Pilots for UAL Corp.'s
There's truth to their argument. Throughout 2008, UAL has cut jobs like a gardener cuts grass, joining unionized bleeders Ford
Don't think this is just a legacy carrier problem – US Airways
Balderdash.
Both management and employees -- and, yes, I'm including pilots -- deserve the blame. I know because I've read UAL's proxy statement. Page 31 reveals this screwed-up business for exactly what it is. There, you'll find UAL's performance versus its internal targets for what the company calls a "success sharing plan." But that's a gross misnomer. More on why in a minute; first, the numbers:
2007 United Promoters Score |
Q1 |
Q2 |
Q3 |
Q4 |
---|---|---|---|---|
Target |
22.1% |
22.9% |
30.9% |
31.7% |
Actual |
20.7% |
16.9% |
22.4% |
22.3% |
Source: SEC filings
On-Time Departures |
Q1 |
Q2 |
Q3 |
Q4 |
---|---|---|---|---|
Target |
59.9% |
61.4% |
61.6% |
61.9% |
Actual |
56.9% |
57.7% |
57.2% |
50.6% |
Source: SEC filings
More troubling: These scores, and targets, are far worse than what UAL put up in 2007:
2006 Definite Intent to Repurchase |
Q1 |
Q2 |
Q3 |
Q4 |
---|---|---|---|---|
Target |
38.2% |
35.8% |
35% |
35.2% |
Actual |
35.6% |
34.9% |
34.4% |
35.1% |
Source: SEC filings
On-Time Departures |
Q1 |
Q2 |
Q3 |
Q4 |
---|---|---|---|---|
Target |
59% |
59% |
59% |
61.1% |
Actual |
56.6% |
58.6% |
61.2% |
61.1% |
Source: SEC filings
Yet, in each case, participants in this program were paid bonuses. Last year, more than 45% of the pool of money set aside was paid out, which means UAL is paying for underperformance.
But the most troubling part of this (ahem) success-sharing plan is that some employees aren’t participating. From the proxy:
The Success Sharing Plan for 2007 provided eligible employees, including the named executive officers, the opportunity to earn short-term incentive awards based upon the achievement of certain predefined performance goals. Since the beginning of 2008, several employee groups have elected not to participate in the Success Sharing Plan in exchange for other compensation. [Emphasis added.]
Tilton's the problem? Yeah, he's part of it. But isn't the bigger problem a business model wherein the interests of management and employees are anything but aligned? One in which underperformance is actually rewarded? Nah, that couldn't possibly be the issue. It makes too much sense.
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