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February 23, 2012 at 10:09 AM EST
Sweating the small stuff at United Continental…
One of the ad campaigns from airline giant United Continental Holdings (UAL) boasts that there may be industry standards, but, “Thankfully, we have our own.” When it comes to executive perks, that’s clearly the case. In fact, a couple of executive benefits laid out in the 10-K that UAL filed on Wednesday strike us as [...]

One of the ad campaigns from airline giant United Continental Holdings (UAL) boasts that there may be industry standards, but, “Thankfully, we have our own.” When it comes to executive perks, that’s clearly the case.

In fact, a couple of executive benefits laid out in the 10-K that UAL filed on Wednesday strike us as quintessential gee-whiz perks — something that probably costs more in legal fees and disclosure headaches than it’s worth, either to the bigwig getting it, or to the company paying for it.

One of these perks is new for 2012, a twist on the company-funded charitable contributions that we used to see directors getting at a variety of companies. But according to the Officer Benefits summary UAL included with its 10-K, beginning this year, executives get to give their favorite causes free airplane tickets: “up to four domestic coach tickets (or two first class domestic tickets) each year.”

The other has been around for almost two years, but caught our attention because the company appears to have just gotten around to filing the plan document. To our eye, it falls squarely in the finding-ways-to-give-executives-more-cash department. Somewhat disingenuously called the Management Cash Match program, it’s designed to sound like a mere extension of the company’s 401(k) matching contribution:

“The purpose of the Program is to pay matching contributions to eligible employees in cash where, as a result of IRS limits, such matching contributions can not be made to the … 401(k) Plan…”

In fact, the benefit has only a passing relationship with the 401(k). To be eligible, it’s true, executives must max out their 401(k) contribution (not counting “catch-up” contributions for older folks — so $16,500 in 2010, the year the plan was adopted). But beyond that, the company basically just gives the executive an additional 4% of whatever he makes over $245,000 a year (based on an IRS limit for tax-favored retirement benefits).

Company matches in 401(k) plans, of course, are supposed to encourage people to save for retirement. UAL provides its regular 401(k) match on that maximum contribution that executives have to make to get the benefit — presumably that helps encourage saving. But beyond that, the company doesn’t seem to require any additional saving — or any additional action of any kind, really — in order to earn the additional 4% “matching” contribution on income over $245,000. The executive just has to earn the salary to get the bonus.

The example UAL provides in the document is for someone making $300,000 a year, with a modest $2,200 coming from this program. But for, say, CEO Jeffery Smisek, who made $791,250 in salary in 2010, the 4% “match” was probably closer to $21,850. Given that Smisek’s other pay doesn’t exactly make it hard for him to save for retirement — his pension benefits alone were worth something like $9 million, according to UAL’s last proxy — we wonder why the company doesn’t just give the man an additional $22,000 in salary and save everyone the headache.

When it comes down to it, we get that free airline tickets are relatively easy to give away when you’re an airline, and that no one who can afford to max out their 401(k) likes bumping up against the IRS’s limits (which are meant to prevent taxpayers from subsidizing savings for people who don’t need the incentives).

But are these perks really something UAL executives were clamoring for? The language in the executive compensation section of UAL’s proxy is all about “Attracting, retaining and appropriately rewarding our executives.” But the top guys, at any rate, took home millions — $4.3 million in cash alone for Smisek, and $2.5 million for Chief Revenue Officer James Compton last year; surely they give to charity unprompted, and could front some airfares on their own (and maybe already do). Were they about to quit over a handful of airline tickets and less than $25,000 in fake retirement-plan contributions?

We have our doubts. But if they were, we suggest that maybe they could pay a little more attention to little things like customer service.

Image source: loose change via Shutterstock.com

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