AA Management Bonuses - Despite More Losses

[eolesen]

Again, for those with blinders on, these are not bonuses.

The individuals named in the LTIP choose to take a smaller base salary and gamble on the stock price. It just so happens that their gamble paid off.

Here's the actual language from the SEC filing:

Under the 1998 Long Term Incentive Plan, and other compensation plans, as outlined in the Form 10-Q for the quarterly period ended June 30, 2005 and other SEC filings, and in accordance with Financial Accounting Standards No. 123, some stock/equity based compensation expense is recognized each period based on the company's current stock price. As such, this expense will vary with the rise or fall of the company's stock price.

Just as the company is having to account for the difference between the street price on your $5.00 options which are exercised, the company has to account for the difference between the street price and the grant price for the options given to the LTIP participant's.

I completely agree with the overall disgust over what executives at TYCO, Exxon/Mobil, Merck, etc. but I really don't think you can paint AMR with the same brush.

 

[nbmcg01]

Again, for those with blinders on, these are not bonuses.

The individuals named in the LTIP choose to take a smaller base salary and gamble on the stock price. It just so happens that their gamble paid off.

Here's the actual language from the SEC filing:
Just as the company is having to account for the difference between the street price on your $5.00 options which are exercised, the company has to account for the difference between the street price and the grant price for the options given to the LTIP participant's.

I completely agree with the overall disgust over what executives at TYCO, Exxon/Mobil, Merck, etc. but I really don't think you can paint AMR with the same brush.

Then they shouldn't be called bonuses.

 

[TWU informer]

QUOTE

Under the 1998 Long Term Incentive Plan, and other compensation plans, as outlined in the Form 10-Q for the quarterly period ended June 30, 2005 and other SEC filings, and in accordance with Financial Accounting Standards No. 123, some stock/equity based compensation expense is recognized each period based on the company's current stock price. As such, this expense will vary with the rise or fall of the company's stock price.

What "other compensation plans" are there that were not disclosed during the restructuring negotiations?

Then why did this not get counted as a profit when the price dropped to below $2?

I do not remember accounting taking in to consideration the "drop" in stock price, when the wolves were after industry leading concessions.

Funny how it works to explain bonuses are going to cause a reported expense loss going in one direction, but doesn't get mentioned as a profit when the bottom drops out.

FUNNY THING IS THAT EARLIER "CONNECTED1" WAS TELLING US A DIFFERENT STORY....

In post 15...

http://www.usaviation.com/forums/index.php...ndpost&p=335239

He was claiming that these bonuses were not even related to the 1998 Long Term Incentive Plan..

Hopefully I can shed some light on the situation and then you can do whatever you want with it. The way I understand it, these "bonuses" are not related to the 1998 long term incentive plan. They are related to the 2003-2005 performance unit plan. Some highlights of the plan:

a. Approved by the Board with full knowledge of the unions in 2003.

Yet, now former ModerAAtor gives us direct quotes from the plan "Under the 1998 Long Term Incentive Plan".

The Management Defenders of Bonuses cannot even keep their stories straight.

Again, NO BONUSES OF ANY KIND ARE ACCEPTABLE WHEN EMPLOYEES ARE WORKING UNDER CONCESSION AGREEMENTS. PERIOD

I DO NOT HAVE "BLINDERS" ON AT ALL, I CAN CLEARLY SEE THROUGH THE CHARADE.

 

[Bob Owens]

What "other compensation plans" are there that were not disclosed during the restructuring negotiations?

Then why did this not get counted as a profit when the price dropped to below $2?

I do not remember accounting taking in to consideration the "drop" in stock price, when the wolves were after industry leading concessions.

Funny how it works to explain bonuses are going to cause a reported expense loss going in one direction, but doesn't get mentioned as a profit when the bottom drops out.

FUNNY THING IS THAT EARLIER "CONNECTED1" WAS TELLING US A DIFFERENT STORY....

In post 15...

http://www.usaviation.com/forums/index.php...ndpost&p=335239

He was claiming that these bonuses were not even related to the 1998 Long Term Incentive Plan..
Yet, now former ModerAAtor gives us direct quotes from the plan "Under the 1998 Long Term Incentive Plan".

The Management Defenders of Bonuses cannot even keep their stories straight.

Again, NO BONUSES OF ANY KIND ARE ACCEPTABLE WHEN EMPLOYEES ARE WORKING UNDER CONCESSION AGREEMENTS. PERIOD

I DO NOT HAVE "BLINDERS" ON AT ALL, I CAN CLEARLY SEE THROUGH THE CHARADE.

Informer, you shouldnt let the truth get in the way of being a teAAm player!

 

[eolesen]

Then they shouldn't be called bonuses.

I agree. But don't hold AMR accountable for the uneducated reporters who assumed this was a bonus and wrote that it was a bonus without getting their facts straight...

What "other compensation plans" are there that were not disclosed during the restructuring negotiations?

Got me, but by law, the compensation plans for officers are typically filed with the SEC in the 10-Q and 10-K, so feel free to browse http://Edgar.SEC.Gov and see what's there.

Then why did this not get counted as a profit when the price dropped to below $2?

I do not remember accounting taking in to consideration the "drop" in stock price, when the wolves were after industry leading concessions.

Funny how it works to explain bonuses are going to cause a reported expense loss going in one direction, but doesn't get mentioned as a profit when the bottom drops out.

Stock options are only a liabilty/expense if the stock price is performing above the grant price.

Options don't expire for 10 years, so the liability stays on the books until the employee quits, gets fired, or cashes them in.

 

[FWAAA]

The Management Defenders of Bonuses cannot even keep their stories straight.

Again, NO BONUSES OF ANY KIND ARE ACCEPTABLE WHEN EMPLOYEES ARE WORKING UNDER CONCESSION AGREEMENTS. PERIOD

I DO NOT HAVE "BLINDERS" ON AT ALL, I CAN CLEARLY SEE THROUGH THE CHARADE.

I'd agree with you if the Board had just decided to grant "bonuses" to the management employees.

But that's not what happened. Certain management employees negotiated to take a percentage of their total comp as non-guaranteed: Only if certain things happened would they get the non-guaranteed portion.

And one of those conditions has finally happened - the stock price is way up from its 2003 lows.

Yeah, yeah, I know. It is still way down from its peaks pre-September 11. Same thing at every other major airline other than WN. Every other major airline. UAL's stock will soon be canceled. So will the stock at NW and DL. USAir has canceled its stock TWICE in the past four years. Only CO and AA have managed to avoid cancelling their stock.

Again - I'd completely agree with you if someone had just decided to award some bonuses. But that ain't what happened here. These compensation plans were arranged years ago. Some in 1998, some in 2003.

Too bad your union failed you yet again and didn't negotiate a similar scheme for you. Something like $15/hr with the potential for a big payoff if the stock ever hit $22 again. But like I posted before, even if your union had proposed such a scheme - it is unlikely that many of the mechanics would have accepted the deal.

Yawn. Let us know if you uncover some real corporate evil. You know, something we haven't known about for years.

 

[TWU informer]

Oh My,

I didn't get a snap-back option in my concessions.

WHY NOT?

 

[local 12 proud]

a snap-back option

...This will never happen under the TWU leadership. If you will attend your union meeting's, remain a good member in standing, do not challenge the appointed leaders, and pay your dues, you will however recieve a T-shirt and or a Hat with the TWU/AA Logo with some snappy slogan...

 

[AMFAMAN]

But that's not what happened. Certain management employees negotiated to take a percentage of their total comp as non-guaranteed: Only if certain things happened would they get the non-guaranteed portion.


Too bad your union failed you yet again and didn't negotiate a similar scheme for you. Something like $15/hr with the potential for a big payoff if the stock ever hit $22 again. But like I posted before, even if your union had proposed such a scheme - it is unlikely that many of the mechanics would have accepted the deal.

I have yet to see a management employee at least in maintenance that took much of a paycut at all. They are all claiming to be back to their 2003 salaries and when level 5's are questioned about the so-called stock for salary program, they laughed.

Now as far as AMT's taking a roughly 65% paycut in exchange for stock, hell no would be the answer. But at the same time, show me a stock bonus recipient that took that 65% cut because there are none. In fact I would like to see one that matched the twu givebacks.

 

[TWU informer]

I have yet to see a management employee at least in maintenance that took much of a paycut at all. They are all claiming to be back to their 2003 salaries and when level 5's are questioned about the so-called stock for salary program, they laughed.

Now as far as AMT's taking a roughly 65% paycut in exchange for stock, hell no would be the answer. But at the same time, show me a stock bonus recipient that took that 65% cut because there are none. In fact I would like to see one that matched the twu givebacks.

There are no management types bonuses or not that matched our concessions.

 

[FWAAA]

There are no management types bonuses or not that matched our concessions.

Dunno what to tell you. I couldn't work for a company if I thought it had so mistreated me. Amazing that AMR has managed to hang on to about 90,000 people over the past 32 months despite the massive paycuts. Of course, being self-employed for a long time has helped me avoid such indignities.

Looks like the discussion has gravitated away from "they shouldn't get bonuses when we don't get snapbacks" to "management didn't give up enough in 2003."

 

[Wretched Wrench]

Looks like the discussion has gravitated away from "they shouldn't get bonuses when we don't get snapbacks" to "management didn't give up enough in 2003."

What do the phrases "Shared Sacrifice", "Leading by Example" and "Pull Together, Win Together" etc mean to you?

 

[FWAAA]

What do the phrases "Shared Sacrifice", "Leading by Example" and "Pull Together, Win Together" etc mean to you?

Useless catch-phrases meant to convince people to work for less and not complain.

Given that it's been 32 months since the concessions, looks like the empty words have worked as planned.

 

[Wretched Wrench]

Useless catch-phrases meant to convince people to work for less and not complain.

Given that it's been 32 months since the concessions, looks like the empty words have worked as planned.

True. Makes me feel lied-to and betrayed. Used.

 

[Bob Owens]

Useless catch-phrases meant to convince people to work for less and not complain.

Given that it's been 32 months since the concessions, looks like the empty words have worked as planned.

You think so?

I hear plenty of complaining and engine changes that typically took 8 hrs now take three days, or 72 hrs. So for a 25% reduction in pay it takes 6 times longer than it used to. Seems to me that a 25% reduction in pay that results in a 600% increase in turn time is not a great way to do business, especially when you factor in how much leases cost and lost revenue.

The company reduced their expenses by eliminating workers in addition to slashing compensation. Like I mentioned on other threads they doubled the savings they claimed they needed to be profitable. However they are not doing that great. What I have to wonder is, if they had just laid off and kept compensation where it was, how profitable they would be today? The loss of morale resulted in a huge loss of productivity, along with the 8 hour engine changes a lot of other things that made the difference between an "on time" flight and a cancellation are gone. While the numbers may not indicate a huge rise in delays and cancellations (although from things I've read there is a rise throughout the industry)a lot of this can be attributed to a surpluss of expensive aircraft that sit around throughout the system. Without all these "spares" my guess is that delays and cancellations would be at an all time high.

So if the goal of mangagement was destroy morale by bankrupting their employees but hoping that the golden handcuffs of debt will keep them showing up for their assigned shift then yes their plan is working. However if they want a workforce that goes above and beyond, resulting in very high productivy, profits and loves their job, then they have lost.

It used to be that most would do "what they could", now they do only "what they must". The margin between the two is huge.