Free flights for life! Inside former United CEO Jeff Smisek's severance package

 Former United CEO Jeff Smisek will (probably) get free flights for life. Photo: United.

Former United CEO Jeff Smisek will (probably) get free flights for life. Photo: United.

As you know, United CEO Jeff Smisek left the company on Tuesday amid a federal investigation over the airline's relations with the Port Authority of New York and New Jersey. 

Here's is some of what Smisek is getting on the way out, according to an SEC filing:

  • "Mr. Smisek will receive a separation payment in the amount of $4,875,000, payable as a lump sum in cash."
  • "The Company will also transfer to Mr. Smisek the title to his current Company vehicle."
  • Mr. Smisek will also receive flight benefits (plus tax indemnification payments on such flight benefits) and parking privileges for the remainder of his lifetime.
  • Smisek may earn a pro-rated portion of his usual performance bonus if "...the Company achieves certain performance targets."
  • "Based on time served by Mr. Smisek in the respective performance periods under his Restricted Share Awards for fiscal years 2013, 2014 and 2015, the Company will vest and deliver to Mr. Smisek a total of 60,746 shares of the Company’s common stock."
  • Mr. Smisek and his eligible dependents will be provided continued coverage under the Company’s welfare benefit plans until he becomes eligible for Medicare coverage under applicable law

But there's a major catch. If Smisek gets in trouble with the law, he might have to give a lot of this stuff back. See the clawback clause. 

Clawback. The Companies may terminate and require repayment of certain severance payments and benefits provided to Mr. Smisek (including the Separation Payment and the Vested Restricted Shares) if (i) the Companies determine that Mr. Smisek has failed to comply with the cooperation provisions of the Separation Agreement, and Mr. Smisek has failed to remedy any such failure within five days of his receipt of written notice from the Companies of their determination that he has failed to so comply or (ii) Mr. Smisek is convicted or pleads guilty or nolo contendere to any felony or any crime involving moral turpitude which conviction or plea relates to or arises from Mr. Smisek’s service with the Companies.

Here's the full SEC filing, which includes the entire severance agreement. 

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