When United’s CEO Jeff Smisek was pushed out last fall, he received a golden parachute that was reported at the time to be:
- $4.8 million cash severance
- Vesting of $3.5 million stock
- Performance bonus (!) pro-rated based on the portion of the year he served as CEO and United’s meeting stated performance targets.
- Full family benefits for 4 years (until he becomes eligible for medicare)
- Flight benefits and parking (and cash to cover taxes on those benefits) for life.
- Company car.
It turns out though that he walked away with even more than many realized. In fact he received $36.8 million since his ouster.
Smisek, 61, received about $6.6 million in cash plus equity awards valued at $29.4 million, according to a proxy statement filed Friday by Chicago-based United Continental Holdings Inc., the airline’s parent.
…Smisek’s exit package also included about $786,000 in various perquisites, such as lifetime flight benefits and a reimbursement for related tax payments, according to Friday’s filing.
If he’s convicted, pleads guilty, or no contest to a “crime of moral terpitude” relating to his service with the airline, he loses benefits and may have to pay back his severance and stock award. Apparently only $10.1 million is ‘at risk’ based on the result of any prosecution that could follow from his involvement in paying off a public official. (But it’s the Gulf carriers getting improper help from their governments, right?)
Under Smisek management came to resent their customers and their employees.
- Frequent customers were called “over-entitled”
- And employees are blamed for the airline’s problems
- They straight up lie to customers when hiding information from them.
- United’s twitter team diagnosed one challenge for the carrier as having too many customers.
It’s that toxic environment that United’s new CEO Oscar Munoz has sought to turn around through better employee relationships, and modest customer experience investments.
Surely the $37 million could have been put to better use. Smisek’s employment contract couldn’t possibly have needed to be so generous — in order to retain his kind of ‘top talent’ — that he becomes an even wealthier man after having been exposed bribing a public official. This says more about flaws in boards and publicly traded companies, though, than it says about United.
All for a dreadful performance. I bet this soon-to-be-indicted p.o.s. and the useless UAL board members (who awarded this theft to smisek) are all in favor of “entitlement reform” and reducing pay/benefits for the working class. This is a prime example of why an ever increasing number of working class (and from what was nice known as the middle class) people are getting ready to hang these 1%ers and their media & politian enablers from the nearest lamp post.
By the way, based on this travesty, Dick Anderson should be livid if he walks away with less than $100 million.
My apologies for the spelling & auto correct errors. Too much emotion reading this post…..and I wish there was an opportunity to edit a response.
Unfortunately I think these golden parachutes are sort of “the way it is” in society now. In order to get someone with lots of experience and or prestige, you have to shell out the big bucks.
Wow, that’s a lot of money for doing such a lousy job, alienating customers and quite likely breaking laws in the process.
But I agree that this is the even bigger issue: “This says more about flaws in boards and publicly traded companies, though, than it says about United.”
I posted before I saw RoloT’s comment, which I heartily endorse is being right on the mark.
Really pisses me off to read nimrods talk about the 1% – the 1% are DINKS, small business owners etc, who end up paying massive.taxes (as.a percentage of income) to support the rest of the n’eer-do-wells. To get it right, it’s the 0.1% who pay less tax than their employees, who are the beneficiaries of 30 years of tax breaks, who own nearly half the assets in the country (and the world). They are the Jeff Smiseks of the world – the C-suite class who don’t give a flying hoot about the 99.9%. They are the ones who decide tax policy, foreign policy, control who becomes President and the lackeys in the legislatures…
Fed up…you’re correct. I should have written 0.1%…..but I don’t think I’m a nimrod, lol.
Interesting that, just yesterday, AA’s Doug Parker made his company tear up his employment contract so that he wouldn’t be eligible for various payouts if he leaves. (Not that I think Parker would be a pauper if he were fired — I’m sure he already has plenty of vested stock options — but at least he’s being a voice of reason).
There’s certainly something to be said about not being piggy at the corporate trough. Smisek’s exit compensation does seem outrageous, especially given his less-than-spectacular performance.
If the candidate really thinks he can turn the company around, then he should be willing to take a measly 1M salary and huge performance bonuses. No success, no bonus.
Well the only upside I can see to this gross pay out to an incompetent, is that for the rest of his life he has to fly United 😉 And I’m sure if he was spotted on a flight there would be a lot of animosity directed his way.
Lifetime flight benefits eh. What would you say if Jeff was seated next to you?
Can you imagine the sheer hell of salary negotiations that took place?
HR: Jeff, we have a nice package of $37 million that you should find more than adequate. We’ve also decided to give you free flights. AND free parking.
Smisek: Yes, but I am also going to need extra cash to pay the taxes on the flights and parking. And more..
This is why I’m considering voting for Donald Trump, even if it means taking the country down. I’m fed up with this system in which politicians are bought to promote the interest of the few. Does Smisek need $37 million?! Meanwhile, the masses struggle. We have to wake up and stop this madness.
United Airlines is a Toxic place to work. With Jeff or without Jeff, United Airlines is a nasty place to work. Every employee group hates one another. Including majority of Flight Attendants hating each other as well, hating the pilots and then the list goes on.
United Airlines management is very top heavy. The middle management are all on power trip and you do not want to piss them off.
I pissed off, a Flight Attendant supervisor because I reported him to upper management for discrimination and inappropriate comments and treating me with disrespect. I reported him to Alexandra Marran with she was in charge of onboard service (hence the nasty buy on board product). In retaliation he got me fired after 27 years of employment as a Flight Attendant/Purser.
Now, after 2 years I still can not get a job even at Target or Wallmart.
I wrote to Jeff many times and he never responded back.
I use to get multiple letters every month from his office for doing an outstanding job because of the commendation letters that passengers sent. But he could not take one minute of his time to get back to me after my hateful supervisor in LAX (he use to be a Eastern Airlines Flight Attendant and the crazy thing is that he is a born again Christian who hates gays and he got in a fist fight on a flight on Eastern Airlines with another male Flight Attendant- He even had affairs with multiple female Flight attendants while allowing them to go on fabricated sick leave so they could have secretive dates, in Denver and various different places. The reason he was not let go of his position because he was buddy buddy with the base manager of LAX.
United Airlines is a toxic place and they caused me emotional stress and anxiety and gray hair.
It is the most disgusting place to work. They treat their employing like children, that is why hateful Flight Attendants take it out on passengers by being super mean, and spitting in everyone’s food and putting visine in pilots and passengers drinks so people can have the shits for days…
I have seen Flight Attendants on United to do the most disgusting things..
You want your steak well done? Or with more sauce? Then it lands on the dirty, filthy galley smelly stinky floor which has not been cleaned in years.. and then gets heated and back in your plate, Mr First Class on 1A. Yes, United Flight Attendants and management are hateful people.
All the care is going on their 5 hour break on the plane that is why they all disappear for hours.. The the hateful management of United such as the Lisa (big fat woman as a base manager in San Fran)… has so many legal pending issues.. firing lesbians (she fired a French lesbian because she came to USA to visit her girlfriend)… and the SFO base manager who has a kinky leather life style… Peter.. with a long ass Greek last name…
I am surprised that Ed Yost guy in LAX did not get fired himself after causing United so many legal and labor relations issues.. Oh, he is based with the aggressive Sob, Steven Pais at LAX who should have been gone post merger but he was kissing ass and as they say cleaning house at LAX, Firing people left and right for so many silly reasons..
If they an hire someone and pay them $21 dollars an a hour (it comes to $7.50 an hour) if you do the match. F/A job is not a 40 hour per week
There much rather get rid of someone who made $57 dollars an hour after all those years and hire a newhire for nothing..
United Airlines business model is “Hate”, discrimination and a toxic environment.
I worked as a HR representative hiring Flight Attendants and I can tell you, how badly United had discriminated, not hiring gays, then dark skinned blacks, definitely not Moslems or Arabs (that is why UA had a difficult time fining Arab speaking Flight Attendants within the system when started flying DXB out of IAD. I was told by my boss to actually give preferential treatment to blacks, mexicans and gays in 1998/1999 because they had discriminated so badly for so many years..
United is a Toxic place to work and I am in process of writing a book … A horrible place to work with so many arrogant, self absorbed people full of hate and anger.. and they will stab knife in your back in a new york second.. the minute you look back..
United management will lie about anything..
They treat disable passengers with such disrespect and I have been a witness to it and I have records and information to back up my claim. In may instances, we would arrive at the gate and a disable passenger will wait for hours to get some help, wheelchair and assistant with connections and United middle management in LAX and SFO would not care whatsoever..
They were just too worried giving themselves promotions and hanging on to their jobs.. and promoting old friends.. Such as Steve, keeping ED Yost who is a huge legal liability for UA…
What a shame… United has excellent route structure but terrible management, a horrible to company to work for, hateful management and therefore it comes down to terrible service and no service and horrible nasty trashy Flight Attendants..
So, Jeff walks away with ton of cash.. He is another example of how screwed up UA is…and has been for so many years.. They got rid of me and I gave my heart and soul to the company and I am an old man.. What should I do now? I will end up being homeless soon…
@David, get some professional help. I mean it. You seem to have gone through something you found really traumatic, and you need some help processing it. Until you do that, I think you will continue to have trouble finding a job.
As a long-time UA elite, I do agree that the company’s short stint under $mi$ek was toxic to every facet of the company’s business. His primary and only preoccupation seemed to be to amass his own wealth and keep stockholders satisfied, with little or no regard to creating an environment that would improve customer/loyalist/employee experience that’s a prerequisite for creating wealth in a service industry — i.e., the type of wealth that would, in fact, benefit everyone, including CEOs and stockholders. He seemed to think that those goals were mutually exclusive and was so completely clueless and incompetent about how to generate broadly based wealth that he simply resorted to copying everything that DL did, since they were profitable, without realizing that DL was profitable because they’d created an environment that enabled it.
$mi$ek’s demise and departure did not come a day too soon, and the change in customer experience since his departure and Munoz took over is truly palpable.
One would think that being under Federal investigation would forfeit any form of severance pay, but what do I know….
@Gerardo with all due respect, that is the one presidential candidate that will NOT fix this system.
@David I echo @mbh – do seek professional help, and I hope Gary helps you plug your book once it’s published and on sale. Best of luck.
@Gerardo as someone whose life has been spent buying politicians do you really think Trump is going to stop it? That it’s about the individual person elected President, especially here where we’re talking about an appointee of a governor?
@Gerardo or anyone who thinks that The Donald is the “problem solver” or exceptional “deal maker” that he claims to be is deluding him/herself. All Trump cares about is promoting his “brand.” Should he be the GOP nominee, as now appears more than likely, he’ll go down in a seismic 50-state landslide defeat, as even many Republicans would cross the party line, hold their noses and vote for Hillary Clinton to prevent the permanent disfigurement of the GOP and movement conservatism that’s sure to happen if Trump is allowed to become their standard bearer for 4 or, unthinkably, 8 years. But for Trump, even the worst defeat in a US presidential election ever would not matter. It would be “mission accomplished” because his “brand”, which thrives on exposure positive or negative, would have received its widest exposure ever.
Perhaps we should invest in a new vocabulary (replacing “pushed out” and “golden parachute”) when discussing the airline industry? Especially someone so disliked as Jeff Smisek? There exists a possibility of misunderstanding and one can envision a critical mistake in the execution of the severance process.
@Gerardo: It is, of course, a mistake to expect informed commentary in the comments section of a blog but it’s still rare to see commentary express an opinion so precisely opposite to reality.
Politics and politicians played no role whatsoever in Smisek’s compensation. I don’t know of any politicians with positions on corporate salaries but if there were to be any such proposals I’m fairly certain they tend towards restricting pay levels in a way that you seem support.
And who best exemplifies the corrupt corporate structure in which those at the top benefit regardless of what happens to customers, employees, and shareholders? Why, that would be Mr. Donald Trump who, in his ability to walk away whole (or better) from failing ventures makes Mr. Smisek look like a piker.
He can walk away with 36+ million and all I want is to walk away debt free with a retirement package of 30-50k and collect my Social Security