David Abney, UPS Chief Executive Officer, currently serves as Chairman of the Board. Scott Davis previously served as our Non-Executive Chairman from his retirement as Chief Executive Officer in September 2014 until February 2016. In connection with Scott’s retirement from the Board, the Board gave thoughtful consideration to its leadership structure and determined that it would be in the best interests of the company and its shareholders to combine the roles of Chairman and Chief Executive Officer. The Board determined that David, who has primary responsibility for managing the company’s day-to-day operations and has extensive knowledge and understanding of the company, is best positioned to focus the Board’s attention on the issues of greatest importance to the company and its shareholders.
The Board also has a Lead Independent Director, and a majority of independent directors who meet regularly in executive session. Independent directors chair the Board’s Audit, Compensation, Risk, and Nominating and Corporate Governance Committees. Other than our Chief Executive Officer, all UPS directors are independent and have no material relationships other than as a UPS director. A complete discussion of our Board leadership structure can be found in the 2016 Annual Proxy Statement Summary at www.ups.investors.com.
The Nominating and Corporate Governance Committee of the Board nominates directors based on their independence as well as their experience and expertise in a variety of areas, including economic, environmental, and social topics. In evaluating each candidate, the Committee considers factors such as personal character, values and disciplines, ethical standards, diversity, professional background, and skills. Shareholders may nominate director candidates in accordance with our bylaws. Director nominations are presented to our shareholders as part of our Annual Meeting process, which, because of the nature of UPS shareholding, means stakeholders with a broad range of views and interests are able to influence whether nominees become directors.
With regard to economic, environmental, and social topics, the Board is in touch with stakeholder concerns through a number of processes. For example, the Board is regularly briefed on issues of concern for customers, unions, employees, retirees, and investors — our largest and most influential stakeholder constituencies. Members of the Board also review our Corporate Sustainability Report, which contains the results of our formal sustainability stakeholder engagement activities, such as our materiality assessment, as well as stakeholder statements from customers, philanthropic partners, and nongovernmental organizations.
Our Board of Directors continually develops and enhances its knowledge of economic, environmental, and social impacts:
- The Board of Directors reviews economic, environmental, and social impacts regularly at Board meetings and Board committee meetings.
- Our Chief Sustainability Officer (CSO) regularly reports to the Board regarding sustainability strategies, priorities, goals, and performance.
- The Board receives regular reports from other governance bodies at UPS.
- The Board oversees efforts by UPS management to develop, approve, and update our vision, values, strategies, policies, and goals related to economic, environmental, and social impacts.
- Members of the Board review the contents of the UPS Corporate Sustainability Report each year, and the Board’s Audit Committee oversees our process of securing third-party assurance and verification for the Report’s contents.
- The Board also oversees strategic risk management efforts at UPS, including identifying and managing risks and opportunities associated with economic, environmental, and social impacts. As part of this oversight, the Board reviews the effectiveness of our risk management processes related to economic, environmental, and social topics.
The Board’s Nominating and Corporate Governance Committee coordinates an annual self-evaluation of the Board of Directors and each committee, with the exception of the Executive Committee. The evaluation includes a review of performance with respect to governance of economic, environmental, and social topics. The Board and each committee review the results of the evaluations, and appropriate actions are taken to address any areas of concern. While this is an internal self-assessment, we note that all members of each committee are independent directors.
Should a critical concern arise regarding sustainability, the Board of Directors would receive a report via the Management Committee, which communicates with all major corporate functions and is responsible for addressing and resolving such concerns. In 2015, no such critical concerns arose. While our markets remain both dynamic and competitive, and there are pressing environmental and social issues for our industry and the global economy as a whole, our governance processes are designed to keep us fully engaged in these areas.
Consultation between members of the Board of Directors and outside stakeholders occurs formally and informally throughout the year. Among the formal processes are reports to the Board by our CSO as described above. Stakeholders who wish to communicate directly with a member of our Board of Directors, with our independent lead director, or with our nonmanagement directors as a group may do so by writing to UPS via our Corporate Secretary at:
UPS, c/o Corporate Secretary
55 Glenlake Parkway, N.E., Atlanta, Georgia 30328
Advertisements, solicitations for business, requests for employment, matters that may be better addressed by management, or other inappropriate materials will not be forwarded to our directors.
The Board delegates authority for day-to-day management of economic, environmental, and social topics to the Management Committee, which comprises the senior managers for all our major corporate functions. The Management Committee further delegates relevant authority for economic, environmental, and social topics—particularly including all the material aspects discussed in UPS Corporate Sustainability Report—to the appropriate organizations in the company UPS was among the first Fortune 100 companies to appoint a Chief Sustainability Officer. This senior executive regularly reports to the Board regarding sustainability strategies, priorities, goals, and performance.
We have two governance bodies dedicated to sustainability at UPS, both of which support the Management Committee and Board of Directors. The Sustainability Directors Committee has primary strategy-setting responsibility for sustainability at UPS. It comprises representatives from most major corporate functions, as well as representatives from each of our international regions and UPS Airlines. The Directors Committee, chaired by the Chief Sustainability Officer, brings critical issues and decisions to our Sustainability Steering Committee, which includes members of the UPS Management Committee and other senior executives. The chairperson of the Sustainability Steering Committee is the Senior Vice President of Global Engineering and Sustainability, who is also a member of the Management Committee.
Remuneration and Compensation Policies
The Compensation Committee of the Board of Directors sets performance criteria and compensation for the CEO, and also reviews and approves compensation for other executive officers. These policies are spelled out in our 2016 Proxy Statement. The Compensation Committee annually engages an independent compensation consultant to make recommendations concerning executive compensation, including input on trends that may be important to investors. Additionally, the Committee keeps itself well-informed regarding compensation practices and policies within our industry and among companies of similar size in other industries. Our most recent “Say on Pay” vote took place in early May 2014, and shareholders approved our proposal by more than 91 percent. Our next “Say on Pay” vote will occur in May 2017.
UPS offers competitive hourly wages, salaries, and total compensation plans to both full-time and part-time employees. The primary process for setting compensation levels for our nonmanagement employees is contract negotiations with collective bargaining associations. Unions represent more than The Board delegates 75 percent of all UPS workers in the United States. Many of our workers in other countries are also represented by collective bargaining organizations. Unions have historically ensured broad equality in remuneration for union workers, by both ethnicity and gender.
UPS provides for equal remuneration policies with regard to women and men and complies with all applicable laws and regulations. UPS currently does not report further on the ratio of basic salary and remuneration of women to men by employee category, or by significant locations of operation. The U.S. Department of Labor is in the process of establishing rules to require reporting of average female salary and average male salary by employee level. UPS will report this information in accordance with the final regulations.
Our employees began sharing the benefits of stock ownership in the 1920s. UPS became a public company in 1999. Employees can purchase stock through the Discounted Employee Stock Purchase Program and their 401(k) plan.
UPS has not formally adopted the precautionary principle. Adoption of the principle would apply primarily to potential harm related to use of fossil fuels and emission of greenhouse gases. We are fully aware of these risks, we are deeply engaged with the world community regarding them, and we manage our business to reduce, avoid, or mitigate them.
Detailed information about corporate governance at UPS, including structures, policies, and processes, may be found on our website at www.investors.ups.com. Materials available and topics covered include, but are not limited to, the following:
- UPS Code of Business Conduct
- Company Bylaws
- Corporate Governance Guidelines
- Board Committees & Charters
- Related Person Transaction Policy
- Political Contributions and Lobbying
In addition, the 2015 UPS Corporate Sustainability Report contains many references to values, principles, standards, and norms of behavior at UPS. A complete description of each of these is available in our Code of Business Conduct, which is listed above as one of the resources available to the public on our website.
In addition, we make available on our website all relevant documents we file with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and Proxy Statement. The latter document contains detailed information on corporate governance and executive compensation at UPS.
We publish the governance structure for UPS, including the committees of our Board of Directors, committee charters, and committee membership, on our investor website. This includes processes and policies for avoiding or managing conflicts of interest.