United’s Incentive Pay Plan Brings Up Old Memories For Employees

On May 3, 2008, the Chicago Tribune reported a pay controversy, as United Airlines prepares to set aside $130 million worth of stock in an incentive plan to “attract, retain, and reward exceptional senior leaders”, said United spokeswoman Jean Medina.

This plan needs the approval of the airline’s shareholders, who will vote at United’s annual meeting in June, and has further angered employees still upset about the $150 million executive incentive plan just two years before.

“To propose something like this is completely outrageous and can only serve to further erode the already tenuous relationship between flight attendants and management,” said Greg Davidowitch, leaders of United’s flight attendants union and author of a shareholder proposal to give investors a say in executive pay, according to the Chicago Tribune article.

Since Glenn Tilton became CEO of United Airlines’ parent company in September 2002, he and his team have negotiated with the company’s employee unions for pay cuts that amounted to $1 billion. Before emerging from Chapter 11 in 2006, the company further cut labor costs, including the 2005 cancellation of its employee pension plan. In January 2006, the judge overseeing the UAL Corporation’s reorganization approved an executive pay package that would give $150 million worth of stock and options to Tilton and other senior managers.

That year, as United exited bankcruptcy, Tilton was named one of the 25 Highest-Paid Men by Fortune Magazine, ranking at 23 with $39.7 million total compensation.