When Oscar Munoz was brought on to be United’s CEO after Jeff Smisek had to resign in disgrace amidst allegations of corruption, the plan that was he’d also gain the Chairman title in 2017.
However as part of a deal with activist shareholders Robert Milton, former CEO of Air Canada became Chairman a year ago — and Munoz’s promised ascendancy was pushed off until 2018.
United CEO Oscar Munoz at Chicago O’Hare
Now in light of all of the turmoil at United, most especially the firestorm surrounding a passenger being dragged off of a flight and bloodied by police called to the plane amidst a denied boarding controversy, Munoz is no longer promised the Chairman position next year either.
United Continental UAL -0.34% Holdings Inc. moved to further stem fallout from the incident in which police dragged off a paying passenger from one its flights, saying its chief executive Oscar Munoz will no longer be taking on the chairman role and that it will revamp executive compensation incentives.
In a federal filing on Friday, United said its board is planning to revamp managerial incentive compensation to focus more on performance measures related to customer service.
In some ways this makes sense, United isn’t firing any employees over the incident they have to show that their leadership has some accountability.
At the same time with the hiring of Scott Kirby, former President of American Airlines, to be President of United — and with Munoz’s health issues and lack of airline experience — I’ve expected that Munoz would become non-executive Chairman in the near future with Kirby finally becoming an airline CEO.
United CEO Oscar Munoz Cutting the Ribbon on the Airline’s First New Boeing 777-300ER
If United’s board, in fact, doesn’t make Munoz Chairman next year that could push off Kirby’s rise — unless Munoz chooses to retire early, simply deciding he doesn’t need this airline job and would rather make the most of life with his family after having returned from a heart transplant.
Oscar needs to improve UA by a lot before he leaves. If Kirby takes over there will be a mass exodus of customers.
If I were a fly and I had been in that board room, this is what I would likely have heard:
“Oscar, the Chairman position is definitely yours, but you must agree that the “optics” would be very bad if we elevated you right after the 3411 debacle. It would (a) raise doubt about the sincerity of your mea culpa — that you apologized simply to salvage your promotion, making your apology tour a waste; and (b) make this board seem insensitive and callous for appearing to reward bad performance in the face of human suffering. So, just go out there and make us proud by transforming the company as you told us you would and were doing pretty well until 3411 happened. Let’s revisit the promotion matter in, say, ’19, maybe ’20…okay?”
The story on CNN Money says that Munoz asked that his employment agreement be amended to remove provisions that would have made him chairman. Hmm. The $18.7 million he made last year is a nice consolation.
“The story on CNN Money says that Munoz asked that his employment agreement be amended to remove provisions that would have made him chairman.”
Official line that is not inconsistent with and is a great “fig leaf” for what a fly in the board room would have heard. The position of company Chairman remains Munoz’s to claim. He, characteristically, just wants to show 2-3 years from now that he earned it…
Overseeing an airline is MUCH different than overseeing a railroad.