April 24, 2018 / 6:24 PM / 4 months ago

United Airlines CEO forgoes 2017 bonus, board chairman to step down

NEW YORK (Reuters) - United Airlines’ (UAL.N) chief executive decided to do without his 2017 annual bonus and the carrier’s board chairman will step down, United said in a regulatory filing on Monday, amid ongoing fallout surrounding its customer-service failures.

FILE PHOTO: A United Airlines Boeing 737-900ER plane takes off from Los Angeles International airport (LAX) in Los Angeles, California, U.S. March 28, 2018. REUTERS/Mike Blake/File Photo

United Chief Executive Officer Oscar Munoz requested that he not be given his performance-based 2017 bonus payment, the company said. The airline also slashed other executive bonuses by 20 to 30 percent as part of an incentive program designed to tie executive compensation more directly to improved customer satisfaction.

“I felt it was important to send a message about the culture of accountability and integrity that we are building here as a United team,” Munoz said in a letter to employees on Monday.

Oscar Munoz, CEO of United Airlines, discusses his vision for the company, in Chicago, Illinois, U.S., March 21, 2018. REUTERS/Kamil Krzaczynski

“We had some incredible successes in 2017 but also some setbacks.”

United, the third-largest U.S. carrier by passenger traffic, suffered a public-relations debacle last year when a video of a passenger being violently dragged from his flight went viral. The April 2017 incident sparked widespread consumer outrage and prompted intervention by the U.S. Congress. [L1N1HZ25Y]

In response to the episode, Munoz’s employment agreement was amended last year to reverse his planned 2018 appointment to board chairman, instead leaving “future determinations related to the Chairman position to the discretion of the Board.”

In the months since, the airline has struggled to regain consumer and investor trust, as missteps continued into the new year.

Last month, the death of a puppy in the overhead bin of one of its flights renewed public criticism of the airline and attracted the unwanted attention of federal regulators, including the introduction of a bill in Congress to regulate more tightly in-flight storage of animals.

In the Monday filing with the U.S. Securities and Exchange Commission, United said two board members, Chairman Robert Milton and director Laurence Simmons, would step down.

United gave no reason for the moves, and a company representative declined to elaborate.

The board will elect a new independent chairman, but will not replace the head count, reducing the size of the group to 14 directors from 16.

In 2017, Munoz’s total compensation was $9.56 million, including a base salary of $1.25 million and $7.84 million in stock awards.

Shares of United Continental Holdings Inc were down 3.6 percent at $67.77 on Tuesday afternoon.

Reporting by Alana Wise in New York; Editing by Matthew Lewis

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