Outrage over AMR exec bonusses
01-10-2006, 05:39 PM
#1
Fun Officer
Thread Starter
Joined APC: Feb 2005
Position: Dallas, Texas
Posts: 515
Outrage over AMR exec bonusses
Again, thanks APA for your givebacks/concessions. You just lined some 1000 managers' pockets.
Exec payouts anger American's unions
Airline calls it deferred pay, but pilots' leader calls it a crisis
12:00 AM CST on Tuesday, January 10, 2006
By ERIC TORBENSON / The Dallas Morning News
American Airlines Inc.'s employee unions on Monday blasted payouts set for some executives, in a dramatic departure from the cordial tone fostered over the past three years between labor and management.
"It is absolute insanity to pay out seven-figure bonuses at a time when the company is suffering nine-figure losses, mired in eleven-figure debt, and seeking further help from its employees," wrote Allied Pilots Association president Ralph Hunter in a heated message to the union's 11,000 pilots.
Last week, Fort Worth-based American told employees that it expects to pay long-term deferred compensation to about 1,000 of its top managers. The total outlay could exceed $20 million.
The biggest payment is planned for executive vice president Dan Garton, who would receive $1.7 million at current stock prices when the payouts occur April 18.
Chairman and chief executive Gerard Arpey declined to participate in the payout program in 2003 when he took the CEO job. But that exemption won't dull labor's wrath.
All three labor groups – representing pilots, flight attendants and ground workers – issued a statement expressing concern about the "irrationality" of the payments at such a critical time.
Mr. Hunter called the payouts "perhaps the biggest crisis" in labor-management relations since Donald Carty resigned nearly three years ago as CEO over failing to disclose executive bonuses and pension protections.
"We cannot in good faith accuse management of keeping the general structure and impact of stock price on management's compensation a secret," Mr. Hunter said in his message to pilots.
But the performance plan is "poorly designed and creates a corrosive atmosphere for any future progress toward fixing the airline."
Mr. Hunter said that "the future of this company may very well hang on what ... [Mr. Arpey] does over the next few weeks."
The Association of Professional Flight Attendants said it would withdraw from meetings that it was to conduct alongside the company to tell flight attendants the results of an efficiency study conducted by American and its employees.
The Transport Workers Union, in a letter to Mr. Arpey, said it opposes the payouts and demanded a meeting to discuss the issue.
American said labor relations – a key tenet of its restructuring plan, Working Together – remain strong. No meeting with the unions has been scheduled, though the airline is aware its unions want more information.
"We remain confident in the Working Together process and the work that has been accomplished thus far," American spokeswoman Lisa Bailey said.
"We are also committed to keeping the lines of communication with our unions open – about this or any other issue."
The April payments come from a long-term compensation program that American insists isn't "bonus money" at all, but rather deferred pay for executives who agree to put some of their salary at risk.
The plan rewards executives based on how shares of AMR Corp., American's parent company, perform relative to peer airlines – three of which are under bankruptcy protection.
For the period between 2003 and 2005, AMR shares rose nearly 170 percent, ranking it first in stock performance.
That performance triggers the maximum payout for executives in the plan, multiplying the number of "performance units" each executive has by 1.75 and then multiplying that total by the stock price on April 18.
Mr. Garton's payout, based on his 44,000 units in the plan, would be $1.7 million at Monday's stock price. It could rise or fall based on what AMR shares do in coming months. Other executives such as top lobbyist Will Ris and chief technology officer Monte Ford would see payouts in excess of $1 million at current stock prices.
American has cut its management ranks by a third since 2001, and the airline says its executives earn 35 percent less than their peers in other industries. Lately American has had difficulty keeping a chief financial officer and has lost a half-dozen top executives in the last four years to more lucrative fields.
The discord poses a challenge to Mr. Arpey's bold strategy launched in summer 2003 to treat employees better than his predecessors had. Using a consultant, American has worked with unions and employees to build a network of committees around the world's largest carrier. Those groups have developed cost-saving plans and distributed information on the company's turnaround in an effort to forge trust.
The latest joint effort is the Performance Leadership Initiative, designed to measure every aspect of American against its peers.
Tommie Hutto-Blake, president of the APFA, said in a hotline message to flight attendants Friday that she has "serious concerns with management ... at a time when we are attempting to work together with AA to bring this company back to profitability," and that the payouts are "clearly not in the best interests of this company and its employees who have worked so hard to turn this airline around."
Exec payouts anger American's unions
Airline calls it deferred pay, but pilots' leader calls it a crisis
12:00 AM CST on Tuesday, January 10, 2006
By ERIC TORBENSON / The Dallas Morning News
American Airlines Inc.'s employee unions on Monday blasted payouts set for some executives, in a dramatic departure from the cordial tone fostered over the past three years between labor and management.
"It is absolute insanity to pay out seven-figure bonuses at a time when the company is suffering nine-figure losses, mired in eleven-figure debt, and seeking further help from its employees," wrote Allied Pilots Association president Ralph Hunter in a heated message to the union's 11,000 pilots.
Last week, Fort Worth-based American told employees that it expects to pay long-term deferred compensation to about 1,000 of its top managers. The total outlay could exceed $20 million.
The biggest payment is planned for executive vice president Dan Garton, who would receive $1.7 million at current stock prices when the payouts occur April 18.
Chairman and chief executive Gerard Arpey declined to participate in the payout program in 2003 when he took the CEO job. But that exemption won't dull labor's wrath.
All three labor groups – representing pilots, flight attendants and ground workers – issued a statement expressing concern about the "irrationality" of the payments at such a critical time.
Mr. Hunter called the payouts "perhaps the biggest crisis" in labor-management relations since Donald Carty resigned nearly three years ago as CEO over failing to disclose executive bonuses and pension protections.
"We cannot in good faith accuse management of keeping the general structure and impact of stock price on management's compensation a secret," Mr. Hunter said in his message to pilots.
But the performance plan is "poorly designed and creates a corrosive atmosphere for any future progress toward fixing the airline."
Mr. Hunter said that "the future of this company may very well hang on what ... [Mr. Arpey] does over the next few weeks."
The Association of Professional Flight Attendants said it would withdraw from meetings that it was to conduct alongside the company to tell flight attendants the results of an efficiency study conducted by American and its employees.
The Transport Workers Union, in a letter to Mr. Arpey, said it opposes the payouts and demanded a meeting to discuss the issue.
American said labor relations – a key tenet of its restructuring plan, Working Together – remain strong. No meeting with the unions has been scheduled, though the airline is aware its unions want more information.
"We remain confident in the Working Together process and the work that has been accomplished thus far," American spokeswoman Lisa Bailey said.
"We are also committed to keeping the lines of communication with our unions open – about this or any other issue."
The April payments come from a long-term compensation program that American insists isn't "bonus money" at all, but rather deferred pay for executives who agree to put some of their salary at risk.
The plan rewards executives based on how shares of AMR Corp., American's parent company, perform relative to peer airlines – three of which are under bankruptcy protection.
For the period between 2003 and 2005, AMR shares rose nearly 170 percent, ranking it first in stock performance.
That performance triggers the maximum payout for executives in the plan, multiplying the number of "performance units" each executive has by 1.75 and then multiplying that total by the stock price on April 18.
Mr. Garton's payout, based on his 44,000 units in the plan, would be $1.7 million at Monday's stock price. It could rise or fall based on what AMR shares do in coming months. Other executives such as top lobbyist Will Ris and chief technology officer Monte Ford would see payouts in excess of $1 million at current stock prices.
American has cut its management ranks by a third since 2001, and the airline says its executives earn 35 percent less than their peers in other industries. Lately American has had difficulty keeping a chief financial officer and has lost a half-dozen top executives in the last four years to more lucrative fields.
The discord poses a challenge to Mr. Arpey's bold strategy launched in summer 2003 to treat employees better than his predecessors had. Using a consultant, American has worked with unions and employees to build a network of committees around the world's largest carrier. Those groups have developed cost-saving plans and distributed information on the company's turnaround in an effort to forge trust.
The latest joint effort is the Performance Leadership Initiative, designed to measure every aspect of American against its peers.
Tommie Hutto-Blake, president of the APFA, said in a hotline message to flight attendants Friday that she has "serious concerns with management ... at a time when we are attempting to work together with AA to bring this company back to profitability," and that the payouts are "clearly not in the best interests of this company and its employees who have worked so hard to turn this airline around."
01-11-2006, 07:25 PM
#2
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Joined APC: Jan 2006
Posts: 40
AA had what? One profitable quarter over the last 4 years? And that kicks in $20,000,000 in bonuses? How about a bonus based on operating margin.
Executive pay has become criminally inflated over the last 10 years in all industries.
Executive pay has become criminally inflated over the last 10 years in all industries.
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