AMR board OKs new stock reward plan for execs

[Skymess]

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
tmaxon@dallasnews.com
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.

 

[The Goose]

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
tmaxon@dallasnews.com
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.

Doesn't that make you just want to jump up and bust ass for the company?

 

[jimntx]

I'm guessing the board didn't even consider basing the stock awards on something weird, like PROFITS. 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. <_<

 

[The Goose]

I'm guessing the board didn't even consider basing the stock awards on something weird, like PROFITS. 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. <_<

Is it any wonder that the airline industry is considered to be the most mismanaged group of businesses in the country?

Extremely lucrative executive pay for outright failure - good work if you can get it. All it takes is extreme stupidity, greed, and a college degree in anything - cpa or finance is preferred but even basketweaving may be acceptable, as long as it's a degree (maybe that's why they like Little Jimmy - he's got a couple of fake degrees).

Add to that a supply of kneepads and the willingness to create negative pressure on demand.

 

[BigMac]

Ditto, Posted Yesterday in the Facility closing topic :

Form 8-K for AMR CORP


--------------------------------------------------------------------------------

22-May-2008

Change in Directors or Principal Officers, Financial Statements and Exhibits



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
The Compensation Committee of the Board of Directors of AMR Corporation conducted its annual review of compensation for its principal executive officer, principal financial officer and other named executive officers (the "named executive officers") with its compensation consultants at its May 20, 2008 meeting. At that meeting, the Compensation Committee approved the following compensation items for the named executive officers effective May 20, 2008:

1. Grants of stock-settled stock appreciation rights ("SSARs") pursuant to the terms and conditions of the form Stock Appreciation Right Agreement ("SAR Agreement"), which is attached as Exhibit 99.1 to this Form 8-K. SSARs are contractual rights to receive shares of our common stock upon their exercise. The SSARs are exerciseable for ten years from the date of grant and generally vest in 20% increments over five years. An attachment to the form SAR Agreement notes the stock-settled stock appreciation rights granted to the named executive officers.

2. Grants of deferred shares pursuant to the terms and conditions of the form Deferred Share Award Agreement for 2008 ("Deferred Share Agreement"), which is attached as Exhibit 99.2 to this Form 8-K. These are contractual rights to receive shares of our common stock, which vest on the third anniversary of the grant date. An attachment to the form Deferred Share Agreement notes the deferred share grants to the named executive officers.

3. Grants of performance shares pursuant to the form of Performance Share Agreement ("Performance Share Agreement") under the 2008 - 2010 Performance Share Plan for Officers and Key Employees ("Performance Share Plan"). These are contractual rights to receive shares of our common stock that vest depending upon achievement of performance measures described in the Performance Share Plan. The form of the Performance Share Agreement and the Performance Share Plan are attached as Exhibit 99.3 to this Form 8-K, and an attachment to the form Performance Share Agreement notes the performance share grants to the named executive officers.

4. A grant of 58,000 career performance shares to Gerard J. Arpey pursuant to the terms and conditions of the Career Performance Shares, Deferred Stock Award Agreement between the Company and Mr. Arpey, dated as of July 25, 2005, as amended. These are contractual rights to receive shares of our common stock that vest generally in 2015 depending upon achievement of performance measures described in that agreement.





Item 9.01 Financial Statements and Exhibits
© Exhibits

Exhibit 99.1 Form of Stock Appreciation Right Agreement (with awards to the named executive officers noted)

Exhibit 99.2 Form of 2008 Deferred Share Award Agreement (with awards to the named executive officers noted)

Exhibit 99.3 Form of Performance Share Agreement under the 2008 - 2010 Performance Share Plan for Officers and Key Employees and the 2008-2010 Performance Share Plan for Officers and Key Employees


(with awards to the named executive officers noted)

 

[FrequentFlierCA]

Doesn't that make you just want to jump up and bust ass for the company?

No kidding. One of the worst-timed moves I've seen an airline make (and that's saying something).

Tying to performance is fine, but you're absolutely right: should be tied to profits. Don't know why the big shareholders allow these shenanigans.

 

[WingNaPrayer]

Don't know why the big shareholders allow these shenanigans.

Can you say . . . buttloads of free first class seats, anytime, anywhere?

Either that or someone swallows . . . repeatedly!

 

[TIME FOR CHANGE]

No need to comment about this one

2 words
Where's mine

:down: :angry: :down:

 

[The Goose]

No kidding. One of the worst-timed moves I've seen an airline make (and that's saying something).

Tying to performance is fine, but you're absolutely right: should be tied to profits. Don't know why the big shareholders allow these shenanigans.

That's what I haven't been able to figure out myself.

Look at the 13 d (I think) SEC forms and check out the firms that own the majority of the company. FMR (Fidelity Funds), D. E. Shaw, and a few others are major shareholders and I find it hard to believe that a "buttload" of first class seats would make the asset performance OK by them. There has to be something else going on for them to tolerate the asset dilution.

 

[wingit88]

No kidding. One of the worst-timed moves I've seen an airline make (and that's saying something).

Tying to performance is fine, but you're absolutely right: should be tied to profits. Don't know why the big shareholders allow these shenanigans.

I almost choked when I read this earlier. I can't figure out why they chose to announce this now. They ought to be tied to profits, but let's remember AA probably won't be making profits anytime soon. Gotta get paid somehow....

 

[The Goose]

I almost choked when I read this earlier. I can't figure out why they chose to announce this now. They ought to be tied to profits, but let's remember AA probably won't be making profits anytime soon. Gotta get paid somehow....

Whether or not AA makes any money is not the basis (performance) of these payouts.

AA's stock simply has to do better than it's peers - if the company is losing money but the stock price has done better than the other airlines, they'll get paid.

SOBs. Every damned one of them.

 

[captianamerica]

then what was this then? 20-May-08 ARPEY GERARD J
Officer 404,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
From yahoo financial.. Now I see why the presidents council said when Arpey brought in that contract proposal last week, he told them it was "Time sensitive"!!!!

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
tmaxon@dallasnews.com
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.

 

[The Goose]

Now I see why the presidents council said when Arpey brought in that contract proposal last week, he told them it was "Time sensitive"!!!!

Anytime there's a Carty(ish) condition put on anything from the company, it's just a given they've done something for themselves again.

Guess we'd better hang onto our collective posteriors - the devils are bleeding the company like it's going out of business - ya think?

 

[TIME FOR CHANGE]

going down to no shares if all other airlines do better than AMR.
No how can we make that work
🙄

 

[BigBangTheory]

I have two things to say about this...


1. FURP

2. FU to everyone who OK'd this to happen.