Profit Sharing Disparities

Oh, it goes deeper and has gone on longer than that although what you say is the "old boys club" I mentioned. The "Railroad Barons" and other industry "Barons" of old made considerably more than the average worker, but at least they built the company.

But part of it is supply and demand. AA probably has north of 10,000 applications on file for pilot jobs whereas no applications on file for the CEO job. So when the BOD is looking for a new CEO they look both in and outside the company. To lure someone to take the job they have to offer something better that what those they look at are currently making, either to entice them to move up to greater responsibility within the company or leave the other company. And let's face it, those sought out know what the previous person in the position made since it's publicly available and therefore that becomes the compensation floor for negotiations over their compensation.

An example from US is Parker and Kirby. Parker was Chairman of the Board, CEO and President of US for the first year after the merger (and I assume he was the same for AWA prior to the merger) while Kirby was EVP Sales & Marketing. Then Kirby was moved up to President, with the compensation that Parker had received while Parker dropped the President role and got an increase in compensation - can't have the new President making less than the old President and can't have the CEO making "only" what the President makes.

But my point still stands - one can beat their head against the wall bemoaning how unfair it is or one can accept it as a fact of life. Neither will change it.

Jim
 
But my point still stands - one can beat their head against the wall bemoaning how unfair it is or one can accept it as a fact of life. Neither will change it.

Jim

And management will have to accept it as a fact of life that employee moral will keep AA rankings at the bottom of the heap.
 
For the more finacially astute:

Is there a way to structure payouts based on total benefits that would accrue to pensionable earnings while not increasing taxable pay?

If Union workers acheived a higher future payout on their DBP based on "equalized bonus accruals" without actually receiving that payment in taxable wages, wouldn't everyone benefit over time?

All of this assumes that AMR would actually contribute the required monetary sums into the DBP while maintaining the fund in 100% of funding status versus the 80% required before a DBP is considered underfunded.

Is there a type of financial annuity that could be considered a DBP "B" fund for Union workers that does not count as a regular DBP contribution and is non-taxable to the individual employee during the period earned?
 
The only sure way I know of to have profit sharing be non-taxable is to defer the entire amount into your 401K, which IIRC is how WN's plan used to work, and used to be possible with AA provided you told Payroll a month in advance that's what you wanted to do....

The only problem with a "B Fund" is it wouldn't be guaranteed by PBGC, so there's some risk if the company isn't on a rock solid footing.

Not sure how you'd structure it, but I like the idea of having a bump deposit into the pension in lieu of cash awards.
 
eolesen,

Tried the idea of having the AAIP and the current model 100% bumped into the 401(k), still got hit with taxes and did not get benefited for the high three.

With respect to a defined "B" fund, it would require a degree of honesty that would be necessitated by outside intervention with fees paid for out of funds contributed: fiduciary duty owned by the membership covered, neither the TWU or AA can be trusted. Not unlike setups for mutual insurance agencies owned through fees paid.

With respect to AMR funding the regular DBP at 100%: refer to Warren Buffet in his statement that anyone
guaranteeing anything above 5% over a long period would invite him to contribute more cash can they could handle.

There is still no legal mechanism that requires a DBP contributor to define, on a year by year basis, the difference between the anticipated return on DBP investments and the actual returns; while the anticipated returns were actually allowed to be "booked" in the calculations of DBP underfunding.
 
eolesen,


With respect to AMR funding the regular DBP at 100%: refer to Warren Buffet in his statement that anyone
guaranteeing anything above 5% over a long period would invite him to contribute more cash can they could handle.
I recall an Economics professor telling us that a 5% margin is considered very good and sustainable over the long term. Somehow expectations became unrealistic, the monies used to meet those expectations came out of workers pockets.

Profit sharing scams are no different, workers are basically coerced into giving up thousands of dollars in wages and benifits for what under the best of circumstances can bring pennies on the dollar on their investment.

If I look back at my 25years with AA I would estimate that the concessions that have been put in place since I entered this industry cost me at least $250,000, and in total I've recieved less than $10,000 in profit sharing or incentive bonuses.

Profit sharing plans are inherantly inequitable. If they want to throw them in as an incentive fine, otherwise keep em, I'll take my wage instead.
 
Bob:

I think it's time we quit arguing about what the company is or is not willing to give us.

We need to talk about what we're going to "give" the company, especially after the mediated Tulsa talks were "cancelled" by the mediator. I wonder how much that cost the company?
 
AA has also proposed a much improved profit sharing plan with the APFA. The problem I have with this plan is that I want a raise that I can count on to pay my bills day in and day out. I don't want a profit sharing plan that replaces a structural increase in wages. I want a profit sharing plan that complements real wage increases.

Without knowing which work group you're in, I read last week that AA's offer to the mechanics included some fairly significant structural pay increases.
 
I remember reading something on one of the blogs about an increase. 6% over a couple years I think, in addition to payouts.
 
Flier, let me help you out. 1.5% after 30 months of the signed contract. You better stay away from the blogs. :)