Good News For Aa Execs

[Hopeful]

bizjournals.com
American's incentive plan worth millions to executives
Wednesday July 27, 2:01 pm ET


AMR Corp., the parent of American Airlines, has approved a long-term incentive plan for CEO and Chairman Gerard Arpey that could be worth millions if he stays with the company and certain performance goals are met.
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Fort Worth-based AMR (NYSE: AMR - News) granted Arpey 58,000 shares of deferred stock, and he will receive subsequent awards of 58,000 deferred shares each year until 2009, provided he remains with AMR and performance goals are met, the company said Tuesday in a regulatory filing with the Securities and Exchange Commission. The shares vest in 10 years, according to the filing.

As part of the plan, Arpey also received 140,000 "performance units," which will vest over a period of years if the company's stock price rises.

Performance criteria include the company's overall cash flow, earnings, share price and other factors.

AMR said the plan is designed to "provide greater incentive to officers and key employees of the subsidiaries and affiliates of AMR Corp. to achieve the highest level of individual performance and to meet specified goals, which will contribute to the success of the corporation."

Arpey has been CEO of AMR since 2003, taking over after the controversial resignation of Donald J. Carty, who resigned after it was revealed that AMR hadn't informed its labor unions about pay incentives for executives at a time when the cash-strapped airline was seeking concessions from the unions.

Arpey also received options for 95,000 shares, at a price of $13.67 a share, that will vest if performance goals are met. The stock was trading at $13.46 a share today.

Under a separate incentive plan, Arpey received 24,000 deferred units that will vest in 2008 if Arpey remains with the company.

"Performance units" also were granted to other key employees of the company.

Web site: www.aa.com.

Published July 27, 2005 by the Dallas Business Journal

 

[NewHampshire Black Bears]

Arpey's NO choir boy, thats for sure.(He was in cahoots with Carty $$$$$)
AND
Lets not forget that "Uncle Bobby" hankpicked Gerard right out of Business school, to personally "GROOM" him, which means "G A" had to have(how shall I say) "certain QUALITIES" !!

With that said,

I think AMR is VERY wise to "lock up Arpey" !!!

I think hes qualified.
I think he's capable.

AND as a Dallas area Texan, ya' gotta' figure he loves the Lone Star "Spotlight" !!!!


NH/BB's

 

[Wretched Wrench]

And how, you may ask, does AA plan to pay for this?

A possible answer came out the same day:

US commercial passenger airlines would have 14 years to pay off billions of dollars in pension funding shortfalls under a proposal unanimously approved Tuesday by the Senate Finance Committee.


http://www.marketwatch.com/news/story.asp?...rden=&minisite=

Looks like Enron, Tyco and UAL all over again. Upper management got the gold mine and the workers get the shaft.

It would appear that AA waited for the Senate committee to approve their pension payment extension, then announced the Executive Retention Plan.

OK, management claque, tell us it is just a coincidence.

 

[eolesen]

Committee approval simply advances the pension bill to the floor for debate. There's still lots of time available for it to die or be amended.

If it were truly a conspiracy, why not wait to announce the options until after the bill is actually approved?

If you look, you'll see the same SEC filing every year for the past two decades. It's nothing new by any means.

AA bought back millions of shares during the late 90's. What do you think happened with that stock?.... They held onto it as treasury stock.

Don't forget that performance shares and options are only valuable -if- the company meets its goals, and -if- the stock performs above about $17. As most of us have already found out, options have taxes and fees attached to them.

 

[Wretched Wrench]

If it were truly a conspiracy, why not wait to announce the options until after the bill is actually approved?

Good point. I thought about that, and considered that AA was pretty sure it was in the bag once it got out of committee. I suspect they knew what they were doing, with respect to timing.

AA is confident enough not to worry about a little outrage here and there. Been there, done that.

 

[Connected1]

And how, you may ask, does AA plan to pay for this?

[post="284507"][/post]​

With future earnings. He gets nothing until the company hits its performance targets.

I believe the stock options vest sooner. Oddly enough, the exercise of stock options are a cash-positive event for the company.

 

[Bob Owens]

With future earnings.  He gets nothing until the company hits its performance targets.

I believe the stock options vest sooner. 

[post="284622"][/post]​

And what are those targets?

We get nothing from profit sharing until the company clears the $500,000,000 mark. In AAs 75 years of existance how many times have they done that?

Oddly enough, the exercise of stock options are a cash-positive event for the company.

Ok but what about now when they issue the stock? Isnt the value of the stock counted as an expense or liability now? If it costs nothing then it must water down the value of our stock. Somebody is paying for this.

So lets see, 58,000 times five years= 290000 shares of stock at $13.46= $3.9 million.

So how much did they say they will save with one engine taxi's or shutting down the APU's? I guess they are doing it to pay for Arpeys bonus. We will have to let Cabin Service know what they are sweating for. They bake in those planes cleaning them in the heat ( cabin temperaures can easily and quickly climb to over 100 degrees on a sunny day)but if they grab a water out of the galley thats left over from a previous flight corporate security will have them fired for theft.

 

[Wretched Wrench]

And how, you may ask, does AA plan to pay for this?

With future earnings.  He gets nothing until the company hits its performance targets.

[post="284622"][/post]​

OF COURSE it is with future earnings. And future earnings are a reflection of cutting future expenses. And delaying the funding of our retirement is a future expense that has just been cut.

That is self-evident.

I believe that is called circular logic.

Again, the executive bonuses are paid for with our retirements, as well as our pay cuts.

Remember "Shared Sacrifice"? Those were just words. Follow the money, and you will find the truth.

 

[eolesen]

OF COURSE it is with future earnings. And future earnings are a reflection of cutting future expenses. And delaying the funding of our retirement is a future expense that has just been cut.

[post="284796"][/post]​

1) Future earnings are going to be a reflection of revenue generation more than anything else. Things like buy-on-board, charging for excess bags, paper tickets, and other service fees which aren't tied to whatever Jetblue is charging for airfare. And, where we can still manage to get them, revenue premiums above whatever LCC's are charging. And yes, we're still getting a revenue premium today relative to the LCC's.

2) Pension funding hasn't been cut. They may have stretched out the catch up period, but it doesn't change the fact that it's still a liability.

Also, the current bill has not passed yet, and there's a 50/50 chance it won't. Bush is against sector-specific legislation, and as long as this is specific to airlines only, it has a fairly good chance of being vetoed.

 

[Bob Owens]

1) Future earnings are going to be a reflection of revenue generation more than anything else. Things like buy-on-board, charging for excess bags, paper tickets, and other service fees which aren't tied to whatever Jetblue is charging for airfare. And, where we can still manage to get them, revenue premiums above whatever LCC's are charging. And yes, we're still getting a revenue premium today relative to the LCC's.

2) Pension funding hasn't been cut. They may have stretched out the catch up period, but it doesn't change the fact that it's still a liability.


Nice spin. They CUT the amount they have to pay this year, and the next. As far as being a liability its a liability that could very well simply dissapear on any given year depending upon the performance of the funds investments.

Also, the current bill has not passed yet, and there's a 50/50 chance it won't. Bush is against sector-specific legislation, and as long as this is specific to airlines only, it has a fairly good chance of being vetoed.


So I guess that 737 that they lent to Bush only gets AA a 50-50 chance.Either way AA wins. If it goes through OK, they can use the pension as a bargaining chip in the next round of negotiations, if it gets bounced, "hey we tried".

 

[nbmcguire]

1) Future earnings are going to be a reflection of revenue generation more than anything else. Things like buy-on-board, charging for excess bags, paper tickets, and other service fees which aren't tied to whatever Jetblue is charging for airfare. And, where we can still manage to get them, revenue premiums above whatever LCC's are charging. And yes, we're still getting a revenue premium today relative to the LCC's.

2) Pension funding hasn't been cut. They may have stretched out the catch up period, but it doesn't change the fact that it's still a liability.
Nice spin. They CUT the amount they have to pay this year, and the next. As far as being a liability its a liability that could very well simply dissapear on any given year depending upon the performance of the funds investments.

Also, the current bill has not passed yet, and there's a 50/50 chance it won't. Bush is against sector-specific legislation, and as long as this is specific to airlines only, it has a fairly good chance of being vetoed.
So I guess that 737 that they lent to Bush only gets AA a 50-50 chance.Either way AA wins. If it goes through OK, they can use the pension as a bargaining chip in the next round of negotiations, if it gets bounced, "hey we tried".

[post="284810"][/post]​

I thought he was doing the job that he was hired for...why should any exec receive a "bonus" for just doing their jobs. Always has been a point of "interest" for me.

 

[Bob Owens]

I thought he was doing the job that he was hired for...why should any exec receive a "bonus" for just doing their jobs. Always has been a point of "interest" for me.

[post="285118"][/post]​

Exactly.

Just part of the double talk workers have accepted from management for years as our weak pimp unions sit back and say Little or nothing at all.

Their job is to make the company profitable, they get huge sums of money whether they deliver or not. When they dont deliver they fire employees or cut their pay but when they do deliver they expect huge bonuses.