Carol Tomé

About Carol Tomé

Carol B. Tomé is UPS’s Chief Executive Officer (since 2020) and a director (since 2003), age 68, with prior CFO and corporate finance leadership experience spanning nearly two decades at The Home Depot . She holds a B.A. in Communication from the University of Wyoming and an MBA from the University of Denver . In 2024, UPS generated $91.1 billion in revenue and returned to year-over-year revenue and profit growth beginning in Q3; the company returned $5.9 billion to shareowners through dividends and repurchases in 2024 . Pay-versus-performance disclosure shows UPS’s value of an initial fixed $100 investment at $127.43 in 2024 and non-GAAP adjusted operating profit of $8,894 million, with GAAP net income at $5,782 million .

Past Roles

External Roles

Fixed Compensation

Multi-year CEO compensation (summary):

Performance Compensation

Annual Management Incentive Program (MIP) – 2024

• Design: Returned to full-year goal setting; weights revised to better align to strategic initiatives (revenue and non-GAAP adjusted operating profit weightings each increased; ROIC replaced by enterprise total committed service) .
• CEO Target: 200% of base salary; Incentive Target Value $3,019,425; Paid $2,747,677 (91% factor) .

Long-Term Incentive Program (LTIP) – Structure and 2022 Cycle Results

• 2024 LTIP Design: 3-year performance period; metrics are non-GAAP adjusted EPS (50%) and non-GAAP adjusted free cash flow (50%); payout modified by relative TSR vs S&P 500 (±20%); maximum 220% of target .
• 2022 LTIP (performance period ended 2024): Final payout 42% after RTSR modifier; EPS metric payout 67%, FCF 56%, RTSR at 14th percentile → -20% modifier .

Equity Awards – 2024 Grants and Vesting

• RPUs: CEO target 115,599 RPUs; maximum 254,318; grant-date fair value $18,283,138 .
• Stock Options: 39,090 options at $154.76 strike; grant-date fair value $1,358,768; vest 20% per year over 5 years; 10-year term .

Equity Ownership & Alignment

• Beneficial Ownership: 442,022 class A shares and 13,036 class B; total 455,058 shares; options exercisable through May 2, 2025: 246,403 .
• Ownership as % of shares outstanding: All directors and executive officers held less than 1% of outstanding class A and class B shares individually .
• Unearned Equity at FY-end: 210,844 unearned equity incentive units (RPUs) valued at $26,587,428 .
• Pledging/Hedging: UPS prohibits executive officers and directors from hedging or pledging UPS stock; short sales prohibited .
• Ownership Guidelines: CEO 8x annual salary; counted holdings include class A shares, deferred units, and RSUs/RPUs; as of Dec 31, 2024, all NEOs subject for ≥5 years exceeded targets .

Employment Terms

• Employment Contracts: UPS does not use employment or separate change-in-control agreements for executive officers; executives sign protective covenant agreements (confidentiality, non-compete, non-solicit) .
• Severance Plan (Key Employee Severance Plan): For CEO, upon involuntary termination without cause: cash equal to two times base salary plus two times target MIP; pro-rata MIP based on actual performance; COBRA differential; up to $30,000 career counseling; retirement-equivalent treatment for equity; options exercisable up to earlier of one year or original expiration .
• Change-in-Control: Double-trigger vesting for continued/assumed awards; otherwise, immediate vesting or prorated based on performance/period .
• Clawback: NYSE-compliant incentive-based compensation clawback policy covering executive officers .

Board Governance

• Board Service: Director since 2003; UPS CEO since 2020 . Committee roles: Chairs the Executive Committee; members include Rod Adkins and William Johnson . She is the only non-independent director; all other directors and all committee members are independent .
• Dual-Role Implications: Independence preserved via separation of CEO and Board Chair since October 2020; William Johnson serves as independent Board Chair with executive sessions of independent directors at every regular board meeting .
• Board Activity & Attendance: Board met six times in 2024; all directors attended ≥75% of meetings and attended the 2024 annual meeting; independent directors held executive sessions at all regular meetings .

Compensation Committee Analysis and Shareholder Feedback

• Compensation Committee: Christiana Smith Shi (Chair), Rodney Adkins, Russell Stokes, Kevin Warsh; all independent; non-employee directors per Rule 16b-3; no interlocks .
• Independent Consultant: FW Cook advises the committee; independence reviewed and confirmed in Nov 2024 .
• Peer Group: AT&T, Boeing, Caterpillar, Cisco, Comcast, Deere, FedEx, Home Depot, Intel, J&J, Lockheed Martin, Lowe’s, McDonald’s, PepsiCo, P&G, Target, Walmart .
• Say-on-Pay: 2024 approval nearly 87% of votes cast .

Director Compensation (context for dual-role)

• CEO receives no director-specific compensation .
• Non-employee directors (2024): $120,000 cash retainer; $185,000 RSU grant; chair retainers: Audit $25,000; Compensation/NCG/Risk $20,000; Board Chair additional $160,000 cash and $70,000 RSUs .
• Effective 2025: Retainers increased to $125,000 cash and $195,000 RSU; Audit Chair $30,000; Compensation Chair $25,000 .

Compensation Structure Observations

• At-risk Mix: 94% of CEO target direct compensation considered “at risk” in 2024; annual goals reinstated for MIP; LTIP three-year performance with RTSR modifier .
• MIP payout below target (91%) due to revenue and operating profit shortfalls versus targets; service reliability exceeded target .
• 2022 LTIP payout at 42% reflects below-target EPS/FCF outcomes and underperformance in RTSR (14th percentile) .
• No tax gross-ups on equity awards or golden parachute excise taxes; double-trigger change-in-control vesting .

Risk Indicators & Red Flags

• Hedging/Pledging: Prohibited for executives and directors (reduces misalignment risk) .
• Related Party Transactions: None requiring disclosure since January 1, 2024 .
• Governance: Independent chair, majority-independent board and committees, annual elections, majority voting, executive sessions (mitigate entrenchment risk) .
• CFO Transition: Former CFO Brian Newman departed June 1, 2024; new CFO Brian Dykes appointed July 9, 2024 (management continuity and succession oversight noted) .

Equity Award Detail and Vesting Schedules (Selective)

Investment Implications

• Pay-for-performance alignment: High at-risk mix and below-target payouts in both annual and long-term programs suggest compensation sensitivity to operating and TSR outcomes; LTIP underperformance (42% payout) indicates conservative realized compensation when multi-year targets are missed .
• Insider selling pressure: 2024 shows equity vesting of 24,930 shares and no option exercises disclosed, with significant unearned RPUs outstanding; options have standard 5-year vest, 10-year term, and no additional holding requirement, but hedging/pledging bans reduce near-term forced selling risk .
• Retention and succession: CEO severance economics are moderate for a large-cap (2x salary + 2x target MIP), with double-trigger equity; protective covenants and robust succession processes mitigate retention risk, though 2024 CFO turnover underscores the importance of ongoing leadership continuity .
• Governance quality: Independent chair, fully independent committees, strong ownership/pledging policies and majority voting support alignment; say-on-pay approval of ~87% suggests shareholder acceptance of program design .

Citations:  
- Governance/roles/biography/age/education: **[1090727_0001090727-25-000038_ups-20250317.htm:31]** **[1090727_0001090727-25-000038_ups-20250317.htm:34]** **[1090727_0001090727-25-000038_ups-20250317.htm:33]** **[1090727_0001090727-25-000038_ups-20250317.htm:8]**  
- Financial/performance metrics: **[1090727_0001090727-25-000038_ups-20250317.htm:14]** **[1090727_0001090727-25-000038_ups-20250317.htm:1]** **[1090727_0001090727-25-000038_ups-20250317.htm:70]**  
- MIP targets/payouts: **[1090727_0001090727-25-000038_ups-20250317.htm:42]**  
- LTIP design/results: **[1090727_0001090727-25-000038_ups-20250317.htm:44]** **[1090727_0001090727-25-000038_ups-20250317.htm:45]**  
- Equity grants/vest/option terms: **[1090727_0001090727-25-000038_ups-20250317.htm:54]** **[1090727_0001090727-25-000038_ups-20250317.htm:46]** **[1090727_0001090727-25-000038_ups-20250317.htm:57]** **[1090727_0001090727-25-000038_ups-20250317.htm:55]**  
- Ownership/pledging/guidelines: **[1090727_0001090727-25-000038_ups-20250317.htm:75]** **[1090727_0001090727-25-000038_ups-20250317.htm:76]** **[1090727_0001090727-25-000038_ups-20250317.htm:48]** **[1090727_0001090727-25-000038_ups-20250317.htm:47]**  
- Employment/severance/CIC/clawback: **[1090727_0001090727-25-000038_ups-20250317.htm:49]** **[1090727_0001090727-25-000038_ups-20250317.htm:62]** **[1090727_0001090727-25-000038_ups-20250317.htm:63]** **[1090727_0001090727-25-000038_ups-20250317.htm:50]** **[1090727_0001090727-25-000038_ups-20250317.htm:48]**  
- Compensation committee/consultant/peer group/say-on-pay: **[1090727_0001090727-25-000038_ups-20250317.htm:35]** **[1090727_0001090727-25-000038_ups-20250317.htm:40]** **[1090727_0001090727-25-000038_ups-20250317.htm:41]** **[1090727_0001090727-25-000038_ups-20250317.htm:50]**  
- Director compensation: **[1090727_0001090727-25-000038_ups-20250317.htm:36]**  
- Related party transactions: **[1090727_0001090727-25-000038_ups-20250317.htm:17]**