WASHINGTON, Feb 20, 2008 /PRNewswire
The Teamsters sent a letter Tuesday to UAL Corporation (Nasdaq: UAUA) demanding that it overhaul its compensation practices.
If the company makes no significant changes, the International Brotherhood of Teamsters General Fund will urge fellow shareholders to withhold votes from directors serving on the subcommittee that set UAL's exorbitant executive pay.
"On the heels of a three-year bankruptcy, UAL rewarded its CEO with $39.7 million. This level of excess is indefensible," said C. Thomas Keegel, general secretary-treasurer of the Teamsters General Fund.
The letter was sent Feb. 20 to UAL's Human Resources Subcommittee in anticipation of this year's proxy season.
The union's General Fund requests that the Human Resources Subcommittee hire a new compensation consultant; change its comparative peer group for compensation from similarly sized businesses to airlines; reduce excessive golden parachutes; and appoint new directors to the subcommittee.
"Long-term shareholders have watched their investments erode, the Pension Benefit Guaranty Corporation was forced to take on the company's pension obligations, and thousands of workers have either lost their jobs or suffered significant cuts in wages, healthcare and pensions. Aircraft maintenance workers' pensions were cut in half," Keegel said. "How does this kind of performance generate an almost $40 million pay package? Directors must be held accountable for these decisions."
In its letter, the Fund said UAL executives are the highest paid airline executives. Even the lowest paid UAL senior executive officer's pay exceeds that of CEOs at peer airlines. The letter also criticized the track records of the directors on their other board service, calling their collective executive compensation experience and performance record "a 'perfect storm' of flawed practices."
"While UAL's board is faced with critical decisions regarding potential mergers, acquisitions and spin-offs, shareholders need to know that these choices will be made with a focus on creating long-term value," Keegel said. "Executive compensation must not drive UAL's business plan. If we don't see substantial changes in pay practices following our recommendations, we will ask our fellow shareholders to join us in withholding votes from these directors come May."
The Teamsters union has long fought to curtail excessive executive pay, initiating successful executive severance reform at Bank of America, Coca-Cola, McKesson and General Electric.
The Teamsters work closely with a coalition of other institutional investors pressing for pay-for-performance reforms through shareholder resolutions and discussions with companies.
Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.
Source: International Brotherhood of Teamsters
