<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
UNITED PARCEL SERVICE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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[LOGO OF UPS APPEARS HERE]
55 Glenlake Parkway, NE, Atlanta, Georgia 30328
Notice of Annual Meeting of Shareowners
May 12, 2000
To our Shareowners:
The Annual Meeting of Shareowners of United Parcel Service, Inc., a Delaware
corporation, will be held at the Hotel du Pont, 11th and Market Streets,
Wilmington, Delaware 19801, on May 12, 2000, at 9:00 a.m., for the following
purposes:
1. To elect a Board of Directors to serve until the next annual meeting of
shareowners;
2. To ratify the appointment of Deloitte & Touche LLP, independent auditors,
as our auditors for the year ending December 31, 2000;
3. To amend our Restated Certificate of Incorporation to modify the
definition of a "permitted transferee" as it applies to lending
institutions; and
4. To transact such other business as may properly come before the meeting.
Our Board of Directors has fixed the close of business on March 15, 2000 as
the record date for determining holders of our common stock entitled to notice
of and to vote at the meeting.
/s/ Joseph R. Moderow
Joseph R. Moderow
Secretary
Atlanta, Georgia
March 27, 2000
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING, KINDLY SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED REPLY
ENVELOPE.
CLASS A SHAREOWNERS--PLEASE BE AWARE THAT FIRST UNION NATIONAL BANK DOES
-------------------
NOT HAVE AUTHORITY TO VOTE YOUR SHARES ON YOUR BEHALF. IN ORDER FOR YOUR
SHARES TO BE VOTED YOU MUST SIGN AND RETURN THE ENCLOSED PROXY.
<PAGE>
[LOGO OF UNITED PARCEL SERVICE APPEARS HERE]
55 Glenlake Parkway, NE, Atlanta, Georgia 30328
March 27, 2000
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of United
Parcel Service, Inc. in connection with the Annual Meeting of Shareowners to
be held on May 12, 2000 and is being mailed with this proxy statement to our
shareowners on or about March 27, 2000. You have the right to revoke your
proxy at any time before it is voted by giving written notice of revocation to
our Secretary, by submitting a subsequent proxy or by voting in person at the
meeting.
In this Proxy Statement, the terms "we" and "us" include both United Parcel
Service, Inc. and United Parcel Service of America, Inc. In October 1999, the
shareowners of United Parcel Service of America, Inc. approved the merger of
that company with a subsidiary of United Parcel Service, Inc. As a result of
the merger, which was completed in November 1999, United Parcel Service of
America, Inc. became a wholly owned subsidiary of United Parcel Service, Inc.
We had 1,032,964,620 shares of our class A common stock (which includes our
class A-1, class A-2 and class A-3 common stock) and 109,400,000 shares of our
class B common stock outstanding and entitled to vote at the close of business
on March 15, 2000. Holders of class A common stock are entitled to ten votes
per share and holders of class B common stock are entitled to one vote per
share on all matters voted on by shareowners. However, the voting rights of
any shareowner or shareowners as a group, other than any of our employee
benefit plans, that beneficially own more than 25% of our voting power are
limited so that such 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. The shares of class A and class B common stock are our only securities
entitled to be voted at our Annual Meeting of Shareowners. Only shareowners of
record at the close of business on March 15, 2000 will be entitled to vote at
the Annual Meeting. In accordance with Delaware law, a list of shareowners
entitled to vote at the meeting will be available at the place of the Annual
Meeting on May 12, 2000 and at The Corporation Trust Company, 1209 Orange
Street, Wilmington, Delaware 19801, for 10 days prior to the meeting, between
the hours of 9:00 a.m. and 5:00 p.m.
Our Bylaws provide that at any meeting of shareowners, the holders of a
majority of our issued and outstanding common stock present in person or by
proxy constitute a quorum for the transaction of business. The election of
directors will be decided by a plurality of the votes cast, in person or by
proxy, at the Annual Meeting. Accordingly, abstentions and broker non-votes
will not affect the outcome of the election of directors. A broker non-vote
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power for that proposal and has not received voting instructions from the
beneficial owner. The ratification of the appointment of Deloitte & Touche LLP
as independent auditors requires the affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote thereon. An
abstention will be counted as a vote against the ratification of Deloitte &
Touche LLP as independent auditors. With respect to broker non-votes, the
shares will be considered present at the meeting for quorum purposes. The
approval of the amendment to our Restated Certificate of Incorporation
requires the affirmative vote of a majority of the outstanding shares entitled
to vote thereon. Accordingly, both abstentions and broker non-votes will have
the effect of a vote against the adoption of the amendment to our Restated
Certificate of Incorporation. No cumulative rights are authorized and
dissenters' rights are not applicable to the matters being voted upon.
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
All shares of stock represented by properly executed proxies received in
response to this solicitation will be voted for the election of the directors
as specified in the proxy by the shareowners. Unless otherwise specified in the
proxy, it is the intention of the persons named on the enclosed proxy card to
vote FOR the election of the following persons as directors. If elected, they
will serve until the next annual meeting and until the election and
qualification of their successors. All directors are elected annually.
Nominees
A Board of 13 directors will be elected at the Annual Meeting. All of the
current directors have been nominated for re-election, except that John W.
Rogers has declined to stand for re-election. John W. Alden announced his
retirement from the Board in August 1999, which took effect in February 2000.
Set forth below is biographical information concerning each of the nominees
for election as a director.
[Photo of
William H. Brown, III William H. Brown, III Age 72 Director
appears here] since 1983
Senior Counsel to the law firm of Schnader Harrison
Segal & Lewis LLP in Philadelphia, Pennsylvania
Bill received a bachelor's degree from Temple University
in 1952 and graduated from the University of
Pennsylvania School of Law in 1955. From 1955 to 1968,
Bill practiced in a small law firm from which four of
seven partners became federal judges, and three others
became state judges. In 1968, he became a Deputy
District Attorney in Philadelphia. Bill was appointed to
the U.S. Equal Employment Opportunity Commission by
President Johnson in 1968 and was selected as its
Chairman by President Nixon in 1969. While with the
EEOC, he won nationwide attention for his work in
negotiating a consent decree in the EEOC complaint
against AT&T. Bill joined his current firm after leaving
his EEOC post in 1973. Since then, his broad experience
in litigation and other matters includes handling a
number of legal matters on behalf of UPS.
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[Photo of
Robert J. Clanin Robert J. Clanin Age 56 Director
appears here] since 1996
UPS Senior Vice President, Treasurer and Chief Financial
Officer
Bob joined UPS in 1971 as a part-time accounting clerk
in the Metro Chicago District. Two years later he was
promoted to Accounting Manager. In 1979 he was named
Wisconsin District Controller and worked in Corporate
Finance and Accounting before accepting the position of
Southwest Region Controller in 1987. Bob returned to
corporate in 1989 as Treasury Manager and then Finance
Manager prior to assuming responsibilities for his
current position in 1994. Bob received a bachelor's
degree from Bradley University in Business
Administration. Bob is also a director of the Georgia
Council on Economic Education and Overseas Partners Ltd.
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[Photo of
Michael L. Eskew Michael L. Eskew Age 50 Director
appears here] UPS Executive Vice President since 1998
Mike joined UPS in 1972, after he received a Bachelor of
Science Degree in Industrial Engineering from Purdue
University. He attended graduate school at Butler
University and completed the Advanced Management Program
at the Wharton School of the University of Pennsylvania.
Mike was responsible for all industrial engineering
activities in Germany when the Company began its
international expansion into Germany. In 1982, he was
named Industrial Engineering ("I.E.") Manager of our
Northwest Region. He was in charge of I.E. for the Air
Group from 1984 to 1991. Mike was a District Manager in
the Central Jersey District from 1991 to 1993, and was
promoted to Corporate I.E. Manager in 1993. He was
appointed Executive Vice President in 1999.
2
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[Photo of
James P. Kelly
appears here] James P. Kelly Age 56 Director
since 1991
UPS Chairman of the Board and Chief Executive Officer
Jim joined UPS in 1964 as a package car driver in the
Metro Jersey District. He entered supervision two years
later and was promoted to Center Manager in 1968.
Subsequent assignments included Package Division Manager
and Labor Relations Manager in the Metro Jersey
District. By attending night school during that period,
he earned a degree in Management from Rutgers
University. Jim was named Atlantic District Manager in
1979 and later served as Pacific Region Labor Relations
Manager before being promoted to North Central Region
Manager in 1985. In 1988, he was assigned as a Corporate
Labor Relations Manager and became U.S. Operations
Manager in 1990. In June 1992, Jim became Chief
Operating Officer and in February 1994, he became
Executive Vice President. From May through December
1996, Jim was Vice Chairman of the Board. In January
1997, he was elected the Chief Executive Officer and
Chairman of the Board of the Company. Jim also is a
director of Georgia-Pacific Corporation.
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[Photo of
Ann M. Livermore
appears here] Ann M. Livermore Age 41 Director
Vice President of Hewlett-Packard Company since 1997
Ann is vice president of Hewlett-Packard Company ("HP")
and President of its Enterprise and Commercial Business.
Ann joined HP in 1982, was named marketing services
manager for the Application Support Division in 1985,
and was promoted to marketing manager of that division
in 1989. Ann became the marketing manager of the
Professional Services Division in 1991 and was named
sales and marketing manager of the former Worldwide
Customer Support Organization. Ann was elected a vice
president of HP in 1995 and was promoted to general
manager of Worldwide Customer Support Operations in
1996. In 1997, she took on responsibility for HP's
software businesses as general manager of the newly
formed Software and Services Group. In 1998, she was
named general manager of the new Enterprise Computing
Solutions Organization. Born in Greensboro, N.C., Ann
holds a bachelor's degree in Economics from the
University of North Carolina at Chapel Hill and an
M.B.A. from Stanford University. Ann is also on the
board of visitors of the Kenan-Flagler Business School
at the University of North Carolina at Chapel Hill.
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[Photo of
Gary E. MacDougal
appears here] Gary E. MacDougal Age 63 Director
since 1973
Former Chairman of the Board and Chief Executive Officer
of Mark Controls Corporation
From 1963 to 1968, Gary was with McKinsey & Co., an
international management consulting firm, where he
became a partner. From 1969 to 1987, Gary was Chairman
and Chief Executive Officer of Mark Controls
Corporation, a flow control products manufacturer. In
1988, he became honorary Chairman. Also in 1988, Gary
was assistant campaign manager in the Bush presidential
campaign, and in 1989 was appointed by President Bush as
a delegate and alternate representative in the U.S.
delegation to the United Nations. He is a Director of
the Bulgarian American Enterprise Fund and a trustee of
the Annie E. Casey Foundation. From 1993 to 1997, he was
Chairman of the Governor's Task Force on Human Service
Reform for the State of Illinois. Gary received his
bachelor's degree from the University of California at
Los Angeles in Engineering in 1958. After receiving his
degree, he spent three years as a U.S. Navy officer.
Following service, Gary attended Harvard Business School
where he received his M.B.A. degree. He serves as an
advisory director of Saratoga Partners, a New York-based
venture capital fund.
3
<PAGE>
[Photo of
Joseph R. Moderow
appears here] Joseph R. Moderow Age 51 Director
since 1988
UPS Senior Vice President, Secretary and Legal & Public
Affairs Group Manager
In 1986, Joe was named Legal & Regulatory Group Manager
and elected Senior Vice President and Secretary. He
assumed additional responsibility for Public Affairs in
1989. Joe began his UPS career in 1968 as a sorter and
unloader in the South California District while an
undergraduate student. He earned a bachelor's degree in
Economics from California State University and a law
degree from Western State University. He is a member of
the State Bar of California. Joe was promoted into
supervision in 1973 and later served as the Arizona
District Industrial Engineering Manager. In 1977, he was
assigned to the National Legal & Regulatory Group. In
1981, Joe participated in the President's Commission on
Executive Exchange in Washington, DC where he served in
the U.S. Department of Labor. In 1982, Joe became the
West Virginia District Manager. He was then assigned to
the national Labor Relations group and later headed the
operations team during the start-up of international air
service.
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[Photo of
Kent C. ("Oz") Nelson
appears here] Kent C. ("Oz") Nelson Age 62 Director
since 1983
Former UPS Chairman of the Board and Chief Executive
Officer
Oz graduated from Ball State University in 1959 with a
bachelor's degree in Business Administration. Two days
later he began his UPS career as a Sales and Customer
Service Representative in Kokomo, Indiana. He served as
Customer Service Manager in the Indiana, North Illinois
and Metro Chicago Districts as well as the North Central
Region. In 1973, Oz assumed national customer
development responsibilities. He served first on the
study team and then on the team that implemented our
service in Germany in 1976. In 1978, he was named
National Customer Service Manager and was also assigned
to develop our Marketing Department. Oz was elected
Senior Vice President in 1983 and was our Finance Group
Manager and Chief Financial Officer from 1984 to 1987.
He became Executive Vice President in 1986 and Vice
Chairman of the Board in February 1989. In November
1989, Oz succeeded Jack Rogers as Chief Executive
Officer and Chairman of the Board. In January 1997, Oz
retired as Chief Executive Officer and Chairman of the
Board of the Company. He also serves as a director of
Columbia/HCA Healthcare Corporation.
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[Photo of
Victor A. Pelson
appears here] Victor A. Pelson Age 62 Director
Senior Advisor, Warburg Dillon Read, LLC since 1990
Vic is a Senior Advisor to Warburg Dillon Read, LLC,
investment bankers, a position he has held since 1996.
He was associated with AT&T from 1959 to March 1996, and
at the time of his retirement was Chairman of Global
Operations and a member of the Board of Directors. He is
a director of Eaton Corp., Dun & Bradstreet, Dynatech
Corp. and Carrier 1 International, S.A. He is also
Chairman of the Board of Trustees of New Jersey
Institute of Technology.
4
<PAGE>
[Photo of
Charles L. Schaffer
appears here] Charles L. Schaffer Age 54 Director
since 1992
UPS Senior Vice President and Chief Operating Officer
Chuck joined UPS in 1970 as a part-time loader/unloader
in the Metro Chicago District. He was later promoted to
hub supervisor, and became a full-time personnel
supervisor in 1973 after graduation from the University
of Illinois, where he earned a bachelor's degree in
Quantitative Methods. He was assigned to Industrial
Engineering ("I.E.") in 1974, and became a member of the
West Region I.E. staff in 1977. Chuck was promoted to
Missouri District I.E. Manager in 1978. Chuck then held
a variety of package and hub operations assignments
before being named North Illinois I.E. Manager in 1981.
He was promoted to Midwest Region I.E. Manager in 1984.
In 1986, Chuck was named Arizona District Manager. In
1988, he became the Technology Task Group Coordinator in
Strategic Planning, and was promoted to Corporate Plant
Engineering Manager in 1989. Chuck became our
Engineering Group Manager in 1990 and in 1996 he was
promoted to U.S. Operations Manager. In 1997, Chuck
became our Chief Operating Officer. Chuck is also a
member of the Board of Trustees for Kettering
University.
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[Photo of
Lea N. Soupata Lea N. Soupata Age 49 Director
appears here] since 1998
UPS Senior Vice President and Human Resources Group
Manager
A native of New York City, Lea joined UPS in 1969 and is
now responsible for the human resources function for
approximately 344,000 employees worldwide. Following
several assignments with UPS in Human Resources, Sales
and Operations, Lea became the Human Resources Manager
in our North New England and Metro New York Districts.
Lea also served as Regional Human Resources Manager for
the East and East Central Regions. In 1990, Lea became
the District Manager of the Central New York District.
She was transferred in 1994 to the Company's corporate
office as Vice President of Human Resources prior to
being named to her current position. Lea serves as chair
of The UPS Foundation, our charitable arm, and has been
active in a number of community services programs,
including United Way. She is also a trustee of the Annie
E. Casey Foundation, the world's largest philanthropic
foundation dedicated to helping disadvantaged children.
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[Photo of
Robert M. Teeter Robert M. Teeter Age 61 Director
appears here] President of Coldwater Corporation since 1990
Bob is a graduate of Albion College and holds a master's
degree from Michigan State University. He is president
of Coldwater Corporation, a Michigan consulting and
research firm that specializes in the areas of strategic
planning, policy development and public opinion
analysis. For more than 20 years he held several
management positions, including President of Market
Opinion Research Company, one of the nation's largest
marketing research firms. Bob is also a director of the
Bank of Ann Arbor.
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[Photo of
Thomas H. Weidemeyer Thomas H. Weidemeyer Age 52 Director
appears here] since 1998
UPS Senior Vice President and Transportation and
Engineering Group Manager; President, UPS Airlines
Tom joined UPS in 1972 in National Personnel after
receiving his Law Degree from the University of North
Carolina Law School and his Bachelor's Degree from
Colgate University. In 1974, he moved to the Metro
Detroit District and worked in various operations
assignments. In 1978, he joined our Legal Department. In
1986, he was promoted to District Manager of Arkansas
and later helped set up our Northwest Ohio District. Tom
became Manager of the Americas Region in 1989, and in
that capacity established the delivery network
throughout Central and South America. In 1990, Tom
became Vice President and Airline Manager of UPS
Airlines and in 1994 was elected its President and Chief
Operating Officer. Tom became Manager of the Air Group
and a member of the Management Committee that same year.
He serves on the Board of Directors of the Air Transport
Association of America and is a member of the Military
Airlift Committee. He also serves on the Board of the
National Center for Family Literacy and the General
Aviation Manufacturers Association.
The Board of Directors recommends that shareowners vote FOR
---
the election of the directors named above.
5
<PAGE>
Meetings of the Board of Directors
Our Board of Directors held five meetings during 1999, of which four
meetings took place while we were United Parcel Service of America, Inc. and
one meeting took place while we were United Parcel Service, Inc. During 1999,
each of our directors attended at least 75% of the total number of meetings of
the Board and any committees of which he or she was a member.
Committees of the Board of Directors
Our Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee, a Salary Committee and a Nominating Committee.
Messrs. Alden, Clanin, Eskew, Kelly, Moderow, Schaffer and Weidemeyer and
Ms. Soupata served as members of the Executive Committee throughout 1999. This
Committee 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. In 1999, this Committee held 15 meetings.
Mr. Brown and Ms. Livermore served as members of the Audit Committee
throughout 1999. Mr. Pelson has served as a member of the Committee since
November 1999. The primary responsibilities of the Audit Committee are to:
. recommend annually the independent auditors for appointment by the
Board,
. review the scope of the audit made by the independent auditors,
. review the audit reports submitted by the independent auditors,
. review the annual program for the internal audit of records and
procedures,
. review audit reports submitted by the internal auditing staff,
. conduct such other reviews as the Audit Committee deems appropriate, and
. make reports and recommendations to the Board within the scope of its
functions.
In 1999, this Committee held nine meetings.
Messrs. Pelson and MacDougal served as members of the Compensation Committee
throughout 1999. Mr. Rogers served as a member of the Committee until November
1999, and Ms. Livermore has served as a member of the Committee since November
1999. The primary responsibility of this Committee is to set the compensation
of our Chairman and Chief Executive Officer and to set the compensation of
other executive officers based upon the recommendation of our Chief Executive
Officer. The Committee is also responsible for administering the United Parcel
Service, Inc. Incentive Compensation Plan. In 1999, the Compensation Committee
held two meetings, one of which took place while we were United Parcel Service
of America, Inc., and at which time this Committee was known as the Officer
Compensation Committee, and one of which took place while we were United
Parcel Service, Inc. See "Compensation of Executive Officers and Directors --
Compensation of Directors."
Messrs. Clanin and Kelly and Ms. Soupata served as members of the Salary
Committee throughout 1999. This Committee determines the compensation for all
management employees other than executive officers. In 1999, the Salary
Committee held 11 meetings.
Messrs. Nelson, Rogers and Teeter served as members of the Nominating
Committee throughout 1999. This Committee recommends nominees for election to
the Board. The Nominating Committee will consider recommendations for nominees
for directors submitted by shareowners who beneficially own at least $1,000 in
current value of our shares entitled to be voted at the annual meeting of
shareowners. Qualifying shareowners who wish the Nominating Committee to
consider their recommendations for nominees for director should submit their
recommendations in writing to the Committee, care of our Secretary, at our
principal executive offices. Under our Bylaws, any director nominations for
the 2001 Annual Meeting of Shareowners must be received by our Secretary not
later than November 27, 2000. According to our Bylaws, such nominations should
set forth the following information:
. as to each person whom the shareowner proposes to nominate for election
or re-election as a director, all information relating to such person
that is required to be disclosed in solicitation of proxies for
6
<PAGE>
election of directors, or is otherwise required, pursuant to Regulation
14A under the Securities Exchange Act of 1934. This information includes
the person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected; and
. as to the shareowner making the nomination, (1) the name and address of
such shareowner and (2) the class and number of shares of our common
stock which are beneficially owned by such shareowner.
In 1999, the Nominating Committee held two meetings.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table describes the beneficial ownership of our common stock
by (1) each person known by us to own beneficially more than five percent of
the outstanding shares of either our class A common stock or class B common
stock, (2) each director, (3) our Chief Executive Officer and each of our four
highest paid executive officers during 1999 and (4) all directors and
executive officers as a group:
<TABLE>
<CAPTION>
Common Stock Held as of February 14, 2000(1)
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Additional Shares
in which the
Beneficial Owner
Has or
Participates in
Number of Options the Voting or Total Shares
Shares Owned(2) Exercisable within Investment Beneficially Owned
(Directly 60 Days(3) Power(4) and
Name Owned) (Option Shares) (Indirectly Owned) Percent of Total(10)
- ---- --------------- ------------------ ------------------ ------------------------
<S> <C> <C> <C> <C> <C>
John W. Alden........... 397,794 34,574 -- 432,368 0.04%
William H. Brown, III... 83,280 2,016 -- 85,296 0.01
Robert J. Clanin........ 396,972 20,744 43,738,254(5)(6) 44,155,970 3.65
Michael L. Eskew........ 231,310 13,484 43,738,254(5)(6) 43,983,048 3.63
James P. Kelly.......... 419,747 43,794 43,738,254(5)(6) 44,201,795 3.65
Ann M. Livermore........ 9,458 -- -- 9,458 0.00
Gary E. MacDougal....... 70,982 2,016 41,640,956(5) 41,713,954 3.45
Joseph R. Moderow....... 309,124 31,692 46,158,456(5)(7) 46,499,272 3.84
Kent C. Nelson.......... 444,429 65,690 46,158,456(5)(7) 46,668,575 3.85
Victor A. Pelson........ 24,688 2,016 -- 26,704 0.00
John W. Rogers.......... 200,000 -- -- 200,000 0.02
Charles L. Schaffer..... 365,233 30,540 2,337,800(8) 2,733,573 0.23
Lea N. Soupata.......... 216,020 5,810 48,255,754(5)(6)(7) 48,477,584 4.00
Robert M. Teeter........ 65,000 2,016 -- 67,016 0.01
Thomas H. Weidemeyer.... 345,408 22,474 2,097,298(6) 2,465,180 0.20
Shares held by all
directors and executive
officers as a group
(23 persons)........... 5,031,832 365,388 50,593,554(9) 55,990,774 4.62
</TABLE>
- --------
(1) All shares listed are shares of our class A common stock. Our directors
and executive officers do not own any shares of our class B common stock,
except that Mr. Kelly owns one share.
(2) Includes shares for which the named person has sole voting and investment
power or has shared voting and investment power with his or her spouse.
Also includes shares held by immediate family members as follows:
Alden -- 33,808; Clanin -- 167,116; Eskew -- 41,800; Kelly -- 61,223;
MacDougal -- 2,000; Moderow -- 45,230; Nelson -- 30,708; Schaffer --
43,840; Weidemeyer -- 10,550; and all directors and officers as a
group -- 531,518. Each named individual disclaims all beneficial
ownership of such shares. Excludes shares that may be acquired through
stock option exercises.
(3) Represents shares that can be acquired through stock option exercises
through April 14, 2000.
(4) None of the directors and officers listed, nor members of their families,
has any direct ownership rights in the shares listed in this column. See
footnotes 5 and 6 to this table.
7
<PAGE>
(5) Includes 41,640,956 shares owned by the Annie E. Casey Foundation, Inc.,
of which Messrs. Clanin, Eskew, Kelly, MacDougal, Moderow and Nelson, Ms.
Soupata, and other non-UPS persons constitute the corporate Board of
Trustees.
(6) Includes 2,097,298 shares held by the UPS Foundation, Inc., a company
sponsored charitable foundation of which Messrs. Clanin, Eskew, Kelly and
Weidemeyer, Ms. Soupata and an executive officer not listed above, are
trustees.
(7) Includes 4,517,500 shares held by various trusts of which Messrs. Moderow
and Nelson and Ms. Soupata are co-fiduciaries.
(8) Includes 2,337,800 shares held by an employee benefit plan of which Mr.
Schaffer is a trustee.
(9) Includes shares held by the foundations, employee benefit plans and
trusts of which directors and executive officers listed are trustees or
fiduciaries. Eliminates duplications in the reported number of shares
arising from the fact that several directors and executive officers share
in the voting power with respect to these shares.
(10) Calculated on the basis of the amount of outstanding shares (both class A
and class B common stock), plus the shares which may be acquired by the
named individual upon the exercise of outstanding stock options through
April 14, 2000.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table shows the cash compensation paid or to be paid by us or
any of our subsidiaries, as well as other compensation paid or accrued, during
the last three fiscal years to our Chief Executive Officer and our other four
highest paid executive officers during 1999. These officers are referred to as
our Named Executive Officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual
Compensation Securities
----------------- Underlying
Stock All Other
Name and Principal Position Year Salary Bonus(2) Options(3) Compensation(4)
- --------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
James P. Kelly....................... 1999 $882,000 $614,806 159,517 $25,348
Chairman of the Board and 1998 $771,500 $319,277 100,936 $ 4,800
Chief Executive Officer 1997 $717,500 $169,647 43,242 --
John W. Alden(1)..................... 1999 $626,250 $432,299 88,768 $11,276
Vice Chairman, Sr. Vice 1998 $588,000 $252,480 76,986 $ 4,800
President and Business 1997 $550,500 $134,726 38,642 --
Development Group Manager
Robert J. Clanin..................... 1999 $494,000 $342,448 69,012 $17,322
Sr. Vice President, Treasurer and 1998 $450,500 $194,620 58,168 $ 4,800
Chief Financial Officer 1997 $409,000 $102,629 27,602 --
Joseph R. Moderow.................... 1999 $471,000 $325,285 66,645 $18,720
Sr. Vice President, Secretary and 1998 $442,000 $189,360 58,168 $ 4,800
Legal & Public Affairs Group Manager 1997 $417,000 $110,160 29,442 --
Charles L. Schaffer.................. 1999 $542,000 $376,638 75,022 $21,337
Sr. Vice President and 1998 $492,000 $210,400 59,878 $ 4,800
Chief Operating Officer 1997 $427,500 $113,400 29,902 --
</TABLE>
- --------
(1) In August 1999, Mr. Alden announced his resignation from the Board of
Directors, which took effect in February 2000, and his retirement as an
officer, which took effect in March 2000.
(2) Reflects the value of awards accrued under the United Parcel Service, Inc.
Incentive Compensation Plan for 1999 and UPS Managers Incentive Plan for
1998 and 1997.
(3) Adjusted in accordance with the 2-for-1 merger exchange ratio related to
our merger in November 1999.
(4) Includes $4,800 in each of 1998 and 1999, which reflects the value of
class A common stock contributed by us to the accounts of the named
individuals pursuant to the UPS SavingsPLUS plan. The additional amounts
for 1999 relate to income imputed based on life insurance premiums paid by
us on behalf of these officers pursuant to a new distribution election
option under the UPS Excess Coordinating Benefit Plan.
9
<PAGE>
Stock Option Grants
The following table sets forth information concerning option grants to our
Chief Executive Officer and our Named Executive Officers in 1999:
Stock Option Grants During 1999
<TABLE>
<CAPTION>
Number of Potential Realized Value at
Class A % of Total Assumed Annual Rates of
Shares Options Stock Price Appreciation for
Underlying Granted to Exercise Option Term
Options Employees in Price per Expiration -----------------------------
Name Granted(1) 1999 Share(2) Date 5% 10%
- ---- ---------- ------------ --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James P. Kelly.......... 106,962 1.0% $21.50 3/31/04(3) $ 635,360 $ 1,403,979
52,555 .5% $50.00 11/9/09(4) $ 1,652,578 $ 4,187,957
John W. Alden........... 61,122 .6% $21.50 3/31/04(3) $ 363,068 $ 802,285
27,646 .3% $50.00 11/9/09(4) $ 869,321 $ 2,203,030
Robert J. Clanin........ 47,114 .4% $21.50 3/31/04(3) $ 279,860 $ 618,417
21,898 .2% $50.00 11/9/09(4) $ 688,577 $ 1,744,989
Joseph R. Moderow....... 45,842 .4% $21.50 3/31/04(3) $ 272,304 $ 601,720
20,803 .2% $50.00 11/9/09(4) $ 654,145 $ 1,657,731
Charles L. Schaffer..... 50,934 .5% $21.50 3/31/04(3) $ 302,551 $ 668,558
24,088 .2% $50.00 11/9/09(4) $ 757,441 $ 1,919,503
</TABLE>
- --------
(1) Adjusted in accordance with the 2-for-1 merger exchange ratio related to
our merger in November 1999.
(2) Represents the fair market value on the date of grant. The exercise price
may be paid by the delivery of already owned shares, subject to certain
conditions.
(3) Reflects options granted under the UPS 1996 Stock Option Plan. Generally,
options granted under the 1996 Stock Option Plan may not be exercised
until five years from the date of grant, and then from April 1 through
April 30 of the exercise year. The last year that options were granted
under this plan was 1999.
(4) Reflects options granted under the United Parcel Service, Inc. Incentive
Compensation Plan. Generally, options granted under the Incentive
Compensation Plan may be exercised between three and ten years from the
date of grant.
Options were granted to our directors under the 1996 Stock Option Plan in
March 1999 and under the Incentive Compensation Plan in November 1999. Options
will no longer be granted under the 1996 Stock Option Plan, and no options
will be granted to directors under the Incentive Compensation Plan in 2000.
Beginning in 2001, options to directors will generally be granted only in the
first quarter of each year at the discretion of the Board.
10
<PAGE>
Stock Option Exercises and Holdings
The following table sets forth information concerning stock option exercises
in 1999 by our Chief Executive Officer and our Named Executive Officers and
the value of these officers' unexercised options as of December 31, 1999:
Aggregated Option Exercises in 1999 and Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Value Options at End of 1999(2) Options at End of 1999(3)
Name on Exercise(1) Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James P. Kelly.......... 42,498 $462,166 0/392,085 $-0-/$18,746,131
John W. Alden........... 35,414 $385,127 0/274,444 $-0-/$13,544,172
Robert J. Clanin........ 8,586 $ 93,373 0/202,892 $-0-/$ 9,934,653
Joseph R. Moderow....... 32,840 $357,135 0/216,353 $-0-/$10,747,143
Charles L. Schaffer..... 31,552 $343,128 0/225,748 $-0-/$11,101,148
</TABLE>
- --------
(1) Represents the aggregate number of class A common shares received in 1999
upon exercise of options granted under the UPS 1991 Stock Option Plan, as
adjusted pursuant to the 2-for-1 merger exchange ratio in connection with
our merger in November 1999.
(2) Represents class A common shares subject to options granted under the UPS
1991 Stock Option Plan, the UPS 1996 Stock Option Plan and the United
Parcel Service, Inc. Incentive Compensation Plan. At the time of our
initial public offering in November 1999, unexercised options granted
under the UPS 1991 Stock Option Plan and UPS 1996 Stock Option Plan were
adjusted to reflect the exchange of two shares of the class A common stock
of United Parcel Service, Inc. for each share of United Parcel Service of
America, Inc. common stock.
(3) Based on the $69.00 closing price of our class B common stock on December
31, 1999.
Retirement Plans
The following table shows the estimated annual retirement benefit payable on
a single-life-only annuity basis to participating employees, including our
Chief Executive Officer and our Named Executive Officers, under the UPS
Retirement Plan and UPS Excess Coordinating Benefit Plan upon retirement,
assumed to occur at age 65. Participating employees are also entitled to
receive $16,440 per year, which is the maximum currently payable, in primary
Social Security benefits:
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefits (as of 12/31/99)
for Years of Service Indicated
------------------------------------------------------
Average Final Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
- ---------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 200,000............... $ 45,890 $ 61,181 $ 76,489 $ 91,780 $ 107,089
$ 250,000............... $ 58,390 $ 77,846 $ 97,324 $ 116,780 $ 136,259
$ 300,000............... $ 70,890 $ 94,511 $ 118,159 $ 141,780 $ 165,429
$ 350,000............... $ 83,390 $ 111,176 $ 138,994 $ 166,780 $ 194,599
$ 400,000............... $ 95,890 $ 127,841 $ 159,829 $ 191,780 $ 223,769
$ 450,000............... $ 108,390 $ 144,506 $ 180,664 $ 216,780 $ 252,939
$ 500,000............... $ 120,890 $ 161,171 $ 201,499 $ 241,780 $ 282,109
$ 600,000............... $ 145,890 $ 194,501 $ 243,169 $ 291,780 $ 340,449
$ 700,000............... $ 170,890 $ 227,831 $ 284,839 $ 341,780 $ 398,789
$ 800,000............... $ 195,890 $ 281,161 $ 326,509 $ 391,780 $ 457,129
$ 900,000............... $ 220,890 $ 294,491 $ 368,179 $ 441,780 $ 515,469
$1,000,000............... $ 245,890 $ 327,821 $ 409,849 $ 491,780 $ 573,809
$1,100,000............... $ 270,890 $ 361,151 $ 451,519 $ 541,780 $ 632,149
$1,200,000............... $ 295,890 $ 394,481 $ 493,189 $ 591,780 $ 690,489
</TABLE>
11
<PAGE>
Amounts exceeding $120,000, which is adjusted from time to time by the
Internal Revenue Service, would be paid pursuant to the UPS Excess
Coordinating Benefit Plan. Pursuant to this plan, participants may choose to
receive the benefit in the form of a life annuity, cash lump sum or life
insurance with a cash value up to 100% of the present value of the benefit.
Beginning with 1994, no more than $150,000, which is adjusted from time to
time by the Internal Revenue Service, of cash compensation could be taken into
account in calculating benefits payable under the UPS Retirement Plan.
Participants who elect forms of payment with survivor options will receive
lesser amounts than those shown in the above table.
The compensation upon which the benefits are summarized in the table above
includes salary and bonuses awarded under the UPS Managers Incentive Plan and
the UPS Incentive Compensation Plan. 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.
As of December 31, 1999, estimated or actual credited years of service under
the plans to our Chief Executive Officer and our Named Executive Officers was
as follows: Kelly -- 35, Alden -- 35, Schaffer -- 30, Clanin -- 29 and
Moderow -- 29.
The plans permit participants with 25 or more years of benefit service to
retire as early as age 55 with no or only a limited reduction in the amount of
their monthly benefits.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors has responsibility for
determining the salary of the CEO, and for approving the salaries of all other
executive officers after the CEO's recommendation. The Committee also
determines the eligibility and levels of participation of executive officers
under the United Parcel Service, Inc. Incentive Compensation Plan. The
compensation department of the Human Resources group and independent
compensation consultants assist the Committee.
One of the most important compensation policies is the historical focus on
the "manager-owner" concept, which has played a central role in the Company's
success. Throughout its history, UPS has been owned by its managers and
managed by its owners. To achieve this objective, compensation plans have
facilitated stock ownership by management employees. The UPS Managers
Incentive Plan, the UPS 1996 Stock Option Plan and UPS SavingsPLUS and United
Parcel Service, Inc. Incentive Compensation Plan are each examples of such
plans.
UPS has a long-standing policy of promotion from within, wherever possible,
which has significantly reduced, relative to other companies, the need to
externally hire managers and executive officers. The overall management
organization is comprised, to a high degree, of employees who have spent
virtually their entire careers with the Company.
Executive compensation has been strongly influenced by these policies. The
CEO and Named Executive Officers are all long-term employees, each having more
than 25 years of service. Because plans are designed to foster stock ownership
by managers, each Named Executive Officer has accumulated a meaningful number
of shares of the Company's common stock. As a result, the interests of
shareowners and our executive officers are closely aligned, and the executive
officers have strong incentives to provide for our effective management. In
the case of the CEO and each of the Named Executive Officers, annual
appreciation derived from stock ownership, dividends and from awards under the
UPS Managers Incentive Plan, the UPS 1996 Stock Option Plan and the United
Parcel Service, Inc. Incentive Compensation Plan exceeds direct cash
compensation. Of the forms of compensation in use, the awards formerly granted
under the UPS Managers Incentive Plan, and now granted under the United Parcel
Service, Inc. Incentive Compensation Plan, are most directly keyed to
corporate performance because the aggregate amount available for distribution
is based on profits.
12
<PAGE>
With respect to cash compensation, the Committee reviews data received
directly from consultants concerning compensation for comparable positions at
companies having similar revenues, irrespective of the financial performance
of those companies. The 1999 salaries of each executive officer, including
that of the CEO, were less than median compensation levels at similarly sized
companies. The companies used for executive compensation comparisons are not
limited to the companies comprising the S&P 500 Index and the Dow Jones
Transport Average used in the performance chart contained in our proxy
statement.
To determine the appropriate CEO compensation and approve the appropriate
compensation of each executive officer, the Committee exercises its judgment
based on considerations including overall responsibilities and the importance
of these responsibilities to the Company's success, experience and ability,
past short-term and long-term job performance and salary history. A
significant factor in determining annual salary increases is the strong desire
of the Committee to keep the compensation levels of executive officers
equitable in comparison with the compensation of other executives with similar
responsibilities at comparable companies and when compared to the compensation
of other UPS management positions. The Committee places a strong emphasis on
teamwork; therefore, annual base salaries are not solely dependent on
objective, corporate performance standards for any executive officer.
The Committee recommended and the Board approved a base salary increase for
the CEO (Jim Kelly) that reflected Jim's strategic vision and leadership,
UPS's business and operational results, and his ability to position UPS as the
premier enabler of global commerce. The Committee did not assign particular
weights to these factors.
Stock bonus awards under the United Parcel Service, Inc. Incentive
Compensation Plan are determined by a formula that takes into consideration
profits, monthly salary, the number of participants and the level of
participation. The level of participation for the CEO and executive officers
is the same as for approximately 10,000 participating employees at or above
the center manager level.
Options granted under the United Parcel Service, Inc. Incentive Compensation
Plan are long-term options intended to promote continuity of employment and to
provide an additional opportunity for stock ownership. Generally, eligible
employees include division managers, district department managers and others
having equivalent or greater responsibilities. The number of options granted
is based on salary and level of participation.
Section 162(m) of the Internal Revenue Code makes compensation paid to
certain executives in amounts in excess of $1 million not deductible unless
the compensation is paid under a predetermined objective performance plan
meeting certain requirements, or satisfies one of various other exemptions.
The Committee has not adopted a policy that all compensation be deductible
under Section 162(m), in order to preserve the Committee's flexibility to
compensate executive officers.
The Compensation Committee
Victor A. Pelson, Chairman
Gary E. MacDougal
Ann M. Livermore
Compensation of Directors
In 1999, directors who were not employees received an annual director's fee
of $55,000. Members of our Audit, Compensation and Nominating Committees who
were not our employees received an additional annual fee of $2,500 for each
committee on which they served, except that committee chairmen received an
additional annual fee of $4,000. Mr. Rogers has declined to accept any fees
for his services as a director.
We established a retirement plan in February 1991, which provided retirement
and disability benefits for directors who were neither employees nor former
employees. Effective January 1, 1997, our Board agreed to discontinue this
plan and, instead, increased the options for which outside directors are
eligible under the UPS 1996 Stock Option Plan. At the discretion of our Board
of Directors, outside directors may now receive grants of options under the
United Parcel Service, Inc. Incentive Compensation Plan. To satisfy the
obligations previously accrued under the retirement plan, our Board agreed to
allocate to each director certain dollar amounts. These amounts will
appreciate or depreciate in tandem with the changes in the share price of our
common stock inclusive of dividends. At the time each director ceases to serve
on our Board, the then current
13
<PAGE>
value of the account will be payable to him or her, or the designated
beneficiary, either in cash or shares of our class A common stock. The value
of these accounts at December 31, 1999, was: Mr. Brown, $1,609,825;
Mr. MacDougal, $1,609,825; Mr. Pelson, $804,913; and Mr. Teeter, $804,913.
Options were granted to our outside directors in both March 1999 and
November 1999, and, as a result, will not be granted in 2000. Beginning in
2001, options to outside directors will generally be granted only in the first
quarter of each year at the discretion of the Board.
Outside directors also have the option of deferring some or all of the fees
and/or retainer payable in connection with their services on our Board into
the UPS Deferred Compensation Plan for Non-Employee Directors. Deferred
amounts are invested in certain mutual funds selected by each director. At the
time a participating director ceases to be a director, the total value of the
director's account will be payable to him or her, or the designated
beneficiary, in 40 quarterly installments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors were members of the Compensation
Committee of our Board of Directors during all or part of 1999: Victor A.
Pelson, Gary E. MacDougal, John W. Rogers and Ann M. Livermore. None of the
members of the Compensation Committee has any direct or indirect material
interest in or relationship with us outside of his or her position as director
and, with respect to Mr. Rogers, other than his benefits accrued while serving
as our employee. Mr. Rogers is our former Chairman of the Board and Chief
Executive Officer. He retired from active employment in 1989 and was a member
of the Compensation Committee until November 1999.
14
<PAGE>
SHAREOWNER RETURN PERFORMANCE GRAPH
The following graph shows a five-year comparison, prepared in accordance
with the rules of the SEC, of cumulative total shareowners' returns for our
common stock, the S&P 500 Index and the Dow Jones Transport Average. The
comparison of the total cumulative return on investment, which is the change
in the quarterly stock price plus reinvested dividends, for each of the
quarterly periods assumes that $100 was invested on December 31, 1994 in (1)
the S&P 500 Index; (2) the Dow Jones Transport Average; and (3) the common
stock of United Parcel Service of America, Inc., each share of which was
converted into two shares of class A common stock of United Parcel Service,
Inc. in November 1999. Although there is no public market for our class A
common stock, after the expiration of certain restricted periods, it is
convertible on a one-for-one basis into our class B common stock for which
market quotations are available. The graph below therefore assumes that the
class A shares and class B shares have the same value.
In past years, the proxy statement of United Parcel Service of America, Inc.
has also included a graph depicting ten-year returns to shareowners. The ten-
year graph was included to provide a perspective on share performance that we
considered to be helpful to shareowners before we became a publicly-traded
company. However, following our initial public offering, and because of the
relationship in the value of our class A common stock and our newly-created
and publicly traded class B common stock, we have decided to present only the
five-year graph required by SEC rules beginning this year.
Comparison of Five-Year Cumulative Total Return
(UPS, S&P 500 Index, Dow Jones Transport Average)
[GRAPH APPEARS HERE]
DOW JONES
TRANSPORT
UPS S&P 500 AVERAGE
-------- --------- ---------
12/31/94 $100.00 $100.00 $100.00
12/31/95 $114.54 $137.45 $137.90
12/31/96 $130.69 $168.92 $158.90
12/31/97 $140.52 $225.21 $231.73
12/31/98 $187.02 $289.57 $225.99
12/31/99 $656.70 $350.50 $215.76
15
<PAGE>
CERTAIN BUSINESS RELATIONSHIPS
William H. Brown, III, a member of our Board of Directors, serves as counsel
to Schnader Harrison Segal & Lewis LLP, a law firm that provides legal
services to us from time to time.
Some of our executive officers are trustees of the UPS Retirement Plan. The
UPS Retirement Plan, through wholly owned subsidiaries, owns real property
that is leased to our subsidiaries for operating purposes at rental rates
determined by independent firms of real estate appraisers. The rentals charged
to our subsidiaries for the leased real estate during 1999 by this Plan
aggregated $282,437.
COMMON RELATIONSHIPS WITH OVERSEAS PARTNERS LTD.
We have had significant relationships with Overseas Partners Ltd., or OPL, a
Bermuda-based company that is engaged in reinsurance and other businesses. OPL
was incorporated under Bermuda law in June 1983 as our wholly owned
subsidiary. OPL was spun-off to UPS's shareowners as a taxable dividend and,
as of January 1, 1984, was no longer a subsidiary. At least a majority of the
owners of our class A common stock also are shareowners of OPL, and a majority
of the directors and officers of OPL are our current or former employees. In
February 1999, we paid OPL approximately $33.3 million for approximately 1.7
million shares of OPL common stock to be distributed in connection with UPS
Managers Incentive Plan awards.
One of our officers and directors is also a director of OPL. In determining
which leasing or other arrangements to enter into with us, this individual
considers the impact of business decisions on each of the two companies.
Although they consider prevailing market conditions in making these decisions,
there can be no assurance that transactions relating to the two companies will
be on the most favorable terms that could be obtained by either party in the
open market. Until October 1, 1999, OPL also served as a reinsurer of excess
value insurance on packages that we carried. Further information relating to
these reinsurance and leasing transactions is provided below.
We do not have any formal conflict of interest resolution procedures.
Nevertheless, in connection with the insurance by OPL of risks related to our
business, we believe the rates charged by the primary insurers reinsured by
OPL were competitive with those charged to shippers utilizing other carriers.
Additionally, in connection with major transactions in which we and OPL have
been involved, primarily leasing transactions, we have generally obtained
fairness or valuation opinions from one or more leading investment banking
firms or other organizations with significant expertise in the evaluation of
the interests involved.
During 1999, National Union Fire Insurance Company, a subsidiary of American
International Group, Inc., terminated the five underlying policies that
provide shippers' risk insurance for our customers. The termination of these
policies triggered the immediate termination of the reinsurance agreement
between National Union and OPL.
Effective October 1, 1999, we restructured the program, and National Union
issued five new policies covering our customers. Through a wholly owned
subsidiary that is a licensed insurance agency, Glenlake Financial
Corporation, an indirect wholly owned subsidiary of UPS, now offers excess
value package insurance to be issued under the five new policies to our
customers.
UPS Re Ltd., our wholly owned subsidiary, has entered into a reinsurance
agreement under which it will reinsure substantially all of the risks
underwritten by National Union in exchange for substantially all of the
premiums collected. UPS Re Ltd. is a licensed reinsurance company formed in
1999. UPS Re Ltd., which is domiciled in Bermuda, has elected to be taxed on
its income as part of our consolidated income tax return for federal income
tax purposes.
As of March 1, 2000, we did not own any shares of OPL common stock.
16
<PAGE>
Reinsurance Transactions
OPL was organized to reinsure shippers' risks relating to packages carried
by us as a common carrier as well as to underwrite life and property and
casualty reinsurance for insureds unaffiliated with us. Since commencing
operations on January 1, 1984, and until October 1, 1999, OPL's reinsurance of
risk related to packages involved reinsuring insurance issued by United
States-based insurance companies unaffiliated with us or OPL. This reinsurance
covered the risk of loss or damage to shippers' packages carried by our
subsidiaries and unaffiliated foreign common carriers whose declared value
exceeded $100 or equivalent in foreign currency. Our position has been that
the reinsurance of excess value insurance did not involve transactions
conducted between us and OPL. Various subsidiaries of American International
Group, Inc., an insurance company unaffiliated with us, have previously
insured and continue to insure customer packages in return for premiums paid
by the customers. After an adverse decision of the United States Tax Court
against us in August 1999, the OPL reinsurance arrangements were terminated as
a result of American International Group's termination of the insurance
policies. Until October 1, 1999, OPL reinsured these primary insurers, whose
premium payments constituted OPL's largest source of revenues and profits. OPL
earned reinsurance premiums of approximately $273.5 million for reinsuring
package risks from January 1, 1999 to September 30, 1999. OPL's reinsurance
business has also included reinsurance of workers compensation insurance
issued by another unaffiliated United States-based insurance company covering
risks of one of our subsidiaries in the state of California.
Leasing Transactions
OPL's business also includes leasing certain real property to our
subsidiaries through Overseas Partners Capital Corporation. OPCC is a wholly
owned subsidiary of OPL, and OPL has guaranteed OPCC's performance of the
leasing arrangements described below. In December 1989, OPCC acquired from us
our Ramapo Ridge Facility. Beginning in July 1990, we leased this facility for
an initial term ending in 2019. We use this facility as a data processing,
telecommunications and operations center. Lease payments on this facility have
fixed and variable components. The fixed component provides for aggregate
lease payments of approximately $216.0 million over the initial term of the
lease. The variable component is based on the number of customer accounts we
maintain.
OPCC has irrevocably assigned the right to receive the fixed component of
rentals on the facility lease to its subsidiary, OPL Funding Corp., a Delaware
corporation. OPL Funding pledged its interest in these payments to secure
bonds issued to finance the acquisition of the leased assets. Our obligation
to pay the fixed rentals to OPL Funding is absolute and unconditional during
the initial term of the lease and continues after an early lease termination
unless we pay to OPL Funding an amount sufficient to defease the remaining
interest payments on the bonds. In the event that OPCC fails to pay certain
income taxes, we are obligated to pay additional rentals to provide for such
taxes. OPCC is required to reimburse us the amount of any such termination or
tax payments.
At the conclusion of this lease, we may purchase the Ramapo Ridge Facility
at fair market value. We have an option to purchase the land on which the
facility is located, but not the buildings, from OPCC in 2050 for
approximately $63.7 million, subject to certain adjustments for increases in
the fair market value of the land. In 1999, OPCC and its subsidiary, OPL
Funding, received rental payments of approximately $17.9 million in the
aggregate from us pursuant to the lease described above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 SEC. These persons are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file
with the SEC. To our knowledge, our directors and executive officers complied
during 1999 with all applicable Section 16(a) filing requirements, except
that, due to our own error, Mr. MacDougal's annual report on Form 5 was filed
approximately one week late. We had no 10% shareowners during 1999.
17
<PAGE>
RATIFICATION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
Our Board of Directors has appointed Deloitte & Touche LLP, independent
auditors, to audit our consolidated financial statements for the year ending
December 31, 2000 and to prepare a report on this audit. A representative of
Deloitte & Touche LLP will be present at the meeting and available to respond
to appropriate questions by shareowners.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE
FOR THE RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
---
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
(PROPOSAL NO. 3)
Our Board of Directors has approved and recommends to the shareowners that
they approve a proposal to amend our Restated Certificate of Incorporation to
modify the definition of a "permitted transferee" as it applies to lending
institutions. The definition of "permitted transferee" is relevant because
holders of class A common stock may not transfer their stock prior to the end
of the applicable restrictive period, as provided in Article Four, Section
(c)(7) of our Restated Certificate of Incorporation, to any person other than a
permitted transferee. In addition, even after the restrictive period has
expired, a transfer of class A common stock to any person other than a
permitted transferee will cause the transferred stock to automatically convert
into class B common stock.
The proposed change broadens the definition of "permitted transferee" to
include all types of lending institutions when common stock is transferred to
them pursuant to pledges by certain of our shareowners. The current Restated
Certificate of Incorporation provides that pledges may only be made to a "bank
or trust company" in order to qualify the institution as a permitted
transferee. The proposed amendment to the Restated Certificate of Incorporation
would allow the institution to qualify as a permitted transferee even if it did
not legally qualify as a "bank or trust company."
The proposed change to the definition of a "permitted transferee" also
modifies the requirement that once a shareowner pledges shares to a lending
institution, in order to qualify as a "permitted transferee," the institution
must agree to "immediately sell" the pledged shares to us in the event that the
institution forecloses on the shares. The proposed language provides that the
lending institutions would have to agree to "immediately offer to sell" the
pledged shares to us, but would not suggest that the sale be required.
The full text of the proposed amendment to our Restated Certificate of
Incorporation is set forth in Annex A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE FOR THE
---
ADOPTION OF THE AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION.
SOLICITATION OF PROXIES
We will pay the cost of soliciting of proxies on our own behalf. Directors,
officers and other employees may solicit proxies by mail, in person or by
telecommunication. We have engaged Corporate Investor Communications, Inc. to
assist us in the proxy solicitation process and will pay that firm
approximately $8,000 for its services. We will not pay any additional
compensation, except reimbursement for actual expenses, for this solicitation.
We will reimburse brokers, fiduciaries, custodians and other nominees for out-
of-pocket expenses incurred in sending our proxy materials to, and obtaining
instructions relating to materials from, beneficial owners.
18
<PAGE>
OTHER BUSINESS
Our Board is not aware of any business to be conducted at the Annual Meeting
other than the proposals described in this Proxy Statement. However, should
any other matter requiring a vote of the shareowners arise, or should any
director nominee be unable to serve or for good cause refuse to serve, the
persons named in the accompanying proxy card will vote in accordance with
their best judgment.
Under our Bylaws and SEC regulations, any shareowner proposals or director
nominations for the 2001 Annual Meeting of Shareowners must be received by our
Secretary not later than November 27, 2000, and proxies may not exercise their
discretionary voting authority with respect to shareowner proposals that were
timely received.
A copy of our 1999 annual report on Form 10-K, including financial
statements, as filed with the SEC, may be obtained without charge upon written
request to: Secretary, United Parcel Service, Inc., 55 Glenlake Parkway, NE,
Atlanta, Georgia 30328.
19
<PAGE>
ANNEX A
FIRST AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
UNITED PARCEL SERVICE, INC.
The Certificate of Incorporation of United Parcel Service, Inc. is hereby
amended as follows:
Subparagraph (c)(16)(i)(H) of Article Fourth of the Corporation's Restated
Certificate of Incorporation is deleted in its entirety and replaced with the
following:
"a lending institution in connection with a pledge of shares by a person who
either (1) was a holder on the Public Offering Date of the shares being
pledged or (2) was an employee of the Corporation or one of its subsidiaries
on the date of the pledge of such shares; and such shares are pledged as bona
fide collateral for a loan to such person provided such lending institution
agrees in writing to immediately offer to sell such shares to the Corporation
in the event such lending institution forecloses on such shares;"
The foregoing amendment shall be effective as of the approval of the
amendment by the Shareowners of the Corporation pursuant to the terms of
Section 242(b) of the Delaware General Corporation Law.
A-1
<PAGE>
[LOGO OF UPS]
[RECYCLED PAPER LOGO]
<PAGE>
P.O. BOX 41784
FIRST UNION NATIONAL BANK ATTN: PA 1204-ESS
PHILADELPHIA, PA
19101-1784
1-888-663-8325
March 27, 2000
To Participants in the UPS Qualified Stock Ownership
Plan and Trust:
We have been advised that the annual meeting of shareowners of United Parcel
Service, Inc. (the "Corporation") will be held at the Hotel du Pont, 11th and
Market Streets, Wilmington, Delaware 19801, on May 12, 2000, at 9:00 a.m. A
copy of the Notice of Meeting and Proxy Statement and a Letter of Instructions
to execute the proxy, which is being solicited on behalf of the Board of
Directors of the Corporation, are enclosed.
Under the UPS Qualified Stock Ownership Plan and Trust Agreement, we are to
notify you of the time and place of the meeting and furnish you the enclosed
Letter of Instructions, which allows you to require us to vote your shares as
you indicate. If you wish to instruct us how to vote your shares, please
complete, date, sign and return the Letter of Instructions to us in the
enclosed pre-addressed postage-paid envelope.
If we do not hear from you prior to May 5, 2000, we will execute and deliver
to Joseph R. Moderow, the Secretary of the Corporation, a proxy to vote your
shares in the same proportion as the shares allocated under the UPS Qualified
Stock Ownership Plan and Trust for which Letters of Instructions to execute
proxy are received and voted.
Very truly yours,
First Union National Bank
Trustee, UPS Qualified Stock
Ownership
Plan and Trust
<PAGE>
----------------------------TOP--------------------------------
FOLD HERE AND DETACH
UNITED PARCEL SERVICE, INC.
This Proxy is Solicited on Behalf of the Board of Directors
Proxy for Annual Meeting of Shareowners--May 12, 2000
United Parcel Service, Inc.
ATTN: Secretary
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
The undersigned hereby appoints JAMES P. KELLY and JOSEPH R. MODEROW, or
either of them, with power of substitution, as attorneys and proxies to vote
all of the shares of stock outstanding in the name of the undersigned as of
March 15, 2000 at the annual meeting of shareowners of United Parcel Service,
Inc. ("UPS") to be held at the Hotel du Pont, 11th and Market Streets,
Wilmington, Delaware 19801, on May 12, 2000, and at any or all adjournments
thereof, and the undersigned hereby instructs and authorizes said attorneys to
vote as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED BELOW [_] WITHHOLD AUTHORITY [_]
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
William H. Brown, III, Robert J. Clanin, Michael L. Eskew, James P. Kelly,
Ann M. Livermore, Gary E. MacDougal, Joseph R. Moderow, Kent C. Nelson,
Victor A. Pelson, Charles L. Schaffer, Lea N. Soupata, Robert M. Teeter and
Thomas H. Weidemeyer.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
2. FOR [_] AGAINST [_] ABSTAIN [_] The ratification of Deloitte & Touche LLP
as auditors for UPS and its subsidiaries
for the year ending December 31, 2000.
3. FOR [_] AGAINST [_] ABSTAIN [_] The amendment of our Restated Certificate
of Incorporation to modify the definition
of a "permitted transferee" as it applies
to lending institutions.
</TABLE>
In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
(OVER)
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<PAGE>
----------------------------TOP--------------------------------
[LOGO OF UPS APPEARS HERE]
- FOLD HERE AND DETACH -
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareowner. If no direction is
made, this Proxy will be voted FOR the election of all nominees listed in Proposal 1 and FOR Proposals 2 and 3.
- ---------------------------------------------- --------------------------------------------
SIGNATURE (sign exactly as SIGNATURE OF CO-OWNER IF ANY
name appears hereon) For joint accounts, all
co-owners must sign. Executors,
Dated this day of , 2000 administrators, custodians, trustees,
------- ----------- etc. should so indicate when signing.
Do you plan to attend the Annual Meeting of Shareowners? [_] Yes [_] No
</TABLE>
Return this card in the enclosed Business Reply Envelope.
--------------------------BOTTOM----------------------------
<PAGE>
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- FOLD HERE AND DETACH -
UPS QUALIFIED STOCK OWNERSHIP PLAN AND TRUST
Letter of Instructions to Execute Proxy for Annual Meeting of Shareowners of
UNITED PARCEL SERVICE, INC.
Solicited on Behalf of the Board of Directors
FIRST UNION NATIONAL BANK
P.O. Box 41784
Philadelphia, PA 19101-1784
The undersigned hereby authorizes First Union National Bank to appoint JAMES
P. KELLY and JOSEPH R. MODEROW, or either of them, with power of substitution,
as attorneys and proxies to vote all of the shares of stock outstanding in the
name of the undersigned and held by the UPS Qualified Stock Ownership Plan and
Trust as of March 15, 2000 at the annual meeting of shareowners of United
Parcel Service, Inc. ("UPS") to be held at the Hotel du Pont, 11th and Market
Streets, Wilmington, Delaware 19801, on May 12, 2000, and at any or all
adjournments thereof, and the undersigned hereby instructs and authorizes said
attorneys to vote as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED BELOW [_] WITHHOLD AUTHORITY [_]
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
William H. Brown, III, Robert J. Clanin, Michael L. Eskew, James P. Kelly,
Ann M. Livermore, Gary E. MacDougal, Joseph R. Moderow, Kent C. Nelson,
Victor A. Pelson, Charles L. Schaffer, Lea N. Soupata, Robert M. Teeter and
Thomas H. Weidemeyer.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
2. FOR [_] AGAINST [_] ABSTAIN [_] The ratification of Deloitte & Touche LLP as auditors for
UPS and its subsidiaries for the year ending December 31,
2000.
3. FOR [_] AGAINST [_] ABSTAIN [_] The amendment of our Restated Certificate of
Incorporation to modify the definition of a "permitted
transferee" as it applies to lending institutions.
</TABLE>
In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
(OVER)
---------------------------BOTTOM----------------------------
<PAGE>
----------------------------TOP--------------------------------
[LOGO OF UPS APPEARS HERE]
- FOLD HERE AND DETACH -
This Letter of Instructions to Execute Proxy when properly executed will be
voted in the manner directed herein by the undersigned shareowner. If no
direction is made, the Proxy will be voted in the same proportion as the
shares allocated under the UPS Qualified Stock Ownership Plan and Trust for
which Letters of Instruction to Execute Proxy are received and voted.
- ------------------------------- ----------------------------------------
SIGNATURE (sign exactly as SIGNATURE OF CO-OWNER IF ANY
name appears hereon) For joint accounts, all
co-owners must sign. Executors,
Dated this day of administrators, custodians,
--------- trustees, etc. should so indicate
, 2000 when signing.
- ----------
Do you plan to attend the Annual Meeting of Shareowners? [_] Yes [_] No
Return this card in the enclosed Business Reply Envelope.
--------------------------BOTTOM----------------------------
