AA Management Bonuses - Despite More Losses

[jimntx]

So in theory they can dump the stock price from its 1998 high of $82+ a share to its 2003 low of $1.25 and because it climbs back to $22, they claim victory and take bonuses.

Well, yes. And, what's your point?

What about docking them for the $81 a share lost from 1998 to 2003.

Surely, you jest! Have you taken to strong drink?

 

[AMFAMAN]

Well, yes. And, what's your point?

Surely, you jest! Have you taken to strong drink?

Actually I was agreeing with your point and adding to it. I know, it's not often.

 

[AMFAMAN]

I hate to be a stickler SOB but with the SABRE spinoff in March of 2000, the AMR stock value decreased to account for the value of SABRE distributed to stockholders and the large cash dividend paid as part of that spinoff.

Doesn't negate your good point, but does lessen the amount of decline from 1998 to 2003.

Good point, but I do wonder and it's not clear on the report I'm reading if these same bonus recipients received a Sabre distribution for their stock options of 3/4 a share for each AMR share as regular shareholders did. I thought I recall that they did, but don't want to go there without facts.

http://www.shareholder.com/aa/faq.cfm?TaxInfo=sabre

 

[Wretched Wrench]

Another article:

http://biz.yahoo.com/ap/060106/american_ai...nuses.html?.v=2

The closing sentence reads: "Similar management-bonus plans were approved in 2004 and 2005 and also cover about 1,000 managers."

 

[TWU informer]

Just wait!

Once Sharon passes, and IRAN tires of the USA threats regarding their nuclear ambitions, the price of oil along with these management bonuses will put AA under a new thought process.

AA is not out of the woods, and neither are the employees.

Giving away management bonuses with so many world concerns still at play is mis-management to say the least.

But hey, as long as they got theirs brother, who cares?

 

[FWAAA]

Just wait!

Once Sharon passes, and IRAN tires of the USA threats regarding their nuclear ambitions, the price of oil along with these management bonuses will put AA under a new thought process.

So what you're saying is "Some month in the future is gonna be really, really bad at AA?"

Another article:

http://biz.yahoo.com/ap/060106/american_ai...nuses.html?.v=2

The closing sentence reads: "Similar management-bonus plans were approved in 2004 and 2005 and also cover about 1,000 managers."

The article you linked really screwed up the numbers. It says in the first paragraph that the execs stand to clear more than $500 million, when in fact that number describes the rank and file total. The Star-Telegram article in the OP, while not perfect, at least avoids such monumental errors.

Edit to add: The article was re-written in the past hour or so to correct some of the more glaring errors. But like the tug/bag belt driver-contractor for AS (who refused to admit his mistake the other day), no mention in the new article of the errors that have been corrected.

 

[upsilon]

I take my hat off to all of the above posters. While adverseral, this has been civil and very informative!

 

[Vortilon]

Hey maybe we non-management types can create a new victim group to go along with the rest of the oppressed types at AA. As non bonus types, we are being marginalized. While the company is force feeding us this diversity crap, they have set themselves up nicely to receive a nice chunk-o-change. Where is the feel good in that? As long as we employees are still in the suck, so should upper management be! C'mon lets pull together, and win together..

 

[B.O.B.]

Yes, you are missing something. You are confusing the options granted with an executive bonus plan. The current bonusses have NOTHING to do with how many or what price options were granted. Those options had to do with the 2003 re-structuring. These bonusses are awarded from a bonus plan that dates back to 1998 (IIRC). That plan awarded bonusses based upon percentage improvement in stock price. (AKA "improving stockholder value").

This conveniently makes them eligible for the bonusses unlike the bonus plan based upon profitability.

Spoken like a true KOOL-AAID drinker.

 

[FA Mikey]

Spoken like a true KOOL-AAID drinker.

Hhmmmm I guess the moderators never got your message about closing your account. What a shame.

 

[Paul]

Let's not start that again. This has been a good topic so far, so don't ruin it with personal attacks. Thank you.

 

[IORFA]

Atleast APFA is starting to stand up. Per todays Hotline, ALL future PLI meetings have been canceled. These meetings were sponsered by both AA and APFA to discuss the results from the Performance Leadership Initiative discussions. Maybe some accountability will result from this. President Blake did mention that out of all the Executives offered this "plan" ALL accepted EXCEPT ARPEY. Atleast someone driving this ship has some morals!!!

 

[Wretched Wrench]

President Blake did mention that out of all the Executives offered this "plan" ALL accepted EXCEPT ARPEY. Atleast someone driving this ship has some morals!!!

It could be said that he is the only one "leading by example" in this case.

The article you linked really screwed up the numbers. It says in the first paragraph that the execs stand to clear more than $500 million, when in fact that number describes the rank and file total. The Star-Telegram article in the OP, while not perfect, at least avoids such monumental errors.

Geeze! First I am accused of making up stuff and citing sources of dubious provenance, and now I post something from Yahoo Finance, and it is not acceptable either.

Oh me, Oh my, what to do?

Here Reuters' take on it:

http://yahoo.reuters.com/financeQuoteCompa...06321772_newsml

Shields up.

 

[TWU informer]

So what you're saying is "Some month in the future is gonna be really, really bad at AA?"
The article you linked really screwed up the numbers. It says in the first paragraph that the execs stand to clear more than $500 million, when in fact that number describes the rank and file total. The Star-Telegram article in the OP, while not perfect, at least avoids such monumental errors.

Maybe if the Exec's did not refuse to provide exact details of shares held, and total value, then the media would not be so prone to error.

The first we heard of this was the SEC filing claiming that the incentive plan was from 1998, now all of sudden it was 2003, but AA has these type of plans since 1988.

Usually when stories keep changing the way this one does, someone has told a big fat lie and is about to get caught in the big lie.

Something is really bad wrong here and my bet is someone digs up the dirt real soon.

Another changing story appears to be when Union Leaders were informed about these bonuses. It has been reported Union leaders were told 24 months ago, yet the President of the APFA on the hotline seems to claim he first got a letter about this yesterday. Now why would the Union be refusing to attend further initiative meetings if the Union Leadership was really informed 24 months ago?

This is Tommie Hutto-Blake, APFA President, with the APFA Hotline for Friday, January 06, 2006.

Today it was announced that many of AA’s management – about 1,000 employees from mid-level all the way to top-management – would be receiving bonuses. In light of this development, APFA has decided to defer our participation in the Base Briefings with AA set to begin next week. We will let you know if and when APFA decides to participate in these Base Briefings.

Yesterday, APFA received a draft letter announcing the fact that there would be bonuses awarded to management in April. Today we received more information that included details on the total compensation at today’s stock price, which would equal a $20M payout. A copy of the plan is available as of today on Jetnet .

The irony of this is that even though AMR has lost $8B over the past four years, recently our stock has most outperformed the airline industry. It must be noted that we have ALL played a key role in driving stock prices up at AMR, resulting in healthy bonuses for both mid-level and top management employees.

APFA has expressed its serious concerns with management that at a time when we are attempting to work together with AA to bring this company back to profitability, the very poor timing of management bonuses is clearly not in the best interests of this Company and its employees who have worked so hard to turn this airline around. To say the least, we are disappointed at this information considering the Company’s substantial debt.

All top-level management on AA Payroll at the time these bonuses were conceived accepted the incentive but for one – CEO Gerard Arpey. These bonuses, which will be in the form of “units,†will be vested on April 18, 2006. The recipients of the plan will receive the equivalent in cash at the stock price on that day.

Each recipient is set to receive a specific number of units. For example, Dan Garton, the Senior VP of Marketing is at the top of the list with 44,000 units. If AMR’s stock price goes unchanged, Dan Garton is set to receive $1.7M in April. The lowest amount to be paid out at today’s stock price would be $2,000 for 50 units, which goes to the lowest level manager invited to participate in the plan. The units will be multiplied by 175% of the stock price on April 18, 2006, due to the fact that AMR’s stock price was the industry’s best performing stock. Since 2003, the stock price has increased 169%.

APFA would like to commend Gerard Arpey for having the resolve to lead by example and turn down a very large amount of money when this plan was offered to him more than two years ago.

Now please stay on the line for the rest of the APFA Hotline. Leslie…

Thanks, Tommie.

Maybe Mr. Arpey would give us a signed letter explaining why "he" did not participate in the scheme? I would love to know why!

 

[Hopeful]

Maybe if the Exec's did not refuse to provide exact details of shares held, and total value, then the media would not be so prone to error.

The first we heard of this was the SEC filing claiming that the incentive plan was from 1998, now all of sudden it was 2003, but AA has these type of plans since 1988.

Usually when stories keep changing the way this one does, someone has told a big fat lie and is about to get caught in the big lie.

Something is really bad wrong here and my bet is someone digs up the dirt real soon.

Another changing story appears to be when Union Leaders were informed about these bonuses. It has been reported Union leaders were told 24 months ago, yet the President of the APFA on the hotline seems to claim he first got a letter about this yesterday. Now why would the Union be refusing to attend further initiative meetings if the Union Leadership was really informed 24 months ago?
Maybe Mr. Arpey would give us a signed letter explaining why "he" did not participate in the scheme? I would love to know why!

Probably because he did not want to participate in anything Cartyesque!