Source: Crain's Chicago Business
Author: Julie Johnsson

Upon emergence from bankruptcy, CEO will also get a base salary of $605,625

(Crain's) - When United Airlines exits bankruptcy next month, CEO Glenn Tilton is expected to pocket stock and options worth $15 million, base pay of $605,625 and a bonus that could double his salary, according to court and internal company documents.

Mr. Tilton would receive 545,000 restricted shares and 822,000 options, about 1.1% of the $1.9 billion in equity United plans to issue. A compensation expert hired by United assumes the airline's restricted stock would be worth $13.75 per share, and that the options would have a value of $9.12.

United's proposed incentive plan for senior managers and directors is expected to be a contentious issue as a Chicago bankruptcy court begins hearings into the carrier's road map for exiting bankruptcy Jan. 18. Elk Grove Township-based United plans to set aside 8% of the equity it will issue, valued at about $152 million, for about 400 salaried and management employees. The stock and option grants will vest over four years. That largesse has been criticized as excessive by the airline's unsecured creditors committee and its unions.

"This is part of an ongoing negotiation with the creditors committee," said United spokeswoman Jean Medina, of Mr. Tilton's payout. "We're very optimistic that we'll resolve these issues consensually."

The value of Mr. Tilton's equity grants, however, will ultimately be determined by how the reorganized airline's stock performs. Shares of U.S. Airways Group Inc. have soared 80% to $34.75 since it emerged from bankruptcy in September.

Ms. Medina notes that Mr. Tilton's options will have no value unless the company's share price increases.

United's three executive vice-presidents-Frederic "Jake" Brace, Pete McDonald and John Tague-would receive restricted stock and options worth $6 million, apiece; four senior vice-presidents who report directly to Mr. Tilton would receive equity grants worth $3 million, apiece; 31 other officers would receive grants worth $750,000, apiece while 366 other managers receive grants valued at $100,000.

"Equity incentive programs are standard practice. It's in everyone's interests to have this component of our management compensation tied to the performance of United's stock price going forward," Ms. Medina said.