Profit Sharing in 2008?

[jimntx]

Now, I was an English major and as a f/a, I'm paid to be cute, not smart, so bear with me. I'm just trying to make sure I understand...

$75 million divided (how ever) among 80,000 employees vs. $200 million divided among less than 1000 executives. Did I get that right? :blink:

 

[eolesen]

Something like that...

 

[Hopeful]

Now, I was an English major and as a f/a, I'm paid to be cute, not smart, so bear with me. I'm just trying to make sure I understand...

$75 million divided (how ever) among 80,000 employees vs. $200 million divided among less than 1000 executives. Did I get that right? :blink:

Fair by management standards

 

[Boomer]

Just finished listening to Trump on CNBC:

Trump was asked why he was such a tough negotiator, he replied, to the effect: that somtetimes others watch when you are taken advantage of and need to see that you will not take it.

Given that the TWU is in NYC and Little and Company are stationed there: why don't they ask the Donald to negotiate our next contract on television with a multi million dollar bonus for a succesful conclusion to the series.

It would make great TV: all of the yahoos from the TWU sitting opposite the CorporAAtion while boosting television revenues in the millions with AD time purchased by the AFL-CIO, the IBEW, the IAM etc...

Seeing the Donald look at the TWU Negotiating Committee and tell them, "You're Fired" would be a great boost to the membership.

Just a thought...I know the TWU is far too scared to put the behind the scenes action with AA telling the TWU what they are going to accept; but given the history...if the TWU is such a righteous Labor Union: let them announce their offer for just such a deal in the Entertainment Rags and see if the Donald accepts.

At least I would get an "honest" representation of the actual negotiations.

 

[FWAAA]

Now, I was an English major and as a f/a, I'm paid to be cute, not smart, so bear with me. I'm just trying to make sure I understand...

$75 million divided (how ever) among 80,000 employees vs. $200 million divided among less than 1000 executives. Did I get that right? :blink:

Close, but not exactly. You're selectively forgetting (ignoring? overlooking? disregarding?) the 35 million options granted to the nonmanagement employees in 2003 that in January of this year were worth a net $1.25 billion and even today are still worth a net $740 million. Comparing the PUP/PSP payouts with the potential profit sharing is sorta like a college freshman complaining about the small check Mom and Dad sent in the fall while ignoring the much larger savings/investment account Mom and Dad set up for the freshman years before.

It's disingenuous.

Flawed as the PUP/PSP payout methodology may be, in 2003, management set up two reward schemes that would pay off if the employees suffered massive paycuts and AMR pulled out of its death spiral.

The first scheme was the rank and file reward, and those options are currently worth $740 million to the rank and file.

The second scheme was the privileged few management reward, and in 2006-07 that scheme paid out about $255 million, mostly in stock (instead of mostly in cash, as was originally envisioned).

Even $740 million was far too little upside for the rank and file. The two democratic unions appropriately strung up the leaders who didn't fight for an appropriate amount of upside. The Worthless Union, on the other hand, . . .

 

[eolesen]

Management employees, including the PUP participants, also were included in the option distribution back in 2003.

The only plans which are mutually exclusive are profit sharing and incentive plan. You're either in one or the other.

Comparing the PUP payouts, which were based on stock price and a lot of external factors, versus the profit sharing pool, which is based on how the company performed internally, is still a valid point in my opinion.

The PUP payouts do reflect the fact that AMR stayed out of bankruptcy and righted its ship without the court's help. But the stock price benefitted just as much (if not moreso) from the fact that management at other carriers far far more inept.

 

[FWAAA]

Management employees, including the PUP participants, also were included in the option distribution back in 2003.

That's true. According to the TWU, management and support staff received 2.9 million of the 37.9 million total options distributed to employees:

http://www.twu.org/divisions/air/pdfs/TWUR...ew3-13-07_2.pdf

That would equal fewer than 500 options if split equally between 6000 management and support staff employees; but I dunno how evenly they were divided nor how many management and support staff were on the payroll. I doubt that the PUP/PSP privileged few took a disproportionate amount of options, but anything's possible.

Comparing the PUP payouts, which were based on stock price and a lot of external factors, versus the profit sharing pool, which is based on how the company performed internally, is still a valid point in my opinion.

I also think it's a valid comparison, as long as that 3/4 billion dollar elephant in the corner of the room is also acknowleged.

The PUP payouts do reflect the fact that AMR stayed out of bankruptcy and righted its ship without the court's help. But the stock price benefitted just as much (if not moreso) from the fact that management at other carriers far far more inept.

Also agree. Of course, avoiding Ch 11 meant that AMR's stock wasn't canceled and didn't fall to zero. The rank and file helped in that cause with their massive paycuts.

And the PUP/PSP payouts' methodology was clearly flawed - they were enhanced by the fact that Southwest's stock was massively overvalued many years ago and has since languished for the past 6+ years. The payouts were enhanced by the fact that many of the peer group canceled their stock in Ch 11. The methodology was clearly flawed.

But those sneaky, greedy management types are probably capable of designing a management incentive scheme that would have paid out just as much money if it had been based on internal profitability or other legitimate measurements instead of relative stock price performance.

That keeps me from getting too worked up about it - one way or the other, management was probably going to take its quarter billion dollar pound of flesh for watching over AMR while it stayed out of Ch 11. The payouts so far pale in comparison to the UAL payouts and are about equal to the DL management payouts (Grinstein was the only one not to share in the largesse, as he was already a billionaire). Haven't yet analyzed the NWA or USAir payouts, but I doubt their management kept their hand out of the new stock cookie jar.

 

[MiAAmi]

With Oil at $90 a barrell. You can count on giving any profit sharing directly to the oil companies.