American Airlines plans bonuses despite continuing red ink
FORT WORTH, Texas – Executives at American Airlines are expecting April stock-based bonuses that could top $1 million for some officials because shares of parent AMR Corp. have risen despite heavy losses at the nation’s largest carrier.AMR officials declined to estimate the cost of the bonuses. The company said stock options given to rank-and-file workers in 2003, which also vest in April, could top $500 million.The amount of the bonuses will be based on AMR’s stock price in April. At AMR’s current stock price, they would range from about $2,000 to about $1.7 million for Daniel P. Garton, the airline’s executive vice president for marketing.Chairman and Chief Executive Gerard J. Arpey did not take part in the bonus plan.The plan was written in 2003, when AMR hovered near bankruptcy, and it rewarded executives and managers if AMR’s stock performed as well or better than that of other airline companies through the end of 2005. During that time, AMR shares gained 169 percent.In 2003, AMR also gave stock options with a strike price of $5 to rank-and-file employees to help offset pay cuts. Senior Vice President Jeff Brundage said in a letter Thursday that those options could have a value to employees of more than $568 million, assuming a share price of $20 in April.Brundage’s figure could be conservative. AMR shares rose 2 cents to $22.53 Friday afternoon on the New York Stock Exchange.The bonuses for managers reward “superior performance,” Brundage said. “Our compensation policy is designed to hold managers and executives directly accountable for the company’s performance by placing a significant portion of your total compensation at risk when the company does not meet or exceed predetermined performance goals.”The company sent copies of Brundage’s letter to leaders of American’s three unions on Thursday. Union officials did not immediately return calls for comment Friday.AMR has lost more than $7 billion since the beginning of 2001, when the airline industry went into a slump that resulted in several carriers filing for bankruptcy protection. AMR has cut costs sharply, largely through layoffs and pay cuts, but analysts still expect the company to post a loss of about $675 million when final 2005 figures are released this month.Under the 2003 bonus plan, some midlevel managers received 50 units, worth more than $2,000 at AMR’s current stock price. Garton got 44,000 units. Unit amounts varied based on job level and performance, said Lisa Bailey, a spokeswoman for American.Bailey said similar management-bonus plans were approved in 2004 and 2005 and cover about 1,000 managers.Vail, Colorado
Support Local Journalism
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User