Execs Dumping Stock

[Dog Wonder]

The Execs could do better somewhere else.

If they could they would. The only loyalty there is to their own self-interest.

 

[PITbull]

I was quoting the posting statement made by JAXpax.

 

[KCFlyer]

Stock options expire. There are also provisions for executives to set triggers that will exercise the options under certain circumstances.

Ah yes...that reminds me of the Sprint/MCI merger that never was. There was a little stipulation in that one that said if the shareholders voted to approve the merger (they did) the execs were fully vested in their stock options and could exercise at will. Most did...when the stock was at an all time high. Then it tanked. And Sprint laid off tens of thousands of workers after the merger was nixed by the feds. Ahhh...the life of an exec. One of them quit and started a venture capital firm with his kid.

IMHO, since AWA execs took a "risk" of merging with a bankrupt carrier, then any stock options exercised should have been withheld until the merged company could show at least two consecutive quaters of profitablity WITHOUT any adjustments from emerging bankruptcy...you know...after the company has proven to be profitable on it's own. After all, they could have let U fail and cherry pick what they wanted. THEY took the risk...and as a result, required labor to throw in a whole bunch of their money...THEY should be required to wait and see if this was actually a good business decision, and not use it as an opportunity to cash out when the "new" stock is at what most likely, will be it's high for several years to come.

 

[Dog Wonder]

I was quoting the posting statment made by JAXpax.

Sorry.

 

[PITbull]

B)

 

[Bluesky]

For the life of me, I can't seem to understand why an employee who's been told to sacrifice his pay, his benefits, his way of life, or even his job, to save the company, doesn't see the massive house addition being built by the very manager who's telling him we need to tighten the belt!

Oh the lies of corporate America, but since they don't have to face their own employees they fleece, I guess it makes it a lot easier. Doesn't breed much loyalty in my book, but who cares about ethics nowadays, new BMW's for their kids in private schools cost a lot of money. Tell them to return their STOLEN stock options to the company, or distribute the gains to the employees. Execs are paid a salary just like everyone else, no need to hide, cheat and steal from the troops.

 

[JAXPax]

The Execs could do better somewhere else, you say, huh,...than obviously the compensation is pretty damn good even when in BK, cause you couldn't pry them out. And those that didn't find jobs were protected as well through the BK judge ruling on the motion to award severance bonuses.

So tell me: What exactly do you believe the management of LCC should be paid/compensated? A nice number figure please.

A good amount of the "severance/retention bonuses" went towards those who are not top officers. You require people like revenue management, accounting, payroll, benefits administration, etc., to run an airline too. Had to stop them from jumping ship at an even greater rate after the merger was announced. I know what it's like when too many of your payroll department quits. When direct deposit starts going in on payday instead of two days early, a company-wide riot ensues.

IMHO, since AWA execs took a "risk" of merging with a bankrupt carrier, then any stock options exercised should have been withheld until the merged company could show at least two consecutive quaters of profitablity WITHOUT any adjustments from emerging bankruptcy...you know...after the company has proven to be profitable on it's own.

According to About US, the options exercised were to expire shortly. So either use them or they are worthless. Are you saying a bonus given to them years ago shouldn't have been taken?

 

[MarkMyWords]

The company's response to the sale of stock options.....

Q: Can you please explain the stock sales by four officers
that were announced earlier this week? With all the sacrifices employees have made for US Airways, how an US Airways write checks to these officers and talk to employees about “no-cost contracts? â€

A: This is a fair question with a fairly long answer, and it’s worth it to read all the way through.

We announced this week that four officers of the company were exercising stock options and selling stock that they were given as America West officers, long before the merger last fall. These were not shares or options that came to them as part of the merger. In some cases, these AWA officers were holding AWA shares or options dating back to the 1990s.

The AWA options converted to LCC options during the merger at the same conversion rate as AWA stockholders (.4125 shares of LCC for every 1 share AWA). Although a lot of these options were vested prior to the merger's close, with the merger's close, any unvested shares also vested at that time.

Fast forward to May 2006 then, when these officers set up what are called 10b5-1 financial plans. These 10b5-1 plans are fairly common and are set up so that company officers and other insiders can trade their company stock based on certain ‘triggers’ that they arrange ahead of time. This is actually a pretty responsible thing to
do -- to, in effect, put control of those shares in an independent plan that doesn't raise the taint of insider trading (much like a member of Congress holds stock in a blind trust).

Also s a side note, options have expiration dates and some of these officers’ shares were set to expire this fall. Rather than lose the value of the shares and options, the officers’ plans allowed them to exercise the options and sell the stock.

Employees may think that US Airways writes a check when these shares are sold --- that the money to pay for these stock sales is coming out of a US Airways' budget, but that's not the way it works. The money from these stock sales comes from whomever bought the stock in the open market - US Airways isn’t out the money --- so it's not a matter of taking it from Peter to pay Paul.

Additionally, a big chunk of the corporate officers' pay comes from stock and stock options. You'll hear Doug refer to this as "at-risk" compensation. It s "at-risk" because stock options can be a good thing when the company's doing well or when shares increase in value as they’ve done since the merger. But on the other hand, they can also end up being pretty much worthless when the company's not doing well. Having a lot of your pay tied to the price of the stock is especially risky in the airline industry, which as seen a lot of stock volatility over the past five years.

We hope this helps explain exactly what happened this past
week, and also helps clarify why it is not correct to say that these executives received this stock during the merger and are already selling it.

 

[KCFlyer]

Are you saying a bonus given to them years ago shouldn't have been taken?

Yes...when they decided just recently to "bet the house" on merging with a twice bankrupt airline. At that point, the risk, not only to US, but to the former AWA as well, changed the rules. If they got options "years ago", why didn't they cash out when the stock was $7 instead of waiting for the merger and cashing them out at $45? When they have yet to prove if that price is sustainable? Nope...when the merger talks were going on and the renegotiations of labors contracts were going on...they should have renegotiated executive compensation, and inserted the verbage I suggested.

Instead, if those options were indeed granted "years ago" and they haven't been out of bankruptcy even one year yet, then it would appear that maybe they changed the number of options to reflect the "new price", but they apparently didn't change the expiration date...knowing full well that the sheep on Wall Street can bloat a "newly merged" companies stock price for a short period anyways.

 

[PITbull]

So tell me: What exactly do you believe the management of LCC should be paid/compensated? A nice number figure please.

A good amount of the "severance/retention bonuses" went towards those who are not top officers. You require people like revenue management, accounting, payroll, benefits administration, etc., to run an airline too. Had to stop them from jumping ship at an even greater rate after the merger was announced. I know what it's like when too many of your payroll department quits. When direct deposit starts going in on payday instead of two days early, a company-wide riot ensues.
According to About US, the options exercised were to expire shortly. So either use them or they are worthless. Are you saying a bonus given to them years ago shouldn't have been taken?

AWA merged with a company that was going oveR the cliff. The management was hired in 2002 to bust the unions and throw the company into BK. As collideral damage to this "plan" stock holders and unsecured creditors got screwed...TWICE. When the BOD realized that they didn't hire airline operational people too, the Business plan changed...twice as a matter of fact in 18 months. U no longer paid attention to employees or customer service...bottom line get the company lean, convince a bunch of investors that U was a legacy converted to an LCC, and wamo MAJOR PAY DAY!

AWA was not in good shape either or position. The speculation was that the company would head to BK too.

My answer: NO. Management from the West and the East should receive no bonuses (only their salary which is quite hefty even in to day's standards with an industry that is very volatile. AWA was failing too. Investors were convinced that bringing these two airlines together with their route system, little over lap would bring about a snyergies. The company receives over a half a billion to emerge from investors, and a pump up of cash of $2.5 billion. They than do PR and pump up the stock by convincining the shareholders that U has plenty of money..read the press releases after Sept. 27, 2005 from wallstreet and YOUR CEO.

How I know, I sat on the Unsecured Creditors Committee.

No one should have a surplus pay day, UNTIL labor starts seeing snap backs in wages, company start to profit without exclusions, and the transition proposals are no longer outsanding with all of labor!

The scene is blatant greed while labor STILL SUFFERS THE EFFECTS OF THE CUTS AND THE TRANSITION. No things don't change and morale still is low.

I get sick of watching the news when they report that DL and NW are attempting to dump pensions in order to emerge from BK, they compare it to UA...I say, UA, you've got to be kidding. They came after the fact, after U dumped theirs after U went into BK. They followed the playbook of U, and the pressure after that was on for all airlines, including AWA.

 

[MarkMyWords]

Once again PitBull....these were stock options afforded to AWA Executives PRIOR to the merger and were converted to LCC stock at the same conversion rate as any other AWA stock holder. These Executives EARNED the right to cash in on these stock options. Who are you to say they can't or shouldn't do it, especially since these options expire.

We announced this week that four officers of the company were exercising stock options and selling stock that they were given as America West officers, long before the merger last fall. These were not shares or options that came to them as part of the merger. In some cases, these AWA officers were holding AWA shares or options dating back to the 1990s.

Also.....The money from these stock sales came from whomever bought the stock in the open market - US Airways isn’t out the money

 

[Zeus]

Any executive will tell you that they can obtain an increase in total compensation outside the aviation industry. I know that the majority of the CCY executives took a salary reduction, especially during the BK process. Remember Pitbull, they took a salary reduction along with the front line employees. While their salaries were higher than labor, they made sacrifices too. Whether the awa execs earned them or not is another story. They were granted these options and have the right to exercise them. I personally have no problem with any executive being granted stock options.

You still only give one side of the story, similiar to when a large number of your f/a group decided not to show up for work during the holidays a few years back.

 

[Doc]

As I sit back I can remember a judge throwing out my pension, pay and other benefits that I have fought for and earned. I remember coming up with a profit sharing plan then having that thrown out a judge.

I for one find this disgusting.

This like backing up the brinks truck up to the back door.

I wish we could all stand together and finally put an end to this kind of behavior but we couldn’t stand in a grocery line together. So we will continue to be the guys that load those brinks trucks with the monies from our hard work so they can have the life of luxury that they DO NOT DESERVE.

 

[MarkMyWords]

Doc -

These are not the executives for the original US Airways. These are former America West Executives that are cashing in stock options they earned prior to the merger. This transaction is NOT costing the company anything.

What if the company did offer us stock options in BK2. Now that the stock price is inflated, you want to cash them in before they expire. But the company were to tell you no. What would you do then?

The bottom line.....these are AWA Executives that earned AWA stock options for remaining with AWA and the companies performance. The AWA stock was converted to LCC stock and was set to expire in the fall. They are cashing in their stock options - just like any one of us would do if we had stock. There is ZERO cost to the company for them to exercise their right to sell the stock! The negotiated stock options into their contract. The are exercising those options. End of story.

 

[PITbull]

The company's response to the sale of stock options.....

Q: Can you please explain the stock sales by four officers
that were announced earlier this week? With all the sacrifices employees have made for US Airways, how an US Airways write checks to these officers and talk to employees about “no-cost contracts? â€

A: This is a fair question with a fairly long answer, and it’s worth it to read all the way through.

We announced this week that four officers of the company were exercising stock options and selling stock that they were given as America West officers, long before the merger last fall. These were not shares or options that came to them as part of the merger. In some cases, these AWA officers were holding AWA shares or options dating back to the 1990s.

The AWA options converted to LCC options during the merger at the same conversion rate as AWA stockholders (.4125 shares of LCC for every 1 share AWA). Although a lot of these options were vested prior to the merger's close, with the merger's close, any unvested shares also vested at that time.

Fast forward to May 2006 then, when these officers set up what are called 10b5-1 financial plans. These 10b5-1 plans are fairly common and are set up so that company officers and other insiders can trade their company stock based on certain ‘triggers’ that they arrange ahead of time. This is actually a pretty responsible thing to
do -- to, in effect, put control of those shares in an independent plan that doesn't raise the taint of insider trading (much like a member of Congress holds stock in a blind trust).

Also s a side note, options have expiration dates and some of these officers’ shares were set to expire this fall. Rather than lose the value of the shares and options, the officers’ plans allowed them to exercise the options and sell the stock.

Employees may think that US Airways writes a check when these shares are sold --- that the money to pay for these stock sales is coming out of a US Airways' budget, but that's not the way it works. The money from these stock sales comes from whomever bought the stock in the open market - US Airways isn’t out the money --- so it's not a matter of taking it from Peter to pay Paul.

Additionally, a big chunk of the corporate officers' pay comes from stock and stock options. You'll hear Doug refer to this as "at-risk" compensation. It s "at-risk" because stock options can be a good thing when the company's doing well or when shares increase in value as they’ve done since the merger. But on the other hand, they can also end up being pretty much worthless when the company's not doing well. Having a lot of your pay tied to the price of the stock is especially risky in the airline industry, which as seen a lot of stock volatility over the past five years.

We hope this helps explain exactly what happened this past
week, and also helps clarify why it is not correct to say that these executives received this stock during the merger and are already selling it.

Mark,

Thank you for posting this explanation you received from some exec., BUT, these execs cashed-in and made millions only because the stock of the NEW company increased, and that increase came about because the USAirways employees made the sacrifices, the concessions in order to facilitate a merger and convincing synergy happen. That in turn gave "wall street" speculator a "green light" that U maybe worth the "risk". And these execs got to cash-in on that speculation. No. I don't think the employees are stupid enough to think that the stock cah-in comes from the company. The issue is if the execs don't feel any pain from BK or merging; as do the employees, than they really can't see the sacrifices. U execs didn't at all, cause they felt no pain. Zeus speaks of his decrease in salary, for the 3 years he spent at U, but in the end he had it paid back 10 fold from the severance bonus.

I can accept their retort on the issue of cashing-in, however, this still is no excuse why they continue to hold down labor wages and stall negotiations for a fair transition agreement.

I am actually quite disturbed by it. If this new company can not survive without increasing any of labor wages, than I believe the business plan is still flawed.

You can not continue to brain wash the employees to think they should just be grateful to have a job, while execs, in whatever form, for whatever reason, cash-in for millions.

Once again PitBull....these were stock options afforded to AWA Executives PRIOR to the merger and were converted to LCC stock at the same conversion rate as any other AWA stock holder. These Executives EARNED the right to cash in on these stock options. Who are you to say they can't or shouldn't do it, especially since these options expire.
Also.....The money from these stock sales came from whomever bought the stock in the open market - US Airways isn’t out the money

I don't care about whether the money came from U, I CARE THAT CERTAIN EXECS ARE MAKING MILLIONS WHILE THEIR EMPLOYEES ARE STILL SUFFERING THE EFFECTS AND THE ABILITY TO KEEP THE STOCK PROVISION IN THE CONTRACTS WAS TAKEN AWAY.

DO YOU SEE THAT YET, OR ARE YOU GOING TO CONTINUE TO DEFEND THE EXECS AND PUT A BLIND EYE TO THE OTHER ISSUE, WHICH IS LABOR???

I'm would bet you wrote to that exec to let him know we were discussing it on this board, cause they sent their lime boy out to defend the execs again.

Tell him, I personally am not as stupid as he would like me to be.