# Redesigned mip

Discussion in 'UPS Partners' started by spritskr, Mar 15, 2005.

1. ### spritskrGuest

Anyone know anything about the announcement for the redesigned MIP?

2. ### 30andoutGuest

I give ..... What is a MIP.

3. ### moreluckGuest

it used to mean management incentive program

4. ### susiedriverGuest

Here is a cut &amp; paste I had from a few years ago describing the MIP:

For anyone who doesn't know how this is computed, you first calculate the overall profit of the company, and take 15% of it (unless they've increased this amount). Then take all mgmt (supervisors and managers) salaries summed together (but you count the managers twice - they are called two-unit mgrs, while supervisors are one-unit...more on this in a second). Then divide this total monthly salary into the 15% of profit...you then get the MIP. It's been just over 2 the last couple of years, for easy math, we'll use 2.0 right now.

Now, you have supervisors (one-unit) who will get their Monthly salary * 1 (one-unit) * 2.0 (MIP) = \$\$\$ awarded.

Managers: Monthly salary * 2 (two-unit) * 2.0 (MIP) = \$\$\$ awarded.

Supes make perhaps 4K/month avg, mgrs make say 6K/mo avg. (some more some less - staff level mgrs make more, and get options too).

Next, you have to apply federal/state taxes to those dollar amounts (which effectively cut them nearly in half for most people). The final figure is then divided by the current stock price yielding number of shares "awarded" to each supervisor/manager.

5. ### suitGuest

New MIP plans are in the works. There is supposed to be an official announcement on the changes sometime next week.

6. ### upstechmanGuest

I have heard the same. It seems UPS management counsel is changing the way in which MIP is calculated. Can't wait to see how UPS screws the little guy on this.

7. ### upscorpisGuest

Did anyone other than me notice the proximity of UPSTECHMAN's and suit's IP addresses in the posts below?

(Message edited by upscorpis on March 16, 2005)

8. ### my2centsGuest

Yeah, probably a dial-up account. Anyway, thanks for the calculation Susie. I knew it was some type of profit sharing formula, but didn't know how the factor was derived. From what I understand, managers can get double, triple, etc., the MIP rate depending on their position. A 2.0 for example, can become a 6.0.

9. ### upscorpisGuest

Actually, they are UPS IP addresses.

Susie's description of 1 unit supervisor and 2 unit manager award levels is accurate. You may hear the term 3 unit but that refers managers that also receive options (2 units + options = 3 unit).

10. ### quebec_driverGuest

Is this system uses globally?

11. ### susiedriverGuest

Employees posting from work? Wouldn't that be stealing? Shouldn't LP look into who had those IP addresses at the time of posting and escort the guilty parties from the premises? Nah...wishful thinking.

Anyway, for an understanding of options, try this:

Staff mgrs get options based on their level (18's and up), their salary, and the stock price.

I believe it was something like:
17 = 20% (used to be discretionary at this level, however, I believe it was eliminated for this level 4 or 5 years ago)
18 = 20%
19 = 40%
20+= 60%
#options = ANNUAL salary * the percentage, divide by the stock price.

12. ### speeddemonGuest

Its a waste of this companies profits.

13. ### revenuerecoveryGuest

How does the mip effect the profits? Aside from share dilution, are there any other negative effects of the mip?....anybody?

14. ### susiedriverGuest

15% of the profit goes to MIP, right? Wouldn't that affect all the shareholders?

Personally, I'd like to see it returned to the shareholders as a special dividend each year.

15. ### susiedriverGuest

Come to think of it, wouldn't Wall Street like to see some of that MIP money, as well?

16. ### revenuerecoveryGuest

So they take the 15% of profit, buy shares on the open market, then give it to the management?

Or is the 15% profit used in only the calculation, and not the actual mip?

I think the 15% profit is for calculation purposes ONLY. I don't think the profits are awarded to the managment. Remember, they're given stock, not money. Where does that stock come from? The open market? (I doubt that one). Or treasury stock??

17. ### moreluckGuest

No one should really begrudge management these bonuses (mip &amp; options). Anyone can have them. Just go into management, take a cut in pay, work unlimited hours and move all over the country wherever they tell you to go. See, it's easy! The grass is always greener, heh?

18. ### susiedriverGuest

Revenuerecovery,

It is my understanding that the company does buy shares on the open market for MIP purposes. It is also my understanding that the 15% figure is actual, not just for demonstration. I have heard complaints from managemant about the share value being high when calculated, and dropping soon after.

Moreluck,
Your description of a management position at UPS sounds an aweful lot like indentured servitude without the legal rights. Just saying...

19. ### moreluckGuest

Susie.....you hit the nail right on the head!!

20. ### my2centsGuest

Just a thought. I wonder if this redesigned MIP is a result of the, dare I say it, 4th Q performance of 2004. Not sure how the announced mananagement hiring freeze is shaking out either.