UPS » Topics » Management Incentive Awards and Restricted Stock Units

This excerpt taken from the UPS 10-K filed Feb 27, 2009.

Management Incentive Awards & Restricted Stock Units

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. Our management incentive awards program provides that half of the annual management incentive award, with certain exceptions, be made in restricted stock units (“RSUs”), which generally vest over a five-year period. The other half of the award is in the form of cash or unrestricted shares of class A common stock and is fully vested at the time of grant. These management incentive awards are generally granted in the fourth quarter of each year.

Upon vesting, RSUs result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, RSUs granted for our management incentive awards generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All RSUs granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on management incentive award RSUs are reinvested in additional RSUs at each dividend payable date.

We also award RSUs in conjunction with our long-term incentive performance awards program to certain eligible employees. The RSUs ultimately granted under the long-term incentive performance award are based

 

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

upon the achievement of certain performance measures, including growth in consolidated revenue and operating return on invested capital, each year during the performance award cycle, and other measures, including growth in consolidated earnings, over the entire three year performance award cycle.

As of December 31, 2008, we had the following nonvested RSUs outstanding, including reinvested dividends:

 

     Shares
(in thousands)
    Weighted
Average
Grant Date
Fair Value
   Weighted Average Remaining
Contractual Term
(in years)
   Aggregate Intrinsic
Value (in millions)

Nonvested at January 1, 2008

   9,982     $ 74.34      

Vested

   (2,839 )     74.06      

Granted

   6,238       46.56      

Reinvested Dividends

   314       N/A      

Forfeited / Expired

   (255 )     73.11      
                  

Nonvested at December 31, 2008

   13,440       61.77    2.23    $ 741
                        

RSUs Expected to Vest

   12,647       62.13    2.16    $ 698
                        

The fair value of each RSU is the New York Stock Exchange (“NYSE”) closing price on the date of grant. The weighted-average grant date fair value of RSUs granted during 2008, 2007, and 2006 was $46.56, $74.94, and $74.87, respectively. The total fair value of RSUs vested was $141, $145, and $82 million in 2008, 2007, and 2006, respectively. As of December 31, 2008, there was $633 million of total unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 3 years and 7 months.

This excerpt taken from the UPS 10-K filed Feb 29, 2008.

Management Incentive Awards & Restricted Stock Units

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. Our management incentive awards program provides that half of the annual management incentive award, with certain exceptions, be made in restricted stock units (“RSUs”), which generally vest over a five-year period. The other half of the award is in the form of cash or unrestricted shares of class A common stock and is fully vested at the time of grant. These management incentive awards are generally granted in the fourth quarter of each year.

Upon vesting, RSUs result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, RSUs granted for our

 

F-31


UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

management incentive awards generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All RSUs granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on management incentive award RSUs are reinvested in additional RSUs at each dividend payable date.

We also award RSUs in conjunction with our long-term incentive performance awards program to certain eligible employees. The RSUs ultimately granted under the long-term incentive performance award will be based upon the achievement of certain performance measures, including growth in consolidated revenue and operating return on invested capital, each year during the performance award cycle, and other measures, including growth in consolidated earnings, over the entire three year performance award cycle.

As of December 31, 2007, we had the following RSUs outstanding, including reinvested dividends:

 

    Shares
(in thousands)
    Weighted
Average
Grant Date
Fair Value
  Weighted Average Remaining
Contractual Term

(in years)
  Aggregate Intrinsic
Value (in millions)

Nonvested at January 1, 2007

  7,561     $ 73.82    

Vested

  (1,855 )     73.71    

Granted

  4,507       74.94    

Reinvested Dividends

  154       N/A    

Forfeited / Expired

  (385 )     73.97    
               

Nonvested at December 31, 2007

  9,982       74.34   2.37   $ 706
                     

RSUs Expected to Vest

  9,431       74.31   2.31   $ 667
                     

The fair value of each RSU is the New York Stock Exchange (“NYSE”) closing price on the date of grant. The weighted-average grant date fair value of RSUs granted during 2007, 2006, and 2005 was $74.94, $74.87, and $72.82, respectively. The total fair value of RSUs vested was $145 million, $82 million, and $0 in 2007, 2006, and 2005, respectively. As of December 31, 2007, there was $529 million of total unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 4 years and 1 month.

This excerpt taken from the UPS 10-K filed Mar 1, 2007.

Management Incentive Awards & Restricted Stock Units

 

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. Our management incentive awards program provides that half of the annual management incentive award, with certain exceptions, be made in restricted stock units (“RSUs”), which generally vest over a five-year period. The other half of the award is in the form of cash or unrestricted shares of class A common stock and is fully vested at the time of grant. These management incentive awards are generally granted in the fourth quarter of each year.

 

Upon vesting, RSUs result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, RSUs granted for our management incentive awards generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All RSUs granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on management incentive award RSUs are reinvested in additional RSUs at each dividend payable date.

 

We also award RSUs in conjunction with our long-term incentive performance awards program to certain eligible employees. The RSUs ultimately granted under the long-term incentive performance award will be based upon the achievement of certain performance measures, including growth in consolidated revenue and operating return on invested capital, each year during the performance award cycle, and other measures, including growth in consolidated earnings, over the entire three year performance award cycle.

 

F-33


Index to Financial Statements

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

As of December 31, 2006, we had the following RSUs outstanding, including reinvested dividends:

 

    

Shares

(in thousands)

   

Weighted

Average

Grant Date

Fair Value

  

Weighted Average
Remaining Contractual
Term

(in years)

  

Aggregate
Intrinsic Value

(in millions)

Nonvested at January 1, 2006

   5,104     $ 72.82      

Vested

   (1,115 )     72.83      

Granted

   3,706       74.87      

Reinvested Dividends

   76       N/A      

Forfeited / Expired

   (210 )     72.90      
                  

Nonvested at December 31, 2006

   7,561       73.82    2.58    $ 567
                        

RSUs Expected to Vest

   7,205       73.82    2.54    $ 540
                        

 

The fair value of each RSU is the New York Stock Exchange (“NYSE”) closing price on the date of grant. The weighted-average grant date fair value of RSUs granted during 2006 and 2005 was $74.87 and $72.82, respectively. The total fair value of RSUs vested was $82 million in 2006, and zero in 2005 and 2004. As of December 31, 2006, there was $437 million of total unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 4 years and 5 months.

 

This excerpt taken from the UPS 10-Q filed Nov 6, 2006.

Management Incentive Awards and Restricted Stock Units

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. Our management incentive awards program provides that half of the annual management incentive award, with certain exceptions, be made in restricted stock units (“RSUs”), which generally vest over a five-year period. The other half of the award is in the form of cash or unrestricted shares of class A common stock and is fully vested at the time of grant. These management incentive awards are generally granted in the fourth quarter of each year.

Upon vesting, RSUs result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, RSUs granted for our management incentive awards generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All RSUs granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on management incentive award RSUs are reinvested in additional RSUs at each dividend payable date.

We also award RSUs in conjunction with our long-term incentive performance awards program to certain eligible employees. The RSUs ultimately granted under the long-term incentive performance award will be based upon the achievement of certain performance measures, including growth in consolidated revenue, operating return on invested capital, and consolidated earnings, each year during the three year performance award cycle.

 

7


UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

As of September 30, 2006, we had the following RSUs outstanding, including reinvested dividends:

 

    

Shares

(in thousands)

   

Weighted
Average
Remaining
Contractual
Term

(in years)

   Aggregate
Intrinsic
Value (in
millions)

Outstanding at January 1, 2006

   5,108       

Vested and Issued

   (3 )     

Granted

   —         

Reinvested Dividends

   76       

Forfeited / Expired

   (224 )     
                 

Outstanding at September 30, 2006

   4,957     2.08    $ 357
                 

RSUs Expected to Vest

   4,921     2.05    $ 354
                 

No RSUs were granted during the first nine months of 2006 or 2005. As of September 30, 2006, there was $289 million of total unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 4 years and 1 month.

This excerpt taken from the UPS 10-Q filed Aug 4, 2006.

Management Incentive Awards & Restricted Stock Units

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. Our management incentive awards program provides that half of the annual management incentive award, with certain exceptions, be made in restricted stock units (“RSUs”), which generally vest over a five-year period. The other half of the award is in the form of cash or unrestricted shares of Class A common stock and is fully vested at the time of grant. These management incentive awards are generally granted in the fourth quarter of each year.

Upon vesting, RSUs result in the issuance of the equivalent number of UPS Class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, RSUs granted for our management incentive awards generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All RSUs granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on management incentive award RSUs are reinvested in additional RSUs at each dividend payable date.

We also award RSUs in conjunction with our long-term incentive performance awards program to certain eligible employees. The RSUs ultimately granted under the long-term incentive performance award will be based upon the achievement of certain performance measures, including growth in consolidated revenue, operating return on invested capital, and consolidated earnings, each year during the three year performance award cycle.

 

7


UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

As of June 30, 2006, we had the following RSUs outstanding, including reinvested dividends:

 

    

Shares

(in thousands)

   

Weighted
Average
Remaining
Contractual
Term

(in years)

   Aggregate
Intrinsic
Value
(in millions)

Outstanding at January 1, 2006

   5,108     —        —  

Vested

   (2 )   —        —  

Granted

   —       —        —  

Reinvested Dividends

   50     —        —  

Forfeited / Expired

   (150 )   —        —  
                 

Outstanding at June 30, 2006

   5,006     2.33    $ 397
                 

RSUs Expected to Vest

   4,899     2.30    $ 389
                 

No RSUs were granted during the first six months of 2006 or 2005. As of June 30, 2006, there was $306 million of total unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 4 years and 4 months.

This excerpt taken from the UPS 10-Q filed May 10, 2006.

Management Incentive Awards & Restricted Stock Units

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. Our management incentive awards program provides that half of the annual management incentive award, with certain exceptions, be made in restricted stock units (RSUs), which generally vest over a five-year period. The other half of the award is in the form of cash or unrestricted shares of Class A common stock and is fully vested at the time of grant. These management incentive awards are generally granted in the fourth quarter of each year.

Upon vesting, RSUs result in the issuance of the equivalent number of UPS Class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, RSUs granted for our management incentive awards generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All RSUs granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on management incentive award RSUs are reinvested in additional RSUs at each dividend payable date.

We also award RSUs in conjunction with our long-term incentive performance awards program to certain eligible employees. The RSUs ultimately granted under the long-term incentive performance award will be based

 

7


UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

upon the achievement of certain performance measures, including growth in consolidated revenue, operating return on invested capital, and consolidated earnings, each year during the three year performance award cycle. As of March 31, 2006, we had the following RSUs outstanding, including reinvested dividends:

 

    

Shares

(in thousands)

   

Weighted
Average
Remaining
Contractual
Term

(in years)

   Aggregate
Intrinsic
Value
(in millions)

Outstanding at January 1, 2006

   5,108     —        —  

Vested

   —       —        —  

Granted

   —       —        —  

Reinvested Dividends

   26     —        —  

Forfeited / Expired

   (53 )   —        —  
                 

Outstanding at March 31, 2006

   5,081     2.58    $ 403
                 

RSUs Expected to Vest

   4,876     2.55    $ 387
                 

No RSUs were granted during the first quarter of 2006 or 2005. As of March 31, 2006, there was $324 million of total unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 4 years and 7 months.

This excerpt taken from the UPS 10-K filed Mar 14, 2006.

Management Incentive Awards & Restricted Stock Units

 

Persons earning the right to receive management incentive awards are determined annually by the Compensation Committee of the UPS Board of Directors. In years prior to 2005, management incentive awards

 

F-30


Index to Financial Statements

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

consisted entirely of UPS Class A common stock that was fully vested in the year of grant. During the first quarter of 2005, we modified our management incentive awards program to provide that half of the annual management incentive award, with certain exceptions, be made in restricted stock units, which generally vest over a five-year period. The other half of the award granted in November 2005 was in the form of cash or unrestricted shares of Class A common stock and was fully vested at the time of grant. Amounts expensed for management incentive awards, including the restricted stock units, were $404, $738, and $606 million during 2005, 2004, and 2003, respectively.

 

Upon vesting, restricted stock units result in the issuance of the equivalent number of UPS Class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, restricted stock units vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. All restricted stock units granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on restricted stock units are reinvested in additional restricted stock units at each dividend payable date. As of December 31, 2005, we had a total of 5.108 million restricted stock units outstanding, with approximately 1.022 million units, before tax withholdings, vesting each year from 2006 through 2010.

 

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