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United CEO Oscar Munoz loses chairman role after passenger problem

CEO Oscar Munoz's employment agreement with United Airlines has been changed after his handling of the forced removal of a passenger from an aircraft. He will no longer become chairman.

United Airlines CEO Oscar Munoz had been expected to become chairman next year. "The Board believes that separating the roles of chief executive officer and chairman of the board is the most appropriate structure at this time," the company said in a securities filing published on Friday.

The corporation's board announced that the CEO's earlier employment agreement had been changed. Munoz has opted to leave "future determinations related to the Chairman position to the discretion of the Board," United said in a US Securities and Exchange Commission filing.

United Airlines CEO Munoz (Reuters/L. Jackson)

CEO but not chairman Oscar Munoz of United Airlines

Munoz also agreed to the removal of another contract clause that would have allowed him to resign his post as chief executive if he was not also given the role of chairman, according to the filing.

"United's management and the Board take recent events extremely seriously, and are in the process of developing targeted compensation program design adjustments to ensure that employees' incentive opportunities for 2017 are directly and meaningfully tied to progress in improving the customer experience," the filing said.

Overbooking drama for David Dao

The recent events were sparked by the forced removal of passengers from a flight out of Chicago to make space for crew members. The 69-year-old David Dao was one of the passengers, and he was injured and taken to hospital after he was dragged away by police.

The whole dramatic and painful procedure was recorded on smartphones and shown broadly online. It caused a storm of criticism with suggestions that an American with Vietnamese origins had been targeted. Social media users across the United States, Vietnam and China called for a boycott of the airline.

USA United Airlines-Passagier wird aus einem Flugzeug gezogen in Chicago (picture-alliance/AP Photo/A. D. Bridges)

Dr David Dao being dragged off the United flight by police

In their first statements, Munoz and United failed to apologize to Dao for the way he had been treated, instead describing him as "disruptive and belligerent."

Munoz did then apologize and said the airline would review its policies and make further changes.

PR disaster

United said on Friday it had asked a US Senate panel for an extra week to answer detailed questions about the incident.

Munoz was paid $18.7 million (17.4 million euros) in 2016 with $13.8 million in stock awards accounting for a large share of it. His compensation was more than three times the $5.8 million he received in 2015, the filing showed.

In March, trade publication PR Week awarded Munoz its Communicator of the Year award, but by the following month, the publication was reported to be regretting it decision.

"It's fair to say that if PR Week was choosing its Communicator of the Year now, we would not be awarding it to Oscar Munoz," the publication was quoted as saying.

jm/bw (Reuters, AP)

 

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