In its Plan of Reorganization (POR), United has included a lavish bonus program for distribution of equity upon exit from bankruptcy and in years directly following exit for 400 unnamed members of management. The Management Equity Incentive Plan (MEIP) is set to comprise 11% of the total equity distributed amongst all creditors, including Flight Attendants and other employees.
United exclaims in its POR Disclosure Statement that the purpose of the MEIP is “to provide the Reorganized Debtors’ management with incentives to maximize future stockholder value [and to] align their interests with the interests of stockholders.” They also state that “awards under the [MEIP]… will not be based on performance conditions.”
Summary of Management Bonuses
- Grant 8% of shares in the new United Airlines to 400 members of current management upon exit from bankruptcy.
- Provide 50% of the value of the shares in restricted stock and 50% in stock options.
- Vest shares and options based on the following schedule 20% after six months, 20% after twelve months, 20% after three years, 20% after four years.
- Continuing stock grants of 3% of total stock in the new United Airlines will be distributed anytime after exit from bankruptcy.
| Level |
Approximate # of Participants |
Average Expected Grant Value 2 |
Average Shares/Participant3 |
% of Shares Outstanding |
| |
|
|
Options |
Restricted Stock |
|
| CEO |
1 |
$15,000,000 |
822,000 |
545,000 |
1.1% |
| EVP |
3 |
$6,000,000 |
329,000 |
218,000 |
1.3% |
| SVP (CEO Reports) |
4 |
$3,000,000 |
164,000 |
109,000 |
0.9% |
| All other officers |
31 |
$750,000 |
41,000 |
27,500 |
1.7% |
| All others |
366 |
$100,000 |
5,500 |
3,600 |
2.7% |
2 Equals the annualized expected value of the shares at grant; face value of grants will be about 38% higher.
3 Assumes $15.20 price per share at emergence, $13.75 restricted stock value (to account for vesting conditions) and an option value equal to 60% of the face value of the stock at grant ($9.12). The actual face value will be dependent on the Debtor's emergence stock price, and the ultimate realized value will depend upon the performance of the Debtors' post-emergence equity.
On the January 6th Boston Legal ABC TV show, James Spader said, "all it takes for evil to succeed is for good people to say 'it's a business'." I almost jumped out of my chair. How many applications does that one phrase have in our current circumstances???
I for one am so disgusted with the management at UAL I cannot even think about it for long or I will get ill from anger. I love the work I do, I love my flying partners and I have much compassion for the unwitting victims of the "more seats is better in economy" gurus at WHQ (namely, the passengers who endure 14 hours in a seat built for not-to-scale mannequins), but I deeply regret working under the current management of this company. I deeply regret it...it is my biggest failure to date.
Thanks for your continuing efforts on our behalf.
-San Francisco Flight Attendant