Wednesday, April 20, 2016

United Continental, Big Shareholders Settle Their Board Fight: PAR Capital and Altimeter Capital to get two seats on United board and have say on third director

The Wall Street Journal 
By David Benoit and Susan Carey
April 20, 2016 7:14 a.m. ET

United Continental Holdings Inc. and two of its big investors have settled a fight over the makeup of the airline’s board of directors, staving off a bruising public battle over the company’s future.

United will appoint two directors chosen by PAR Capital Management Inc. and Altimeter Capital Management LP to its board, the companies said Wednesday morning. A mutually agreed-upon third director will also be named in the next six months, the company said.

The Wall Street Journal had reported Tuesday night that the airline had struck a deal with the shareholders, likely to be announced Wednesday morning.

PAR and Altimeter’s board picks are former Orbitz Worldwide CEO Barney Harford and PAR partner Edward Shapiro.

In addition, United elected Robert Milton, a former Air Canada chief executive, as nonexecutive chairman. United added Mr. Milton and two other independent directors to its board last month.

“When taken together with substantial changes the board independently has adopted…the addition of the two new directors designated by Altimeter and PAR will transform our board governance,” said United Chief Executive Oscar Munoz.

PAR and Altimeter together own 7.1% of United’s stock and have been pressing since early March to put more people with airline experience on the United board. The hedge funds were pushing for a slate of six director nominees to be considered by shareholders at the carrier’s annual meeting later this spring, including Gordon Bethune, a former Continental chief executive they wanted named chairman.

The board fight came at a difficult time for United, which was working to overcome performance issues that had dogged the company since United’s 2010 merger with Continental. It also began just as Mr. Munoz was easing back to work full time after a January heart transplant.

At the time, United called the shareholders’ move a “hostile action.” A day before PAR and Altimeter launched their fight, United added three independent directors to its 12-member board, including two with airline experience.

PAR and Altimeter, longtime airline investors that don’t typically wage public board fights, believed the carrier needed to add even more airline expertise to its board. The carrier challenged their claims about the board’s inexperience, pointing to Mr. Munoz’s decade of service on United’s board.

The two sides had engaged in talks for several weeks, ultimately agreeing on a deal after the board informed the investors it was planning to change the chairman to Mr. Milton, one person said. With the addition of Messrs. Harford and Shapiro and the to-be-named director, half of United’s board will have changed over in recent months.

Mr. Munoz, 57, took the lead in brokering the settlement with PAR and Altimeter, according to people familiar with the negotiations. The former railroad executive was plucked from United’s board to take the helm at the airline after its prior CEO was ousted.

He was slated to become United’s chairman in 2017, but United’s decision to make Mr. Milton nonexecutive chairman delays that move until at least 2018, some of the people said.

Original article can be found here:

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