UPS Shareowners Elect Board, Reappoint Deloitte and Touche

[TechGrrl]

A 3% dividend with almost no capital appreciation in years (even in a good economy) isn't a good return. Insiders that have too much stock and a dual class share structure tend to focus on safety and maintaining voting control rather than focusing on stock price growth that would benefit common shareholders according to a study from the Wharton school of business (The Effects of Dual-class Ownership on Ordinary Shareholders - Knowledge@Wharton).

Our acquitision history seems to reflect the findings of the Wharton study. The main reason given for going public was to enable UPS to use stock as a currency for acquisitions, but the majority have been financed with cash and debt. Are the decisions being made on maintaining control versus maximizing value for shareholders? It looks like the dual class share structure is a drag on our stock price.

TNT (2012) - $6.8 billion total, $5 billion cash, $1.8 billion debt (tried to use more debt but ratings agencies served notice of possible downgrades to our debt rating).
Overnite (2005) - 1.2 billion cash.
Menlo (2004) - $150 million cash, $110 debt.
Mailboxes Etc. (2001) - $191 million cash.
Fritz (2001) - 450 million in class B shares.
First International Bancorp (2001) - $78 million in class B shares.

The real reason companies use debt instead of equity when making acquisitions is due to the ridiculous ways the tax laws subsidize debt financing. Was watching some show the other night that was yapping about Bain Capital, and they had a chart that showed that while equity financing cost a company around 38%, debt financing was actually subsidized by the tax laws by about 4%. So you would have to be nuts to use equity instead of debt.

 

[TechGrrl]

The shares of 30,000 management owners don't mean squat. If they did the results would be different and those on the management committee that repeatedly dream up schemes and/or support the practice of reducing management compensation would be history.

30,000 management people have been taking it in the shorts for the last 10 years while a small percentage at the top are reaping the benefits.

Everyone under the level of an 18 would vote out the entire management committee if they had the ability to do so.

No one with an ounce of sense would vote to support a candidate that openly intends to financially punish them for their support.

Agree 100%. That is why I keep encouraging everyone I know to always vote AGAINST anything the Board is FOR. Even if all the holders of "A" shares can't overcome the UPS Foundation and the Casey Foundation, the external board members will start noticing when there is this huge chunk of "NO" votes from the minions.