Item 5.02. Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Executive Transition
On December 5, 2019, United Airlines Holdings,
Inc. (the “Company”), the parent company of United Airlines, Inc. (“United”), announced that Oscar Munoz
will transition from the role of Chief Executive Officer of the Company following the Company’s 2020 Annual Meeting of Stockholders
(the “2020 Annual Meeting”) and assume the role of Executive Chairman of the Board of Directors of the Company (the
“Board”), and that J. Scott Kirby, currently the President of the Company, will assume the role of Chief Executive
Officer of the Company at such time. The 2020 Annual Meeting is scheduled for May 20, 2020.
Mr. Kirby, 52, has served as President
of the Company and United since August 2016. Prior to joining the Company, from December 2013 to August 2016, Mr. Kirby served
as President of American Airlines Group Inc. and American Airlines, Inc. Mr. Kirby also previously served as President of US Airways
from October 2006 to December 2013. Mr. Kirby held significant other leadership roles at US Airways and at America West prior to
the 2005 merger of those carriers, including Executive Vice President-Sales and Marketing (2001 to 2006); Senior Vice President,
e-business (2000 to 2001); Vice President, Revenue Management (1998 to 2000); Vice President, Planning (1997 to 1998);
and Senior Director, Scheduling and Planning (1995 to 1998). Prior to joining America West, Mr. Kirby worked for American Airlines
Decision Technologies and at the Pentagon.
The Company has issued a press release
related to the transition. The press release is attached as Exhibit 99.1.
Transition Agreement with Mr. Munoz
On December 4, 2019, the Company and United
entered into a Transition Agreement with Mr. Munoz (the “Transition Agreement”) reflecting the terms and conditions
of the transition and Mr. Munoz’s employment. The Transition Agreement provides that Mr. Munoz will continue to serve as
Chief Executive Officer and a director of the Company through the 2020 Annual Meeting and that, during this period, Mr. Munoz’s
employment will continue to be governed by the terms and conditions of his Employment Agreement, dated December 31, 2015, with
the Company and United (as amended, the “Employment Agreement”). Pursuant to the Transition Agreement, Mr. Munoz will
transition from the position of Chief Executive Officer of the Company and United following the 2020 Annual Meeting and will assume
the role of Executive Chairman at such time. The Transition Agreement contemplates that Mr. Munoz will serve as Executive Chairman
and remain a director of the Company until the date of the Company’s 2021 Annual Meeting of Stockholders (the “2021
Annual Meeting,” and such period, the “First Transition Period”). During the First Transition Period, Mr. Munoz
will receive a base salary at an annual rate of $2,000,000 and will generally continue to be eligible to participate in senior
executive-level employee benefit programs. Mr. Munoz will not be entitled to receive any annual incentive compensation with respect
to any year after 2020 or any grants of long-term incentive compensation following the 2020 Annual Meeting. As of the date of the
2021 Annual Meeting, Mr. Munoz will transition from his role as Executive Chairman and as a director of the Company, and will continue
as a non-officer employee until March 1, 2022 (such period, the “Second Transition Period”). During the Second Transition
Period, Mr. Munoz will receive a base salary at an annual rate of $360,000 and will be eligible to participate in those employee
benefit programs that are generally available to non-officer employees of the Company.
Under the Transition Agreement, if Mr.
Munoz’s employment with the Company is terminated by the Company without cause, by Mr. Munoz for good reason or due to Mr.
Munoz’s death or disability, in each case during either the First Transition Period or Second Transition Period, then in
lieu of any payments or benefits under the Employment Agreement, Mr. Munoz would be entitled to receive the payments and benefits
that he would have otherwise received under the Transition Agreement had his employment not terminated. The Transition Agreement
also includes certain restrictive covenants, including confidentiality, non-solicitation and non-competition obligations from the
Employment Agreement that are incorporated by reference. The Transition Agreement also contains mutual general releases of claims
among the parties.
The foregoing description of the terms and conditions of the
Transition Agreement does not purport to be complete and is qualified in its entirety by reference to the Transition Agreement
which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Compensation Arrangement with Mr. Kirby
In connection with Mr. Kirby’s responsibilities upon his
transition to the role of Chief Executive Officer, the Compensation Committee of the Board approved an award of premium-priced
stock options (with an exercise price that is 25% higher than the closing stock price of the Company’s common stock on December
4, 2019, the date of grant) with a total Black-Scholes grant value of $9.7 million (the “Option Award”). The options
will have a ten-year term, and will vest in accordance with the following schedule: (i) 11% of the options will vest on May 20,
2023; (ii) 22% of the options will vest on May 20, 2024; (iii) 22% of the options will vest on May 20, 2025; (iv) 22% of the options
will vest on May 20, 2026; (v) 11% of the options will vest on May 20, 2027; and (vi) 12% of the options will vest on May 20, 2028.
The Stock Option Award Notice pursuant to which the Option Award
will be granted is filed as Exhibit 10.2 hereto and is incorporated herein by reference.
Retirement of Jane C. Garvey
On December 3, 2019, Jane C. Garvey notified the Nominating/Governance
Committee of her intention to retire from her role as Chairman of the Board and as a director of the Company at the end of her
current term. Ms. Garvey’s retirement is not a result of any disagreement with the Company.
Mr. Munoz will succeed Ms. Garvey as Chairman of the Board,
effective following the 2020 Annual Meeting. The independent members of the Board have chosen Edward M. Philip to serve as Lead
Independent Director at that time.