EXHIBIT 10.1
------------
February 24, 2000
Xx. Xxxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Dear Xxxx:
It is with great pleasure that I can confirm the
decision to offer you continued employment with United Air
Lines, Inc. This offer of continued employment is effective
March 1, 2000 ("Effective Date") and supercedes and voids
all agreements you have with United Air Lines, Inc. and UAL
Corporation (together "United") including that Letter
Agreement dated February 27, 1997, the Agreement dated March
1, 1997, and the Letter Agreement dated November 6, 1998.
The continued offer of employment is made on the
following terms:
POSITION
Senior Vice President - People
TERM AND STATUS
The term of your continued employment is effective March 1,
2000 and ends February 28, 2007 ("Term"). During the Term
your employment status shall be as follows:
March 1, 2000 to September 1, 2001 Full-time status
September 1, 2001 to March 1, 2004 Part-time
status with an
established
schedule of an
average of
three days a
week "on-site"
and available
for
consultation at
other times as
needed.
March 1, 2004 through February 28, 2007 On-call status
BASE SALARY
Your annual base salary shall be $212,160 from the Effective
Date to April 13, 2000. Effective April 13, 2000, your base
salary shall be increased to $300,000. Effective April 1,
2001 your base salary shall be increased to $350,000 and
shall remain in effect until March 1, 2004. United may
increase your base salary at its discretion.
PERFORMANCE INCENTIVE PLAN ("PIP") PARTICIPATION
For the Program years 2000 through 2003, you will be
eligible for incentive payments in accordance with the
Program's terms at a target incentive rate of 55% of base
salary. United, in its sole discretion, may include you in
the Program for the Program year 2004 at a rate to be
determined at that time.
NON-QUALIFIED STOCK OPTIONS/EQUITY COMPENSATION
Upon your acceptance of this offer you will return to United
for cancellation all stock options granted to you prior to
February 23, 2000 pursuant to that Letter Agreement between
you and United dated February 27, 1997. You will be
eligible for any grants of stock options or any other equity
compensation for senior officers on or after the Effective
Date through 2003.
EMPLOYEE BENEFITS
You will continue to participate in United's employee
benefit plans and programs offered to senior officers
pursuant to the terms of the employee benefit plans or
programs. Nothing in this offer restricts United from
terminating, amending, adding or replacing any employee
benefit plan or program.
Additional Pension Plan Credit
------------------------------
On February 29, 2004, United will grant you three (3)
additional Years of Participation at your then current
annual base salary under the United Air Lines, Inc.
Management, Administrative and Public Contact Defined
Benefit Pension Plan and Supplemental Plan for purposes of
calculating your pension benefit. The pension benefit
attributable to the additional Years of Participation shall
be paid from the Supplemental Plan.
Vacation/Holidays
-----------------
You will be entitled to four (4) weeks of vacation each year
through 2003. You will not be entitled to take any vacation
on or after March 1, 2004 and will not be entitled to
payment for any accrued but unused vacation at that time.
You will be entitled to all vacation days available to other
senior officers up to March 1, 2004.
Automobile
----------
A leased automobile will be provided to you including
insurance, maintenance and a telephone from the Effective
Date through February 29, 2004. The annual lease cost shall
not exceed $7,500.
DEFERRED COMPENSATION
On the Effective Date, United shall create a bookkeeping
account in your name to which it will credit $1 million.
Each February, May, August and November ("Accounting Date")
thereafter the account shall be credited with interest since
the last preceding Accounting Date computed at the prime
rate as reported in the Wall Street Journal for the current
Accounting Date, or if such Accounting Date is not a
business day, for the next preceding business day until
payment commences. In addition, if you are employed on
August 31, 2001, United shall credit to such account an
additional $200,000. The amounts credited to your deferred
compensation account shall be subject to FICA taxation on
the date credited to the deferred compensation account by
United.
On January 1, 2005, United shall commence payment of the
Deferred Compensation account to you in twenty annual
installments. The annual payment amount shall be determined
by annuitizing the total amount in the deferred compensation
account as of December 31, 2004 for a 20-year certain payout
at the then prime rate but not less than 8%. United may, in
its sole discretion, accelerate the payment of the deferred
compensation account at any time after January 1, 2005.
In the event of your death prior to commencement of the
deferred compensation account or prior to the time the
entire account has been paid, payment shall be made to or
continue to your designated beneficiary, if then surviving,
or if not, to your contingent beneficiary, if then
surviving, or if not, to your estate. After your death
payment of your deferred compensation account shall
commence, if it has not already done so, as soon as
administratively possible to your designated beneficiary.
Your beneficiary designation must be made in writing and
must be filed with the Director of Compensation.
SEVERANCE
In the event your employment is terminated for any reason
other than due to your death or for "Cause", you shall be
entitled to continuation of all benefits and payment of base
salary and crediting of all deferred compensation through
the end of the Term.
In the event your employment is terminated for Cause, base
salary, PIP payments, stock or other equity grants, and
employee benefits (other than those vested under the plans
or by law) shall cease. Payment of the deferred
compensation account shall not commence until January 1,
2005.
For purposes of this Letter "Cause" shall mean any of the
following: (A) an act of willful misconduct or gross
negligence in the performance of your material duties or
obligations to United which (1) continues after written
notice is received by you specifying the alleged failure in
reasonable detail, and (2) is materially and demonstrably
damaging to the relationships of United with its customers,
suppliers, shareholders or employees, or (B) your conviction
of a felony involving moral turpitude, or (C) a material act
of dishonesty or breach of trust on your part resulting or
intended to result directly or indirectly in personal gain
or enrichment at the expense of United.
MISCELLANEOUS
The Letter shall be construed in accordance with the laws of
the State of Illinois, and the rights and obligations of the
parties hereunder shall be construed and enforced in
accordance with, and governed by the laws of the State of
Illinois, without regard to the principles of conflicts of
laws.
Any dispute or controversy arising under or in connection
with the Letter shall be settled exclusively by arbitration
in Chicago, Illinois in accordance with the National Rules
for the Resolution of Employment Disputes of the American
Arbitration Association the in effect. You agree to
arbitration in Chicago, Illinois, agree that judgement may
be entered in the courts of the State of Illinois on any
such arbitration award, agree to the jurisdiction of the
courts of Illinois, both state and federal, for the
enforcement of any such arbitration award and agree not to
disturb such choice of forum.
Xxxx, we are pleased to be able to continue our
relationship. If you have any questions about this
material, please call Fed Xxxxxx or me.
Sincerely,
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Chairman and Chief
Executive Officer
Agreed and accepted this 10 day
of March, 2000.
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
