Ladies and gentlemen, I would like to welcome you to the 2020 UPS Annual Meeting of Shareowners. It is now my pleasure to turn the call over to your host, Mr. Scott Childress, investor relations officer. Sir, the floor is yours.
Good morning, and welcome. Today's meeting will be conducted solely through virtual means in light of the unique circumstances presented as a result of the coronavirus pandemic. Please note that this meeting is being recorded. Joining me today are David Abney, Chairman and Chief Executive Officer of UPS, Carol Tomé, UPS board member and soon to be UPS Chief Executive Officer, Norm Brothers, General Counsel and Corporate Secretary, and Brian Newman, Chief Financial Officer. Norm will act as secretary of the meeting. Also present on the phone are each of the UPS board members, each of the UPS senior executive officers, representatives from Deloitte & Touche, our independent auditors, and the inspector of election for this meeting, Carl Hagberg, who will receive proxies, count the votes, and report the voting results. The inspector of election has previously been duly sworn and has completed the examination of the proxy.
We will conduct the business portion of the meeting first, then answer shareowner questions at the end of the meeting. We have also allotted time to respond to shareowner questions regarding the proposals. Shareowners can submit questions through the webcast link. We will attempt to answer questions of a long-term strategic nature and respond to as many as possible during our allotted time. An electronic copy of the 2019 UPS annual report is available for your review and can be found on the UPS investor relations website. I would now like to turn the meeting over to David Abney, UPS Chairman and CEO.
Thank you, Scott, and thank you to everyone for participating today. I will now call this meeting to order. To ensure fairness, we will follow the rules for the meeting, which are available on the web portal. Please review these rules as they contain important information, including how this meeting may be adjourned and reconvened if we experience technical issues. The secretary has advised me that the proxy materials or notices of internet availability of proxy materials were first mailed on or about March 20, 2020. These proxy materials were mailed to our shareowners of record as of March 16, 2020, who are entitled to vote at this meeting. A copy of the list of shareowners as of the record date is available during the meeting for inspection by any shareowner on the web portal.
Mr. Hagberg has advised me that a quorum is present, so we will begin the meeting. Our agenda today calls for action on six matters. After the presentation of these matters, we will read any appropriate and related shareowner comments that are submitted through the web portal. This discussion will be limited to these six matters only. Out of consideration for others, please limit yourself to one question or comment. Only shareowners may ask questions or make comments in the designated field on the web portal. The polls are now open on all matters. The first matter is the election of 12 directors to serve until the next annual meeting of shareowners or until their earlier resignation, removal, or retirement.
All directors are expected to serve the full term, with the exception of me, as I have previously announced my intention to retire from the board of directors effective September 30, 2020. The nominees are me, David Abney, Chairman and Chief Executive Officer of UPS. Carol Tomé, former Chief Financial Officer and Executive Vice President of The Home Depot and incoming UPS CEO Elect. Rodney C. Adkins, former Senior Vice President of IBM. Michael J. Burns, former Chairman, Chief Executive Officer, and President of Dana Incorporated. William R. Johnson, former Chairman, President, and Chief Executive Officer of H.J. Heinz Company. Bill currently serves as our Lead Independent Director and will serve as Independent Chairman of the Board upon my retirement in September. Ann M. Livermore, former Executive Vice President of Hewlett-Packard Company. Rudy Markham, former Financial Director, Unilever. Franck Moison, former Vice Chairman of Colgate-Palmolive Company.
Clark T. Randt Jr., former U.S. ambassador to the People's Republic of China. Christiana Smith Shi, former President of Nike's Direct-to-Consumer business. John Stankey, President and Chief Operating Officer, AT&T. Kevin Warsh, former member of the Board of Governors of the Federal Reserve System and distinguished visiting fellow of the Hoover Institution at Stanford University. The board of directors recommends a vote for each of these nominees. I have been advised by the secretary that there are no other nominees. There being no other nominees, I declare the nominations closed. The second item for consideration is the approval on an advisory basis of a resolution on executive compensation. The board of directors recommends a vote for this proposal. The third item for consideration is the ratification of the audit committee's appointment of Deloitte & Touche as independent registered public accountants for UPS and its subsidiaries for the year ending December 31st, 2020.
The board of directors recommends a vote for this proposal. If you have any questions for Deloitte & Touche, please submit your question through the web portal. The fourth item for consideration is a shareowner proposal requesting the board to prepare an annual report on UPS's lobbying activities. Tim Smith will present the proposal. Mr. Smith, as described under the rules for the meeting, you have three minutes to make a statement in support of the proposal. You do not need to read the text of the proposal.
Good morning, Mr. Chairman, and thank you for the introduction. I am Timothy Smith. I work with Boston Trust Walden, an investment firm based in Boston. We're the lead sponsor of this resolution, number 4. We're the holder of approximately 463,000 UPS shares. We're longtime holders. We're very pleased with the company. Your leadership is exemplary. We have a number of other investors involved in the co-filing of this resolution, representing a cross-section of stockholders who've been knocking on UPS's door for years on this particular issue. Let me start by clarifying that these investors and our company want to thank UPS and the team for the heroic service you're providing during the pandemic. Your valuable work is more important than ever. We also want to commend UPS for your leadership on so many sustainability issues.
For example, on the environment, you are working to reduce the carbon footprint of your vehicles, and you've committed to source, I think it's 25% of your electricity from renewables by 2025. Those are just but two examples of UPS's record as a strong corporate citizen, which is outlined in your sustainability report. Thank you for this and so much more. The issue of company lobbying presented in this resolution today is one that is being raised with hundreds of companies internationally, not just with UPS at all. The resolution urges oversight and expanded transparency about how UPS's money is spent in trying to impact laws and regulations to influence public policy. Much of UPS's lobbying is probably routine, supporting our business. When we lobby through associations like the Chamber of Commerce or the American Legislative Exchange Council, called ALEC, we face a different dilemma.
UPS's dollars and reputation can get involved in some very questionable actions that undermine our company's values, what we stand for. For example, several companies, including more recently Verizon and Comcast, withdrew membership in ALEC after ALEC had a white supremacist speak at their conference. That deeply offended Verizon and contravened their values. In fact, over 110 companies have ended ALEC membership. UPS seems to be hanging in year after year, even when the organization works to undermine the work we do on diversity or the environment. The issue of climate lobbying is now a much higher priority for companies who are being urged to ensure their public policy advocacy doesn't undercut needed climate policy. I know UPS is sympathetic to having a meaningful public policy, and yet we need to make sure that our trade associations aren't undercutting our vision here.
In fact, last fall, 200 investors with $6 trillion of assets under management sent letters to companies urging them to review their lobbying related to climate and make sure that it was consistent with the Paris Agreement, setting the global goals for climate. Companies like Shell and BP have done in-depth studies on the positions of their major trade associations. They pulled out of a few and put others on a watch list. To take one example, we know UPS is trying to use its voice, along with other companies, and thank you for that, to improve the U.S. Chamber of Commerce's position on climate. Progress is still slow. It's so important that our influence, our voice, our power is utilized within trade associations to make sure they know where you and others stand and to try to move them into the future.
Mr. Smith, you're over your three-minute timing. Could you wrap it up, please, soon?
I can, and thank you for reminding me of the time. We look forward to further dialogue with UPS on this issue. The issue's been before the board for a decade now, and we might suggest that it's time for a serious dialogue to see if we can find common ground. Thank you very much.
Thank you. A second is not required for this proposal. The board of directors recommends a vote against this shareholder proposal for the reasons described in the proxy statement. Proposal five. The fifth item for consideration is a shareholder proposal to reduce the voting power of Class A stock from 10 votes per share to one vote per share. Mr. Jesse Alba will present the proposal. Mr. Alba, as described under the rules of the meeting, you have three minutes to make a statement in support of the proposal. You do not need to read the text of the proposal.
Thank you, and good morning. Proposal 5, equal voting rights for each shareholder, sponsored by John Chevedden. Shareholders request that the board of directors take steps to ensure that all of the outstanding UPS stock has an equal 1 vote per share in each shareholder voting situation. This would encompass all practicable steps, including encouragement and negotiation with current and future shareholders who have more than 1 vote per share to request that they relinquish for the common good of all shareholders, any preexisting rights, if necessary. This proposal topic may have received a majority vote from the independent shares of UPS stock in every year since 2016. This proposal is important because certain shares have super-sized voting power with 10 votes per share compared to 1 vote per share for other shareholders.
With stock having 10 times more voting power, UPS takes shareholder money but does not give shareholders in return a significant voice in UPS corporate governance. Without a voice, shareholders cannot hold management accountable. With the UPS shareholder-unfriendly brand of corporate governance, shareholders had no right to call a special meeting or act by written consent, and shareholders were restricted by provisions mandating an 80% vote in order to make certain improvements to UPS corporate governance. In the last five years, UPS stock has ended up flat during a mostly robust market. To top things off, UPS management recommended that they get a three-year holiday on a shareholder vote on their executive pay. The vast majority of Fortune 500 companies recommend an annual vote on executive pay. Excellent corporate governance is a cost-effective way to improve stock performance.
Setting an example, social and mobile game maker Zynga announced moving to a single class share structure. Zynga executives said that a single class share structure simplifies the company stock structure and gives parity to shareholders. In its annual report, the old multi-class share system could limit the ability of its other stockholders to influence the company and could negatively impact its share price. Corporate governance advocates, as well as many investors and index managers, have pushed back on the UPS-type dual-class structure. S&P Dow Jones Indices said that new companies with multiple classes of shares would be barred from entering its flagship S&P 500 index. Please vote yes, equal voting rights for each shareholder, proposal five. Thank you.
Thank you. A second is not required for this proposal. The Board of Directors recommends a vote against this shareholder proposal for the reasons described in the proxy statement. The sixth and final item for consideration is a shareholder proposal requesting the Board to prepare a report on reducing UPS's total contribution to climate change. Pat Tamaino will present the proposal. Mr. Tamaino, as described under the rules for the meeting, you have three minutes to make a statement in support of the proposal. You do not need to read the text of the proposal.
Thank you. Greetings to the board, management team, and fellow shareholders. My name is Pat Miguel Tamainoyo, Director of Socially Responsible Investing at Zevin Asset Management in Boston. On behalf of Zevin Asset Management and Trillium Asset Management, I hereby move proposal number 6. This proposal relates to climate change and whether UPS intends to align its company-wide carbon impact with the goals of the Paris Climate Agreement to limit to well below two degrees Celsius, warming beyond pre-industrial levels. Investors are increasingly paying attention to the material risks of climate change for individual issuers and across our portfolios. We appreciate the steps that UPS has taken on climate strategy, especially regarding carbon emissions from road-based operations, including setting ambitious goals in that area.
While UPS has taken some positive steps, our company's total emissions have increased nearly 13% since 2015, and there is no goal to reduce absolute emissions from UPS's airline, which accounts for nearly 60% of the total carbon footprint. UPS's airline emissions have risen 17% over the last four years. Going forward, UPS has plans to purchase many new planes, which will drive airline emissions even higher. This is a concern for several reasons. First, in a world still being shaped by the impacts of COVID-19, the nexus between air pollution and human health is rightfully coming under increased scrutiny. Efforts to reduce emissions will be widely welcomed as an additional way to help foster healthier communities. Second, low carbon regulations are passing in state houses across the country as well as internationally.
This could force costly compliance efforts if UPS is not already striving to align its operations with a low carbon future as best it can. Third, we are concerned that the longer that UPS waits to develop strategies to compete in a low carbon future, the harder and costlier it will be. DHL, FedEx, KLM, JetBlue and Amazon are among the companies proceeding with concrete investment plans and goals to reduce their carbon footprints. This will impact availability of low carbon fuels and technologies that UPS would need to meet the demands of a low carbon world. We urge UPS's board and leadership to develop an ambitious strategy that would rein in the emissions from its airline and bring its total carbon footprint in line with the objectives of the Paris Agreement.
We urge our fellow investors to vote for this proposal and urge UPS to focus on the airline, which is the outsized portion of the overall carbon footprint for our company. Thank you so much. We encourage you to vote for.
In order to ensure fairness to all, we will follow the rules for the meeting. Excuse me. Thank you. A second is not required for this proposal. The Board of Directors recommends a vote against this shareholder proposal for the reasons described in the proxy statement. Again, in order to ensure fairness to all, we will follow the rules for the meeting, which are available on the web portal. We will now address any questions or comments related to the six items on the agenda.
Mr. Chairman, we have several questions that have been submitted. Why has UPS decided not to report on plans to reduce total contributions to climate change?
Well, the proposal, we don't believe is necessary. UPS has already adopted and publishes ambitious goals to reduce greenhouse gas emissions. We're widely recognized for our sustainability practices. The Dow Jones Sustainability World Index, the Barron's Annual List of the 100 most sustainable companies are examples. UPS has proven effective in achieving sustainability objectives, and we update stakeholders annually on our progress. Thank you.
Our next submitted question, why doesn't UPS prepare an annual report on lobbying activity?
UPS has effective policies for the appropriate disclosure and oversight of lobbying and political activities. UPS complies with all federal, state, and local requirements and publishes a semi-annual report on our website disclosing all federal and state political contributions. We are not engaged in any grassroots lobbying.
Our final submitted question regarding the proposal relating to the annual compensation, CEO compensation since 2017 relative to total returns between UPS and the S&P 500 index.
David, do you want me to take that one?
Yes.
This is Norm Brothers, UPS's General Counsel. The Compensation Committee of the UPS Board of Directors determines CEO compensation. The committee is comprised of five independent board members. The committee uses an independent compensation consultant to provide advice and benchmarking data to help guide CEO compensation decisions. For example, the current CEO compensation is around median for our peer group of companies. UPS is very much a pay-for-performance company. The Comp Committee has designed our executive comp program to reward performance over a multi-year period based on a number of factors. In fact, 90% of UPS CEO compensation is performance-based.
Okay. Thank you, Norm. I want to thank you all for your comments and questions. I want to thank you all for your comments and questions. Since we don't have any further questions, the discussion is now closed. Any shareholder who has not yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. We will take a very brief pause to allow for final voting. Shareholders who have sent in proxies or voted via telephone or internet and do not want to change their vote do not need to take any further action. Okay. Thank you. Voting has concluded, and I declare the polls closed. Mr. Hagberg, please present your preliminary report.
Good morning. On the basis of my preliminary report, I can declare that the 12 nominees for director have been elected to serve until the next annual meeting of shareholders and until their successors have been elected and qualified or until earlier resignation, removal, or retirement. The compensation of the named executive officers as described in the Compensation Discussion and analysis section and in the compensation tables and accompanying narrative disclosure in the company's proxy statement for the 2020 annual meeting of shareholders has been approved. The appointment of Deloitte & Touche LLP to serve as independent registered public accountants to the company for 2020 has been ratified. The shareholder proposal requesting the board to prepare an annual report on lobbying activities was not approved.
The shareholder proposal to reduce the voting power of the company's Class A shares from 10 votes per share to one vote per share was not approved. The shareholder proposal requesting the board to prepare a report on reducing UPS's total contribution to climate change was not approved. Final voting results will be filed by the company with the SEC on a Form 8-K within four business days. Thank you.
Thank you. The 2020 Annual Meeting of Shareowners is adjourned.
We will now transition to shareowner questions. Only shareowners who have held stock as of March the 16th, 2020 may ask questions in the designated field on the web portal. Out of consideration for others, please limit yourself to one question. We will do our best to respond to all appropriate shareowner questions as time permits. Any other questions may be raised separately from the annual meeting by contacting UPS Investor Relations at www.investors.ups.com and clicking on the Contact IR button. Mr. Chairman, we have several questions that have been submitted. Our first question, what is UPS doing to manage liquidity in this uncertain environment?
Okay, we'll have our CFO, Brian Newman.
Thank you, David, and thanks for the question. With respect to liquidity, we have a disciplined and balanced approach to capital allocation at UPS. Both our capital management and dividends remain a high priority. I'd offer three comments on the steps we're taking and why we're confident in our liquidity. First, adjusted free cash flow in the first quarter of this year was consistent with our first quarter average over the last three years. Second, we strengthened our liquidity with a debt issuance of $3.5 billion in March, which more than satisfies our debt obligations for 2020. Finally, we're lowering our use of cash in 2020 by $1.8 billion through a combination of reduced CapEx and suspension of share buybacks. Thank you.
Our next question comes in as, why did you select a non-UPSer to be CEO?
Well, first, the board, including myself as the chairman, went through a rigorous selection process. We focused on internal and external candidates, and we agreed upon a detailed profile for the next CEO and identifying a proven strategic leader with diverse knowledge across multiple industries. Carol Tomé's strong knowledge of UPS, as she'd been a board member for 17 years and had been the chair of the Audit Committee for most of that time. Also, her vast retail and e-commerce experience and proven leadership just made her the right fit. Our transition is going exceptionally well. She's been involved in all aspects of the business since being announced in early March, and all these factors allow Carol Tomé to hit the ground running and will move UPS forward to build an even stronger company. Very glad to have Carol Tomé on board, and she is the right person for the job.
Our next question, considering the coronavirus impact, what are the biggest challenges that you're facing?
Our highest priority has certainly been the health and safety of our people, the customers, and the general public, and would really like to thank UPSers worldwide for making such a difference to the world during this crisis. We've been operating as a critical infrastructure building. People are counting on UPS more than ever before, and I'm just really proud of the heroic actions of our employees through this pandemic. The biggest challenge that we're seeing is really just uncertainty. Uncertainty over the scope and the duration of the pandemic. Of course, one of the things we've seen with the closure and shelter in place is that many businesses that we were delivering to on a regular basis have been closed, and we've certainly seen the opportunities in the areas of healthcare and, of course, in B2C e-commerce.
We will just have to continue to do what we're doing and make sure that we're doing our part to restore the economy and to get through this pandemic and look forward to a recovery and really believe that our company will come out of this even stronger than we entered it.
Mr. Chairman, let me look for I think we've got a couple more questions here. This one comes in, are there any encouraging recent legislative developments in Congress which may bring relief to UPS's multi-employer pension funding obligations?
Well, this is certainly an issue that's important to our retirees, but it goes much, much further than UPS. This is important to retirees of many, many companies that are still in existence and those who, unfortunately, are not. We are advocating strongly for pension reform, and we would like to see it included in a future coronavirus stimulus bill. We're working with all industry stakeholders to craft a legislative solution that will maintain the solvency of the most troubled multi-employer pension plans, and also to protect the retirees' pension to the greatest extent possible. We are constantly working on both sides for a bipartisan solution in this area.
Our next question comes in, does the downturn in the airline passenger business mean that there will be a lot of used jets that can be converted to cargo for UPS?
Well, it certainly means that there's going to be a lot of jets that are going to be retired from the passenger side. We are constantly, when we're looking at the needs of our airline, we're looking at new aircraft and used aircraft, and we have a history of doing both. If we see that we need additional aircraft, and if there are opportunities available to convert some of these passenger aircraft, then we will certainly consider that, and we just monitor it through.
Mr. Chairman, we have one more question that was submitted. What is the status of the lawsuit against the EU for blocking the acquisition of the TNT?
All right. We'll have Norm Brothers, our General Counsel, answer that question.
Thanks, David. Back in 2017, we did challenge the EC's decision to block our acquisition of TNT. We challenged the decision to ensure a more accurate analysis of the EU competitive landscape and to ensure that no precedent was established by the EC that would limit our international growth opportunities. We were successful in that action, and the EC's decision was annulled. We subsequently filed a damages claim, and that is still pending. We had anticipated that that would go to a hearing sometime in 2020. In light of the current circumstances with the pandemic, it likely will get pushed, but that's the current status.
This was my last annual meeting as Chairman and Chief Executive Officer of UPS. It's been an honor to lead such an exceptional company, and I couldn't be more confident that we will continue to thrive under Carol's leadership. We have faced enormous challenges over the last few months as a result of the COVID-19 pandemic. Thanks to the hard work and dedication of our employees, we have shown resilience. Under Carol's leadership, UPS will continue to adapt to the changing environment, strengthen our network, and create new solutions to support our strategic growth initiatives and help our customers grow and compete. Importantly, we believe UPS will continue to deliver the results that drive shareowner value. I hope you are as excited about UPS's future as we are. The meeting is now concluded.
Thank you for attending the 2020 Annual Meeting, and thank you for your investment in UPS.