AMR RECOVERY PLAN/ SECTION- 1113, 03' Concessions

[john john]

So........... the mechanics are not getting bonuses, salary and benefits?

Welcome to the club a little history for you
http://liveweb.archive.org/http://files.cwa-union.org/CwaNet/050615Opinion.pdf
Before the court is the motion of the debtors in possession for approval of a
severance and retention program – referred to as the Transaction Retention Program or TRP
– for executives of the company and for over 1800 management employees. The motion is
supported by the Official Committee of Unsecured Creditors (which negotiated a number of
changes to the original proposal) but is opposed by the United States Trustee and by the
unions representing the debtor’s pilots, flight attendants, mechanics, and reservation agents.1
Following an evidentiary hearing, the court took the motion under advisement. For the
reasons stated, the court will approve the program for the non-officer management
employees, but will require that the proposed new employment contracts for the officers be
approved as part of a plan of reorganization.
Bankruptcy Judge admits employees think the $32 Million Management Bonus Plan is unfair and unjust…
June 15, 2005
CWA


US Bankruptcy Court Judge Stephens cut out the $18 Million Executive Bonus plan but he allowed the $32 Million Management Bonus Plan, along with the $5 Million discretionary "slush fund" to retain managers. But in his written legal decision he admits that employees are outraged by this giveaway:
"While management employees took some pay cuts and benefit reductions, the plain truth is that those cuts were significantly less than the cuts experienced by the non-management employees.
"It is hardly any wonder, therefore, that the rank and file employees have reacted to the proposal with considerable outrage, as evidenced, for example, by the petition that was admitted at the hearing signed by 2,209 members of the Communications Workers of America denouncing the proposed severance plan and urging this court not to approve it."
Full text of the judges opinion
http://liveweb.archive.org/http://files.cwa-union.org/CwaNet/050615Opinion.pdf

 

[jimntx]

So, the judge "understood" the employee outrage, but he allowed the incredible bonusses anyway. I'm sure that his empathy made all of you feel so much better. I know it makes me feel all warm and fuzzy, and our executives haven't even been given their latest round of bonusses...yet.

 

[eolesen]

Jim, fairly certain you're being cynical, but just in case, I doubt the PSP/PUP will see light of day in April 2012...

There's a force majeure clause in the program which allows awards to be suspended indefinitely, but more importantly, I'm fairly certain that AA would have been in last place even on a three year basis compared to the peer group, and there's no payout for last place...

My guess is that this program will not be resurrected in its current format (share performance vs. peer group).

 

[Buck]

Jim, fairly certain you're being cynical, but just in case, I doubt the PSP/PUP will see light of day in April 2012...

There's a force majeure clause in the program which allows awards to be suspended indefinitely, but more importantly, I'm fairly certain that AA would have been in last place even on a three year basis compared to the peer group, and there's no payout for last place...

My guess is that this program will not be resurrected in its current format (share performance vs. peer group).

Does share performance have any affect on "common" shares? I guess my question is will the common share need to be higher to push the stock based bonuses up? Or will it be based on a new issue?

 

[BoeingBoy]

Share performance usually is for common shares - how much they go up or down compared to the "peers" can be a part of the executive bonus calculation (it's about 50% of the bonus at US, don't have any idea at AA). Given where the stock is trading (50+/- cents/share) eolsen is undoubtedly correct - there'll be no executive bonuses based on stock performance. Likewise, the bankruptcy filing makes it unlikely that the execs will get any money from stock options - even if the options were given, they would be wiped out like any other shares upon exit from bankruptcy.

Never fear, though. Like the other carriers that have been through bankruptcy, AA's execs will undoubtedly get a share of the new stock issued upon exit from bankruptcy.

Jim

ps - john john is behind the times on retention bonuses. The change in bankruptcy law makes it almost impossible to give retention bonuses now.

 

[damajagua]

So, the judge "understood" the employee outrage, but he allowed the incredible bonusses anyway. I'm sure that his empathy made all of you feel so much better. I know it makes me feel all warm and fuzzy, and our executives haven't even been given their latest round of bonusses...yet.

What a joke. I expect same results at AMR

 

[Frank Szabo]

What a joke. I expect same results at AMR

... as do I, but - in 2005, there was a little item included in the Bankruptcy Reform Legislation that requires the parasites to present a bona fide job offer (from another company) to collect his/her failure bonus. Supposedly, the judge has the option to either grant the bonus or tell the loser to take the employment offer.

We shall see how that works out in the real world but I suspect it won't be much more that a PITA formality fo them. I'm sure to 'Good ol' boy' club will have a job ready and waiting to present.

 

[BoeingBoy]

As I said, the bankruptcy laws were changed after US, UA, DL, & NW filed bankruptcy. In fact, it's rumored that DL & NW filed when they did to avoid the changes which took effect within a month or two of their filings. It's not possible to hand out retention bonuses like candy at Halloween these days.

In the other bankruptcies, the company presented the judge with a list of people they wanted to give retention bonuses to and the judge approved it. Now, each specific candidate for a retention bonus must have a valid offer for other employment at higher salary before the company can even ask to give that person a retention bonus. There is no longer an ability to present a laundry list of people to give retention bonuses to.

Jim

 

[Buck]

As I said, the bankruptcy laws were changed after US, UA, DL, & NW filed bankruptcy. In fact, it's rumored that DL & NW filed when they did to avoid the changes which took effect within a month or two of their filings. It's not possible to hand out retention bonuses like candy at Halloween these days.

In the other bankruptcies, the company presented the judge with a list of people they wanted to give retention bonuses to and the judge approved it. Now, each specific candidate for a retention bonus must have a valid offer for other employment at higher salary before the company can even ask to give that person a retention bonus. There is no longer an ability to present a laundry list of people to give retention bonuses to.

Jim

I am missing something here. If the employee is being asked to stay and receive a retention bonus why would the employee who has agreed to stay, need another job offer?

 

[FWAAA]

I am missing something here. If the employee is being asked to stay and receive a retention bonus why would the employee who has agreed to stay, need another job offer?

Retention bonuses cannot be provided unless there's a real risk the executive might leave, and a job offer from another employer is pretty good evidence that they're in demand and might actually leave.

Retention bonuses are moot anyway, since the execs can simply provide a big stock payout for themselves in the plan of reorganization like at US, UA, NW and DL. Grinstein made news because he turned his down, but everyone else made out like a bandit as their companies exited Ch 11.

 

[jimntx]

Jim, fairly certain you're being cynical, but just in case, I doubt the PSP/PUP will see light of day in April 2012...

There's a force majeure clause in the program which allows awards to be suspended indefinitely, but more importantly, I'm fairly certain that AA would have been in last place even on a three year basis compared to the peer group, and there's no payout for last place...

My guess is that this program will not be resurrected in its current format (share performance vs. peer group).

Who said anything about the PSP/PUP? I was referring to the link to the US Airways bankruptcy document where the judge, right before awarding retention bonusses to the US Airways executives, stated in writing that he "understood" the employees outrage over the bonusses. I have no doubt that the AMR executives will come up with a way to award themselves retention bonusses as well. But, knowing that the judge "understands" my outrage, makes it all better.

And, if any of them bring job offers to the court to "prove" their eligibility for a retention bonus, the judge, if there is justice in this life, will tell them, "I recommend that you take this other offer. Your efforts at AMR landed them in my court. If any other company wants your services after that, you should jump at the opportunity." And, then deny the retention bonus. We'll find out very quickly whether the job offers were bogus or bona fide.

 

[BoeingBoy]

We'll find out very quickly whether the job offers were bogus or bona fide.

At least in theory, that's the judge's job under the changes to the law. AA or a specific mid/upper management person can't just tell the judge that they've had an offer. They have to present evidence that the offer is real. In general, I agree that the judge should tell them that they should take the offer. However, the judge's job isn't to set compensation levels - it's to help the company to reorganize within the confines of the law. So if AA says "We need this person to remain here" and the person does have a real job offer with better money the judges hands are somewhat tied.

Jim

 

[eolesen]

Who said anything about the PSP/PUP? I was referring to the link to the US Airways bankruptcy document where the judge, right before awarding retention bonusses to the US Airways executives

Ah, I read your comment differently... When you said "given their latest round of bonuses" I assumed you were talking about the Privileged 1000's annual visit to the PSP trough.

 

[jimntx]

Go back and re-read both of my posts. I never used the phrase you are quoting.

 

[FWAAA]

Go back and re-read both of my posts. I never used the phrase you are quoting.

Looks to me like you used it.

So, the judge "understood" the employee outrage, but he allowed the incredible bonusses anyway. I'm sure that his empathy made all of you feel so much better. I know it makes me feel all warm and fuzzy, and our executives haven't even been given their latest round of bonusses...yet.

"given their latest round of bonusses...yet." Looks like you used the phrase you now disown.

Ah, I read your comment differently... When you said "given their latest round of bonuses" I assumed you were talking about the Privileged 1000's annual visit to the PSP trough.

That's how I interpreted his comment.