AA Management Bonuses - Despite More Losses

[Bob Owens]

Mr Owens, we've been over this before, but here it is again. The historic daily volume and price data of AMR stock can be found here:

http://www.shareholder.com/aa/stock.cfm

Millions of shares traded each day in early 2003 for less than $2/sh.

For example:

March 11, 2003; Nearly 14 million shares opened at $2.40, closed at $1.59.

March 12, 2003; 16.4 million shares opened at $1.60, closed at $1.41, touched $1.25 that day.

March 13, 2003; 27.3 million shares opened at $1.48, closed at $1.50, touched $1.36 and $1.60 that day.

In those three days alone, trading volume was greater than one-third the outstanding shares (about 150 million shares outstanding that quarter).

It kept up for several more days.

Were the shares available for those prices? Yep. Lots of them, as the scared sold to the risk-takers who knew the employees' concessions would be approved (either legitimately or not) - "imposed" is probably a better word.

A majority of the company at $1.25? Not quite that cheap, but more like two-thirds of the outstanding shares traded for less than $2/sh during March, 2003. Too bad employees were busy whining about PIN numbers instead of taking care of their retirement by loading up on the cheap.

Well actually I did buy what I could. However there is no way I could have afforded to buy enough to make up for what we are losing. While I did not get in a $1.25, because I never directly bought stock before, I bought at around $5/shr.(It took a while to set up the account.)

Now going back to the claim that we could have purchased the company, thats not neccisarily true. If there are 165.1million shares outstanding that does not mean that those who have them are willing to part with them. You claim that 2/3rds traded at below $2/share. How do you know that they were not the same shares getting repeatedly bought and sold over that time period? If the same 14 million shares were bought and sold 9 times that would account for your erroneous claim that 2/3 of the outstanding shares were traded for less than $2/share. A more accurate statement would be that the total number of sales broken down to individual shares was equal to 2/3 of the outstanding, the highest number that you quoted as far as stocks available on any given day, at opening, was 27 million.

 

[TWU informer]

Yeah but this thread is about management bonuses not stock purchase price or volume.

 

[Wretched Wrench]

Wretched Wrench-

For the sake of all of us that actually make sure we paste factual numbers here, please don't post real numbers if you cannot cite their source. That makes it seem like a real fabrication...especially when, as AirLUVer points out, the resulting #'s aren't even anywhere near factual. Even if $40k is too high for the average (is it really? I don't know) you can bet your tail that it is higher than $20k which would leave CEO salaries at $10M...AVERAGE. That also is not at all close to reality. Your attempt to justify your numbers by saying that they are from "mainstream sources...seen often in the press" conveys that you fabricated them to make a point. I agree with your point that they are overpaid but tend to think that the facts lie much lower than what you cite unless you can actually give us a source. If it is something you just happen on "often in the press", I think you must have a photographic memory to be able to rattle off numbers like that.

Please stick to truth on these boards or at least admit when the numbers are not citeable. I more than welcome you posting a link or source but don't ask me why..."mainstream sources...seen often in the press" seems kind of like a WMD arguement with vague sources. IOW...fiction presented inaccurately as non-fiction to make a case.

I will gladly apologize if you post a real citation.


You see...most people on these boards actually post a link or cite the source when presenting something as exact as what you did. To do otherwise makes you looks like a story teller.

-ch. 12

No, I am not a " story teller". I should add that I am not accustomed to being called a liar, particularly in so patronizing and smarmy a manner. Since dueling is outlawed, just this once, I will indulge you by providing you with footnotes, just like college.

In response to your offer,

"I will gladly apologize if you post a real citation",

I offer the following:

In 1980, CEO pay was 42 times average worker pay in the US.

http://money.cnn.com/2005/08/26/news/economy/ceo_pay/

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In 1991 it was 140 times the average worker pay.

http://www.pbs.org/newshour/bb/business/ju...ceo4_12-05.html

--------------------------------------------------------

In 1998, it was 419 times the average worker pay.

http://csmonitor.com/cgi-bin/durableRedire...text/p17s1.html

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By 2003 it was over 500 times.

http://www.law.harvard.edu/faculty/bebchuk....Constraint.pdf

----------------------------------------------------

Today's El Lay Times has an article entitled, "No dearth of Greed and Graft in 2005". It is kind of a reprise of CEO shenanigans this year.

The author says executive compensation went up 12.6% this year.

http://www.latimes.com/news/local/la-me-lo...-inland-mininav

-----------------------------------------------------

NOW.......WHICH of my figures was I making up? Some?...ALL?

And WHICH of my sources do you believe not to be mainstream?....CNN?...PBS?...Christian Science Monitor?...New York Times?....Harvard Law School?...Los Angeles Times?...Please, oh please, share your insight and perspicacity with us.

I apologize for citing links that will require you to actually read all those words. I presume you do not read much, or those numbers you doubt would be generally familiar to you. The sites do not highlight the words and numbers you desire like Google does.

I would also suggest that the next time you disbelieve someone, you check the facts and figures by private research before you call someone a liar. The fact that you do not believe what I posted is of little consequence to anyone, and only shows your lack of information on the subject. I should think you would be averse to trumpeting such ignorance over a public forum.

Are you familiar with http://www.google.com/? it is a tremendous research and learning help. Let me help....If you go there and type (all on the same line) "executive pay" "42 times" and enter, they will pro vice a plethora of citations for that figure. Repeat the process for each number I cited. That way, you will learn something new yourself, and will not subject yourself to public embarrassment by calling someone a liar just because you are uninformed and ill-mannered.

BTW, I have too much respect for this forum and its members to knowingly post untruths or made-up figures. There are some very well-informed members here who will correct a post they have found to be incorrect, although they do it with a little more class than you.

 

[Dea Certe]

I believe a recent issue of Business Week had some stories about CEO compensation being out of hand.

Most depressing all the way around.

Dea

 

[AirLUVer]

Here is the quote from one of your sources.

The new issue of Forbes magazine has an article headlined: "The Age of the $100 million CEO." It profiles a dozen chief executives recruited with salaries, bonuses, plus stock options worth from $130 million to $1.8 billion over a few years.


It lists 50 bosses with total 1999 incomes that range from $3.3 million to $650 million.

Unfortunately it does not name the companies. Considering Arpey's Salary is less than 600,000 he is probably not included in that list of 50 bosses.

 

[Ch. 12]

BTW, I have too much respect for this forum and its members to knowingly post untruths or made-up figures. There are some very well-informed members here who will correct a post they have found to be incorrect, although they do it with a little more class than you.

Well, then, as promised I apologize. However...seeing as you have been around here quite a bit as well, you should know that when asked for sources, if you just state "you know...I've seen them around", that raises much suspicion. When hard numbers are posted with no reference, it isn't MY duty to track them down as you must have recently reviewed them. That's why I and most others here will just post a link when posting hard numbers or at least cite it in some concrete way.

And I wasn't out to "correct" with my own real numbers b/c I am informed enough to know that you can find just about any number you want for the CEO compensations. Heck...even your first citation has ratios for years that are way off from your other citations. CEO compensation is a pretty subjective measure (should I include options, bounuses, unexercised options, unrealized incentives???).

Either way...I have told you that I do think that CEOs often make way too much when they are leading a failing company into more failure. I also still don't at all believe the 500 to 1 ratio. Look here at the 2005 compensations for the top 500 CEOs: CEO Pay (Fortune 500) You will notice that if #495 were making 500 times the average, then the avg worker would only make $164 per year. Ouch! Even #50 (which I sure would hope would still be above the average CEO pay), that means average compensation is 47k. Compared to #100, the avg would be $27k. I just don't see a 500 to 1 existing out there. I also think that since we are looking to compare CEOs to other workers, median salaries would be the way to go b/c one big cap CEO's compensation is likely to be way higher than others...drastically throwing off the average.

Again...I apologize. I just like to know where concrete statements arise and I felt that you skirted the question the first time through. Citations are a wonderful thing.

 

[nbmcg01]

Well, then, as promised I apologize. However...seeing as you have been around here quite a bit as well, you should know that when asked for sources, if you just state "you know...I've seen them around", that raises much suspicion. When hard numbers are posted with no reference, it isn't MY duty to track them down as you must have recently reviewed them. That's why I and most others here will just post a link when posting hard numbers or at least cite it in some concrete way.

And I wasn't out to "correct" with my own real numbers b/c I am informed enough to know that you can find just about any number you want for the CEO compensations. Heck...even your first citation has ratios for years that are way off from your other citations. CEO compensation is a pretty subjective measure (should I include options, bounuses, unexercised options, unrealized incentives???).

Either way...I have told you that I do think that CEOs often make way too much when they are leading a failing company into more failure. I also still don't at all believe the 500 to 1 ratio. Look here at the 2005 compensations for the top 500 CEOs: CEO Pay (Fortune 500) You will notice that if #495 were making 500 times the average, then the avg worker would only make $164 per year. Ouch! Even #50 (which I sure would hope would still be above the average CEO pay), that means average compensation is 47k. Compared to #100, the avg would be $27k. I just don't see a 500 to 1 existing out there. I also think that since we are looking to compare CEOs to other workers, median salaries would be the way to go b/c one big cap CEO's compensation is likely to be way higher than others...drastically throwing off the average.

Again...I apologize. I just like to know where concrete statements arise and I felt that you skirted the question the first time through. Citations are a wonderful thing.

My question has always been, "Why bonus payments for doing what they are already being compensated through their contractual pay?" They are receiving bonuses for "doing their jobs". I wonder what happens if it perceived that they haven't "done their job". Straight salary? Mini-bonus? Do they have to return pay? What an archaic system in this time of raping negotiated (in good faith) collective bargaining agreements. On the other hand, bonus payments will make it a little more difficult to come to the workers with open hand, asking, "more, more, more".

 

[Hopeful]

Let us not forget that the people who sign off on CEO compensation and bonus packages are the board of directors who, hmmm, let's see, oh yeah, ARE USUALLY BIGWIGS FROM OTHER COMPANIES WHO RECIPROCATE THE OBSENCE PAYOUTS!

You know, the people who inflate each others' worth and create the "market" rate for such positions.

You know, the people who conspired to beat the average worker into the ground and pay them what THEY think is fair compensation.

You know, the people who meet on the golf course and decide how best to f### labor and give themselves bonuses for f###ing labor.

Market rate, my a$$!

 

[Ch. 12]

My question has always been, "Why bonus payments for doing what they are already being compensated through their contractual pay?" They are receiving bonuses for "doing their jobs". I wonder what happens if it perceived that they haven't "done their job". Straight salary? Mini-bonus? Do they have to return pay? What an archaic system in this time of raping negotiated (in good faith) collective bargaining agreements. On the other hand, bonus payments will make it a little more difficult to come to the workers with open hand, asking, "more, more, more".

I agree. Executive bonuses seem to be tied to nothing quantitative. Has there ever been an instance where an executive has not received their bonus?

On the bonus front...NPR reported yesterday that companies have stated they plan to pay larger bonuses to general staff next year than they did this year. My thought is that that is a rather simple statement...seeing as not many people received bonuses this year, ANYTHING would be better next year. Now just give me a 10 million dollar bonus and I would be happy.

 

[FWAAA]

My question has always been, "Why bonus payments for doing what they are already being compensated through their contractual pay?" They are receiving bonuses for "doing their jobs". I wonder what happens if it perceived that they haven't "done their job". Straight salary? Mini-bonus? Do they have to return pay? What an archaic system in this time of raping negotiated (in good faith) collective bargaining agreements. On the other hand, bonus payments will make it a little more difficult to come to the workers with open hand, asking, "more, more, more".

These variable pay components aren't "bonuses." The management personnel simply negotiated to take a portion of their total pay in this manner. The conditions necessary to activate their variable pay have occurred (stock price is over $22 - $23) and so they receive the "rest of their pay." Not a complex or earth-shattering concept. Except that there's little likelihood that the mechanics or rampers or FAs would have agreed to the same scheme. How many of you would agree to slice your fixed pay in half wi9th the prospect of getting the other half only if certain metrics were achieved?

 

[Ch. 12]

These variable pay components aren't "bonuses." The management personnel simply negotiated to take a portion of their total pay in this manner. The conditions necessary to activate their variable pay have occurred (stock price is over $22 - $23) and so they receive the "rest of their pay." Not a complex or earth-shattering concept. Except that there's little likelihood that the mechanics or rampers or FAs would have agreed to the same scheme. How many of you would agree to slice your fixed pay in half wi9th the prospect of getting the other half only if certain metrics were achieved?

Mesa is currently doing this (on a voluntary basis) with much of their staff and everything I have heard seems to be favorable. But then again...without a profit, it wouldn't be favorable to most of us here.

 

[Skymess]

These variable pay components aren't "bonuses." The management personnel simply negotiated to take a portion of their total pay in this manner. The conditions necessary to activate their variable pay have occurred (stock price is over $22 - $23) and so they receive the "rest of their pay." Not a complex or earth-shattering concept. Except that there's little likelihood that the mechanics or rampers or FAs would have agreed to the same scheme. How many of you would agree to slice your fixed pay in half wi9th the prospect of getting the other half only if certain metrics were achieved?

You're comparing apples to oranges here. I think many \ of would agree to do it if our compensation was on the level theirs is. There's a difference between taking half of $600,000 vs. half of what we make. Wouldn't you say?

 

[Skymess]

My question has always been, "Why bonus payments for doing what they are already being compensated through their contractual pay?" They are receiving bonuses for "doing their jobs". I wonder what happens if it perceived that they haven't "done their job". Straight salary? Mini-bonus? Do they have to return pay? What an archaic system in this time of raping negotiated (in good faith) collective bargaining agreements. On the other hand, bonus payments will make it a little more difficult to come to the workers with open hand, asking, "more, more, more".

It seems as though they are all in collusion with each other. The skull and bones society. Stock analysts in with corporate management. Ever notice when they recommend or upgrade a stock nobody wants because the company isn't doing anything and then downgrade it after everyone buys it? Who do you suppose is buying the stock before it goes up or unloading their worthless stock after it goes all the way up? Makes me a little suspicious. Jet Blue is a good example. Stock shouldn't be climbing daily but the wall street investors have to keep their money alive.

The problem with the executive bonus scheme is that they don't necessarily make a bonus for achieving a profit but they make it when the stock price beats Wall Streets expectations. God help them with their tiny compensation if they had to take their money on real profits.

http://www.shareholder.com/aa/stock.cfm[/url]

Millions of shares traded each day in early 2003 for less than $2/sh.

For example:

March 11, 2003; Nearly 14 million shares opened at $2.40, closed at $1.59.

March 12, 2003; 16.4 million shares opened at $1.60, closed at $1.41, touched $1.25 that day.

March 13, 2003; 27.3 million shares opened at $1.48, closed at $1.50, touched $1.36 and $1.60 that day.

Boy does this open up a gaping wound. I bought 1,000 shares at $1.50 and sold it at 5 bucks. I thought for sure we were going to bankruptcy after the FA no vote came out. But they wouldn't let it come and it didn't.

If I had been thinking I would have sold half, gotten my profit, and still had half. :rant:

I sold half of my stock options the other day at 23 bucks. I learned my lesson. If it keeps going up I still have half and if it doesn't than I have money I didn't have before.

 

[nbmcg01]

These variable pay components aren't "bonuses." The management personnel simply negotiated to take a portion of their total pay in this manner. The conditions necessary to activate their variable pay have occurred (stock price is over $22 - $23) and so they receive the "rest of their pay." Not a complex or earth-shattering concept. Except that there's little likelihood that the mechanics or rampers or FAs would have agreed to the same scheme. How many of you would agree to slice your fixed pay in half wi9th the prospect of getting the other half only if certain metrics were achieved?

I suppose if I were paid in the range of the bonus receivers, I'd consider it. However, I have never been afraid of performance based compensation. I would like to see a "jury" of their co-workers have the ability to weigh in on the appropriate amounts.

If in fact this is part of their compensation package, it should not be called a bonus. It is either deferred pay or just plain pay. A bonus is a bonus is a bonus...The word implies an additional compensation for "something". The people in question have done no more than they were hired to do... The "Peter Principle" at its best.

 

[Wretched Wrench]

Considering Arpey's Salary is less than 600,000 he is probably not included in that list of 50 bosses.

my post was in response to a post reflecting on executive compensation in the USA, and not just AAL.

BUT.......regardless of the dollar amounts, the gap between executive pay and workers' pay is widening at a frightening rate.

Yes, as previously posted, I would agree the figures do not seem to fit AA very well.

I also would be interested in how some of this information is compiled. I only have one semester of statistics, but I am aware of the different ways information can be presented. But the general trend they illustrate cannot be denied.

The issue here is not just the dollar amount of the executive pay, but the concept of the "Imperial CEO", who is so far above the actual producers of his company's product or service. You know, the Marie Antoinette school of management. Along with the problems of an "imperial" situation, there is the matter of isolation. Some of it is brought about by the executive's view of himself, but much of it is caused and exacerbated by his minions. This can be seen at lower levels, as well, just not as dramatically.

I should add here that accusations of being an Imperial CEO would be better aimed at Carty than Arpey. However, the damage done to this company by Carty and the board will linger on for years. Our BOD is still the same bunch of cronies and tokens as before. Many many companies are the same. Hopeful has commented here in that area.

These problems are not unique to corporate America..... some of Bush's problems are related to his view of his Imperial Presidency as well as the "bubble" on a recent cover of Newsweek. I believe Nixon's downfall was a result of a similar situation.

.