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United seeks OK for incentive plan

By David Milstead, Rocky Mountain News (Contact)

Published June 11, 2008 at 8 p.m.
Updated June 11, 2008 at 8:53 p.m.

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United Airlines is running out of stock to give to its executives, so it's asking shareholders to approve a new incentive plan at today's annual meeting in California.

Only a few hundred thousand shares are available under the plan last approved by the company's shareholders as it emerged from bankruptcy two years ago.

United's new plan allows for 8 million new shares to be given out as options or restricted shares.

The reaction from the top proxy-advisory firms is mixed.

Proxy Governance recommends a "no" vote. It says in 2006, when UAL made the bulk of the awards, approximately one-third of them went to the five top executives named in the proxy.

RiskMetrics Group, formerly Institutional Shareholder Services, says to vote "yes."

It calculates what it calls shareholder value transfer, the value of the incentive plan compared with the company's market value. RiskMetrics says the UAL plan is close to, but below, the cap it has set for the company, so the plan passes muster.

Glass Lewis & Co. also recommended a "yes" vote, saying the UAL plan "failed a few of our tests, but the severity of the failures was minimal in comparison to the other plans we review."

The Association of Flight Attendants-CWA, which represents United's flight attendants, has a shareholder proposal to give UAL's stockholders a "say on pay," an advisory vote on compensation packages. RiskMetrics and Glass Lewis recommended "yes" votes, while Proxy Governance recommended "no."