<PAGE>
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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy 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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
UAL CORPORATION
April 17, 1995
Dear Fellow Owners:
The past year has seen tremendous and exciting changes for UAL
Corporation. The Board of Directors joins me in inviting you to attend
the 1995 Annual Meeting of Stockholders to reflect upon these changes,
to vote on the matters described in the enclosed Proxy Statement, and
to discuss our direction for 1995 and beyond.
It is important that your shares be represented at the meeting
whether or not you plan to attend in person. Therefore, please sign
and return the enclosed proxy in the envelope provided. If you do
attend the meeting and desire to vote in person, you may do so even
though you have previously sent in a proxy. If you hold your shares
through a broker, trustee or other fiduciary, please consult the
accompanying materials for the manner in which you may vote your
shares.
We hope that you will be able to attend the meeting and we 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,
/s/ Gerald Greenwald
--------------------
Gerald Greenwald
<PAGE>
UAL CORPORATION
P. O. BOX 66919
CHICAGO, ILLINOIS 60666
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of UAL Corporation, a Delaware
corporation, will be held in the California Ballroom of the Westin Bonaventure
Hotel, 404 South Figueroa Street, Los Angeles, California 90071 on Thursday,
May 18, 1995, at 10:00 a.m., local time, for the following purposes:
1. To elect a Board of Directors as follows:
(a) Five Public Directors shall be elected by the holders of Common
Stock;
(b) Four Independent Directors shall 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 shall 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. To approve the UAL Corporation 1995 Directors Plan;
3. To approve Amendments to the Restated Certificate of Incorporation of
this Corporation relating to certain definitions;
4. To approve Amendments to the Restated Certificate of Incorporation of
this Corporation relating to certain Board Committee matters;
5. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for this Corporation for fiscal year 1995; and
6. To transact such other business, including a stockholder proposal, as
may properly be brought before the meeting or any adjournment or
postponement thereof.
Only stockholders of record as of the close of business on March 22, 1995 are
entitled to notice of, and to vote at, the meeting and at any adjournment or
postponement thereof. A list of such stockholders will be open for examination
during ordinary business hours by any stockholder for any purpose germane to
the meeting at 619 West Sixth Street, Los Angeles, California 90017 for a
period of ten days prior to the meeting. The list will also be available on May
18, 1995 at the place of the Annual Meeting.
Stockholders are urged to fill out, sign and mail promptly the enclosed proxy
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
April 17, 1995
PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE MEETING.
<PAGE>
UAL CORPORATION
P.O. BOX 66919
CHICAGO, ILLINOIS 60666
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, MAY 18, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of UAL Corporation (the
"Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation to be held on Thursday, May 18, 1995, at the Westin Bonaventure
Hotel, 404 South Figueroa Street, Los Angeles, California 90071 at 10:00 A.M.
local time, and at any and all adjournments and postponements thereof (the
"Meeting"). The meeting has been called for the purposes set forth in the
notice of the Meeting. The approximate date of mailing this Proxy Statement and
enclosed proxy is April 17, 1995.
THE RECAPITALIZATION
On July 12, 1994 the Corporation's stockholders approved a Plan of
Recapitalization pursuant to which an aggregate 55% voting interest in the
Corporation was transferred to State Street Bank and Trust Company as trustee
of the UAL Corporation Employee Stock Ownership Plan Trust (the "ESOP")
established for the benefit of certain groups of employees in exchange for wage
and benefit reductions and work-rule changes. The transaction took the form of
a recapitalization (the "Recapitalization") in which the holders of the then
outstanding common stock, par value $5 per share ("Old Common Stock"), of the
Corporation received in exchange for each share of Old Common Stock one-half of
a new share of common stock, par value $0.01 per share ("Common Stock"), of the
Corporation and a cash payment of $84.81 (and cash in lieu of fractional
shares). A portion of this cash payment was funded by the proceeds of a public
offering of securities by the Corporation and United Air Lines, Inc.
("United"), and the balance was funded from the Corporation's cash on hand.
The Recapitalization resulted in, among other things, a revision of the
corporate governance structure with respect to the election of the
Corporation's Board of Directors and a change in the membership of a majority
of the Board. See "Proposal No. 1--Election of Directors". The Recapitalization
may be deemed to have resulted in a change in control of the Corporation.
<PAGE>
VOTING RIGHTS AND PROXY INFORMATION
The Board of Directors has fixed the close of business on March 22, 1995 as
the record date (the "Record Date") for determining the holders of capital
stock of the Corporation 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 Corporation outstanding as of the Record Date, the number
of holders of each such class as of the Record Date entitled to notice of and
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:
<TABLE>
<CAPTION>
AGGREGATE VOTES
TITLE OF SHARES NUMBER OF PER
CLASS OUTSTANDING VOTES HOLDERS OF RECORD SHARE VOTING FOR DIRECTORS
- -------- ----------- ------------- ------------------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
Common 12,382,364 12,382,364 10,945 1 Class elects
Stock* 5 Public Directors**
Class P 669,589 6,996,448.20 1 (ESOP Trustee) 10.45 None
ESOP
Voting
Junior
Preferred
Stock
("Class
P Voting
Stock")
Class M 537,786 5,619,254.20 1 (ESOP Trustee) 10.45 None
ESOP
Voting
Junior
Preferred
Stock
("Class
M Voting
Stock")
Class S 241,012 2,518,297.60 1 (ESOP Trustee) 10.45 None
ESOP
Voting
Junior
Preferred
Stock
("Class
S
Voting
Stock")
Class Pi- 1 1 1 (United Airlines 1 Class elects
lot MEC Pilots Master 1 ALPA Director**
Junior Executive Council,
Preferred Air Line Pilots
Stock Association,
("Class International
Pilot ("ALPA-MEC"))
MEC
Stock")
Class IAM 1 1 1 (International 1 Class elects
Junior Association of 1 IAM Director**
Preferred Machinists and
Stock Aerospace Workers
("Class ("IAM"))
IAM
Stock")
Class SAM 3 3 2 (SAM Director** 1 Class elects
Junior and Senior Vice 1 SAM Director**
Preferred President--People)
Stock
("Class
SAM
Stock")
Class I 4 4 4 (Independent 1 Class elects
Junior Directors) 4 Independent Directors**
Preferred
Stock
("Class
I
Preferred
Stock")
</TABLE>
- --------
*Shares of Common Stock outstanding, aggregate number of votes, and holders of
record do not include shares of Common Stock issuable but not yet issued
upon tender of stock certificates for Old Common Stock not yet tendered nor
the holders of such stock certificates.
**The terms "Public Directors", "ALPA Director", "IAM Director", and
"Independent Directors" have the meanings specified in the Restated
Certificate of Incorporation of the Corporation and the term "SAM Director"
is used to refer to the "Salaried/Management Employee Director" as defined
in the Restated Certificate of Incorporation.
HOLDERS WHO HAVE NOT YET TENDERED THEIR CERTIFICATES FOR OLD COMMON STOCK AS
THE RESULT OF THE RECAPITALIZATION ARE NOT CONSIDERED HOLDERS OF RECORD OF THE
SHARES OF COMMON STOCK THAT WOULD BE RECEIVED UPON TENDER OF THEIR
CERTIFICATES, AND THUS WILL NOT BE ABLE TO VOTE THESE SHARES AT THE MEETING.
FOR MORE
2
<PAGE>
INFORMATION CONCERNING TENDER PROCEDURES, CONTACT THE CORPORATION'S TRANSFER
AGENT, FIRST CHICAGO TRUST COMPANY OF NEW YORK, TENDERS AND EXCHANGES, P.O. BOX
2507, SUITE 4660, JERSEY CITY, NJ 07303-2507 OR CALL 201/324-0137.
Shares of the Class P Voting Stock, the Class M Voting Stock and the Class S
Voting Stock (collectively, the "Voting Preferred Stock") held by a trust
established under a tax-qualified employee stock ownership plan (the "Qualified
ESOP") that have been allocated to individual ESOP participants will be voted
by participants, as named fiduciaries under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), 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 shares of Class P Voting Stock allocated to former
employees who were members of the Air Line Pilots Association, International
("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 Stock, 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 Preferred 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 Restated Certificate of
Incorporation of the Corporation (as from time to time in effect, 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 amendments to the
Charter relating to certain definitions (the "Definitional Charter Amendments")
and certain Board Committee matters (the "Board Committee Charter Amendments,"
and, together with the Definitional Charter Amendments, the "Charter
Amendments") 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
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, SUCH PROXIES WILL BE VOTED FOR
APPROVAL OF EACH OF THE CHARTER AMENDMENTS AND THE UAL CORPORATION 1995
DIRECTORS PLAN (THE "DIRECTORS PLAN" OR THE "NEW PLAN"), FOR THE ELECTION OF
DIRECTORS OF THE CLASS, IF ANY, ON WHICH THE SHARES REPRESENTED BY THE PROXY
ARE ENTITLED TO VOTE; FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP, AND AGAINST THE STOCKHOLDER
3
<PAGE>
PROPOSAL. The Board of Directors of the Corporation does not know of any
matters, other than as described in the Notice of Meeting attached to this
Proxy Statement, that are to come before the Meeting. If a proxy is given, the
persons named in such 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 otherwise concerning the conduct of the Meeting.
Abstentions will have the effect of a vote against each of the Charter
Amendments and the other matters presented for a vote of the stockholders
(other than the election of directors). With respect 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 Amendments, and will not be
counted for purposes of establishing a quorum. With respect to the Charter
Amendments, 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 each of the Charter Amendments.
If a quorum is not present at the time the Meeting is convened for any
particular purpose, or if for any other reason the Corporation believes that
additional time should be allowed for the solicitation of proxies, the
Corporation may adjourn the Meeting with a vote of the stockholders then
present. The persons named in the enclosed form of proxy will vote any shares
of capital stock for which they have voting authority in favor of such
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 Corporation, 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 Corporation 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.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Except where authority has been withheld by a stockholder, the enclosed proxy
will be voted for the election of the respective nominee(s) named below for the
directorships to be voted on by the class of stock of which the shares
represented by the proxy are a part, 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 (as defined in the Charter) are to be elected by the
holders of Common Stock. Each nominee was previously elected by the
stockholders of the Corporation, other than Mr. Edwardson, who was elected by
the Board of Directors upon his commencement of employment with the Corporation
as
4
<PAGE>
of July 12, 1994. Each nominee has served continuously as a Public Director for
the period succeeding the date of his election.
In the event any one or more of the named nominees shall unexpectedly become
unavailable before election, votes will be cast pursuant to authority granted
by the enclosed proxies from holders of Common Stock for such person or persons
as may be designated by the Board of Directors or Committee thereof in
accordance with the requirements in the Charter. No person, other than the
directors of the Corporation or such Committee, as the case may be, acting
solely in that capacity, is responsible for the naming of the nominees.
JOHN A. EDWARDSON, 45. President and Chief Operating Officer of the
Corporation and President of United. Director since 1994. Mr. Edwardson was
elected President of the Corporation and United as of July 12, 1994 and Chief
Operating Officer of the Corporation on March 30, 1995. Mr. Edwardson served as
Executive Vice President and Chief Financial Officer of Ameritech Corporation
(telecommunications) from June 1991 to July 1994. In July 1990, he was elected
to serve as Chief Financial Officer of United Employee Acquisition Corp. in
connection with the proposed 1990 employee acquisition of the Corporation.
Previously, he served as Executive Vice President and Chief Financial Officer
of Imcera Group, Inc. (chemicals and minerals) from November 1988 to July 1990
and of Northwest Airlines, Inc. (air carrier) from 1985 to 1988. Mr. Edwardson
is a director of Household International, Inc.
GERALD GREENWALD, 59. Chairman and Chief Executive Officer of the Corporation
and United. Director since 1994. Mr. Greenwald was elected Chairman and Chief
Executive Officer of the Corporation and United on July 12, 1994. Mr. Greenwald
served as Chairman of Tatra Truck Company, Czech Republic (truck manufacturing)
from March 1993 until July 1994. Mr. Greenwald served as Vice Chairman of the
Chrysler Corporation (automotive manufacturing) from 1989 to 1990. Prior
thereto, Mr. Greenwald was employed by Chrysler for approximately 10 years in a
number of senior executive positions. In 1990, Mr. Greenwald was selected to
serve as chief executive officer of United Employee Acquisition Corp. in
connection with the proposed 1990 employee acquisition of the Corporation.
Following the termination of that proposed transaction, Mr. Greenwald served as
a managing director of Dillon Read & Co. Inc. (investment banking) in 1991 and
as president of Olympia & York Developments Limited (a real estate development
company that was 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) from April 1992 until March 1993. Mr. Greenwald is a director of
Aetna Life and Casualty Company and a trustee of Princeton University.
JOHN F. MCGILLICUDDY, 64. Retired Chairman and Chief Executive Officer,
Chemical Banking Corporation (banking and finance). Director since 1984. Mr.
McGillicuddy served as Chairman and Chief Executive Officer of Chemical Banking
Corporation from January 1992 until his retirement in December 1993, and of
Manufacturers Hanover Corporation and Manufacturers Hanover Trust Company from
1979 until the merger of Manufacturers Hanover Corporation and Chemical Banking
Corporation in January 1992. Mr. McGillicuddy is also a director of Chemical
Banking Corporation, The Continental Corporation and USX Corporation.
JAMES J. O'CONNOR, 58. Chairman and Chief Executive Officer, Unicom
Corporation (holding company for Commonwealth Edison Company, an electric power
utility) for the past five years. Director since 1984. Mr. O'Connor is also a
director of American National Can Company, Corning Incorporated, First Chicago
Corporation, the Chicago Stock Exchange, Scotsman Industries, Inc. and The
Tribune Company.
PAUL E. TIERNEY, JR., 52. Managing Director, Gollust, Tierney and Oliver,
Inc. (investment banking) for the past five years. Director since 1990. Mr.
Tierney is also Chairman of the Board of Directors of Technoserve, Inc. and a
director of the Argentine Investment Fund, the Straits Corporation, the
Overseas Development Council and International Venture Partners.
5
<PAGE>
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 Corporation 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
Corporation and has served continuously as a director of the Corporation for
the period succeeding the date of his election. If any one or more of the named
nominees shall unexpectedly become unavailable before election, or if the
holders of the respective class of stock shall notify the Corporation that a
substitute nominee has been selected, votes will be cast pursuant to the
authority granted by the proxies for the person or persons who may be
designated as substitute nominees by the respective holders or, if applicable,
in accordance with the nomination procedures identified below.
INDEPENDENT DIRECTORS--ELECTED BY HOLDERS OF CLASS I PREFERRED STOCK
Four Independent Directors (as defined in the Charter) are to be elected by
the four Independent Directors who are the holders of Class I Preferred Stock.
Each nominee has been nominated as such by the Independent Director Nomination
Committee and, pursuant to a Stockholders Agreement among the holders of Class
I Preferred 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 acting as such, is responsible for the naming of the
nominees.
DUANE D. FITZGERALD, 55. President and Chief Executive Officer, Bath Iron
Works Corporation (shipbuilding) for the past five years. Director since 1994.
Mr. Fitzgerald is also the Chairman and a director of the American Shipbuilding
Association and a trustee of Boston University and the IAM Pension Fund.
RICHARD D. MCCORMICK, 54. Chairman, President and Chief Executive Officer of
U S WEST, Inc. (telecommunications). Director since 1994. Mr. McCormick has
been Chairman of U S WEST since May 1992 and President and Chief Executive
Officer since 1991. He served as President and Chief Operating Officer from
1986 to 1991. Mr. McCormick is also a director of Norwest Corporation, Super
Valu Stores, Inc. and Financial Security Assurance Holdings, Inc.
JOHN K. VAN DE KAMP, 59. Partner, Dewey Ballantine (law firm) since 1991.
Director since 1994. Mr. Van de Kamp served as Attorney General of the State of
California from 1989 until January 1991. He is also a member of the advisory
board of Falcon Classic Cable Income Properties, Ltd., and a director of
Lawry's Restaurants, Inc. and The Employers Group, as well as of Day One, the
Eisenhower World Affairs Institute, the Los Angeles Conservation Corps, the
Planning and Conservation League and Skid Row Development Corporation.
PAUL A. VOLCKER, 67. Chairman, James D. Wolfensohn Inc. (investment banking)
and Frederick H. Schultz Professor of International Economic Policy, Princeton
University for the past five years. Director since 1994. Mr. Volcker is also a
director of Nestle S.A., Municipal Bond Assurance Corp. (MBIA), 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 ALPA-
MEC, the holder of the Class Pilot MEC Stock. The ALPA-MEC has advised the
Corporation that it has nominated and intends to reelect Harlow Osteboe as the
ALPA Director.
HARLOW B. OSTEBOE, 58. Chairman, ALPA-MEC (labor union) since August 1994,
and Captain, DC-10, United for the past five years. Director since 1994. Mr.
Osteboe served as Vice Chairman of the ALPA-MEC from October 1992 to August
1994. Mr. Osteboe is also an Executive Board Member of ALPA.
6
<PAGE>
IAM DIRECTOR--ELECTED BY HOLDER OF CLASS IAM STOCK
One IAM Director (as defined in the Charter) is to be elected by the IAM, the
holder of the Class IAM Stock. The IAM has advised the Corporation that it has
nominated and intends to reelect John Peterpaul as the IAM Director.
JOHN F. PETERPAUL, 59. Retired General Vice President, International
Association of Machinists and Aerospace Workers (labor union) since June 1,
1994 and, prior thereto, General Vice President, International Association of
Machinists and Aerospace Workers for the past five years. Director since 1994.
Mr. Peterpaul retired from the IAM in May 1994. He is a member of the Executive
Board, General Council and Management Committee of the International Transport
Workers' Federation (ITF), headquartered in London, England. He has served as
Labor Chairman of the National Transportation Apprenticeship and Training
Conference, as Chairman of the Railway Labor Executives' Association and on
numerous other labor and government committees including the 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 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 Corporation 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.
JOSEPH V. VITTORIA, 59. Chairman and Chief Executive Officer, Avis, Inc.
(automobile renting and leasing). Director since 1994. Mr. Vittoria is also a
director of Transmedia Europe, Inc., as well as Cilva Holdings, PLC and
Transmedia Asia Pacific.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
Prior to the Recapitalization, the Board of Directors of the Corporation held
a total of 10 meetings in 1994, and after the Recapitalization the Board of
Directors held another 6 meetings in 1994. During their periods of service all
directors attended 75 percent or more of the total of such meetings and
meetings of Board committees on which they were members.
COMMITTEES
The standing committees of the Board of Directors of the Corporation since
the Recapitalization consist of the Executive, Audit, Compensation,
Compensation Administration, CAP, Labor, Independent Director Nomination,
Outside Public Director Nomination, Pension and Welfare Plans Oversight and
Transaction Committees.
Set forth below is a brief description of the functions performed, the names
of the committee members, and the number of meetings held by each committee
during 1994.
EXECUTIVE COMMITTEE. The Executive Committee is authorized by the Charter and
Bylaws of the Corporation to exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, with certain
exceptions. The Executive Committee held five meetings in 1994. The members of
the Committee are Gerald Greenwald, Chairman, and Richard D. McCormick, Harlow
B. Osteboe, John F. Peterpaul, Paul E. Tierney, Jr., and Paul A. Volcker.
7
<PAGE>
AUDIT COMMITTEE. The Audit Committee is authorized by the Board to review
with the Corporation's independent public accountants the annual financial
statements of the Corporation prior to publication, to review the work of and
approve non-audit services performed by such independent accountants and to
make annual recommendations to the Board for the appointment of independent
public accountants for the ensuing year. The Committee reviews the
effectiveness of the financial and accounting functions, organization,
operations and management of the Corporation and its subsidiaries and
affiliates. The Audit Committee held two meetings in 1994. The members of the
Committee are 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 Corporation and reviews
general policy matters relating to compensation and benefits of non-union
employees of the Corporation and its subsidiaries. The Committee also
administers the equity incentive compensation plans of the Corporation, except
for responsibilities reserved for the Compensation Administration Committee.
The Compensation Committee held eight meetings in 1994. The members of the
Committee are John F. McGillicuddy, Chairman, and Duane D. Fitzgerald, Gerald
Greenwald, Richard D. McCormick, Harlow B. Osteboe, 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 Corporation 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, the 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 two meetings in 1994. The members of the
Committee are John F. McGillicuddy, Chairman, and Duane D. Fitzgerald and
Richard D. McCormick.
CAP COMMITTEE. The CAP Committee oversees implementation of the Corporation's
Competitive Action Plan developed as part of the Recapitalization to improve
United's competitiveness on many short-haul routes, and pursuant to which
"Shuttle by United" was established. The CAP Committee has the exclusive
authority, acting for and on behalf of the Board and consistent with the
protection of the interests of the holders of Common Stock, to approve on
behalf of the Corporation any and all modifications of or amendments to the
Competitive Action Plan, other than those matters reserved to the Labor
Committee. The CAP Committee held no meetings in 1994. The members of the
Committee are Duane D. Fitzgerald, Chairman, and Gerald Greenwald, John F.
McGillicuddy, James J. O'Connor, Harlow B. Osteboe, John F. Peterpaul, Paul E.
Tierney, Jr., and John K. Van de Kamp.
LABOR COMMITTEE. The Labor Committee has the exclusive authority on behalf of
the Board to approve on behalf of the Corporation the entering into of, or any
modification or amendment to, any collective bargaining agreement to which the
Corporation or any of its subsidiaries is a party. The Committee held two
meetings in 1994. The members of the Committee are Gerald Greenwald, Chairman,
and Richard D. McCormick and Paul E. Tierney, Jr.
INDEPENDENT DIRECTOR NOMINATION COMMITTEE. The Independent Director
Nomination Committee is authorized to nominate candidates to become Independent
Director members of the Board of Directors, to fill vacancies in Independent
Director positions and to appoint Independent Directors to serve on Board
Committees. The Committee held two meetings in 1994. The members of the
Committee are John K. Van de Kamp, Chairman, and Duane D. Fitzgerald, Richard
D. McCormick, Harlow B. Osteboe, John F. Peterpaul, Joseph V. Vittoria and Paul
A. Volcker.
OUTSIDE PUBLIC DIRECTOR NOMINATION COMMITTEE. The Outside Public Director
Nomination Committee is authorized to nominate candidates to become Outside
Public Director (as defined in the Charter) members of the Board of Directors,
to fill vacancies in Outside Public Director positions and to appoint Outside
Public Directors to serve on Board Committees. The Outside Public Director
Nomination Committee will consider
8
<PAGE>
nominees recommended by stockholders, who may submit such recommendations by
addressing a letter to the Chairman of such Committee at UAL Corporation, P. O.
Box 66919, Chicago, Illinois 60666. Qualification requirements for Outside
Public Directors are specified in the Charter. The Committee held two meetings
in 1994. The members of the Committee are 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 exercises oversight with respect to compliance by the
Corporation and its subsidiaries with laws governing employee benefit plans
maintained by the Corporation and its subsidiaries and subject to the
provisions of ERISA. The Committee held two meetings in 1994. The members of
the Committee are Paul A. Volcker, Chairman, and James J. O'Connor, Harlow B.
Osteboe, 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 Corporation or any of its subsidiaries with or into, the sale, lease or
exchange of all or substantially all of the Corporation'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 1994. The members of the Committee are 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, Osteboe and Peterpaul serve on the Compensation Committee,
but not the Compensation Administration Committee. Messrs. Osteboe and
Greenwald are employees of the Corporation. Mr. Osteboe 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. Prior
to February 1994, Mr. Peterpaul was the General Vice President of the IAM.
United and the IAM are parties to collective bargaining agreements for United
employees of the various classes or crafts represented by the IAM. During 1994,
ALPA-MEC and the IAM entered into various agreements with the Corporation and
United in order to accomplish the Recapitalization. Pursuant to those
agreements, the Corporation paid or reimbursed certain fees and expenses
incurred by ALPA, ALPA-MEC and the IAM in connection with the Recapitalization,
including the $80,000 per month consulting fee and expense reimbursement
($549,867 in the aggregate, including third party reimbursements made in 1995
for pre-Recapitalization expenditures) to which Mr. Greenwald was entitled for
the period January 1, 1994 through July 11, 1994 pursuant to his Retention
Agreement dated as of January 1, 1994 with ALPA and the IAM.
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. Directors who are employees of the
Corporation or any of its subsidiaries, including Messrs. Greenwald, Edwardson
and Osteboe, do not receive any retainer fee, meeting fee or Common Stock for
their service on the Board of Directors or any committee. During 1994, Mr.
Peterpaul waived his right to receive any such director compensation.
In 1994, amendments to the UAL Corporation 1992 Stock Plan for Outside
Directors (the "1992 Plan" or the "Prior Plan"), as well as a new Directors
Plan, were adopted to allow directors to defer their annual stock grants and
fee payments for federal income tax purposes, and, if approved by stockholders
at the
9
<PAGE>
Meeting, to receive cash fees in stock, whether or not deferred. See "Proposal
No. 2--Approval of UAL Corporation 1995 Directors Plan."
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 Corporation or any of its subsidiaries. If a retiring director has at
least ten years of service and is age 70 or over at retirement, he is entitled
to a life annuity equal to the greater of $20,000 per year or the annual
retainer fee at retirement. Reduced benefits are available if the director has
less than ten years of service or if retirement occurs before age 70. For
purposes of the Retirement Plan, prior to March 1995, a director who was a
director at the time of a "change in control" of the Corporation was credited
with three additional years of service, was deemed to have satisfied the five-
year minimum service requirement and was deemed to be three years older than
his actual age. Surviving spouse benefits are available in some cases. A trust
(the "Trust") has been created to serve as a source of payments of benefits
under the Retirement Plan.
Under the Corporation's travel and cargo policy for directors, each director
of the Corporation, his spouse and their eligible dependent children are
entitled to free transportation and free cargo shipment on United. The
directors are reimbursed by the Corporation for additional income taxes
resulting from the taxation of these benefits. The cost of supplying these
benefits for each director in 1994, including cash payments made in February,
1995 for income tax liability, was as follows:
<TABLE>
<CAPTION>
NAME COST ($)
- ---- --------
<S> <C>
John A. Edwardson....... 8,763
Duane D. Fitzgerald..... 0
Gerald Greenwald........ 16,808
Richard D. McCormick.... 9,256
John F. McGillicuddy.... 13,827
James J. O'Connor....... 25,934
</TABLE>
<TABLE>
<CAPTION>
NAME COST ($)
- ---- --------
<S> <C>
Harlow B. Osteboe....... 0
John F. Peterpaul....... 0
Paul E. Tierney, Jr..... 59,849
John K. Van de Kamp..... 8,140
Joseph V. Vittoria...... 6,834
Paul A. Volcker......... 407
</TABLE>
Prior to March 1995, a non-employee director (and his spouse and eligible
dependent children) serving as such at the time of a "change in control" was
entitled to continue such travel and cargo benefits thereafter for life. The
Recapitalization constituted a change in control of the Corporation under the
Retirement Plan, the Trust, and the director travel and cargo policies with
respect to those non-employee directors who were serving immediately prior to
the Recapitalization, and as a result of this change in control the Trust
became irrevocable. Effective March 30, 1995, the travel and cargo policies and
Retirement Plan for non-employee directors were amended to eliminate the change
in control provisions described above with respect to any future change in
control of the Corporation.
BENEFICIAL OWNERSHIP OF SECURITIES
FIVE PERCENT BENEFICIAL OWNERS
The following table shows the number of shares of the Corporation's voting
securities beneficially owned by any person or group known to the Corporation
as of March 1, 1995 to be the beneficial owner of more than five percent of any
class of the Corporation's voting securities.
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER CLASS OF BENEFICIAL OWNERSHIP OF CLASS
------------------- -------- ----------------------- --------
<S> <C> <C> <C>
Sanford C. Bernstein & Co., Inc. Common Stock 1,083,471(1) 8.71%
One State Street Plaza
New York, NY 10004
Wellington Management Co. Common Stock 1,190,200(2) 9.57%
75 State Street
Boston, MA 02109
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER TITLE OF CLASS OF BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------- ----------------------- --------
<S> <C> <C> <C>
Vanguard/Windsor Fund, Inc. Common Stock 1,190,200(3) 9.57%
P.O. Box 823
Valley Forge, PA 19482
AXA Assurances I.A.R.D. Mutuelle Common Stock 3,709,874(4) 29.58%
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
State Street Bank and Trust Company, Common Stock 1,789,585(5) 12.58%
Trustee Class P Voting Stock 1(6) 100%
UAL Corporation Class M Voting Stock 1(6) 100%
Employee Stock Ownership Plan Class S Voting Stock 1(6) 100%
225 Franklin Street
Boston, MA 02110
United Airlines Pilots Class Pilot MEC Stock 1(7) 100%
Master Executive Council
Air Lines Pilots Association, In-
ternational
6400 Shaffer Court, Suite 700
Rosemont, IL 60018
International Association of Machin-
ists and Aerospace Workers Class IAM Stock 1(8) 100%
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 Preferred Stock 1(10) 25%
Bath Iron Works Corp.
700 Washington Street
Bath, ME 04530
Richard D. McCormick Class I Preferred Stock 1(10) 25%
U S WEST, Inc.
7800 E. Orchard Road
Englewood, CO 80111-2533
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER TITLE OF CLASS OF BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------- ----------------------- --------
<S> <C> <C> <C>
John K. Van de Kamp Class I Preferred Stock 1(10) 25%
Dewey Ballantine
333 S. Hope Street
Los Angeles, CA
90071-3003
Paul A. Volcker Class I Preferred Stock 1(10) 25%
James D. Wolfensohn
Inc.
599 Lexington Avenue
New York, NY 10022
</TABLE>
- --------
(1) Based on Schedule 13G dated February 7, 1995, in which the beneficial owner
reported that as of December 31, 1994, it had sole dispositive power over
1,083,471 shares of Common Stock ("Shares") and sole voting power over
600,015 of such Shares.
(2) Based on Schedule 13G dated February 6, 1995, in which the beneficial owner
reported that as of December 31, 1994, it had no voting power and shared
dispositive power over such Shares.
(3) Based on Schedule 13G dated February 10, 1995, in which the beneficial
owner reported that as of December 31, 1994, it had sole voting power and
shared dispositive power over such Shares.
(4) Based on Schedule 13G dated January 9, 1995 in which each of AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha Assurances I.A.R.D.
Mutuelle, Alpha Assurances Vie Mutuelle, Uni Europe Assurance Mutuelle, AXA
and The Equitable Companies Incorporated reported that as of December 31,
1994 it had sole voting power for 2,312,984 of such Shares, shared voting
power for 91,650 of such Shares, and sole dispositive power for all such
Shares. Such amounts include 73,000 Shares issuable upon exercise of
options and 35,195 Shares issuable upon conversion of Series A Preferred
Stock.
(5) Based on Schedule 13G dated February 13, 1995, in which the beneficial
owner reported that as of December 31, 1994, it had shared dispositive
power over 1,789,585 shares of Class 1 Non-Voting ESOP Convertible
Preferred Stock convertible into the same number of Shares.
(6) Based on Schedule 13G dated February 13, 1995, in which the beneficial
owner reported that as of December 31, 1994, it had shared voting power
over 1 share of Class P Voting Stock representing 25.4% of the voting power
of the Corporation, 1 share of Class M Voting Stock representing 20.4% of
the voting power of the Corporation, and 1 share of Class S Voting Stock
representing 9.2% of the voting power of the Corporation. Voting power is
limited to matters other than the vote for directors.
(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 Preferred 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 Corporation.
The foregoing information in footnotes (1) through (6) is based on a review,
as of March 1, 1995, by the Company of statements filed with the Securities and
Exchange Commission under Sections 13(d) and 13(g) of the Securities Exchange
Act of 1934 (the "Exchange Act").
12
<PAGE>
SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock and
Voting Preferred Stock beneficially owned as of March 22, 1995, by each
director and executive officer included in the Summary Compensation Table, and
by all directors and executive officers of the Corporation, 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 Corporation also beneficially own shares of various other classes of
preferred stock of the Corporation. See "Beneficial Ownership of Securities--
Five Percent Beneficial Owners."
<TABLE>
<CAPTION>
COMMON STOCK VOTING PREFERRED
BENEFICIALLY PERCENT STOCK BENEFICIALLY PERCENT
NAME OF DIRECTOR OR EXECUTIVE OFFICER AND GROUP OWNED OF CLASS OWNED OF CLASS
- ----------------------------------------------- ------------ -------- ------------------ --------
<S> <C> <C> <C> <C>
John A. Edwardson........... 63,699(1) * 149.73(2) *
Duane D. Fitzgerald......... 100 * --
Gerald Greenwald............ 152,535(3) 1.2% 217.11(2) *
Richard D. McCormick........ 600 * --
John F. McGillicuddy........ 750 * --
James J. O'Connor........... 450 * --
Harlow B. Osteboe........... 268(4) * 131.13(5) *
John F. Peterpaul........... 100 * --
Paul E. Tierney, Jr......... 19,054 * --
John K. Van de Kamp......... 100 * --
Joseph V. Vittoria.......... 100 * --
Paul A. Volcker............. 600 * --
James M. Guyette............ 39,114(6) * 101.82(2) *
Joseph R. O'Gorman.......... 35,851(7) * 101.82(2) *
Stuart I. Oran.............. 41,336(8) * 101.82(2) *
Directors and Executive
Officers as a Group (17
persons)................... 402,304 3.2% 857.97(9) *
</TABLE>
- --------
*Less than 1%
(1) Includes 32,500 shares which Mr. Edwardson has the right to acquire within
60 days of March 22, 1995 by the exercise of stock options.
(2) Reflects beneficial ownership of Class S Voting Stock owned through the
ESOP.
(3) Includes 100,000 shares which Mr. Greenwald has the right to acquire within
60 days of March 22, 1995 by the exercise of stock options, 300 shares held
indirectly by Mr. Greenwald's wife and 105 shares held indirectly by a UAL
401(k) plan (at close of business on December 30, 1994).
(4) Includes 200 shares held indirectly by Mr. Osteboe's wife and 10 shares
held indirectly by Pilots' Retirement Income Plan.
(5) Reflects beneficial ownership of Class P Voting Stock owned through the
ESOP.
(6) Includes 30,000 shares which Mr. Guyette has the right to acquire within 60
days of March 22, 1995 by the exercise of stock options.
(7) Includes 30,000 shares which Mr. O'Gorman has the right to acquire within
60 days of March 22, 1995 by the exercise of stock options.
(8) Includes 27,500 shares which Mr. Oran has the right to acquire within 60
days of March 22, 1995 by the exercise of stock options.
(9) Reflects ownership of Class S Voting Stock owned through the ESOP. No
director or executive officer other than Mr. Osteboe beneficially owns
shares of Class P Voting Stock.
13
<PAGE>
EXECUTIVE COMPENSATION
UAL CORPORATION COMPENSATION AND COMPENSATION ADMINISTRATION
COMMITTEES REPORT
PHILOSOPHY
The Corporation'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 Corporation and to its longer-term return to stockholders.
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 corporations in general industry of comparable size. Base
salaries were further reduced on July 13, 1994 by 8.25% as required by the
Recapitalization.
Annual incentive compensation provides an opportunity for additional
earnings. An incentive pool is created based upon the Corporation'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 of 1986, as amended) 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 of 1986, as amended (the "Internal Revenue Code").
The stock compensation program is comprised of stock options and restricted
stock. Stock compensation gives each officer the opportunity to become a
stockholder of the Corporation. Stock grants are determined in consideration of
individual performance and contribution and in consideration of airline
industry practice, using the same three-carrier peer 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 162(m) qualified grants) stock
option and/or restricted stock grants for each officer; there are no specific
target award levels or weighting of factors considered in determining stock
grants. 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. Options and restricted shares typically are granted in
alternating years (options in one year, restricted stock in the next, etc.).
14
<PAGE>
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
shares typically have vesting restrictions of up to 5 years. In 1994,
stockholders approved amendments to the Corporation's stock plans to preserve,
to the maximum extent possible, the deductibility by the Corporation of amounts
awarded under the plans.
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 Corporation to attract high quality management at the most
senior officer levels within the Corporation, 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
Base salary for Stephen M. Wolf, former Chairman and Chief Executive Officer
of the Corporation, for 1994 was for the period from January 1, 1994 to July
12, 1994, the date of his retirement in connection with the closing of the
Recapitalization and reflected no increase from the salary rate authorized in
1993. His compensation specified in the "All Other Compensation" column in the
Summary Compensation Table and the basis upon which such compensation was paid
is described in the footnotes to the Table.
The compensation package for Mr. Greenwald was established pursuant to an
Employment Agreement negotiated by Mr. Greenwald with ALPA and the IAM that was
contingent upon the Recapitalization transaction (the "Greenwald Agreement").
As part of the Greenwald Agreement, a base salary rate of $725,000 was
established for Mr. Greenwald upon his employment on July 12, 1994, which was
the same rate as his predecessor. That rate was reduced by 8.25% to $665,188 on
July 13, 1994 according to the terms of the Recapitalization. A non-guaranteed
target bonus of $725,000 per year was also established (prorated to $362,500
for his partial year of service in 1994), which was paid to Mr. Greenwald in
1995 (in Common Stock) since his performance was consistent with the Board
Committee's objectives and directions, and since the 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
Corporation'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 Greenwald Agreement. In addition,
Mr. Greenwald received one-time sign-on compensation in the form of Common
Stock, stock options, restricted stock and a success fee payable in cash upon
commencement of employment as required by the Greenwald Agreement.
COMPENSATION FOR THE OTHER NAMED OFFICERS
Mr. Edwardson was employed as President as of July 12, 1994, at a base salary
rate of $500,000, which was the same rate as his predecessor. On July 13, 1994,
that rate was reduced by 8.25% to $458,750 according to the terms of the
Recapitalization. Mr. Oran was employed as Executive Vice President--Corporate
Affairs and General Counsel as of July 12, 1994, at a base salary rate of
$340,000, which was the same rate as his predecessor. On July 13, 1994, that
rate was reduced by 8.25% to $311,950 according to the terms of the
Recapitalization. In connection with his agreement to join the Corporation and,
as a result, to terminate his prior employment, each of Messrs. Edwardson and
Oran was awarded one-time sign-on compensation in the form of cash, Common
Stock, restricted stock and options. In lieu of issuing all of Mr. Edwardson's
sign-on Common Stock grant to him, at Mr. Edwardson's request the Corporation
made a charitable contribution of
15
<PAGE>
a portion of the Common Stock. In determining the amount of such compensation
for Messrs. Edwardson and Oran, the Corporation considered the respective views
of Messrs. Edwardson and Oran as to the compensation and benefits they would
forfeit with their then current employers. Mr. Edwardson was paid an incentive
compensation award for 1994 performance in 1995 of $204,000 in Common Stock,
which was granted pursuant to the normal incentive compensation plan terms
described earlier and prorated for his partial year of service, and according
to a pre-established formula (adjusted downward as described below) in full
compliance with Section 162(m) of the Internal Revenue Code. Mr. Oran was not
eligible for an incentive compensation award for 1994.
Base salary rates for Messrs. O'Gorman and Guyette of $340,000 were reduced
8.25% on July 13, 1994 to $311,950 according to the terms of the
Recapitalization. Neither received a cash incentive award in 1994, or an
increase to base salary in 1994 or 1995. Each received an incentive
compensation award for 1994 performance in 1995 of $234,000, of which 100% of
Mr. O'Gorman's and 50% of Mr. Guyette's was paid in Common Stock. These bonuses
were granted pursuant to the normal incentive compensation plan terms described
earlier, and according to a pre-established formula (adjusted downward as
described below) in full compliance with Section 162(m) of the Internal Revenue
Code. Each received a stock option grant, subject to the Corporation's normal
grant schedule. No payments were made under the annual Incentive Compensation
Plan with respect to 1991, 1992 or 1993.
In making the bonus determination for all ICP participants for 1994, the pre-
tax earnings component of the bonus formula was reduced by the Compensation and
Compensation Administration Committees by an amount equal to the Corporation's
estimate of the net labor savings to the Corporation for 1994 resulting from
the ESOP, because the formula established by the Compensation Committee in
February 1994 did not take into account earnings attributable to those labor
savings in the bonus calculation (due to the fact that the formula was,
consistent with past practice, finalized before it was clear that any
transaction would occur).
CHANGE IN CONTROL AGREEMENTS
In 1993 the Corporation and United entered into amendments to and new
severance agreements with provisions that became effective only upon a "change
in control" of the Corporation. The Compensation Committee believed it was
important to take steps to maintain a stable management team throughout the
period preceding the Recapitalization and during the transition following the
closing. The Recapitalization was a "change in control" for this purpose. The
Compensation Committee has now decided to permit the various change in control
severance agreements to expire at their earliest possible expiration dates, and
the Corporation gave the required notices during March 1995 to accomplish this.
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 Harlow B. Osteboe
Gerald Greenwald John F. Peterpaul
Joseph V. Vittoria
UAL CORPORATION COMPENSATION ADMINISTRATION COMMITTEE
John F. McGillicuddy, Chairman Richard D. McCormick
Duane D. Fitzgerald
16
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------------
OTHER RESTRICTED ALL
NAME AND ANNUAL STOCK STOCK OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION (1) YEAR ($) ($)(2) ($) ($)(3) (#) ($)
- ------------ ---- ------- --------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wolf 1994 372,190 0 23,791 0 0 6,797,696(4)
1993 604,134 0 122,173(5) 0 0 29,821(6)
1992 625,000 0 25,515 0 0 30,985(6)
Greenwald 1994 313,300 3,662,521(7) 16,224 2,300,000 200,000 18,972(8)
Edwardson 1994 216,069 2,156,025(7) 8,458 2,208,000 130,000 13,084(8)
O'Gorman 1994 322,916 234,029 7,078 0 30,000 16,480(8)
1993 314,348 0 7,548 855,000 0 4,024(6)
1992 300,000 0 18,379 0 30,000 7,094(6)
Guyette 1994 321,329 233,967 8,576 0 30,000 24,410(8)
1993 310,749 0 5,183 855,000 0 10,708(6)
1992 300,000 0 327 0 30,000 7,874(6)
Oran 1994 147,865 1,540,000(7) 312,846(9) 1,150,000 55,000 8,897(8)
</TABLE>
- --------
Wolf= Stephen M. Wolf, Former Chairman and Chief Executive Officer
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
Guyette= James M. Guyette, Executive Vice President
Oran= Stuart I. Oran, Executive Vice President-Corporate Affairs and General
Counsel
- --------
(1) Mr. Wolf retired on July 12, 1994, in connection with the closing of the
Recapitalization. Messrs. Greenwald, Edwardson and Oran joined the
Corporation on July 12, 1994, following the closing of the
Recapitalization.
(2) Although each of Messrs. Greenwald, Edwardson, O'Gorman and Guyette were
awarded an annual cash bonus for 1994 pursuant to the Corporation's
Incentive Compensation Plan and, in the case of Mr. Greenwald, his
Employment Agreement with the Corporation, at the request of the
Corporation each of these officers waived 100%, in the case of Messrs.
Greenwald, Edwardson and O'Gorman, and 50%, in the case of Mr. Guyette, of
his right to receive this bonus in cash and agreed to accept Common Stock
of value equivalent to the amount of the bonus waived, as follows:
<TABLE>
<CAPTION>
NAME CASH BONUS WAIVED ($) COMMON STOCK (#)
---- --------------------- ----------------
<S> <C> <C>
G. Greenwald...................... (362,500) 3,806
J. Edwardson...................... (204,000) 2,142
J. O'Gorman....................... (234,000) 2,457
J. Guyette........................ (117,000) 1,228
</TABLE>
Mr. Oran was not eligible to receive an annual bonus for 1994. The value of
shares of Common Stock referred to in this footnote are included in the
Summary Compensation Table. Differences between table and footnote values
result from rounding to whole shares. Portions of awards were withheld to
cover tax withholding obligations.
(3) The restricted stock granted in 1994 to Mr. Greenwald vests in five equal
annual installments commencing one year from the date of grant; to Mr.
Edwardson vests in four equal annual installments commencing two years from
the date of grant; and to Mr. Oran vests 20% at January 15, 1995 and the
balance in four equal annual installments commencing one year from the date
of grant. All 1994 restricted stock awards are valued at the closing market
price on July 13, 1994, the first trading day (on a "when issued" basis) of
the post-Recapitalization Common Stock. The number of shares of restricted
stock awarded in 1994 and the number and aggregate value, respectively, of
these restricted holdings at fiscal year-end is: Mr. Wolf, none; Mr.
Greenwald, 25,000 shares, $2,184,375; Mr. Edwardson, 24,000
17
<PAGE>
shares, $2,097,000; Mr. O'Gorman, none; Mr. Guyette none; and Mr. Oran,
12,500 shares, $1,092,188. These dollar amounts differ from amounts in table
as table values are determined as of a different date. The total number of
shares awarded in 1994 for each executive officer is equal to such number of
shares at fiscal year-end. The restricted stock granted in 1993 to Mr.
O'Gorman (7,500 shares) and Mr. Guyette (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 closing of the
Recapitalization. No dividends have been paid on restricted shares, but
officers have the right to retain any dividends paid on such shares.
(4) Amount represents $10,333 attributable to split dollar life insurance
premiums and the following payments made pursuant to an agreement in
connection with Mr. Wolf's retirement: $4.35 million as severance (based on
a multiple of three times annual salary and deemed bonus); $2,145,617 as a
supplemental pension benefit; $208,412 in respect of the value of Mr.
Wolf's split dollar life insurance policy, and $83,333 in respect of
accrued but unused vacation.
(5) Includes $39,243 attributable to tax gross-ups during the fiscal year
associated with travel privileges, $16,180 attributable to financial
planning, travel, certain insurance and automobile benefits, and the
balance attributable to club membership costs and dues.
(6) Amounts represent compensation attributable to split dollar insurance
program premiums.
(7) Mr. Greenwald was retained by ALPA and the IAM as of January 1994 to serve
as a consultant, at which time he agreed to enter into the Greenwald
Agreement with the Corporation to serve as Chairman and Chief Executive
Officer if and when the Recapitalization closed. The Greenwald Agreement
provided Mr. Greenwald with one-time sign-on compensation which included
Common Stock and a success fee payable in cash (all of which cash was
withheld by the Corporation to cover tax withholding obligations arising
from the sign-on award). In addition, in order to induce Messrs. Edwardson
and Oran to leave their then current employment positions (as Executive
Vice President and Chief Financial Officer of Ameritech Corporation in the
case of Mr. Edwardson, and as a partner in a New York City law firm in the
case of Mr. Oran) upon the closing of the Recapitalization and thereby
forego their then current compensation and benefits, the Corporation made a
donation of Common Stock to a charitable foundation as requested by Mr.
Edwardson in lieu of issuing such shares to him and provided Messrs.
Edwardson and Oran with other one-time sign-on compensation which included
Common Stock and cash (portions of which were withheld to cover tax
withholding obligations arising from the sign-on award). The sign-on
compensation for these officers in the form of Common Stock and cash that
was donated, awarded or paid as of the closing date of the Recapitalization
was as follows:
<TABLE>
<CAPTION>
COMMON STOCK DONATED TO
NAME CHARITABLE FOUNDATION (#/$) COMMON STOCK (#/$) * CASH ($) *
---- --------------------------- -------------------- ----------
<S> <C> <C> <C>
G. Greenwald. N/A 25,000/2,300,000 1,000,000
J. Edwardson. 7,767/700,000 6,000/ 552,000 700,000
S. Oran...... N/A 7,500/ 690,000 575,000
</TABLE>
* Includes portions of awards withheld to cover tax withholding obligations.
Common Stock is valued at the closing market price on July 13, 1994, except
that the Common Stock donation is valued on the basis of the average of the
high and low market prices on that date because the number of shares
donated was determined using this method. The second and final installment
of Mr. Oran's one-time sign-on cash compensation in the amount of $275,000
was paid on or about January 15, 1995. All amounts referred to in this
footnote are included in the Summary Compensation Table.
(8) Amounts represent compensation attributable to split dollar insurance
program premiums for Messrs. O'Gorman ($7,583) and Guyette ($15,513) and
value of shares of ESOP preferred stock allocated to the officer's account
for 1994 as follows, based upon the closing price of the Common Stock as of
December 30, 1994 multiplied by the number of shares of Common Stock
issuable upon conversion of such ESOP preferred stock: Mr. Greenwald,
$18,972; Mr. Edwardson, $13,084; Mr. O'Gorman, $8,897; Mr. Guyette, $8,897
and Mr. Oran, $8,897.
(9) Includes a one-time $300,000 payment made in 1995 in consideration of
waiving all rights under the Corporation's normal relocation policy.
18
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock options granted
during 1994 by the Corporation to the named executive officers. The
hypothetical present values of stock options granted in 1994 are calculated
under a modified Black-Scholes model, a mathematical formula used to value
options. The actual amount, if any, realized upon exercise of stock options
will depend upon the amount by which the market price of the Common Stock on
the date of exercise exceeds the exercise price. The individuals named below
will not be able to realize a gain from the stock options granted unless,
during the exercise period, the market price of the Common Stock is above the
exercise price of the options. SUCH AN INCREASE IN THE MARKET PRICE OF THE
COMMON STOCK WOULD ALSO BENEFIT THE OTHER STOCKHOLDERS OF THE CORPORATION.
<TABLE>
<CAPTION>
HYPOTHETICAL
% OF TOTAL PRESENT VALUE
NUMBER OF OPTION/SARS AT DATE
SECURITIES GRANTED TO EXERCISE OF GRANT
UNDERLYING EMPLOYEES OR BASE ($000S EXCEPT
OPTIONS/SARS IN FISCAL PRICE EXPIRATION PER SHARE
NAME GRANTED (#) YEAR 1994 ($/SH) DATE AMOUNTS) (5)
- ---- ------------ ----------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Stephen M. Wolf......... 0 N/A N/A N/A
Gerald Greenwald........ 200,000(1) 21.1 90.125 07/11/04 10,451
John A. Edwardson....... 130,000(2) 13.7 90.125 07/11/04 6,793
James M. Guyette........ 30,000(3) 3.1 90.125 07/11/04 1,568
Joseph R. O'Gorman...... 30,000(3) 3.1 90.125 07/11/04 1,568
Stuart I. Oran.......... 55,000(4) 5.8 90.125 07/11/04 2,874
Per Share Present Value. N/A N/A 90.125 N/A 52.25
</TABLE>
- --------
(1) Options for 50% of shares are exercisable at July 12, 1994, and the balance
become exercisable in five equal annual installments commencing on July 12,
1995.
(2) Options for 25% of shares are exercisable at July 12, 1994 and the balance
become exercisable in three equal annual installments commencing July 12,
1996.
(3) Options become exercisable in four equal annual installments commencing
July 12, 1995.
(4) Options for 17,500 shares are exercisable at July 12, 1994, for an
additional 10,000 are exercisable at January 15, 1995, and the balance
become exercisable in four equal annual installments commencing July 12,
1995.
(5) If hypothetical present values represent amounts actually realized upon the
exercise of the options, market price would have increased from $90.125 to
$142.38. The modified Black-Scholes model used to calculate the
hypothetical values at date of grant considers a number of factors to
estimate the option's present value, including the stock's historic
volatility calculated using the monthly closing price of Common Stock over
a three year period (1992 through year end 1994), the exercise period of
the option, interest rates and the stock's expected dividend yield. The
assumptions used in the valuation of the options were: stock price
volatility--.2748, exercise period--10 years, interest rate--7.5%, and
dividend yield--0.00%.
Because the stock options described above are not transferable, the Corporation
believes the grant date present values shown above may be overstated.
There is no assurance that the hypothetical present values of stock options
presented in the table above represent the actual values of such options, and
the hypothetical values shown should not be construed as predictions by the
Corporation as to the future value of the Common Stock.
19
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1)
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
ACQUIRED ON OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
EXERCISE VALUE ------------------------------------- --------------------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ --------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Wolf......... 62,500 5,143,594 112,500(2) 0 0 0
Gerald Greenwald........ 0 N/A 100,000 100,000 0 0
John A. Edwardson....... 0 N/A 32,500 97,500 0 0
Joseph R. O'Gorman...... 0 N/A 30,000 30,000 135,840 0
James M. Guyette........ 11,060 1,134,883 30,000 30,000 1,158,555 0
Stuart I. Oran.......... 0 N/A 17,500 37,500 0 0
</TABLE>
- --------
(1) Options granted prior to the Recapitalization ("Pre-Closing Options") for
one share of Old Common Stock became exercisable as the result of the
Recapitalization 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) These unexercised options expired January 11, 1995.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF PARTICIPATION
FINAL --------------------------------------------------------------
AVERAGE PAY 10 15 20 25 30 35 40
----------- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 32,000 $ 48,000 $ 64,000 $ 80,000 $ 96,000 $112,000 $128,000
300,000 48,000 72,000 96,000 120,000 144,000 168,000 192,000
400,000 64,000 96,000 128,000 160,000 192,000 224,000 256,000
500,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000
600,000 96,000 144,000 192,000 240,000 288,000 336,000 384,000
700,000 112,000 168,000 224,000 280,000 336,000 392,000 448,000
800,000 128,000 192,000 256,000 320,000 384,000 448,000 512,000
900,000 144,000 216,000 288,000 360,000 432,000 504,000 576,000
1,000,000 160,000 240,000 320,000 400,000 480,000 560,000 640,000
1,100,000 176,000 264,000 352,000 440,000 528,000 616,000 704,000
1,200,000 192,000 288,000 384,000 480,000 576,000 672,000 768,000
1,300,000 208,000 312,000 416,000 520,000 624,000 728,000 832,000
1,400,000 224,000 336,000 448,000 560,000 672,000 784,000 896,000
1,500,000 240,000 360,000 480,000 600,000 720,000 840,000 960,000
</TABLE>
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 the Recapitalization 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 bonuses paid to Messrs. Greenwald, Edwardson and
Oran do not qualify as pension earnings and will not be included in any pension
calculations. Under the qualified plan, credited years of participation with
the Corporation and United for persons named in the cash compensation table are
as follows: Mr. Greenwald--0 years; Mr. Edwardson--0 years; Mr. Oran--0 years;
Mr. Guyette--26 years and Mr. O'Gorman--22 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 Greenwald Agreement entitles Mr. Greenwald to an annual pension equal to
the greater of the pension that would accrue under the Corporation plans with
credit for 30 years of service or $500,000 per year. Such pension is payable at
any time elected by Mr. Greenwald following retirement or termination of
20
<PAGE>
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 Greenwald Agreement, a revocable trust has been funded to provide funding
for the additional pension obligation for Mr. Greenwald.
The Corporation has agreed to supplement Messrs. Edwardson's and Oran's
benefits under the qualified pension plans and United has agreed to supplement
Mr. O'Gorman's benefits under the qualified pension plan, in each case by
granting them credit for additional years of service--10 years for Mr.
Edwardson, 20 years for Mr. Oran, and 6 years for Mr. O'Gorman. In addition,
for Messrs. Edwardson and Oran, the Corporation has agreed to waive the service
requirement for benefit vesting under the qualified pension plan and to impose
no decrement to the pension benefit based on age.
UAL CORPORATION
RELATIVE MARKET PERFORMANCE
TOTAL RETURN 1990-1994
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
UAL Corp........ 100 64.31 85.11 73.65 85.26 73.59
S&P 500......... 100 96.89 126.42 136.05 149.76 151.74
D-J Airline
Group(1)....... 100 79.83 107.72 108.90 134.21 89.70
</TABLE>
Source: Compustat Database
- --------
(1) Alaska Air, AMR, Delta, Southwest, USAir.
21
<PAGE>
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
Pursuant to the Greenwald Agreement, Mr. Greenwald is paid a salary of
$725,000 per year, reduced by 8.25% (equivalent to the salaried and management
concession) 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
Corporation'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 Corporation's financial performance (including cumulative
profitability since the Recapitalization) in determining the extent of Mr.
Greenwald's bonus. Pursuant to the Greenwald Agreement, Mr. Greenwald received
upon commencement of employment one-time sign-on compensation in the form of
Common Stock, restricted stock, options and a success fee payable in cash as
described in the Summary Compensation Table and Option/SAR Grants in the Last
Fiscal Year table and the footnotes to such tables. All options and restricted
stock vest on any termination of Mr. Greenwald's employment other than
termination by the Corporation 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". Additional options and restricted stock could be issued to
the extent the average market price for the Common Stock during the one year
period following the Recapitalization closing caused the equity adjustment
mechanism to be triggered so that the ESOP interest in the Corporation's stock
increased above 55%.
If Mr. Greenwald's employment is terminated by the Corporation without
"cause" or by him for "good reason," his salary and guaranteed $725,000 bonus
will continue for 3 years (or, if greater, the remainder of the 5 year contract
term). Generally, the Corporation 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 Corporation has agreed that, in the event of a termination of employment
of Mr. Edwardson by the Corporation without cause or by Mr. Edwardson with good
reason, the Corporation 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 which would have otherwise vested within
twelve months after the date of termination.
Mr. O'Gorman is a party to a severance agreement (the "Severance Agreement")
with the Corporation that provides certain benefits if the executive's
employment with United is terminated (1) by the Corporation 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 within three years
following a "change in control" (as defined in the Severance Agreement). The
Recapitalization constituted a change in control under the Severance Agreement.
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 the date of the change in control
or as in effect on the date his or her employment terminates plus (b) the
average of the greater of the bonuses paid to the executive with respect to the
three years preceding the change in control or the bonuses paid to the
executive with respect to the three years preceding his or her termination of
employment, (2) continuation of travel privileges (and partial tax
reimbursement) on United for the executive and his or her 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 or her 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 or her
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
22
<PAGE>
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.
The Corporation gave the required notice during 1995 to cause the Severance
Agreement to expire at the earliest possible date.
The Corporation and Mr. Guyette also entered into a Severance Agreement
having the same terms as the Severance Agreement with Mr. O'Gorman. In 1995,
the Corporation and United entered into an agreement with Mr. Guyette (the
"Guyette Agreement") whereby Mr. Guyette is resigning from his executive
officer positions with the Corporation and United, and will be providing such
services as may be requested by United through April 30, 2000 (the "Retirement
Date"), at which time he will retire. Pursuant to the Guyette Agreement, Mr.
Guyette's Severance Agreement has been terminated. Under the Guyette Agreement,
Mr. Guyette will receive payments through the Retirement Date of $20,000 per
month ("Monthly Payments") and travel, automobile, medical and other welfare
benefits, as well as either a lump sum payment in respect of his split dollar
insurance policy of approximately $111,000 or an alternative treatment of the
policy offered by United with no greater cost to United. These payments in the
aggregate do not exceed the aggregate lump sum payments that would be made to
Mr. Guyette under his Severance Agreement if the rights under such agreement
were to be triggered and exercised. If Mr. Guyette does not become employed by,
or serve as a consultant to, another airline, directly or indirectly, or any
company affiliated with another airline, prior to the Retirement Date, he will
receive an additional $85,000 upon retirement. If he does become so employed or
so serve, he will receive a lump-sum payment equal to the balance of his
Monthly Payments through the Retirement Date, he will not be entitled to early
retirement and related benefits and all other benefits under the Guyette
Agreement will terminate.
RULE 405 DISCLOSURE
A Form 4 for July 1994 and a Form 3, with respect to one matter each, were
inadvertently filed late for Richard P. Cooley, a former director of the
Corporation (with respect to a transaction after he ceased to be a director)
and Harlow B. Osteboe (with respect to a deferred compensation plan interest),
respectively. The Corporation, and not the individuals, takes responsibility
for effecting these filings.
PROPOSAL NO. 2
APPROVAL OF UAL CORPORATION 1995 DIRECTORS PLAN
On December 15, 1994, the Board of Directors unanimously approved the UAL
Corporation 1995 Directors Plan for non-employee directors, which is intended
to consolidate and replace the existing director compensation arrangements. The
New Plan encourages stock ownership by directors by allowing them to elect to
receive Common Stock in lieu of cash fees, and also enables the directors to
defer their stock awards and cash or stock fees until after their retirement
from Board (unless an earlier date is elected by them). THE NEW PLAN DOES NOT
CHANGE THE FEE AMOUNTS OR STOCK AWARD LEVELS FOR DIRECTORS THAT ARE CURRENTLY
IN EFFECT.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE NEW PLAN.
COMPARISON TO EXISTING DIRECTOR COMPENSATION ARRANGEMENTS
As described under "Compensation of Directors," non-employee directors
currently receive an annual cash retainer fee plus an additional retainer for
committee chairmen, and fees for attending board and committee meetings
(collectively, "Fees"), as well as an annual award and optional deferral of 100
shares of Common Stock under the UAL Corporation 1992 Stock Plan for Outside
Directors. The New Plan continues to provide for annual grants of 100 shares of
Common Stock ("Stock Awards") to each Participant (as defined below) and would
replace the Prior Plan, under which 15,800 shares remain available for
issuance. Similarly, the New Plan does not affect the level of Fees payable to
directors, which have been reduced by 10% as
23
<PAGE>
re-affirmed by the Board following the Recapitalization. The New Plan also
gives Participants the opportunity to elect to receive all or part of their
Fees in the form of Common Stock. A Participant may elect to defer the receipt
of any cash or Common Stock (including Common Stock received pursuant to Stock
Awards) otherwise payable under the New Plan.
GENERAL
The purposes of the New Plan are (1) to encourage stock ownership by
directors to further align their interests with those of the stockholders of
the Corporation, while providing flexibility for directors who, due to their
individual circumstances, may be unable to take stock in lieu of cash
compensation, and (2) to provide certain deferral features for Fees and Stock
Awards. Participation in the New Plan would be limited to directors of the
Corporation who are not employees of the Corporation or any of its subsidiaries
("Participants").
A summary of the material provisions of the New Plan is set forth below and
is qualified in its entirety by reference to the New Plan as set forth in
Exhibit A hereto. There are currently nine directors eligible to be
Participants under the New Plan. As of March 22, 1995, the closing price of the
Common Stock on the New York Stock Exchange was $95.75 per share.
The New Plan is being submitted for stockholder approval in order to qualify
the New Plan for an exemption from the "short-swing trading" provisions of the
Exchange Act provided by Rule 16b-3 thereunder. The provisions of the New Plan
with respect to Stock Awards, elections to receive Common Stock in lieu of
Fees, and the ability to defer receipt of Common Stock will be effective on
July 3, 1995 (the "Effective Date") if approved by the stockholders of the
Corporation. If stockholder approval of the New Plan is not obtained, the New
Plan will be restated to delete all references to those provisions and will
continue in effect only with respect to the deferral of cash Fees, and the
Prior Plan will continue in effect. If the New Plan is not approved by
stockholders, the directors will not have the ability to receive stock in lieu
of Fees or to defer receipt of such stock Fees.
ADMINISTRATION
The Executive Committee of the Board of Directors administers the New Plan
and has the sole and complete authority to interpret the New Plan, to adopt,
amend and rescind administrative guidelines, rules and regulations relating to
the New Plan, to correct any defect or omission and to reconcile any
inconsistency in the New Plan or in any payment made thereunder, and to make
all other determinations and to take all other actions necessary or advisable
for the implementation and administration of the New Plan, to the extent
consistent with the exempt status of the New Plan under Rule 16b-3.
STOCK AWARDS
The New Plan provides for the award to each Participant on the first business
day of January in each year commencing in 1996 of 100 shares of Common Stock.
THIS IS IDENTICAL TO, AND WOULD REPLACE, THE CURRENT STOCK AWARD UNDER THE
PRIOR PLAN. The aggregate number of shares of Common Stock available for Stock
Awards pursuant to the New Plan is 20,000. Stock elections in lieu of Fees (see
below) are not included in this total. The shares of Common Stock that will be
granted pursuant to Stock Awards will be treasury shares. In the event of any
merger, consolidation, reorganization, recapitalization, spinoff, stock split,
reverse stock split, rights offering, exchange or other change in the corporate
structure or capitalization affecting the Common Stock, the Executive Committee
will make appropriate adjustments to the Stock Awards and to the aggregate
number of shares available for Stock Awards under the New Plan.
STOCK ELECTION IN LIEU OF FEES
A feature of the New Plan not available under the Prior Plan is the ability
of a Participant to elect to receive shares of Common Stock in lieu of all or
any portion of the Fees otherwise payable to the Participant. This election
must be made at least six months prior to any date following the Effective Date
on which such
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Fees would otherwise be payable (or prior to January 1, 1995 with respect to
amounts payable during 1995 prior to the Effective Date and deferred pursuant
to a deferral election). Once effective, the election will continue in effect
until it is revised or revoked. No such revision or revocation will be
effective prior to six months from the date it is made.
The number of shares of Common Stock that a Participant will receive by
reason of an election to have all or part of the Participant's Fees paid in
Common Stock is determined by dividing the amount of such Fees by the Fair
Market Value (as defined in the New Plan) of a share of Common Stock as of the
date on which such Fees would otherwise have been paid to the Participant. The
shares of Common Stock that may be awarded under the New Plan pursuant to a
stock election will be treasury shares.
NEW PLAN BENEFITS
The following table indicates the number of shares of Common Stock and the
dollar value thereof that could be received under the New Plan during 1995 had
it been in effect since the beginning of the year:
<TABLE>
<CAPTION>
DOLLAR NUMBER
NAME AND POSITION VALUE ($) OF SHARES
----------------- --------- ---------
<S> <C> <C>
Non-Executive Director Group:
Stock Awards (February 1, 1995 grant)................ 86,625 900
Stock Elections in Lieu of Fees (1).................. 323,100 3,357
------- -----
Total (9 persons).................................. 409,725 4,257
======= =====
</TABLE>
- --------
(1) Assumes that all eligible Participants had elected to receive all of their
Fees in Common Stock. These amounts are based on Board and committee
meetings held to date and scheduled for the remainder of the year and on
the current level of Fees, and assume a share price for purposes of
converting future Fees of $96.25, the average of the high and low trading
prices of the Common Stock on the New York Stock Exchange on March 22,
1995.
DEFERRAL ELECTIONS
Each Participant may elect to defer receipt of all or any portion of his or
her Fees or Common Stock until a future date (the "Distribution Date")
specified by the Participant in the manner provided under the New Plan and have
such amounts credited to a bookkeeping account maintained by the Corporation
pending distribution. If no Distribution Date is specified by the Participant,
the Distribution Date will be the first business day in January of the year
following the date on which the Participant ceases to be a director of the
Corporation, although the Executive Committee in its sole discretion may
approve a change to the Distribution Date requested by a Participant other than
in accordance with the New Plan procedures.
Any deferred cash Fees will be credited quarterly with interest computed at
the prime rate as reported by The Wall Street Journal. Any deferred Stock
Awards or Common Stock elected in lieu of Fees will be credited to the
Participant's account as "Stock Units." As of the record date for any dividend
paid on Common Stock, the participant will be credited with additional Stock
Units equal to the amount of dividends that would have been payable on the
shares of Common Stock represented by the Stock Units in the Participant's
account divided by the Fair Market Value of a share of Common Stock on such
date. Similar adjustments will be made for other distributions and equitable
adjustments will be made in the event of any merger, consolidation,
reorganization, recapitalization, spinoff, stock split, reverse stock split,
rights offering, exchange or other change in the corporate structure or
capitalization of the Corporation affecting the Common Stock as the Executive
Committee shall determine.
Deferred cash Fees or Common Stock will be payable to the Participant in up
to 10 annual installments beginning on the Distribution Date. A Participant may
elect to receive payment of any deferred Fees or Common Stock in a lump sum or
in fewer than 10 installments in the manner provided under the New Plan,
although the Executive Committee in its sole discretion nonetheless may
distribute all deferred cash Fees and
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Common Stock to a Participant in a lump sum payment, and lump sum distributions
will be made in the event of the death of a Participant. The Executive
Committee in its sole discretion also may elect to distribute deferred cash
Fees and Common Stock to a Participant in installments if requested by such
Participant other than in accordance with the New Plan procedures. Similar
Stock Award deferral provisions are currently provided for under the Prior
Plan.
AMENDMENT AND TERMINATION
The New Plan may be amended or terminated at any time by the Board of
Directors of the Corporation, provided that no action to amend or terminate the
New Plan shall be taken by the Board, (i) without stockholder approval to the
extent such approval is required by law, agreement or the rules of any exchange
or automated quotation system on which the Common Stock is listed or quoted,
(ii) to materially alter or impair the rights of a Participant under the New
Plan without the consent of the Participant with respect to rights already
accrued, or (iii) that would disqualify the New Plan or any other plan of the
Corporation intended to be qualified under the exemption provided by Rule 16b-
3. The provisions relating to Stock Awards and the election to receive Common
Stock in lieu of Fees under the New Plan may not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code, ERISA or the rules thereunder.
FEDERAL TAX CONSEQUENCES
Unless a Participant elects to defer receipt of his or her Stock Award under
the New Plan for any year, the Participant will recognize ordinary income at
the time of the Stock Award, and the Corporation will be entitled to a
corresponding deduction, equal to the fair market value of the Common Stock
awarded.
Unless a Participant elects to defer receipt of Fees, including Fees that he
or she has elected to receive in shares of Common Stock, the Participant will
recognize ordinary income at the time such Fees are paid in an amount equal to
the cash paid or, if applicable, the fair market value of the Common Stock
issued to the Participant, and the Corporation will be entitled to a
corresponding deduction.
If a Participant elects to defer receipt of his or her Stock Award or Fees
(including those fees that the Participant has elected to receive in Common
Stock), the Participant will recognize income at the time such amounts are
actually paid in cash or distributed in the form of Common Stock, as
applicable, pursuant to the election and the Corporation's corresponding
deduction will be deferred until that time. The amount of income will be equal
to the cash paid or the fair market value of Common Stock issued, as
applicable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE NEW PLAN.
PROPOSAL NO. 3
APPROVAL OF CHARTER AMENDMENTS--CERTAIN DEFINITIONS
The Board of Directors unanimously approved the Charter Amendments relating
to certain definitions as of March 9, 1995, which make technical corrections to
and clarify ambiguities in the method for determining the duration of the
Corporation's special corporate governance provisions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE DEFINITIONAL CHARTER AMENDMENTS.
A summary of the material provisions of the Definitional Charter Amendments
is set forth below and is qualified in its entirety by reference to clauses
(A), (B) and (C) of Section FIRST of the Proposed Charter Amendments included
in Exhibit B hereto.
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Under the Charter (Article FIFTH, Section 1.72), on the date (the
"Termination Date") on which (a) the Common Equity (defined below) held in the
ESOPs and other employee trusts or pension, retirement or other employee
benefit plans (including 401(k) plans, employee stock purchase plans, and the
Pilot's Directed Account Retirement Income Plan) sponsored by the Corporation
or any of its Subsidiaries (as defined) plus (b) the number of Available
Unissued ESOP Shares (defined, generally, as shares of Common Stock that would
be issuable under shares of preferred stock committed to be issued to the ESOPs
over the ESOP investment period) (collectively, "Employee Benefit Plan Shares")
is less than 20% of (x) the total Common Equity of the Corporation plus (y) the
number of Available Unissued ESOP Shares, many of the special corporate
governance provisions applicable to the Corporation will expire (absent an
Uninstructed Trustee Action, as defined in the Charter). These special
corporate governance provisions were established in the Recapitalization and
consist of a variety of provisions not customarily included in the certificates
of incorporation or by-laws of Delaware corporations, including with respect to
director and stockholder voting on specified corporate actions; qualification,
voting and classification requirements applicable to Public Directors and
Independent Directors; Board committees; quorum requirements and appointment
and removal of officers. Upon the Termination Date, the Corporation will file a
restated certificate of incorporation eliminating these special corporate
governances (which by their terms are in effect only until the Termination
Date) and providing for more customary corporate governance provisions. "Common
Equity" (Article FIFTH, Section 1.26) generally includes those shares of Common
Stock issued in exchange for Old Common Stock outstanding at the time of the
Recapitalization or issued or issuable after the Recapitalization pursuant to
certain options and convertible securities outstanding at the time of the
Recapitalization, as well as Permitted Bankruptcy Equity (as defined). Other
shares of Common Stock issued after the Recapitalization generally are excluded
from Common Equity ("Excluded Shares").
Under the Definitional Charter Amendments, the Common Equity definition has
been rewritten in order to make it easier to read and understand. In addition,
it differs from the definition of Common Equity in the current Charter in two
substantive respects. First, a mechanism has been added to provide for an
automatic adjustment in the number of shares included in Common Equity in the
event of a stock dividend, stock combination or stock split in respect of
Common Stock. Under the ESOP preferred stock anti-dilution provisions in the
Charter, a proportionate adjustment in the number of shares of Common Stock
issuable upon conversion of the ESOP preferred stock would result automatically
from such a transaction, but no other adjustment would be made under the Common
Equity definition to take into account the effect of the transaction on other
outstanding shares of Common Stock. Such a transaction could skew the
Termination Date calculation in the event of a stock split, dividend or
combination, even though the ratio of Employee Benefit Plan Shares to total
shares of Common Stock would remain unchanged. The current Charter language
could have the unintended consequence of discouraging the Corporation from
pursuing stock splits, dividends and combinations that would otherwise benefit
stockholders.
Under the Definitional Charter Amendments, all of the shares of Common Stock
included in the definition of Common Equity would be proportionately adjusted
as the result of the transaction so that the stock dividend, split, combination
or reverse split would have no effect whatsoever on the Termination Date
calculation. The Board believes that this result is appropriate in light of the
fact that such a transaction would have no effect on the economic position of
the holders of Employee Benefit Plan Shares, on the one hand, and other holders
of Common Stock, on the other hand.
For example, assume 100 shares of Common Equity are outstanding, of which 55
shares, or 55%, are held in the ESOPs, and no other Employee Benefit Plan
Shares are outstanding. In the event of a two-for-one stock split, the 55
shares held in the ESOPs would double to 110 shares because, pursuant to the
ESOP preferred stock anti-dilution provisions, the participants in the ESOPs
would receive two shares for every one share previously held. Similarly, the
additional 55 shares would be added to the 100 shares (because all ESOP shares
are Common Equity), but none of the other shares issued in the stock split
would be taken into account in Common Equity because these shares were not
issued or issuable until after the Recapitalization, and therefore are Excluded
Shares. Accordingly, the ratio of Employee Benefit Plan Shares to Common
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<PAGE>
Equity would have shifted as the result of the stock split from 55:100 (55%) to
110:155 (71%), even though the split did not effect any change in the status
quo prior to the split. Under the Definitional Charter Amendments, the 100
shares would double to 200 shares on account of the stock split, thus
preserving the same relationship between Employee Benefit Plan Shares and
Common Equity (i.e., 110:200, or 55%.)
Second, the current Charter does not provide any guidance for the treatment
of Common Equity in the event that the Corporation repurchases stock at a time
that Excluded Shares are outstanding. Under the Definitional Charter
Amendments, in such an event the Corporation would be required to make an
assessment as to whether or not the shares being reacquired are included in
Common Equity. If the Corporation conclusively establishes that the shares
being reacquired are included in Common Equity, such reacquisition will reduce
Common Equity by an amount of shares equal to the number of shares being
acquired. Conversely, if the Corporation conclusively establishes that such
shares are Excluded Shares, the reacquisition will have no effect on Common
Equity. If the Corporation cannot conclusively establish whether or not such
shares are included in Common Equity, then the shares reacquired will be
apportioned between Common Equity and Excluded Shares, and the number of shares
included in Common Equity will be reduced as a result of the reacquisition by
an amount determined by multiplying the number of shares so reacquired by a
fraction, the numerator of which is the number of shares of outstanding Common
Stock included in Common Equity immediately prior to the reacquisition and the
denominator of which is the aggregate number of shares of Common Stock
outstanding immediately prior to the reacquisition. As of March 22, 1995,
113,257 Excluded Shares were outstanding and the Corporation can conclusively
establish the ownership of 112,257 of such Excluded Shares.
The Definitional Charter Amendments also clarify the "Termination Date"
definition. In connection with the establishment of the ESOP, the Corporation,
ALPA and the IAM agreed that employees should have the ability to delay the
occurrence of the Termination Date by purchasing Common Stock through various
pension, retirement and employee benefit plans sponsored by the Corporation or
its Subsidiaries (as defined) in addition to the ESOP (collectively, the
"Plans"). This agreement is reflected in the Charter by the manner in which
Employee Benefit Plan Shares are included in the Termination Date calculation.
Under the Charter as currently in effect, only Common Equity, and not Excluded
Shares, are counted among Employee Benefit Plan Shares. However, shares of
Common Stock traded in the open market are fungible, and once a share of Common
Stock is sold in an open market transaction it becomes impractical, if not
impossible, for the Corporation and the employee to determine whether a
particular share acquired is an "Excluded Share" or "Common Equity."
Furthermore, the Corporation does not believe that such a distinction is
appropriate in light of the purpose of the provision, nor was it intended under
the original Charter.
The Definitional Charter Amendments would treat as Employee Benefit Plan
Shares all Common Stock held in the Plans that was acquired in open market
purchases or in private transactions with parties other than the Corporation,
without regard to whether the Common Stock is "Common Equity." Absent this
change, the Corporation does not believe it could calculate the Termination
Date in a reliable manner. The Corporation does not expect this change to cause
any material delay in the occurrence of the Termination Date.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
DEFINITIONAL CHARTER AMENDMENTS.
PROPOSAL NO. 4
APPROVAL OF CHARTER AMENDMENTS--BOARD COMMITTEE MATTERS
The Board of Directors unanimously approved the Charter Amendments relating
to Board Committee matters as of March 9, 1995, which provide certain
flexibility to the Board in administering its Committee structure.
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<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE BOARD COMMITTEE CHARTER AMENDMENTS.
A summary of the material provisions of the Board Committee Charter
Amendments is set forth below and is qualified in its entirety by reference to
clauses (D) through (J) of Section FIRST of the Proposed Charter Amendments
included in Exhibit B hereto.
The Charter contains a number of limitations on the authority of the various
Board Committees, particularly those Committees that do not include either the
ALPA Director or the IAM Director (together, the "Union Directors" and, with
the Salaried/Management Employee Director, the "Employee Directors"). The Board
Committee Charter Amendments provide flexibility in certain areas in which the
Corporation believes flexibility is warranted and the balancing of interests
under the Charter's corporate governance provisions will not be disrupted.
Audit Committee. The amendments make clear that the Audit Committee has
authority to review cash management, risk management, investment management and
foreign exchange management policies of the Corporation. The current Charter
gives the Audit Committee ancillary authority which arguably may include
authority to review these policies. The Board Committee Charter Amendments
provide the Audit Committee with clear and express authority to perform these
functions. (Article FIFTH, Section 4.1.1)
Compensation Committee. The amendments clarify the allocation of
responsibility between the Compensation Committee and the Board with respect to
compensation and benefit matters, and vest the Committee with limited ancillary
authority not clearly present under the current Charter. Under the current
Charter, certain internally inconsistent provisions make it unclear how
authority is allocated between the Compensation Committee and the full Board.
Under the Board Committee Charter Amendments, the Board would be responsible
for general policy matters relative to compensation and benefit matters for the
officers of the Corporation, while the Committee would be responsible for
implementation of the policies and, within that framework, for decision-making
with respect to individual officer compensation and benefits. (Article FIFTH,
Section 4.1.3)
Compensation Administration Committee. The amendments clarify that the
Compensation Administration Committee is vested with all of the authority
necessary for the Corporation to take maximum advantage of the provisions of
Rule 16b-3 under the Exchange Act and Section 162(m) of the Internal Revenue
Code. The current Charter refers to Committee authority over stock option plans
and executive compensation programs, while the Board Committee Charter
Amendments add references to restricted stock and equity incentive plans to
make clear the full scope of the Committee's authority. (Article FIFTH, Section
4.1.4)
Labor Committee. Under the current Charter, every amendment or modification
to any Collective Bargaining Agreement (as defined) for employees of the
Corporation or its Subsidiaries, regardless of significance or effect on the
Corporation, must be approved by the Labor Committee (a committee that contains
no Employee Directors). Neither the Board nor the Committee has any authority
to delegate any of this responsibility to management. The Board Committee
Charter Amendments vest the Board with authority to delegate to management
authority to approve immaterial modifications or amendments to Collective
Bargaining Agreements, as well as immaterial Collective Bargaining Agreements
with labor unions representing 100 or fewer U.S. employees. The delegating
resolutions would require the approval of the Labor Committee, 80% of the
Board, all Outside Public Directors, and at least one Union Director.
"Immateriality" under these circumstances would be determined by Board
resolution, and the resolutions must specify the types of modifications,
amendments and agreements for which authority is delegated. (Article FIFTH,
Section 4.1.7)
Committees Generally. The Compensation Committee, the Executive Committee and
Other Board Committees (as defined) have special quorum requirements designed
to assure the presence of Independent
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<PAGE>
Directors and Employee Directors at each Committee meeting. The Board Committee
Charter Amendments would permit these quorum requirements to be waived by
unanimous vote of the Employee Directors serving on the Committee. The Board
Committee Charter Amendments would also permit the Board to delegate additional
duties to the Compensation or CAP Committee, by the same vote that is required
in order to create a new Board Committee. (Article FIFTH, Sections 4.1.3,
4.1.5, 4.1.10 and 4.1.12)
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
BOARD COMMITTEE CHARTER AMENDMENTS.
PROPOSAL NO. 5
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 Corporation for the year 1995. 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
CORPORATION FOR 1995.
STOCKHOLDER PROPOSAL
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave., N.W.,
Suite 215, Washington, D.C. 20037, owner of 26 shares of Common Stock of the
Corporation, has given notice that she will introduce the following resolution
at the Meeting:
RESOLVED, "That the stockholders of United Airlines Corp., assembled in
Annual Meeting in person and by proxy, hereby recommend that the
Corporation affirm its political non-partisanship. To this end the
following practices are to be avoided:
"(a) The handing of contribution cards of a single political party to
an employee by a supervisor.
"(b) Requesting an employee to send a political contribution to an
individual in the Corporation for a subsequent delivery as part of a
group of contributions to a political party or fund raising committee.
"(c) Requesting an employee to issue personal checks blank as to
payee for subsequent forwarding to a political party, committee or
candidate.
"(d) Using supervisory meetings to announce that contribution cards
of one party are available and that anyone desiring cards of a
different party will be supplied one on request to his supervisor.
"(e) Placing a preponderance of contribution cards of one party at
mail station locations.
REASONS, "The Corporation must deal with a great number of governmental
units, commissions and agencies. It should maintain scrupulous political
neutrality to avoid embarrassing entanglements detrimental to its business.
Above all, it must avoid the appearance of coercion in encouraging its
employees to make political contributions against their personal
inclinations. The Troy (Ohio) News has condemned partisan solicitation for
political purposes by managers in a local company (not United Airlines)."
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<PAGE>
"If you AGREE, please mark your proxy FOR this resolution.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THIS PROPOSAL.
The Corporation encourages its employees to participate as individuals in the
political process but makes no demands on them in political matters. While
various groups of employees of the Corporation and subsidiaries maintain
political action committees, the Corporation does not engage in any of the
practices cited by Mrs. Davis in her proposed resolutions. Further the
Corporation's policies require it to comply scrupulously with all applicable
laws regarding political contributions and donations and to refrain from
providing any corporate support for any political activity, except when and
where it is legally permissible to do so.
Since the Corporation does not engage in any of such practices, the proposed
resolution serves only as an ethics affirmation. We believe such an affirmation
may be confusing and represents an inappropriate subject matter for a
resolution.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE STOCKHOLDER
PROPOSAL.
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 Annual Meeting of
Stockholders to be held in 1996 must be received by December 18, 1995, by the
Secretary of the Corporation, 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.
GENERAL
A copy of the Corporation's Annual Report for the year ended December 31,
1994 has been mailed, under separate cover, 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
Corporation.
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 Corporation. In addition to solicitation by use
of the mails, proxies may be solicited by directors, officers and employees of
the Corporation 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 Corporation may reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith. To assure
the presence in person or by proxy of the largest number of stockholders
possible, the Corporation has engaged Georgeson & Co. to solicit proxies on
behalf of the Corporation. The Corporation 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.
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In order to assure the presence of the necessary quorum at the Meeting,
please sign and mail the enclosed proxy promptly in the envelope provided. No
postage is required if mailed within the United States. The signing of a proxy
will not prevent your attending the Meeting and voting your shares of Common
Stock in person, should you so desire.
IF YOU EXPECT TO ATTEND THE MEETING, PLEASE DETACH THE ADMISSION CARD
ATTACHED TO THE PROXY CARD BEFORE MAILING AND BRING THE ADMISSION CARD TO THE
MEETING.
By order of the Board of Directors,
Francesca M. Maher
Vice President--Law
and Corporate Secretary
April 17, 1995
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.
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EXHIBIT A
UAL CORPORATION 1995 DIRECTORS PLAN
SECTION 1
GENERAL
1.1. Purpose, History and Effective Date. UAL Corporation (the "Company")
maintains the UAL Corporation 1992 Stock Plan for Outside Directors (the "Prior
Plan") which provides certain benefits to non-employee directors of the
Company. In order to (i) encourage stock ownership by directors to further
align their interests with those of the stockholders of the Company, while at
the same time providing flexibility for directors who, due to their individual
circumstances, may be unable to take stock in lieu of cash compensation, and
(ii) add certain deferral features for fees and stock awards, the Company has
authorized a variety of compensation alternatives, including those set forth in
the Prior Plan, that will be available to Outside Directors under a new plan to
be known as the UAL Corporation 1995 Directors Plan (the "Plan"). The Plan
shall be effective immediately upon approval by the Board of Directors, except
that subsections 1.4, 1.5, 1.7, 1.8 and 4.2 and Sections 2 and 3 and all
references to Stock Awards, Stock Deferrals and the Company Stock Subaccount
shall be effective on July 3, 1995, but only if the Plan is approved by
shareholders of the Company (the "Effective Date") prior thereto. Upon the
Effective Date the Prior Plan shall be terminated (with prior stock deferrals
thereunder being treated as deferrals under subsection 4.2 of the Plan);
provided, however, that if shareholder approval is not obtained at the next
annual meeting of shareholders of the Company, subsections 1.4, 1.5, 1.7, 1.8
and 4.2 and Sections 2 and 3 and all references to Stock Awards, Stock
Deferrals and the Company Stock Subaccount shall be deleted and the Plan shall
be restated accordingly, and the Prior Plan will continue in effect in
accordance with its terms.
1.2. Participation. Only Outside Directors shall be eligible to participate
in the Plan. As of any applicable date, an "Outside Director" is a person who
is serving as a director of the Company who is not an employee of the Company
or any subsidiary of the Company as of that date.
1.3. Administration. The authority to manage and control the operation and
administration of the Plan shall be vested in the Executive Committee of the
Board (the "Committee"). Subject to the limitations of the Plan, the Committee
shall have the sole and complete authority to:
(a) interpret the Plan and to adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan;
(b) correct any defect or omission and to reconcile any inconsistency in
the Plan or in any payment made hereunder; and
(c) to make all other determinations and to take all other actions
necessary or advisable for the implementation and administration of the
Plan.
The Committee's determinations on matters within its control shall be
conclusive and binding on the Company and all other persons. Notwithstanding
the foregoing, no member of the Committee shall act with respect to the
administration of the Plan except to the extent consistent with the exempt
status of the Plan under Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended ("Rule 16b-3").
1.4. Shares Subject to the Plan. Shares of stock which may be distributed
under the plan are shares of common stock of the Company, par value $.01 per
share ("Stock"). The shares of Stock which shall be available for distribution
pursuant to the Plan shall be treasury shares (including, in the discretion of
the Company, shares purchased in the open market). The number of shares of
Stock to be distributed pursuant to Outside Directors' elections to receive
shares of Stock in lieu of Eligible Cash Fees (as described in subsection 3.1)
shall be determined in accordance with Section 3. The number of shares of Stock
to be distributed pursuant to Outside Directors' Deferral Elections (as
described in Section 4) shall be determined
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in accordance with Section 4. The number of shares of Stock which are available
for awards under Section 2 shall be 20,000; provided, however, that:
(a) in the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock split, reverse stock split, rights
offering, exchange or other change in the corporate structure or
capitalization of the Company affecting the Stock, the number and kind of
shares of Stock available for awards under Section 2 and the annual awards
provided thereunder shall be equitably adjusted in such manner as the
Committee shall determine in its sole judgment;
(b) in determining what adjustment, if any, is appropriate pursuant to
paragraph (a), the Committee may rely on the advice of such experts as they
deem appropriate, including counsel, investment bankers and the accountants
of the Company; and
(c) no fractional shares shall be granted or authorized pursuant to any
adjustment pursuant to paragraph (a), although cash payments may be
authorized in lieu of fractional shares that may otherwise result from such
an equitable adjustment.
1.5. Compliance with Applicable Laws. Notwithstanding any other provision of
the Plan, the Company shall have no obligation to deliver any shares of Stock
under the Plan unless such delivery would comply with all applicable laws and
the applicable requirements of any securities exchange or similar entity. Prior
to the delivery of any shares of Stock under the Plan, the Company may require
a written statement that the recipient is acquiring the shares for investment
and not for the purpose or with the intention of distributing the shares. If
the redistribution of shares is restricted pursuant to this subsection 1.5, the
certificates representing such shares may bear a legend referring to such
restrictions.
1.6. Director and Shareholder Status. The Plan will not give any person the
right to continue as a director of the Company, or any right or claim to any
benefits under the Plan unless such right or claim has specifically accrued
under the terms of the Plan. Participation in the Plan shall not create any
rights in a director (or any other person) as a shareholder of the Company
until shares of Stock are registered in the name of the director (or such other
person).
1.7. Definition of Fair Market Value. The "Fair Market Value" of a share of
Stock on any date shall be equal to the average of the high and low prices of a
share of Stock reported for New York Stock Exchange Composite Transactions for
the applicable date or, if there are no such reported trades for such date, for
the last previous date for which trades were reported.
1.8. Source of Payments. Except for Stock actually delivered pursuant to the
Plan, the Plan constitutes only an unfunded, unsecured promise of the Company
to make payments or awards to directors (or other persons) or deliver Stock in
the future in accordance with the terms of the Plan.
1.9. Nonassignment. Neither a director's nor any other person's rights to
payments or awards under the Plan are subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the director.
1.10. Elections. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company, at
the Company's principal executive offices. The Committee may, by advance
written notice to affected persons, revise such notice procedure from time to
time. Any notice required under the Plan may be waived by the person entitled
thereto.
SECTION 2
FORMULA STOCK AWARDS
As of the first business day of January each year after the Effective Date,
each Outside Director shall be awarded 100 shares of Stock (the "Stock Award").
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SECTION 3
ELECTIONS TO RECEIVE STOCK IN
LIEU OF ELIGIBLE CASH FEES
3.1. Election to Receive Stock. Subject to the terms and conditions of the
Plan, each Outside Director may elect to forego receipt of all or any portion
of the Eligible Cash Fees (as defined below) payable to him or her during 1995
following the Effective Date (or payable during 1995 prior to the Effective
Date and subject to a Deferral Election made in accordance with Section 4) and
during any calendar year thereafter and instead to receive whole shares of
Stock of equivalent value to the Eligible Cash Fees so foregone (determined in
accordance with subsection 3.3). An election under this subsection 3.1 to have
Eligible Cash Fees paid in shares of Stock shall be valid only if it is in
writing, signed by the Outside Director, and filed with the Committee in
accordance with uniform and nondiscriminatory rules adopted by the Committee
but, in any event:
(a) at least six months prior to any date in 1995 following the Effective
Date or subsequent years on which such Eligible Cash Fees would otherwise
be payable; and
(b) prior to January 1, 1995 with respect to any amounts payable during
1995 prior to the Effective Date and deferred pursuant to a Deferral
Election made in accordance with Section 4.
For purposes of the Plan, the term "Eligible Cash Fees" means the retainer
fees, meeting fees, committee fees and committee chair fees that would
otherwise be payable to the Outside Director by the Company in cash as
established, from time to time, by the Board or any committee thereof.
3.2. Revocation of Election to Receive Stock. Once effective, an election
pursuant to subsection 3.1 to receive Stock shall remain in effect for
successive calendar years until it is revised or revoked. Any such revision or
revocation shall be in writing, signed by the Outside Director and filed with
the Committee and shall be effective for the calendar year next following the
date on which it is received by the Committee, or such later date specified in
such notice; provided, however, that no revision or revocation shall be
effective prior to six months from the date it is made.
3.3. Equivalent Amount of Stock. The number of whole shares of Stock to be
distributed to any Outside Director, or credited to his or her Deferred
Compensation Account (as defined in subsection 4.3) pursuant to a Deferral
Election made in accordance with Section 4, by reason of his or her election
pursuant to subsection 3.1 to receive Stock in lieu of Eligible Cash Fees shall
be equal to:
(a) the amount of the Eligible Cash Fees which the Outside Director has
elected to have paid to him or her in shares of Stock or credited to his or
her Company Stock Subaccount (as defined in subsection 4.3);
DIVIDED BY
(b) the Fair Market Value of a share of Stock as of the date on which
such Eligible Cash Fees would otherwise have been payable to the Outside
Director.
The Fair Market Value of any fractional share shall be paid to the Outside
Director in cash; provided, however, that fractional shares subject to a
Deferral Election filed in accordance with subsection 4.1 shall be deferred and
credited to the Company Stock Subaccount.
SECTION 4
DEFERRAL ELECTIONS
4.1. Deferrals of Fees. Subject to the terms and conditions of the Plan, each
Outside Director, by filing a written "Deferral Election" with the Committee in
accordance with uniform and nondiscriminatory rules adopted by the Committee,
may elect to defer the receipt of all or any portion of the Eligible Cash Fees
otherwise payable to him or her for a calendar year commencing on or after
January 1, 1995 (including any
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Eligible Cash Fees that he or she has elected to receive in Stock pursuant to
Section 3) until a future date (the "Distribution Date") specified by the
Outside Director in his or her Deferral Election as of which payment of his or
her Deferred Compensation Account attributable to amounts deferred pursuant to
his or her Deferral Election shall commence in accordance with subsection 4.4;
provided, however, that in no event shall the Distribution Date elected
pursuant to this subsection 4.1 be different from the Distribution Date, if
any, elected by the Outside Director pursuant to subsection 4.2. If no
Distribution Date is specified in an Outside Director's Deferral Election or
has otherwise been elected by the Outside Director pursuant to subsection 4.2,
the Distribution Date shall be deemed to be the first business day in January
of the year following the date on which the Outside Director ceases to be a
director of the Company for any reason. An Outside Director's Deferral Election
shall be effective with respect to Eligible Cash Fees (including any Eligible
Cash Fees that he or she has elected to receive in Stock pursuant to Section 3)
otherwise payable to him or her for services rendered after the last day of the
calendar year in which such election is filed with the Committee; provided,
however, that:
(a) a Deferral Election which is filed within 30 days of the date on
which a director first becomes an Outside Director shall be effective with
respect to all Eligible Cash Fees (including any Eligible Cash Fees that he
or she has elected to receive in Stock pursuant to Section 3) otherwise
payable to him or her after the date of the Deferral Election; and
(b) by notice filed with the Committee in accordance with uniform and
nondiscriminatory rules established by it, a director may terminate or
modify any Deferral Election as to Eligible Cash Fees payable for services
rendered after the last day of the calendar year in which such notice is
filed with the Committee; provided, however, that no modification may be
made to the Distribution Date unless the Outside Director shall file such
notice with the Committee at least one year prior thereto.
Notwithstanding the provisions of paragraph (b) next above, the Committee may,
in its sole discretion, after considering all of the pertinent facts and
circumstances, approve a change to the Distribution Date which is requested by
an Outside Director less than one year prior thereto.
4.2. Deferral of Stock Awards. Subject to the terms and conditions of the
Plan, each Outside Director, by filing a written "Stock Deferral Election" with
the Committee in accordance with uniform and nondiscriminatory rules adopted by
the Committee, may elect to defer the receipt of all or any portion of the
Stock Award which is otherwise to be made to him or her for 1996 and subsequent
years until the Distribution Date; provided, however, that if no Distribution
Date has been elected (or is deemed to have been elected) pursuant to
subsection 4.1, the "Distribution Date" shall be the date specified by the
Outside Director in his or her Stock Deferral Election or, if no such date is
specified, the first business day in January of the year following the date on
which the Outside Director ceases to be a director of the Company for any
reason. An Outside Director's Stock Deferral Election shall be effective with
respect to Stock Awards otherwise to be made to him or her pursuant to Section
2 after the last day of the calendar year in which such election is filed with
the Committee; provided, however, that by notice filed with the Committee in
accordance with uniform and nondiscriminatory rules established by it, an
Outside Director may terminate or modify any Stock Deferral Election as to
Stock Awards to be made after the last day of the calendar year in which such
notice is filed with the Committee. No modification may be made to the
Distribution Date unless the Outside Director shall file such notice with the
Committee at least one year prior thereto. Notwithstanding the provisions of
this section, the Committee may, in its sole discretion, after considering all
of the pertinent facts and circumstances, approve a change to the Distribution
Date which is requested by an Outside Director less than one year prior
thereto.
4.3. Crediting and Adjustment of Deferred Amounts. The amount of any Eligible
Cash Fees (including any Eligible Cash Fees that he or she has elected to
receive in Stock pursuant to Section 3) deferred pursuant to subsection 4.1
("Deferred Compensation") and the amount of any Stock Award deferred by an
Outside Director pursuant to a Stock Deferral Election ("Stock Deferral") shall
be credited to a bookkeeping account maintained by the Company in the name of
the Outside Director (the "Deferred Compensation Account"), which account shall
consist of two subaccounts, one known as the "Cash Subaccount" and the other as
the
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"Company Stock Subaccount." Any Stock Deferrals and Eligible Cash Fees that the
Outside Director has elected to receive in Stock pursuant to Section 3 and
which he or she has also elected to defer pursuant to subsection 4.1 shall be
credited to his or her Company Stock Subaccount. Any other Deferred
Compensation shall be credited to his or her Cash Subaccount. An Outside
Director's Deferred Compensation Account shall be adjusted as follows:
(a) As of the first day of February, May, August and November, and as of
July 3, 1995 (which dates are referred to herein as "Accounting Dates"),
the Outside Director's Cash Subaccount shall be adjusted as follows:
(i) first, the amount of any distributions made since the last
preceding Accounting Date and attributable to the Cash Subaccount shall
be charged to the Cash Subaccount;
(ii) next, the balance of the Cash Subaccount after adjustment in
accordance with subparagraph (i) above shall be credited with interest
for the period since the last preceding Accounting Date computed at the
prime rate as reported by The Wall Street Journal for the current
Accounting Date, or if such date is not a business day, for the next
preceding business day;
(iii) next, on the Accounting Date occurring on July 3, 1995, the
balance in the Cash Subaccount shall be charged with a distribution
equal to that portion of the balance in the Cash Subaccount which is
attributable to Eligible Cash Fees payable prior to the Effective Date
which the Outside Director has elected to receive in Stock pursuant to
Section 3 and which were credited to the Cash Subaccount pursuant to
the Outside Director's Deferral Election (as adjusted in accordance
with the terms of the Plan through July 3, 1995); and
(iv) finally, after adjustment in accordance with the foregoing
provisions of this paragraph (a), the Cash Subaccount shall be credited
with the portion of the Deferred Compensation otherwise payable to the
Outside Director since the last preceding Accounting Date or, in the
case of the Accounting Date occurring on February 1, 1995, subsequent
to January 1, 1995, which is to be credited to the Cash Subaccount.
(b) The Outside Director's Company Stock Subaccount shall be adjusted as
follows:
(i) as of the Effective Date, the Company Stock Subaccount shall be
credited with that number of stock units ("Stock Units") which is equal
to the amount charged to the Cash Subaccount as of that date pursuant
to subparagraph (a) (iii) next above, divided by the Fair Market Value
of a share of Stock as of the Effective Date;
(ii) as of any date on or after the Effective Date on which Eligible
Cash Fees would have been payable to the Outside Director in Stock but
for his or her Deferral Election, the Company Stock Subaccount shall be
credited with a number of Stock Units equal to the number of shares of
Stock (including any fractional shares) to which he or she would have
been entitled pursuant to Section 3;
(iii) as of the date on which a Stock Award would be made to the
Outside Director pursuant to Section 2 but for his or her Stock
Deferral Election, the Company Stock Subaccount shall be credited with
a number of Stock Units equal to the number of shares of Stock that
would have been awarded to the Outside Director as of such date but for
his or her Stock Deferral Election;
(iv) as of the date on which shares of Stock are distributed to the
Outside Director in accordance with subsection 4.4 below, the Company
Stock Subaccount shall be charged with an equal number of Stock Units;
and
(v) as of the record date for any dividend paid on Stock, the Company
Stock Subaccount shall be credited with that number of additional Stock
Units which is equal to the number obtained by multiplying the number
of Stock Units then credited to the Company Stock Subaccount by the
amount of the cash dividend or the fair market value (as determined by
the Board of Directors) of any dividend in kind payable on a share of
Stock, and dividing that product by the then Fair Market Value of a
share of Stock.
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In the event of any merger, consolidation, reorganization, recapitalization,
spinoff, stock split, reverse stock split, rights offering, exchange or other
change in the corporate structure or capitalization of the Company affecting
the Stock, each Outside Director's Company Stock Subaccount shall be equitably
adjusted in such manner as the Committee shall determine in its sole judgment.
4.4. Payment of Deferred Compensation Account. Except as otherwise provided
in this subsection 4.4 or subsection 4.5, the balances credited to the Cash
Subaccount and Company Stock Subaccount of an Outside Director's Deferred
Compensation Account shall each be payable to the Outside Director in 10 annual
installments commencing as of the Distribution Date and continuing on each
annual anniversary thereof. Notwithstanding the foregoing, an Outside Director
may elect, by filing a notice with the Committee at least one year prior to the
Distribution Date, to change the number of payments to a single payment or to
any number of annual payments not in excess of ten. Each such payment shall
include a cash portion, if applicable, and a Stock portion, if applicable, as
follows:
(a) The cash portion to be paid as of the Distribution Date or any
anniversary thereof and charged to the Cash Subaccount shall be equal to
the balance of the Cash Subaccount multiplied by a fraction, the numerator
of which is one and the denominator of which is the number of remaining
payments to be made, including such payment.
(b) The Stock portion to be paid as of the Distribution Date or any
anniversary thereof and charged to the Company Stock Subaccount shall be
distributed in whole shares of Stock, the number of shares of which shall
be determined by rounding to the next lower integer the product obtained by
multiplying the number of Stock Units then credited to the Outside
Director's Company Stock Subaccount by a fraction, the numerator of which
is one and the denominator of which is the number of remaining payments to
be made, including such payment. The Fair Market Value of any fractional
share of Stock remaining after all Stock distributions have been made to
the Outside Director pursuant to this paragraph (b) shall be paid to the
Outside Director in cash.
Notwithstanding the foregoing, the Committee, in its sole discretion, may
distribute all balances in any Deferred Compensation Account to an Outside
Director (or former Outside Director) in a lump sum as of any date.
Notwithstanding the foregoing, the Committee, in its sole discretion, may
distribute all of an Outside Director's Share Unit Account to such Outside
Director (or former Outside Director) in a lump sum as of any date or, if
requested by an Outside Director who has elected to receive a lump sum, the
Committee, in its sole discretion, may distribute all balances in any Deferred
Compensation Account to an Outside Director (or former Outside Director) in
installments satisfying this Section 4.4 as requested by the Outside Director
(or former Outside Director).
4.5. Payments in the Event of Death. If an Outside Director dies before
payment of his or her Deferred Compensation Account commences, all amounts then
credited to his or her Deferred Compensation Account shall be distributed to
his or her Beneficiary (as described below), as soon as practicable after his
or her death, in a lump sum. If an Outside Director dies after payment of his
or her Deferred Compensation Account has commenced but before the entire
balance of such account has been distributed, the remaining balance thereof
shall be distributed to his or her Beneficiary, as soon as practicable after
his or her death, in a lump sum. Any amounts in the Cash Subaccount shall be
distributed in cash and any amounts in the Stock Subaccount shall be
distributed in whole shares of Stock determined in accordance with paragraph
4.4(b), and the Fair Market Value of any fractional share of Stock shall be
distributed in cash. For purposes of the Plan, the Outside Director's
"Beneficiary" is the person or persons the Outside Director designates, which
designation shall be in writing, signed by the Outside Director and filed with
the Committee prior to the Outside Director's death. A Beneficiary designation
shall be effective when filed with the Committee in accordance with the
preceding sentence. If more than one Beneficiary has been designated, the
balance in the Outside Director's Deferred Compensation Account shall be
distributed to each such Beneficiary per capita (with cash distributed in lieu
of any fractional share of Stock). In the absence of a Beneficiary designation
or if no Beneficiary survives the Outside Director, the Beneficiary shall be
the Outside Director's estate.
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SECTION 5
AMENDMENT AND TERMINATION
While the Company expects and intends to continue the Plan, the Board of
Directors of the Company reserves the right to, at any time and in any way,
amend, suspend or terminate the Plan; provided, however, that no amendment,
suspension or termination shall:
(a) be made without shareholder approval to the extent such approval is
required by law, agreement or the rules of any exchange or automated
quotation system upon which the Stock is listed or quoted;
(b) except as provided in subsection 4.4 (relating to lump sum payments
of amounts held in an Outside Director's Deferred Compensation Account) or
this Section 5, materially alter or impair the rights of an Outside
Director under the Plan without the consent of the Outside Director with
respect to rights already accrued hereunder;
(c) amend the provisions of Section 2 or 3 more frequently than once in
any six-month period except to comport with changes in the Internal Revenue
Code of 1986, as amended, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder; or
(d) make any change that would disqualify the Plan or any other plan of
the Company intended to be so qualified from the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, as amended.
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EXHIBIT B
PROPOSED CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
UAL CORPORATION
UAL CORPORATION, a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That as of March 9, 1995, the Board of Directors of the Corporation
adopted resolutions proposing and declaring advisable that the Restated
Certificate of Incorporation of this Corporation (the "Restated Certificate")
be amended as follows:
(A) that Article FIFTH, Subsection 1.26, of the Restated Certificate be
amended to be and read as follows:
1.26 "Common Equity" means, in the aggregate and without double-
counting:
(a) the Common Stock outstanding at the time in question that
satisfies any one or more of the following clauses (i) through (vi):
(i) that was issued upon conversion of ESOP Convertible
Preferred Stock or Voting Stock (other than Common Stock);
(ii) that was issued upon conversion of the Series A Preferred
Stock or any Pre-Closing Covered Convertible;
(iii) that was issued upon exercise of any Pre-Closing Covered
Option;
(iv) that constitutes Permitted Bankruptcy Equity or was
issued upon conversion, exercise or exchange of any Permitted
Bankruptcy Equity;
(v) that was outstanding immediately prior to the close of
business on the Measuring Date (as defined in the
Recapitalization Agreement), other than as a result of an
issuance initially approved after the Effective Time; or
(vi) that was issued in a transaction described in Part II,
Section 6.4(a) (i), (ii) or (iii), of Article FOURTH of this
Restated Certificate in respect of the number of shares of
Common Stock that at the time of such transaction were included
in the definition of Common Equity;
(b) the Common Stock issuable upon conversion of ESOP Convertible
Preferred Stock or Voting Stock (other than Common Stock)
outstanding at the time in question;
(c) the Common Stock issuable upon conversion of any Series A
Preferred Stock or Pre-Closing Covered Convertible outstanding at
the time in question;
(d) the Common Stock issuable upon conversion, exercise or
exchange of any Permitted Bankruptcy Equity outstanding at the time
in question; and
(e) the Common Stock issuable upon exercise of any Pre-Closing
Covered Option outstanding at the time in question.
For purposes of the foregoing, if the Corporation reacquires any shares of
outstanding Common Stock at a time that shares of Common Stock not included in
the definition of Common Equity are outstanding, the Corporation shall make an
assessment as to whether or not the shares so reacquired are included in the
definition of Common Equity. If the Corporation cannot conclusively establish
whether or not the shares so reacquired are included in the definition of
Common Equity, then the number of outstanding shares of Common Stock included
in the definition of Common Equity pursuant to clause (a) above shall be deemed
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reduced as a result of such reacquisition by the number determined by
multiplying the number of shares of Common Stock so reacquired by a fraction,
the numerator of which is the number of shares of Common Stock included in the
definition of Common Equity outstanding immediately prior to the reacquisition
and the denominator of which is the aggregate number of shares of Common Stock
outstanding immediately prior to the reacquisition.
(B) that Article FIFTH, Section 1, of the Restated Certificate be amended
to add the following new Subsections 1.58.1, 1.58.2 and 1.66.1 in their
respective numerical order:
1.58.1 "Pre-Closing Covered Convertible" means any Convertible
Company Securities (as defined in Section 1.8 of the Recapitalization
Agreement), other than the Series A Preferred Stock, outstanding
immediately prior to the Effective Time with a conversion price equal
to or less than the Old Share Equivalent Price (as defined in Section
1.10 of the Recapitalization Agreement).
1.58.2 "Pre-Closing Covered Option" means any employee stock option
granted under any employee stock option or compensation plan or
arrangement of the Corporation outstanding immediately prior to the
Effective Time with an exercise price of less than the Old Share
Equivalent Price (as defined in Section 1.10 of the Recapitalization
Agreement).
1.66.1 "Series A Preferred Stock" means the series of Serial
Preferred Stock of the Corporation, without par value, designated
Series A Convertible Preferred Stock in Article FOURTH, Part I.A, of
this Restated Certificate.
(C) that Article FIFTH, Subsection 1.72, of the Restated Certificate be
amended to be and read as follows:
"Termination Date" means, except as otherwise provided in this
Restated Certificate, the date on which (a) the Common Equity held in
the ESOPs, the Existing Plans or in any other employee trusts or
pension, retirement or other employee benefit plans sponsored by the
Corporation or any of its Subsidiaries for the benefit of its employees
as of the close of business on such date, plus (b) the number of
Available Unissued ESOP Shares, plus, but without double-counting (c)
the number of other shares of Common Stock that are held in the ESOPs,
the Existing Plans or in any other employee trusts or pension,
retirement or other employee benefit plans sponsored by the Corporation
or any of its Subsidiaries for the benefit of its employees as of the
close of business on such date and that were acquired (i) in open
market transactions or (ii) in privately negotiated transactions from a
person other than the Corporation or one or more Subsidiaries,
represent, in the aggregate, less than 20% of (x) the Common Equity of
the Corporation plus (y) the number of Available Unissued ESOP Shares.
(D) that Article FIFTH, Section 4.1.1, of the Restated Certificate be
amended to be and read as follows:
4.1.1 Audit Committee. The Audit Committee shall consist of the four
Independent Directors and the three Outside Public Directors or such
fewer number of such Directors (in as nearly as practicable that same
proportion of Independent Directors and Outside Public Directors) as
shall qualify for audit committee membership under applicable rules of
the securities exchanges or other similar trading market on which the
Common Stock is traded. The function of the Audit Committee shall be
(a) to review the professional services and independence of the
Corporation's independent auditors and the scope of the annual external
audit as recommended by the independent auditors, (b) to ensure that
the scope of the annual external audit is sufficiently comprehensive,
(c) to review, in consultation with the independent auditors and the
internal auditors, the plan and results of the annual external audit,
the adequacy of the Corporation's internal control systems, and the
results of the Corporation's internal audits, (d) to review, with
management and the independent auditors, the Corporation's annual
financial statements, financial reporting practices and the results of
each external audit, (e) to review the Corporation's cash management,
risk management, investment management and foreign exchange management
policies, and (f) to undertake reasonably related activities to those
set forth in clauses (a) through (e) of this Subsection 4.1.1. The
Audit Committee
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shall also have the authority to consider the qualification of the
Corporation's independent auditors, to make recommendations to the
Board as to their selection and to review and resolve disputes between
such independent auditors and management relating to the preparation of
the annual financial statements.
(E) that Article FIFTH, Subsection 4.1.3, of the Restated Certificate be
amended to be and read as follows:
Compensation Committee. The Compensation Committee shall consist of
seven Directors, including two Independent Directors, two Public
Directors and the three Employee Directors. Of the two Public
Directors, one shall be an Outside Public Director appointed by the
Outside Public Director Nomination Committee, and one shall be the
Chief Executive Officer, if the Chief Executive Officer is a Public
Director. The two Independent Director members shall be appointed by
the Independent Director Nomination Committee, which appointment shall
require the affirmative vote of all of the votes entitled to be cast by
the Independent Directors. At all meetings of the Compensation
Committee, the presence of Directors entitled to cast at least a
majority of the aggregate number of votes entitled to be cast by all
Directors on such committee, including, unless otherwise consented to
by all Employee Directors, the presence of at least one Independent
Director, shall be required to constitute a quorum for the transaction
of business. The principal functions of the Compensation Committee
shall be (a) to review and recommend to the Board the compensation and
benefit policies to be established for the officers of the Corporation,
(b) to review and approve the individual compensation and benefit
arrangements for the officers of the Corporation, except as provided in
Subsection 4.1.4, (c) to review general policy matters relating to
compensation and benefit arrangements of non-union employees of the
Corporation, (d) to administer the stock option plans and executive
compensation programs of the Corporation, including bonus and incentive
plans applicable to officers and key employees of the Corporation,
except as provided in Subsection 4.1.4, and (e) to undertake
administrative activities reasonably related to the functions set forth
in clauses (a) through (d) of this sentence. Subject to final approval
by the Compensation Committee in accordance with Subsection 4.1.4, the
Compensation Committee may delegate to the Compensation Administration
Committee specific responsibilities with respect to the Chief Executive
Officer's compensation.
(F) that the proviso to the fourth sentence of Article FIFTH, Subsection
4.1.4, of the Restated Certificate be amended to be and read as follows:
provided, however, that in order for any action of the Compensation
Administration Committee to be effective, such action must also be
approved by the Compensation Committee (unless such approval could
reasonably be expected to prevent a stock option plan, restricted stock
plan, other equity incentive plan or other executive compensation
program (or a component thereof) that is intended to qualify under Rule
16b-3 (or any successor provision) or to qualify for an exception under
Section 162(m) (or any successor provision) from receiving the benefits
of Rule 16b-3 or qualifying for such exception, respectively).
(G) that the fourth sentence of Article FIFTH, Subsection 4.1.5, of the
Restated Certificate be amended by inserting the phrase ", unless otherwise
consented to by all Employee Directors who are members of the Executive
Committee," between "including" and "the presence."
(H) that Article FIFTH, Subsection 4.1.7, of the Restated Certificate be
amended to add the following new sentence at the end of such Subsection:
Notwithstanding the foregoing, by resolutions approved by both the
Labor Committee and the Board (which vote must include the affirmative
vote of at least 80% of the votes entitled to be cast by the entire
Board, all Outside Public Directors and at least one Union Director)
the officers of the Corporation or the applicable Subsidiary may be
authorized to approve such modifications or amendments, or such
Collective Bargaining Agreements with any labor union representing in
the aggregate not more than 100 of the Corporations' or any of its
Subsidiaries' employees based
B-3
<PAGE>
in the United States, in each case of the type or types provided for in
such resolutions and which are determined pursuant to such resolutions
not to be material to the Corporation and its Subsidiaries.
(I) that Article FIFTH, Subsection 4.1.10, of the Restated Certificate be
amended to add the following new sentence at the end of such Subsection:
Until the Termination Date, the Board, by resolution passed as
aforesaid, may also delegate to the CAP Committee and the Compensation
Committee, or any of them, such other power and authority as could have
been delegated to an Other Board Committee.
(J) that the proviso to the first sentence of Article FIFTH, Subsection
4.1.12, be amended by inserting the phrase ", unless otherwise consented to
by all Employee Directors who are members of such Other Board Committee,"
between "Other Board Committee," the first time such phrase appears in such
proviso and "if less than all".
SECOND: That the foregoing amendments have been duly adopted in accordance
with the provisions of Section 242 of the Delaware General Corporation Law by
the affirmative vote of a majority of the shares of stock of the Corporation
entitled to vote thereon at the annual meeting of stockholders held on May 18,
1995, voting together as a single class.
IN WITNESS WHEREOF, UAL Corporation has caused this Certificate to be signed
and attested by the Corporation's duly authorized officers this day of
, 1995.
UAL Corporation
By: _____________________________
Print Name: _____________________
Title: __________________________
ATTEST:
By: _________________________________
Print Name: _________________________
Title: ______________________________
B-4
<PAGE>
P R O X Y
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 be-
fore the Meeting of Stockholders to be held at the Westin Bonaventure Hotel,
404 S. Figueroa Street, Los Angeles, California on May 18, 1995, at 10:00 a.m.,
local time, and any adjournments or postponements thereof, unless otherwise
specified herein.
ELECTION OF PUBLIC DIRECTORS
Nominees for Election as Public
Directors:
John A. Edwardson, Gerald Greenwald,
John F. McGillicuddy,
James J. O'Connor and Paul E. Tierney.
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 WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
SERVING MORE THAN 300 CITIES
ON FIVE CONTINENTS AROUND THE WORLD.
COME FLY OUR FRIENDLY SKIES.
[UNITED AIRLINES LOGO]
<PAGE>
[X] Please mark your votes as in this example. | 4660
----
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, "FOR" PROPOSALS 2, 3, 4 AND 5, AND
"AGAINST" PROPOSAL 6. 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 PROPOSALS 1, 2, 3, 4 AND 5.
- --------------------------------------------------------------------------------
1. Election of five Public Directors (See reverse side for list of nominees).
FOR [_] WITHHELD [_]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Approval of UAL Corporation 1995 Directors Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
3. Approval of Charter Amendments--Certain Definitions.
FOR [_] AGAINST [_] ABSTAIN [_]
4. Approval of Charter Amendments--Board Committee Matters.
FOR [_] AGAINST [_] ABSTAIN [_]
5. Ratification of the selection of Arthur Andersen LLP as the independent
accountants.
FOR [_] AGAINST [_] ABSTAIN [_]
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 6.
- --------------------------------------------------------------------------------
6. Proposal on political non-partisanship.
FOR [_] AGAINST [_] ABSTAIN [_]
- --------------------------------------------------------------------------------
Do you plan to attend the Meeting of Stockholders in person?
YES [_] NO [_]
__________________________________________________________________________, 1995
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 there-
of.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ADMISSION TICKET
---------------------------------
MEETING OF STOCKHOLDERS OF UAL
CORPORATION MAY 18, 1995 10:00
[LOGO OF UAL CORPORATION] A.M. CALIFORNIA BALLROOM WESTIN
BONAVENTURE HOTEL 404 S.
FIGUEROA STREET LOS ANGELES,
CALIFORNIA
--------------------
-----------------------------------------------------------------
You must present this ticket to the UAL Corporation representative at
the entrance to the California Ballroom 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.
--------------------
