United Airlines Board of Directors
Category: Business and Money
Asked by: halejrb-ga
List Price: $5.00
06 Oct 2002 19:36 PDT
Expires: 05 Nov 2002 18:36 PST
Question ID: 73417
According to the New York Times, United Airlines employees own 55% of the company's stock. But they apparently only get 3 members on the board of directors. Since they are the majority stockholders, why can't they vote in a complete new board of their choosing?
Re: United Airlines Board of Directors
Answered By: mwalcoff-ga on 06 Oct 2002 21:29 PDT
Hello, All shares of stock are not created equal. There are eight types of UAL stock, each of whose holders can elect zero to 5 members of the board. Regular stock holders elect five board members. The three holders of Class I stock elect four board members. The three holders of Class SAM (salaried workers and management) stock elect one member. The pilots' union and the machinists' union -- sole holders of Class IAM and Class MEC stock, respectively -- each elect one member to the board. The remaining three classes of stock are all ESOP -- owned by the employees. Holders of those classes of stock do not get to elect a board member. This set-up was part of the deal when the airline's employees bought a majority stake in UAL in 1994. Changing it would require a change to the company's charter. All of the above information comes from the company's 2002 proxy statement, available at (http://www.sec.gov/Archives/edgar/data/100517/000095013702001625/c67947def14a.txt). I hope this answer meets your needs. If not, please request clarification. Search strategy: SEC EDGAR ://www.google.com/search?sourceid=navclient&q=sec+edgar UAL 1994 ://www.google.com/search?sourceid=navclient&q=ual+1994
rated this answer:
An excellent answer. However, to paraphrase "Animal Farm" some shares are more equal than others. This makes a mockery of the employees "majority stake" in the company.
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