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UPS Partners
Mip Factor Announced
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<blockquote data-quote="squeekywheel" data-source="post: 130568" data-attributes="member: 4999"><p>Why I consider this MIP award a money grab:</p><p> </p><p>Back in 2004 the MIP factor was 2.4. This was determined by dividing pre-tax profit by the management compensation pool - a simple calculation reflecting the strength of the company.</p><p> </p><p>Fast forward to 2006. Profit for the 2006 MIP cycle is 30% higher than the 2004 MIP cycle (source: UPS earnings reports 2003-2006). A less easily derived number is the increase in management compensation pool. The increase is due to pay raises and total increase in number of managers. Based on pre 2004 numbers I'll throw out the number of around 7.5% per year or 15% for 2 years. (Feel free to substitute your guess). That leaves the following math:</p><p> </p><p>2006 Est. Factor = (Profit Increase/Mgmt Pool Increase) * 2004 Factor</p><p> </p><p>2006 Est. Factor = (130%/115%) * 2.4 = <strong>2.71</strong></p><p> </p><p>Even if you assumed the Management Pool Compensation increased 30% over the 2 year period, the result is 2.4. It would take a 95% increase in the Management Pool Compensation over 2 years to yield a 1.6 factor for these profits. We know neither of the above occurred!</p></blockquote><p></p>
[QUOTE="squeekywheel, post: 130568, member: 4999"] Why I consider this MIP award a money grab: Back in 2004 the MIP factor was 2.4. This was determined by dividing pre-tax profit by the management compensation pool - a simple calculation reflecting the strength of the company. Fast forward to 2006. Profit for the 2006 MIP cycle is 30% higher than the 2004 MIP cycle (source: UPS earnings reports 2003-2006). A less easily derived number is the increase in management compensation pool. The increase is due to pay raises and total increase in number of managers. Based on pre 2004 numbers I'll throw out the number of around 7.5% per year or 15% for 2 years. (Feel free to substitute your guess). That leaves the following math: 2006 Est. Factor = (Profit Increase/Mgmt Pool Increase) * 2004 Factor 2006 Est. Factor = (130%/115%) * 2.4 = [B]2.71[/B] Even if you assumed the Management Pool Compensation increased 30% over the 2 year period, the result is 2.4. It would take a 95% increase in the Management Pool Compensation over 2 years to yield a 1.6 factor for these profits. We know neither of the above occurred! [/QUOTE]
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