Flight Attendants Urge Shareholders to Shun United Board Nominees
April 13, 2007
Ladies and Gentlemen:
We write to encourage all Flight Attendants who are UAL Corp (UAUA) shareholders to withhold authority for the election of the ten nominees for the UAL Board of Directors. Since there is no alternative slate of candidates this is the only way for you to register your disapproval of the nominees and, in essence, cast a 'no' vote.
We take this action in the sincere belief that these directors are not serving the interests of the employees or the interests of United Airlines as long as they continue to support outrageous executive compensation at a time of continuing sacrifice by the workers who make this airline successful. We encourage you to withhold your support for these directors as a way of casting a spotlight on issues of great importance to employees and other concerned shareholders of UAL Corporation. All these nominees - who are to be elected by holders of Common Stock - currently serve on the Board of Directors. [Please Note: the ALPA and IAM representatives on the Board are specifically exempt from this advice to withhold your authority - the holders of Common Stock do not vote on these Directors].
Our reasons for this recommendation are based on the track record of the UAL Board while these nominees have been Directors, specifically:
- favoring management's interests over those of employees and shareholders;
- failing to align the interests of management with other employees; and
- that the Compensation Committee of the Board of Directors is responsible for setting the compensation levels of management employees, which recently has led to disproportionate rewards for company executives at a time of disproportionate sacrifice by the employees.
If you own UAUA Common Stock, either directly or through an investment fund (i.e. 401k), we encourage you to withhold your authority directly, or by instructing United States Trust Company (U.S. Trust), the Trustee for various investment Plans. In its capacity as Trustee, U.S. Trust has provided participants with UAUA stock proxy materials. As a Plan participant, you have the right to direct the U.S. Trust how to vote your UAUA shares on the matters brought before the shareholders at the annual meeting on May 10, 2007. A complete description of these matters and other important information is included in the Proxy Statement. You should review the materials carefully.
According to the latest figures, CEO Glenn Tilton's total compensation last year exceeded $39 million. That means Mr. Tilton's executive compensation is 1,000 times what a Flight Attendant earns on average at the top of the pay scale, or over 2,000 times the average pay of a new hire. That disparity cannot be justified and the members of the Board of Directors must be held accountable.
We are concerned about the disparity between executive compensation and the pay levels of the rest of the company's employees because the contribution of workers is essential to corporate growth and success. Both the executives and the workers should share in that success. During a time when Glenn Tilton and others enjoyed such lucrative compensation packages, close to 40,000 United Airlines workers lost their jobs. Those who remain have been forced to endure massive cuts in pay, benefits and working conditions. At the same time executive compensation has ballooned, the frontline workforce has been subjected to massive cuts in pay, benefits and workrules.
There is a need to restore a measure of proportionality to the relative levels of compensation received by United's management and other United employees, and this Board of Directors must be given the message that it will be held accountable.
Concerned investors should be alarmed, as we are, that United executives receive exorbitant pay and bonuses while workers are still subject to the bankruptcy concessions. The value of Mr. Tilton's compensation package last year exceeded the entire profit generated by the company. From a broader perspective, these corporate practices have resulted in the unchecked and growing concentration of wealth and privilege. It is a system that perpetuates itself, and, it does not promote the common good - economically, socially or politically.
This Board of Directors, and their executive compensation practices, are just part of a disturbing larger picture. Over the last several years, the compensation packages for top executives at large U.S. corporations have grown sharply, increasing the pay gap between the highest and lowest paid employees and weakening the connection between corporate performance and executive compensation. The Corporate Library, a corporate governance watchdog group, surveyed the proxy filings of 1,000 large U.S. companies and found that overall CEO compensation increased at a rate of 16% in 2005 and 9.29% in 2006. By comparison, UAL Securities and Exchange Commission filings show Tilton and his suite of senior executives received increases in compensation equaling 40% on a year-over-year basis, as well as bonuses throughout the company's bankruptcy. This troubling trend continues post-bankruptcy, in addition to generous stock rewards. The Institute for Policy Studies - United for a Fair Economy, reported in 2006 that executive wages were 411 times the average pay of workers.
To date, this Board of Directors has been part of the problem, not part of the solution.
Your vote is important. We urge you to withhold your voting authority for the nominees to the UAL Board of Directors.
Greg Davidowitch, President
United Master Executive Council