United Airlines Executive Stock Plan Not Out of Line Says GSB Professor

One of the last remaining hurdles in the United Airlines bankruptcy case was cleared on January 19. With the approval by a federal bankruptcy judge of management stock plan, it’s expected that UAL, the airline’s parent corporation, will emerge from a three-year reorganization.

Unions had objected to a plan that would distribute eight percent of the new company’s stock to management executives. At issue was whether or not the reward for guiding the company through bankruptcy was excessive.

According to an article in the Chicago Tribune, Steven Kaplan, Neubauer Family Professor of entrepreneurship and finance, says the amount is not unfair. “For the size of the company and the risk that [United President Glenn] Tilton took on, it doesn’t strike me as crazy.”

Kaplan has debated the issue of executive compensation in the May 30, 2005 issue of Crain’s Chicago Business. In “Are CEO salaries too big?” Kaplan took the opposing view. He squared off against Dale Moyers, president of the Chicago Compensation Association and director of compensation and benefits at Loyola University of Chicago. Read an article about the debate.

Read a related article, “Executive Hiring: Avoiding Overpayment.”

Executives from the airline industry who have spoken at the GSB include:

• JetBlue CEO Neeleman on ”Airline Customer Service No Longer “an Oxymoron”
• Boeing Senior Vice President for International Relations Thomas Pickering on “Boeing Backing Smaller Planes; Airbus Living Large”