Case 2: Ethics Dilemma: Resistance to Clawback CEO Severance Pay at United Airli

Case 2: Ethics Dilemma: Resistance to Clawback CEO Severance Pay at United Airlines
A recent scandal involving United Airlines’ (former) CEO Jeffrey Smisek led to his termination. Smisek re-instituted an unprofitable air route between Newark International Airport and an airport in Columbia, South Carolina. Although re-establishing a money-losing air route is not unethical, Smisek made the decision outside the standard decision processes. Smisek made the decision to start up the unprofitable air route in response to a threat by David Samson, Chair of the Port Authority of New York and New Jersey, to prohibit the airline from building a hangar at the Newark Airport.
The United board of directors terminated Smisek’s employment during a federal corruption investigation on other matters. Smisek received a generous severance package including cash and restricted stock totaling nearly $29 million. Outraged by this decision, a shareholder group filed a lawsuit, demanding that the United board of directors clawback Smisek’s severance compensation because of the circumstances under which he was fired. United’s board of directors refused, arguing that taking back Smisek’s severance package would cause substantial harm to its ability to recruit and retain talent.
11-8. As a compensation professional, what would you do?
11-9. What factor(s) in this ethical dilemma might influence a person (or group) to make a less-than-ethical decision?