Here is a cut & 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.
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.
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.
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%
#options = ANNUAL salary * the percentage, divide by the stock price.
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??
No one should really begrudge management these bonuses (mip & 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?
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.
Your description of a management position at UPS sounds an aweful lot like indentured servitude without the legal rights. Just saying...