AMR board OKs new stock reward plan for execs
12:00 AM CDT on Friday, May 23, 2008
By TERRY MAXON / The Dallas Morning News
[email protected]
Despite growing labor anger and criticism, AMR Corp. board members have adopted the latest version of a stock plan that rewards company executives when AMR shares outperform those of other airline companies.
American Airlines Inc. employees and unions have criticized management for taking the stock while rank-and-file employees are still toiling under big pay cuts and other concessions from 2003.
The stock performance plan, which has handed out approximately $300 million in AMR stock over the last three years, compares AMR stock against that of nine other airlines.
Participants in the plan will get a set number of shares depending on how AMR's stock price performs between the start of 2008 and the end of 2009 compared with that of the other airlines. If AMR shares outperform the others, participants will get 175 percent of their target amount, going down to no shares if all other airlines do better than AMR.
In addition, AMR said Thursday that the board approved stock awards and rights for chairman and chief executive Gerard Arpey and other top executives.
Mr. Arpey was given a grant of 58,000 "career performance shares" based on a July 2005 agreement. He would get the shares in 2015 "depending upon achievement of performance measures" in the 2005 agreement, AMR said in a filing with the Securities and Exchange Commission.
A number of employees chastised Mr. Arpey and the board at Wednesday's annual shareholder meeting for the stock distributions and executive pay levels. Mr. Arpey defended them as needed to keep AMR's executives.
Dennis Burchette, American employee and international vice president of the Transport Workers Union, pointed out the ways that union members had worked with American to increase revenue, cut costs and otherwise improve the airline's finances since the 2003 near-bankruptcy.
"What we have seen of late is that management, while they say the right thing ... only a few of us get the rewards and the rest of us feel the pain," Mr. Burchette said.
In the SEC filings, AMR said Mr. Arpey was granted 230,000 AMR shares as his target amount for the 2008-10 plan.
Executive vice presidents Tom Horton, Bob Reding and Dan Garton were each granted 108,000 shares. Senior vice president and general counsel Gary F. Kennedy was awarded 61,500 shares.
The board also granted long-term incentive plan shares that they'll get in three years if they remain with AMR: 116,000 shares for Mr. Arpey, 44,850 each for Mr. Reding and Mr. Horton, 25,550 for Mr. Kennedy and 54,590 for Mr. Garton.
And the five top executives were also granted "stock appreciation rights" that will let them profit if the price of AMR stock goes up from the recent price of $8.20: 286,000 units for Mr. Arpey, 110,550 each for the executive vice presidents and 62,950 for Mr. Kennedy. The rights vest over a five-year period beginning next May.
AMR shares closed Thursday at $6.56, up 34 cents.
12:00 AM CDT on Friday, May 23, 2008
By TERRY MAXON / The Dallas Morning News
[email protected]
Despite growing labor anger and criticism, AMR Corp. board members have adopted the latest version of a stock plan that rewards company executives when AMR shares outperform those of other airline companies.
American Airlines Inc. employees and unions have criticized management for taking the stock while rank-and-file employees are still toiling under big pay cuts and other concessions from 2003.
The stock performance plan, which has handed out approximately $300 million in AMR stock over the last three years, compares AMR stock against that of nine other airlines.
Participants in the plan will get a set number of shares depending on how AMR's stock price performs between the start of 2008 and the end of 2009 compared with that of the other airlines. If AMR shares outperform the others, participants will get 175 percent of their target amount, going down to no shares if all other airlines do better than AMR.
In addition, AMR said Thursday that the board approved stock awards and rights for chairman and chief executive Gerard Arpey and other top executives.
Mr. Arpey was given a grant of 58,000 "career performance shares" based on a July 2005 agreement. He would get the shares in 2015 "depending upon achievement of performance measures" in the 2005 agreement, AMR said in a filing with the Securities and Exchange Commission.
A number of employees chastised Mr. Arpey and the board at Wednesday's annual shareholder meeting for the stock distributions and executive pay levels. Mr. Arpey defended them as needed to keep AMR's executives.
Dennis Burchette, American employee and international vice president of the Transport Workers Union, pointed out the ways that union members had worked with American to increase revenue, cut costs and otherwise improve the airline's finances since the 2003 near-bankruptcy.
"What we have seen of late is that management, while they say the right thing ... only a few of us get the rewards and the rest of us feel the pain," Mr. Burchette said.
In the SEC filings, AMR said Mr. Arpey was granted 230,000 AMR shares as his target amount for the 2008-10 plan.
Executive vice presidents Tom Horton, Bob Reding and Dan Garton were each granted 108,000 shares. Senior vice president and general counsel Gary F. Kennedy was awarded 61,500 shares.
The board also granted long-term incentive plan shares that they'll get in three years if they remain with AMR: 116,000 shares for Mr. Arpey, 44,850 each for Mr. Reding and Mr. Horton, 25,550 for Mr. Kennedy and 54,590 for Mr. Garton.
And the five top executives were also granted "stock appreciation rights" that will let them profit if the price of AMR stock goes up from the recent price of $8.20: 286,000 units for Mr. Arpey, 110,550 each for the executive vice presidents and 62,950 for Mr. Kennedy. The rights vest over a five-year period beginning next May.
AMR shares closed Thursday at $6.56, up 34 cents.
Since the basis is performance of the stock compared to other airlines, they can still collect the bonus even if the stock is in the toilet. As long as it just hasn't been flushed yet, and others have, they win. <_<
