The truth behind the 1.6 MIP for this year

[Channahon]

Channahon, two questions:

1) How many years did you have to wait to get your 2 units? We wait 5.

2) How many of your options (which were on top of your 2 units) were worth the same or less when exercised? Did you want 6 years for no gain? That's what's happening to us.

You knew how your MIP was calculated - 15% of gross earnings. The current MIP calculation is "confidential." We're currently granted RSUs based on someone's whim. They don't appreciate, but we can't sell them and buy a better investment. The RSUs aren't over and above the units granted, they're a part of them...totally different than your situation. One other note - you can't hypo a RSU. Yep - I'm irked about it.

For what it worth.... Change is all around us
Here's a little history on MIP as it was at my career at UPS. You were given your stock and told to keep it in a drawer and watch it grow. If you ever thought about selling it back to UPS, you had to go to your Manager, Division Manager, who then went to the District Manager for approval. That in itself was a deterrent not to sell you stock. Keep in mind the company was private until 1999.

In today's environment you have the option of taking 1/2 of your stock in cash or 401K. Something I had not been able to do. Who knows what my 401K would be today, if I had that option.

Do I have options that are not the same worth when I received them. You bet I do. Do I dwell over that, no, because some vest in 3,5 or 10 years, before I have to do something with them.

Is there a chance I won't exercise some options based on value, probably. Does that upset me, sure it does. I worked just as hard as the next management person for this company. Do I have other financial means to fall back on, based on that scenario? That is something everyone needs to do, not only for retirement, but I'm not counting on Social Security either.

 

[Tarnsman]

I'm sure most of you know the 1.6 MIP is for supervisors and managers get 3.2. The MIP is an award, not a bonus, you have to be recommended by your Division/Staff Manager.

As far as the new payout, is it that bad of a deal? 50% of your award is deferred over 5 years, so if you were awarded $20,000 only $10,000 is added to your earnings for the year. In some cases, this may bring someone into a lower tax bracket.

The RSU's are no different that a stock option for divison/staff managers, who leave UPS prior to their stock vesting, they lose their options.

Well, the actual truth of many peoples situation is that the base pay of a supervisor is quite poor...add into the increasing monthly & out of pocket medical expenses for Heath Care means that over the past any number of years they are taking paycut after paycut.....Average annual pay increases( ?) of 2% is insulting when annual inflation is 2% to 4% .........If the 5 year stock plan is advantageous to both UPS & the person I would think that the person should have the option of either the 5 year screwing or the award as done in the past............