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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
8-K
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CURRENT
REPORT PURSUANT
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TO
SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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Date
of Report (Date of earliest event reported): January 1,
2010
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CONTINENTAL
AIRLINES, INC.
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(Exact
Name of Registrant as Specified in Its
Charter)
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DELAWARE
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(State
or Other Jurisdiction of
Incorporation)
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1-10323
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74-2099724
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1600
Smith Street, Dept. HQSEO, Houston, Texas
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77002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(713)
324-2950
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(Registrant’s
Telephone Number, Including Area
Code)
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______________________________________
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(Former
Name or Former Address, if Changed Since Last
Report)
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Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction A.2.
below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
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(17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
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(17
CFR 240.13e-4(c))
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Item
5.02.
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Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
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(c)
As previously announced, Jeff Smisek has assumed the position of Chairman of the
Board, President and Chief Executive Officer of Continental Airlines, Inc. (the
“Company”), effective on January 1, 2010 following the resignation of Larry
Kellner effective on December 31, 2009. In connection with his promotion,
Mr. Smisek has entered into an agreement with the Company dated January 4, 2010
pursuant to which he has agreed to forego his annual salary of $730,000 and any
annual bonus that would otherwise be earned for each calendar year beginning
January 1, 2010 unless the Company makes a profit for such full calendar
year. In the agreement, Mr. Smisek acknowledges that his participation in
certain benefits, such as the Company’s 401(k) plan and employee stock purchase
plan, will be impacted by his salary and annual bonus waiver. The
Company also agrees that if the salary and annual bonus waiver impacts Mr.
Smisek’s participation in welfare benefit plans such as life insurance or
disability, it will provide him equivalent benefits at no additional cost.
The agreement further provides that the salary and annual bonus waiver will not
otherwise affect Mr. Smisek’s rights under his employment agreement, including,
without limitation, Mr. Smisek’s right to participate in any long term incentive
program maintained by the Company and the calculation of benefits based on
salary or annual bonus level.
The
information required to be reported pursuant to Item 5.02(c)(2) of Form 8-K was
included in Item 5.02(c) to the Company's Current Report on Form 8-K dated July
16, 2009, which is incorporated herein by reference. The foregoing
description of the agreement with Mr. Smisek is qualified in its entirety by
reference to the full text of the agreement, which is filed herewith as Exhibit
99.1.
On
January 4, 2010, Mr. Smisek wrote a letter to employees, which the Company
released to the press, concerning his decision to forego his salary and annual
bonus. Mr. Smisek’s letter to employees is filed herewith as Exhibit 99.2
and is incorporated in this Item 5.02 by reference.
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Item
9.01.
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Financial Statements
and Exhibits.
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(d)
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Exhibits
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99.1
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Letter
Agreement dated January 4, 2010 between the Company and Jeff
Smisek
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99.2
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Letter
to employees released to the press
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SIGNATURE
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Pursuant to the requirements of the
Securities Exchange Act of 1934, Continental Airlines, Inc. has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
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CONTINENTAL
AIRLINES, INC.
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January
4, 2010
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By
/s/ Lori A.
Gobillot
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Lori
A. Gobillot
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Staff
Vice President and Assistant General
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Counsel
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EXHIBIT
INDEX
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99.1
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Letter
Agreement dated January 4, 2010 between the Company and Jeff
Smisek
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99.2
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Letter
to employees released to the press
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Exhibit
99.1
January
4, 2010
Mr.
Jeffery A. Smisek
Continental
Airlines, Inc.
1600
Smith Street, Dept. HQSEO
Houston,
TX 77002
Dear
Jeff:
The
purpose of this letter is to set forth your voluntary agreement to forego your
annual salary of $730,000 and any annual bonus that would otherwise be earned by
you pursuant to the Employment Agreement between you and Continental Airlines,
Inc. (the “Company”) effective October 15, 2007 (as amended, the “Employment
Agreement”) with respect to each calendar year beginning January 1, 2010 and
continuing during the term of the Employment Agreement (each such year, a
“Covered Year”) unless the Company achieves a profit for such Covered
Year. For purposes of this letter agreement, “profit” shall have the
same meaning as ascribed to the equivalent term used in the Company’s
broad-based employee profit sharing program applicable for such Covered
Year. If the Company does not have such a program in effect for a
Covered Year, then the term “profit” shall mean a positive net income of the
Company (before taxes) as shown on its audited consolidated financial statements
for such Covered Year, but calculated excluding any unusual or non-recurring
items, prepared in accordance with applicable accounting standards.
You agree
that (i) the Company will not pay you, and you shall have no right to, any
salary or annual bonus with respect to any Covered Year (which would otherwise
be earned by you as an employee of the Company with respect to your service)
unless the Company achieves a profit for such Covered Year, and (ii) the
voluntary salary and annual bonus waiver is provided by you in connection with
your promotion as successor Chairman and Chief Executive Officer and your
associated salary increase and the waiver shall not constitute a breach by the
Company of the Employment Agreement.
You
acknowledge that your ability to participate in, or to accrue benefits under,
the Continental Retirement Plan, the Continental 401(k) Plan, and the
Continental Employee Stock Purchase Plan are dependent upon your receipt of base
salary and will be impacted by this voluntary salary waiver. The
Company agrees that this voluntary salary and annual bonus waiver shall not
affect your rights under the Employment Agreement except as specifically set
forth in this letter, and those rights shall be determined for all other
purposes as if your salary and annual bonus continued to be paid at its
then-approved level, without regard to this waiver, including without limitation
your rights as reflected in the Employment Agreement in paragraphs 3.2(b), 3.3,
3.5 and 3.6, and the definition of “Termination Payment” in paragraph
4.8(xi). In addition, to the extent that the salary and annual bonus
waiver impacts your participation in, or the level of benefits provided under,
any welfare benefit plan provided by the Company, including without limitation
the disability plan or the life insurance plan, the Company shall provide an
equivalent benefit to you at no additional cost, of any kind, to
you. The Company will pay you an amount sufficient to make you whole
for any such additional costs as soon as practicable, but not later than the end
of the Covered Year following the Covered Year the cost is
incurred. This letter will not impact your right to participate in
any long term incentive program maintained by the Company as described in
paragraph 3.2(b) of the Employment Agreement.
If the
Company achieves a profit for any Covered Year, the Company will pay to you the
unpaid salary for such Covered Year upon determination by the Human Resources
Committee that a profit has been achieved for the Covered Year (and in no event
later than January 30th following the Covered Year). If a
determination has been made by the Human Resources Committee that a profit was
achieved for any Covered Year, you will be entitled to receive any annual bonus
for that year to which you would otherwise have been entitled, payable in
accordance with the terms otherwise applicable to that bonus. In
addition, notwithstanding the terms of this letter agreement, if your employment
is terminated (i) by the Company “without Cause” (as defined in the Employment
Agreement) or pursuant to paragraph 2.2(i) or 2.2(ii) of the Employment
Agreement, or (ii) by you for “Good Reason” (as defined in the
Employment Agreement), the Company shall pay to you (or, in the event of a
termination pursuant to paragraph 2.2(i) of the Employment Agreement, your
estate) on the effective date of such termination all salary and annual bonus
amounts that have not been paid to you during or with respect to any Covered
Year as a result of the terms of this letter agreement. If the
Company has not achieved a profit for any Covered Year, the Company will provide
written confirmation to you no later than March 1 following such Covered Year of
the amount of salary and any annual bonus to which you would otherwise have been
entitled for such Covered Year. Either party shall have the right to
terminate the salary and annual bonus waiver pursuant to this letter agreement
for any Covered Year by providing written notice to the other party prior to
January 1 of such Covered Year.
It is
intended that any payment pursuant to the terms of this letter agreement be
exempt from the application of Section 409A of the Internal Revenue Code of
1986, as amended, pursuant to the short term deferral exclusion and this letter
agreement shall be administered accordingly; provided, however, that Section
5.17 of the Employment Agreement shall apply to the terms of this letter
agreement to the extent applicable.
By
signing below, you agree that this letter agreement accurately reflects our
mutual understanding with respect to your desire to forego your salary and
annual bonus as described herein and shall be deemed to constitute an agreement
of the parties with respect to its terms for purposes of paragraph 5.12 of the
Employment Agreement.
Very
truly yours,
CONTINENTAL
AIRLINES, INC.
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By:
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/s/
Jennifer L. Vogel
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Name:
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Jennifer
L. Vogel
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Title:
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Senior
Vice President, General Counsel, Secretary and Chief Compliance
Officer
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APPROVED:
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/s/
Charles Yamarone
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Charles
Yamarone
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Chair,
Human Resources Committee
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ACKNOWLEDGED
AND AGREED:
JEFFERY
A. SMISEK
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/s/
Jeffery A. Smisek
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January
4,
2010 Exhibit
99.2
Dear
Co-worker:
As I step
into my new role as CEO, I’m proud and excited to be leading the greatest team
in the airline industry. You have proven again and again that you can
provide the best customer service and product in the business, despite the many
challenges that have become the “new normal” for this industry. You
just proved that yet again over the holidays, when you performed at the top of
your game in one of the worst winter storms in decades on one of the busiest
travel days of the year. No one does it better.
Now we
need to focus on conquering our biggest challenge of all: making money on an
on-going basis. Making money will make possible all the good things
you want and deserve from Continental – job security, better pay, better
benefits, career advancement and retirement security. Continuing year
after year of losses will result in all the things you don’t want – furloughs,
pay and benefit reductions, career stagnation and worries about
retirement. We’ve lost almost $1 billion since 9/11 as we’ve managed
from one crisis to the next. It’s our airline and it’s time to take
control of our destiny.
To
demonstrate my belief in your ability to do just that, I am going to refuse to
accept any salary or annual bonus until we make a full-year profit. I
am willing to make this commitment because I have faith in you, and because the
tone for any business is set at the top. I am not asking you or
anyone else to reduce their pay. What I am asking is that you join me in making
Continental profitable again. I’m asking that you do what you do best – provide
our customers outstanding service while working more efficiently, bringing in
new revenue and out-performing the competition.
While we
face enormous challenges, we also have significant strengths. We have
you – the most professional men and women in the industry. We belong
to the world’s best and most comprehensive airline alliance – Star
Alliance. We fly the newest, most fuel-efficient fleet in the
industry, and we have world class facilities. We continue to ensure
that our product is competitive, adding amenities like DIRECTV, Video on Demand
and flat-bed seats.
Our
greatest strength is and always has been the Continental team and our Working
Together culture. You are the key to our success and deserve all of the
opportunities that will come from making money again. It’s our
airline. Let’s get it back in the black so we can all enjoy the
benefits that will flow from making money again.
I wish
you all a healthy, happy – and prosperous – New Year.
/s/ Jeff