Shared Sacrifices? Tilton’s Compensation Scandal

Page updated: August 19, 2004

A couple weeks ago we shared news reports with you regarding Tilton’s refusal to take a “scheduled raise” to $845,500 and instead kept his salary at a mere $712,500 – not withstanding the:

  • $1.5 million in stock payments,
  • $3 million “signing bonus,” and
  • special $4.5 million pension trust.

Non-bankrupt American Airlines chief executive, Gerard Arpey, makes $200,000 less than Tilton and recently declined a nearly 22 percent raise offered by his company's board.

Since that time we have discovered that Tilton actually took the raise for a period of time!

Here’s a chronology of events regarding Tilton’s latest compensation scandal:

  1. On April 4, 2003, in a letter to United’s General Counsel, Tilton agreed to a 14% reduction in pay from $845,000 to $712,500 precisely during the time that Section 1113 negotiations were at their climax, the deadline for negotiating employee concessions was looming and employees were demanding to see sacrifices from management.
  2. On April 16, 2003 the “Emergency Wartime Supplemental Appropriations Act, 2003” was enacted. The Act provided billions of dollars in relief to the airlines and contained a one year restriction limiting the pay of an airline’s two most highly compensated executives to their salaries in 2002. This restriction has no effect on Tilton’s compensation.
  3. On May 13, 2004, Tilton submitted a letter to United’s General Counsel stating, “now that the compensation restriction period set out in the Act has expired, at the request of the Board of Directors I revoke my April 4, 2003 letter.” As a result, Tilton’s pay was increased from $712,500 to $845,000. During this same time, Tilton led the management group that was demanding millions of dollars in cuts to retiree health care!
  4. On August 2, 2004, United filed its 10-Q with the Security and Exchange Commission (SEC) and stated that “in the wake of the ATSB’s rejection”… Tilton made the decision to have his salary “revert” to its previous level of $712,500 effective August 1, 2004. This means that Tilton actually took the raise after just one year of “shared sacrifice” when all of the front-line employees of United Airlines were bound to six year Contracts with concessions in not just wages, but also work rules, benefits and pensions. It remains unclear if Tilton’s increase was effective as of April 1, 2004 when the restriction he referenced was lifted, or as of the date of his May 13, 2004 letter.
It’s almost two years later and we are still in bankruptcy. Now he is putting our pensions on the chopping block and planning for another Section 1113 to take more concessions.

Throughout this bankruptcy we have all been eager to work collaboratively to see our airline succeed. We have sacrificed, we are working longer for less and we are presenting record breaking service performance. We are dedicated to our airline’s success. Is Tilton?

Tilton talks about having to make the tough decisions. How “tough” was it for Tilton to take a raise while threatening to cut retiree health care? How “tough” was it for Tilton to tell all of us to “stay United,” while taking a raise as the rest of us struggle?

Is this a man we can trust to lead us to success? Is this a man we can trust?

This is the man we had to appropriately compensate to lead us out of bankruptcy. It’s almost two years later and we are still in bankruptcy. Now he is putting our pensions on the chopping block and planning for another Section 1113 to take more concessions.

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