Davis, 62, has been chairman and CEO since 2008 and has been with the company since 1986. The company said that he oversaw significant expansion of its international capabilities.
"Scott Davis has skillfully guided UPS through one of the most turbulent global economic periods in history while executing growth strategies in emerging markets and specialized business segments," UPS board member Duane Ackerman said in a statement.
Like its rivals, the Atlanta company was hurt during the busy holiday shopping season. It wasn't prepared for a big increase in online shopping and a crush of last-minute orders by shoppers before Christmas. It hired more seasonal workers to keep up with deliveries, driving costs higher during the fourth quarter.
In the most recent quarter, UPS reported earnings and revenue that missed Wall Street expectations, hurt by winter storms that increased costs.
Shares of United Parcel Service Inc. slipped 7 cents to $103.55 in midday trading Friday. Its shares have slipped just over 1 percent so far this year.