SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement |
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o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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x Definitive Proxy Statement | ||||
o Definitive Additional Materials | ||||
o Soliciting Material Pursuant to §240.14a-12 |
United Parcel Service, Inc.
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
o | 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: |
(2) | Aggregate number of securities to which transaction applies: |
(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): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | 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: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
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Annex I | ||||
Annex II |
| You may vote by using the Internet. The address of the website for Internet voting is www.proxyvote.com. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on May 6, 2009. Easy-to-follow instructions allow you to vote your shares and confirm that your instructions have been properly recorded. | |
| You may vote by telephone. The toll-free telephone number is noted on your proxy card. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on May 6, 2009. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. | |
| You may vote by mail. If you received a proxy card by mail and choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope. |
| submitting a subsequent proxy by using the Internet, by telephone or by mail with a later date; |
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| sending written notice of revocation to our Corporate Secretary at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328; or | |
| voting in person at the annual meeting. |
| the election of ten directors nominated by the board of directors to serve until our 2010 annual meeting of shareowners; | |
| the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accountants for the year ending December 31, 2009; and | |
| the approval of the United Parcel Service, Inc. 2009 Omnibus Incentive Compensation Plan (the 2009 Plan). |
| vote FOR the election of the ten nominees for director; | |
| WITHHOLD AUTHORITY to vote for one or more of the nominees and vote FOR the remaining nominees; or | |
| WITHHOLD AUTHORITY to vote for the ten nominees. |
| reduce the number of directors that serve on the board, or | |
| designate a substitute nominee. |
| vote FOR the proposal; | |
| vote AGAINST the proposal; or | |
| ABSTAIN from voting on the proposal. |
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| vote FOR the proposal; | |
| vote AGAINST the proposal; or | |
| ABSTAIN from voting on the proposal. |
| FOR all ten director nominees; | |
| FOR the ratification of the appointment of our independent registered public accountants; and | |
| FOR the approval of the 2009 Plan. |
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F. Duane Ackerman Age 66 Director since 2007
Chairman Emeritus, BellSouth Corporation Duane has been Chairman Emeritus of BellSouth Corporation, a communication services company, since 2007. He previously served as Chairman and Chief Executive Officer of BellSouth Corporation from 2005 through 2006 and as Chairman, President and Chief Executive Officer from 1998 until 2005. He is also a director at Allstate Corporation and The Home Depot Inc. |
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Michael J. Burns Age 57 Director since 2005
Former Chairman, Chief Executive Officer and President, Dana Corporation Michael was the Chairman, Chief Executive Officer and President of Dana Corporation until February 2008. He joined Dana Corporation in March 2004 after 34 years with General Motors Corporation. Michael had served as President of General Motors Europe since 1998. |
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D. Scott Davis Age 57 Director since 2006
UPS Chairman and Chief Executive Officer Scott earned a bachelors degree in finance from Portland State University and completed the Advanced Management Program at the Wharton School of Business. He joined UPS in 1986 when the company acquired an Oregon technology company, II Morrow, where he had served as the chief financial officer and then chief executive officer. From 1991 to 1998, Scott held positions of increasing responsibility as treasury manager, financial reports and plans manager and accounting manager. From late 1998 to early 2000, he served as chief executive officer of Overseas Partners, Ltd., a Bermuda reinsurance company. Scott rejoined UPS as its vice president of finance in 2000. He joined the UPS Management Committee and assumed the role of Chief Financial Officer in 2001. In 2006, Scott was also appointed Vice Chairman. Scott became Chairman and Chief Executive Officer on January 1, 2008. He serves as a director of Honeywell International Inc. and is the chairman of the board of the Federal Reserve Bank of Atlanta. Scott is also a trustee of the Annie E. Casey Foundation, the worlds largest philanthropic foundation dedicated to helping disadvantaged children. |
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Stuart E. Eizenstat Age 66 Director since 2005
Partner, Covington & Burling LLP Stuart has been a partner of Covington & Burling LLP in Washington, D.C. since 2001, and heads the law firms international practice. He served as Deputy Secretary of the United States Department of the Treasury from July 1999 to January 2001. He was Under Secretary of State for Economic, Business and Agricultural Affairs from 1997 to 1999. Stuart served as Under Secretary of Commerce for International Trade from 1996 to 1997 and was Ambassador to the European Union from 1993 to 1996. From 1977 to 1981 he was Chief Domestic Policy Advisor in the White House to President Carter. He is a trustee of BlackRock Funds, a member of the board of directors of the Chicago Climate Exchange and serves on the International Advisory Council of The Coca-Cola Company, on the advisory board of BT Americas Inc. and on the International Advisory Board of GML Ltd. He has received seven honorary doctorate degrees and awards from the United States, French, German, Austrian, Belgian and Israeli governments. He was selected as the best international trade lawyer in Washington, D.C. in 2007 by Legal Times. He is the author of Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II. |
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Michael L. Eskew Age 59 Director since 1998
Former UPS Chairman and Chief Executive Officer Mike joined UPS in 1972, after he received a bachelor of science degree in industrial engineering from Purdue University. He also completed the Advanced Management Program at the Wharton School of Business. In 1994, Mike was named UPSs Corporate Vice President for Industrial Engineering. Two years later he became Group Vice President for Engineering. He was appointed Executive Vice President in 1999 and Vice Chairman in 2000. In January 2002, he became Chairman and Chief Executive Officer. In January 2008, Mike retired as Chairman and Chief Executive Officer. Mike serves on the Presidents Export Council and is a trustee of the Annie E. Casey Foundation. Mike also is a director of 3M Company, International Business Machines Corporation and Eli Lilly and Company. |
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William R. Johnson Age 60 Director since 2009
Chairman, President and Chief Executive Officer of H. J. Heinz Company Bill has been Chairman, President and Chief Executive Officer of the H. J. Heinz Company, a global packaged foods manufacturer, since 2000. He became President and Chief Operating Officer of Heinz in June 1996, and assumed the position of President and Chief Executive Officer in April 1998. He was named Chairman, President and Chief Executive Officer in September 2000. Bill also serves on Emerson Electric Companys board of directors. |
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Ann M. Livermore Age 50 Director since 1997
Executive Vice President, Hewlett-Packard Company Ann is Executive Vice President of Hewlett-Packard Company and general manager of its Technology Solutions Group. Before that, she was the general manager of the HP Services Business. Ann joined HP in 1982, was named marketing services manager for the Application Support Division in 1985, and was promoted to marketing manager of that division in 1989. Ann became the marketing manager of the Professional Services Division in 1991 and was named sales and marketing manager of the former Worldwide Customer Support Organization. Ann was elected a Vice President of HP in 1995 and was promoted to general manager of Worldwide Customer Support Operations in 1996. In 1997, she took on responsibility for HPs 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 and, in 2001, general manager of the Services Business. Born in Greensboro, N.C., Ann holds a bachelors degree in economics from the University of North Carolina at Chapel Hill and an M.B.A. from Stanford University. |
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Rudy Markham Age 63 Director since 2007
Retired Financial Director, Unilever PLC and Unilever NV Rudy was the Financial Director of Unilever from August 2000 through May 2007. He joined Unilever in 1968 and from 1989-1998 was based in East Asia where he held a series of increasing responsibilities, ultimately serving as Business Group President North East Asia based in Singapore. Rudy joined the Board of Unilever as Strategy and Technology Director and became a member of its Executive Committee in May 1998. In May 2007 he retired from the Board of Unilever and on October 31, 2007 he retired as CFO. Rudy studied at Christs College, Cambridge, where he gained a Masters Degree in Natural Sciences. He is a fellow of the Chartered Institute of Management Accountants and of the Association of Corporate Treasurers. He also is a Non-executive Director of Legal & General Group PLC, AstraZeneca PLC and Standard Chartered PLC, where he serves as Chairman of its Audit & Risk Committee. Rudy is also a Non-executive Director of the Financial Reporting Council and Non-executive Chairman of Moorfields Eye Hospital, both of which are UK-registered institutions. |
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John W. Thompson Age 59 Director since 2000
Chairman and Chief Executive Officer, Symantec Corporation John has been Chairman and Chief Executive Officer of Symantec Corporation, the world leader in information security and availability solutions, since April 1999. Prior to joining Symantec, he held a variety of senior leadership positions at International Business Machines Corporation, including General Manager of IBM Americas, and was a member of IBMs Worldwide Management Council. John is a director of Seagate Technology. He currently serves on the Presidents National Infrastructure Advisory Council and the Board of Advisors for Teach for America. |
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Carol B. Tomé Age 52 Director since 2003
Chief Financial Officer and Executive Vice President Corporate Services, The Home Depot, Inc. Carol has been Executive Vice President and Chief Financial Officer of The Home Depot, Inc., the worlds largest home improvement specialty retailer and the second largest retailer in the United States, since May 2001. In January 2007 Carol assumed the additional role of Executive Vice President Corporate Services. Prior to that, she had been Senior Vice President Finance and Accounting/Treasurer since February 2000. From 1995 until 2000, she served as Vice President and Treasurer. A native of Jackson, Wyoming, Carol holds a B.S. in Communication from the University of Wyoming and an M.B.A. in Finance from the University of Denver. She is an active volunteer, including serving as the chair of the Advisory Board for the Metropolitan Atlanta Arts Fund, a member of The Committee of 200, and a member of the High Museum and Atlanta Botanical Garden board. In January 2008, Carol joined the board of the Federal Reserve Bank of Atlanta and serves as deputy chair of the board. |
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Nominating |
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and |
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Corporate |
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Director
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Audit | Compensation | Governance | Executive | ||||||||||||
F. Duane Ackerman
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X | X* | ||||||||||||||
Michael J. Burns
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X | |||||||||||||||
D. Scott Davis
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X* | |||||||||||||||
Stuart E. Eizenstat
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X | X | ||||||||||||||
Michael L. Eskew
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X | |||||||||||||||
William R. Johnson
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X | |||||||||||||||
Ann M. Livermore
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X | |||||||||||||||
Rudy Markham
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X | |||||||||||||||
John W. Thompson
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X* | |||||||||||||||
Carol B. Tomé
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X* | |||||||||||||||
Ben Verwaayen
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X |
| discharging the boards responsibility relating to our accounting, reporting and financial practices, | |
| general responsibility for overseeing our accounting and financial reporting processes, | |
| overseeing the integrity of our financial statements, our systems of disclosure controls and internal controls and our compliance with legal and regulatory requirements, | |
| overseeing the qualification and independence of our auditors and the performance of our internal audit function and independent auditors, and | |
| having sole authority to appoint and oversee a registered public accounting firm (as defined by applicable law) to serve as our independent auditors, including sole discretion to retain and terminate the independent auditors. |
| discharging the boards responsibilities with respect to compensation of our executive officers, | |
| establishing corporate goals and objectives relevant to the compensation for our Chairman and Chief Executive Officer (CEO), | |
| evaluating the CEOs performance in light of these goals and objectives and establishing the total compensation for the CEO based on this evaluation, | |
| reviewing and approving the compensation of other executive officers based upon all relevant information, and | |
| reviewing and approving awards to executive officers under our equity compensation plans. |
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| receiving and considering recommendations from the CEO and others regarding succession at the CEO and other senior officer levels, | |
| assisting the board in identifying and screening qualified candidates to serve as directors, including considering shareowner nominees, | |
| recommending to the board candidates for election or reelection to the board or to fill vacancies on the board, | |
| aiding in attracting qualified candidates to serve on the board, and | |
| making recommendations to the board concerning corporate governance principles, including the structure, composition and functioning of the board and all board committees, the delegation of authority to management, board oversight of management actions and reporting duties of management. |
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| our directors, | |
| our Chief Executive Officer for 2008, Chief Financial Officer for 2008 and three other executive officers who had the highest total compensation for 2008, calculated in accordance with SEC rules and regulations (the Named Executive Officers), | |
| all of our directors and executive officers as a group, and | |
| each shareowner known to us to beneficially own more than 5% of our class A or class B common stock. |
Additional Shares in |
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which the Beneficial |
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Owner Has or |
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Number of Shares |
Options |
Participates in the |
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Directly Owned(1)(2) |
Exercisable |
Voting or |
Total Shares |
Percent of |
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Class A |
Class B |
within 60 |
Investment |
Beneficially |
Outstanding |
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Directors and Executive Officers
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Shares | Shares | Days(3) | Power(4) | Owned | Shares(5) | ||||||||||||||||||
David P. Abney
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82,325 | 2,500 | 24,310 | 0 | 109,135 | * | ||||||||||||||||||
F. Duane Ackerman
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1,912 | 0 | 0 | 0 | 1,912 | * | ||||||||||||||||||
Michael J. Burns
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4,643 | 0 | 0 | 0 | 4,643 | * | ||||||||||||||||||
D. Scott Davis
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97,117 | 0 | 57,212 | 6,426,742 | (6) | 6,581,071 | * | |||||||||||||||||
Stuart E. Eizenstat
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4,643 | 200 | 0 | 0 | 4,843 | * | ||||||||||||||||||
Michael L. Eskew
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224,082 | 0 | 326,805 | 6,426,742 | (6) | 6,977,629 | * | |||||||||||||||||
William R. Johnson
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0 | 160 | 0 | 0 | 160 | * | ||||||||||||||||||
Kurt P. Kuehn
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38,284 | 0 | 14,248 | 1,880,809 | (7) | 1,933,341 | * | |||||||||||||||||
Ann M. Livermore
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25,655 | 0 | 5,872 | 0 | 31,527 | * | ||||||||||||||||||
Rudy Markham
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1,929 | 0 | 0 | 0 | 1,929 | * | ||||||||||||||||||
Robert E. Stoffel
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125,014 | 0 | 12,966 | 0 | 137,980 | * | ||||||||||||||||||
John W. Thompson
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6,777 | 1,125 | 4,266 | 0 | 12,168 | * | ||||||||||||||||||
Carol B. Tomé
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6,277 | 1,000 | 1,521 | 0 | 8,798 | * | ||||||||||||||||||
Ben Verwaayen
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5,895 | 0 | 0 | 0 | 5,895 | * | ||||||||||||||||||
James F. Winestock, Jr.
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19,615 | 14,000 | 68,457 | 0 | 102,072 | * | ||||||||||||||||||
Shares held by all directors and executive officers as a group
(23 persons)
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999,814 | 57,111 | 653,274 | 8,307,551 | (8) | 10,017,750 | * | |||||||||||||||||
5% Holders
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Capital Research Global Investors(9)
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| 38,726,500 | | | 38,726,500 | 3.9 | % | |||||||||||||||||
Capital World Investors(10)
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| 37,965,570 | | | 37,965,570 | 3.8 | % |
* | Less than 1%. | |
(1) | Includes shares for which the named person has sole voting or investment power or has shared voting or investment power with his or her spouse. Includes shares held by immediate family members as follows: Abney 26,500; Davis 200; Eskew 40,820; Kuehn 3,205; Stoffel 39,073; Winestock 160; and all directors and executive officers as a group 127,944. Each named individual disclaims all beneficial ownership of the shares held by immediate family members. | |
(2) | Includes shares pledged as of February 1, 2009 as follows: Abney 39,590; Davis 6,600; Kuehn 29,630; Stoffel 61,686; Winestock 17,646; and all directors and executive officers as a group 353,189. | |
(3) | Represents class A shares that may be acquired through stock options exercisable through April 1, 2009. | |
(4) | Except as described in footnote 6, all shares listed in this column are class A shares. None of the individuals listed, nor members of their families, has any direct ownership rights in the shares listed. See footnotes 6, 7 and 8. |
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(5) | Based on an aggregate of 995,885,566 shares of class A and class B common stock outstanding as of February 1, 2009. Assumes that all options exercisable through April 1, 2009 owned by the named individual are exercised. The total number of shares outstanding used in calculating this percentage also assumes that none of the options owned by other named individuals are exercised. | |
(6) | Includes 6,250,484 class A shares and 176,258 class B shares owned by the Annie E. Casey Foundation, Inc., of which Scott Davis, Mike Eskew and one other executive officer not listed above and other persons constitute the corporate Board of Trustees. | |
(7) | Includes 1,880,809 class A shares held by various trusts of which Kurt Kuehn and one other executive officer not listed above and other persons are co-fiduciaries. | |
(8) | Includes shares held by the foundations and trusts of which the listed directors and executive officers are trustees. 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. | |
(9) | According to a Schedule 13G/A filed with the SEC on February 17, 2009, Capital Research Global Investors, a division of Capital Research and Management Company (Capital Research), an investment advisor, has sole voting power with respect to 19,717,100 shares of our class B common stock and sole dispositive power with respect to 38,726,500 shares of our class B common stock. According to the Schedule 13G/A, Capital Research beneficially owned 5.7% of our class B common stock as of December 31, 2008. Capital Research disclaims beneficial ownership of these shares. The business address of Capital Research is 333 South Hope Street, Los Angeles, CA 90071. | |
(10) | According to a Schedule 13G/A filed with the SEC on February 12, 2009, Capital World Investors, a division of Capital Research and Management Company (Capital World), an investment advisor, has sole voting power with respect to 5,362,000 shares of our class B common stock and sole dispositive power with respect to 37,965,570 shares of our class B common stock. According to the Schedule 13G, Capital World beneficially owned 5.6% of our class B common stock as of December 31, 2008. Capital World disclaims beneficial ownership of these shares. The business address of Capital World is 333 South Hope Street, Los Angeles, CA 90071. |
Other |
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Deferred |
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Restricted |
Stock Option |
Compensation |
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Restricted |
Phantom |
Performance |
Deferral |
Plan |
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Stock Units | Stock Units | Units | Shares | Shares | Total | |||||||||||||||||||
David P. Abney
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12,849 | 0 | 23,311 | 13,286 | 0 | 49,446 | ||||||||||||||||||
F. Duane Ackerman
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0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Michael J. Burns
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0 | 0 | 0 | 0 | 3,599 | 3,599 | ||||||||||||||||||
D. Scott Davis
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18,304 | 0 | 41,827 | 5,019 | 0 | 65,150 | ||||||||||||||||||
Stuart E. Eizenstat
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0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Michael L. Eskew
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31,221 | 0 | 81,546 | 59,490 | 0 | 172,257 | ||||||||||||||||||
William R. Johnson
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0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Kurt P. Kuehn
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11,357 | 0 | 20,482 | 11,746 | 0 | 43,585 | ||||||||||||||||||
Ann M. Livermore
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0 | 1,859 | 603 | 0 | 0 | 2,462 | ||||||||||||||||||
Rudy Markham
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0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Robert E. Stoffel
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11,317 | 0 | 20,324 | 0 | 0 | 31,641 | ||||||||||||||||||
John W. Thompson
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0 | 1,859 | 603 | 0 | 225 | 2,687 | ||||||||||||||||||
Carol B. Tomé
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0 | 879 | 603 | 0 | 0 | 1,482 | ||||||||||||||||||
Ben Verwaayen
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0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
James F. Winestock, Jr.
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11,514 | 0 | 19,261 | 28,789 | 0 | 59,564 |
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| strong culture of partnership and loyalty among all UPSers; | |
| employees establishing and maintaining a significant stock ownership in our company; and | |
| the opportunity for multiple careers within the same organization. |
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| Fairly compensate executive officers; | |
| Motivate executives by linking a significant portion of pay to corporate performance incentives; and | |
| Encourage long-term stock ownership and careers with UPS. |
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Boeing Co.
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Dell Inc. | Lowes Companies Inc. | Sysco Corp. | |||
Caterpillar Inc.
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FedEx Corporation | McDonalds Corp. | Target Corp. | |||
Coca-Cola
Co.
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Johnson & Johnson | Motorola Inc. | United Technologies Corp. | |||
Coca-Cola
Enterprises Inc.
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Kroger Co. | PepsiCo Inc. | Walgreen Co. | |||
Costco Wholesale Corp.
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Lockheed Martin | Procter & Gamble | Xerox Corp. |
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| base salary; | |
| annual incentives (delivered in cash or UPS stock); | |
| long-term incentives (delivered in stock options, restricted stock units and restricted performance units); and | |
| benefits and perquisites. |
2008 Base Salary |
2007 Base Salary |
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(as of March 1, |
(as of March 1, |
Percentage Increase |
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Named Executive Officer
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2008) ($) | 2007) ($) | (%) | |||||||||
D. Scott Davis(1)
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960,000 | 600,000 | 60.0 | |||||||||
Kurt P. Kuehn
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384,000 | 360,000 | 6.7 | |||||||||
David P. Abney
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444,000 | 420,000 | 5.7 | |||||||||
Robert E. Stoffel
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372,600 | 360,000 | 3.5 | |||||||||
James F. Winestock, Jr.
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381,000 | 366,600 | 3.9 |
(1) | Scott Davis received his 2008 base salary increase effective January 1, 2008, when he was promoted to chairman and chief executive officer. |
| for Scott Davis, the additional responsibilities assumed by him as chairman and chief executive officer and his relative positioning to market data; |
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| for Kurt Kuehn, the additional responsibilities assumed by him as chief financial officer and his relative positioning to market data; and | |
| for David Abney, his relative positioning to market data. |
Payment Form and |
Target Amount (As a |
Performance |
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Program
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Program Type
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Multiple of Salary)
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Measures
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Program Objectives
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Management Incentive Program (MIP) short-term portion and MIP Ownership Incentive Award short-term portion | 50% of the total MIP award and MIP ownership incentive award is paid, at the participants election, in cash, UPS stock or deferred into the participants 401(k) or related savings program |
Cash portion of the MIP award equivalent to two times monthly
base salary for the Management Committee and more senior
management Cash portion of the MIP ownership incentive award equivalent to one-half of one month base salary for all Participants |
For MIP award, volume growth, revenue growth, EPS growth, operating leverage and end-to-end service For MIP ownership incentive award, ownership level in UPS stock compared to ownership target |
Support our annual operating plan and business strategy Ownership incentive award supports the manager-owner concept; enhances stock ownership and shareowner alignment |
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Half-Month Bonus | Cash | One-half of one month base salary for all participants | General company performance | Broad-based program to reward contributions to company and performance throughout the year, particularly peak operating period during fourth quarter |
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Business Element
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Performance Target
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Result
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Volume growth to business plan
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2.0% increase in total average daily volume | Below target | ||
Growth in consolidated revenue
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7.0% growth | Slightly below target at 6.6% growth | ||
Growth in consolidated, as adjusted, diluted earnings per share
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7.0% growth | Below target at 8.1% decline | ||
Positive operating leverage
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Product yields increase at a rate greater than cost increase | Below target | ||
End-to-end service
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Improved year-over-year service levels, with different service levels based on product | Above target |
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Cash Portion of the |
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MIP Award and MIP |
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Ownership Incentive |
Total Cash Awards |
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Award |
Half-Month Bonus |
for 2008 |
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Named Executive Officer
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($) | ($) | ($) | |||||||||
D. Scott Davis
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136,944 | 40,000 | 176,944 | |||||||||
Kurt P. Kuehn
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60,800 | 16,000 | 76,800 | |||||||||
David P. Abney
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70,300 | 18,500 | 88,800 | |||||||||
Robert E. Stoffel
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58,995 | 15,525 | 74,520 | |||||||||
James F. Winestock, Jr.
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60,325 | 15,875 | 76,200 |
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Performance |
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Measures or |
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Program and Award |
Payment Form and |
Target Amount (As a |
Value |
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Type
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Program Type | Multiple of Salary) | Proposition | Program Objectives | ||||
Long-Term Incentive (LTI) program granted as stock options | Stock options that vest 20% per year over five years; ten-year term |
Overall award is 175% of base salary for the chief executive officer. Stock option portion equals 25% of total award target.
Overall award is 125% of base salary for the other members of the Management Committee. Stock option portion equals 25% of total award target. |
Value recognized only if UPS stock price appreciates |
Retention
Provides a significant link to our stock price performance Value realized only if stock price appreciates Enhances stock ownership and shareowner alignment and maximize shareholder value |
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LTI program granted as restricted performance units | RPUs that are paid in UPS stock upon vesting; vesting is 20% per year over five years |
Total target is 175% of base salary for the chief executive officer. RPU portion equals 75% of total target
Total target is 125% of base salary for the other members of the Management Committee. RPU portion equals 75% of total target. |
Value increases as stock price increases |
Retention
Reinforces the manager-owner concept Enhances stock ownership and shareowner alignment |
||||
MIP and MIP Ownership Incentive Award long-term portion granted as restricted stock units |
50% paid in RSUs for the long-term portion of the program
RSUs are settled in UPS stock upon vesting; vesting is 20% per year over five years |
For MIP, RSU portion equivalent to two times monthly base salary for the Management Committee and more senior management
For MIP ownership incentive award, RSU portion equivalent to one-half of one month base salary for all participants |
For MIP award, volume growth, revenue growth, EPS growth, operating leverage and end-to-end service
For MIP ownership incentive award, ownership level in UPS stock compared to ownership target |
Supports our annual operating plan and business strategy Ownership incentive award supports the manager-owner concept Enhances stock ownership and shareowner alignment |
||||
Long-Term Incentive Performance Award Program (LTIP) granted as restricted stock units | RSUs that are settled in UPS stock upon vesting; three-year vesting |
475% of base salary for the chief executive officer
450% of base salary for the chief operating officer 250% of base salary for the chief financial officer 225% of base salary for the other members of the Management Committee |
Revenue growth
Operating return on invested capital Three-year net income or EPS targets |
Supports our short and long-term operating plan and business
strategy Enhances stock ownership and shareowner alignment |
24
| maintain the long-term nature of the award and its impact on retention; and | |
| continue to represent shareowner interests by utilizing an award the value of which is linked to share price performance. |
25
| The first grant, made in 2006, covers the period from 2006 through 2008. | |
| The 2007 grant covers the period from 2007 through 2009. | |
| The 2008 grant covers the period from 2008 through 2010. |
26
2007-2009 |
2008-2010 |
2009-2011 |
Planned 2010-2012 |
|||||||||||||
LTIP Target |
LTIP Target |
LTIP Target |
LTIP Target |
|||||||||||||
(% of base salary) | (% of base salary) | (% of base salary) | (% of base salary) | |||||||||||||
Chief executive officer
|
250 | 475 | 600 | 675 | ||||||||||||
Chief operating officer
|
225 | 450 | 500 | 575 | ||||||||||||
Chief financial officer
|
225 | 250 | 275 | 300 |
27
Percent of Total |
Percent of LTIP |
|||||||||||
LTIP Award
|
Performance Goals
|
Actual Results
|
Tranche Earned | |||||||||
2006 LTIP Award
|
||||||||||||
2006 Performance Tranche
|
30 | % | revenue growth of 10.7% and operating ROIC of 22.8% | revenue growth, as adjusted, of 8.9% and operating ROIC, as adjusted, of 21.8% | 85 | % | ||||||
2007 Performance Tranche
|
30 | % | revenue growth of 6.1% and operating ROIC of 25.0% | revenue growth of 4.5% and operating ROIC, as adjusted, of 24.5% | 75 | % | ||||||
2008 Performance Tranche
|
30 | % | revenue growth of 7.0% and operating ROIC of 23.0% | revenue growth of 3.6% and operating ROIC, as adjusted, of 18.7% | 65 | % | ||||||
2008 Earnings Measurement Tranche
|
10 | % | net income in 2008 of $5.6 billion | net income, as adjusted, in 2008 of $3.6 billion | 0 | % | ||||||
2007 LTIP Award
|
||||||||||||
2007 Performance Tranche
|
30 | % | revenue growth of 6.1% and operating ROIC of 25.0% | revenue growth of 4.5% and operating ROIC, as adjusted, of 24.5% | 75 | % | ||||||
2008 Performance Tranche
|
30 | % | revenue growth of 7.0% and operating ROIC of 23.0% | revenue growth of 3.6% and operating ROIC, as adjusted, of 18.7% | 65 | % | ||||||
2009 Performance Tranche
|
30 | % | * | * | * | |||||||
2009 Earnings Measurement Tranche
|
10 | % | earnings per share in 2009 of $5.28 | * | * | |||||||
2008 LTIP Award
|
||||||||||||
2008 Performance Tranche
|
30 | % | revenue growth of 7.0% and operating ROIC of 23.0% | revenue growth of 3.6% and operating ROIC, as adjusted, of 18.7% | 65 | % | ||||||
2009 Performance Tranche
|
30 | % | * | * | * | |||||||
2010 Performance Tranche
|
30 | % | * | * | * | |||||||
2010 Earnings Measurement Tranche
|
10 | % | earnings per share in 2010 of $5.62 | * |
* | Performance for 2009 and 2010 cannot be determined at this time. |
28
29
30
Non-Equity |
||||||||||||||||||||||||||||||||||||
Incentive |
Change in |
All Other |
||||||||||||||||||||||||||||||||||
Stock |
Option |
Plan |
Pension |
Compen- |
||||||||||||||||||||||||||||||||
Salary |
Bonus |
Awards |
Awards |
Compensation |
Value |
sation |
Total |
|||||||||||||||||||||||||||||
Name and Principal Position
|
Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($)(7) | ($) | |||||||||||||||||||||||||||
D. Scott Davis(8)
|
2008 | 960,000 | 40,000 | 3,188,915 | 535,325 | 136,944 | 712,041 | 30,014 | 5,603,239 | |||||||||||||||||||||||||||
Chairman and
|
2007 | 584,000 | 25,000 | 1,249,165 | 358,018 | 115,000 | 287,600 | 27,367 | 2,646,150 | |||||||||||||||||||||||||||
Chief Executive Officer
|
2006 | 500,000 | 21,000 | 1,126,569 | 375,304 | 88,200 | 280,100 | 26,003 | 2,417,176 | |||||||||||||||||||||||||||
Kurt P. Kuehn(9)
|
2008 | 380,000 | 16,000 | 889,375 | 233,701 | 60,800 | 368,792 | 21,082 | 1,969,750 | |||||||||||||||||||||||||||
Senior Vice President and
Chief Financial Officer |
||||||||||||||||||||||||||||||||||||
David P. Abney
|
2008 | 440,000 | 18,500 | 832,352 | 213,369 | 70,300 | 363,444 | 7,976 | 1,945,941 | |||||||||||||||||||||||||||
Senior Vice President and
|
2007 | 420,000 | 17,500 | 545,346 | 157,664 | 80,500 | 271,700 | 7,771 | 1,500,481 | |||||||||||||||||||||||||||
Chief Operating Officer
|
2006 | 383,000 | 16,050 | 345,034 | 122,927 | 67,410 | 342,600 | 10,519 | 1,287,540 | |||||||||||||||||||||||||||
Robert E. Stoffel(9)
|
2008 | 370,500 | 15,525 | 691,466 | 181,657 | 58,995 | 320,522 | 20,061 | 1,658,726 | |||||||||||||||||||||||||||
Senior Vice President,
Engineering, Strategy and Supply Chain |
||||||||||||||||||||||||||||||||||||
James F. Winestock, Jr.(8)(10)
|
2008 | 378,600 | 15,875 | 1,064,241 | 175,922 | 60,325 | 366,017 | 12,771 | 2,073,751 | |||||||||||||||||||||||||||
Senior Vice President,
|
2007 | 364,500 | 15,275 | 810,473 | 205,104 | 70,265 | 281,900 | 12,252 | 1,759,769 | |||||||||||||||||||||||||||
U.S. Operations
|
2006 | 351,000 | 14,750 | 743,574 | 236,752 | 61,950 | 272,700 | 11,786 | 1,692,512 |
(1) | The salary amount represents the salary earned from January 1 through December 31 of the applicable year. | |
(2) | This column represents the Half-Month Bonus awarded annually. For a description of this bonus, see Compensation Discussion and Analysis. | |
(3) | The values for equity-based awards in this column represent the cost recognized for financial statement reporting purposes for the applicable year, in accordance with FAS 123R. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. Current and prior year awards with compensation expense recognized in 2008 include: | |
RPUs granted under the LTI in 2003, 2004, 2005,
2006, 2007 and 2008;
|
||
RSUs granted under the MIP for 2005, 2006, 2007 and
2008; and
|
||
RSUs granted under the LTIP for 2006, 2007 and 2008.
|
||
Information about the FAS 123R value of these awards can be found in Note 11 Stock-Based Compensation in our 2008 Form 10-K, except for our 2003, 2004 and 2005 RPUs and 2005 RSUs, which can be found in Note 11 Capital Stock and Stock-Based Compensation in our 2006 Form 10-K. | ||
The grant date fair value of the awards made in 2008 can be found in the Grants of Plan-Based Awards table below. An overview of the features of each program can be found in the Compensation Discussion and Analysis section above, and in the narrative following the Grants of Plan-Based Awards table. | ||
(4) | The values for stock option awards in this column represent the cost recognized for financial statement reporting purposes for the applicable year, in accordance with FAS 123R. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. Current and prior year awards with compensation expense recognized in 2008 include the grants made in 2003, 2004, 2005, 2006, 2007 and 2008 under the LTI. | |
The assumptions used to value these awards can be found in Note 11 Stock-Based Compensation in our 2008 Form 10-K, except for our 2003, 2004 and 2005 stock option awards, which can be found in Note 11 Capital Stock and Stock-Based Compensation in our 2006 Form 10-K. | ||
The grant date fair value of the awards can be found in the Grants of Plan-Based Awards table below. An overview of the features of the program can be found in the Compensation Discussion and Analysis section above, and in the narrative following the Grants of Plan-Based Awards table below. |
31
(5) | This column shows the cash portion (representing 50%) of the MIP award and the MIP Ownership Incentive award. For a description of the MIP, see the Compensation Discussion and Analysis section above. The MIP Ownership Incentive award was paid at 100% of target (one months salary) for each named executive officer who met or exceeded his target ownership level. | |
(6) | This column represents an estimate of the annual increase in the actuarial present value of the named executive officers accrued benefit under our retirement plans for the applicable year, assuming a retirement age of 60. Due to the change in measurement date that took effect in 2008 for our retirement plans which changed the measurement date from September 30 to December 31, the amount reported for 2008 represents the pro-rated 12-month change. See the Pension Benefits table below for additional information, including the present value assumptions used in this calculation. There are no above market or preferential earnings for the UPS Deferred Compensation Plan. | |
(7) | Amounts reported in this column for 2008 include 401(k) matching contributions in the amount of $6,900 for each named executive officer. Also includes imputed income of life insurance premiums for the named executive officers in the following amounts: Davis $4,386, Kuehn $911, Abney $1,076, Stoffel $884, and Winestock $1,696. Also includes imputed income on the Restoration Plan Rollover Option discussed in the Pension Benefits table below as follows: Davis $5,498 and Winestock $4,175. The only perquisite was for financial planning services as follows: Davis $13,230, Kuehn $13,271, and Stoffel $12,277. | |
(8) | Because Scott Davis and Jim Winestock meet the definition for retirement eligibility under our 1999 Plan, we are required to expense in 2008 the full grant date fair value for all awards granted to them in 2008, rather than expensing the awards over the vesting period of the award. | |
(9) | Because Kurt Kuehn and Bob Stoffel first became named executive officers in 2008, SEC rules require only that their 2008 compensation is included in the table. | |
(10) | Jim Winestock retired on February 10, 2009. |
32
All Other |
All Other |
|||||||||||||||||||||||||||||||||||||||||||
Stock |
Option |
Grant Date |
||||||||||||||||||||||||||||||||||||||||||
Awards: |
Awards: |
Exercise |
Fair Value |
|||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts |
Estimated Future Payouts |
Number |
Number of |
or Base |
of Stock |
|||||||||||||||||||||||||||||||||||||||
Under Non-Equity |
Under Equity Incentive |
of Shares |
Securities |
Price of |
and |
|||||||||||||||||||||||||||||||||||||||
Incentive Plan Awards(1) | Plan Awards(2) |
of Stock |
Underlying |
Option |
Option |
|||||||||||||||||||||||||||||||||||||||
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
or Units |
Options |
Awards |
Award |
||||||||||||||||||||||||||||||||||
Name
|
Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#)(3) | ($/Sh) | ($)(4) | |||||||||||||||||||||||||||||||||
D. Scott Davis
|
| 200,000 | | |||||||||||||||||||||||||||||||||||||||||
03/17/2008 | 16,162 | 35,915 | 52,077 | 1,497,777 | ||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 18,337 | (5) | 1,308,737 | |||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 26,089 | 71.58 | 437,619 | |||||||||||||||||||||||||||||||||||||||||
09/04/2008 | 14,546 | 32,323 | 46,869 | 621,669 | ||||||||||||||||||||||||||||||||||||||||
12/05/2008 | 3,065 | (6) | 135,904 | |||||||||||||||||||||||||||||||||||||||||
Kurt P. Kuehn
|
| 80,000 | | |||||||||||||||||||||||||||||||||||||||||
03/17/2008 | 5,819 | 12,930 | 18,749 | 748,632 | ||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 5,239 | (5) | 373,915 | |||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 7,454 | 71.58 | 125,034 | |||||||||||||||||||||||||||||||||||||||||
09/04/2008 | 647 | 1,437 | 2,084 | 27,756 | ||||||||||||||||||||||||||||||||||||||||
12/05/2008 | 1,361 | (6) | 60,347 | |||||||||||||||||||||||||||||||||||||||||
David P. Abney
|
| 92,500 | | |||||||||||||||||||||||||||||||||||||||||
03/17/2008 | 6,728 | 14,950 | 21,678 | 857,000 | ||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 6,058 | (5) | 432,368 | |||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 8,619 | 71.58 | 144,576 | |||||||||||||||||||||||||||||||||||||||||
09/04/2008 | 6,728 | 14,950 | 21,678 | 287,563 | ||||||||||||||||||||||||||||||||||||||||
12/05/2008 | 1,574 | (6) | 69,792 | |||||||||||||||||||||||||||||||||||||||||
Robert E. Stoffel
|
| 77,625 | | |||||||||||||||||||||||||||||||||||||||||
03/17/2008 | 5,646 | 12,546 | 18,192 | 740,643 | ||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 5,084 | (5) | 362,852 | |||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 7,233 | 71.58 | 121,327 | |||||||||||||||||||||||||||||||||||||||||
12/05/2008 | 1,321 | (6) | 58,574 | |||||||||||||||||||||||||||||||||||||||||
James F. Winestock, Jr. |
| 79,375 | | |||||||||||||||||||||||||||||||||||||||||
03/17/2008 | 5,774 | 12,829 | 18,603 | 755,086 | ||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 5,198 | (5) | 370,988 | |||||||||||||||||||||||||||||||||||||||||
05/07/2008 | 7,396 | 71.58 | 124,061 | |||||||||||||||||||||||||||||||||||||||||
12/05/2008 | 1,351 | (6) | 59,904 |
(1) | The amount reflects the target value of the cash portion of the 2008 MIP award and the MIP Ownership Incentive Award for each named executive officer. The potential payments for the MIP are performance-based and therefore at risk. The MIP program is described in the Compensation Discussion and Analysis section above. | |
(2) | These columns show the potential number of RSUs that would be awarded under the 2008 LTIP at the end of the three year term if the threshold, target or maximum performance goals are satisfied. | |
(3) | This column shows the number of stock options granted under the LTI on May 7, 2008. | |
(4) | This column shows the grant date fair value of RSUs, RPUs and stock options under FAS 123R granted to each of the named executive officers in 2008. The grant date fair values are calculated using the NYSE closing price of UPS stock on the date of grant for RSUs and RPUs and the Black-Scholes option pricing model for stock options. For the RSUs under the 2008 LTIP, the grant date fair value assumes that the award is earned at 100%. There can be no assurance that the grant date fair value of stock and option awards will ever be realized. | |
(5) | Represents the number of RPUs granted under the LTI on May 7, 2008. | |
(6) | Represents the number of RSUs granted under the MIP on December 5, 2008. |
33
Stock Awards | ||||||||||||||||||||||||||||||||||||
Equity |
||||||||||||||||||||||||||||||||||||
Incentive |
||||||||||||||||||||||||||||||||||||
Equity |
Plan |
|||||||||||||||||||||||||||||||||||
Incentive |
Awards: |
|||||||||||||||||||||||||||||||||||
Plan |
Market or |
|||||||||||||||||||||||||||||||||||
Awards: |
Payout |
|||||||||||||||||||||||||||||||||||
Option Awards |
Number of |
Value of |
||||||||||||||||||||||||||||||||||
Number of |
Market |
Unearned |
Unearned |
|||||||||||||||||||||||||||||||||
Number of |
Securities |
Number of |
Value of |
Shares, |
Shares, |
|||||||||||||||||||||||||||||||
Securities |
Underlying |
Shares or |
Shares or |
Units or |
Units or |
|||||||||||||||||||||||||||||||
Underlying |
Unexercised |
Units of |
Units of |
Other |
Other |
|||||||||||||||||||||||||||||||
Unexercised |
Options |
Option |
Stock |
Stock That |
Rights That |
Rights That |
||||||||||||||||||||||||||||||
Options |
(#) |
Exercise |
Option |
Option |
That Have |
Have Not |
Have Not |
Have Not |
||||||||||||||||||||||||||||
(#) |
Unexercisable |
Price |
Grant |
Expiration |
Not Vested |
Vested |
Vested |
Vested |
||||||||||||||||||||||||||||
Name
|
Exercisable | (1) | ($) | Date | Date | (#)(2) | ($)(3) | (#)(4) | ($)(3) | |||||||||||||||||||||||||||
D. Scott Davis
|
6,976 | 50.00 | 11/09/1999 | 11/09/2009 | ||||||||||||||||||||||||||||||||
20,043 | 56.90 | 03/30/2001 | 03/30/2011 | |||||||||||||||||||||||||||||||||
23,864 | 60.22 | 04/25/2002 | 04/25/2012 | |||||||||||||||||||||||||||||||||
13,305 | 62.40 | 05/02/2003 | 05/02/2013 | |||||||||||||||||||||||||||||||||
12,260 | 70.70 | 05/03/2004 | 05/02/2014 | |||||||||||||||||||||||||||||||||
12,660 | 72.07 | 05/09/2005 | 05/08/2015 | |||||||||||||||||||||||||||||||||
11,844 | 80.88 | 05/01/2006 | 04/29/2016 | |||||||||||||||||||||||||||||||||
16,086 | 70.90 | 05/09/2007 | 05/08/2017 | |||||||||||||||||||||||||||||||||
26,089 | 71.58 | 05/07/2008 | 05/07/2018 | |||||||||||||||||||||||||||||||||
60,131 | 3,316,830 | 39,097 | 2,156,563 | |||||||||||||||||||||||||||||||||
Kurt P. Kuehn
|
2,519 | 50.00 | 11/09/1999 | 11/09/2009 | ||||||||||||||||||||||||||||||||
4,490 | 56.90 | 03/30/2001 | 03/30/2011 | |||||||||||||||||||||||||||||||||
4,819 | 60.22 | 04/25/2002 | 04/25/2012 | |||||||||||||||||||||||||||||||||
2,420 | 62.40 | 05/02/2003 | 05/02/2013 | |||||||||||||||||||||||||||||||||
7,905 | 70.70 | 05/03/2004 | 05/02/2014 | |||||||||||||||||||||||||||||||||
8,862 | 72.07 | 05/09/2005 | 05/08/2015 | |||||||||||||||||||||||||||||||||
8,178 | 80.88 | 05/01/2006 | 04/29/2016 | |||||||||||||||||||||||||||||||||
9,652 | 70.90 | 05/09/2007 | 05/08/2017 | |||||||||||||||||||||||||||||||||
7,454 | 71.58 | 05/07/2008 | 05/07/2018 | |||||||||||||||||||||||||||||||||
31,839 | 1,756,247 | 11,714 | 646,117 | |||||||||||||||||||||||||||||||||
David P. Abney
|
2,716 | 50.00 | 11/09/1999 | 11/09/2009 | ||||||||||||||||||||||||||||||||
3,977 | 56.90 | 03/30/2001 | 03/30/2011 | |||||||||||||||||||||||||||||||||
8,296 | 60.22 | 04/25/2002 | 04/25/2012 | |||||||||||||||||||||||||||||||||
9,321 | 62.40 | 05/02/2003 | 05/02/2013 | |||||||||||||||||||||||||||||||||
9,034 | 70.70 | 05/03/2004 | 05/02/2014 | |||||||||||||||||||||||||||||||||
9,812 | 72.07 | 05/09/2005 | 05/08/2015 | |||||||||||||||||||||||||||||||||
9,052 | 80.88 | 05/01/2006 | 04/29/2016 | |||||||||||||||||||||||||||||||||
11,260 | 70.90 | 05/09/2007 | 05/08/2017 | |||||||||||||||||||||||||||||||||
8,619 | 71.58 | 05/07/2008 | 05/07/2018 | |||||||||||||||||||||||||||||||||
36,160 | 1,994,566 | 19,480 | 1,074,517 | |||||||||||||||||||||||||||||||||
Robert E. Stoffel
|
4,169 | 56.90 | 03/30/2001 | 03/30/2011 | ||||||||||||||||||||||||||||||||
4,849 | 60.22 | 04/25/2002 | 04/25/2012 | |||||||||||||||||||||||||||||||||
3,948 | 62.40 | 05/02/2003 | 05/02/2013 | |||||||||||||||||||||||||||||||||
7,905 | 70.70 | 05/03/2004 | 05/02/2014 | |||||||||||||||||||||||||||||||||
8,862 | 72.07 | 05/09/2005 | 05/08/2015 | |||||||||||||||||||||||||||||||||
8,178 | 80.88 | 05/01/2006 | 04/29/2016 | |||||||||||||||||||||||||||||||||
9,652 | 70.90 | 05/09/2007 | 05/08/2017 | |||||||||||||||||||||||||||||||||
7,233 | 71.58 | 05/07/2008 | 05/07/2018 | |||||||||||||||||||||||||||||||||
31,641 | 1,745,308 | 10,894 | 600,913 | |||||||||||||||||||||||||||||||||
James F. Winestock, Jr.
|
6,022 | 50.00 | 11/09/1999 | 11/09/2009 | ||||||||||||||||||||||||||||||||
8,659 | 56.90 | 03/30/2001 | 03/30/2011 | |||||||||||||||||||||||||||||||||
9,489 | 60.22 | 04/25/2002 | 04/25/2012 | |||||||||||||||||||||||||||||||||
4,907 | 62.40 | 05/02/2003 | 05/02/2013 | |||||||||||||||||||||||||||||||||
4,975 | 70.70 | 05/03/2004 | 05/02/2014 | |||||||||||||||||||||||||||||||||
8,862 | 72.07 | 05/09/2005 | 05/08/2015 | |||||||||||||||||||||||||||||||||
8,319 | 80.88 | 05/01/2006 | 04/29/2016 | |||||||||||||||||||||||||||||||||
9,828 | 70.90 | 05/09/2007 | 05/08/2017 | |||||||||||||||||||||||||||||||||
7,396 | 71.58 | 05/07/2008 | 05/07/2018 | |||||||||||||||||||||||||||||||||
30,775 | 1,697,591 | 11,116 | 613,131 |
34
(1) | Stock options granted on May 3, 2004, May 9, 2005, May 1, 2006 and May 9, 2007 vest on May 4, 2009, May 10, 2010, May 2, 2011 and May 10, 2012, respectively. For these option grants, the options vest five years from the date of grant. For stock options granted on May 7, 2008, the options generally vest over a five-year period with 20% of the option vesting at each anniversary date of the grant. All options expire ten years from the date of grant. | |
(2) | Unvested stock awards in this column include RSUs and RPUs. The RSUs granted as part of MIP generally vest over a five-year period with approximately 20% of the award vesting at each anniversary date of the grant. RSUs were granted as part of MIP in 2005, 2006, 2007 and 2008 and will vest on October 15th of each year during the five-year vesting period. The RSUs granted as part of LTIP will vest, if earned, on January 31 of the year following the end of the three-year performance cycle for each grant. For the RPUs granted in 2004, 2005, 2006 and 2007, they generally vest five years after the date of grant. Therefore the RPUs will vest on May 4, 2009, May 10, 2010, May 2, 2011, and May 10, 2012, respectively. For RPUs granted in 2008, vesting is generally over a five-year period with 20% of the award vesting at each anniversary date of the grant. Values were rounded to the closest unit. | |
(3) | Market value based on NYSE closing price on December 31, 2008 of $55.16. | |
(4) | Represents the potential RSUs to be earned under the 2006 LTIP award (for the 2008 performance period), the 2007 LTIP award (for the 2008 and 2009 performance periods) and the 2008 LTIP award (for the 2008, 2009 and 2010 performance periods) if threshold performance goals are satisfied. |
Option Awards(1) | Stock Awards | |||||||||||||||
Number of |
Number of |
|||||||||||||||
Shares |
Value |
Shares |
Value |
|||||||||||||
Acquired |
Realized |
Acquired |
Realized |
|||||||||||||
on Exercise |
on Exercise |
on Vesting |
on Vesting |
|||||||||||||
Name
|
(#) | ($) | (#)(2) | ($)(3) | ||||||||||||
D. Scott Davis
|
| | 5,020 | 354,558 | ||||||||||||
Kurt P. Kuehn
|
| | 1,205 | 79,451 | ||||||||||||
David P. Abney
|
| | 3,544 | 249,787 | ||||||||||||
Robert E. Stoffel
|
| | 1,711 | 116,575 | ||||||||||||
James F. Winestock, Jr.
|
| | 2,034 | 140,119 |
(1) | None of the named executive officers exercised stock options in 2008. | |
(2) | The value in this column represents approximately 20% of the 2005, 2006 and 2007 MIP award granted in the form of RSUs that vested on October 15, 2008 and the 2003 LTI award, which also includes the 10% bonus in the form of RPUs for achieving the EPS target, that vested on May 2, 2008. Vested awards are distributed to participants in an equivalent number of class A shares. | |
(3) | The value shown is based on the NYSE closing prices on October 15, 2008, the date the RSUs vested, of $51.30 per share and May 2, 2008, the date the RPUs vested, of $73.28 per share. |
35
Present |
||||||||||||||
Number of |
Value of |
Payments |
||||||||||||
Years |
Accumulated |
During Last |
||||||||||||
Credited |
Benefit |
Fiscal Year |
||||||||||||
Name
|
Plan Name | Service(#)(1) | ($)(2) | ($) | ||||||||||
D. Scott Davis
|
UPS Retirement Plan | 24.0 | 684,445 | | ||||||||||
Restoration Plan Rollover Option | 24.0 | 1,370,241 | | |||||||||||
UPS Excess Coordinating Plan | 24.0 | 1,054,654 | | |||||||||||
Total | 3,109,340 | |||||||||||||
Kurt P. Kuehn
|
UPS Retirement Plan | 31.9 | 761,679 | | ||||||||||
UPS Excess Coordinating Plan | 31.9 | 1,112,609 | | |||||||||||
Total | 1,874,288 | |||||||||||||
David P. Abney
|
UPS Retirement Plan | 34.8 | 780,215 | | ||||||||||
UPS Excess Coordinating Plan | 34.8 | 1,419,013 | | |||||||||||
Total | 2,199,228 | |||||||||||||
Robert E. Stoffel
|
UPS Retirement Plan | 33.8 | 762,148 | | ||||||||||
UPS Excess Coordinating Plan | 33.8 | 1,095,441 | | |||||||||||
Total | 1,857,589 | |||||||||||||
James F. Winestock, Jr.
|
UPS Retirement Plan | 39.3 | 1,137,007 | | ||||||||||
Restoration Plan Rollover Option | 38.6 | 526,838 | | |||||||||||
UPS Excess Coordinating Plan | 39.3 | 1,193,359 | | |||||||||||
Total | 2,857,204 |
(1) | With the exception of the RPRO, as discussed below, this column represents the years of service as of December 31, 2008. | |
(2) | This column represents the total discounted value of the monthly lifetime benefit earned at December 31, 2008 assuming the executive continues in service and retires at age 60. The present value is not the monthly or annual lifetime benefit that would be paid to the executive. The present values are based on discount rates of 6.75%, 5.72% and 6.69% for the UPS Retirement Plan, Restoration Plan Rollover Option and UPS Excess Coordinating Plan, respectively, at December 31, 2008. The present values assume no pre-retirement mortality and utilize the RP 2000 mortality tables projected to 2011 using scale AA with no collar adjustments. |
36
Executive |
Registrant |
Aggregate |
Aggregate |
Aggregate |
||||||||||||||||
Contributions in |
Contributions in |
Earnings/(Loss) |
Withdrawals/ |
Balance at |
||||||||||||||||
Last FY |
Last FY |
in Last FY |
Distributions |
Last FYE |
||||||||||||||||
Name
|
($) | ($) | ($) | ($) | ($)(1) | |||||||||||||||
D. Scott Davis
|
3,607 | | (163,172 | ) | | 610,650 | ||||||||||||||
Kurt P. Kuehn
|
| | (202,228 | ) | | 703,107 | ||||||||||||||
David P. Abney
|
| | (343,124 | ) | | 985,408 | ||||||||||||||
Robert E. Stoffel
|
| | (104,379 | ) | | 306,353 | ||||||||||||||
James F. Winestock, Jr.
|
| | (380,929 | ) | | 1,588,023 |
(1) | Certain amounts in the Aggregate Balance column represent salary or bonus that was reported in the summary compensation tables in prior years as follows: |
Amount included in both |
||||
2008 Non-Qualified Deferred |
||||
Compensation Table and |
||||
Prior Years Summary |
||||
Compensation Tables |
||||
Name
|
($) | |||
D. Scott Davis
|
535,026 | |||
Kurt P. Kuehn
|
711,254 | |||
David P. Abney
|
1,031,485 | |||
Robert E. Stoffel
|
177,658 | |||
James F. Winestock, Jr.
|
1,628,382 |
37
| Prior to December 31, 2004, contributions could be deferred from executive officers monthly salary and the Half-Month Bonus. | |
| Prior to December 31, 2004, non-employee directors could defer retainer and meeting fees quarterly. Assets from the discontinued UPS Retirement Plan for Outside Directors were transferred to the 2004 and Before Salary Deferral Feature in 2003. | |
| No contributions were permitted after December 31, 2004. |
| Executive officers may defer one to 35% of their monthly salary, one to 100% of the Half Month Bonus and one to 100% of the cash portion of the MIP award. They may also defer excess pre-tax contributions if the UPS Savings Plan fails the annual average deferral percentage (ADP) test. | |
| Non-employee directors may defer retainer fees quarterly. | |
| Elections are made annually for the following calendar year. |
| Assets are invested solely in shares of UPS stock. | |
| Non-qualified or Incentive Stock Options which vested prior to December 31, 2004 were deferrable during the annual enrollment period for the following calendar year. Participants deferred receipt of UPS stock that would otherwise be taxable upon the exercise of the stock option. | |
| The shares received upon exercise of these options are deferred into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as deferred compensation obligations in the shareowners equity section of the balance sheet. | |
| No deferrals of stock options which vest after December 31, 2004 are permitted. However, stock options that vested prior to December 31, 2004 and were deferred but not yet exercised will be deferred into the Stock Option Deferral Feature at the time of exercise, provided no separation from service has occurred. | |
| As a result of the requirements applicable to non-qualified deferred compensation arrangements under Section 409A of the Internal Revenue Code and related guidance, deferral of stock options is no longer offered under the UPS Deferred Compensation Plan for options that vested after December 31, 2004. |
| For the 2004 and Before Salary Deferral Feature and the 2005 and Beyond Salary Deferral Feature, participants may elect to receive the funds in a lump sum or up to a 10 year installment (of 120 monthly payments), subject to restrictions if the balances are less than $20,000 and $10,000, respectively. For the Stock Option Deferral Feature, participants may elect to receive shares in a lump sum or up to 10 annual installments, subject to restrictions if the balance is less than $20,000. | |
| The distribution election is irrevocable under the 2005 and Beyond Salary Deferral Feature, but may be changed under the 2004 and Before Salary Deferral Feature and the Stock Option Deferral Feature. | |
| Hardship distributions are permitted under all three features of the UPS Deferred Compensation Plan. | |
| No withdrawals are permitted under the 2005 and Beyond Salary Deferral Feature, but withdrawals are permitted for 100% of the account under the 2004 and Before Salary Deferral Feature and Stock Option Deferral Feature with forfeitures of 10% of the total account balances. |
38
| all outstanding options become immediately exercisable, and remain exercisable as follows: |
| upon a change in control, they remain exercisable for their entire term, and | |
| upon the participants retirement, death or disability, for options granted prior to 2003 they remain exercisable for three years and for options granted since 2003 they remain exercisable for their entire term or end of option exercise period, whichever occurs first; |
| any restriction periods and restrictions imposed on shares of restricted stock or RSUs which are not performance-based lapse; and | |
| target payout opportunities attainable under all outstanding awards of performance-based restricted stock, RSUs and RPUs are deemed to have been fully earned for the applicable performance periods, and payment of the awards (in cash or stock, as applicable) is paid to the participant based upon an assumed achievement of all relevant targeted performance goals and the length of time within the applicable performance period which has elapsed. |
39
Accelerated |
||||||||||||||||||||
Vesting of |
||||||||||||||||||||
Equity |
Estimated Tax |
|||||||||||||||||||
Severance |
Awards |
Benefits |
Gross-Up |
Total |
||||||||||||||||
Name
|
Amount | ($)(1) | ($)(2) | ($)(3) | ($) | |||||||||||||||
D. Scott Davis
|
||||||||||||||||||||
Termination (Voluntary or Involuntary)
|
| | | | | |||||||||||||||
Change in Control
|
| 4,436,688 | | 1,353,116 | 5,789,804 | |||||||||||||||
Early Retirement (Age 55)
|
| 4,436,688 | 2,448,602 | | 6,885,290 | |||||||||||||||
Normal Retirement (Age 65)
|
| 4,436,688 | | | 4,436,688 | |||||||||||||||
Death
|
| 4,436,688 | | | 4,436,688 | |||||||||||||||
Disability
|
| 4,436,688 | | | 4,436,688 | |||||||||||||||
Kurt P. Kuehn
|
||||||||||||||||||||
Termination (Voluntary or Involuntary)
|
| | | | | |||||||||||||||
Change in Control
|
| 2,157,757 | | 274,391 | 2,432,148 | |||||||||||||||
Early Retirement (Age 55)
|
| 2,157,757 | | | 2,157,757 | |||||||||||||||
Normal Retirement (Age 65)
|
| 2,157,757 | | | 2,157,757 | |||||||||||||||
Death
|
| 2,157,757 | | | 2,157,757 | |||||||||||||||
Disability
|
| 2,157,757 | | | 2,157,757 | |||||||||||||||
David P. Abney
|
||||||||||||||||||||
Termination (Voluntary or Involuntary)
|
| | | | | |||||||||||||||
Change in Control
|
| 2,597,244 | | 340,882 | 2,938,126 | |||||||||||||||
Early Retirement (Age 55)
|
| 2,597,244 | | | 2,597,244 | |||||||||||||||
Normal Retirement (Age 65)
|
| 2,597,244 | | | 2,597,244 | |||||||||||||||
Death
|
| 2,597,244 | | | 2,597,244 | |||||||||||||||
Disability
|
| 2,597,244 | | | 2,597,244 | |||||||||||||||
Robert E. Stoffel
|
||||||||||||||||||||
Termination (Voluntary or Involuntary)
|
| | | | | |||||||||||||||
Change in Control
|
| 2,127,180 | | 262,051 | 2,389,231 | |||||||||||||||
Early Retirement (Age 55)
|
| 2,127,180 | | | 2,127,180 | |||||||||||||||
Normal Retirement (Age 65)
|
| 2,127,180 | | | 2,127,180 | |||||||||||||||
Death
|
| 2,127,180 | | | 2,127,180 | |||||||||||||||
Disability
|
| 2,127,180 | | | 2,127,180 | |||||||||||||||
James F. Winestock, Jr.
|
||||||||||||||||||||
Termination (Voluntary or Involuntary)
|
| | | | | |||||||||||||||
Change in Control
|
| 2,086,911 | | 906,159 | 2,993,070 | |||||||||||||||
Early Retirement (Age 55)
|
| 2,086,911 | 2,051,295 | | 4,138,206 | |||||||||||||||
Normal Retirement (Age 65)
|
| 2,086,911 | | | 2,086,911 | |||||||||||||||
Death
|
| 2,086,911 | | | 2,086,911 | |||||||||||||||
Disability
|
| 2,086,911 | | | 2,086,911 |
(1) | Represents value of accelerated vesting of stock options, RSUs, RPUs and RSUs in accordance with the terms of the 1999 Plan and the related award certificates. | |
(2) | For Scott Davis and Jim Winestock, represents the present value of additional amounts accrued under the UPS Excess Coordinating Plan, life insurance elected under the Retirement Plan Restoration Option and post-retirement medical benefits as a result of early retirement as of December 31, 2008. For information about the UPS Excess Coordinating Plan and the Retirement Plan Restoration Option, see the 2008 Pension Benefits table and related narrative. The same assumptions were used to calculate the present value of the amounts in this table that were used for the 2008 Pension Benefits table. | |
(3) | In accordance with the terms of the 1999 Plan, we are required to provide tax gross-ups in connection with the accelerated vesting of the equity awards in the event of a change in control. |
40
| life insurance upon death in the amount of 12 times the employees monthly base salary, with a December 31, 2008 maximum benefit payable of $1 million; | |
| a death benefit in the amount of three times the employees monthly salary; | |
| disability benefits; and | |
| accrued vacation amounts. |
| the value of equity awards that are already vested; | |
| amounts payable under defined benefit pension plans; and | |
| amounts previously deferred into the deferred compensation plan. |
| shareowners approval of a reorganization, merger, share exchange or consolidation, in each case, where persons who were the shareowners immediately prior to such event do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged, surviving or consolidated companys then outstanding securities entitled to vote generally in the election of directors; | |
| a liquidation or dissolution of UPS or the sale of substantially all of UPSs assets; | |
| the board members as of November 9, 1999 or board members whose elections or nominations are approved by a majority of such board members cease for any reason to constitute at least an 80% majority of the board of directors; or | |
| a change (other than due to retirement) of 50% or more of the executive officers of UPS at the level of Senior Vice President and above within a consecutive 12-month period. |
41
Fees Earned |
||||||||||||||||||||
or Paid in |
Stock |
Option |
All Other |
|||||||||||||||||
Cash |
Awards |
Awards |
Compensation |
Total |
||||||||||||||||
Name
|
($)(1) | ($)(2) | ($)(3)(4) | ($)(5) | ($) | |||||||||||||||
F. Duane Ackerman
|
80,000 | 29,628 | | | 109,628 | |||||||||||||||
Michael J. Burns
|
75,000 | 94,444 | | | 169,444 | |||||||||||||||
Stuart E. Eizenstat
|
75,000 | 94,444 | | | 169,444 | |||||||||||||||
Michael L. Eskew
|
75,000 | | | (6 | ) | 75,000 | ||||||||||||||
James P. Kelly(7)
|
37,500 | 192,085 | 4,314 | | 233,899 | |||||||||||||||
Ann M. Livermore
|
75,000 | 109,331 | 6,020 | | 190,351 | |||||||||||||||
Rudy Markham
|
75,000 | 29,444 | | | 104,444 | |||||||||||||||
Victor A. Pelson(7)
|
42,500 | 120,442 | 6,020 | | 168,962 | |||||||||||||||
John W. Thompson
|
85,000 | 109,331 | 6,020 | | 200,351 | |||||||||||||||
Carol B. Tomé
|
95,000 | 109,331 | 6,020 | 3,000 | 213,351 | |||||||||||||||
Ben Verwaayen
|
75,000 | 98,889 | | | 173,889 |
(1) | The following directors deferred 2008 cash compensation into the UPS Deferred Compensation Plan (further described above under the Non-Qualified Deferred Compensation Table): Burns $75,000; Tomé $95,000; and Verwaayen $75,000. | |
(2) | This column represents the compensation expense recognized for financial statement reporting purposes in 2008, in accordance with FAS 123R, excluding the normal reduction for estimated forfeitures, for the following stock awards: restricted stock granted in 2005, 2006, 2007 and 2008; restricted performance units granted in 2003 and 2004; and phantom stock granted in 2001, 2002, 2003, and 2004. The grant date fair value for each restricted stock award, restricted performance unit award and phantom stock award was $110,000 ($25,000 for initial stock grants to newly-elected directors), $65,000 and $25,000, respectively, and the number of units was determined using the NYSE closing price of UPS class B common stock on the date of grant. The dividends earned on each award are reinvested in additional units (dividend equivalent units) at each dividend payable date. |
42
Restricted stock vests three years from the date of grant, except for the initial stock grants made to newly-elected directors which vest five years from the date of grant. In addition, any unvested restricted stock vests at the board meeting preceding a directors 70th birthday. Restricted performance units vest five years after the date of grant. Phantom stock vests at the date of grant and are settled in cash at the end of a directors term. | ||
(3) | Directors in 2003 and 2004 received stock options awards. However, in 2005 those awards were discontinued. From 2005 through 2008 we granted restricted stock to all directors. | |
(4) | This column represents the dollar amount recognized for financial statement reporting purposes in 2008, in accordance with FAS 123R, excluding an estimate for forfeitures, for stock option awards granted in 2003 and 2004. The assumptions used to value stock option awards granted in 2003 and 2004 can be found in Note 11 Capital Stock and Stock-Based Compensation in our 2006 Form 10-K. | |
(5) | This column represents a charitable contribution match for 2008. | |
(6) | Although Mike Eskew retired as our chief executive officer as of December 31, 2007, he continued as an employee of UPS until February 29, 2008 and was compensated as an employee during that period. He earned a salary of $172,000 for 2008. We expensed $3,488,128 in stock awards and $983,748 in option awards for him during 2008. He did not receive a bonus or any non-equity incentive plan compensation for 2008. The change in his pension value was $979,010. Mike received all other compensation of $26,067 in 2008, comprised of a 401(k) matching contribution ($5,160), imputed income of life insurance premium ($845), imputed income on the Restoration Plan Rollover Option discussed in the 2008 Pension Benefits table ($7,942) and financial planning services ($12,120). The total compensation he received as an employee in 2008 was $5,648,953. | |
(7) | Jim Kellys and Vic Pelsons FAS 123R compensation expense for stock awards exceeds that of the other non-management directors due to the accelerated vesting of their restricted stock. Jim Kelly and Vic Pelson served as directors until May 8, 2008, the date of the 2008 annual meeting. |
Stock Options | ||||||||||||||||
Stock Awards |
Number of |
|||||||||||||||
Restricted |
Phantom |
Shares |
||||||||||||||
Performance |
Stock |
Underlying |
||||||||||||||
Restricted |
Units |
Units |
Options |
|||||||||||||
Name
|
Stock (#) | (#) | (#) | (#) | ||||||||||||
F. Duane Ackerman
|
1,912 | | | | ||||||||||||
Michael J. Burns
|
4,643 | | | | ||||||||||||
Stuart E. Eizenstat
|
4,643 | | | | ||||||||||||
Michael L. Eskew
|
| | | | ||||||||||||
James P. Kelly
|
| 546 | 390 | 1,343 | ||||||||||||
Ann M. Livermore
|
4,272 | 603 | 1,859 | 7,215 | ||||||||||||
Rudy Markham
|
1,929 | | | | ||||||||||||
Victor A. Pelson
|
| 546 | 1,859 | 5,609 | ||||||||||||
John W. Thompson
|
4,272 | 603 | 1,859 | 5,609 | ||||||||||||
Carol B. Tomé
|
4,272 | 603 | 879 | 2,864 | ||||||||||||
Ben Verwaayen
|
4,638 | | | |
43
44
| reviewed and discussed with management UPSs audited financial statements, including managements report on internal controls over financial reporting, included in our Annual Report on Form 10-K for the year ended December 31, 2008, | |
| discussed with Deloitte & Touche the matters required by Statement of Accounting Standards No. 61, as amended (Codification of Statements on Auditing Standards, AU § 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and | |
| received from and discussed with Deloitte & Touche the communications from Deloitte & Touche required by the Public Company Accounting Oversight Board regarding their independence. |
45
Fiscal Year Ended | ||||||||
2008 | 2007 | |||||||
Audit Fees(1)
|
$ | 13,819,000 | $ | 13,441,000 | ||||
Audit-Related Fees(2)
|
460,000 | 334,000 | ||||||
Total Audit and Audit-Related Fees
|
14,279,000 | 13,775,000 | ||||||
Tax Fees(3)
|
1,302,100 | 1,719,000 | ||||||
All Other Fees
|
| | ||||||
Total Fees
|
$ | 15,581,100 | $ | 15,494,000 |
(1) | Includes fees for the audit of our annual financial statements, Sarbanes-Oxley Section 404 attestation procedures, statutory audits of foreign subsidiary financial statements and services associated with securities filings. | |
(2) | Includes fees for employee benefit plan audits and accounting consultations. | |
(3) | Includes fees for tax compliance work and tax planning and advice services. |
46
| options to purchase more than 600,000 shares; | |
| stock appreciation rights with respect to more than 600,000 shares; | |
| restricted stock in excess of 600,000 shares and restricted stock units with a payout greater than the value of 600,000 shares; | |
| restricted performance shares or restricted performance units with a payout greater than the value of 600,000 shares; | |
| management incentive awards or other cash awards with a payout greater than the value of 600,000 shares. |
47
48
49
|
Earnings per share; | |
|
Net income (before or after taxes); | |
|
Return measures, including, but not limited to, return on assets, return on equity, return on operating capital, return on invested capital, and return on sales; | |
|
Cash flow return on investments which equals net cash flows divided by owners equity; | |
|
Earnings before or after taxes, interest and depreciation; | |
|
Gross revenues; | |
|
Share price; | |
|
Shareholder return; | |
|
Pretax profit; | |
|
Economic value added; | |
|
Volume growth; | |
|
Package flow technology; | |
|
Successfully integrating acquisitions; | |
|
Reducing non-operations expenses; | |
|
Other operating efficiency ratios; | |
|
Operating income; | |
|
Return on capital; | |
|
Return on capital employed; and/or | |
|
Pre-tax income margin. |
| options and SARs will become immediately exercisable as of the termination or resignation; | |
| restrictions imposed on restricted stock or RSUs that are not performance-based will lapse, and RSUs will be paid in cash or stock (as provided in the award document) ), with payment of RSUs that are exempt from Section 409A of the Internal Revenue Code (Section 409A) made within 30 days after the termination or resignation and payment of RSUs that are subject to Section 409A made within the 30-day period following the 6-month anniversary of the participants separation from service (as defined in regulations under Section 409A); and | |
| performance-based awards will vest with respect to each performance measurement tranche completed during the performance period prior to the termination or resignation (or, if the performance period is not divided into separate performance measurement tranches, proportionately based on the portion of the performance period completed prior to such resignation or termination), with payment to be made, based on actual performance, in cash or stock (as provided in the award document) at such time following the performance period as otherwise specified in the award document. |
50
51
52
Number of Securities Remaining |
||||||||||||
Number of Securities to be |
Available for Future Issuance |
|||||||||||
Issued Upon Exercise |
Weighted-Average Exercise |
Under Equity Compensation |
||||||||||
of Outstanding Options, |
Price of Outstanding Options, |
Plans (Excluding Securities |
||||||||||
Warrants and Rights |
Warrants and Rights |
Reflected in Column (a)) |
||||||||||
Plan category
|
(a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders
|
37,287,146 | $ | 32.02 | 34,683,922 | ||||||||
Equity compensation plans not approved by security holders
|
| N/A | | |||||||||
Total
|
37,287,146 | $ | 32.02 | 34,683,922 | ||||||||
53
54
Article 1.
|
Establishment, Objectives, and Duration | 1 | ||||
1.1.
|
Establishment of the Plan | 1 | ||||
1.2.
|
Objectives of the Plan | 1 | ||||
1.3.
|
Duration of the Plan | 1 | ||||
Article 2.
|
Definitions | 1 | ||||
2.1.
|
Affiliate | 1 | ||||
2.2.
|
Award | 1 | ||||
2.3.
|
Award Document | 1 | ||||
2.4.
|
Beneficial Owner or Beneficial Ownership | 1 | ||||
2.5.
|
Board or Board of Directors | 1 | ||||
2.6.
|
Cause | 1 | ||||
2.7.
|
Change in Control | 2 | ||||
2.8.
|
Code | 2 | ||||
2.9.
|
Committee | 2 | ||||
2.10.
|
Company | 2 | ||||
2.11.
|
Director | 2 | ||||
2.12.
|
Effective Date | 2 | ||||
2.13.
|
Employee | 2 | ||||
2.14.
|
ERISA | 2 | ||||
2.15.
|
Exchange Act | 2 | ||||
2.16.
|
Executive Participant | 2 | ||||
2.17.
|
Fair Market Value of a Share | 3 | ||||
2.18.
|
409A Guidance | 3 | ||||
2.19.
|
Freestanding SAR | 3 | ||||
2.20.
|
Good Reason | 3 | ||||
2.21.
|
Incentive Stock Option or ISO | 3 | ||||
2.22.
|
Insider | 3 | ||||
2.23.
|
Key Person | 3 | ||||
2.24.
|
Management Incentive Award | 3 | ||||
2.25.
|
Nonqualified Stock Option or NQSO | 3 | ||||
2.26.
|
Option | 3 | ||||
2.27.
|
Option Price | 3 | ||||
2.28.
|
Outside Director | 3 | ||||
2.29.
|
Participant | 4 | ||||
2.30.
|
Performance-Based Exception | 4 | ||||
2.31.
|
Performance Period | 4 | ||||
2.32.
|
Period of Restriction | 4 | ||||
2.33.
|
Person | 4 | ||||
2.34.
|
Restricted Performance Share | 4 | ||||
2.35.
|
Restricted Performance Unit | 4 | ||||
2.36.
|
Restricted Stock or Restricted Stock Unit | 4 | ||||
2.37.
|
Retirement | 4 | ||||
2.38.
|
Shares | 4 | ||||
2.39.
|
Stock Appreciation Right or SAR | 4 | ||||
2.40.
|
Subsidiary | 4 | ||||
2.41.
|
Tandem SAR | 4 |
i
Article 3.
|
Administration | 4 | ||||
3.1.
|
General | 4 | ||||
3.2.
|
Authority of the Committee | 4 | ||||
3.3.
|
Delegation | 5 | ||||
3.4.
|
Decisions Binding | 5 | ||||
Article 4.
|
Shares Subject to the Plan and Maximum Awards | 5 | ||||
4.1.
|
Number of Shares Available for Grants | 5 | ||||
4.2.
|
Adjustments in Authorized Shares | 5 | ||||
4.3.
|
Reversion of Shares | 6 | ||||
4.4.
|
Restrictions on Share Transferability | 6 | ||||
Article 5.
|
Eligibility and Participation | 6 | ||||
5.1.
|
Eligibility | 6 | ||||
5.2.
|
Actual Participation | 6 | ||||
Article 6.
|
Stock Options | 6 | ||||
6.1.
|
Grant of Options | 6 | ||||
6.2.
|
Award Document | 6 | ||||
6.3.
|
Option Price | 6 | ||||
6.4.
|
Duration of Options | 7 | ||||
6.5.
|
Exercise of Options | 7 | ||||
6.6.
|
Payment | 7 | ||||
6.7.
|
Termination of Employment/Directorship/Other Relationship | 7 | ||||
6.8.
|
Nontransferability of Options | 7 | ||||
Article 7.
|
Stock Appreciation Rights | 8 | ||||
7.1.
|
Grant of SARs | 8 | ||||
7.2.
|
Exercise of Tandem SARs | 8 | ||||
7.3.
|
Exercise of Freestanding SARs | 8 | ||||
7.4.
|
Award Document | 8 | ||||
7.5.
|
Duration of SARs | 8 | ||||
7.6.
|
Payment of SAR Amount | 8 | ||||
7.7.
|
Termination of Employment/Directorship/Other Relationship | 8 | ||||
7.8.
|
Nontransferability of SARs | 9 | ||||
Article 8.
|
Restricted Stock and Restricted Stock Units | 9 | ||||
8.1.
|
Grant of Restricted Stock or Restricted Stock Units | 9 | ||||
8.2.
|
Award Document | 9 | ||||
8.3.
|
Transferability | 9 | ||||
8.4.
|
Other Restrictions | 9 | ||||
8.5.
|
Voting Rights | 9 | ||||
8.6.
|
Dividends | 10 | ||||
8.7.
|
Termination of Employment/Directorship/Other Relationship | 10 | ||||
Article 9.
|
Restricted Performance Units and Restricted Performance Shares | 10 | ||||
9.1.
|
Grant of Restricted Performance Units/Shares | 10 | ||||
9.2.
|
Value of Restricted Performance Units/Shares | 10 | ||||
9.3.
|
Earning of Restricted Performance Units/Shares | 10 | ||||
9.4.
|
Form and Timing of Payment of Restricted Performance Units/Shares | 10 | ||||
9.5.
|
Termination of Employment/Directorship/Other Relationship | 11 | ||||
9.6.
|
Nontransferability | 11 |
ii
Article 10.
|
Management Incentive Awards | 11 | ||||
10.1.
|
Grant of Management Incentive Awards | 11 | ||||
10.2.
|
Form of Awards | 11 | ||||
10.3.
|
Amount of Awards | 11 | ||||
10.4.
|
Additional Ownership Award | 11 | ||||
Article 11.
|
Performance-Based Exception Awards | 11 | ||||
11.1.
|
Purpose | 11 | ||||
11.2.
|
Objective Performance Goals | 11 | ||||
11.3.
|
Performance Measures | 12 | ||||
11.4.
|
Committee Certification | 12 | ||||
11.5.
|
Disclosure and Shareholder Approval | 13 | ||||
11.6.
|
Compliance with Code § 162(m) | 13 | ||||
Article 12.
|
Rights of Employees/Directors/Key Persons | 13 | ||||
12.1.
|
Employment and Performance of Services | 13 | ||||
12.2.
|
Participation | 13 | ||||
Article 13.
|
Change in Control | 13 | ||||
13.1.
|
Continuation, Assumption or Substitution of Awards | 13 | ||||
13.2.
|
No Continuation, Assumption or Substitution of Awards | 14 | ||||
13.2.
|
Termination, Amendment and Modification of Change in Control Provisions | 14 | ||||
13.3
|
Termination, Amendment and Modification of Change in Control Provisions | 14 | ||||
Article 14.
|
Amendment, Modification and Termination | 15 | ||||
14.1.
|
Amendment, Modification and Termination | 15 | ||||
14.2.
|
Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events | 15 | ||||
14.3.
|
Awards Previously Granted | 15 | ||||
14.4
|
Section 409A and Performance-Based Exception Compliance | 15 | ||||
Article 15.
|
Withholding | 16 | ||||
15.1.
|
Tax Withholding | 16 | ||||
15.2.
|
Share Withholding | 16 | ||||
Article 16.
|
Indemnification | 16 | ||||
Article 17.
|
Successors | 16 | ||||
Article 18.
|
Miscellaneous | 16 | ||||
18.1.
|
Number | 16 | ||||
18.2.
|
Severability | 16 | ||||
18.3.
|
Requirements of Law | 16 | ||||
18.4.
|
Securities Law Compliance | 16 | ||||
18.5.
|
Governing Law | 17 | ||||
18.6.
|
Plan Document Controls | 17 | ||||
18.7.
|
Unfunded Arrangement | 17 | ||||
18.8.
|
Custody of Awards Paid in Shares | 17 | ||||
18.9.
|
Awards Granted in Substitution | 17 | ||||
18.10.
|
Repayment of Awards as a Result of Certain Improper Conduct | 17 | ||||
18.11.
|
Section 409A Compliance | 17 |
iii
1.1. | Establishment of the Plan. United Parcel Service, Inc. (UPS), a Delaware corporation (hereinafter referred to as the Company), hereby establishes an incentive compensation plan to be known as the United Parcel Service, Inc. 2009 Omnibus Incentive Compensation Plan (hereinafter referred to as the Plan), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Restricted Performance Shares, Restricted Performance Units, Management Incentive Awards, and other Awards. |
1.2. | Objectives of the Plan. The objectives of the Plan are to optimize the profitability and growth of the Company through annual and long-term incentives which are consistent with the Companys goals and which link the compensation of Participants to the value of the Companys Stock and thereby align the interests of Participants more closely with those of the Companys stockholders; to provide Participants with an incentive for excellence in individual performance; and to promote teamwork among Participants. |
1.3. | Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 2.12 hereof, and shall remain in effect, subject to the right of the Committee to amend or terminate the Plan at any time pursuant to Article 14 hereof, until all Shares subject to the Plan shall have been purchased or acquired according to the Plans provisions. However, in no event may an Award be granted under the Plan on or after the tenth (10th) anniversary of the Effective Date. |
2.1. | Affiliate means any corporation, partnership, joint venture or other entity in which the Company either directly or indirectly controls at least twenty-five percent (25%) of the voting interest or owns at least twenty-five percent (25%) or more of the value or capital or profits interest of such entity. |
2.2. | Award means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Restricted Performance Shares, Restricted Performance Units, Management Incentive Awards, or other cash awards described in Section 11.1 hereof. |
2.3. | Award Document means the document or documents setting forth the terms and provisions applicable to an Award. |
2.4. | Beneficial Owner or Beneficial Ownership shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. |
2.6. | Cause means, except as otherwise provided in the Award Document, that the Company or a Subsidiary or an Affiliate for which an Employee works has determined that (a) the Employee has been insubordinate or refused or failed to carry out the instructions or policies of the Company or the Subsidiary or Affiliate for which the Employee works, or the supervisors or managers to whom the Employee reports; (b) the Employee has engaged in misconduct or negligence in performing the Employees duties and responsibilities; (c) the Employee has engaged in conduct which is dishonest, fraudulent or materially injurious to |
the Company, or the Subsidiary or Affiliate for which the Employee works; (d) the Employee has been indicted for a felony or any crime involving dishonesty, fraud or moral turpitude; and/or (e) the Employee has materially breached the Employees employment agreement, if any, or engaged in activity prohibited by any other agreement between the Employee and the Company or the Subsidiary or Affiliate for which the Employee works. |
2.7. | Change in Control of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied: |
(a) | The consummation of a reorganization, merger, share exchange or consolidation, in each case, where persons who were shareholders of UPS immediately prior to such reorganization, merger, share exchange or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power of the reorganized, merged, surviving or consolidated companys then outstanding securities entitled to vote generally in the election of directors; or a liquidation or dissolution of UPS or the sale of substantially all of UPSs assets; or |
(b) | Individuals who, as of the Effective Date, constitute the Board of Directors (the Incumbent Board) and who cease for any reason to constitute at least an eighty percent (80%) majority of the Board of Directors, provided that any person becoming a director subsequent to the Effective Date whose election, or nomination for election by UPSs shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of UPS, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be considered as though such person were a member of the Incumbent Board. |
2.13. | Employee means any employee of the Company, a Subsidiary or an Affiliate. Under no circumstances shall an individual who performs services for the Company, a Subsidiary or an Affiliate, but who is not classified on the payroll of such entity as an employee (for example, an individual performing services for the Company, a Subsidiary or an Affiliate pursuant to a leasing agreement), be treated as an Employee even if such individual qualifies as an employee of the Company, a Subsidiary or an Affiliate by virtue of common law principles or the leased employee rules under Code § 414(n). Further, if an individual performing services for the Company, a Subsidiary or an Affiliate is retroactively reclassified as an employee of the Company, Subsidiary or an Affiliate for any reason (whether pursuant to court order, settlement negotiation, arbitration, mediation, government agency (e.g., IRS) reclassification, or otherwise), such reclassified individual shall not be treated as an Employee for purposes of this Plan for any period prior to the actual date (and not the effective date) of such reclassification. Directors who are classified as employees on the payroll of the Company, a Subsidiary or an Affiliate shall be considered Employees under this Plan. |
2.14. | ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. |
2.15. | Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. |
2.16. | Executive Participant means an executive officer as defined in Rule 3b-7 under the Exchange Act. |
2
2.17. | Fair Market Value of a Share means, as of any date, the value of a Share determined as follows: |
(a) | The value of a Share shall be equal to the value of a share of the Class B common stock of the Company, as determined in accordance with the following provisions: |
(1) | If shares of Class B common stock are listed on any established stock exchange or a national market system, the closing price for a share of Class B common stock as reported in The Wall Street Journal or such other source as the Committee deems reliable. | |
(2) | If shares of Class B common stock are not listed on any established stock exchange or a national market system, the value of a Share shall be determined by the Committee in its sole and absolute discretion. |
(b) | If, for any reason, the value of a Share (as described in (a)) cannot be ascertained or is unavailable for the date in question, the value of a Share may, in the sole and absolute discretion of the Committee, be determined as of the nearest preceding date on which such value can be ascertained under the appropriate method indicated above. |
2.18. | 409A Guidance means the regulations and other guidance issued under Code § 409A. |
2.19. | Freestanding SAR means a SAR that is granted independently of any Options, as described in Article 7 herein. |
2.20. | Good Reason means, except as otherwise provided in the Award Document, the occurrence, without an Employees written consent, of either of the following: (a) material diminution in the Employees authority, duties or responsibilities from those in effect immediately prior to the Change in Control; or (b) a material reduction in the Employees annual base salary from that in effect immediately prior to the Change in Control. Notwithstanding the foregoing, a termination of employment shall not be considered for Good Reason unless the Employee provides the Company, or the Subsidiary or Affiliate for which the Employee works, written notice within thirty (30) calendar days of the occurrence of the act or omission giving rise to the Employees intention to terminate for Good Reason, detailing the particular act or acts or omission or omissions that constitute the grounds on which the proposed termination for Good Reason is based, and the Company, or the Subsidiary or Affiliate for which the Employee works, fails to correct the breach (if correctable) within thirty (30) calendar days of the date of receipt of such written notice. |
2.21. | Incentive Stock Option or ISO means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Code § 422. |
2.22. | Insider means an individual who is, on the relevant date, an officer, Director or ten percent (10%) beneficial owner of any class of the Companys equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act. |
2.23. | Key Person means a consultant, agent or other person who has rendered or will render valuable services to the Company or a Subsidiary or Affiliate. |
2.24. | Management Incentive Award means an Award granted to a Participant, as described in Article 10 herein. |
2.25. | Nonqualified Stock Option or NQSO means an option to purchase Shares granted under Article 6 herein and which is not intended to be treated as an ISO under Code § 422. |
2.26. | Option means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein. |
2.27. | Option Price means the price at which a Share may be purchased by a Participant pursuant to an Option. |
2.28. | Outside Director means a member of the Board who is not an employee of the Company or any Subsidiary or Affiliate thereof and who qualifies as (1) a non-employee director under Rule 16b-3(b)(3) of the General Rules and Regulations of the Exchange Act, as amended from time to time, and (2) an outside director under Code § 162(m) and the regulations promulgated thereunder. |
3
2.29. | Participant means an Employee or Director or Key Person who has been selected to receive an Award or who has outstanding an Award granted under the Plan. |
2.30. | Performance-Based Exception means the performance-based exception from the deduction limitations of Code § 162(m) and Treas. Reg. § 1.162-27(e). |
2.31. | Performance Period means the time period described in Section 9.2 hereof. |
2.32. | Period of Restriction means the period during which Shares of Restricted Stock and Restricted Stock Units are subject to a substantial risk of forfeiture, as provided in Article 8 herein. |
2.33. | Person shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a group as defined in Section 13(d) thereof. |
2.34. | Restricted Performance Share means an Award granted to a Participant, as described in Article 9 herein. |
2.35. | Restricted Performance Unit means an Award granted to a Participant, as described in Article 9 herein. |
2.36. | Restricted Stock or Restricted Stock Unit means an Award granted to a Participant pursuant to Article 8 herein, with a Restricted Stock Unit being an award of a unit tied to the value of a Share, which may be paid in cash or Shares. |
2.37. | Retirement means (1) except as otherwise determined by the Committee in its sole discretion, with respect to Participants who participate in the Companys tax-qualified defined benefit retirement plan, the attainment of early retirement age (as defined in the Companys tax-qualified defined benefit retirement plan) accompanied by a cessation of employment with the Company and all Subsidiaries and an election by the employee to receive (or commence receiving) retirement benefits under the Companys tax-qualified defined benefit retirement plan, and (2) with respect to all other Participants, retirement as determined by the Committee in its sole discretion. |
2.38. | Shares means shares of the Class A common stock of the Company. |
2.39. | Stock Appreciation Right or SAR means an Award, granted alone or in connection with a related Option, designated as a SAR, pursuant to the terms of Article 7 herein. |
2.40. | Subsidiary means any corporation, partnership, joint venture, or other entity in which the Company either directly or indirectly controls at least fifty percent (50%) of the voting interest or owns at least fifty percent (50%) of the value or capital or profits interest. |
2.41. | Tandem SAR means a SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled). |
3.1. | General. The Plan shall be administered by the Committee; provided, however, (1) the Board may at any time take on the powers, authority and duties of the Committee hereunder, and (2) the Board shall have the powers, authority and duties of the Committee with respect to the granting and interpretation of Awards to Directors who are not Employees. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. With respect to Committee appointments and composition, while the Board has complete discretion with respect to such matters, it should be noted that only a Committee (or a sub-committee thereof) comprised solely of two or more Outside Directors may grant Awards which will meet the Performance-Based Exception. |
3.2. | Authority of the Committee. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to select Employees, Directors and Key Persons who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement, instrument or other document entered into under the Plan; establish, amend, or |
4
waive rules and regulations for the Plans administration; and (subject to the provisions of Article 13 and Article 14 herein) amend the terms and conditions of any outstanding Award. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. |
3.3. | Delegation. The Committee may delegate its power, authority and duties as identified herein, except as otherwise prohibited by law (and subject to Section 3.1 herein for the grant of Awards intended to satisfy the Performance-Based Exception). |
3.4. | Decisions Binding. All determinations and decisions made by the Board, the Committee or the Committees delegate pursuant to the provisions of the Plan and all related orders and resolutions of the Board, the Committee or the Committees delegate shall be final, conclusive and binding on all persons, including the Company, its stockholders, Directors, Employees, Key Persons, Participants, and their estates and beneficiaries. |
Article 4. | Shares Subject to the Plan and Maximum Awards |
4.1. | Number of Shares Available for Grants. Subject to adjustment as provided in Section 4.2 herein, the maximum aggregate number of Shares that may be issued pursuant to Awards shall not exceed eighty million (80,000,000) Shares (the Share Reserve), which shall also be the maximum aggregate number of Shares that can be issued under the Plan upon the exercise of ISOs. Each Share issued pursuant to an Option shall reduce the Share Reserve by one (1) Share. Each Share subject to the exercised portion of a SAR (whether the distribution upon exercise is made in cash, Shares or a combination of the two) shall reduce the Share Reserve by one (1) Share. Each Share issued pursuant to Restricted Stock, a Restricted Stock Unit, a Restricted Performance Share or a Restricted Performance Unit shall reduce the Share Reserve by 2.76 Shares. To the extent that a distribution pursuant to an Award is made in cash, the Share Reserve shall be reduced by the number of Shares (if any) subject to the exercised or distributed portion of the Award. |
(a) | Stock Options. The maximum aggregate number of Shares that may be granted in the form of Stock Options in any one calendar year to any one single Participant shall be six hundred thousand (600,000). |
(b) | SARs. The maximum aggregate number of Shares that may be granted in the form of Stock Appreciation Rights in any one calendar year to any one single Participant shall be six hundred thousand (600,000). |
(c) | Restricted Stock or Restricted Stock Units. The maximum aggregate number of Shares that may be granted in the form of Restricted Stock in any one calendar year to any one Participant shall be six hundred thousand (600,000). The maximum aggregate payout (determined as of the end of the applicable Period of Restriction) with respect to Restricted Stock Units granted in any one calendar year to any one Participant shall be equal to the value of six hundred thousand (600,000) Shares. |
(d) | Restricted Performance Shares/Units. The maximum aggregate payout (determined as of the end of the applicable performance period) with respect to Awards of Restricted Performance Shares/Units granted in any one calendar year to any one Participant shall be equal to the value of six hundred thousand (600,000) Shares. |
(e) | Cash Awards. The maximum aggregate payout with respect to the cash portion of Management Incentive Awards or other cash awards granted in any one calendar year to any one Participant shall be equal to the value of six hundred thousand (600,000) Shares. |
4.2. | Adjustments in Authorized Shares. If the Company effects a subdivision or consolidation of shares of stock or other capital adjustment, the number and class of Shares which may be delivered under Section 4.1, the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and the |
5
Award limits set forth in Section 4.1, shall be adjusted in the same manner and to the same extent as all other Shares. If there are material changes in the capital structure of the Company resulting from the payment of a special dividend (other than regular quarterly dividends) or other distributions to shareowners without receiving consideration therefore; the spin-off of a subsidiary; the sale of a substantial portion of the Companys assets; in the event of a merger or consolidation in which the Company is not the surviving entity; or other extraordinary non-recurring events affecting the Companys capital structure and the value of Shares, the Committee shall make equitable adjustments in the number and class of Shares which may be delivered under Section 4.1, the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and the Award limits set forth in Section 4.1, to prevent the dilution or enlargement of the rights of Award recipients. Following any such adjustment, the number of Shares subject to any Award shall always be a whole number. Notwithstanding the foregoing provisions of this Section 4.2, no adjustment shall be made to an Option or SAR to the extent that it causes such Option or SAR to provide for a deferral of compensation subject to Code § 409A and the 409A Guidance. |
4.3. | Reversion of Shares. If any Shares subject to an Award hereunder are forfeited before vesting or any such Award otherwise expires, terminates or is cancelled without the issuance of such Shares in full to a Participant, such Shares, to the extent of any such forfeiture, expiration, termination or cancellation, shall again be available for grant under the Plan. |
4.4. | Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to an Award as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. |
Article 5. | Eligibility and Participation |
5.1. | Eligibility. Persons eligible to participate in this Plan include all Employees, Directors and Key Persons. |
5.2. | Actual Participation. Subject to the provisions of the Plan, |
(a) | the Committee may from time to time select from all eligible Employees, Directors and Key Persons, those to whom Awards shall be granted and shall determine the nature and amount of each Award, and |
(b) | Awards may be granted to Participants at any time and from time to time as shall be determined by the Committee, including in connection with any other compensation program established by the Company. |
Article 6. | Stock Options |
6.1. | Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee; provided, however, that ISOs only may be granted to Participants who are Employees of the Company or a Subsidiary that is a subsidiary of the Company within the meaning of Code § 424(f). |
6.2. | Award Document: Each Option grant shall be evidenced by an Award Document that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Document also shall specify whether the Option is intended to be an ISO or an NQSO. |
6.3. | Option Price. The Option Price for each grant of an Option under the Plan shall be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date as of which the Option is granted. In addition, the Option Price of any ISO which is granted to an individual who owns more than ten percent (10%) of the voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company (within the meaning of Code § 424(e) and (f)) (a 10% Owner) may not be less than one hundred ten percent (110%) of the Fair Market Value of a Share on the date the Option is granted. |
6
6.4. | Duration of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant (and no ISO granted to a 10% Owner shall be exercisable later than the fifth (5th) anniversary of its grant). |
6.5. | Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. |
6.6. | Payment. Options granted under this Article 6 shall be exercised by the delivery of notice of exercise to the Company (in accordance with the procedures established by the Committee), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. |
6.7. | Termination of Employment/Directorship/Other Relationship. Each Participants Option Award Document shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participants employment or directorship or other relationship with the Company and its Subsidiaries and Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Document entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination. |
6.8. | Nontransferability of Options. |
(a) | Incentive Stock Options. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant; provided, however, that in the event the Participant is incapacitated and unable to exercise his or her ISO, such ISO may be exercised by such Participants legal guardian, legal representative, or other representative whom the Committee deems appropriate based on applicable facts and circumstances. The determination of incapacity of a Participant and the determination of the appropriate representative of the Participant who shall be able to exercise the ISO if the Participant is incapacitated shall be determined by the Committee in its sole and absolute discretion. |
(b) | Nonqualified Stock Options. Except as otherwise provided in a Participants Award Document, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participants Award Document, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant; provided, however, that in the event the Participant is incapacitated and unable to exercise his or her NQSO, such NQSO may be exercised by such Participants legal guardian, legal representative, or other representative whom the Committee deems appropriate based on applicable facts and circumstances. The determination of incapacity of a Participant and the determination of |
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the appropriate representative of the Participant who shall be able to exercise the NQSO if the Participant is incapacitated shall be determined by the Committee in its sole and absolute discretion. |
Article 7. | Stock Appreciation Rights |
7.1. | Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SAR. |
7.2. | Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. Upon exercise of a Tandem SAR as to all or some of the Shares subject to such Award, the related Option shall be automatically canceled to the extent of the number of Shares subject to the exercise. Conversely, if the related Option is exercised as to some or all of the Shares subject to such Award, the Tandem SAR shall automatically be canceled to the extent of the number of Shares subject to the exercise. |
7.3. | Exercise of Freestanding SARs. Subject to Section 7.1, Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them. |
7.4. | Award Document. Each SAR grant shall be evidenced by an Award Document that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine. |
7.5. | Duration of SARs. The term of a SAR shall be determined by the Committee, in its sole discretion; provided, however, that such term shall not exceed ten (10) years. |
7.6. | Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying |
(a) | the difference between the Fair Market Value of a Share on the date of exercise over the grant price, by |
(b) | the number of Shares with respect to which the SAR is exercised. |
7.7. | Termination of Employment/Directorship/Other Relationship. Each SAR Award Document shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participants employment or directorship or other relationship with the Company and its Subsidiaries and Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in |
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the Award Document entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination. |
7.8. | Nontransferability of SARs. Except as otherwise provided in a Participants Award Document, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participants Award Document, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant; provided, however, that in the event the Participant is incapacitated and unable to exercise his or her SAR, such SAR may be exercised by such Participants legal guardian, legal representative, or other representative whom the Committee deems appropriate based on applicable facts and circumstances. The determination of incapacity of a Participant and the determination of the appropriate representative of the Participant who shall be able to exercise the SAR if the Participant is incapacitated shall be determined by the Committee in its sole and absolute discretion. |
Article 8. | Restricted Stock and Restricted Stock Units |
8.1. | Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Stock or Restricted Stock Units to Participants in such amounts as the Committee shall determine. |
8.2. | Award Document. Each Restricted Stock or Restricted Stock Unit grant shall be evidenced by an Award Document that shall specify the Period(s) of Restriction, the number of Shares (or units tied to the value of Shares) granted, and such other provisions as the Committee shall determine. |
8.3. | Transferability. Except as otherwise provided in a Participants Award Document, the Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Award Document, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Award Document, other than by will or by the laws of descent and distribution. Except as otherwise provided in a Participants Award Document, Restricted Stock Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. |
8.4. | Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Restricted Stock or Restricted Stock Units as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable federal or state securities laws, and such restrictions may apply after the Period of Restriction specified in the Award Document or earlier satisfaction of any other conditions set forth in the Award Document. Restricted Stock or Restricted Stock Units shall be forfeited to the extent that a Participant fails to satisfy the applicable conditions or restrictions during the Period of Restriction. |
8.5. | Voting Rights. Participants holding Restricted Stock shall be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction, unless otherwise provided in the Award Document. |
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8.6. | Dividends. Unless otherwise provided in a Participants Award Document, during the Period of Restriction, (a) Participants holding Restricted Stock granted hereunder shall be credited with and shall be paid regular cash dividends paid with respect to the underlying Shares while they are so held, but shall not be entitled to stock dividends or other non-cash distributions, and (b) Participants awarded Restricted Stock Units shall not be entitled to any dividends or dividend equivalents declared with respect to Shares. The Committee may apply any additional restrictions to dividends and dividend equivalents that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Stock or Restricted Stock Units is intended to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends or dividend equivalents declared with respect to such Restricted Stock or Restricted Stock Units, such that the dividends, dividend equivalents and/or the Restricted Stock or Restricted Stock Units maintain eligibility for the Performance-Based Exception. |
8.7. | Termination of Employment/Directorship/Other Relationship. Each Award Document shall set forth the extent to which the Participant shall have the right to receive unvested Restricted Stock (or payment with respect to unvested Restricted Stock Units) following termination of the Participants employment or directorship or other relationship with the Company and its Subsidiaries and Affiliates prior to the end of the Period of Restriction. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Document entered into with each Participant, need not be uniform among all Awards and may reflect distinctions based on the reasons for termination. |
Article 9. | Restricted Performance Units and Restricted Performance Shares |
9.1. | Grant of Restricted Performance Units/Shares. Subject to the terms of the Plan, Restricted Performance Units and Restricted Performance Shares may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee. |
9.2. | Value of Restricted Performance Units/Shares. Each Restricted Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Restricted Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Restricted Performance Units/Shares that will be paid out to the Participant. For purposes of this Article 9, the time period during which the performance goals must be met shall be called a Performance Period. |
9.3. | Earning of Restricted Performance Units/Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Restricted Performance Units/Shares shall be entitled to receive a payment based on the number and value of Restricted Performance Units/Shares earned by the Participant over the Performance Period to be determined as a function of the extent to which the corresponding performance goals have been achieved. Restricted Performance Units/Shares shall be forfeited to the extent that a Participant fails to satisfy the applicable performance goals during the Performance Period. |
9.4. | Form and Timing of Payment of Restricted Performance Units/Shares. Unless otherwise provided in a Participants Award Document, payment of earned Restricted Performance Units/Shares shall be made in a single lump sum following the close of the applicable Performance Period. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Restricted Performance Units/Shares in the form of cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Restricted Performance Units/Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Document pertaining to the grant of the Award. |
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9.5. | Termination of Employment/Directorship/Other Relationship. Each Restricted Performance Unit/Share Award Document shall set forth the extent to which the Participant shall have the right to receive payment with respect to Restricted Performance Unit/Shares following termination of the Participants employment or directorship or other relationship with the Company and its Subsidiaries and Affiliates prior to the last day of the Performance Period. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Document entered into with each Participant, need not be uniform among all Restricted Performance Units/Shares issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination. |
9.6. | Nontransferability. Except as otherwise provided in a Participants Award Document, Restricted Performance Units/Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. |
Article 10. | Management Incentive Awards |
10.1. | Grant of Management Incentive Awards. Subject to the terms and provisions of the Plan, Management Incentive Awards may be granted to Participants who are Employees at such times and in such amount and upon such terms as shall be determined by the Committee consistent with this Article. The Committee shall select those Participants who shall receive Awards under the Plan for a given year, and shall base its decision upon the recommendations of district, regional and corporate group managers. The Committee shall have full discretion and authority to decide which Participants should receive Management Incentive Awards and how such Participants should be determined. |
10.2. | Form of Awards. Each Management Incentive Award shall consist of Shares, cash, Restricted Stock Units, or other Awards, at the discretion of the Committee. |
10.3. | Amount of Awards. The aggregate amount of the Management Incentive Awards shall be determined by the Committee in its sole discretion. The aggregate amount determined for Management Incentive Awards shall be divided among those Participants who have been selected to receive Management Incentive Awards in such manner and amount as the Committee in its discretion shall determine. |
10.4. | Additional Ownership Award. In addition to the remuneration that a Participant receives pursuant to Section 10.3 above, a Participant receiving a Management Incentive Award may (in the discretion of the Committee) also receive, as a part of such Award, an amount not to exceed one (1) months salary of the Participant. |
Article 11. | Performance-Based Exception Awards |
11.1. | Purpose. If the Committee deems it appropriate to make an Award that is intended to qualify for the Performance-Based Exception, then any such Award shall satisfy the requirements of this Article 11 and requirements of Code § 162(m) and Treas. Reg. § 1.162-27(e). Such Awards, in the Committees discretion, may include cash awards made in connection with any other compensation program established by the Company. Notwithstanding the preceding sentence, the grant of an Option or SAR is not subject to this Article 11. |
11.2. | Objective Performance Goals. The compensation attributable to an Award subject to this Article 11 must be paid solely on account of the attainment of one or more preestablished, objective performance goals in accordance with Code § 162(m) and the regulations thereunder. A performance goal will be considered preestablished if it is established in writing by the Committee not later than ninety (90) days after the commencement of the period of service to which the performance goal or goals relates (the performance period); provided that the outcome is substantially uncertain at the time the Committee actually establishes the goal or goals. In no event, however, will a performance goal be considered to be preestablished if it is established after twenty-five percent (25%) of the performance period has elapsed. A performance goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. |
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Performance goals must be based on one or more of the performance measures set forth in Section 11.3 that apply to the individual, a business unit, a Subsidiary or the Company as a whole. |
11.3. | Performance Measures. One or more of the following performance measure(s) must be used to establish performance goals for Awards which are intended to qualify for the Performance-Based Exception: |
(a) | Earnings per share; |
(b) | Net income (before or after taxes); |
(c) | Return measures, including, but not limited to: |
(1) | Return on assets; | |
(2) | Return on equity; | |
(3) | Return on operating capital; | |
(4) | Return on invested capital; and | |
(5) | Return on sales; |
(d) | Cash flow return on investments which equals net cash flows divided by owners equity; | |
(e) | Earnings before or after taxes, interest and depreciation; | |
(f) | Gross revenues; | |
(g) | Share price; | |
(h) | Shareholder return; | |
(i) | Pretax profit; | |
(j) | Economic Value Added; | |
(k) | Volume growth; | |
(l) | Package flow technology; | |
(m) | Successfully integrating acquisitions; | |
(n) | Reducing non-operations expenses; | |
(o) | Other operating efficiency measures or ratios; | |
(p) | Operating income; | |
(q) | Return on capital; | |
(r) | Return on capital employed; and/or | |
(s) | Pre-tax income margin. |
11.4. | Committee Certification. The Committee must certify in writing prior to payment of, or such other event that results in the inclusion of income (for example, the vesting of Restricted Stock) from, an Award intended to qualify for the Performance-Based Exception that the performance goals and any other material terms of the Award were in fact satisfied. Approved written minutes of the Committee meeting in which the certification is made shall be treated as a written certification. |
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11.5. | Disclosure and Shareholder Approval. The following provisions of the Plan must be disclosed to and approved by the shareholders of the Company as described in Section this 11.5 in order for Awards other than Options and SARs to qualify for the Performance-Based Exception: |
(a) | The class of Employees eligible to receive Awards described in Section 2.13; |
(b) | The performance measures described in Section 11.3; and |
(c) | The applicable Award limits set forth in subsections (a)-(e) of Section 4.1. |
11.6. | Compliance with Code § 162(m). The Committee shall have full and absolute discretion to determine whether an Award granted under this Plan is intended to comply with the requirements of Code § 162(m) and the regulations thereunder. In addition, in the event that changes are made to Code § 162(m) to permit greater flexibility with respect to any Awards, the Committee may make any adjustments to the process described in this Article 11 it deems appropriate. |
Article 12. | Rights of Employees/Directors/Key Persons |
12.1. | Employment and Performance of Services. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participants employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participants services at any time, nor confer upon any Participant any right to continue performing services for the Company. |
12.2. | Participation. No Employee, Director or Key Person shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. |
Article 13. | Change in Control |
13.1. | Continuation, Assumption or Substitution of Awards. In the event of a Change in Control, any or all outstanding Awards may be continued or assumed by the continuing or successor (as the case may be) organization (the Successor), or the Successor may substitute equivalent awards. If an Award is continued, assumed or substituted by the Successor and within two (2) years following a Change in Control the Participant (a) is terminated by the Successor (or an affiliate thereof) without Cause or (b) resigns for Good Reason, the following rules shall apply to the continued, assumed or substituted Awards, unless otherwise specifically provided in the applicable Award Document: |
(a) | Vesting of Options and SARs. Any and all such Options and SARs shall become immediately exercisable as of the termination or resignation. |
(b) | Lapse of Restricted Stock and Unit Restrictions that are not Performance-Based. Any restrictions imposed on such Restricted Stock or Restricted Stock Units that are not performance-based shall lapse. Restricted Stock Units shall be paid in cash or stock as provided in the Award Document (as adjusted, if applicable, pursuant to Section 4.2). If such Restricted Stock Units are exempt from the requirements of Code § 409A, the Restricted Stock Units shall be paid within thirty (30) days following the termination or resignation. If such Restricted Stock Units are subject to the requirements of Code § 409A, then the Restricted Stock Units shall be paid within the thirty (30) day period following the six (6) month anniversary of the Participants separation from service (within the meaning of the 409A Guidance) (a Separation from Service). If a Participants termination or resignation is not a Separation from Service, Restricted Stock Units subject to the requirements of Code § 409A shall be paid as of the earlier of the time specified in the Award |
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Document or one day after the six (6) month anniversary of the date the Participant has a Separation from Service following such Change in Control. |
(c) | Vesting, Payment and Achievement of Performance-Based Awards. Such performance-based Awards shall vest with respect to each performance measurement tranche completed during the Performance Period prior to the termination or resignation (or, if the Performance Period is not divided into separate performance measurement tranches, proportionately based on the portion of the Performance Period completed prior to such resignation or termination), with payment to be made, based on actual performance, in cash or stock (as adjusted, if applicable, pursuant to Section 4.2) at such time following the Performance Period as otherwise specified in the Award Document. |
(d) | Transfer. A transfer among the Successor and its affiliates shall not be deemed a termination or resignation of employment. |
13.2. | No Continuation, Assumption or Substitution of Awards. In the event of a Change in Control, any outstanding Awards that are not continued, assumed, or substituted with equivalent awards, by the Successor, or in the case of a dissolution or liquidation of the Company, all Awards, shall be subject to the following rules: |
(a) | Options and SARs. All such Options and SARs shall be fully vested and exercisable and the Committee shall either (1) give a Participant a reasonable opportunity to exercise the Option and SAR before the transaction resulting in the Change in Control or (2) pay the Participant the difference between the exercise price for the Option or SAR and the consideration provided to other similarly situated shareholders in such Change in Control. In either case, such Option or SAR shall be cancelled. The Committee shall not be obligated to treat all Options and SARs subject to this Section 13.2(a) in the same manner. |
(b) | Lapse of Restricted Stock and Unit Restrictions that are not Performance-Based. Any restrictions imposed on such Restricted Stock or Restricted Stock Units that are not performance-based shall lapse. Restricted Stock Units shall be paid in cash or stock as provided in the Award Document (as adjusted, if applicable, pursuant to Section 4.2). If such Restricted Stock Units are exempt from the requirements of Code § 409A, then the Restricted Stock Units shall be paid within thirty (30) days following the Change in Control. If such Restricted Stock Units are subject to the requirements of Code § 409A, then the time of payment will depend on whether the Change in Control is a distribution event under Treasury Regulation § 1.409A-3(a)(5) ( a 409A Change in Control). If the Change in Control is a 409A Change in Control, then the Restricted Stock Units subject to the requirements of Code § 409A shall be paid within the thirty (30) day period following the six (6) month anniversary of the Change in Control. If the Change in Control is not a 409A Change in Control, Restricted Stock Units subject to the requirements of Code § 409A shall be paid as of the earlier of the time specified in the Award Document or one day after the six (6) month anniversary of the date the Participant has a Separation from Service following such Change in Control. |
(c) | Vesting, Payment and Achievement of Performance-Based Awards. Such performance-based Awards shall vest with respect to each performance measurement tranche completed during the Performance Period prior to the Change in Control or dissolution or liquidation (or, if the Performance Period is not divided into separate performance measurement tranches, proportionately based on the portion of the Performance Period completed prior to such Change in Control or dissolution or liquidation), with payment to be made, based on actual performance, in cash or stock (as adjusted, if applicable, pursuant to Section 4.2) at such time following the Performance Period as otherwise specified in the Award Document. |
13.3. | Termination, Amendment and Modification of Change in Control Provisions. Notwithstanding any other provision of this Plan or any Award Document provision to the contrary, the provisions of this Article 13 may not be terminated, amended, or modified on or after the date of a Change in Control to affect |
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adversely any Award theretofore granted under the Plan without the prior written consent of the Participant to whom the Award was made or the Participants proper assignee; provided, however, that the Committee shall retain the power to amend any provision of this Article 13 to comply with changes in the Code, the Exchange Act or other applicable law or stock exchange rule after the date of a Change in Control and further provided that the Committee may terminate, amend, or modify this Article 13 and Section 2.7 hereof at any time and from time to time prior to the date of a Change in Control, except that no action shall be permitted under this Section 13.3 that would impermissibly accelerate or postpone payment of an Award subject to Code § 409A and the 409A Guidance. |
Article 14. | Amendment, Modification and Termination |
14.1. | Amendment, Modification and Termination. Subject to the terms of the Plan, the Committee may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part; provided, however, that without the prior approval of the Companys shareowners, no material amendment shall be made if shareowner approval is required by law, regulation or applicable listing requirement of any stock exchange upon which the Companys class B common stock is then listed; provided, further, however, that notwithstanding any other provision of the Plan or any Award Document, no such alteration, amendment, suspension or termination shall be made without the approval of the shareowners of the Company if the alteration, amendment, suspension or termination would: |
(a) | increase the number of Shares available for Awards under the Plan, except as provided in Article 4 hereof; or |
(b) | except as provided in Section 4.2 and Section 18.9, permit Options, Stock Appreciation Rights or other stock-based Awards encompassing rights to purchase Shares to be repriced, replaced, or regranted through cancellation, or by lowering the Option Price of a previously granted Option or the grant price of a previously granted Stock Appreciation Right, or the purchase price of any other stock-based Award. |
14.2. | Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. Subject to Article 13 and this Article 14, the Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. |
14.3. | Awards Previously Granted. Except for the Committees right pursuant to Section 13.3 hereof to terminate, amend, or modify Article 13 and Section 2.7 hereof at any time and from time to time prior to the date of a Change in Control, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the prior written consent of the Participant to whom the Award was made or the Participants proper assignee. |
14.4. | Section 409A and Performance-Based Exception Compliance. Notwithstanding any other provision of this Article 14, no adjustment described in Section 14.2 (unless the Committee determines otherwise at the time such adjustment is considered) and no termination, amendment, or modification of the Plan shall (1) cause an Award intended to satisfy the Performance-Based Exception to fail to satisfy such Performance-Based Exception, (2) impermissibly accelerate or postpone payment of an Award subject to Code § 409A and the 409A Guidance, (3) cause an Option or SAR to provide for a deferral of compensation subject to Code § 409A and the 409A Guidance, or (4) apply to any Award that otherwise is intended to satisfy the requirements of Code § 409A and the 409A Guidance to the extent such action would cause compensation deferred under the applicable Award (and applicable earnings) to be included in income under Code § 409A. |
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Article 15. | Withholding |
15.1. | Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company as a cond |