8-KLeadership ChangesExhibits & Filings

UNITED PARCEL SERVICE INC 8-K Report, Executive Changes (Mar 7, 2007)

Filed March 7, 2007For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) filed an 8-K on March 7, 2007, reporting on the approval of its 2007 Long-Term Incentive Performance Awards (LTIP) by the Compensation Committee of the Board of Directors. This filing details the structure and performance criteria for restricted stock unit (RSU) awards granted to executive officers, officers, and eligible managers. The LTIP is designed to align executive compensation with key company performance metrics over a three-year award cycle (2007-2009). For investors, the key takeaway is UPS's commitment to incentivizing leadership through performance-based equity. The LTIP ties a significant portion of awards to operational and revenue growth targets, specifically consolidated operating return on invested capital and consolidated revenue growth for the annual tranches, and adjusted earnings per share for the three-year cycle. This structure aims to drive long-term shareholder value by rewarding executives for achieving financial and operational excellence.

Key Highlights

  • 1UPS Compensation Committee approved the 2007 Long-Term Incentive Performance Awards (LTIP) for executive officers and eligible managers.
  • 2Awards are in the form of Restricted Stock Units (RSUs) representing class A common stock.
  • 3Target RSU awards range from 50% to 250% of annual salary.
  • 490% of the target award is based on annual performance measures: consolidated operating return on invested capital and growth in consolidated revenue.
  • 5The remaining 10% of the target award is tied to the company's achievement of adjusted earnings per share over the three-year award cycle (2007-2009).
  • 6Earned RSUs will vest on January 31, 2010, subject to continued employment (with provisions for death, disability, or retirement).
  • 7RSU awards will be adjusted quarterly for dividends paid on UPS class A common stock and paid in shares.

Frequently Asked Questions

The LTIP is designed to align the compensation of UPS's executive officers, officers, and eligible managers with the company's long-term financial and operational performance, thereby incentivizing them to drive shareholder value.

Performance is measured in two ways: 90% of the award is based on annual metrics including consolidated operating return on invested capital and growth in consolidated revenue. The remaining 10% is tied to the company's adjusted earnings per share performance over the entire three-year award cycle (2007-2009).

The RSUs will vest on January 31, 2010, provided the recipient is still employed by UPS, unless specific vesting rules for termination due to death, disability, or retirement apply. The payment of vested shares is scheduled for March 12, 2010.

Yes, the Compensation Committee retains discretion to adjust the company's results to exclude the effects of certain transactions and accounting changes when determining achievement of performance criteria and targets.