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Author Topic: American Airlines Wants Concessions From Unions
twaokc
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http://www.channeloklahoma.com/news/1823779/detail.html?treets=okl&tid=2652593944813&tml=okl_12pm&tmi=okl_12pm_775_12000112062002&ts=H
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capeman
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Has Caarty and upper management thrown in the hat first with pay cuts. They have to practice what they preach...
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AHP
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It appears that there is a total lack of mature leadership in the major carriers today. The leadership appears not to take any responsibility for their continual screwups other than to say it's labors fault. Sooner or later when a few of these carriers go belly up, the inept management will still be chanting the mantra, "It is all labors fault". It appears that in an industry with razor thin margins, where only astute leadship will prevail, there isn't any. What are our major business schools teaching anyway??????
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webmoonchild
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What are business schools teaching today? Fudge the numbers, don't take responsibility for your failures, cash out stock options early, and resign before the truth is exposed. I apologize for my cynicism.
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puppies
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AHP,

You are absolutely correct. "It's labor's fault!" And our beloved?? ex CEO Bob Crandall is still spewing that venom whenever he can.

Sue


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Flight Planner Jim
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At least you union people are being ASKED to make concessions. When I was in "management" at TWA, I was TOLD what my concessions would be. And EXPECTED to still work my 60+ hours a week for no extra pay to help my company survive. And I did because I worked for my company, not a union.
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donuway
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quote:
Originally posted by capeman:
Has Caarty and upper management thrown in the hat first with pay cuts. They have to practice what they preach...

Don Carty told people in STL yesterday that he had not taken a paycheck this quarter,

Don


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AHP
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quote:
Originally posted by donuway:

Don Carty told people in STL yesterday that he had not taken a paycheck this quarter,
Don

Upper management harvests the majority of their compensation from other than base pay. They will always tell the employees how they are not taking any pay or are taking big pay cuts. If you look at it closely, their pay cuts apply only to their basic annual pay. Not included is stock options, bonues, etc. etc. etc. Unfortunately for the shareholders and to a lessor degree the employee, these extras have become obscene in the last 20 years or so. Massive levels of compensation that do not really relate to the performance of the corporation.


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donuway
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quote:
Originally posted by AHP:

Upper management harvests the majority of their compensation from other than base pay. They will always tell the employees how they are not taking any pay or are taking big pay cuts. If you look at it closely, their pay cuts apply only to their basic annual pay. Not included is stock options, bonues, etc. etc. etc. Unfortunately for the shareholders and to a lessor degree the employee, these extras have become obscene in the last 20 years or so. Massive levels of compensation that do not really relate to the performance of the corporation.



I know that, as I am sure most of the other posters do. But you have to admit, it's something many other CEOs don't do, and I'm sure his stock options aren't worth a hoot right now.

I would also think one could live quite comfortably off of 3/4 of Mr Carty's salary.

Don


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chrispy
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I support Don Carty 110%, anyone who tells the TWA employees in STL, to "deal with the cards you were dealt by the AA unions" and "get over it" in regards to the 2/3 of the TWA employees on the street gets my vote.

I want to shake his hand for helping get rid of all the red tails...they were just lucky to tell their friends they worked with the elite, AMERICAN AIRLINES !!!! 2/3 down only 1/3 to go till full extermination of the red tails


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AHP
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quote:
Originally posted by donuway:

I would also think one could live quite comfortably off of 3/4 of Mr Carty's salary.
Don


I would shure like to try. )


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John Lange
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The Baumert Report December 16, 2002
> Labor's Loss, Carty's Gain?
>
>
> AMR CEO Don Carty recently announced that AMR management would forgo
> scheduled wage increases and has asked labor groups to do likewise. While
> this has a "we're all in this together" feel, it hides the very real
> probability that AMR senior management could easily profit from labor's
> concessions. How could that possibly happen? Simple: The pay increase
> management is forgoing applies only to their base salary, and senior
> management has plenty of other forms of compensation that far exceeds
> their base salary.
>
> In 2001, Carty's base salary comprised just 8.3% of his total compensation
> package. In 2000, his base salary represented just 4.7% of his total
> compensation and in 1999 it was just 5%. Truth be told, Carty will
> probably be freezing only 5-8% of his total compensation.
>
> You see, at AMR the compensation for the most highly paid executives is
> really made up of stock options, restricted stock awards, bonuses and long
> term incentive plan (LTIP) payouts. These are the forms of income where
> senior management actually rakes in the big bucks, not their base salary.
> And Carty never happened to mention these other types of executive
> compensation in his announcement. Apparently, these extremely lucrative
> forms of executive pay are still very much in play.
>
> And lucrative they are indeed. In 1999, Carty was awarded a stock options
> package valued at $10.3 million. In 2000, he was awarded an options
> package worth $12.5 million. Stock option awards are valued by
multiplying
> the number of shares of the grant by the exercise price. The exercise
price
> is determined by the average market price of AMR's stock on the date the
> stock options are awarded.
>
> The compensation committee could simply ladle out gobs of options at very
> advantageous prices to senior executives. These options could easily
> increase in value due in large part to the concessions of labor. All the
> while, management can claim they are in it with employees because their
base
> salary is frozen. By the way, AMR's compensation committee is made up of
> several board members one of whom is Michael Miles, a gentleman who sits
on
> three boards with Don Carty at Dell, Sears and AMR.
>
> The "long-term incentive plan" payout portion of Carty's compensation is
> also very rewarding and absolutely dwarfs his base salary. Since 1997,
> on Carty's annual LTIP payouts have totaled an astounding $13.8 million.
> The compensation committee could continue their generous ways with the
> LTIP payouts while labor endures freezes or cuts.
>
> And let's not forget about bonuses. In 2000, Don Carty received a cash
> bonus of $1.35 million dollars for meeting that year's financial targets.
> By snatching concessions from labor, it will make it much easier to hit
> financial targets that could trigger cash bonuses for Mr. Carty.
>
> Then there's the matter of what I like to call "backdoor" bonuses. You
> have to scour the Proxy report to find these. In 1999, Carty lost out
> on "the annual cash performance return payment" and, in 2000, he didn't
get
> a base salary increase, so the compensation committee bestowed him with an
> annual total bonus of two additional years of credited service for
> his pension plan every single year until he retires. Now, for every year
> Don Carty works at AMR, he gets three years of credited service for his
> pension, the one year he actually works and his two bonus years. The
> compensation committee could award such "backdoor" bonuses to make up for
> Carty's "sacrifice".
>
> Now, if you are still inclined to give concessions at this time, but don't
> want senior management to profit from them, what can you do? Well, before
> giving any concessions, demand the following concessions from senior
> management:
>
> - Cancel all unexercised and unsold stock options held by senior
management
> - Halt the issuance of stock option awards to senior management
> - Place a moratorium on all bonuses and long term incentive plan payouts
> - All additional actions by the compensation committee (such as backdoor
> bonuses) must be approved by all those who had their wages frozen or made
> concessions
>
> However, if you see concessions as wholly unnecessary, unfair and/or
> somewhat dubious, then you don't have to worry about senior management
> enriching themselves on the backs of your pay and benefit cuts or
freezes -
> as long as the majority of your colleagues feel the same.
>
> Sources: AMR Proxy Filing for fiscal years 2001, 2000 and 1999;
> Whitney Tilson of Tilson Capital Partners, LLC, New York City
>
>
> Steven Baumert
> To receive The Baumert Report email baumertpm@hotmail.com
>
> Addendum:
> 1) In 1997 Carty's base salary was $648,083. By 2000, it had grown to
>
> $772,375, an increase of 19.2% or an annual rate of 6.4%.
>
> 2) AMR does not expense their stock options. When the costs of stock
>
> options are not booked as an expense and are never run through the income
> statement, it vastly understates executive compensation and inflates
> earnings. As Warren Buffett wrote, "If options aren't a form of
> compensation, what are they? If compensation isn't an expense, what is
> it?
> And if expenses shouldn't go into the calculation of earnings, where in
the
> world should they go?"
>
> Disclosure: I do not own the securities of AMR. Nor do I own the
> securities of any commercial airline or the parent company of a commercial
> airline.

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Bob Ritchie
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The trouble is....

Don Carty and other senior management can attract similiar financial compensation elsewhere. Most airline employees, including yours truly, couldn't earn 30% of their current salary outside of the industry.

If one chases away management talent.... then the death spiral just tightens. I don't like the outrageous salary/benefits packages recieved by the leaders of U.S. corporations any more than anyone else. However an attempt to change it, within one endangered segment of corporate America, is a death wish.

During TWA's final years....we couldn't give away our senior management positions. Our piddly executive salaries were laughed at.

Early on executives were concerned about their reputations and feared being associated with an endangered airline. Later on, no one with any talent was willing to work for the relative peanuts which we could affort. So....the innovative leadership drifted away.

We were left with home grown talent. Some of it, in the case of Bill Compton, was exceptional, despite his limitations. Much of the rest was well intentioned and committed....but ineffective.

Folks don't seem to worry about paying baseball players $10,000,000.00 a year to run around the bases. I am not going to worry about Carty's compensation package. His talents and political connections are invaluable.

Bob Ritchie


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MaxEPR
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Mr. Carty has made it clear that this is not a problem specific to one salaried group, but instead to outside factors. Wisely, he has not singled out unionized labor. He has made it very clear that all of us have to cough up something. He emphasized his words by having management give first, along wiih some very significant captital cost cuts.

Seems to me he's checked all the blocks.

It is now unionized labors turn. We can either pretend through some fabrication that they, management, haven't given enough, or that what they have conceded is all smoke and mirrors --a process not unfamiliar to unions, or we can swallow a small dose of the medicine NOW or wait and, either be out of a job, or forced by a judge to swallow a bigger dose.

Shane Daigle


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trake8
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"We were left with home grown talent. Some of it, in the case of Bill Compton, was exceptional, despite his limitations."

Sure...now a subpoena can't even get him to talk about it...or can it?

t8


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rampguy
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quote:
Originally posted by trake8:
"We were left with home grown talent. Some of it, in the case of Bill Compton, was exceptional, despite his limitations."

Sure...now a subpoena can't even get him to talk about it...or can it?

t8


And if he did talk and he did confirm the conspiracy theory, then what? Even if there were a conspiracy (which I don't subscribe to) that doesn't change the fact that we are now in a mess in this airline business. We have to deal with the here and now. Bob Ritchie and MaxEPR have it right. Executive compensation isn't the point. Pay some now or pay a whole lot more later.


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webmoonchild
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I think work rules should be negotiated before pay cuts. A dollar in givebacks is never ever fully returned to us. A pay freeze usually becomes a permanent pay cut. We moan about escalating costs of living by foregoing cost of living increases, wonder why we can't catch up. Ok, let's talk productivity first and pay cuts last. A bird in the hand... Productivity increases are in kind dollars. Maybe giving up some vacation days or other work rule changes can close the gap. Ask a TSA (Thousands Standing Around) how much they're being paid to harass us keeping our transportation system safe and you'll probably be asked to take off your shoes and spread your legs. Add it all up and I feel I gave at the security checkpoint. Maybe Uncle Sam should be giving us a tax break for all the crap we have to endure coming to work everyday. Then let's talk pay cuts.
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IA Farm Boy
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I work at Eagle, so my reply probably doesn't mean much on a AA board, but-

My response to wage concessions is, "No thanks. I gave at the door." Coming in, that is. I knew it, so I didn't complain, but to give more? Thank you, no.


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skerf
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Hey Chrispy, Lick me.
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puppies
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Webmoonchild,

I totally disagree with you. Once we give up perhaps rigs or increase productivity, we have never gotten them returned. One current example and a big one at that is the 4:45 averaging. That was a huge gain for the company.

Sue


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Kirkpatrick
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I would like to see any (if any) give backs accompanied with an agreement written in stone that they would snap back on certain date.

MK


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puppies
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Kirkpatrick,

I agree wholeheartedly about an agreement written in stone. However, as I understand it, Carty asked us to "forego" the 3%, instead of using the term "defer".

But, my point on the rigs, is you never give back a rig. It costs us so much more when we relinquish rigs than just a mere 3% pay increase.

Sue


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rod777
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I WOULD LIKE TO KNOW THE %OF EXECUTIVE PAY IN THE TOTAL LABOR COSTS.I BET WE THE EMPLOYEES WILL NEVER KNOW 10%,20%,30%,OR WHAT
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TWA Fan 1
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quote:
Originally posted by rod777:
I WOULD LIKE TO KNOW THE %OF EXECUTIVE PAY IN THE TOTAL LABOR COSTS.I BET WE THE EMPLOYEES WILL NEVER KNOW 10%,20%,30%,OR WHAT

The sad fact is that executive pay is a small part of labor cost. The average "salary" for senior executives in a company such as AMR is no more than $300,000/yr (executive salaries drop substantially once you get past the senior officers of the corporation). Multiplied times let's say 100 senior executives it amounts to a paltry $30 million.

Then there are stock options. But this is an "at risk" form of compensation and almost impossible to compute on a yearly basis. When the stock loses 90% of its value as it has recently, the "compensation value" of stock options is very low.

About 110,000 employees at AMR. Even if, hypothetically, the average salary is only $30,000 yr. (that is 1/10th of executive salary) you're looking at a yearly tab of over $3 billion.

I'd say executive salaries at AMR likely amount to about 10% of total salaries paid, give or take.


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rampguy
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quote:
Originally posted by rod777:
I WOULD LIKE TO KNOW THE %OF EXECUTIVE PAY IN THE TOTAL LABOR COSTS.I BET WE THE EMPLOYEES WILL NEVER KNOW 10%,20%,30%,OR WHAT

Is your caps lock key stuck?


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eagledriver
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If you want to know the exact details of all AMR senior executive compensation log onto AA.com, click "ABOUT AA/AMR CORPORATION/INVESTOR RELATIONS". On the left side of the page scroll down until you see "2002 Proxy Statement". Click this and you'll read anything you want about Mr. Carty's, Arpey's, etc. executive compensation packages. It's interesting reading for an accountant or if it concerns your own pay, but not for the average guy.

I could not find any information about executive intangible perks like leased cars, limos, boxes at AA Center/Arena, positive space travel. Holly Hegeman got her info from some public source though. Anyone know where to find out about executive perks at AMR HQ?

Eagledriver


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