Oh wonderful. This ought to boost morale at UA. ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/02/21/f= inancial1603EST0201.DTL ---------------------------------------------------------------------- Friday, February 21, 2003 (AP) Bankruptcy judge OKs United CEO's disputed pay package DAVE CARPENTER, AP Business Writer (02-21) 16:42 PST CHICAGO (AP) -- 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 its restructuring. He said the financial impact on United should be comparatively negligible. Tilton's five-year deal was contested by the Association of Flight Attendants as premature and unfair at a time when United employees have taken interim pay cuts and are being asked for longer-term concessions. The flight attendants argued that United should send a message of shared sacrifice by revising or delaying the plan rather than its stated message of full confidence in its CEO, to which Wedoff responded that "you may be right." They said 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 Tilt= on -- the terms of which were lowered somewhat this week -- was "eminently reasonable" and even below market average for a company its size. Tilton got a $3 million signing bonus last September as part of a pay package that also included an annual salary of $950,000, $4.5 million in pension benefits, 1.15 million stock options in United parent UAL Corp. and relocation expenses. The chairman and chief executive volunteered early in United's 10-week-o= ld bankruptcy reorganization to take an 11 percent pay cut, which would lower that sum to $845,500 if adopted. United did not 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. 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 percent 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 Wedoff said the tax benefit could have "very substantial significanc= e" 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. UAL shares fell 1 cent to close at $1.06 each on the New York Stock Exchange. On the Net: www.united.com =20 ---------------------------------------------------------------------- Copyright 2003 AP