Go Back  FlyerTalk Forums > Miles&Points > Discontinued Programs/Partners > United Mileage Plus (Pre-Merger)
Reload this Page >

Hole in the Golden Parachute? Tilton to Waive Cash Severance

Hole in the Golden Parachute? Tilton to Waive Cash Severance

 
Old May 5, 10, 8:16 pm
  #1  
Original Poster
 
Join Date: Jun 2008
Location: ORD
Programs: UA 1K
Posts: 82
Hole in the Golden Parachute? Tilton to Waive Cash Severance

Didnt see this posted anywhere yet, very unexpected and interesting development. From the WSJ today.

"UAL Corp. said Tuesday Chairman and Chief Executive Glenn Tilton would swap a cash severance for an equivalent amount of restricted stock if the United Airlines' parent completes its planned merger with Continental Airlines Inc.

The Chicago airline also reached management retention deals with five other senior executives that outline compensation and benefits following a completed deal, according to a regulatory filing.

***

The retention deal also applies to United executives Graham Atkinson, Peter McDonald, Kathryn Mikells, Thomas Sabatino and John Tague."

http://online.wsj.com/article_email/...TEwNDUyWj.html

Last edited by Ocn Vw 1K; May 5, 10 at 9:42 pm Reason: Edited by moderator to comply with FT Rules in not quoting entirety of copyrighted article.
pnut4912 is offline  
Old May 5, 10, 8:50 pm
  #2  
 
Join Date: Sep 2008
Programs: UA 1k Million Miler
Posts: 349
Not giving anything up just defering the compensation (and tax due).
n9536j is offline  
Old May 5, 10, 8:58 pm
  #3  
 
Join Date: Jan 2010
Location: SEA
Programs: UA AS DL Hyatt SPG/Bonvoy HHonors
Posts: 1,711
It is a concession

Originally Posted by n9536j View Post
Not giving anything up just defering the compensation (and tax due).
It is a concession for two reasons:

Tax rates are likely to be higher in the future

The company probably needs the cash - and he's giving up current cash.

It is actually a vote of confidence in the merged company - because he thinks the stock will be worth more in the future. It's a bullish sign and a move to be applauded, not criticized.
seacarl is offline  
Old May 5, 10, 9:01 pm
  #4  
FlyerTalk Evangelist
 
Join Date: Aug 2002
Location: Bay Area, CA
Programs: UA Plat 2MM; AS MVP Gold 75K
Posts: 34,993
I don't care about Tilton's payout -- we knew he was going to cash out, nobody cares if it's cash or stock.

This is more important:

Originally Posted by pnut4912 View Post
The Chicago airline also reached management retention deals with five other senior executives that outline compensation and benefits following a completed deal, according to a regulatory filing.

...

The retention deal also applies to United executives Graham Atkinson, Peter McDonald, Kathryn Mikells, Thomas Sabatino and John Tague.

It's our first indication of who they're going to hang onto.

If Atkinson is in and Bergsrud is out, this is a good sign for FFers.
channa is online now  
Old May 5, 10, 9:26 pm
  #5  
 
Join Date: Jul 2004
Location: SNA
Programs: AA EXP, UA 1K (until it expires then never again), *wood Plat, Marriott Gold
Posts: 9,050
Originally Posted by seacarl View Post
It is a concession for two reasons:

Tax rates are likely to be higher in the future

The company probably needs the cash - and he's giving up current cash.

It is actually a vote of confidence in the merged company - because he thinks the stock will be worth more in the future. It's a bullish sign and a move to be applauded, not criticized.
Well I wouldn't call it a concession, he's not really giving anything up in fact I would take it as you pointed out he believes the merged company will do really well and the future value of the stock will be worth more than the cash today and I agree its a positive sign. w/r/t tax rates, I don't know though, in 3-5 years I'd guess they'd be lower than what is here today/coming soon especially for those of us that are the evil and dare be successful now isn't a good time tax-wise, I can't see it getting worse.

The funniest part about it though is all the rabble rousing here and elsewhere about how he only wanted to sell/merge to cash a big check and didn't care to have the airline be successful just there to fill his pockets............waiting patiently for the mea culpas (don't worry, suffocation sounds unpleasant so I won't hold my breath literally).
ryan182 is offline  
Old May 5, 10, 10:14 pm
  #6  
 
Join Date: Jan 2002
Location: Washington, DC, USA
Programs: UA MM, MB LifeTit
Posts: 1,717
This must be a genuine act of generosity, since Mr. Tilton wasn't involved in negotiating the merger deal. Or was he?
EricH is offline  
Old May 5, 10, 10:16 pm
  #7  
A FlyerTalk Posting Legend
 
Join Date: Apr 2004
Location: GVA (Greater Vancouver Area)
Programs: DREAD Gold; UA 1.021MM; Bonvoy Au-197; PCC Elite+; CWC Au-197; CCC Elite*; WoH Dis
Posts: 50,038
I have to admit, he's earned a bit of respect from me that I never thought he would.
mahasamatman is offline  
Old May 5, 10, 10:32 pm
  #8  
 
Join Date: Jan 2007
Location: Bellingham/Gainesville
Programs: UA-G MM, Priority Club Platinum, Avis First, Hertz 5*, Red Lion
Posts: 1,884
Originally Posted by channa View Post



It's our first indication of who they're going to hang onto.

If Atkinson is in and Bergsrud is out, this is a good sign for FFers.
+1, at least for Atkinson and Tague.

Honestly, I just think that Tilton is trying to sweeten the pot to get regulatory approval. Either that or 5 cents says there will be a congressional hearing on the merger and Tilton would have to fly to DC in E- or the jumpseat in order to plead for merger approval.
prestonh is offline  
Old May 5, 10, 10:32 pm
  #9  
 
Join Date: Jul 2005
Location: SEA
Programs: UA*G, UA 1MM, AS MVPG, DL PM
Posts: 1,277
Anyone who does not think taxes will be higher in 3-5 years does not understand what trillion+ deficit spending is all about.

Tilton is giving up a sure payment today and betting that he will get a better payment tomorrow. A lot can happen in 3-5 years good or bad. This move aligns him with the shareholders of the company. I give him thumbs up for this.
woodway is offline  
Old May 5, 10, 10:46 pm
  #10  
 
Join Date: Aug 2008
Programs: UA 1K, AC *S, Marriott Plat....
Posts: 127
I saw this earlier today and thought it was a major confidence booster towards the merged UA.

For all the Tilton haters out there, hes betting his huge cash payout that the company will improve. If UA stock tanks again, hes out the money, plain and simple.
d3van is offline  
Old May 5, 10, 11:04 pm
  #11  
FlyerTalk Evangelist
 
Join Date: Sep 2007
Location: SJC, SFO, YYC
Programs: AA-EXP, AA-0.41MM, UA-Gold, Ex UA-1K (2006 thru 2015), PMUA-0.95MM, COUA-1.5MM-lite, AF-Silver
Posts: 13,437
Originally Posted by n9536j View Post
Not giving anything up just defering the compensation (and tax due).
IME, that's an oversimplification.

The restricted stock vests over a period of time. Each time a block of stock vests, a portion of the block is automatically sold to pay taxes due. Which means that the holder of the stock might as well sell the rest of the block, lest the stock declines in value and the holder now has a capital loss which he can deduct against personal income at a whopping maximum of $3000 per year.

Given Tilton's tax bracket, given that Congress just passed a law hiking payroll taxes, and given that income hikes are coming, Tilton will pay more taxes even if the value of UAUA does not change over the years that he vests.

Tilton could have taken the cash, and bought UAUA stock with it and sold it whenever it took a dip to limit his exposure. By trading for equivalent restricted stock he is taking a risk.

So he's definitely giving up a lot.

And here I thought Tilton was evil if this forum was to be believed. Cynics will say he wasn't given any choice by CO.
mre5765 is offline  
Old May 5, 10, 11:04 pm
  #12  
 
Join Date: Aug 2007
Location: Near SEA
Programs: UA MM, AS MVPG, Marriott Lifetime Gold
Posts: 7,890
Originally Posted by mahasamatman View Post
I have to admit, he's earned a bit of respect from me that I never thought he would.
+1
bmvaughn is offline  
Old May 5, 10, 11:44 pm
  #13  
 
Join Date: Apr 2010
Programs: UA Plat
Posts: 148
I have to agree that he's giving up a lot. It could turn out better in the long run or tank if things go bad with the stock. Better to have these senior management have a vested long-term interest in the company.
TPacific is offline  
Old May 6, 10, 3:09 am
  #14  
 
Join Date: Feb 2007
Location: DEN / Bay Area
Programs: UA 1K, DL PM, AA EXP, VX Gold, SPG Gold
Posts: 208
Originally Posted by seacarl View Post
It is a concession for two reasons:

Tax rates are likely to be higher in the future

The company probably needs the cash - and he's giving up current cash.

It is actually a vote of confidence in the merged company - because he thinks the stock will be worth more in the future. It's a bullish sign and a move to be applauded, not criticized.
I feel like Smisek probably talked him into this.
avsrock90 is offline  

Thread Tools
Search this Thread
Search Engine: