NOTE 5 - EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans. The Company’s net periodic benefit cost includes the following components (in millions):



	Pension Benefits				Other Postretirement Benefits
	Three Months Ended June 30,				Three Months Ended June 30,
	2017		2016		2017		2016
Service cost	$	49	$	27	$	4	$	6
Interest cost		55		50		17		22
Expected return on plan assets		(61)		(54)		(1)		(1)
Amortization of unrecognized (gain) loss and prior service cost (credit)		32		20		(18)		(14)
Settlement loss		1		1		—		—

Total	$	76	$	44	$	2	$	13


	Pension Benefits				Other Postretirement Benefits
	Six Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Service cost	$	98	$	55	$	6	$	10
Interest cost		110		101		34		44
Expected return on plan assets		(121)		(108)		(1)		(1)
Amortization of unrecognized (gain) loss and prior service cost (credit)		63		38		(36)		(27)
Settlement loss		2		2		—		—

Total	$	152	$	88	$	3	$	26

During the three and six months ended June 30, 2017, the Company contributed $160 million and $240 million, respectively, to its U.S. domestic tax-qualified defined benefit pension plans.

Share-Based Compensation. During the first six months of 2017, UAL’s Board of Directors and stockholders approved the United Continental Holdings, Inc. 2017 Incentive Compensation Plan (the “2017 Plan”). The 2017 Plan is an incentive compensation plan that allows the Company to use different forms of long-term equity incentives to attract, retain, and reward officers and employees (including prospective officers and employees). The 2017 Plan replaced the United Continental Holdings, Inc. 2008 Incentive Compensation Plan (the “2008 Plan”). Any awards granted under the 2008 Plan prior to the approval of the 2017 Plan remain in effect pursuant to their terms. Awards may not be granted under the 2017 Plan after May 24, 2027. Under the 2017 Plan, the Company may grant: non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986), stock appreciation rights, restricted shares, restricted share units (“RSUs”), performance compensation awards, performance units, cash incentive awards, other equity-based and equity-related awards, and dividends and dividend equivalents.

In the six months ended June 30, 2017, UAL granted share-based compensation awards pursuant to both the 2008 Plan and the 2017 Plan. These share-based compensation awards include 1.5 million RSUs, consisting of 0.9 million time-vested RSUs and 0.6 million performance-based RSUs, and approximately 36 thousand stock options. The time-vested RSUs vest pro-rata, on February 28th of each year, over a three year period from the date of grant. These 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 performance-based RSUs vest based on the Company’s relative improvement in pre-tax margin for the three years ending December 31, 2019. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. The Company accounts for the performance-based RSUs as liability awards.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Share-based compensation expense	$	33	$	3	$	56	$	13

	June 30, 2017		December 31, 2016
Unrecognized share-based compensation	$	123	$	65

Profit Sharing Plans. Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special charges, profit sharing expense and share-based compensation. Profit sharing percentages range from 5% to 20% depending on the work group, and in some cases profit sharing percentages vary above and below certain pre-tax margin thresholds. Eligible U.S. co-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker’s annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic work groups. Eligible non-U.S. co-workers receive profit sharing based on the calculation under the U.S. profit sharing plan for management and administrative employees. Profit sharing expense is recorded as a component of Salaries and related costs in the Company’s statements of consolidated operations.