>>It is said that guru Tilton and his family's "temporary" accommodation at the Four Season's Hotel at downtown Chicago (not near the airport nor near UAL's World Headquarters) are costing the company $18,000 per month...Not to mention Tilton's $950,000 annual salary, plus $3 Million "signing" bonus, plus $4.8 Million compensation for lost pension benefits at his former employer, plus entitlements to "future" bonuses, including 200% of his "base" salary. <<
Looks like the judge has OK'ed Tilton's pay package, let's see what he approves for the pilots on March 15...
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Bankruptcy Judge Clears
United CEO's Pay Package
Associated Press
CHICAGO -- A bankruptcy judge allowed United Airlines to go ahead Friday with its multimillion-dollar pay package for Chief Executive Glenn Tilton, despite acknowledging that the timing may send a questionable message to employees.
Judge Eugene Wedoff said rejecting the company's bid for prompt adoption of the compensation package in bankruptcy would have raised questions about the court's confidence in the carrier's restructuring. He said the financial impact on UAL Corp.'s United should be comparatively negligible.
The Association of Flight Attendants contested Mr. Tilton's five-year contract as premature and unfair, given that United employees have taken interim pay cuts and are being asked for longer-term concessions. The flight attendants argued that, instead of stating full confidence in its CEO, United should send a message of shared sacrifice by revising or delaying the plan. To that argument, Judge Wedoff responded: "You may be right." The flight attendants said Mr. Tilton's compensation should be tied to the success of the company's restructuring.
United said the original $11.4 million pay and benefits package for Mr. Tilton -- the terms of which were lowered somewhat this week -- was "eminently reasonable" and even below market average for a company its size. Mr. Tilton got a $3 million signing bonus last September as part of a package that also included an annual salary of $950,000, $4.5 million in pension benefits, 1.15 million stock options in parent UAL, and relocation expenses.
The chairman and CEO volunteered early in United's 10-week-old bankruptcy reorganization to take an 11% pay cut, which would lower this salary to $845,500 if adopted. United didn't immediately disclose the terms of the revised package.
A spokeswoman for the flight attendants' union, Sara Nelson Dela Cruz, said the group remains fully committed to United's success "regardless of whether we agree with the judge's decision." She said the judge will have an opportunity to "balance" his decision on CEO compensation with that of employee wages when renegotiated contracts come before the court.
Judge Wedoff also sided with the company Friday in extending the ban on further sales of employee-owned stock in the airline. After hearing arguments from both United and the independent trustee for its employee stock ownership plan, State Street Bank & Trust Co., he said he would issue a new injunction blocking the sale.
United will lose what could amount to a billion-dollar tax writeoff if employee ownership falls below the 20% level it's at now.
State Street argued that employees' 12 million remaining shares could be worthless if not allowed to be sold soon. Its attorneys called United's plan for a low-cost carrier at the heart of its restructuring strategy "more an exercise in hope than in reality."
But Judge Wedoff said the tax benefit could have "very substantial significance" as an element of United's restructuring. He said employees can benefit more from a revived United than from cashing in their remaining shares, which at current value are worth about $13 million -- an average of about $170 for each of 75,000 participants, based on the company's figures.
Updated February 21, 2003 9:19 p.m. EST