UAL CORP /DE/, DEF 14A, 1996-03-20

UAL CORP /DE/
DEF 14A, 1996-03-20
AIR TRANSPORTATION, SCHEDULED

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)

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 240.14a-11(c) or 240.14a-12

UAL CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

UAL CORPORATION
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the 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:*

- -------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- -------------------------------------------------------------------------------

(5) Total fee paid:

- -------------------------------------------------------------------------------

/x/ Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- -------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- -------------------------------------------------------------------------------

(3) Filing Party:

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(4) Date Filed:

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* Set forth the amount on which the filing fee is calculated and state how it
was determined.

<PAGE> 2

UAL CORPORATION LOGO

March 22, 1996

Dear Fellow Owners:

What makes our Company different and special? Our employee owners are
committed to taking the future into their hands. Our managers are employee
owners guiding the Company in shaping its future. Share value has risen
spectacularly, along with stockholder return on ownership. We're more profitable
and more competitive than ever.

UAL Corporation's 1995 earnings from ongoing operations were the highest in
the Company's history. Over the year, fully distributed market capitalization
increased by nearly $3.0 billion, or about $91 per share -- an increase in value
of more than 100%. Fully distributed market capitalization includes the 12.6
million shares of UAL Common Stock outstanding and an additional 20.1 million
shares issued or issuable under our ESOP agreement and other outstanding
commitments included in calculating fully diluted shares.

At the same time, the Company pursued a number of initiatives designed to
improve long-term profitability, such as electronic ticketing and other
distribution cost reductions. To review this exciting year and discuss the
future of our Company, the Board of Directors joins me in inviting you to attend
the 1996 Annual Meeting of Stockholders and to vote on the matters described in
the enclosed proxy statement.

Your vote is important. To be sure your shares are represented at the
meeting, please sign and return the enclosed proxy card in the envelope
provided, even if you plan to attend the meeting in person.

I hope you will be able to attend the meeting and I look forward to seeing
you. If you plan to attend, please detach the admission card attached to your
proxy card and bring it with you to the meeting.

Sincerely yours,

Gerald Greenwald
<PAGE> 3

UAL CORPORATION
P. O. BOX 66919
CHICAGO, ILLINOIS 60666

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT

The Annual Meeting of Stockholders of UAL Corporation, a Delaware
corporation (the "Company"), will be held in the Gold Coast Room of The Drake
Hotel, 140 E. Walton Place, Chicago, Illinois 60611 on Wednesday, April 24,
1996, at 10:00 a.m., local time, to:

1. Elect a Board of Directors as follows:

(a) Five Public Directors, to be elected by the holders of Common
Stock;

(b) Four Independent Directors, to be elected by the holders of
Class I Junior Preferred Stock; and

(c) One ALPA Director, one IAM Director and one Salaried/Management
Employee Director, to be elected by the holders of Class Pilot MEC
Junior Preferred Stock, Class IAM Junior Preferred Stock and Class SAM
Junior Preferred Stock, respectively.

2. Approve an amendment to the Restated Certificate of Incorporation
of this Company to increase the number of authorized shares of Common Stock
in connection with a proposed 4-for-1 stock split.

3. Approve an amendment to the 1981 Incentive Stock Plan to increase
the shares available for grant.

4. Ratify the appointment of independent public accountants.

5. Transact any other business that is properly brought before the
meeting.

Stockholders of record at the close of business on March 11, 1996, will be
entitled to vote at the meeting. This proxy statement and the accompanying proxy
are being mailed beginning approximately March 22, 1996.

Stockholders are urged to fill out, sign and mail promptly the enclosed
proxy card in the accompanying envelope, which requires no postage if mailed in
the United States. Proxies forwarded by or for brokers, trustees, or fiduciaries
should be returned as directed. The prompt return of proxies will save the
expense involved in further communication.

By order of the Board of Directors

Francesca M. Maher
Vice President--Law
and Corporate Secretary

Chicago, Illinois
March 22, 1996

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE> 4

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Except where authority has been withheld by a stockholder, the enclosed
proxy will be voted at the 1996 Annual Meeting of Stockholders of the Company or
any adjournments or postponements (the "Meeting") for the election of the
respective nominee(s) named below for a term of one year and until their
successors are duly elected and qualified. The terms of all directors will
expire at the Meeting. The Board of Directors expects all nominees named below
to be available for election.

DIRECTORS TO BE ELECTED BY HOLDERS OF COMMON STOCK

PUBLIC DIRECTORS

Five Public Directors are to be elected by the holders of Common Stock, par
value $.01 per share ("Common Stock"). Each nominee was previously elected by
the holders of Common Stock and has served continuously as a Public Director
since the date of his election. The term "Public Director" is used as defined in
the Restated Certificate of Incorporation, as amended, of the Company (the
"Charter").

If a nominee unexpectedly becomes unavailable before election, proxies from
holders of Common Stock will be voted for the person designated by the Board of
Directors or the appropriate Board Committee in accordance with the requirements
of the Charter. No person, other than the directors of the Company or such
Committee, as applicable, is responsible for the naming of nominees.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
(1) PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
NOMINEE (2) OTHER BUSINESS AFFILIATIONS AGE SINCE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John A. Edwardson (1) President (1994) and Chief Operating Officer 46 1994
(1995) of the Company and its wholly owned
subsidiary, United Air Lines, Inc. ("United").
Executive Vice President and Chief Financial
Officer, Ameritech Corporation
(telecommunications) (1991-1994).
(2) Director, Household International, Inc. and
trustee, Purdue University.
- ------------------------------------------------------------------------------------------------------
Gerald Greenwald (1) Chairman and Chief Executive Officer of the 60 1994
Company and United (1994). Chairman, Tatra Truck
Company, Czech Republic (truck manufacturing)
(1993-1994); President, Olympia & York
Development Limited (real estate development
company in the process of a financial
restructuring at the time Mr. Greenwald agreed
to serve as president and certain subsidiaries
of which filed for protection under federal
bankruptcy laws in connection with such
restructuring) (1992-1993); Managing Director,
Dillon Read & Co. Inc. (investment banking)
(1991-1992).
(2) Director, Aetna Life and Casualty Company, and
trustee, Princeton University.
- ------------------------------------------------------------------------------------------------------
John F. McGillicuddy (1) Retired Chairman and Chief Executive Officer, 65 1984
Chemical Banking Corporation (banking and
finance) (1993). Chairman and Chief Executive
Officer, Chemical Banking Corporation
(1992-1993) and Manufacturers Hanover
Corporation and Manufacturers Hanover Trust
Company (1979-1992).
(2) Director, Chemical Banking Corporation, Southern
Peru Copper Corporation and USX Corporation.
- ------------------------------------------------------------------------------------------------------
</TABLE>

2
<PAGE> 5

DIRECTORS TO BE ELECTED BY HOLDERS OF OTHER CLASSES OF STOCK

The following classes of directors are to be elected by the holder of
certain classes of stock of the Company other than Common Stock. THE HOLDERS OF
COMMON STOCK DO NOT VOTE ON THE ELECTION OF THESE DIRECTORS. Each nominee was
previously elected by the holders of the applicable class of stock of the
Company and has served continuously as a director of the Company for the period
succeeding the date of his election. If a nominee unexpectedly becomes
unavailable before election, or the Company is notified that a substitute
nominee has been selected, votes will be cast pursuant to the authority granted
by the proxies from the respective holder(s) for the person who may be
designated as a substitute nominee by the respective holder(s) or, if
applicable, in accordance with the nomination procedures identified below.

INDEPENDENT DIRECTORS--ELECTED BY HOLDERS OF CLASS I STOCK

Four Independent Directors (as defined in the Charter) are to be elected by
the four Independent Directors as the holders of Class I Junior Preferred Stock
of the Company ("Class I Stock"). Each nominee has been nominated by the
Independent Director Nomination Committee and, pursuant to a Stockholders
Agreement among the holders of Class I Stock, each such holder has agreed to
vote in favor of such nominees. No person, other than the members of the
Independent Director Nomination Committee, is responsible for the naming of the
nominees.

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<PAGE> 6

ALPA DIRECTOR--ELECTED BY HOLDER OF CLASS PILOT MEC STOCK

One ALPA Director (as defined in the Charter) is to be elected by the
United Airlines Pilots Master Executive Council, Air Line Pilots Association,
International ("ALPA-MEC"), the holder of the Class Pilot MEC Junior Preferred
Stock of the Company ("Class Pilot MEC Stock"). The ALPA-MEC has advised the
Company that it has nominated and intends to re-elect Michael H. Glawe as the
ALPA Director.

IAM DIRECTOR--ELECTED BY HOLDER OF CLASS IAM STOCK

One IAM Director (as defined in the Charter) is to be elected by the
International Association of Machinists and Aerospace Workers ("IAM"), the
holder of the Class IAM Junior Preferred Stock of the Company ("Class IAM
Stock"). The IAM has advised the Company that it has nominated and intends to
re-elect John Peterpaul as the IAM Director.

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<PAGE> 7

SALARIED/MANAGEMENT EMPLOYEE DIRECTOR--ELECTED BY HOLDERS OF CLASS SAM STOCK

One Salaried/Management Employee Director (as defined in the Charter) is to
be elected by the holders of the Class SAM Junior Preferred Stock of the Company
("Class SAM Stock"), who are Joseph V. Vittoria, the Salaried/Management
Employee Director, and Paul G. George, United's Senior Vice President-People.
Mr. Vittoria has been nominated for re-election by the "System Roundtable," a
body of salaried and management employees of United empowered to review and
discuss issues relating to the Company and their effect on salaried and
management employees. Pursuant to a Stockholders Agreement between the holders
of Class SAM Stock, each such holder has agreed to vote in favor of the System
Roundtable nominee.

CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS

The Board of Directors of the Company held a total of eight meetings in
1995. All directors attended 75 percent or more of the total of such meetings
and meetings of Board Committees of which they were members.

COMMITTEES

The Board of Directors has Executive, Audit, Compensation, Compensation
Administration, CAP, Labor, Independent Director Nomination, Outside Public
Director Nomination, Pension and Welfare Plans Oversight and Transaction
Committees.

EXECUTIVE COMMITTEE. The Executive Committee is authorized to exercise the
powers of the Board of Directors in the management of the business and affairs
of the Company, with certain exceptions. The Executive Committee is also
responsible for periodically reviewing Board effectiveness and overseeing the
compensation arrangements for non-employee directors. The Executive Committee
held four meetings in 1995. Committee members: Gerald Greenwald, Chairman, and
Michael H. Glawe, Richard D. McCormick, John F. Peterpaul, Paul E. Tierney, Jr.,
and Paul A. Volcker.

AUDIT COMMITTEE. The Audit Committee reviews with the Company's independent
public accountants the annual financial statements of the Company prior to
publication, reviews the work of and approves non-audit services performed by
such independent accountants, makes annual recommendations to the Board for the
appointment of independent public accountants for the ensuing year, and reviews
the effectiveness of the financial and accounting functions, organization,
operations and management of the Company and its subsidiaries and affiliates.
The Audit Committee held two meetings in 1995. Committee members: James J.
O'Connor, Chairman, and Duane D. Fitzgerald, Richard D. McCormick, John F.
McGillicuddy, Paul E. Tierney, Jr., John K. Van de Kamp, and Paul A. Volcker.

COMPENSATION COMMITTEE. The Compensation Committee reviews and approves the
compensation and benefits of all officers of the Company and reviews general
policy matters relating to compensation and benefits of non-union employees of
the Company and its subsidiaries. The Committee also administers the equity
incentive compensation plans of the Company, except for responsibilities
reserved for the Compensation Administration Committee. The Compensation
Committee held eight meetings in 1995. Committee members: John F. McGillicuddy,
Chairman, and Duane D. Fitzgerald, Michael H. Glawe, Gerald Greenwald, Richard
D. McCormick, John F. Peterpaul, and Joseph V. Vittoria.

COMPENSATION ADMINISTRATION COMMITTEE. The Compensation Administration
Committee administers the stock option plans and executive compensation programs
of the Company to the extent such functions cannot or are not appropriate to be
performed by the Compensation Committee in light of any provision of the

5
<PAGE> 8

Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
securities laws, any other applicable law or any regulations promulgated under
any of the foregoing, and also oversees the evaluation process for CEO
performance. The Compensation Administration Committee held five meetings in
1995. Committee members: John F. McGillicuddy, Chairman, and Duane D. Fitzgerald
and Richard D. McCormick.

CAP COMMITTEE. The CAP Committee oversees implementation of the Company's
Competitive Action Plan to improve United's competitiveness on many short-haul
routes, pursuant to which "Shuttle by United" was established. The CAP Committee
has the exclusive authority to approve on behalf of the Company any
modifications of or amendments to the Competitive Action Plan, other than those
matters reserved to the Labor Committee. The CAP Committee held one meeting in
1995. Committee members: Duane D. Fitzgerald, Chairman, and Michael H. Glawe,
Gerald Greenwald, John F. McGillicuddy, James J. O'Connor, John F. Peterpaul,
Paul E. Tierney, Jr., and John K. Van de Kamp.

LABOR COMMITTEE. The Labor Committee reviews and approves the entering into
of, and modifications and amendments to, collective bargaining agreements to
which the Company or any of its subsidiaries is a party, with certain
exceptions. The Committee held three meetings in 1995. Committee members: Gerald
Greenwald, Chairman, and Richard D. McCormick and Paul E. Tierney, Jr.

INDEPENDENT DIRECTOR NOMINATION COMMITTEE. The Independent Director
Nomination Committee nominates candidates to become Independent Director members
of the Board of Directors, fills vacancies in Independent Director positions and
appoints Independent Directors to serve on Board Committees. The Committee held
one meeting in 1995. Committee members: John K. Van de Kamp, Chairman, and Duane
D. Fitzgerald, Michael H. Glawe, Richard D. McCormick, John F. Peterpaul, Joseph
V. Vittoria and Paul A. Volcker.

OUTSIDE PUBLIC DIRECTOR NOMINATION COMMITTEE. The Outside Public Director
Nomination Committee nominates candidates to become Outside Public Director (as
defined in the Charter) members of the Board of Directors, fills vacancies in
Outside Public Director positions and appoints Outside Public Directors to serve
on Board Committees. The Outside Public Director Nomination Committee will
consider nominees recommended by stockholders, who may submit recommendations by
addressing a letter to the Committee Chairman at UAL Corporation, P. O. Box
66919, Chicago, Illinois 60666. Qualification requirements for Outside Public
Directors are specified in the Charter. The Committee held one meeting in 1995.
Committee members: Paul E. Tierney, Jr., Chairman, and John F. McGillicuddy and
James J. O'Connor.

PENSION AND WELFARE PLANS OVERSIGHT COMMITTEE. The Pension and Welfare
Plans Oversight Committee oversees compliance by the Company and its
subsidiaries with laws governing employee benefit plans maintained by the
Company and its subsidiaries. The Committee held seven meetings in 1995.
Committee members: Paul A. Volcker, Chairman, and Michael H. Glawe, James J.
O'Connor, John F. Peterpaul, John K. Van de Kamp and Joseph V. Vittoria.

TRANSACTION COMMITTEE. The Transaction Committee is authorized to evaluate
and advise the Board with respect to any proposed merger or consolidation of the
Company or any of its subsidiaries with or into, the sale, lease or exchange of
all or substantially all of the Company's or any of its subsidiaries' property
or assets to, or a significant business transaction with, any Labor Affiliate
(as defined in the Charter). The Transaction Committee held no meetings in 1995.
Committee members: Richard D. McCormick, Chairman, and Duane D. Fitzgerald, John
F. McGillicuddy, James J. O'Connor, Paul E. Tierney, Jr., John K. Van de Kamp
and Paul A. Volcker.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Messrs. Greenwald, Glawe and Peterpaul serve on the Compensation Committee,
but not the Compensation Administration Committee. Messrs. Glawe and Greenwald
are employees of the Company. Mr. Glawe is also the Chairman of the ALPA-MEC and
an officer of ALPA. United and ALPA are parties to a collective bargaining
agreement for United's pilots represented by ALPA.

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<PAGE> 9

COMPENSATION OF DIRECTORS

Each non-employee director receives an annual retainer of $18,000 and is
paid $900 for each meeting attended. The non-employee Chairman of each Committee
other than the Compensation Administration Committee receives an additional
retainer of $2,700 per year. Each non-employee member of a Committee receives a
fee of $900 for each Committee meeting attended. The above fees reflect the 10%
reduction in Board compensation that was instituted in January 1993 and
reaffirmed by the Board in September 1994. Non-employee directors also receive
100 shares of Common Stock annually, which, pursuant to Stock Ownership
Guidelines adopted in February 1996, they are to keep throughout their tenure on
the Board. Directors may elect to receive all or any portion of their cash
retainer and fees in Common Stock, as well as to defer their stock and cash
compensation for federal income tax purposes. Directors who are employees of the
Company or any of its subsidiaries, including Messrs. Greenwald, Edwardson and
Glawe, do not receive any retainer fee, meeting fee or Common Stock for their
service on the Board of Directors or any Committee.

Non-employee directors are eligible to participate in a retirement income
plan (the "Retirement Plan") if they have at least five years of service on the
date of retirement and are not otherwise eligible to receive pension benefits
from the Company or any of its subsidiaries. If a retiring director has at least
10 years of service and is at least age 70 at retirement, he is entitled to a
life annuity equal to the greater of $20,000 per year or the annual retainer fee
at retirement. Reduced benefits are available if the director has less than 10
years of service or if retirement occurs before age 70. For purposes of the
Retirement Plan, a non-employee director who was a director upon the change in
control of the Company on July 12, 1994, has been credited with three additional
years of service and is deemed to be three years older than his actual age.
Surviving spouse benefits are available in some cases. A trust has been created
to serve as a source for payment of benefits under the Retirement Plan.

The Company considers it important for its directors to understand its
business and have exposure to its operations and employees. For this reason, the
Company provides free transportation and free cargo shipment on United to each
director of the Company and his spouse and eligible dependent children. The
directors are reimbursed by the Company for income taxes resulting from actual
use of the travel and shipment privilege. A director who was a director upon the
change in control of the Company on July 12, 1994, is entitled to continue such
travel and cargo benefits for life. The cost of this policy in 1995 for each
director, including cash payments made in February 1996 for income tax
liability, was as follows:
<TABLE>
<CAPTION>
NAME COST($)
- ------------------------------------- -------
<S> <C>
John A. Edwardson.................... 7,231
Duane D. Fitzgerald.................. 9,043
Michael H. Glawe..................... 0
Gerald Greenwald..................... 25,508
Richard D. McCormick................. 17,607
John F. McGillicuddy................. 19,334

<CAPTION>
NAME COST($)
- ------------------------------------- -------
<S> <C>
James J. O'Connor.................... 23,174
John F. Peterpaul.................... 0
Paul E. Tierney, Jr. ................ 62,404
John K. Van de Kamp.................. 12,627
Joseph V. Vittoria................... 5,562
Paul A. Volcker...................... 592
</TABLE>

SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the number of shares of Common Stock and of
voting preferred stock held in the UAL Corporation Employee Stock Ownership Plan
Trust (the "ESOP") beneficially owned as of March 11, 1996, by each director and
executive officer included in the Summary Compensation Table, and by all
directors and executive officers of the Company as a group. Unless indicated
otherwise by footnote, the owner exercises sole voting and investment power over
the securities (other than unissued securities, the ownership of which has been
imputed to such owner). Certain directors and executive officers of the Company

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<PAGE> 10

also beneficially own shares of various other classes of preferred stock of the
Company. See "Security Ownership of Certain 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........................................... 76,241(1) * 602(2) *
Duane D. Fitzgerald......................................... 513 * --
Michael H. Glawe............................................ -- 311(3) *
Gerald Greenwald............................................ 189,106(4) 1.5 918(2) *
Richard D. McCormick........................................ 872 * --
John F. McGillicuddy........................................ 850 * --
James J. O'Connor........................................... 550 * --
John F. Peterpaul........................................... 200 * --
Paul E. Tierney, Jr......................................... 19,154 * --
John K. Van de Kamp......................................... 200 * --
Joseph V. Vittoria.......................................... 366 * --
Paul A. Volcker............................................. 700 * --
Douglas A. Hacker........................................... 26,776(5) * 415(2) *
Joseph R. O'Gorman.......................................... 50,351(6) * 474(2) *
Stuart I. Oran.............................................. 40,109(7) * 316(2) *
Directors and Executive Officers as a Group (20 persons).... 517,155(8) 4.09 4,032(9) *
</TABLE>

- ------------
* Less than 1%

(1) Includes 32,500 shares that Mr. Edwardson has the right to acquire within 60
days of March 11, 1996, by the exercise of stock options.

(2) Reflects beneficial ownership of Class S ESOP Voting Junior Preferred Stock
("Class S Voting Stock") owned through the ESOP.

(3) Reflects beneficial ownership of Class P ESOP Voting Junior Preferred Stock
("Class P Voting Stock") owned through the ESOP.

(4) Includes 120,000 shares that Mr. Greenwald has the right to acquire within
60 days of March 11, 1996, by the exercise of stock options, 1,671 shares
held indirectly by Mr. Greenwald's wife and 199 shares held indirectly by a
United 401(k) plan (calculated as of the close of business on December 29,
1995).

(5) Includes 18,750 shares that Mr. Hacker has the right to acquire within 60
days of March 11, 1996, by the exercise of stock options.

(6) Includes 37,500 shares that Mr. O'Gorman has the right to acquire within 60
days of March 11, 1996, by the exercise of stock options.

(7) Includes 25,875 shares that Mr. Oran has the right to acquire within 60 days
of March 11, 1996, by the exercise of stock options.

(8) Includes 310,583 shares that directors or executive officers have the right
to acquire within 60 days of March 11, 1996, by the exercise of stock
options, shares held indirectly as discussed in footnote (4) and an
additional 24 shares held in a United 401(k) plan (calculated as of the
close of business on December 29, 1995).

(9) Reflects ownership of Class S Voting Stock owned through the ESOP. No
director or executive officer other than Mr. Glawe beneficially owns shares
of Class P Voting Stock.

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<PAGE> 11

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the performance graph immediately
following shall not be incorporated by reference into any such filings.

EXECUTIVE COMPENSATION

UAL CORPORATION COMPENSATION AND COMPENSATION ADMINISTRATION
COMMITTEES REPORT

PHILOSOPHY

The Company's executive compensation program is designed to attract, retain
and motivate top quality and experienced officers. The program provides industry
competitive compensation opportunities, supports a pay-for-performance culture
and emphasizes pay-at-risk. The program is heavily oriented toward incentive
compensation tied to the annual and longer-term financial performance of the
Company and to its longer-term return to stockholders.

The Company's compensation program was modified in 1995 to provide, among
other matters, that the program would be administered in a manner consistent
with the philosophy of an employee-owned company. To encourage accumulation and
retention of Common Stock by Company officers, guidelines were adopted providing
for ownership of Common Stock at the following multiples of annual salary:
Chairman and Chief Executive Officer and President and Chief Operating Officer,
five times; Executive and Senior Vice Presidents, two times; and Vice
Presidents, one times. Unexercised stock options, unvested restricted stock and
ESOP stock ownership are not recognized for purposes of these guidelines.

COMPONENTS

There are two components to the executive compensation program:

- Cash compensation.

- Stock compensation.

The cash compensation program is composed of base salary and annual
incentive compensation. Base salaries are competitive with other large domestic
air carriers, which include the three largest of the five carriers in the
Relative Market Performance Graph that follows. Base salaries are substantially
less than other companies in general industry of comparable size. Base salaries
for officers were reduced on July 13, 1994, by 8.25%. No general salary
increases were awarded to officers in 1995.

Annual incentive compensation provides an opportunity for additional
earnings. Awards under the incentive compensation program effectively were
reduced by 8.25% on July 13, 1994, since these awards are calculated as a
percentage of base salary. Under the program, an incentive pool is created based
upon the Company's earnings; each year the Compensation Committee approves a
schedule of annual incentive pool funding relative to specified earnings
targets. The CEO recommends to the Compensation Committee (or the Compensation
Administration Committee, in the case of incentive awards intended to qualify
under Section 162(m) of the Internal Revenue Code) incentive awards for each
officer based upon an assessment of each officer's contribution over the
preceding year. The assessment is based upon, among other things, an appraisal
prepared annually for each officer on his or her managerial skills and the
performance by him or her of assigned responsibilities. Before making a
recommendation, the CEO discusses such appraisals with other members of senior
management and considers these discussions, along with an overall evaluation of
corporate performance and industry competitive data. The Compensation Committee
makes a final determination of awards for all officers, including the CEO, who
is assessed by the Compensation Committee using a comparable process established
under his Employment Agreement. The awards for the other proxy-named

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<PAGE> 12

officers are made by the Compensation Administration Committee based on a
pre-established formula in full compliance with Section 162(m) of the Internal
Revenue Code.

The stock compensation program is comprised of stock options and, until
December 1995, restricted stock. Stock compensation gives each officer the
opportunity to become a stockholder of the Company. Stock grants are determined
in consideration of individual performance and contribution and in consideration
of airline industry practice, using the same group referred to above for base
salary and annual incentive compensation. The CEO recommends to the Compensation
Committee (or the Compensation Administration Committee, in the case of awards
under plans which qualify for certain exceptions from Section 16 of the Exchange
Act pursuant to Rule 16b-3 or Section 162(m) qualified grants) stock option
and/or, until December 1995, restricted stock grants for each officer. While
there are no specific target award levels or weighting of factors considered in
determining stock grants, grants are made within grant-range guidelines for each
officer level. The Committee determines stock awards for the CEO based upon a
comparable process and makes a final determination on stock awards for all other
officers. Until December 1995, options and restricted shares typically were
granted in alternating years (options in one year, restricted stock in the next,
etc.). In December 1995, the Compensation and Compensation Administration
Committees adopted a new officer compensation philosophy, eliminating restricted
stock as a normal component of officer compensation and replacing this component
with stock option grants. Under this new policy, stock options typically will be
granted annually, and restricted stock will be used only on an individual basis
for a very limited number of United employees in response to compelling business
requirements, such as for recruitment or retention of key management employees.

Stock options may not be granted at less than fair market value on the date
of grant. Stock options carry a 10-year term and typically have exercise vesting
restrictions that lapse ratably over a four-year period. Restricted stock awards
typically have had vesting restrictions of up to five years. The Company's stock
plans include provisions to preserve, to the maximum extent possible, the
deductibility by the Company of amounts awarded under the plans. For the first
time, biennial restricted stock awards in 1995 included performance vesting
criteria, which were based on the Company's 1995 pretax margin ranking relative
to the other large U.S. airlines, in full compliance with Section 162(m) of the
Internal Revenue Code.

The officer compensation program in total, although primarily focused on
promoting pay-for-performance and emphasizing pay-at-risk, is heavily oriented
toward stockholder interests through the use of long-term incentives that create
a direct linkage between executive rewards and increased stockholder value. The
long-term incentive component, which is composed totally of stock-based
incentives, represents over half the total income opportunity for the officers.

To enable the Company to attract high quality management at the most senior
officer levels within the Company, sign-on compensation packages for these
officers at the time of hiring sometimes include cash and unrestricted stock
awards in addition to compensation of the types described above. These
compensation packages are often the subject of negotiation, and may have vesting
provisions for restricted stock and stock options that vary from the normal
schedules.

CEO COMPENSATION

The compensation package for Mr. Greenwald was established pursuant to an
Employment Agreement negotiated by Mr. Greenwald with ALPA and the IAM in 1994
(the "Employment Agreement"). As part of the Employment Agreement, a base salary
rate of $665,188 was established for Mr. Greenwald, giving effect to the 8.25%
reduction. A non-guaranteed target bonus of $725,000 per year was also
established, which was paid to Mr. Greenwald in 1996 (in Common Stock) since his
1995 performance was consistent with the Board Committee's objectives and
directions, and corporate performance did not compel a lesser bonus. In making
those determinations, the applicable Board Committee took into account (i)
airline industry trends and (ii) the Company's cumulative profitability since
the transaction date. No weighting was given to any particular factor. These are
standards for performance evaluation that were established under the Employment
Agreement. Mr. Greenwald received a restricted stock grant subject to the
Company's normal grant schedule and performance vesting criteria, in full
compliance with Section 162(m) of the Internal Revenue Code.

10
<PAGE> 13

COMPENSATION FOR THE OTHER NAMED OFFICERS

Base salary rates for the other named executive officers have not changed
since being reduced by 8.25% in July 1994. In 1996 each of the named executive
officers received an incentive compensation award for 1995 performance, which
was granted pursuant to the normal incentive compensation plan terms according
to a pre-established formula in full compliance with Section 162(m) of the
Internal Revenue Code (which Mr. Edwardson received in Common Stock). Each such
officer received a restricted stock grant in 1995 subject to the Company's
normal grant schedule and performance vesting criteria, in full compliance with
Section 162(m) of the Internal Revenue Code.

CHANGE IN CONTROL AGREEMENTS

The Company and United are parties to severance agreements (each, a
"Severance Agreement") with certain officers with provisions that took effect
upon the change in control of the Company on July 12, 1994. The Company took
action in 1995 to terminate all of the Severance Agreements. During 1995,
following a reorganization with respect to which Mr. O'Gorman waived his right
to trigger his Severance Agreement, such agreement was amended to provide that
the Company would impose no decrement to his pension benefit based on age at
retirement and to provide for a termination date in August 1998. The Severance
Agreement of Mr. Hacker, the only other named executive officer who has such an
agreement, expires in August 1997.

COMPENSATION CONSULTANT AND COMPETITIVE DATA

The Compensation Committee and Compensation Administration Committee
consult with independent compensation advisors on executive compensation
matters. The Committees also have access to competitive data on compensation
levels for officer positions.

UAL CORPORATION COMPENSATION COMMITTEE

<TABLE>
<S> <C>
John F. McGillicuddy, Chairman Richard D. McCormick
Duane D. Fitzgerald John F. Peterpaul
Michael H. Glawe Joseph V. Vittoria
Gerald Greenwald
</TABLE>

UAL CORPORATION COMPENSATION ADMINISTRATION COMMITTEE

<TABLE>
<S> <C>
John F. McGillicuddy, Chairman Richard D. McCormick
Duane D. Fitzgerald
</TABLE>

11
<PAGE> 14

UAL CORPORATION
RELATIVE MARKET PERFORMANCE
TOTAL RETURN 1991-1995

<TABLE>
<CAPTION>
MEASUREMENT PERIOD D-J AIR-
(FISCAL YEAR COV- LINE
ERED) UAL CORP. S&P 500 GROUP(1)
<S> <C> <C> <C>
1990 100 100 100
1991 132.35 130.47 134.95
1992 114.53 140.41 136.42
1993 132.58 154.56 168.12
1994 114.44 156.60 112.37
1995 233.79 215.45 162.78
</TABLE>

Source: Compustat Database

- ------------
(1) Alaska Air, AMR, Delta, Southwest, USAir.

12
<PAGE> 15

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- ----------------------
OTHER RESTRICTED
NAME AND ANNUAL STOCK STOCK ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (#) ($)(4)
- ----------- ---- ------- --------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greenwald 1995 657,184 725,000 79,006(5) 1,820,000 0 254,234(6)
1994 313,300 3,662,521(7) 16,224 2,300,000 200,000 169,002(6)
Edwardson 1995 455,222 455,000 6,962 1,251,250 0 132,704(6)
1994 216,069 2,156,025(7) 8,458 2,208,000 130,000 72,353(6)
O'Gorman 1995 308,196 256,000 10,984 853,125 0 73,439(6)
1994 322,916 234,029 7,078 0 30,000 16,452(6)
1993 314,348 0 7,548 855,000 0 4,024
Oran 1995 310,750 270,000 10,145 426,563 0 84,371(6)
1994 147,865 1,540,000(7) 312,846(8) 1,150,000 55,000 61,638(6)
Hacker 1995 293,600 210,000 9,138 682,500 0 60,187(6)
- -----------
Greenwald = Gerald Greenwald, Chairman and Chief Executive Officer
Edwardson = John A. Edwardson, President and Chief Operating Officer
O'Gorman = Joseph R. O'Gorman, Executive Vice President
Oran = Stuart I. Oran, Executive Vice President-Corporate Affairs and General Counsel
Hacker = Douglas A. Hacker, Senior Vice President and Chief Financial Officer
</TABLE>

- ------------
(1) 1994 salaries for Messrs. Greenwald, Edwardson and Oran reflect a partial
year of service.

(2) Messrs. Greenwald and Edwardson received the after-tax value of their 1995
bonuses in Common Stock instead of cash. Messrs. Greenwald, Edwardson and
O'Gorman waived their 1994 bonuses in cash, and accepted Common Stock of
value equivalent to the amount of the bonus waived. The value of these
shares is included in the Summary Compensation Table.

(3) The restricted stock granted in 1995 to all officers named in the Summary
Compensation Table and in 1994 to Mr. Greenwald vests in five equal annual
installments commencing one year from the date of grant; to Mr. Edwardson in
1994 vests in four equal annual installments commencing two years from the
date of grant; and to Mr. Oran in 1994 vests 20% on January 15, 1995, and
the balance in four equal annual installments commencing one year from the
date of grant. The number and aggregate value, respectively, of restricted
holdings as of fiscal year-end is: Mr. Greenwald, 36,000 shares, $6,426,000;
Mr. Edwardson, 35,000 shares, $6,247,500; Mr. O'Gorman, 7,500 shares,
$1,338,750; Mr. Oran, 11,250 shares, $2,008,125; and Mr. Hacker, 6,000
shares, $1,071,000. The number of shares of restricted stock awarded in 1995
reflects the actual award after the application of vesting criteria based on
the Company's 1995 profitability as compared to other major U.S. airlines,
which could have resulted in an award ranging from 150% of the actual award
to a complete forfeiture of the award. The restricted stock granted in 1993
to Mr. O'Gorman (7,500 shares) was scheduled to vest in five equal annual
installments commencing one year from the date of grant, but these vesting
restrictions lapsed upon the change in control of the Company on July 12,
1994. No dividends have been paid on restricted shares, but officers are
entitled to any dividends paid on such shares.

(4) Except as otherwise specified, amounts represent compensation attributable
to split dollar insurance program premiums. Such amounts specified for 1994
for Messrs. Greenwald, Edwardson and Oran reflect compensation attributable
to premiums paid in 1995 for obligations accrued in 1994.

(5) Amount includes $38,498 attributable to term life insurance benefits and
$15,000 attributable to automobile benefits.

(6) Amounts include value of shares of ESOP preferred stock allocated to the
officer's account for 1995 and 1994 as follows, based upon the year-end
closing price of the Common Stock multiplied by the number of

13
<PAGE> 16

shares of Common Stock issuable upon conversion of such ESOP preferred
stock: Mr. Greenwald, $125,246, $18,912; Mr. Edwardson, $80,851, $13,043;
Mr. O'Gorman, $66,426, $8,869; Mr. Oran, $38,315, $8,869; and Mr. Hacker,
$56,964 (1995 only).

(7) Includes one-time sign-on compensation consisting of Common Stock and cash
and, in the case of Mr. Edwardson, a donation of Common Stock to a
charitable foundation at his request in lieu of issuing such shares to him.

(8) Includes a one-time $300,000 payment made in 1995 in consideration of
waiving all rights under the Company's normal relocation policy.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1)

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON FY-END (#) AT FY-END ($)
EXERCISE VALUE ----------------------------- -----------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald Greenwald............... 0 N/A 120,000 80,000 10,515,000 7,010,000
John A. Edwardson.............. 0 N/A 32,500 97,500 2,847,813 8,543,438
Joseph R. O'Gorman............. 0 N/A 37,500 22,500 3,023,288 1,971,563
Stuart I. Oran................. 7,500(2) 612,656(2) 26,875 20,625 2,354,921 1,807,266
Douglas A. Hacker.............. 0 N/A 18,750 18,750 1,952,281 1,642,969
</TABLE>

- ------------
(1) Each option granted prior to July 12, 1994 (a "Pre-Closing Option"), is
exercisable for one-half a share of Common Stock and $84.81 in cash. Value
of Pre-Closing Options includes the cash amount deliverable upon exercise.

(2) Shares having an aggregate market value of $249,317 were withheld by the
Company from the exercise proceeds to cover tax withholding obligations on
the value realized upon exercise.

PENSION PLAN TABLE

<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
400,000 64,000 96,000 128,000 160,000 192,000 224,000 256,000
600,000 96,000 144,000 192,000 240,000 288,000 336,000 384,000
800,000 128,000 192,000 256,000 320,000 384,000 448,000 512,000
1,000,000 160,000 240,000 320,000 400,000 480,000 560,000 640,000
1,200,000 192,000 288,000 384,000 480,000 576,000 672,000 768,000
1,400,000 224,000 336,000 448,000 560,000 672,000 784,000 896,000
1,600,000 256,000 384,000 512,000 640,000 768,000 896,000 1,024,000
1,800,000 288,000 432,000 576,000 720,000 864,000 1,008,000 1,152,000
2,000,000 320,000 480,000 640,000 800,000 960,000 1,120,000 1,280,000
</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 10 years of covered compensation,
with compensation after July 12, 1994, being adjusted to add back the 8.25%
salary reduction). The retirement benefit amount is not offset by the
participant's social security benefit. Compensation covered by the plan includes
salary and amounts shown as annual bonus in the Summary Compensation Table.
Sign-on compensation paid to Messrs. Greenwald, Edwardson and Oran in 1994 does
not qualify as pension earnings and will not be included in any pension
calculations. Under the qualified plan, years of participation for persons named
in the cash compensation table are as follows: Mr. Greenwald--1 year; Mr.
Edwardson--1 year; Mr. Oran--1 year; Mr. O'Gorman--23 years and Mr. Hacker--2
years. The amounts shown do not reflect limitations imposed by the Internal
Revenue Code on retirement benefits that may be paid under plans qualified under
the Internal Revenue Code. United

14
<PAGE> 17

has agreed to provide under non-qualified plans the portion of the retirement
benefits earned under the pension plan that would otherwise be subject to
Internal Revenue Code limitations.

The Employment Agreement entitles Mr. Greenwald to an annual pension equal
to the greater of the pension that would accrue under the Company plans with
credit for 30 years of service or $500,000 per year. This pension is payable at
any time elected by Mr. Greenwald following retirement or termination of
employment. Mr. Greenwald's retirement benefit will continue to be paid to his
spouse at 67% of his benefit level under a joint survivor annuity. Pursuant to
the Employment Agreement, a revocable trust has been funded to provide funding
for the additional pension obligation for Mr. Greenwald.

The Company has agreed to supplement Messrs. Edwardson's, O'Gorman's and
Oran's benefits under the qualified pension plans by granting them credit for
additional years of service--10 years for Mr. Edwardson, 6 years for Mr.
O'Gorman and 20 years for Mr. Oran. In addition, the Company has agreed to waive
the service requirement for benefit vesting under the qualified pension plan for
Messrs. Edwardson and Oran and to impose no decrement to the pension benefit
based on age at retirement for Messrs. Edwardson, O'Gorman and Oran.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS

Pursuant to his Employment Agreement, Mr. Greenwald is paid a salary of
$665,188 per year, giving effect to the 8.25% salaried and management salary
reduction in July 1994, and a non-guaranteed target bonus of $725,000 per year,
which target bonus will be payable if Mr. Greenwald's performance is "consistent
with the applicable Board Committee's objectives and directions" and the
Company's performance "does not compel" a lesser bonus. In addition, the
applicable Board Committee will take into account (i) airline industry trends
and (ii) the Company's financial performance (including cumulative profitability
since July 12, 1994) in determining the extent of Mr. Greenwald's bonus. The
applicable Board Committee also has the discretion to award a bonus in excess of
the target amount. The options and restricted stock received by Mr. Greenwald
upon commencement of employment pursuant to the Employment Agreement vest on any
termination of Mr. Greenwald's employment other than termination by the Company
for cause or a voluntary resignation. The options, to the extent vested, will
remain outstanding for 10 years, notwithstanding termination of Mr. Greenwald's
employment for any reason, including "cause."

If Mr. Greenwald's employment is terminated by the Company without "cause"
or by him for "good reason," his salary (at the $725,000 pre-reduction rate) and
guaranteed $725,000 bonus will continue for 3 years (or, if greater, the
remainder of the five-year contract term). Generally, the Company will not be
entitled to a deduction for Federal income tax purposes with respect to the
amounts described above to the extent that such amounts exceed $1 million in any
year.

The Company has agreed that, in the event of a termination of employment of
Mr. Edwardson by the Company without cause or by Mr. Edwardson with good reason,
the Company shall pay to Mr. Edwardson a lump sum equal to his base salary and
bonus paid in the prior 12-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
12-month period, as well as immediate vesting of any of his initial option
grants that would have otherwise vested within 12 months after the date of
termination.

Each of Mr. Hacker and Mr. O'Gorman is a party to a Severance Agreement
that provides certain benefits if the executive's employment with United is
terminated (1) by the Company without "cause" (as defined in the Severance
Agreement) or (2) by the executive for "good reason" (as defined in the
Severance Agreement) in either case prior to August 31, 1997 (Mr. Hacker), or
August 1, 1998 (Mr. O'Gorman). Upon such a termination of employment, the
executive officer will be entitled to receive (1) a cash payment equal to three
times the sum of (a) the greater of the executive's base salary as in effect on
July 12, 1994, or as in effect on the date his employment terminates plus (b)
the average of the greater of the bonuses paid to the executive with respect to
the three years preceding July 12, 1994, or the bonuses paid to the executive
with respect to the three years preceding his termination of employment, (2)
continuation of travel privileges (and partial tax reimbursement) on United for
the executive and his spouse and other dependents for three years following

15
<PAGE> 18

termination of employment (and for life thereafter if the executive would have
qualified for retiree travel privileges had his employment continued during such
three-year period), (3) coverage under United's medical and other welfare
benefits for a period of three years following the date of termination (and for
life thereafter if the executive would have qualified for retiree medical
benefits had his employment continued during such three-year period), (4) a
lump-sum payment equal to the value of the pension benefits (including any early
retirement benefits) that the executive officer would have earned under United's
pension plans and arrangements had the executive officer continued to be
employed for an additional three years, and (5) a lump-sum payment equal to the
amounts that United would have paid on behalf of the executive officer with
respect to split-dollar life insurance policies in effect for the executive.

PROPOSAL NO. 2

APPROVAL OF CHARTER AMENDMENT
IN CONNECTION WITH PROPOSED STOCK SPLIT

The Board of Directors has approved an amendment to Article FOURTH of the
Charter (the "Charter Amendment") to increase the number of shares of stock that
the Company is authorized to issue from 191,100,022 (100 million in Common Stock
and the balance in various classes of preferred stock) to 291,100,022 (200
million in Common Stock and no change in the number of shares of the various
classes of preferred stock).

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE CHARTER AMENDMENT.

PROPOSED FOUR-FOR-ONE STOCK SPLIT IN THE FORM OF A 300% DIVIDEND

The Board has authorized a four-for-one split of Common Stock in the form
of a 300% stock dividend, subject to stockholder approval of the Charter
Amendment. The increase in authorized shares is necessary to provide the Company
with authority to issue a number of shares sufficient to effect the split and to
reserve an amount sufficient to meet all known requirements and to provide
flexibility for the future. THE PROPOSED STOCK SPLIT CANNOT OCCUR UNLESS
STOCKHOLDERS APPROVE THE CHARTER AMENDMENT. Except for the proposed stock split,
there are no agreements, commitments or understandings for the issuance of the
newly authorized shares.

The Board of Directors anticipates that the increase in the number of
outstanding shares of Common Stock through the stock split may place the market
price of Common Stock in a range more attractive to investors and may result in
a broader market for the stock.

As a result of the stock split, the number of shares of Common Stock
issuable upon conversion of ESOP preferred stock and other benefit and
compensation programs of the Company, as well as the conversion price and number
of shares of Common Stock issuable under the Company's convertible debentures
and the exercise price and number of shares of Common Stock issuable under
outstanding stock options, would be proportionately adjusted to give effect to
the stock split. For example, an employee who has been allocated 10 shares of
non-voting ESOP preferred stock currently would receive 10 shares of Common
Stock upon conversion of such non-voting ESOP preferred stock at the time of
distribution. Upon completion of the proposed stock split, the same employee
would continue to be allocated 10 shares of non-voting ESOP preferred stock, but
the number of shares of Common Stock into which such preferred stock is
convertible would be adjusted four-for-one so that such ESOP preferred stock
would convert into 40 shares of Common Stock at the time of distribution. Thus,
the proposed stock split would not dilute the economic interest of the holders
of ESOP preferred stock in the Company, nor would it have any effect on the
proportionate voting rights of such holders in the Company's outstanding voting
stock.

Following the split, an amount equal to the par value of shares issued in
the split would be transferred from additional capital invested to the Company's
stated capital accounts. The $.01 par value of the Common Stock would not be
adjusted. As of March 11, 1996, 12,645,564 shares of Common Stock were issued
and outstanding and an aggregate of 21,330,597 shares of Common Stock were
reserved for issuance or available for grant under various employee benefit
plans, including the ESOP, and the Directors Plan and for issuance upon the
conversion of certain convertible debt securities.

16
<PAGE> 19

If adopted, the Charter Amendment and the stock split will be effective at
the close of business on the day of filing the Charter Amendment with the
Delaware Secretary of State as required by the General Corporation Law of
Delaware. It is anticipated that this will occur on May 6, 1996. Stockholders of
record at the close of business on such date would receive an additional stock
certificate representing three additional shares of Common Stock for each share
held. Stockholders would retain certificates issued prior to such date, and
those certificates would continue to represent the same number of shares.
Certificates should not be returned to the Company or its transfer agent. It is
anticipated that certificates representing additional shares to be received
would be mailed on or about May 20, 1996, to entitled holders. Assuming
transactions of an equivalent dollar amount, brokerage commissions on purchases
and sales of the Common Stock after the split and transfer taxes, if any, may be
somewhat higher than before the split, depending on the specific number of
shares involved.

FEDERAL INCOME TAX CONSEQUENCES

Under existing U.S. federal income tax laws and regulations, the receipt of
additional shares of Common Stock in a stock split effected in the form of a
dividend will not constitute taxable income or gain or loss to stockholders. The
cost or other tax basis of each share of Common Stock held by a stockholder
immediately prior to the split would be divided equally among the corresponding
four shares held immediately after the split and the holding period for each of
the four shares would include the period for which the corresponding old share
of Common Stock was held. The laws of jurisdictions other than the United States
(including state and foreign jurisdictions) may impose income taxes on the
receipt by a stockholder of additional shares of Common Stock resulting from the
split. Stockholders are urged to consult their own tax advisors.

OTHER USES FOR ADDITIONAL SHARES

The ability of the Company to issue Common Stock is subject to a number of
limitations. First, under a First Refusal Agreement dated as of July 12, 1994,
as amended (the "First Refusal Agreement"), the Company has granted to ALPA and
the IAM on behalf of the United employees represented by them and to United
salaried and management employees a right of first refusal to purchase newly
issued shares of Common Stock before such shares can be issued to third parties,
subject to certain exceptions. The First Refusal Agreement has been amended so
as not to apply to the proposed four-for-one stock split, but it would apply to
any future stock split unless further amended by the parties to the First
Refusal Agreement. In addition, issuances of Common Stock must be approved by
one of the following: (i) three-quarters of the entire Board, including the ALPA
Director, the IAM Director or all four Independent Directors; or (ii) three
quarters of the voting power of shares of voting stock of the Company present at
a stockholder meeting. These extraordinary approval requirements do not apply to
issuances pursuant to existing commitments under outstanding options and
convertible securities or pursuant to certain employee benefit plans and the
Directors Plan. Subject to the foregoing, the additional authorized shares may
be used in the future for any proper corporate purpose, such as additional stock
splits or stock dividends or financings, corporate acquisitions, employee
benefit programs, acquisitions of property, or other corporate purposes. Except
as provided above, no further action or authorization by the stockholders would
be necessary prior to the issuance of additional shares unless the applicable
laws or regulations or the rules of any stock exchange on which the Company's
Common Stock may then be listed require such approval. Stockholders of the
Company do not otherwise have preemptive rights with respect to future issuances
of Common Stock. The issuance of such shares otherwise than to existing
stockholders on a pro rata basis could have the effect of reducing an existing
stockholder's proportionate interest.

As is presently the case, the availability for issuance of additional
shares of Common Stock could enable the Board of Directors to render more
difficult or discourage an attempt to obtain control of the Company. For
example, the issuance of shares of Common Stock in a public or private sale,
merger or similar transaction would increase the number of outstanding shares,
thereby possibly diluting the interest of a party attempting to obtain control
of the Company. The Company is not aware of any pending or threatened efforts to
obtain control of the Company.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE CHARTER AMENDMENT.

17
<PAGE> 20

PROPOSAL NO. 3

APPROVAL OF AMENDMENT TO THE 1981 INCENTIVE STOCK PLAN

The Board of Directors has unanimously adopted an amendment (the "1981 Plan
Amendment") to the 1981 Incentive Stock Plan (the "1981 Plan") to add 1,100,000
shares of Common Stock to the maximum number of shares with respect to which
grants may be made under the 1981 Plan, subject to the approval of the 1981 Plan
Amendment by stockholders at the Meeting. These additional shares represent less
than four percent (4%) of the number of fully distributed shares -- Common Stock
outstanding plus ESOP preferred stock allocated and to be allocated under the
ESOP -- of the Company.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE 1981 PLAN AMENDMENT.

The following summary of the 1981 Plan is qualified in its entirety by the
full text of the 1981 Plan included as Annex I to this Notice of Annual Meeting
and Proxy Statement.

COMPENSATION PHILOSOPHY

The Company believes it is very important to align the economic well-being
of its senior management with the long-term interests of the Company and its
stockholders. For this reason, stock options represent a significant component
of compensation for senior management employees. The Company believes that its
continued ability to offer stock options is critical to attracting and retaining
talented individuals for its senior management ranks. Stock options take on even
greater significance in light of the recent decision to eliminate restricted
stock as part of normal recurring compensation for senior management.

ADMINISTRATION

The 1981 Plan is administered by the Compensation Committee or, for grants
intended to be qualified under Section 162(m) of the Internal Revenue Code or
exempt under Section 16 of the Exchange Act, the Compensation Administration
Committee of the Board (as applicable, the "Plan Committee").

SHARES SUBJECT TO THE 1981 PLAN

As initially approved by the stockholders on April 29, 1982, 1,300,000
shares were issuable under the 1981 Plan. On April 24, 1986, April 25, 1991, and
July 12, 1994, an additional 2,000,000, 1,000,000 and 1,200,000 shares,
respectively, were authorized for issuance under the 1981 Plan. (Prior to July
12, 1994, shares authorized under the 1981 Plan consisted of the Company's
common stock, par value $5.00 per share.) As of March 11, 1996, 970,461 shares
were subject to outstanding options under the 1981 Plan (including 231,055
shares issuable upon exercise of Pre-Closing Options, which are each exercisable
for one-half a share of Common Stock and $84.81 in cash), and 424,000 shares
were available for future grants. Shares subject to awards under the 1981 Plan
that are forfeited or terminated or expire unexercised will become available for
future awards, other than shares subject to Pre-Closing Options, which may not
be used for future awards. The amendments recommended by the Board would make
1,100,000 additional shares available for issuance under the 1981 Plan. The
number of shares authorized under the 1981 Plan is subject to automatic
proportionate adjustment under the 1981 Plan in the event a stock split is
effected. See "Proposal No. 2. -- Approval of Charter Amendment in Connection
with Proposed Stock Split." Stock issuable under the 1981 Plan may be newly
issued or treasury shares.

PARTICIPATION

Grants under the 1981 Plan are made by the Plan Committee based on the
recommendations of management and only to officers and key employees (including
officers who may also be directors) of the Company or any of its subsidiaries.
Approximately 200 individuals are eligible for grants under the 1981 Plan,
although a significantly smaller number of such persons actually have received
grants. The number of shares with respect to which grants may be made under the
1981 Plan to any individual during any two-year period is limited to 125,000
(250,000 with respect to grants made to any new employee as a condition of
employment),

18
<PAGE> 21

subject to adjustment if the stock split is effected. See "Proposal No. 2 --
Approval of Charter Amendment in Connection with Proposed Stock Split." During
1995, options to purchase 4,000 shares of Common Stock were awarded to executive
officers of the Company (none to executive officers named in the Summary
Compensation Table) and options to purchase 82,000 shares of Common Stock were
awarded to other plan participants. No determination has been made as to
additional individual grants under the 1981 Plan if stockholder approval of the
amendment is obtained.

TERMS OF AWARDS

The Plan Committee may allocate any or all of the shares subject to the
1981 Plan for issuance pursuant to grants of incentive stock options ("ISOs")
under Section 422 of the Internal Revenue Code, stock options not intended to
qualify under Section 422 of the Internal Revenue Code ("NQSOs") and stock
appreciation rights ("SARs"). Awards under the 1981 Plan are not transferable,
other than by will or the law of descent and distribution. The option price for
ISOs and NQSOs may not be less than 100% of the fair market value of the Common
Stock on the date of grant. The closing price of Common Stock as reported by the
New York Stock Exchange Composite Transaction Tape for March 11, 1996, was $186.
The duration of options granted under the 1981 Plan cannot exceed 10 years,
subject to earlier termination of vested options in the event of separation of
employment for reasons other than retirement and to forfeiture of unvested
options upon an earlier separation of employment for reasons other than
retirement (options continue to vest upon retirement). SARs may be granted
exercisable in cash, or in Common Stock, or in a combination of cash and Common
Stock. SARs may be granted to any participant in the 1981 Plan independent of or
in tandem with an NQSO. On exercise of an SAR, the holder will receive up to
100% of the appreciation in fair market value of the shares subject to the SAR.
In the case of a tandem SAR, the appreciation is measured from the option price.
Exercise of an SAR reduces the number of shares reserved for issuance under the
1981 Plan by the number of shares as to which the SAR is exercised.

AMENDMENT AND TERMINATION OF PROGRAM

The Board may amend the 1981 Plan from time to time or terminate the 1981
Plan at any time, but may not reduce the then-existing amount of any
participant's options or SARs or adversely change any option's terms or
conditions without the participant's consent. Absent stockholder approval, no
amendment may materially (i) increase the benefits accruing to participants,
(ii) increase the number of shares which may be issued, or (iii) modify the
requirements as to eligibility for participation in the 1981 Plan. The 1981 Plan
will automatically terminate on December 8, 2001, except as to awards
outstanding at that date.

FEDERAL INCOME TAX CONSEQUENCES

The Federal income tax consequences to participants in the 1981 Plan and
the Company under the Internal Revenue Code and the regulations thereunder as
now in effect are substantially as follows.

With respect to NQSOs and SARs, an optionee is not deemed to receive any
income at the time an NQSO or SAR is granted nor is his or her employer entitled
to a deduction at that time. However, when any part of the NQSO or SAR is
exercised, the optionee is deemed to have received ordinary income (i) in the
case of an NQSO, in an amount equal to the difference between the option price
and the fair market value of the shares acquired upon such exercise and (ii) in
the case of an SAR, in an amount equal to the sum of the fair market value of
the shares and any cash received. The optionee's employer generally is entitled
to a tax deduction in an amount equal to the amount of ordinary income realized
by the optionee.

With respect to ISOs, an optionee is not deemed to receive any income at
the time an ISO is granted or exercised, and the employer is not entitled to any
deduction. If the optionee disposes of the stock prior to the expiration of the
holding period required by Section 422 of the Internal Revenue Code, he or she
will have ordinary income in the year of disposition equal to the lesser of (i)
the excess of the value of the shares on the exercise date over the option
price, or (ii) the excess of the amount received for the shares over the option
price. The employer generally is entitled to a tax deduction at such time in an
amount equal to the amount of ordinary income realized by the optionee. If the
optionee disposes of the stock after expiration of the holding

19
<PAGE> 22

period required by Section 422 of the Internal Revenue Code, the excess of the
amount received for the shares over the option price will be taxed as long-term
capital gain and no deduction will be available to the employer.

Special rules apply in the case of individuals subject to Section 16(b) of
the Exchange Act. In particular, under current law, any shares received pursuant
to the exercise of a stock option or SAR within six months of the grant date,
absent an election by the optionee to include in his or her income at the time
of exercise the excess of the value of shares received over the option price,
are treated as restricted as to transferability and subject to a substantial
risk of forfeiture for a period of six months after the date of grant of the
option or SAR. Accordingly, the amount of ordinary income recognized, and the
amount of the employer's deduction, are determined as of such later date.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE 1981 PLAN AMENDMENT.

PROPOSAL NO. 4

APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, at the recommendation of the Audit Committee, has
appointed, subject to approval by the stockholders, the firm of Arthur Andersen
LLP as independent public accountants, to examine the financial statements of
the Company for the year 1996. It is anticipated that a representative of Arthur
Andersen LLP will be present at the meeting and will have the opportunity to
make a statement, if he desires to do so, and will be available to respond to
appropriate questions at that time. If the stockholders do not approve the
appointment of Arthur Andersen LLP, the selection of independent public
accountants will be reconsidered by the Board of Directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
COMPANY FOR 1996.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table shows the number of shares of the Company's voting
securities beneficially owned by any person or group known to the Company as of
March 1, 1996, to be the beneficial owner of more than five percent (5%) of any
class of the Company's voting securities.

20
<PAGE> 23

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER TITLE OF CLASS OF BENEFICIAL OWNERSHIP CLASS
- ---------------------------------------- ------------------------------------------ ----------------------- -------
<S> <C> <C> <C>
Capital Growth Management Common Stock 1,885,000(3) 11.77%
Limited Partnership
One International Place
Boston, MA 02110
FMR Corp. Common Stock 1,170,860(4) 9.23%
Edward C. Johnson 3d.
Abigail P. Johnson
82 Devonshire Street
Boston, MA 02109
Oppenheimer Group, Inc. Common Stock 819,846(5) 6.47%
Oppenheimer Capital
Oppenheimer Tower, World
Financial Center
New York, NY 10281
The TCW Group, Inc. Common Stock 659,800(6) 5.2%
Robert Day
865 South Figueroa Street
Los Angeles, CA 90017
United Airlines Pilots Class Pilot MEC Stock 1(7) 100%
Master Executive Council
Air Line Pilots Association,
International
6400 Shafer Court, Suite 700
Rosemont, IL 60018
International Association of Machinists Class IAM Stock 1(8) 100%
and Aerospace Workers
District #141
9000 Machinists Place
Upper Marlboro, MD 20772
Joseph V. Vittoria Class SAM Stock 2(9) 66.67%
Avis, Inc.
900 Old Country Road
Garden City, NY 11530
Paul G. George Class SAM Stock 1(9) 33.33%
Senior Vice President -- People
United Airlines
P.O. Box 66100
Chicago, IL 60666
Duane D. Fitzgerald Class I Stock 1(10) 25%
Bath Iron Works Corp.
700 Washington Street
Bath, ME 04530
Richard D. McCormick Class I Stock 1(10) 25%
U S WEST, Inc.
7800 E. Orchard Road
Englewood, CO 80111-2533
John K. Van de Kamp Class I Stock 1(10) 25%
Dewey Ballantine
333 S. Hope Street
Los Angeles, CA 90071-3003
Paul A. Volcker Class I Stock 1(10) 25%
James D. Wolfensohn Inc.
599 Lexington Avenue
New York, NY 10022
</TABLE>

- ------------
(1) Based on Revised Schedule 13G dated February 20, 1996, in which the
reporting person reported that as of December 31, 1994, (i) as trustee
under the ESOP (the "ESOP Trustee"), it had shared voting power over
663,792 shares of Class P Voting Stock representing 25.4% of the voting
power of the Company, 535,268 shares of Class M ESOP Voting Junior
Preferred Stock ("Class M Voting Stock," and together with the Class P
Voting Stock and the Class S Voting Stock, the "Voting Preferred Stocks")
representing 20.4% of the voting power of the Company, and 239,384 shares
of Class S Voting

21
<PAGE> 24

Stock representing 9.2% of the voting power of the Company, and shared
dispositive power over 4,632,505 shares of Class 1 ESOP Convertible
Preferred Stock and 302,071 shares of Class 2 ESOP Convertible Preferred
Stock, each convertible into the same number of shares of Common Stock
("Shares"), as well as 144 Shares issuable upon conversion of the Voting
Preferred Stocks, and (ii) as trustee for various collective investment
funds and other employee benefit plans and other index accounts, it had
sole dispositive power over 533,055 Shares and sole voting power over
426,055 of such Shares. The reporting person disclaims beneficial ownership
of all shares reported. Voting power of Voting Preferred Stocks is limited
to matters other than the vote for directors.

(2) Based on Schedule 13G dated February 9, 1996 in which AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha Assurances I.A.R.D.
Mutuelle, Alpha Assurances Vie Mutuelle and Uni Europe Assurance Mutuelle,
AXA and The Equitable Companies Incorporated reported, as of December 31,
1995, sole voting power for 1,447,249 of such Shares, shared voting power
for 80,550 of such Shares, and sole dispositive power for all such Shares.
Such amounts include 3,000 Shares issuable upon exercise of options.

(3) Based on Schedule 13G dated February 12, 1996, in which the reporting
person reported that as of December 31, 1995, it had sole voting power over
1,626,200 of such Shares and shared dispositive power over all such Shares.
The reporting person disclaims beneficial ownership of all such Shares.

(4) Based on Schedule 13G dated February 14, 1996, in which the reporting
persons reported sole voting power for 144,376 of such Shares and sole
dispositive power for all of such Shares.

(5) Based on Schedule 13G dated February 1, 1996, in which the reporting
persons, on behalf of subsidiary companies and/or certain investment
advisory clients or discretionary accounts, reported shared voting and
dispositive power for all such Shares. The reporting persons disclaim
beneficial ownership of all such Shares.

(6) Based on Schedule 13G dated February 12, 1996, in which the reporting
persons reported sole power to vote and dispose of all such Shares.

(7) Share elects one ALPA Director and has one vote on all matters submitted to
the holders of Common Stock other than the election of directors.

(8) Share elects one IAM Director and has one vote on all matters submitted to
the holders of Common Stock other than the election of directors.

(9) Shares elect one Salaried/Management Employee Director and each share has
one vote on all matters submitted to the holders of Common Stock other than
the election of directors. Pursuant to a Stockholders Agreement dated as of
July 12, 1994, the holders of Class SAM Stock have agreed to vote their
shares in favor of the election of the Salaried/Management Employee
Director nominated by the System Roundtable of United salaried and
management employees.

(10) Shares elect four Independent Directors and do not vote on other matters
except as required by law. Pursuant to a Stockholders Agreement dated as of
July 12, 1994, the holders of Class I Stock have agreed to vote their
shares in favor of the election of the Independent Directors nominated by
the Independent Director Nomination Committee of the Board of Directors of
the Company.

The foregoing information in footnotes (1) through (6) is based on a
review, as of March 1, 1996, by the Company of statements filed with the
Securities and Exchange Commission under Sections 13(d) and 13(g) of the
Exchange Act.

OTHER MATTERS

The Board of Directors knows of no other proposals to be presented for
consideration at the Meeting, but if other matters do properly come before the
Meeting, the persons named in the proxy will vote the shares according to their
best judgment.

22
<PAGE> 25

SUBMISSION OF STOCKHOLDER PROPOSALS

Any stockholder proposal submitted for consideration at the Company's 1997
Annual Meeting of Stockholders must be received by November 22, 1996, by the
Secretary of the Company, Francesca M. Maher, UAL Corporation, P.O. Box 66919,
Chicago, Illinois 60666 and must otherwise comply with rules promulgated by the
Securities and Exchange Commission.

VOTING RIGHTS AND PROXY INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of the Company at the Annual
Meeting of Stockholders called to be held on Wednesday, April 24, 1996. The
Board of Directors has fixed the close of business on March 11, 1996, as the
record date (the "Record Date") for determining the holders of capital stock of
the Company who are entitled to notice of and to vote at the Meeting. The
following chart identifies the number of shares of each class of voting stock of
the Company outstanding as of the Record Date, the number of holders of each
such class as of the Record Date entitled to vote at the Meeting, the aggregate
and per share votes for shares of each class for all matters on which such
shares vote, and the class of directors, if any, with respect to which each
class of stock is entitled to vote:

<TABLE>
<CAPTION>
AGGREGATE VOTES
SHARES NUMBER OF PER
TITLE OF CLASS OUTSTANDING VOTES HOLDERS OF RECORD SHARE VOTING FOR DIRECTORS
- --------------------- ------------ ------------- ----------------------------- ----- -----------------------
<S> <C> <C> <C> <C> <C>
Common Stock 12,645,564 12,645,564 11,338 1 Class elects
5 Public Directors
Class P Voting Stock 2,079,924 7,145,165.02 1 (ESOP Trustee) 3.44 --
Class M Voting Stock 1,675,281 5,738,697.33 1 (ESOP Trustee) 3.43 --
Class S Voting Stock 750,028 2,571,826.65 1 (ESOP Trustee) 3.43 --
Class Pilot MEC Stock 1 1 1 (ALPA-MEC) 1 Class elects
1 ALPA Director
Class IAM Stock 1 1 1 (IAM) 1 Class elects
1 IAM Director
Class SAM Stock 3 3 2 (SAM Director and 1 Class elects
Senior Vice President-People) 1 SAM Director
Class I Stock 4 4 4 (Independent Directors) 1 Class elects
4 Independent Directors
</TABLE>

The Voting Preferred Stocks held by a trust established under a
tax-qualified employee stock ownership plan (the "Qualified ESOP") that have
been allocated to individual participants in the ESOP will be voted by
participants, as named fiduciaries under the Employee Retirement Income Security
Act of 1974, as amended, on a confidential pass-through basis. The ESOP Trustee
generally is obligated to vote as instructed by the participants to whom the
Voting Preferred Stock has been allocated, and the outstanding shares command
the entire voting power of each class of Voting Preferred Stock. The Class P
Voting Stock allocated to former employees who were members of ALPA will be
voted by the ESOP Trustee. The ESOP Trustee will (except as may be required by
law) vote the unallocated or otherwise unvoted shares in the Qualified ESOP in
proportions directed by participants who give instructions to the ESOP Trustee
with respect to such shares; each participant who is an employee has the right
to give such directions to the ESOP Trustee in the proportion that the
participant's allocated shares bears to the allocated shares of all participants
giving such directions. Shares held by the ESOP Trustee under a non-qualified
employee stock ownership plan (the "Supplemental ESOP") will be voted as
instructed by the administrative committee appointed under the Supplemental
ESOP. The Supplemental ESOP provides that the administrative committee will
consider the views of participants concerning the vote, but is not required to
take any particular action in response to those views.

The holders of Common Stock, the Voting Preferred Stocks, the Class Pilot
MEC Stock, the Class IAM Stock, and the Class SAM Stock will vote together as a
single class on all items of business at the Meeting

23
<PAGE> 26

except the election of directors. The presence in person or by properly executed
proxy of the holders of a majority of the total voting power of the shares of
all such classes outstanding at the Record Date is necessary to constitute a
quorum at the Meeting for all items of business other than the election of
directors. The Class I Stock does not vote on any matter other than the election
of the Independent Directors.

The presence in person or by properly executed proxy of the holders of a
majority of the total voting power of the outstanding shares entitled to vote on
the election of a particular class of director(s) is necessary to constitute a
quorum at the Meeting for the election of director(s) of such class.

Under the Delaware General Corporation Law and the Charter, (i) the
affirmative vote of the holders of the shares of capital stock present in person
or represented by proxy at the Meeting representing a plurality of the votes
cast on the matter will be required to elect each of the directors to be elected
by the applicable class of capital stock, (ii) the affirmative vote of the
holders of the shares of capital stock outstanding on the Record Date
representing a majority of the votes entitled to be cast on the matter will be
required to approve and adopt the proposed Charter Amendment and (iii) the
affirmative vote of the holders of the shares of capital stock representing a
majority of the votes present in person or represented by proxy at the Meeting
and entitled to be cast on the matter will be required to approve or adopt each
of the other matters identified in this Notice of Annual Meeting and Proxy
Statement as being presented to holders of capital stock at the Meeting.

All the shares of capital stock that are represented at the Meeting by
properly executed proxies received prior to or at the Meeting and not revoked
will be voted at the Meeting in accordance with the instructions indicated in
such proxies. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
APPROVAL OF THE CHARTER AMENDMENT; FOR THE AMENDMENT TO THE 1981 PLAN; FOR THE
ELECTION OF DIRECTORS OF THE CLASS, IF ANY, ON WHICH THE SHARES REPRESENTED BY
THE PROXY ARE ENTITLED TO VOTE; AND FOR THE RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP. The Board of Directors of the Company does not know of any
matters, other than as described in this Notice of Annual Meeting and Proxy
Statement, that are to come before the Meeting. If a proxy is given, the persons
named in the proxy will have authority to vote in accordance with their best
judgment on any other matter that is properly presented at the Meeting for
action, including without limitation any proposal to adjourn the Meeting or
concerning the conduct of the Meeting.

Abstentions will have the effect of a vote against the Charter Amendment
and the other matters presented for a vote of the stockholders (other than the
election of directors). As to abstentions, the shares of capital stock are
considered present at the Meeting. The abstentions are not, however, affirmative
votes for the matters presented for a vote and, therefore, they will have the
same effect as votes against any matter presented for a vote of the stockholders
(other than the election of directors). With respect to the election of
directors, abstentions and broker non-votes will have no effect on the outcome
of the vote. Broker non-votes will have no effect on the outcome of the vote on
any of the matters presented for a vote of stockholders at the Meeting, other
than the Charter Amendment, and will not be counted for purposes of establishing
a quorum. With respect to the Charter Amendment, the required vote is based on
the voting power of total shares outstanding, rather than the shares present or
voted, so broker non-votes will have the effect of a vote against the Charter
Amendment.

If a quorum is not present at the time the Meeting is convened for any
particular purpose, or if for any other reason the Company believes that
additional time should be allowed for the solicitation of proxies, the Company
may adjourn the Meeting with a vote of the stockholders then present. The
persons named in the enclosed form of proxy may vote any shares of capital stock
for which they have voting authority in favor of such an adjournment.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, before the polls are closed with respect to
the vote, a written notice of revocation bearing a later date than the proxy,
(ii) duly executing a subsequent proxy relating to the same shares and
delivering it to the Secretary of the Company, or (iii) attending the meeting
and voting in person (although attendance at the Meeting will not in and of
itself constitute a revocation of a proxy). Any written notice revoking a proxy
in accordance with clause (i) or (ii) above should be sent to: UAL Corporation,
P.O. Box 66919, Chicago, Illinois 60666, Attention: Francesca M. Maher,
Secretary. Special voting rules will apply if you hold Voting Preferred Stock
through the ESOP

24
<PAGE> 27

Trustee. If so, please consult the accompanying materials concerning the manner
in which to vote these shares.

GENERAL

A copy of the Company's Annual Report for the year ended December 31, 1995,
has been mailed to each stockholder. Additional copies of the Annual Report and
of the Notice of Annual Meeting and Proxy Statement and accompanying proxy may
be obtained from Georgeson & Company, Inc., Wall Street Plaza, New York, New
York 10005 or from the Secretary of the Company.

Proxies are being solicited by and on behalf of the Board. All expenses of
this solicitation, including the cost of preparing and mailing this Proxy
Statement, will be borne by the Company. In addition to solicitation by use of
the mails, proxies may be solicited by directors, officers and employees of the
Company in person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally compensated, but
may be reimbursed for out-of-pocket expenses, in connection with such
solicitation. Arrangements will also be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation material to beneficial owners
of Common Stock and Voting Preferred Stock held of record by such persons, and
the Company may reimburse such custodians, nominees and fiduciaries for their
reasonable expenses. To assure the presence in person or by proxy of the largest
number of stockholders possible, the Company has engaged Georgeson & Co. to
solicit proxies on behalf of the Company. The Company has agreed to pay such
firm a proxy solicitation fee not to exceed $10,000 and to reimburse such firm
for its reasonable out-of-pocket expenses.

In order to assure the presence of the necessary quorum at the Meeting,
please sign and mail the enclosed proxy card promptly in the envelope provided.
No postage is required if mailed within the United States. The signing of a
proxy will not prevent any holder of Common Stock from attending the Meeting and
voting his or her shares in person.

STOCKHOLDERS WHO PLAN TO ATTEND THE MEETING MUST DETACH THE ADMISSION CARD
ATTACHED TO THE PROXY CARD BEFORE MAILING AND BRING THE ADMISSION CARD TO THE
MEETING.

YOUR VOTE IS IMPORTANT

PLEASE MARK, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT IN THE
ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE SO THAT YOU WILL BE REPRESENTED AT THE
MEETING WHETHER OR NOT YOU EXPECT TO ATTEND.

25
<PAGE> 28

ANNEX I (incorporates
amendment that has been
submitted for, and is subject
to, stockholder approval)

UAL CORPORATION 1981 INCENTIVE STOCK PLAN

1. Purpose. The purpose of the UAL Corporation 1981 Incentive Stock Plan
(the "Plan") is to attract and retain outstanding individuals as officers and
key employees of UAL Corporation (the "Company") and its subsidiaries, and to
furnish incentives to such persons by providing such persons opportunities to
acquire shares of the Company's Common Stock, par value $.01 per share ("Common
Stock"), or monetary payments based on the value of such shares or both, on
advantageous terms as herein provided.

2. Administration. The Plan shall be administered by the Compensation
Administration Committee of the Board of Directors of the Company for all grants
to (I) any "officer" as such term is defined in Rule 16a-1(f) under the
Securities Exchange Act of 1934, as amended, or (II) any "covered employee"
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, and by the Compensation
Committee of the Board of Directors of the Company for all other grants (such
committee, as applicable, herein called the "Committee"). No member of the
Compensation Administration Committee shall be eligible, while a member of such
Committee, to receive a Benefit under the Plan. The Committee is authorized to
interpret the provisions of the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and conditions of
Benefits to be granted under the Plan and to make all other determinations
necessary or advisable for the administration of the Plan, but only to the
extent not contrary to or inconsistent with the express provisions of the Plan.

3. Participants. Participants in the Plan will consist of such officers or
other key employees of the Company and its subsidiaries as the Committee in its
sole discretion may designate from time to time to receive Benefits hereunder.
The Committee shall consider such factors as it deems pertinent in selecting
participants and in determining the type and amount of their respective
Benefits, including without limitation (i) the financial condition of the
Company; (ii) anticipated profits for the current or future years; (iii)
contributions of participants to the profitability and development of the
Company; and (iv) other compensation provided to participants.

4. Types of Benefits. Benefits under the Plan may be granted in any one or
a combination of (a) Incentive Stock Options, (b) Non-qualified Stock Options,
and (c) Stock Appreciation Rights, all as described below.

5. Shares Reserved Under the Plan. There is hereby reserved for issuance
under the Plan an aggregate of 2,300,000 shares of Common Stock, which may be
newly issued or treasury shares.(1) All of such shares may, but need not be
issued pursuant to the exercise of Incentive Stock Options. If there is a lapse,
expiration, termination or cancellation of any Benefit granted hereunder without
the issuance of shares or payments of cash thereunder, or if shares are issued
under any Benefit and thereafter are reacquired by the Company pursuant to
rights reserved upon the issuance thereof, the shares subject to or reserved for
such Benefit may again be used for new options or rights under this Plan;
provided, however, that in no event may the number of shares issued under this
Plan exceed the total number of shares reserved for issuance hereunder. Subject
to Section 14(a), in no event may the aggregate number of shares of Common Stock
with respect to which options or Stock Appreciation Rights are granted to any
individual exceed 125,000 in any period of two calendar years, provided,
however, that grants made to any new employee as a condition of employment may
not exceed two times such biennial limit during the first two years of
employment.

6. Incentive Stock Options. Incentive Stock Options will consist of options
to purchase shares of Common Stock at purchase prices not less than one hundred
percent (100%) of the fair market value of such

- ---------------

(1)Represents shares reserved for issuance under the Plan in connection with
grants made on or after July 12,
1994. Shares issuable under grants made prior to such date are in addition to
such number of shares.

A-1
<PAGE> 29

shares on the date of grant. Incentive Stock Options will be exercisable over
not more than ten (10) years after date of grant and shall terminate not later
than three (3) months after termination of employment for any reason other than
death. If the optionee should die while employed or within three (3) months
after termination of employment, the right of the optionee or his or her
successor in interest to exercise an option shall terminate not later than
twelve (12) months after the date of death. The aggregate fair market value
(determined as of the time the option is granted) of the shares of Common Stock
which any participant may exercise pursuant to Incentive Stock Options for the
first time in any calendar year (under all option plans of the Company and its
parent and subsidiary corporations) shall not exceed $100,000.

7. Non-qualified Stock Options. Non-qualified Stock Options will consist of
options to purchase shares of Common Stock at purchase prices not less than one
hundred percent (100%) of the fair market value of shares on the date of grant.
Non-qualified Stock Options will be exercisable over not more than ten (10)
years after date of grant. Non-qualified Stock Options will terminate no later
than six (6) months after termination of employment for any reason other than
retirement or death, unless immediately after such termination of employment the
optionee shall be a member of the Board of Directors of the Company, in which
case such options will terminate two (2) years after such termination of
employment. In the event termination of employment occurs by reason of the
optionee's retirement, the option shall terminate not later than the fixed
expiration date set forth therein. In the event termination of employment occurs
by reason of the optionee's death or if the optionee's death occurs within six
months after termination of employment, the option shall terminate not later
than twelve (12) months after the date of such death.

8. Stock Appreciation Rights. The Committee may, in its discretion, grant a
Stock Appreciation Right to the holder of any Non-qualified Stock Option granted
hereunder. In addition, a Stock Appreciation Right may be granted independently
of and without relation to any stock option. Stock Appreciation Rights shall be
subject to such terms and conditions consistent with the Plan as the Committee
shall impose from time to time, including the following:

(a) A Stock Appreciation Right may be granted with respect to a
Non-qualified Stock Option at the time of its grant or at any time
thereafter up to six (6) months prior to its expiration.

(b) Each Stock Appreciation Right will entitle the holder to elect to
receive up to 100% of the appreciation in fair market value of the shares
subject thereto up to the date the right is exercised. In the case of a
Stock Appreciation Right issued in relation to a Non-qualified Stock
Option, such appreciation shall be measured from the option price. In the
case of a Stock Appreciation Right issued independently of any stock
option, the appreciation shall be measured from not less than the fair
market value of the Common Stock on the date the right is granted.

(c) The Committee shall have the discretion to satisfy a participant's
right to receive the amount of cash determined under subparagraph (b)
hereof, in whole or in part, by the delivery of shares of Common Stock
valued as of the date of the participant's election.

(d) In the event of the exercise of a Stock Appreciation Right, the
number of shares reserved for issuance hereunder (and the shares subject to
the related option, if any) shall be reduced by the number of shares with
respect to which the right is exercised.

9. Nontransferability. Each Benefit granted under this Plan shall not be
transferable other than by will or the laws of descent and distribution, and
shall be exercisable, during the holder's lifetime, only by the holder.

10. Other Provisions. The award of any Benefit under the Plan may also be
subject to other provisions (whether or not applicable to the Benefit awarded to
any other participant) as the Committee determines appropriate, including,
without limitation, provisions for the purchase of common shares under stock
options in installments, provisions for the payment of the purchase price of
shares under stock options by delivery of other shares of the Company having a
then market value equal to the purchase price of such shares, restrictions on
resale or other disposition, such provisions as may be appropriate to comply
with federal or state securities laws and stock exchange requirements and
understandings or conditions as to the participant's employment in addition to
those specifically provided for under the Plan.

A-2
<PAGE> 30

11. Term of Plan and Amendment, Modification or Cancellation of
Benefits. No Benefit shall be granted after December 8, 2001; provided, however,
that the terms and conditions applicable to any Benefits granted prior to such
date may at any time be amended, modified, extended or canceled by mutual
agreement between the Committee and the participant or such other persons as may
then have an interest therein, so long as any amendment or modification does not
increase the number of shares of Common Stock issuable under this Plan and any
extension does not extend the option term beyond ten (10) years.

12. Taxes. The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares deliverable under the Plan after
giving the person entitled to receive such amount or shares notice as far in
advance as practicable, and the Company may defer making payment or delivery if
any such tax may be pending unless and until indemnified to its satisfaction.

13. Fair Market Value. The Fair Market Value of the Company's shares of
Common Stock at any time shall be determined in such manner as the Committee may
deem equitable or required by applicable laws or regulations.

14. Adjustment Provisions.

(a) If the Company shall at any time change the number of issued
shares of Common Stock without new consideration to the Company (such as by
stock dividend or stock split), the total number of shares reserved for
issuance under this Plan, the maximum number of shares with respect to
which options or Stock Appreciation Rights may be granted to any
individual, the exercise price of outstanding options (other than options
granted prior to July 12, 1994) and the base for measuring a Stock
Appreciation Right and the number of shares covered by each outstanding
Benefit (including the number of shares issuable upon exercise of
outstanding options granted prior to July 12, 1994, which are exercisable
for "reclassification packages" consisting of a combination of cash and
shares, so that the number of shares included in each such reclassification
package shall adjust as herein provided) shall be adjusted so that the
aggregate consideration payable to the Company and the value of each such
Benefit shall not be changed. The Committee shall also have the right to
provide for the continuation of Benefits or for other equitable adjustments
after changes in the shares of Common Stock resulting from the
reorganization, sale, merger, consolidation or similar occurrence.

(b) Notwithstanding any other provision of this Plan, and without
affecting the number of shares otherwise reserved or available hereunder,
the Committee may authorize the issuance or assumption of Benefits in
connection with any merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and conditions as it may deem
appropriate.

15. Amendment and Termination of Plan. The Board of Directors of the
Company may amend the Plan from time to time or terminate the Plan at any time,
but no such action shall reduce the then existing amount of any participant's
Benefit or adversely change the terms and conditions thereof without the
participant's consent. However, except for adjustments expressly provided for
herein, no amendment may, without stockholder approval, (i) materially increase
the Benefits accruing to participants, (ii) materially increase the number of
shares which may be issued, or (iii) materially modify the requirements as to
eligibility for participation in the Plan.

A-3
<PAGE> 31

UAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF UAL CORPORATION

- --------------------------------------------------------------------------------
The undersigned, having received the Notice of Meeting and Proxy Statement,
hereby appoints Gerald Greenwald, John F. McGillicuddy and James J. O'Connor,
and each of them, as proxies with full power of substitution, for and in the
name of the undersigned, to vote all shares of Common Stock of UAL Corporation
owned of record by the undersigned on the matters listed on the reverse side
hereof and, in their discretion, on such other matters as may properly come
before the Meeting of Stockholders to be held at The Drake Hotel, 140 E. Walton
Place, Chicago, Illinois on April 24, 1996, at 10:00 a.m., local time, and any
adjournments or postponements thereof, unless otherwise specified herein.

This card also constitutes voting instructions to the respective Trustees of
the Employees' Stock Purchase Plan, 401(k) Plans and International Employee
Stock Ownership Plans of UAL Corporation or United Air Lines, Inc. to vote, in
person or by proxy, all shares of Common Stock of UAL Corporation allocated to
the accounts of the undersigned held by the Trustees.

IF YOU PLAN TO ATTEND THE MEETING OF STOCKHOLDERS IN PERSON,
PLEASE MARK THE APPROPRIATE BOX ON THE REVERSE SIDE OF THIS CARD.

You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The proxies cannot
vote your shares unless you sign and return this card.

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

DID YOU KNOW ... OUR EFFORTS TO SERVE YOU BETTER ARE BEING RECOGNIZED THE
WORLD OVER?

OUR LATEST HONORS INCLUDE:

- MILEAGE PLUS(R): AIRLINE PROGRAM OF THE YEAR - InsideFlyer magazine,
the leading U.S. frequent traveler publication - second year in a row.

- MILEAGE PLUS: BEST NORTH AMERICAN FREQUENT TRAVELLER PROGRAMME - Inside
Flyer International.

- MILEAGE PLUS: NUMBER ONE FREQUENT FLYER PROGRAM - Business Traveller
Asia-Pacific magazine.

- MILEAGE PLUS: BEST FREQUENT FLYER PROGRAM - USA TODAY International.

- UNITED AIRLINES: BEST U.S. DOMESTIC CARRIER - poll conducted by the
UK's Executive Travel magazine and OAG, the travel information supplier.

DID YOU KNOW ... HOW UNITED IS BRINGING ADVANCED TECHNOLOGY INTO SERVICE FOR
YOU?

- Now you can reach United online! The Friendly Skyline (SM), our World
Wide Web site, at http://www.ual.com, gives you 24-hour access to
information on United services.

- You can shop for flights, hotels and rental cars around the world and
book them from your PC - with UNITED CONNECTION(SM) software.

- You can fly the technologically advanced BOEING 777 - introduced by
United. Our engineers worked with Boeing to give you more space, better
stowage, better in-flight entertainment.

- With E-TICKET (SM), our electronic ticketing service, you can reserve
your flight by phone, then show your photo I.D. at the airport to get
your boarding pass. No tickets to keep track of!

DID YOU KNOW ... WE'RE "UNITING THE WORLD" IN EXCITING NEW WAYS?

- - With our 'ROUND-THE-WORLD SERVICE, United is the [#1 Medallion
only airline with flights that circle the globe, Symbol]
with stops in Los Angeles, Hong Kong, Delhi,
London and New York.

- - And with FRIENDS AROUND THE WORLD, an educational
pen pal program, we're fostering a cultural exchange
among students in "sister cities" on the
'Round-The-World route.

<PAGE> 32

<TABLE>
<S><C>
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

This proxy when properly executed will be voted in the manner directed herein. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" ALL OF THE BOARD OF DIRECTORS' NOMINEES FOR PUBLIC DIRECTOR AND "FOR" PROPOSALS 2, 3 AND 4. If this card constitutes voting
instructions to a plan trustee, such trustee will vote as described in the plan documents and any accompanying materials. In their
discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting.

The Board of Directors recommends a vote FOR all Proposals.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 3. Approval
five Public of Amend-
Director ment to
nominees: 1981
John A. Edwardson Incentive
Gerald Greenwald Stock Plan.
John F. McGillicuddy
James J. O'Connor
Paul E. Tierney DO YOU PLAN TO ATTEND THE YES NO
For, except vote withheld from the MEETING OF STOCKHOLDERS
following nominee(s): FOR AGAINST ABSTAIN IN PERSON?
4. Ratification
- ------------------------------ of the selection
FOR AGAINST ABSTAIN of Arthur
Andersen LLP
2. Approval of as the indepen-
Charter dent accountants.
Amendment in
connection with
Proposed
Stock Split.

, 1996
- -------------------------------------------------------------------------------------------------------------------
SIGNATURE(S) DATE

Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. The signer hereby revokes all proxies heretofore given by the signer to vote
at said Meeting or any adjournments or postponements thereof.

- ----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE

ADMISSION TICKET
MEETING OF STOCKHOLDERS
OF UAL CORPORATION
APRIL 24, 1996
[UAL LOGO] 10:00 A.M.
GOLD COAST ROOM,
THE DRAKE HOTEL
140 EAST WALTON PLACE
CHICAGO, ILLINOIS

- -----------------------------------------------------------------------------------------------------------------------------------
You must present this ticket to the UAL Corporation representative at the entrance to the Gold Coast Room to be admitted to the
Meeting of Stockholders.

-----------------------

IF YOU PLAN TO ATTEND THE MEETING OF STOCKHOLDERS,
PLEASE MARK THE APPROPRIATE BOX ON THE PROXY CARD ABOVE.

-----------------------

</TABLE>