LTIP for the CEO, COO & CFO

BURMDPsupe

Well-Known Member
Im not to say how they should be compensated, but I will say its not a fair comparison to enron or any of the "golden parachutes" those execs would gain in the hundreds of millions of dollars plus their pensions... Even if you doubled our CEOs compensation it still would be far less then many execs in far smaller companies

Really Drewed? You wouldn't classify an increase of 250% to 675% of the CEO's LTIP excessive? Did you ever receive a 425% raise within 5 years?

Scott is building (end-loading) his compensation plan at such a tremendous rate, yet the frontline sups in this company suffer; when Scott retires in 5 years, will the 401K matching program be reinstated? Will management get raises? Will the half-month still be there? What will be the price of UPS stock?

Lastly, why does it seem like the "compensation" for full-time supervisors is slowly eroding while the CEO, COO and CFO's packages are increasing?

M-
 

Stran

Holy Toledo
You had to know it was coming. First UPS CEO that didn't come up through the ranks. I have to wonder if he ever put on a set of "Browns". The compensation at the top was less than other companies because it was spread through the entire management team. Not any more. Casey has to be turning over in his grave seeing what they are doing to the company he started and loved. When there is such a huge disconnect at the top from the average worker the company will suffer. We drivers all see it on our routes everyday. UPS is no longer looked at and admired like it once was.
 

Catatonic

Nine Lives
You had to know it was coming. First UPS CEO that didn't come up through the ranks. I have to wonder if he ever put on a set of "Browns".
Yep, I've seen him in Browns. Looked spiffy.

The compensation at the top was less than other companies because it was spread through the entire management team. Not any more. Casey has to be turning over in his grave seeing what they are doing to the company he started and loved.
Actually, Casey had it set so that District Manager and above got most of their compensation in stock and they were millionaires back when being a millionaire was a big deal. As I remember, it was called PARMAC and the IRS forced it to be dissolved.

When there is such a huge disconnect at the top from the average worker the company will suffer.
Tend to agree but there was a huge disconnect back in Casey's day as well ... it was after the upper manager retired that it became evident. Old time UPS had guidelines that management drove older cars (no Mercedes or Cadillacs, etc) and no ostentatious homes or lifestyles. Obviously that is no longer the case.

We drivers all see it on our routes everyday. UPS is no longer looked at and admired like it once was.
I don't see this but I'm not a driver (and in Atlanta) so I'll respect your opinion even if I take it with a grain of salt. One's perception is always affected by their own life experiences - yours and mine included. :wink2:
 

tieguy

Banned
I choose not to concern myself with how the management of this company is compensated.

In 1999 when the stock went public and split, some management became instant millionaires while I recieved a $.65 raise. I didnt begrudge them their profit; they made one choice while I made another, they invested and took a risk and profited from that risk. Thats the American way, and they were entitled to profit from their investment.

I knew quite a few teamsters that rolled thier thrift plan money into ups stock before the split that also did very well. The benifits of the stock splits were not limited to management but rather all stock owners.
 

pretzel_man

Well-Known Member
Really Drewed? You wouldn't classify an increase of 250% to 675% of the CEO's LTIP excessive? Did you ever receive a 425% raise within 5 years?

Scott is building (end-loading) his compensation plan at such a tremendous rate, yet the frontline sups in this company suffer; when Scott retires in 5 years, will the 401K matching program be reinstated? Will management get raises? Will the half-month still be there? What will be the price of UPS stock?

Lastly, why does it seem like the "compensation" for full-time supervisors is slowly eroding while the CEO, COO and CFO's packages are increasing?

M-

Here's the answer but you won't like it and may not believe it. With that warning expressed here is why you're seeing things you do.

Corporate compensation does regular benchmarking of UPS compensation compared to other companies in similar and other industries. They do this for all different jobs in UPS. (Engineering, IS, Supervisors, Automotive, etc.)

They found that compared to other companies, supervisors and managers are compensated higher than others. Division managers are compensated about the same as other companies.

Grade 20's and above are compensated less than counterparts in other companies.

So, they created LTIP. Its goal is to compensate those more senior managers but ALSO tie their compensation to leading business indicators.

A district manager has 75% of their pay incentive based. This means that in a bad year, they will see significantly less pay. The current LTIP is paying pretty low.

While no one at those levels has a need to complain, remember that Division Managers and above are sitting on 10 years of worthless stock options. WORTHLESS.

I said you won't like the answer.

P-Man
 

Hangingon

Well-Known Member
Since these percentage increases are already announced, will they get it no matter how the indices stack up? If so then why is it called incentive pay?
 

PASinterference

Yes, I know I'm working late.
Really Drewed? You wouldn't classify an increase of 250% to 675% of the CEO's LTIP excessive? Did you ever receive a 425% raise within 5 years?

Scott is building (end-loading) his compensation plan at such a tremendous rate, yet the frontline sups in this company suffer; when Scott retires in 5 years, will the 401K matching program be reinstated? Will management get raises? Will the half-month still be there? What will be the price of UPS stock?

Lastly, why does it seem like the "compensation" for full-time supervisors is slowly eroding while the CEO, COO and CFO's packages are increasing?

M-
Lets give ol Scott a break.He's just GOING GREEN.Seriously though,greed is killing this country.
 

Black_6_Leader

Well-Known Member
P-man . . . . you have a credibility gap.

According to the 14A (proxy) The LTI program was modified in 2008 so that except for region managers & up, the LTI was paid in RPUs (Stock that vests in 5 years) not options, and that for the region managers and above it is 75% RPUs and 25% options. For the non management committee types, the payout is between 25 & 75% of annual base salary. LTI covers 3,100 folks, and has no performance objectives!

LTIP is a THIRD bonus, on top of MIP & LTI, and the target payouts are higher, ranging from50-200% of annual base salary, but covers 600 folks. And the payouts are and have been, substantial since the plans inception; in 2006 85% to plan; 2007 75% to plan and 2008 65% to plan. 65% of 200% is still 130% of base salary. A pretty nice bonus in anyones book. And the RSUs vest in three years, two years faster then MIP

So how much is a district managers salary??

As a company, UPS has never had much of a problem with the retention of District Managers have they?? And in fact, I have never heard of a member of the Management Committee being swept up by another firm . . . Only Eric Kirchner comes to mind as a Region Manager that left for the "brass ring" elsewhere.

The issue is the retention of front line managers & supervisors; by continuing to balance the books on the backs of those supervisors & managers means that the retention issue will only get worse.
 

Catatonic

Nine Lives
Since these percentage increases are already announced, will they get it no matter how the indices stack up? If so then why is it called incentive pay?
These are in the form of Stock Options which mature at some point in the future which means if the stock does not increase in price then they get $0, zero, nada, nothing extra.

This makes them more directly accountable to the stockholders.
The Board of Director's legal responsibility is to the Shareholders.
Therefore, this makes sense in this respect.
 
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Int'lguy

International Guy
I was brought up to believe that if you can't go home and tell your family what you did today, then it isn't right.

Exec - "Hey honey, I just got a 150% raise this year!"

Wife - "Wow - you did? UPS must be doing very well. Or did you do that much better?"

Exec - "No, the salary commitee just decided to boost the raise of the top level managers and most of the rest of the management team didn't get any raise this year. In fact, they are making much less than last year when you consider now they have to pay more for their benefits."

Wife - "Oh".

If it doesn't sound right, if it doesn't feel right, it aint right.

I don't know about you all but I wouldn't be very proud about that. And I'm not proud of my company for doing it.
 

Black_6_Leader

Well-Known Member
Hoaxster, I have to call you on this one! your comment on LTIP is flat-out WRONG. No options are involved.

LTIP Long-Term Incentive Performance Award Program (LTIP) is granted as restricted stock units (RSUs) that are settled in UPS stock upon vesting; three-year vesting.

This is on page 24 of the Proxy.
 

Catatonic

Nine Lives
Hoaxster, I have to call you on this one! your comment on LTIP is flat-out WRONG. No options are involved.

LTIP Long-Term Incentive Performance Award Program (LTIP) is granted as restricted stock units (RSUs) that are settled in UPS stock upon vesting; three-year vesting.

This is on page 24 of the Proxy.
An RSU is a quasi-form of a Stock Option...
You buy in at one price and if the stock price goes up you get much more than what it was awarded at.
If it goes down, you get less at maturity.

Didn't think someone was going to get technical on me ... the effect is the same.

According to the 14A (proxy) The LTI program was modified in 2008 so that except for region managers & up, the LTI was paid in RPUs (Stock that vests in 5 years) not options, and that for the region managers and above it is 75% RPUs and 25% options. For the non management committee types, the payout is between 25 & 75% of annual base salary. LTI covers 3,100 folks, and has no performance objectives!

As a company, UPS has never had much of a problem with the retention of District Managers have they?? And in fact, I have never heard of a member of the Management Committee being swept up by another firm.

The issue is the retention of front line managers & supervisors; by continuing to balance the books on the backs of those supervisors & managers means that the retention issue will only get worse.

Depends on one's point of view...mine tends to be closer to yours.
However, the Board of Directors have no legal responsibility to you or me but they are responsible to UPS Shareholders. This incentive plan's goal is to ensure that managers in position to influence and make decisions within the company are working in the best interests of the UPS Stock Shareholders.

I remember playing out this scenario in 1999 as to why UPS as company was not going to be as good a place to work once we went public. There is nothing special about UPS in this respect ... this is the nature of all publicly held companies.
 

Black_6_Leader

Well-Known Member
More then a technicality.

An option is the right to purchase shares at a set price (strike price) at a future time (window). If at that future time (window), the market price of the shares is less then the strike price, the option is said to be "underwater" (and yes, has no value ~ why you purchase shares at a higher price then the market). There are no dividends paid on UPS options.
LTI Stock options that vest 20% per year over five years; ten-year term (window)

The RPUs and RSUs are awarded like an option, but that is where the similarity ends. Each (RPU &RPU) represent shares (you get dividends on them), and if the value of the shares is lower on the vesting date then on the grant date, they are worth less (but still represents actual shares of stock).

LTI RPUs that are paid in UPS stock upon vesting; vesting is 20% per year over five years;
LTIP RSUs that are settled in UPS stock upon vesting; three-year vesting
MIP RSUs are settled in UPS stock upon vesting; vesting is 20% per year over five years
 

Catatonic

Nine Lives
More then a technicality.

Do you agree that if the price of stock goes up from the time of award to when it is "cashed out" that the person has gained the difference in value?

The purpose is the same...to heavily incent top management to make sure the price goes up which is the same goal as the shareholders.
 

Feeder Hawgg

Feeder Hawgg
Here is the true problem for me......My part time supes just got a 2.5% increase, me and my full time supes just got zilch. We had the best performance in my building since it opened and I mean a fantastic year. Beat the cost plan, all service numbers above plan, etc....... The reason the management committee get awarded these numbers is largely from the leadership and work of the college students. Always has been that way. Have you ever tried to staff a midnight hub sort with quality employees when there are companies paying as much or more than us? And how do you freeze the full time management salaries but increase by the National Master agreement, everyone who works for you salaries. If the economy wasn't in the dumper as much as it is we would have a mass exodus of all lower levels of management from Division managers down. I just don't understand how the standard is different for those caught in the web I am. I am willing to make the sacrifice for the sake of financial stability by not getting a raise this year, just seems that so should the top brass.
 

Catatonic

Nine Lives
Here is the true problem for me......My part time supes just got a 2.5% increase, me and my full time supes just got zilch. We had the best performance in my building since it opened and I mean a fantastic year. Beat the cost plan, all service numbers above plan, etc....... The reason the management committee get awarded these numbers is largely from the leadership and work of the college students. Always has been that way. Have you ever tried to staff a midnight hub sort with quality employees when there are companies paying as much or more than us? And how do you freeze the full time management salaries but increase by the National Master agreement, everyone who works for you salaries. If the economy wasn't in the dumper as much as it is we would have a mass exodus of all lower levels of management from Division managers down. I just don't understand how the standard is different for those caught in the web I am. I am willing to make the sacrifice for the sake of financial stability by not getting a raise this year, just seems that so should the top brass.

It occurs to me that this could be an example in college textbooks in 5 - 10 years of a company in transition and how Change Management made the transition either smooth or rough.

If this was about another large corporation, I would say the compensation would appear very normal and it would conform well with other corporations.
These changes simply point to how unique and special United Parcel Service was (before going public) and how UPS is now just another large corporation.

It appears that the Board of Directors and Management Compensation Committee feels that the reward system should focus primarily on those people in positions to drive results the most - above a certain level - at or above the Region staff level. Biggest bang for the bucks.

I've heard this expressed around the Corporate office as: the "partnership" is now for those in Level 20 and above.


These are the 7 primary levels of mgt at UPS.
Mgt Committee
Region Mgr
District Mgr
Region Staff Mgr - Level 20
-----------------------------------------------------
Division Level/District Staff Level
Manager
Supervisor
 

Black_6_Leader

Well-Known Member
Do you agree that if the price of stock goes up from the time of award to when it is "cashed out" that the person has gained the difference in value?
The purpose is the same...to heavily incent top management to make sure the price goes up which is the same goal as the shareholders.


In general the answer is yes for options, and NO for RSUs & RPUs.

In the case of an option, the holder only receives a benefit if the market price is higher then the strike price. For UPS, the option has been the right to purchase the stock at today's price at some future date. And the cost to the company is only realized when the option is exercised; and then the cost is only the difference between the strike price and the market price. If the stock price goes sideways or worse yet, goes down, the option has no value to the holder, and no cost to the company.

For the RPU and RSU, there is ALWAYS a value to the holder, and a cost to the company. And that applies even if the share price declines.

Flat out options, have a higher risk of a no or low payout.

If rewarding the share owner (by increasing the share price) is truly the goal, options are the answer, as there is no reward if the share price is flat or goes down.

It should be pointed out that since 2008, options represent only 25% of the LTI bonus and that only applies to Region Managers on up, so there is very little that is truly at risk.
 

Catatonic

Nine Lives
In general the answer is yes for options, and NO for RSUs & RPUs.

In the case of an option, the holder only receives a benefit if the market price is higher then the strike price. For UPS, the option has been the right to purchase the stock at today's price at some future date. And the cost to the company is only realized when the option is exercised; and then the cost is only the difference between the strike price and the market price. If the stock price goes sideways or worse yet, goes down, the option has no value to the holder, and no cost to the company.

For the RPU and RSU, there is ALWAYS a value to the holder, and a cost to the company. And that applies even if the share price declines.

Flat out options, have a higher risk of a no or low payout.

If rewarding the share owner (by increasing the share price) is truly the goal, options are the answer, as there is no reward if the share price is flat or goes down.

It should be pointed out that since 2008, options represent only 25% of the LTI bonus and that only applies to Region Managers on up, so there is very little that is truly at risk.

Now I understand your points better... I did not think this all the way through. I'll give this one to you. True Stock Options would incent top management better than the RSU's do...not sure I want that though...it's bad enough now! :wink2:
 

Black_6_Leader

Well-Known Member
Hoaxster,
The shift in compensation philisophy has been subtle; but the impact is significant.
The reward is real; the risk is limited at best. And funny, share price is not one of the elements LTIP payouts are based on.
 
This partnership has been dead since we went public in 1999. Not everybody realized this in 1999, and believe it or not, there are still some people that don't want to believe it, mostly from retirees who really have no idea how bad things are currently for lower level management. No raises, no 401k match, no career path, and I doubt the 401k match will EVER come back.

Retirement at 55 is now basically a thing of the past since even Region Manager level people have suffered from the negative return on UPS stock over the last 10 years. Look around the Corporate Office and see how many retirement eligible people past age 55 are still hanging around. Why leave your job when you receive LTIP up to 250% of your base pay every year, plus LTI and MIP and another year of service adding to your pension under your belt? If I can't get it in stock growth, I'll get it in salary.

Greed was the reason for the IPO, and it is greed now that is consolidating all the pay for the top 600 employees. It was also greed that got this country in this current financial mess, UPS is just part of the club. Every man for himself. Get used to it. Like Gordon Gecko, our Board of Directors is made up of people from other companies that
think greed is good.

I actually believe Scott is doing the best he can with the situation he inherited, but it's like trying to fight the incoming tide. The IPO let Pandora out of the box.
 
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