Eliminating MIP below Level 20

[JustTired]

The big difference between then and now (the last 10 years) is stock growth. As a management person, the magic was the growth in stock each quarter. We knew that we killed ourselves daily to see the stock growth at the directors' meeting.

We need the stock to grow. While some people cry about what UPS has taken away, we forget that its the competition that has taken things away. They compete on cost and pay almost 1/2 for a driver than we pay. We did not have to deal with that in the old days... We need our packages back. We need the stock to grow.

P-Man

While I agree........
The stock will most likely never grow. At least the way it did when the company was private.

The company is spending its' time and money chasing an unattainable goal. It is now out of their hands. Continuing to do so will most likely result in the destruction of what has been a decent living for tens of thousands of employees. The "golden goose" is gone. Spending millions on programs........ lay offs and cutbacks in employment....... and possibly eliminating or reducing management incentives....will not bring it back.

Returning to a "privately held" status would be the only thing that could possibly save the situation. A daunting task......but not impossible.

 

[hangin455]

Never say never.

A few years ago I heard there was absolutely NO buyout coming.

I also heard the stock will NEVER go public, people are our MOST important asset, we take of our PEOPLE, we report EVERY accident and injury, Telematics is an AUTOMOTIVE program, PAS will save $600 mil per year, RPS is nothing to be concerned about, we treat our PEOPLE fairly, we promote from WITHIN (only), we don't HIRE relatives, we RESPECT every employees opinion, the Employee Opinion Survey is here to stay, there are no QUOTAS, and THE CHECK'S IN THE MAIL.

What does that tell you about what is NOT going to happen?

Been around long enough to have heard all these except the RPS one - I don't think anybody ever considered that their business model couldn't work.
As for all the others I remember the day a long time manager I knew said "what has a better chance of happening - UPS going public or the Pope's converting to Judaism". My reply was "when's the Bar Mitzvah?" That was certainly the biggest thing to go by the wayside.
That said, I agree NOTHING is untouchable but I believe as most others here do that this isn't going to happen anytime soon. I'd like to think that the most recent round of reductions were intended to leave a bigger piece of the pie for those that have stayed.

 

[FracusBrown]

Good point but this rumor doesn't have much chance because the elimination of MIP doesn't make a lot of financial sense. Most MIP recipients are putting in loads of overtime that would now have to be paid instead of being compensated by MIP.

What makes you think they would have to pay overtime? Management is a salary position exempt from overtime pay by the US Dept of Labor.

Been around long enough to have heard all these except the RPS one - I don't think anybody ever considered that their business model couldn't work.
As for all the others I remember the day a long time manager I knew said "what has a better chance of happening - UPS going public or the Pope's converting to Judaism". My reply was "when's the Bar Mitzvah?" That was certainly the biggest thing to go by the wayside.
That said, I agree NOTHING is untouchable but I believe as most others here do that this isn't going to happen anytime soon. I'd like to think that the most recent round of reductions were intended to leave a bigger piece of the pie for those that have stayed.

The bigger piece of the pie theory would have been a reality before the MIP program was rewritten. Now the amount awarded is based upon an arbitrary amount determined by the board. Under the old program 15% of before tax profit was divided up between the MIP participants based upon salary. Less participants meant more per person. Less participants now just mean less expense to the company.

 

[fxdwg]

Just keep those dividends coming!!!!!!!

 

[whiskeyagogo]

What makes you think they would have to pay overtime? Management is a salary position exempt from overtime pay by the US Dept of Labor.

There is no such thing as an exemption. Overtime is compensated via the MIP payout at the end of the year. Without the MIP compensation, overtime would have to be paid per federal law.

Example - There are salaried positions, esp in Corporate, called 'specialists', that are non-MIP. They get overtime because there is no other compensation. Those of us with specialists reporting to them had a training session to how federal law requires the overtime and our role in how that overtime was metered.

Cutting out the MIP and paying time 1/2 just doesn't seem to make financial sense. I understand that UPS is looking to limit management pay but this doesn't seem like a likely course of action.

 

[FracusBrown]

What makes you think they would have to pay overtime? Management is a salary position exempt from overtime pay by the US Dept of Labor.

There is no such thing as an exemption. Overtime is compensated via the MIP payout at the end of the year. Without the MIP compensation, overtime would have to be paid per federal law.

Example - There are salaried positions, esp in Corporate, called 'specialists', that are non-MIP. They get overtime because there is no other compensation. Those of us with specialists reporting to them had a training session to how federal law requires the overtime and our role in how that overtime was metered.

Cutting out the MIP and paying time 1/2 just doesn't seem to make financial sense. I understand that UPS is looking to limit management pay but this doesn't seem like a likely course of action.

No offense intended, but you misunderstood the training or the training was inaccurate.

I'll explain in another post why MIP is likely to be eliminated or reduced. Research "Principle Agent Problem" and "Role of the Board of Directors" and I think you'll understand why it's likely.

There are very specific rules that apply to "exempt" employees. The duties, responsibilities, pay rate and a few other items are the determining factors. There may be some specialists that do not quality as "exempt," however nearly all management people fit the "exempt" status at UPS and every other company in the US.

From the Department of Labor

The FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional, and outside sales employees. It also exempts certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the Department's regulations. The FLSA contains other exemptions which are applicable to specific types of work or to specific types of businesses.

 

[whiskeyagogo]

No offense intended, but you misunderstood the training or the training was inaccurate.
[/I]

If not for fear of reprisal or violating BC's policies, I would post the UPS authored documents stating their overtime was a matter of federal law. UPS started paying overtime, as they said, in response to a change in federal overtime rules. These folks didn't get overtime until the change, so it would seem the law requires it. I'm sure lots of lawyers were involved before UPS voluntarily started paying overtime; maybe UPS could 'lawyer' their way out of paying overtime if the MIP were removed, who knows.

Either way, if they didn't pay MIP or overtime, I bet the newly MIP-less would suddenly do a lot less overtime. I already see lots of people doing a lot less & caring a lot less after last year's layoffs.

 

[browniehound]

MIP is worth less than cash, so if they're going to replace MIP with an increase in cash compensation it would be a plus. The days when UPS could reasonably expect management people to invest their life savings in company stock are long gone. Only a fool would do it now. By going public and introducing Market Risk, the game was changed entirely. Why do you think they started withholding half of the MIP a few years ago? MIP went from something everyone wanted to something nobody wanted. The only way they could get people to hold UPS stock was to force it on them. And look where we are now. By the time you're vested in each year's withheld MIP it's worth far less that it was when the award was made. It's just as well, since any notion of UPS management people working together toward common goals is also a distant memory. Now it's cutthroat, back-stabbing or whatever else it takes to "succeed" at someone else's expense.

I think this is a great post. I don't know much about MIP but I know enough that I want to avoid like the plague. All the extra hours you put in exchange for something that could be absolutely valueless when its time to cash in? I'd rather be paid in real dollars. I'd rather take less money and paid OT than given stock in ONE company.

Like Popeye said, its such a volatile market and nothing has demonstrated that better than the last 3 years. Also, what is the price of oil going to be in 20 years? During that huge run-up in 2008 it got to $120/ barrel. What could it be in 20 years? $500/barrel? Its not like the earth is making anymore of it in the next 60 million years.

How will this affect the stock price?

 

[UpstateNYUPSer(Ret)]

BH, by 2030 our fleet will be 100% powered by alternative fuel sources.

 

[Popeye]

Yeah you're right. I am sure all the part time management working at poverty level incomes wouldn't want a full time gig that pays more than triple what they are making now. We might as well close the doors....

How will the company run when it comes to that? Managed by people who are stuck there because they don't have any other options? Anyone who's not in college and can't do better than a P/T supervisor job at UPS can't have much going for them.

 

[UPSSOCKS]

How will the company run when it comes to that? Managed by people who are stuck there because they don't have any other options? Anyone who's not in college and can't do better than a P/T supervisor job at UPS can't have much going for them.

That's where you are wrong. Part Time supervision is the fastest way to get benefits for YOU AND YOUR FAMILY. Teamsters have cut the throat of their young and future members. I had numerous part time sups that owned their own buisness and just stay employed on the night shift for the benny's.........