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Directors at United Under Fire for Smisek’s Severance Package

United Airlines’ board of directors is being sued for allowing ex-CEO Jeff Smisek to walk away from the company with a lavish severance package following his departure from the airline.

United Airlines’ board of directors has landed itself in hot water for granting ex-CEO Jeff Smisek and other former top staff extravagant severance packages. Bloomberg reports that a pension fund has taken legal action against the board after Smisek left the carrier with a $37 million package.

Smisek resigned from his position at the carrier in September 2015 following an investigation into a bribery scandal. The alleged impropriety saw United run curiously unprofitable flights between Newark and Columbia, South Carolina. At the time, United was looking for funding from the Port Authority of New York and New Jersey to improve train service to its Newark hub.

The resumption of these unprofitable flights, which had previously been canceled, was sought by David Samson, the one-time chairman of this body, who had a vacation home close to Columbia. In 2016, Samson pleaded guilty to bribery charges after it was found that he pressured United into setting up this so-called “Chairman’s Flight.”

The outlet reports that the legal suit, brought forth by the City of Tamarac Firefighters Pension Trust Fund, says that directors also erred by allowing Smisek to resign and claim his severance package rather than firing him. It also indicates that the board acted to the detriment of investors by not asking Smisek to return his severance package.

Lawyers from the fund say that United’s board, “put the interests of Smisek and the other officers ahead of the company’s best interests.”

In a statement for United, which has already paid hefty fines to both the U.S. Securities and Exchange Commission as well as the Justice Department as part of the investigation, spokesperson Erin Benson said “We will defend ourselves against this claim, which we believe has no merit.”

Comments are Closed.
5202flyer May 17, 2017

The Board members should be ashamed of themselves for paying out millions to Jeff Smisek, but it appears that they have no remorse whatsoever.

Flyer1M May 16, 2017

Oscar was part of the Jeff's management. Thought most thought Oscar would save the day and he has made improvement he covered for Jeff by paying the fine and claiming no wrong doing. If there was no wrong doing why did United pay millions.

Sabai May 13, 2017

Wasn't Oscar Munoz a member of the very same board? It would seem that he was equally clueless and complicit.