Annual report pursuant to Section 13 and 15(d)

SHAREOWNERS' EQUITY

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SHAREOWNERS' EQUITY
 12 Months Ended
Dec. 31, 2023
Stockholders' Equity Note [Abstract]  
SHAREOWNERS' EQUITY SHAREOWNERS' EQUITY
Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interests
We are authorized to issue two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company's founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the New York Stock Exchange ("NYSE") under the symbol "UPS". Class A and B shares both have a $0.01 par value, and as of December 31, 2023, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares authorized to be issued, with a par value of $0.01 per share. As of December 31, 2023, no preferred shares had been issued.
The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling minority interests accounts for the years ended December 31, 2023, 2022 and 2021 (in millions, except per share amounts):
2023 2022 2021
  Shares Dollars Shares Dollars Shares Dollars
Class A Common Stock:
Balance at beginning of year 134  $ 2  138  $ 2  147  $ 2 
Stock award plans 5  —  5  —  6  — 
Common stock issuances 2  —  3  —  2  — 
Conversions of class A to class B common stock (14) —  (12) —  (17) — 
Class A shares issued at end of year 127  $ 2  134  $ 2  138  $ 2 
Class B Common Stock:
Balance at beginning of year 725  $ 7  732  $ 7  718  $ 7 
Common stock purchases (13) —  (19) —  (3) — 
Conversions of class A to class B common stock 14  —  12  —  17  — 
Class B shares issued at end of year 726  $ 7  725  $ 7  732  $ 7 
Additional Paid-In Capital:
Balance at beginning of year $ —  $ 1,343  $ 865 
Stock award plans 425  624  574 
Common stock purchases (882) (2,462) (500)
Common stock issuances 467  495  404 
Other (1)
(10) —  — 
Balance at end of year $ —  $ —  $ 1,343 
Retained Earnings:
Balance at beginning of year $ 21,326  $ 16,179  $ 6,896 
Net income attributable to controlling interests 6,708  11,548  12,890 
Dividends ($6.48, $6.08 and $4.08 per share) (2)
(5,611) (5,363) (3,604)
Common stock purchases (1,368) (1,038) — 
Other —  —  (3)
Balance at end of year $ 21,055  $ 21,326  $ 16,179 
Non-Controlling Interests:
Balance at beginning of year $ 17  $ 16  $ 12 
Change in non-controlling interests (9) 1  4 
Balance at end of year $ 8  $ 17  $ 16 
(1)    Includes a 1% excise tax applicable to share repurchases.
(2)    The dividend per share amount is the same for both class A and class B common stock. Dividends include $239, $249 and $167 million for 2023, 2022 and 2021, respectively, that were settled in shares of class A common stock.
We repurchased 12.8, 19.0 and 2.6 million shares of class B common stock for $2.3, $3.5 and $0.5 billion during the years ended December 31, 2023, 2022 and 2021, respectively. These repurchases were completed as follows:
•In August 2021, the Board of Directors authorized the company to repurchase up to $5.0 billion of class A and class B common stock (the "2021 Authorization"). The share repurchases discussed above for the years ended December 31, 2022 and 2021, were completed under this authorization. For the year ended December 31, 2023, we repurchased 0.5 million shares of class B common stock for $82 million under this authorization.
•In January 2023, the Board of Directors terminated the 2021 Authorization and approved a new share repurchase authorization for $5.0 billion of class A and class B common stock (the "2023 Authorization"). For the year ended December 31, 2023, we repurchased 12.3 million shares for $2.2 billion under the 2023 Authorization. As of December 31, 2023, we had $2.8 billion available under this repurchase authorization.
Future share repurchases may be in the form of accelerated share repurchase programs, open market purchases or other methods we deem appropriate. The timing of share repurchases will depend upon market conditions. Unless terminated earlier by the Board of Directors, this program will expire when we have purchased all shares authorized for repurchase under the program.
Movements in additional paid-in capital in respect of stock award plans comprise accruals for unvested awards, offset by adjustments for awards that vest during the period.
Accumulated Other Comprehensive Income (Loss)
We recognize activity in other comprehensive income for foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in accumulated other comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
2023 2022 2021
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of year $ (1,446) $ (1,162) $ (981)
Translation adjustment (net of tax effect of $(15), $(17) and $42)
 190  (315) (181)
Reclassification to earnings (net of tax effect of $0, $2 and $0)
 8  31  — 
Balance at end of year $ (1,248) $ (1,446) $ (1,162)
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
Balance at beginning of year $ (11) $ (1) $ 6 
Current period changes in fair value (net of tax effect of $2, $(3) and $0)
 7  (12) (2)
Reclassification to earnings (net of tax effect of $1, $1 and $0)
 2  2  (5)
Balance at end of year $ (2) $ (11) $ (1)
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of year $ 167  $ (17) $ (223)
Current period changes in fair value (net of tax effect of $(28), $128 and $82)
 (89) 407  261 
Reclassification to earnings (net of tax effect of $(48), $(70) and $(17))
 (154) (223) (55)
Balance at end of year $ (76) $ 167  $ (17)
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of year $ (259) $ (2,098) $ (5,915)
Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities (net of tax effect of $(793), $810 and $1,956)
 (2,530) 2,576  6,195 
Reclassification to earnings (net of tax effect of $111, $(230) and $(749))
 357  (737) (2,378)
Balance at end of year $ (2,432) $ (259) $ (2,098)
Accumulated other comprehensive income (loss) at end of year $ (3,758) $ (1,549) $ (3,278)
Detail of the gains (losses) reclassified from accumulated other comprehensive income (loss) to the statements of consolidated income for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions):
Amount Reclassified from AOCI
 Affected Line Item in the Income Statement
2023 2022 2021
Unrealized Gain (Loss) on Foreign Currency Translation:
Realized gain (loss) on business wind-down $ (8) $ (33) $ —  Other expenses
Income tax (expense) benefit —  2  —  Income tax expense
Impact on net income $ (8) $ (31) $ —  Net income
Unrealized Gain (Loss) on Marketable Securities:
Realized gain (loss) on sale of securities $ (3) $ (3) $ 5  Investment income and other
Income tax (expense) benefit 1  1  —  Income tax expense
Impact on net income $ (2) $ (2) $ 5  Net income
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts $ (10) $ (10) $ (11) Interest expense
Foreign currency exchange contracts 213  304  83  Revenue
Foreign currency exchange contracts (1) (1) —  Investment income and other
Income tax (expense) benefit (48) (70) (17) Income tax expense
Impact on net income $ 154  $ 223  $ 55  Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs $ (109) $ (94) $ (148) Investment income and other
Prior service credit for divested business —  —  69  Other expenses
Plan amendments for divested business —  —  (66) Other expenses
Remeasurement of benefit obligation (351) 1,027  3,272  Investment income and other
Curtailments and settlements of benefit obligations (8) 34  —  Investment income and other
Income tax (expense) benefit 111  (230) (749) Income tax expense
Impact on net income $ (357) $ 737  $ 2,378  Net income
Total amount reclassified for the year $ (213) $ 927  $ 2,438  Net income
Deferred Compensation Obligations and Treasury Stock
We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as a deferred compensation obligation within Shareowners’ Equity in our consolidated balance sheets. The number of shares needed to settle the liability for deferred compensation obligations is included in the denominator in both the basic and diluted earnings per share calculations. Employees are generally no longer able to defer the gains from stock options exercised.
Activity in the deferred compensation program for the years ended December 31, 2023, 2022 and 2021 was as follows (in millions):
2023 2022 2021
  Shares Dollars Shares Dollars Shares Dollars
Deferred Compensation Obligations:
Balance at beginning of year $ 13  $ 16  $ 20 
Reinvested dividends —  2  1 
Benefit payments (4) (5) (5)
Balance at end of year $ 9  $ 13  $ 16 
Treasury Stock:
Balance at beginning of year —  $ (13) —  $ (16) —  $ (20)
Reinvested dividends —  —  —  (2) —  (1)
Benefit payments —  4  —  5  —  5 
Balance at end of year —  $ (9) —  $ (13) —  $ (16)