MIP Awards' Effect on Public Stock Price?

Discussion in 'UPS Discussions' started by my2cents, Nov 3, 2005.

  1. my2cents

    my2cents New Member

    With the recent declaration of the annual MIP award, which from my understanding, occurs at the end of October or early November, I decided to check to see if these annual awards had any noticeable effect on the public share price. Does the share price rise, fall or stay flat? Are there any spikes in trading volume around these dates?

    Attached in text format is the public trading data for UPS shares. I started with the year 2000, followed by each subsequent year. The trading periods are excerpted for the months of October and November. After studying the data, I have been unable to find any trend or any significant day trading event in regards to the annual MIP award, other than whatever market trend was in place during each time period. Moreover, I was unable to discern anything useful from scanning over the volume figures.

    FWIW, I performed this exercise to satisfy my own curiosity as a participant in the discounted employee stock purchase plan and for any useful discussion on this board, confirming or refuting my findings. Personally, I find this subject of interest because there are roughly as many "Class A" shareholders as "Class B."

    Attached Files:

  2. susiedriver

    susiedriver New Member

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    I have never been management, though some close friends were/are, so I speak of the MIP secondhand, at best.
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    To get to the point, I dont think the MIP has much effect of the price, in the long run. Face it; the value hasnt changed that much since the IPO, except for a brief, shining moment late last year.
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    I understand that the MIP underwent major changes for this years award. From the very little I have bothered to learn about this years MIP, it is better for the bottom line of the company, and therefore the stock value. In the past the award was given all at once, and though one couldnt (for all practical purposes) cash it in , at least one actually held it. Starting this year, it is only promised over a period of time (10 years?), and half is cash, half stock (I think).

    You won't see any spike in trading volume, because the shares are never(rarely) sold by the participants, and are acquired over time (stock buybacks) by the company.

    Bottom line, revised MIP - better for share value, the overall hit on the bottom line is negligible.
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    I see the MIP almost as a forced contribution towards retirement of as much as 20% of your monetary compensation with a return based on the increasing value of UPS stock. In 1980, it was a heck of a bargain, not so sure today.

    As far as employee discounted stock, it's your money, invest it as you see fit. At least you're not paying retail for UPS stock, which is a better discount than you get on shipping a package:D.
  3. formerbrown

    formerbrown New Member

    I agree that the MIP does not affect the stock price. The company sure worked it out to stick it to their management. The stock price figured as a basis for the MIP usually comes in high. You get your MIP divided by that figure and are awarded X numbers of shares. Then you sit by and watch as the stock falls until you get you certificate. 2004 was the first year it went up instead of down (I believe it hit $88, on an award of $78). I, fool that I am, believed we finally made money on our MIP. I don't need to tell you that it hasn't seen middle 70's since.

    I believe that the changes in the MIP award was done to try and keep as much money away from those who left before retirement. Whether you wanted to go or not, you lost a sizeable chunk. The company said they did this to help them maintain cash to do what was needed to get lost volume and customers back. I have seen many people leave over the last 12 months. Mostly all before their "retirement date". I have talked to some who were going to hang in to get their stock, who now just get up and leave. For a company that wants to aggressively go after the competition, they are letting and forcing, some very good people who could help them do this, leave.

    Overall the MIP is a good thing. I believe the changes were not in the best interest of their people. The only way it will affect the stock price is in losing the workforce needed to get a bigger share of the market back. I know many drivers who turn in lead after lead to help, but if they don't have the people to follow up and those who are willing to work with the drivers to give the customers what they want, it is all mute.
  4. my2cents

    my2cents New Member

    Someone please correct me if I'm wrong, but isn't the share price in the annual award based on a market closing price?