Hole in the Golden Parachute? Tilton to Waive Cash Severance
May 5, 2010, 8:16 pm
#1
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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
"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, 2010 at 9:42 pm Reason: Edited by moderator to comply with FT Rules in not quoting entirety of copyrighted article.
May 5, 2010, 8:50 pm
#2
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Not giving anything up just defering the compensation (and tax due).
May 5, 2010, 8:58 pm
#3
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It is a concession
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.
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.
May 5, 2010, 9:01 pm
#4
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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:
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.
This is more important:
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.
...
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.
May 5, 2010, 9:26 pm
#5
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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.
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.
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).
May 5, 2010, 10:14 pm
#6
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This must be a genuine act of generosity, since Mr. Tilton wasn't involved in negotiating the merger deal. Or was he?
May 5, 2010, 10:16 pm
#7
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I have to admit, he's earned a bit of respect from me that I never thought he would.
May 5, 2010, 10:32 pm
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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.
May 5, 2010, 10:32 pm
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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.
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.
May 5, 2010, 10:46 pm
#10
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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.
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.
May 5, 2010, 11:04 pm
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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.
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.
May 5, 2010, 11:04 pm
#12
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May 5, 2010, 11:44 pm
#13
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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.
May 6, 2010, 3:09 am
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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.
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.