United Airlines 2010 Annual Report Download - page 173

Relative Performance Program (the “RPP,” and, together with the RSU Program, the “Long-Term Programs”),
each effective January 1, 2011, and the forms of Performance-Based RSU Award Notice and Long-Term
Relative Performance Award Notice to be used to make grants to officers of UAL or a subsidiary under the RSU
Program and the RPP, respectively. The RSU Program was adopted under the 2008 Incentive Plan and the RPP
was adopted under the Incentive Plan 2010.
Each restricted stock unit (“RSU”) under the RSU Program represents the right to receive a cash payment at
the end of a three-year performance period based on the then fair market value of UAL common stock (which
fair market value is determined based on an average closing price over 20 trading days at the end of the period)
provided that UAL’s return on invested capital (“ROIC”) meets or exceeds the entry level ROIC set by the
Compensation Committee. The number of RSUs that become vested under the RSU Program increases as the
Company’s ROIC for the performance period exceeds the entry level ROIC. The Compensation Committee may,
in its discretion, establish a maximum payment amount with respect to each RSU that becomes vested with
respect to a performance period. Payments earned under the RSU Program for a performance period will be made
to participants in a lump sum by March 15 of the year following the end of the three-year performance period.
Awards under the RPP are paid in cash at the end of a three-year performance period if the Company
achieves a minimum level of performance with regard to its cumulative pre-tax margin (which is generally equal
to the Company’s pre-tax income over the performance period divided by its revenues over such period) as
compared to the cumulative pre-tax margin achieved by the Company’s peer group (which is generally equal to
the peer companies’ aggregate pre-tax income over the performance period divided by the peer companies’
aggregate revenues over such period). The amount of the payment under the RPP is generally based on a
percentage of a participant’s annual base salary, which percentage varies in relation to the Company’s
performance compared to its peer group. The RPP provides that the Company’s peer group for this purpose
initially includes AMR Corporation, Delta Air Lines Inc., US Airways Group, Inc., Southwest Airlines Co.,
JetBlue Airways Corporation, and Alaska Air Group, Inc.; provided, however, that the peer group is subject to
potential change in accordance with the terms of the RPP. Payments earned under the RPP for a performance
period will be made to participants in a lump sum by March 15 of the year following the end of the three-year
performance period.
Generally, except as otherwise provided in a participant’s employment agreement, a participant in a Long-
Term Program must remain continuously employed from the date the participant received an award for a
performance period through the last day of such performance period in order to receive a payment with respect to
the award. However, if a participant retires during the performance period, then the participant will receive a
pro-rata payment of the award (based on the number of days of participation in the Long-Term Program through
the date of retirement) if and when actively employed participants receive payments based on the Company’s
actual performance results. Further, if a participant dies or becomes disabled during a performance period then,
except as otherwise provided in the participant’s employment agreement, a pro-rata portion of the award (based
on the number of days of participation in the Long-Term Program during the performance period and assuming
achievement of the target level of performance) will be paid as soon as possible following the participant’s death
or disability.
In the event a change of control of the Company occurs during a performance period, the performance goal
under the Long-Term Program for such performance period will be deemed to be achieved at the change of
control level (as pre-established by the Compensation Committee for such performance period) and, except as
otherwise provided in a participant’s employment agreement, those participants who remain employed by the
Company or a subsidiary until the end of the performance period will receive full payment of the award at that
level. Retirement eligible participants will receive pro-rated payments after each year during the performance
period. Except as otherwise provided in a participant’s employment agreement, any participant who experiences
a qualifying event (which is generally a termination of employment under circumstances entitling the participant
to a cash severance payment) or who terminates employment by reason of death, disability or retirement
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