Redesigned mip

[upsdawg]

These are different times---not like the old days when you could forcast out the price of UPS Stock-----there was software that you could plug in your shares and know what it would be worth in 5 years----of course at a growth of 20% annually, it is easy math to see the how the stock would double after 5 years!!!

UPS has downsized all of our PCA locations--last year we went from >50 locations to 3--eliminating 1300 UPS Positions---but nothing that impacted management--other than management people that were dis-placed after losing 1300 people ---having to assume other positions----but we always find ways to keep our Management. I don't know how namy other companies would have been that concerned over their management people.
So, UPS has} changed---will continue to change---to stay competitive with the "Other" delivery companies----and most of all to have the perception to our "Shareholders" and the "Market", that we are "On-Track, according to our Projections!!

I really think that the challenge is to make the "Market" aware that UPS is moving away from the low revenue ground volume and targeting the high revenue International and Supply Chain Solutions business.

It is frustrating to see us have a record profit quarter and be 1 penny below our "Target" and have our stock price plummett!!

I have been with the company for a long time and knew that it was a decision I made to "Stick" it out--through good times and bad!! We are changing and we do need to ask questions---we also need to change our mindset and think different!!

 

[proups]

Some points to ponder:

upsdawg: our stock went up almost $3/share when we made our earnings announcement for 1qtr 2005. Then it went back down a little, and is now getting back to where it was right after the announcement. Take a look at historical data of UPS stock vs. the Market. UPS does pretty well - better than most over the long haul.

OneToofar: all of the UPS millionaires were in your position when they first went into management and they took the risk of investing into a company where they could make a difference by their efforts. That has not changed with UPS going public. Those millionaires put their money where their mouth was - and got results. That is what the MIP plan has to be with a publicly traded stock.

Interested: I've looked at other companies before, if I can use your example of personal career management. I've never found a company that could offer what Big Brown offers me - a stable, secure company that is willing to do whatever it takes to be a market leader.

 

[had_enough]

pro,
HYPO??? If stock loses 10% of value then you need have to pay off the loan. Never happened while private (pretty much a guarteed way to make some money) How many times has it lost 10% of value since being public (at least 6 times would be my guess probably more).

interested,
It is fear of the unknown and other things. UPS gets most of us early before the wife and kids, the mortgage, the car payments, etc.... has you bleeding brown. Now your in your 30's with the wife (or ex with alimony), kids, mortgage, car payments and now you bleed from where brown stuff comes out from repeated abuse. Do you go out into the great unknown for better pay (or not) and better treatment? It's not an easy thing to do but I do not know anyone who left who regrets it including
myself. The big question is why are mgmt at least thinking about leaving if not actually doing it.
The answer is UPS can only push /screw a person so much. When I left , I can't tell you how many other mgmt people came up to me and said "I wish I had the guts to do what your doing". To all those people wishing they had the guts, it is not that scary and you end up a lot happier.

 

[pretzel_man]

The key to UPS stock growth is GROWTH in profits. This is true as a public company, just as it was true as a private one.

Without company growth, not much is secure especially stock value. As a public company, I would expect flat growth to result in stock price loss.

That being said, why stay with UPS? Well, I guess I'm one of the few that really likes it here. I love the people I work with and being in management.

Jim Casey said the the concept of owner-management helped the company more than anything else.

I guess its corny, but I really do think and feel like an owner. Therefore, I'm willing to sacrifice during hard times.

Interested: You asked about other jobs. As with you, I too have skills that are valued outside UPS. I've gained some recognition outside the company and get calls from headhunters.

Coincidentally, I've been offered three jobs in the last six months. Pay was anywhere from double to triple what I make now.

Never considered them because (like I said), I really do like the place.

My point is that attitude is everything. Maybe I'm overly optimistic, but management working together for a common goal can do anything.

Jim Casey said that long ago, and I think its still true today.

That's why I support the management committee and their goal of focusing the company leaders (management) on what's really important. Growth.

P-Man

 

[tieguy]

I wish I was as optomistic. But when the company trims pay increases while Mike E. gains 7 percent something tells me the partnership is not all chipping in their fair share.

 

[interested]

Pretzel Man-

Excellent post!!

 

[proups]

Pretzel: I could not agree more with what you posted.

If all of the management team thought like you, and got the hourly workforce to help grow the business, we would be flying past FredEx not only in growth but stock price as well.

Tie: c'mon....Mike Eskew is one of the lowest paid CEOs in the world. UPS is one of the most profitable companies in the US. He deserves whatever they decide to give him.

 

[proups]

had enough: yes, HYPO! As I stated, ask any of the long-term UPS millionaires and they will tell you that a hypo is the way to go to purchase UPS stock.

I would also bet if you did your homework, you would see that the 10% loss in value that you see comes less often than the gains - UPS stock grows at better than 10% every year.

If you had stayed with UPS, you could have also participated in the Discounted Employee Stock Purchase Program, where the 10% loss a day example you gave would negate your concern - that 10% is built into the DESSP.

I see from your profile that you are still young, and with your skills and education, probably acquired a good job. Tell us about it.

 

[onetoofar]

Proups:"OneToofar: all of the UPS millionaires were in your position when they first went into management and they took the risk of investing into a company where they could make a difference by their efforts. That has not changed with UPS going public. Those millionaires put their money where their mouth was - and got results. That is what the MIP plan has to be with a publicly traded stock"

I think you missed my point entirely.
1. Young managers "back then" never had to deal with a volatile stock price when considering hypo. Never.
2. My efforts no longer make a direct impact on the MIP given out. The MIP is awarded on how well a group of people guessed we would do on several elements. I personally saved the company $4M last year; this year I'm up to $3 already. That money does not go into the MIP pool anymore.
3. I still believe in this company. I still think I can make a difference but I'm upset at the end of partnership this MIP change forced. I am constructively dissatisfied.
4. UPS stock did NOT grow at 10%. The stock price from 1 year ago today is less than $1 difference.

 

[had_enough]

Pro,
I went to school for crim justice to be a cop. I decided at age 32 that I could not take another 23 years (at least) of this current treatment. It took 2 years but I got back into shape and lost 50 lbs and was hired as a police officer making 43k base a year. I had to get through a 26 week academy , if you got injuried and could not continue then you were out of a job (it did happen to one girl in week 20).

I would have made 70k if I stayed for all of 2004 at UPS.
This 1st year as a cop, I will make close to 50k with OT and shift differential. (I now actually get paid when I have to work a 14 hour day) I work less time and get to spend more time with my wife and sons (3 and 1).

When I left, iI knew I could still fall back on my mgmt experience and still go get a mgmt job making close to 100k a year in the Philadelphia area if something went wrong with the police job.

I knew I could make this money because I became friends with a headhunter. He came up to me at a friends BBQ asking about UPS since he had no dealings with them. I told him at the time that I was making just under 70K with MIP and supervising approx. 80 people and was the FT who got stuck with all the Haz Mat crap. He could not believe how underpaid I was, he told me he could get me interviews for 3 jobs making at least 90k a year. I thought he was full of it until he e-mail 6 job postings, the lowest starting at 92k that Monday morning. He also stated that the Haz Mat crap that gets forced on one FT in every operation usually equates to about 25k in most other businesses. I still talk to him now and again and he still e-mails me job postings from time to time. He thinks that I am really nuts now for being a cop but I am a much happier person.

I used to love going to work at UPS but it changed along the way and every mgmt person will privately tell you so. I got to work with a lot of great people. I will miss the great people I used to work with and hope some one at the top realizes how bad it has gotten for their sake. I am a person who can't give less than 110% but I also can't work where I am being treated unfairly. I posted a thread called "my exit interview" in end of Feb or early March that has some more info.

 

[proups]

Had Enough: you have chosen a very honorable profession and I respect you for it. I had a friend at UPS many moons ago that was a PE Mechanic, making top rate, and left to be a cop. Be careful and be safe. Good luck to you.

OneTooFar: you are being too short sighted:
You said:
"I think you missed my point entirely."
No, I did not.

"1. Young managers "back then" never had to deal with a volatile stock price when considering hypo. Never."
You are correct. But during the 70s, stock barely grew at all. Those were very lean years. Take a look if you don't believe me. Those young managers stuck with UPS, bought stock wih hypo's, and it paid off.

"2. My efforts no longer make a direct impact on the MIP given out. The MIP is awarded on how well a group of people guessed we would do on several elements. I personally saved the company $4M last year; this year I'm up to $3 already. That money does not go into the MIP pool anymore."
Congratulations! Nice job on saving the company money. There isn't a "MIP pool" any more. It is no longer a profit sharing plan. Get over it! You are evidently doing your job.

"3. I still believe in this company. I still think I can make a difference but I'm upset at the end of partnership this MIP change forced. I am constructively dissatisfied."
You have the right to be constructively dissatisfied. I don't see how the partnership ended with the MIP change. If anything, it emphasized that all UPSers must work together to reach goals that are important to the success of UPS.

"4. UPS stock did NOT grow at 10%. The stock price from 1 year ago today is less than $1 difference."
Go to any financial page and look at the last five years at UPS stock prices. The graph I saw at money.com shows that we have grown approximately 14.5% in that time frame. Compare that to any/many other stocks and you will see that you have a good thing going with the MIP....and if you keep it, buy more, keep getting results, accept more responsibility when asked (promotions), then you too can be like the "old days" when UPS made management people millionaires. Oh, don't foget about your option to hypo when you have accumulated a lot of stock!

(Message edited by proups on May 06, 2005)

 

[onetoofar]

Responding to ProUps:
"isn't a "MIP pool" any more. It is no longer a profit sharing plan. Get over it!"
Who are you to tell me or any other young manager that the end of profit sharing is something to 'get over'. That's my point, which you did miss (again). There IS no sharing of the work done by partners anymore. There is no partnership - the work the partners done is no longer rewarded via MIP; only how well a few folks guessed we can do on specific items; not how well our partners performed.
As for the lean years of the 70s, yes, I know all about it. Not once did the stock go down or lose over 10% of it's value because we mis-guessed our 4th quarter earnings, like a few months ago. That's a very real possibilty today, leading to having to pay off the hypo; hypo is now a suckers bet.
Lots of young managers are worried the same people who fouled up the 4th quarter will be the same people in charge of the MIP estimates and they'll do the same lousy job.

 

[pretzel_man]

OneTooFar:

As one of those "old time" managers, I'd like a chance to respond to your concerns:

1) Yes, the stock price used to be much less volitile. Hypo was much more safe. True. On the other hand, the reason for the safe stock price was that the company kept growing.

2) So, you have no impact on the six initiatives the management commitee spelled out? They laid out initiatives that are geared toward growth, capability, and cost reduction.

3) You have a right to be constructively dissatisfied. I believe in the company too. Not sure how long you've been around, but after a while, you learn that the few new shares you get or don't get are dwarfed by the growth (or lack of growth) in the shares you already have. Isn't that the way it should be? I think the change is geared toward growing company value rather than keeping the status quo.

4) Yep, the stock did not grow. And so, that is my point. Lets work on growing the stock. If profits do not grow in 2005, do we deserve "high fives" at the end of the year and a 2.4 MIP?

Seems like we really need to focus on the six initiatives.

BTW, when I was a young Sup, stock had lean times, and a 2.0 or 2.4 MIP was very, very high.

P-Man

 

[swingdriver]

I don't know exactly what all this "MIP" talk is about, since I am just a lonely swing driver. How about we just focus on improvements and kicking everyone's ass. I'm sure our stock price will go up and so will the Money In your Pocket.

 

[proups]

swingdriver: great post.

You hit the nail on the head with "Money In Your Pocket".....that is exactly what it is.

If every UPSer had your attitude, this thread would not be here. Keep kicking A$%!

 

[interested]

Onetoofar is on to something very real here. I think it is safe to say that the management folks who have always been awarded the MIP,directly associated that compensation with their work within the partnership. I know I did, even as an outside hire. I have said this before, I will state it again, There is no other company UPS size that has the ability to rally its people around a cause. If it snows in some arbitrary region of the country and you are in management with a company that has its own distribution arm, you are not getting out of bed to drive a truck, load a truck or dispatch a truck. We are.

When one of Tie Guys full time supervisors wants to cut out on a Friday after only three hours of work, he is covered. No vacation day, personal day, request permission from hr- just partnership- "Tie, two weeks from now on such snd such a date-I am going to blow out of here early and start my weekend-will you cover me-No sweat" That is partnership. So is going the extra 8-10 hours a week, missing ball games, backyard picnics and eating a cold lonely dinner at the kitchen table at 10:00 at night. We have people who have lived, breathed and supported the partnership in this manner EVERY DAY for TWENTY YEARS. Now the company and some of us here are going to just say it has changed-"Get over it". That is such an insult to the intelligence and past hard work of many of these partners. As we discussed many are perceived to be stuck, but many are still young enough to make decisions about careers that will at least pay you for the time they expect you to put in and pay you what the market bears for your efforts.

We have heard from some here that have made the change and we have also witnessed some examples of how different life is on the outside. Everyone has a choice, but lets not insult each other by intimating that the stock price is directly correlated to managements efforts and their preoccupation with the change in the MIP.

The market is the market and it WILL NOT EVER RETURN TO YOU the profits we saw as a privately held, growing company, from the advent of common carrier until the IPO.

It is a very bitter pill to swallow indeed to punish those who have worked no less hard than the generation before them by yanking the blanket out from underneath. After all we are a top heavy organization it is there game plan we follow every day, to the letter. Why punish us now by removing the MIP.

This company will go down in history as having record profits for the service industry. UPS makes billions. It should be very clear to everyone that they have been so successful because they have been able to keep costs down-That includes compensation of its people. That is a reality. Maybe our drivers are paid very well for their industry, and they deserve to be, but our management is not. Now we are compensated even less and the partnership has become something that has far less meaning these days.

The strength of United Parcel Service has always been its people. They are this organizations greatest resource, why demean that resourcewith this move. Why cater to the dalliances of a group of wealthy investors in New York who have never even worked here. Why not let us share in the profits that we have worked so hard for. You brought so many along in this organization, preaching big picture, retirement, run your career the right way, and then you just yank it out from under them.

How about at least an explanation.

 

[tieguy]

"1) Yes, the stock price used to be much less volitile. Hypo was much more safe. True. On the other hand, the reason for the safe stock price was that the company kept growing."

the company still grows and still often makes record profits and yet the general public yawns. They don't care for a slow growing transportation stock they want the bottle rockets and that is where the money goes. If we had stayed private the share price would have caught up to the public price by now. I don't believe in deferred compensation. I didn't sign up for deferred compensation. The plan I signed up for pays me the same year I earn it. Despite your strongest efforts to sell this mip plan I think the company survey will find huge dissatisfaction with the changes that were made. Pretzel shine this turd anyway you want but it still stinks.

 

[pretzel_man]

Tieguy:

I have no reason to shine the turd. I speak what I believe.

You think the MIP plan is the turd. I think no growth is the turd. The old MIP plan just put perfume on the turd. At least we are forced to smell it now, and maybe we'll do something about it.

Your belief that the stock would be higher if we were private is unfounded. The facts show otherwise.

When UPS was private, we valued ourselves with a PE ratio of between 12 and 14.

As a public company, we are valued anywhere from 23 to 29. Nearly double what we valued ourselves when private.

So, think about the facts. If we were still private, why would the board all of a sudden value us at the 23+ PE we are now. We'd be back to the 14 range. We'd be maybe 40% less valuable than today.

I'm not saying that that's bad, either. Like I said, I'm here for the long term.

Growth is growth. Whether your PE hovers at 25 or at 14.... Grow the company, and stock value will grow.

By the way, did you forget all the meetings where the board only raised the stock 25 cents? Were you around then? Management committee members used to get quarters in their house mail.

The root of the problem then is the sam as today. No growth....

P-Man

 

[onetoofar]

For PretzelMan:
"So, you have no impact on the six initiatives the management commitee spelled out? They laid out initiatives that are geared toward growth, capability, and cost reduction. "

I certainly do, specifically cost reduction. Last year when I saved UPS $4M, it went right back in all the business partner's pockets as part of the MIP. Last year, I had a direct impact on the bottom line and thus the MIP. It was a lot of long days, travel, and most weekends but I knew it would pay off in the end when it came back to me and the other business partners.
This year, I'll probably save more than that. But, instead of it coming back into the business partner's pockets, it gets measured against a 'goal' set by a dozen people in Atlanta. The long hours & weekends aren't quite as easy to do when there is no solid reward waiting.
If the same people setting the goals are the same people who set the estimates for 4Q last year, we are in for some real trouble.

 

[threepercent]

I understand why the company changed the MIP, I understand why costs are being controlled, promotion / hiring freeze, structure changes (Engineering). However, I have a problem with the 3% "merit" increases. These are cost of living adjustments not merit increases. An extremely productive management person may get $50 more a month than a mediocre manager. Does anyone see a problem with this? We can talk about the long haul and how everything will get better but, I have to tell you I have seen many things over the past 15+ years and unfortunately I do not like what I see. Pretzel - you defend the new MIP. I do not disagree with many of your points. What will you say when the pension is changed? What if you have to stay until you are 60 to get your benefits? Will you still carry the company torch?
What if you were transferred to a high cost of living area with the understanding that "suck it up you will only be here for a couple of years" to learn that regardless of the work you have done you are stuck there for at least another 5 years (on top of the 6 years already spent there) with a slim (if any) chance for a promotion?
I know some people have talked about Eskew's pay. I wonder how they convinced themselves that they deserved 5-7% raises while holding the rest of us to 3% or less? They should have taken one for the team - period.
So far as the MIP the main reason for the change was to defer $300M in costs this year. This change will lower the company's overhead for the next 5 years while they try to right the ship.
Until recently I could never have imagined working for another company - now sometimes I cannot imagine staying another day.
I don't know where we are going and I am not sure I will hang around to find out.