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United suspends automatic promotion of Munoz to chairman

United Continental chief executive Oscar Munoz will not automatically assume the role of chairman in 2018 as previously planned, as the airline group also introduced plans to more directly link employee bonuses to customer experience.

The moves come less than a fortnight after the company became the centre of a storm over the forcible removal of a passenger from a crowded United flight, as well as a subsequent slow-footed response from management.

In a regulatory filing late on Friday, United said that Mr Munoz’s employment agreement had been amended earlier this week to strip out a provision appointing him chairman of the board at the 2018 shareholder meeting.

The change was initiated by Mr Munoz, the company said. The filing did not say Mr Munoz would not take up the role, but rather that “future determinations related to the chairman position” would be left to the “discretion of the board.”

Mr Munoz — whose total compensation in 2016 was valued at $18.7m, the bulk of which was in United stock, according to a separate filing on Friday — has drawn lasting criticism for his poor handling of the passenger scandal. His immediate defence of airline staff before offering a more unconditional mea culpa was met with a torrent of criticism in public debate.

United had previously announced that it would undertake an internal review of its policies in the wake of the incident, which left Dr David Dao with a broken nose, concussion and two lost teeth after being dragged from an overflowing United flight by airport police in Chicago.

It is due to announce the results of that review by April 30. The company has said it will also discuss those findings at an upcoming hearing before the US House of Representatives’ transportation committee.

The regulatory filing on Friday said that the company took “recent events extremely seriously” and was in the process of developing targeted amendments to its compensation programme design to make sure incentive pay opportunities for 2017 were “directly and meaningfully tied to progress in improving the customer experience and in the necessary cultural and process change in support of this goal.”

While the initial bonus metrics for 2017 which are tied to financial and operating measures will still apply, bonuses for the year “will be more thoroughly linked to demonstrable progress toward improvements in the customer experience and the implementation of necessary cultural and process changes across United.”

The controversy has also weighed on United’s stock, which has fallen 2.7 per cent since the incident on April 9 after video taken by fellow passengers went viral.

Via FT