Mon, Apr 21, 2003
American's Top Union Issues Statement On Executive Perks
The Allied Pilots Association (APA) Sunday released the
following statement by President Captain John Darrah regarding the
enhancements to executive compensation that were revealed in AMR
Corp.'s year-end report to shareholders:
"As we emphasized with the announcement of the
flight attendants' approval of their tentative agreement, the
membership of all three unions met the cost-savings targets that
management established at the onset of negotiations. We have
sacrificed deeply to enable American Airlines to avoid an immediate
bankruptcy filing. Unfortunately, it appears that management is not
off to a very promising start at making the most of the reprieve
the unionized employees have provided through our collective
sacrifices.
"As part of its annual report to shareholders, AMR Corp. is
required by the Securities and Exchange Commission to file
additional, more detailed supporting documents. These documents
reveal that the top six executives will be eligible to receive cash
retention bonuses of twice their annual salaries, through a
so-called 'Retention Award Agreement,' if they stay through January
2005. AMR also established a 'Supplemental Executive Retirement
Program' for its 45 top executives that protects a portion of their
retirement income in the event of a bankruptcy filing.
No Briefing, No Way
"An article in today's edition of The Wall Street Journal
reports that management 'briefed union leaders before the voting'
about these new executive perquisites. That is totally erroneous.
We found out about these enhancements to executive compensation
only after AMR made its year-end financial filing with the SEC.
"As we seek clarification from management about why we were not
previously informed of these items, our pilots are justifiably
irate at the latest revelations. For that matter, every employee on
this property should rightfully question management's motives and
judgment with regard to enhancing executive compensation. After
all, the members of all three unions have just agreed to sacrifice
a total of $1.62 billion a year for the next six years.
"From the very beginning of our discussions concerning cost
savings, we stressed to management that both the sacrifices and the
potential future upside must be shared between the employees and
management. In light of the debate we had with management at the
very end of negotiations concerning equity and upside sharing, we
are particularly disturbed to see that both the sacrifices and
upside potential appear utterly lopsided. That is unacceptable. "On
April 10 at a meeting in Dallas/Fort Worth with a large group of
American Airlines employees, CEO Don Carty stated that 'Shared
sacrifice has to lead to shared success...' Management would be
wise to take this statement to heart and consider the ramifications
of their decisions during this critical time."
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