"Pay Mix" update...

RandomUPSDude

New Member
The ownership incentive going away is just about a wash for those who already have the award maxed out.

For those who do not, your Total Target Compensation is being reduced despite all the claims otherwise. New employees who haven't had time to obtain enough stocks are no longer able to earn that award which maxes out at ones months salary (a little more than 8% of you salary). So you are taking a future 8% pay cut, if you are the type of person to accumulate stocks. If you are the kind of person that would cash out your stocks anyway, then you aren't really losing much with the change.

If you are able to purchase stocks and hold them on Dec 1, 2022 this year, you will earn 3.5% (for sup level) on those funds as long as you continue to work for UPS. After Dec 1, 2022, you can move those same funds somewhere else, but you will continue to earn your 3.5% on them. Of course, the stock market could drop in that period, creating a loss.
 

UPSBD

Supa Star
The ownership incentive going away is just about a wash for those who already have the award maxed out.

For those who do not, your Total Target Compensation is being reduced despite all the claims otherwise. New employees who haven't had time to obtain enough stocks are no longer able to earn that award which maxes out at ones months salary (a little more than 8% of you salary). So you are taking a future 8% pay cut, if you are the type of person to accumulate stocks. If you are the kind of person that would cash out your stocks anyway, then you aren't really losing much with the change.

If you are able to purchase stocks and hold them on Dec 1, 2022 this year, you will earn 3.5% (for sup level) on those funds as long as you continue to work for UPS. After Dec 1, 2022, you can move those same funds somewhere else, but you will continue to earn your 3.5% on them. Of course, the stock market could drop in that period, creating a loss.

Is the OIP participation level based on the closing stock price on 12/1?
 
@Dragon ?
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Kadok

Member
Still confused: How do you calc the new salary? I know we will roll in the Ownership incentive figure - so that is divided by 12 for the monthly increase. But how is the calc made to incorporate 17% (or 34% for mgrs) into the monthly increase to account for the difference in MIP that is reduced to 10% (or 20%)?

Thx for any help from those who can follow my logic (or mixed up logic)!
 

DELACROIX

In the Spirit of Honore' Daumier
Still confused: How do you calc the new salary? I know we will roll in the Ownership incentive figure - so that is divided by 12 for the monthly increase. But how is the calc made to incorporate 17% (or 34% for mgrs) into the monthly increase to account for the difference in MIP that is reduced to 10% (or 20%)?

Thx for any help from those who can follow my logic (or mixed up logic)!

Should of remained a Teamster...

They lost me from the start...

7/14 percent of your projected MIP is going into your salary, you still get the remaining 10/20 percent in stock at the end of every year?

The rest of the (merit) raises or bonuses not too sure...🤔
 
Still confused: How do you calc the new salary? I know we will roll in the Ownership incentive figure - so that is divided by 12 for the monthly increase. But how is the calc made to incorporate 17% (or 34% for mgrs) into the monthly increase to account for the difference in MIP that is reduced to 10% (or 20%)?

Thx for any help from those who can follow my logic (or mixed up logic)!
No need to break your annual salary into monthly. You just need to know your “real” total compensation amount for 2022. Once you have that, you then divide it by 1.10 for 10% mip or 1.20 for 20% mip and so forth.

If you care to look, I gave the formula plus some background in an earlier post. With it you can calculate your new salary.
 

Fenris

Well-Known Member
Still confused: How do you calc the new salary? I know we will roll in the Ownership incentive figure - so that is divided by 12 for the monthly increase. But how is the calc made to incorporate 17% (or 34% for mgrs) into the monthly increase to account for the difference in MIP that is reduced to 10% (or 20%)?

Thx for any help from those who can follow my logic (or mixed up logic)!
There are sample calculations on UPSers.
 
Let me know if I'm thinking about this correctly.

This is a hypothetical scenario where two Managers both make $100,000/year and are eligible for 3% OIP, and were hired before 2008. The only difference in these Managers is that one owns no UPS A stock on 12/1/22 and the other holds $280,000 worth (based on the Jan 1-Dec 1, 2022 average stock price). I'm using $280,000 because that is the amount necessary to get the full OIP Award and thus maxes out their salary increase ($280,000 x 3%= $8400).

Current Salary per YearCurrent Salary per MonthStock Ownership Amount on Dec 1, 2022New Salary 2023MIP Award 2023 (20%)Pension Offset in 2023 (13%)Total
$100,000$8,333$0$111,000$22,200$14,430$147,630
$100,000$8,333$280,000$119,333$23,867$15,513$158,713
Difference$8,333$1,667$1,083$11,083

So, all other things being equal, the difference between maxing out the one time OIP salary adjustment is $11,000 in the first year. Each year after that (again, all other things being equal), the number gets larger. In 2028, the Pension Offset becomes 15%, so that number grows a bit too.
So if Manager #2 stays with the company for 10 more years until they retire, they will make at least $110,000 more than Manager #1 would, all other things equal. Manager #1 is essentially buying an $11,000/year raise for a $280,000 short term investment, as that Manager could sell all the stock on Dec 2 and still lock in the raise. Of course, that Manager will probably hold onto the stock until Dec 31, 2022 to get the 2022 OIP Award of $8,333.

Is this right? Am I missing something?
 
Let me know if I'm thinking about this correctly.

This is a hypothetical scenario where two Managers both make $100,000/year and are eligible for 3% OIP, and were hired before 2008. The only difference in these Managers is that one owns no UPS A stock on 12/1/22 and the other holds $280,000 worth (based on the Jan 1-Dec 1, 2022 average stock price). I'm using $280,000 because that is the amount necessary to get the full OIP Award and thus maxes out their salary increase ($280,000 x 3%= $8400).

Current Salary per YearCurrent Salary per MonthStock Ownership Amount on Dec 1, 2022New Salary 2023MIP Award 2023 (20%)Pension Offset in 2023 (13%)Total
$100,000$8,333$0$111,000$22,200$14,430$147,630
$100,000$8,333$280,000$119,333$23,867$15,513$158,713
Difference$8,333$1,667$1,083$11,083

So, all other things being equal, the difference between maxing out the one time OIP salary adjustment is $11,000 in the first year. Each year after that (again, all other things being equal), the number gets larger. In 2028, the Pension Offset becomes 15%, so that number grows a bit too.
So if Manager #2 stays with the company for 10 more years until they retire, they will make at least $110,000 more than Manager #1 would, all other things equal. Manager #1 is essentially buying an $11,000/year raise for a $280,000 short term investment, as that Manager could sell all the stock on Dec 2 and still lock in the raise. Of course, that Manager will probably hold onto the stock until Dec 31, 2022 to get the 2022 OIP Award of $8,333.

Is this right? Am I missing something?


Your math does not sum up to their total compensation. That is the only variable that is fixed in this equation.
I’m going to break this down in two parts as you did. I’m going to call the manager 1 who makes 100k, with no OIP, example 1. Manager 2 who makes 108,400, example 2.

Today’s Total compensation = 2023 Total compensation. I am ignoring pensions because that is not apart of the total compensation formula.

Example 1.
New salary would be 111,666 (without 20% bonus.)

Example 2.
New salary would be 118,666 (without 20% bonus.)
 
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Your math does not sum up to their total compensation. That is the only variable that is fixed in this equation.
I’m going to break this down in two parts as you did. I’m going to call the manager 1 who makes 100k, with no OIP, example 1. Manager 2 who makes 108,400, example 2.

Today’s Total compensation = 2023 Total compensation. I am ignoring pensions because that is not apart of the total compensation formula.

Example 1.
New salary would be 111,666 (without 20% bonus.)

Example 2.
New salary would be 118,666 (without 20% bonus.)
Thanks for your response. I think I was unclear in my previous post and I apologize.

I want to know the difference between owning no stock and maxing out the stock as it relates to the Jan 1, 2023 salary recalculation. For a Manager making $100,000/yr ($8,333/mo) the new salary should be $8,333 more for a Manager who owns $280,000 worth of Class A stock versus a Manager who owns $0. Correct?
 
Thanks for your response. I think I was unclear in my previous post and I apologize.

I want to know the difference between owning no stock and maxing out the stock as it relates to the Jan 1, 2023 salary recalculation. For a Manager making $100,000/yr ($8,333/mo) the new salary should be $8,333 more for a Manager who owns $280,000 worth of Class A stock versus a Manager who owns $0. Correct?

Not sure I fully understand. But maybe this may help.

On Jan 1, 2023, For a Manager making $100,000/yr ($8,333/mo) the new salary should be $9884.26/mo or $578.70/mo more for a Manager who owns $280,000 worth of Class A stock versus a Manager who owns $0.
 
Not sure I fully understand. But maybe this may help.

On Jan 1, 2023, For a Manager making $100,000/yr ($8,333/mo) the new salary should be $9884.26/mo or $578.70/mo more for a Manager who owns $280,000 worth of Class A stock versus a Manager who owns $0.
Can you explain why it would be $578.70/mo ($6,936/yr) more and not $694.42/mo ($8,333/year) more?

All of the materials on the Pay Mix Update indicate that all of the current OIP incentive will be incorporated into the new base salary, based on Class A holdings on Dec 1. And the current OIP incentive is 3% of a Manager's Class A stock holdings on 12/1/22, up to a maximum of one month's salary (per the Q&A document at Upsers.com).

So both Managers will get an ~11% raise in base salary. However, the Manager who owns no Class A shares on 12/1/22 will get no more money reallocated to their base salary on 1/1/23. However, Managers who own Class A shares on 12/1/22 should get an additional 3% of the 2022 average value of those shares, up to one month's salary maximum.

So $280,000 x 3% = $8,400 and the max OIP payout for a Manager who makes $100,000/yr is $8,333. So shouldn't that Manager receive $8,333/yr ($694.42/mo) more on their base salary versus a $100k/yr Manager who owns no stock?

I'm mainly wondering what formula you're using to arrive at your number and why it's different than mine. Can you show your math to help me understand?
 
You also have to take in to consideration the pay bands. Someone making less tends to get larger raises and the higher paid employee will max out very quickly
 
Can you explain why it would be $578.70/mo ($6,936/yr) more and not $694.42/mo ($8,333/year) more?

All of the materials on the Pay Mix Update indicate that all of the current OIP incentive will be incorporated into the new base salary, based on Class A holdings on Dec 1. And the current OIP incentive is 3% of a Manager's Class A stock holdings on 12/1/22, up to a maximum of one month's salary (per the Q&A document at Upsers.com).

So both Managers will get an ~11% raise in base salary. However, the Manager who owns no Class A shares on 12/1/22 will get no more money reallocated to their base salary on 1/1/23. However, Managers who own Class A shares on 12/1/22 should get an additional 3% of the 2022 average value of those shares, up to one month's salary maximum.

So $280,000 x 3% = $8,400 and the max OIP payout for a Manager who makes $100,000/yr is $8,333. So shouldn't that Manager receive $8,333/yr ($694.42/mo) more on their base salary versus a $100k/yr Manager who owns no stock?

I'm mainly wondering what formula you're using to arrive at your number and why it's different than mine. Can you show your math to help me understand?
Just sent you a PM. There is an example I
used earlier here. With that example, you should be able to interpret the below.

Total comp./bonus = base

Manager who is participating fully in OIP:
(134k+8,333.33)/1.20=118,611.11/yr or 9884.26/Mo.

subtract 8,333.33 from your total comp. Will bring you to the manager who is not participating in OIP.

(134k)/1.20= 111,666.67/yr or 9305.56/Mo
Mathematically everything is correct.

Let’s check our work.

As they said over and over. Your total compensation will not change.

in the 1st example, their total 2022 comp was 142,333.33. His/her new 2023 salary is 118,611.11 and has a new target bonus payout of 23,722.22. Add those numbers together and you get your 2023 total compensation matching 2022 total comp.
 
You also have to take in to consideration the pay bands. Someone making less tends to get larger raises and the higher paid employee will max out very quickly
That's a good point and a consideration. But bosses give merit raises all the time for reasons other than performance. I've heard bosses say that they gave a larger merit raise to an employee because they knew they needed the money (sole breadwinner, just had a child, etc.). It's not right, but we all know it happens frequently.

I think that's all the more reason that, if anyone can control giving themselves a raise via stock holdings on Dec 1, and take it out of the hands of their boss, they should. Plus, even if they get smaller merit raises in the future, that merit raise is based on a larger number. It may take a number of years for the Manager with the smaller new base salary to catch up to the Manager with the larger one. That's money in the bank.

Also, the 2023 and beyond retirement benefits (8% and 5%, rising to 7%) are based off of that base salary number.

Also, they claim that they are going to re-examine the salary bands in light of this change. Well see. No matter what, I'd still rather be at the maximum salary band sooner rather than later.
 
Just sent you a PM. There is an example I
used earlier here. With that example, you should be able to interpret the below.

Total comp./bonus = base

Manager who is participating fully in OIP:
(134k+8,333.33)/1.20=118,611.11/yr or 9884.26/Mo.

subtract 8,333.33 from your total comp. Will bring you to the manager who is not participating in OIP.

(134k)/1.20= 111,666.67/yr or 9305.56/Mo
Mathematically everything is correct.

Let’s check our work.

As they said over and over. Your total compensation will not change.

in the 1st example, their total 2022 comp was 142,333.33. His/her new 2023 salary is 118,611.11 and has a new target bonus payout of 23,722.22. Add those numbers together and you get your 2023 total compensation matching 2022 total comp.
Got it. $6,944.40 more on the base salary and $1,388.93 more on the MIP for a total of $8,333.33. Thanks.

Then, for those eligible, the salary adjustment will increase the new Retirement Contribution (8%) and Transition Contribution (5%) by ~$902/year until 2028 and $1041 after 2028. Separate issue, but the base salary does impact the amount, so it is a consideration.

Unfortunately, they gave such short notice that few people, apart from the Senior Management, will be able to come up with the money and execute any large stock purchases in time to take advantage of it.
 
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