UNITED PARCEL SERVICE OF AMERICA INC, DEF 14A, 1999-03-15

UNITED PARCEL SERVICE OF AMERICA INC
DEF 14A, 1999-03-15
TRUCKING & COURIER SERVICES (NO AIR)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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, 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:

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55 Glenlake Parkway, NE, Atlanta, GA 30328

Notice of Annual Meeting of Shareowners

April 29, 1999

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 29, 1999, 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, 1999; 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 1, 1999 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 15, 1999

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 15, 1999

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 15, 1999. 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 the common stock of UPS (the "Common Stock") held by First Union
National Bank ("First Union") as Trustee under the UPS Managers Stock Trust,
the UPS Employees Stock Trust and the UPS Qualified Stock Ownership Plan and
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 the UPS
Managers Stock Trust or the UPS Employees Stock Trust 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 22, 1999 will be voted by First Union.

UPS had 558,603,610 shares of Common Stock outstanding and entitled to vote
at the close of business on March 1, 1999. These shares are the only
securities of UPS entitled to be voted at the Annual Meeting of Shareowners on
April 29, 1999 (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
Trusts 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 1, 1999 will be
entitled to vote. Saul & Co., nominee for First Union, is the record owner of
362,980,550 shares, constituting 64.98% of the Common Stock outstanding and
entitled to vote as of March 1, 1999.

UPS's By-Laws provide that at any meeting of shareowners, the holders of a
majority of the issued and outstanding Common Stock 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. Set forth below is
certain biographical information concerning each of the nominees for election
as a director.

[Photo of
John W. Alden John W. Alden Age 57 Director
appears here] since 1988
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 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. John
is also a director of Browning-Ferris Industries, Inc.,
and he serves on its compensation committee.
---------------------------------------------------------

[Photo of
William H. Brown, III William H. Brown, III Age 71 Director
appears here] since 1983
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.
---------------------------------------------------------

Robert J. Clanin Age 55 Director
[Photo of since 1996
Robert J. Clanin UPS Senior Vice President, Treasurer and Chief Financial
appears here] 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
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>

[Photo of
Michael L. Eskew
appears here] Michael L. Eskew Age 49 Director
since 1998
UPS Senior Vice President and Group Manager of
Engineering and Corporate Development

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 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 became
Manager of our Engineering Group in 1996. Mike serves on
the Georgia Institute of Technology's Advisory Board,
and is a member of the University of Michigan Trucking
Industry Program.
---------------------------------------------------------

[Photo of
James P. Kelly
appears here] James P. Kelly Age 55 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, 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
appears here] Ann M. Livermore Age 40 Director
Vice President of Hewlett-Packard Company since 1997

Ann is vice president of Hewlett-Packard Company ("HP")
and general manager of its Enterprise Computing
Solutions Organization. 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.
---------------------------------------------------------

[Photo of
Gary E. MacDougal
appears here] Gary E. MacDougal Age 62 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
(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 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.

3
<PAGE>

[Photo of
Joseph R. Moderow
appears here] Joseph R. Moderow Age 50 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.
---------------------------------------------------------

[Photo of
Kent C. ("Oz") Nelson
appears here] Kent C. ("Oz") Nelson Age 61 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 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.
---------------------------------------------------------

[Photo of
Victor A. Pelson
appears here] Victor A. Pelson Age 61 Director
Senior Advisor, Warburg Dillon Read, LLC since 1990

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. and Carrier I
International, S.A. 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.

---------------------------------------------------------

[Photo of
John W. Rogers John W. Rogers Age 65 Director
appears here] since 1979
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 the Wisconsin District.
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.

4
<PAGE>

[photo of Charles L. Schaffer Age 53 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 U.S. 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 Lea N. Soupata Age 48 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 333,000 employees worldwide. Following
several assignments with UPS in Human Resources, Sales
and Operations, Lea became the Human Resources Manager
in the company's 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, the Company's 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.

---------------------------------------------------------

[photo of
Robert M. Teeter Robert M. Teeter Age 60 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
Browning-Ferris Industries, Inc., Optical Imaging
Systems and Durakon Industries.

---------------------------------------------------------

[photo of
Thomas H. Weidemeyer Thomas H. Weidemeyer Age 51 Director
appears here] since 1998
UPS Senior Vice President and Transportation 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

5
<PAGE>

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, 1999
----------------------------------------------------------------------
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........... 196,651(1)(2) 21,834,274(a) 22,030,925 4.01
William H. Brown, III... 31,640 0 31,640 0.01
Robert J. Clanin........ 210,009(1)(2) 22,882,923(a)(c) 23,092,932 4.20
Michael L. Eskew........ 110,535(1)(2) 1,048,649(c) 1,159,184 0.21
James P. Kelly.......... 207,172(1)(2) 22,882,923(a)(c) 23,090,095 4.20
Ann M. Livermore........ 2,229 0 2,229 0.00
Gary E. MacDougal....... 35,991(1) 21,834,274(a) 21,870,265 3.98
Joseph R. Moderow....... 154,243(1)(2) 24,183,821(a)(b) 24,338,064 4.42
Kent C. Nelson.......... 270,448(1)(2) 24,183,821(a)(b) 24,454,269 4.45
Victor A. Pelson........ 12,344 0 12,344 0.00
John W. Rogers.......... 450,971(1) 0 450,971 0.08
Charles L. Schaffer..... 177,838(1)(2) 1,168,900(e) 1,346,738 0.24
Lea N. Soupata.......... 103,060(2) 24,240,923(a)(c)(d) 24,343,983 4.43
Robert M. Teeter........ 30,000 0 30,000 0.01
Thomas H. Weidemeyer.... 169,309(1)(2) 1,048,649(c) 1,217,958 0.22
Shares held by all
directors and executive
officers as a group
(including the above).. 2,853,893(3) 27,759,370(5) 30,613,263 5.56
</TABLE>
- --------
(1) The amounts shown in this column include an aggregate of 366,171 shares
owned by or held in trust for the members of the families of Messrs.
Alden, Clanin, Eskew, Kelly, MacDougal, Moderow, Nelson, Rogers, Schaffer,
Weidemeyer and five other executive officers, as to which they disclaim
all beneficial ownership.
(2) Includes shares which may be acquired within 60 days of January 31, 1999,
upon the exercise of outstanding stock options as follows: Alden --
17,707; Clanin -- 4,293; Eskew -- 3,606; Kelly -- 21,249; Moderow --
16,420; Nelson -- 33,483; Schaffer -- 15,776; Soupata -- 3,022; and
Weidemeyer -- 9,337.
(3) Shares owned by executive officers as a group include 163,620 shares which
may be acquired within 60 days of January 31, 1999, 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) 21,834,274 shares are owned by the Annie
E. Casey Foundation, Inc., of which Messrs. Alden, Clanin, Kelly,
MacDougal, Moderow and Nelson, Ms. Soupata, and other non-UPS persons
constitute the corporate Board of Trustees, (b) 2,349,547 shares are held
by various trusts of which Messrs. Moderow and Nelson are co-fiduciaries,
(c) 1,048,649 shares are 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, (d) 1,358,000 shares are held by two Voluntary Employee
Beneficiary Associations ("VEBAs") of which Ms. Soupata is a fiduciary,
and (e) 1,168,900 shares that are held by an employee benefit plan of
which Mr. Schaffer is a trustee.
(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

6
<PAGE>

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, 1999, 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 1998. During 1998, each
director of UPS 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

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 and Schaffer served as members of the
Executive Committee throughout 1998. Mr. Tyler served as a member of the
Executive Committee until his retirement on January 15, 1998, and Messrs.
Eskew and Weidemeyer and Ms. Soupata have served as members of the Committee
since their appointments in May 1998. 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 1998, this
Committee held 13 meetings.

Mr. Brown served as a member of the Audit Committee throughout 1998, Mr.
Kaysen served as a member of the Committee until April 1998, and Ms. Livermore
has served as a member of the Committee since her appointment in February
1998. 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 1998, this
Committee held three meetings.

Messrs. Pelson, MacDougal and Rogers served as members of the Officer
Compensation Committee throughout 1998. 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 the executive officers
under the UPS 1996 Stock Option Plan (the "1996 Plan") and the UPS Managers
Incentive Plan. The 1996 Plan also provides for grants of options to non-
employee directors. In 1998, the Officer Compensation Committee held two
meetings. See "Compensation of Executive Officers and Other Information --
Compensation of Directors."

Messrs. Clanin and Kelly served as members of the Salary Committee
throughout 1998, and Ms. Soupata served as administrator of the Committee
until April 1998 and has since served as a member of the Committee. This
Committee determines the compensation for all management employees other than
executive officers, and

7
<PAGE>

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 1998, the Salary Committee held 12 meetings.

Messrs. Nelson, Rogers and Teeter served as members of the Nominating
Committee throughout 1998, and Mr. Kaysen served as a member of the Committee
until April 1998. This Committee recommends nominees for election to the Board.
Under the By-laws of UPS and SEC regulations, any shareowner proposals or
director nominations for the 2000 Annual Meeting of Shareowners must be
received by the Secretary of UPS not later than November 16, 1999. In 1998,
this Committee held one meeting.

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
1998 with all applicable Section 16(a) filing requirements.

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
Compensation Securities
----------------- Underlying
Name and Principal Stock All Other
Position Year Salary Bonus(1) Options Compensation(2)
- ------------------ ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
James P. Kelly 1998 $771,500 $319,277 50,468 $4,800
Chairman and Chief 1997 $717,500 $169,647 21,621 --
Executive Officer 1996 $575,500 $182,260 22,298 --
John W. Alden 1998 $588,000 $252,480 38,493 $4,800
Vice Chairman, Sr. Vice 1997 $550,500 $134,726 19,321 --
President and Business 1996 $470,000 $148,748 17,737 --
Development Group Manager
Robert J. Clanin 1998 $450,500 $194,620 29,084 $4,800
Sr. Vice President,
Treasurer and 1997 $409,000 $102,629 13,801 --
Chief Financial Officer 1996 $363,000 $120,635 13,683 --
Joseph R. Moderow 1998 $442,000 $189,360 29,084 $4,800
Sr. Vice President,
Secretary and 1997 $417,000 $110,160 14,721 --
Legal & Public Affairs
Group Manager 1996 $392,000 $134,769 15,203 --
Charles L. Schaffer 1998 $492,000 $210,400 29,939 $4,800
Sr. Vice President and 1997 $427,500 $113,400 14,951 --
Chief Operating Officer 1996 $396,250 $137,150 15,203 --
</TABLE>
- --------

(1) Reflects the value of awards accrued and paid under the UPS Managers
Incentive Plan for the respective fiscal years.

(2) Reflects the value of UPS common stock contributed by UPS to the accounts
of the named individuals pursuant to the UPS SavingsPLUS plan.

9
<PAGE>

Stock Option Grants

The following table sets forth information concerning option grants to the
Named Executive Officers in 1998:

STOCK OPTION GRANTS DURING 1998

<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 1998 Share(1) Date(2) 5% 10%
---- ---------- ------------ --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James P. Kelly.......... 50,468 1.23% $ 32.00 2003 $ 446,188 $ 985,959
John W. Alden........... 38,493 0.94% $ 32.00 2003 $ 340,317 $ 752,012
Robert J. Clanin........ 29,084 0.71% $ 32.00 2003 $257,132 $ 568,194
Joseph R. Moderow....... 29,084 0.71% $ 32.00 2003 $ 257,132 $ 568,194
Charles L. Schaffer..... 29,939 0.73% $ 32.00 2003 $ 264,691 $ 584,898
</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

The following table sets forth information on stock option exercises in 1998
by the Named Executive Officers and the value of such officers' unexercised
options on December 31, 1998:

AGGREGATED OPTION EXERCISES IN 1998 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 1998 (2) End of 1998
Acquired on Value Exercisable/ Exercisable/
Name Exercise (1) Realized Unexercisable Unexercisable
---- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
James P. Kelly................ 21,175 $280,569 None/ N/A
137,533 $1,669,478
John W. Alden................. 18,254 $241,866 None/ N/A
110,545 $1,349,485
Robert J. Clanin.............. 3,895 $ 51,609 None/ N/A
71,233 $ 801,050
Joseph R. Moderow............. 17,159 $227,357 None/ N/A
91,274 $1,146,574
Charles L. Schaffer........... 15,333 $203,162 None/ N/A
91,139 $1,134,337
</TABLE>
- --------
(1) Represents gross number of common shares underlying the options exercised
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 UPS Excess
Coordinating Benefit Plan upon retirement (assumed to occur at age 65).
Participating employees are also entitled to receive $16,008 per year (maximum
currently payable) in primary Social Security benefits:

<TABLE>
<CAPTION>
Estimated Annual Retirement Benefits (as of 12/31/98)
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............... $ 45,998 $ 61,325 $ 76,669 $ 91,996 $107,341
$ 250,000............... $ 58,498 $ 77,990 $ 97,504 $116,996 $136,511
$ 300,000............... $ 70,998 $ 94,655 $118,339 $141,996 $165,681
$ 350,000............... $ 83,498 $111,320 $139,174 $166,996 $194,851
$ 400,000............... $ 95,998 $127,985 $160,009 $191,996 $224,021
$ 450,000............... $108,498 $144,650 $180,844 $216,996 $253,191
$ 500,000............... $120,998 $161,315 $201,679 $241,996 $282,361
$ 600,000............... $145,998 $194,645 $243,349 $291,996 $340,701
$ 700,000............... $170,998 $227,975 $285,019 $341,996 $399,041
$ 800,000............... $195,998 $261,305 $326,689 $391,996 $457,381
$ 900,000............... $220,998 $294,635 $368,359 $441,996 $515,721
$1,000,000............... $245,998 $327,965 $410,029 $491,996 $574,061
$1,100,000............... $270,998 $361,295 $451,699 $541,996 $632,401
$1,200,000............... $295,998 $394,625 $493,369 $591,996 $690,741
</TABLE>

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 (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.

As of December 31, 1998, estimated or actual credited years of service under
the plans to the Named Executive Officers was as follows: Kelly -- 34,
Alden -- 34, Schaffer -- 29, Clanin--28 and Moderow -- 28.

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, the 1996 Plan and UPS SavingsPLUS 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 a meaningful 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, appreciation derived from stock ownership, 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 1998 salaries of UPS's executive officers, including
that of its 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 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, 1993 in UPS, the S&P 500
Index and the DJ Transport.

Comparison of Five Year Cumulative Total Return
(UPS, S&P 500 Index, DJ Transport)

[GRAPH APPEARS HERE]

Measurement Period S&P 500 UPS DJ Trans
- ------------------- ------- ------- --------
12/31/93 $ 100 $ 100 $ 100
12/31/94 $101.32 $ 116 $ 83.69
12/31/95 $139.26 $132.87 $115.41
12/31/96 $171.15 $151.60 $132.98
12/31/97 $228.18 $163.01 $193.93
12/31/98 $293.39 $216.54 $189.13

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 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, 1988 in UPS, the S&P 500 Index, and the DJ Transport.

Comparison of Ten Year Cumulative Total Return
(UPS, S&P 500 Index, DJ Transport)

[GRAPH APPEARS HERE]

Measurement Period S&P 500 UPS DJ Trans
- ------------------- ------- ------- --------
12/31/88 $ 100 $ 100 $ 100
12/31/89 $131.69 $112.06 $123.38
12/31/90 $127.59 $121.59 $ 97.17
12/31/91 $166.47 $131.46 $147.39
12/31/92 $179.14 $156.29 $159.69
12/31/93 $197.20 $179.72 $196.37
12/31/94 $199.80 $208.47 $164.34
12/31/95 $274.63 $238.78 $226.62
12/31/96 $337.51 $272.46 $261.14
12/31/97 $449.97 $292.95 $380.82
12/31/98 $578.56 $389.17 $371.39

Compensation of Directors

In 1998, directors who were not employees of UPS received an annual
director's fee of $50,000. Members of the Audit, Officer Compensation and
Nominating Committees who were not employees of UPS 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.

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, 1998, was: Mr. Brown, $458,029; Mr. MacDougal,
$458,029; Mr. Pelson, $229,014; and Mr. Teeter, $229,014. The value of Mr.
Kaysen's account at the time of his retirement was $429,632.

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, MacDougal, Pelson and Teeter and
Ms. Livermore were granted options under the 1996 Plan during 1998.

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 LLP, 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 Retirement
Plan. The UPS Retirement Plan, through wholly-owned corporations, owns 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 1998 by this Plan
aggregated $282,437.

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 February 1999, UPS paid
Overseas approximately $33,274,815 for approximately 1,677,158 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 of interest 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 1, 1999, 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,
1998 to December 31, 1998 were approximately $371.8 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.

OPCC has irrevocably assigned the right to receive the fixed component of
rentals on the Facility lease to its subsidiary, OPL Funding Corp. ("OPL
Funding"), a Delaware corporation. OPL 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.

16
<PAGE>

At the conclusion of this lease, UPS may purchase 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 1998, OPCC and its subsidiary, OPL Funding, received rental
payments of approximately $14.7 million in the aggregate from UPS pursuant to
the lease described above.

In December 1989, OPCC acquired from UPS its rights to purchase from the
Boeing Company five 757 aircraft that were then being manufactured. The
aircraft were delivered to OPCC in 1990 and leased to UPS. From January to
July 1998, OPL Funding received rental payments of approximately $12.4 million
from UPS pursuant to the lease. In July 1998, UPS exercised an option under
such lease to purchase from OPCC all five aircraft for approximately $202
million.

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, 1999 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 $178,000 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 SEC regulations, any shareowner proposals or
director nominations for the 2000 Annual Meeting of Shareowners must be
received by the Secretary of UPS not later than November 16, 1999.

A copy of the 1998 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 of America, Inc., 55
Glenlake Parkway, NE, Atlanta, GA 30328.

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UPS QUALIFIED STOCK OWNERSHIP PLAN AND TRUST
Letter of Instructions to Execute Proxy for Annual Meeting of Shareowners of
UNITED PARCEL SERVICE OF AMERICA, INC.
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 29,
1999, 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 UPS Qualified Stock Ownership Plan and
Trust as of March 1, 1999, as follows:

1. ELECTION OF DIRECTORS FOR ALL NOMINEES WITHHOLD
LISTED BELOW [_] AUTHORITY [_]
(except as marked to vote for all the
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.
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2. FOR [_] AGAINST [_] ABSTAIN [_]

the appointment of Deloitte & Touche LLP as auditors for UPS and its
subsidiaries for the year ending December 31, 1999.

In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.

(OVER)
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[LOGO OF UPS APPEARS HERE]

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FOLD AND DETACH HERE

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 stock
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 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 , 1999.

Return this card in the enclosed Business Reply Envelope.

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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 29, 1999

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 1, 1999 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 29, 1999, 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 WITHHOLD AUTHORITY [_]
LISTED BELOW [_] to vote for
(except as marked all nominees
to the contrary 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.

2. FOR [_] AGAINST [_] ABSTAIN [_]

the appointment of Deloitte & Touche LLP as auditors for UPS and its
subsidiaries for the year ending December 31, 1999.

In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.

(OVER)
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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.

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SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY
appears hereon) For joint accounts, all co-owners
must sign. Executors,
administrators, custodians,
trustees, etc. should so indicate
when signing.

Dated this ________ day of , 1999

Return this card in the enclosed Business Reply Envelope.

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FOLD AND DETACH HERE

UPS STOCK TRUSTS
Which include the following: The UPS Stock Trust, UPS Managers Stock Trust and
the UPS Employees Stock Trust
Letter of Instructions to Execute Proxy for Annual Meeting of Shareowners of
UNITED PARCEL SERVICE OF AMERICA, INC.
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 29,
1999, 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 1,
1999, as follows:

1. ELECTION OF DIRECTORS FOR ALL NOMINEES WITHHOLD AUTHORITY [_]
LISTED BELOW [_] to vote for all the
(except as marked nominees listed below
to the contrary
below)

2. FOR [_] AGAINST [_] ABSTAIN [_]
the appointment of Deloitte & Touche LLP as auditors for UPS and its
subsidiaries for the year ending December 31, 1999.

In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.

(OVER)
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FOLD AND DETACH HERE

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SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY For
appears hereon) joint accounts, all co-owners must
sign. Ex-ecutors, administrators,
custodians, trustees, etc. should
so indicate when signing.

Dated this ________ day of , 1999.

Return this card in the enclosed Business Reply Envelope.
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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.
Solicited on Behalf of the Board of Directors

FIRST UNION NATIONAL BANK
P.O. Box 41784
Philadelphia, PA 19101-1784

Ladies and Gentlemen:

1. ELECTION OF DIRECTORS FOR ALL NOMINEES WITHHOLD AUTHORITY [_]
LISTED BELOW [_] to vote for all the
(except as marked nominees listed below
to the contrary
below)

2. FOR [_] AGAINST [_] ABSTAIN [_]

the appointment of Deloitte & Touche LLP as auditors for UPS and its
subsidiaries for the year ending December 31, 1999.

In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.

(OVER)
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FOLD HERE AND DETACH

- ------------------------------- -----------------------------------
SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY For
appears hereon) joint accounts, all co-owners must
sign. Ex-ecutors, administrators,
custodians, trustees, etc. should so
indicate when signing.

Dated this ________ day of , 1999.

Return this card in the enclosed Business Reply Envelope.
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FIRST UNION NATIONAL BANK P. O. BOX 41784
ATTN: PA 1204-ESS
PHILADELPHIA, PA
19101-1784
1-888-663-8325

March 15, 1999

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 29, 1999, 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 would like
such a proxy, please advise us.

Alternatively, you may use the enclosed Letter of Instructions to require us
to vote your shares as you indicate. If you wish your stock voted in this
manner, 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 April 22, 1999, we will execute and
deliver to Joseph R. Moderow, the Secretary of the Corporation, a proxy to vote
your shares.

Very truly yours,

First Union National Bank
Trustee, UPS Stock Trusts
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P.O. BOX 41784
FIRST UNION NATIONAL BANK ATTN: PA 1204-ESS
PHILADELPHIA, PA
19101-1784
1-888-663-8325

March 15, 1999

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 of America, Inc. (the "Corporation") will be held at 1209 Orange
Street, Wilmington, Delaware, on April 29, 1999, 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 April 22, 1999, we will execute and
deliver to Joseph R. Moderow, the Secretary of the Corporation, a proxy to vote
your shares.

Very truly yours,

First Union National Bank
Trustee, UPS Qualified Stock
Ownership
Plan and Trust
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P.O. BOX 41784
FIRST UNION NATIONAL BANK ATTN: PA 1204-ESS
PHILADELPHIA, PA
19101-1784
1-888-663-8325

March 15, 1999

To Participants in the Annie E. Casey
Foundation Stock Compensation Plan:

Under the Annie E. Casey Foundation Stock Compensation Plan, 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 would like such a proxy, please advise us.

If we do not hear from you prior to April 22, 1999, we will execute and
deliver to Joseph R. Moderow, the Secretary of the Corporation, a proxy to vote
your shares.

Very truly yours,

First Union National Bank