SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
UAL CORPORATION
___________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
UAL CORPORATION
____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l),
or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controvery pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
_________________________________________________________________________
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:*
_____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
(5) Total fee paid:
__________________________________________________________________________
[x] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_____________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_____________________________________________________________________________
(3) Filing Party:
_____________________________________________________________________________
(4) Date Filed:
_____________________________________________________________________________
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
PRELIMINARY COPY
LOGO UAL Corporation
March ____, 1996
Dear Fellow Owners:
What makes our Company different and special? Our
employee owners are committed to taking the future into
their hands. Our managers are employee owners guiding the
Company in shaping its future. Share value has risen
spectacularly, along with stockholder return on ownership.
We're more profitable and more competitive than ever.
UAL Corporation's 1995 earnings from ongoing operations
were the highest in the Company's history. Over the year,
fully distributed market capitalization increased by nearly
$3.0 billion, or about $91 per share -- an increase in value
of more than 100%. Fully distributed market capitalization
includes the 12.7 million shares of UAL Common Stock
outstanding and an additional 20.1 million shares issued or
issuable under our ESOP agreement and other outstanding
commitments included in calculating fully diluted shares.
At the same time, the Company pursued a number of
initiatives designed to improve long-term profitability, such
as electronic ticketing and other distribution cost
reductions. To review this exciting year and discuss the
future of our Company, the Board of Directors joins me in
inviting you to attend the 1996 Annual Meeting of
Stockholders and to vote on the matters described in the
enclosed proxy statement.
Your vote is important. To be sure your shares are
represented at the meeting, please sign and return the
enclosed proxy card in the envelope provided, even if you
plan to attend the meeting in person.
I hope you will be able to attend the meeting and I look
forward to seeing you. If you plan to attend, please detach
the admission card attached to your proxy card and bring it
with you to the meeting.
Sincerely yours,
Gerald Greenwald
PRELIMINARY COPY
UAL Corporation
P. O. Box 66919
Chicago, Illinois 60666
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
The Annual Meeting of Stockholders of UAL Corporation, a
Delaware corporation (the "Company"), will be held in the Gold
Coast Room of The Drake Hotel, 140 E. Walton Place, Chicago,
Illinois 60611 on Wednesday, April 24, 1996, at 10:00 a.m., local
time, to:
1. Elect a Board of Directors as follows:
(a) Five Public Directors, to be elected by the holders
of Common Stock;
(b) Four Independent Directors, to be elected by the
holders of Class I Junior Preferred Stock; and
(c) One ALPA Director, one IAM Director and one
Salaried/Management Employee Director, to be elected by the
holders of Class Pilot MEC Junior Preferred Stock, Class
IAM Junior Preferred Stock and Class SAM Junior Preferred
Stock, respectively.
2. Approve an amendment to the Restated Certificate of
Incorporation of this Company to increase the number of
authorized shares of Common Stock in connection with a
proposed 4-for-1 stock split.
3. Approve an amendment to the 1981 Incentive Stock Plan to
increase the shares available for grant.
4. Ratify the appointment of independent public accountants.
5. Transact any other business that is properly brought
before the meeting.
Stockholders of record at the close of business on March 11, 1996
will be entitled to vote at the meeting. This proxy statement
and the accompanying proxy are being mailed beginning
approximately March ___, 1996.
Stockholders are urged to fill out, sign and mail promptly the
enclosed proxy card in the accompanying envelope, which requires
no postage if mailed in the United States. Proxies forwarded by
or for brokers, trustees, or fiduciaries should be returned as
directed. The prompt return of proxies will save the expense
involved in further communication.
By order of the Board of Directors
Francesca M. Maher
Vice President - Law
and Corporate Secretary
Chicago, Illinois
March ___, 1996
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Except where authority has been withheld by a stockholder, the
enclosed proxy will be voted at the 1996 Annual Meeting of
Stockholders of the Company or any adjournments or postponements
(the "Meeting") for the election of the respective nominee(s)
named below for a term of one year and until their successors are
duly elected and qualified. The terms of all directors will
expire at the Meeting. The Board of Directors expects all
nominees named below to be available for election.
Directors To Be Elected By Holders Of Common Stock - Public Directors
Five Public Directors are to be elected by the holders of
Common Stock, par value $.01 per share ("Common Stock"). Each
nominee was previously elected by the holders of Common Stock and
has served continuously as a Public Director since the date of
his election. The term "Public Director" is used as defined in
the Restated Certificate of Incorporation, as amended, of the
Company (the "Charter").
If a nominee unexpectedly becomes unavailable before election,
proxies from holders of Common Stock will be voted for the person
designated by the Board of Directors or the appropriate Board
Committee in accordance with the requirements of the Charter. No
person, other than the directors of the Company or such
Committee, as applicable, is responsible for the naming of
nominees.
(1) Principal Occupation or Employment Director
Nominee (2) Other Business Affiliations Age Since
- ------- -------------------------------------- --- --------
John A. (1) President (1994) and Chief 46 1994
Edwardson Operating Officer (1995) of the Company
and its wholly-owned subsidiary, United
Air Lines, Inc. ("United"). Executive
Vice President and Chief Financial
Officer, Ameritech Corporation
(telecommunications) (1991-1994).
(2) Director, Household International,
Inc. and trustee, Purdue University.
Gerald (1) Chairman and Chief Executive 60 1994
Greenwald Officer of the Company and United
(1994). Chairman, Tatra Truck Company,
Czech Republic (truck manufacturing)
(1993-1994); President, Olympia & York
Development Limited (real estate
development company in the process of a
financial restructuring at the time Mr.
Greenwald agreed to serve as president
and certain subsidiaries of which filed
for protection under federal bankruptcy
laws in connection with such
restructuring) (1992-1993); Managing
Director, Dillon Read & Co. Inc.
(investment banking) (1991-1992).
(2) Director, Aetna Life and Casualty
Company, and trustee, Princeton
University.
(1) Principal Occupation or Employment Director
Nominee (2) Other Business Affiliations Age Since
- ------- -------------------------------------- --- --------
John F. (1) Retired Chairman and Chief 65 1984
McGillicuddy Executive Officer, Chemical Banking
Corporation (banking and finance)
(1993). Chairman and Chief Executive
Officer, Chemical Banking Corporation
(1992-1993) and Manufacturers Hanover
Corporation and Manufacturers Hanover
Trust Company (1979-1992).
(2) Director, Chemical Banking
Corporation, Southern Peru Copper
Corporation and USX Corporation.
James J. (1) Chairman and Chief Executive 59 1984
O'Connor Officer, Unicom Corporation (supplier
of electricity) for the past five
years.
(2) Director, American National Can
Company, Corning Incorporated, First
Chicago NBD Corporation, Scotsman
Industries, Inc. and The Tribune
Company.
Paul E. (1) Managing Director, Gollust, Tierney 53 1990
Tierney, Jr. and Oliver, Inc. (investment banking)
for the past five years.
(2) Director, Liz Claiborne, Inc.,
Saint John's College and D.C. United
(major league soccer), and Chairman of
the Board of Directors, Technoserve,
Inc.
Directors To Be Elected By Holders Of Other Classes Of Stock
The following classes of directors are to be elected by the
holder of certain classes of stock of the Company other than
Common Stock. The holders of Common Stock do not vote on the
election of these directors. Each nominee was previously elected
by the holders of the applicable class of stock of the Company
and has served continuously as a director of the Company for the
period succeeding the date of his election. If a nominee
unexpectedly becomes unavailable before election, or the Company
is notified that a substitute nominee has been selected, votes
will be cast pursuant to the authority granted by the proxies
from the respective holder(s) for the person who may be
designated as a substitute nominee by the respective holder(s)
or, if applicable, in accordance with the nomination procedures
identified below.
Independent Directors-Elected by Holders of Class I Stock
Four Independent Directors (as defined in the Charter) are to
be elected by the four Independent Directors as the holders of
Class I Junior Preferred Stock of the Company ("Class I Stock").
Each nominee has been nominated by the Independent Director
Nomination Committee and, pursuant to a Stockholders Agreement
among the holders of Class I Stock, each such holder has agreed
to vote in favor of such nominees. No person, other than the
members of the Independent Director Nomination Committee, is
responsible for the naming of the nominees.
(1) Principal Occupation or Employment Director
Nominee (2) Other Business Affiliations Age Since
- ------- -------------------------------------- --- --------
Duane D. (1) Chairman (1996), and former 56 1994
Fitzgerald President (1988-1996) and Chief
Executive Officer (1991-1996), Bath
Iron Works Corporation (shipbuilding)
and former Vice President of its
parent company, General Dynamics
Corporation (1995-1996).
(2) Trustee, Boston University and IAM
National Pension Fund.
Richard D. (1) Chairman (1992), President (1986) 55 1994
McCormick and Chief Executive Officer (1991) of
US WEST, Inc. (telecommunications).
(2) Director, Norwest Corporation and
Financial Security Assurance Holdings,
Inc.
John K. Van (1) Partner, Dewey Ballantine (law 60 1994
de Kamp firm) (1991). Attorney General of the
State of California (1989-1991).
Effective April 1, 1996, President
and General Counsel, Thoroughbred
Owners of California, and Of Counsel,
Dewey Ballantine.
(2) Member, Advisory Board, Falcon
Classic Cable Income Properties, Ltd.,
and director, Lawry's Restaurants,
Inc., The Employers Group, Day One,
Eisenhower World Affairs Institute,
Los Angeles Conservation Corps,
Planning and Conservation League, Skid
Row Development Corporation and Norton
Simon Museum.
Paul A. (1) Chairman, James D. Wolfensohn Inc. 68 1994
Volcker (investment banking), and Frederick H.
Schultz Professor of International
Economic Policy, Princeton University,
for the past five years.
(2) Director, Nestle S.A., the
American Stock Exchange and Prudential
Insurance Co. of America.
ALPA Director-Elected by Holder of Class Pilot MEC Stock
One ALPA Director (as defined in the Charter) is to be elected
by the United Airlines Pilots Master Executive Council, Air Line
Pilots Association, International ("ALPA-MEC"), the holder of the
Class Pilot MEC Junior Preferred Stock of the Company ("Class
Pilot MEC Stock"). The ALPA-MEC has advised the Company that it
has nominated and intends to reelect Michael H. Glawe as the ALPA
Director.
(1) Principal Occupation or Employment Director
Nominee (2) Other Business Affiliations Age Since
- ------- -------------------------------------- --- --------
Michael H. (1) Chairman, ALPA-MEC (labor union) 48 1/1/96
Glawe (1996); Chairman, ALPA-MEC Grievance
Committee (1993-1995), and Captain, B-
727, United, for the past five years.
(2) Executive Board Member, Air Line
Pilots Association, International
("ALPA").
IAM Director-Elected by Holder of Class IAM Stock
One IAM Director (as defined in the Charter) is to be elected
by the International Association of Machinists and Aerospace
Workers ("IAM"), the holder of the Class IAM Junior Preferred
Stock of the Company ("Class IAM Stock"). The IAM has advised
the Company that it has nominated and intends to reelect John
Peterpaul as the IAM Director.
(1) Principal Occupation or Employment Director
Nominee (2) Other Business Affiliations Age Since
- ------- -------------------------------------- --- --------
John F. (1) Retired General Vice President, 60 1994
Peterpaul IAM (labor union) (1994). General Vice
President, IAM, for the preceding five
years.
(2) Former Chairman, Railway Labor
Executives' Association; former
member, National Commission to Ensure
a Strong Competitive Airline Industry.
Salaried/Management Employee Director-Elected by Holders of Class
SAM Stock
One Salaried/Management Employee Director (as defined in the
Charter) is to be elected by the holders of the Class SAM Junior
Preferred Stock of the Company ("Class SAM Stock"), who are
Joseph V. Vittoria, the Salaried/Management Employee Director,
and Paul G. George, United's Senior Vice President-People. Mr.
Vittoria has been nominated for reelection by the "System
Roundtable," a body of salaried and management employees of
United empowered to review and discuss issues relating to the
Company and their effect on salaried and management employees.
Pursuant to a Stockholders Agreement between the holders of Class
SAM Stock, each such holder has agreed to vote in favor of the
System Roundtable nominee.
(1) Principal Occupation or Employment Director
Nominee (2) Other Business Affiliations Age Since
- ------- -------------------------------------- --- --------
Joseph V. (1) Chairman and Chief Executive 60 1994
Vittoria Officer, Avis, Inc. (automobile
renting and leasing) for the past five
years.
(2) Director, Cilva Holdings, PLC
Transmedia Europe, Inc., and
Transmedia Asia Pacific.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors of the Company held a total of eight
meetings in 1995. All directors attended 75 percent or more of
the total of such meetings and meetings of Board Committees of
which they were members.
Committees
The Board of Directors has Executive, Audit, Compensation,
Compensation Administration, CAP, Labor, Independent Director
Nomination, Outside Public Director Nomination, Pension and
Welfare Plans Oversight and Transaction Committees.
Executive Committee. The Executive Committee is authorized to
exercise the powers of the Board of Directors in the management
of the business and affairs of the Company, with certain
exceptions. The Executive Committee is also responsible for
periodically reviewing Board effectiveness and overseeing the
compensation arrangements for non-employee directors. The
Executive Committee held four meetings in 1995. Committee
members: Gerald Greenwald, Chairman, and Michael H. Glawe,
Richard D. McCormick, John F. Peterpaul, Paul E. Tierney, Jr.,
and Paul A. Volcker.
Audit Committee. The Audit Committee reviews with the
Company's independent public accountants the annual financial
statements of the Company prior to publication, reviews the work
of and approves non-audit services performed by such independent
accountants, makes annual recommendations to the Board for the
appointment of independent public accountants for the ensuing
year, and reviews the effectiveness of the financial and
accounting functions, organization, operations and management of
the Company and its subsidiaries and affiliates. The Audit
Committee held two meetings in 1995. Committee members: James
J. O'Connor, Chairman, and Duane D. Fitzgerald, Richard D.
McCormick, John F. McGillicuddy, Paul E. Tierney, Jr., John K.
Van de Kamp, and Paul A. Volcker.
Compensation Committee. The Compensation Committee reviews and
approves the compensation and benefits of all officers of the
Company and reviews general policy matters relating to
compensation and benefits of non-union employees of the Company
and its subsidiaries. The Committee also administers the equity
incentive compensation plans of the Company, except for
responsibilities reserved for the Compensation Administration
Committee. The Compensation Committee held eight meetings in
1995. Committee members: John F. McGillicuddy, Chairman, and
Duane D. Fitzgerald, Michael H. Glawe, Gerald Greenwald, Richard
D. McCormick, John F. Peterpaul, and Joseph V. Vittoria.
Compensation Administration Committee. The Compensation
Administration Committee administers the stock option plans and
executive compensation programs of the Company to the extent such
functions cannot or are not appropriate to be performed by the
Compensation Committee in light of any provision of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"),
securities laws, any other applicable law or any regulations
promulgated under any of the foregoing, and also oversees the
evaluation process for CEO performance. The Compensation
Administration Committee held five meetings in 1995. Committee
members: John F. McGillicuddy, Chairman, and Duane D. Fitzgerald
and Richard D. McCormick.
CAP Committee. The CAP Committee oversees implementation of
the Company's Competitive Action Plan to improve United's
competitiveness on many short-haul routes, pursuant to which
"Shuttle by United" was established. The CAP Committee has the
exclusive authority to approve on behalf of the Company any
modifications of or amendments to the Competitive Action Plan,
other than those matters reserved to the Labor Committee. The
CAP Committee held one meeting in 1995. Committee members: Duane
D. Fitzgerald, Chairman, and Michael H. Glawe, Gerald Greenwald,
John F. McGillicuddy, James J. O'Connor, John F. Peterpaul, Paul
E. Tierney, Jr., and John K. Van de Kamp.
Labor Committee. The Labor Committee reviews and approves the
entering into of, or any modification or amendment to, any
collective bargaining agreement to which the Company or any of
its subsidiaries is a party. The Committee held three meetings
in 1995. Committee members: Gerald Greenwald, Chairman, and
Richard D. McCormick and Paul E. Tierney, Jr.
Independent Director Nomination Committee. The Independent
Director Nomination Committee nominates candidates to become
Independent Director members of the Board of Directors, fills
vacancies in Independent Director positions and appoints
Independent Directors to serve on Board Committees. The
Committee held one meeting in 1995. Committee members: John K.
Van de Kamp, Chairman, and Duane D. Fitzgerald, Michael H. Glawe,
Richard D. McCormick, John F. Peterpaul, Joseph V. Vittoria and
Paul A. Volcker.
Outside Public Director Nomination Committee. The Outside
Public Director Nomination Committee nominates candidates to
become Outside Public Director (as defined in the Charter)
members of the Board of Directors, fills vacancies in Outside
Public Director positions and appoints Outside Public Directors
to serve on Board Committees. The Outside Public Director
Nomination Committee will consider nominees recommended by
stockholders, who may submit recommendations by addressing a
letter to the Committee Chairman at UAL Corporation, P. O. Box
66919, Chicago, Illinois 60666. Qualification requirements for
Outside Public Directors are specified in the Charter. The
Committee held one meeting in 1995. Committee members: Paul E.
Tierney, Jr., Chairman, and John F. McGillicuddy and James J.
O'Connor.
Pension and Welfare Plans Oversight Committee. The Pension and
Welfare Plans Oversight Committee oversees compliance by the
Company and its subsidiaries with laws governing employee benefit
plans maintained by the Company and its subsidiaries. The
Committee held seven meetings in 1995. Committee members: Paul
A. Volcker, Chairman, and Michael H. Glawe, James J. O'Connor,
John F. Peterpaul, John K. Van de Kamp and Joseph V. Vittoria.
Transaction Committee. The Transaction Committee is authorized
to evaluate and advise the Board with respect to any proposed
merger or consolidation of the Company or any of its subsidiaries
with or into, the sale, lease or exchange of all or substantially
all of the Company's or any of its subsidiaries' property or
assets to, or a significant business transaction with, any Labor
Affiliate (as defined in the Charter). The Transaction Committee
held no meetings in 1995. Committee members: Richard D.
McCormick, Chairman, and Duane D. Fitzgerald, John F.
McGillicuddy, James J. O'Connor, Paul E. Tierney, Jr., John K.
Van de Kamp and Paul A. Volcker.
Compensation Committee Interlocks and Insider Participation;
Certain Relationships and Related Transactions
Messrs. Greenwald, Glawe and Peterpaul serve on the
Compensation Committee, but not the Compensation Administration
Committee. Messrs. Glawe and Greenwald are employees of the
Company. Mr. Glawe is also the Chairman of the ALPA-MEC and an
officer of ALPA. United and ALPA are parties to a collective
bargaining agreement for United's pilots represented by ALPA.
Compensation of Directors
Each non-employee director receives an annual retainer of
$18,000 and is paid $900 for each meeting attended. The non-
employee Chairman of each Committee other than the Compensation
Administration Committee receives an additional retainer of
$2,700 per year. Each non-employee member of a Committee
receives a fee of $900 for each Committee meeting attended. The
above fees reflect the 10% reduction in Board compensation that
was instituted in January 1993 and reaffirmed by the Board in
September 1994. Non-employee directors also receive 100 shares
of Common Stock annually which, pursuant to Stock Ownership
Guidelines adopted in February 1996, they are to keep throughout
their tenure on the Board. Directors may elect to receive all or
any portion of their cash retainer and fees in Common Stock, as
well as to defer their stock and cash compensation for federal
income tax purposes. Directors who are employees of the Company
or any of its subsidiaries, including Messrs. Greenwald,
Edwardson and Glawe, do not receive any retainer fee, meeting fee
or Common Stock for their service on the Board of Directors or
any Committee.
Non-employee directors are eligible to participate in a
retirement income plan (the "Retirement Plan") if they have at
least five years of service on the date of retirement and are not
otherwise eligible to receive pension benefits from the Company
or any of its subsidiaries. If a retiring director has at least
ten years of service and is at least age 70 at retirement, he is
entitled to a life annuity equal to the greater of $20,000 per
year or the annual retainer fee at retirement. Reduced benefits
are available if the director has less than ten years of service
or if retirement occurs before age 70. For purposes of the
Retirement Plan, a non-employee director who was a director upon
the change in control of the Company on July 12, 1994 has been
credited with three additional years of service and is deemed to
be three years older than his actual age. Surviving spouse
benefits are available in some cases. A trust (the "Trust")
has been created to serve as a source for payment of benefits
under the Retirement Plan.
The Company considers it important for its directors to
understand its business and have exposure to its operations and
employees. For this reason, the Company provides free
transportation and free cargo shipment on United to each director
of the Company and his spouse and eligible dependent children.
The directors are reimbursed by the Company for income taxes
resulting from actual use of the travel and shipment privilege. A
director who was a director upon the change in control of the
Company on July 12, 1994 is entitled to continue such travel and
cargo benefits for life. The cost of this policy in 1995 for
each director, including cash payments made in February 1996 for
income tax liability, was as follows:
Name Cost($) Name Cost($)
---- ------- ---- -------
John A. Edwardson 7,231 James J. O'Connor 23,174
Duane D. Fitzgerald 9,043 John F. Peterpaul 0
Michael H. Glawe 0 Paul E. Tierney, Jr. 62,404
Gerald Greenwald 25,507 John K. Van de Kamp 12,627
Richard D. McCormick 17,607 Joseph V. Vittoria 5,562
John F. McGillicuddy 19,334 Paul A. Volcker 592
SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common
Stock and of voting preferred stock held in the UAL Corporation
Stock Ownership Plan Trust (the "ESOP") beneficially owned as of
March 11, 1996, by each director and executive officer included
in the Summary Compensation Table, and by all directors and
executive officers of the Company as a group. Unless indicated
otherwise by footnote, the owner exercises sole voting and
investment power over the securities (other than unissued
securities, the ownership of which has been imputed to such
owner). Certain directors and executive officers of the Company
also beneficially own shares of various other classes of
preferred stock of the Company. See "Security Ownership of
Certain Beneficial Owners."
Common Stock Voting Preferred
Benefically Percent Stock Benefically Percent
Name of Director or Executive and Group Owned of Class Owned of Class
--------------------------------------- ------------ -------- ----------------- --------
John A. Edwardson 76,241(1) * 602(2) *
Duane D. Fitzgerald 513 * ---
Michael H. Glawe --- 311(3) *
Gerald Greenwald 189,106(4) 1.5 918(2) *
Richard D. McCormick 872 * ---
John F. McGillicuddy 850 * ---
James J. O'Connor 550 * ---
John F. Peterpaul 200 * ---
Paul E. Tierney, Jr. 19,154 * ---
John K. Van de Kamp 200 * ---
Joseph V. Vittoria 366 * ---
Paul A. Volcker 700 * ---
Douglas A. Hacker 26,776(5) * 415(2) *
Joseph R. O'Gorman 50,351(6) * 474(2) *
Stuart I. Oran 40,109(7) * 316(2) *
Directors and Executive Officers 514,030(8) 4.07 4,032(9) *
as a Group (20 persons)
*Less than 1%
(1) Includes 32,500 shares which Mr. Edwardson has the right
to acquire within 60 days of March 11, 1996 by the exercise of
stock options.
(2) Reflects beneficial ownership of Class S ESOP Voting
Junior Preferred Stock ("Class S Voting Stock") owned through
the ESOP.
(3) Reflects beneficial ownership of Class P ESOP Voting
Junior Preferred Stock ("Class P Voting Stock") owned through
the ESOP.
(4) Includes 120,000 shares which Mr. Greenwald has the right
to acquire within 60 days of March 11, 1996 by the exercise of
stock options, 1,671 shares held indirectly by Mr. Greenwald's
wife and 199 shares held indirectly by a UAL 401(k) plan (at
close of business on December 29, 1995).
(5) Includes 18,750 shares which Mr. Hacker has the right to
acquire within 60 days of March 11, 1996 by the exercise of
stock options.
(6) Includes 37,500 shares which Mr. O'Gorman has the right
to acquire within 60 days of March 11, 1996 by the exercise of
stock options.
(7) Includes 25,875 shares which Mr. Oran has the right to
acquire within 60 days of March 11, 1996 by the exercise of
stock options.
(8) Includes 307,456 shares which directors or officers have
the right to acquire within 60 days of March 11, 1996 by the
exercise of stock options, shares held indirectly as discussed
in footnote (4) and an additional 24 shares held in a UAL
401(k) plan (at close of business on December 29, 1995).
(9) Reflects ownership of Class S Voting Stock owned through
the ESOP. No director or executive officer other than Mr.
Glawe beneficially owns shares of Class P Voting Stock.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as
amended, or the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part, the
following report and the performance graph immediately following
shall not be incorporated by reference into any such filings.
EXECUTIVE COMPENSATION
UAL Corporation Compensation and Compensation Administration
Committees Report
Philosophy. The Company's executive compensation program is
designed to attract, retain and motivate top quality and
experienced officers. The program provides industry competitive
compensation opportunities, supports a pay-for-performance
culture and emphasizes pay-at-risk. The program is heavily
oriented toward incentive compensation tied to the annual and
longer-term financial performance of the Company and to its
longer-term return to stockholders.
The Company's compensation program was modified in 1995 to
provide, among other matters, that the program would be
administered in a manner consistent with the philosophy of an
employee owned company. To encourage accumulation and retention
of Common Stock by Company officers, guidelines were adopted
providing for ownership of Common Stock at the following
multiples of annual salary: Chairman and Chief Executive Officer
and President and Chief Operating Officer, five times; Executive
and Senior Vice Presidents, two times; and Vice Presidents, one
time. Unexercised stock options, unvested restricted stock and
ESOP stock ownership are not recognized for purposes of these
guidelines.
Components. There are two components to the executive
compensation program:
- Cash compensation.
- Stock compensation.
The cash compensation program is comprised of base salary and
annual incentive compensation. Base salaries are competitive
with other large domestic air carriers, which include the three
largest of the five carriers in the Relative Market Performance
Graph that follows. Base salaries are substantially less than
other companies in general industry of comparable size. Base
salaries for officers were reduced on July 13, 1994 by 8.25%. No
general salary increases were awarded to officers in 1995.
Annual incentive compensation provides an opportunity for
additional earnings. Awards under the incentive compensation
program effectively were reduced by 8.25% on July 13, 1994 since
these awards are calculated as a percentage of base salary.
Under the program, an incentive pool is created based upon the
Company's earnings; each year the Compensation Committee approves
a schedule of annual incentive pool funding relative to specified
earnings targets. The CEO recommends to the Compensation
Committee (or the Compensation Administration Committee, in the
case of incentive awards intended to qualify under Section 162(m)
of the Internal Revenue Code) incentive awards for each officer
based upon an assessment of each officer's contribution over the
preceding year. The assessment is based upon, among other
things, an appraisal prepared annually for each officer on his or
her managerial skills and the performance by him or her of
assigned responsibilities. Before making a recommendation, the
CEO discusses such appraisals with other members of senior
management and considers these discussions, along with an overall
evaluation of corporate performance and industry competitive
data. The Compensation Committee makes a final determination of
awards for all officers, including the CEO, who is assessed by
the Compensation Committee using a comparable process established
under his Employment Agreement. The awards for the other proxy-
named officers are made by the Compensation Administration
Committee based on a pre-established formula in full compliance
with Section 162(m) of the Internal Revenue Code.
The stock compensation program is comprised of stock options
and, until December 1995, restricted stock. Stock compensation
gives each officer the opportunity to become a stockholder of the
Company. Stock grants are determined in consideration of
individual performance and contribution and in consideration of
airline industry practice, using the same group referred to above
for base salary and annual incentive compensation. The CEO
recommends to the Compensation Committee (or the Compensation
Administration Committee, in the case of awards under plans which
qualify for certain exceptions from Section 16 of the Exchange
Act pursuant to Rule 16b-3 or Section 162(m) qualified grants)
stock option and/or, until December 1995, restricted stock grants
for each officer. While there are no specific target award
levels or weighting of factors considered in determining stock
grants, grants are made within grant range guidelines for each
officer level. The Committee determines stock awards for the CEO
based upon a comparable process and makes a final determination
on stock awards for all other officers. Until December 1995,
options and restricted shares typically were granted in
alternating years (options in one year, restricted stock in the
next, etc.). In December 1995, the Compensation and Compensation
Administration Committees adopted a new officer compensation
philosophy, eliminating restricted stock as a normal component of
officer compensation and replacing this component with stock
option grants. Under this new policy, stock options typically
will be granted annually, and restricted stock will be used only
on an individual basis for a very limited number of United
employees in response to compelling business requirements, such
as for recruitment or retention of key management employees.
Stock options may not be granted at less than fair market value
on the date of grant. Stock options carry a ten-year term and
typically have exercise vesting restrictions that lapse ratably
over a four-year period. Restricted stock awards typically have
had vesting restrictions of up to 5 years. The Company's stock
plans include provisions to preserve, to the maximum extent
possible, the deductibility by the Company of amounts awarded
under the plans. For the first time, biennial restricted stock
awards in 1995 included performance vesting criteria, which were
based on the Company's 1995 pretax margin ranking relative to the
other large U.S. airlines, in full compliance with Section 162(m)
of the Internal Revenue Code.
The officer compensation program in total, although primarily
focused on promoting pay-for-performance and emphasizing pay-at-
risk, is heavily oriented toward stockholder interests through
the use of long-term incentives that create a direct linkage
between executive rewards and increased stockholder value. The
long-term incentive component, which is comprised totally of
stock-based incentives, represents over half the total income
opportunity for the officers.
To enable the Company to attract high quality management at the
most senior officer levels within the Company, sign-on
compensation packages for these officers at the time of hiring
sometimes include cash and unrestricted stock awards in addition
to compensation of the types described above. These compensation
packages are often the subject of negotiation, and may have
vesting provisions for restricted stock and stock options that
vary from the normal schedules.
CEO Compensation. The compensation package for Mr. Greenwald was
established pursuant to an Employment Agreement negotiated by Mr.
Greenwald with ALPA and the IAM in 1994 (the "Employment
Agreement"). As part of the Employment Agreement, a base salary
rate of $665,188 was established for Mr. Greenwald, giving effect
to the 8.25% reduction. A non-guaranteed target bonus of
$725,000 per year was also established, which was paid to Mr.
Greenwald in 1996 (in Common Stock) since his 1995 performance
was consistent with the Board Committee's objectives and
directions, and corporate performance did not compel a lesser
bonus. In making those determinations, the applicable Board
Committee took into account (i) airline industry trends and (ii)
the Company's cumulative profitability since the transaction
date. No weighting was given to any particular factor. These are
standards for performance evaluation that were established under
the Employment Agreement. Mr. Greenwald received a restricted
stock grant subject to the Company's normal grant schedule and
performance vesting criteria, in full compliance with Section
162(m) of the Internal Revenue Code.
Compensation for the Other Named Officers. Base salary rates for
the other named executive officers have not changed since being
reduced by 8.25% in July 1994. In 1996 each of the named
executive officers received an incentive compensation award for
1995 performance, which was granted pursuant to the normal
incentive compensation plan terms according to a pre-established
formula in full compliance with Section 162(m) of the Internal
Revenue Code (which Mr. Edwardson received in Common Stock).
Each such officer received a restricted stock grant in 1995
subject to the Company's normal grant schedule and performance
vesting criteria, in full compliance with Section 162(m) of the
Internal Revenue Code.
Change in Control Agreements. The Company and United are parties
to severance agreements (each, a "Severance Agreement") with
certain officers with provisions that took effect upon the change
in control of the Company on July 12, 1994. The Company took
action in 1995 to terminate all of the Severance Agreements.
During 1995, following a reorganization with respect to which Mr.
O'Gorman waived his right to trigger his Severance Agreement,
such agreement was amended to provide that the Company would
impose no decrement to his pension benefit based on age at
retirement and to provide for a termination date in August 1998.
The Severance Agreement of Mr. Hacker, the only other named
executive officer who has such an agreement, expires in August
1997.
Compensation Consultant and Competitive Data. The
Compensation Committee and Compensation Administration Committee
consult with independent compensation advisors on executive
compensation matters. The Committees also have access to
competitive data on compensation levels for officer positions.
UAL Corporation Compensation Committee
John F. McGillicuddy, Chairman Richard D. McCormick
Duane D. Fitzgerald John F. Peterpaul
Michael H. Glawe Joseph V. Vittoria
Gerald Greenwald
UAL Corporation Compensation Administration Committee
John F. McGillicuddy, Chairman Richard D. McCormick
Duane D. Fitzgerald
UAL Corporation
Relative Market Performance
Total Return 1991-1995
CHART
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
UAL Corp. 100 132.35 114.53 132.58 114.44 233.79
S&P 500 100 130.47 140.41 154.56 156.60 215.45
D-J Airline Group(1) 100 134.95 136.42 168.12 112.37 162.78
Source: Compustat Database
(1) Alaska Air, AMR, Delta, Southwest, USAir.
Summary Compensation Table
--------------------------
Annual Compensation Long Term Compensation
-------------------------------------- -----------------------
Other Restricted
Name and Annual Stock Stock All Other
Principal Compensation Awards Options Compensation
Position Year Salary($)(1) Bonus($)(2) ($) ($)(3) (#) ($)(4)
- -------- ---- ------------ ----------- ------------ ---------- ------- ------------
Greenwald 1995 657,184 725,000 79,006(5) 1,820,000 0 254,234(6)
1994 313,300 3,662,521(7) 16,224 2,300,000 200,000 169,002(6)
Edwardson 1995 455,222 455,000 6,962 1,251,250 0 132,704(6)
1994 216,069 2,156,025(7) 8,458 2,208,000 130,000 72,353(6)
O'Gorman 1995 308,196 256,000 10,984 853,125 0 73,439(6)
1994 322,916 234,029 7,078 0 30,000 16,452(6)
1993 314,348 0 7,548 855,000 4,024
Oran 1995 310,750 270,000 10,145 426,563 0 84,371(6)
1994 147,865 1,540,000(7) 312,846(8) 1,150,000 55,000 61,638(6)
Hacker 1995 293,600 210,000 9,138 682,500 0 60,187(6)
Greenwald = Gerald Greenwald, Chairman and Chief Executive Officer
Edwardson = John A. Edwardson, President and Chief Operating Officer
O'Gorman = Joseph R. O'Gorman, Executive Vice President
Oran = Stuart I. Oran, Executive Vice President-Corporate Affairs
and General Counsel
Hacker = Douglas A. Hacker, Senior Vice President and Chief
Financial Officer
__________________
(1) 1994 salaries for Messrs Greenwald, Edwardson and Oran
reflect a partial year of service.
(2) Messrs. Greenwald and Edwardson received the after-tax
value of their 1995 bonuses in Common Stock instead of cash.
Messrs. Greenwald, Edwardson and O'Gorman waived their 1994
bonuses in cash, and accepted Common Stock of value equivalent
to the amount of the bonus waived. The value of these shares
is included in the Summary Compensation Table.
(3) The restricted stock granted in 1995 to all officers
named in the Summary Compensation Table and in 1994 to Mr.
Greenwald vests in five equal annual installments commencing
one year from the date of grant; to Mr. Edwardson in 1994
vests in four equal annual installments commencing two years
from the date of grant; and to Mr. Oran in 1994 vests 20% at
January 15, 1995 and the balance in four equal annual
installments commencing one year from the date of grant. The
number and aggregate value, respectively, of restricted
holdings as of fiscal year-end is: Mr. Greenwald, 36,000
shares, $6,426,000; Mr. Edwardson, 35,000 shares, $6,247,500;
Mr. O'Gorman, 7,500 shares, $1,338,750; Mr. Oran, 11,250
shares, $2,008,125; and Mr. Hacker 6,000 shares, $1,071,000.
The number of shares of restricted stock awarded in 1995
reflects the actual award after the application of vesting
criteria based on the Company's 1995 profitability as compared
to other major U.S. airlines, which could have resulted in an
award ranging from 150% of the actual award to a complete
forfeiture of the award. The restricted stock granted in 1993
to Mr. O'Gorman (7,500 shares) was scheduled to vest in five
equal annual installments commencing one year from the date of
grant, but these vesting restrictions lapsed upon the change
in control of the Company on July 12, 1994. No dividends have
been paid on restricted shares, but officers are entitled to
any dividends paid on such shares.
(4) Except as otherwise specified, amounts represent
compensation attributable to split dollar insurance program
premiums. Such amounts specified for 1994 for Messrs.
Greenwald, Edwardson and Oran reflect compensation
attributable to premiums paid in 1995 for obligations accrued
in 1994.
(5) Amount includes $38,498 attributable to term life insurance
benefits and $15,000 attributable to automobile benefits.
(6) Amounts include value of shares of ESOP preferred stock
allocated to the officer's account for 1995 and 1994 as follows, based
upon the year-end closing price of the Common Stock multiplied
by the number of shares of Common Stock issuable upon
conversion of such ESOP preferred stock: Mr. Greenwald,
$125,246, $18,912; Mr. Edwardson, $80,851, $13,043; Mr. O'Gorman,
$66,426, $8,869; Mr. Oran, $38,315, $8,869; and Mr. Hacker,
$56,964 (1995 only).
(7) Includes one-time sign-on compensation consisting of
Common Stock and cash and, in the case of Mr. Edwardson, a
donation of Common Stock to a charitable foundation at his
request in lieu of issuing such shares to him.
(8) Includes a one-time $300,000 payment made in 1995 in
consideration of waiving all rights under the Company's normal
relocation policy.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values (1)
Shares Number of Securities Underlying Value of Unexercised In-the-Money
Acquired On Options/SARs at FY-End (#) Options/SARs at FY-End ($)
Exercise Value ------------------------------- ---------------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
Gerald Greenwald 0 N/A 120,000 80,000 10,515,000 7,010,000
John A. Edwardson 0 N/A 32,500 97,500 2,847,813 8,543,438
Joseph R. O'Gorman 0 N/A 37,500 22,500 3,023,288 1,971,563
Stuart I. Oran 7,500(2) 612,656(2) 26,875 20,625 2,354,921 1,807,266
Douglas A. Hacker 0 N/A 18,750 18,750 1,952,281 1,642,969
(1) Each option granted prior to July 12, 1994 (a "Pre-
Closing Option") is exercisable for one-half a share of
Common Stock and $84.81 in cash. Value of Pre-Closing Options
includes the cash amount deliverable upon exercise.
(2) Shares having an aggregate market value of $249,317 were
withheld by the Company from the exercise proceeds to cover
tax withholding obligations on the value realized upon
exercise.
Pension Plan Table
Years of Participation
Final ------------------------------------------------------------------
Average Pay 10 15 20 25 30 35 40
- ----------- -- -- -- -- -- -- --
$200,000 $32,000 $48,000 $64,000 $80,000 $96,000 $112,000 $128,000
400,000 64,000 96,000 128,000 160,000 192,000 224,000 256,000
600,000 96,000 144,000 192,000 240,000 288,000 336,000 384,000
800,000 128,000 192,000 256,000 320,000 384,000 448,000 512,000
1,000,000 160,000 240,000 320,000 400,000 480,000 560,000 640,000
1,200,000 192,000 288,000 384,000 480,000 576,000 672,000 768,000
1,400,000 224,000 336,000 448,000 560,000 672,000 784,000 896,000
1,600,000 256,000 384,000 512,000 640,000 768,000 896,000 1,024,000
1,800,000 288,000 432,000 576,000 720,000 864,000 1,008,000 1,152,000
2,000,000 320,000 480,000 640,000 800,000 960,000 1,120,000 1,280,000
The above illustration is based on retirement at age 65 and
selection of a straight life annuity (other annuity options are
available, which would reduce the amounts shown above). The
amount of the normal retirement benefit under the plan is the
product of 1.6% times years of credited participation in the plan
times final average pay (highest five of last ten years of
covered compensation, with compensation after July 12, 1994 being
adjusted to add back the 8.25% salary reduction). The retirement
benefit amount is not offset by the participant's social security
benefit. Compensation covered by the plan includes salary and
amounts shown as annual bonus in the Summary Compensation Table.
Sign-on compensation paid to Messrs. Greenwald, Edwardson and
Oran in 1994 does not qualify as pension earnings and will not be
included in any pension calculations. Under the qualified plan,
years of participation for persons named in the cash compensation
table are as follows: Mr. Greenwald-1 year; Mr. Edwardson-1 year;
Mr. Oran-1 year; Mr. O'Gorman-23 years and Mr. Hacker-2 years.
The amounts shown do not reflect limitations imposed by the
Internal Revenue Code on retirement benefits which may be paid
under plans qualified under the Internal Revenue Code. United has
agreed to provide under non-qualified plans the portion of the
retirement benefits earned under the pension plan which would
otherwise be subject to Internal Revenue Code limitations.
The Employment Agreement entitles Mr. Greenwald to an annual
pension equal to the greater of the pension that would accrue
under the Company plans with credit for 30 years of service or
$500,000 per year. This pension is payable at any time elected by
Mr. Greenwald following retirement or termination of employment.
Mr. Greenwald's retirement benefit will continue to be paid to
his spouse at 67% of his benefit level under a joint survivor
annuity. Pursuant to the Employment Agreement, a revocable trust
has been funded to provide funding for the additional pension
obligation for Mr. Greenwald.
The Company has agreed to supplement Messrs. Edwardson's,
O'Gorman's and Oran's benefits under the qualified pension plans
by granting them credit for additional years of service-10 years
for Mr. Edwardson, 6 years for Mr. O'Gorman and 20 years for Mr.
Oran. In addition, the Company has agreed to waive the service
requirement for benefit vesting under the qualified pension plan
for Messrs. Edwardson and Oran and to impose no decrement to the
pension benefit based on age at retirement for Messrs. Edwardson,
O'Gorman and Oran.
Employment Contracts and Change in Control Arrangements
Pursuant to his Employment Agreement, Mr. Greenwald is paid a
salary of $665,188 per year, giving effect to the 8.25% salaried
and management salary reduction in July 1994, and a non-
guaranteed target bonus of $725,000 per year, which target bonus
will be payable if Mr. Greenwald's performance is "consistent
with the applicable Board Committee's objectives and directions"
and the Company's performance "does not compel" a lesser bonus.
In addition, the applicable Board Committee will take into
account (i) airline industry trends and (ii) the Company's
financial performance (including cumulative profitability since
July 12, 1994) in determining the extent of Mr. Greenwald's
bonus. The applicable Board Committee also has the discretion to
award a bonus in excess of the target amount. The options and
restricted stock received by Mr. Greenwald upon commencement of
employment pursuant to the Employment Agreement vest on any
termination of Mr. Greenwald's employment other than termination
by the Company for cause or a voluntary resignation. The options,
to the extent vested, will remain outstanding for 10 years,
notwithstanding termination of Mr. Greenwald's employment for any
reason, including "cause".
If Mr. Greenwald's employment is terminated by the Company
without "cause" or by him for "good reason," his salary (at
the $725,000 pre-reduction rate) and guaranteed $725,000 bonus
will continue for 3 years (or, if greater, the remainder of the 5
year contract term). Generally, the Company will not be entitled
to a deduction for Federal income tax purposes with respect to
the amounts described above to the extent that such amounts
exceed $1 million in any year.
The Company has agreed that, in the event of a termination of
employment of Mr. Edwardson by the Company without cause or by
Mr. Edwardson with good reason, the Company shall pay to Mr.
Edwardson a lump sum equal to his base salary and bonus paid in
the prior twelve month period. In the event of a termination
without cause within five years after commencement of employment,
Mr. Oran is entitled to a cash payment equal to his base salary
and annual bonus paid in the prior twelve month period, as well
as immediate vesting of any of his initial option grants that
would have otherwise vested within twelve months after the date
of termination.
Each of Mr. Hacker and Mr. O'Gorman is a party to a Severance
Agreement that provides certain benefits if the executive's
employment with United is terminated (1) by the Company without
"cause" (as defined in the Severance Agreement) or (2) by the
executive for "good reason" (as defined in the Severance
Agreement) in either case prior to August 31, 1997 (Mr. Hacker)
or August 1, 1998 (Mr. O'Gorman). Upon such a termination of
employment, the executive officer will be entitled to receive (1)
a cash payment equal to 3 times the sum of (a) the greater of the
executive's base salary as in effect on July 12, 1994 or as in
effect on the date his employment terminates plus (b) the average
of the greater of the bonuses paid to the executive with respect
to the three years preceding July 12, 1994 or the bonuses paid to
the executive with respect to the three years preceding his
termination of employment, (2) continuation of travel privileges
(and partial tax reimbursement) on United for the executive and
his spouse and other dependents for three years following
termination of employment (and for life thereafter if the
executive would have qualified for retiree travel privileges had
his employment continued during such three-year period), (3)
coverage under United's medical and other welfare benefits for a
period of three years following the date of termination (and for
life thereafter if the executive would have qualified for retiree
medical benefits had his employment continued during such three-
year period), (4) a lump sum payment equal to the value of the
pension benefits (including any early retirement benefits) that
the executive officer would have earned under United's pension
plans and arrangements had the executive officer continued to be
employed for an additional three years, and (5) a lump sum
payment equal to the amounts that United would have paid on
behalf of the executive officer with respect to split dollar life
insurance policies in effect for the executive.
PROPOSAL NO. 2
APPROVAL OF CHARTER AMENDMENT
IN CONNECTION WITH PROPOSED STOCK SPLIT
The Board of Directors has approved an amendment to Article
FOURTH of the Charter (the "Charter Amendment") to increase the
number of shares of stock that the Company is authorized to issue
from 191,100,022 (100 million in Common Stock and the balance in
various classes of preferred stock) to 291,100,022 (200 million
in Common Stock and no change in the number of shares of the
various classes of preferred stock).
The Board of Directors unanimously recommends that stockholders
vote FOR approval of the Charter Amendment.
Proposed Four-For-One Stock Split in the Form of a 300%
Dividend. The Board has authorized a four-for-one split of
Common Stock in the form of a 300% stock dividend, subject to
stockholder approval of the Charter Amendment. The increase in
authorized shares is necessary to provide the Company with
authority to issue a number of shares sufficient to effect the
split and to reserve an amount sufficient to meet all known
requirements and to provide flexibility for the future. The
proposed stock split cannot occur unless stockholders approve the
Charter Amendment. Except for the proposed stock split, there
are no agreements, commitments or understandings for the issuance
of the newly authorized shares.
The Board of Directors anticipates that the increase in the
number of outstanding shares of Common Stock through the stock
split may place the market price of Common Stock in a range more
attractive to investors and may result in a broader market for
the stock.
As a result of the stock split, the number of shares of Common
Stock issuable upon conversion of ESOP preferred stock and other
benefit and compensation programs of the Company, as well as the
conversion price and number of shares of Common Stock issuable
under the Company's convertible debentures and the exercise price
and number of shares of Common Stock issuable under outstanding
stock options, would be proportionately adjusted to give effect
to the stock split. For example, an employee who was allocated
ten shares of non-voting ESOP preferred stock immediately prior
to the proposed stock split would have received ten shares of
Common Stock upon conversion of such non-voting ESOP preferred
stock at the time of distribution. Upon completion of the
proposed stock split, the same employee would continue to be
allocated ten shares of non-voting ESOP preferred stock, but the
number of shares of Common Stock into which such preferred stock
is convertible would be adjusted 4-for-1 so that such ESOP
preferred stock would convert into forty shares of Common Stock
at the time of distribution. Thus, the proposed stock split
would not dilute the economic interest of the holders of ESOP
preferred stock in the Company, nor would it have any effect on
the proportionate voting rights of such holders in the Company's
outstanding voting stock.
Following the split, an amount equal to the par value of shares
issued in the split would be transferred from additional capital
invested to the Company's stated capital accounts. The $.01 par
value of the Common Stock would not be adjusted. As of March 11,
1996, 12,645,564 shares of Common Stock were issued and outstanding
and an aggregate of 21,330,597 shares of Common Stock were reserved for
issuance or available for grant under various employee benefit plans,
including the ESOP, and the Directors Plan and for issuance upon the
conversion of certain convertible debt securities.
If adopted, the Charter Amendment and the stock split will be
effective at the close of business on the day of filing the
Charter Amendment with the Delaware Secretary of State as
required by the General Corporation Law of Delaware. It is
anticipated that this will occur on May 6, 1996. Stockholders of
record at such date would receive an additional stock certificate
representing three additional shares of Common Stock for each
share held. Stockholders would retain certificates issued prior
to such date, and those certificates would continue to represent
the same number of shares. Certificates should not be returned
to the Company or its transfer agent. It is anticipated that
certificates representing additional shares to be received would
be mailed on or about May 20, 1996 to entitled holders. Assuming
transactions of an equivalent dollar amount, brokerage
commissions on purchases and sales of the Common Stock after the
split and transfer taxes, if any, may be somewhat higher than
before the split, depending on the specific number of shares
involved.
Federal Income Tax Consequences. Under existing U.S. federal
income tax laws and regulations, the receipt of additional shares
of Common Stock in a stock split effected in the form of a
dividend will not constitute taxable income or gain or loss to
stockholders. The cost or other tax basis of each share of
Common Stock held by a stockholder immediately prior to the split
would be divided equally among the corresponding four shares held
immediately after the split and the holding period for each of
the four shares would include the period for which the
corresponding old share of Common Stock was held. The laws of
jurisdictions other than the United States (including state and
foreign jurisdictions) may impose income taxes on the receipt by
a stockholder of additional shares of Common Stock resulting from
the split. Stockholders are urged to consult their own tax
advisors.
Other Uses for Additional Shares. The ability of the Company
to issue Common Stock is subject to a number of limitations.
First, under a First Refusal Agreement dated as of July 12, 1994,
as amended (the "First Refusal Agreement"), the Company has
granted to ALPA and the IAM on behalf of the United employees
represented by them and to United salaried and management
employees a right of first refusal to purchase newly issued
shares of Common Stock before such shares can be issued to third
parties, subject to certain exceptions. The First Refusal
Agreement has been amended so as not to apply to the proposed 4-
for-1 stock split, but it would apply to any future stock split
unless further amended by the parties to the First Refusal
Agreement. In addition, issuances of Common Stock must be
approved by one of the following: (i) three-quarters of the
entire Board, including the ALPA Director, the IAM Director or
all four Independent Directors; or (ii) three quarters of the
voting power of shares of voting stock of the Company present at
a stockholder meeting. These extraordinary approval requirements
do not apply to issuances pursuant to existing commitments under
outstanding options and convertible securities or pursuant to
certain employee benefit plans and the Directors Plan. Subject
to the foregoing, the additional authorized shares may be used in
the future for any proper corporate purpose, such as additional
stock splits or stock dividends or financings, corporate
acquisitions, employee benefit programs, acquisitions of
property, or other corporate purposes. Except as provided above,
no further action or authorization by the stockholders would be
necessary prior to the issuance of additional shares unless the
applicable laws or regulations or the rules of any stock exchange
on which the Company's Common Stock may then be listed require
such approval. Stockholders of the Company do not otherwise have
preemptive rights with respect to future issuances of Common
Stock. The issuance of such shares otherwise than to existing
stockholders on a pro rata basis could have the effect of
reducing an existing stockholder's proportionate interest.
As is presently the case, the availability for issuance of
additional shares of Common Stock could enable the Board of
Directors to render more difficult or discourage an attempt to
obtain control of the Company. For example, the issuance of
shares of Common Stock in a public or private sale, merger or
similar transaction would increase the number of outstanding
shares, thereby possibly diluting the interest of a party
attempting to obtain control of the Company. The Company is not
aware of any pending or threatened efforts to obtain control of
the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE CHARTER AMENDMENT.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE 1981 INCENTIVE STOCK PLAN
The Board of Directors has unanimously adopted an amendment
(the "1981 Plan Amendment") to the 1981 Incentive Stock Plan (the
"1981 Plan") to add 1,100,000 shares of Common Stock to the
maximum number of shares with respect to which grants may be made
under the 1981 Plan, subject to the approval of the 1981 Plan
Amendment by stockholders at the Meeting. These additional
shares represent less than four percent (4%) of the number of
fully distributed shares -- Common Stock outstanding plus ESOP
preferred stock allocated and to be allocated under the ESOP --
of the Company.
The Board of Directors unanimously recommends that stockholders
vote FOR approval of the 1981 Plan Amendment.
The following summary of the 1981 Plan is qualified in its
entirety by the full text of the 1981 Plan included as Annex I to
this Notice of Annual Meeting and Proxy Statement.
Compensation Philosophy. The Company believes it is very
important to align the economic well-being of its senior
management with the long-term interests of the Company and its
stockholders. For this reason, stock options represent a
significant component of compensation for senior management
employees. The Company believes that its continued ability to
offer stock options is critical to attracting and retaining
talented individuals for its senior management ranks. Stock
options take on even greater significance in light of the recent
decision to eliminate restricted stock as part of normal
recurring compensation for senior management.
Administration. The 1981 Plan is administered by the
Compensation Committee or, for grants intended to be qualified
under Section 162(m) of the Internal Revenue Code or exempt under
Section 16 of the Exchange Act, the Compensation Administration
Committee of the Board (as applicable, the "Plan Committee").
Shares Subject to the 1981 Plan. As initially approved by the
stockholders on April 29, 1982, 1,300,000 shares were issuable
under the 1981 Plan. On April 24, 1986, April 25, 1991 and July
12, 1994, an additional 2,000,000, 1,000,000 and 1,200,000
shares, respectively, were authorized for issuance under the 1981
Plan. (Prior to July 12, 1994, shares authorized under the 1981
Plan consisted of the Company's common stock, par value $5.00 per
share.) As of March 11, 1996, 970,461 shares were subject to
outstanding options under the 1981 Plan (including 231,055 shares
issuable upon exercise of Pre-Closing Options, which are each
exercisable for one-half a share of Common Stock and $84.81 in
cash), and 424,000 shares were available for future grants.
Shares subject to awards under the 1981 Plan that are forfeited
or terminated or expire unexercised will become available for
future awards, other than shares subject to Pre-Closing Options,
which may not be used for future awards. The amendments
recommended by the Board would make 1,100,000 additional shares
available for issuance under the 1981 Plan. The number of shares
authorized under the 1981 Plan is subject to automatic
proportionate adjustment under the 1981 Plan in the event a stock
split is effected. See "Proposal No. 2. -- Approval of Charter
Amendment in connection with Proposed Stock Split." Stock
issuable under the 1981 Plan may be newly issued or treasury
shares.
Participation. Grants under the 1981 Plan are made by the
Plan Committee based on the recommendations of management and
only to officers and key employees (including officers who may
also be directors) of the Company or any of its subsidiaries.
Approximately 200 individuals are eligible for grants under the
1981 Plan, although a significantly smaller number of such
persons actually have received grants. The number of shares with
respect to which grants may be made under the 1981 Plan to any
individual during any two-year period is limited to 125,000
(250,000 with respect to grants made to any new employee as a
condition of employment), subject to adjustment if the stock
split is effected, see "Proposal No. 2 -- Approval of Charter
Amendment in connection with Proposed Stock Split." During 1995,
options to purchase 4,000 shares of Common Stock were awarded to
executive officers of the Company (none to executive officers
named in the Summary Compensation Table) and options to purchase
82,000 shares of Common Stock were awarded to other plan
participants. No determination has been made as to additional
individual grants under the 1981 Plan if stockholder approval of
the amendment is obtained.
Terms of Awards. The Plan Committee may allocate any or all
of the shares subject to the 1981 Plan for issuance pursuant to
grants of incentive stock options ("ISOs") under Section 422 of
the Internal Revenue Code, stock options not intended to qualify
under Section 422 of the Internal Revenue Code ("NQSOs") and
stock appreciation rights ("SARs"). Awards under the 1981 Plan
are not transferable, other than by will or the law of descent
and distribution. The option price for ISOs and NQSOs may not be
less than 100% of the fair market value of the Common Stock on
the date of grant. The closing price of Common Stock as reported
by the New York Stock Exchange Composite Tape for March 11, 1996
was $186. The duration of options granted under the 1981
Plan cannot exceed ten years, subject to earlier termination of
vested options in the event of separation of employment for
reasons other than retirement and to forfeiture of unvested
options upon an earlier separation of employment for reasons
other than retirement (options continue to vest upon retirement).
SARs may be granted exercisable in cash, or in Common Stock, or
in a combination of cash and Common Stock. SARs may be granted
to any participant in the 1981 Plan independent of or in tandem
with an NQSO. On exercise of an SAR, the holder will receive up
to 100% of the appreciation in fair market value of the shares
subject to the SAR. In the case of a tandem SAR, the
appreciation is measured from the option price. Exercise of an
SAR reduces the number of shares reserved for issuance under the
1981 Plan by the number of shares as to which the SAR is
exercised.
Amendment and Termination of Program. The Board may amend the
1981 Plan from time to time or terminate the 1981 Plan at any
time, but may not reduce the then existing amount of any
participant's options or SARs or adversely change any option's
terms or conditions without the participant's consent. Absent
stockholder approval, no amendment may materially (i) increase
the benefits accruing to participants, (ii) increase the number
of shares which may be issued, or (iii) modify the requirements
as to eligibility for participation in the 1981 Plan. The 1981
Plan will automatically terminate on December 8, 2001, except as
to awards outstanding at that date.
Federal Income Tax Consequences. The Federal income tax
consequences to participants in the 1981 Plan and the Company
under the Internal Revenue Code and the regulations thereunder as
now in effect are substantially as follows.
With respect to NQSOs and SARs, an optionee is not deemed to
receive any income at the time an NQSO or SAR is granted nor is
his or her employer entitled to a deduction at that time.
However, when any part of the NQSO or SAR is exercised the
optionee is deemed to have received ordinary income (i) in the
case of an NQSO, in an amount equal to the difference between the
option price and the fair market value of the shares acquired
upon such exercise and (ii) in the case of an SAR, in an amount
equal to the sum of the fair market value of the shares and any
cash received. The optionee's employer generally is entitled to
a tax deduction in an amount equal to the amount of ordinary
income realized by the optionee.
With respect to ISOs, an optionee is not deemed to receive any
income at the time an ISO is granted or exercised, and the
employer is not entitled to any deduction. If the optionee
disposes of the stock prior to the expiration of the holding
period required by Section 422 of the Internal Revenue Code, he
or she will have ordinary income in the year of disposition equal
to the lesser of (i) the excess of the value of the shares on the
exercise date over the option price, or (ii) the excess of the
amount received for the shares over the option price. The
employer generally is entitled to a tax deduction at such time in
an amount equal to the amount of ordinary income realized by the
optionee. If the optionee disposes of the stock after expiration
of the holding period required by Section 422 of the Internal
Revenue Code, the excess of the amount received for the shares
over the option price will be taxed as long term capital gain and
no deduction will be available to the employer.
Special rules apply in the case of individuals subject to
Section 16(b) of the Exchange Act. In particular, under current
law any shares received pursuant to the exercise of a stock
option or SAR within six months of the grant date, absent an
election by the optionee to include in his or her income at the
time of exercise the excess of the value of shares received over
the option price, are treated as restricted as to transferability
and subject to a substantial risk of forfeiture for a period of
six months after the date of grant of the option or SAR.
Accordingly, the amount of ordinary income recognized, and the
amount of the employer's deduction, are determined as of such
later date.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF THE 1981 PLAN AMENDMENT.
PROPOSAL NO. 4
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, at the recommendation of the Audit
Committee, has appointed, subject to approval by the
stockholders, the firm of Arthur Andersen LLP as independent
public accountants, to examine the financial statements of the
Company for the year 1996. It is anticipated that a
representative of Arthur Andersen LLP will be present at the
meeting and will have the opportunity to make a statement, if he
desires to do so, and will be available to respond to appropriate
questions at that time. If the stockholders do not approve the
appointment of Arthur Andersen LLP, the selection of independent
public accountants will be reconsidered by the Board of
Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY FOR 1996.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of the Company's
voting securities beneficially owned by any person or group known
to the Company as of March 1, 1996 to be the beneficial owner of
more than five percent of any class of the Company's voting
securities.
Name and Address of Beneficial Amount and Nature Percent
Owner Title of Class of Beneficial Ownership of Class
- ------------------------------ -------------- ----------------------- --------
State Street Bank and Trust Company, Common Stock 5,467,775(1) 28.1%
Trustee Class P Voting Stock 663,792(1) 100%
225 Franklin Street Class M ESOP Voting
Boston, MA 02110 Junior Preferred Stock 535,268(1) 100%
Class S Voting Stock 239,384(1) 100%
AXA Assurances I.A.R.D. Mutuelle Common Stock 2,430,935(2) 19.1%
AXA Assurances Vie Mutuelle
La Grande Arche
Pardi Nord
92044 Paris La Defense
France
Alpha Assurances I.A.R.D. Mutuelle
Alpha Assurances Vie Mutuelle
101-100 Terrasse Boieldieu
92042 Paris La Defense
France
Uni Europe Assurance Mutuelle
24, Rue Drouot
75008 Paris France
AXA
23, Avenue Matignon
75008 Paris France
The Equitable Companies Incorporated
787 Seventh Avenue
New York, New York 10019
Capital Growth Management Common Stock 1,885,000(3) 11.77%
Limited Partnership
One International Place
Boston, MA 02110
FMR Corp. Common Stock 1,170,860(4) 9.23%
Edward C. Johnson 3d.
Abigail P. Johnson
82 Devonshire Street
Boston, MA 02109
Oppenheimer Group, Inc. Common Stock 819,846(5) 6.47%
Oppenheimer Capital
Oppenheimer Tower, World
Financial Center
New York, NY 10281
The TCW Group, Inc. Common Stock 659,800(6) 5.2%
Robert Day
865 South Figueroa Street
Los Angeles, CA 90017
United Airlines Pilots Class Pilot MEC Stock 1(7) 100%
Master Executive Council
Air Line Pilots Association,
International
6400 Shafer Court, Suite 700
Rosemont, IL 60018
International Association of Machinists Class IAM Stock 1(8) 100%
and Aerospace Workers
District #141
9000 Machinists Place
Upper Marlboro, MD 20772
Joseph V. Vittoria Class SAM Stock 2(9) 66.67%
Avis, Inc.
900 Old Country Road
Garden City, NY 11530
Paul G. George Class SAM Stock 1(9) 33.33%
Senior Vice President - People
United Airlines
P.O. Box 66100
Chicago, IL 60666
Duane D. Fitzgerald Class I Stock 1(10) 25%
Bath Iron Works Corp.
700 Washington Street
Bath, ME 04530
Richard D. McCormick Class I Stock 1(10) 25%
U S WEST, Inc.
7800 E. Orchard Road
Englewood, CO 80111-2533
John K. Van de Kamp Class I Stock 1(10) 25%
Dewey Ballantine
333 S. Hope Street
Los Angeles, CA 90071-3003
Paul A. Volcker Class I Stock 1(10) 25%
James D. Wolfensohn Inc.
599 Lexington Avenue
New York, NY 10022
(1) Based on Revised Schedule 13G dated February 20, 1996,
in which the reporting person reported that as of December
31, 1994, (i) as trustee under the ESOP (the "ESOP Trustee"),
it had shared voting power over 663,792 shares of Class P
Voting Stock representing 25.4% of the voting power of the
Company, 535,268 shares of Class M ESOP Voting Junior
Preferred Stock ("Class M Voting Stock," and together with
the Class P Voting Stock and the Class S Voting Stock, the
"Voting Preferred Stocks") representing 20.4% of the voting
power of the Company, and 239,384 shares of Class S Voting
Stock representing 9.2% of the voting power of the Company,
and shared dispositive power over 4,632,505 shares of Class 1
Non-Voting ESOP Convertible Preferred Stock and 302,071
shares of Class 2 Non-Voting ESOP Convertible Preferred
Stock, each convertible into the same number of shares of
Common Stock ("Shares"), as well as 144 Shares issuable upon
conversion of the Voting Preferred Stocks, and (ii) as
trustee for various collective investment funds and other
employee benefit plans and other index accounts, it had sole
dispositive power over 533,055 Shares and sole voting power
over 426,055 of such Shares. The reporting person disclaims
benefical ownership of all shares reported. Voting power of
Voting Preferred Stocks is limited to matters other than the
vote for directors.
(2) Based on Schedule 13G dated February 9, 1996 in which AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle,
Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie
Mutuelle and Uni Europe Assurance Mutuelle, AXA and The
Equitable Companies Incorporated reported, as of December 31,
1995, sole voting power for 1,447,249 of such Shares, shared
voting power for 80,550 of such Shares, and sole dispositive
power for all such Shares. Such amounts include 3,000 Shares
issuable upon exercise of options.
(3) Based on Schedule 13G dated February 12, 1996, in which the
reporting person reported that as of December 31, 1995, it
had sole voting power over 1,626,200 of such Shares and
shared dispositive power over all such Shares. The reporting
person disclaims beneficial ownership of all such Shares.
(4) Based on Schedule 13G dated February 14, 1996 in which the
reporting persons reported sole voting power for 144,376 of
such Shares and sole dispositive power for all of such
Shares.
(5) Based on Schedule 13G dated February 1, 1996 in which the
reporting persons, on behalf of subsidiary companies and/or
certain investment advisory clients or discretionary accounts
reported shared voting and dispositive power for all such
Shares. The reporting persons disclaim beneficial ownership
of all such Shares.
(6) Based on Schedule 13G dated February 12, 1996 in which the
reporting persons reported sole power to vote and dispose of
all such Shares.
(7) Share elects one ALPA Director and has one vote on all
matters submitted to the holders of Common Stock other than
the election of directors.
(8) Share elects one IAM Director and has one vote on all matters
submitted to the holders of Common Stock other than the
election of directors.
(9) Shares elect one Salaried/Management Employee Director and
each share has one vote on all matters submitted to the
holders of Common Stock other than the election of directors.
Pursuant to a Stockholders Agreement dated as of July 12,
1994, the holders of Class SAM Stock have agreed to vote
their shares in favor of the election of the
Salaried/Management Employee Director nominated by the System
Roundtable of United salaried and management employees.
(10) Shares elect four Independent Directors and do not vote
on other matters except as required by law. Pursuant to a
Stockholders Agreement dated as of July 12, 1994, the holders
of Class I Stock have agreed to vote their shares in favor of
the election of the Independent Directors nominated by the
Independent Director Nomination Committee of the Board of
Directors of the Company.
The foregoing information in footnotes (1) through (6) is based
on a review, as of March 1, 1996, by the Company of statements
filed with the Securities and Exchange Commission under Sections
13(d) and 13(g) of the Exchange Act.
OTHER MATTERS
The Board of Directors knows of no other proposals to be
presented for consideration at the Meeting, but if other matters
do properly come before the Meeting, the persons named in the
proxy will vote the shares according to their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal submitted for consideration at the
Company's 1997 Annual Meeting of Stockholders must be received by
December ___, 1996, by the Secretary of the Company, Francesca M.
Maher, UAL Corporation, P.O. Box 66919, Chicago, Illinois 60666
and must otherwise comply with rules promulgated by the
Securities and Exchange Commission.
VOTING RIGHTS AND PROXY INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of
Directors of the Company at the Annual Meeting of Stockholders
called to be held on Wednesday, April 24, 1996. The Board of
Directors has fixed the close of business on March 11, 1996 as
the record date (the "Record Date") for determining the holders
of capital stock of the Company who are entitled to notice of and
to vote at the Meeting. The following chart identifies the
number of shares of each class of voting stock of the Company
outstanding as of the Record Date, the number of holders of each
such class as of the Record Date entitled to vote at the Meeting,
the aggregate and per share votes for shares of each class for
all matters on which such shares vote, and the class of
directors, if any, with respect to which each class of stock is
entitled to vote:
Aggregate Votes
Shares Number of Per
Title of Class Outstanding Votes Holders of Record Share Voting For Directors
- -------------- ----------- --------- ----------------- ----- --------------------
Common Stock 12,645,564 12,645,564 11,338 1 Class elects
5 Public Directors
Class P Voting Stock 2,079,924 7,145,165.02 1 (ESOP Trustee) 3.44 ---
Class M Voting Stock 1,675,281 5,738,697.33 1 (ESOP Trustee) 3.43 ---
Class S Voting Stock 750,028 2,571,826.65 1 (ESOP Trustee) 3.43 ---
Class Pilot MEC Stock 1 1 1 (ALPA-MEC) 1 Class elects
1 ALPA Director
Class IAM Stock 1 1 1 (IAM) 1 Class elects
1 IAM Director
Class SAM Stock 3 3 2 (SAM Director and 1 Class elects
Senior Vice President- 1 SAM Director
People)
Class I Stock 4 4 4 (Independent 1 Class elects
Directors) 4 Independent
Directors
The Voting Preferred Stocks held by a trust established under a
tax-qualified employee stock ownership plan (the "Qualified
ESOP") that have been allocated to individual participants in the
ESOP will be voted by participants, as named fiduciaries under
the Employee Retirement Income Security Act of 1974, as amended,
on a confidential pass-through basis. The ESOP Trustee generally
is obligated to vote as instructed by the participants to whom
the Voting Preferred Stock has been allocated, and the
outstanding shares command the entire voting power of each class
of Voting Preferred Stock. The Class P Voting Stock allocated to
former employees who were members of ALPA will be voted by the
ESOP Trustee. The ESOP Trustee will (except as may be required by
law) vote the unallocated or otherwise unvoted shares in the
Qualified ESOP in proportions directed by participants who give
instructions to the ESOP Trustee with respect to such shares;
each participant who is an employee has the right to give such
directions to the ESOP Trustee in the proportion that the
participant's allocated shares bears to the allocated shares of
all participants giving such directions. Shares held by the ESOP
Trustee under a non-qualified employee stock ownership plan (the
"Supplemental ESOP") will be voted as instructed by the
administrative committee appointed under the Supplemental ESOP.
The Supplemental ESOP provides that the administrative committee
will consider the views of participants concerning the vote, but
is not required to take any particular action in response to
those views.
The holders of Common Stock, the Voting Preferred Stocks, the
Class Pilot MEC Stock, the Class IAM Stock, and the Class SAM
Stock will vote together as a single class on all items of
business at the Meeting except the election of directors. The
presence in person or by properly executed proxy of the holders
of a majority of the total voting power of the shares of all such
classes outstanding at the Record Date is necessary to constitute
a quorum at the Meeting for all items of business other than the
election of directors. The Class I Stock does not vote on any
matter other than the election of the Independent Directors.
The presence in person or by properly executed proxy of the
holders of a majority of the total voting power of the
outstanding shares entitled to vote on the election of a
particular class of director(s) is necessary to constitute a
quorum at the Meeting for the election of director(s) of such
class.
Under the Delaware General Corporation Law and the Charter, (i)
the affirmative vote of the holders of the shares of capital
stock present in person or represented by proxy at the Meeting
representing a plurality of the votes cast on the matter will be
required to elect each of the directors to be elected by the
applicable class of capital stock, (ii) the affirmative vote of
the holders of the shares of capital stock outstanding on the
Record Date representing a majority of the votes entitled to be
cast on the matter will be required to approve and adopt the
proposed Charter Amendment and (iii) the affirmative vote of the
holders of the shares of capital stock representing a majority of
the votes present in person or represented by proxy at the
Meeting and entitled to be cast on the matter will be required to
approve or adopt each of the other matters identified in this
Notice of Annual Meeting and Proxy Statement as being presented
to holders of capital stock at the Meeting.
All the shares of capital stock that are represented at the
Meeting by properly executed proxies received prior to or at the
Meeting and not revoked will be voted at the Meeting in
accordance with the instructions indicated in such proxies. If no
instructions are indicated, proxies will be voted for approval of
the Charter Amendment; for the amendment to the 1981 Plan; for
the election of directors of the class, if any, on which the
shares represented by the proxy are entitled to vote; and for the
ratification of the appointment of Arthur Andersen LLP. The
Board of Directors of the Company does not know of any matters,
other than as described in this Notice of Annual Meeting and
Proxy Statement, that are to come before the Meeting. If a proxy
is given, the persons named in the proxy will have authority to
vote in accordance with their best judgment on any other matter
that is properly presented at the Meeting for action, including
without limitation any proposal to adjourn the Meeting or
concerning the conduct of the Meeting.
Abstentions will have the effect of a vote against the Charter
Amendment and the other matters presented for a vote of the
stockholders (other than the election of directors). As to
abstentions, the shares of capital stock are considered present
at the Meeting. The abstentions are not, however, affirmative
votes for the matters presented for a vote and, therefore, they
will have the same effect as votes against any matter presented
for a vote of the stockholders (other than the election of
directors). With respect to the election of directors,
abstentions and broker non-votes will have no effect on the
outcome of the vote. Broker non-votes will have no effect on the
outcome of the vote on any of the matters presented for a vote of
stockholders at the Meeting, other than the Charter Amendment,
and will not be counted for purposes of establishing a quorum.
With respect to the Charter Amendment, the required vote is based
on the voting power of total shares outstanding, rather than the
shares present or voted, so broker non-votes will have the effect
of a vote against the Charter Amendment.
If a quorum is not present at the time the Meeting is convened
for any particular purpose, or if for any other reason the
Company believes that additional time should be allowed for the
solicitation of proxies, the Company may adjourn the Meeting with
a vote of the stockholders then present. The persons named in the
enclosed form of proxy may vote any shares of capital stock for
which they have voting authority in favor of such an adjournment.
Any proxy given pursuant to this solicitation may be revoked by
the person giving it at any time before it is voted. Proxies may
be revoked by (i) filing with the Secretary of the Company,
before the polls are closed with respect to the vote, a written
notice of revocation bearing a later date than the proxy, (ii)
duly executing a subsequent proxy relating to the same shares and
delivering it to the Secretary of the Company, or (iii) attending
the meeting and voting in person (although attendance at the
Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy in accordance with
clause (i) or (ii) above should be sent to: UAL Corporation, P.O.
Box 66919, Chicago, Illinois 60666, Attention: Francesca M.
Maher, Secretary. Special voting rules will apply if you hold
Voting Preferred Stock through the ESOP Trustee. If so, please
consult the accompanying materials concerning the manner in which
to vote these shares.
GENERAL
A copy of the Company's Annual Report for the year ended
December 31, 1995 has been mailed to each stockholder. Additional
copies of the Annual Report and of the Notice of Annual Meeting
and Proxy Statement and accompanying proxy may be obtained from
Georgeson & Company, Inc., Wall Street Plaza, New York, New York
10005 or from the Secretary of the Company.
Proxies are being solicited by and on behalf of the Board. All
expenses of this solicitation including the cost of preparing and
mailing this Proxy Statement will be borne by the Company. In
addition to solicitation by use of the mails, proxies may be
solicited by directors, officers and employees of the Company in
person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally
compensated, but may be reimbursed for out-of-pocket expenses, in
connection with such solicitation. Arrangements will also be made
with custodians, nominees and fiduciaries for forwarding of proxy
solicitation material to beneficial owners of Common Stock and
Voting Preferred Stock held of record by such persons, and the
Company may reimburse such custodians, nominees and fiduciaries
for their reasonable expenses. To assure the presence in person
or by proxy of the largest number of stockholders possible, the
Company has engaged Georgeson & Co. to solicit proxies on behalf
of the Company. The Company has agreed to pay such firm a proxy
solicitation fee not to exceed $10,000 and to reimburse such firm
for its reasonable out-of-pocket expenses.
In order to assure the presence of the necessary quorum at the
Meeting, please sign and mail the enclosed proxy card promptly in
the envelope provided. No postage is required if mailed within
the United States. The signing of a proxy will not prevent any
holder of Common Stock from attending the Meeting and voting his
or her shares in person.
Stockholders who plan to attend the Meeting must detach the
admission card attached to the proxy card before mailing and
bring the admission card to the Meeting.
YOUR VOTE IS IMPORTANT
Please mark, date and sign the accompanying proxy card and
return it in the envelope provided as promptly as possible so
that you will be represented at the Meeting whether or not you
expect to attend.
ANNEX I (incorporates
amendment that has
been submitted for,
and is subject to,
stockholder approval)
UAL CORPORATION 1981 INCENTIVE STOCK PLAN
1. Purpose. The purpose of the UAL Corporation 1981
Incentive Stock Plan (the "Plan") is to attract and retain
outstanding individuals as officers and key employees of UAL
Corporation (the "Company") and its subsidiaries, and to furnish
incentives to such persons by providing such persons
opportunities to acquire shares of the Company's Common Stock,
par value $.01 per share ("Common Stock"), or monetary payments
based on the value of such shares or both, on advantageous terms
as herein provided.
2. Administration. The Plan shall be administered by
a stock option committee (the "Committee") of not less than three
Directors of the Company who shall be appointed from time to time
by the Board of Directors of the Company; provided, however, that
no Director, who within one year prior thereto was eligible to
participate in the Plan, shall be appointed as a member of the
Committee. No member of the Committee shall be eligible, while a
member of the Committee, to receive a Benefit under the Plan.
The Committee is authorized to interpret the provisions of the
Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and conditions of
Benefits to be granted under the Plan and to make all other
determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to or inconsistent
with the express provisions of the Plan.
3. Participants. The Plan shall be administered by
the Compensation Administration Committee of the Board of
Directors of the Company for all grants to (I) any "officer" as
such term is defined in Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended, or (II) any "covered employee"
within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder,
and by the Compensation Committee of the Board of Directors of
the Company for all other grants (such committee, as applicable,
herein called the "Committee"). The Committee shall consider
such factors as it deems pertinent in selecting participants and
in determining the type and amount of their respective Benefits,
including without limitation (i) the financial condition of the
Company; (ii) anticipated profits for the current or future
years; (iii) contributions of participants to the profitability
and development of the Company; and (iv) other compensation
provided to participants.
4. Types of Benefits. Benefits under the Plan may be
granted in any one or a combination of (a) Incentive Stock
Options, (b) Non-qualified Stock Options, and (c) Stock
Appreciation Rights, all as described below.
5. Shares Reserved Under the Plan. There is hereby
reserved for issuance under the Plan an aggregate of 2,300,000
shares of Common Stock, which may be newly issued or treasury
shares. (1) All of such shares may, but need not be issued pursuant
to the exercise of Incentive Stock Options. If there is a lapse,
expiration, termination or cancellation of any Benefit granted
hereunder without the issuance of shares or payments of cash
thereunder, or if shares are issued under any Benefit and
thereafter are reacquired by the Company pursuant to rights
reserved upon the issuance thereof, the shares subject to or
reserved for such Benefit may again be used for new options or
rights under this Plan; provided, however, that in no event may
the number of shares issued under this Plan exceed the total
number of shares reserved for issuance hereunder. Subject to
Section 14(a), in no event may the aggregate number of shares of
Common Stock with respect to which options or Stock Appreciation
Rights are granted to any individual exceed 125,000 in any period
of two calendar years, provided, however, that grants made to any
new employee as a condition of employment may not exceed two
times such biennial limit during the first two years of
employment.
(1) Represents shares reserved for issuance under the Plan in connection
with grants made on or after July 12, 1994. Shares issuable under grants
made prior to such date are in addition to such number of shares.
6. Incentive Stock Options. Incentive Stock Options
will consist of options to purchase shares of Common Stock at
purchase prices not less than one hundred percent (100%) of the
fair market value of such shares on the date of grant. Incentive
Stock Options will be exercisable over not more than ten (10)
years after date of grant and shall terminate not later than
three (3) months after termination of employment for any reason
other than death. If the optionee should die while employed or
within three (3) months after termination of employment, the
right of the optionee or his or her successor in interest to
exercise an option shall terminate not later than twelve (12)
months after the date of death. The aggregate fair market value
(determined as of the time the option is granted) of the shares
of Common Stock which any participant may exercise pursuant to
Incentive Stock Options for the first time in any calendar year
(under all option plans of the Company and its parent and
subsidiary corporations) shall not exceed $100,000.
7. Non-qualified Stock Options. Non-qualified Stock
Options will consist of options to purchase shares of Common
Stock at purchase prices not less than one hundred percent (100%)
of the fair market value of shares on the date of grant. Non-
qualified Stock Options will be exercisable over not more than
ten (10) years after date of grant. Non-qualified Stock Options
will terminate no later than six (6) months after termination of
employment for any reason other than retirement or death, unless
immediately after such termination of employment the optionee
shall be a member of the Board of Directors of the Company, in
which case such options will terminate two (2) years after such
termination of employment. In the event termination of
employment occurs by reason of the optionee's retirement, the
option shall terminate not later than the fixed expiration date
set forth therein. In the event termination of employment occurs
by reason of the optionee's death or if the optionee's death
occurs within six months after termination of employment, the
option shall terminate not later than twelve (12) months after
the date of such death.
8. Stock Appreciation Rights. The Committee may, in
its discretion, grant a Stock Appreciation Right to the holder of
any Non-qualified Stock Option granted hereunder. In addition, a
Stock Appreciation Right may be granted independently of and
without relation to any stock option. Stock Appreciation Rights
shall be subject to such terms and conditions consistent with the
Plan as the Committee shall impose from time to time, including
the following:
(a) A Stock Appreciation Right may be granted with
respect to a Non-qualified Stock Option at the
time of its grant or at any time thereafter up to
six (6) months prior to its expiration.
(b) Each Stock Appreciation Right will entitle the
holder to elect to receive up to 100% of the
appreciation in fair market value of the shares
subject thereto up to the date the right is
exercised. In the case of a Stock Appreciation
Right issued in relation to a Non-qualified Stock
Option, such appreciation shall be measured from
the option price. In the case of a Stock
Appreciation Right issued independently of any
stock option, the appreciation shall be measured
from not less than the fair market value of the
Common Stock on the date the right is granted.
(c) The Committee shall have the discretion to satisfy
a participant's right to receive the amount of
cash determined under subparagraph (b) hereof, in
whole or in part, by the delivery of shares of
Common Stock valued as of the date of the
participant's election.
(d) In the event of the exercise of a Stock
Appreciation Right, the number of shares reserved
for issuance hereunder (and the shares subject to
the related option, if any) shall be reduced by
the number of shares with respect to which the
right is exercised.
9. Nontransferability. Each Benefit granted under
this Plan shall not be transferable other than by will or the
laws of descent and distribution, and shall be exercisable,
during the holder's lifetime, only by the holder.
10. Other Provisions. The award of any Benefit under
the Plan may also be subject to other provisions (whether or not
applicable to the Benefit awarded to any other participant) as
the Committee determines appropriate, including, without
limitation, provisions for the purchase of common shares under
stock options in installments, provisions for the payment of the
purchase price of shares under stock options by delivery of other
shares of the Company having a then market value equal to the
purchase price of such shares, restrictions on resale or other
disposition, such provisions as may be appropriate to comply with
federal or state securities laws and stock exchange requirements
and understandings or conditions as to the participant's
employment in addition to those specifically provided for under
the Plan.
11. Term of Plan and Amendment, Modification or
Cancellation of Benefits. No Benefit shall be granted after
December 8, 2001; provided, however, that the terms and
conditions applicable to any Benefits granted prior to such date
may at any time be amended, modified, extended or canceled by
mutual agreement between the Committee and the participant or
such other persons as may then have an interest therein, so long
as any amendment or modification does not increase the number of
shares of Common Stock issuable under this Plan and any extension
does not extend the option term beyond ten (10) years.
12. Taxes. The Company shall be entitled to withhold
the amount of any tax attributable to any amount payable or
shares deliverable under the Plan after giving the person
entitled to receive such amount or shares notice as far in
advance as practicable, and the Company may defer making payment
or delivery if any such tax may be pending unless and until
indemnified to its satisfaction.
13. Fair Market Value. The Fair Market Value of the
Company's shares of Common Stock at any time shall be determined
in such manner as the Committee may deem equitable or required by
applicable laws or regulations.
14. Adjustment Provisions.
(a) If the Company shall at any time change
the number of issued shares of Common Stock
without new consideration to the Company (such as
by stock dividend or stock split), the total
number of shares reserved for issuance under this
Plan, the maximum number of shares with respect to
which options or Stock Appreciation Rights may be
granted to any individual, the exercise price of
outstanding options (other than options granted
prior to July 12, 1994) and the base for measuring
a Stock Appreciation Right and the number of
shares covered by each outstanding Benefit
(including the number of shares issuable upon
exercise of outstanding options granted prior to
July 12, 1994, which are exercisable for
"reclassification packages" consisting of a
combination of cash and shares, so that the number
of shares included in each such reclassification
package shall adjust as herein provided) shall be
adjusted so that the aggregate consideration
payable to the Company and the value of each such
Benefit shall not be changed. The Committee shall
also have the right to provide for the
continuation of Benefits or for other equitable
adjustments after changes in the shares of Common
Stock resulting from the reorganization, sale,
merger, consolidation or similar occurrence.
(b) Notwithstanding any other provision of
this Plan, and without affecting the number of
shares otherwise reserved or available hereunder,
the Committee may authorize the issuance or
assumption of Benefits in connection with any
merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and
conditions as it may deem appropriate.
15. Amendment and Termination of Plan. The Board of
Directors of the Company may amend the Plan from time to time or
terminate the Plan at any time, but no such action shall reduce
the then existing amount of any participant's Benefit or
adversely change the terms and conditions thereof without the
participant's consent. However, except for adjustments expressly
provided for herein, no amendment may, without stockholder
approval, (i) materially increase the Benefits accruing to
participants, (ii) materially increase the number of shares which
may be issued, or (iii) materially modify the requirements as to
eligibility for participation in the Plan.
Preliminary Copy
UAL Corporation
This Proxy is Solicited on Behalf of
the Board of Directors of UAL Corporation
The undersigned, having received the Notice of Meeting and Proxy Statement,
hereby appoints Gerald Greenwald, John F. McGillicuddy and James J. O'Connor,
and each of them, as proxies with full power of substitution, for and in the
name of the undersigned, to vote all shares of Common Stock of UAL Corporation
owned of record by the undersigned on the matters listed on the reverse side
hereof and, in their discretion, on such other matters as may properly come
before the Meeting of Stockholders to be held at The Drake Hotel, 140 E.
Walton Place, Chicago, Illinois on April 24, 1996, at 10:00 a.m., local time,
and any adjournments or postponements thereof, unless otherwise specified
herein.
This card also constitutes voting instructions to the respective Trustees of
the Employees' Stock Purchase Plan, 401(k) Plans and International Employee
Stock Ownership Plans of UAL Corporation or United Air Lines, Inc. to vote,
in person or by proxy, all shares of Common Stock of UAL Corporation allocated
to the accounts of the undersigned held by the Trustees.
If you plan to attend the Meeting of Stockholders in person,
please mark the appropriate box on the reverse side of this card.
You are encouraged to specify your choices by marking the appropriate boxes
SEE REVERSE SIDE, but you need not mark any boxes if you wishto vote in
accordance with the Board of Directors' recommendations. The proxies cannot
vote your shares unless you sign and return this card.
- ----------------------------------------------------------------------------
FOLD AND DETACH HERE
Did You Know ... our efforts to serve you better are being recognized the world
over?
Our latest honors include:
- Mileage Plus: Airline Program of the Year - InsideFlyer magazine, the
leading U.S. frequent traveler publication - second year in a row.
- Mileage Plus: Best North American Frequent Traveller Programme -
InsideFlyer International.
- Mileage Plus: Number One Frequent Flyer Program - Business Traveller
Asia-Pacific magazine.
- Mileage Plus: Best Frequent Flyer Program - USA TODAY International.
- United Airlines: Best U.S. Domestic Carrier - poll conducted by the UK's
Executive Travel magazine and OAG, the travel information supplier.
Did You Know ... how United is bringing advanced technology into service for
you?
- Now you can reach United online! The Friendly Skyline, [service mark]
our World Wide Web site, at http://www.ual.com, gives you 24-hour access
to information on United services.
- You can shop for flights, hotels and rental cars around the world and
book them from your PC - with United Connection [service mark] software.
- You can fly the technologically advanced Boeing 777 - introduced by
United. Our engineers worked with Boeing to give you more space, better
stowage, better in-flight entertainment.
- With E-Ticket, [service mark] our electronic ticketing service, you can
reserve your flight by phone, then show your photo I.D. at the airport
to get your boarding pass. No tickets to keep track of!
Did You Know ... we're "uniting the world" in exciting new ways?
- With our 'Round-The-World service, United
is the only airline with flights that circle [#1 Medallion Symbol]
the globe, with stops in Los Angeles, Hong
Kong, Delhi, London and New York.
- And with Friends Around the World, an educational
pen pal program, we're fostering a cultural
exchange among students in "sister cities" on the
'Round-The-World route.
[x] Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted "FOR" all of the Board of
Directors' nominees for Public Director and "FOR" Proposals 2, 3 and 4. If
this card constitutes voting instructions to a plan trustee, such trustee will
vote as described in the plan documents and any accompanying materials. In
their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
The Board of Directors recommends a vote FOR all Proposals.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 3. Approval
five Public of Amend-
Director ment to
nominees: 1981
John A. Edwardson Incentive
Gerald Greenwald Stock Plan.
John F. McGillicuddy
James J. O'Connor
Paul E. Tierney
For, except vote withheld Do you plan to attend the YES NO
from the following nominees(s): Meeting of Stockholders
______________________________ in person?
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Approval of 4. Ratification
Charter Amendment of the selection
in connection with of Arthur
Proposed Stock Split. Andersen LLP
as the independent
accountants.
____________________________________________________________________, 1996
SIGNATURE(S) DATE
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. The signer hereby revokes all proxies heretofore given by
the signer to vote at said Meeting or any adjournments or postponements thereof.
- --------------------------------------------------------------------------
FOLD AND DETACH HERE
Admission ticket
Meeting of Stockholders
of UAL Corporation
April 24, 1996
[UAL Logo] 10:00 a.m.
Gold Coast Room,
The Drake Hotel
140 East Walton Place
Chicago, Illinois
___________________________________________________________________________
You must present this ticket to the UAL Corporation representative at the
entrance to the Gold Coast Room to be admitted to the Meeting of Stockholders.
_____________________________
If you plan to attend the Meeting of Stockholders,
please mark the appropriate box on the proxy card above.
------------------------------
