are reported on a gross basis within our statements of
consolidated income.
Accounts Receivable, Net
Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their
net estimated realizable value. Losses on accounts receivable are recognized when reasonable and supportable forecasts affect
the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts
receivable at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current
conditions, forward-looking indicators, trends in customer payment frequency, and judgments about the probable effects of
relevant observable data, including present and future economic conditions and the financial health of specific customers and
market sectors. Our risk management process includes standards and policies for reviewing major account exposures and
concentrations of risk.
74
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our allowance for expected credit losses decreased by $20 million during 2023 as lower volumes decreased our total
accounts receivable balance. Our allowance for credit losses as of December 31, 2023 and 2022 was $126 and $146 million,
respectively. Amounts for credit losses charged to expense before recoveries during the twelve months ended December 31,
2023 and 2022 were $205 and $214 million, respectively.
Contract Assets and Liabilities
Contract assets include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right
to payment only when services have been completed (i.e., shipments have been delivered). Amounts do not exceed their net
realizable value. Contract assets are generally classified as current and the full balance is converted each quarter based on the
short-term nature of the transactions.
Contract liabilities consist of advance payments and billings in excess of revenue as well as deferred revenue. Advance
payments and billings in excess of revenue represent payments received from our customers that will be earned over the
contract term. Deferred revenue represents the amount due from customers related to in-transit shipments that has not yet been
recognized as revenue based on our selected measure of progress. We classify advance payments and billings in excess of
revenue as either current or long-term, depending on the period over which the amount will be earned. We classify deferred
revenue as current based on the short-term nature of the transactions. Our contract assets and liabilities are reported in a net
position on a contract-by-contract basis at the end of each reporting period. In order to determine revenue recognized in the
period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning
of the period until the revenue exceeds that deferred revenue balance.
Contract assets and liabilities as of December 31, 2023 and 2022 were as follows (in millions):
Contract Assets:
Revenue related to in-transit packages
Other current assets
$
237 $
308
Balance Sheet Location
2023
2022
Contract Liabilities:
Short-term advance payments from customers
Other current liabilities
Long-term advance payments from customers
Other non-current liabilities
$
$
20 $
25 $
11
26
75
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. MARKETABLE SECURITIES AND NON-CURRENT INVESTMENTS
The following is a summary of marketable securities classified as trading and available-for-sale as of December 31, 2023
and 2022 (in millions):
2023
Current trading marketable securities:
Equity securities
Total trading marketable securities
Current available-for-sale marketable securities:
U.S. government and agency debt securities
Mortgage and asset-backed debt securities
Corporate debt securities
U.S. state and local municipal debt securities
Non-U.S. government debt securities
Total available-for-sale marketable securities
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
$
4 $
4
— $
—
— $
—
4
4
963
3
1,891
—
7
2,864
2
—
4
—
—
6
(4)
—
(4)
—
—
(8)
961
3
1,891
—
7
2,862
Total current marketable securities
$
2,868 $
6 $
(8) $
2,866
2022
Current trading marketable securities:
Equity securities
Total trading marketable securities
Current available-for-sale marketable securities:
U.S. government and agency debt securities
Mortgage and asset-backed debt securities
Corporate debt securities
U.S. state and local municipal debt securities
Non-U.S. government debt securities
Total available-for-sale marketable securities
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
$
2 $
2
— $
—
— $
—
2
2
355
9
1,472
4
165
2,005
—
—
—
—
—
—
(8)
—
(6)
—
—
(14)
347
9
1,466
4
165
1,991
Total current marketable securities
$
2,007 $
— $
(14) $
1,993
Total current marketable securities that were pledged as collateral for our self-insurance requirements had estimated fair
values of $343 and $333 million as of December 31, 2023 and 2022, respectively.
The gross realized gains on sales of available-for-sale marketable securities totaled $1, $0 and $7 million in 2023, 2022
and 2021, respectively. The gross realized losses on sales of available-for-sale marketable securities totaled $4, $3 and $2
million in 2023, 2022 and 2021, respectively.
There were no material impairment losses recognized on marketable securities during 2023, 2022 or 2021.
76
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unrealized Losses
The following table presents the age of gross unrealized losses and fair value by investment category for all securities in a
loss position as of December 31, 2023 (in millions):
Less Than 12 Months
12 Months or More
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. government and agency debt securities
$
508 $
(1) $
191 $
(3) $
699 $
Corporate debt securities
Total marketable securities
Maturity Information
751
(2)
475
(2)
1,226
$
1,259 $
(3) $
666 $
(5) $
1,925 $
(4)
(4)
(8)
The amortized cost and estimated fair value of marketable securities as of December 31, 2023 by contractual maturity are
shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may
have the right to prepay obligations with or without prepayment penalties.
Due in one year or less
Due after one year through three years
Due after three years through five years
Due after five years
Equity securities
Non-Current Investments
Cost
Estimated
Fair Value
$
1,346 $
1,513
5
—
2,864
4
$
2,868 $
1,343
1,514
5
—
2,862
4
2,866
We hold non-current investments that are reported within Other Non-Current Assets in our consolidated balance sheets.
Cash paid for these investments, excluding investments obtained through business acquisitions, is included in Other investing
activities in our statements of consolidated cash flows.
•
•
•
Equity method investments: As of December 31, 2023 and 2022, equity securities accounted for under the equity
method had a carrying value of $295 and $256 million, respectively. In 2023, we obtained an equity method
investment as part of our acquisition of MNX Global Logistics. See note 8 for further discussion of business
acquisitions. Cash paid for this investment is included in Acquisitions, net of cash acquired in our statement of
consolidated cash flows. In 2022, we invested $252 million in the parent company of CommerceHub, Inc., a software
provider connecting retailers and brands with marketplaces, drop ship solutions and delivery providers. We determined
there is no amortizable basis difference between the purchase price for our investment and the underlying books and
records of the investee.
Other equity securities: Certain equity securities that do not have readily determinable fair values are reported in
accordance with the measurement alternative in Accounting Standards Codification Topic 321 Investments – Equity
Securities. As of December 31, 2023 and 2022, we had equity securities of $47 and $31 million, respectively,
accounted for under the measurement alternative.
Other investments: We hold an investment in a variable life insurance policy to fund benefits for the UPS Excess
Coordinating Benefit Plan. The investment had a fair market value of $19 and $18 million as of December 31, 2023
and 2022, respectively.
77
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value Measurements
Marketable securities valued utilizing Level 1 inputs include active exchange-traded equity securities and equity index
funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable
securities valued utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities
are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.
The following table presents information about our investments measured at fair value on a recurring basis as of
December 31, 2023 and 2022, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair
value (in millions):
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
2023
Marketable Securities:
U.S. government and agency debt securities
$
961 $
— $
— $
Mortgage and asset-backed debt securities
Corporate debt securities
U.S. state and local municipal debt securities
Equity securities
Non-U.S. government debt securities
Total marketable securities
Other non-current investments(1)
—
—
—
—
—
961
—
3
1,891
—
4
7
1,905
19
—
—
—
—
—
—
—
Total
$
961 $
1,924 $
— $
(1) Represents a variable life insurance policy funding benefits for the UPS Excess Coordinating Benefit Plan.
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
2022
Marketable Securities:
U.S. government and agency debt securities
$
279 $
68 $
— $
Mortgage and asset-backed debt securities
Corporate debt securities
U.S. state and local municipal debt securities
Equity securities
Non-U.S. government debt securities
Total marketable securities
Other non-current investments(1)
—
—
—
—
—
279
—
9
1,466
4
2
165
1,714
18
—
—
—
—
—
—
—
Total
$
279 $
1,732 $
— $
(1) Represents a variable life insurance policy funding benefits for the UPS Excess Coordinating Benefit Plan.
There were no transfers of investments into or out of Level 3 during 2023 or 2022.
961
3
1,891
—
4
7
2,866
19
2,885
347
9
1,466
4
2
165
1,993
18
2,011
78
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including owned assets and assets subject to finance leases, consisted of the following as
of December 31, 2023 and 2022 (in millions):
Vehicles
Aircraft
Land
Buildings
Building and leasehold improvements
Plant equipment
Technology equipment
Construction-in-progress
Less: Accumulated depreciation and amortization
Property, Plant and Equipment, Net
2023
2022
$
11,768 $
22,888
2,138
6,255
5,241
17,322
2,656
3,247
71,515
(34,570)
10,628
22,598
2,140
6,032
5,067
16,145
2,411
2,409
67,430
(32,711)
$
36,945 $
34,719
Property, plant and equipment purchased on account was $309 and $176 million as of December 31, 2023 and 2022,
respectively.
There were no material impairment charges to property, plant or equipment during the years ended December 31, 2023 or
2022.
In 2022, we reduced the estimated residual value of our MD-11 aircraft to zero, incurring a one-time charge on our fully-
depreciated aircraft. This resulted in an increase in depreciation expense of $76 million, and a decrease in net income of
$58 million, or $0.07 per share on a basic and diluted basis, for the year ended December 31, 2022. The change in estimate for
the remainder of our MD-11 fleet is being accounted for over the remaining useful lives.
79
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS
We sponsor various retirement and pension plans, including defined benefit and defined contribution plans, which cover
our employees worldwide.
U.S. Pension Benefits
In the U.S. we maintain the following single-employer defined benefit pension plans:
•
•
•
•
The UPS Retirement Plan is noncontributory and includes substantially all eligible employees of participating
domestic subsidiaries hired prior to July 1, 2016 who are not members of a collective bargaining unit, as well as
certain employees covered by a collective bargaining agreement. This plan generally provides for retirement benefits
based on average compensation earned by employees prior to retirement. Benefits payable under this plan are subject
to maximum compensation limits and the annual benefit limits for a tax-qualified defined benefit plan as prescribed by
the Internal Revenue Service (“IRS”). The plan ceased accruals of additional benefits for future service and
compensation for non-union participants effective January 1, 2023.
The UPS Pension Plan is noncontributory and includes certain eligible employees of participating domestic
subsidiaries and members of collective bargaining units that elect to participate in the plan. This plan generally
provides for retirement benefits based on service credits earned by employees prior to retirement.
The UPS/IBT Full-Time Employee Pension Plan is noncontributory and includes employees that were previously
members of the Central States Pension Fund ("CSPF"), a multiemployer pension plan, in addition to other eligible
employees who are covered under certain collective bargaining agreements. This plan generally provides for
retirement benefits based on service credits earned by employees prior to retirement.
The UPS Excess Coordinating Benefit Plan is a non-qualified plan that provides benefits to certain participants in the
UPS Retirement Plan, hired prior to July 1, 2016, for amounts that exceed the benefit limits described above. The plan
ceased accruals of additional benefits for future service and compensation for non-union participants effective January
1, 2023.
In the third quarter of 2023, our Teamsters employees ratified a new five-year national master agreement that contained
wage and benefit rate increases for Teamsters employees in the UPS Pension Plan and UPS/IBT Full-Time Employee Pension
Plan. The impacts of these increases were recognized as part of the year end measurement of these plans.
The divestiture of UPS Freight in 2021 triggered an interim remeasurement of the plan assets and benefit obligations of
the UPS Pension Plan, UPS Retirement Plan and UPS Retired Employee Health Care Plan as of April 30, 2021. The interim
remeasurement resulted in an actuarial gain of $2.1 billion, reflecting updated actuarial assumptions, and was recorded in other
comprehensive income within the equity section of the consolidated balance sheet during the second quarter of 2021. An
actuarial gain of $69 million ($52 million after tax) for a prior service credit related to the divested group and a $66 million loss
($50 million after tax) for certain plan amendments to the UPS Pension Plan were immediately recognized within Other
expenses in the statement of consolidated income for the year ended December 31, 2021.
During 2021, we remeasured the UPS/IBT Full-Time Employee Pension Plan following the enactment into law of the
American Rescue Plan Act, which is discussed below. The interim remeasurement resulted in a pre-tax mark-to-market gain of
$3.3 billion ($2.5 billion after tax) during the year. The gain was included within Investment income and other in the statement
of consolidated income for the year ended December 31, 2021.
International Pension Benefits
We also sponsor various defined benefit plans covering certain of our international employees. The majority of our
international obligations are for defined benefit plans in Canada and the United Kingdom. In addition, many of our international
employees are covered by government-sponsored retirement and pension plans. We are not directly responsible for providing
benefits to participants of government-sponsored plans.
During 2022, we amended certain Canadian defined benefit pension plans to cease future benefit accruals effective
December 31, 2023. We remeasured plan assets and benefit obligations for the plans, which resulted in curtailment gains of
$34 million ($24 million after tax). These gains were included in Investment income and other in our statement of consolidated
income for the year ended December 31, 2022.
80
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. Postretirement Medical Benefits
We also sponsor postretirement medical plans in the U.S. that provide healthcare benefits to certain non-union retirees, as
well as select union retirees who meet certain eligibility requirements and who are not otherwise covered by multiemployer
plans. Generally, this includes employees with at least 10 years of service who have reached age 55 and employees who are
eligible for postretirement medical benefits from a company-sponsored plan pursuant to collective bargaining agreements. We
have the right to modify or terminate certain of these plans. These benefits have been provided to certain retirees on a
noncontributory basis; however, in many cases, retirees are required to contribute all or a portion of the total cost of the
coverage.
Defined Contribution Plans
We sponsor a defined contribution plan for employees not covered under collective bargaining agreements, and several
smaller defined contribution plans for certain employees covered under collective bargaining agreements. We match, in cash, a
portion of the participating employees’ contributions. Matching contributions charged to expense were $161, $153 and $153
million for 2023, 2022 and 2021, respectively.
Beginning in 2023, non-union employees, including those previously accruing benefits in the UPS Retirement Plan,
receive a retirement contribution of 5% to 8% (3% to 8% prior to 2023 for employees hired after July 1, 2016) of eligible
compensation to the UPS 401(k) Savings Plan based on years of vesting service. Retirement contributions charged to expense
were $380, $83 and $107 million for 2023, 2022 and 2021, respectively. In addition, the UPS 401(k) Savings Plan provides for
transition contributions to certain participants hired prior to 2008. The amount charged to expense for transition contributions in
2023 was $128 million. There were no transition contributions in previous years.
Contributions under this plan are subject to maximum compensation and contribution limits for a tax-qualified defined
contribution plan as prescribed by the IRS. The UPS Restoration Savings Plan is a non-qualified plan that provides benefits to
certain participants in the UPS 401(k) Savings Plan for amounts that exceed these benefit limits.
Contributions are also made to defined contribution money purchase plans under certain collective bargaining agreements.
Amounts charged to expense were $132, $119 and $112 million for 2023, 2022 and 2021, respectively.
We also sponsor certain international defined contribution plans, which are not individually material.
Net Periodic Benefit Cost
Information about net periodic benefit cost for the company-sponsored pension and postretirement defined benefit plans is
as follows (in millions):
Net Periodic Benefit Cost:
Service cost
Interest cost
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
2023
2022
2021
2023
2022
2021
2023
2022
2021
$ 1,172 $ 2,024 $ 1,897 $
20 $
30 $
28 $
43 $
68 $
2,508
1,950
1,948
Expected return on plan assets
(2,967)
(3,280)
(3,327)
Amortization of prior service cost
Actuarial (gain) loss
Curtailment and settlement (gain) loss
106
393
—
93
139
(875)
(3,284)
—
—
116
(12)
2
—
—
83
(4)
—
—
—
81
(5)
7
24
—
66
(84)
1
45
(78)
1
(42)
(152)
8
(34)
Net periodic benefit cost
$ 1,212 $
(88) $ (2,627) $
126 $
109 $
135 $
(8) $
(150) $
81
76
38
(68)
2
(12)
—
36
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Actuarial Assumptions
The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost:
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
2023
2022
2021
2023
2022
2021
2023
2022
2021
Service cost discount rate
Interest cost discount rate
5.79 % 3.13 % 2.90 % 6.06 % 3.28 % 2.88 % 5.09 % 2.78 % 2.38 %
5.79 % 3.13 % 2.90 % 6.06 % 3.28 % 2.88 % 5.02 % 2.74 % 2.22 %
Rate of compensation increase
3.25 % 4.29 % 4.50 %
N/A
N/A
N/A
3.20 % 3.17 % 2.93 %
Expected return on plan assets
7.07 % 5.90 % 6.50 % 6.62 % 4.77 % 3.65 % 5.13 % 3.87 % 3.68 %
Cash balance interest credit rate
4.21 % 2.50 % 2.50 %
N/A
N/A
N/A
3.69 % 2.94 % 2.74 %
The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of our
plans:
Discount rate
Rate of compensation increase
Cash balance interest credit rate
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
2023
2022
2023
2022
2023
2022
5.42 %
3.25 %
3.83 %
5.79 %
3.25 %
4.21 %
5.80 %
6.06 %
N/A
N/A
N/A
N/A
4.21 %
3.19 %
3.31 %
4.63 %
3.20 %
3.69 %
A discount rate is used to determine the present value of our future benefit obligations. To determine the discount rate for
our U.S. pension and postretirement benefit plans, we use a bond matching approach to select specific bonds that would satisfy
our projected benefit payments. We believe the bond matching approach reflects the process we would employ to settle our
pension and postretirement benefit obligations. For our international plans, the discount rate is determined by matching the
expected cash flows of the plan, where available, or of a sample plan of similar duration, to a yield curve based on long-term,
high quality fixed income debt instruments available as of the measurement date. These assumptions are updated each
measurement date, which is typically annually.
As of December 31, 2023, the impact of each basis point change in the discount rate on the projected benefit obligation of
our pension and postretirement medical benefit plans is as follows (in millions):
Increase (Decrease) in the Projected Benefit Obligation
Pension Benefits
Postretirement Medical Benefits
One basis point increase in discount rate
One basis point decrease in discount rate
$
$
(62) $
65 $
(1)
2
The Society of Actuaries ("SOA") published mortality tables and improvement scales are used in developing the best
estimate of mortality for our U.S. plans. In October 2023, the SOA elected to not release a new mortality improvement scale.
Based on our perspective of future longevity, we elected to maintain the MP 2021 mortality scale assumption for purposes of
measuring pension and other postretirement benefit obligations.
Assumptions for the expected return on plan assets are used to determine a component of net periodic benefit cost for the
year. The assumption for our U.S. plans is developed using a long-term projection of returns for each asset class. Our asset
allocation targets are reviewed annually and, if necessary, updated taking into consideration plan changes, funded status and
actual performance. The expected return for each asset class is a function of passive, long-term capital market assumptions and
excess returns generated from active management. The capital market assumptions used are provided by independent
investment advisors, while excess return assumptions are supported by historical performance, fund mandates and investment
expectations. As a result of our long-term U.S. capital market assumptions and investment objectives for pension assets, the
weighted-average long-term expected rate of return on assets increased from 5.90% during 2022 to 7.07% in 2023.
82
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For plans outside the U.S., consideration is given to local market expectations of long-term returns. Strategic asset
allocations are determined by plan, based on the nature of liabilities and considering the demographic composition of the plan
participants.
Actuarial Assumptions - Central States Pension Fund
UPS was a contributing employer to the CSPF until 2007, at which time UPS withdrew from the CSPF. Under a collective
bargaining agreement with the International Brotherhood of Teamsters (“IBT”), UPS agreed to provide coordinating benefits in
the UPS/IBT Full-Time Employee Pension Plan (“UPS/IBT Plan”) for UPS participants whose last employer was UPS and who
had not retired as of January 1, 2008 (“the UPS Transfer Group”) in the event that benefits are reduced by the CSPF consistent
with the terms of our withdrawal agreement with the CSPF. Under this agreement, benefits to the UPS Transfer Group cannot
be reduced without our consent and can only be reduced in accordance with law.
Subsequent to our withdrawal, the CSPF incurred extensive asset losses and indicated that it was projected to become
insolvent. In such event, the CSPF benefits would be reduced to the legally permitted Pension Benefit Guaranty Corporation
("PBGC") limits, triggering the coordinating benefits provision in the collective bargaining agreement.
In 2021, the American Rescue Plan Act (“ARPA”) was enacted into law. The ARPA contains provisions that allow for
qualifying multiemployer pension plans to apply for special financial assistance ("SFA") from the PBGC, which will be funded
by the U.S. government. Following SFA approval, a qualifying multiemployer pension plan will receive a lump sum payment to
enable it to continue paying unreduced pension benefits through 2051. The multiemployer plan is not obligated to repay the
SFA. The ARPA is intended to prevent both the PBGC and certain financially distressed multiemployer pension plans,
including the CSPF, from becoming insolvent through 2051. The CSPF submitted an application for SFA that was approved in
December 2022. In January 2023, $35.8 billion was paid to the CSPF by the PBGC.
The passage of the ARPA triggered a remeasurement of the UPS/IBT Plan under ASC Topic 715. Accordingly, we
remeasured the plan assets and pension benefit obligation as of March 31, 2021, which resulted in an actuarial gain of
$6.4 billion, reflecting a reduction of the liability for coordinating benefits of $5.1 billion and a gain from other updated
actuarial assumptions of $1.3 billion. We recorded a gain of $3.1 billion in accumulated other comprehensive income within the
equity section of our consolidated balance sheet and a mark-to-market gain of $3.3 billion within Investment income and other
in our statement of consolidated income during the first quarter of 2021.
We account for the potential obligation to pay coordinating benefits under ASC Topic 715, which requires us to provide a
best estimate of various actuarial assumptions in measuring our pension benefit obligation at the December 31 measurement
date. As of December 31, 2023, our best estimate of coordinating benefits that may be required to be paid by the UPS/IBT Plan
after SFA funds have been exhausted was immaterial.
The value of our estimate for future coordinating benefits will continue to be influenced by a number of factors, including
interpretations of the ARPA, future legislative actions, actuarial assumptions and the ability of the CSPF to sustain its long-term
commitments. Actual events may result in a change in our best estimate of the projected benefit obligation. We will continue to
assess the impact of these uncertainties in accordance with ASC Topic 715.
Other Actuarial Assumptions
Healthcare cost trends are used to project future postretirement medical benefits payable from our plans. For purposes of
measuring our U.S. plan obligations as of December 31, 2023, a 7.25% annual rate of increase in postretirement medical benefit
costs was assumed; the rate was assumed to decrease gradually to 4.50% by 2035 and to remain at that level thereafter.
83
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Funded Status
The following table discloses the funded status of our plans and the amounts recognized in our consolidated balance
sheets as of December 31 (in millions):
Funded Status:
Fair value of plan assets
Benefit obligation
Funded status
Funded Status Recognized in our Balance Sheet:
Other non-current assets
Other current liabilities
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
2023
2022
2023
2022
2023
2022
$
43,491 $
42,058 $
98 $
215 $
1,893 $
1,643
(47,712)
(43,504)
(1,974)
(2,016)
(1,601)
(1,416)
$
(4,221) $
(1,446) $
(1,876) $
(1,801) $
292 $
227
$
— $
1,408 $
— $
— $
510 $
416
(26)
(24)
(123)
(7)
(7)
(211)
Pension and postretirement benefit obligations
(4,195)
(2,830)
(1,753)
(1,794)
Net asset (liability)
Amounts Recognized in AOCI(1):
$
(4,221) $
(1,446) $
(1,876) $
(1,801) $
292 $
Unrecognized net prior service cost
$
(1,326) $
(734) $
(2) $
(3) $
(7) $
Unrecognized net actuarial gain (loss)
Gross unrecognized cost
Deferred tax assets (liabilities)
Net unrecognized cost
(1) Accumulated Other Comprehensive Income (Loss)
(2,097)
(3,423)
831
80
(654)
168
129
127
(31)
201
198
(48)
99
92
(28)
$
(2,592) $
(486) $
96 $
150 $
64 $
(6)
(183)
227
(8)
115
107
(30)
77
The accumulated benefit obligation for our pension plans as of December 31, 2023 and 2022 was $49.2 and $44.8 billion,
respectively. The accumulated benefit obligation for our postretirement medical benefit plans as of both December 31, 2023 and
2022 was $2.0 billion.
Benefit payments under the pension plans include $35 and $31 million paid from employer assets for the years ended
December 31, 2023 and 2022, respectively. Benefit payments (net of participant contributions) under the postretirement
medical benefit plans include $51 and $174 million paid from employer assets for the years ended December 31, 2023 and
2022, respectively. Such benefit payments from employer assets are also categorized as employer contributions.
As of December 31, 2023 and 2022, the projected benefit obligation, the accumulated benefit obligation and the fair value
of plan assets for pension plans with benefit obligations in excess of plan assets were as follows (in millions):
U.S. Pension Benefits:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
International Pension Benefits:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Projected Benefit Obligation
Exceeds the Fair Value of Plan Assets
Accumulated Benefit Obligation
Exceeds the Fair Value of Plan Assets
2023
2022
2023
2022
$
$
47,712 $
24,452 $
47,712 $
47,674
43,491
24,414
21,598
47,674
43,491
345 $
311 $
315 $
304
127
278
121
281
100
24,452
24,414
21,598
274
246
86
The accumulated postretirement benefit obligation presented in the funded status table exceeds plan assets for all U.S.
postretirement medical benefit plans.
84
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Benefit Obligations and Fair Value of Plan Assets
The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets
as of the respective measurement dates in each year (in millions):
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
2023
2022
2023
2022
2023
2022
Benefit Obligations:
Projected benefit obligation at beginning of year
$
43,504 $
61,378 $
2,016 $
2,592 $
1,416 $
2,106
Service cost
Interest cost
Gross benefits paid
Plan participants’ contributions
Plan amendments(1)
Actuarial (gain)/loss
Foreign currency exchange rate changes
Curtailments and settlements
Other
1,172
2,508
2,024
1,950
(2,437)
(2,151)
—
699
—
145
2,266
(19,842)
—
—
—
—
—
—
20
116
(265)
34
—
53
—
—
—
30
83
(268)
31
—
(452)
—
—
—
43
66
(46)
4
—
99
51
(38)
6
68
45
(45)
3
—
(575)
(150)
(40)
4
Projected benefit obligation at end of year
$
47,712 $
43,504 $
1,974 $
2,016 $
1,601 $
1,416
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
2023
2022
2023
2022
2023
2022
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year
$
42,058 $
55,954 $
215 $
115 $
1,643 $
2,106
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Gross benefits paid
Foreign currency exchange rate changes
Curtailments and settlements
Other
2,664
1,206
—
(13,657)
1,912
—
(2,437)
(2,151)
—
—
—
—
—
—
(8)
122
34
(265)
—
—
—
(15)
352
31
(268)
—
—
—
201
65
4
(46)
64
(38)
—
(349)
78
3
(45)
(144)
(6)
—
Fair value of plan assets at end of year
$
43,491 $
42,058 $
98 $
215 $
1,893 $
1,643
(1) Plan amendments in 2023 and 2022 were related to collective bargaining agreements with the Teamsters and the Independent Pilots Association,
respectively.
85
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2023 - $2.4 billion pre-tax actuarial loss related to benefit obligations:
•
•
Discount Rates ($2.3 billion pre-tax loss): The weighted-average discount rate for our pension and postretirement
medical plans decreased from 5.77% as of December 31, 2022 to 5.40% as of December 31, 2023, primarily due to a
decrease in credit spreads on AA-rated corporate bonds.
Demographic and Assumption Changes ($0.1 billion pre-tax loss): This represents the difference between actual and
estimated participant data and demographic factors, including healthcare cost trends, compensation changes, rates of
termination, retirement, mortality and other changes.
2022 - $20.9 billion pre-tax actuarial gain related to benefit obligations:
•
•
Discount Rates ($21.1 billion pre-tax gain): The weighted-average discount rate for our pension and postretirement
medical plans increased from 3.11% as of December 31, 2021 to 5.77% as of December 31, 2022, primarily due to an
increase in U.S. treasury yields, as well as an increase in credit spreads on AA-rated corporate bonds.
Demographic and Assumption Changes ($0.2 billion pre-tax loss): This represents the difference between actual and
estimated participant data and demographic factors, including healthcare cost trends, compensation changes, rates of
termination, retirement, mortality and other changes.
Pension and Postretirement Plan Assets
Pension assets are invested in accordance with applicable laws and regulations, as well as investment guidelines
established by plan trustees. The strategic asset mixes are specifically tailored for each plan given distinct factors, including
liability and liquidity needs. Equities, alternative investments, and other higher-yielding assets are utilized to generate returns
and promote growth. Derivatives, repurchase/reverse repurchase agreements and fixed income securities are utilized as tools for
duration management, mitigating interest rate risk, and minimizing funded status volatility.
The primary long-term investment objectives for pension assets are to provide for a reasonable amount of long-term
capital growth to meet future obligations while minimizing risk exposures and reducing funded status volatility. To meet these
objectives, investment managers are engaged to actively manage assets within the guidelines and strategies set forth by our
investment committee. Active managers are monitored regularly and their performance is compared to applicable benchmarks.
Fair Value Measurements
Plan assets valued utilizing Level 1 inputs include equity investments, corporate debt instruments, U.S. government
securities, derivatives and other instruments. Fair values were determined by closing prices for those securities traded on
national stock exchanges, while securities traded in the over-the-counter market and listed securities for which no sale was
reported on the valuation date are valued at the mean between the last reported bid and ask prices.
Level 2 assets include fixed income securities that are valued based on yields currently available on comparable securities
of other issues with similar credit ratings; mortgage-backed securities that are valued based on cash flow and yield models
using acceptable modeling and pricing conventions; certain investments that are pooled with other investments in a commingled
fund; and derivatives and other instruments primarily valued using pricing models that rely on market observable inputs such as
yield curves, foreign currency exchange rates and investment forward price. We value our investments in commingled funds by
taking the percentage ownership of the underlying assets, each of which has a readily determinable fair value.
Fair value estimates for certain investments are based on unobservable inputs that are not corroborated by observable
market data and are thus classified as Level 3.
86
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments that do not have a readily determinable fair value, and which provide a net asset value ("NAV") or its
equivalent developed consistent with FASB measurement principles, are valued using NAV as a practical expedient. These
investments are not classified in Levels 1, 2, or 3 of the fair value hierarchy but instead included within the subtotals by asset
category. Such investments include hedge funds, real estate investments, private debt and private equity funds. Investments in
hedge funds are valued using the reported NAV as of December 31. Real estate investments, private debt and private equity
funds are valued at NAV per the most recent partnership audited financial reports, and adjusted, as appropriate, for investment
activity between the date of the financial reports and December 31. Due to the inherent limitations in obtaining a readily
determinable fair value measurement for alternative investments, the fair values reported may differ from the values that would
have been used had readily available market information for the alternative investments existed. These investments are
described further below:
•
•
Hedge Funds: Plan assets are invested in hedge funds that pursue multiple strategies to diversify risk and reduce
volatility. Most of these hedge funds allow redemptions either quarterly or semi-annually after a two- to three-month
notice period, while others allow for redemption after only a brief notification period with no restriction on redemption
frequency. No unfunded commitments existed with respect to hedge funds as of December 31, 2023.
Real Estate, Private Debt and Private Equity Funds: Plan assets are invested in limited partnership interests in various
private equity, private debt and real estate funds. Limited provisions exist for the redemption of these interests by the
limited partners that invest in these funds until the end of the term of the partnerships, typically ranging between 10
and 15 years from the date of inception. An active secondary market exists for similar partnership interests, although
no particular value (discount or premium) can be guaranteed. As of December 31, 2023, unfunded commitments to
such limited partnerships totaling approximately $3.3 billion are expected to be contributed over the remaining
investment period, typically ranging between three and six years.
87
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair values of U.S. and international pension and postretirement benefit plan assets by asset category as of December
31, 2023 and 2022 are presented below (in millions), as well as the percentage that each category comprises of our total plan
assets and the respective target allocations. The tables have been updated from prior year presentation to show derivative assets
and liabilities separately from other asset categories, primarily U.S. Government Securities, by type of underlying risk.
Total
Assets(1)
Level 1
Level 2
Level 3
$
1,018 $
894 $
124 $
Total Fixed Income Securities
25,673
17,299
December 31, 2023
Asset Category (U.S. Plans):
Cash and Cash Equivalents
Equity Securities:
U.S. Large Cap
U.S. Small Cap
Emerging Markets
Global Equity
International Equity
Total Equity Securities
Fixed Income Securities:
U.S. Government Securities
Corporate Bonds
Global Bonds
Municipal Bonds
Other Investments:
Hedge Funds
Private Equity
Private Debt
Real Estate
Structured Products(2)
Total Other Investments
Derivatives and Other Instruments:
Equity Risk
Interest Rate Risk
Other Risk(3)
Total Derivatives and Other
Instruments
Total U.S. Plan Assets
Asset Category (International Plans):
Cash and Cash Equivalents
Equity Securities:
Local Markets Equity
U.S. Equity
Emerging Markets
International / Global Equity
Total Equity Securities
Fixed Income Securities:
Local Government Bonds
Corporate Bonds
Global Bonds
Total Fixed Income Securities
Other Investments:
Real Estate(1)
Other(1)
5,732
335
970
62
3,065
10,164
18,024
7,041
602
6
1,457
335
733
62
861
3,448
17,236
62
1
—
3,959
5,071
948
2,575
169
12,722
(136)
(5,877)
25
(5,988)
28
—
—
393
—
421
29
(20)
(1)
8
4,275
—
237
—
2,204
6,716
788
6,979
601
6
8,374
2,194
—
—
77
169
2,440
(165)
(5,857)
26
(5,996)
$
$
43,589 $
22,070 $
11,658 $
71 $
77 $
(6) $
—
89
—
20
109
827
424
141
1,392
66
255
—
—
—
20
20
175
—
137
312
—
—
—
89
—
—
89
652
424
4
1,080
18
183
Total International Plan Assets
Total Plan Assets
$
$
1,893 $
45,482 $
409 $
22,479 $
1,364 $
13,022 $
Includes certain investments that are measured at NAV per share (or its equivalent).
(1)
(2) Represents mortgage and asset-backed securities.
(3)
Includes credit risk, foreign currency exchange risk and commodity risk.
88
Percentage of
Plan Assets
Percentage
Target
Allocation
2.3 %
1-7%
23.3
15-45
30-70
3-13
3-15
2-15
3-15
0-5
58.9
9.1
11.6
2.2
5.9
0.4
(0.3)
(13.5)
0.1
100.0 %
3.8 %
1-10
5.8
1-10
73.5
3.5
13.4
100.0 %
50-75
1-10
10-35
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
25
55
80
80
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total
Assets(1)
Level 1
Level 2
Level 3
$
1,235 $
870 $
365 $
Total Fixed Income Securities
21,973
14,640
December 31, 2022
Asset Category (U.S. Plans):
Cash and Cash Equivalents
Equity Securities:
U.S. Large Cap
U.S. Small Cap
Emerging Markets
Global Equity
International Equity
Total Equity Securities
Fixed Income Securities:
U.S. Government Securities
Corporate Bonds
Global Bonds
Municipal Bonds
Other Investments:
Hedge Funds
Private Equity
Private Debt
Real Estate
Structured Products(2)
Total Other Investments
Derivative and Other Instruments:
Equity Risk Contracts
Interest Rate Risk Contracts
Other Risk(3)
Total Derivative and Other
Instruments
Total U.S. Plan Assets
Asset Category (International Plans):
Cash and Cash Equivalents
Equity Securities:
Local Markets Equity
U.S. Equity
Emerging Markets
International / Global Equity
Total Equity Securities
Fixed Income Securities:
Local Government Bonds
Corporate Bonds
Global Bonds
Total Fixed Income Securities
Other Investments:
Real Estate(1)
Other(1)
6,599
698
1,597
1,168
3,555
13,617
15,165
6,129
670
9
2,517
698
1,171
1,168
1,663
7,217
14,633
7
—
—
4,364
5,012
829
2,415
170
12,790
(87)
(7,280)
25
(7,342)
—
—
—
267
—
267
(6)
(4)
(1)
4,082
—
426
—
1,892
6,400
532
6,122
670
9
7,333
2,713
—
—
69
170
2,952
(81)
(7,276)
26
(11)
(7,331)
$
$
42,273 $
22,983 $
9,719 $
147 $
70 $
77 $
138
(3)
—
298
433
91
494
119
704
95
264
—
—
—
36
36
59
—
98
157
—
—
138
(3)
—
262
397
32
494
21
547
48
190
Total International Plan Assets
Total Plan Assets
$
$
1,643 $
263 $
1,259 $
43,916 $
23,246 $
10,978 $
Includes certain investments that are measured at NAV per share (or its equivalent).
(1)
(2) Represents mortgage and asset-backed securities.
(3)
Includes credit risk, foreign currency exchange risk and commodity risk.
89
Percentage of
Plan Assets
Percentage
Target
Allocation
2.9 %
1-7%
32.2
20-45
30-70
3-13
3-15
1-15
3-15
0-5
52.0
10.3
11.9
2.0
5.7
0.4
(0.2)
(17.2)
—
100.0 %
8.9 %
1-10
26.4
20-50
42.8
5.8
16.1
100.0 %
35-55
1-10
1-30
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
25
52
77
77
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the changes in the Level 3 instruments measured on a recurring basis for the years ended
December 31, 2023 and 2022 (in millions):
Balance as of January 1, 2022
Actual Return on Assets:
Assets Held at End of Year
Assets Sold During the Year
Purchases
Sales
Transfers Into (Out of) Level 3
Balance as of December 31, 2022
Actual Return on Assets:
Assets Held at End of Year
Assets Sold During the Year
Purchases
Sales
Transfers Into (Out of) Level 3
Balance as of December 31, 2023
Corporate Bonds
Other
Total
$
14 $
74 $
—
(35)
482
(460)
(1)
(2)
—
9
(4)
—
$
— $
77 $
—
2
450
(452)
—
4
—
2
(3)
—
$
— $
80 $
88
(2)
(35)
491
(464)
(1)
77
4
2
452
(455)
—
80
There were no shares of UPS class A or class B common stock directly held in plan assets as of December 31, 2023 or
2022.
Expected Cash Flows
Information about expected cash flows for our pension and postretirement medical benefit plans is as follows (in
millions):
Expected Employer Contributions:
2024 to plan trust
2024 to plan participants
Expected Benefit Payments:
2024
2025
2026
2027
2028
2029 - 2033
U.S.
Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension Benefits
$
$
1,200 $
27
74 $
92
2,238 $
216 $
2,371
2,506
2,643
2,777
15,637
206
196
187
177
760
37
7
50
55
62
69
77
473
Our funding policy guideline for U.S. plans is to contribute amounts annually that are at least equal to the amounts
required by applicable laws and regulations. International plans will be funded in accordance with local regulations. Additional
discretionary contributions may be made when deemed appropriate to meet the long-term obligations of the plans. Expected
benefit payments for pensions will be paid primarily from plan trusts. Expected benefit payments for postretirement medical
benefits will be paid from plan trusts and corporate assets.
90
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
We contribute to a number of multiemployer pension plans under the terms of collective bargaining agreements that cover
our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible
employees within the applicable collective bargaining units, based on specific eligibility and participation requirements, vesting
periods and benefit formulas. The risks of participating in multiemployer plans are different from single-employer plans in the
following respects:
•
•
•
Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other
participating employers.
If we negotiate to cease participating in a multiemployer pension plan, we may be required to pay that plan an amount
based on our allocable share of its underfunded status, referred to as a "withdrawal liability". However, cessation of
participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective
bargaining process.
If any of the multiemployer pension plans in which we participate enter critical status, and our contributions are not
sufficient to satisfy any rehabilitation plan funding schedule, we could be required under the Pension Protection Act of
2006 to make additional surcharge contributions to the multiemployer pension plan in the amount of five to ten percent
of the existing contributions required by our labor agreement. Such surcharges would cease upon the ratification of a
new collective bargaining agreement and could not reoccur unless a plan re-entered critical status at a later date.
The discussion that follows sets forth the impact on our results of operations and cash flows for the years ended December
31, 2023, 2022 and 2021 from our participation in multiemployer pension plans. As part of the overall collective bargaining
process for wage and benefit levels, we have agreed to contribute certain amounts to these plans during the contract period. The
plans set benefit levels and are responsible for benefit delivery to participants. Future contributions to the plans are determined
only through collective bargaining, and we have no additional legal or constructive obligation to increase contributions beyond
the agreed-upon amounts (except potential surcharges under the Pension Protection Act of 2006 described above).
The number of employees covered by multiemployer pension plans in 2023 decreased relative to 2022 as we reduced
union headcount due to the reduction in volume. The number of covered employees in 2022 was relatively flat compared to
2021. Contribution rates increased in accordance with the terms of our collective bargaining agreements. There have been no
other significant changes that affect the comparability of 2023, 2022 and 2021 contributions. We recognize expense for the
contractually-required contributions for each period, and we recognize a liability for any contributions due and unpaid at the
end of a reporting period.
Status of Collective Bargaining Agreements
We have approximately 310,000 employees in the U.S. employed under a national master agreement and various
supplemental agreements with local unions affiliated with the Teamsters. These agreements were scheduled to expire on July
31, 2023. In September 2023, a new national master agreement with the Teamsters was ratified. This agreement contains wage
and health and welfare benefit rate increases for our covered part-time and full-time Teamster employees.
We have approximately 10,000 employees in Canada employed under a collective bargaining agreement with the
Teamsters which runs through July 31, 2025.
We have approximately 3,300 pilots who are employed under a collective bargaining agreement with the Independent
Pilots Association. This collective bargaining agreement becomes amendable September 1, 2025.
We have approximately 1,900 airline mechanics who are covered by a collective bargaining agreement with Teamsters
Local 2727 which becomes amendable November 1, 2026. In addition, approximately 3,000 of our auto and maintenance
mechanics who are not employed under agreements with the Teamsters are employed under collective bargaining agreements
with the International Association of Machinists and Aerospace Workers ("IAM"). The collective bargaining agreement with
the IAM runs through July 31, 2024.
91
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Multiemployer Pension Plans
The following table outlines our participation in multiemployer pension plans as of December 31, 2023, 2022 and 2021,
and sets forth our calendar year contributions and accruals for each plan.
The EIN/Pension Plan Number column provides the Employer Identification Number ("EIN") and the three-digit plan
number. The most recent Pension Protection Act zone status available in 2023 and 2022 relates to each plan's two most recent
fiscal year ends. The zone status is based on information that we received from the plans’ administrators and is certified by each
plan’s actuary. Plans certified in the red zone are generally less than 65% funded; plans certified in the orange zone are both
less than 80% funded and have an accumulated funding deficiency, or are expected to have a deficiency in any of the next six
plan years; plans certified in the yellow zone are less than 80% funded; and plans certified in the green zone are at least 80%
funded.
The FIP / RP Status Pending / Implemented column indicates whether a financial improvement plan ("FIP") for yellow/
orange zone plans, or a rehabilitation plan ("RP") for red zone plans, is either pending or has been implemented. As of
December 31, 2023, all plans that have either a FIP or RP requirement have had the respective plan implemented. Our
collectively-bargained contributions satisfy the requirements of all implemented FIPs and RPs and do not currently require the
payment of any surcharges. In addition, minimum contributions outside of the agreed-upon contractual rates are not required.
For the plans detailed in the following table, the expiration date of the associated collective bargaining agreements is July
31, 2028, with the exception of the IAM National Pension Fund / National Pension Plan, which has a July 31, 2024 associated
expiration date. For all plans detailed in the following table, we provided more than 5% of the total plan contributions from all
employers for 2023, 2022 and 2021, as disclosed in the annual filing with the Department of Labor for each respective plan.
Certain plans have been aggregated in the All Other Multiemployer Pension Plans line in the following table, as
contributions to each of these plans are not individually material.
92
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UPS Contributions and
Accruals
(in millions)
2023
2022
2021
Surcharge
Imposed
10
82
10
21
13
10
75
10
21
13
9
65
8
18
12
Pension Fund
EIN / Pension
Plan Number
Alaska Teamster-Employer Pension Plan
92-6003463-024
Pension
Protection Act
Zone Status
2023
Red
2022
Red
FIP / RP Status
Pending / Implemented
Yes
Implemented
Central Pennsylvania Teamsters Defined
Benefit Plan
23-6262789-001 Green
Eastern Shore Teamsters Pension Fund
52-0904953-001 Green
Green
Green
No
No
NA
NA
Employer-Teamsters Local Nos. 175 & 505
Pension Trust Fund
Hagerstown Motor Carriers and Teamsters
Pension Fund
I.A.M. National Pension Fund / National
Pension Plan
International Brotherhood of Teamsters Union
Local No. 710 Pension Fund
Local 705, International Brotherhood of
Teamsters Pension Plan
Local 804 I.B.T. & Local 447 I.A.M.—UPS
Multiemployer Retirement Plan
55-6021850-001
Red
Red
Yes
Implemented
52-6045424-001 Green
Red
No
NA
51-6031295-002
Red
Red
Yes
Implemented
50
48
48
36-2377656-001 Green
Green
No
36-6492502-001 Green
Green
No
NA
NA
NA
NA
196
191
180
138
136
131
143
144
135
62
62
58
Milwaukee Drivers Pension Trust Fund
39-6045229-001 Green
51-6117726-001 Green
Green
Green
No
No
New England Teamsters & Trucking Industry
Pension Fund
New York State Teamsters Conference
Pension and Retirement Fund
Teamster Pension Fund of Philadelphia and
Vicinity
Teamsters Joint Council No. 83 of Virginia
Pension Fund
Teamsters Local 639—Employers Pension
Trust
Teamsters Negotiated Pension Plan
Truck Drivers and Helpers Local Union
No. 355 Retirement Pension Plan
United Parcel Service, Inc.—Local 177, I.B.T.
Multiemployer Retirement Plan
Western Conference of Teamsters Pension
Plan
Western Pennsylvania Teamsters and
Employers Pension Fund
All Other Multiemployer Pension Plans
04-6372430-001
Red
Red
Yes
Implemented
234
167
145
16-6063585-074
Red
Red
Yes
Implemented
139
149
147
23-1511735-001 Green
Green
No
54-6097996-001 Green
Green
No
53-0237142-001 Green
43-6196083-001 Green
Green
Green
No
No
52-6043608-001 Green
Green
No
13-1426500-419 Green
Green
No
91-6145047-001 Green
Green
No
NA
NA
NA
NA
NA
NA
NA
25-6029946-001
Red
Red
Yes
Implemented
98
100
98
84
49
28
98
85
49
30
94
89
80
45
29
122
124
116
1,254
1,310
1,260
46
76
46
73
40
78
Total Contributions
$ 2,953 $ 2,941 $ 2,787
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Agreement with the New England Teamsters and Trucking Industry Pension Fund
In 2012, we reached an agreement with the New England Teamsters and Trucking Industry Pension Fund ("NETTI
Fund"), a multiemployer pension plan in which UPS is a participant, to restructure the pension liabilities for approximately
10,200 UPS employees represented by the Teamsters. As of December 31, 2023 and 2022, we had $813 and $821 million,
respectively, recognized in Other Non-Current Liabilities and $9 and $8 million, respectively, recorded in Other current
liabilities in our consolidated balance sheets, representing the remaining balance of the NETTI Fund withdrawal liability. This
liability is payable in equal monthly installments over a remaining term of approximately 39 years. Based on the borrowing
rates currently available to us for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal
liability as of December 31, 2023 and 2022 was $710 and $686 million, respectively. We utilized Level 2 inputs in the fair
value hierarchy to determine the fair value of this liability.
93
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Multiemployer Health and Welfare Plans
We also contribute to a number of multiemployer health and welfare plans covering both active and retired employees.
Healthcare benefits are provided to participants who meet certain eligibility requirements as covered under the applicable
collective bargaining unit. The following table sets forth our calendar year plan contributions and accruals. Certain plans have
been aggregated in the All Other Multiemployer Health and Welfare Plans line, as the contributions to each of these plans are
not individually material.
Health and Welfare Fund
Bay Area Delivery Drivers
Central Pennsylvania Teamsters Health & Pension Fund
Central States, South East & South West Areas Health and Welfare Fund
Delta Health Systems—East Bay Drayage Drivers
Joint Council #83 Health & Welfare Fund
Local 401 Teamsters Health & Welfare Fund
Local 804 Welfare Trust Fund
Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund
New York State Teamsters Health & Hospital Fund
Northern California General Teamsters (DELTA)
Northern New England Benefit Trust
Oregon / Teamster Employers Trust
Teamsters 170 Health & Welfare Fund
Teamsters Benefit Trust
Teamsters Local 175 & 505 Health and Welfare Fund
Teamsters Local 191 Health Fund
Teamsters Local 251 Health & Insurance Plan
Teamsters Local 638 Health Fund
Teamsters Local 639—Employers Health & Pension Trust Funds
Teamsters Local 671 Health Services & Insurance Plan
Teamsters Union 25 Health Services & Insurance Plan
Teamsters Western Region & Local 177 Health Care Plan
Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund
Utah-Idaho Teamsters Security Fund
Washington Teamsters Welfare Trust
All Other Multiemployer Health and Welfare Plans
Total Contributions
UPS Contributions and Accruals
(in millions)
2023
2022
2021
$
40 $
40 $
46
3,712
42
3,497
39
63
23
131
64
87
206
83
69
21
57
20
29
22
73
36
24
73
39
62
22
129
62
89
211
87
70
25
58
20
17
26
70
38
25
75
1,076
1,035
23
54
88
109
23
54
88
129
41
39
3,374
39
56
19
123
59
91
209
81
66
24
60
17
17
26
66
40
24
74
980
23
52
83
130
$
6,268 $
6,033 $
5,813
94
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. GOODWILL AND INTANGIBLE ASSETS
The following table indicates the allocation of goodwill (in millions):
Balance as of January 1, 2022
Acquired
Currency / Other
Balance as of December 31, 2022
Acquired
Impairments
Currency / Other
Balance as of December 31, 2023
2023 Goodwill Activity
U.S. Domestic
Package
International
Package
Supply Chain
Solutions
Consolidated
$
$
$
847 $
403 $
2,442 $
—
—
105
(16)
491
(49)
847 $
492 $
2,884 $
—
—
—
4
—
7
723
(125)
40
847 $
503 $
3,522 $
3,692
596
(65)
4,223
727
(125)
47
4,872
Goodwill acquired during 2023 was primarily associated with our acquisitions of MNX Global Logistics and Happy
Returns, which are both reported within Supply Chain Solutions. It also reflects the 2023 completion of purchase accounting
allocations from our 2022 acquisition of Bomi Group and other immaterial transactions completed during 2023. See note 8 for
further discussion of business acquisitions.
As described in more detail below, during 2023 we recorded non-cash goodwill impairment charges of $125 million,
comprised of: $56 million related to our Roadie reporting unit, $61 million related to our Delivery Solutions reporting unit,
which represented all of the goodwill associated with that reporting unit, and an immaterial charge resulting from the closure of
a trade management services business within Supply Chain Solutions.
The remaining changes were due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S.
Dollar goodwill balances.
2022 Goodwill Activity
Goodwill acquired during 2022 was primarily associated with our acquisitions of Delivery Solutions and Bomi Group.
Goodwill associated with Delivery Solutions was reported in Supply Chain Solutions as of December 31, 2022. Goodwill
associated with Bomi Group is reported in International Package and Supply Chain Solutions.
The remaining changes were due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S.
Dollar goodwill balances.
Goodwill Impairment
We complete our annual goodwill impairment test as of July 1 on a reporting unit basis. In developing our valuation
assumptions underlying the annual impairment test in 2023, we determined that the cost of capital for our Roadie and Delivery
Solutions reporting units had increased, driven by increases in the risk-free interest rate and volatility of the stock prices of
market comparables. The results of our annual test using these assumptions indicated that the carrying values of our Roadie and
Delivery Solutions reporting units exceeded their estimated fair values and as a result, we recorded the impairment charges
described above.
In addition to our annual impairment test, we are also required to conduct interim impairment tests when changes in
circumstances indicate an impairment may have occurred between annual tests. In connection with matters resulting in the
Coyote trade name impairment discussed below, we performed an interim test of the goodwill associated with our Coyote
reporting unit as of December 31, 2023. While this interim test did not indicate an impairment, we continue to monitor this
reporting unit and may be required to perform additional interim tests in future periods as facts and circumstances evolve.
Within our consolidated goodwill balance of $4.9 billion as of December 31, 2023, approximately $0.9 billion was
represented by certain reporting units within Supply Chain Solutions, including Coyote and Roadie, that had a limited excess of
fair value as of the most recent valuation.
95
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We did not record any goodwill impairment charges for the years ended December 31, 2022 or 2021. Cumulatively, we
have recorded $1.2 billion of goodwill impairment charges in Supply Chain Solutions, while our International and U.S.
Domestic Package segments have not recorded any goodwill impairment charges.
Intangible Assets
The following is a summary of intangible assets as of December 31, 2023 and 2022 (in millions):
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Value
Weighted-Average
Amortization
Period
(in years)
6.8
4.1
20.0
12.2
8.1
8.8
8.2
December 31, 2023
Capitalized software
Licenses
Franchise rights
Customer relationships
Trade name
Trademarks, patents and other
Amortizable intangible assets
Indefinite-lived intangible assets
Total Intangible Assets
December 31, 2022
Capitalized software
Licenses
Franchise rights
Customer relationships
Trade name
Trademarks, patents and other
Amortizable intangible assets
Indefinite-lived intangible assets
Total Intangible Assets
$
5,839 $
(3,900) $
1,939
30
291
1,115
172
320
(7)
(49)
(516)
(30)
(53)
7,767 $
(4,555) $
93
—
7,860 $
(4,555) $
23
242
599
142
267
3,212
93
3,305
5,186 $
(3,500) $
1,686
55
226
872
125
183
(30)
(37)
(453)
(8)
(27)
6,647 $
(4,055) $
204
—
6,851 $
(4,055) $
25
189
419
117
156
2,592
204
2,796
$
$
$
$
$
A trade name and licenses with carrying values of $89 and $4 million, respectively, as of December 31, 2023 are deemed
to be indefinite-lived intangible assets, and therefore are not amortized. These assets are reported within Supply Chain
Solutions. Impairment tests for indefinite-lived intangible assets are performed annually, or more frequently if required. Our
annual test as of July 1 indicated that the fair value of the Coyote trade name was in excess of its carrying value, although the
excess was less than 10 percent.
Since the July 1 testing date, our truckload brokerage business continued to be negatively impacted by market conditions,
which resulted in revenue declines. In response, during the fourth quarter of 2023, we began to evaluate strategic alternatives
for this business. As a result, we tested the Coyote trade name for impairment as of December 31, 2023, using forecasts that
reflected updated market conditions and our evaluation of strategic alternatives related to this business. We concluded that the
carrying value of the trade name exceeded its estimated fair value and recorded an impairment charge of $111 million within
Other expenses in our statement of consolidated income. The revised carrying value of this trade name as of December 31, 2023
was $89 million. The trade name continues to be indefinite-lived.
All of our other recorded intangible assets are deemed to be finite-lived and are amortized over their estimated useful
lives. Impairment tests for these assets are performed when a triggering event occurs that may indicate that the carrying value of
the intangible asset may not be recoverable. Additionally, a decision to sell or abandon an intangible asset before the end of its
useful life may result in an impairment charge. Impairments of finite-lived intangible assets were $8, $17 and $19 million in
2023, 2022, and 2021, respectively.
96
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amortization of intangible assets was $597, $525 and $475 million in each of 2023, 2022 and 2021, respectively.
Expected amortization of finite-lived intangible assets recorded as of December 31, 2023 for the next five years is as follows (in
millions): 2024—$685; 2025—$588; 2026—$482; 2027—$401; 2028—$306. Amortization expense in future periods will be
affected by business acquisitions and divestitures, software development, licensing agreements, purchases of development areas
or similar franchise rights and other factors.
97
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. ACQUISITIONS
In November 2023, we acquired Happy Returns, a technology-focused company that provides innovative end-to-end
returns services, and MNX Global Logistics, a global time-critical and temperature-sensitive logistics provider. These
businesses are reported within Supply Chain Solutions. The impact of these acquisitions to our consolidated revenue and net
income in 2023 was not material.
During 2023, we also acquired franchise development areas for The UPS Store, which are recorded as intangible assets
within Supply Chain Solutions. Other acquisitions completed within International Package and Supply Chain Solutions during
the period were immaterial.
The aggregate purchase price for acquisitions in 2023 was approximately $1.3 billion, net of cash acquired. Acquisitions
were funded using cash from operations.
The estimated fair values of assets acquired and liabilities assumed are subject to change based on completion of our
purchase accounting. Certain areas, including the fair value of equity method investments included within Other Non-Current
Assets and our estimates of tax positions, are preliminary as of December 31, 2023. The preliminary purchase price allocation
for acquired companies can be modified for up to one year from the date of acquisition. The following table summarizes the
estimated fair values of the assets acquired and liabilities assumed as of the acquisition dates (in millions):
Cash and cash equivalents
Accounts receivable
Other current assets
Property, Plant and Equipment
Operating Lease Right-Of-Use Assets
Goodwill
Intangible Assets(1)
Other Non-Current Assets
Accounts Payable and other current liabilities
Non-Current Operating Leases
Deferred Income Tax Liabilities
2023
$
18
62
11
20
17
742
550
49
(65)
(11)
(46)
Total purchase price
(1)
Includes $64 million for acquisitions of development areas for The UPS Store.
$
1,347
Goodwill recognized upon acquisition of approximately $742 million is attributable to expected synergies from future
growth. We assigned $738 million of goodwill to Supply Chain Solutions and $4 million to our International Package segment.
A portion of the goodwill acquired is expected to be deductible for income tax purposes.
Intangible assets acquired of approximately $550 million consist of $249 million of customer relationships (amortized
over a weighted average of 15 years), $64 million of franchise rights (amortized over 20 years), $165 million of developed
technology and software (amortized over a weighted average of 11 years), $45 million of trade names (amortized over a
weighted average of 9 years) and $27 million of other intangible assets (amortized over a weighted average of 3 years). The
carrying value of accounts receivable approximates fair value.
Acquisition-related costs in 2023 were approximately $12 million. These were expensed as incurred and included in Other
expenses within our statement of consolidated income.
98
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2022, we acquired Delivery Solutions, a digital platform that optimizes customer deliveries across multiple networks
and provides real-time customer tracking and notifications. We also acquired Bomi Group to accelerate our growth in
healthcare logistics by expanding our international presence and increasing our cold chain capabilities in major European and
Latin American markets. Delivery Solutions and Bomi Group are both reported within Supply Chain Solutions.
During 2022, we also acquired development areas for The UPS Store, which are recorded as intangible assets within
Supply Chain Solutions.
The aggregate purchase price for acquisitions in 2022 was approximately $755 million, net of cash acquired. Acquisitions
were funded using cash from operations.
The following table summarizes the final purchase price allocation (in millions):
Cash and cash equivalents
Accounts receivable
Other current assets
Property, Plant and Equipment
Operating Lease Right-Of-Use Assets
Goodwill
Intangible Assets(1)
Accounts Payable and other current liabilities
Non-Current Operating Leases
Long-Term Debt and Finance Leases
Deferred Income Tax Liabilities
Total purchase price
2022
$
$
29
86
17
63
111
581
381
(150)
(85)
(183)
(66)
784
(1)
Includes $113 million for acquisitions of development areas for The UPS Store.
Goodwill recognized of approximately $581 million, including immaterial measurement period adjustments, was
attributable to expected synergies from future growth, including synergies in our International Package segment. We allocated
$105 and $476 million of goodwill to reporting units within International Package and Supply Chain Solutions, respectively.
Deductible goodwill for income tax purposes was not material.
Intangible assets acquired of approximately $381 million consisted of $177 million of customer relationships (amortized
over a weighted average of 15 years), $113 million of franchise rights (amortized over 20 years), $70 million of trade names
(amortized over a weighted average of 5 years), $14 million of technology (amortized over a weighted average of 6 years) and
$7 million in other intangibles (amortized over a weighted average of 5 years). The carrying value of accounts receivable
approximated fair value.
Acquisition-related costs in 2022 were approximately $25 million. These were expensed as incurred and included in Other
expenses within the statement of consolidated income.
99
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2021, we acquired Roadie, a technology platform that provides local same-day delivery with operations throughout the
United States. The Roadie technology platform is purpose-built to connect merchants and consumers with contract drivers to
enable efficient and scalable same-day local delivery services for items that are not compatible with the UPS network. The
acquisition was funded using cash from operations. We report Roadie within Supply Chain Solutions.
The following table summarizes the final purchase price allocation (in millions):
Cash and cash equivalents
Accounts receivable
Goodwill
Intangible Assets
Deferred Income Tax Liabilities
Total purchase price
2021
12
15
375
231
(47)
586
$
$
Goodwill recognized of approximately $375 million was attributable to expected synergies from future growth, including
synergies in our U.S. Domestic Package segment. We allocated $243 and $132 million of the recognized goodwill to Supply
Chain Solutions and U.S. Domestic Package, respectively. None of the goodwill is deductible for income tax purposes.
Intangible assets acquired of approximately $231 million primarily consisted of $145 million of technology (amortized
over 8 years), $67 million of trade name (amortized over 10 years) and $19 million in other intangibles (amortized over an
average of 8 years). The carrying value of accounts receivable approximated fair value.
Acquisition-related costs were not material, and were expensed as incurred and included in Other expenses within our
statement of consolidated income.
100
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. DEBT AND FINANCING ARRANGEMENTS
The carrying value of our outstanding debt obligations, as of December 31, 2023 and 2022 consists of the following (in
Principal
Amount
$
2,195
Maturity
2024
Carrying Value
2023
2022
$
2,172
$
millions):
Commercial paper
Fixed-rate senior notes:
2.500% senior notes
2.800% senior notes
2.200% senior notes
3.900% senior notes
2.400% senior notes
3.050% senior notes
3.400% senior notes
2.500% senior notes
4.450% senior notes
4.875% senior notes
6.200% senior notes
5.200% senior notes
4.875% senior notes
3.625% senior notes
3.400% senior notes
3.750% senior notes
4.250% senior notes
3.400% senior notes
5.300% senior notes
5.050% senior notes
Floating-rate senior notes:
Floating-rate senior notes
Floating-rate senior notes
Debentures:
7.620% debentures
Pound Sterling Notes:
5.500% notes
5.125% notes
Euro Senior Notes:
0.375% senior notes
1.625% senior notes
1.000% senior notes
1.500% senior notes
Canadian senior notes:
2.125% senior notes
Finance lease obligations (see note 11)
Facility notes and bonds
Other debt
Total debt
Less: current maturities
Long-term debt
—
999
499
399
997
499
995
747
397
744
—
—
499
400
999
499
996
747
398
745
894
1,485
1,485
494
491
369
492
1,138
743
689
1,232
1,083
—
1,545
280
84
550
—
774
551
551
566
472
320
6
494
491
369
492
1,137
743
688
1,231
—
500
1,027
280
79
521
745
744
531
530
553
390
320
36
22,264
(3,348)
$
18,916
$
19,662
(2,341)
17,321
—
500
400
1,000
500
1,000
750
400
750
900
1,500
500
500
375
500
1,150
750
700
1,250
1,100
—
1,562
2023
2024
2024
2025
2026
2027
2029
2029
2030
2033
2038
2040
2040
2042
2046
2047
2049
2049
2050
2053
2023
2049-2073
276
2030
85
579
—
775
554
554
567
472
320
2031
2050
2023
2025
2028
2032
2024
2024 – 2046
2029 – 2045
6
2024 – 2025
$
22,470
101
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Commercial Paper
We are authorized to borrow up to $10.0 billion under a U.S. commercial paper program and €5.0 billion (in a variety of
currencies) under a European commercial paper program. As of December 31, 2023, we had $2.2 billion outstanding under our
U.S. commercial paper program with an average interest rate of 5.45%. The entire balance was classified as a current liability in
our consolidated balance sheet as of December 31, 2023. There was no commercial paper outstanding as of December 31, 2022.
The amount of commercial paper outstanding under these programs in 2024 is expected to fluctuate.
Debt Classification
As of December 31, 2023, we continued to classify our 2.200% senior notes with a principal balance of $400 million that
mature in September 2024 as long-term debt in our consolidated balance sheet based on our intent and ability to refinance the
debt.
Debt Repayments
On April 1, 2023, our 2.500% senior notes with a principal balance of $1.0 billion and our floating-rate senior notes with a
principal balance of $500 million matured and were repaid in full. On November 15, 2023, our 0.375% Euro senior notes with a
principal balance of €700 million ($749 million) matured and were repaid in full. Additionally, during 2023, we repaid $23
million of debt assumed in the Bomi Group acquisition.
Debt Issuances
On February 23, 2023, we issued two series of notes in the principal amounts of $900 million and $1.1 billion. These
notes bear interest at 4.875% and 5.050%, respectively, and mature on March 3, 2033, and March 3, 2053, respectively. Interest
on the notes is payable semi-annually, beginning September 2023. Each series of notes is callable at our option at a redemption
price equal to the greater of 100% of the principal amount, or the sum of the present values of scheduled payments of principal
and interest, plus accrued and unpaid interest.
On March 7, 2023, we issued floating rate senior notes with a principal balance of $529 million. These notes bear interest
at a rate equal to the compounded Secured Overnight Financing Rate ("SOFR") less 0.350% per year and mature on March 15,
2073. Interest on the notes is payable quarterly, beginning June 2023. These notes are callable at various times after 30 years at
a stated percentage of par value and are redeemable at the option of the note holders at various times after one year at a stated
percentage of par value.
Fixed-Rate Senior Notes
All of our fixed-rate notes pay interest semi-annually and allow for redemption by us at any time by paying the greater of
the principal amount or a "make-whole" amount, plus accrued interest. We subsequently entered into interest rate swaps on
certain of these notes, which effectively converted the fixed interest rates on the notes to variable interest rates. The average
interest rates payable on the notes where fixed interest rates were swapped to variable interest rates, including the impact of the
interest rate swaps, for the years ended December 31, 2023 and 2022 were as follows:
2.450% senior notes
1,000
2022
— %
1.75 %
Principal
Value
Average Effective Interest Rate
Maturity
2023
2022
There were no outstanding interest rate swaps as of December 31, 2023.
Reference Rate Reform
Our floating-rate senior notes that mature between 2049 and 2067 initially bore interest at rates that referenced the London
Interbank Offer Rate ("LIBOR") for U.S. Dollars. As part of a broader program of reference rate reform, U.S. Dollar LIBOR
rates ceased to be published after June 2023. Beginning July 1, 2023, we transitioned these notes to an alternative reference
rate, SOFR, which was adopted in accordance with recommendations of the Alternative Reference Rates Committee.
102
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Floating-Rate Senior Notes
We had floating-rate senior notes in the principal amounts of $500 and $400 million that matured in 2023 and 2022, and
bore interest at three-month LIBOR plus spreads of 45 and 38 basis points, respectively. The average interest rate on these notes
for 2023 and 2022 was 5.32% and 1.93%, respectively.
Our outstanding floating-rate senior notes with principal amounts totaling $1.6 billion bear interest at either thirty-day,
ninety-day or compounded SOFR, less a spread ranging from 4 to 35 basis points. These notes have maturities ranging from
2049 through 2073. Interest is payable monthly for notes maturing through 2053 and quarterly for notes maturing from 2064
through 2073.
The average interest rate on the outstanding floating-rate senior notes for 2023 and 2022 was 4.75% and 1.44%,
respectively. These notes are callable at various times after 30 years at a stated percentage of par value, and redeemable at the
option of the note holders at various times after one year at a stated percentage of par value. We have classified these floating-
rate senior notes as long-term liabilities in our consolidated balance sheets, due to our intent and ability to refinance the debt if
the put option is exercised.
7.620% Debentures
The $276 million debentures have a maturity of April 1, 2030. These debentures are redeemable in whole or in part at any
time at our option. The redemption price is equal to the greater of the principal amount plus accrued interest, or the present
value of remaining scheduled payments of principal and interest thereon discounted to the date of redemption at a benchmark
treasury yield plus five basis points, plus accrued interest. Interest is payable semi-annually in April and October, and the
debentures are not subject to sinking fund requirements.
Pound Sterling Notes
The Pound Sterling notes consist of two separate tranches, as follows:
•
•
Notes with a principal amount of £66 million accrue interest at a fixed rate of 5.50% and are due in February 2031.
Interest is payable semi-annually and these notes are not callable.
Notes with a principal amount of £455 million accrue interest at a fixed rate of 5.125% and are due in February 2050.
Interest is payable semi-annually. These notes are callable at our option at a redemption price equal to the greater of
the principal amount plus accrued interest, or the present value of the remaining scheduled payments of principal and
interest thereon discounted to the date of redemption at a benchmark U.K. government bond yield plus 15 basis points,
plus accrued interest.
Euro Senior Notes
The Euro notes consist of three separate issuances, as follows:
•
•
•
Notes with a principal amount of €700 million accrue interest at a fixed rate of 1.625% and are due in November 2025.
Interest is payable annually. These notes are callable at our option at a redemption price equal to the greater of the
principal amount, or the present value of the remaining scheduled payments of principal and interest thereon
discounted to the date of redemption at a benchmark German government bond yield plus 20 basis points, plus accrued
interest.
Notes with a principal amount of €500 million accrue interest at a fixed rate of 1.00% and are due in November 2028.
Interest is payable annually. These notes are callable at our option at a redemption price equal to the greater of the
principal amount, or the present value of the remaining scheduled payments of principal and interest thereon
discounted to the date of redemption at a benchmark comparable German government bond yield plus 15 basis points,
plus accrued interest.
Notes with a principal amount of €500 million accrue interest at a fixed rate of 1.50% and are due in November 2032.
Interest is payable annually. The notes are callable at our option at a redemption price equal to the greater of the
principal amount, or the present value of the remaining scheduled payments of principal and interest thereon
discounted to the date of redemption at a benchmark comparable government bond yield plus 20 basis points, plus
accrued interest.
103
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollar Senior Notes
The Canadian Dollar notes consist of a single series, as follows:
•
Notes in the principal amount of C$750 million, which bear interest at a fixed rate of 2.125% and mature in May 2024.
Interest is payable semi-annually. The notes are callable at our option, in whole or in part, at the Government of
Canada yield plus 21.5 basis points, and on or after the par call date at par value.
Finance Lease Obligations
We have certain property, plant and equipment subject to finance leases. For additional information on finance lease
obligations, see note 11.
Facility Notes and Bonds
We have entered into agreements with certain municipalities or related entities to finance the construction of, or
improvements to, facilities that support our operations in the United States. These facilities are located around airport properties
in Louisville, Kentucky; Dallas, Texas; and Philadelphia, Pennsylvania. Under these arrangements, we enter into a lease or loan
agreement that covers the debt service obligations on the bonds issued by these entities, as follows:
•
•
•
•
Bonds with a principal balance of $149 million issued by the Louisville Regional Airport Authority associated with
our Worldport facility in Louisville, Kentucky. The bonds are due in January 2029 and bear interest at a variable rate
that is payable monthly. The average interest rates for 2023 and 2022 were 3.31% and 0.16%, respectively.
Bonds with a principal balance of $42 million issued by the Louisville Regional Airport Authority associated with our
airfreight facility in Louisville, Kentucky. The bonds are due in November 2036 and bear interest at a variable rate that
is payable monthly. The average interest rates for 2023 and 2022 were 3.29% and 1.08%, respectively.
Bonds with a principal balance of $29 million issued by the Dallas/Fort Worth International Airport Facility
Improvement Corporation associated with our Dallas, Texas airport facilities. The bonds are due in May 2032 and bear
interest at a variable rate that is payable quarterly. The variable cash flows on this obligation were swapped to a fixed
rate of 5.11% until July 2023, when the interest rate swap was terminated. The average interest rate for 2023 was
4.42%.
Bonds with a principal balance of $100 million issued by the Delaware County, Pennsylvania Industrial Development
Authority associated with our Philadelphia, Pennsylvania airport facilities. These bonds are due in September 2045 and
bear interest at a variable rate that is payable monthly. The average interest rates for 2023 and 2022 were 3.26% and
1.03%, respectively.
Contractual Commitments
The following table sets forth the aggregate annual principal payments on our long-term debt and our projected aggregate
annual purchase commitments (in millions):
Year
2024
2025
2026
2027
2028
After 2028
Total
Debt Principal
Purchase
Commitments (1)
$
3,668 $
1,775
500
1,000
554
14,501
1,873
1,177
457
39
26
8
$
21,998 $
3,580
(1) Purchase commitments include estimates of future amounts yet to be recognized in our financial statements.
Purchase commitments represent contractual agreements for capital expenditures that are legally binding, including
contracts for aircraft, vehicles and facility construction projects.
104
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sources of Credit
Letters of Credit
As of December 31, 2023, we had outstanding letters of credit totaling approximately $1.9 billion issued in connection
with our self-insurance reserves and other routine business requirements. We also issue surety bonds as an alternative to letters
of credit in certain instances and, as of December 31, 2023, we had $1.6 billion of surety bonds written.
Revolving Credit Facilities
We maintain two credit agreements with a consortium of banks. The first of these agreements provides revolving credit
facilities of $1.0 billion and expires on December 3, 2024. Amounts outstanding under this agreement bear interest at a periodic
fixed rate equal to the term SOFR rate, plus 0.10% per annum and an applicable margin based on our then-current credit rating.
The applicable margin from the credit pricing grid as of December 31, 2023 was 0.70%. Alternatively, a fluctuating rate of
interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United
States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one month interest period
plus 1.00%, may be used at our discretion.
The second agreement provides revolving credit facilities of $2.0 billion and expires on December 7, 2026. Amounts
outstanding under this facility bear interest at a periodic fixed rate equal to the term SOFR rate plus 0.10% per annum and an
applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of December
31, 2023 was 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by
The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; and (3) the
Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, plus an applicable margin, may be used at our
discretion.
If the credit ratings established by Standard & Poor's and Moody’s differ, the higher rating will be used, except in cases
where the lower rating is two or more levels lower. In these circumstances, the rating one step below the higher rating will be
used. We are also able to request advances under these facilities based on competitive bids for the applicable interest rate. There
were no amounts outstanding under our revolving credit facilities as of December 31, 2023.
Debt Covenants
Our existing debt instruments and credit facilities subject us to certain financial covenants. As of December 31, 2023 and
for all prior periods presented, we have satisfied these financial covenants. These covenants limit the amount of secured
indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible
assets. As of December 31, 2023, 10% of net tangible assets is equivalent to $4.5 billion; however, we have no covered sale-
leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our
financial condition or liquidity.
Fair Value of Debt
Based on the borrowing rates currently available to us for long-term debt with similar terms and maturities, the fair value
of long-term debt, including current maturities, was approximately $22.1 and $18.2 billion as of December 31, 2023 and 2022,
respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of
our debt instruments.
105
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. LEGAL PROCEEDINGS AND CONTINGENCIES
We are involved in a number of judicial proceedings and other matters arising from the conduct of our business.
Although there can be no assurances as to the ultimate outcome, we have generally denied, or believe we have meritorious
defenses and will deny, liability in pending matters, including (except as may be otherwise noted herein) the matters described
below, and we intend to vigorously defend each matter. We accrue amounts associated with judicial proceedings and other
contingencies when and to the extent a loss becomes probable and can be reasonably estimated. The actual costs of resolving
legal proceedings may be substantially higher or lower than the amounts accrued on those claims.
For matters as to which we are not able to estimate a possible loss or range of losses, we are not able to determine whether
any such loss will have a material impact on our operations or financial condition. For these matters, we have described the
reasons that we are unable to estimate a possible loss or range of losses.
Judicial Proceedings
We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations
under state wage-and-hour laws. We do not believe that any loss associated with any such matter will have a material impact on
our operations or financial condition.
In July 2023, Baker v. United Parcel Service, Inc. (DE) and United Parcel Service, Inc. (OH) was certified as a class
action in federal court in the Eastern District of Washington. The plaintiff in this matter alleges that UPS violated the
Uniformed Services Employment and Reemployment Rights Act. We are vigorously defending ourselves in this matter and
believe that we have a number of meritorious defenses, and there are unresolved questions of law and fact that could be
important to the ultimate resolution of this matter. Accordingly, we are not able to estimate a possible loss or range of loss that
may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial
condition, results of operations or liquidity.
Other Matters
We are a party to various other matters that arose in the normal course of business. These include disputes with
government authorities in various jurisdictions over the imposition of duties, fines, taxes and assessments from time to time.
We are vigorously defending ourselves and believe that we have a number of meritorious defenses in these disputes. There are
also unresolved questions of law that could be important to the ultimate resolution of these disputes. Accordingly, we are not
able to estimate a possible loss or range of loss that may result from these disputes or to determine whether such loss, if any,
would have a material impact on our financial condition, results of operations or liquidity.
In August 2016, Spain’s National Markets and Competition Commission ("CNMC") announced an investigation into 10
companies in the commercial delivery and parcel industry, including UPS, related to alleged nonaggression agreements to
allocate customers. In May 2017, we received a Statement of Objections issued by the CNMC. In July 2017, we received a
Proposed Decision from the CNMC. In March 2018, the CNMC adopted a final decision, finding an infringement and imposing
an immaterial fine on UPS. We appealed the decision. In December 2022, a trial court ruled against us. We have filed an appeal
before the Spanish Supreme Court. We are vigorously defending ourselves and believe that we have a number of meritorious
defenses. There are also unresolved questions of law that could be important to the ultimate resolution of this matter. We do not
believe that any loss from this matter would have a material impact on our operations or financial condition.
We do not believe that the eventual resolution of any other matters (either individually or in the aggregate), including any
reasonably possible losses in excess of current accruals, will have a material impact on our operations or financial condition.
106
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. LEASES
We have finance and operating leases for real estate (primarily package centers, airport facilities and warehouses), aircraft
and engines, information technology equipment, vehicles and various other equipment used in operating our business. Certain
leases for real estate and aircraft contain options to purchase, extend or terminate the lease.
Aircraft
In addition to the aircraft that we own, we charter aircraft to handle package and cargo volume on certain international
trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the
agreement with short notice, we have classified these as short-term leases. A majority of our long-term aircraft operating leases
are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations,
we are restricted from operating an airline.
Transportation equipment and other equipment
We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet
contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without
penalty. We also enter into equipment leases to increase capacity during periods of high demand. These leases are treated as
short-term as the cumulative right of use is less than 12 months over the term of the contract.
Some of our transportation and technology equipment leases require us to make additional lease payments based on the
underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in
the right of use lease asset and associated lease obligation.
The components of lease expense for the years ended December 31, 2023, 2022 and 2021 were as follows (in millions):
Operating lease costs
Finance lease costs:
Amortization of assets
Interest on lease liabilities
Total finance lease costs
Variable lease costs
Short-term lease costs
Total lease costs(1)
2023
2022
2021
$
$
860 $
736 $
119 $
112 $
18
137
279
1,166
14
126
270
1,499
$
2,442 $
2,631 $
729
97
14
111
246
1,510
2,596
(1) This table excludes sublease income for all periods presented as it was not material.
In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the
carrying value of the assets may not be recoverable. There were no material impairments recognized for the years ended
December 31, 2023, 2022 or 2021.
107
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2023
and 2022 are as follows (in millions, except lease term and discount rate):
Operating Leases:
Operating lease right-of-use assets
Current maturities of operating leases
Non-current operating leases
Total operating lease obligations
Finance Leases:
Property, plant and equipment, net
Current maturities of long-term debt, commercial paper and finance leases
Long-term debt and finance leases
Total finance lease obligations
Weighted average remaining lease term (in years):
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
$
$
$
$
$
$
2023
2022
4,308
$
3,755
709
$
3,756
4,465
$
621
3,238
3,859
856
$
959
104
368
472
$
$
10.8
7.4
92
298
390
10.8
8.4
3.20 %
3.88 %
2.32 %
3.17 %
Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 is as follows (in
millions):
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
2023
2022
$
835 $
17
126
$
$
1,278 $
209 $
705
14
149
879
122
108
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Future payments for lease obligations as of December 31, 2023 are as follows (in millions):
Finance Leases
Operating Leases
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Imputed interest
Total lease obligations
Less: Current obligations
Long-term lease obligations
$
119 $
96
70
45
40
185
555
(83)
472
(104)
$
368 $
819
764
657
561
415
2,106
5,322
(857)
4,465
(709)
3,756
As of December 31, 2023, we had additional leases which have not commenced of $835 million. These leases will
commence between 2024 and 2025 when we are granted access to the property, such as when leasehold improvements are
completed by the lessor or a certificate of occupancy is obtained.
109
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. SHAREOWNERS' EQUITY
Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interests
We are authorized to issue two classes of common stock, which are distinguished from each other primarily by their
respective voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas class B shares are entitled to one vote
per share. Class A shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company's
founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the New
York Stock Exchange ("NYSE") under the symbol "UPS". Class A and B shares both have a $0.01 par value, and as of December
31, 2023, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are
200 million preferred shares authorized to be issued, with a par value of $0.01 per share. As of December 31, 2023, no preferred
shares had been issued.
The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling
minority interests accounts for the years ended December 31, 2023, 2022 and 2021 (in millions, except per share amounts):
2023
2022
2021
Shares
Dollars
Shares
Dollars
Shares
Dollars
Class A Common Stock:
Balance at beginning of year
Stock award plans
Common stock issuances
Conversions of class A to class B common stock
Class A shares issued at end of year
Class B Common Stock:
Balance at beginning of year
Common stock purchases
Conversions of class A to class B common stock
Class B shares issued at end of year
Additional Paid-In Capital:
Balance at beginning of year
Stock award plans
Common stock purchases
Common stock issuances
Other (1)
Balance at end of year
Retained Earnings:
Balance at beginning of year
Net income attributable to controlling interests
Dividends ($6.48, $6.08 and $4.08 per share) (2)
Common stock purchases
Other
Balance at end of year
Non-Controlling Interests:
Balance at beginning of year
Change in non-controlling interests
Balance at end of year
134 $
5
2
(14)
127 $
725 $
(13)
14
726 $
2
—
—
—
2
7
—
—
7
$
$
—
425
(882)
467
(10)
—
138 $
5
3
(12)
134 $
732 $
(19)
12
725 $
2
—
—
—
2
7
—
—
7
147 $
6
2
(17)
138 $
718 $
(3)
17
732 $
$
1,343
$
624
(2,462)
495
—
—
$
2
—
—
—
2
7
—
—
7
865
574
(500)
404
—
$
1,343
$
21,326
$
16,179
$
6,896
6,708
(5,611)
(1,368)
—
11,548
(5,363)
(1,038)
—
12,890
(3,604)
—
(3)
$
21,055
$
21,326
$
16,179
$
$
17
(9)
8
$
$
16
1
17
$
$
12
4
16
Includes a 1% excise tax applicable to share repurchases.
(1)
(2) The dividend per share amount is the same for both class A and class B common stock. Dividends include $239, $249 and $167 million for 2023, 2022 and
2021, respectively, that were settled in shares of class A common stock.
110
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We repurchased 12.8, 19.0 and 2.6 million shares of class B common stock for $2.3, $3.5 and $0.5 billion during the years
ended December 31, 2023, 2022 and 2021, respectively. These repurchases were completed as follows:
•
•
In August 2021, the Board of Directors authorized the company to repurchase up to $5.0 billion of class A and class B
common stock (the "2021 Authorization"). The share repurchases discussed above for the years ended December 31,
2022 and 2021, were completed under this authorization. For the year ended December 31, 2023, we repurchased
0.5 million shares of class B common stock for $82 million under this authorization.
In January 2023, the Board of Directors terminated the 2021 Authorization and approved a new share repurchase
authorization for $5.0 billion of class A and class B common stock (the "2023 Authorization"). For the year ended
December 31, 2023, we repurchased 12.3 million shares for $2.2 billion under the 2023 Authorization. As of December
31, 2023, we had $2.8 billion available under this repurchase authorization.
Future share repurchases may be in the form of accelerated share repurchase programs, open market purchases or other
methods we deem appropriate. The timing of share repurchases will depend upon market conditions. Unless terminated earlier by
the Board of Directors, this program will expire when we have purchased all shares authorized for repurchase under the program.
Movements in additional paid-in capital in respect of stock award plans comprise accruals for unvested awards, offset by
adjustments for awards that vest during the period.
Accumulated Other Comprehensive Income (Loss)
We recognize activity in other comprehensive income for foreign currency translation adjustments, unrealized holding gains
and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and
unrecognized pension and postretirement benefit costs. The activity in accumulated other comprehensive income (loss) for the
years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of year
Translation adjustment (net of tax effect of $(15), $(17) and $42)
Reclassification to earnings (net of tax effect of $0, $2 and $0)
Balance at end of year
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
2023
2022
2021
$
(1,446) $
(1,162) $
190
8
(315)
31
(981)
(181)
—
$
(1,248) $
(1,446) $
(1,162)
Balance at beginning of year
$
(11) $
(1) $
Current period changes in fair value (net of tax effect of $2, $(3) and $0)
Reclassification to earnings (net of tax effect of $1, $1 and $0)
Balance at end of year
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of year
Current period changes in fair value (net of tax effect of $(28), $128 and $82)
Reclassification to earnings (net of tax effect of $(48), $(70) and $(17))
Balance at end of year
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of year
Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and
liabilities (net of tax effect of $(793), $810 and $1,956)
Reclassification to earnings (net of tax effect of $111, $(230) and $(749))
Balance at end of year
Accumulated other comprehensive income (loss) at end of year
$
$
$
$
$
$
111
7
2
(12)
2
(2) $
(11) $
6
(2)
(5)
(1)
167 $
(17) $
(223)
(89)
(154)
407
(223)
(76) $
167 $
261
(55)
(17)
(259) $
(2,098) $
(5,915)
(2,530)
357
2,576
(737)
6,195
(2,378)
(2,432) $
(259) $
(2,098)
(3,758) $
(1,549) $
(3,278)
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Detail of the gains (losses) reclassified from accumulated other comprehensive income (loss) to the statements of
consolidated income for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
Unrealized Gain (Loss) on Foreign Currency Translation:
$
Realized gain (loss) on business wind-down
Income tax (expense) benefit
Impact on net income
Unrealized Gain (Loss) on Marketable Securities:
Realized gain (loss) on sale of securities
Income tax (expense) benefit
Impact on net income
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts
Foreign currency exchange contracts
Foreign currency exchange contracts
Income tax (expense) benefit
Impact on net income
Amount Reclassified from AOCI
2023
2022
2021
Affected Line Item in the Income
Statement
(8) $
(33) $
—
2
(8) $
(31) $
(3) $
(3) $
1
1
(2) $
(2) $
—
—
—
5
—
5
Other expenses
Income tax expense
Net income
Investment income and other
Income tax expense
Net income
(10) $
(10) $
(11)
Interest expense
$
$
$
$
213
(1)
(48)
304
(1)
(70)
$
154 $
223 $
83
—
(17)
55
Revenue
Investment income and other
Income tax expense
Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs
$
(109) $
(94) $
(148)
Investment income and other
Prior service credit for divested business
Plan amendments for divested business
Remeasurement of benefit obligation
Curtailments and settlements of benefit obligations
Income tax (expense) benefit
Impact on net income
Total amount reclassified for the year
—
—
(351)
(8)
111
—
—
69
(66)
Other expenses
Other expenses
1,027
3,272
Investment income and other
34
(230)
—
(749)
Investment income and other
Income tax expense
$
$
(357) $
737 $
2,378
(213) $
927 $
2,438
Net income
Net income
112
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Compensation Obligations and Treasury Stock
We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer the gains on
stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are classified
as treasury stock, and the liability to participating employees is classified as a deferred compensation obligation within
Shareowners’ Equity in our consolidated balance sheets. The number of shares needed to settle the liability for deferred
compensation obligations is included in the denominator in both the basic and diluted earnings per share calculations. Employees
are generally no longer able to defer the gains from stock options exercised.
Activity in the deferred compensation program for the years ended December 31, 2023, 2022 and 2021 was as follows (in
millions):
Deferred Compensation Obligations:
Balance at beginning of year
Reinvested dividends
Benefit payments
Balance at end of year
Treasury Stock:
2023
2022
2021
Shares
Dollars
Shares
Dollars
Shares
Dollars
$
$
13
—
(4)
9
$
$
16
2
(5)
13
$
$
20
1
(5)
16
Balance at beginning of year
— $
(13)
— $
(16)
— $
(20)
Reinvested dividends
Benefit payments
Balance at end of year
—
—
— $
—
4
(9)
—
—
(2)
5
—
—
(1)
5
— $
(13)
— $
(16)
113
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. STOCK-BASED COMPENSATION
In 2021, our shareholders approved our 2021 Omnibus Incentive Compensation Plan (the "Plan") under which we are
authorized to issue non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock units
("RSUs"), and restricted performance shares and performance units ("RPUs", collectively with RSUs, "Restricted Units")
underlying 25 million shares. Each award issued in the form of Restricted Units, stock options and other permitted awards
reduces the share reserve by one share. We had 10 million shares available to be issued under the Plan as of December 31,
2023.
Our primary equity compensation programs are the UPS Long-Term Incentive Performance Award program (the "LTIP")
and the UPS Stock Option program. We also grant Restricted Units to our Board of Directors (the "Board") as a component of
their annual compensation and, from time to time, to individual employees as a retention mechanism. Beginning in 2023,
awards earned under the UPS Management Incentive Award Program (the "MIP") are fully electable, at the option of the
recipient, in the form of cash or unrestricted shares of class A common stock. The total expense recognized in our statements of
consolidated income under all stock compensation programs during 2023, 2022 and 2021 was $0.2, $1.6 and $0.9 billion,
respectively. The associated income tax benefit recognized in our statements of consolidated income during 2023, 2022 and
2021 was $42, $451 and $301 million, respectively. The cash income tax benefit received from the exercise of stock options
and conversion of Restricted Units to class A shares during 2023, 2022 and 2021 was $201, $352 and $278 million,
respectively.
Management Incentive Award Program
Non-executive management eligibility under the MIP is determined annually by the executive officers of UPS. Executive
officer eligibility is determined annually by the Compensation and Human Capital Committee of the Board (the "Compensation
Committee"). Prior to 2023, MIP awards were generally paid in one-half to two-thirds RPUs, depending upon the recipient's
level of seniority. The remainder of the award was electable in the form of cash or unrestricted shares of class A common stock,
and was fully vested at the time of grant. Upon conversion, RPUs resulted in the issuance of an equivalent number of shares of
class A common stock after required tax withholdings.
MIP RPUs granted between 2019 and prior to 2022, vested over one year following the grant date conditioned upon
continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting
occurred). The grant value was expensed on a straight-line basis (less estimated forfeitures) over the requisite service period
(except in the case of death, disability or retirement, in which case immediate expensing occurred). MIP RPUs granted prior to
2019 vested over a five-year period with approximately 20% of the award vesting and converting to class A common stock each
anniversary of the grant date. As of December 31, 2023, all outstanding MIP RPUs had fully vested.
During 2022, the Compensation Committee amended and restated the terms and conditions governing 2022 MIP RPUs to
provide that such awards would fully vest as of December 31, 2022. The elimination of a future service requirement for this
award resulted in the recognition of an additional $505 million of stock compensation expense in 2022, of which approximately
$431 million was recorded in U.S. Domestic Package. In 2022, this award was classified as a compensation obligation and
recorded in Accrued wages and withholdings in our consolidated balance sheet. In 2023, the Compensation Committee
approved the 2022 MIP awards and the compensation obligation was relieved. The RPUs granted were recorded as additional
paid-in capital on the measurement date.
Dividends earned on Restricted Units are reinvested in additional Restricted Units at each dividend payable date until
conversion to class A shares occurs.
114
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table shows the change in non-vested Restricted Units under our equity compensation programs other than
the LTIP (defined below) in 2023:
Non-vested as of January 1, 2023
Vested
Granted
Reinvested Dividends
Forfeited / Expired
Non-vested as of December 31, 2023
Restricted Units
(in thousands)
Weighted-Average
Grant Date
Fair Value
3,106 $
(5,965)
2,816
120
(19)
58 $
221.97
204.63
185.66
N/A
220.60
176.68
The fair value of these Restricted Units is the NYSE closing price of class B common stock on the date of grant. The
weighted-average grant date fair value of Restricted Units, other than awards granted under the LTIP, which are discussed
below, granted during 2023, 2022 and 2021 was $185.66, $223.72 and $165.27, respectively. The total fair value of these RPUs
vested was $1.1, $0.9 and $0.7 billion in 2023, 2022 and 2021, respectively. During 2023, all outstanding MIP Restricted Units
fully vested. As of December 31, 2023, there was $7 million of total unrecognized compensation cost related to non-vested
Restricted Units, other than awards granted under the LTIP, which are discussed below. That cost is expected to be recognized
over a weighted-average period of two years and two months.
Long-Term Incentive Performance Award Program ("LTIP")
LTIP RPUs vest at the end of a three-year performance period, assuming continued employment with the Company
(except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The number
of RPUs earned is based on achievement of performance targets established on the grant date.
For LTIP awards with a performance period ended December 31, 2021, the performance targets were equally weighted
among consolidated operating return on invested capital ("ROIC"), growth in currency-constant consolidated revenue and total
shareholder return ("RTSR") relative to a peer group of companies. For the two-thirds of the award related to ROIC and growth
in currency-constant consolidated revenue, we recognized the grant date fair value of these RPUs (less estimated forfeitures) as
compensation expense ratably over the vesting period, based on the number of awards expected to be earned. The remaining
one-third of the award was valued using a Monte Carlo model. We recognized the grant date fair value of this portion of the
award (less estimated forfeitures) as compensation expense ratably over the vesting period.
For LTIP awards with a performance period ending in 2022 or later, the performance targets are equally weighted
between adjusted earnings per share and adjusted cumulative free cash flow. The final number of RPUs earned will then be
subject to adjustment based on RTSR relative to the Standard & Poor's 500 Index. We determine the grant date fair value of
these RPUs using a Monte Carlo model and recognize compensation expense (less estimated forfeitures) ratably over the
vesting period, based on the number of awards expected to be earned.
The weighted-average assumptions used in our Monte Carlo models for each award year were as follows:
Risk-free interest rate
Expected volatility
3.89 %
30.23 %
2.35 %
31.92 %
Weighted-average fair value of units granted
$
198.78
$
227.00
$
Share payout
107.72 %
107.37 %
0.19 %
30.70 %
168.05
102.39 %
2023
2022
2021
There is no expected dividend yield as units earn dividend equivalents.
115
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table shows LTIP RPU activity during the year ended December 31, 2023:
Non-vested as of January 1, 2023
Vested
Granted
Reinvested Dividends
Forfeited / Expired
Non-vested as of December 31, 2023
RPUs
(in thousands)
Weighted-Average
Grant Date
Fair Value
1,243 $
(661)
760
69
(143)
1,268 $
197.17
172.39
198.78
N/A
205.74
210.04
The fair value of each LTIP RPU is based on the NYSE closing price of class B common stock on the date of grant. The
weighted-average grant date fair value of LTIP RPUs granted during 2023, 2022 and 2021 was $198.78, $227.00 and $168.10,
respectively. The total fair value of LTIP RPUs vested during 2023, 2022 and 2021was $111, $239 and $160 million,
respectively. As of December 31, 2023, there was $150 million of total unrecognized compensation cost related to non-vested
LTIP RPUs. That cost is expected to be recognized over a weighted-average period of one year and nine months.
Non-qualified Stock Options
Stock options may be granted under the Plan, and must have an exercise price at least equal to the NYSE closing price of
UPS class B common stock on the date the option is granted.
We grant non-qualified stock options to a limited group of eligible senior management employees annually, in which the
value granted is determined as a percentage of salary. Stock option grants vest over a five-year period with approximately 20%
of the award vesting at each anniversary of the grant date (except in the case of death, disability or retirement, in which case
immediate vesting occurs). Option grants expire 10 years after the date of the grant. Option holders may exercise their options
via the payment of cash or class A common stock; new class A shares are issued upon exercise.
The following table provides an analysis of activity during 2023 relating to options to purchase shares of class A common
stock:
Options
(in thousands)
Weighted-Average
Exercise
Price
Weighted-Average
Remaining
Contractual Term
(in years)
Aggregate Intrinsic
Value
(in millions)
Outstanding at January 1, 2023
Exercised
Granted
Forfeited / Expired
Outstanding as of December 31, 2023
Options Vested and Expected to Vest
Exercisable as of December 31, 2023
1,466 $
(188)
127
(23)
1,382 $
1,382 $
1,004 $
120.51
106.38
185.54
N/A
127.91
127.91
116.59
5.61
5.61
4.93
$
$
$
51
51
46
The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted-average
assumptions used by year, and the calculated weighted-average fair values of options, are as follows:
Expected dividend yield
Risk-free interest rate
Expected life in years
Expected volatility
2023
2022
2021
3.54 %
3.70 %
5.93
28.31 %
2.35 %
2.39 %
7.50
25.04 %
Weighted-average fair value of options granted
$
41.08
$
48.45
$
3.31 %
0.84 %
7.50
23.15 %
23.71
116
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The expected dividend yield is based on recent historical dividend yields for our stock, taking into account changes in
dividend policy. The risk-free interest rate is based on the term structure of interest rates at the time of the option grant. The
expected life represents an estimate of the period of time options are expected to remain outstanding. In determining this, we
have relied upon a combination of the observed exercise behavior of our prior grants with similar characteristics and the
contractual term of the grants. Expected volatilities are based on the historical returns on our stock and the implied volatility of
our publicly-traded options.
We received cash of $20, $14 and $16 million during 2023, 2022 and 2021, respectively, from option holders resulting
from the exercise of stock options. The total intrinsic value of options exercised during 2023, 2022 and 2021 was $15, $20 and
$16 million, respectively. As of December 31, 2023, there was $4 million of total unrecognized compensation cost related to
non-vested options. That cost is expected to be recognized over a weighted-average period of three years and four months.
Discounted Employee Stock Purchase Plan
We maintain an employee stock purchase plan for all eligible employees. Under this plan, shares of UPS class A common
stock may be purchased at quarterly intervals at 95% of the NYSE closing price of UPS class B common stock on the last day
of each quarterly period. Employees purchased 0.7, 0.6 and 0.6 million shares at average prices of $162.34, $180.80 and
$172.07 per share, during 2023, 2022 and 2021, respectively. This plan is not considered to be compensatory, and therefore no
compensation cost is incurred for the employees’ purchase rights.
117
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14. SEGMENT AND GEOGRAPHIC INFORMATION
We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as
our global small package operations. Our remaining businesses are reported as Supply Chain Solutions. Global small package
operations represent our most significant business and are broken down into regional operations around the world. Regional
operations managers are responsible for both domestic and export products within their geographic area. Supply Chain
Solutions comprises the results of non-reportable operating segments that do not meet the quantitative and qualitative criteria of
a reportable segment as defined under ASC Topic 280.
U.S. Domestic Package
U.S. Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the
United States.
International Package
International Package operations include delivery to more than 200 countries and territories worldwide, including
shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. Our
International Package reporting segment includes our operations in Europe, the Indian sub-continent, Middle East and Africa
(together "EMEA"), Canada and Latin America (together "Americas") and Asia.
Supply Chain Solutions
Supply Chain Solutions includes our Forwarding, Logistics, digital and other businesses. Our Forwarding and Logistics
businesses provide services in more than 200 countries and territories worldwide and include international air and ocean freight
forwarding, truckload brokerage, customs brokerage, mail services, healthcare logistics, distribution and post-sales services.
Our digital businesses leverage technology to enable a range of on-demand services such as same-day delivery, end-to-end
return services and integrated supply chain and high-value shipment insurance solutions.
In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating
profit is before investment income and other, interest expense and income tax expense. Certain expenses are allocated between
the segments using activity-based costing methods. These activity-based costing methods require us to make estimates that
impact the amount of each expense category that is attributed to each segment. Changes in these estimates directly impact the
amount of expense allocated to each segment, and therefore the operating profit of each reporting segment. Our allocation
methodologies are refined periodically, as necessary, to reflect changes in our businesses. In 2021, we updated our cost
allocation methodology for aircraft engine maintenance expense to better align with aircraft utilization by segment, resulting in
an immaterial reallocation of expense from our U.S. Domestic Package segment to our International Package segment.
As we operate an integrated, global multimodal network, we evaluate many of our capital expenditure decisions at a
network level. Accordingly, expenditures on property, plant and equipment by segment are not presented. Unallocated assets
are comprised primarily of cash and marketable securities.
118
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Segment information for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
2023
2022
2021
Revenue:
U.S. Domestic Package
International Package
Supply Chain Solutions
Consolidated revenue
Operating Profit:
U.S. Domestic Package
International Package
Supply Chain Solutions
Consolidated operating profit
Assets:
U.S. Domestic Package
International Package
Supply Chain Solutions
Unallocated
Consolidated assets
Depreciation and Amortization Expense:
U.S. Domestic Package
International Package
Supply Chain Solutions
Consolidated depreciation and amortization expense
$
$
$
$
$
$
$
$
59,958 $
64,209 $
17,831
13,169
19,698
16,431
90,958 $
100,338 $
5,076 $
6,997 $
3,231
834
4,326
1,771
60,317
19,541
17,429
97,287
6,436
4,646
1,728
9,141 $
13,094 $
12,810
38,368 $
38,303 $
17,587
11,245
3,657
17,670
10,407
4,744
35,746
17,225
9,556
6,878
70,857 $
71,124 $
69,405
2,290 $
2,173 $
2,058
742
334
761
254
685
210
3,366 $
3,188 $
2,953
Revenue by product type for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
2023
2022
2021
U.S. Domestic Package:
Next Day Air
Deferred
Ground
Total U.S. Domestic Package
International Package:
Domestic
Export
Cargo
Total International Package
Supply Chain Solutions:
Forwarding
Logistics
Freight
Other
Total Supply Chain Solutions
Consolidated revenue
$
9,894 $
10,699 $
5,093
44,971
59,958
3,144
14,003
684
17,831
5,534
5,927
—
1,708
13,169
5,968
47,542
64,209
3,346
15,341
1,011
19,698
8,943
5,351
—
2,137
16,431
$
90,958 $
100,338 $
10,009
5,846
44,462
60,317
3,690
15,012
839
19,541
9,872
4,767
1,064
1,726
17,429
97,287
119
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Geographic information for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
United States:
Revenue
Long-lived assets
International:
Revenue
Long-lived assets
Consolidated:
Revenue
Long-lived assets
2023
2022
2021
$
$
$
$
$
$
71,749 $
78,110 $
33,301 $
32,002 $
19,209 $
22,228 $
13,687 $
12,991 $
90,958 $
100,338 $
46,988 $
44,993 $
74,376
29,609
22,911
11,098
97,287
40,707
Long-lived assets include property, plant and equipment, pension and postretirement benefit assets, long-term
investments, goodwill and intangible assets.
No countries outside of the United States accounted for 10% or more of consolidated revenue for the years ended
December 31, 2023, 2022 or 2021. For the years ended December 31, 2023, 2022 and 2021, Amazon.com, Inc. and its affiliates
("Amazon") represented 11.8%, 11.3% and 11.7% of our consolidated revenues, respectively. Substantially all of this revenue
was attributed to U.S. Domestic Package. Amazon accounted for approximately 15.8%, 15.5% and 15.5% of Accounts
receivable, net, included within our consolidated balance sheets as of December 31, 2023, 2022 and 2021, respectively.
120
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. INCOME TAXES
The income tax expense (benefit) for the years ended December 31, 2023, 2022 and 2021 consists of the following (in
millions):
Current:
U.S. Federal
U.S. State and Local
Non-U.S.
Total Current
Deferred:
U.S. Federal
U.S. State and Local
Non-U.S.
Total Deferred
Total Income Tax Expense
2023
2022
2021
$
1,012 $
2,006 $
1,388
195
459
1,666
150
20
29
199
273
467
2,746
296
136
99
531
$
1,865 $
3,277 $
194
478
2,060
1,311
273
61
1,645
3,705
Income before income taxes includes the following components (in millions):
United States
Non-U.S.
Total Income Before Income Taxes:
2023
2022
2021
$
$
6,246 $
12,276 $
2,327
2,549
8,573 $
14,825 $
14,220
2,375
16,595
A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31,
2023, 2022 and 2021 consists of the following:
Statutory U.S. federal income tax rate
U.S. state and local income taxes (net of federal benefit)
Non-U.S. tax rate differential
U.S. federal tax credits
Goodwill and other asset impairments
Net uncertain tax positions
Other
Effective income tax rate
2023
2022
2021
21.0 %
21.0 %
21.0 %
1.9
(0.6)
(0.7)
0.1
(0.5)
0.6
21.8 %
2.0
0.1
(0.5)
—
0.4
(0.9)
22.1 %
2.2
—
(0.4)
—
0.6
(1.1)
22.3 %
Our effective tax rate is affected by recurring factors, such as statutory tax rates in the jurisdictions in which we operate
and the relative amounts of taxable income we earn in those jurisdictions. It is also affected by discrete items that may occur in
any given year, but may not be consistent from year to year.
Our effective tax rate was 21.8% in 2023, compared with 22.1% and 22.3% in 2022 and 2021, respectively, primarily due
to the effects of the aforementioned recurring factors and the following discrete tax items.
121
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2023 Discrete Items
We recorded pre-tax Transformation strategy costs of $435 million. As a result, we recorded an additional income tax
benefit of $102 million. This income tax benefit was generated at a higher average tax rate than the 2023 U.S. federal statutory
tax rate due to the effect of U.S. state and local and foreign taxes.
We recognized an income tax benefit of $85 million related to pre-tax defined benefit pension and postretirement medical
benefit plan losses of $359 million. This income tax benefit was generated at a higher average tax rate than the 2023 U.S.
federal statutory tax rate because it included the effect of U.S. state and local and foreign taxes.
We recorded goodwill and indefinite-lived intangible asset impairment charges of $236 million. As a result, we recorded
an additional income tax benefit of $43 million. This income tax benefit was generated at a lower average tax rate than the 2023
U.S. federal statutory tax rate due to certain impairment charges not being deductible for tax purposes.
We recorded a pre-tax expense of $61 million in connection with a one-time compensation payment made during the year.
As a result, we recorded an additional income tax benefit of $15 million. This income tax benefit was generated at a higher
average tax rate than the 2023 U.S. federal statutory tax rate due to the effect of U.S. state and local taxes.
The recognition of excess tax benefits and deficiencies related to share-based compensation in income tax expense did not
impact our effective tax rate for the year ended December 31, 2023.
2022 Discrete Items
We recognized an income tax expense of $255 million related to pre-tax defined benefit pension and postretirement
medical plan gains of $1.1 billion. This income tax expense was generated at a higher average tax rate than the 2022 U.S.
federal statutory tax rate because it included the effect of U.S. state and local and foreign taxes.
We recorded pre-tax Transformation strategy costs of $178 million. As a result, we recorded an additional income tax
benefit of $36 million. This income tax benefit was generated at a lower average tax rate than the 2022 U.S. federal statutory
tax rate due to the effect of foreign taxes.
We recorded pre-tax expenses of $505 million in connection with incentive compensation program design changes. As a
result, we recorded an additional income tax benefit of $121 million. This income tax benefit was generated at a higher average
tax rate than the 2022 U.S. federal statutory tax rate due to the effect of U.S. state and local and foreign taxes.
We recorded pre-tax expenses of $76 million as a result of a reduction in estimated residual value for certain aircraft. As a
result, we recorded an additional income tax benefit of $18 million. This income tax benefit was generated at a higher average
tax rate than the 2022 U.S. federal statutory tax rate due to the effect of U.S. state and local taxes.
The recognition of excess tax benefits and deficiencies related to share-based compensation in income tax expense
resulted in a net tax benefit of $95 million and reduced our effective tax rate by 0.6% during the year ended December 31,
2022.
2021 Discrete Items
We recognized an income tax expense of $784 million related to pre-tax defined benefit pension and postretirement
medical plan gains of $3.3 billion. This income tax expense was generated at a higher average tax rate than the 2021 U.S.
federal statutory tax rate because it included the effect of U.S. state and local and foreign taxes.
We recorded pre-tax Transformation strategy costs of $380 million. As a result, we recorded an additional income tax
benefit of $95 million. This income tax benefit was generated at a higher average tax rate than the 2021 U.S. federal statutory
tax rate due to the effect of U.S. state and local and foreign taxes.
We recorded a pre-tax gain of $46 million related to the divestiture of UPS Freight. As a result, we recorded an additional
income tax expense of $11 million. This income tax expense was generated at a higher average tax rate than the 2021 U.S.
federal statutory tax rate due to the effect of U.S. state and local taxes.
The recognition of excess tax benefits and deficiencies related to share-based compensation in income tax expense
resulted in a net tax benefit of $105 million and reduced our effective tax rate by 0.6% during the year ended December 31,
2021.
122
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Items
Beginning in 2012, we were granted a tax incentive for certain of our non-U.S. operations. In 2022, this incentive was
renegotiated and extended through December 31, 2026. The tax incentive is conditional upon our meeting specific employment
and investment thresholds. The impact of this tax incentive decreased non-U.S. tax expense by $15, $47 and $61 million
(increased diluted earnings per share by $0.02, $0.05 and $0.07) for 2023, 2022 and 2021, respectively.
Deferred income tax assets and liabilities are comprised of the following as of December 31, 2023 and 2022 (in millions):
Fixed assets and capitalized software
Operating lease right-of-use assets
Other
Deferred tax liabilities
Pension and postretirement benefits
Loss and credit carryforwards
Insurance reserves
Stock compensation
Accrued employee compensation
Operating lease liabilities
Other
Deferred tax assets
Deferred tax assets valuation allowance
Deferred tax asset (net of valuation allowance)
Net deferred tax asset (liability)
Amounts recognized in our consolidated balance sheets:
Deferred tax assets
Deferred tax liabilities
Net deferred tax asset (liability)
2023
2022
$
(5,974) $
(5,819)
(1,017)
(605)
(7,596)
1,304
232
626
158
354
1,073
322
4,069
(119)
3,950
(893)
(708)
(7,420)
637
242
603
315
304
948
331
3,380
(123)
3,257
$
$
$
(3,646) $
(4,163)
126 $
(3,772)
(3,646) $
139
(4,302)
(4,163)
The valuation allowance decreased by $4 million and increased by $1 and $34 million during the years ended December
31, 2023, 2022 and 2021, respectively.
We have a U.S. federal capital loss carryforward of $200 million as of December 31, 2023, less than $1 million of which
expires on December 31, 2025, $150 million of which expires on December 31, 2026 and the remainder of which expires on
December 31, 2027.
123
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Further, we have U.S. state and local operating loss and credit carryforwards as follows (in millions):
U.S. state and local operating loss carryforwards
U.S. state and local credit carryforwards
2023
2022
$
$
762 $
48 $
653
46
The U.S. state and local operating loss carryforwards and credits can be carried forward for periods ranging from three
years to indefinitely. We also have non-U.S. loss carryforwards of $432 million as of December 31, 2023, the majority of which
may be carried forward indefinitely. As indicated in the table above, we have established a valuation allowance for certain U.S.
federal, state and non-U.S. carryforwards due to the uncertainty resulting from a lack of previous taxable income within the
applicable tax jurisdictions and other limitations.
Undistributed earnings and profits ("E&P") of our foreign subsidiaries amounted to $5.4 billion as of December 31, 2023.
Currently, $493 million of the undistributed E&P of our foreign subsidiaries is considered to be indefinitely reinvested and,
accordingly, no deferred income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends
or otherwise, we would be subject to U.S. state and local taxes and withholding taxes payable in various jurisdictions.
Determination of the amount of unrecognized deferred income tax liability is not practicable because of the complexities
associated with its hypothetical calculation.
In December 2017, the United States enacted into law the Tax Cuts and Jobs Act (the "Tax Act"), requiring a one-time
transition tax on certain unrepatriated earnings of foreign subsidiaries. We elected to pay the tax over eight years based on an
installment schedule outlined in the Tax Act. The remaining liability of $105 million is reflected in current and non-current
liabilities in our consolidated balance sheets based on the timing of payment. This balance will be paid between 2024 and 2026.
Additionally, the Organization for Economic Co-operation and Development ("OECD") has introduced a framework to
implement a global minimum corporate tax of 15%, referred to as Pillar Two or the minimum tax directive. Many aspects of the
minimum tax directive will be effective beginning in 2024, with certain remaining impacts to be effective beginning in 2025.
While it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, certain countries in which we
operate have adopted legislation, and other countries are in the process of introducing legislation, to implement the minimum
tax directive. While we do not currently expect the minimum tax directive to have a material impact on our effective tax rate,
our analysis is ongoing as the OECD continues to release additional guidance and countries implement legislation. To the extent
additional changes take place in the countries in which we operate, it is possible that these legislative changes and efforts may
increase uncertainty and have an adverse impact on our effective tax rates or operations.
124
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the activity related to our uncertain tax positions (in millions):
Balance as of January 1, 2021
Additions for tax positions of the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years for:
Changes based on facts and circumstances
Settlements during the period
Lapses of applicable statute of limitations
Balance as of December 31, 2021
Additions for tax positions of the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years for:
Changes based on facts and circumstances
Settlements during the period
Lapses of applicable statute of limitations
Balance as of December 31, 2022
Additions for tax positions of the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years for:
Changes based on facts and circumstances
Settlements during the period
Lapses of applicable statute of limitations
Balance as of December 31, 2023
Tax
Interest
Penalties
$
333 $
61 $
85
107
(42)
(3)
—
480
56
25
(9)
(10)
(9)
533
26
147
(164)
(47)
(3)
—
23
(4)
(2)
—
78
—
30
(1)
(1)
(2)
104
—
37
(24)
(9)
—
$
492 $
108 $
4
—
—
(2)
—
—
2
—
2
—
—
—
4
—
1
(1)
—
—
4
The total amount of gross uncertain tax positions as of December 31, 2023, 2022, and 2021 that, if recognized, would
affect the effective tax rate was $492, $533, and $479 million, respectively. Our continuing policy is to recognize interest and
penalties associated with income tax matters as a component of income tax expense.
We file income tax returns in the U.S. federal jurisdiction, most U.S. state and local jurisdictions, and many non-U.S.
jurisdictions. We have substantially resolved all U.S. federal income tax matters for tax years prior to 2016.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the
ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the liability for uncertain
tax positions could significantly increase or decrease within the next twelve months. Items that may cause changes to
unrecognized tax benefits include the allowance or disallowance of deductions, the timing of deductions and the allocation of
income and expense between tax jurisdictions. These changes could result from the settlement of ongoing litigation, the
completion of ongoing examinations, the expiration of the statute of limitations, or other unforeseen circumstances. At this
time, an estimate of the range of the reasonably possible change cannot be made.
125
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. EARNINGS PER SHARE
The earnings per share amounts are the same for class A and class B common shares as the holders of each class are
legally entitled to equal per share distributions whether through dividends or in liquidation.
The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share
amounts):
Numerator:
2023
2022
2021
Net income attributable to common shareowners
$
6,708 $
11,548 $
12,890
Denominator:
Weighted-average shares
Deferred compensation obligations
Vested portion of restricted shares
Denominator for basic earnings per share
Effect of Dilutive Securities:
Restricted performance units and contingent shares(1)
Stock options
Denominator for diluted earnings per share
Basic Earnings Per Share
Diluted Earnings Per Share
855
—
4
859
1
—
860
868
—
3
871
3
1
875
$
$
7.81 $
7.80 $
13.26 $
13.20 $
869
—
5
874
3
1
878
14.75
14.68
(1) Contingent shares relate to MIP awards that may be settled in cash or Class A common stock at the employees' election - see note 13.
Diluted earnings per share for the years ended December 31, 2023, 2022 and 2021 exclude the effect of 0.3, 0.1 and
0.1 million shares, respectively, of common stock that may be issued upon the exercise of employee stock options because such
effect would be antidilutive.
126
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
Risk Management Policies
Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations and we actively
monitor these exposures. Where deemed appropriate, to manage the impact of these exposures on earnings and/or cash flows,
we may enter into a variety of derivative financial instruments. We do not hold or issue derivative financial instruments for
trading or speculative purposes.
Credit Risk Management
The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be
unable to meet the terms of the agreements. We seek to minimize such risk exposures for these instruments by limiting the
counterparties to banks and financial institutions that meet established credit guidelines. We may further manage credit risk
through the use of zero threshold bilateral collateral provisions and/or early termination rights utilizing master netting
arrangements, whereby cash is exchanged based on the net fair value of derivatives associated with each counterparty.
As of December 31, 2023 and 2022, we held cash collateral of $103 and $534 million, respectively, under these
agreements. This collateral is included in Cash and cash equivalents in our consolidated balance sheets and is unrestricted. As
of December 31, 2023 we were required to post $13 million with our counterparties. As of December 31, 2022, no collateral
was required to be posted with our counterparties.
Types of Hedges
Commodity Risk Management
Currently, the fuel surcharges that we apply in our domestic and international package businesses are the primary means
of reducing the risk of adverse fuel price changes on our business. In order to mitigate the impact of fuel surcharges imposed on
us by outside carriers, we regularly adjust the rates we charge for our freight brokerage services.
Foreign Currency Risk Management
To protect against the reduction in value of forecasted foreign currency cash flows from our international package
business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to
the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We generally designate and
account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue.
We may also hedge portions of our anticipated cash settlements of principal and interest on certain foreign currency
denominated debt. We generally designate and account for these contracts as cash flow hedges of forecasted foreign currency
denominated transactions.
We hedge our net investment in certain foreign operations with foreign currency denominated debt instruments.
Interest Rate Risk Management
We may use a combination of derivative instruments to manage the fixed and floating interest rate mix of our total debt
portfolio and related overall cost of borrowing.
We generally designate and account for interest rate swaps that convert fixed-rate interest payments into floating-rate
interest payments as fair value hedges of the associated debt instruments. We designate and account for interest rate swaps that
convert floating-rate interest payments into fixed-rate interest payments as cash flow hedges of the forecasted payment
obligations.
We may periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings by
using forward starting interest rate swaps, interest rate locks or similar derivatives.
127
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Outstanding Positions
As of December 31, 2023 and 2022, the notional amounts of our outstanding derivative positions were as follows (in
millions):
Currency hedges:
Euro
British Pound Sterling
Canadian Dollar
Hong Kong Dollar
Interest rate hedges:
Floating to Fixed Interest Rate Swaps
2023
2022
EUR
GBP
CAD
HKD
4,408
663
1,550
1,822
4,115
856
1,598
4,261
USD
—
28
As of December 31, 2023 and 2022, we had no outstanding commodity hedge positions.
Balance Sheet Recognition
The following table indicates the location in our consolidated balance sheets where our derivative assets and liabilities
have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those
derivatives.
We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our
derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in our
consolidated balance sheets. The columns labeled Net Amounts if Right of Offset had been Applied indicate the potential net fair
value positions by type of contract and location in our consolidated balance sheets had we elected to apply the right of offset as
of December 31, 2023 and 2022 (in millions):
Asset Derivatives
Derivatives designated as hedges:
Balance Sheet
Location
Fair Value
Hierarchy
Level
Gross Amounts Presented in
Consolidated Balance Sheets
Net Amounts if Right of Offset
had been Applied
2023
2022
2023
2022
Foreign currency exchange contracts
Other current assets
Level 2
$
95 $
174 $
73 $
Foreign currency exchange contracts
Other non-current assets
Level 2
Derivatives not designated as hedges:
Foreign currency exchange contracts
Other current assets
Level 2
63
—
250
1
19
—
Total Asset Derivatives
$
158 $
425 $
92 $
171
226
1
398
Liability Derivatives
Derivatives designated as hedges:
Balance Sheet
Location
Fair Value
Hierarchy
Level
Gross Amounts Presented in
Consolidated Balance Sheets
Net Amounts if Right of Offset
had been Applied
2023
2022
2023
2022
Foreign currency exchange contracts
Other current liabilities
Level 2
$
26 $
3 $
4 $
Foreign currency exchange contracts
Interest rate contracts
Derivatives not designated as hedges:
Other non-current
liabilities
Other non-current
liabilities
Level 2
Level 2
Foreign currency exchange contracts
Other current liabilities
Level 2
65
—
1
24
5
—
21
—
1
Total Liability Derivatives
$
92 $
32 $
26 $
—
—
5
—
5
128
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our foreign currency exchange rate and interest rate derivatives are largely comprised of over-the-counter derivatives,
which are primarily valued using pricing models that rely on market observable inputs such as yield curves, foreign currency
exchange rates and investment forward prices; therefore, these derivatives are classified as Level 2.
Balance Sheet Location of Hedged Item in Fair Value Hedges
The following table indicates the amounts that were recorded in our consolidated balance sheets related to cumulative
basis adjustments for fair value hedges as of December 31, 2023 and 2022 (in millions):
Line Item in our Consolidated Balance Sheets in
Which the Hedged Item is Included
Carrying Amount of
Hedged Liabilities
Cumulative Amount
of Fair Value Hedge
Adjustments
Carrying Amount of
Hedged Liabilities
Cumulative Amount
of Fair Value Hedge
Adjustments
Long-Term Debt and Finance Leases
$
280 $
4 $
280 $
5
2023
2022
Income Statement and AOCI Recognition of Designated Hedges
The following table indicates the amount of gains and (losses) that have been recognized in the statements of consolidated
income for fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value
hedges for the years ended December 31, 2023 and 2022 (in millions):
Location and Amount of Gain (Loss) Recognized in
Income on Fair Value and Cash Flow Hedging
Relationships
Revenue
Gain or (loss) on fair value hedging relationships:
2023
Interest
Expense
Investment
Income and
Other
Revenue
2022
Interest
Expense
Investment
Income and
Other
Interest Contracts:
Hedged items
$
— $
— $
— $
— $
11 $
Derivatives designated as hedging instruments
—
—
—
—
(11)
—
—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from
accumulated other comprehensive income
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from
accumulated other comprehensive income
Total amounts of income and expense line items
presented in the statement of income in which the
effects of fair value or cash flow hedges are recorded
—
(10)
—
—
(10)
—
213
—
(1)
304
—
(1)
$
213 $
(10) $
(1) $
304 $
(10) $
(1)
The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the years ended
December 31, 2023 and 2022 for those derivatives designated as cash flow hedges (in millions):
Derivative Instruments in Cash Flow Hedging Relationships
2023
2022
Interest rate contracts
Foreign currency exchange contracts
Total
$
$
(1) $
(116)
(117) $
6
529
535
Amount of Gain (Loss) Recognized in AOCI on Derivatives
As of December 31, 2023, there were $62 million of pre-tax gains related to cash flow hedges deferred in AOCI that are
expected to be reclassified to income over the 12-month period ending December 31, 2024. The actual amounts that will be
reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions. The
maximum term over which we are hedging exposures to the variability of cash flows is approximately 3 years.
129
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table indicates the amount of gains and (losses) that have been recognized in AOCI within foreign currency
translation adjustment for the years ended December 31, 2023 and 2022 for those instruments designated as net investment
hedges (in millions):
Non-derivative Instruments in Net Investment Hedging Relationships
2023
2022
Foreign denominated debt
Total
$
$
(119) $
(119) $
199
199
Amount of Gain (Loss) Recognized in AOCI on Debt
Income Statement Recognition of Non-Designated Derivative Instruments
Derivative instruments that are not designated as hedges are recorded at fair value with unrealized gains and losses
reported in earnings each period. Cash flows from the settlement of derivative instruments appear in the statement of
consolidated cash flows within the same categories as the cash flows of the hedged item.
We may periodically terminate interest rate swaps and foreign currency exchange forward contracts or enter into
offsetting swap and foreign currency positions with different counterparties. As part of this process, we de-designate our
original hedge relationship.
Amounts recorded in the statements of consolidated income related to fair value changes and settlements of interest rate
swaps and foreign currency forward contracts not designated as hedges for the years ended December 31, 2023 and 2022 (in
millions) were as follows:
Derivative Instruments Not Designated in
Hedging Relationships
Location of Gain
(Loss) Recognized
in Income
Amount of Gain (Loss) Recognized in Income
2023
2022
Foreign currency exchange contracts
Investment income and other $
Total
$
(7) $
(7) $
(69)
(69)
130
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18. TRANSFORMATION STRATEGY COSTS
We are undertaking an enterprise-wide transformation of our organization that includes initiatives, as well as changes in
processes and technology, that impact global direct and indirect operating costs. During the fourth quarter of 2023, we
implemented our "fit to serve" initiative, which is intended to right-size our business for the future through a workforce
reduction of approximately 12,000 positions and create a more efficient operating model to enhance responsiveness to changing
market dynamics.
As of December 31, 2023, we recorded an accrual for separation costs, primarily related to U.S. separations, of
$205 million in our consolidated balance sheet, all of which we expect to pay in 2024. We expect to incur additional expense
for U.S. and international separations during 2024.
The table below presents Transformation strategy costs for the years ended December 31, 2023, 2022 and 2021 (in
millions):
Compensation and benefits
Total other expenses
Total Transformation Strategy Costs
Income Tax Benefit from Transformation Strategy Costs
After-Tax Transformation Strategy Costs
2023
2022
2021
$
$
$
337 $
98
435 $
(102)
333 $
46 $
132
178 $
(36)
142 $
206
174
380
(95)
285
The income tax effects of Transformation strategy costs are calculated by multiplying the amount of the adjustments by
the statutory tax rates applicable in each tax jurisdiction.
131
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, management, including our Principal Executive Officer and Principal
Financial and Accounting Officer, evaluated the effectiveness of the design and operation of our disclosure controls and
procedures. Based upon, and as of the date of, the evaluation, our Principal Executive Officer and Principal Financial and
Accounting Officer concluded that the disclosure controls and procedures were effective to ensure that information required to
be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and
when required and is accumulated and communicated to our management, including our Principal Executive Officer and
Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2023 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We continue
to monitor and assess the effects of remote and hybrid work on our internal controls to minimize the impact on their design and
operating effectiveness.
Management’s Report on Internal Control Over Financial Reporting
UPS management is responsible for establishing and maintaining adequate internal control over financial reporting for
United Parcel Service, Inc. and its subsidiaries (the "Company"). Based on the criteria for effective internal control over
financial reporting established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, management has assessed our internal control over financial reporting as effective
as of December 31, 2023. The independent registered public accounting firm of Deloitte & Touche LLP, as auditors of the
consolidated balance sheets of United Parcel Service, Inc. and its subsidiaries as of December 31, 2023 and the related
statements of consolidated income, consolidated comprehensive income and consolidated cash flows for the year ended
December 31, 2023, has issued an attestation report on our internal control over financial reporting, which is included herein.
132
Report of Independent Registered Public Accounting Firm
To the Shareowners and Board of Directors of
United Parcel Service, Inc.
Atlanta, Georgia
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of United Parcel Service, Inc. and subsidiaries (the
"Company") as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) ("PCAOB"), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and
our report dated February 20, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 20, 2024
133
Item 9B.
Other Information
Insider Trading Arrangements and Policies
None.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
134
Item 10. Directors, Executive Officers and Corporate Governance
Information about our Executive Officers
PART III
Name and Office
Carol B.Tomé
Chief Executive Officer
Norman M. Brothers, Jr.
Executive Vice President; Chief Legal and Compliance Officer
and Corporate Secretary
Nando Cesarone
Executive Vice President; President, U.S.
Darrell Ford
Executive Vice President; Chief Human Resources Officer and
Chief Diversity, Equity and Inclusion Officer
Matt Guffey
Executive Vice President; Chief Commercial and Strategy Officer
Kate M. Gutmann
Executive Vice President; President International, Healthcare and
Supply Chain Solutions
Laura Lane
Executive Vice President; Chief Corporate Affairs,
Communications and Sustainability Officer
Brian Newman
Executive Vice President; Chief Financial Officer
Bala Subramanian
Executive Vice President; Chief Digital and Technology Officer
Principal Occupation and Employment For the Last
Five Years
Age
67 Chief Executive Officer (2020 - present), Chief Financial
Officer, The Home Depot, Inc. (2001 - 2019).
56 Chief Legal and Compliance Officer and Corporate
Secretary (2020 - present), Senior Vice President, General
Counsel and Corporate Secretary (2016 - 2020).
52 President, U.S. (2020 - present), President, UPS
International (2018 - 2020), Europe Region Manager
(2016 - 2018).
59 Chief Human Resources Officer and Chief Diversity,
Equity and Inclusion Officer (2022 - present), Chief
Human Resources Officer (2021 - 2022), Chief Human
Resources Officer, DuPont (2018 - 2020), Chief Human
Resources Officer, Xerox Corporation (2015 - 2018).
45 Chief Commercial and Strategy Officer (present), Senior
Vice President, Global Strategy (2020 - 2023), President,
Corporate Strategy (2020), Marketing Department
Manager (2019 - 2020), Product Management Senior
Director (2018).
55 President International, Healthcare and Supply Chain
Solutions (2022 - present), Chief Sales and Solutions
Officer, Executive Vice President, UPS Global Healthcare
(2020 - 2022), Chief Sales and Solutions Officer; Senior
Vice President The UPS Store and UPS Capital (2017 -
2019).
57 Chief Corporate Affairs, Communications and
Sustainability Officer (2020 - present), Chief Corporate
Affairs and Communications Officer (August 2020 -
October 2020), President, Global Public Affairs (2011 -
2020).
55 Chief Financial Officer (2021 - present), Chief Financial
Officer and Treasurer (2019 - 2021), Executive Vice
President, Finance and Operations, Latin America,
PepsiCo, Inc. (2017 - 2019).
52 Chief Digital and Technology Officer (2022 - present),
Chief Digital Officer, AT&T Inc. (2018 - 2022), Chief
Digital Officer, Best Buy Co., Inc. (2017 - 2018).
135
Information about our directors will be presented under the caption "Our Board of Directors" in our definitive proxy
statement for our meeting of shareowners to be held on May 2, 2024 (the "Proxy Statement") and is incorporated herein by
reference.
Information about our Audit Committee will be presented under the caption "Our Board of Directors - Committees of the
Board of Directors" and "Audit Committee Matters" in our Proxy Statement and is incorporated herein by reference.
Information about our Code of Business Conduct is presented under the caption "Where You Can Find More Information"
in Part I, Item 1 of this report.
Information with respect to compliance with Section 16(a) of the Exchange Act will be presented under the caption
"Ownership of Our Securities - Delinquent Section 16(a) Reports" in our Proxy Statement and is incorporated herein by
reference.
Item 11. Executive Compensation
Information about our board and executive compensation will be presented under the captions "Our Board of Directors -
Director Compensation" and "Executive Compensation" in our Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information about security ownership will be presented under the caption "Ownership of Our Securities - Securities
Ownership of Certain Beneficial Owners and Management" in our Proxy Statement and is incorporated herein by reference.
Information about our equity compensation plans will be presented under the caption "Executive Compensation - Equity
Compensation Plans" in our Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information about transactions with related persons will be presented under the caption "Corporate Governance - Conflicts
of Interest and Related Person Transactions" in our Proxy Statement and is incorporated herein by reference.
Information about director independence will be presented under the caption "Our Board of Directors - Director
Independence" in our Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information about aggregate fees billed to us by our principal accountant will be presented under the caption "Audit
Committee Matters - Principal Accounting Firm Fees" in our Proxy Statement and is incorporated herein by reference.
136
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as a part of this report:
1. Financial Statements.
See Item 8 for the financial statements filed with this report.
2. Financial Statement Schedules.
None.
3. Exhibits.
See the Exhibit Index below for a list of the exhibits incorporated by reference into or filed with this report.
(b) Exhibits Required To Be Filed
See Item 15(a) 3 above.
(c) Financial Statement Schedules Required To Be Filed
See Item 15(a) 2 above.
Item 16. Form 10-K Summary
None.
137
Exhibit No.
Description
EXHIBIT INDEX
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
— Restated Certificate of Incorporation of United Parcel Service, Inc. (incorporated by reference to Exhibit 3.3 to
Form 8-K filed on May 12, 2010).
— Amended and Restated Bylaws of United Parcel Service, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-
K, filed on May 9, 2023).
— Indenture dated as of December 18, 1997 (incorporated by reference to Exhibit T-3C to Form T-3 (No.
022-22295), filed on December 18, 1997) (1).
— Indenture dated as of January 26, 1999 (incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No.
1 to Form S-3 (No. 333-08369), filed on January 26, 1999) (1).
— Form of First Supplemental Indenture to Indenture dated as of January 26, 1999 (incorporated by reference to
Exhibit 4.2 to Post-Effective Amendment No. 1 to Form S-3 (No. 333-08369-01), filed on March 15, 2000).
— Second Supplemental Indenture dated as of September 21, 2001 to Indenture dated as of January 26, 1999
(incorporated by reference to Exhibit 4 to Form 10-Q for the quarter ended September 30, 2001).
— Indenture dated as of August 26, 2003 (incorporated by reference to Exhibit 4.1 to Form S-3 (No. 333-108272),
filed on August 27, 2003).
— First Supplemental Indenture dated as of November 15, 2013 to Indenture dated as of August 26, 2003
(incorporated by reference to Exhibit 4.2 to Form S-3ASR (No. 333-192369), filed on November 15, 2013).
— Second Supplemental Indenture dated as of May 18, 2017 (incorporated by reference to Exhibit 4.1 to Form 8-K,
filed on May 18, 2017).
— Indenture dated as of September 30, 2022, between UPS and U.S. Bank Trust Company, National Association, as
Trustee (incorporated by reference to Exhibit 4.4 to Form S-3 (File No.333-267664), filed on September 30, 2022).
— Indenture dated as of September 30, 2022, between UPS and Truist Bank, as Trustee (incorporated by reference to
Exhibit 4.5 to Form S-3 (File No.333-267664), filed on September 30, 2022).
— Form of 6.20% Senior Notes due January 15, 2038 (incorporated by reference to Exhibit 4.3 to Form 8-K, filed on
January 15, 2008).
— Form of 4.875% Senior Notes due November 15, 2040 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed
on November 12, 2010).
— Form of 3.625% Senior Notes due October 1, 2042 (incorporated by reference to Exhibit 4.3 to Form 8-K, filed on
September 27, 2012).
— Form of Floating Rate Senior Notes due December 15, 2064 (incorporated by reference to Exhibit 4.1 to Form 8-K,
filed on December 15, 2014).
— Form of Floating Rate Senior Notes due September 15, 2065 (incorporated by reference to Exhibit 4.1 to Form 8-
K, filed on September 17, 2015).
— Form of 1.625% Senior Notes due November 15, 2025 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed
on November 20, 2015).
— Form of Floating Rate Senior Notes due March 15, 2066 (incorporated by reference to Exhibit 4.1 to Form 8-K,
filed on April 1, 2016).
— Form of 2.40% Senior Notes Due November 2026 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on
October 25, 2016).
— Form of 3.40% Senior Notes Due November 2046 (incorporated by reference to Exhibit 4.3 to Form 8-K, filed on
October 25, 2016).
— Form of 1.00% Senior Notes Due November 2028 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on
October 25, 2016).
— Form of Floating Rate Senior Notes due March 15, 2067 (incorporated by reference to Exhibit 4.1 to Form 8-K,
filed on March 31, 2017).
— Form of 2.125% Senior Notes due May 21, 2024 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on
May 18, 2017).
138
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
10.1
— Form of 4.875% Senior Notes due 2033 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on February
27, 2023).
— Form of 1.500% Senior Notes due November 15, 2032 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed
on November 13, 2017).
— Form of 5.050% Notes due 2053 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on February 27,
2023).
— Form of Floating Rate Senior Notes due 2073 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on
March 7, 2023).
— Form of 2.800% Senior Notes due November 15, 2024 (incorporated by reference to Exhibit 4.5 to Form 8-K, filed
on November 14, 2017).
— Form of 3.050% Senior Notes due November 15, 2027 (incorporated by reference to Exhibit 4.6 to Form 8-K, filed
on November 14, 2017).
— Form of 3.750% Senior Notes due November 15, 2047 (incorporated by reference to Exhibit 4.7 to Form 8-K, filed
on November 14, 2017).
— Form of Floating Rate Senior Notes due November 15, 2067 (incorporated by reference to Exhibit 4.8 to Form 8-
K, filed on November 14, 2017).
— Form of 3.400% Senior Notes due March 15, 2029 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on
March 15, 2019).
— Form of 4.250% Senior Notes due March 15, 2049 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on
March 15, 2019).
— Form of 2.200% Senior Notes due September 1, 2024 (incorporated by reference to Exhibit 4.1 to Form 8-K filed
on August 16, 2019).
— Form of 2.500% Senior Notes due September 1, 2029 (incorporated by reference to Exhibit 4.2 to Form 8-K filed
on August 16, 2019).
— Form of 3.400% Senior Notes due September 1, 2049 (incorporated by reference to Exhibit 4.3 to Form 8-K filed
on August 16, 2019).
— Form of 3.900% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on March 25,
2020).
— Form of 4.450% Senior Notes due 2030 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on March 25,
2020).
— Form of 5.200% Senior Notes due 2040 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on March 25,
2020).
— Form of 5.300% Senior Notes due 2050 (incorporated by reference to Exhibit 4.4 to Form 8-K filed on March 25,
2020).
— Description of Securities.
— UPS Retirement Plan Amendment and Restatement Effective January 1, 2014 (incorporated by reference to Exhibit
10.1 to Form 10-K for the year ended December 31, 2014).*
10.1(a)
— Amendment No. 1 to UPS Retirement Plan, as Amended and Restated, effective as of June 30, 2016 (incorporated
by reference to Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2016).*
10.1(b)
— Amendment Four to the Amended and Restated UPS Retirement Plan effective June 23, 2017 (incorporated by
reference to Exhibit 10.2 to Form 8-K, filed on June 27, 2017).*
10.2
10.3
10.4
— Amended and Restated UPS 401(k) Savings Plan, effective as of January 1, 2023 (incorporated by reference to
Exhibit 10.2 to Form 10-K for the year ended December 31, 2022).*
— Amended and Restated Restoration Savings Plan, effective as of January 1, 2023 (incorporated by reference to
Exhibit 10.3 to Form 10-K for the year ended December 31, 2022).*
— Amendment One to the Amended and Restated UPS Excess Coordinating Benefit Plan effective June 23, 2017
(incorporated by reference to Exhibit 10.4 to Form 8-K, filed on June 27, 2017).*
10.4(a)
— UPS Excess Coordinating Benefit Plan, as Amended and Restated, effective as of January 1, 2012 (incorporated by
reference to Exhibit 10.5 to Form 10-K for the year ended December 31, 2012).*
139
10.5
— United Parcel Service, Inc. 2012 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to
the Definitive Proxy Statement, filed on March 12, 2012).*
10.5(a)
— Form of Non-Employee Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).*
10.5(b)
— UPS Stock Option Program Terms and Conditions effective as of January 1, 2012 (incorporated by reference to
Exhibit 10.7(4) to the Form 10-K for the year ended December 31, 2011).*
10.6
— Form of UPS Deferred Compensation Plan as Amended and Restated effective January 1, 2012 (incorporated by
reference to Exhibit 10.6 to Form 10-K for the year ended December 31, 2018).*
10.6(a)
— Amendment No. 1 to Amended and Restated UPS Deferred Compensation Plan (incorporated by reference to
Exhibit 10.7(1) to the Form 10-K for the year ended December 31, 2012).*
10.7
10.8
10.9
— 2015 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to the Definitive Proxy
Statement filed on March 24, 2015).*
— 2018 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to the Definitive Proxy
Statement filed on March 16, 2018).*
— UPS Stock Option Program Amended and Restated Terms and Conditions effective November 8, 2018
(incorporated by reference to Exhibit 10.8(b) to Form 10-K for the year ended December 31, 2018).*
10.10
— Protective Covenant Agreement between the Company and Brian Newman, dated August 7, 2019 (incorporated by
reference to Exhibit 10.2 to Form 8-K filed on August 13, 2019).*
10.11
— UPS Long-Term Incentive Performance Program Amended and Restated Terms and Conditions effective as of
February 13, 2020 (incorporated by reference to Exhibit 10.16 to Form 10-K for the year ended December 31,
2019).*
10.12
— Protective Covenant Agreement between UPS and Carol Tomé, dated March 11, 2020 (incorporated by reference
to Exhibit 10.2 to Form 8-K filed on March 13, 2020).*
10.13
— Form of Protective Covenant Agreement between UPS and each of Nando Cesarone and Kate Gutmann
(incorporated by reference to Exhibit 10.19 to Form 10-K for the year ended December 31, 2020).*
10.14
— Retention Arrangement Letter between UPS and Nando Cesarone, dated April 15, 2020 (incorporated by reference
to Exhibit 10.20 to Form 10-K for the year ended December 31, 2020).*
10.15
— Employment offer letter agreement between UPS and Bala Subramanian, dated May 24, 2022 (incorporated by
reference to Exhibit 10.17 to Form 10-K for the year ended December 31, 2022).*
10.16
— Protective Covenant Agreement between UPS and Bala Subramanian, dated May 24, 2022 (incorporated by
reference to Exhibit 10.18 to Form 10-K for the year ended December 31, 2022).*
10.17
— United Parcel Service, Inc. Key Employee Severance Plan (incorporated by reference to Exhibit 10.1 to Form 8-K,
filed on May 10, 2022).*
10.18
— UPS Management Incentive Program Amended and Restated Terms and Conditions effective November 3, 2022
(incorporated by reference to Exhibit 10.20 to Form 10-K for the year ended December 31, 2022).*
10.19
— UPS Management Incentive Program Amended and Restated Terms and Conditions effective January 1, 2023
(incorporated by reference to Exhibit 10.21 to Form 10-K for the year ended December 31, 2022).*
10.20
— Retention Arrangement Letter between UPS and Kate Gutmann, dated April 15, 2020 (incorporated by reference to
Exhibit 10.21 to Form 10-K for the year ended December 31, 2020).*
10.21
— UPS Long-Term Incentive Performance Program Amended and Restated Terms and Conditions effective as of
March 25, 2021 (incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2021).*
10.22
— United Parcel Service, Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to
the definitive proxy statement on Schedule 14A filed March 29, 2021).*
10.23
21
23
31.1
— UPS Long-Term Incentive Performance Program Amended and Restated Terms and Conditions, effective as of
March 22, 2023 (incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2023).*
— Subsidiaries.
— Consent of Deloitte & Touche LLP.
— Certification of the Principal Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
140
31.2
32.1
32.2
97
101
104
— Certification of the Principal Financial and Accounting Officer Pursuant to Rule 13a-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
— Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
—
Certification of the Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
— UPS Incentive-Based Compensation Clawback Policy.
—
The following financial information from the Annual Report on Form 10-K for the year ended December 31, 2023,
formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the
Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
—
Cover Page Interactive Data File - The cover page from this Annual Report on Form 10-K for the year ended
December 31, 2023 is formatted in iXBRL (included as Exhibit 101).
__________________________
(1)
*
Filed in paper format.
Management contract or compensatory plan or arrangement.
141
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, United Parcel Service, Inc. has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
UNITED PARCEL SERVICE, INC.
(REGISTRANT)
By:
/S/ CAROL B. TOMÉ
Carol B. Tomé
Chief Executive Officer (Principal Executive Officer)
Date: February 20, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
/S/ CAROL B. TOMÉ
Carol B. Tomé
/S/ BRIAN O. NEWMAN
Brian O. Newman
/S/ RODNEY C. ADKINS
Rodney C. Adkins
/S/ EVA C. BORATTO
Eva C. Boratto
/S/ MICHAEL J. BURNS
Michael J. Burns
/S/ WAYNE M. HEWETT
Wayne M. Hewett
/S/ ANGELA HWANG
Angela Hwang
/S/ KATE E. JOHNSON
Kate E. Johnson
/S/ WILLIAM R. JOHNSON
William R. Johnson
/S/ FRANCK J. MOISON
Franck J. Moison
/S/ CHRISTIANA SMITH SHI
Christiana Smith Shi
/S/ RUSSELL STOKES
Russell Stokes
/S/ KEVIN M. WARSH
Kevin M. Warsh
Date
February 20, 2024
Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
February 20, 2024
(Principal Financial and Accounting Officer)
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
142
Reconciliation of Non-GAAP Financial Measures
(amounts in millions, except per share amounts)
Reported / GAAP
One-time compensation
Goodwill & asset impairment charges
Incentive compensation program redesign
Long-lived asset estimated residual
value changes
Transformation & other
Adjusted
Cash flows from operating activities (GAAP)
Capital expenditures
Proceeds from disposals of property,
plant and equipment
Other investing activities
Free Cash Flow (Non-GAAP)
Net Income
Add back (deduct):
Income tax expense
Interest expense
Other pension (income) expense
Investment (income) expense and other
Operating profit
Incentive compensation program redesign
Long-lived asset estimated residual
value changes
One-time compensation
Goodwill & asset impairment charges
Transformation and other
Adjusted operating profit
Operating Profit
2023
$ 9,141
61
236
–
2022
$13,094
–
–
505
–
435
$ 9,873
76
178
$13,853
Reconciliation of Free
Cash Flow (Non-GAAP
measure)
2023
$ 10,238
(5,158)
2022
$14,104
(4,769)
193
(19)
$ 5,254
12
(309)
$ 9,038
Reconciliation of
Adjusted Return
on Invested Capital
(Non-GAAP measure)
2022
$11,548
2023
$ 6,708
1,865
785
95
(312)
9,141
–
3,277
704
(2,251)
(184)
13,094
505
–
61
236
435
$ 9,873
76
-
-
178
$13,853
Reported / GAAP
One-time compensation
Goodwill & asset impairment charges
Incentive compensation program redesign
Long-lived asset estimated residual
value changes
Transformation & other
Adjusted
Operating Margin
2022
2023
13.0%
10.0%
0.0%
0.1%
0.0
0.3
0.5
0.0
0.0%
0.5%
10.9%
0.1%
0.2%
13.8%
Net income
Add back:
Income tax expense
Interest expense
Depreciation & amortization
EBITDA
Add back (deduct):
Incentive compensation program redesign
One-time compensation
Goodwill and asset impairment charges
Transformation and other
Defined benefit plan (gains) and losses
Investment income and other
pension income
Adjusted EBITDA
Reconciliation of
Adjusted Debt to
Adjusted EBITDA
(Non-GAAP measure)
2022
$ 11,548
2023
$ 6,708
1,865
785
3,366
3,277
704
3,188
12,724
18,717
–
61
236
435
(359)
505
–
–
178
(1,061)
(576)
$ 13,239
(1,374)
$ 16,965
Average debt and finance leases, including
current maturities
Average pension and postretirement
benefit obligations
Average shareowners’ equity
Average invested capital
20,963
20,789
5,483
18,558
$ 45,004
6,427
17,036
$44,252
Net income to average invested capital
14.9%
26.1%
Debt and finance leases, including
current maturities
Add back:
Non-current pension and postretirement
benefit obligations
Adjusted total debt
$ 22,264
$ 19,662
6,159
$ 28,423
4,807
$ 24,469
Adjusted total debt/Net Income
4.24
2.12
Adjusted Return on Invested Capital
(Non-GAAP)
21.9%
31.3%
Adjusted total debt/adjusted EBITDA
(Non-GAAP)
2.15
1.44
Note: The adjustments denoted in the tables above are further described in our annual reports on Form 10-K for the years ended December 31, 2023 and 2022.
Note: We supplement the reporting of our financial information determined under generally accepted accounting principles in the United States (“GAAP”) with certain
non-GAAP financial measures.
Adjusted financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our adjusted
financial measures do not represent a comprehensive basis of accounting and therefore may not be comparable to similarly titled measures reported by other
companies.
A-1
I N V E S T O R I N FO R M A T I O N
A N N U A L M E E T I N G
Our annual meeting of shareowners will be held
virtually at 8 a.m. on May 2, 2024 at www.
virtualshareholdermeeting.com/UPS2024. Shareowners
of record as of March 5, 2024 are entitled to vote at the
meeting.
G O PA P E R L E S S
Go paperless and sign up for e-delivery of your UPS
Proxy materials. To sign up, go to icsdelivery.com/ups
and select electronic delivery of proxy materials.
I N V E S T O R R E L A T I O N S
You can contact our Investor Relations Department at:
UPS
55 Glenlake Parkway, NE
Atlanta, GA 30328-3474
800.877.1503 or 404.828.6059
investors.ups.com
E X C H A N G E L I S T I N G
Our Class B common stock is listed on the New York
Stock Exchange under the symbol “UPS.”
T R A N S F E R A G E N T A N D R E G I S T R A R
Computershare
Send notices of address changes or questions regarding
account status, stock transfer, lost certificates, or
dividend payments to:
Regular Mail
UPS
c/o Computershare
P.O. Box 43084
Providence, RI 02940-3084
or:
Expedited Delivery
UPS
c/o Computershare
150 Royall St., Suite 101
Canton, MA 02021
F O R M 1 0-K
Our Annual Report on Form 10-K for the year ended
December 31, 2023 forms part of the UPS 2023 Annual
Report. If you would like an additional copy of our Form
10-K, you can access it through the Investor Relations
website at investors.ups.com or at the Securities and
Exchange Commission website, sec.gov. The Form 10-K
also is available free of charge by calling, contacting
via the website or writing to the Investor Relations
Department.
U P S S H A R E O W N E R S E R V I C E S
Convenient access 24 hours a day, seven days a week.
Class A Common Shareowners
www.computershare.com/ups
888.663.8325
Class B Common Shareowners
www.computershare.com/ups
800.758.4674
Calls from outside the United States: 201.680.6612
TDD for hearing impaired: 800.231.5469
TDD for non-U.S. shareowners: 201.680.6610
D I R E C T S T O C K P U R C H A S E P L A N
To make an initial purchase of UPS Class B Common
Stock online, visit www.computershare.com/Investor
and click “Make a Purchase” in the upper right, next to
the Help button. Follow the instructions provided to get
started, select a company to invest in and access the
Enrollment Wizard.
Current Class B shareowners can enroll in the plan
online by accessing their accounts through
www.computershare.com/ups or by calling 800.758.4674.
D I V I D E N D R E I N V E S T M E N T P L A N
To reinvest dividends in additional UPS shares:
Class A and B Shareowners
www.computershare.com/ups
O N L I N E A C C E S S T O S H A R E O W N E R
A C C O U N T M A T E R I A L S
Enroll in E-Communications, a self-service program
that provides electronic notification and secure access
to shareowner communications. To enroll, access
your account at www.computershare.com/ups. After
accessing your account, click the “What would you like
to do” dropdown menu in the upper left of the page.
Under “Holdings” click “Manage My Stock,” select “My
Profile,” click “Update” under “E-Communications” and
follow the enrollment instructions.
U P S W E B S I T E S
Investor Relations . . . . . . . . investors.ups.com
UPS Corporate . . . . . . . . . .ups.com
Sustainability/
Corporate Responsibility . . . about.ups.com