The company has capped this year's raises at 3.5%. The following snippet was published by the Wall Street Journal. It's nice to hear that Mike Eskew leads by example... You won't be seeing this article anytime soon on ups.com.
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UPS Increased the Salaries
Of Top 5 Executives in 2002
Parcel-Delivery Company Calls for Probe
Into DHL Acquisition of Airborne Business
By RICK BROOKS
Staff Reporter of THE WALL STREET JOURNAL
ATLANTA -- United Parcel Service Inc., which saw its profit surge last year despite a slip in delivery volume as the economy struggled, increased the salaries of its top five executives in 2002, with Michael Eskew, its chairman and chief executive, getting a 27% salary boost.
Separately, UPS called for a federal investigation of the proposed acquisition of Airborne Inc.'s ground-delivery operations by DHL Worldwide Express Inc., saying the U.S. Department of Transportation "should require a full disclosure of the source of the funds being used to finance" the deal.
Mr. Eskew, 53 years old, received a salary of $792,000, according to proxy materials filed Wednesday with the Securities and Exchange Commission, up from his 2001 salary of $625,500. The average salary increase received by the four other UPS executives whose compensation was disclosed in the proxy was 5.5%.
Four of the five executives received a slightly smaller bonus last year, reflecting the price of UPS's shares "on the dates the awards were granted," according to the proxy. UPS's shares climbed 16% in 2002. Mr. Eskew's bonus rose 5.6% to $330,753 from $313,140 in 2001.
The compensation committee of the UPS board said Mr. Eskew's salary increase reflected his "strategic vision and leadership" and his "ability to position UPS as the premier enabler of global commerce," as well as the company's operational results.
The five top UPS executives were awarded options to acquire a total of 190,154 shares with an exercise price of $60.22 each and potential realized value of $7.2 million if UPS's stock price climbs at an annual rate of 5%. UPS's shares traded at $58.35 in 4 p.m. composite trading Tuesday on the New York Stock Exchange Wednesday.
UPS saw its net income jump 35% to $3.18 billion, or $2.81 a share, last year, from $2.4 billion, or $2.12 a share, in 2001. The 2002 results got a big boost from the settlement of a tax dispute that essentially reversed a charge taken by UPS three years ago after the Internal Revenue Service claimed the company had restructured a unit to avoid paying taxes.
Excluding what it called "nonrecurring transactions," profit at UPS slipped 2% last year to $2.35 billion, or $2.14 a share. Revenue rose 3.1% to $31.27 billion from $30.32 billion, but delivery volume fell 1.6% to an average of 13.3 million packages a day in 2002 from 13.6 million in 2001.
Opposition by UPS to the proposed takeover of Airborne's ground-delivery operations, valued at slightly more than $1 billion, was expected. UPS and FedEx Corp. already contend in an ongoing DOT proceeding that DHL's complicated ownership structure violates federal laws, and the agency's Office of Inspector General has recommended a probe of arrangements between various DHL entities and Deutsche Post AG, the parent of Brussels-based DHL Worldwide Express.
UPS said DOT officials should determine by scrutinizing the Airborne-DHL deal whether "government sanctioned monopoly revenues are financing the transaction," adding that it "would be contrary to the public interest to allow such unfair competition," according to a filing submitted to the agency Wednesday. Deutsche Post has a monopoly on letter deliveries in Germany and is owned mostly by the German government.
A DOT official said the agency is reviewing comments filed on the matter but declined to comment further.
Airborne and DHL officials have repeatedly said their deal is structured to satisfy federal laws that prohibit foreign control or ownership of more than 25% of any U.S. carrier. As reported, terms of the transaction call for DHL to get the pickup-and-delivery facilities, customer-service functions and sales force of Airborne. Planes used by Airborne to transport overnight shipments would be spun off into an independent, publicly traded company that has "arms-length commercial agreements" with DHL, according to both companies.
An Airborne spokesman said the comments by UPS "are a predictable attempt to distract attention from the real issue, which is that the DHL/Airborne transaction will create additional choice for customers and increased opportunities for American workers." UPS and FedEx have a "stranglehold" on the U.S. market, so "it is no surprise that they will attempt to prevent real competition in any way they can," he added.