UPS CEO Abney to retire, will be replaced by former The Home Depot exec Tomé

A change at the top is coming for Atlanta-based global transportation and logistics bellwether UPS, with the company announcing today that the UPS Board of Directors has named Carol Tomé as its new CEO, effective June 1. Tomé will replace UPS Chairman and CEO David Abney.

UPS said Abney will continue to serve in his current roles until June 1, at which point he will transition to Executive Chairman of the Board and then subsequently retire from the UPS Board at the end of September. The company added that Abney will serve as a special consultant through the end of the calendar year “to ensure a smooth and successful peak season” and retire on the heels of a 46-year career at Big Brown. And UPS Lead Independent Director William Johnson will become UPS Non-Executive Chairman, effective September 30. Johnson also serves as Chair of the UPS Nominating and Corporate Governance Committee and is a member of the Executive Committee.

Tomé, whom will become UPS’s 12th CEO in its 113 years of operation, has served as a member of the UPS Board of Directors going back to 2003 and also is Chairperson of the Audit Committee. Tomé served as Executive Vice President and Chief Financial Officer of home improvement retailer giant The Home Depot from 2001-2019. In her roles at the company, she oversaw corporate strategy, finance, and business development, and over her 18-year period as CFO, Tomé played a key role in driving a 450% increase in the company’s shareholder value.

“After a rigorous selection process involving both internal and external candidates, Carol was the clear choice,” said Johnson in a statement. “Carol is one of the most respected and talented leaders in Corporate America and has a proven track record of driving growth at a global organization, maximizing shareholder value, developing talent and successfully executing against strategic priorities. As a member of the Board and Chair of the Audit Committee, Carol has in-depth knowledge of UPS’s business, strategy and people, and is the right executive to lead the company at this important time in its transformation. We congratulate David on a truly exceptional career at UPS. He has undertaken bold actions to place UPS at the forefront of the transportation industry and position its global network and people to capitalize on emerging trends that will carry the company well into the future.”

Abney’s UPS career goes back to 1974, when he started as a package handler at a company facility in Greenwood Mississippi while he was a student at Delta State University. He was named CEO in 2014 and Chairman in 2016. Prior to being named CEO, her served as Chief Operating Officer going back to 2007 and oversaw logistics, sustainability, engineering, and all UPS transportation network facets. And prior to being named COO, Abney served as President of UPS International and led the company's strategic initiative to increase its global logistics capabilities. He also played a role in various global acquisitions made by UPS, including Coyote, Marken, the Fritz Companies, Sonic Air, Stolica, Lynx Express, and Sino-Trans in China.

UPS highlighted myriad company accomplishments by the company while Abney was at the helm, including:

• increasing revenue by 27%, increased adjusted net income by nearly 50% and raised adjusted earnings per share by nearly 60%;
• returning over $29 billion to shareholders through dividends and share repurchases;
• implementing a multi-year transformation program that established strategic growth priorities and significantly improved U.S. operating leverage in 2019;
• significantly expanding global network capacity, enabling over 32 million package deliveries per day during the 2019 peak season;
• creating UPS Flight Forward and obtained the FAA’s first full approval to operate a drone airline; and
• shifting the composition of the Board and management team to increase the company’s diversity

Morgan Stanley analyst Ravi Shanker wrote in a research note that this move is the right step for UPS during challenging times, adding that Abney’s departure “caps the churn in the C-suite for UPS,” following the August 2019 departure of CFO Richard Peretz and the October 2019 departure of COO Jim Barber.

“It is clear that the next decade for UPS will be led by a new guard,” wrote Shanker. “Looking outside for a replacement also signals a fresh start. UPS has long been known to look internally for talent but current CFO Brian Newman was brought in from the outside (Pepsico) last fall, UPS’s CTSO Scott Price came from Walmart.”

The analyst also noted that incoming CEO Tomé is extremely well regarded and known for her expertise for financial management, strategy, and supply chain, adding she led HD through choppy e-commerce waters and competing with large online players, which he said could come in handy in leading UPS.   

“This move could well mark a new direction for UPS,” wrote Shanker. “The company is facing severe systemic (COVID-19, tariff issues, macro concerns) and idiosyncratic (AMZN insourcing and 3P competitive risk, rapidly changing eCommerce trends) headwinds. An all-new management team could well use this opportunity to mark a reset of its go-to-market strategy with a high focus on leveraging strengths (scale, brand) and technology to keep UPS competitive for the years to come. But they are likely to have their hands full. There are no easy answers to the challenges facing UPS, in our view. In addition to navigating the COVID situation, the new mgmt. team will have to solve the problem of overexposure to AMZN in the near term and figure out how to sustainably make adequate returns in eCommerce over time, despite the cost of serving customers rising and the price paid by customers falling (the negative flywheel effect).”

Jerry Hempstead, president of Hempstead Consulting, said that Tomé has an amazing curriculum vitae.

“Apart from being an EVP and CFO of Home Depot, the fourth largest retailer, she is also in the Federal Reserve on the board of Verizon,” he said. “So she has extensive business acumen and a quick study and will bring a fresh perspective to mahogany row in Atlanta, known in the past for filling positions from within. As Bloomberg once said I think 'I can teach anyone how to do the freight business, you pick up a package, transport it to destination, and deliver it.' It doesn’t get any more complicated than that. That being the case, Carol will do an awesome job at one of the largest publicly traded companies in the world and we all wish her the very best ( unless you work for FedEx).”