<PAGE>
SCHEDULE 14A INFORMATION
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 Section 240.14a-11(c) or Section 240.14a-12
UNITED PARCEL SERVICE OF AMERICA
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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:
<PAGE>
LOGO
55 Glenlake Parkway, NE, Atlanta, GA 30328
Notice of Annual Meeting of Shareowners
APRIL 30, 1998
To our Shareowners:
The Annual Meeting of Shareowners of United Parcel Service of America, Inc.,
a Delaware corporation ("UPS"), will be held at The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801, on April 30, 1998, 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 confirm the appointment of Deloitte & Touche LLP, independent
auditors, as auditors of UPS and its subsidiaries for the year ending
December 31, 1998; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 2, 1998 as
the record date for determining holders of common stock of UPS entitled to
notice of and to vote at the meeting.
Joseph R. Moderow
Secretary
Atlanta, GA
March 16, 1998
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 STAMPED
ENVELOPE.
<PAGE>
[LOGO OF UNITED PARCEL SERVICE APPEARS HERE]
55 Glenlake Parkway, NE, Atlanta, GA 30328
March 16, 1998
PROXY STATEMENT
The accompanying proxy and voting instructions are solicited by the Board of
Directors (the "Board") of United Parcel Service of America, Inc. ("UPS" or
the "Company") and are being mailed with this proxy statement to all
shareowners on or about March 16, 1998. The person giving a proxy has the
right to revoke it at any time before it is voted by giving written notice of
revocation to the Secretary of UPS, by submitting a subsequent proxy or by
voting in person at the meeting. The expense of this proxy solicitation will
be paid by UPS. In addition to solicitation by mail, employees may personally
solicit proxies for which no additional compensation will be paid.
Owners of Common Stock held by First Union National Bank ("First Union") as
Trustee under the UPS Managers Stock Trust and the UPS Employees Stock Trust
(the "Trusts") may direct the voting of their shares by executing and
returning to First Union voting instructions that they receive along with this
notice of meeting and proxy statement. An owner of shares subject to one of
the Trusts who wishes to vote his or her shares in person may request First
Union to issue a proxy to him or her for the number of shares held for his or
her account. Shares for which no instructions or requests for proxies are
received by First Union prior to April 21, 1998 will be voted by First Union.
UPS had 547,539,827 shares of Common Stock outstanding and entitled to vote
at the close of business on March 2, 1998. These shares are the only
securities of UPS entitled to be voted at the Annual Meeting of Shareowners on
April 30, 1998 (the "Annual Meeting"). Each share of Common Stock is entitled
to one vote except that the voting rights of any shareowner or shareowners as
a group who beneficially own more than 10% of the voting stock, except the UPS
Managers Stock Trust, UPS Employees Stock Trust, or any employee benefit plan
of UPS, are limited so that such shareowner or group may cast only one one-
hundredth of a vote with respect to each share in excess of 10 percent of the
outstanding shares of Common Stock. Only shareowners of record at the close of
business on March 2, 1998 will be entitled to vote. Saul & Co., nominee for
First Union, is the record owner of 338,210,629 shares, constituting 61.77% of
the Common Stock of UPS outstanding and entitled to vote as of March 2, 1998.
UPS's By-Laws provide that at any meeting of shareowners, the holders of a
majority of the issued and outstanding Common Stock of UPS present in person
or by proxy constitute a quorum for the transaction of business at the
meeting. The election of directors will be decided by a plurality of the votes
of the shares present in person or by proxy, and entitled to vote thereon. 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 any other matters that may come before the Annual Meeting,
if proxies are executed and returned, such proxies will be voted in a manner
deemed by the proxy representatives named therein to be in the best interests
of the Company and its shareowners.
<PAGE>
ELECTION OF DIRECTORS
All shares of stock represented by properly executed proxies received in
response to this solicitation will be voted for the election of the directors
specified therein 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 who, if elected, 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 15 directors will be elected at the Annual Meeting. All of the
current directors have been nominated for re-election, except that Mr. Tyler
retired from UPS and resigned from the Board, and Mr. Kaysen has declined to
stand for re-election. In addition, Michael L. Eskew, Lea N. Soupata and
Thomas H. Weidemeyer have been nominated for election as directors. Each is an
officer of UPS and a member of the Management Committee. Set forth below is
certain biographical information concerning each of the nominees for election
as a director.
[PHOTO OF John W. Alden Age 56 Director
JOHN W. ALDEN since 1988
APPEARS HERE] UPS Vice Chairman of the Board, Senior Vice President
and Business Development Group Manager
In 1986, John joined the Management Committee and was
elected Senior Vice President of Business Development.
He has served on the Company's Board of Directors since
1988 and in November 1996 became Vice Chairman of the
Board. He presently oversees marketing, sales,
advertising, public relations and the UPS Logistics
Group and its subsidiaries. John, who majored in history
while attending Boston University, started with UPS as
an operations report clerk in Watertown, Massachusetts
in 1965. Two years later, he was promoted into
supervision. After several staff and hub assignments, he
became the East New England District Customer Service
Office Manager in 1971. The following year, John was
named to manage the entire Customer Service function for
the district. In 1977, John was promoted to Midwest
Region Customer Service Manager, and in 1978 he joined
the UPS corporate office as Customer Development
Manager.
---------------------------------------------------------
[PHOTO OF William H. Brown, III Age 70 Director
WILLIAM H. BROWN since 1983
APPEARS HERE] Partner in 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.
---------------------------------------------------------
[PHOTO OF Robert J. Clanin Age 54 Director
ROBERT J. CLANIN since 1996
APPEARS HERE] UPS Senior Vice President, Treasurer and Chief Financial
Officer
Bob joined UPS in 1971 as a part-time accounting clerk.
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 present position. 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.
2
<PAGE>
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[PHOTO OF Michael L. Eskew Age 48 Director
MICHAEL L. ESKEW Nominee
APPEARS HERE] UPS Senior Vice President and Engineering Group Manager
Mike joined UPS in 1972, after he received a Bachelor of
Science Degree in Industrial Engineering from Purdue
University; he also 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 1976, and was
made Industrial Engineering ("I.E.") Manager for Germany
in 1978. In 1982, he was named 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 became
Manager of our Engineering Group in 1996. Mike serves on
the Georgia Institute of Technology's Council on
Industrial Engineering and its Advisory Board, and is a
member of the University of Michigan Trucking Industry
Program. Mike also serves on the Board of SciTrek, a
science and technology museum located in Atlanta.
---------------------------------------------------------
[PHOTO OF James P. Kelly Age 54 Director
JAMES P. KELLY since 1991
APPEARS HERE] 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 USA 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, and in January 1997, he was
elected the Chief Executive Officer and Chairman of the
Board of the Company. Jim is also a director of
Unisource Worldwide, Inc., a vendor of office supplies.
---------------------------------------------------------
[PHOTO OF Ann M. Livermore Age 39 Director
ANN M. LIVERMORE since 1997
APPEARS HERE] Vice President of Hewlett-Packard Company, Mountain
View, California
Ann received a Bachelor's Degree in Economics from the
University of North Carolina at Chapel Hill in 1980 and
a Master's Degree in Business Administration from
Stanford University in 1982. Ann joined Hewlett-Packard
in 1982 and worked initially on administration processes
and systems in the U.S. Field Operations. She was made
Manager of Marketing Services for the Application
Support Division in 1985, promoted to Manager of
Research and Development of that Division in 1986, and,
in 1989, was named Marketing Manager of the Application
Support Division. Ann became Marketing Manager of the
Professional Services Division in 1991, and Sales and
Marketing Manager of Worldwide Customer Support in 1993.
In 1995, Ann was elected a Vice President, and she was
promoted to General Manager of Worldwide Customer
Support Operations in 1996. In 1997 she became General
Manager of the Software and Services Group within the
Hewlett-Packard Computer Organization.
3
<PAGE>
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[PHOTO OF Gary E. MacDougal Age 61 Director
GARY E. MACDOUGAL since 1973
APPEARS HERE] 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
(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 trustee 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, and is currently Senior Advisor
to the Governor for Human Services Reform. 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 is a director
and Chairman of the public policy committee and a member
of the compensation and nominating committee of Union
Camp Corporation, a forest products producer. He also
serves as an advisory director of Saratoga Partners, a
New York-based venture capital fund.
---------------------------------------------------------
[PHOTO OF Joseph R. Moderow Age 49 Director
JOSEPH R. MODEROW since 1988
APPEARS HERE] 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.
---------------------------------------------------------
[PHOTO OF Kent C. ("Oz") Nelson Age 60 Director
KENT C. NELSON since 1983
APPEARS HERE] 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 has served
as Customer Service Manager in Indiana, North Illinois,
Metro Chicago, and 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 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 is also a director of Columbia/HCA
Healthcare Corporation (effective April 1998).
---------------------------------------------------------
[PHOTO OF Victor A. Pelson Age 60 Director
VICTOR A. PELSON Senior Advisor, SBC Warburg Dillon Read. since 1990
APPEARS HERE]
Prior to the merger of SBC Warburg and Dillon Read in
1997, Vic served as a Director and Senior Advisor to the
New York investment banking firm of Dillon Read since
April 1996. He previously was Chairman of Global
Operations for AT&T, with responsibility for AT&T's
operations in the U.S. and around the world. Vic started
with AT&T in 1959 as an engineer and held a variety of
assignments in different departments, including
engineering, operations, finance, marketing and sales.
At the time of his retirement from AT&T in 1996, he was
a member of the AT&T Board of Directors and the
Management Executive Committee. He is also a member of
the Board of Directors of Eaton Corp. Vic received a
bachelor's degree from New Jersey Institute of
Technology and an M.B.A. from New York University. He is
Chairman of the Board of Trustees of New Jersey
Institute of Technology.
4
<PAGE>
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[PHOTO OF John W. Rogers Age 64 Director
JOHN W. ROGERS since 1979
APPEARS HERE] Former UPS Chairman of the Board and Chief Executive
Officer
Jack was elected a Director and Vice President in
November 1979. In January of that year, he was given
responsibility for our national operations. Jack
graduated from Miami University in Ohio with a degree in
Business Administration in 1957. He began his career
with UPS that same year as a trainee in Cincinnati. His
first UPS assignments involved night loading and
delivering. He next worked in industrial engineering and
personnel before entering hub and delivery operations.
Jack was then promoted to Division Manager in Chicago
and later Operations Manager in Wisconsin. He became the
first Georgia District Manager in 1966. In 1972, he was
appointed West Region Manager. Two years later, he was
named the Northeast Region Manager. In 1976, Jack was
assigned to national operations with coordinating
responsibilities for four regions. He was elected Senior
Vice President and then Vice Chairman in 1983 and became
Chief Executive Officer and Chairman of the Board of the
Company in May 1984. He stepped down as Chairman of the
Board in November 1989 and retired from active
employment at the end of that year.
---------------------------------------------------------
[PHOTO OF Charles L. Schaffer Age 52 Director
CHARLES L. SCHAFFER since 1992
APPEARS HERE] 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 USA Operations Manager. In 1997, Chuck
became our Chief Operating Officer. Chuck is also
Chairman of the Board of Trustees for Kettering
University.
---------------------------------------------------------
[PHOTO OF Lea N. Soupata Age 47 Director
LEA N. SOUPATA Nominee
APPEARS HERE] UPS Senior Vice President and Human Resources Group
Manager
Lea joined UPS in 1969 after attending Long Island
University. Following assignments in Human Resources,
Sales and Operations, Lea was promoted to North New
England District Human Resources Manager in 1978. She
served as District Human Resources Manager in the Metro
New York District, later serving as Human Resources
Manager in the Company's East and East Central Regions.
In 1990, Lea was promoted to District Manager of the
Central New York District and became Corporate Human
Resources Manager in 1994. She became Manager of the
Human Resources Group in 1995. Lea is also Chair of the
UPS Foundation.
---------------------------------------------------------
[PHOTO OF Robert M. Teeter Age 59 Director
ROBERT M. TEETER President of Coldwater Corporation since 1990
APPEARS HERE]
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
Browning-Ferris Industries, Inc., Optical Imaging
Systems and Durakon Industries.
5
<PAGE>
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[PHOTO OF Thomas H. Weidemeyer Age 50 Director
THOMAS H. WEIDEMEYER Nominee
APPEARS HERE] UPS Senior Vice President and Air Group Manager
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 the Company's 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 President and Chief
Operating Officer of that subsidiary. 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE FOR
THE ELECTION OF THE DIRECTORS NAMED ABOVE
STOCK OWNERSHIP
Set forth below is information relating to the beneficial ownership of
Common Stock by (i) each person known by UPS to own beneficially more than
five percent of the outstanding Common Stock, (ii) each director or director
nominee, (iii) the Chief Executive Officer and each of the four highest paid
executive officers and (iv) all directors and executive officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK HELD AS OF JANUARY 31, 1998
-------------------------------------------------------------------------
NUMBER OF SHARES AS ADDITIONAL SHARES
TO WHICH THE IN WHICH THE
BENEFICIAL OWNER BENEFICIAL OWNER
EXERCISES SOLE HAS OR PARTICIPATES IN
VOTING OR INVESTMENT THE VOTING OR TOTAL SHARES AND
NAME OF BENEFICIAL OWNER POWER INVESTMENT POWER(4) PERCENT OF CLASS(6)
- ------------------------ -------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
John W. Alden........... 153,740(1)(2) 24,012,841(a) 24,166,581 4.41
William H. Brown, III... 25,796 0 25,796 0.00
Robert J. Clanin........ 126,461(1)(2) 25,361,490(a)(c) 25,487,951 4.66
Michael L. Eskew........ 103,967(1)(2) 1,348,649(c) 1,452,616 0.27
Carl Kaysen............. 12,700 0 12,700 0.00
James P. Kelly.......... 189,974(1)(2) 25,361,490(a)(c) 25,551,464 4.67
Ann M. Livermore........ 0 0 0 0.00
Gary E. MacDougal....... 54,845(1) 24,012,841(a) 24,067,686 4.40
Joseph R. Moderow....... 150,496(1)(2) 26,380,553(a)(b) 26,531,049 4.85
Kent C. Nelson.......... 261,508(2) 26,380,553(a)(b) 26,642,061 4.87
Victor A. Pelson........ 9,000 0 9,000 0.00
John W. Rogers.......... 457,604(1) 0 457,604 0.08
Charles L. Schaffer..... 158,938(1)(2) 948,900(e) 1,107,838 0.20
Lea N. Soupata.......... 100,950(2) 41,117,933(a)(c)(d)(f) 41,218,883 7.53
Robert M. Teeter........ 14,000 0 14,000 0.00
Calvin E. Tyler, Jr..... 321,606(2) 25,361,490(a)(c) 25,683,096 4.69
Thomas H. Weidemeyer.... 161,493(1)(2) 1,348,649(c) 1,510,142 0.28
Shares held by all
directors and executive
officers as a group
(including the above).. 2,802,102(3) 44,434,545(5) 47,236,647 8.63
</TABLE>
6
<PAGE>
- --------
(1) The amounts shown in this column include an aggregate of 334,558 shares
owned by or held in trust for members of the families of Messrs. Alden,
Clanin, Eskew, Kelly, MacDougal, Moderow, Rogers, Schaffer, Weidemeyer and
two other executive officers, as to which they disclaim all beneficial
ownership.
(2) Includes shares which may be acquired within 60 days of January 31, 1998,
upon the exercise of outstanding stock options as follows: Alden --
18,254; Clanin -- 3,895; Eskew -- 3,349; Kelly -- 21,175; Moderow --
17,159; Nelson -- 35,047; Schaffer -- 15,333; Soupata -- 3,233; Tyler --
17,524; and Weidemeyer -- 9,492.
(3) Shares owned by executive officers as a group include 138,690 shares which
may be acquired within 60 days of January 31, 1998, upon the exercise of
outstanding stock options.
(4) None of the directors and the officers listed in the table above, nor
members of their families, have any ownership rights in the shares listed
in this column. Of the shares (a) 24,012,841 shares are owned by the Annie
E. Casey Foundation, Inc., of which Messrs. Alden, Clanin, Kelly,
MacDougal, Moderow, Nelson, Tyler, Ms. Soupata, and other non-UPS persons
constitute the corporate Board of Trustees, (b) 2,367,712 shares are held
by various trusts of which Messrs. Moderow and Nelson are co-fiduciaries,
(c) 1,348,649 shares are held by the UPS Foundation, Inc., a Company-
sponsored charitable foundation of which Messrs. Clanin, Eskew, Kelly,
Tyler, Weidemeyer, Ms. Soupata, and an executive officer not listed above,
are trustees, (d) 1,358,000 shares are held by two Voluntary Employee
Beneficiary Associations ("VEBAs") of which Ms. Soupata is a fiduciary,
(e) 948,900 shares that are held by an employee benefit plan of which
Mr. Schaffer is a trustee, and (f) 14,398,443 shares are held by the
trustees of an employee benefit plan of which Ms. Soupata is a fiduciary.
(5) This number includes shares held by the foundations, VEBAs, employee
benefit plans and trusts of which directors and executive officers listed
above are trustees or fiduciaries. This number 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.
(6) The percentages are calculated on the basis of the amount of outstanding
shares plus the shares which may be acquired by the named individual and
the group, as applicable, within 60 days of January 31, 1998, upon
exercise of outstanding stock options.
These holdings are reported in accordance with regulations of the Securities
and Exchange Commission (the "SEC") requiring disclosure of shares as to which
directors and Named Executive Officers (defined herein) hold voting or
dispositive power, notwithstanding that they are held in a fiduciary, rather
than a personal capacity, and that such power is shared among a number of
fiduciaries including, in several cases, corporate trustees, directors or
other persons who are neither executive officers nor directors of UPS.
MEETINGS OF THE BOARD OF DIRECTORS
The UPS Board of Directors held four meetings during 1997. During 1997, each
director of UPS attended at least 75% of the total number of meetings of the
Board and any committees of which he was a member.
COMMITTEES OF THE BOARD OF DIRECTORS
The UPS Board of Directors has an Executive Committee, an Audit Committee,
an Officer Compensation Committee, a Salary Committee and a Nominating
Committee.
Messrs. Alden, Clanin, Kelly, Moderow, Schaffer and Tyler served as members
of the Executive Committee throughout 1997. This Committee may exercise all
powers of the Board of Directors in the management of the business and affairs
of UPS except for those powers expressly reserved to the Board under Delaware
law (such as amendment of the Certificate of Incorporation or By-Laws,
declaration of dividends, issuance of stock, mergers, consolidations, a sale
of substantially all of the assets of UPS and a dissolution). In 1997, this
Committee held 17 meetings.
7
<PAGE>
Messrs. Brown and Kaysen served as members of the Audit Committee throughout
1997. The primary responsibilities of the Audit Committee are to recommend
annually the independent public auditors for appointment by the Board as
auditors for UPS and its subsidiaries; review the scope of the audit made by
the accountants; review the audit reports submitted by the accountants; 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 1997, this
Committee held two meetings.
Messrs. Pelson, MacDougal and Rogers, as non-employee directors, served as
members of the Officer Compensation Committee throughout 1997. The primary
responsibility of this Committee is to set the proper and appropriate
compensation of the Chairman and Chief Executive Officer ("CEO") and to set the
proper and appropriate compensation of executive officers based upon the
recommendation of the CEO. The Committee is also responsible for making awards
to certain eligible employees under the UPS 1996 Stock Option Plan (the "1996
Plan") and the UPS Managers Incentive Plan. In 1997, the Officer Compensation
Committee held one meeting. The 1996 Plan also provides for grants of options
to non-employee directors. See "Compensation of Executive Officers and Other
Information -- Compensation of Directors."
Messrs. Clanin, Kelly and Ms. Soupata (as administrator) served as members of
the Salary Committee throughout 1997. This Committee determines the
compensation for all management employees other than executive officers, and is
responsible for the administration of the UPS Managers Incentive Plan, the UPS
1991 Stock Option Plan (the "1991 Plan") and the 1996 Plan for such employees.
In 1997, the Salary Committee held 12 meetings.
Messrs. Kaysen, Nelson, Rogers and Teeter served as members of the Nominating
Committee throughout 1997. This Committee recommends nominees for election to
the Board of Directors of UPS. Under the By-laws of UPS and the Securities and
Exchange Commission regulations any shareowner proposals or director
nominations for the 1999 Annual Meeting of Shareowners must be received by the
Secretary of UPS not later than November 16, 1998. In 1997, this Committee held
two meetings.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own
beneficially more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership of such stock with the SEC. Directors,
executive officers and greater than 10% shareowners are required by SEC
regulations to furnish the Company with copies of all such forms they file. To
the Company's knowledge, its directors and executive officers complied during
1997 with all applicable Section 16(a) filing requirements, except that due to
an error by the Company, Ms. Livermore's initial report on Form 3 was not filed
on time.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION
The following table shows the cash compensation paid or to be paid by UPS or
any of its subsidiaries, as well as certain other compensation paid or
accrued, during the fiscal years indicated to the Chief Executive Officer and
the other four highest paid executive officers of UPS for such period (the
"Named Executive Officers"), in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
----------------- STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS
- --------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
James P. Kelly 1997 $717,500 $169,647 21,621
Chairman and Chief 1996 $575,500 $182,260 22,298
Executive Officer 1995 $526,000 $150,640 21,897
John W. Alden 1997 $550,500 $134,726 19,321
Vice Chairman, Sr. Vice 1996 $470,000 $148,748 17,737
President, Business 1995 $417,500 $123,003 17,287
Development Group Manager
Calvin E. Tyler, Jr.(2) 1997 $450,500 $119,880 15,641
Sr. Vice President, USA 1996 $417,000 $143,480 16,217
Operations Manager 1995 $388,000 $122,240 16,711
Charles L. Schaffer 1997 $427,500 $113,400 14,951
Sr. Vice President, 1996 $396,250 $137,150 15,203
Chief Operating Officer 1995 $361,000 $114,600 15,270
Joseph R. Moderow 1997 $417,000 $110,160 14,721
Sr. Vice President, Secretary and 1996 $392,000 $134,769 15,203
Legal & Public Affairs Group Manager 1995 $365,000 $113,266 15,846
</TABLE>
- --------
(1) Reflects the value of awards accrued and paid under the UPS Managers
Incentive Plan for the respective fiscal years.
(2) Mr. Tyler retired from the Company effective February 28, 1998.
9
<PAGE>
STOCK OPTION GRANTS
The following table sets forth information concerning option grants to the
Named Executive Officers in 1997:
STOCK OPTION GRANTS DURING 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED 1997 SHARE(1) DATE(2) 5% 10%
---- ---------- ------------ --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James P. Kelly.......... 21,621 0.67% $ 29.75 2002 $ 177,711 $ 392,695
John W. Alden........... 19,321 0.60% $ 29.75 2002 $ 158,807 $ 350,921
Calvin E. Tyler, Jr..... 15,641 0.48% $ 29.75 2002 $ 128,559 $ 284,082
Charles L. Schaffer..... 14,951 0.46% $ 29.75 2002 $ 122,888 $ 271,550
Joseph R. Moderow....... 14,721 0.46% $ 29.75 2002 $ 120,997 $ 267,373
</TABLE>
- --------
(1) Represents the current price on the date of grant. The exercise price may
be paid by the delivery of already owned shares, subject to certain
conditions.
(2) Generally, options may not be exercised until the expiration of five years
from the date of grant, and then from April 1 through April 30 of the
exercise year.
STOCK OPTION EXERCISES AND HOLDINGS IN 1997
The following table sets forth information on stock option exercises in 1997
by the Named Executive Officers and the value of such officers' unexercised
options on December 31, 1997:
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
END OF OPTIONS AT
SHARES 1997 (2) END OF 1997
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (1) REALIZED UNEXERCISABLE UNEXERCISABLE
---- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
James P. Kelly................ 5,248 $69,536 None/ N/A
108,240 $714,483
John W. Alden................. 5,248 $69,536 None/ N/A
90,306 $594,108
Calvin E. Tyler, Jr........... 4,771 $63,216 None/ N/A
83,478 $568,877
Charles L. Schaffer........... 4,174 $55,306 None/ N/A
76,533 $512,720
Joseph R. Moderow............. 4,889 $64,779 None/ N/A
79,349 $544,552
</TABLE>
- --------
(1) Represents common shares acquired pursuant to the exercise of options
granted under the 1991 Plan.
(2) Represents common shares subject to options granted under the 1991 and
1996 Plans.
10
<PAGE>
RETIREMENT PLANS
The following table shows the estimated annual retirement benefit payable on
a single life only annuity basis to participating employees, including the
Named Executive Officers, under the UPS Retirement Plan and Coordinating
Benefit Plan upon retirement (assumed to occur at age 65). Participating
employees are also entitled to receive $15,912 per year (maximum currently
payable) in primary Social Security benefits:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS (AS OF 12/31/97)
FOR YEARS OF SERVICE INDICATED
-----------------------------------------------------------
AVERAGE FINAL EARNINGS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 200,000.00........... $ 46,022.00 $ 61,356.53 $ 76,709.47 $ 92,044.00 $107,396.94
$ 250,000.00........... $ 58,522.00 $ 78,021.53 $ 97,544.47 $117,044.00 $136,566.94
$ 300,000.00........... $ 71,022.00 $ 94,686.53 $118,379.47 $142,044.00 $165,736.94
$ 350,000.00........... $ 83,522.00 $111,351.53 $139,214.47 $167,044.00 $194,906.94
$ 400,000.00........... $ 96,022.00 $128,016.53 $160,049.47 $192,044.00 $224,076.94
$ 450,000.00........... $108,522.00 $144,681.53 $180,884.47 $217,044.00 $253,246.94
$ 500,000.00........... $121,022.00 $161,346.53 $201,719.47 $242,044.00 $282,416.94
$ 600,000.00........... $146,022.00 $194,676.53 $243,389.47 $292,044.00 $340,756.94
$ 700,000.00........... $171,022.00 $228,006.53 $285,059.47 $342,044.00 $399,096.94
$ 800,000.00........... $196,022.00 $261,336.53 $326,729.47 $392,044.00 $457,436.94
$ 900,000.00........... $221,022.00 $294,666.53 $368,399.47 $442,044.00 $515,776.94
$1,000,000.00........... $246,022.00 $327,996.53 $410,069.47 $492,044.00 $574,116.94
$1,100,000.00........... $271,022.00 $361,326.53 $451,739.47 $542,044.00 $632,456.94
$1,200,000.00........... $296,022.00 $394,656.53 $493,409.47 $592,044.00 $690,796.94
</TABLE>
- --------
* Amounts exceeding $120,000 (which is adjusted from time to time by the
Internal Revenue Service) would be paid pursuant to the Coordinating
Benefit Plan.
** 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 payment forms 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 (the
"Covered Compensation"). 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.
Estimated or actual credited years of service under the plans to the Named
Executive Officers was as follows: Kelly -- 33, Alden -- 33, Tyler -- 34,
Schaffer -- 28 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 OFFICER COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Officer Compensation Committee of the Board of Directors has furnished
the following report on Executive Compensation:
The Officer 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, including those named above, after
recommendation of the CEO. The Committee also determines the eligibility of
executive officers to participate in awards under the UPS Managers Incentive
Plan and the eligibility and levels of participation of executive officers in
stock options granted under the 1996 Plan. The Committee is assisted in the
conduct of its responsibilities by the Compensation Department of the
Company's Human Resources group and by independent compensation consultants.
11
<PAGE>
One of the most important of UPS's compensation policies is its historical
focus on its "manager-owner" concept, which has played a central role in the
Company's development and success. Throughout its history, UPS has endeavored
to be owned by its managers and managed by its owners. To achieve this
objective, UPS has for many years maintained compensation plans intended to
facilitate stock ownership by its management employees. The UPS Managers
Incentive Plan and the 1996 Plan are examples of such plans.
UPS also has a long-standing policy of promotion from within, wherever
possible, which has significantly reduced, relative to other companies, its
need to hire managers and executive officers from outside the Company. UPS's
overall management organization is comprised, to a high degree, of employees
who have spent virtually their entire careers with the Company.
UPS's executive compensation has been strongly influenced by these policies.
The CEO and the other Named Executive Officers are all long-term employees of
UPS, each having more than 25 years of service. Because UPS's plans are
designed to foster stock ownership by its managers, each Named Executive
Officer has accumulated an individually-significant number of shares of Common
Stock. As a result, the interests of shareowners and the Company's executive
officers are closely aligned, and the executive officers have strong
incentives to provide for the effective management of UPS. In the case of each
of the Named Executive Officers, earnings derived from stock appreciation,
dividends and from awards under the UPS Managers Incentive Plan and the 1996
Plan exceed or nearly exceed direct cash compensation. Of the forms of
compensation used by the Company, the awards granted under the UPS Managers
Incentive Plan are most directly keyed to corporate performance because the
aggregate amount available for distribution under the UPS Managers Incentive
Plan is based on Company profits.
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 1997 salaries of UPS's executive officers including
that of its CEO, were less than median compensation levels at similarly sized
companies. The Committee has generally found data concerning transportation
companies to be less helpful in that the companies are not of comparable size
and do not provide a meaningful comparison since executive compensation in the
industry tends to be high relative to revenues. Thus, 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
charts following this report.
In determining the appropriate CEO compensation and in approving the
appropriate compensation of each executive officer, the Committee does not
employ formulas but instead 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 when compared to
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 and
annual base salaries are not dependent on objective, corporate performance
standards for any executive officers, including the CEO.
Awards under the Managers Incentive Plan are determined by a formula that
takes into consideration Company profits, monthly salary, the number of
participants and the level of participation. The level of participation for
executive officers is the same as for approximately 10,000 participating
employees at or above the center manager level.
Options granted under the 1996 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 value of options on the date of the grant is based on
salary and level of participation.
12
<PAGE>
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.
Graphs depicting five-year and ten-year returns to shareowners are set forth
following this report. The five-year graph is required under the proxy rules
of the SEC. The ten-year graph was included to provide a perspective on share
performance that the Company considers to be more meaningful to shareowners.
The Compensation Committee
Victor A. Pelson, Chairman
Gary E. MacDougal
John W. Rogers
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 UPS,
the S&P 500 Index and the Dow Jones Transport Average (the "DJ Transport").
The comparison of the total cumulative return on investment (change in the
quarterly stock price plus reinvested dividends) for each of the quarterly
periods assumes that $100 was invested on December 31, 1992 in UPS, the S&P
500 Index and DJ Transport.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(UPS, S&P 500 INDEX, DJ TRANSPORT)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement period
(Fiscal Year Covered) SP 500 UPS DJ TRANS
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/92 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/93 $ 110.08 $ 114.99 $ 122.97
FYE 12/31/94 $ 111.53 $ 133.39 $ 102.91
FYE 12/31/95 $ 153.30 $ 152.78 $ 141.92
FYE 12/31/96 $ 188.41 $ 174.33 $ 163.53
FYE 12/31/97 $ 251.18 $ 187.44 $ 238.48
</TABLE>
Because shares of UPS Common Stock are not traded on any exchange or in the
organized over-the-counter market, share prices are not affected by some of
the factors that influence the value of publicly traded securities, such as
short-term market trends, supply and demand and the like. The fair value of
UPS Common Stock is set quarterly by the Board of Directors based on a variety
of factors, including past and current earnings, future earnings estimates,
the ratio of UPS Common Stock to debt of UPS, other factors affecting the
business and long-range prospects of UPS and general economic conditions, as
well as opinions furnished from time to time by investment counselors acting
as independent appraisers. The Board's decision as to prices considers factors
13
<PAGE>
affecting generally the market prices of publicly-traded securities, and
prolonged changes in those prices that could have an effect on the prices
offered by UPS. The Board generally does not give substantial weight to short-
term variations in average price-earnings ratios of publicly-traded securities
which at times have been considerably higher, and at other times, considerably
lower than those for UPS's securities. Because the value of UPS Common Stock
is not subject to the market fluctuations of publicly traded securities, UPS
believes that a longer term perspective on share performance would be
meaningful to shareowners.
The following graph shows a ten year comparison of cumulative returns for
UPS, the S&P 500 Index and the DJ Transport. The comparison of the total
cumulative return on investment (change in the quarterly stock price plus
reinvested dividends) for each of the quarterly periods assumes that $100 was
invested on December 31, 1987 in UPS, the S&P 500 Index, and the DJ Transport.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG SP500, UPS INDEX AND DJ TRANS INDEX
<CAPTION>
Measurement period ________ ________ ________
(Fiscal Year Covered) SP 500 UPS DJ TRANS
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/87 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/88 $ 116.61 $ 115.34 $ 131.99
FYE 12/31/89 $ 153.56 $ 129.25 $ 162.85
FYE 12/31/90 $ 148.79 $ 140.24 $ 128.26
FYE 12/31/91 $ 194.12 $ 151.62 $ 194.54
FYE 12/31/92 $ 208.90 $ 180.27 $ 210.77
FYE 12/31/93 $ 229.95 $ 207.29 $ 259.18
FYE 12/31/94 $ 232.99 $ 240.45 $ 216.91
FYE 12/31/95 $ 320.24 $ 275.41 $ 299.12
FYE 12/31/96 $ 393.58 $ 314.26 $ 344.68
FYE 12/31/97 $ 524.72 $ 337.89 $ 502.64
</TABLE>
COMPENSATION OF DIRECTORS
In 1997, directors who were not employees of UPS (other than Mr. Rogers)
received an annual director's fee of $50,000. Members of the Audit, Officer
Compensation and Nominating Committees who were not employees of UPS, other
than Mr. Rogers, 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.
UPS established a retirement plan in February 1991, which provided
retirement and disability benefits for directors who were neither employees
nor former employees of UPS ("Outside Directors"). Effective January 1, 1997,
the Board agreed to discontinue this plan and, in conjunction therewith,
increase the options for which Outside Directors are eligible under the 1996
Plan. In satisfaction of the obligations previously accrued under
14
<PAGE>
the retirement plan, the Board agreed to allocate to each director certain
amounts. The amounts so allocated to each director will appreciate or
depreciate in tandem with the changes in the share price of UPS Common Stock
(inclusive of dividends). At the time each director ceases to be a director of
UPS, the then current value of the account will be payable to him, or his
designated beneficiary, either in cash or UPS Common Stock. The value of these
accounts at December 31, 1997, was: Mr. Brown, $344,144; Mr. Kaysen, $344,144;
Mr. MacDougal, $344,144; Mr. Pelson, $172,072; and Mr. Teeter, $172,072.
In addition to permitting grants of options to eligible employees, the 1996
Plan provides for grants of non-qualified options to the Outside Directors.
Such non-qualified options are granted on the first day in each year on which
any option is granted to an employee optionee and allow such director to
purchase a number of shares equal to 109.5% of such Outside Director's annual
director's fee divided by the Current Price (as defined in the 1996 Plan) of
UPS Common Stock. Each of Messrs. Brown, Kaysen, MacDougal, Pelson and Teeter
were granted options under the 1996 Plan during 1997.
Outside Directors also have the option of deferring some or all of the fees
and/or retainer payable in connection with their services on the Board into
the UPS Deferred Compensation Plan for Non-Employee Directors. Amounts
deferred under such plan are treated as 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 shall be payable to him,
or his designated beneficiary, in forty quarterly installments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors are the members of the Officer
Compensation Committee (the "Committee") of the Board of Directors: Victor A.
Pelson, Gary E. MacDougal and John W. Rogers. None of the members of the
Compensation Committee has any direct or indirect material interest in or
relationship with UPS outside of his position as director and other than his
benefits accrued while serving as an employee of UPS. Mr. Rogers is a former
Chairman of the Board and Chief Executive Officer of UPS. He retired from
active employment with UPS in 1989. To UPS's knowledge, there were no
interlocks involving members of the Compensation Committee or other directors
of UPS requiring disclosure in this proxy statement.
CERTAIN BUSINESS RELATIONSHIPS
William H. Brown, III, a director of UPS, is a partner of Schnader Harrison
Segal & Lewis, a law firm that provides legal services from time to time to
UPS and its subsidiaries.
Certain executive officers of the Company are trustees of the UPS Thrift
Plan and the UPS Retirement Plan. The UPS Thrift Plan and the UPS Retirement
Plan, through wholly-owned corporations, own real property that is leased to
UPS subsidiaries for operating purposes at rental rates determined by
independent firms of real estate appraisers. The rentals charged UPS
subsidiaries for the leased real estate during 1997 by these plans aggregated
$252,201.
COMMON RELATIONSHIPS WITH OVERSEAS PARTNERS LTD.
Overseas Partners Ltd. ("Overseas") was incorporated under Bermuda law in
June 1983, as a wholly-owned subsidiary of UPS. On December 31, 1983, prior to
commencing operations, Overseas was spun off when UPS paid a special dividend
to UPS shareowners of one share of Overseas Common Stock for each share of UPS
Common Stock then outstanding, resulting in the distribution of approximately
97% of the outstanding Common Stock of Overseas. In January 1998, UPS paid
Overseas approximately $19,983,058 for approximately 1,175,474 shares of
Overseas Common Stock to be distributed in connection with UPS Managers
Incentive Plan awards.
Certain employees, officers and a director of UPS are directors of Overseas.
In considering which risks related to UPS's business to reinsure, or which
leasing or other arrangements to enter into with UPS, these
15
<PAGE>
individuals consider the impact of their business decisions on each of the two
companies. Although prevailing market conditions are among the factors
considered by them in making such 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. Further information
relating to these reinsurance and leasing transactions are set forth below.
UPS does not have any formal conflict resolution procedures. Nevertheless,
in connection with the insurance by Overseas of risks related to the business
of UPS, UPS believes the rates charged by the primary insurers reinsured by
Overseas are competitive with those charged to shippers utilizing other
carriers. Additionally, in connection with major transactions in which UPS and
Overseas have been involved, primarily leasing transactions, UPS has 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.
As of March 2, 1998, UPS did not own any shares of Overseas Common Stock.
REINSURANCE TRANSACTIONS
Overseas was organized to reinsure shippers' risks relating to packages
carried by UPS as a common carrier as well as to underwrite life and property
and casualty reinsurance for insureds unaffiliated with UPS. Since commencing
operations on January 1, 1984, Overseas' reinsurance business has related
primarily to reinsuring insurance issued by United States-based insurance
companies unaffiliated with UPS or Overseas. This reinsurance covers the risk
of loss or damage to shippers' packages carried by UPS's subsidiaries and
unaffiliated foreign common carriers whose declared value exceeds $100 or
equivalent in foreign currency. The reinsurance of excess value insurance does
not involve transactions conducted between UPS and Overseas. Various
subsidiaries of American International Group, Inc. (an insurance company
unaffiliated with UPS) insure customer packages in return for premiums paid by
the customers. Overseas reinsures these primary insurers, whose premium
payments constitute Overseas' largest source of revenues and profits.
Reinsurance premiums earned by Overseas for reinsuring risks from January 1,
1997 to December 31, 1997 were approximately $367.0 million. Overseas'
reinsurance business has also included reinsurance of workers compensation
insurance issued by another unaffiliated United States-based insurance company
covering risks of a UPS subsidiary in the state of California.
LEASING TRANSACTIONS
Overseas' business has included leasing certain aircraft and real property
to subsidiaries of UPS through Overseas Partners Capital Corporation ("OPCC").
OPCC is a wholly owned subsidiary of Overseas and Overseas has guaranteed
OPCC's performance of the leasing arrangements described below. In December
1989, OPCC acquired from UPS the Ramapo Ridge Facility (the "Facility").
Beginning in July 1990, the Facility was leased to UPS for an initial term
ending in 2019. UPS uses the Facility as a data processing, telecommunications
and operations center. Lease payments 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 maintained by UPS.
In December 1989, OPCC acquired from UPS for approximately $67.9 million its
rights to purchase from the Boeing Company five 757 aircraft which were then
being manufactured. The aircraft were delivered to OPCC in 1990 and are leased
to UPS for a term ending in 2012. Lease payments have fixed and variable
components. The fixed component provides for minimum aggregate lease payments
of approximately $376.5 million over the term of the lease. The variable
component is based on the number of flight hours recorded for the aircraft.
Rentals began in the fourth quarter of 1990.
OPCC has irrevocably assigned the right to receive the fixed component of
rentals on the Boeing 757 aircraft and Facility leases to its subsidiary, OPL
Funding Corp. ("OPL Funding"), a Delaware corporation. OPL
16
<PAGE>
Funding pledged its interest in these payments to secure bonds issued to
finance the acquisition of the leased assets. UPS's obligation to pay the
fixed rentals to OPL Funding is absolute and unconditional during the initial
term of each lease, and continues after an early lease termination unless UPS
pays 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, UPS is obligated to pay additional rentals to provide for such taxes.
OPCC is required to reimburse UPS the amount of any such termination or tax
payments.
At the conclusion of each of the leases, UPS may purchase the aircraft and
the Facility at fair market value. UPS has 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 1997, OPCC and its subsidiary, OPL
Funding, received rental payments of approximately $42.2 million in the
aggregate from UPS pursuant to the leases described above.
17
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, independent
auditors, subject to ratification by the shareowners, to audit the
consolidated financial statements of UPS and its subsidiaries for the year
ending December 31, 1998 and to prepare a report on such audit. A
representative of Deloitte & Touche LLP will not be present at the meeting,
but officers of UPS will be available to respond to appropriate questions by
shareowners.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies on behalf of the Company will be
borne by the Company. The Company has engaged First Union to assist it in the
proxy solicitation process and will pay such firm approximately $170,000 for
its services. In addition, directors, officers and other employees of the
Company may, without additional compensation, except reimbursement for actual
expenses, solicit proxies by mail, in person or by telecommunication. The
Company will reimburse brokers, fiduciaries, custodians and other nominees for
out-of-pocket expenses incurred in sending the Company's proxy materials to,
and obtaining instructions relating to such materials from, beneficial owners.
OTHER BUSINESS
The Board is not aware of any business to be conducted at the Annual Meeting
other than the proposals described herein. However, should any other matter
requiring a vote of the shareowners arise, the proxies named in the
accompanying proxy will vote in accordance with their best judgment.
Under the By-laws of UPS and the Securities and Exchange Commission
regulations, any shareowner proposals or director nominations for the 1999
Annual Meeting of Shareowners must be received by the Secretary of UPS not
later than November 16, 1998.
A COPY OF THE 1997 ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL
STATEMENTS, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE
OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO: SECRETARY, UNITED PARCEL
SERVICE OF AMERICA, INC., 55 GLENLAKE PARKWAY, NE, ATLANTA, GA 30328.
18
<PAGE>
TOP
FOLD AND DETACH HERE
BOTTOM
UPS STOCK TRUSTS
WHICH INCLUDE THE FOLLOWING: THE UPS STOCK TRUST, UPS MANAGERS STOCK TRUST, OR
THE UPS EMPLOYEES STOCK TRUST
LETTER OF INSTRUCTIONS TO EXECUTE PROXY FOR ANNUAL MEETING OF SHAREOWNERS OF
UNITED PARCEL SERVICE OF AMERICA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FIRST UNION NATIONAL BANK
P.O. Box 41784
Philadelphia, PA 19101-1784
Ladies and Gentlemen:
In connection with the annual meeting of shareowners of United Parcel
Service of America, Inc. to be held in Wilmington, Delaware, on April 30,
1998, you are hereby instructed and directed to deliver a proxy to James P.
Kelly and Joseph R. Moderow, or either of them, with power of substitution,
instructing and authorizing them to vote all shares which you are holding for
the benefit of the undersigned in the various UPS stock trusts as of March 2,
1998, as follows:
1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary the nominees listed below [_]
below) [_]
John W. Alden, 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, John W. Rogers, 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.
- -------------------------------------------------------------------------------
2. FOR [_] AGAINST [_] ABSTAIN [_] the appointment of Deloitte &
Touche LLP, as auditors for UPS
and its subsidiaries for the
year ending December 31, 1998.
In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
(OVER)
<PAGE>
[LOGO OF UNITED PARCEL SERVICE APPEARS HERE]
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
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 Proposals 1, and 2.
- ------------------------------- --------------------------------
SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY
appears hereon) For joint accounts, all
co-owners must sign. Ex-
ecutors, administrators,
custodians, trustees,
etc. should so indicate
when signing.
Dated this ________ day of __________________, 1998.
Return this card in the enclosed Business Reply Envelope.
<PAGE>
FOLD HERE AND DETACH
- --------------------------------------------------------------------------------
UNITED PARCEL SERVICE OF AMERICA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREOWNERS--APRIL 30, 1998
United Parcel Service of America, 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 2, 1998 at the annual meeting of shareowners of United Parcel Service of
America, Inc. ("UPS") to be held at the Corporation Trust Company, 1209 Orange
Street, Wilmington, Delaware, on April 30, 1998, and at any or all
adjournments thereof; and the undersigned hereby instructs and authorizes said
attorneys to vote as follows:
1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to vote for all
to the contrary nominees listed
below) [_] below [_]
John W. Alden, 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, John W. Rogers, 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.
- -------------------------------------------------------------------------------
2. FOR [_] AGAINST [_] ABSTAIN [_] the appointment of Deloitte &
Touche LLP, as auditors for UPS
and its subsidiaries for the
year ending December 31, 1998.
In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
(OVER)
<PAGE>
[LOGO OF UNITED PARCEL SERVICE APPEARS HERE]
FOLD HERE AND DETACH
- --------------------------------------------------------------------------------
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 Proposals 1, and 2.
- -------------------------------- ---------------------------------
SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY
appears hereon) For joint accounts, all
co-owners must sign. Ex-
ecutors, administrators,
custodians, trustees,
etc. should so indicate
when signing.
Dated this ________ day of ____________________, 1998.
Return this card in the enclosed Business Reply Envelope.
<PAGE>
FOLD HERE AND DETACH
ANNIE E. CASEY FOUNDATION
STOCK COMPENSATION PLAN
LETTER OF INSTRUCTIONS TO EXECUTE PROXY FOR ANNUAL MEETING OF SHAREOWNERS OF
UNITED PARCEL SERVICE OF AMERICA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FIRST UNION NATIONAL BANK
P.O. Box 41784
Philadelphia, PA 19101-1784
Ladies and Gentlemen:
In connection with the annual meeting of shareowners of United Parcel
Service of America, Inc. to be held in Wilmington, Delaware, on April 30,
1998, you are hereby instructed and directed to deliver a proxy to James P.
Kelly and Joseph R. Moderow, or either of them, with power of substitution,
instructing and authorizing them to vote all shares which you are holding for
the benefit of the undersigned as of March 2, 1998, as follows:
1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to vote for all the
to the contrary below) [_] nominees listed
below [_]
John W. Alden, 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, John W. Rogers, 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.
- -------------------------------------------------------------------------------
2. FOR [_] AGAINST [_] ABSTAIN [_] the appointment of Deloitte &
Touche LLP, as auditors for UPS and
its subsidiaries for the year
ending December 31, 1998.
In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
(OVER)
<PAGE>
[LOGO OF UNITED PARCEL SERVICE APPEARS HERE]
FOLD HERE AND DETACH
- --------------------------------------------------------------------------------
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 Proposals 1, and 2.
- ------------------------------- -----------------------------------
SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY
appears hereon) For joint accounts, all
co-owners must sign. Ex-
ecutors, administrators,
custodians, trustees,
etc. should so indicate
when signing.
Dated this ________ day of___________________, 1998.
Return this card in the enclosed Business Reply Envelope.
<PAGE>
P.O. BOX 41784
FIRST UNION NATIONAL BANK ATTN: PA 1204-ESS
PHILADELPHIA, PA
19101-1784
1-888-663-8325
March 16, 1998
To Participants in the Annie E. Casey
Foundation Stock Compensation Plan:
We have been advised that the annual meeting of shareowners of United Parcel
Service of America, Inc. (the "Corporation") will be held at 1209 Orange
Street, Wilmington, Delaware, on April 30, 1998, at 9:00 A.M. A copy of this
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 applicable agreement, we are to notify you of the time and place of
the meeting and offer to furnish you, and furnish if requested, a proxy
permitting you to vote at the meeting the number of shares of capital stock of
the Corporation held by us under the trust for you. If you want such a proxy,
please advise us.
If you wish your stock voted as indicated in the enclosed Letter of
Instructions, please date, sign and return the letter to us in the addressed
envelope which requires no postage.
If we do not hear from you prior to April 21, 1998, we will execute and
deliver to Joseph R. Moderow, the Secretary of the Corporation, a proxy to vote
all shares for which no proxy has been requested and for which we have not
received a Letter of Instructions.
Very truly yours,
First Union National Bank
<PAGE>
FIRST UNION NATIONAL BANK P. O. BOX 41784
ATTN: PA 1204-ESS
PHILADELPHIA, PA
19101-1784
1-888-663-8325
March 16, 1998
To Members Of The UPS Stock Trusts:
We have been advised that the Annual Meeting of Shareowners of United Parcel
Service of America, Inc. (the "Corporation") will be held at 1209 Orange
Street, Wilmington, Delaware, on April 30, 1998, 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 applicable trust agreement, we are to notify you of the time and
place of the meeting and offer to furnish you, and furnish if requested, a
proxy permitting you to vote at the meeting the number of shares of capital
stock of the Corporation held by us under the trust for you. If you want such a
proxy, please advise us.
If you wish your stock voted as indicated in the enclosed Letter of
Instructions, please date, sign and return the letter to us in the addressed
envelope which requires no postage.
If we do not hear from you prior to April 21, 1998, we will execute and
deliver to Joseph R. Moderow, the Secretary of the Corporation, a proxy to vote
all shares for which no proxy has been requested and for which we have not
received a Letter of Instructions.
Very truly yours,
First Union National Bank
Trustee, UPS Stock Trusts
