As UAL makes its final preparations for tomorrow’s confirmation hearing, it surely is focusing its aim on the objections of the trustees for the holders of unsecured aircraft public debt and on the objections of the unions for the pilots (ALPA) and the flight attendants (AFA). Recent filings by UAL, however, suggest that its attitude as it enters the confirmation hearing is best captured by Alfred E. Neumann’s favorite catch-phrase, “What, me worry?”
The Unions’ Attack on UAL’s Proposed Management Equity Incentive Plan
The WSJ Law Blog, Ideoblog, and the Business Law Prof Blog recently cited to and commented upon last Sunday’s highly-charged NYT article by Gretchen Morgenson attacking the UAL Management Equity Incentive Plan (MEIP) as excessive, and even “exceed[ing] what was described as ‘reasonable’ by Towers Perrin, the compensation consultant employed by the company.” These harsh refrains echo the separate objections filed by ALPA and AFA (here and here) against the proposed MEIP (which at the time the objections were filed offered almost 50% more than the recent scaled down version approved by the Unsecured Creditors’ Committee and made part of the revised “Second Amended Plan” filed yesterday).
An interesting bankruptcy litigation angle to this dispute over the propriety of the MEIP relates to the unions’ proposed use of expert testimony and other evidence related to “employee morale” or “shared sacrifice” in support of their objections. Last Friday, UAL filed this motion in limine to exclude the unions’ use of such testimony and evidence. The primary focus of this objection is UAL’s attempt to bar the testimony of the AFA’s proferred expert, Thomas Jones, a professor of business ethics at the University of Washington School of Business, who was retained by the AFA to testify about the “ethical questions” surrounding UAL’s proposed MEIP. UAL argues in its motion in limine :

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