Updated from 12:54 p.m. EST

Continental Airlines

(CAL) - Get Report

Tuesday announced initiatives from its board and management aimed at assisting cost-cuts at the nation's fifth-largest airline.

Continental said its board has agreed to cut base retainer fee and meeting fees by 30%, beginning Feb. 28. It will also forgo its entire stock option grant for 2005.

The board's audit committee, however, will see no change in its fees because of increased responsibilities resulting from the Sarbanes-Oxley act.

"Our board took this action in recognition of the sacrifice our co-workers are being asked to make to help assure the survival of our airline," said Larry Kellner, Continental's chief executive. "We appreciate their efforts to work together toward our goal of cutting $500 million out of our pay and benefit costs."

Separately, the board adjusted the incentive program for managers so they will not be rewarded for improvements in airline performance resulting from employee pay and benefit cuts. The board raised the incentive program's financial performance targets so as to offset the positive impact of the cuts.

Also, Continental's officers have agreed to surrender all of their June 2005 restricted stock units, or RSUs. In a press release, the airline said the move was aimed at avoiding "even the appearance that officers would personally benefit from the pay and benefit reductions." Officers would have been able to cash in the RSUs had Continental shares risen to $17.48 by June 30.

In November, Continental said it needed to make $500 million in annual pay and benefit reductions by the end of February. At the time, the airline said about half the savings would come from productivity and benefit changes, and the other half from wage cuts.

The airline has made some progress toward the goal. Airport ticket, gate, ramp and cargo agent employees have agreed to $99 million in cuts, while management and clerical employees have assented to $48 million and reservation workers have agreed to another $22 million.

The airline says it continues to negotiate with other employee groups.

Continental was the last of the U.S. network airlines to seek companywide pay cuts in the wake of the Sept. 11, 2001, terrorist attacks.

Airlines' revenue remains under pressure from overcapacity, fierce price competition and high fuel costs.

Shares were down 5 cents, or 0.5%, at $10.68.