United execs in the jet set
United executives in the jet set?
Paper reports the airline's IPO could drive more than $100M in stock grants to top managers to $400M.
January 30, 2006: 8:39 AM EST
NEW YORK (CNNMoney.com) - Top executives at United Airlines, already in line to receive stock worth more than $100 million as part of the company's emergence from bankruptcy court protections, could see that stake almost triple, according to a published report.
Under the reorganization plan, which was opposed by the company's unions, the top 400 executives are to receive 9.8 million shares and stock options among them, equal to eight percent of the newly issued stock. Shares in United parent UAL Corp. are due to start trading Thursday.
According to various published reports, the company put the estimated value of each of those shares at the time of the IPO at $15, although the company has yet to file a price range for the initial public offering.
USA Today reported Monday that the UAL shares were selling at $43 a share on Friday on a "when issued" basis. Analyst Helane Becker of Benchmark Co. told the paper that prices in last week's trading likely foreshadow share values in public trading of the stock.
At $43 a share, the value of shares in the executive stock plan would total $422.5 million.
Union officials told the paper that the potential value of the stock is another sign of the problem with the stock compensation plan.
"Executive compensation in America has been crazy for a while," Duane Woerth, national president of the Air Line Pilots Association, told the paper, "but I don't think anyone was expecting this from a company coming out of Chapter 11."
United spokeswoman Jean Medina told the paper Friday the ultimate value of the stock plan is "theoretical" and will depend on share prices in the future, when executives can sell their stock.
United Chief Financial Officer Jake Brace declined to comment to the paper on Friday about the potential value of the new UAL shares, but said airlines generally are "on the upswing in the financial markets."
United, the nation's No. 2 airline, has been operating under bankruptcy court protection for just over three years. During that time it cut about one quarter of its personnel and won steep pay and benefit cuts from its unionized work force.
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