United Airlines 2010 Annual Report Download - page 174

following a change of control and before the end of the performance period during which the change of control
occurs will receive a pro-rata payment of the award (based on the number of days of participation in the Long-
Term Program during such performance period) no later than March 15 of the year following the year during
which such event occurred.
In general, and subject to limited exceptions set forth in the Long-Term Programs, the Compensation
Committee has the right to reduce or eliminate a payment under a Long-Term Program that would otherwise be
payable if the Compensation Committee determines that such reduction or elimination is appropriate based on
the Company’s level of unrestricted cash and cash available under unused credit lines as of the end of the
performance period; provided, however, that any such reduction or elimination shall apply in a uniform manner
to all participants who are otherwise entitled to receive a payment under the Long-Term Program with respect to
that performance period.
Restricted Share Awards
On February 17, 2011, the Compensation Committee approved a form of Restricted Share Award Notice
that will be used to grant restricted shares under the 2008 Incentive Plan. These restricted shares will vest over
time, subject to the employee’s continued employment with the Company or its subsidiaries from the date of
grant through each vesting date (except as otherwise provided by the Compensation Committee or as provided in
the 2008 Incentive Plan or the employee’s employment agreement). The Restricted Share Award Notice shall
provide the specific vesting schedule for each grant of restricted shares.
Notwithstanding the vesting schedule that will be included in a Restricted Share Award Notice, if the
employee remains continuously employed by the Company or an affiliate from the date of grant until the date
upon which a qualifying event (which is generally a termination of employment within two years following a
change of control of the Company under circumstances entitling the employee to a cash severance payment)
occurs, then on the date of such qualifying event the employee’s rights with respect to all restricted shares that
are not then vested will become vested and all restrictions on such restricted shares will lapse. Further, if the
employee’s employment is terminated by reason of death or disability, then, except as otherwise provided in the
employee’s employment agreement, all restricted shares that are not then vested will fully vest. The holder of
restricted shares will be eligible to receive any dividends or other distributions paid or distributed with respect to
the restricted shares at the time the restricted shares vest, if at all.
Merger Performance Incentive Awards
On February 17, 2011, the Compensation Committee approved the form of Merger Performance Incentive
Award Notice to be used to make grants of restricted stock units (the “Merger Incentive RSUs”) under the 2008
Incentive Plan. These awards will represent a one-time grant of restricted stock units intended to provide
incentives related to the achievement of performance goals arising out of the integration of the operations of
United and Continental.
Each Merger Incentive RSU represents the right to receive a cash payment upon achievement of the related
performance goal based on the then fair market value of a share of UAL’s common stock (which fair market
value is determined based on an average closing price over 20 trading days immediately preceding the time of
achievement of such goal). Vesting of a portion of the Merger Incentive RSUs is based on achievement of certain
milestones that have been set by the Compensation Committee (including integration of customer loyalty
programs, integration of reservation systems, ratification of new joint collective bargaining agreements, and
obtaining a single operating certificate from the FAA). Vesting of the remainder of the Merger Incentive RSUs is
based on achievement of revenue and cost synergies over a three-year performance period ending on
December 31, 2013. As a general matter, each tranche of the Merger Incentive RSUs will vest and will be paid in
cash to the recipients following the achievement of the performance goal for such tranche; provided that the
tranche relating to the achievement of revenue and cost synergies will vest and be paid after the three-year
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