AMR top executives share more than $1.8 million from performance share plan

It appears that AMR's top six executives received 338,500 shares of AMR stock Thursday under the 2008-2010 share performance plan.

At Thursday's close on the New York Stock Exchange of $5.49 a share, that values their stock at $1,858,365.

Chairman and CEO Gerard Arpey received 115,000 shares, valued at $631,350 based on the $5.49 per share price. Next were president Tom Horton and executive vice president Dan Garton and Bob Reding, who each received 54,000 shares valued at $296,460.

Two senior vice president, CFO Bella Goren and general counsel Gary Kennedy, each received 30,750 shares valued at $168,818.

The six turned around and sold 89,535 shares, or 26.5 percent, to satisfy income tax liability on the stock awards. In addition, Garton sold the rest of his award shares as well.

Executive	Shares received	Sold Thursday	Sale proceeds	Shares remaining	Value ($5.49/share)
Gerard Arpey	115,000	30,418	$171,557.52	84,582	$464,355.18
Tom Horton	54,000	14,283	$80,556.12	39,717	$218,046.33
Bella Goren	30,750	8,134	$45,875.76	22,616	$124,161.84
Gary Kennedy	30,750	8,134	$45,875.76	22,616	$124,161.84
Dan Garton	54,000	54,000	$300,163.33	-	$0.00
Bob Reding	54,000	14,283	$80,556.12	39,717	$218,046.33
Totals	338,500	129,252	$724,584.61	209,248	$1,148,771.52

The executives received only half of their "target" amount because AMR shares performed so poorly against shares of seven other U.S. airlines during the 2008-2010 period.

AMR shares finished last. Under the performance share plan guidelines set up in 2008, an eighth place finished meant that executives and other "key employees" in the plan would get only 50 percent of the targets set nearly three years ago.

However, the plan participants should thank Delta Air Lines/Northwest Airlines and Continental Airlines/United Airlines for merging after the plan was set up.

The plan was originally set up to compare 10 airline companies, and a ninth or 10th place finish would have meant that AMR participants would have received nothing. But because the list shrank to eight, a last-place finish still earned AMR managers 50 percent of the target.

For those inclined to sympathize with the executives, the last-place finish meant that they also missed out on a lot of stock they could have received with a higher finish.

If AMR had done better than all the other airlines, the participants would have received 175 percent of target. So instead of splitting up shares worth $1,858,365, the six executives would have split up $6.5 million in stock, including $2.2 million for Arpey.

The results of the 2008-2010 performance share plan also show the problems we have in writing about executive compensation.

In the 2008 proxy, Arpey was shown to have received 230,000 shares from the performance share plan that paid off Thursday. Based on the $8.20 share price May 20, 2008, when the shares were approved, Arpey's payout at 100 percent of target would have been $1,886,000.

The $1,886,000 is the amount he is shown in the 2008 proxy as having received from the 2008-2010 performance share plan. At 175 percent, the maximum possible, it would have been $3.3 million.

But what did he really receive from that 2008 award? It appears he received about $636,000 worth of stock, or $464,355 after deducting 26.5 percent for taxes.

That would be a nice bump in my compensation and for that of most American Airlines employees. But it's far less than the 2008 proxy said he received that year.

The flip side is that if shares had doubled, executives eventually would have received far more than the proxy said they did

Source: http://aviationblog.dallasnews.com/archives/2011/04/amr-top-executives-share-more.html

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