AMR CEO's compensation rises 11 percent to $5.2M

[Hopeful]

Hopeful, is that not all money that AA is paying out to you or on your behalf?... That's exactly what compensation is -- salary, retirement, and healthcare....

Frank, I'd rather see a VAT instead of an income tax, but I'd accept a flat tax of 10-15%. No deductions, no shelters. It's fair, easy to understand, and doesn't require me spending a couple hours a year trying to figure out what we owe or what we get back. It would also kill off a multi-million dollar industry built around tax preparation.

Yes, it is all compensation. but the way AA depicts it to public concerns is misleading. My salary just that..SALARY...
Last year, AA contributed $1200 to my defined pension. So they added $1200 to my salary/total value.
Now, suppose we had no defined pension and AA matched 5%. In my total value statement the 5% would show up as $3500 and they add it in as total value.

Ok. So if I contributed 15% or $10500 of my salary into the 401k, CAN I SAY MY SALARY IS $59000 A YEAR AFTER DEDUCTING THE $10,500.

I didn't think so......Every penny that I earn is salary, and every benefit AA gives me gets added into my total value.....So anyone might believe that I make in excess of $100k....But the money we kick in to medical premiums and co payments and 401k contributions DOESN'T get deducted from our total value?????????..

I see now!

 

[Hopeful]

Would Arpey leave if he was just getting $600 k? maybe, but not so much because of the money but because of his EGO and the fact that he already has more money than he will ever spend. CR Smith left, the company survived,Crandall left, the company survived, Carty left, the company survived, if Arpey left, guess what, the company could still survive.

My father was a Chauffeur for the CEO of a very large Chemcal company. He did that for around 20 of the 40+ years he had with the company. When he started the ratio was around 10 to one, my father earned about $20k and the boss in the back seat earned around $200k. Over the years the ratio diverged but much more modestly than the skyrocketing rates we see today. There is no justification for todays executive compensation, it is what it is 'because they can", and no other reason.

As a kid sometimes on the weekend if my father had to work I would go along for the ride, while the houses were very nice they were not what I'd expected, I'd expected something like Old Westbury Gardens, what I saw instead was less than Garden City. These people were about accumulating wealth, not flaunting it. They ran their lives the way they ran their business.

One day he was told to pick up one of the execs that he once drove who had since retired and bring him to the office. Later on the ride home he sat in the front seat and admitted that he didnt miss the money at all, he already had more than he would ever spend, he missed the power. He missed being in control and the way he was treated.

So Arpey may leave if his pay was cut to $600k but not because of the loss of income but because of the loss of face. For him and other CEOs is not about getting stuff or living well off their income its about seeing how much they can exract, even though they dont need it, its about ego. They arent working to put food on the table they are working to feed their ego, because they are important and they are in control, the money is more symbolic than essentail.

With over 100,000 new MBAs pumped out of schools they would have no problem finding an eager replacement to take charge of such a big company, and have all that power, at sums far less than $600,000.

As a shareholder of AMR do I think I'm getting what I'm paying for from Arpey? Not by a long shot.

I couldn't agree more. I guess I really don't see the big picture when it comes to executive compensation. This good ol boys network of upper class have created their own worth trying to justify that these people need to make millions in order to retain them. While we are told the "market" dictates our rate, the big boys at the top get to dictate their own.
maybe it's just me..
What amazes me is that the greedy fat cat executive supporters claim that the BOD compensation committee determine CEO and top exec pay.

But these same supporters always seem to omit the fact that Boards of Directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of other fat cat executives from other corporations whose board of directors are made up of .................and the cycle continues.

 

[Bob Owens]

AA needs to crap or get off the pot. What is it going to be? We gave to save the airline yet we are still losing money. So this indicates that management does NOT know what they are doing. Something has to give here and labor already gave at the office.

In 2002 AMR brought in $17.42 billion dollars but claim they spent over $20 billion and posted a loss of $3billion for 2002.

They employed 109,600 workers and operated and maintained 1105 aircraft. They spent $8.392 billion in wages.

In 2010 they brought in $22.17 billion with just 914 aicraft, 78,250 workers and spent $6.847 in wages. Wage expense decreased by $1.545 billion, it would have been more except for the "Rise" program where supervisors were elevated to managers even though they did the same job and the pay raises that all the non-union workers got.


In 2002 they spent around $2.5 billion on fuel, in 2010 they spent $6.4 billion in fuel. A $3.9 billion increase.I have no idea how much they save by dumping 200 aircraft, but it has to be in the hundreds of millions per year. There should also be savings associated with reduced capacity-less landing fees. less leased space etc etc.



Revenue increased by $4.75 billion

So between just wages and increased revenues they should have had an extra $6.295 billion to cover the increased fuel costs. OK so fuel ate up all but $2.93 billion. Actually more since they claim they lost $470 million. Where did that extra $3.4 billion go?

They did shed $1.2 billion in debt but that still leaves $2.2 billion in increased costs not related to fuel or labor for a carrier that should have seen all or at least most other costs decline as the operation got smaller. They shed over 20% of their airplanes and 29% of their workforce!

 

[eolesen]

My father was a Chauffeur for the CEO of a very large Chemcal company. He did that for around 20 of the 40+ years he had with the company. When he started the ratio was around 10 to one, my father earned about $20k and the boss in the back seat earned around $200k. Over the years the ratio diverged but much more modestly than the skyrocketing rates we see today. There is no justification for todays executive compensation, it is what it is 'because they can", and no other reason.

I'm glad your dad knew how much the guy's paycheck was, but did the owner also have stock in the company?....

Arpey's salary is probably pretty close to 10x that of the average front line worker earning $65K. Where it differs is the stock grants and awards. And you've made it very clear you want nothing to do with stock. No risk, no reward.


I have no idea where you're pulling your cost numbers from to get your $3.4B, Bob, but have you compared the numbers for medical/health care expenses? Real estate? Liability insurance post-9/11? How about debt servicing expense?...

It's a little difficult for anyone other than you to understand Bobonomics when you don't bother to cite sources for your figures...

I do know that JFK's facility rental costs significantly more today than it did eight years ago. Same in MIA, not certain about LAX or ORD. Airports have raised landing fees everywhere except DFW (who has kept fees quite low thanks to natural gas wells on the property...). Labor and fuel are indeed the two largest line items, but there are lots of other items which you have to consider as well.

Show us the math, and maybe you might find the answers you so desperately are seeking...

 

[Bob Owens]

I'm glad your dad knew how much the guy's paycheck was, but did the owner also have stock in the company?....

Arpey's salary is probably pretty close to 10x that of the average front line worker earning $65K. Where it differs is the stock grants and awards. And you've made it very clear you want nothing to do with stock. No risk, no reward.


I have no idea where you're pulling your cost numbers from to get your $3.4B, Bob, but have you compared the numbers for medical/health care expenses? Real estate? Liability insurance post-9/11? How about debt servicing expense?...

It's a little difficult for anyone other than you to understand Bobonomics when you don't bother to cite sources for your figures...

I do know that JFK's facility rental costs significantly more today than it did eight years ago. Same in MIA, not certain about LAX or ORD. Airports have raised landing fees everywhere except DFW (who has kept fees quite low thanks to natural gas wells on the property...). Labor and fuel are indeed the two largest line items, but there are lots of other items which you have to consider as well.

Show us the math, and maybe you might find the answers you so desperately are seeking...

I doubt there was a single owner, the company was Union Carbide, a large company at the time.

If AA wants to give me stock in addition to the pay fine, but match my pay to what mechanics at UPS gets first, after all they do the exect same job as I do. If anything they have less liability.

Health and Medical would be included in the salaries. AA has been self insured for years and no I havent looked at real estate, are you saying that rents, despite the drawback have gone up $3billion? Are we as workers supposed to just sit back and be content to accept what the oil companies, Airports, vendors and banks decide to leave on the table? Sorry no can do, lets see how much revenue they draw when we go on strike.

The sources, wages, fuel, fleet sizes are all from the 10K reports. I think I made it clear how I used those numbers to come up with the $3 billion gap.

 

[FrequentFlierCA]

If AA wants to give me stock in addition to the pay fine...

I still don't understand why the TWU turned this down in 2003...

 

[Hackman]

I still don't understand why the TWU turned this down in 2003...

Because more than likely we couldn't sell it off, like what happened during the ESOP at UAL. The way management likes it.

 

[Hopeful]

I still don't understand why the TWU turned this down in 2003...

As Bob said, if they wanted to give stock in ADDITION.......
They gave us a disproportionate amount of stock compared to the concessions each employee gave.

The 449 shares of stock I received optioned at $5 was in exchange for $20000/yr pay cuts.
Hardly a good deal.

 

[Deleted member 14439]

I don`t remember who posted this suggestion but it was interesting. We went back to our 2009 "total value" from jetnet and did a little math. My total value/ hours worked (2277) came out to 43 and change /hr. Now I subtracted the SSI the company includes and the amount I paid in for medical (EE+2). That dropped it to 36/hour. I`m sure our forum accounting police will spin and dismiss these numbers. However it seems to me that for a 21 yr AMT with full benefits that`s pretty cheap for the poor company. Ok, FLAME ON.........................

 

[FWAAA]

Revenue increased by $4.75 billion

So between just wages and increased revenues they should have had an extra $6.295 billion to cover the increased fuel costs. OK so fuel ate up all but $2.93 billion. Actually more since they claim they lost $470 million. Where did that extra $3.4 billion go?

The net loss for 2002 was $3.5 billion; that's where the $3.4 billion you ask about is "hiding." Revenues in 2002 were far below the costs, so the first $3.5 billion of additional revenue (in 2010 compared to 2002) would bring 2002 up to breakeven. 2002 was a very bad year - one in which revenue fell short of GAAP expenses by $3.5 billion. Of course revenue grew substantially since then - several more revenue disasters like 2002 would have caused the end of AA, concessions or not.

They did shed $1.2 billion in debt but that still leaves $2.2 billion in increased costs not related to fuel or labor for a carrier that should have seen all or at least most other costs decline as the operation got smaller. They shed over 20% of their airplanes and 29% of their workforce!

Borrowing money or paying down debt does not affect the income statement for that year. Net loss or net income is independent of increases or decreases in debt during that year. Paying down debt does not reduce net income or increase the size of losses and borrowing additional money does not reduce net loss or increase net income.

 

[Bob Owens]

The net loss for 2002 was $3.5 billion; that's where the $3.4 billion you ask about is "hiding." Revenues in 2002 were far below the costs, so the first $3.5 billion of additional revenue (in 2010 compared to 2002) would bring 2002 up to breakeven. 2002 was a very bad year - one in which revenue fell short of GAAP expenses by $3.5 billion. Of course revenue grew substantially since then - several more revenue disasters like 2002 would have caused the end of AA, concessions or not.

Wrong. First of all the $3.4 billion that no one seems to be able to account for was for 2010, not 2002. What kind of game are you playing? Cant come up with an answer so you see if you can get away with that? Thats not even a nice try.

The "net Loss" of 2002 was mostly fiction anyway, legal, but fiction none the less, a benificial byproduct of allowing corporations to write Tax laws. Nearly $1 billion of that 2002 loss was "Goodwill" losses. Most of that was related to the purchase of TWA.

Borrowing money or paying down debt does not affect the income statement for that year. Net loss or net income is independent of increases or decreases in debt during that year. Paying down debt does not reduce net income or increase the size of losses and borrowing additional money does not reduce net loss or increase net income.

Sure but thats not how the company spins it.

The interest and fees they pay on the debt does affect the income statement though and thats a considerable amount. The company does talk about how much debt the company has and what a huge menacing burden it is. Now that we brought up debt, how much does it cost to pay down a billion in debt? Some would assume $1billion, however when a corporation lists its debt they dont go by the principle they go by the total amount including interest and fees. So for example using this concept when I borrowed $100,000 to buy my house my "debt" was actually $270,000. So when I took the loan my debt just on the house was a more than 5 times my annual income. However I could shed that debt by paying back $100,000 if I did it right away. $170,000 of debt would simply dissapear. When I applied for the loan the mortgage company loked at the loan as just 2 times my annual income. Another component of the debt is leases,if the company signed a 10 year lease for $1million a month they would have $120million added to their total debt. So back when the company and some union officials were running around saying that AA had $22 billion in debt and just $18 billion in revenue it it really wasnt anything to be concerned about, it was less than 2 times their annual income. So when we ask what happened to all those billions and the comapny says "We paid down x billions in debt" it's not a dollar for dollar account of where the monies went.

 

[FrequentFlierCA]

As Bob said, if they wanted to give stock in ADDITION.......
They gave us a disproportionate amount of stock compared to the concessions each employee gave.

The 449 shares of stock I received optioned at $5 was in exchange for $20000/yr pay cuts.
Hardly a good deal.

Understood, but that's why there's the old saying "no risk, no reward". AMR's management put a chunk of their paycheck at risk in the markets, and have been rewarded for that. The unions chose the safer road and got steady, contractual pay. It's hardly fair to complain about that now. Sounds like the unions wanted a deal of "no risk, high reward".

 

[Hopeful]

Understood, but that's why there's the old saying "no risk, no reward". AMR's management put a chunk of their paycheck at risk in the markets, and have been rewarded for that. The unions chose the safer road and got steady, contractual pay. It's hardly fair to complain about that now. Sounds like the unions wanted a deal of "no risk, high reward".

Herein lies the dilemma...
Personally, I would not want to tie my compensation to stock, especially airline stock. Any and every hiccup in speed bump in the economy adversely impacts it.
Why would i want to tie my pay to a stock in an industry where the price of oil can make or break a company's bottom line?
Now, you say "no risk, no reward." That's fine for an executive who agrees to that formula when he or she signs on. Let's not forget that they also get a salary AND stock options. They too are guaranteed a salary, just as us at the bottom of the food chain are.

But more importantly, why would I want to tie my compensation to stock performance where the company's well being may or may not be best served by the current management team?
As it is, our livelihoods are at the mercy of executives who may or may not be the best out there.

 

[Frank Szabo]

Perhaps off topic but as further proof Corporate America has no shame and is infested by the lowest forms of life on Planet Earth, I offer this tidbit:


On May 3, just two days after Usama bin Laden was killed in a raid on the Al Qaeda leader’s Pakistan compound, Disney filed trademark applications to use the name "SEAL Team 6" on everything from entertainment, toys, video games, clothing, footwear -- even Christmas ornaments and snow globes.


Read more: http://www.foxnews.com/politics/2011/05/25/navy-seals-fights-mickey-mouse-trademark/#ixzz1NNcvCthK

I believe an unannounced visit from ST6 to Disney's marketing department would be in order to help cure any constipation problems the marketing schmekels might have.

 

[Deleted member 14439]

Understood, but that's why there's the old saying "no risk, no reward". AMR's management put a chunk of their paycheck at risk in the markets, and have been rewarded for that. The unions chose the safer road and got steady, contractual pay. It's hardly fair to complain about that now. Sounds like the unions wanted a deal of "no risk, high reward".

1.5% raises 2004 thru 2008 swallowed up by yearly increases in our medical plans. No "raises" since May 2008 but medical continues to increase yearly. I`m pretty sure the same pain is not felt by the upper management of this company.