Doug Parker decries profit sharing....
- Thread starter Lucky777
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conehead777
Veteran
- Dec 8, 2014
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your a Broken record the ps was reduced for pay raises in Lew of higher ps. That's more ps then we get at aa its zero percent . And the aa side is not getting one this year because of jim little .on the twu side700UW said:
- Banned
- #64
No it was not, they got a pay raise last year, not this year.conehead777 said:
It was reduced in 2012 by 33% pilots got a 20% raise from June 2012 till December of 2014, while ACS got 2%-8% raise over the same time period, depending on when they were hired. The non- union ACS have three decades different pay scales
PS was reduced effective this year with no raise given to make it up.
Educate yourself.
I despise Doug Parker, but on this issue, I don't fault him. Starting in May, 2015 (and future years, unless the board changes his compensation formula), Parker received no cash salary and no cash bonus from AA; instead, his compensation is 100% stock and other somewhat complex equity-based pay. And the amount of stock he gets depends on AA's performance.Overspeed said:
I'm not an expert in how much employer stock a CEO should own, but the AA board's compensation committee has consulted experts to get their opinions, as have most other large corporations. In last year's Proxy Statement, AA said that under the board-adopted formula, Parker's 2015 minimum stock holdings were computed to be 116,667 shares, and in April, 2015, Parker owned 625,000 shares, about five times the minimum level as determined by the board. By July 1, 2015, Parker owned 1.6 million shares, more than 13 times the minimum required of him.
In May, 2015, Parker had about 2 million shares worth of additional various equity awards that had not yet vested, worth about $70 million. At AA's current share price, Parker has about $100 million tied up in AA stock between the stock he currently holds plus all the not-yet-vested equity awards.
Parker's total compensation for 2015 is probably north of $20 million in AA stock due to the outrageously huge profit of $6.3 billion, excluding special items, and as he actually gets that stock in the future, it's all ordinary income (not capital gains), and Parker, a one-percenter, is in the top tax bracket of 39.6%, so when he exercises stock options worth, say, $4 million, he has to send the IRS $1.6 million whether or not he sells that stock, so of course he's going to sell quite a bit (most/maybe all) of his new-found stock so he can pay his estimated taxes and have some beer money.
In theory, his ownership percentage actually grows as AA buys back billions worth of AAL stock on the open market, making him even richer, as there are fewer shares outstanding.
When AA gave the employees options for 35 million shares in 2003, there were lots of employees who sold it all on the first day they were permitted to sell, instead of holding onto their shares until January, 2006, when it peaked at $41/sh (which would have been a profit of $36/share, all capital gains).
When AA emerged from bankruptcy, lots of employees boasted here that they were selling all their AAL stock immediately, and thus missed out on the stock more than doubling in value not long after AA left bankruptcy court.
At the extreme, there are AA employees who constantly rationalize that trading away (selling) all of their Horton-granted 15% profit-sharing in exchange for small raises (essentially "buying" their raises) is preferable to having any variable compensation. As an aside, real unions negotiate raises for their membership without giving away their share of the future profits. If management wants to buy back that profit-sharing, real unions would make management pay thru the nose for that privilege. Obviously, no sane individual would confuse the TWU for a real union.
Against that backdrop, it's ironic to read opinions that the CEO isn't holding enough AAL stock, considering that he currently holds more than he did when AA emerged from Ch 11 and he's now paid entirely in variable performance based compensation that's paid out entirely in AA stock, options, and other complex schemes resembling stock that he can't even sell for several years into the future. The stock that Parker sold in 2014 and 2015 isn't stock he earned in 2014 and 2015, it was stock he earned between 2005 and 2013 as the CEO of US Airways. He's exercising options granted to him over the past decade - options that probably would not have been in-the-money but for the merger.
I certainly agree that CEOs should hold a lot of their employer stock, but in this case, it just looks to me like he's holding an awful lot of AA's stock. In a few months, when this year's Proxy Statement is released, we'll get a better idea of how much AA stock Parker holds.
Exactly. And the timing of the sales is on a pre-arranged schedule which is really the only way the executives can sell stock because they're always in possession of insider information. Because of laws against insider trading, the executives can't just call their broker and sell the way non-insiders can.
jimntx
Veteran
FWAAA, thanks for the enlightenment on the executive stock acquisitions and sales. Makes a lot more sense than my assumptions about exec compensation. But then, I'm a flight attendant. I'm paid to be cute, not smart. 
http://www.nytimes.com/2016/02/07/business/energy-environment/airlines-reap-record-profits-and-passengers-get-peanuts.html?ref=business&_r=0
and we see NOTHING......not even peanuts.
and we see NOTHING......not even peanuts.
WeAAsles
Veteran
- Oct 20, 2007
- 23,144
- 5,237
eolesen said:
E according to our contracts are we entitled to anything for the (sick) amount of profit the company made? No. Some of us absolutely do understand that. But is it really wrong to hope for a Bonus for a job well done? And is it wrong to ask or advocate for it? (Debatable)
If it did come though no matter how much should it be appreciated? Yes.
That's up to management though for the tone they want to set? Personally I'm losing my impression that I had at the beginning when at least for one group at the airline I'm seeing no gestures of any type of good faith so far. Zip......
chris perry
Veteran
- Sep 17, 2008
- 544
- 118
WE have gain sharing in our contract eolesen they just are ignoring the contract.
