Good morning, and welcome to the 2026 UPS Annual Meeting of Shareowners. I would like to turn the call over to UPS Investor Relations Officer, Mr. PJ Guido.
Good morning and welcome. Today's meeting will be conducted solely through virtual means. Please note that this meeting is being recorded. A replay is expected to be available through our investor relations website following the conclusion of the meeting for a limited time. Joining me today are William R. Johnson, UPS Independent Board Chair, Carol B. Tomé, Chief Executive Officer, Norman M. Brothers, Jr., Chief Legal and Compliance Officer and Corporate Secretary, and Brian Dykes, Chief Financial Officer. Norman M. Brothers, Jr. will act as Secretary of the meeting. Also present are other board nominees, each other member of our executive leadership team, representatives from Deloitte & Touche, our independent auditors, and the Inspector of Election for this meeting, Peter 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 proxies.
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 relating to the same topic, we may summarize the questions. We will respond to as many questions as possible during our allotted time. An electronic copy of the 2026 proxy statement and 2025 annual report is available on the UPS Investor Relations website. I will now turn the meeting over to Bill Johnson.
Thank you, PJ. First off, I would like to acknowledge and thank Kate Johnson for her five years of valuable service to the UPS Board of Directors. Kate is not standing for reelection, as she is using the time to focus on her other professional responsibilities. We thank Kate for her dedication in sharing her expertise and acumen with our board. Moving on to meeting matters. Mr. Hagberg has advised me that a quorum is present. I 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 it may be adjourned and reconvened if required.
The proxy materials or notice of Internet and availability of proxy materials were first mailed on March 19, 2026 to shareowners of record as of March 9, 2026. Our agenda today calls for action on 7 matters. The discussion will be limited to these 7 matters only. After the presentation of these matters, we will answer related shareowner questions. Only shareowners or their proxies may ask questions. Out of consideration for others, please limit yourself to 1 question. 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. The nominees are Carol B. Tomé, Rodney C. Adkins, Eva Boratto, Kevin Clark, Wayne Hewett, Angela Hwang, Franck Moison, John Morikis, Christiana Smith Shi, Russell Stokes, Kevin Warsh, and me, William R. Johnson. Detailed information about each nominee is included in the proxy statement.
Recommends a vote for each nominee. Having no other nominees, I declare the nominations closed. Second item is the approval on an advisory basis of a resolution on named executive officer compensation. Recommends a vote for this proposal. Third item is the approval of the 2026 omnibus incentive compensation plan. The board recommends a vote for this proposal. Item is the ratification of the Audit Committee's appointment of Deloitte & Touche as the company's independent registered public accountants for the year ending December 31, 2026. The board recommends a vote for this proposal. If you have any questions for Deloitte & Touche, please submit them through the annual meeting website.
The fifth item is a Shareowner proposal to reduce the voting power of the Class A stock from 10 votes per share to one vote per share. John Chevedden will present the proposal. Mr. Chevedden, you will have three minutes to make a statement in support of your proposal.
It appears that the shareowner who submitted this proposal is not connected. Out of respect for the process, but without waiving any rights to the company in the future, I'll move the proposal on the shareowner's behalf. I hereby move proposal 5 on behalf of John Chevedden, requesting that the board reduce the voting power of Class A stock from 10 votes per share to 1 vote per share.
Thank you. As described in the proxy statement, the board recommends a vote against this proposal. The sixth item is a shareowner proposal requesting UPS engage an independent third-party evaluation of the impact of UPS operations affecting Black, Indigenous, and people of color in low-income communities. Rachel Lowy will present the proposal. Ms. Lowy, you have three minutes to make a statement in support of your proposal.
Ms. Lowy, you may proceed.
Good morning, Ms. Tomé and members of the board. My name is Rachel Lowy, and I am presenting proposal number 6 on behalf of As You Sow. This proposal requests UPS disclose an evaluation conducted by an independent third party of the impacts of its operations affecting Black, Indigenous, and people of color and low-income communities. UPS operates one of the largest logistics networks in the U.S., with extensive warehouse and distribution center infrastructure and high fleet volumes. Enforcement records confirm that UPS's footprint overlaps with overburdened communities. The EPA has stated that many UPS facilities reviewed in the nationwide settlement are in communities identified as disproportionately impacted by pollution and experiencing elevated environmental burdens.
A 2024 study found that warehouse activity is associated with significant increases in nitrogen dioxide, a pollutant linked to asthma and cardiovascular disease, and that warehouse locations are typically located in disproportionately marginalized and minority communities. These outcomes contribute to potential regulatory risk and heightened litigation risk for the company. Regulators increasingly recognize that warehouse operations contribute to local air pollution through associated truck traffic and are beginning to hold operators accountable. These developments indicate that UPS may face heightened legal, regulatory, and reputational risks related to environmental justice. A third-party evaluation would provide investors with critical transparency into how UPS is managing these risks and whether additional mitigation measures are needed.
Shareholders urge UPS to vote yes on this proposal, which will provide important information about the extent to which its current warehouse and delivery center operations are adversely impacting surrounding Black, Indigenous, and people of color, and low-income communities. Additionally, it will help inform its current and future actions to reduce such harm and associated risks to the company. Thank you.
Thank you. As described in the proxy statement, the Board recommends a vote against this proposal. The seventh item is a Shareowner proposal requesting UPS prepare a report describing if and how the company plans to align its operations and investments with its carbon neutrality goal. Chris Richardson will present the proposal. Mr. Richardson, you have three minutes to make a statement in support of your proposal.
Good morning. My name is Christopher Richardson, I speak today on behalf of Mercy Investment Services, co-filer of item 7, As You Sow, the lead filer. We are long-term shareholders of UPS, We are proud to invest in a company that has built its reputation on reliability. That is precisely why we are here today. Our ask is simple. We are not asking UPS to change their strategy. We're asking UPS to tell us what its strategy is. Specifically, how does it plan to align its operations and investments with its own carbon neutrality goal? UPS has committed to carbon neutrality by 2050. Shareholders support that ambition, Right now the company actions are moving in the opposite direction. Emissions intensity per package has increased by 5.5% since the 2020 baseline, despite a target to cut it 50% by 2030.
In 2025, only 11.6% of capital expenditures supported environmental sustainability goals. UPS continues to invest heavily in natural gas vehicles or source that can actually worsen climate outcomes due to methane leakage. That's just not an environmental concern, but also a financial one. UPS' own Form 10-K acknowledges that extreme weather poses material, operational, and financial risks. In 2024 alone, extreme weather caused an estimated $100 billion in global supply chain losses. Climate-driven disruptions could cost up to $24 trillion by 2060. For a company whose entire value proposition rests on supply chain reliability, these are existential business risks, not just footnotes. Meanwhile, UPS's competitors are moving. FedEx operates 8,000 electric vehicles and has set concrete electrification milestones through 2040. DHL links executive pay to sustainability outcomes and conducts full climate scenario analysis.
UPS lags peers across every one of these dimensions in a highly competitive that is market at a strategic liability. Early movers in fleet electrification stand to benefit. EVs are projected to reach total cost of ownership parity with diesel delivery vehicles by 2027, which could be a 10%-15% cheaper by 2030 and reduce reliance on fuel volatility. These companies building capabilities today will have the margin and the market share advantages tomorrow. We're not asking UPS to solve all of this today, but just to report at reasonable cost that simply describes if and how the company plans to meet and get there. That transparency is what investors need to assess long-term value. A vote yes on item 7 is a vote for accountability, for competitiveness, and for a UPS that is built to last. Thank you.
Thank you. As described in the proxy statement, the Board recommends a vote against this proposal. We will now address any questions related to the seven items on the agenda.
Thank you, Bill. Multiple shareholders submitted questions regarding board composition matters, including its size, demographics, and areas of expertise. How do you think about our board makeup?
The company's board is comprised entirely of independent directors other than our CEO, which is consistent with best practices. We have intentionally structured our board to be substantially independent of management because we believe that it promotes more effective oversight and accountability. The board is committed to strong governance. It actively and constructively challenges management with the objective of supporting the company's long-term success. We believe the board, as it currently sits, is appropriately sized with a balanced mix of skills, perspectives, and experience for a company with UPS's complexity and breadth. Our directors bring deep professional expertise across a range of areas that are critical to the company's strategy, including technology, finance, healthcare, operations, small and medium-sized businesses, and international markets.
The board routinely evaluates its composition and remains focused on continuous improvement to ensure it has the right mix of skills and experiences necessary to support the company's evolving strategy. Since 2020, seven new directors have joined the board, including two in the last year alone. As a result, we have both a highly engaged and a significantly refreshed board.
We received a few questions and comments regarding executive compensation and alignment with shareholder interests. How are financial results tied to executive compensation?
There is significant information about compensation in our proxy statement. I understand that some shareholders feel that management should be punished for recent performance. We have structured our compensation programs to reward results. Therefore, when performance falls short of goals, compensation outcomes do reflect that reality. The incentive pay delivered in 2025 was significantly below target levels. Importantly, compensation tables shown in a proxy statement follow SEC rules that do not necessarily reflect the actual compensation executives receive. The Compensation and Human Capital Committee of the board designs and maintains executive compensation programs that support the long-term interest of the company's shareowners. Executive compensation at UPS is primarily performance-based and heavily weighted towards long-term incentives. For example, 94% of the CEO's target compensation is at risk and subject to the achievement of annual or long-term performance goals.
The company's annual long-term incentive programs utilize multiple distinct goals. These goals are reevaluated each year for current relevance. Further, the committee uses stock options as an incentive, which only provide value when the share price increases. This directly aligns the interests of management with those of the company's shareowners. While some shareholders may reasonably hold differing views, the board believes that the current compensation structure, its oversight practices, and the proposed omnibus incentive compensation plan are in fact aligned with the company's long-term interests and support sustainable value creation.
Somewhat related, we received some comments that were critical of management. What is the level of the board's confidence in the current management team?
Let me be clear. The board is confident that Carol and her team continue to be the right people to lead our company at this time. Carol is a world-class CEO and a proven strategic leader who is executing one of the most significant, and I might add necessary, strategic transformations in our company's history. Under her leadership, the company has successfully navigated COVID-related disruptions, shifting market conditions, trade disruptions and distractions, and ongoing geopolitical uncertainty, all of which have created a challenging operating environment. We recognize that this has not been an easy period, and we also understand the recent share price performance has been disappointing. That said, the board believes the strategy being executed is the right one for the long-term health, competitiveness, and growth of the company, as well as the creation of long-term sustainable shareholder value.
The company's recent performance shows that these efforts are in fact beginning to translate into results. The company has delivered several consecutive quarters of product and customer mix improvements. When we look at all this together, the board remains confident in both the company's strategic direction and the leadership team that's executing it.
Thank you for your questions and comments. The discussion is now closed on these matters.
Shareowners who have not voted or wish to change their vote may still go to the annual meeting website to vote by following the voting instructions. Shareowners who have already voted do not need to take any further action. We will take a brief pause to allow for final voting. Thank you. Voting has concluded, and the polls are closed. Mr. Hagberg, please present your preliminary report.
Thank you, and good morning. I have completed the examination of proxies on file at the opening of this meeting. On the basis of my preliminary report, the 12 director nominees have been elected to serve until the next annual meeting of shareowners 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 2026 proxy statement, has been approved. The 2026 omnibus incentive compensation plan has been approved. The appointment of Deloitte & Touche LLP to serve as independent registered public accountants to the company for 2026 has been ratified, and none of the shareowner proposals were approved.
Thank you, Mr. Hagberg. Final voting results will be filed by the company with the SEC on a Form 8-K within four business days.
The 2026 annual meeting of shareowners is now adjourned. We will now transition to general shareowner questions. We received several questions which we have categorized into topics. If you submitted a question on a topic that we did not respond to, please contact UPS Investor Relations at www.investors.ups.com. Before we begin, I want to remind you that some of the comments we'll make today are forward-looking statements. These statements are subject to risks and uncertainties which are described in our reports we file with or furnish to the Securities and Exchange Commission. In addition, unless stated otherwise, our discussion refers to adjusted results. A reconciliation of non-GAAP adjustments, adjusted amounts to GAAP financial results is available on the UPS Investor Relations website. Moving to our first question, how will the company return to growth after the Amazon glide down?
First, good morning to our shareowners, and thank you for joining us today. Progress with the Amazon glide down is unfolding as we expected. We are now in the final 2 months of our 18-month network reconfiguration. We anticipate the second half of this year will be a key inflection point, positioning us for future operating margin expansion and greater operational agility as we continue to shift our mix away from low-profit packages towards premium offerings, including healthcare, SMB, and commercial volume. As we move forward, our number 1 priority is to move the right packages and the right mix of volume through our network. The market has changed, and we're adapting decisively. We're overturning the long-standing industry assumption that scale alone drives profitability. Instead, we're focused on premium segments. That strategy is working.
We're seeing favorable mix improvements with SMB and B2B volume representing a larger share of U.S. volume. Premium customer wins are driving meaningful revenue per piece growth. We're winning premium volume through innovative and differentiated capabilities like RFID labeling at customer locations, end-to-end cold chain solutions, Roadie for same-day and big and bulky deliveries, Happy Returns for boxless, labeless returns, DAP, our Digital Access Program, and so much more. We're continuing to capitalize on significant growth opportunities in international small package and healthcare. In Europe, we're speeding up our ground network to win premium commercial volume. In Asia, we recently opened two major hubs, enhancing speed and connectivity across the Asia Pacific region and strengthening links to and from Europe, further improving service for premium customers. In healthcare, we've built a world-class end-to-end logistics network to handle the most complex time and temperature-sensitive healthcare products.
These capabilities are enabling us to win. Our global healthcare portfolio has gained market share every year since 2021. In the first quarter of this year, we generated our first $3 billion healthcare revenue quarter ever. Taken together, these actions put us on a path to deliver sustainable revenue growth going forward.
Thank you, Carol. We received several questions on the dividend. Could you please address the security of the UPS dividend?
We fully understand how important the dividend is to our investors. The dividend is secure, and your company is rock-solid strong. Last year, we generated $8.5 billion in cash from operations and ended the year with nearly $6 billion in cash on the balance sheet. I'm pleased to announce that your board just approved a quarterly dividend of $1.64 per share, which will be payable on June 4th.
Carol B. Tomé, can you give us an update on how technology and automation is benefiting UPS?
Technology and automation remain critical enablers of both a better experience for customers and greater operational efficiency across UPS. We are not only deploying proven technology, but also developing and testing next-generation solutions as part of our network reconfiguration. These efforts include robotics, autonomous vehicles, and expanded applications of artificial intelligence. In 2025, we deployed new automated systems in 57 facilities with 66% of U.S. volume moving through an automated process, up from 63% in 2024. We expect to reach 68% automation by the end of this year. This progress matters as cost per piece in our automated buildings is 28% less than in our conventional buildings. Artificial intelligence is already being used across our company, from operations to pricing to sales and customer support, and we see significant opportunity ahead. Here's one example.
Following the elimination of the de minimis exemption for U.S. imports in August of last year, UPS experienced a 10-fold surge in daily customs entries. To manage the increased volume and complexity, we enhanced our customs brokerage capabilities by integrating agentic AI. This advanced technology streamlined formal entry processes, minimized customer disruptions, and kept global commerce flowing.
With that question, I'd like to thank you for your participation and for your investment in UPS. I will now turn it over to Carol for some closing remarks.
Thank you, PJ. I want to close by expressing how proud I am of UPSers around the world. We continue to operate in a very dynamic environment, marked by significant external challenges, from volatile global markets to rising fuel costs. Through it all, our teams remain focused on advancing our transformation forward and delivering the reliable, exceptional service our customers rely on. As we reach the finish line on our Amazon glide down and complete our network reconfiguration, we expect to return to revenue and profit growth. Our actions are positioning UPS for sustained long-term growth and value creation for our shareowners. Thank you for attending and for your continued support of UPS.
That concludes today's meeting. You may now disconnect your lines.