Activist investors question United Airlines CEO's board role, pay
By Jeffrey Dastin and Alwyn Scott
NEW YORK (Reuters) - The two hedge funds that launched a boardroom fight with United Continental Holdings Inc (UAL.N: Quote) last week oppose the airline's plans to give Chief Executive Oscar Munoz the additional role of chairman and have concerns about his compensation, according to a person familiar with the matter.
The funds, PAR Capital Management Inc and Altimeter Capital Management LP, on Tuesday described United's performance as "inexcusable" and asked shareholders to consider six new directors for the company's board, including former Continental Airlines chief Gordon Bethune.
They are expected to lay out more specific claims about the company in coming weeks that address what they believe are the causes of the No. 3 U.S. airline's low customer satisfaction scores and its sagging stock, down almost 14 percent in the past 12 months.
The funds, which together own 7.1 percent of United, have said they support Munoz as CEO, but their doubts about United's pay policies and its plan to make him chairman could become a flashpoint as the long-running struggle over the airline's management develops.
United has refused to appoint Bethune as chairman, ending months of talks with the funds in early March, the source and two other people familiar with the matter said. That refusal led the funds to take their objections public last week, the sources said.
United declined comment on the talks.
The activist investors question whether Munoz, a former president at railroad operator CSX Corp (CSX.O: Quote), was guided well by United's board in allowing him to spend his first weeks after starting the job in September talking to the media and workers rather than focusing on capital allocation, for example, the first source said.
The two funds called the board "underqualified" last week because it lacked what they consider experienced airline executives. Continued...