Here’s a question United Airlines shareholders — and maybe a passenger or two — are probably asking themselves: Does United Airlines’ chief executive Glenn F. Tilton deserve his new $850,000-a-year salary?
On Friday, the company quietly filed a form 8-K with the Securities and Exchange Commission (an “unscheduled” material event, in corporate-speak). The reason? It was giving its CEO a 40 percent pay raise and extending his contract through Sept. 1, 2011.
No one expects Tilton to stay that long. He’s hired investment bankers Goldman Sachs & Co. to find another airline to merge with. At that point, he’ll probably bail out and cash in on the generous severance that his new contract provides.
But to the matter at hand: Does Tilton deserve his 800k?
As a shareholder, I’d be skeptical. Your UAL stock has slid from about $35 a share when it began trading in February, post-bankruptcy, to a not-so-impressive close of about $26 on the last day of trading.
Not good.
And would passengers approve a Tilton pay raise?
I checked out the latest Air Travel Consumer Report to find out if the carrier is doing right by customers.
» On-time arrivals: 72.7 percent, slightly below average. Grade: C-
» Number of flights canceled: 2.2 percent, slightly below average. Grade: C-
» Mishandled bags: 5.4 per thousand, slightly better than average. Grade: C+
» Involuntary denied-boardings: 0.72 per 10,000 passengers, slightly better than average. Grade: C+
» Complaints filed by passengers: 111, making it the most complained-about domestic airline. Grade: F.
The numbers tell the story. From the perspective of both a shareholder and a customer, Tilton’s performance as CEO has been average, at best, lately.
Re-upping his contract with a geneous compensation sends the wrong message to investors, passengers, and worst of all, to the hardworking United employees who have given up so much during the last five years.
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For what Tilton and Brace have done to this Airline, It’s passengers and it’s employees from all walks exuding the corrupt leadership at the top of UAL inc. They deserve not a huge pay raise and incentives, but a very long and stiff prison sentences in Federal Prison.