UAL execs face cuts
If workers' pensions go, officials' plans to be slashed, too
By David Kesmodel and David Milstead, Rocky Mountain News
October 19, 2004
As executives at United Airlines prepare to take a knife to the
company's employee pension plans, they do so knowing they would be inflicting deep
wounds on their own retirement benefits in many cases.
More than 100 current and former United officials would see their
pension benefits cut dramatically if the carrier ended its plans, leading to
life-style changes for some but saving United tens of millions of dollars.
These officials, able to qualify for rich pensions based on their years
of service and high annual pay, would join the airline's pilots as the workers and
retirees facing the biggest hit from pension terminations.
The giant carrier says it likely will end its four pension plans, which
are severely under funded, and replace them with less-generous retirement benefits to emerge from bankruptcy and become a viable business.
Only one senior United executive - Chairman and CEO Glenn Tilton - has a
retirement benefit with special protection from creditors in the
bankruptcy, the airline said.
A $4.5 million trust was set up for Tilton when he was hired in 2002 "in
consideration of projected retirement benefits" he forfeited by leaving
ChevronTexaco Corp., United has said in regulatory documents.
Those foregone projected benefits could have totaled about $500,000
annually for the rest of his life, the Rocky Mountain News estimates.
Tilton, 56, whose trust has been opposed by the union representing
United flight attendants, would lose all the pension benefits he has accrued as a
United employee because he hasn't worked the five years required to be vested.
Many current and former United executives, including Chief Financial
Officer Jake Brace and Chief Operating Officer Pete McDonald, would see very steep
cuts in pension benefits because their high salaries have made them eligible for
a supplemental retirement plan that United, the operating unit of UAL
Corp., began in 1987.