Key Insights

• United Parcel Service's Annual General Meeting to take place on 8th of May
• CEO Carol Tome's total compensation includes salary of US$1.51m
• Total compensation is 421% above industry average
• United Parcel Service's EPS declined by 17% over the past three years while total shareholder loss over the past three years was 41%

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The results at United Parcel Service, Inc. (NYSE:UPS) have been quite disappointing recently and CEO Carol Tome bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 8th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing United Parcel Service, Inc.'s CEO Compensation With The Industry

Our data indicates that United Parcel Service, Inc. has a market capitalization of US$82b, and total annual CEO compensation was reported as US$24m for the year to December 2024. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

For comparison, other companies in the American Logistics industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$4.6m. Hence, we can conclude that Carol Tome is remunerated higher than the industry median. Furthermore, Carol Tome directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	US$1.5m	US$1.5m	6%
Other	US$23m	US$22m	94%
Total Compensation	US$24m	US$23m	100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. It's interesting to note that United Parcel Service allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

United Parcel Service, Inc.'s Growth

Over the last three years, United Parcel Service, Inc. has shrunk its earnings per share by 17% per year. Its revenue is up 1.3% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has United Parcel Service, Inc. Been A Good Investment?

Few United Parcel Service, Inc. shareholders would feel satisfied with the return of -41% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business.

Switching gears from United Parcel Service, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.