Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Executive Transition
On December 5, 2019, United Airlines Holdings, Inc. (the "Company"), the parent
company of United Airlines, Inc. ("United"), announced that Oscar Munoz will
transition from the role of Chief Executive Officer of the Company following the
Company's 2020 Annual Meeting of Stockholders (the "2020 Annual Meeting") and
assume the role of Executive Chairman of the Board of Directors of the Company
(the "Board"), and that J. Scott Kirby, currently the President of the Company,
will assume the role of Chief Executive Officer of the Company at such time. The
2020 Annual Meeting is scheduled for May 20, 2020.
Mr. Kirby, 52, has served as President of the Company and United since August
2016. Prior to joining the Company, from December 2013 to August 2016, Mr. Kirby
served as President of American Airlines Group Inc. and American Airlines, Inc.
Mr. Kirby also previously served as President of US Airways from October 2006 to
December 2013. Mr. Kirby held significant other leadership roles at US Airways
and at America West prior to the 2005 merger of those carriers, including
Executive Vice President-Sales and Marketing (2001 to 2006)? Senior Vice
President, e-business (2000 to 2001)? Vice President, Revenue Management (1998
to 2000)? Vice President, Planning (1997 to 1998)? and Senior Director,
Scheduling and Planning (1995 to 1998). Prior to joining America West, Mr. Kirby
worked for American Airlines Decision Technologies and at the Pentagon.
The Company has issued a press release related to the transition. The press
release is attached as Exhibit 99.1.
Transition Agreement with Mr. Munoz
On December 4, 2019, the Company and United entered into a Transition Agreement
with Mr. Munoz (the "Transition Agreement") reflecting the terms and conditions
of the transition and Mr. Munoz's employment. The Transition Agreement provides
that Mr. Munoz will continue to serve as Chief Executive Officer and a director
of the Company through the 2020 Annual Meeting and that, during this period, Mr.
Munoz's employment will continue to be governed by the terms and conditions of
his Employment Agreement, dated December 31, 2015, with the Company and United
(as amended, the "Employment Agreement"). Pursuant to the Transition Agreement,
Mr. Munoz will transition from the position of Chief Executive Officer of the
Company and United following the 2020 Annual Meeting and will assume the role of
Executive Chairman at such time. The Transition Agreement contemplates that Mr.
Munoz will serve as Executive Chairman and remain a director of the Company
until the date of the Company's 2021 Annual Meeting of Stockholders (the "2021
Annual Meeting," and such period, the "First Transition Period"). During the
First Transition Period, Mr. Munoz will receive a base salary at an annual rate
of $2,000,000 and will generally continue to be eligible to participate in
senior executive-level employee benefit programs. Mr. Munoz will not be entitled
to receive any annual incentive compensation with respect to any year after 2020
or any grants of long-term incentive compensation following the 2020 Annual
Meeting. As of the date of the 2021 Annual Meeting, Mr. Munoz will transition
from his role as Executive Chairman and as a director of the Company, and will
continue as a non-officer employee until March 1, 2022 (such period, the "Second
Transition Period"). During the Second Transition Period, Mr. Munoz will receive
a base salary at an annual rate of $360,000 and will be eligible to participate
in those employee benefit programs that are generally available to non-officer
employees of the Company.
Under the Transition Agreement, if Mr. Munoz's employment with the Company is
terminated by the Company without cause, by Mr. Munoz for good reason or due to
Mr. Munoz's death or disability, in each case during either the First Transition
Period or Second Transition Period, then in lieu of any payments or benefits
under the Employment Agreement, Mr. Munoz would be entitled to receive the
payments and benefits that he would have otherwise received under the Transition
Agreement had his employment not terminated. The Transition Agreement also
includes certain restrictive covenants, including confidentiality,
non-solicitation and non-competition obligations from the Employment Agreement
that are incorporated by reference. The Transition Agreement also contains
mutual general releases of claims among the parties.
The foregoing description of the terms and conditions of the Transition
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Transition Agreement which is filed as Exhibit 10.1 hereto and
is incorporated herein by reference.
Compensation Arrangement with Mr. Kirby
In connection with Mr. Kirby's responsibilities upon his transition to the role
of Chief Executive Officer, the Compensation Committee of the Board approved an
award of premium-priced stock options (with an exercise price that is 25% higher
than the closing stock price of the Company's common stock on December 4, 2019,
the date of grant) with a total Black-Scholes grant value of $9.7 million (the
"Option Award"). The options will have a ten-year term, and will vest in
accordance with the following schedule: (i) 11% of the options will vest on May
20, 2023; (ii) 22% of the options will vest on May 20, 2024; (iii) 22% of the
options will vest on May 20, 2025; (iv) 22% of the options will vest on May 20,
2026; (v) 11% of the options will vest on May 20, 2027; and (vi) 12% of the
options will vest on May 20, 2028.
The Stock Option Award Notice pursuant to which the Option Award will be granted
is filed as Exhibit 10.2 hereto and is incorporated herein by reference.
Retirement of Jane C. Garvey
On December 3, 2019, Jane C. Garvey notified the Nominating/Governance Committee
of her intention to retire from her role as Chairman of the Board and as a
director of the Company at the end of her current term. Ms. Garvey's retirement
is not a result of any disagreement with the Company.
Mr. Munoz will succeed Ms. Garvey as Chairman of the Board, effective following
the 2020 Annual Meeting. The independent members of the Board have chosen Edward
M. Philip to serve as Lead Independent Director at that time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Exhibit Description
10.1 Transition Agreement, dated as of December 4, 2019, by and among
United Airlines Holdings, Inc., United Airlines, Inc. and Oscar
Munoz
10.2 Stock Option Award Notice, dated as of December 4, 2019, to J.
Scott Kirby pursuant to the United Continental Holdings, Inc. 2017
Incentive Compensation Plan
Press Release issued by United Airlines Holdings, Inc. dated
99.1 December 5, 2019
Cover Page Interactive Data File (embedded within the Inline XBRL
104 document)
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