Good morning, and welcome to the 2021 UPS Annual Meeting of Shareholders. I would now like to turn the call over to UPS Investor Relations Officer, Mr. Scott Childress.
Good morning.
A replay will be available through
our Investor Relations website following the conclusion of the meeting for a limited time. Jones. Joining me today are Bill Johnson, UPS Non Executive Board Chair Carol Tamay, Chief Executive Officer Norm Brothers, Chief Legal and Compliance Officer and Corporate Secretary and Brian Newman, Chief Financial Officer. Norm will act as secretary of the meeting. Also present are each board nominee, Each member of the UPS executive leadership team, representatives from Deloitte and Touche, our independent auditors and the Inspector of Election for this meeting, Carl Hagberg, who will receive proxy, count the votes and report the voting results.
The Inspector's election has previously been duly sworn and has completed the examination of the proxy. We will conduct the business portion of the meeting first and then answer shareowner questions at the end of the meeting. Shareowners can submit questions through the webcast link. We will answer questions related to matters being discussed at the meeting and in our proxy statement. When we receive multiple questions related to the same topic, we may summarize the questions.
We will respond to as many questions as possible during our allotted time. We will address long term business strategy and financial outlook in detail at our Investor and Analyst Day meeting on June 9. Information on how to participate in that meeting will be made available on the UPS Investor Relations website. An electronic copy of the 2021 proxy statement and 2020 Annual Report is available on the UPS Investor Relations website. I will now turn the meeting over to Bill Johnson, UPS Non Executive Board Chair.
Thank you, Scott. Mr. Hagberg has advised me that a quorum is present. I will now call this meeting to order. To ensure fairness to all, we will follow the rules for the meeting, which are available on the Annual Meeting website.
The rules contain important information about the Annual Meeting, Including how this meeting may be adjourned and reconvened if we experience technical issues. The proxy materials or notice of Internet availability of proxy materials were first mailed on or about March 29, 2021 to share owners of record as of March 22, 2021. A copy of the list of shareowners as of the record date is available for inspection on the Annual Meeting website during the meeting. Our agenda today calls for action on 9 matters. After the presentation of these matters, We will read any appropriate and related shareowner comments and answer related shareowner questions.
Only shareowners may ask questions or make comments. The discussion will be limited to these nine matters only. Out of consideration for others, please limit yourself to one question for one comment. The polls are now open on all matters. The first matter is the election of 13 directors to serve until the next annual meeting of shareowners or until their earlier resignation, removal or retirement.
The nominees are Carol Tome, Rod Atkins, Eva Berrado, Mike Burns, Wayne Hewitt, Angela Wang, Kate Johnson, Anne Livermore, Franck Moisson, Christiana Smith Shi Russell Stokes Kevin Warsh and me, Bill Johnson. Detailed information about each of the Director nominees is included in the proxy statement. The Board recommends a vote for each nominee. There being no other nominees, I declare the nominations closed. The second item is the approval on an advisory basis of a resolution on executive compensation as set out in the proxy statement.
The Board recommends a vote for this proposal. The third item is the approval of the 2021 UPS Omnibus Incentive Compensation Plan. The Board recommends a vote for this proposal. The 4th item is the ratification of the Audit Committee's appointment of Deloitte and Touche as independent registered public accountants for UPS for the year ending December 31, 2021. The Board recommends a vote for this proposal.
If you have any questions for Deloitte and Touche, please use the annual meeting website. The 5th item is a shareholder proposal requesting the Board to prepare an annual report on UPS's blocking activities. Tim Smith will present the proposal. Mr. Smith's shareholders have had the opportunity to review the proposal in the proxy statement, So you do not need to read the text of the proposal.
You have 3 minutes to make a statement in support.
Good morning, Mr. Chairman and CEO, Thome. I'm Tim Smith here today representing Boston Trust Walden, A long time investor in UPS, presently holding 629,000 shares. Our company is based in Boston, manages approximately $12,000,000,000 in assets for clients. On behalf of our clients, we carefully evaluate the ESG record of companies as we make our investments and we actively engage scores of companies we invest in on issues like diversity, climate, lobbying, corporate governance and other sustainability concerns.
We're pleased to be an investor in UPS. I move the resolution on lobbying for a vote. This resolution has been filed by approximately Advocacy advocacy and political spending by companies has risen rapidly in public consciousness, stimulated by several factors. Won the dramatic scrutiny of company political spending to congressional representatives who were election deniers after the January 6 takeover of the capital secondly, the concern about hidden money going through third parties to influence legislation And thirdly, heightened focus on climate lobbying. For example, global investors With $54,000,000,000,000 of assets under management, I've created a group called Climate 100 Plus And are urging companies to ensure that their greenhouse gas emissions are reduced consistent with the Paris Accord and science based targets And lobbying and public policy advocacy, both directly by companies like UPS and by our trade associations, are promoting positive goals to help us reach reasonable climate goals.
In short, How companies and their trade associations lobby are being examined as never before. This resolution has been on the UPS Some points to make. UPS spent $68,000,000 in Federal lobbying from 2010 to 2019 and an uncertain amount on state lobbying. And you know, while our Board response in the proxy, argues that we do disclose information about political spending to elect candidates And has given top marks for this disclosure. We mislead investors in the proxy when we imply that such disclosure And thus confuses these 2 categories.
One of the goals of this resolution is to have management carefully scrutinize UPS' position of trade associations we're part of to make sure that we're in sync with them Or perhaps if we're misaligned with them. For example, we know UPS has a forward looking view on climate policy. But do the trade associations in which we pay 100 of 1,000 of dollars in dues share our values and views? I do know as a member of the Chamber of Commerce, UPS and other companies have been pressing inside the chamber to update their climate positions. And there's been some positive movement, but many companies like Shell and BP publicly stated that the Chamber gets poor grades for its climate positions.
Yet, unfortunately, UPS investors Have no information on how management has evaluated the Chamber's position or how maybe you're trying to change it from within. Another example is, yes. You're at time, if you wouldn't mind wrapping up your comments, please. I will. Thank you, Mr.
Chairman. I was just going to mention that, we hope that the Board would also review the American Legislative Exchange Council and its controversial positions in opposing the election results and on climate. And in closing, I would state that We believe this next year is a timely one for UPS to become more transparent and disclose where our lobbying dollars are spent
Thank you, Mr. Smith. The Board recommends a vote against this shareholder proposal for the reasons described in the proxy statement. The 6th item is a shareholder proposal to reduce the voting power of Class A stock from 10 votes per share to 1 vote per share. Vanessa Kelly will present the proposal.
Ms. Kelly, shareholders have had the opportunity to review the proposal in the proxy state,
So you do not need
to read the text of the proposal. You have 3 minutes to make the statement in support.
Thank you. I am here today resolved that shareholders request that our Board of Directors take steps to ensure that all of our company's outstanding stock has an equal one 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 pre existing rights if necessary. This proposal is not intended to unnecessarily limit our Board's judgment in crafting the requested change in accordance to applicable laws and existing contracts. This proposal is important because share because certain shares have supersized voting power with 10 votes per share compared to the weakling 1 vote per share for other shareholders.
Corporate Governance Advocates have suggested a 7 year transition to equal voting rights for each share. In spite of lopsided shares having 10 times more voting power, support for this proposal topic has steadily grown from 21% support in 2013 to 29% support in 2020. With stock having 10 times more voting power, Our company takes our shareholder money, but does not give us in return an equal voice in our company's management. Without a voice, Shareholders cannot hold management accountable. Without this proposal, the Board is less accountable to allowing UPS to fund legislators across the country that are working to strategically suppress the vote and undermine our democracy.
UPS has given tens of 1,000 of dollars to legislators that passed SB202 in Georgia, otherwise known as the Jim Crow 2.0 Bill. Georgians are demanding that UPS create a strong and permanent policy to cease funding legislators that cynically push voter suppression bills, withdraw from any industry associations that don't institute the same policy and publicly oppose the wave of voter suppression bills around the country. This proposal will make our company more competitive in a business sense and help ensure that management upholds the basic principles of democracy and free enterprise. Thank you for your time.
Thank you, Ms. Kelly. The Board recommends a vote against this shareholder The 7th item is as shown in the proposal requesting the Board to
Greetings to the Board, management team and fellow shareholders. My name is Kate Monahan, Director of Shareholder Advocacy at Trillium Asset Management LLC. On behalf of Devon Asset Management LLC and Trillium Asset Management LLC, I hereby move proposal number 7. This proposal asks UPS to describe if and how it plans to reduce its company wide carbon impact and align its operations with the Paris Agreement's goal of maintaining global temperature increases atorbelow1.5 degrees Celsius. 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, particularly setting ambitious goals regarding carbon emissions from its road based operations. However, UPS has not set an analogous reduction goal for its airplane fleet, which accounts for 60% of the company's direct greenhouse gas footprint. UPS' airplane fleet emissions have increased by 22% from 2015 to 2019, leading to a 16% increase in total operational footprint in the same timeframe. Going forward, UPS has plans to purchase many new planes, which will drive airline emissions even higher. We're concerned that the longer the company 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 lower their overall carbon footprint. This will impact availability of low carbon fuels and technologies that UPS would need to meet the demands of a low carbon world. Additionally, in a world still being shaped by the impacts of COVID-nineteen, the nexus between air pollution and human health is rightfully coming under increased scrutiny. Efforts to reduce emissions are an additional way to help foster healthier communities. We urge UPS' Board and leadership to develop an ambitious science based strategy that will reign in the emissions for this airline and bring its total carbon footprint in line with the Paris agreement.
We encourage our fellow investors to vote for this proposal.
Thank you, Ms. Monahan. The Board recommends a vote against this shareholder proposal for the reasons described in the proxy statement. The 8th item is a shareholder proposal requesting the Board to take the steps necessary for the company to amend its certificate of incorporation and become a Public Benefit Corporation. Sarah Murphy will present the proposal.
Ms. Murphy's shareholders have had the opportunity to review the proposal in the proxy statement, So you do not need to read the text of the proposal. You have 3 minutes to make the statement in support.
Mr. Chairman, it appears that the sharer who submitted the proposal is not able to connect. Therefore, I hereby move Proposal 8 on behalf of Myra Young, requesting that UPS transition to a public benefit corporation.
Thank you. The Board recommends a vote against the shareholder proposal for the reasons described in the proxy statement. The 9th and final item for consideration is a shareholder proposal requesting the Board prepare an annual report on diversity and inclusion. Meredith Benton will present you.
Hello. I am Meredith Benton speaking on behalf of the nonprofit Siggi Organization, as you saw. And I'm also the CEO of the consultancy, Whistle Stop Capital. I formally moved Proposal 9, asking for UPS to report on the process that the Board follows for determining the effectiveness of its diversity and inclusion program and how it assesses goals, metrics and trends related to recruitment, promotion and retention. UPS' materiality matrix shows workforce diversity and inclusion to be of the highest importance to the company, both in its influence on business success and on stakeholders.
However, the limited data UPS shares with investors does not reflect this belief. Best practices for diversity and inclusion reporting exist and are increasingly in use across companies. Publishing the company's EEO-one form, a governmentally mandated providing basic workforce composition details is the first step, one UPS recently committed to. The release of workforce composition data is akin to a balance sheet, and Company Financials. So too is the EEO-one by itself insufficient in assessing the effectiveness of its inclusion programs.
The company's data on hiring, retention and promotion rates of diverse employees must also be shared for investors that have a full understanding of the With UPS employees, in theory, companies should want to share their retention data. If it's a good company to work at, people will want to stay. Companies should, in theory, want to share their promotion data. If it's a company that hires good people, Those people will ascend with mentorship and time. In a June 2020 press release, UPS' CEO said, No one is safe until we are all safe, and we know there is no place in any community anywhere in the world for racism, bigotry or hate.
She added, we will not stand quietly or idly on the sidelines of this issue. Should consumers, employees and others determine that UPS has sought to build its brand by representing itself as an ally to justice movement, Term Performative Allyship or Wealth Washing. Without integrating best practices into its own operations, UPS may erode the trust of key consumers and employees. Investors may wish to be particularly vigilant against this concern at UPS as the company has faced a number of allegations of discrimination on the basis of race and religion. We encourage transparency Even in the face of imperfection, in order to show that UPS is truly committed to its existing and future employees
Thank you. The Board recommends a vote against this shareholder proposal for the reasons described in the proxy statement. We will now address any questions or
comments related to 9 items on the agenda.
Okay. Thank you, Bill.
Our first question is around the process of adding a topic or request to the annual voting ballot.
Thank you, Scott. I think it is the shareholders can see with the number of topics we discussed today, we welcome the opportunity to have a dialogue with our shareowners. Not only do we conduct investor outreach programs throughout the year to find out what's on the mind of our owners, We provide owners with multiple options for communicating with our company. Instructions for how shareholders can submit a proposal for inclusion in next year's proxy or nominated Director are contained in the proxy beginning on Page 91. Any proposal will obviously need to comply with
The next topic is a consolidation of several dozen questions around our Board related to Board composition, nominating directors, Board size and other Director comments and Director retirements.
I think we are rightly proud of our Board with the mix of talented individuals Boards are made up of talented, committed individuals that are independent of management And of the highest personal character, integrity and ethical standards. This is a difficult but critical task to promote the proper functioning of the Board and in the case of UPS, I think one that has been met quite well. We seek to promote diversity in the Board room with And like the vast majority of S and P 500 Our CEO is the only member of management that serves on the Board. This enables the Board to focus on its oversight responsibilities, while management takes responsibility for the day to day operations of the business. The Board's Nominating and Corporate Governance Committee uses a variety of sources to identify potential candidates for the Board.
These sources include other Board members, members of management, independent consultants, Recruiters, shareholder recommendations and so forth. Shareholder recommended director candidates are considered on the same basis as recommendations from other sources and information on how shareholders can recommend candidates is also contained
in the proxy statement.
Prospective candidates are evaluated based on a number of Including feedback from independent consultants, reviews of various candid backgrounds and their qualifications, interviews with Board members This is a consideration of potential director for the focus on long term company strategy. Each director candidate is carefully evaluated to ensure Existing and planned future commitments by that individual will not materially interfere with the UPS Board responsibilities that they will undertake. If elected, we'd also limit the number of outside boards that our directors can serve on to 4. During this entire process, the Board seeks to balance the knowledge and experience that comes from longer term Board service with new ideas and energy that come from new directors. Accordingly, we added 5 new independent directors to the Board in 2020.
We also had 4 directors retire last year, 2 reached the Board's mandatory retirement age of 75. We think the average tenure of our Board Just over 7 years, reflects an appropriate balance between different perspectives brought by long serving directors as well as those who bring new ideas and refresh our perspective on the Board. Regarding the Board's size, we believe that we have the appropriate number of directors This allows us to provide appropriate oversight while still enabling each director to also provide meaningful contributions in our internal board debates. UPS is a complex global business and we benefit from a diverse set of skills and perspectives that are brought by each of our directors.
A number of shareowners want to know why the Board recommends voting against proposals related to climate change,
There may be some misinterpretation of the Board's recommendations regarding these proposals. Make no mistake, the Board generally agrees with the sentiments behind these proposals, But it's the methodology that we do not necessarily agree with or align with. UPS supports global efforts to mitigate the impact of climate change As we demonstrate on a day to day basis by the operations of this company, we are also committed to diversity, equity and inclusion, And we are as transparent and accountable with respect to lobbying and political activities as we possibly can be. The company already commits a significant amount And internal resources to all of these issues producing and disclosing a number of regular reports. And while we receive significant recognition for our efforts We all understand that additional work has to be done for the benefit not only of stakeholders, but of the communities and the customers we serve.
However, we do not agree that producing additional reports to satisfy a particular or specific shareholder request
Kyrie, shareowners, about the continued inclusion of the proposal to reduce the voting power of the Class A
In response to our question and proxy, as you can see, the company respects the rights We believe UPS' ownership structure has contributed to its long term success, and we also believe it is unique in that Class A shares are widely held by over 155,000 Class A share owners. As a result, it does not present the same predicament or concerns associated with other dual class public companies Such as entrenched management, conflicts of interest, concentration of voting power, our core corporate governance practices. It's our belief that we owe our success to a significant degree to the commitment of our ownership structure and the way it inspires our employee shareowners. Elimination of this structure would not improve the corporate governance,
but only the financial performance of UPS. And lastly, Mr. Chairman, we received a question about the reengagement of Deloitte and Touche as our company auditor.
Well, this is a determination made every year by the Audit Committee who reviews the appropriateness of our current auditors. They consider Deloitte to be well qualified, properly independent in possessing the necessary expertise required to audit UPS' global business. In deciding whether or not to reengage the firm, the Audit Committee considered the length of time that Lloyd has served as UPS' independent auditors, The breadth and complexity of our business, our global footprint and the resulting demands placed upon our auditing firm. The committee also considered the expertise in UPS' business and our management's perception relating to the depth And breadth of Deloitte's auditing qualifications and capabilities also the breadth, quantity and quality of Deloitte's staff and their global reach and the appropriateness of Deloitte's feeds. Additionally, the communication and interaction with the Deloitte team over the course of the prior year is taken into consideration As is any reviews that the PCAOB may have done on Deloitte, which is reviewed carefully by the Audit Committee and management.
This is weighed against the potential impact and disruption of changing our independent registered public accounting firm. Therefore, after considering all these factors, The Audit Committee recommended to the Board and the Board agreed that the engagement of Deloitte was in the company's continued best interest.
Thank you for your comments and questions. The discussion is now closed on these matters.
Shareowners who have not voted or wish to change their vote can go to the Annual Meeting website and follow the voting instructions. Thank you. Voting has concluded and the polls are closed. Mr. Hagberg, please present your preliminary report.
Good morning. On the basis of my preliminary report, the 13 director nominees have been elected to serve until the next Annual Meeting of Shareholders and until their successors have been elected and qualified or until their earlier resignation, removal or retirement. The compensation of the named executive officers as described in the company's 2021 proxy statement has been approved. The 2021 UPS Omnibus Incentive Plan has been approved. The appointment of Deloitte and Touche, LLP to serve as independent registered public accountants to the company for 2021 has been ratified.
The shareowner proposal requesting the Board to prepare an annual report on lobbying activities was not approved. The shareowner 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' total contribution to climate change The shareholder proposal requesting the Board take steps necessary for the company to become a public benefit corporation was not approved And the shareholder proposal requesting the Board to prepare an annual report on diversity and inclusion was not approved.
Thank you, Carl. Final voting results will be filed by the company with the SEC on a Form 8 ks within 4 business days. The 2021 Annual Meeting of Shareholders is now adjourned.
We will now transition to general shareowner questions. We have received several hundred questions and have categorized them into various topics. We will do our best to address all the topics raised in the questions. If you submitted a question on a topic that we do not respond to, please feel free to contact UPS Investor Relations at investors. Ups.com.
As a reminder, some of the comments we'll make are forward looking statements within the federal security laws and address our expectation for the future performance or operating results of the company. These statements are subject to risk and uncertainty, which are described in detail in our 2020 Form 10 ks and and from the SEC. The first question we want to address that seems to be front of mind Many of our employees and shareholders is related to politics. We received numerous questions regarding UPS's position on voting rights laws.
Thank you, Scott. UPS believes that voting laws and legislation Make it easier, not harder for Americans to exercise their right to vote, as we have stated in the past. Consequently, We are taking a number of steps to help ensure equitable poll access to voting for our employees. We are continuing to provide voter education resources employees through our Drive the Vote program, including information such as registration and voting deadlines. We are helping print absentee ballot request forms for UPS'ers at our facilities, where we are committed to do so by state and local laws.
We are dedicating funding support to nonpartisan nonprofits that organize voter registration and engagement activities, And we are having UPS volunteers facilitate voter ID and registration efforts at UPS facilities for employees.
Can you discuss the current status of our political contributions and how we determine where to spend?
While there are many important topics, as a logistics company, we are naturally focused on issues that are germane to UPS. These include areas in transportation, trade, regulatory and energy security issues as they affect our employees, Our customers and communities we operate in. We generally do not get involved in topics not directly related to our work. UPS supports and is engaged with organizations that could be described as conservative, liberal and everything in between. The company makes a strong effort to assess the overall merit to joining trade associations and thus so to further the interest of the business and its shareowners with respect to discrete issues that are relevant to the company.
Areas of interest, as I stated, include UPS PAC contributions to 2020 were about $2,000,000 with contributions made to both Republicans and Democrats. UPSPAC received voluntary contributions from UPS management employees and made contributions through UPSPAC in a manner consistent with the company's Corveig. As most of you are aware, UPS has currently suspended all PAC contributions for now as we navigate through
Our next question has to do with sustainability and our rolling laboratory. Investors want to know what role electrical powered vehicles play in UPS's future? Carol?
Well, I'm happy to take that question and good day everyone. Since our founding, UPS has operated our business to achieve a balance of economic prosperity, social responsibility and environmental stewardship. In 2020, we released our 18th annual sustainability report and our first SaaS report. Reducing our carbon footprint and it's a big one, but reducing it is extremely important to UPS and electric vehicles will play a big part in helping us achieve that. We take a rolling laboratory approach to test the performance of different solutions in our network and have many exciting partnerships and pilots going on right now.
For example, we work with a company called Arrival to order 10,000 purpose built vehicles. Of these deliveries start in 2021. We've just announced the partnership with Veda to purchase 10 e of Baltol, which is electric vertical takeoff and landing aircraft. We'll take our first of those battery powered aircraft in 2024. It's very exciting for us.
We're working with 2 Simple to pilot autonomous Class A vehicles And with Workhorse, which is the drone delivery network, so there's a lot going on here. We've got a real commitment to reducing our carbon footprint and I I would
argue we're one of the
leaders in this space. For example, we have over 13,000 vehicles that are powered by alternative fuel. So thank you for that question.
Moving on to financial matters, we received a number of questions regarding our capital allocation.
From the Board's perspective, we are very excited about what the future holds for our company and our strategy is clearly working. The business has performed well and the management team is laser focused on generating free cash flow, improving the company's overall profitability and Increasing our return on invested capital. We have a disciplined and balanced approach to capital allocation. 1st is to the business where the priorities exist and the opportunities are plentiful. 2nd is to the dividend.
3rd is to protect the financials of the company. And 4th is to return the excess to shareowners The dividend is only one component of Cove's shareholder return. By the way, as many of you noted, the stock price More than doubled since June 1, 2020, from about $99 a share to over $200 a share. The management team and the Board are taking prudent steps to strengthen our balance sheet and improve our credit ratings. And we will continue to evaluate the Capital distribution policies and we fully recognize that cash belongs to our shareholders, not to the company.
Looking ahead, you should expect a dividend payout of roughly about 50% of earnings. So as our earnings grow, our dividend will grow. We will be providing a detailed update on business and financial matters at our Investor and Analyst Day on June 9. Information on how to listen into this virtual event are on our Investor Relations website.
We had numerous questions related to UPS stock. Can you explain why UPS stock price is consistently below FX's stock price. And also, will we see a stock split Anytime soon.
This is one of those questions that we kick back and forth trying to understand the
reason for it. And so I'm going to
take a fairly simplistic approach here. Remember that a company stock price is just one gauge in the formula to determine the company's value. Although our stock price of over $200 is below FedEx Pushing around $2.90 We have far more shares outstanding. So if you multiply the stock price by the number of shares outstanding, You get the company's market capitalization or its market value. UPS has more than 3 times as many shares outstanding as FedEx, And our market cap is approximately $175,000,000,000 versus about $78,000,000,000 for FedEx.
So in essence, we are worth almost $100,000,000,000 more than FedEx. Additionally, our Price earnings ratio is over 20% higher than FedEx, meaning that investors are willing to pay 20% more for each dollar of UPS earnings than they are Also UPS' dividend yield is 2x higher than the FedEx yield. As it pertains to a stock split, the company at This point does not have any plans on splitting its shares.
We have a number of operationally focused questions that have come in.
Carol, I think these questions really are in your daily way.
Happy to take them, Bill. Thank you.
So our first question, Why are you reducing CapEx at a period of high demand?
Well, over the past several years, we've invested heavily in our capacity. And now it's time to get a return off of that investment and to drive productivity. We call it sweating our assets, But it doesn't mean that we're not investing because we are. This year we'll spend about $4,000,000,000 of capital with $2,400,000,000 for growth and Capability. We're adding about 2,000,000 square feet to our network and over 150,000 packages per hour Looking ahead, we will invest in attractive opportunities and the right capability that matters the most to our customers.
Some of these investments will require capital dollars and some will require expense dollars. We will use the financial power of UPS to invest while generating higher returns on the capital we deploy.
Our next question is what is the plan to reduce UPS debt?
A strong balance sheet and credit rating is a core principle of UPS and we've made a lot of progress this year. We've repaid $2,500,000,000 of term debt And the passage of the American Rescue Plan Act or ARPA reduced our pension liabilities by $6,400,000,000
Our next question, are you worried that offshoring jobs UPS businesses can cause a reduction in revenue as companies and people take their business elsewhere in a post COVID environment. UPS is ready
to help our customers move their goods through supply chains no matter where in the world As you know, we operate in 2 20 countries and territories around the world and our global smart logistics network is extremely flexible. We are helping our customers by making it easier for them to control their supply chain and expand their market reach.
We've also received numerous questions asking how the American Rescue Plan Act of 2021 has impacted UPS and our multi floor pension plans.
Well, I think you know, we've been working for a long time with stakeholders to support a legislative solution that would maintain the solvency of the most troubled multiemployer pension plans and protect retiree pension. And ARPA does just that. It allows qualifying multi employer pension plans That are in danger of insolvency to receive lump sum assistance. And as a result of this new law and for us it really pertains to several We reported an after tax mark to market pension benefit to net income of $2,500,000,000 and a $6,400,000,000 reduction in our net pension liability. But the best thing about this is that retiree pensions were protected.
Now if you want to learn more about this, you can go to a presentation that we've posted to our Investor Relations website, which details the financial impact.
We had a few questions about Amazon. Specifically, what is your long term strategy with Amazon? Amazon is an important customer and we
view that relationship as mutually beneficial. But look, they're not our only customer. In the United States, our focus is on growing our SMB and Healthcare segments. And in the Q1, we saw volume growth rate in those segments than we did in our large enterprise customer segment, which would include Amazon. We're optimizing our network and leaning into those
Can you discuss the reasons that we sold UPS Freight? And do we have any concerns That we will lose this business to competitors.
Well, when I onboarded a year ago, as a leadership team, we talked about What got us here wasn't going to get us to where we needed to go and that we were going to take a hard look at our portfolio of assets to determine those assets The future of UPS. We called it better not bigger. And as we looked at the portfolio of assets, we wanted to look at those that were giving us the highest return. UPS Freight is a great business, but it's a low margin capital intensive business. And when we looked at it, we said, you know what, we don't need to own this business to provide an LTL solution for our customers.
We can do that contractually. So we were delighted to sell this business to TFI, which is an LTL trucking company, but good news story for our UPS freight assumption. And with the disposition of UPS, right, we will be smaller, but we will be better. We'll be able to give our customers the service they want And we'll see an improvement in our operating margin and our return on invested capital.
Our next question is, does UPS have any
So last year, we set up our time in transit And we have advantage or priority in 20 of 29 of the most important markets, But we are not done. We are increasing weekend delivery. And by October of this year, We will have a Saturday delivery for over 90% of the U. S. Population.
We're also working on improving delivery and here are some of the things that we're doing. We're using My Choice to allow customers to select the days they want to receive packages. We're using UPS access points and we have thousands of access points to increase delivery density and we're improving order consolidation There's a lot going on in this space to meet our customers where they want us to be and we'll share more details with you as our strategy develops.
Some questions have come in regarding the state of our packaged cars and why are they allowed to go out on the road when they are not fully clean?
There is no excuse for a dirty packaged car. Car washing plans and guidelines exist at all of our facilities. We will ensure the appearance of our package car reflects positively on our brand, and I personally increased spending in this area in 2021.
This is a good one.
We have some comments regarding making the UPS website more user friendly.
Well, this is a personal passion of mine because it's not very friendly. In fact, our website hasn't been updated in many years. It's too cumbersome. We have almost 3,200 pages on our website. So we're investing in a brand new website and the experience It will be helpful and we're using customer feedback to design the experience.
So more to come.
We also have received various questions related to compensation and employee benefits. We are committed
to providing competitive pay and benefit programs, consistent with our policy of compensating our people fairly. As our market and employees continue to rapidly evolve, we've embraced change, identified opportunities and have made headway to become a more competitive and agile employer. But we're not done. One of our wildly important initiatives is to modernize talent development, investing so we can attract and retain great talent across the enterprise. As we modernize our reward program, we look forward to sharing more in that area.
And lastly, we had some comments and questions. The last comment and question. UPS has made many positive changes at the company since last June. For example, the change in our appearance guidelines. Some of our long term employees and share owners have commented on the changes to our appearance standards.
What do we want to say to them?
Well, to all of you, I am personally committed to maintaining and living our values, I just like integrity and respect. To be an employer of choice, some policies like facial hair, well they had to change. Bringing one's authentic self to work is the best way to live values of integrity and respect. In Jim Casey's 1956 talk with Joe, He noted that, you will learn more and more from experience that no two individuals are exactly alike. Not only will you be tolerant, but you will give full weight to the opinions of people who differ from you I think Jim Casey was pretty insightful back in 1956 about the power of bringing North America's health to work.
And unfortunately, that is all the time we have. Thank you for your questions and for your investment in UPS. I will now turn it over to Carol for some closing remarks.
Thank you, Scott, and good day, everyone. Well, I've been attending annual UPS Shareowner Meeting since 2004. This is my first annual meeting as your Chief Executive Officer. It has been an honor to lead this company since June 1 last year. We faced enormous challenges due to the COVID-nineteen pandemic, but because of the hard work and dedication of our employees, We persevered.
We delivered what matters. Customer first, people led, innovation driven. UPS will continue to adapt to the changing environment and will create new solutions to help our customers grow. We will invest in our people and become an employer of choice, and we will strengthen our competitive positioning to offer the best digital experience powered by our smart global logistics network. We will attend to the needs of all stakeholders.
And by doing so, we believe we will deliver shareowner value creation. We look forward to sharing more information about our Strategy with you during our upcoming Investor and Analyst Day on June 9. Please visit our Investor Relations website for additional details. As our Founder, Jim Casey said, Our horizon is as distant as our mind's eye wishes it to be. UPS is a company with a proud past and an even brighter future.
I hope you are as Excited about UPS' future as we are. Thank you for attending the 2021 Annual Meeting and for your investment in UPS.
The meeting has concluded. You may now disconnect.