AMR Corp.’s top five executives sold nearly 400,000 shares of company stock Thursday – most of about 550,000 shares they had just received that day as part of an executive compensation program from the parent of American Airlines.
CEO Gerard Arpey was a big seller:
Big sellers included AMR chairman Gerard Arpey, who sold 81,520 shares for $695,317. He had received 187,600 shares in the program that rewards executives based on how well AMR stock performs relative to that of competing airlines.
But not the biggest:
Two of Arpey’s top lieutenants surpassed his sales total. Executive vice presidents Dan Garton for marketing and Tom Horton for finance each sold their entire allotment of 103,984 shares, bringing in $886,932 apiece. (Horton is also the company's chief financial officer.)
I want to go back to that second pull quote, and specifically:
The program rewards executives based on how well AMR stock performs relative to that of competing airlines.
Squeeze me?
First, ALL airlines pretty much such on the P-and-L bottom line right now. Shouldn’t every airline exec with a stock-option bonus have to forfeit it on those grounds alone?
Second, Arpey was the CEO who neither flew back to Dallas nor held an impromptu press conference in Los Angeles the day the Federal Aviation Administration announced it was grounding American’s MD-80s. And Garton, not the company’s top safety officer, was the guy who actually got tapped to do the presser tap dance back here in DFW.
Certainly, American’s pilots and their union, which have been so unhappy about the idea of executive bonuses as to make vague strike noises, weren’t mollified by the sell-off, nor were flight attendants:
The airline’s unions, which accepted deep cuts in pay, benefits and working conditions as the airline struggled in 2003, have complained about the stock awards to executives.
Monday, union officials said the quick sales by executives make it appear the top people don’t believe in their own company.
“It just gave me a sick feeling,” said Jim Little, Transport Workers Union international president. “It's almost ‘take the money and run.’”
“The question is, how much should the investors feel the executives are committed to this company?” said pilots’ union spokesman Karl Schricker.
He said (the) company’s board should have taken into account the airline’s dismal record on customer service and other areas when it decided on the stock awards.
“If you judge our management team on their performance, there should have been no bonuses this year of any kind,” said Mr. Schricker, an American pilot.
The Association of Professional Flight Attendants has said the top five executives should resign because they took the shares.
That’s all right.
Surely, Arpey et al will earn those stock-option bonuses by meeting an FAA May 30 deadline to complete 19 overdue inspections:
The inspectors will be looking at American's manuals and programs to make sure they comply with federal regulations, not doing hands-on inspections of aircraft.
American claims it’s not worried:
The inspections, which are unrelated to the earlier maintenance problems, “have a very low probability of impact as far as operations go,” said Tim Wagner, an American spokesman. “We understand they’ll complete them by the end of May.”
Yeah, sure.
Meanwhile, cross-Metroplex rival Southwest Airlines supposedly still hasn’t completed four similar inspections itself, according to Inspector General Calvin L. Scovel III.
I have blogged more than once about taking that summer vacation early. If American has planes stuck in the hangar at the start of Memorial Day weekend, you’re going to wish you had considered that!
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