Judge approves UAL’s incentive plan
During the first day of a hearing in Chicago to confirm UAL's reorganization plan, U.S. Bankruptcy Court Judge Eugene Wedoff listened to union complaints that the proposal is "excessive" at a time when other employees have made concessions to help the airline rebound financially. But he said the U.S. Bankruptcy Code doesn't expressly call for a review of management compensation, so the only reasonable basis for a decision is if the plan is "what's done in the marketplace."
"It may be we have a culture in this country that overcompensates management," the judge said. "But United is just one enterprise that operates in that general environment," and therefore it can't be expected to stand against the tide and be uncompetitive.
The plan approved yesterday calls for 9.8 million shares in the form of restricted shares or stock options to be made available to management, with the rights vesting over four years with the first 20% after six months. The stock compensation isn't tied to performance. Specific awards to top executives and lower-level managers haven't yet been set by the board.
Robert P. Mark
1/19/2006
A federal bankruptcy judge overseeing the 37-month reorganization of United Airlines parent UAL Corp. overruled union and retiree objections to an equity incentive plan that will award 8% of the 125 million new UAL shares to 400 top managers of the airline.1/19/2006
During the first day of a hearing in Chicago to confirm UAL's reorganization plan, U.S. Bankruptcy Court Judge Eugene Wedoff listened to union complaints that the proposal is "excessive" at a time when other employees have made concessions to help the airline rebound financially. But he said the U.S. Bankruptcy Code doesn't expressly call for a review of management compensation, so the only reasonable basis for a decision is if the plan is "what's done in the marketplace."
"It may be we have a culture in this country that overcompensates management," the judge said. "But United is just one enterprise that operates in that general environment," and therefore it can't be expected to stand against the tide and be uncompetitive.
The plan approved yesterday calls for 9.8 million shares in the form of restricted shares or stock options to be made available to management, with the rights vesting over four years with the first 20% after six months. The stock compensation isn't tied to performance. Specific awards to top executives and lower-level managers haven't yet been set by the board.
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