AmazonScience/document-haystack

1Employment and Severance Arrangements; Change in Control Payments2We do not enter into agreements providing for the continuation of employment, or separate change in control 3agreements with any of our executive officers, including our NEOs, or other U.S.-based non-union employees.4However, in recent periods, to attract and retain senior executive talent and in furtherance of the board’s 5succession planning efforts, we have entered into various employment offer letters, transition agreements, 6retention arrangements and non-compete agreements in favor of UPS. These arrangements may provide for 7compensation to an executive, but do not guarantee an employment term; employment is on an at-will basis. 8Some of the agreements were designed to compensate the individuals for compensation forfeited at their prior 9employers, to transition them into our incentive programs or to provide consideration for their agreement not to 10compete with UPS following their potential separation. In addition, retention arrangements are intended to 11incentivize those individuals to maintain their employment with UPS. To the extent any agreements entered into 12with any of the NEOs contain ongoing obligations of the Company, those agreements are described below.13Subramanian Employment Offer Letter14In connection with his appointment as Chief Digital and Technology Officer, on May 24, 2022, the Company 15entered into an employment offer letter with Bala Subramanian providing for: (i) an annual base salary of 16$725,000 (subject to future increase); (ii) a MIP award target for 2022 of 130% of base salary; (iii) an LTIP 17program award target of 450% of base salary (his final 2022 LTIP award payout will be prorated based on his 18July 2022 start date); (iv) a stock option grant target of 50% of base salary (commencing in 2023); (v) an initial 19grant of RSUs valued at $3,000,000, which generally vests 50% in July 2023 and 50% in July 2024; (vi) cash 20transition payments of $250,000 in each of August 2022, January 2023, July 2023 and January 2024; and (vii) 21an initial RPU grant valued at $1,000,000, generally vesting in December 2023, with the final number of RPUs 22subject to performance under the 2021 LTIP award. Payments are subject to his continued employment through 23the applicable vesting or payment dates, or termination without cause. Certain of these amounts are subject to 24repayment on a prorated basis if he is terminated for cause within 36 months following his July 2022 start date.25Protective Covenant Agreements26Each of our NEOs have entered into protective covenant agreements with the Company, which protect UPS’s 27confidential information and include non-competition and non-solicitation covenants in favor of UPS. In the event 28that either Carol or Brian is terminated without cause, the Company is obligated to make separation payments 29equal to two years’ salary if it elects to enforce the post-termination non-compete covenants.30Key Employee Severance Plan31The UPS Key Employee Severance Plan (the “Plan”) provides for severance compensation and benefits upon 32certain terminations of employment of key employees, including the NEOs. The severance protections under the 33Plan replace cash severance benefits (if any) to which a participating employee would have otherwise been 34entitled under their protective covenant agreements. 35The Plan in general provides that if the Company terminates a participant’s employment other than due to 36“Cause,” “Disability Termination,” or death (a “Qualifying Termination”), the Company will pay: (i) an amount in 37cash equal to a pro-rata portion of the individual’s annual performance incentive award under the MIP that would 38have been earned for the year of termination, based on actual performance for the full performance period, with 39the pro-rata portion calculated based on the number of months during which the individual was employed by the 40Company during the applicable year; (ii) an amount in cash equal to one times (or, for the CEO, two times) the 41sum of the participant’s annual base salary plus the participant’s target MIP performance award in effect as of 42the termination date; (iii) an amount in cash equal to the portion of the participant’s monthly Consolidated 43Omnibus Budget Reconciliation Act of 1985 (“COBRA”) premium for the participant and the participant’s 44dependents to the extent it exceeds the premiums paid by the participant for such coverage immediately prior to 45termination times the number of months in the participant’s applicable COBRA period; and (iv) career counseling 46services up to $20,000 (or, for the CEO, up to $30,000).47In addition, with respect to options held by retirement eligible employees, and RPUs granted under the MIP or 48LTIP, in each case granted on or after the effective date of the Plan, a participant who experiences a Qualifying 49Termination will generally be entitled to the same treatment that would apply in the event of “retirement” under 50the terms of such awards. With respect to stock options granted to a participant on or after the effective date of 51the Plan, such stock options (to the extent the participant is not retirement eligible and that are vested as of the 52date of the Qualifying Termination) will remain exercisable until the earlier of the first anniversary of the 53termination date and the original expiration date of the stock options.54 5543