United Air to Accept Board Overhaul in Proxy Dispute Dealby and
Chairman Henry Meyer to step down; activists to gain seats
Settlement pact could be announced as early as Wednesday
United Continental Holdings Inc. is nearing an agreement with activist investors that would include replacing Chairman Henry Meyer III as part of a broader board overhaul, people with familiar with the talks said.
Meyer’s departure would clear the way for a successor with deep airline experience, one of the changes sought by Altimeter Capital Management LP and PAR Capital Management Inc., which combined control 7.2 percent of the airline’s stock. The 66-year-old retired banker has served as United’s non-executive chairman since the September ouster of former Chief Executive Officer Jeff Smisek, but drew criticism for communication lapses when new CEO Oscar Munoz fell gravely ill.
Contenders to succeed Meyer include two directors who joined the United board a day before the proxy fight became public: former Air Canada CEO Robert Milton and James Whitehurst, a former chief operating officer at Delta Air Lines Inc., three of the people said. Milton is poised to emerge as the winner because of his stint heading the Canadian carrier and its holding company, two of the people said.
The company has been working with the investors to end a boardroom battle that threatened to overshadow Munoz’s efforts to turn around United, whose stock and operational performance have largely lagged peers since it acquired Continental Airlines in 2010. The parties could have an agreement in hand by the time United reports earnings on April 20, one of the people said.
The negotiations are ongoing and a final agreement hasn’t been reached, the people said. United spokeswoman Megan McCarthy and a representative for Par and Altimeter both declined to comment. Meyer didn’t respond to a request for comment.
The funds are set to gain representation on United’s board, but not the six seats they had requested, the people said. Two or three of the investors’ candidates are under consideration for director posts, while former Continental CEO Gordon Bethune is no longer in the running, they said.
The boardroom tussle broke into public view March 8, when the funds proposed an insurgent slate that included Bethune, who revived Continental in the 1990s, former Orbitz Worldwide Inc. CEO Barney Harford and Brad Gerstner, founder and CEO of Altimeter Capital.
The activist investors said in a letter that they supported Munoz and weren’t seeking to control the board. Rather, they believe the airline would be better served by naming either Bethune, Milton or Whitehurst as chairman.
Employees have rallied in support of Munoz, who took over from Smisek in September after leaving railroad CSX Corp. Munoz was sidelined with a heart attack about a month later and subsequently received a heart transplant.
Pilots and flight attendants picketed Par and Altimeter headquarters in Boston on April 6, complaining that the board fight was creating unnecessary distractions.
During his recovery, Munoz made appearances around the company and pushed for labor peace as a step to revitalizing United’s culture and improving service. The approach has been “night and day” from the divisive tactics favored by previous management teams, said Craig Symons, president of the union that represents United’s flight dispatchers.
“It is finally a decent place to work,” he said by phone. “I haven’t seen it this optimistic in a long time.”