Proxy Blog

United Parcel Service, Inc. 

May 2, 2019

The annual proxy for this package delivery company had the following proposals: 

  1. Proforma votes on directors and the appointment of auditors 
  2. Votes on shareholder proposals covering lobbying activities, voting power of class A stock, and sustainability metrics 

Magni voted as follows: 

  1. For and against proforma proposals.
    -Against directors  Despite the qualifications and independence of the directors standing for election, Magni voted against all of the candidates. The director compensation does not include any long-term components (e.g., ownership requirements, restrictions on selling company shares while on the board). In addition, the company does not have a “Say-on-pay” vote. Per the shareholder proposal on Class A shares (see below), the current company structure does not make the directors very accountable to the shareholders.
    -For auditors – There appear to be no controversies with the financial statements of the company. 
  2. For and against shareholder proposals. 
    -Against additional disclosure of lobbying activities – The proposal requested greater disclosure of lobbying activitiesThe shareholder is primarily focused on the company’s participation in industry organizations. Since the company has won awards for its transparency in this area and participation in industry organizations is good for the shareholders, Magni voted against the proposal. 
    -For reducing voting power of class A stock – Class A stock is used for employee ownership. These shares have much higher voting power than the class B shares available on the exchange. The company defends the practice by focusing on the benefits of employee ownership. There are benefits from the employee involvement and engagement. That said, the voting disparity means that class B shareholders have no power on issues. The company should be more accountable to the public shareholders.
    -Against required integration of sustainability metrics into executive compensation – Sustainability is an important issue, and companies with strong governance tend to address sustainability. That said, this shareholder proposal was generic. It did not identify any weaknesses in the company’s activities. The company has won many sustainability awards across a variety of related topics. Further, the structure of executive compensation should be a board decision.