Incentive Plans (Window dressing)

[AANOTOK]

http://www.centreforaviation.com/news/2010/05/13/us-airline-employee-incentive-plans-largely-window-dressing/page1

"giving stock recipients less than 7 cents on the dollar compared what the company intended to pay them three years ago"

That has got to be the best definition of spin I have ever seen!

 

[The Goose]

http://www.centreforaviation.com/news/2010/05/13/us-airline-employee-incentive-plans-largely-window-dressing/page1

"giving stock recipients less than 7 cents on the dollar compared what the company intended to pay them three years ago"

That has got to be the best definition of spin I have ever seen!

Excuse me while I puke ...

 

[Rogallo]

I can't wait for the 'Executive Defenders' comments on this one...

 

[AANOTOK]

I can't wait for the 'Executive Defenders' comments on this one...

Yep, waiting for those who said Arpey was underpaid since he was in the middle or near the bottom
of the compensation pool for this industry.

 

[Hopeful]

Where's my handkerchief and violin?

 

[eolesen]

Interesting article. Take a look at the following -- exec comp as a ratio of income...

AMR's smack dab in the middle.

 

[Winglet]

Interesting article. Take a look at the following -- exec comp as a ratio of income...

AMR's smack dab in the middle.

How about a chart showing compensation in relation to losses and customer satisfaction, by AMR "Top Talent."

 

[AANOTOK]

Interesting article. Take a look at the following -- exec comp as a ratio of income...

AMR's smack dab in the middle.

Nice chart "e", but the fact remains that many said Arpey was underpaid in the industry and in reality
he is #2. I don't think that is where his leadership has AA positioned both in the DOT rankings or earnings.

As a matter of fact, the top five execs are ranked
#2 in the industry. They must really be scratching the BOD backs!

 

[eolesen]

Looking at a one year sample size does wonders for making the point they're all overpaid, but if you look over time, it's not nearly as compelling of an argument. It's offensive, but it's still not as bad as what the guys at DL and UA got away with... In 2006 alone, Glenn Tilton took home $39.7 million. Richard Anderson took in $17.4M in 2008. Again, not defending it, but average it out, and Arpey's still not earning what his two largest competitors within the industry earn.

If you bothered to look, comments about him being underpaid in comparison go back to the 1Q01-1Q06 timeframe, and it's factual. Since 2006, including incentive, he's definitely doing better than most.

When Horton returned to AMR in 2Q06, his re-entry salary was higher than Arpey's, and Gerard's salary was adjusted to a percentage above Tom's. That's also common knowledge if you bother to read the annual reports, earnings call transcripts, and quarterly financial releases. If you look at what he's done as a CFO, I'd say he's earned his keep. Unfortunately, Finance can't make up every dollar that Marketing or Operations manage to lose.

 

[AANOTOK]

Looking at a one year sample size does wonders for making the point they're all overpaid, but if you look over time, it's not nearly as compelling of an argument. It's offensive, but it's still not as bad as what the guys at DL and UA got away with... In 2006 alone, Glenn Tilton took home $39.7 million. Richard Anderson took in $17.4M in 2008. Again, not defending it, but average it out, and Arpey's still not earning what his two largest competitors within the industry earn.

If you bothered to look, comments about him being underpaid in comparison go back to the 1Q01-1Q06 timeframe, and it's factual. Since 2006, including incentive, he's definitely doing better than most.

When Horton returned to AMR in 2Q06, his re-entry salary was higher than Arpey's, and Gerard's salary was adjusted to a percentage above Tom's. That's also common knowledge if you bother to read the annual reports, earnings call transcripts, and quarterly financial releases. If you look at what he's done as a CFO, I'd say he's earned his keep. Unfortunately, Finance can't make up every dollar that Marketing or Operations manage to lose.

No "e" I didn't "bother and look" at 1Q01-1Q06 time frame. I'm not talking ten years ago "e", I'm talking now. The remarks I was referring to are now.
What does Tom and Arpey's comparisons have to do with anything. Why do I need to "bother to look" at that. That was not my point.
My point was "if you bothered to comprehend" was he is paid well above most. Something that you and your apologist have stated differently.
So "e", don't come on here telling me to "bother and look" when you need to learn to comprehend.

 

[eolesen]

Whatever. By your standard, I guess the fact you didn't lose any money in 2009 means you must be doing great, right?

 

[wcs]

If you look at what he's done as a CFO, I'd say he's earned his keep. Unfortunately, Finance can't make up every dollar that Marketing or Operations manage to lose.

I'd have to say you've made your point about Horton. He's done an excellent job.He should be rewarded for it. But who in Ops and Marketing has paid the losses, besides the rank and file?

 

[FWAAA]

"giving stock recipients less than 7 cents on the dollar compared what the company intended to pay them three years ago"

That has got to be the best definition of spin I have ever seen!

I would have thought y'all would be celebrating the "concessions" enjoyed by the executives this year as their total compensation was much less than the target set by the board. Instead of $45 million in Performance Shares, the top 1,000 got a mere $3 million. The top five received just $545,000 instead of the target amount of $8 million. Finally, the executives see their variable compensation trend downward in a big way, and instead of cheering their misfortune, you're whining that they got crumbs instead of the multi-millions they would have received had AA performed better. The board intended to give Arpey $2.7 million in the PSP, but the award ended up being just $185,000. And yet the whining continues. The execs could work for free yet the slaves to the worthless union would complain that the execs don't pay to work for AA. As the company spokeshole said in the article you linked:

But the company defended the executive pay. "Our management compensation targets the median of the market, and it strongly links to pay to performance and the interests of shareholders,” Investor Spokesperson Andy Backover explained. “There is no better example of what we mean by at-risk pay than the 2007 stock compensation that vested this week. All of the management participants combined - approximately 1,000 people -- received roughly $3 million in total value from the 2007 stock grants that just vested - giving stock recipients less than 7 cents on the dollar compared what the company intended to pay them three years ago. It's hard to envision how that outcome could be characterized as excessive."

As overpaid as management is, they certainly took it on the chin this past year. So why aren't you celebrating? Here's an article explaining the smaller PSP payouts:

http://aviationblog.dallasnews.com/archives/2010/04/amr-executives-take-a-hit-on-s.html

Today, AA announced that it would pay out over $11 million to 74,000 employees in the AIP, more than three times the amount of Performance Shares paid out to the 1000 participants in that plan. Chicken feed, to be sure, but substantially more than the PSP execs received in their long-term incentive variable pay plan a few weeks ago.

 

[jimntx]

I would have thought y'all would be celebrating the "concessions" enjoyed by the executives this year as their total compensation was much less than the target set by the board. Instead of $45 million in Performance Shares, the top 1,000 got a mere $3 million. The top five received just $545,000 instead of the target amount of $8 million. Finally, the executives see their variable compensation trend downward in a big way, and instead of cheering their misfortune, you're whining that they got crumbs instead of the multi-millions they would have received had AA performed better. The board intended to give Arpey $2.7 million in the PSP, but the award ended up being just $185,000.

How about this compensation plan...if the company loses money in the vast amounts we seem to be capable of losing, the executives get NO bonuses. You know, the way it is done in normal for-profit companies. Bonuses should be paid for exceptional performance. "Leading" the company to a half-billion dollar loss in the 1st quarter is certainly exceptional, but not in the "let's give them a bonus"sense.

Today, AA announced that it would pay out over $11 million to 74,000 employees in the AIP, more than three times the amount of Performance Shares paid out to the 1000 participants in that plan. Chicken feed, to be sure, but substantially more than the PSP execs received in their long-term incentive variable pay plan a few weeks ago.

We, the peons, met or exceeded the goals set for us by the company. Therefore, we earned the AIP payouts. Can you in all honesty say the same for the goals and expectations of executive performance?

I spent over 20 years in the oil business. AMR executives are amateurs in the "let's give us a bonus" game compared to oil company executives. However, there is a BIG difference...in the oil business we were making money hand over fist. The oil executives received bonuses because profits were some percentage over the goals and expectations. When was the last time the word, profit, was used in the same sentence with AMR corporation?

 

[FWAAA]

How about this compensation plan...if the company loses money in the vast amounts we seem to be capable of losing, the executives get NO bonuses. You know, the way it is done in normal for-profit companies. Bonuses should be paid for exceptional performance. "Leading" the company to a half-billion dollar loss in the 1st quarter is certainly exceptional, but not in the "let's give them a bonus"sense.

The executives have received no bonuses (in the "let's give them a bonus because of exceptional profits" sense) since the year 2000. The difficulty many of the rank and file seem to have is that AA's huge losses will not cause the board to withhold all variable compensation from the greedy executives. I'm certain that Glading and Hill and the TWU's mouthpieces would love it if Arpey was paid only his base cash salary (a little less than $700k) , but that's not how it works in the real world. In 2009, Arpey made at least $2.5 million less than he would have had the company's financial performance been impressive. I'd say a pay reduction of $2.5 million from what the board planned to pay him is a pretty fair trade for the company's dismal 2009 performance and huge losses.

We, the peons, met or exceeded the goals set for us by the company. Therefore, we earned the AIP payouts. Can you in all honesty say the same for the goals and expectations of executive performance?

Nope, the executives didn't earn their short-term incentive bonuses, and hence, for the tenth straight year, they were paid no bonuses. It's outlined in the proxy statement.

I spent over 20 years in the oil business. AMR executives are amateurs in the "let's give us a bonus" game compared to oil company executives. However, there is a BIG difference...in the oil business we were making money hand over fist. The oil executives received bonuses because profits were some percentage over the goals and expectations.

What you aren't remembering are the years when oil companies didn't make money hand over fist, like during Pres Reagan's second term, when oil bottomed out at about $10/bbl in early 1986 and bounced around from that level to about $25/bbl until the first Gulf War. Same thing for most of the 1990s, when oil profits were meager compared to the good times. While the oil company execs didn't make huge bonuses during that time, their pay consisted of more than just their base cash salary. Just like the execs at AMR over the past 10 years. Lack of profits doesn't mean that execs do without; it simply means they don't get quite as much outrageous compensation as they would if the profits were hand over fist.

When was the last time the word, profit, was used in the same sentence with AMR corporation?

2007, when AMR earned $504 million; also in 2006, when AMR earned $231 million. The only profitable years for AMR in the past decade.