8-KLeadership ChangesExhibits & Filings

UNITED PARCEL SERVICE INC 8-K Report, Executive Changes (Mar 20, 2008)

Filed March 20, 2008For Securities:UPS

Summary

This 8-K filing by United Parcel Service, Inc. (UPS) details the approval of the UPS 2008 Long-Term Incentive Performance Awards (2008 LTIP) by the Compensation Committee of the Board of Directors on March 17, 2008. The LTIP involves granting restricted stock units (RSUs) to executive officers, officers, and eligible managers, with awards ranging from 50% to 250% of annual salary. This plan aligns executive compensation with company performance over a three-year award cycle (2008-2010), aiming to incentivize growth and profitability. The performance criteria for the 2008 LTIP are tied to specific financial metrics, including consolidated operating return on invested capital, growth in consolidated revenue for annual tranches, and adjusted earnings per share for the full three-year cycle. The Compensation Committee retains discretion to adjust performance results to exclude certain transactions and accounting changes, providing flexibility but also requiring investor vigilance in understanding how reported results translate to compensation. The RSUs, if earned, are set to vest on January 31, 2011, and will be settled in UPS Class A common stock.

Key Highlights

  • 1UPS has approved its 2008 Long-Term Incentive Performance Awards (2008 LTIP) for executive officers and key managers.
  • 2Awards are in the form of Restricted Stock Units (RSUs), representing Class A common stock.
  • 3Target RSU award grants can range from 50% to 250% of an executive's annual salary.
  • 490% of the target award is tied to annual performance, with specific metrics for each year (2008-2010) to be determined by the Compensation Committee.
  • 5Key performance criteria for 2008 include consolidated operating return on invested capital and growth in consolidated revenue.
  • 6The remaining 10% of the target award is based on the Company's achievement of adjusted earnings per share over the three-year award cycle.
  • 7RSUs, if earned, will vest on January 31, 2011, and will be settled in UPS Class A common stock, with dividend equivalents accrued quarterly.

Frequently Asked Questions

The primary purpose of the 2008 LTIP is to align the compensation of UPS's executive officers and key managers with the company's long-term financial performance and strategic goals. It incentivizes them to drive growth and profitability by granting them equity-based awards (Restricted Stock Units) that are contingent on achieving specific performance metrics.

The target RSU award grant is a percentage (50% to 250%) of an executive's annual salary. 90% of the award is subject to annual performance criteria (like operating return on invested capital and revenue growth) over three years, with a matrix determining payout based on achievement. The remaining 10% is based on achieving a three-year adjusted earnings per share target. If earned, the RSUs vest on January 31, 2011, provided the employee is still with UPS, with some exceptions for termination due to death, disability, or retirement.

The Compensation Committee has significant discretion. They determine the specific performance measures and targets for each year before or within the first quarter of the performance year. They also retain the right to adjust reported company results to exclude the effects of certain transactions and accounting changes when determining whether performance criteria targets have been met. This provides flexibility to account for unusual events but investors should monitor how these adjustments might impact executive payouts.

The earned RSUs are scheduled to be paid out in the form of UPS Class A common shares on March 11, 2011, provided the participant is employed by UPS on the vesting date. Dividend equivalents paid on UPS Class A common stock will be adjusted into the RSU account quarterly.