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

[Frank Szabo]

... snip

It's not too different from the people who think tax breaks for the rich are always bad without comprehending that "the rich" are already taxed at 40-50% and paying far more of the tax burden than what anyone reasonable would consider "fair"...

... snip

... that's 40 - 50% of what's left AFTER the income has been slashed severely by the deductions/write-offs/tax shelters/etc. devised by professional tax advisors (the services of which are provided/paid for by AMR for their elite, as I recall, as well as for many other corporate lovlies as a perk). "Wealth Advisors" are paid many thousands every year for just the purpose of helping the elite keep more of what they are paid.

That 50% you scream about usually amounts to the total we peons pay, if any at all because of all this "assistance". A flat taxation schedule of 10-12% would break the SOBs.

 

[Hopeful]

I don't think that's the case at all, Hopeful. But there are some huge misconceptions when it comes to executive compensation, especially the fact that 70% of their take-home pay is at-risk every year. It's not too different from the people who think tax breaks for the rich are always bad without comprehending that "the rich" are already taxed at 40-50% and paying far more of the tax burden than what anyone reasonable would consider "fair"...

Make no mistake -- the 30% of salary that is guaranteed is more than enough to live on. But the remaining 70% isn't just some arbitrary amount. There are defined thresholds which dictate how and when that gets paid, and that's why it isn't a bonus by the real definition of a bonus. And those thresholds are specifically what I have taken issue with as a former employee and shareholder -- performance pay shouldn't ever be based on stock price. It should be based exclusively on meeting corporate operational, strategic, and/or financial targets, and not external factors.

For comparison, calling variable comp a bonus isn't too different than calling Jim Little a scab because he sold you out at the bargaining table in 2003. It's despicable behavior, but it isn't fair to put him on par with a replacement worker or a unionist who willingly crosses a picket line...

Eric, I will repeat what I have said in many a post. Prior to the 2003 concessions, I truly did not care what anyone else earned, let alone any executive. What transpired at AA eight years ago with threats and promises of sharing the pain, the company hasn't exactly lived up to the bumper sticker slogan. I'm sorry, I cannot subscribe to the fact that since the executives did not get what they could have potentially got is the same as a concession or a paycut. The fact is that they got an increase....As a mechanic, i lost $20,000 a year in pay and benefits. For the first 5 years I got $.42 an hour increase give or take a couple of pennies because it was 1.5 % of BASE pay. That was WAY off set by increases in cost of living and medical premiums.

You speak of misconceptions....Do you know what a big misconception is? When AA tells the public and the media that I make in excess of $100,000 a year.
They fail to mention that figure includes salary, pension contribution, customer experience award and even medical claims.
So when you describe executive compensation misconceptions, don't forget to mention the PR game that AA plays regarding worker pay.

 

[eolesen]

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.

 

[Frank Szabo]

... snip

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.

... not to mention the blow to organized crime (the Infernal Revenue Disservice).

If we were to have a flat 10% income tax, Congress would temporarily have more money than it could waste but, as far as the industry "built around tax prep", wouldn't that be multi-BILLION dollar industry?

Re: your evasive answer - the top 50% rate is for those in that particular income bracket that don't plan their finances and life with with the VERY EXPENSIVE assistance available. Most can knock their taxable income down to considerably less than mine with these tricks.

 

[FWAAA]

If we were to have a flat 10% income tax, Congress would temporarily have more money than it could waste but, as far as the industry "built around tax prep", wouldn't that be multi-BILLION dollar industry?

Sadly, it would take a much higher flat tax than just 10% for federal revenues and federal expenditures to balance.

Personal Income (aggregate of all income in the USA) was a total $12.5 trillion last year. Obama's federal spending spree has the US spending about $3.7 trillion for this next fiscal year. A 30% flat tax would temporarily provide the government with enough revenue to meet your "more money than Congress could waste" standard and would balance the budget.

I saw a stat the other day that said the tax prep/planning/avoidance industry soaked up about $50 billion last year. Don't recall if that included the billions the IRS consumes.

 

[FWAAA]

Eric, I will repeat what I have said in many a post. Prior to the 2003 concessions, I truly did not care what anyone else earned, let alone any executive. What transpired at AA eight years ago with threats and promises of sharing the pain, the company hasn't exactly lived up to the bumper sticker slogan. I'm sorry, I cannot subscribe to the fact that since the executives did not get what they could have potentially got is the same as a concession or a paycut. The fact is that they got an increase.....

Ok, so the greedy bastard executives should have been told by the Board of Directors "All you get for the indefinite future is your base salary, cut by the same percentage as suffered by the rank and file. No performance shares, no stock grants, no stock appreciation rights, no stock options, no allowance with which to pay club dues or lease a nice car. Nothing but your several hundred thousands of base salary."

Once all the laughing subsided, all of the top level executives plus most of the 850 plus or minus lower-level PUP/PSP recipients would have emailed their resumes to other Fortune 500 companies and would have found work elsewhere. Sure, someone would have been willing to do Arpey's job for a maximum of about $600k with no variable pay component, but that would have been like hiring a $30/hr lawyer to defend you in a criminal charge: you may get what you pay for.

Oh, and had the Board of Directors cut the pay of the execs as described above, the Directors would have been sued by angry shareholders after the management exodus and the resulting implosion of AA. That's one reason the board has decided to pay management they way management is currently paid: Directors don't like to be sued by shareholders.

Yes, in a couple of recent years, the greedy bastard execs have received their full potential variable pay (what the union leaders ignorantly call "bonuses"). In 2010, they received 50% of their PSP stock payouts. In 2009, they received just 25% of their PSP stock payouts. No, their kids won't go hungry or go shoeless, but AA's variable pay program has worked as it should have: 2009 and 2010 saw AA turn in subpar results, and the execs paid for it (by not earning quite as many millions as they hoped they would).

Yes, you're mad that the greedy bastard execs haven't suffered as much as you wanted them to. Hope that's not too big a surprise - greedy bastard execs tend to make a lot of money when things are lousy and tend to earn obscene amounts when things go well. AA's mechanics are grossly underpaid (especially the line mechanics). Overall, however, AA's mainline employees are a lot more expensive (per ASM) than at Delta or United/Continental. I just don't see AA borrowing money to fund raises but I've been wrong before. So far, your union leaders have failed to convince AA that you're worth substantially more money. Perhaps replacing them would be a start? Perhaps finally firing your impotent union (the worthless union) would be a good idea as well?

 

[Bob Owens]

Sadly, it would take a much higher flat tax than just 10% for federal revenues and federal expenditures to balance.

Personal Income (aggregate of all income in the USA) was a total $12.5 trillion last year. Obama's federal spending spree has the US spending about $3.7 trillion for this next fiscal year. A 30% flat tax would temporarily provide the government with enough revenue to meet your "more money than Congress could waste" standard and would balance the budget.

I saw a stat the other day that said the tax prep/planning/avoidance industry soaked up about $50 billion last year. Don't recall if that included the billions the IRS consumes.

Obamas spending spree? You mean the two Wars in the Middle East that were started by Bush? Or do you mean all the tax breaks that allow corporations to bring in Billions and pay nothing in taxes?

If corporations want the rights of "legal persons" then they should also have the responsibilities of legal "persons", 10% flat tax on all income, just like human persons and the government would have more money than they know what to do with.

We both know that corporations probably could not afford to pay that but if they want to be able to participate in the electoral system and continue to spend billions on lobbiests to influence the legislative system to tilt things even more in their favor then they should pay just like citizens do-on their gross income, not their net.

 

[Bob Owens]

Ok, so the greedy bastard executives should have been told by the Board of Directors "All you get for the indefinite future is your base salary, cut by the same percentage as suffered by the rank and file. No performance shares, no stock grants, no stock appreciation rights, no stock options, no allowance with which to pay club dues or lease a nice car. Nothing but your several hundred thousands of base salary."

Once all the laughing subsided, all of the top level executives plus most of the 850 plus or minus lower-level PUP/PSP recipients would have emailed their resumes to other Fortune 500 companies and would have found work elsewhere. Sure, someone would have been willing to do Arpey's job for a maximum of about $600k with no variable pay component, but that would have been like hiring a $30/hr lawyer to defend you in a criminal charge: you may get what you pay for.

Oh, and had the Board of Directors cut the pay of the execs as described above, the Directors would have been sued by angry shareholders after the management exodus and the resulting implosion of AA. That's one reason the board has decided to pay management they way management is currently paid: Directors don't like to be sued by shareholders.

Please, this country pumps out more MBAs than the rest of the world combined. These guys arent there because of what they knew but rather who they knew. The "old boys Club".

Its funny how your side claims that they could replace all their pilots and all their mechanics with lower paid workers without a hitch but to replace a couple of hundred top guys, in a country thats overflowing with MBAs, that would be impossible, sounds like an MBA protecting the profession to me.

There are around 100,000 MBAs awarded annually, and around 3000 A&Ps,(many to foriegners who leave the country once certified) yet you claim that if the company could replace 11,000 A&Ps immediately but they could not replace 800 Executives.
http://www.gmac.com/gmac/NewsandEvents/GMNews/2010/Mar/HowManyUSMBAStudentsAreThereGMACsAwardWinningAnswer.htm

Its true these guys woiuld be on a learning curve but momentum would carry the company along for a considerable period of time. With us we have to make instantaneous decisions.

 

[odie01]

Apr 20, 2011 GOREN ISABELLA D
Officer 38,884 Direct Disposition (Non Open Market) at $0 - $5.64 per share. N/A

Apr 20, 2011 REDING ROBERT W
Officer 68,283 Direct Disposition (Non Open Market) at $0 - $5.64 per share. N/A

Apr 20, 2011 KENNEDY GARY F
Officer 38,884 Direct Disposition (Non Open Market) at $0 - $5.64 per share. N/A

Apr 20, 2011 GARTON DANIEL P
Officer 68,283 Direct Disposition (Non Open Market) at $0 - $5.64 per share. N/A

Apr 20, 2011 ARPEY GERARD J
Officer 145,418 Direct Disposition (Non Open Market) at $0 - $5.64 per share. N/A

Apr 20, 2011 HORTON THOMAS W
Officer 68,283 Direct Disposition (Non Open Market) at $0 - $5.64 per share. N/A

 

[Hopeful]

Obamas spending spree? You mean the two Wars in the Middle East that were started by Bush? Or do you mean all the tax breaks that allow corporations to bring in Billions and pay nothing in taxes?

If corporations want the rights of "legal persons" then they should also have the responsibilities of legal "persons", 10% flat tax on all income, just like human persons and the government would have more money than they know what to do with.

We both know that corporations probably could not afford to pay that but if they want to be able to participate in the electoral system and continue to spend billions on lobbiests to influence the legislative system to tilt things even more in their favor then they should pay just like citizens do-on their gross income, not their net.

Hey Bob...What do you think of Obama's right hand man/economic adviser? You know the one? GE CEO Jeffrey Immelt? You know the one Bob? The one who is CEO of GE of which paid ZERO taxes? The CEO who can't stop bragging about all his firm's off shore profits. And Obama still keeps him by his side.

Sorry Bob, I respect what you are trying to do with regards to our contract, but sometimes even your do-no-wrong democrats can be just as bad.
Why hasnt Obama told this Jeffrey Immelt where to go??????????????????????????

 

[Bob Owens]

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....

No, the company actually provides us with a "Total Value statement" that includes everything, their share of SSI, pension and other benifits, even what they paid in health care claims. The thing is they dont deduct out what we pay them for the coverage. For me they claimed that my all in was $78,000 for 2009, less the three thousand I paid for medical coverage it comes out to $75000. They claimed my salary was $69k even though my W-2 was $68 k.

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

Of course you would.

No its not fair. Its regressive, because the poor use all of their income on essentials such as food, housing, clothing, transporation and health care so they would be paying tax on every penny they earn while the rich would get to take all their extra earnings, disposable income not used to pay for the essentials, and allow those earnings to compound without paying any tax on them. Lets say we went with a 25% Vat, the guy earning $30,000 would end up with the equivelent of 25% ($7500)of his income going towards taxes because I think its safe to say that at that level there will be no ability to save, but the guy earning a million could easily get away with paying less than 1% of his earmings towards taxes (assuming that $30k provides an acceptable standard of living).So the poor would end up paying a lot more per dollar earned than the rich, not only that but they would be laboring for those dollars while the rich could live off the earnings of their wealth without paying tax on those earnings, only what they consume. In this case 100% of one guys earnings would effectively be taxed in order to provide the essentials while 99% of the million a year guys earnings would not be taxed unless he decided to purchase luxuries with that extra income.

I'm not that much against a flat tax but only if corporations, since they are legal persons, pay the same rate and they pay it on their income like we do-no deductions. Then there would be less incentive for corporations to provide hidden compensation for executives. Even most illegal aliens pay income tax but corporations only pay tax on their profits, sometimes.

 

[Hopeful]

Ok, so the greedy bastard executives should have been told by the Board of Directors "All you get for the indefinite future is your base salary, cut by the same percentage as suffered by the rank and file. No performance shares, no stock grants, no stock appreciation rights, no stock options, no allowance with which to pay club dues or lease a nice car. Nothing but your several hundred thousands of base salary."

Once all the laughing subsided, all of the top level executives plus most of the 850 plus or minus lower-level PUP/PSP recipients would have emailed their resumes to other Fortune 500 companies and would have found work elsewhere. Sure, someone would have been willing to do Arpey's job for a maximum of about $600k with no variable pay component, but that would have been like hiring a $30/hr lawyer to defend you in a criminal charge: you may get what you pay for.

Oh, and had the Board of Directors cut the pay of the execs as described above, the Directors would have been sued by angry shareholders after the management exodus and the resulting implosion of AA. That's one reason the board has decided to pay management they way management is currently paid: Directors don't like to be sued by shareholders.

Yes, in a couple of recent years, the greedy bastard execs have received their full potential variable pay (what the union leaders ignorantly call "bonuses"). In 2010, they received 50% of their PSP stock payouts. In 2009, they received just 25% of their PSP stock payouts. No, their kids won't go hungry or go shoeless, but AA's variable pay program has worked as it should have: 2009 and 2010 saw AA turn in subpar results, and the execs paid for it (by not earning quite as many millions as they hoped they would).

Yes, you're mad that the greedy bastard execs haven't suffered as much as you wanted them to. Hope that's not too big a surprise - greedy bastard execs tend to make a lot of money when things are lousy and tend to earn obscene amounts when things go well. AA's mechanics are grossly underpaid (especially the line mechanics). Overall, however, AA's mainline employees are a lot more expensive (per ASM) than at Delta or United/Continental. I just don't see AA borrowing money to fund raises but I've been wrong before. So far, your union leaders have failed to convince AA that you're worth substantially more money. Perhaps replacing them would be a start? Perhaps finally firing your impotent union (the worthless union) would be a good idea as well?

That's the corporate culture with which we have to live under. I guess Arpey making ONLY $600k a year is simply not enough for him or any executive to do their job. No, CEO's simply must receive 20, 30, 50, 100x the average worker salary in this country. And you know what, FWAAA..that's ok.

But don't tell us lowly workers that we have to be happy with a base salary AND do our jobs, but the fat cats need to get millions in combined/bonus money in order for them to do their jobs.
And yes, I am damn angry that our wonderful executive team has not shared in the pain. Maybe people like yourself in the upper class world of society have no problem with it because maybe people like yourself aspire to be as greedy and self serving as they are.
Oh and another thing, please tell me what you think about the most exclusive, greediest, unrealistic, and self serving union of all.....THE GOOD OL' BOYS CLUB?

You know the one, FWAAA? The one who's members are made up of Boards Of Directors who wash each others backs and compensate each other and always seem to find their seats on each others boards?
Now, THAT"S a greedy union.

 

[Bob Owens]

Hey Bob...What do you think of Obama's right hand man/economic adviser? You know the one? GE CEO Jeffrey Immelt? You know the one Bob? The one who is CEO of GE of which paid ZERO taxes? The CEO who can't stop bragging about all his firm's off shore profits. And Obama still keeps him by his side.

Sorry Bob, I respect what you are trying to do with regards to our contract, but sometimes even your do-no-wrong democrats can be just as bad.
Why hasnt Obama told this Jeffrey Immelt where to go??????????????????????????

When have you ever heard me claim the Democrats can do no wrong?

Read the book "The Ragged Trousered Philanthrpoists by Robert Tressel.

Both parties are owned by the same people but the Democrats reprsent the softer side of capitalism while the Republicans represent the harsher side.

I've advocated the formation of a Workers or Labor party for decades.

 

[Hopeful]

When have you ever heard me claim the Democrats can do no wrong?

Read the book "The Ragged Trousered Philanthrpoists by Robert Tressel.

Both parties are owned by the same people but the Democrats reprsent the softer side of capitalism while the Republicans represent the harsher side.

I've advocated the formation of a Workers or Labor party for decades.

You posted the two BUSH wars and the fact that big corporations get billions in tax breaks. You should have mentioned OBAMA's buddy CEO bragging how GE paid dick in taxes. Not a word from Obama..If that were BUSH the idiot, the media and every tom dick and harry would be all over it.
I too had hoped Obama would have done more to help the working man and woman in this country... but after appointing the GE CEO as top economic adviser....well, need I say more...

 

[Bob Owens]

That's the corporate culture with which we have to live under. I guess Arpey making ONLY $600k a year is simply not enough for him or any executive to do their job. No, CEO's simply must receive 20, 30, 50, 100x the average worker salary in this country. And you know what, FWAAA..that's ok.

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.