UPS Timeline from a Major Shipper's POV

[Bagels]

Companies don't go public to reward management anymore than they go public to reward employees. They go public to grow, and grown UPS has. Management is just in a better position to catch more of the benefits. Thus, they do more to "grow the business" in the ways that management does, trying to create and maintain an efficient operation. Management-even the CEO-are all "employees", too.

While most companies go public to raise capital, this was clearly not the case with UPS (or other companies such as FaceBook). At the time of its IPO, UPS was sitting on a large amount of cash & had an AAA credit rating. UPS acknowledged that it was going public primarily to reward its employees - such as its then-CEO Jim Kelly, who earned something like a $30M pay day the day UPS went public.

Don't be naive. There's a cost to being traded on Wall Street. UPS didn't make such move to reward its hourly employees -- it did so primarily to reward its management (especially then-management) ... given that they're the ones who made the decision, well, they were rewarding themselves. It's difficult to fault UPS for this, since many felt their management was under compensated within the industry. But I take issue with Hoaxster's rhetoric that UPS's relationship with its employees was never the same after they went on strike... when really UPS's relationship with employees would never be the same after the company went public.

If UPSers had never striked and instead remained loyal to UPS, do you think we'd still be getting Holiday turkeys? Or do you think that would've been long forgotten and Scott Davis instead would've continued with his cost-cutting efforts as he has?

 

[IVE GOTTA PACKAGE 4U]

While most companies go public to raise capital, this was clearly not the case with UPS (or other companies such as FaceBook). At the time of its IPO, UPS was sitting on a large amount of cash & had an AAA credit rating. UPS acknowledged that it was going public primarily to reward its employees - such as its then-CEO Jim Kelly, who earned something like a $30M pay day the day UPS went public.

Don't be naive. There's a cost to being traded on Wall Street. UPS didn't make such move to reward its hourly employees -- it did so primarily to reward its management (especially then-management) ... given that they're the ones who made the decision, well, they were rewarding themselves.

If I remember correctly wasn't UPS in some IRS trouble over the OPL stock at that time?

 

[Anonymous 10]

Companies don't go public to reward management anymore than they go public to reward employees. They go public to grow, and grown UPS has. Management is just in a better position to catch more of the benefits. Thus, they do more to "grow the business" in the ways that management does, trying to create and maintain an efficient operation. Management-even the CEO-are all "employees", too.

Drivers and even PT hub workers have benefits, too, because UPS went public, they just aren't perceived as such. However, while the Union is necessary to make sure we get our fair share of the pie, the pie is there, in part, because of UPS going public and the money it generated allowing UPS to do what it felt to improve the company. EDD, PAS, MyChoice-while we drivers disdain them, I do see how they have made the company better. The acquisition of Overnight, even the attempted acquisition of TNT, are things made possible by going public.

The benefit to me is the company stays profitable and atractive, and in no danger of drastically reducing it's workforce, to say nothing of going out of business. Thus, at the height of the recession, I had a deep sense of security knowing that while work loads were light my job wasn't in danger. I have had to have several conversations with my wife about why I am not as afraid as she thinks I should be when it comes to looking for a new house or some other big purchase. Her brother-in-law was laid off from his job, and thus his family is always worried about the possibility of being "downsized", so they are hesitant about big purchases. Myself, the only reason I have to worry-at this time, anyway-is when I do stupid things that can lead to discipline. That assurance is in large part due to UPS going public many years ago. Conditions haven't necessarily improved work-wise, but the company is making big profits, and should be around long enough for me to do what I need to set myself up for retirement, another two decades at least.

Most company's go public to grow but ups went public for pure greed. Plain and simple.

 

[Bagels]

If I remember correctly wasn't UPS in some IRS trouble over the OPL stock at that time?

I believe it was the creation of OPL in a tax haven to handle package insurance claims that got them into trouble. IIRC, UPS effectively won the case although it entered into a cheap settlement to avoid continued litigation. While ongoing during the IPO, the decision to go public was made well before the OPL issue arose.

 

[IVE GOTTA PACKAGE 4U]

I believe it was the creation of OPL in a tax haven to handle package insurance claims that got them into trouble. IIRC, UPS effectively won the case although it entered into a cheap settlement to avoid continued litigation. While ongoing during the IPO, the decision to go public was made well before the OPL issue arose.

Thanx maybe Im just getting old...I just seem to remember something about the OPL stock and Irs trouble
and something about 800 million.

 

[Catatonic]

Hoaxster,
While I appreciate and acknowledge the viewpoint you're getting at, I think it's somewhat short sighted:


4) UPS was preparing to go public when the strike occurred. UPS didn't go public to reward its employees -- it did so to reward its management. Its relationship with its employees was already changing for the worse.

The rest of your comments made sense.

This one absolutely and totally missed the point.
Every management person was worse off by 2005, if not before.
An extremely small percent benefitted from going private and only if they sold their stock by 2005.

The reason UPS went public was to buy acquisitions using investor money and the execution on that was pitiful.
​UPS is always trying to get something at the best price and they missed way too many opportunities in the early 2000's.

 

[Catatonic]

Thanx maybe Im just getting old...I just seem to remember something about the OPL stock and Irs trouble
and something about 800 million.

UPS got all money they had put in escrow and they paid a "go-away" payment to the IRS ... much less than $800 M.

 

[browned_out]

UPS got all money they had put in escrow and they paid a "go-away" payment to the IRS ... much less than $800 M.

I do remember that all my OPL stock was liquidated, can't remember if they paid what is was worth.

 

[Bagels]

The rest of your comments made sense.

This one absolutely and totally missed the point.
Every management person was worse off by 2005, if not before.
An extremely small percent benefitted from going private and only if they sold their stock by 2005.

The reason UPS went public was to buy acquisitions using investor money and the execution on that was pitiful.
​UPS is always trying to get something at the best price and they missed way too many opportunities in the early 2000's.

UPS certainly had the balance sheet to pursue any acquisition it desired without raising investor money. Perhaps they sought investor money as an opportunity to diversity its balance sheet, and if a byproduct was a $30M or more pay day for people like Kelly, then so be it . IPOs use to be about raising money to expand a business, but they're increasingly being used by management as a means for a large pay day - but often with only a few people benefiting. Sad to hear that may have been the case with UPS as well.
​

 

[sortaisle]

UPS went public for 2 reasons. 1. They knew they'd be able to pull off a record IPO. It's free money for them. 2. Free money for them. Greed. The company is run by a few people who get paid more in shares than they do in salary. And when you get 50-80% of your money from shares, you make sure the shares are worth as much as possible. This is why the union is/can/should be the counter balance. The problem is the part time workforce doesn't give a crap about stuff and just shows up for a paycheck. Perfect storm in favor of UPS.

 

[anonymous4]

UPS went public for 2 reasons. 1. They knew they'd be able to pull off a record IPO. It's free money for them. 2. Free money for them. Greed. The company is run by a few people who get paid more in shares than they do in salary. And when you get 50-80% of your money from shares, you make sure the shares are worth as much as possible. This is why the union is/can/should be the counter balance. The problem is the part time workforce doesn't give a crap about stuff and just shows up for a paycheck. Perfect storm in favor of UPS.

also 99% of the part-timers at UPS are morans passing through or going into part-time supervision. simply telling them "NO!" is more effective than explaining what is bad about this TA (take note of ibt strategy).