Amr's Arpey Declines To Take Higher Salary

[Oneflyer]

His stock options given in lieu of hard salary in the past 12-14 months alone have a market value today of $1,503,280.00

Once again, its an option! Which means he has to first purchase the stock, the current set he was given has a strike price of $8.88 which mean they are worthless right now.

Wing, why do try to infer that Arpey received $1.5 million when you know that the options are worthless right now?

labor will be asked again for wage concessions before the end of the year.

You are wrong and you have no reason to make this statement.

 

[WingNaPrayer]

You are wrong and you have no reason to make this statement.

You're absolutely certain?

Just so we're clear ahead of time, will you be wanting fries with your words when you end up eating them?

I'm sorry I forgot to bow before your infinite wisdom before posting.

 

[LaBradford22]

I think your being way too conservative! Isn't Tilton at UAL making like 5mil a year? Thats around 10X's Arpey's pay. And thats for an obscure Oil industry exec with no airline experience!!!
Good article in the Dallas paper a while back about Tom Horton Former CFO at AA now making around 5X's what his former boss arpey is making doing the same job at SBC.

Horton is actually at AT&T. But your point is absolutely correct, and points to the difficulty that AMR has in retaining good management. In the last two years, AMR has seen two CFO's (Horton and then Campbell) leave for much higher paying gigs. AMR does not pay senior management well relative to other companies of comparable size. Granted, none of these guys (and gals) are going to be applying for food stamps anytime soon (just as no pilots are either, even after 23% paycuts and getting displaced down several seats). But still, all objective evidence shows that AMR senior management is paid below market rates. Wing will never acknowledge this, as he is anti-AMR in everything - in fact, I think it's his sole purpose for existence.

 

[flyhigh]

I've read the UAL boards, I've also read that the machinist's union is suing over this issue and the PBGC is raising flags as well. Just because they said they're not going to fund it, doesn't make it so. While I believe this is the begining of UAL's pension "negotiations", it is just that, a first step. Because they allowed that clause to enter the contract for continued funding of the DIP monies, they will now use it as a tool to force labor (wrongly I might add) to accept lower pensions. I think there is something seriously wrong with agreeing to a contract you can't fulfill. It doesn't seem to me they had the legal authority to sign away the continued funding. Mgmt will now sit at the table and say they had to agree to that to get the funding to keep the company going so that people have paychecks. It sucks, but it's not over by any means. I think in the end, some sort of cash balance pension will be negotiated...basically making a 401(k) the pension.

Conversely, I must say that one huge advantage that LCC's have over legacy carriers is the lack of a defined benefit pension. By not having the need to fund millions every year into pension plans, they rid themselves of a huge burden. Since consumers don't look at that as a reason to buy, or not buy, a ticket, legacy carriers have to find ways to afford it or get rid of it.

 

[FA Mikey]

Horton is actually at AT&T. But your point is absolutely correct, and points to the difficulty that AMR has in retaining good management. In the last two years, AMR has seen two CFO's (Horton and then Campbell) leave for much higher paying gigs. AMR does not pay senior management well relative to other companies of comparable size. Granted, none of these guys (and gals) are going to be applying for food stamps anytime soon (just as no pilots are either, even after 23% paycuts and getting displaced down several seats). But still, all objective evidence shows that AMR senior management is paid below market rates. Wing will never acknowledge this, as he is anti-AMR in everything - in fact, I think it's his sole purpose for existence.

Market rates, yea that is a nice way to put it. I don't get market rates. I do though have to pay them though. I do also have to see exec's paid and compensated in such a way. My company says they cannot afford market rates for me. So they drop the bar. We get cut back in pay and benefits, many others furloughed. Until the next industry exec manages to get their employees to drop the bar lower, and then low and behold, Mine will be back to ask for more. Well, airline X employees only make this, they don't get a pension, so we cannot afford it either.

Why should the CEO or any other manager make such outrageous salary's and compensation packages? Its time Americans realized that cooperate compensation is way over the top and out of control. They use this tired argument about I am personally responsible for the livelihood of X number of people I have to report and profit the share holders. As though all this work is done by themselves alone. They are so over worked and stressed. I am sure there golf and tennis games suffer so.

Market rates, we see it everywhere in this country today. Drug companies who charge extraordinarily high prices for drugs here, yet offer the same product for 1/3 the price in Europe and Asia. We see HMO's and other insurance companies screw the little guy in insurance rates and then offer a plan riddled with loop holes and want no responsibility, when its time pay out for the service we purchased.

Market rates and this greedy self importance of high level executives. Is over the top and disgusting. Lou Dobbs knocks it out of the park when he show cases the ridiculous levels of pay, and lifstyles for CEO's, in this country. As compared to there counter parts every where else in the world. Exactly how much is enough? How much do you need to be compensated? When you make more in a year than you could literally spend in a lifetime that is gluttony. Its a level of over compensation that should boggle the mind of any average joe.

If Arpey wants to go, fine let him. If someone else wants to, let them. Who knows why he turned down the raise. Whether it was for show or real, is not that important. Where he goes from here may just be. What is his long term plan, what does he want from this company? Is he in it for the challenge or looking to see what a turn around of this magnitude could land him later? Perhaps there is a sense of loyalty to this place he has work for so many years. Like's the company, position, title, and people he works with, and for.Only time will tell.

 

[mweiss]

I don't get market rates.

Yes you do. You just don't like the market rates.

 

[Wretched Wrench]

Conversely, I must say that one huge advantage that LCC's have over legacy carriers is the lack of a defined benefit pension. By not having the need to fund millions every year into pension plans, they rid themselves of a huge burden. Since consumers don't look at that as a reason to buy, or not buy, a ticket, legacy carriers have to find ways to afford it or get rid of it.

I would agree with that, but the type of plan is only part of the story. The younger carriers do not have as many retirees, so regardless of the type of pension they have, their retirement obligations are less. (UAL has 62K employees and 58K retirees)

Additionally, a carrier that has a defined contribution plan, as do most LCCs , are on a "pay as you go" system, where the defined benefit plans are allowed to go more and more underfunded, with a balloon payment in the future which cannot be met. Sort of like a credit card bill that keeps getting extensions on payment. If the difined benefit companies were not allowed to weasel out of fully funding the plans, (or using bogus calculations) we would not be looking at this problem.

With equivalent projected benefits, a defined contribution plan is superior, as it can not be taken away and is portable. It is inferior in that poor investment choices by either employer or employee can diminish its payout in retirement.

 

[LaBradford22]

Mikey - I understand the sentiments and frustrations in your post. Although I don't agree with some of it. Allow me to respond point by point:

Market rates, yea that is a nice way to put it. I don't get market rates.

Well, you do and you don't. Union membership is sort of a double-edged sword. As is non-Union membership. With Union membership, the market is eliminated or, at the very least, distorted. Union members trade the upside of the market in order to eliminate the downside. Non-Union employees get the upside of the market, but alas, they must also live with the downside. The upside of the market is that, if you do well, you advance more quickly and can earn greater compensation more quickly. The downside of the market is that, if you don't do well, or if your company doesn't do well, you can be out of a job very quickly - you are not protected. The trade-off of the Union is that you give up mobility in exchange for stability. It is a distorted market.

My company says they cannot afford market rates for me. So they drop the bar. We get cut back in pay and benefits, many others furloughed. Until the next industry exec manages to get their employees to drop the bar lower, and then low and behold, Mine will be back to ask for more. Well, airline X employees only make this, they don't get a pension, so we cannot afford it either.

Like it or not, the market is largely set by benchmarking against competitors. Another knife that cuts both ways. When everyone in the industry is/was doing well, Unions could point to other airlines and say, "Look what airline X is paying its employees - we need to be industry-leading." See US/UA/DL/almost AA pilots for an example of this one-upsmanship. When the industry is doing poorly, it works the other way.

Why should the CEO or any other manager make such outrageous salary's and compensation packages? Its time Americans realized that cooperate compensation is way over the top and out of control.

I'm with you to some extent on this one. I don't have a problem with CEO's making a lot of money. What I do have a problem with, and what I'm somewhat amazed by, is the lax corporate governance on the part of Boards of Directors in terms of controlling CEO pay. Because to me the bottom line is that the CEO is worth whatever the shareholders and Board of Directors think he is worth. The problem that you rightly point out is that many times shareholders are asleep at the wheel while the Board of Directors approves lavish salaries and compensation packages on CEO's. You would think there would be a breaking point where shareholders would start to become more active on this issue, but we haven't gotten there yet. And that does surprise me somewhat.

They use this tired argument about I am personally responsible for the livelihood of X number of people I have to report and profit the share holders.

As far as I'm concerned, if a CEO grows a company, provides jobs and livelihoods for a large number of people, provides good financial returns to shareholders, and at the same time is a good corporate citizen, then I say he/she is worth a very high salary. Herb Kelleher has made a lot of money at Southwest, but no one seems to mind, because he has served his employees, shareholders, and communities very well.

As though all this work is done by themselves alone. They are so over worked and stressed. I am sure there golf and tennis games suffer so.

The best CEO's constantly give credit and thanks to their employees. Kelleher was a master at this, and I think Arpey does a nice job as well.

Market rates, we see it everywhere in this country today. Drug companies who charge extraordinarily high prices for drugs here, yet offer the same product for 1/3 the price in Europe and Asia. We see HMO's and other insurance companies screw the little guy in insurance rates and then offer a plan riddled with loop holes and want no responsibility, when its time pay out for the service we purchased.

Hey, I'm not crazy about high health care costs, either (and I've been lucky enough to be 100% healthy my whole life). But I recognize that, if you shut down the free market on pharmaceutical drugs, you kill innovation. Drugs are a risky business. If there is suddenly no profit incentive, then there is much less incentive to undertake costly R&D to generate a drug that may or may not ever become marketable. Again, high costs are a necessary evil for innovative new drugs.

Market rates and this greedy self importance of high level executives. Is over the top and disgusting. Lou Dobbs knocks it out of the park when he show cases the ridiculous levels of pay, and lifstyles for CEO's, in this country. As compared to there counter parts every where else in the world. Exactly how much is enough? How much do you need to be compensated? When you make more in a year than you could literally spend in a lifetime that is gluttony. Its a level of over compensation that should boggle the mind of any average joe.

It's a fallen world, and in America, we have fallen for the almighty dollar. There's no question about it. I've found that the secret to life lies in not worrying about what others have, but simply being happy with the many blessings that you have. I also refuse to knock myself out just to earn a few extra bucks. Life is too short. And I think many in my generation feel the same way. Personally, I've seen the impact that excessive career focus has had on my parents (as well as many others in the Boomer generation) and I just want no part of it. My parents lived to work. I would rather work to live. Until the overall mindset in this nation changes in this way, you'll continue to see corporate greed surface in cases like Enron, Tyco, Worldcomm, etc.

If Arpey wants to go, fine let him. If someone else wants to, let them. Who knows why he turned down the raise. Whether it was for show or real, is not that important. Where he goes from here may just be. What is his long term plan, what does he want from this company? Is he in it for the challenge or looking to see what a turn around of this magnitude could land him later? Perhaps there is a sense of loyalty to this place he has work for so many years. Like's the company, position, title, and people he works with, and for.Only time will tell.

Having been in several meetings with Gerard, I think he genuinely does like the company. I remember, right before the restructuring deals were done, he shook my hand and thanked me for my work to save the company, and I'll never forget what he added on to that - he said, "This company is worth saving." I think he really believes that. I don't just think he's out for his own personal gain here (although I suppose everyone has a breaking point at which the alternative is just too good to pass up). I think he really wants to see this company not just surviving, but growing and thriving and kicking some butt again. Whether or not he will get there is another matter, but I think that is his goal and I think he is 100% focused on it.

 

[FWAAA]

Market rates, yea that is a nice way to put it. I don't get market rates. I do though have to pay them though. I do also have to see exec's paid and compensated in such a way. My company says they cannot afford market rates for me. So they drop the bar. We get cut back in pay and benefits, many others furloughed. Until the next industry exec manages to get their employees to drop the bar lower, and then low and behold, Mine will be back to ask for more. Well, airline X employees only make this, they don't get a pension, so we cannot afford it either.

FAMikey. you DO get market rates for your labor. Problem is, the market rates for airline help (like FAs, pilots and mechanics) has declined recently.

On the other hand, the market rates for executives has not recently declined. The current compensation of most of AA's management falls short of what they could make elsewhere as executives. Are there airlines out there right now where you could make more money as an FA than you currently make? If so, submit an application or ask for a raise.

That's the choice available to those who haven't tied their fortunes to thousands of other employees like you, the pilots and the mechanics have done. Your predecessors formed a union, turned the screws to AA when times were good (even struck the company) and now you have to lie in the bed they made for you.

I realize that it sucks. But your sad reality doesn't change the fact that management at your company isn't hobbled by a seniority system like you are. They are free to leave (and even return). And they are free to negotiate their own compensation and benefits packages. And they probably make more money than you.

What do you expect from a job where the minimum qualifications consist of being 19 years old with a HS diploma and completion of a four week training program (like at Eagle)? Unskilled labor will probably never again be paid what AA FAs earn. Unfair? Sure.

 

[mweiss]

The younger carriers do not have as many retirees, so regardless of the type of pension they have, their retirement obligations are less.

DC plans don't cost anything after the employee is no longer employed, so your statement is false.

 

[FA Mikey]

FAMikey. you DO get market rates for your labor. Problem is, the market rates for airline help (like FAs, pilots and mechanics) has declined recently.

On the other hand, the market rates for executives has not recently declined. The current compensation of most of AA's management falls short of what they could make elsewhere as executives. Are there airlines out there right now where you could make more money as an FA than you currently make? If so, submit an application or ask for a raise.

That's the choice available to those who haven't tied their fortunes to thousands of other employees like you, the pilots and the mechanics have done. Your predecessors formed a union, turned the screws to AA when times were good (even struck the company) and now you have to lie in the bed they made for you.

I realize that it sucks. But your sad reality doesn't change the fact that management at your company isn't hobbled by a seniority system like you are. They are free to leave (and even return). And they are free to negotiate their own compensation and benefits packages. And they probably make more money than you.

What do you expect from a job where the minimum qualifications consist of being 19 years old with a HS diploma and completion of a four week training program (like at Eagle)? Unskilled labor will probably never again be paid what AA FAs earn. Unfair? Sure.

In a one sided way of looking at it You are right, I do get market rates. But its was not due to a downward trend. It was an exploitation a horrific event, that brought about an unprecedented rape and pillage on working class Americans. That combined with thecurrent group in elected office. Have left this economy in a downward trend. I seems you cant spend billions and billions fighting unjustified wars all over the world and expect the home economy to grow.

What's sad is we do live in a county and in a time when people are so ignorant as to believe that one person should be paid and compensated millions and millions of dollars for a job many times not even done well. Many execs who are subsequently terminated are frequently sent away with millions of dollars. In existence today is the one of the strongest good ol boy networks. That rules heavy handed and lines there pockets with the ill gotten gains of the good and honest people below them.

No person deserves to be compensated by a company with more money than they could possibly spend in there lifetime. Its an utter waste. Those are dollars that should have been funneled down to the lowest people on the ladder. Should a CEO be allowed to make tens of millions a year while they offer to there employees, part time minimum wages, with no health insurance, and no possibility of saving for a retirement. There by adding to the number of people who continue to treat social security as their sole retirement plan.

I am tied to AA for a couple reasons. Seniority is admittedly among them. As is many jobs a bid for shifts and days off more often than not is done by date of hire. I say most jobs have some sort of seniority type system. The best reason was, it was a place I truly enjoyed working. I used to say I enjoyed coming to work as much as I enjoyed coming home from it. Its no longer the case. I can say one thing improved. For me the ability to work longer days and have shorter layovers has been a God send. I have a family and a business of my own to run. Plus who could not love the idea of more days off at home.

I am amazed you can actually say somehow AA's unions have put the screws to it. Like the company was some sweet innocent little ol thing, who has been squeezed by its employee's and unions. AA is by the far the toughest negotiator out there. They invented the squeeze, they didn't get squeezed. I am at 13 years flying and still not at parity with my senior colleagues. AA invented new ways to put the screws to us.

I wonder why it is Eagle has those low minimum qualifications for a flight attendant. Is it because they have many people applying for the job and they can be very, very selective? Or is it more alone the lines of its a low pay, long hour, and long stretches of time away from home, that makes it less attractive to a large group in the job market. My guess if they paid the same as a SR exec, they could raise the minimum list of qualifications bit higher.

 

[Oneflyer]

Typical union blaber. Take a job that takes little or no skill then expect to be paid like the CEO. Its always someone else's fault, the government, 911, the good old boy network, etc........... The person that took a job that they knew was based on seniority and no chance for rapid advancement or rapid salary growth is never to blame.

The fact is that there are people in this world that satisfied working the same job every day, doing what it takes to keep your job while doing as little work as possible. For those people, there are unions.

Everyone else relies on their own brains and work ethic to advance up the ladder. When you're willing to work hard and educated yourself you are provided with the opportunity to make more money than most other people. This is how our capitalist system works.

 

[woztwa]

Arpey declines higher salary


Gerard Arpey, chairman and chief executive of AMR Corp., has declined a raise offered by the board of directors, the Fort Worth company said Wednesday.

The parent of American Airlines Inc. set the base salary for Mr. Arpey's position at $625,000 a year, said spokesman Roger Frizzell.

He currently earns $513,700, the same salary he earned as president and chief operating officer.



Arpey declines higher salary

Its a good thing. How short sighted is this board. I guess at least Arpey believes it is a shared sacrifice. Then again how could he continue to talk to us or ask for support while taking a 100,000 plus dollar a year raise.

Yes a good thing?--so let's get rid of the BOD members who felt he should have it--and for what?--Hmmm, CEO of Costco $425,000 annually and he is happy, CEO NYSE $200 million-appalling!!!!! and being investigated
do I think Arpey is doing a good thing? NO--I would live very well on that money

 

[FA Mikey]

Typical union blaber. Take a job that takes little or no skill then expect to be paid like the CEO. Its always someone else's fault, the government, 911, the good old boy network, etc........... The person that took a job that they knew was based on seniority and no chance for rapid advancement or rapid salary growth is never to blame.

The fact is that there are people in this world that satisfied working the same job every day, doing what it takes to keep your job while doing as little work as possible. For those people, there are unions.

Everyone else relies on their own brains and work ethic to advance up the ladder. When you're willing to work hard and educated yourself you are provided with the opportunity to make more money than most other people. This is how our capitalist system works.

Please point out where I or anyone else on this thread is asking for pay equal to a CEO. Please point out where the complaints of seniority are in any of the posts. Please also show us all where the complaints of lack of advancement are. There are none, and your attempt to hijack this in to a union trashing thread has failed.

Your second paragraph really says it all. Unfortunately your one sided contemptuous view of people in unions as being lazy, lacking in work ethic. Having no initiative for change or advancement. Really shows off your true colors.

I can tell you though the capitalist system is failing when we allow one person to walk away with untold millions and millions of dollars, and for what? There is a serious lack of moral ethics on the side of boards and execs for hoarding money like they do.

You want to talk about work ethics and management. Look at enron, tyco and martha stewarts ladder climbing execs and tell me about how management and CEO's have stronger morals and work ethics.

 

[Oneflyer]

You're not really trying to throw Arpey in with Enron and Tyco are you?