Employee Benefit Plans

6 Months Ended

Jun. 30, 2021

Defined Benefit Pension and Other Postretirement Benefit Plans. The Company's net periodic benefit cost includes the following components for the three months ended June 30 (in millions):


	Pension Benefits				Other Postretirement Benefits				Affected Line Item in the Statements of Consolidated Operations
	2021		2020		2021		2020
Service cost	$	60	$	53	$	3	$	3	Salaries and related costs
Interest cost	46		56		7		7		Miscellaneous, net
Expected return on plan assets	(71)		(91)		(1)		(1)		Miscellaneous, net
Amortization of unrecognized (gain) loss	42		37		(7)		(11)		Miscellaneous, net
Amortization of prior service credit	—		—		(31)		(31)		Miscellaneous, net
Special termination benefits	—		35		—		125		Miscellaneous, net
Settlement loss — Voluntary Programs (defined below)	—		71		—		—		Miscellaneous, net
Other	1		11		—		—		Miscellaneous, net
Total	$	78	$	172	$	(29)	$	92

The Company's net periodic benefit cost includes the following components for the six months ended June 30 (in millions):


	Pension Benefits				Other Postretirement Benefits				Affected Line Item in the Statements of Consolidated Operations
	2021		2020		2021		2020
Service cost	$	120	$	107	$	5	$	5	Salaries and related costs
Interest cost	92		112		13		14		Miscellaneous, net
Expected return on plan assets	(142)		(182)		(1)		(1)		Miscellaneous, net
Amortization of unrecognized (gain) loss	85		72		(14)		(22)		Miscellaneous, net
Amortization of prior service credit	—		—		(62)		(62)		Miscellaneous, net
Special termination benefits	—		35		46		125		Miscellaneous, net
Settlement loss — Voluntary Programs (defined below)	—		71		—		—		Miscellaneous, net
Other	1		14		—		—		Miscellaneous, net
Total	$	156	$	229	$	(13)	$	59

In 2020 and 2021, the Company offered several voluntary leave programs and voluntary separation programs ("Voluntary Programs") to certain eligible employees, which in some cases included a partially-paid leave of absence with active health benefits and travel privileges. Under these Voluntary Programs, employees generally separated (or will separate) from employment with certain post-employment health benefits and travel privileges.

Included in the Voluntary Programs offered during the first quarter of 2021, the Company offered special separation benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees. The subsidies are in the form of a one-time contribution to a notional Retiree Health Account of $125,000 for full-time employees and $75,000 for part-time employees. As a result, the Company recorded $46 million for those additional benefits in the three months ended March 31, 2021.

During the second quarter of 2020, the Company offered Voluntary Programs to its U.S.-based front-line employees, excluding pilots, and management and administrative employees. Included in these Voluntary Programs, the Company offered special separation benefits in the form of additional years of pension service and additional subsidies for retiree medical costs (based on employee group, age and completed years of service). As a result, the Company recorded, in the second quarter of 2020, $35 million and $125 million, respectively, for those additional benefits. Also, the Company recognized a $71 million settlement loss related to the defined benefit pension plan covering certain U.S. non-pilot employees in the second quarter of 2020.

Share-Based Compensation. During the six months ended June 30, 2021, UAL's Board of Directors and stockholders approved the United Airlines Holdings, Inc. 2021 Incentive Compensation Plan (the "2021 Plan"). The 2021 Plan is an incentive compensation plan that allows the Company to use different forms of equity incentives to attract, retain and reward officers and employees. Under the 2021 Plan, the Company may grant: nonqualified stock options; incentive stock options (within the

meaning of Section 422 of the Internal Revenue Code of 1986); stock appreciation rights ("SARs"); restricted shares; restricted stock units ("RSUs"); performance units; cash incentive awards and other equity-based and equity-related awards. An award (other than an option, SAR or cash incentive award) may provide the holder with dividends or dividend equivalents. The 2021 Plan replaces the United Continental Holdings, Inc. 2017 Incentive Compensation Plan (the "2017 Plan"). Any awards granted under the 2017 Plan prior to the approval of the 2021 Plan remain in effect pursuant to their terms. Awards may not be granted under the 2021 Plan after May 26, 2031.

During the six months ended June 30, 2021, UAL granted share-based compensation awards pursuant to both the 2017 Plan and the 2021 Plan. These share-based compensation awards included 2.9 million RSUs, consisting of 1.3 million time-vested RSUs and 1.6 million short-term performance-based RSUs. A majority of the time-vested RSUs vest equally in 25% increments every 6 months over a two-year period from the date of grant. The short-term performance-based RSUs vest upon the achievement of established goals based on financial and customer satisfaction metrics for the performance period January 1, 2021 to December 31, 2021. RSUs are generally equity awards settled in stock for domestic employees and liability awards settled in cash for international employees. The cash payments are based on the 20-day average closing price of UAL common stock immediately prior to the vesting date.

The table below presents information related to share-based compensation (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Share-based compensation expense	$	69	$	24	$	103	$	42

	June 30, 2021		December 31, 2020
Unrecognized share-based compensation	$	191	$	88