Good to be the King II


Dec 21, 2002
Judge leaves United chief''s pay package alone
February 22, 2003
By Dave Carpenter Advertisement

A bankruptcy judge allowed United Airlines to go ahead Friday with its multimillion-dollar pay package for Chief Executive Glenn Tilton despite acknowledging that the timing may send a questionable message to employees.
Judge Eugene Wedoff said rejecting the company''s bid for prompt adoption of the compensation package in bankruptcy would have raised questions about the court''s confidence in its restructuring. He said the financial impact on United should be comparatively negligible.
Tilton''s five-year deal was contested by the Association of Flight Attendants as premature and unfair at a time when United employees have taken interim pay cuts and are being asked for longer-term concessions.
The flight attendants argued that United should send a message of shared sacrifice by revising or delaying the plan rather than its stated message of full confidence in its CEO, to which Wedoff responded that ''''you may be right.'''' They said Tilton''s compensation should be tied to the success of the company''s restructuring.
United said the original $11.4 million pay and benefits package for Tilton--the terms of which were lowered somewhat this week--was ''''eminently reasonable'''' and even below market average for a company its size.
Tilton got a $3 million signing bonus last September as part of a pay package that also included an annual salary of $950,000, $4.5 million in pension benefits, 1.15 million stock options in United parent UAL Corp. and relocation expenses.
The chairman and chief executive volunteered early in United''s 10-week-old bankruptcy reorganization to take an 11 percent pay cut, which would lower that sum to $845,500 if adopted. United did not immediately disclose the terms of the revised package.
A spokeswoman for the flight attendants'' union, Sara Nelson Dela Cruz, said the group remains fully committed to United''s success ''''regardless of whether we agree with the judge''s decision.'''' She said the judge will have an opportunity to ''''balance'''' his decision on CEO compensation with that of employee wages when renegotiated contracts come before the court.
Wedoff also was hearing arguments Friday involving the temporary limit on sales of employee-held company stock.