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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
AMR Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
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April 23, 2010
Dear Stockholder,
You are cordially invited to attend our annual meeting of
stockholders on Wednesday, May 19, 2010, at
8:00 a.m. Eastern time. The meeting will be held at
730 Third Avenue, 17th Floor, New York, New York.
Details of the meeting are explained in the attached notice of
the meeting and proxy statement, and additional information
about us is included in the enclosed 2009 annual report to
stockholders.
Please note that starting this year, brokers cannot vote your
shares in director elections without your voting instructions.
Please submit your proxy so your vote will be counted. You can
submit your proxy by using the Internet, by telephone, or by
completing and returning the enclosed proxy card or voting
instruction form.
On behalf of the entire board, we look forward to seeing you at
the meeting.
Sincerely,
Gerard J. Arpey
Chairman, President
and Chief Executive Officer
Important notice regarding the
availability of proxy materials for the annual stockholder
meeting to be held on May 19, 2010: Our official Notice of
Annual Meeting of Stockholders, Proxy Statement and 2009 Annual
Report to Stockholders are also available at our website located
at www.aa.com/investorrelations.
2010 ANNUAL
MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
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P.O. Box 619616,
MD 5675, Dallas/Fort Worth International Airport, TX
75261-9616
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DATE
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Wednesday, May 19, 2010
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TIME
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Registration Begins:
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7:15 a.m. Eastern time
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Meeting Begins:
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8:00 a.m. Eastern time
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PLACE
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730 Third Avenue (between East 45th and East
46th Streets)
17th Floor
New York, New York 10017
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ITEMS OF
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(1) to elect thirteen directors
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BUSINESS
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(2) to ratify the selection by the Audit Committee of Ernst
& Young LLP as our independent auditors for the year ending
December 31, 2010
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(3) to consider one stockholder proposal
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(4) to transact any other business that properly comes
before the annual meeting (or any adjournments or postponements
of the meeting)
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RECORD DATE
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You can vote at the annual meeting only if you were a
stockholder of record at the close of business on Monday, March
22, 2010.
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FINANCIAL STATEMENTS
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Audited financial statements for the year ended December 31,
2009 and the related Managements Discussion and Analysis
of Financial Condition and Results of Operations are included in
our Annual Report on Form 10-K, which is contained in the 2009
Annual Report to Stockholders included in this mailing.
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ANNUAL
MEETING ADMISSION
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To attend the annual meeting, you must have an admission ticket
(printed on, or included with, the proxy card or voting
instruction form) or other proof of ownership of AMR Corporation
shares as of March 22, 2010 that is acceptable to us (such as a
statement from your broker showing your stock ownership as of
March 22, 2010). We may ask each stockholder to present valid
governmentally-issued picture identification, such as a
drivers license or passport. For security reasons, all
bags are subject to search, and all persons who attend the
meeting may be subject to a metal detector and/or a hand wand
search. The use of cameras or other recording devices at the
annual meeting is prohibited. If you do not have valid picture
identification and either an admission ticket or appropriate
documentation showing that you owned our stock on March 22,
2010, or you do not comply with our security measures, you will
not be admitted to the annual meeting.
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VOTING BY
PROXY
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Your vote is important. Please vote by using the Internet, by
telephone, or by signing and returning the enclosed proxy card
or voting instruction form as soon as possible. The proxy card
or voting instruction form contains instructions for each of
these voting options.
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By Order of the Board of Directors,
Kenneth W. Wimberly
Corporate Secretary
April 23, 2010
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P.O. Box 619616,
MD 5675, Dallas/Fort Worth International Airport, TX
75261-9616
Annual Meeting of
Stockholders
May 19, 2010
We are mailing this Proxy Statement and the form of proxy to
stockholders on or around April 23, 2010 in connection with
a solicitation of proxies by the Board of Directors of AMR
Corporation (the Company, we or
us) for use at the annual meeting of stockholders
that we are holding on May 19, 2010. This Proxy Statement
also includes information regarding our wholly-owned and
principal subsidiary, American Airlines, Inc. The annual meeting
will be held at 730 Third Avenue, 17th Floor, New York, New
York 10017, on Wednesday, May 19, 2010, at
8:00 a.m. Eastern time. The physical address of our
principal executive offices is AMR Corporation, 4333 Amon Carter
Boulevard, MD 5675, Fort Worth, Texas 76155. Our
mailing address is shown above.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Stockholder Meeting to be held on
May 19, 2010. Our official Notice of Annual Meeting of
Stockholders, Proxy Statement and 2009 Annual Report to
Stockholders are available on our website located at
www.aa.com/investorrelations.
As an alternative to receiving printed copies of these materials
in future years, you can elect to receive and access future
annual meeting materials electronically. If your shares are
registered directly in your name with our stock registrar and
transfer agent, American Stock Transfer &
Trust Company, LLC, you can make this election by going to
its website (www.amstock.com) and clicking on
Shareholder Account Access or by following the
instructions provided when voting by Internet.
If you hold your shares in a brokerage account or through some
other third party in street name, please refer to the
information provided by your bank, broker or nominee for
instructions on how to elect to receive and view future annual
meeting materials electronically.
What is the
purpose of the annual meeting?
The purpose of the annual meeting is to allow you to vote on the
matters described in this Proxy Statement. These matters
include: (a) the election of directors, (b) the
ratification of the Audit Committees selection of our
independent auditors for 2010 and (c) consideration of one
stockholder proposal. In addition, management will report on our
performance during 2009.
Where is the
annual meeting?
The annual meeting will be held at 730 Third Avenue (between
East 45th and East 46th Streets), 17th Floor, New
York, New York 10017, on Wednesday, May 19, 2010, at
8:00 a.m. Eastern time.
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Who can attend
the annual meeting?
Stockholders of record as of the close of business on
March 22, 2010, or their duly appointed proxies, can attend
the annual meeting. Admission to the annual meeting will be on a
first-come,
first-served
basis. Registration will begin at 7:15 a.m. Eastern
time on May 19, 2010.
What are the
requirements to attend the annual meeting?
All stockholders must check-in at the registration desk. At
check-in, you must provide (a) an admission ticket or other
proof of ownership of our stock as of March 22, 2010 that
is acceptable to us and (b) valid governmentally-issued
picture identification.
You can find your admission ticket on your proxy card or with
your voting instruction form. A copy of a statement from your
broker showing your stock ownership is an acceptable form of
proof of ownership. A drivers license or passport is an
acceptable form of governmentally-issued picture identification.
If you fail to provide the required admission ticket or proof of
ownership and a valid governmentally-issued picture
identification, you will not be admitted to the annual meeting.
All meeting attendees must comply with our security measures. We
may require a search of your bags. In addition, we may require a
metal detector
and/or hand
wand search of all persons attending the meeting. You may not
use cameras or other recording devices at the annual meeting. If
you fail to meet our security requirements, you will not be
admitted to the annual meeting.
What is the
quorum for the annual meeting?
The presence, in person or by proxy, of the holders of at least
one-third of the issued and outstanding shares entitled to vote
at the annual meeting constitutes a quorum for the annual
meeting. We will count abstentions and broker non-votes as
present for determining whether a quorum exists. If we do not
have a quorum at the annual meeting, the holders of shares
entitled to vote at the annual meeting who are present in person
or by proxy may adjourn the meeting from time to time until a
quorum exists. Any business that could have been conducted at
the original meeting may be conducted at any adjourned and
reconvened meeting at which a quorum exists.
What is the
difference between a stockholder of record and a street
name holder?
If your shares are registered directly in your name with our
stock transfer agent, you are considered the stockholder of
record of those shares. If you are a stockholder of record, we
have sent the proxy statement, annual report and proxy card
directly to you. If you hold your shares in a stock brokerage
account or your shares are held by a bank or other nominee, you
are considered the beneficial owner of these shares, and your
shares are held in street name. The proxy statement,
annual report and proxy card have been forwarded to you by your
broker, bank or nominee, which is considered the stockholder of
record of those shares. As the beneficial owner, you have the
right to direct your broker, bank or nominee how to vote your
shares by using the voting instructions included in the mailing
or by following their instructions for voting by telephone or
the Internet.
Who is
entitled to vote at the annual meeting?
Only stockholders of record at the close of business on
March 22, 2010 are entitled to vote their shares of common
stock at the annual meeting. If you were a stockholder of record
on March 22, 2010, you will be entitled to vote all of the
shares that you held on that date at the annual meeting (or any
postponements or adjournments of the meeting). If your shares
are held in street name, you may vote your shares in person at
the annual meeting only if you obtain a legal proxy from the
broker or nominee that held your shares on March 22, 2010
that is acceptable to us. On March 22, 2010, we had
332,689,067 shares of common stock outstanding. Each
stockholder of record on March 22, 2010 will be entitled to
one vote in person or by proxy for each share held.
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If you are an employee/participant holding shares of our common
stock as an investment option under the $uper $aver 401(k) Plan,
you will receive one proxy card for all the shares that you own
through the $uper $aver 401(k) Plan. The proxy card will serve
as your voting instructions for the investment manager of the
$uper $aver 401(k) Plan (Evercore Trust Company, N.A.). To
allow sufficient time for the investment manager to vote your
$uper $aver 401(k) Plan shares, the investment manager must
receive your voting instructions by 11:59 p.m. Eastern
time on May 16, 2010. The number of shares you are eligible
to vote is based on your unit balance in the $uper $aver 401(k)
Plan on March 22, 2010. If the investment manager does not
receive your instructions by that date, it will vote your $uper
$aver 401(k) Plan shares in the same proportion as shares for
which instructions were received from other
employee/participants in the $uper $aver 401(k) Plan. As of
March 22, 2010, the $uper $aver 401(k) Plan held a total of
499,450 shares of our common stock on behalf of
employees/participants.
Do my
unexercised stock options allow me to vote at or attend the
annual meeting?
Holding unexercised stock options does not entitle you to vote
at or attend the annual meeting. You must own shares of our
common stock at the close of business on March 22, 2010 to
vote at or attend the annual meeting.
How do I vote
before the annual meeting?
Stockholders of record on March 22, 2010 may vote
before the annual meeting, as explained in the detailed
instructions on the proxy card or voting instruction form. In
summary, you may vote before the annual meeting by any one of
the following methods:
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By Internet. If you are a stockholder of
record, you can vote over the Internet at the website address
shown on the proxy card. The Internet voting procedure allows
you to verify your identity and vote your shares. In addition,
it will confirm that we have properly recorded your voting
instructions. If you hold your shares in street name, the
availability of Internet voting will depend on the voting
process of your bank or broker. Please follow the Internet
voting instructions found on the voting instruction form that
you received from your bank or broker.
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By telephone. If you are a stockholder of
record, you can vote by telephone using the telephone number
shown on the proxy card. The telephone voting procedure allows
you to verify your identity and vote your shares. In addition,
it will confirm that we have properly recorded your voting
instructions. If you hold your shares in street name, the
availability of telephone voting will depend on the voting
process of your bank or broker. Please follow the telephone
voting instructions found on the voting instruction form that
you received from your bank or broker.
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By mail. If you are a stockholder of record,
you can vote by mail by completing, signing and returning the
enclosed proxy card in the postage paid envelope provided. The
proxies will vote your shares according to the directions you
provide on the card. If you hold your shares in street name,
please follow the vote by mail instructions found on the voting
instruction form you receive from your bank or broker.
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When will
Internet and telephone voting facilities close?
For stockholders of record, the Internet and telephone voting
facilities will close at 11:59 p.m. Eastern time on
May 18, 2010. If your shares are held in street name,
please refer to the information provided by your bank, broker or
nominee for information on when voting will end.
Can I change
my vote after I have voted?
If you are a stockholder of record, you may change your vote or
revoke your proxy at any time before the annual meeting begins.
To change your vote, you must file a notice of revocation and a
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properly executed, later-dated proxy with our Corporate
Secretary that is acceptable to us. Whether you are a
stockholder of record or hold your shares in street name, you
may also change your vote or revoke your proxy by voting your
shares at the annual meeting.
How are votes
counted?
For the election of directors (proposal 1), you may either
vote FOR all or less than all of the nominated
directors or your vote may be WITHHELD from one or
more of them. Stockholders elect the nominated directors by a
plurality of the votes cast at the annual meeting. This means
that the stockholders will elect the thirteen persons receiving
the highest number of FOR votes at the annual
meeting. See Corporate Governance Majority
Voting, on page 11, for further details regarding the
election of directors.
For proposals 2 and 3, a majority of the votes cast at the
annual meeting is required for approval. For these two
proposals, you may vote FOR, AGAINST or
ABSTAIN. If you ABSTAIN, it will not
have an effect on the approval of these two proposals.
If you are a stockholder of record, you may vote your shares in
person at the annual meeting, through the mail, by telephone or
over the Internet. Each of these voting methods is described on
the proxy card (see also How do I vote before the annual
meeting? on page 3, for more information). If you
sign your proxy card and provide no voting instructions, the
proxies will vote your shares FOR proposals 1
(as to all nominated directors) and 2; and AGAINST
proposal 3. On any additional matters that properly come
before the annual meeting, the vote will be determined by our
proxies, Gerard J. Arpey, David L. Boren and Ann M. Korologos.
Each proxy has full power to act without the others and has full
power of substitution to vote in their discretion.
If you hold your shares in street name, follow the instructions
on the voting instruction form you received from your broker
(see also How do I vote before the annual meeting?
on page 3, for more information). On any additional matters
that properly come before the annual meeting, the vote will be
determined in the discretion of our proxies, as described above.
Please note that proposals 1 and 3 are non-discretionary
items under the voting procedures of the New York Stock Exchange
(NYSE). As a result, NYSE-member brokers cannot vote
your shares on these proposals without your voting instructions
(known as a broker non-vote). If you do not submit
voting instructions on proposals 1 and 3, we cannot count
your shares on these proposals. Broker non-votes will have no
effect on the approval of proposals 1 and 3.
Proposal 2, the ratification of the appointment of our
independent auditors, is a discretionary item under the voting
procedures of the NYSE. As a result, NYSE-member brokers can
vote your shares on proposal 2 even if you do not provide
them with voting instructions.
What are the
recommendations of the Board of Directors?
The recommendations of the Board of Directors are included with
the description of each item in this Proxy Statement. In
summary, the Board of Directors recommends a vote:
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FOR the election of the nominated slate of
directors (proposal 1)
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FOR the ratification of the selection by the Audit
Committee of Ernst & Young LLP as our independent
auditors for 2010 (proposal 2)
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AGAINST approval of stockholder proposal 3
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What happens
if additional matters are presented at the annual
meeting?
Other than the three proposals described in this Proxy
Statement, we are not aware of any other business to be
presented at the annual meeting. If you sign and return the
proxy card or the voting instruction form, our proxies will be
able to vote your shares on any additional matters presented at
the
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annual meeting. If for any reason any director nominee cannot
stand for election at the annual meeting, our proxies may vote
your shares for a substitute nominee chosen by the Board.
Who will bear
the cost of soliciting proxies for the annual
meeting?
We will pay the cost of this solicitation. In addition to using
regular mail, we may use our directors, officers, employees or
agents to solicit proxies in person or by telephone, facsimile,
e-mail or
other means of electronic communication. We will also request
brokers or nominees that hold common stock in their names to
forward proxy materials to their beneficial owners at our
expense. To aid in the solicitation of proxies, we have retained
Laurel Hill Advisory Group, LLC, a firm of professional proxy
solicitors, at an estimated fee of $16,500, plus reimbursement
of normal expenses.
When and where
can I find the voting results of the annual
meeting?
We intend to post the official voting results of the annual
meeting at the Investor Relations section of our website
(www.aa.com/investorrelations) as soon as possible. In
addition, the preliminary results or, if they are available, the
official results, will be published in a current report on
Form 8-K
within four business days of the annual meeting.
The Board of Directors proposes that stockholders elect the
following thirteen director candidates to serve until the next
annual meeting. All of these nominees currently serve as
directors of the Company and American Airlines, Inc., our
wholly-owned subsidiary. Each of them has indicated that he or
she will serve if elected. Each has also furnished the following
information about his or her principal occupation or employment
and other directorships as of March 22, 2010. A plurality
of the votes cast is necessary for the election of each director.
The Board believes that each nominee meets the requirements of
our Director Nominating Policies and Nominating/Corporate
Governance Committee Charter, which are described below in
Director Nominees, beginning on page 16. In
addition, we have included a brief description of some of the
specific experience, qualifications, attributes or skills that
led the Board to the conclusion that each nominee should be
elected to again serve on our Board. The Board believes that all
of the nominees also have good judgment, integrity, and a
dedication to the Company and our business, as well as
intelligence, wisdom and inquisitiveness. The nominees work well
together, challenge each other and management when appropriate,
and collaborate to come up with innovative ideas and solutions.
Unless you indicate otherwise, all proxy cards and voting
instruction forms will be voted for the election of the nominees
listed below. If any nominee is not available for election
because of unforeseen circumstances, the proxies designated by
the Board may vote for the election of a substitute nominee
selected by the Board. Although we will attempt to provide
advance notice of any substitute nominee, we may be unable to do
so.
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Gerard J. Arpey (Age 51) First elected a
director in 2003
Mr. Arpey began his career at American
Airlines in 1982, and he has held several leadership roles at the Company and
American since then. Mr. Arpey was elected Chairman of the Company and
American Airlines, Inc. in May 2004. He had been President and
Chief Executive Officer of the Company and American since April 2003
when he was first elected to our Board of Directors. Prior to that, he had served as President and Chief Operating Officer of the Company and
American starting in 2002, Executive Vice President -
Operations from 2000 to 2002, and Senior Vice President -
Finance and Planning and Chief Financial Officer from 1995 to
2000. He therefore brings to the Board extensive and unique
Company and industry experience. Since he is responsible for,
and familiar with, our day-to-day operations and implementation
of our strategy, his insights into our performance and the
airline industry are critical to Board discussions and our
success.
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John W. Bachmann (Age 71) First elected a director in 2001
Mr. Bachmann began his
career at Edward Jones, one of the worlds largest retail
brokerage firms, in 1959. He has served in many capacities at the firm,
including as its Managing Partner from 1980 to 2003. He has been Senior Partner at
Edward Jones since January 2004. With his long history at Edward Jones and as
its leader for many years, Mr. Bachmann has extensive
financial, capital markets, strategic and executive leadership experience. He is also a director of the Monsanto
Company and is Senior Council Board Member of the United States
Chamber of Commerce. He previously served as a director of the
National Association of Securities Dealers and, until American
acquired its assets in 2001, of Trans World Airlines, Inc. His
experience as a director and member of board committees of these
and other companies provides important insights into corporate
governance and board functions. He is a resident of St. Louis,
Missouri, one of our markets. His background and experience make
him an effective member of the Board and its Audit and Diversity
committees, and a strong Chairman of the Audit Committee.
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David L. Boren (Age 68) First elected a director in 1994
Mr. Boren has been the
President of The University of Oklahoma, one of the largest universities in the U.S.,
since November 1994. Before resigning from the U.S. Senate in 1994 to
assume leadership of the university, he was a political leader in
Oklahoma for nearly 30 years. He served in the Oklahoma House of
Representatives from 1967 to 1975, and was Governor of
Oklahoma from 1975 until his election to the U.S. Senate in 1979. With this background, he brings to the board extensive
educational, public policy, strategic and executive leadership
experience. He is also a director of Continental Resources,
Inc., Texas Instruments Incorporated and Torchmark Corporation,
and he previously served as a director of Hiland Partners, LP.
He also serves as Chairman of the Oklahoma Foundation of
Excellence. His experience as a director and member of board
committees of these and other companies provides important
insights into corporate governance and board functions. One of
Americans largest employee bases is in Oklahoma, and our
business is highly regulated, so his knowledge is particularly
helpful. His background and experience make him an effective
member of the Board and its Compensation and
Nominating/Corporate Governance committees, and a strong
Chairman of the Nominating/Corporate Governance Committee.
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Armando M. Codina (Age 63) First elected a director in 1995
Mr. Codina founded
Codina Group, a large South Florida-based commercial real
estate firm, in 1980. As Codina Groups Chairman and
Chief Executive Officer, he led its growth for 26 years
until he merged it with Florida East Coast Industries in 2006 to
become Florida East Coast Industries full-service real
estate business, Flagler Development Group.
He served as Flagler Development Groups Chairman, Chief Executive Officer and President until September 2008, and he
continues to serve as its Chairman. Prior to founding Codina
Group, he served as President of Professional Automated
Services, Inc., which provided data processing services to
physicians. Mr. Codinas extensive experience in
commercial real estate and business provides significant insight
into the real estate, business, strategic and other issues we
face. He is also a director of The Home Depot, Inc., and he
previously served as a director of Bell South Corporation,
General Motors Corporation, Merrill Lynch & Co., Inc.
and Florida East Coast Industries, Inc. His experience as a
director and member of board committees of these and other
companies provides important insights into corporate governance
and board functions. His deep roots in Florida also provide
important perspective of one of our largest and most important
markets. His background and experience make him an effective
member of the Board and its Nominating/Corporate Governance
Committee, and a strong Lead Director.
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Rajat K. Gupta (Age 61) First elected a director in 2008
Mr. Gupta
joined McKinsey & Company, one of the worlds largest
management consulting firms in 1973.
After leading the firms Scandinavian offices
starting in 1981 and then its Chicago office beginning in 1989,
he served as the Managing Director Worldwide of McKinsey from 1994 to 2003 and
as Senior Partner from 2003 until his retirement in
January 2008. Since then, he has served as Senior Partner Emeritus of the firm. During his
34-year
career at McKinsey, Mr. Gupta advised many leading
companies on a broad set of topics related to strategy,
organization and operations. He therefore brings to our Board
extensive consulting, strategic, operations, organizational and
executive leadership experience. Mr. Gupta is also a
director of Genpact Limited, Goldman Sachs Group, Inc., Harman
International Industries and The Procter & Gamble
Company, and he is active in many non-profit institutions that
focus on education, health and development. His experience as a
director and member of board committees of these and other
companies provides important insights into corporate governance
and board functions. As a global airline, his experience in the
U.S. and abroad advising other global firms is very
beneficial. His background and experience make him an effective
member of the Board and its Audit Committee.
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Alberto Ibargüen (Age 66) First elected a director in 2008
Mr. Ibargüen has
served as President and Chief Executive Officer of the
John S. and James L. Knight Foundation
since July 2005. In this role, he has led the foundations
support of journalism and civic advancement in 26 U.S. communities.
Previously, Mr. Ibargüen served as Chairman of Miami
Herald Publishing Co. from 1998 to 2005, a
Knight Ridder subsidiary, and as publisher of The
Miami Herald and of El Nuevo Herald. He therefore brings extensive media,
philanthropic, strategic, and executive leadership experience to
the Board. He is a director of PepsiCo, Inc., and is Chairman of
the Board of the Newseum in Washington, D.C. and of the
World Wide Web Foundation, based in Switzerland. He previously
served as a director of NCL Corporation Ltd. and on the Advisory
Committee of the Public Company Accounting Oversight Board. His
experience as a director and member of board committees of these
and other companies provides important insights into corporate
governance and board functions. He is a resident of Miami,
Florida, one of our largest and most important markets. His
background and experience make him an effective member of the
Board and its Audit and Diversity committees.
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7
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Ann M. Korologos (Age 68) First elected a director in
1990
Mrs. Korologos held several important posts in the
U.S. government, including U.S. Secretary of Labor from
1987 to 1989, and Under Secretary of the Department of Interior and
Assistant Secretary of the Treasury before that. She most recently
served as Chairman of the Board of Trustees of RAND Corporation, an
international public policy research organization, from April 2004 to
April 2009. She has served as Chairman Emeritus of The Aspen Institute since
August 2004, where she has served on its Board of Trustees since
1989. She also was Senior Advisor for Benedetto,
Gartland & Company from 1996 to 2005. With her
leadership roles in political, financial and other fields,
Mrs. Korologos brings to our Board extensive public policy,
financial, strategic and executive leadership experience.
Mrs. Korologos is also a director of Harman International
Industries, Host Hotels & Resorts, Inc., Vulcan
Materials Company and Kellogg Company. She previously served as
a director of Fannie Mae, Host Marriott Corporation and
Microsoft Corporation. Her experience as a director and member
of board committees of these and other companies provides
important insights into corporate governance and board
functions. She is a resident of Washington, D.C., one of
our important markets. Her background and experience make her an
effective member of the Board and its Diversity Committee.
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Michael A. Miles (Age 70) First elected a director in
2000
Since 1995, Mr. Miles has been a Special Limited
Partner and a member of the Advisory Board of Forstmann
Little & Co., a New York-based private equity firm.
Previously, he was Chairman and Chief Executive Officer of Philip
Morris Companies Inc. from 1991 until his retirement in 1994, and he
served as Chairman and Chief Executive Officer of Kraft Foods, Inc.
before that. With roles at these and other companies, he brings
extensive business, financial, strategic and executive leadership
experience to the Board. Mr. Miles is also a director of
Citadel Broadcasting Corporation and Time Warner Inc., and he
previously served as a director of Dell Inc., Morgan Stanley and
Sears Holdings Corporation. His experience as a director and
member of board committees of these and other companies provides
important insights into corporate governance and board
functions. He also resides in the Chicago area, one our largest
and most important markets. His background and experience make
him an effective member of the Board and its Compensation
Committee and a strong Chairman of that committee.
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Philip J. Purcell (Age 66) First elected a director in 2000
Mr. Purcell became
President and Chief Operating Officer of Dean Witter in 1982.
He was Chairman and Chief Executive Officer of Dean Witter Discover & Co.
from 1986 until it acquired Morgan Stanley in 1997. He then served as Chairman and CEO of
Morgan Stanley until he retired in July 2005. Mr. Purcell has been the
President of Continental Investors, LLC, a
Chicago-based private equity firm, since January 2006. With his leadership roles at major financial services companies
and a private equity firm, Mr. Purcell has extensive
financial, capital markets, strategic and executive leadership
experience. He also previously served as a director of the New
York Stock Exchange, including as its Vice Chairman during 1995
and 1996. His experience as a chairman and director of these and
other companies provides important insights into corporate
governance and board functions. He also resides in the Chicago
area, one our largest and most important markets. His background
and experience make him an effective member of the Board and its
Compensation and Nominating/Corporate Governance committees.
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8
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Ray M. Robinson (Age 62) First elected a director in 2005
Mr. Robinson
started his career at AT&T in 1968, and prior to his
retirement from AT&T in 2003, he held several executive positions,
including President of the Southern Region, its largest region,
President and CEO of AT&T Tridom, Vice President of Operations for AT&T Business
Customer Care, Senior Vice President of AT&T
Outbound Services and Vice President of AT&T Public Relations.
Since 2003, Mr. Robinson has served as Chairman of Citizens
Trust Bank of Atlanta, Georgia, the largest African
American-owned bank in the southeast U.S. and the
nations second largest. With his numerous executive
leadership positions, Mr. Robinson has extensive
technology, banking, communications, strategic and executive
leadership experience. Mr. Robinson is also a director of
Aaron Rents, Inc., Acuity Brands, Inc. and Avnet, Inc., and he
previously served as a director of ChoicePoint and Mirant
Corporation. His experience as a director and member of board
committees of these and other companies provides important
insights into corporate governance and board functions. He
resides in the Atlanta, Georgia area, an important business
center, where he has been Vice Chairman of the East Lake
Community Foundation since November 2003. His background and
experience make him an effective member of the Board and its
Audit and Nominating/Corporate Governance committees.
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Dr. Judith Rodin (Age 65) First elected a director in 1997
Dr. Rodin has served as
President of The Rockefeller Foundation since March 2005. The foundation, founded in 1913,
supports efforts to combat global social, economic, health and environmental challenges. From 1994 to 2004,
Dr. Rodin led the University of Pennsylvania through a period of significant growth as its President.
Before that, at Yale University she chaired the Department of
Psychology, served as Dean of the Graduate School of Arts and Sciences and Provost, and she was a
faculty member for 22 years. As the leader of important
philanthropic and higher learning institutions, Dr. Rodin
has extensive educational, philanthropic, strategic and
executive leadership experience. Dr. Rodin is also a
director of Citigroup Inc. and Comcast Corporation, and she
previously served as a director of Aetna, Inc. Her experience as
a director and member of board committees of these and other
companies provides important insights into corporate governance
and board functions. She is a resident of New York City, one of
our most important markets. Her background and experience make
her an effective member of the Board and its Compensation
Committee.
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Matthew K. Rose (Age 51) First elected a director in 2004
Mr. Rose has been the Chairman,
President and Chief Executive Officer of Burlington Northern
Santa Fe Corporation, one of the countrys largest
freight railways, since 2002. Before serving as its
chairman, Mr. Rose held several leadership positions there and at its
predecessors, including President and Chief Executive Officer from 2000 to 2002,
President and Chief Operating Officer
from 1999 to 2000, and Senior Vice President and Chief Operations Officer from 1997 to 1999.
As the chairman, president and CEO of a major transportation
company, Mr. Rose brings to the Board extensive business,
financial, strategic and executive leadership experience in the
transportation industry. He previously served as a director of
Centex Corporation. His experience as a director and member of
board committees of these and other companies provides important
insights into corporate governance and board functions. He lives
in the Dallas-Fort Worth area, where our headquarters and
principal hub are located. His background and experience make
him an effective member of the Board and its Compensation
Committee.
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Roger T. Staubach (Age 68) First elected a director in 2001
Mr. Staubach founded The
Staubach Company, a large commercial real estate firm until
its merger with Jones Lang LaSalle Incorporated in July 2008. He has
served as a director and as Executive Chairman, Americas, of
Jones Lang LaSalle Incorporated since the merger. Prior to that, he served as
Executive Chairman of The Staubach Company from July 2007 to
July 2008, and Chairman and Chief Executive Officer from 1982 to June 2007. A graduate of the United States
Naval Academy in 1965, Mr. Staubach served four years as an
officer in the U.S. Navy, and he played professional
football from 1969 to 1979 with the Dallas Cowboys. Through his
service as chairman
and/or CEO
of two large commercial real estate firms, Mr. Staubach has
extensive real estate, business, strategic and executive
leadership experience. Mr. Staubach is also a director of
Cinemark Holdings, Inc., and he previously served as a director
of McLeod USA Incorporated. His experience as a director of
these and other companies provides important insights into
corporate governance and board functions. He lives in the
Dallas-Fort Worth area, where our headquarters and
principal hub are located. His background and experience make
him an effective member of the Board and the Diversity Committee
and a strong Chairman of that committee.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED ABOVE.
10
Majority
Voting
Under the Board of Directors Governance Policies, any nominee
for director who receives a greater number of votes
WITHHELD than votes FOR in an
uncontested election will be required to tender his or her
resignation promptly to the Nominating/Corporate Governance
Committee. After taking into account our best interests and the
best interests of the stockholders, the committee will recommend
to a special committee of independent directors of the Board
whether to accept the tendered resignation or to take some other
action. Nominees receiving a majority of withheld votes will not
be eligible to sit on this special committee. The special
committee will have 90 days from the date of the election
to consider the Nominating/Corporate Governance Committees
recommendation and determine whether to accept the tendered
resignation or take some other action. Thereafter, we will
publicly disclose the special committees decision. This is
a summary of the director resignation procedure. The entire
procedure is in Section 18 of the Boards Governance
Policies, which are available on the Investor Relations section
of our website located at www.aa.com/investorrelations by
clicking on the Corporate Governance link.
Number of Board
of Directors Meetings; Attendance at Board of Directors,
Committee and Annual Meetings
We generally hold nine regular meetings of the Board of
Directors per year, and schedule special meetings when required.
In 2009, the Board held nine regular meetings and seven special
meetings. During 2009, each director attended at least 75% of
the sum of the total number of meetings of the Board and each
committee of which he or she was a member. We encourage each
director to attend the annual meeting. Last year, all of our
directors attended the annual meeting.
Self-Assessment
The Board and its standing committees conduct a self-assessment
of their effectiveness each year.
Standards of
Business Conduct for Employees and Directors
We have written standards for business conduct that are
applicable to all our employees. We designed our Standards of
Business Conduct to help employees resolve ethical issues in an
increasingly complex business environment. The Standards of
Business Conduct apply to all our employees, including the Chief
Executive Officer, the Chief Financial Officer, the General
Counsel and Chief Compliance Officer, the Controller, the
Treasurer, the Corporate Secretary and the General Auditor. The
Standards of Business Conduct cover several topics, including
conflicts of interest, full, fair, accurate, timely and
understandable disclosure in Securities and Exchange Commission
(SEC) filings, confidentiality of information and
accountability for adherence to the Standards of Business
Conduct, prompt internal reporting of violations of the
Standards of Business Conduct, and compliance with laws and
regulations. A copy of the Standards of Business Conduct is
available on the Investor Relations section of our website
located at www.aa.com/investorrelations by clicking on
the Corporate Governance link.
The Board of Directors has adopted a Code of Ethics and
Conflicts of Interest Policy for the Board. It is designed to
help the directors recognize and resolve ethical issues and to
identify and avoid conflicts of interest. A copy of the Code of
Ethics and Conflicts of Interest Policy is available on the
Investor Relations section of our website located at
www.aa.com/investorrelations by clicking on the
Corporate Governance link. We may post amendments
to, or waivers of, the provisions of the Standards of Business
Conduct and the Code of Ethics and Conflicts of Interest Policy
for any director or executive officer on this website.
11
Executive
Sessions
Our non-employee directors meet regularly throughout the year in
executive session (without the presence of any management
employee, including our Chief Executive Officer). In 2009, the
non-employee directors held eight such executive sessions. The
Lead Director chairs the executive sessions. Executive sessions
may be scheduled by the Lead Director, the Chairman of the
Nominating/Corporate Governance Committee, or at the request of
the Board. See Board Leadership Structure below for
more details.
Board Leadership
Structure
The Board believes it is in the best interests of the
stockholders and the Company that the Board have the flexibility
to select the best director to serve as Chairman at any given
time, regardless of whether that director is an independent
director or the Chief Executive Officer. Consequently, the
Boards Governance Policies allow the Board to determine
whether to separate or combine the roles of the Chairman and
Chief Executive Officer at any time. Using this flexibility, in
April 2003 the Board separated the roles of the Chairman and
Chief Executive Officer when Mr. Arpey became the Chief
Executive Officer and President. In May 2004, the Board asked
Mr. Arpey to also serve as Chairman, at which time the
Board appointed an independent director to serve as Lead
Director.
The Board strongly believes that the most effective Board
leadership structure at this time is for Mr. Arpey to serve
both as our Chairman of the Board and our Chief Executive
Officer. Mr. Arpey is responsible for both the day-to-day
operations of the Company and the execution of the
Companys strategies. Since these topics are an integral
part of our Board discussions, Mr. Arpey is the director
best qualified to chair those discussions. His vast knowledge of
the Company and the airline industry are critical to Board
discussions and our success. The Board believes that he is an
effective leader of the Company and the Board, and combining the
roles has served the Company well.
No single leadership model is right for all companies, and the
Board recognizes that depending upon the circumstances, other
leadership structures, such as a separate independent Chairman,
might be appropriate. The Board therefore periodically reviews
its leadership structure.
Since the Board combined the roles of Chairman and Chief
Executive Officer in 2004, the Board has also appointed strong
independent directors to serve as Lead Director. Mr. Codina
has served as our Lead Director since 2007. The Lead Director
has frequent contact with Mr. Arpey and the other members
of our senior management throughout the year. As provided in the
Boards Governance Policies, the responsibilities of the
Lead Director are determined by the independent directors from
time to time. Those responsibilities include:
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presiding at Board meetings when the Chairman is not present,
including executive sessions of the independent directors
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serving as a liaison between the Chairman and the independent
directors (although the independent directors are encouraged to
communicate freely with the Chairman)
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approving Board meeting agendas and schedules in collaboration
with the Chairman and with input from the other directors
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calling meetings of the independent directors
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Evaluation of the
Chief Executive Officer
Each year, the Chairman of the Nominating/Corporate Governance
Committee leads the independent directors in an executive
session to assess the Chief Executive Officers
performance. The results of this review are discussed with the
Chief Executive Officer.
12
Continuing
Education
We encourage our directors to attend seminars, conferences and
external director education programs relating to, among other
things, board governance practices and the functioning of the
Boards principal committees. We also conduct a
comprehensive orientation process for new directors. In
addition, directors receive continuing education through
educational sessions at meetings and mailings between meetings.
We hold periodic training sessions for the Audit Committee and
invite the other directors and executive officers to these
sessions. We reimburse the directors for any costs associated
with these seminars and conferences, including related travel
expenses.
Director Access
to Management and Independent Advisers
Independent directors have direct access to members of
management whenever they deem it necessary. In accordance with
NYSE listing standards, each of the Audit Committee, the
Compensation Committee and the Nominating/Corporate Governance
Committee has the authority to retain its own independent
advisers at our expense. The independent directors and the
Diversity Committee can also retain their own independent
advisers at any time and at our expense.
Risk
Oversight
We have an enterprise risk management program. Under this
program, we regularly assess our risks and the risk management
measures undertaken by our primary operating groups. The leader
of each operating group is responsible for incorporating risk
assessment and management into that organizations business
processes, and our senior management team frequently reviews
their efforts. While the responsibility for our risk assessment
and management lies with our senior management team, the Board
also provides oversight of our risk management function in
several ways, depending upon the type of risk. For example, our
strategic, financial and operations risks are frequently
reviewed and discussed by the full Board. The Boards
standing committees also consider the risks within their area of
responsibilities. The Audit Committee reviews our risk
assessment and management policies and oversees risks relating
to accounting matters, financial reporting, legal and regulatory
compliance, ethics and other matters. In fulfilling these
responsibilities, the committee meets regularly with our Chief
Financial Officer, General Counsel and Chief Compliance Officer,
General Auditor and external auditor, and frequently receives
reports in these areas from them and other members of our
management team. As described below, the Compensation Committee
oversees risks relating to our compensation programs. The
Nominating/Corporate Governance Committee reviews risks related
to director and officer succession planning and our corporate
governance programs and policies. The committee also receives
regular reports from our Chief Executive Officer, General
Counsel and Chief Compliance Officer, and Corporate Secretary to
help monitor these risks. The Diversity Committee reviews risks
related to our diversity policies and practices in several
areas, and meets frequently with members of management to
support this role, including our Senior Vice President of Human
Resources and our Vice President of Diversity and Leadership
Strategies. The reports prepared for the meetings of the
Boards standing committees are sent to all of the
directors, and the chair of each committee gives a report to the
full Board following each committee meeting. We believe that
this division of risk oversight ensures that oversight of each
type of risk falls to the particular directors most qualified to
oversee it. It also promotes Board efficiency because Board
committees are able to select the most important risk-related
issues for full Board consideration.
We also assessed whether our employee compensation policies and
practices create risks that are reasonably likely to have a
material adverse impact on us. In doing so, we considered that
our executive compensation programs are designed with what we
believe is an appropriate focus on both our short-term and
long-term performance. We also considered risk mitigation
elements of these programs. For example, our incentive plans are
tied to broad measures of Company performance that
13
cannot be directly influenced by individual employees, such as
pre-tax earnings and shareholder return. Also, our short term
incentive awards are capped, and our long-term awards vest over
periods of three to five years. We have also adopted a
recoupment policy, which is described in Recoupment
Policy on page 32. With the assistance of its
consultants and our Chief Executive Officer and Senior Vice
President of Human Resources, we discussed the assessments
findings with the Compensation Committee.
Contacting the
Board of Directors
The Board has adopted procedures for written communications
between the directors and employees, stockholders and other
interested third parties. These procedures are available on the
Investor Relations section of our website located at
www.aa.com/investorrelations by clicking on the
Corporate Governance link. To contact the Lead
Director, a standing committee of the Board, the Board as a
whole or any individual director, a person should write to the
following address:
AMR Corporation
The Board of Directors
P.O. Box 619616, MD 5675
Dallas/Fort Worth International Airport, Texas
75261-9616
Under those procedures, our General Counsel and Chief Compliance
Officer and Corporate Secretary review the communications with
the Lead Director, another director or committee, or an
executive officer, in each case depending on the facts and
circumstances outlined in the communication. For example, we
review letters concerning a stockholder nominee with the
Nominating/Corporate Governance Committee. We review complaints
regarding accounting or internal accounting controls with the
Audit Committee and the General Auditor. The
Nominating/Corporate Governance Committee frequently reviews
with senior management the number and types of stockholder
communications received; the nature of the communications; the
responses sent; and, as applicable, the ultimate outcome of any
communication.
14
The Board of Directors has standing Audit, Compensation,
Diversity and Nominating/Corporate Governance committees. All
members of the Audit Committee are independent in accordance
with the listing standards of the NYSE, the requirements of the
SEC, and the Boards Governance Policies. In addition, all
members of the Compensation, Diversity and Nominating/Corporate
Governance committees are independent in accordance with the
NYSE listing standards and the Boards Governance Policies.
No member of the Audit, Compensation, Diversity or
Nominating/Corporate Governance committees is a current or
former employee or officer of the Company or any of our
affiliates. The committees on which the members of the Board
(other than Mr. Arpey) serve as of April 21, 2010 are
shown in the chart below.
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Nominating /
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Corporate
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Audit
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Compensation
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Diversity
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Governance
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Director
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Committee
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Committee
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Committee
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Committee
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John W. Bachmann
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ü(Chair)
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ü
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David L. Boren
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ü
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ü(Chair)
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Armando M. Codina
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ü
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Rajat K. Gupta
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ü
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Alberto Ibargüen
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ü
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ü
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Ann M. Korologos
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ü
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Michael A. Miles
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ü(Chair)
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Philip J. Purcell
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ü
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ü
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Ray M. Robinson
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ü
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ü
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Judith Rodin
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ü
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Matthew K. Rose
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ü
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Roger T. Staubach
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ü(Chair)
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Number of
Committee Meetings
in 2009:
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9
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5
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4
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6
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Each committee has a charter that details its responsibilities.
These charters are available on the Investor Relations section
of our website located at www.aa.com/investorrelations by
clicking on the Corporate Governance link.
Nominating/Corporate
Governance Committee Matters
The functions of the committee include:
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Establishing and implementing appropriate processes for the
Board and its standing committees
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Recommending candidates for officer positions and, with the
Chief Executive Officer, reviewing our succession planning
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Proposing a slate of directors for election by the stockholders
at the annual meeting
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Nominating candidates to fill any vacancies on the Board
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Determining the optimal size of the Board
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Reviewing and setting the compensation of directors
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Considering the qualifications of stockholder and self-nominated
director nominees
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15
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Developing and reviewing the Boards Governance Policies
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Monitoring and reviewing succession planning for the Chief
Executive Officer
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Reviewing any proposed changes to our certificate of
incorporation, our bylaws, and the charters of the Boards
standing committees
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Reviewing stockholder proposals for the annual meeting and our
responses to them
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Reviewing transactions with related persons
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Determining director independence under applicable rules and the
Boards Governance Policies
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Director
Nominees
As noted above, the committee is responsible for recommending
nominees for election to the Board. To fulfill this role, the
committee annually reviews the optimal size of the Board and its
composition to determine if any additional skills,
qualifications or areas of expertise are needed. To be
considered for nomination to the Board, a candidate must:
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have unquestioned integrity
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have a well established record in business, finance, government
relations, academics or the sciences
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have the ability to devote substantial time to the Board and at
least one of the Boards standing committees
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When assessing a candidates qualifications (including a
self-nominee or a candidate nominated by a stockholder), the
committee considers, among things:
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the number of other boards on which the candidate serves,
including public, private and not-for-profit boards
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other business and professional commitments of the candidate
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the Boards need at that time for directors having certain
skills and experience
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the potential for any conflicts between our interests and the
interests of the candidate
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the candidates ability to fulfill our director
independence standards
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the candidates ability to add value to the work of our
Board committees
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Under our Director Nominating Policies, the committee also
considers each director nominees contribution to the
diversity of the Board. In doing so, the committee considers
diversity in the broadest sense, taking into account race,
gender, geographic residence and professional background. This
focus on diversity has produced a Board with two Hispanic
members, one Asian member, one African American member, and two
female members. In addition, our Board members come from diverse
geographical locations and have diverse professional
backgrounds, including banking and financial services,
education, real estate, consulting, media, government,
philanthropic, public policy, investment banking, private equity
and transportation. On an annual basis, the committee reviews
with the Board its assessment of the skills and characteristics
appropriate for outside Board members. The goal of this
assessment is to determine if the needs of the Board, including
diversity, are being met by the current members of the Board.
16
The committee considers all of these factors when determining
whether to recommend a candidate for a director position. The
committee from time to time has used a search firm to help
identify suitable candidates for director positions, although
one is not retained at present.
The committee will consider stockholder nominees for election to
the Board at an annual meeting or if a vacancy exists on the
Board. In 2009, there were no stockholder nominees for election
to the Board. See Other Information, beginning on
page 59, for further details regarding submitting
nominations for director positions.
Director
Independence; Board of Directors Governance Policies
The Board has approved the Boards Governance Policies,
which govern many of the Boards procedures and protocols.
The policies are available on the Investor Relations section of
our website located at www.aa.com/investorrelations by
clicking on the Corporate Governance link.
Among other things, the Boards Governance Policies
establish the standards for director independence. In general,
the policies provide that a director is independent if the
director has no direct or indirect material relationship with
us. A relationship is material if it would interfere
with the directors independent judgment. The policies
include guidelines to assist the committee in determining
whether a relationship is material. In general, the guidelines
provide that a director is not independent if:
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We have employed the director or an immediate family member of
the director as an executive officer during the last three years
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The director is a current partner or employee of a firm that is
the Companys internal or external auditor
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The director has an immediate family member who is a current
partner of a firm that is the Companys internal or
external auditor
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The director has an immediate family member who is a current
employee of a firm that is the Companys internal or
external auditor and personally works on the Companys audit
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The director (or an immediate family member) has received during
any twelve-month period within the last three years more than
$120,000 in direct compensation from the Company, other than
retainers, fees and benefits for serving as a director of the
Company
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The director (or an immediate family member) is, or has been
within the last three years, employed as an executive officer of
another company where any of the Companys present
executive officers serves or served on that other companys
compensation committee
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The director is a current employee, or an immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, the Company for
property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million or 2%
of the other companys consolidated gross revenues
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This is a summary of the Boards independence guidelines,
which also incorporate any additional requirements of the SEC
and the NYSE. A complete list of the guidelines and principles
are in the Boards Governance Policies. The committee has
determined, and the Board has agreed, that Mrs. Korologos,
Dr. Rodin, and Messrs. Bachmann, Boren, Codina, Gupta,
Ibargüen, Miles, Purcell, Robinson, Rose and Staubach are
all independent in accordance with the Governance Policies. In
making these determinations, the Board considered information
submitted by the directors in response to questionnaires,
information from our records and advice from counsel. Because
Mr. Arpey is one of our employees, he is not considered
independent.
17
Transactions with
Related Persons
The Board has adopted a written policy for the review, approval
or ratification of related party transactions. Our policy
defines a related party transaction generally as a transaction
or series of related transactions involving the Company totaling
$120,000 or more and in which any of the following persons has a
direct or indirect material interest: (a) our directors or
nominees for director; (b) our executive officers;
(c) persons owning five percent or more of our outstanding
stock at the time of the transaction; or (d) the immediate
family members of our directors, nominees for director,
executive officers, or five percent stockholders. The Board has
determined that certain interests and transactions are by their
nature not material and are not subject to the policy.
The policy requires that the committee review and approve or
ratify related party transactions with the assistance of our
General Counsel and Chief Compliance Officer or Corporate
Secretary. In its review, the committee considers, among other
factors: (a) the size of the transaction and the amount of
consideration payable to or receivable by the related party;
(b) the nature of the interest of the related party; and
(c) whether the transaction may involve a conflict of
interest.
Audit Committee
Matters
The functions of the committee include:
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Selecting, retaining, compensating and overseeing our
independent auditors
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Approving in advance the services rendered by, and the fees paid
to, our independent auditors
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Monitoring compliance with our Standards of Business Conduct
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Periodically reviewing the organization and structure of our
Internal Audit department
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Reviewing:
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the scope and results of the annual audit, including our
independent auditors assessment of internal controls
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quarterly financial information with representatives of
management and the independent auditors
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our consolidated financial statements
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the scope of non-audit services provided by our independent
auditors
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our periodic filings
(Forms 10-K
and 10-Q)
filed with the SEC, including the section
Managements Discussion and Analysis of Financial
Condition and Results of Operations
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our earnings releases
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our risk management policies
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other aspects of our relationship with our independent auditors,
including a letter on the independence of our auditors
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Establishing procedures to deal with accounting or auditing
complaints or concerns
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At its meetings in 2009, the committee reviewed, among other
things, the quality and integrity of our financial statements,
our compliance with legal and regulatory requirements, periodic
filings on
Form 10-K
and
Form 10-Q,
the qualifications and independence of Ernst & Young
LLP, the performance of our internal audit function, the status
of the internal controls audit required by Section 404 of
the Sarbanes-Oxley Act of 2002, the performance of the
independent auditors, and other significant financial matters.
18
Each member of the committee is an independent director as
defined in the NYSE listing standards and the rules and
regulations of the SEC. Also, each member of the committee
fulfills the independence standards established under the
Boards Governance Policies and has been determined to be
financially literate. The Board has concluded that
Mr. Bachmann qualifies as an audit committee financial
expert under SEC rules and regulations and has the requisite
financial management expertise required by the NYSE listing
standards. The Board believes that other members of the
committee may also meet these qualifications.
Audit Committee
Report
Throughout 2009, the Audit Committee met and held discussions
with our management and with Ernst & Young, our
independent auditor. Several of the discussions between the
committee and Ernst & Young were in private, with no
members of our management present. The committee also met
privately with our General Auditor several times during 2009.
Among other things, the committee reviewed and discussed our
audited consolidated financial statements with management, our
General Auditor, and Ernst & Young during these
meetings.
The committee has also discussed with Ernst & Young
the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (Communication with Audit
Committees). The committee has received and reviewed the written
disclosures and the letter from Ernst & Young required
by the applicable requirements of the Public Company Accounting
Oversight Board. The committee has also discussed with
Ernst & Young the firms independence.
In reliance upon the reviews and discussions noted above, the
committee recommended to the Board of Directors that our audited
consolidated financial statements be included in our Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2009. Subject to
stockholder approval at the 2010 annual meeting, the committee
has also selected Ernst & Young as our independent
auditors for 2010 (see proposal 2).
Audit Committee of AMR Corporation:
John W. Bachmann, Chairman
Rajat K. Gupta
Alberto Ibargüen
Ray M. Robinson
Independent
Auditors Fees
The following table reflects the aggregate fees paid to
Ernst & Young for audit services rendered in
connection with the consolidated financial statements, reports
for fiscal years 2008 and 2009, and for other services rendered
during fiscal years 2008 and 2009 on our behalf:
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(amounts in thousands)
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2009
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2008
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Audit Fees
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$
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2,570
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$
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2,578
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Audit-Related Fees
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1,258
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819
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Tax Fees
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188
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171
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All Other Fees
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0
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0
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Total Fees
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$
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4,016
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$
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3,568
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Audit Fees: Consists of fees billed for
professional services rendered for (a) the audit of our
consolidated financial statements; (b) the audit of
internal control over financial reporting; (c) the review
of the interim condensed consolidated financial statements
included in quarterly reports; (d) services that are
normally provided by Ernst & Young in connection with
statutory and
19
regulatory filings or engagements and attest services, except
those not required by statute or regulation; and
(e) consultations concerning financial accounting and
reporting standards.
Audit-Related Fees: Consists of fees billed
for assurance and related services that are reasonably related
to the performance of the audit or review of our consolidated
financial statements and are not reported under Audit
Fees. These services include (a) employee benefit
plan audits; (b) auditing work on proposed transactions;
(c) attest services that are not required by statute or
regulation; and (d) consultations concerning financial
accounting and reporting standards that do not impact the annual
audit.
Tax Fees: Consists of tax
compliance/preparation and other tax services. Tax
compliance/preparation consists of fees billed for professional
services related to (a) federal, state and international
tax compliance; (b) assistance with tax audits and appeals;
(c) expatriate tax services; and (d) assistance
related to the impact of mergers, acquisitions and divestitures
on tax return preparation. Other tax services consist of fees
billed for other miscellaneous tax consulting and planning.
All Other Fees: There were no fees for other
services not included above.
In selecting Ernst & Young as our independent auditors
for the fiscal year ending December 31, 2010, the committee
has considered whether services other than audit and
audit-related services provided by Ernst & Young are
compatible with maintaining the firms independence.
The committee pre-approves all audit and permissible non-audit
services provided by Ernst & Young, including audit
services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to one year,
and any pre-approval is detailed as to the particular service or
category of services and includes an anticipated budget. In
addition, the committee may also pre-approve particular services
on a
case-by-case
basis. The committee has delegated pre-approval authority to its
chairman. Under this delegation, the chairman must report any
pre-approval decision by him to the committee. The committee
pre-approved all such audit, audit-related and permissible
non-audit services in 2008 and 2009 in accordance with these
procedures.
Diversity
Committee Matters
The functions of the committee include:
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Providing oversight, counsel and guidance to senior management
at American Airlines, our other subsidiaries and the Board on
issues related to diversity and inclusion, including:
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Equal employment opportunity policies
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Hiring practices
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Employee retention issues
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Corporate procurement decisions, including our Supplier
Diversity Program
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Work environment
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Monitoring and overseeing the development and implementation of
diversity policies, programs and procedures to ensure that they
are appropriate to, and assist in the fulfillment of, our
responsibilities to our internal and external minority
constituencies
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Exploring a wide spectrum of our operations to help us promote
our diversity efforts
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20
Compensation
Committee Matters
Functions
The functions of the committee include:
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Formulating and approving the compensation and benefit programs
for our officers and the officers of our subsidiaries
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Approving the compensation of our Chief Executive Officer
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Approving and monitoring our annual incentive program and our
stock-based and other compensation programs
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Determining performance measures under our various compensation
programs
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Determining amounts to be paid under our compensation and
benefits programs
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Retaining compensation consultants to perform an annual review
of executive compensation
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Processes and
Procedures
The committee acts on behalf of the Board and approves the
compensation of all of our officers, including the named
executive officers. This responsibility includes establishing
and implementing our executive compensation objectives, such as
linking each named executive officers compensation to our
short-term and long-term strategic, financial and operational
goals. The committee also determines the performance measures
established for performance-based awards for our officers and,
where the performance measures are subjective, whether we have
met those performance measures and the amounts payable under
those awards. The committee reviews and has authority to approve
employment and change in control agreements and incentive awards
for our officers, including performance shares, deferred shares,
stock appreciation rights and career performance shares.
The committee is responsible for the administration of our
executive compensation program. The committee delegates
authority for the
day-to-day
administration of the program to our Senior Vice President of
Human Resources and our Human Resources department, but the
committee does not delegate compensation determinations for our
officers.
The committee meets regularly throughout the year to review
general compensation issues and to monitor the compensation of
our officers. In 2009, the committee directly engaged two
external compensation consultants, Hewitt Associates and
Deloitte Consulting, to help the committee fulfill its
responsibilities. Hewitt Associates provided compensation
benchmarking services for our officers. Deloitte Consulting
provided assistance on competitive pay benchmarking for our
officers, incentive plan design, performance metrics analysis,
peer group selection, and other executive compensation advice.
Deloitte Consulting also helped us design our 2009 Long Term
Incentive Plan and made compensation recommendations for our
named executive officers. At the committees direction, the
compensation consultants assisted Mr. Arpey and our Senior
Vice President of Human Resources in preparing their
compensation recommendations for our named executive officers.
In 2009, we paid Deloitte Consulting fees of $148,050 for the
executive compensation assistance the firm provided the
committee. Deloitte Consulting and some of its affiliates also
provided additional services to the Company in 2009 unrelated to
the services they provided the committee, such as tax services.
We paid them aggregate fees of approximately $3,346,680 for
these additional services. Management made the decision to
engage Deloitte Consulting and its affiliates for these
additional services in the ordinary course of business. We
discussed the additional services with the committee, but the
committee was not asked to formally approve them. The employees
providing the additional services were not the employees who
advised the committee. The committee believes that these
relationships do not impair the independence or objectivity of
Deloitte Consulting or the employees advising the
21
committee. The committee, however, decided not to use Deloitte
Consulting as its compensation consultant for 2010 and
terminated the firms engagement in March 2010.
For executives other than the Chief Executive Officer, the
committee makes compensation decisions with, and frequently
based upon the recommendation of, the Chief Executive Officer
and our Senior Vice President of Human Resources. The committee
also reviews and considers comparative market data provided by
Hewitt Associates. The committee makes all determinations
related to the Chief Executive Officers compensation with
the assistance, when appropriate, of our Lead Director, Hewitt
Associates and Deloitte Consulting.
The Nominating/Corporate Governance Committee is responsible for
determining compensation for the Board of Directors. See
Director Compensation, beginning on page 53,
for further details regarding the Nominating/Corporate
Governance Committees role in this determination.
The Compensation Discussion and Analysis below
provides further details regarding our compensation objectives
and programs, including information regarding the Compensation
Committees annual compensation review, the types of
compensation awards it uses, and the manner in which it
determines the size and terms of compensation awards.
Compensation
Committee Interlocks and Insider Participation
Dr. Rodin and Messrs. Boren, Miles, Purcell and Rose
were the members of the Compensation Committee during 2009. None
of the members of the committee was at any time during 2009, or
at any other time, one of our officers or employees. No
executive officer of the Company served or serves on the
compensation committee or board of any company that employed or
employs any member of our Compensation Committee or Board.
The following discussion provides an overview and analysis of
the material elements and objectives of our executive
compensation program. Our named executive officers in 2009 were:
Gerard J. Arpey, Chairman, President and Chief Executive
Officer of AMR Corporation and American Airlines
Thomas W. Horton, Executive Vice President Finance
and Planning and Chief Financial Officer of AMR Corporation and
American Airlines
Daniel P. Garton, Executive Vice President
Marketing of AMR Corporation and American Airlines
Robert W. Reding, Executive Vice President
Operations of AMR Corporation and American Airlines
Gary F. Kennedy, Senior Vice President, General Counsel
and Chief Compliance Officer of AMR Corporation and American
Airlines
Please read this discussion with Executive
Compensation beginning on page 34.
Executive
Summary
Below are some of the highlights of our named executive officer
compensation program in 2009:
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No base salary increases. Due to the financial
difficulties facing us and the airline industry in general, we
decided to forego annual base pay increases for our front-line
employees and officers. Consistent with that approach, we
decided that none of the named executive officers would receive
a base salary increase in 2009.
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No increases to total potential compensation
levels. For the same reasons, we decided not to
increase the total target compensation that each of our named
executive officers was eligible to earn in 2009.
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Change in the mix of long-term incentive
awards. Over the ten years 1999 through 2008,
volatility in our stock price has caused large variations from
the targeted value of our long-term equity incentive awards,
such as performance shares and stock appreciation rights. To
reduce these large swings, we changed the mix of the targeted
values of the long-term incentive awards to our named executive
officers as follows: (i) we increased the percentage
represented by deferred shares from 20% to 30%; (ii) we
increased the percentage represented by stock appreciation
rights from 30% to 35%; and (iii) we decreased the
percentage represented by performance shares (including for
Mr. Arpey, career performance shares) from 50% to 35%.
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Payout of 2006/2008 Performance Share Plan. In
April 2009, we determined the payout under our 2006/2008
Performance Share Plan. Based on our total shareholder return
(TSR) rank of
4th place
among a group of competitor airlines, we paid 75% of the shares
originally awarded.
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No payment under financial component of our Annual Incentive
Plan. Because we did not meet the pre-tax
earnings threshold of our Annual Incentive Plan in 2009, we did
not make any payment under the financial component of the plan.
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Our Compensation
Objectives and Philosophy
We designed our executive compensation program to support our
business strategy, promote long-term growth, and align our
executives decisions with the long-term interests of our
stockholders.
With this in mind, the principal objectives of our executive
compensation program are to:
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provide compensation that enables us to attract, motivate,
reward and retain talented executives
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reward achievement of our goals
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sustain a pay for performance approach in which variable or
at risk compensation is a substantial portion of
each executives compensation
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link our compensation programs with the interests of our
stockholders through long-term stock-based compensation
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Consistent with these objectives, an average of 70% of the total
potential pay we awarded to our named executive officers in 2009
was in the form of long-term stock-based compensation. These
awards are considered at risk because the amount of compensation
that our executives ultimately receive depends on our stock
price or achieving financial and operating measures. While we
believe this aligns the interests of our named executive
officers and our stockholders, it can also lead to actual
realized compensation below market when our stock price declines
for general economic or industry reasons, as has been the case
the past few years.
The discussion in the sections below describes the efforts of
the Compensation Committee to address these issues.
The Process We
Use to Determine Compensation
Each year, the Compensation Committee conducts a comprehensive
review of our executive compensation program. As part of this
review, the committee uses several tools to structure our
compensation programs to meet our objectives. These tools
include benchmarking, peer group analysis, internal equity data,
tally sheets, and input from Mr. Arpey, each of which is
discussed further
23
below. Please also see Processes and Procedures,
beginning on page 21, for further details regarding the
administration of our executive compensation program.
Benchmarking and
Peer Group Analysis
The Compensation Committee believes that it is important that
our executive compensation program is both in line with other
airlines and sufficiently competitive to retain our named
executive officers and attract talent from other industries when
needed. Consequently, the committee reviewed the following
reports in 2009:
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(1)
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A peer group analysis prepared by our Human Resources
department. This analysis compared the compensation of each of
our named executive officers to compensation paid to each of
their peers at AirTran Airways, Alaska Air Group, Continental
Airlines, Delta Air Lines, JetBlue Airways, Southwest Airlines,
United Airlines and US Airways (the Peer Group).
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(2)
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A competitive market analysis from Hewitt Associates comparing
the compensation of each of our named executive officers to the
compensation paid to each of their peers at 27 companies in
the cross-industry comparator group shown below (the
Comparator Group). These companies were selected
from Hewitts database of participating survey companies
because we share one or more of the following characteristics:
(a) comparable revenue size (with our revenue being
approximately at the median); (b) operations in multiple
locations across the United States; (c) similar labor
requirements; (d) headquarters in the
Dallas-Fort Worth area; and (e) comparable management
structures so that job comparisons are meaningful. The companies
in the Comparator Group for 2009 were:
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3M Company
Alcoa Inc.
The Boeing Company
Burlington Northern Santa Fe
Corporation
Caterpillar Inc.
The Coca Cola Company
Deere & Company
FedEx Corporation
General Dynamics Corporation
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The Goodyear Tire & Rubber
Company
H.J. Heinz Company
Honeywell International, Inc.
J.C. Penney Corporation, Inc.
Johnson Controls, Inc.
Kimberly-Clark Corporation
Lockheed Martin Corporation Motorola, Inc.
Northrop Grumman Corporation
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Raytheon Company
Sara Lee Corporation
Target Corporation
UAL Corporation
United Parcel Service, Inc.
United Technologies
Corporation
Weyerhaeuser Company Whirlpool Corporation
Xerox Corporation
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Executive pay at other airlines has been highly variable during
the past decade. Due to bankruptcy proceedings, executives at
several airlines in the Peer Group did not receive equity grants
for several years. However, most of these airlines granted
substantial equity awards to their management teams following
their emergence from bankruptcy. To help smooth out this
variability and provide more meaningful comparisons, the Peer
Group analysis in 2009 included both granted and realized pay
and averages of each over the last three years.
The Compensation Committee did not target a specific pay level
or rank among the Peer Group. Because we avoided bankruptcy and
maintained a consistent approach in setting pay and granting
equity awards over the past several years, the committees
objective in its Peer Group analysis instead was to ensure that
our named executive officers realized compensation was
generally in line with the Peer Group. The Peer Group analysis
showed that the realized pay for our named executive officers
was the fourth highest among the eight airlines for 2008, and
the second highest for the period 2006 through 2008. Based on
this information, the committee determined that our named
executive officer compensation was in line with the Peer Group.
The Compensation Committees Comparator Group analysis
focused on both annual total compensation and each pay
element base, short-term incentive and long-term
incentive pay. For each of our named executive officers, the
committee generally targeted the median total
24
compensation for similar positions at companies in the
Comparator Group. However, for Mr. Arpey, the committee
benchmarked his pay to the average of the median chief executive
officer pay in the Comparator Group and the Peer Group. His
compensation remains significantly below the median of the CEOs
in the Comparator Group. Also, the committee benchmarked
Mr. Gartons pay to two positions in the Comparator
Group analysis the head of marketing and the chief
financial officer. The committee did this because of his
(a) contributions and broad skill set; (b) oversight
of a large operating group, our flight attendants, in addition
to his marketing responsibilities; and (c) prior experience
as a chief financial officer of a company in the airline
industry.
Internal
Equity
The committee also considered internal pay equity among the
named executive officers, particularly among
Messrs. Horton, Garton and Reding, who are all Executive
Vice Presidents. The committee did not target specific pay
ratios among the named executive officers or between them and
other officers, but instead tried to keep their total
compensation and each pay element in line with the others.
Tally
Sheets
To better understand the impact of its decisions on our named
executive officers total compensation, the Compensation
Committee also analyzed tally sheets during its 2009 review. The
tally sheets quantified all material components of their
compensation during the preceding five years. The components
analyzed included: (a) annual base salary and bonuses;
(b) outstanding equity awards and their value;
(c) compensation actually realized; (d) retirement
benefits; (e) potential termination of employment benefits
(or payments); and (f) change in control payments under
different scenarios.
Role of the Chief
Executive Officer in Setting Compensation
Mr. Arpey regularly attends Compensation Committee
meetings. At those meetings, he provides his perspective on the
performance of the other named executive officers. He also
provides other subjective considerations that may influence the
committees compensation decisions for them, such as
retention, succession planning, and critical personnel and
business needs. Because Mr. Arpey has direct knowledge of
each officers performance and contributions, the committee
gives considerable weight to his evaluations. Mr. Arpey is
not present during the committees deliberations or
decisions regarding his compensation.
Other
Considerations
The Compensation Committee also considered the following factors
in setting pay for our named executive officers in 2009:
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The need to retain and motivate them to achieve our goals and
restore sustained profitability
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No employees received annual base pay increases in 2009
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Since 2001, no payment has been made to them under the financial
component of our short-term incentive programs since we have not
met the required 5% pre-tax earnings margins during that time,
and they have not received any discretionary short-term
incentive awards
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Our cyclical business and the difficult economic environment
have resulted in extraordinary volatility in our stock price,
the primary variable of our long-term equity based compensation.
This volatility, coupled with our heavy emphasis on long-term
compensation, has produced significant variations in realized
compensation for our named executive officers from year to year.
In addition, the future value of their long-term compensation
remains highly unpredictable
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25
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For the ten years 1999 through 2008, their total realized
compensation was only approximately 65% of the total targeted
compensation awarded to them during this period
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How Corporate
Performance Impacts Compensation
To implement our pay for performance objective described above,
the Compensation Committee has linked our named executive
officers performance-based compensation to these measures:
Pre-Tax ProfitsOver its long history, the airline
business has been very cyclical and vulnerable to general
economic conditions and external factors, such as fuel prices
and the economy. This has been especially true over the last
several years. To encourage our named executive officers to
strive to generate adequate profit levels, the Annual Incentive
Plan requires that we earn at least a 5% pre-tax earnings margin
in order for any bonuses to be paid under that plan.
Customer ServiceAll employees, including our named
executive officers, are awarded cash payments under the Annual
Incentive Plan if we achieve our target for on-time flight
departures or customer satisfaction scores. We believe that by
focusing all employees on customer satisfaction, we are more
likely to achieve positive pre-tax earnings and long-term
stockholder value.
Stock Price GrowthWe believe that consistent
execution of our strategy over multi-year periods should lead to
an increase in our stock price over time. Stock appreciation
rights, which vest over a
5-year
period, provide our named executive officers with a stake in
this potential increase. The actual compensation realized from
the stock appreciation rights is entirely dependent on increases
in our stock price after the stock appreciation right grant
date. We also grant performance shares and deferred shares that
generally vest after three years, the value of which is also
dependent on our stock price over time.
Total Shareholder ReturnIn addition to general
growth in our stock price, we believe that it is important for
our stock to perform as well as or better than the stock of our
competitors. Distributions under our performance share plans are
consequently based on how well our total shareholder return (or
TSR) compares to the total shareholder return of our
competitors over three-year measurement periods. The three-year
TSR measure is used because it is an objective, market-based
metric that directly measures shareholder value over the
long-term. Use of a relative TSR metric also tends to mitigate
the effects of general market or sector performance on our stock
price.
The Primary
Components of Our Compensation Program
Our executive compensation program principally consists of the
following components:
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base salary
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short-term incentive compensation
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long-term incentive compensation
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retirement benefits
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travel perquisites and other benefits
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In addition, we provide post-employment benefits to our named
executive officers. We describe all of these further in the
tables and footnotes following this Compensation Discussion and
Analysis.
26
While we do not target a fixed mix of pay, we generally allocate
compensation to our named executive officers as follows:
General
Compensation Allocation
The mix of pay actually realized by our named executive officers
varies from this allocation based on our financial results and
stock price performance.
Base
Salary
The Compensation Committee believes that it is important to pay
a base salary to our named executive officers to provide them
with a secure, known amount of cash compensation during the year.
2009
Due to the financial difficulties facing us and the airline
industry in general, in 2009 we decided to forego annual merit
pay increases for our employees. Consistent with that approach,
none of our named executive officers received a base salary
increase in 2009.
Short-Term
Incentive Compensation the Annual Incentive
Plan
As part of our Turnaround Plan, we established the Annual
Incentive Plan to link the interests of our stockholders,
customers and employees. All employees, including the named
executive officers, participate in the Annual Incentive Plan,
which provides potential cash incentive payments upon the
achievement of monthly customer service goals and annual
financial goals.
The customer service component of the Annual Incentive Plan
provides for payments of up to $100 per month for each employee
if we achieve one of its customer service targets. We believe
that by focusing all employees on customer satisfaction, we are
more likely to achieve positive pre-tax earnings and long-term
stockholder value.
Our employees (including the named executive officers) can also
earn awards annually under the financial component of the Annual
Incentive Plan. Awards are paid under this component if American
Airlines achieves at least a 5% pre-tax earnings margin. Awards
are paid as a percentage of base salary and increase as our
pre-tax earnings margin increases, with the potential to receive
either no payment, payment at the threshold level, payment at
the target level, or payment at the maximum level. For our named
executive officers, each year the Compensation Committee
determines the percentages of base salary that will be paid to
them under the financial component of the Annual Incentive Plan.
The committee determines this percentage during its compensation
review, considering short-term incentive opportunities available
to persons holding comparable positions at companies in the
Comparator Group. The committee has discretion to adjust the
final awards paid under the Annual Incentive Plan, although
actual awards, if paid, are capped at 200% of base salary. The
percentage of base salary that each of our named executive
officers was eligible to receive in 2009 and the approximate
pre-tax earnings levels that corresponded to the
27
threshold, target and maximum levels under the 2009 Annual
Incentive Plan are set forth in Non-Equity Incentive Plan
Awards Annual Incentive Plan on page 37.
2009
During 2009, each named executive officer earned $583 under the
customer service component of the Annual Incentive Plan. We did
not make any payments to our named executive officers under the
financial component of the Annual Incentive Plan because we did
not meet the 5% pre-tax earnings margin required by the plan.
Long-Term Incentive Compensation Performance Shares,
Stock Appreciation Rights and Deferred Shares
Long-term incentive compensation is a critical component of our
executive compensation program. We design our long-term
incentive compensation to link executive compensation to the
interests of our stockholders by motivating executives to
increase total stockholder return over the long term. We also
believe that long-term incentive compensation is an important
retention tool because awards only vest if the recipient remains
with the Company for at least one year after the grant.
The Compensation Committee uses a variety of equity-based awards
to provide long-term incentive compensation for our named
executive officers. In 2009, these awards consisted of
performance shares (including career performance shares for
Mr. Arpey), stock appreciation rights and deferred shares.
The committee uses these awards to reward achievement of
different goals.
We generally grant awards at the time of the Compensation
Committees annual compensation review, although we grant
interim awards from time to time to new hires or upon increases
in responsibilities. For stock appreciation rights, our practice
is to use the date the committee approves the grant as the
effective date. However, if the grants are approved at the time
of our earnings release, the effective date of the grant is the
third business day after the earnings release. The exercise
price of the stock appreciation rights is the fair market value
of our common stock on that date. Our long-term incentive plans
generally allow us to settle long-term incentive awards in
stock, cash, or a combination of stock and cash.
For awards other than stock appreciation rights, we establish
the targeted grant values using a standard valuation methodology
developed by Hewitt Associates that provides an estimate of the
present value of the future amounts likely to be realized from
the award. Hewitts methodology takes into account the
terms of the awards, including their vesting and performance
criteria. We use a modified Black-Scholes valuation model to
determine the value and number of stock appreciation rights
awards.
Below is a summary of each equity-based instrument that the
Compensation Committee generally awards to the named executive
officers, why the Compensation Committee chooses to pay each
type of award, and when and how each type of award vests.
Performance
Shares
Performance shares are contractual rights to receive shares of
our common stock at the end of a three-year measurement period.
They are designed to reward our named executive officers when
our stock performs better than the stock of our primary
competitors. The actual number of performance shares (if any)
ultimately distributed to the named executive officers is based
on our total shareholder return compared to that of our primary
competitors over that three-year period. The average stock price
at the close of trading on the NYSE (adjusted for splits and
dividends) for the three months prior to the beginning and end
of the measurement period is used to smooth out market
fluctuations. Final distribution of the performance share awards
for the
2009-2011
measurement period could range
28
from 0% to 175% of the performance shares originally granted,
depending on our TSR performance during the measurement period.
Each year, the Compensation Committee selects the competing
airlines against which our TSR is compared, based on their
market capitalization, revenues and airline seat capacity. For
awards under the 2009/2011 Performance Share Plan granted in
July 2009, the committee included the following nine airlines:
AirTran Holdings, Inc., Alaska Air Group, Inc., AMR Corporation,
Continental Airlines, Inc., Delta Air Lines Inc., JetBlue
Airways Corporation, Southwest Airlines Co., US Airways Group,
Inc. and UAL Corporation. For the 2006/2008 Performance Share
Plan, which paid out in April 2009, the group consisted of:
Alaska Airlines, Continental Airlines, JetBlue Airways,
Southwest Airlines, US Airways, UAL Corporation and AMR
Corporation. The committee did not include Delta Air Lines or
Northwest Airlines in the 2006/2008 Performance Share Plan
because their stock was not listed on a national securities
exchange due to their bankruptcy proceedings at that time.
Under the terms of the performance share awards granted from
2004 to 2007, one-half of the distributions to our named
executive officers was based on our TSR, and the other half on
the Compensation Committees assessment of our achievement
of annual corporate objectives for the measurement period. In
determining whether we achieved the corporate objectives, the
committee was not required to use any formula or other measure
or assign any particular weighting to any objective. In
addition, the committee had the discretion to consider any other
factor it considered important or appropriate. For more
information on performance shares, please see the discussion
under Equity Incentive Plan Awards Performance
Shares on page 38.
Stock
Appreciation Rights
Stock appreciation rights are contractual rights to receive
shares of our common stock over a ten-year exercise period. They
are designed to reward our executives for stock price
appreciation over the exercise period. They provide compensation
only if the market value of our common stock appreciates from
the date of grant. Stock appreciation rights vest in equal
annual installments over five years, so an officer must
generally complete five years of service to receive the full
benefit of any stock appreciation right grant. In 2009, the
stock appreciation rights and other awards were approved at the
time we released our second quarter earnings. Accordingly, the
effective date of the stock appreciation rights granted at that
time was July 20, 2009, which was three business days after
the date of our earnings release.
Deferred
Shares
Deferred shares are the contractual right to receive shares of
our common stock upon the completion of three years of service
following the grant date. Since deferred shares are not subject
to the achievement of any performance objectives, the value of
the deferred shares at the time of vesting depends entirely on
the value of our common stock at that time. The Compensation
Committee believes that deferred shares are important for the
long term retention of our named executive officers because they
provide a guaranteed award for their continued service through
the three-year service period.
Career
Performance Shares
Recognizing that Mr. Arpeys pay was significantly
below market, in 2005 the Compensation Committee evaluated
various alternatives to address the need to retain him. Based on
recommendations from Deloitte Consulting and Hewitt Associates,
in 2005 the committee entered into an agreement with
Mr. Arpey under which he would be granted a minimum of
58,000 shares of our common stock (called career
performance shares) each year from 2005 through and
including 2009. These awards do not vest until 2015. The career
performance share agreement also reflects the committees
desire to retain Mr. Arpey because of his knowledge of the
airline business, his
29
contributions to the airlines success, and its confidence
that Mr. Arpey has the vision and managerial capability to
oversee our success.
Under the agreement, the actual number of career performance
shares Mr. Arpey is entitled to receive in July 2015 is
based on the Compensation Committees subjective evaluation
of our performance during 2005 to 2015 under a list of criteria.
Depending on this assessment, the committee can decide to pay
Mr. Arpey 0% to 175% of the career performance shares
originally granted to him. For more information on the career
performance shares, see the discussion under Equity
Incentive Plan Awards Career Performance Shares on
page 38.
2009
The values the Compensation Committee targeted for the long-term
incentive grants to our named executive officers in 2007, 2008
and 2009 have been approximately the same as the value targeted
in 2006. The values reported in the stock and option awards
columns in the Fiscal Year 2007, 2008 and 2009 Summary
Compensation Table on page 34 for 2009 are lower than
the values reported in those columns for 2008 and 2007. Those
differences are due to variability between our modeling
estimates and the actual stock price on the date of grant. Also,
the stock appreciation rights values reflected in the option
awards column are based on valuation assumptions required under
accounting rules that are different from the assumptions used
for determining compensation value. Except for
Mr. Arpeys awards, the value of these long-term
incentive awards was generally targeted to the median of the
values of long-term incentive awards granted to the persons
holding similar positions in the Comparator Group, although the
committee made adjustments based on internal pay equity,
economic and other concerns. Our targeted long-term incentive
value for Mr. Arpey is significantly below the median in
the Comparator Group, but is generally in line with average
annual long-term incentive compensation granted to CEOs in the
Peer Group.
In setting compensation for 2009, the Compensation Committee
changed the mix of long-term equity awards in an effort to
reduce the large swings in realized compensation that had been
experienced in the prior several years. Upon the advice of the
committees compensation consultants, the committee
increased the percentage of value represented by deferred shares
and stock appreciation rights and correspondingly reduced the
percentage of value represented by performance shares. The
committee granted long-term equity awards to the named executive
officers in approximately the following proportions:
Mix of Long-Term
Equity Awards
As a result, while the total targeted value of the long-term
incentive awards we granted to our named executive officers in
2009 was approximately equal to the targeted values in 2006
through 2008, approximately 70% of the potential long-term
incentive compensation awarded to them in 2009 is dependent upon
our financial and operating performance (including, in the case
of stock appreciation rights, appreciation in our stock price),
compared to 80% in 2008.
30
For performance share awards under the 2006/2008 Performance
Share Plan, in April 2009 the Compensation Committee determined
that we had a fourth place TSR rank during the
2006-2008
measurement period, resulting in a TSR distribution percentage
of 75%. The committee also determined that achievement of our
corporate objectives during that period was well in excess of
75%. Because TSR is the only performance measure used to
determine performance shares distributed to all of the other
participants in that plan, with the consent of the named
executives and our other senior officers, the committee based
the final distribution of performance shares entirely on TSR. As
a result, on April 15, 2009, our named executive officers
received 75% of the awards originally granted to them under the
2006/2008 Performance Share Plan.
Retirement
Our named executive officers are eligible to participate in the
Retirement Benefit Plan of American Airlines, Inc. for Agents,
Management, Specialists, Support Personnel and Officers (the
Retirement Benefit Plan). This is a defined benefit
plan that provides compensation to all of our eligible employees
during their retirement. Our named executive officers are also
eligible to participate in the Supplemental Executive Retirement
Plan (the Non-Qualified Plan). The Non-Qualified
Plan is designed to address limitations on benefits paid under
the Retirement Benefit Plan pursuant to the Employee Retirement
Income Security Act of 1974 (ERISA). No changes were
made to our retirement plans in 2009. See 2009 Pension
Benefits Table and the accompanying narrative discussion
and footnotes that follow the table, beginning on page 44,
and Post-Employment Compensation, beginning on
page 47, for further details regarding our retirement plans.
Travel
Perquisites and Other Benefits
The named executive officers also participate in a variety of
health and welfare and other benefits that we provide to our
other
U.S.-based
employees. The Compensation Committee has determined that it is
important to provide a limited number of additional perquisites
and benefits to our named executive officers to attract and
retain them, including unlimited air transportation on American
Airlines and American Eagle Airlines. Instead of perquisites
frequently provided to executive officers of other public
companies, such as automobile lease payments, club memberships,
financial planning fees and split dollar life insurance, we
provide personal allowances to our named executive officers. We
describe these and other perquisites we provide them in footnote
(5) to the Fiscal Year 2007, 2008 and 2009 Summary
Compensation Table on page 35.
No changes were made to the perquisites and benefits offered to
our named executive officers in 2009.
Post-Employment
and Change in Control Benefits
Following their employment with us, the named executive officers
are eligible for the benefits, perquisites and privileges that
we generally provide to all of our other salaried employees.
These include severance, pro-rated incentive compensation and
equity distributions, and a limited number of other benefits. We
describe these benefits further in the narrative discussion
under Post-Employment Compensation beginning on
page 47. The Compensation Committee has determined that it
is important to provide these post-termination benefits,
perquisites and privileges to our named executive officers to
attract and retain them.
The named executive officers are also entitled to immediate
vesting of equity incentive awards and payment under the
Non-Qualified Plan upon a change in control of the Company. We
describe these benefits further in the narrative discussion
under Change In Control beginning on page 51.
The events used to define change in control were
chosen because each reflects a circumstance in which, through a
partys acquisition of a significant voting block, a shift
in the control of the majority of
31
the Board of Directors, or a corporate transaction, a third
party or group would be expected to obtain control or effective
control over our policies and direction. In those circumstances,
the Compensation Committee believes it would be appropriate to
provide them the benefit of the awards that were awarded to them
before the change in control, and to waive the service and other
conditions applicable to those awards. The committee believes
this is appropriate because such a change could reasonably be
expected to materially alter our policies and objectives, and
result in a material change in the composition of management.
The committee has determined that these change in control
provisions are common for equity incentive awards and benefit
plans like ours, and that they are thus necessary and
appropriate to attract and retain our named executive officers.
We have also entered into executive termination benefit
agreements with our named executive officers for terminations
associated with a change in control. We describe these
agreements further in the narrative discussion under
Change In Control beginning on page 51. The
Compensation Committee believes it is important to provide these
agreements because: (a) the airline industry has been and
remains subject to potential future consolidation and economic
contingencies; (b) they encourage the executive to work for
the best interests of the stockholders during a potential change
in control situation by guaranteeing the executive a specified
level of financial security if the executives employment
is terminated following such change in control; (c) they
help ensure that the executive will remain with us for a
reasonable period after a change in control, enabling a smooth
transition to new management; (d) they are in common use in
our industry; and (e) they help us attract senior leaders
to the Company. The events used to define change in
control under these agreements were chosen for the same
reasons as those described for our long-term incentive awards
and Non-Qualified Plan. However, the executive termination
agreements include a double trigger. This means that
in order for the benefits to be paid, the change in control must
be followed by a termination of the named executive
officers employment. The double trigger is intended to
encourage the executive to remain with the Company for a period
of time following a change in control to help smooth the
transition to new management.
No changes were made to the post-termination and change in
control benefits offered to our named executive officers in 2009.
Recoupment
Policy
In March 2009, the Compensation Committee approved a policy that
allows us to recoup compensation paid to our chief executive
officer and each of his direct reports (including each other
named executive officer) if we restate our financial statements
due to that officers intentional misconduct. The
recoupment policy applies to excess compensation that may have
been realized, as a result of the misstated financial
information, by the officer engaged in the misconduct under an
annual incentive plan or equity incentive awards to the extent
the awards were predicated upon metrics that were affected by
the misstated financial information.
Consideration of
Tax Consequences in Determining Compensation
Section 162(m) of the Code limits the deductibility of
compensation paid to our named executive officers to
$1 million in some circumstances. While the Compensation
Committee believes that it is important for the compensation
paid to our named executive officers to be tax deductible under
Section 162(m), it does not think this should be the
determining factor in establishing compensation. The committee
believes that we must balance the emphasis on maximizing
deductibility against both the need to retain executive talent
and our long-term strategies and goals.
32
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management. Based on
such review and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
Compensation Committee of AMR Corporation:
Michael A. Miles, Chairman
David L. Boren
Philip J. Purcell
Judith Rodin
Matthew K. Rose
33
Fiscal Year 2007,
2008 and 2009 Summary Compensation Table
The following Fiscal Year 2007, 2008 and 2009 Summary
Compensation Table contains information regarding compensation
paid to our Chief Executive Officer, Chief Financial Officer and
three other most highly compensated executive officers in the
years 2007, 2008 and 2009.
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Change in |
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Pension Value
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and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name and
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Salary
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Bonus
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Awards1
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Awards2
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Compensation3
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Earnings4
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Compensation5
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Total
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Principal Position
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Year
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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Gerard J. Arpey-Chairman, President & CEO
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2009
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669,646
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0
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2,994,330
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957,580
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583
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908,270
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100,593
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|
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5,631,002
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2008
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666,348
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0
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3,312,800
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1,078,220
|
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160
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171,213
|
|
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60,293
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5,289,033
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2007
|
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656,500
|
|
|
|
|
0
|
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4,946,070
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949,500
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50
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254,126
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36,146
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6,842,392
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Thomas W. Horton-Exec. Vice Pres.-Finance &
Planning & CFO
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2009
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618,135
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0
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1,148,355
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370,459
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583
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869,709
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30,075
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3,037,316
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2008
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615,090
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0
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1,253,370
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416,774
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160
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535,943
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30,413
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2,851,750
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2007
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606,000
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0
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1,701,105
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440,568
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50
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522,507
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30,060
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3,300,290
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Daniel P. Garton-Exec. Vice Pres.-Marketing
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2009
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530,478
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0
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1,227,770
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370,459
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583
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693,174
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31,870
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2,854,334
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2008
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527,865
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0
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1,333,238
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|
|
416,774
|
|
|
|
|
160
|
|
|
|
|
114,744
|
|
|
|
|
31,728
|
|
|
|
|
2,424,508
|
|
|
|
|
2007
|
|
|
|
|
520,064
|
|
|
|
|
0
|
|
|
|
|
1,792,593
|
|
|
|
|
440,568
|
|
|
|
|
50
|
|
|
|
|
169,864
|
|
|
|
|
31,479
|
|
|
|
|
2,954,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Reding-Exec. Vice Pres.-Operations
|
|
|
|
2009
|
|
|
|
|
530,479
|
|
|
|
|
0
|
|
|
|
|
1,148,355
|
|
|
|
|
370,459
|
|
|
|
|
583
|
|
|
|
|
506,583
|
|
|
|
|
32,046
|
|
|
|
|
2,588,505
|
|
|
|
|
2008
|
|
|
|
|
527,865
|
|
|
|
|
0
|
|
|
|
|
1,253,370
|
|
|
|
|
416,774
|
|
|
|
|
160
|
|
|
|
|
217,796
|
|
|
|
|
31,821
|
|
|
|
|
2,447,786
|
|
|
|
|
2007
|
|
|
|
|
478,530
|
|
|
|
|
0
|
|
|
|
|
1,599,275
|
|
|
|
|
411,318
|
|
|
|
|
50
|
|
|
|
|
247,380
|
|
|
|
|
31,751
|
|
|
|
|
2,768,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary F. Kennedy-Sr. Vice Pres., General Counsel & Chief
Compliance Officer
|
|
|
|
2009
|
|
|
|
|
488,646
|
|
|
|
|
0
|
|
|
|
|
653,906
|
|
|
|
|
210,947
|
|
|
|
|
583
|
|
|
|
|
516,690
|
|
|
|
|
30,826
|
|
|
|
|
1,901,598
|
|
|
|
|
2008
|
|
|
|
|
486,238
|
|
|
|
|
0
|
|
|
|
|
713,810
|
|
|
|
|
237,322
|
|
|
|
|
160
|
|
|
|
|
125,154
|
|
|
|
|
28,194
|
|
|
|
|
1,590,878
|
|
|
|
|
2007
|
|
|
|
|
479,053
|
|
|
|
|
0
|
|
|
|
|
967,772
|
|
|
|
|
250,668
|
|
|
|
|
50
|
|
|
|
|
236,567
|
|
|
|
|
31,209
|
|
|
|
|
1,965,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The amounts shown were not
actually paid to the named executive officers. Rather, as
required by the rules of the SEC, the amounts represent the
aggregate grant date fair value of the performance shares,
deferred shares and career performance shares awarded to each of
them in 2007, 2008 and 2009. These values were determined in
accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (FASB ASC Topic
718). The grant date fair value of the performance share
and career performance share awards is based on our estimate on
the grant date of the probable outcome of meeting the
performance conditions of these awards. See note 9 to the
consolidated financial statements in our
Form 10-K
for the fiscal year ended December 31, 2009 for the
assumptions made in determining the aggregate grant date fair
value of these awards. The following are the aggregate grant
date fair values of these performance share and career
performance share awards assuming we meet the highest level (or
175%) of the performance conditions of these awards:
Mr. Arpey ($2,901,465), Mr. Horton ($1,107,472),
Mr. Garton ($1,107,472), Mr. Reding ($1,107,472) and
Mr. Kennedy ($630,633). The amounts reported do not include
any reduction in the value of the awards for the possibility of
forfeiture.
|
|
(2)
|
|
The amounts shown were not
actually paid to the named executive officers. Rather, as
required by the rules of the SEC, the amounts represent the
aggregate grant date fair value of the stock appreciation rights
granted to each of them in 2007, 2008 and 2009. These values
were determined in accordance with FASB ASC Topic 718. See
note 9 to the consolidated financial statements in our
Form 10-K
for the fiscal year ended December 31, 2009 for the
assumptions made in determining the aggregate grant date fair
value of these awards. These amounts do not include any
reduction in the value of the awards for the possibility of
forfeiture.
|
34
|
|
|
(3)
|
|
The amounts shown are payments
earned under the customer service component of the Annual
Incentive Plan. We made no payments in 2007, 2008 or 2009 under
the financial component of the Annual Incentive Plan because we
did not meet the minimum payout level.
|
|
(4)
|
|
The amounts shown are the change
in the actuarial present value of the accumulated benefit under
both the Retirement Benefit Plan and the Non-Qualified Plan from
January 1 to December 31 of each year. The present value of the
accumulated benefits increased from December 31, 2008 to
December 31, 2009 due to a change in the discount rate used
to calculate our liability and the passage of time. As described
in note 10 to the consolidated financial statements in our
Form 10-K
for the fiscal year ended December 31, 2009, the discount
rate decreased from 6.5% at December 31, 2008 to 6.1% at
December 31, 2009. For Messrs. Horton and Reding, the
amounts also include additional years of credited service under
the Non-Qualified Plan. The amounts in this column do not
include any above-market or preferential earnings on
non-qualified deferred compensation.
|
|
(5)
|
|
The amounts shown include a
personal allowance paid in each of 2007, 2008 and 2009 of
$33,000 to Mr. Arpey and $27,000 to each of
Messrs. Horton, Garton, Reding and Kennedy. In order to
reduce costs, we provide these personal allowances instead of
perquisites commonly provided to executive officers of other
public companies, such as automobile lease payments, club
memberships, financial/estate planning fees and split dollar
life insurance.
|
|
|
|
Amounts shown also include the
estimated aggregate incremental cost to us of providing
perquisites and other personal benefits to our named executive
officers. These include the estimated aggregate incremental cost
of the air transportation provided by us to each of the named
executive officers and their family members. The incremental
costs include the estimated cost of incremental fuel, catering,
insurance, and reservation and ticketing costs, but exclude fees
and taxes paid by the named executive officer for the air
transportation. Amounts also include reimbursement for:
(a) the cost of one annual medical exam, (b) the
premium for a term life insurance policy (with a policy amount
equal to the base salary of the named executive officer),
(c) a portion of the premium for long-term disability
insurance, and (d) broker fees associated with the exercise
of stock options/stock appreciation rights by the named
executive officer. Each named executive officer and his spouse
were also provided an Admirals
Club®
membership (American Airlines travel clubs located at
American Airlines large U.S. and international airports),
airport parking, and some of them were provided access to events
or venues sponsored by us or received reduced cost air
transportation on other airlines, at no incremental cost to us.
For Mr. Arpey, the amount shown for 2009 also includes
$64,561 for the estimated incremental cost to us of providing
personal security services to him and his family that we believe
would be characterized under applicable rules as personal to him
and his family.
|
35
Fiscal Year 2009
Grants of Plan-Based Awards Table
The table below lists each grant or award made in 2009 to our
named executive officers under our equity and non-equity
incentive plans.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
|
Estimated Future Payouts |
|
Estimated Future Payouts Under |
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan Awards1 |
|
Incentive Plan Awards2 |
|
All Other |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Awards: |
|
Exercise |
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Number of |
|
or Base |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of |
|
Securities |
|
Price of |
|
of Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or |
|
Underlying |
|
Option |
|
and Option |
|
|
Grant |
|
Threshold |
|
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units6
|
|
Options7
|
|
Awards |
|
Awards |
Name
|
|
Date3
|
|
($)
|
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616,074
|
|
|
|
|
937,504
|
|
|
|
1,339,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
308,0004
|
|
|
|
539,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,395,240
|
|
Arpey |
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
58,0005
|
|
|
|
101,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262,740
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
295,000
|
|
|
|
|
|
|
|
|
|
|
|
1,336,350
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,000
|
|
|
|
4.53
|
|
|
|
957,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333,793
|
|
|
|
|
667,586
|
|
|
|
1,236,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horton
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
139,7004
|
|
|
|
244,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
632,841
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,800
|
|
|
|
|
|
|
|
|
|
|
|
515,514
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,850
|
|
|
|
4.53
|
|
|
|
370,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286,458
|
|
|
|
|
572,916
|
|
|
|
1,060,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garton |
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
139,7004
|
|
|
|
244,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
632,841
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,331
|
|
|
|
|
|
|
|
|
|
|
|
594,929
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,850
|
|
|
|
4.53
|
|
|
|
370,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286,459
|
|
|
|
|
572,917
|
|
|
|
1,060,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reding |
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
139,7004
|
|
|
|
244,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
632,841
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,800
|
|
|
|
|
|
|
|
|
|
|
|
515,514
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,850
|
|
|
|
4.53
|
|
|
|
370,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
244,323
|
|
|
|
|
366,485
|
|
|
|
977,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kennedy
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
79,5504
|
|
|
|
139,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,362
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,800
|
|
|
|
|
|
|
|
|
|
|
|
293,544
|
|
|
|
|
07/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,050
|
|
|
|
4.53
|
|
|
|
210,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | |
(1)
| | The amounts shown were not
actually paid to the named executive officers. Rather, the
amounts are payments that we would have made if we had met the
minimum payment level of the financial component of the Annual
Incentive Plan. Under its terms, any amounts paid under the
customer service component of the Annual Incentive Plan are
subtracted from amounts paid under the financial component of
the Annual Incentive Plan, so no amounts are included in the
table for payments under the customer service component of the
Annual Incentive Plan. Since we did not meet the threshold for
payment under the financial component of the Annual Incentive
Plan in 2009, the actual amount earned by each named executive
officer in 2009 was $583 under the plans customer service
component. These payments are instead reported in the
Fiscal Year 2007, 2008 and 2009 Summary Compensation
Table above in the column Non-Equity Incentive Plan
Compensation.
|
|
(2)
| | The amounts shown are potential
payments of performance share awards to the named executive
officers and potential payments of career performance share
awards to Mr. Arpey. Final payments of these awards can
range from 0% to 175% of the shares originally granted,
depending on our performance during the applicable measurement
period.
|
|
(3)
| | The annual performance shares,
deferred shares and stock appreciation rights granted to our
named executive officers were approved at a meeting of the
Compensation Committee on July 15, 2009. In accordance with
our grant policy, the grants were awarded to them on
July 20, 2009, which was three business days after our
second quarter earnings release. The exercise price of the stock
appreciation
|
36
|
|
|
|
|
rights was the fair market value
of our common stock on July 20, 2009, which was the last
reported sales price of our common stock on that date.
|
|
(4)
|
|
These are performance shares
granted under the 2009/2011 Performance Share Plan.
|
|
(5)
|
|
These are career performance
shares granted under Mr. Arpeys career performance
share agreement.
|
|
(6)
|
|
These are deferred shares granted
under 2009 deferred share award agreements.
|
|
(7)
|
|
These are stock appreciation
rights granted under 2009 stock appreciation rights agreements.
|
Discussion
Regarding Fiscal Year 2007, 2008 and 2009 Summary Compensation
Table and Fiscal Year 2009 Grants of Plan-Based Awards
Table
General
As described in Compensation Discussion and
Analysis The Primary Components of Our Compensation
Program, beginning on page 26, the base salary we pay
to our named executive officers is generally designed to be 15%
of their targeted annual compensation. The short-term incentive
compensation they are awarded is generally designed to be 15% of
their targeted annual compensation. However, we have not paid
any annual bonuses to our named executive officers since 2001.
The long-term incentive compensation awarded to them is
generally designed to be 70% of their targeted annual
compensation.
Non-Equity
Incentive Plan Awards Annual Incentive Plan
All of our employees, including the named executive officers,
participate in the Annual Incentive Plan. The Annual Incentive
Plan provides cash incentive payments upon the achievement of
monthly customer service goals and annual financial goals. Under
the customer service component of the plan, awards of up to $100
per month are earned if we meet our customer satisfaction and
dependability targets. The financial component of the Annual
Incentive Plan provides for payments if American Airlines meets
threshold, target or maximum pre-tax earnings margins described
in the following table:
|
|
|
|
|
|
|
|
|
Approximate
|
|
|
|
|
Pre-Tax Earnings
|
|
|
Pre-Tax
|
|
(Based on
|
Level
|
|
Earnings Margin
|
|
American Airlines 2009
Revenue)
|
|
Threshold
|
|
5%
|
|
$0.9 Billion
|
Target
|
|
10%
|
|
$1.9 Billion
|
Maximum
|
|
15%
|
|
$2.9 Billion
|
The actual dollar amount paid under the financial component of
the Annual Incentive Plan is determined as a percentage of base
salary. The percentage increases with higher levels of
responsibility and higher pre-tax earnings margins. The
percentages of base salary that each of our named executive
officers was eligible to receive in 2009 (based upon our
achievement of the threshold, target or maximum performance
levels) are described in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Base Salary
|
Name
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
Arpey
|
|
|
|
92
|
%
|
|
|
140%
|
|
|
200%
|
Horton
|
|
|
|
54
|
%
|
|
|
108%
|
|
|
200%
|
Garton
|
|
|
|
54
|
%
|
|
|
108%
|
|
|
200%
|
Reding
|
|
|
|
54
|
%
|
|
|
108%
|
|
|
200%
|
Kennedy
|
|
|
|
50
|
%
|
|
|
75%
|
|
|
200%
|
|
37
We did not meet any of the Annual Incentive Plans pre-tax
earnings margin thresholds in 2009 or in any year since 2000. We
therefore have not paid any short-term incentive compensation
under the plans financial component since March 2001.
Equity Incentive
Plan Awards
During its annual compensation review in July 2009, the
Compensation Committee approved grants to the named executive
officers of performance shares, career performance shares,
deferred shares and stock appreciation rights as described below.
Performance Shares. Performance shares are
grants of stock-based compensation that vest after the
completion of a three-year measurement period. The Fiscal
Year 2009 Grants of
Plan-Based
Awards Table shows the number of performance shares
granted in 2009 under the
2009/2011
Performance Share Plan. Except as provided below, vesting of
these performance shares is also generally subject to the named
executive officers continued employment with us through
April 18, 2012. In the event of the death, disability,
termination other than for cause, or early retirement of a named
executive officer, his performance shares will vest on a
pro-rata basis, based upon the number of months that have
elapsed since January 1, 2009. Payment of these shares is
subject to achievement of the performance criteria in the plan.
The potential payment ranges from 0% to 175% of the shares
originally granted. In the event of a change in control, payment
of the performance shares will be at the target level (or 100%)
of the shares initially granted to each named executive officer.
Career Performance Shares. In 2005, we entered
into a career performance share agreement with Mr. Arpey.
As required by that agreement, we granted Mr. Arpey 58,000
career performance shares in 2009. Those shares vest and become
payable in 2015, but the shares granted will vest early:
(a) in the event of Mr. Arpeys death,
disability, termination other than for cause, or early
retirement; (b) in the event Mr. Arpey resigns for
good reason; or (c) in the event of a change in control.
When these shares vest, the Compensation Committee will
determine whether any payment of the shares will be made. Under
the agreement, that determination is based on the
committees subjective evaluation of our performance during
2005 to 2015 in the following areas: (a) overall cash flow;
(b) earnings; (c) the per share price of our common
stock; (d) operating performance (including safety and
other issues concerning regulatory compliance); (e) the
rate of return achieved on our investments
and/or
equity; (f) measures of employee engagement
and/or
satisfaction; (g) the overall state of relations with our
organized labor groups; (h) our balance sheet; (i) our
overall relationships with our largest stockholders;
(j) revenues; and (k) other factors the Compensation
Committee may, in its judgment, deem material. Depending on this
assessment, the committee can decide to pay Mr. Arpey 0% to
175% of the career performance shares originally granted to him.
The committee is not required to use any formula or other
measure or assign any particular weighting to any objective. The
committee can also consider any other factor that it considers
important or appropriate.
Deferred Shares. The deferred shares granted
in 2009 to each of our named executive officers vest on
July 20, 2012, subject to the named executive
officers continued employment with us through that date.
In the event of the death, disability, termination other than
for cause, or early retirement of a named executive officer, his
deferred shares will vest on a pro-rata basis, based on the
number of months that have elapsed since the award date. In the
event of a change in control, deferred shares previously awarded
will vest.
Stock Appreciation Rights. Stock appreciation
rights are exercisable for ten years from the date of grant and
vest in 20% increments over five years. In the event of death or
a change in control, vesting is accelerated. In the event of
early retirement or disability, unexercised stock appreciation
rights continue to vest and remain exercisable until their
expiration. The effective date of the stock appreciation rights
granted in 2009 was July 20, 2009. Upon the exercise of a
stock appreciation right, we subtract the exercise price from
the fair market value of one share of common stock on the day
the
38
stock appreciation right is exercised. We multiply this amount
by the number of stock appreciation rights exercised and issue
to the employee the number of shares equal to that value.
Employment
Agreement with Mr. Horton
To attract Mr. Horton to return to work for us, we entered
into an employment agreement with him in March 2006. That
agreement, as extended in July 2008, expires in March 2012.
Under the agreement, Mr. Horton is entitled to an annual
base salary of $600,000 (which is reviewed annually and may not
be reduced after any increase), and an annual personal allowance
of at least $27,000 per year. His annual target bonus is 108% of
his salary. He is also eligible to participate in our benefit
programs, including the Retirement Benefit Plan and the
Non-Qualified Plan. The agreement grants Mr. Horton
additional years of credited service under the Non-Qualified
Plan, as described under 2009 Pension Benefits
Table, beginning on page 44. It also provides
post-employment and change in control benefits, as described
under Post-Employment Compensation, beginning on
page 47, and Change In Control, beginning on
page 51. We are not a party to any other employment
agreements with any of our named executive officers.
See Post-Employment Compensation, beginning on
page 47, and Change In Control, beginning on
page 51, for more information about the treatment of equity
incentive plan awards upon termination of employment or after a
change in control.
2009 Outstanding
Equity Awards At Fiscal Year-End Table
The following table lists all of the outstanding stock and stock
option/stock appreciation right awards held on December 31,
2009 by each of our named executive officers. The table also
includes, where applicable, the value of these awards based on
the closing price of our common stock on December 31, 2009,
which was $7.73. Each award listed in the Number of
Securities Underlying Unexercised Options Unexercisable
column with an expiration date prior to July 24, 2016 is a
stock option with a tandem stock appreciation right. The other
awards listed in this column are stock appreciation rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/Stock Appreciation Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Equity Incentive
|
|
|
|
Market or
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Plan Awards:
|
|
|
|
Payout Value of
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Number of
|
|
|
|
Unearned
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Unearned
|
|
|
|
Shares, Units
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
|
|
|
|
Stock That
|
|
|
|
Stock That
|
|
|
|
Shares, Units or
|
|
|
|
or Other Rights
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Exercise
|
|
|
|
Option
|
|
|
|
Have Not
|
|
|
|
Have Not
|
|
|
|
Other Rights That
|
|
|
|
That Have Not
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Vested
|
|
|
|
Vested
|
|
|
|
Have Not Vested
|
|
|
|
Vested
|
|
Name
|
|
(#)
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
|
237,000
|
|
|
|
|
|
|
|
|
|
24.39
|
|
|
|
|
01/24/2010
|
|
|
|
|
23,7508
|
|
|
|
|
183,588
|
|
|
|
|
230,00014
|
|
|
|
|
1,777,900
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
33.38
|
|
|
|
|
07/24/2010
|
|
|
|
|
20,0009
|
|
|
|
|
154,600
|
|
|
|
|
308,00015
|
|
|
|
|
2,380,840
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
36.18
|
|
|
|
|
07/23/2011
|
|
|
|
|
116,00011
|
|
|
|
|
896,680
|
|
|
|
|
290,00016
|
|
|
|
|
2,241,700
|
|
|
|
|
84,000
|
|
|
|
|
|
|
|
|
|
26.71
|
|
|
|
|
02/27/2012
|
|
|
|
|
295,00012
|
|
|
|
|
2,280,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
24.47
|
|
|
|
|
04/02/2012
|
|
|
|
|
99,54013
|
|
|
|
|
769,444
|
|
|
|
|
|
|
|
|
|
|
|
Arpey
|
|
|
103,200
|
|
|
|
|
|
|
|
|
|
8.88
|
|
|
|
|
07/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,000
|
|
|
|
|
19,0001
|
|
|
|
|
13.67
|
|
|
|
|
07/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
30,0003
|
|
|
|
|
23.21
|
|
|
|
|
07/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
45,0004
|
|
|
|
|
28.59
|
|
|
|
|
07/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,200
|
|
|
|
|
228,8006
|
|
|
|
|
8.20
|
|
|
|
|
05/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
377,0007
|
|
|
|
|
4.53
|
|
|
|
|
07/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/Stock Appreciation Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Equity Incentive
|
|
|
|
Market or
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Plan Awards:
|
|
|
|
Payout Value of
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Number of
|
|
|
|
Unearned
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Unearned
|
|
|
|
Shares, Units
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
|
|
|
|
Stock That
|
|
|
|
Stock That
|
|
|
|
Shares, Units or
|
|
|
|
or Other Rights
|
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Exercise
|
|
|
|
Option
|
|
|
|
Have Not
|
|
|
|
Have Not
|
|
|
|
Other Rights That
|
|
|
|
That Have Not
|
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Vested
|
|
|
|
Vested
|
|
|
|
Have Not Vested
|
|
|
|
Vested
|
|
Name
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
|
|
35,520
|
|
|
|
|
23,6802
|
|
|
|
|
26.70
|
|
|
|
|
03/29/2016
|
|
|
|
|
13,0008
|
|
|
|
|
100,490
|
|
|
|
|
108,00014
|
|
|
|
|
834,840
|
|
|
|
|
|
23,100
|
|
|
|
|
15,4003
|
|
|
|
|
23.21
|
|
|
|
|
07/24/2016
|
|
|
|
|
7,5009
|
|
|
|
|
57,975
|
|
|
|
|
139,70015
|
|
|
|
|
1,079,881
|
|
Horton
|
|
|
|
13,920
|
|
|
|
|
20,8804
|
|
|
|
|
28.59
|
|
|
|
|
07/23/2017
|
|
|
|
|
44,85011
|
|
|
|
|
346,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,110
|
|
|
|
|
88,4406
|
|
|
|
|
8.20
|
|
|
|
|
05/20/2018
|
|
|
|
|
113,80012
|
|
|
|
|
879,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
145,8507
|
|
|
|
|
4.53
|
|
|
|
|
07/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
237,000
|
|
|
|
|
|
|
|
|
|
24.39
|
|
|
|
|
01/24/2010
|
|
|
|
|
13,0008
|
|
|
|
|
100,490
|
|
|
|
|
108,00014
|
|
|
|
|
834,840
|
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
33.38
|
|
|
|
|
07/24/2010
|
|
|
|
|
10,7009
|
|
|
|
|
82,711
|
|
|
|
|
139,70015
|
|
|
|
|
1,079,881
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
36.18
|
|
|
|
|
07/23/2011
|
|
|
|
|
54,59011
|
|
|
|
|
421,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,000
|
|
|
|
|
|
|
|
|
|
26.71
|
|
|
|
|
02/27/2012
|
|
|
|
|
131,33112
|
|
|
|
|
1,015,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,800
|
|
|
|
|
|
|
|
|
|
10.68
|
|
|
|
|
07/21/2013
|
|
|
|
|
99,54013
|
|
|
|
|
769,444
|
|
|
|
|
|
|
|
|
|
|
|
Garton
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
8.88
|
|
|
|
|
07/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,680
|
|
|
|
|
11,8401
|
|
|
|
|
13.67
|
|
|
|
|
07/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,100
|
|
|
|
|
15,4003
|
|
|
|
|
23.21
|
|
|
|
|
07/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,920
|
|
|
|
|
20,8804
|
|
|
|
|
28.59
|
|
|
|
|
07/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,110
|
|
|
|
|
88,4406
|
|
|
|
|
8.20
|
|
|
|
|
05/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
145,8507
|
|
|
|
|
4.53
|
|
|
|
|
07/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,550
|
|
|
|
|
|
|
|
|
|
29.53
|
|
|
|
|
03/20/2010
|
|
|
|
|
13,0008
|
|
|
|
|
100,490
|
|
|
|
|
108,00014
|
|
|
|
|
834,840
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
33.38
|
|
|
|
|
07/24/2010
|
|
|
|
|
4,2509
|
|
|
|
|
32,853
|
|
|
|
|
139,70015
|
|
|
|
|
1,079,881
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
36.18
|
|
|
|
|
07/23/2011
|
|
|
|
|
3,25010
|
|
|
|
|
25,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
|
|
|
|
|
|
|
|
|
26.71
|
|
|
|
|
02/27/2012
|
|
|
|
|
44,85011
|
|
|
|
|
346,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
6.50
|
|
|
|
|
05/27/2013
|
|
|
|
|
113,80012
|
|
|
|
|
879,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,800
|
|
|
|
|
|
|
|
|
|
10.68
|
|
|
|
|
07/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reding
|
|
|
|
34,800
|
|
|
|
|
|
|
|
|
|
8.88
|
|
|
|
|
07/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,800
|
|
|
|
|
7,7001
|
|
|
|
|
13.67
|
|
|
|
|
07/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,080
|
|
|
|
|
8,7203
|
|
|
|
|
23.21
|
|
|
|
|
07/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,920
|
|
|
|
|
11,8804
|
|
|
|
|
28.59
|
|
|
|
|
07/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
9,0005
|
|
|
|
|
24.62
|
|
|
|
|
09/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,110
|
|
|
|
|
88,4406
|
|
|
|
|
8.20
|
|
|
|
|
05/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
145,8507
|
|
|
|
|
4.53
|
|
|
|
|
07/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000
|
|
|
|
|
|
|
|
|
|
33.38
|
|
|
|
|
07/24/2010
|
|
|
|
|
7,4008
|
|
|
|
|
57,202
|
|
|
|
|
61,50014
|
|
|
|
|
475,395
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
36.18
|
|
|
|
|
07/23/2011
|
|
|
|
|
4,2509
|
|
|
|
|
32,853
|
|
|
|
|
79,55015
|
|
|
|
|
614,922
|
|
|
|
|
|
28,000
|
|
|
|
|
|
|
|
|
|
26.71
|
|
|
|
|
02/27/2012
|
|
|
|
|
25,55011
|
|
|
|
|
197,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
3.26
|
|
|
|
|
01/27/2013
|
|
|
|
|
64,80012
|
|
|
|
|
500,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,800
|
|
|
|
|
|
|
|
|
|
10.68
|
|
|
|
|
07/21/2013
|
|
|
|
|
42,66013
|
|
|
|
|
329,762
|
|
|
|
|
|
|
|
|
|
|
|
Kennedy
|
|
|
|
34,800
|
|
|
|
|
|
|
|
|
|
8.88
|
|
|
|
|
07/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,400
|
|
|
|
|
7,7001
|
|
|
|
|
13.67
|
|
|
|
|
07/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,080
|
|
|
|
|
8,7203
|
|
|
|
|
23.21
|
|
|
|
|
07/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,920
|
|
|
|
|
11,8804
|
|
|
|
|
28.59
|
|
|
|
|
07/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,590
|
|
|
|
|
50,3606
|
|
|
|
|
8.20
|
|
|
|
|
05/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
83,0507
|
|
|
|
|
4.53
|
|
|
|
|
07/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Award becomes exercisable on
July 25, 2010.
|
|
(2)
|
|
Award becomes exercisable in two
equal installments of 11,840. The first installment became
exercisable on March 29, 2010. The other installment
becomes exercisable on March 29, 2011.
|
40
|
|
|
(3)
|
|
Award becomes exercisable in two
equal installments on July 24 of 2010 and 2011. The number of
shares in each installment is: Mr. Arpey, 15,000;
Mr. Horton, 7,700; Mr. Garton, 7,700; Mr. Reding,
4,360; and Mr. Kennedy, 4,360.
|
|
(4)
|
|
Award becomes exercisable in three
equal installments on July 23 of 2010, 2011 and 2012. The number
of shares in each installment is: Mr. Arpey, 15,000;
Mr. Horton, 6,960; Mr. Garton, 6,960; Mr. Reding,
3,960; and Mr. Kennedy, 3,960.
|
|
(5)
|
|
Award becomes exercisable in three
equal installments on September 19 of 2010, 2011 and 2012. The
number of shares in each installment is 3,000.
|
|
(6)
|
|
Award becomes exercisable in four
equal installments on May 20 of 2010, 2011, 2012 and 2013. The
number of shares in each installment is: Mr. Arpey, 57,200;
Mr. Horton, 22,110; Mr. Garton, 22,110;
Mr. Reding, 22,110; and Mr. Kennedy, 12,590.
|
|
(7)
|
|
Award becomes exercisable in five
equal installments on July 20 of 2010, 2011, 2012, 2013 and
2014. The number of shares in each installment is:
Mr. Arpey, 75,400; Mr. Horton, 29,170;
Mr. Garton, 29,170; Mr. Reding, 29,170; and
Mr. Kennedy, 16,610.
|
|
(8)
|
|
These performance shares were
granted under the 2007/2009 Performance Share Plan and vested on
April 21, 2010. Under the plan, one-half of the payments to
the named executive officers was to be based on our TSR during
the 2007 2009 measurement period, and the other half
was to be based on the Compensation Committees
determination of achievement of the corporate objectives
(described under Discussion Regarding 2009 Option
Exercises and Stock Vested Table, beginning on
page 43) for the measurement period. The Compensation
Committee determined that we had a sixth place TSR rank during
the measurement period, resulting in a TSR distribution
percentage of 25%, and that achievement of our corporate
objectives during that period was well in excess of 25%. Because
TSR is the only performance measure used to determine
performance shares distributed to the other participants in the
plan, with the consent of the named executives and our other
senior officers, the committee instead based the final
distribution entirely on TSR. As a result, on April 21,
2010, our named executive officers received 25% of the awards
originally granted to them under the 2007/2009 Performance Share
Plan.
|
|
(9)
|
|
These deferred shares vest on
July 23, 2010, generally subject to the recipients
continued employment through that date.
|
|
(10)
|
|
We granted these deferred shares
in connection with Mr. Redings promotion on
September 19, 2007. They will vest on September 19,
2010, generally subject to Mr. Redings continued
employment through that date.
|
|
(11)
|
|
These deferred shares vest on
May 20, 2011, generally subject to the recipients
continued employment through that date.
|
|
(12)
|
|
These deferred shares vest on
July 20, 2012, generally subject to the recipients
continued employment through that date.
|
|
(13)
|
|
These career equity shares will
vest upon retirement after age 60, or upon a qualifying
early retirement under the Retirement Benefit Plan, in each case
generally subject to continued employment through that date. If
the named executive officer retires earlier than age 60,
there is a 3% reduction in the total number of shares that will
vest for each year the officers retirement date precedes
age 60.
|
|
(14)
|
|
These performance shares were
granted under the 2008/2010 Performance Share Plan and will
vest, if at all, on April 20, 2011. Vesting is subject to
satisfaction of the applicable performance criteria and is
generally subject to the recipients continued employment
through that date. As required by the SECs disclosure
rules, the number of performance shares shown assumes that
target levels of performance (100%) will be achieved. The
Compensation Committee will determine the actual levels of
performance achieved in 2011.
|
|
(15)
|
|
These performance shares were
granted under the 2009/2011 Performance Share Plan and will
vest, if at all, on April 18, 2012. Vesting is subject to
the satisfaction of the applicable performance criteria and is
generally subject to the recipients continued employment
through that date.
|
41
|
|
|
|
|
As required by the SECs
disclosure rules, the number of performance shares shown assumes
that target levels of performance (100%) will be achieved. The
Compensation Committee will determine the actual levels of
performance achieved in 2012.
|
|
(16)
|
|
These career performance shares
were granted to Mr. Arpey under his career performance
share agreement and will vest, if at all, on July 25, 2015.
Vesting is subject to the satisfaction of the applicable
performance criteria and is generally subject to
Mr. Arpeys continued employment through that date. As
required by the SECs disclosure rules, the career
performance shares shown assumes that target levels of
performance (100%) will be achieved in 2015.
|
Discussion
Regarding 2009 Outstanding Equity Awards at Fiscal Year End
Table
The awards described in the 2009 Outstanding Equity Awards
at Fiscal Year End Table and its footnotes generally vest
on the dates specified in the footnotes. In some circumstances,
however, the awards may not vest on the dates specified. In the
case of normal or early retirement of a named executive officer
under the Retirement Benefit Plan, all of his unexercised stock
options and stock appreciation rights will continue to vest and
remain exercisable until expiration. If he dies, or there is a
change in control, the vesting of his options and stock
appreciation rights is accelerated. With respect to the
performance and deferred shares listed in the table, in the
event of death, disability, or termination other than for cause
of a named executive officer, his shares will instead vest on a
pro-rata basis, based on the number of months that have elapsed
since the award date. In the event of a change in control, the
performance shares and deferred shares will vest and will be
paid at the target level (or 100%) of the shares initially
granted to the officer. Mr. Arpeys career performance
shares listed in the table will vest in the event of his death,
disability or termination other than for cause; upon a change in
control; or if he resigns for good reason. The actual number of
vested shares that would be paid to Mr. Arpey in any of
those circumstances would be between 0% and 175%, depending upon
the Compensation Committees determination of satisfaction
of the performance criteria in the agreement. Please see
Equity Incentive Plan Awards Career
Performance Shares, on page 38, for a description of
the performance criteria, and Post-Employment
Compensation Termination By Executive For Good
Reason on page 48 for the definition of good
reason in that agreement.
Messrs. Arpey, Garton and Kennedy also hold the career
equity shares listed in the above table. Career equity shares
are deferred shares under our Career Equity Program. We
established the program in 1988 to encourage retention and stock
ownership by our senior management. We have discontinued the
program, and we did not make any grants under this program in
2009. Each of their career equity shares generally vest at
age 60. However, in the event of death, disability,
termination other than for cause, or early retirement prior to
age 60, the career equity shares vest pro-rata. If the
executive retires before turning 60, the number of career equity
shares he will receive is reduced by 3% for each year his age is
below 60. For Mr. Arpey, the program guarantees that the
value of his career equity shares at retirement will be at least
equal to three and one-half times his final average salary as
determined for purposes of the Non-Qualified Plan. Also, upon a
change in control, the career equity shares immediately vest in
full.
As of December 31, 2009, none of the named executive
officers had become eligible for early retirement status.
However, as of February 2010, Mr. Reding became eligible
for retirement and, in May 2010, Mr. Kennedy will become
eligible for early retirement.
See Discussion Regarding Fiscal Year 2007, 2008 and 2009
Summary Compensation Table and Fiscal Year 2009 Grants of
Plan-Based Awards Table, beginning on page 37,
Post-Employment Compensation, beginning on
page 47, and Change In Control, beginning on
page 51, for further details.
42
2009 Option
Exercises and Stock Vested Table
The following table summarizes exercises of stock options and
stock appreciation rights, as well as stock awards that vested
for the named executive officers in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
On Exercise
|
|
|
On Exercise
|
|
|
On Vesting1
|
|
|
On Vesting2
|
Name
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
Arpey
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
91,250
|
|
|
|
|
450,163
|
|
Horton
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
54,150
|
|
|
|
|
268,352
|
|
Garton
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
57,700
|
|
|
|
|
284,895
|
|
Reding
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
30,950
|
|
|
|
|
153,415
|
|
Kennedy
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
30,950
|
|
|
|
|
153,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The numbers shown are the number
of shares that vested in April 2009 under the 2006/2008
Performance Share Plan and the number of deferred shares that
vested in July 2009 under the 2006 deferred share agreements.
|
|
(2)
|
|
Amounts shown are the fair market
value of our stock on the date of vesting, multiplied by the
number of shares shown in the column entitled Number of
Shares Acquired on Vesting for the named executive
officer.
|
Discussion
Regarding 2009 Option Exercises and Stock Vested Table
The shares under the 2006/2008 Performance Share Plan referenced
in the above 2009 Option Exercises and Stock Vested
Table were delivered to the named executive officers on
April 15, 2009. Under the terms of that plan, one-half of
the payments to the named executive officers was to be based on
our TSR during the 2006 2008 measurement period, and
the other half was to be based on the Compensation
Committees determination of achievement of the corporate
objectives for the measurement period.
The payment of performance shares based on our TSR varies as
shown in the chart below. In the chart, Rank is our
TSR ranking among the following airlines: AirTran Airways,
Alaska Airlines, AMR Corporation, Continental Airlines, JetBlue
Airways, Southwest Airlines and US Airways. Under the heading
Percentage of Original Award is the percentage of
the performance shares initially granted to our named executive
officers that will be paid to them based on our TSR ranking. In
the event that one or more of the selected airlines ceases to
trade on a national securities exchange at any point during the
three year measurement period, under the plan that airline is
excluded from the calculation of TSR rank, which is reflected in
the chart below under the heading, Number of Carriers in
Airline Group.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Original Award (Based on Rank)
|
|
|
|
Rank
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carriers in Airline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
7
|
|
|
|
175
|
%
|
|
|
|
135
|
%
|
|
|
|
100
|
%
|
|
|
|
75
|
%
|
|
|
|
50
|
%
|
|
|
|
25
|
%
|
|
|
|
0
|
%
|
6
|
|
|
|
175
|
%
|
|
|
|
135
|
%
|
|
|
|
100
|
%
|
|
|
|
75
|
%
|
|
|
|
50
|
%
|
|
|
|
0
|
%
|
|
|
|
|
|
5
|
|
|
|
175
|
%
|
|
|
|
135
|
%
|
|
|
|
100
|
%
|
|
|
|
75
|
%
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
175
|
%
|
|
|
|
135
|
%
|
|
|
|
100
|
%
|
|
|
|
75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
175
|
%
|
|
|
|
135
|
%
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The corporate objectives under the 2006/2008 Performance Share
Plan were: (a) keeping safety our top priority;
(b) raising external capital, maintaining a minimum amount
of cash and building a strong balance sheet; (c) meeting
our pension funding obligations; (d) continuing to lower
our
43
non-fuel
costs and implementing measures to conserve fuel;
(e) improving customer service and dependability rankings;
(f) continuously improving revenues and business results
through employee collaboration and other means;
(g) enhancing our image and customer loyalty;
(h) continuing to successfully advocate on industry
legislative and regulatory issues; (i) focusing on a
positive work environment and promoting diversity;
(j) promoting employee commitment to the employee standards
of conduct and compliance with laws and regulations;
(k) meeting financial goals in order to return to and
sustain profitability and create long-term shareholder value;
and (l) any other factors that the Compensation Committee
may determine are important or appropriate. In determining
whether we met the corporate objectives, the Compensation
Committee was not required to use any formula or other measure
or assign any particular weighting to any objective. The
committee could also consider any other factor that it
considered important or appropriate.
In April 2009, the Compensation Committee determined that we had
a fourth place TSR rank during the 2006 2008
measurement period. This resulted in a TSR payment percentage of
75% under the 2006/2008 Performance Share Plan. The committee
also determined that the payment percentage based on the
corporate objectives would have been well in excess of 75%.
Because TSR is the only performance measure used to determine
performance shares distributed to all of the other participants
in that plan, with the consent of our named executive and other
senior officers, the committee instead based the final
distribution of performance shares entirely on TSR. As a result,
on April 15, 2009, our named executive officers received
75% of the awards originally granted to them under the 2006/2008
Performance Share Plan.
2009 Pension
Benefits Table
The following table summarizes the present value of the
accumulated pension benefits of the named executive officers as
of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
of Years
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited
|
|
|
Present Value of
|
|
|
Payments During
|
|
|
|
|
|
|
Service
|
|
|
Accumulated Benefit
|
|
|
Last Fiscal Year
|
Name
|
|
|
Plan Name
|
|
|
(#)
|
|
|
($)1,
2
|
|
|
($)
|
Arpey
|
|
|
Retirement Benefit Plan
|
|
|
|
26
|
.274
|
|
|
|
|
701,519
|
|
|
|
|
0
|
|
|
|
Non-Qualified Plan
|
|
|
|
26
|
.274
|
|
|
|
|
3,288,848
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horton
|
|
|
Retirement Benefit Plan
|
|
|
|
19
|
.6553
|
|
|
|
|
520,256
|
|
|
|
|
0
|
|
|
|
Non-Qualified Plan
|
|
|
|
23
|
.5553
|
|
|
|
|
2,465,358
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garton
|
|
|
Retirement Benefit Plan
|
|
|
|
22
|
.368
|
|
|
|
|
641,590
|
|
|
|
|
0
|
|
|
|
Non-Qualified Plan
|
|
|
|
22
|
.368
|
|
|
|
|
2,608,977
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reding
|
|
|
Retirement Benefit Plan
|
|
|
|
8
|
.9124
|
|
|
|
|
295,677
|
|
|
|
|
0
|
|
|
|
Non-Qualified Plan
|
|
|
|
17
|
.8244
|
|
|
|
|
1,430,800
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kennedy
|
|
|
Retirement Benefit Plan
|
|
|
|
24
|
.547
|
|
|
|
|
792,608
|
|
|
|
|
0
|
|
|
|
Non-Qualified Plan
|
|
|
|
24
|
.547
|
|
|
|
|
1,673,928
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
We have partially funded the
benefits under the Non-Qualified Plan into a trust as described
in
Non-Qualified
Plan beginning on page 46. Assets in the trust are
separate from our operating assets and become payable to the
named executive officer only upon normal or early retirement.
The amounts listed in this column for the Non-Qualified Plan
reflect the present value of the total benefit payable under the
Non-Qualified Plan to each of the named executive officers,
without any reduction for amounts contributed to the trust.
|
|
(2)
|
|
Tax laws treat the contributions
made to the trust under the Non-Qualified Plan as taxable income
to the named executive officers, which requires them to pay
applicable federal, state and local income taxes. We did not
reduce the Non-Qualified Plan amounts shown in this column to
reflect the contributions to the trust or the tax liabilities
since we will not know the impact of the tax liabilities
|
44
|
|
|
|
|
until normal or early retirement.
Therefore, we do not consider such amounts as paid from the
Non-Qualified Plan until that time. For 2009, the gross benefit
amounts and the applicable tax liability are identified in the
table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Benefit
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Tax Liability
|
|
|
Net Amount
|
Name
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Arpey
|
|
|
|
75,182
|
|
|
|
|
27,404
|
|
|
|
|
47,778
|
|
Horton
|
|
|
|
262,872
|
|
|
|
|
95,817
|
|
|
|
|
167,055
|
|
Garton
|
|
|
|
31,732
|
|
|
|
|
12,416
|
|
|
|
|
19,316
|
|
Reding
|
|
|
|
50,047
|
|
|
|
|
19,051
|
|
|
|
|
30,997
|
|
Kennedy
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
As of December 31, 2009,
Mr. Horton had 19.655 years of credited service under
the Retirement Benefit Plan and 23.555 years of credited
service under the Non-Qualified Plan. Mr. Horton left our
company in 2002 and rejoined us in 2006. Under the terms of the
Retirement Benefit Plan and the
Non-Qualified
Plan, Mr. Hortons prior credited service in each plan
was reinstated when he rejoined us. In addition, under his
employment agreement, Mr. Horton had earned an additional
3.9 years of age and service credit under the Non-Qualified
Plan with an estimated value of $1,069,957.
|
|
(4)
|
|
As of December 31, 2009,
Mr. Reding had 8.912 years of credited service under
the Retirement Benefit Plan and 17.824 years of credited
service under the Non-Qualified Plan. Under an agreement with
Mr. Reding, he earns two years of credited service in the
Non-Qualified Plan for each year of credited service earned in
the Retirement Benefit Plan, up to a maximum of 10 years of
additional service credit. As of December 31, 2009,
Mr. Reding had earned 8.912 additional years of service
credit under the Non-Qualified Plan with an estimated value of
$916,923.
|
Discussion
Regarding 2009 Pension Benefits Table
Retirement
Benefit Plan
We provide the Retirement Benefit Plan to assist our named
executive officers and most of our other salaried employees
during their retirement. We have similar defined benefit plans
for other American Airlines employees, including those employees
covered by bargained labor agreements. Our Retirement Benefit
Plan is only available to employees hired prior to
January 1, 2002 who had completed 1,000 hours of
eligible service in one year prior to that date. To vest in the
plans benefits, a participant must also: (a) complete
at least five years of eligible service, (b) reach
age 65, or (c) be permanently and totally disabled.
After becoming a participant in the Retirement Benefit Plan,
each participant earns one year of credited service for each
plan year in which at least 1,900 hours of service are
completed.
Normal retirement age under the plan is 65. However,
participants with at least 10 years of retirement eligible
service may retire at age 60 and receive unreduced
benefits. Participants with at least 15 years of retirement
eligible service may retire at age 55, but their benefits
are reduced by 3% for each year that the participants age
is below age 60. Participants who retire before age 60
with more than 10 years but less than 15 years of
retirement eligible service may receive reduced retirement
benefits starting at age 60. These benefits are reduced by
3% for each year that the participants age is below
age 65. Retirement Benefit Plan benefits are paid as a
monthly annuity and the participant may elect the form of
annuity payments. Payment options include single life, joint and
survivor, guaranteed period or level income. We reduce the
monthly payments for the receipt of social security benefits. As
of December 31, 2009, none of the named executive officers
had become eligible for retirement or early retirement status
under the Retirement Benefit Plan. However, as of February 2010,
Mr. Reding became eligible for retirement and, in May 2010,
Mr. Kennedy will become eligible for early retirement under
the plan.
45
The Retirement Benefit Plan complies with ERISA and qualifies
for an exemption from federal income tax under the Internal
Revenue Code. As a qualified plan, it is subject to various
restrictions under the Internal Revenue Code and ERISA that
limit the maximum annual benefit payable under the plan. The
limit was $195,000 in 2009. The Internal Revenue Code also
limits the maximum amount of annual compensation that we may
take into account under the Retirement Benefit Plan. The limit
was $245,000 in 2009. As described further in
Non-Qualified Plan below, we maintain the
Non-Qualified Plan to address these limits on benefit payments
to our named executive officers.
We determine the benefits payable to all participants (including
the named executive officers) under the Retirement Benefit Plan
and the Non-Qualified Plan using the four formulas described
below. For each participant, we use the formula that provides
the participant the greatest benefit, consistent with the terms
of the plans. For purposes of the table above, we therefore
assumed that Messrs. Arpey, Horton, Garton and Kennedy will
each receive benefits under the Retirement Benefit Plan pursuant
to the Final Average Retirement Benefit Formula, and
under the Non-Qualified Plan pursuant to the Social
Security Offset Formula. For Mr. Reding, we assumed
that he will receive benefits under the Retirement Benefit Plan
pursuant to the Career Average Benefit Formula, and
under the Non-Qualified Plan pursuant to the Social
Security Offset Formula.
Final Average Retirement Benefit
Formula. Under this formula, a participants
annual benefit at normal retirement will equal the product of
(a) 1.667% of his or her final average compensation times
(b) his or her years of credited service. Final average
compensation is the average of the participants
pensionable pay during the four highest paid
consecutive years during the last ten years of employment.
Pensionable pay includes regular pay, but excludes bonuses,
expenses and equity-based compensation.
Career Average Benefit Formula. A
participants annual benefit at normal retirement under
this formula will equal the sum of the following amounts,
determined for each year the participant is a member of the
Retirement Benefit Plan: (a) 1.25% times the
participants pensionable pay (as described above) for each
year up to $6,600 and (b) 2% times the participants
pensionable pay for each such year over $6,600.
Social Security Offset Formula. A
participants annual benefit at normal retirement under
this formula will equal the difference between (a) the
product of (1) 2% of the participants final average
compensation (as described above) times (2) the
participants years of credited service, and (b) the
product of (1) 1.5% of the participants estimated
annual Social Security benefit times (2) the
participants years of credited service, up to a maximum of
33.3 years of service.
Minimum Retirement Benefit Formula. Under this
formula, a participants annual benefit at normal
retirement will equal the product of (a) 12, times
(b) $23.50 for participants whose final average
compensation (as described above) is less than $15,000, or
$24.00 for participants whose final average compensation is at
least $15,000, times (c) the number of years of the
participants credited service.
Non-Qualified
Plan
The Non-Qualified Plan provides retirement benefits to our named
executive officers because their compensation exceeds the
maximum recognizable compensation limit allowed under the
Internal Revenue Code, which was $245,000 in 2009.
The formulas used to calculate benefits under the Non-Qualified
Plan are generally the same as those under the Retirement
Benefit Plan. However, under the Non-Qualified Plan, benefit
calculations for the named executive officers also include:
(a) the average of the four highest short-term incentive
payments made since 1985; (b) any additional years of
credited service that may have been granted to the named
executive officer; and (c) the average of the four highest
performance return payments made since 1989. Performance
return payments are dividend equivalent payments that were
made
46
between 1989 and 1999 on outstanding career equity shares. They
were calculated using the following criteria: (a) the
number of shares granted; (b) the grant price;
(c) individual performance; and (d) a rolling
three-year return on investment. Income received from long-term
incentive compensation payments (such as stock option/stock
appreciation right exercises, and performance share, deferred
share and career performance share payments) are not used to
calculate benefits in the Non-Qualified Plan. In addition, we
granted additional years of credited service for
Messrs. Horton and Reding as reflected in the footnotes to
the above 2009 Pension Benefits Table.
In 2002, the Board of Directors established a trust to fund
benefits payable under the Non-Qualified Plan. We periodically
fund the trust to give Non-Qualified Plan participants a
certainty of payment of plan benefits that is comparable to the
certainty eligible employees have under the Retirement Benefit
Plan. The funds in the trust are not subject to claims from
creditors in the event of bankruptcy. Payments to the trust for
vested retirement benefits result in taxable income to the
participants. It is our current policy not to fund the
Non-Qualified Plans trust to any greater extent than the
funded percentage of our least funded qualified defined benefit
plan for non-officer employees. As they are participants in the
Non-Qualified Plan, the 2009 Pension Benefits Table
above reflects amounts the named executive officers accrued
under the Non-Qualified Plan (whether or not funded under the
trust). Benefits payable under the Non-Qualified Plan, including
benefits from the trust, are payable in a lump sum.
Present Value
Calculations
The following discusses some of the assumptions used in
calculating the value of accrued benefits under the Retirement
Benefit Plan and the Non-Qualified Plan.
The values of accrued benefits under the Retirement Benefit Plan
are determined using a 6.1% interest rate and the sex-distinct
RP2000 Mortality Tables projected to 2006. The lump sums payable
under the Non-Qualified Plan are calculated using the December
2009 segment rates and the unisex mortality table prescribed by
the Internal Revenue Service in the Pension Protection Act of
2006. Retirement benefits for both plans are then discounted to
December 31, 2009 using an interest only discount of 6.1%.
At December 31, 2008, the same assumptions were used,
except that the lump sums under the Non-Qualified Plan were
calculated using a 6.5% interest rate.
The present value is the amount today that, with fixed interest
earned over time, will equal the employees accrued
retirement benefit at retirement. The present values generally
assume retirement at age 60, which is the age when
unreduced benefits may be available. However, as of
December 31, 2009, Mr. Hortons employment
agreement provides an unreduced Non-Qualified Plan benefit when
he reaches age 56.
Post-Employment
Compensation
This section describes the payments, benefits and perquisites we
may provide to the named executive officers following
termination of their employment. Except as otherwise stated
below, these are in addition to the payments, benefits and
perquisites that we generally provide to all of our salaried
employees following termination of their employment.
Retirement. As described in Discussion
Regarding 2009 Pension Benefits Table, beginning on
page 45, we provide retirement benefits to our employees
(including the named executive officers) who retire after they
reach normal retirement age or meet the requirements for early
retirement. As of December 31, 2009, none of the named
executive officers was eligible to retire under our plans.
However, as of February 2010, Mr. Reding became eligible
for retirement and, in May 2010, Mr. Kennedy will become
eligible for early retirement.
In addition, upon normal retirement at age 65 or early
retirement at age 60 or 55, our long-term incentive plans
generally provide for pro-rata payments of stock awards granted
under those plans to
47
our named executive officers. These awards and their payment
terms are described in Discussion Regarding Fiscal Year
2007, 2008 and 2009 Summary Compensation Table and Fiscal Year
2009 Grants of Plan-Based Awards Table beginning on
page 37. Since the named executive officers were not
eligible to retire as of December 31, 2009, they were not
eligible for any stock award payments as of that date due to
retirement.
Upon retirement, we will provide each named executive officer
and his spouse or companion and any dependent children unlimited
complimentary air transportation on American Airlines and
American Eagle Airlines in any available class of service, and
we will reimburse them for any related taxes. Under our policy,
Mr. Kennedy is vested in this retirement perquisite but he
would not receive it until he turns 55. Mr. Reding vested
in March 2010. Under a policy that we discontinued for officers
elected after 1996, Messrs. Arpey, Horton and Garton will
receive this perquisite upon retirement or other separation of
employment. The estimated aggregate incremental cost to us of
providing this travel perquisite to each named executive officer
is listed in the table below under the heading Voluntary
Separation. In addition, we will provide lifetime Admirals
Club®
memberships to each named executive officer and his spouse or
companion, at no incremental cost to us.
Voluntary Separation and Termination For
Cause. In the event that a named executive
officer resigns or voluntarily terminates his employment (other
than a normal or early retirement or as noted in
Termination By Executive For Good Reason below) or
we terminate his employment for cause, under our plans the named
executive officer will forfeit all outstanding stock-based
awards. In addition, we will discontinue his salary, perquisites
and benefits. To the extent a named executive officer is vested
in the Retirement Benefit Plan and Non-Qualified Plan, he is
entitled to the benefits under these plans based on the number
of years of credited service earned as of the date of
separation. Assuming a separation of service as of
December 31, 2009, Messrs. Arpey, Horton, Garton and
Kennedy would be vested in or eligible to receive the
complimentary air transportation (and related tax
reimbursements) described above under Retirement
beginning on page 47. For these purposes, for
cause means a felony conviction, failure to contest
prosecution of a felony, or willful misconduct or dishonesty of
a named executive officer that is directly and materially
harmful to our business or reputation.
Termination By Executive For Good Reason. The
career performance shares award agreement we entered into with
Mr. Arpey and the employment agreement we entered into with
Mr. Horton provide benefits to them if they terminate their
employment with us for good reason. Messrs. Garton, Reding
and Kennedy are not parties to any agreements with us that
contemplate a termination for good reason by them.
If Mr. Arpey terminates his employment for good reason,
under his career performance share agreement, all of the career
performance shares previously awarded to him would vest. Payment
of the shares would be subject to a determination by the
Compensation Committee that we met the performance criteria in
the agreement. In that agreement, good reason
includes: (a) a reduction in his salary (other than a
reduction pursuant to a salary reduction program including other
senior officers); (b) a significant reduction in his
authority, duties or responsibilities such that he believes he
can no longer perform his duties; or (c) a material
reduction in the benefits we provide him, in each case unless he
consents.
Under Mr. Hortons employment agreement, if he resigns
for good reason, he would be entitled to receive: (a) his
accrued base salary, vacation and short-term incentive bonus (if
such bonus had been determined but not paid as of his employment
termination date); and (b) two times his annual salary and
target bonus. In addition, all of his outstanding stock options
and stock appreciation rights and deferred and performance
shares would vest and become free of all restrictions. However,
the number of performance shares that he would receive, if any,
would be subject to a determination by the Compensation
Committee that we met the performance criteria under the
applicable performance share plans. We would also pay for COBRA
coverage for Mr. Horton and his dependents for the maximum
period allowed at a total estimated cost to us of $1,747 (based
on
48
2010 cost information). In Mr. Hortons employment
agreement, good reason includes: (a) actions
that result in a diminution in his position, authority, duties
or responsibilities; (b) failure to comply with any of the
compensation provisions of his employment agreement;
(c) any requirement that his services be performed
primarily outside Dallas/Fort Worth, Texas; or
(d) failure of a successor of ours to assume his employment
agreement, in each case unless he consents.
Involuntary Termination Other Than For
Cause. For each named executive officer except
Mr. Horton, under our current practices and policies for
all salaried
U.S.-based
employees, if we terminate his employment other than for cause,
the officer is eligible to receive up to one years annual
salary. The amount actually payable is based on the named
executive officers years of service with us. For
Mr. Horton, he would instead receive severance benefits
under his employment agreement. Under his employment agreement,
if Mr. Horton were terminated other than for cause, he
would be entitled to receive the same benefits as if he had
resigned for good reason as described above in Termination
By Executive For Good Reason.
For a period of two years after termination of employment other
than for cause, each named executive officer is also entitled to
unlimited travel privileges on American Airlines and American
Eagle Airlines for himself and his spouse or companion and any
dependent children. Under this policy, each named executive
officer would be required to pay all related taxes, fees and
charges for the transportation.
In addition, under our long-term incentive plans, performance
shares and deferred shares would vest on a pro-rata basis as if
the named executive officer had instead retired on the date of
termination. The named executive officer would immediately
forfeit all unvested stock options and stock appreciation rights
and would have ninety days to exercise vested stock options and
stock appreciation rights. Career equity awards previously
awarded would immediately vest (at a rate of 10% per year for
each year of service following the date of grant), and would
become payable following the separation. All of the career
performance shares previously awarded to Mr. Arpey would
vest and would be paid subject to a determination by the
Compensation Committee that we met the performance criteria for
those shares.
Termination Due to Death or
Disability. According to the terms of our
long-term incentive plans, upon the death or disability of a
named executive officer, all performance shares and deferred
shares awarded to the named executive officer would vest on a
pro-rata basis, and stock options and stock appreciation rights
would continue to be exercisable. All of the career performance
shares previously awarded to Mr. Arpey would vest and would
be paid based upon a determination by the Compensation Committee
that we met the performance criteria. Career equity awards
previously awarded would immediately vest at a rate of 20% per
year for each year of service following the date of grant and
would become payable. In the event of death of a named executive
officer, his unvested stock options and stock appreciation
rights would immediately vest. In addition, each named executive
officer (or surviving spouse) and his dependent children would
be vested in or eligible to receive the complimentary air
transportation (and related tax reimbursements) described under
Retirement beginning on page 47.
The following table quantifies the severance payments, long-term
incentives and air transportation each named executive officer
would have received had there been a termination of his
employment on December 31, 2009 in the situations described
above, other than retirement. As of December 31, 2009, none
of the named executive officers was eligible for retirement. For
further details regarding payments to our named executive
officers upon a change in control, please see Change In
Control beginning on page 51. In calculating the
amounts in the table, we used a stock price of $7.73 per share,
which was the closing price of our common stock on
December 31, 2009.
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Voluntary
|
|
|
Good
|
|
|
|
|
|
|
|
|
Other Than
|
|
|
|
|
|
|
Separation
|
|
|
Reason3
|
|
|
Death
|
|
|
Disability
|
|
|
For Cause
|
Name
|
|
|
Benefit
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
Cash Severance
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
669,646
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
0
|
|
|
|
|
2,241,7004
|
|
|
|
|
6,535,213
|
|
|
|
|
5,328,813
|
|
|
|
|
5,328,813
|
|
Arpey
|
|
|
|
Pension1
|
|
|
|
|
3,990,368
|
|
|
|
|
3,990,368
|
|
|
|
|
3,990,368
|
|
|
|
|
3,990,368
|
|
|
|
|
3,990,368
|
|
|
|
|
|
Air
Transportation2
|
|
|
|
|
75,972
|
|
|
|
|
75,972
|
|
|
|
|
75,972
|
|
|
|
|
75,972
|
|
|
|
|
75,972
|
|
|
|
|
|
Total
|
|
|
|
|
4,066,340
|
|
|
|
|
6,308,040
|
|
|
|
|
10,601,553
|
|
|
|
|
9,395,153
|
|
|
|
|
10,064,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
-
|
|
|
|
|
2,630,878
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,630,878
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
0
|
|
|
|
|
2,801,644
|
|
|
|
|
1,480,149
|
|
|
|
|
1,013,429
|
|
|
|
|
2,801,644
|
|
Horton
|
|
|
|
Pension1
|
|
|
|
|
2,985,614
|
|
|
|
|
2,985,614
|
|
|
|
|
2,985,614
|
|
|
|
|
2,985,614
|
|
|
|
|
2,985,614
|
|
|
|
|
|
Air
Transportation2
|
|
|
|
|
78,566
|
|
|
|
|
78,566
|
|
|
|
|
78,566
|
|
|
|
|
78,566
|
|
|
|
|
78,566
|
|
|
|
|
|
Total
|
|
|
|
|
3,064,180
|
|
|
|
|
8,496,701
|
|
|
|
|
4,544,329
|
|
|
|
|
4,077,609
|
|
|
|
|
8,496,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
530,479
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
2,334,620
|
|
|
|
|
1,867,900
|
|
|
|
|
1,867,900
|
|
Garton
|
|
|
|
Pension1
|
|
|
|
|
3,250,567
|
|
|
|
|
-
|
|
|
|
|
3,250,567
|
|
|
|
|
3,250,567
|
|
|
|
|
3,250,567
|
|
|
|
|
|
Air
Transportation2
|
|
|
|
|
74,572
|
|
|
|
|
-
|
|
|
|
|
74,572
|
|
|
|
|
74,572
|
|
|
|
|
74,572
|
|
|
|
|
|
Total
|
|
|
|
|
3,325,139
|
|
|
|
|
0
|
|
|
|
|
5,659,759
|
|
|
|
|
5,193,039
|
|
|
|
|
5,723,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
367,255
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
1,478,753
|
|
|
|
|
1,012,033
|
|
|
|
|
1,012,033
|
|
Reding
|
|
|
|
Pension1
|
|
|
|
|
1,726,477
|
|
|
|
|
-
|
|
|
|
|
1,726,477
|
|
|
|
|
1,726,477
|
|
|
|
|
1,726,477
|
|
|
|
|
|
Air
Transportation2
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
9,996
|
|
|
|
|
0
|
|
|
|
|
9,996
|
|
|
|
|
|
Total
|
|
|
|
|
1,726,477
|
|
|
|
|
0
|
|
|
|
|
3,215,226
|
|
|
|
|
2,738,510
|
|
|
|
|
3,115,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
488,646
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
1,369,999
|
|
|
|
|
1,104,239
|
|
|
|
|
1,104,239
|
|
Kennedy
|
|
|
|
Pension1
|
|
|
|
|
2,466,535
|
|
|
|
|
-
|
|
|
|
|
2,466,535
|
|
|
|
|
2,466,535
|
|
|
|
|
2,466,535
|
|
|
|
|
|
Air
Transportation2
|
|
|
|
|
70,745
|
|
|
|
|
-
|
|
|
|
|
72,579
|
|
|
|
|
72,579
|
|
|
|
|
72,579
|
|
|
|
|
|
Total
|
|
|
|
|
2,537,280
|
|
|
|
|
0
|
|
|
|
|
3,909,113
|
|
|
|
|
3,643,353
|
|
|
|
|
4,131,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These amounts for each named executive officer are also reported
in the 2009 Pension Benefits Table, beginning on
page 44, and are paid at retirement age.
|
|
|
(2)
|
These amounts are based on figures that include the estimated
average aggregate incremental cost to us of providing the air
transportation and related tax reimbursements described above to
our named executive officers generally in 2009. For each named
executive officer, we have estimated these costs by using the
average of the estimated annual incremental cost to us of
providing this air transportation for the named executive
officers for the number of years of the named executive
officers projected life expectancy (according to the
mortality tables we used to determine the present value of his
retirement benefits in the 2009 Pension Benefits
Table).
|
|
|
(3)
|
Messrs. Garton, Reding and Kennedy are not parties to any
agreements with us that contemplate a termination for good
reason, so no amounts are shown for them in this column. Each
would have been entitled to receive the amounts shown in the
Voluntary Separation column had they terminated
their employment with us for any reason on December 31,
2009.
|
|
|
(4)
|
This amount represents career performance shares that were
previously granted to Mr. Arpey under his career
performance share agreement. The amount shown is calculated
based on achieving target levels of performance (100%).
|
50
Change In
Control
As described above, if there is a change in control of the
Company, the named executive officers are entitled to benefits
under our long-term incentive plans, the Non-Qualified Plan, and
our executive termination benefit agreements.
Under these plans and agreements, a change in control of the
Company is deemed to occur if: (a) over a
12-month
period, a third party or group acquires beneficial ownership of
30% or more of our common stock or the members of our Board of
Directors (or their approved successors) no longer constitute a
majority of the board; or (b) our stockholders approve a
complete liquidation or dissolution of the Company. Also, a
reorganization, merger or consolidation of the Company, or a
sale or other disposition of all our assets, is considered a
change in control, unless (1) our stockholders prior to the
transaction hold at least 50% of the voting securities of the
successor company, (2) no one person owns more than 30% of
the successor company, and (3) the members of the Board of
Directors prior to the transaction constitute at least a
majority of the board of the successor company. In each case
described above, however, the event must also meet the change in
control requirements under Section 409A of the Internal
Revenue Code.
Under the terms of our long-term incentive plans and agreements,
following a change in control all outstanding stock options and
stock appreciation rights become immediately exercisable, all
outstanding career equity and deferred shares vest, and all
performance shares vest and will be paid at target levels (or
100%) of the original award. The career performance shares
granted to Mr. Arpey will also vest and will be paid,
subject to a determination by the Compensation Committee of
whether we have met the performance criteria in that agreement.
Each named executive officer will also receive a payment under
the Non-Qualified Plan equal to the present value of the accrued
annual retirement benefit to be paid to him under that plan.
As described under Compensation Discussion and
Analysis Post-Employment and Change in Control
Benefits, beginning on page 31, our executive
termination benefit agreements have a double trigger.
Termination benefits under those agreements are therefore
payable to a named executive officer in the event of a change of
control only if: (a) within two years following a change in
control, we (or a successor) terminate the named executive
officers employment for any reason (other than his death,
disability, felony conviction, or willful misconduct or
dishonesty that materially harms our business or reputation);
(b) within two years following a change in control, the
named executive officer terminates his employment for good
reason; (c) the named executive officer terminates his
employment for any reason during the thirty days following the
first anniversary of the change in control; or (d) the
named executive officers employment is terminated
following the commencement of change in control discussions and
the change of control occurs within 180 days after the
termination. For purposes of these agreements, good
reason includes the occurrence of any of the following
after the change in control: (1) a failure to maintain the
executive in a substantially equivalent position; (2) a
significant adverse change in the nature or scope of his
position; (3) a reduction in his salary or incentive
compensation target or a reduction of his benefits; (4) a
change in his employment circumstances, such as a change in
responsibilities that hinder his ability to perform his duties;
(5) the successor company breaches the agreement or does
not assume our obligations under it; or (6) we relocate our
headquarters or require the executive to relocate more than
50 miles from its current location.
Under the executive termination benefit agreements, in the event
of a change in control and termination of his employment in the
situations described above, the named executive officer would be
entitled to the following additional benefits:
|
|
|
|
|
We would pay the named executive officer a cash payment of three
times (or two times in the case of Mr. Horton) the sum of
his annual base salary and the target annual award paid under
our incentive compensation plan (or the largest incentive award
paid under that plan during the prior three years, if greater)
|
51
|
|
|
|
|
For three years following the termination of employment, we
would provide all perquisites and benefits provided to him prior
to the change in control, including health and welfare,
insurance, and other perquisites and benefits described above
|
|
|
|
We would provide a one-time reimbursement for relocation
expenses and outplacement services
|
|
|
|
We would provide the named executive officer, his spouse or
companion, and any dependent children unlimited complimentary
air transportation on American Airlines or American Eagle
Airlines in any available class of service until age 55. At
age 55, we would provide the lifetime air transportation
and tax reimbursements we provide upon retirement described above
|
|
|
|
We would reimburse the named executive officer for any excise
taxes payable under Sections 280G and 4999 of the Internal
Revenue Code as a result and any federal income, employment or
excise taxes payable on the excise tax reimbursement
|
|
|
|
We would treat the named executive officer as fully vested in
his currently accrued benefits under the Retirement Benefit Plan
and the Non-Qualified Plan. We would calculate benefits under
the plans as though his compensation rate equaled the sum of his
base pay and incentive pay and credit him with three additional
years of service
|
|
|
|
We would pay the named executive officers legal fees if
there was a disagreement related to the agreement, and we would
establish a trust to assure their payment
|
The following table lists the estimated payments and values that
would have been due to each named executive officer had a change
in control occurred on December 31, 2009 and the named
executive officers employment was terminated on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
Vesting of
|
|
|
|
Value of
|
|
|
|
|
|
|
|
Outplacement,
|
|
|
|
|
|
|
|
Gross-up
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/Stock
|
|
|
|
Non-
|
|
|
|
Vesting of
|
|
|
|
Value of
|
|
|
|
Relocation and
|
|
|
|
|
|
|
|
Payment
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Appreciation
|
|
|
|
Performance-
|
|
|
|
Performance-
|
|
|
|
Additional
|
|
|
|
Continuing
|
|
|
|
|
|
|
|
for 280G
|
|
|
|
Change in
|
|
|
|
|
Cash
|
|
|
|
Rights
|
|
|
|
Based Stock
|
|
|
|
Based Stock
|
|
|
|
Pension
|
|
|
|
Perquisites and
|
|
|
|
Air
|
|
|
|
Excise
|
|
|
|
Control
|
|
|
|
|
Severance
|
|
|
|
Vesting
|
|
|
|
Awards
|
|
|
|
Awards
|
|
|
|
Benefits
|
|
|
|
Benefits
|
|
|
|
Transportation
|
|
|
|
Taxes
|
|
|
|
Benefits
|
|
Name
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
Arpey
|
|
|
|
4,821,453
|
|
|
|
|
1,206,400
|
|
|
|
|
4,101,074
|
|
|
|
|
6,400,440
|
|
|
|
|
4,875,082
|
|
|
|
|
471,345
|
|
|
|
|
0
|
|
|
|
|
6,370,555
|
|
|
|
|
28,246,348
|
|
Horton
|
|
|
|
2,571,442
|
|
|
|
|
466,720
|
|
|
|
|
1,248,340
|
|
|
|
|
1,914,721
|
|
|
|
|
4,230,293
|
|
|
|
|
440,859
|
|
|
|
|
0
|
|
|
|
|
2,812,282
|
|
|
|
|
13,720,656
|
|
Garton
|
|
|
|
3,310,182
|
|
|
|
|
466,720
|
|
|
|
|
2,289,325
|
|
|
|
|
1,914,721
|
|
|
|
|
1,782,014
|
|
|
|
|
427,969
|
|
|
|
|
0
|
|
|
|
|
2,771,490
|
|
|
|
|
12,962,420
|
|
Reding
|
|
|
|
3,310,186
|
|
|
|
|
466,720
|
|
|
|
|
1,284,340
|
|
|
|
|
1,914,721
|
|
|
|
|
1,880,267
|
|
|
|
|
376,415
|
|
|
|
|
65,261
|
|
|
|
|
2,578,452
|
|
|
|
|
11,876,362
|
|
Kennedy
|
|
|
|
2,565,389
|
|
|
|
|
265,760
|
|
|
|
|
1,061,020
|
|
|
|
|
1,090,317
|
|
|
|
|
2,182,725
|
|
|
|
|
419,694
|
|
|
|
|
1,876
|
|
|
|
|
2,229,983
|
|
|
|
|
9,816,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the above table, we based the stock values on a price of
$7.73 per share, which was the closing price of our common stock
on December 31, 2009. The value of the additional pension
benefits estimated in the table was determined using the same
actuarial assumptions and mortality tables used to determine the
present value of retirement benefits shown in the 2009
Pension Benefits Table beginning on page 44. These
figures assume all payments are made at the time provided under
Section 409A of the Internal Revenue Code.
As described above, upon a change in control, the executive
termination benefits agreements provide that each of the named
executive officers will receive lifetime air transportation.
Since Messrs. Arpey, Horton and Garton are entitled to this
perquisite regardless of whether a change in control has
occurred, their aggregate incremental cost is reflected in the
table in Post-Employment Compensation beginning on
page 47. Since Mr. Kennedy is not entitled to this
retirement perquisite until age 55, this table includes the
estimate of the aggregate incremental costs to us for the
complimentary air transportation (and related taxes) that he
would receive under the agreement until his 55th birthday.
Mr. Reding was not vested in or eligible to receive the air
transportation perquisite as of December 31, 2009, so the
table includes the estimate of the aggregate incremental costs
to us for him for his lifetime. We have estimated the air
transportation costs by using the average of the estimated
annual incremental cost to us of providing this air
transportation for the named executive officers in 2009 for the
number of years of the named executive officers projected
life expectancy (according to the mortality tables we used to
determine the present value of his retirement benefits in the
2009 Pension Benefits Table beginning on
page 44).
52
Our Nominating/Corporate Governance Committee reviews annually
the overall compensation of the directors in consultation with
the Board and with the assistance of our management. In doing
so, the committee has the authority to retain a compensation
consultant, although no consultant was engaged in 2009. The
Board approves any changes to director compensation. There were
no changes to our director compensation program in 2009.
The following is a description of our director compensation
program in 2009. Mr. Arpey does not receive any
compensation as a director or as Chairman because we compensate
him as an employee. We describe Mr. Arpeys
compensation in the Fiscal Year 2007, 2008 and 2009
Summary Compensation Table and accompanying text and
Compensation Discussion and Analysis above.
Elements of
Director Compensation
Retainers/Fees
Each of our non-employee directors received in 2009:
|
|
|
|
|
An annual retainer of $20,000 for service on the Board
|
|
|
|
An additional annual retainer of $3,000 for service as Lead
Director or for service on one or more of the Boards
standing committees
|
|
|
|
$1,000 for participating in a regular or special Board or
committee meeting. The maximum payment for meeting participation
is $1,000 per day
|
All of our directors deferred the payment of their 2009
retainers and fees until they depart from the Board. According
to the terms of the deferral agreements with the directors other
than Dr. Rodin, their deferred fees and retainers are
converted into a number of deferred units based on our stock
price. We calculate the number of deferred units by dividing the
amount of the fees and retainers earned in a month by the
average of the highest and lowest quoted selling price of our
common stock during that month. We will pay the deferred units
to them in cash after they cease to be a member of the Board.
The payment is equal to the number of deferred units held by the
director, multiplied by the average of the highest and lowest
quoted selling prices of our common stock during the month
preceding the month in which the director ceases to be a member
of our Board. Under the deferral agreement with Dr. Rodin,
her 2009 fees and retainers accrue interest at a rate equal to
the prime rate in effect, from time to time, at J.P. Morgan
Chase National Bank, N.A.
Annual Grants of
Deferred Units
Under the terms of the 2004 Directors Unit Incentive Plan,
each non-employee director received an annual award of 2,610
deferred units in July 2009. We will pay the deferred units to
them in cash after they cease to be a member of the Board. The
payment is equal to the number of deferred units held by the
director, multiplied by the average of the highest and lowest
quoted selling prices of our common stock on the date the
director leaves the Board.
As described below under Pension and Other Retirement
Benefits, non-employee directors elected after
May 15, 1996 are not eligible to participate in our
director pension plan. We instead provide them an additional
annual grant of 710 deferred units. These deferred units are
paid on the same terms as the annual deferred units described
above. Since they were elected after May 15, 1996,
Dr. Rodin and Messrs. Bachmann, Gupta, Ibargüen,
Miles, Purcell, Robinson, Rose and Staubach were each granted an
additional 710 deferred units in July 2009.
53
Other
Compensation
Each non-employee director and his or her spouse or companion
and dependent children also received unlimited complimentary air
transportation on American Airlines and American Eagle Airlines
in any available class of service, and we reimbursed them for
any related taxes. They also received assistance while traveling
and when making reservations. We provided to them membership in
our Admirals
Club®
airport lounges and all of the benefits and privileges American
Airlines gives to its best frequent flyers, including class of
service upgrade credits. We also provided a limited number of
other perquisites and personal benefits, which are described in
footnote 5 to the Director Compensation Table For Fiscal
Year 2009 below.
Pension and Other
Retirement Benefits
Each non-employee director elected to the Board on or before
May 15, 1996 that serves on the Board until age 62 is
entitled to receive a pension benefit of $20,000 per year until
the later of the death of the director or the directors
spouse. Upon retirement from the Board, each of
Messrs. Boren and Codina and Mrs. Korologos is
entitled to receive this benefit.
We will also continue to provide the Admirals
Club®
membership, frequent flyer benefits, complimentary air
transportation services and tax reimbursements described above
following the non-employee directors retirement. For each
non-employee director who has served on the Board for at least
ten years and retires at or following age 70, we continue
to provide the complimentary air transportation services until
the later of the death of the director or his or her spouse. For
directors who either do not serve until age 70 or do not
serve for at least ten years, we continue to provide the
complimentary air transportation for the number of years the
director served on the Board.
Director
Compensation Table For Fiscal Year 2009
The following table contains information regarding compensation
paid to our non-employee directors in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
in Cash1
|
|
|
Awards2
|
|
|
Awards3
|
|
|
Compensation
|
|
|
Earnings4
|
|
|
Compensation5
|
|
|
Total
|
Name
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
John W. Bachmann
|
|
|
|
39,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16,510
|
|
|
|
70,550
|
David L. Boren
|
|
|
|
38,000
|
|
|
|
|
11,823
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
17,580
|
|
|
|
6,446
|
|
|
|
73,849
|
Armando M. Codina
|
|
|
|
39,000
|
|
|
|
|
11,823
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
14,403
|
|
|
|
6,951
|
|
|
|
72,177
|
Rajat K. Gupta
|
|
|
|
36,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,294
|
|
|
|
65,334
|
Alberto Ibargüen
|
|
|
|
38,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,991
|
|
|
|
60,031
|
Ann M. Korologos
|
|
|
|
39,000
|
|
|
|
|
11,823
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
15,630
|
|
|
|
6,968
|
|
|
|
73,421
|
Michael A. Miles
|
|
|
|
39,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
906
|
|
|
|
54,946
|
Philip J. Purcell
|
|
|
|
38,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
867
|
|
|
|
53,907
|
Ray M. Robinson
|
|
|
|
39,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7,811
|
|
|
|
61,851
|
Judith Rodin
|
|
|
|
37,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,848
|
|
|
|
72,888
|
Matthew K. Rose
|
|
|
|
38,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
11,261
|
|
|
|
64,301
|
Roger T. Staubach
|
|
|
|
39,000
|
|
|
|
|
15,040
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7,089
|
|
|
|
61,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The amounts represent the aggregate dollar amount of all fees
the directors earned in 2009 for service as a director,
including annual retainer, committee, meeting and Lead Director
fees. The directors deferred payment of the retainers and fees
until they leave the Board.
|
54
|
|
(2) |
The amounts shown were not actually paid to the directors.
Rather, as required by the rules of the SEC, the amounts
represent the aggregate grant date fair value of deferred units
we granted to the directors in 2009 under the
2004 Directors Unit Incentive Plan. These values were
determined in accordance with FASB ASC Topic 718. See
note 9 to the consolidated financial statements in our
Form 10-K
for the fiscal year ended December 31, 2009 for the
assumptions made in determining the aggregate grant date fair
value of these awards.
|
The chart below reflects the aggregate number of outstanding
stock-based compensation awards each director held as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1994 Directors Stock
|
|
|
2004 Directors Unit
|
|
|
Directors Fees
|
|
|
|
Incentive Plan Shares
|
|
|
Incentive Plan Units
|
|
|
Deferred Units
|
Name
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
Bachmann
|
|
|
|
4,266
|
|
|
|
|
18,733
|
|
|
|
|
29,283
|
|
Boren
|
|
|
|
12,322
|
|
|
|
|
14,472
|
|
|
|
|
22,437
|
|
Codina
|
|
|
|
12,322
|
|
|
|
|
14,472
|
|
|
|
|
35,039
|
|
Gupta
|
|
|
|
0
|
|
|
|
|
6,640
|
|
|
|
|
10,204
|
|
Ibargüen
|
|
|
|
0
|
|
|
|
|
6,640
|
|
|
|
|
10,836
|
|
Korologos
|
|
|
|
13,270
|
|
|
|
|
14,472
|
|
|
|
|
22,113
|
|
Miles
|
|
|
|
6,399
|
|
|
|
|
18,733
|
|
|
|
|
22,865
|
|
Purcell
|
|
|
|
8,532
|
|
|
|
|
18,733
|
|
|
|
|
29,433
|
|
Robinson
|
|
|
|
0
|
|
|
|
|
13,280
|
|
|
|
|
12,397
|
|
Rodin
|
|
|
|
12,798
|
|
|
|
|
18,733
|
|
|
|
|
13,692
|
|
Rose
|
|
|
|
0
|
|
|
|
|
16,600
|
|
|
|
|
17,918
|
|
Staubach
|
|
|
|
4,266
|
|
|
|
|
18,733
|
|
|
|
|
29,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Prior to 2006, we granted directors stock appreciation rights
under the 1999 Directors Stock Appreciation Rights
Plan. As of December 31, 2009, the aggregate number of
outstanding stock appreciation rights each director held was as
follows: Mr. Bachmann (3,555), Mr. Boren (2,370),
Mr. Codina (5,925), Mr. Gupta (0),
Mr. Ibargüen (0), Mrs. Korologos (5,925),
Mr. Miles (4,740), Mr. Purcell (5,925),
Mr. Robinson (0), Dr. Rodin (5,925), Mr. Rose
(0) and Mr. Staubach (3,555). We did not grant stock
appreciation rights to any directors in 2009.
|
|
(4)
|
Since Messrs. Boren and Codina and Mrs. Korologos were
elected prior to May 15, 1996, each is entitled to receive
a pension benefit of $20,000 per year from the date of
retirement until the later of the death of the director or his
or her spouse. The present value of their accumulated retirement
benefits increased from December 31, 2008 to
December 31, 2009 due to a change in the discount rate used
to calculate our liability and the passage of time. As described
in note 10 to the consolidated financial statements in our
Form 10-K
for the fiscal year ended December 31, 2009, the discount
rate decreased from 6.5% at December 31, 2008 to 6.1% at
December 31, 2009.
|
|
(5)
|
Amounts shown include: (a) the estimated aggregate
incremental cost to us of the complimentary air transportation
on American Airlines and American Eagle Airlines that we
provided to the directors and their respective family members in
2009; and (b) the dollar value of insurance premiums we
paid in 2009 for a $50,000 life insurance policy for the benefit
of each director. The amounts also include tax reimbursements
that we paid to our directors in 2009 for the complimentary air
transportation we provided them in 2008. We paid the following
tax reimbursements in 2009: Mr. Bachmann ($14,791),
Mr. Boren ($5,736), Mr. Codina ($6,377),
Mr. Gupta ($13,367), Mr. Ibargüen ($6,148),
Mrs. Korologos ($5,735), Mr. Miles ($167),
Mr. Robinson ($6,672), Dr. Rodin ($19,511),
Mr. Rose ($9,931) and Mr. Staubach ($6,040).
|
55
The following table lists (as of April 21, 2010) the
number and percentage of shares of our common stock beneficially
owned by our directors, our named executive officers, and our
directors and executive officers as a group. The number and
percentage of shares of common stock beneficially owned is
determined under the rules of the SEC and is not necessarily
indicative of beneficial ownership for any other purpose. To our
knowledge, and except as indicated in the footnotes to this
table, each person named in the table has sole voting and
investment power with respect to the shares opposite such
persons name, and none of the individuals below has
pledged any shares of our common stock. The address for each
individual listed below is
c/o P.O. Box 619616,
MD 5675, Dallas/Fort Worth International Airport, TX
75261-9616.
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|
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AMR Corporation
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|
|
|
|
|
|
Common Stock1,
2
|
|
|
Percent of Class
|
Name
|
|
|
(#)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
Gerard J. Arpey
|
|
|
|
1,125,514
|
|
|
|
|
|
*
|
John W. Bachmann
|
|
|
|
6,500
|
|
|
|
|
|
*
|
David L. Boren
|
|
|
|
400
|
|
|
|
|
|
*
|
Armando M. Codina
|
|
|
|
1,000
|
|
|
|
|
|
*
|
Rajat K. Gupta
|
|
|
|
5,000
|
|
|
|
|
|
*
|
Alberto Ibargüen
|
|
|
|
9,000
|
|
|
|
|
|
*
|
Ann M. Korologos
|
|
|
|
7,800
|
|
|
|
|
|
*
|
Michael A. Miles
|
|
|
|
15,000
|
|
|
|
|
|
*
|
Philip J. Purcell
|
|
|
|
10,000
|
|
|
|
|
|
*
|
Ray M. Robinson
|
|
|
|
3,000
|
|
|
|
|
|
*
|
Judith Rodin
|
|
|
|
1,000
|
|
|
|
|
|
*
|
Matthew K. Rose
|
|
|
|
1,000
|
|
|
|
|
|
*
|
Roger T. Staubach
|
|
|
|
5,000
|
|
|
|
|
|
*
|
Thomas W. Horton
|
|
|
|
177,988
|
|
|
|
|
|
*
|
Daniel P. Garton
|
|
|
|
615,204
|
|
|
|
|
|
*
|
Robert W. Reding
|
|
|
|
369,345
|
|
|
|
|
|
*
|
Gary F. Kennedy
|
|
|
|
209,814
|
|
|
|
|
|
*
|
Directors and executive officers as
a group
|
|
|
|
2,562,565
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
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(1)
|
This column includes the following shares of common stock that
may be acquired under stock options and stock appreciation
rights that are exercisable before June 20, 2010:
919,600 shares for Mr. Arpey; 128,600 shares for
Mr. Horton; 602,720 shares for Mr. Garton;
263,170 shares for Mr. Reding; and 185,180 shares
for Mr. Kennedy.
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(2)
|
See 2009 Outstanding Equity Awards At Fiscal Year-End
Table, beginning on page 39, for other outstanding
equity awards held by our named executive officers that are not
included in this table.
|
56
The following table presents information known to us about the
beneficial ownership of our common stock as of April 1,
2010, by all persons and entities that we believe beneficially
own more than 5% of our outstanding common stock. The
information below is based on reports filed with the SEC by such
entities, except that the percentage is based upon calculations
made in reliance upon the number of shares of common stock
reported to be beneficially owned by such entity in such report.
The percentage of beneficial ownership is based on
332,700,401 shares of our common stock outstanding on
April 1, 2010.
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|
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|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
|
|
|
|
Beneficial Ownership
|
|
|
Percent of Class
|
Name and Address of Beneficial
Owner
|
|
|
(#)
|
|
|
(%)
|
Capital Research Global Investors
|
|
|
|
23,352,7791
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|
|
|
|
7.0
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|
333 South Hope Street
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|
|
|
|
|
|
|
|
|
|
Los Angeles, CA 90071
|
|
|
|
|
|
|
|
|
|
|
Capital World Investors
|
|
|
|
26,293,0722
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|
|
|
|
7.9
|
|
333 South Hope Street
|
|
|
|
|
|
|
|
|
|
|
Los Angeles, CA 90071
|
|
|
|
|
|
|
|
|
|
|
FMR LLC
|
|
|
|
47,295,5083
|
|
|
|
|
14.2
|
|
82 Devonshire Street
|
|
|
|
|
|
|
|
|
|
|
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
|
|
PRIMECAP Management Company
|
|
|
|
39,615,7784
|
|
|
|
|
11.9
|
|
225 South Lake Avenue #400
|
|
|
|
|
|
|
|
|
|
|
Pasadena, California 91101
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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|
|
(1)
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|
Based on a Schedule 13G filed
February 11, 2010, Capital Research Global Investors, a
division of Capital Research and Management Company, reported
that it beneficially owned and had sole dispositive power over
23,352,779 shares of our common stock, sole voting power
over 9,700,128 of such shares, shared voting power over
2,344,571 of such shares and shared dispositive power over none
of such shares.
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|
(2)
|
|
Based on a Schedule 13G filed
February 10, 2010, Capital World Investors, a division of
Capital Research and Management Company, reported that it
beneficially owned and had sole dispositive power over
26,293,072 shares of our common stock, sole voting power
over 20,575,900 of such shares, and shared voting and shared
dispositive power over none of such shares.
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|
(3)
|
|
Based on Amendment No. 3 to
Schedule 13G filed February 16, 2010, FMR LLC, a
parent holding company (FMR), Edward C. Johnson 3d,
Chairman of FMR, and FMRs direct and indirect subsidiaries
report beneficially owning 47,295,508 shares of our common
stock. FMR LLC reports having sole voting power over 151,515 of
such shares, sole dispositive power over 47,295,508 shares,
and shared voting and shared dispositive power over none of such
shares. Edward C. Johnson 3d reports having sole dispositive
power over 47,295,508 of such shares, and sole and shared voting
power and shared dispositive power over none of such shares.
|
|
(4)
|
|
Based on Amendment No. 20 to
Schedule 13G filed February 11, 2010, PRIMECAP
Management Company reported that it beneficially owned and had
sole dispositive power over 39,615,778 shares of our common
stock, sole voting power over 9,929,358 of such shares, and
shared voting and shared dispositive power over none of such
shares.
|
57
Our Audit Committee has selected Ernst & Young LLP to
serve as our independent auditors for the year ending
December 31, 2010. We request that the stockholders ratify
the Audit Committees selection. Representatives of
Ernst & Young will be present at the annual meeting,
will have the opportunity to make a statement (if they desire),
and will be available to answer appropriate questions.
Vote Required for
Ratification
A majority of votes cast is necessary to ratify the Audit
Committees selection of the independent auditors. If the
stockholders do not ratify the selection of Ernst &
Young, the Audit Committee will reconsider the selection of the
independent auditors.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 2.
We expect a stockholder to present the following proposal at the
annual meeting. The Board of Directors recommends a vote against
the proposal for the reasons stated following the proposal.
Mrs. Evelyn Y. Davis, The Watergate Office Building, 2600
Virginia Ave., N.W., Suite 215, Washington, D.C.
20037, who owns 1,000 shares of our common stock, has given
notice that she will propose the following resolution at the
annual meeting. Her proposed resolution and statement in support
are set forth below. A majority of votes cast is necessary for
approval of the proposal.
RESOLVED: That the stockholders of AMR, assembled in
Annual Meeting in person and by proxy, hereby request the Board
of Directors to take the necessary steps to provide for
cumulative voting in the election of directors, which means each
stockholder shall be entitled to as many votes as shall equal
the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such
votes for a single candidate, or any two or more of them as he
or she may see fit.
REASONS: Many states have mandatory cumulative
voting, so do National Banks.
In addition, many corporations have adopted cumulative voting.
Last year the owners of 50,821,841 shares, representing
approximately 31% of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy FOR this resolution.
End
of Stockholder Proposal
The
Board of Directors Position
FOR THE REASONS STATED BELOW, THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST PROPOSAL 3.
Like most large public companies, we do not elect directors
using cumulative voting. It is the Boards opinion that
cumulative voting could enable groups of stockholders with less
than a majority of our outstanding shares to elect directors who
would represent special interests rather than the best interests
of all stockholders. It is also the Boards opinion that
cumulative voting could give special-interest stockholder groups
a voice in director elections disproportionate to their economic
58
investment. The Board believes that no director should represent
or favor the interests of any one stockholder or a limited group
of stockholders. Instead, every director should represent the
stockholders as a whole.
The Board also believes that cumulative voting is unnecessary in
light of our strong corporate governance practices and
philosophy. For example, twelve of our thirteen directors are
independent, non-management directors, and the Boards
Nominating/Corporate Governance Committee, which is responsible
for identifying and recommending qualified individuals for
director positions, consists solely of independent,
non-management directors. This ensures that the Board will
continue to exercise independent business judgment and remain
accountable to all of our stockholders, rather than to a
particular special-interest stockholder group.
The Board further notes that our present system of electing
directors, where each share of common stock is allowed to have
one vote for each Board seat, is crucial to minimize the risks
of Board divisiveness, which can impair the ability of the Board
to operate effectively. The Board believes that our current
director election system ensures that each director acts in the
best interests of all the Companys stockholders and
reduces the risk of divisiveness on the Board.
The Board of Directors believes that changing our director
election system would not be in the best interests of all
stockholders.
FOR THESE
REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST PROPOSAL 3.
If any other matters properly come before or are otherwise voted
on at the annual meeting (or any adjournment or postponement of
the meeting), the proxies identified on page 4 will use
their discretion to vote in accordance with their best judgment.
Section 16(a) of the Exchange Act requires our directors
and executive officers to file statements of beneficial
ownership and changes in beneficial ownership of our common
stock with the SEC and the NYSE, and to furnish us with copies
of these statements. Based solely on our review of the
statements furnished to us and written representations that no
other statements were required, we believe that our directors
and executive officers complied with all these requirements
during 2009. Based upon our review of their filings on
Schedule 13G, we believe that the beneficial owners of more
than 10 percent of our common stock are not required to
file reports pursuant to Section 16(a) of the Exchange Act.
From time to time, stockholders submit proposals that may be
proper subjects for inclusion in the Companys proxy
statement and for consideration at the annual meeting. Any
stockholder proposals for inclusion in our 2011 proxy statement
must be received by our Corporate Secretary at the address
provided on the next page no later than December 24, 2010.
All stockholders submitting proposals must meet the stockholder
eligibility requirements of
Rule 14a-8
(available on the SEC website). Please direct any such proposal,
as well as any related questions, to our Corporate Secretary at
the address on the next page.
Our bylaws provide that any stockholder wishing to nominate a
director at or bring any other item before an annual meeting,
other than proposals intended to be included in the proxy
materials pursuant to
Rule 14a-8,
must provide timely and compliant written notice. To be timely
for the 2011
59
annual meeting, a notice must be delivered to our Corporate
Secretary at the address below, but not before January 19,
2011 nor after February 18, 2011. However, if the 2011
annual meeting is advanced by more than 30 days or delayed
more than 60 days from May 19, 2011, then our bylaws
provide a different deadline for the notice. The notice must
contain and be accompanied by additional information as
specified in our bylaws. We recommend that any stockholder
wishing to nominate a director at or bring any other item before
an annual meeting review a copy of our bylaws, which are
available on the Investor Relations section of our website
located at www.aa.com/investorrelations by clicking on
the Corporate Governance link.
The Nominating/Corporate Governance Committee has adopted a
policy where it will consider qualified candidates for director
suggested by our stockholders. Stockholders can suggest
qualified candidates for director by writing to our Corporate
Secretary at the address below. We will forward submissions of
candidates that meet the Boards criteria for director
nominees to the Chairman of the Nominating/Corporate Governance
Committee for further review and consideration. The criteria for
director nominees are described in Director
Nominees, beginning on page 16, and are also
available on the Investor Relations section of our website
located at www.aa.com/investorrelations by clicking on
the Corporate Governance link.
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Via U.S. Mail:
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Via Courier:
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AMR Corporation
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AMR Corporation
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Corporate Secretary
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Corporate Secretary
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P.O. Box 619616, MD 5675
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4333 Amon Carter Blvd., MD 5675
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Dallas/Fort Worth International Airport, Texas
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Fort Worth, Texas 76155
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75261-9616
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|
In certain sections of this Proxy Statement, references are made
to documents that may be found at our website
www.aa.com/investorrelations by clicking on the
Corporate Governance link. All summaries of
documents in this Proxy Statement are qualified in their
entirety by reference to the actual text of the documents on our
website.
AMR CORPORATION
April 23, 2010
60
ADMISSION TICKET
AMR CORPORATION
2010 ANNUAL MEETING OF STOCKHOLDERS
730 Third Avenue
(between East 45th and East 46th Streets)
17th Floor
New York, New York 10017
Wednesday, May 19, 2010
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Registration Begins:
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7:15 a.m. Eastern time |
Meeting Begins:
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8:00 a.m. Eastern time |
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TO ATTEND THIS MEETING YOU MUST PRESENT THIS ADMISSION TICKET OR OTHER PROOF OF
SHARE OWNERSHIP. |
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Stockholders may be asked to present valid governmentally-issued picture identification, such
as a drivers license or passport. For security reasons, all bags are subject to search, and all persons
who attend the meeting may be subject to a metal detector and/or a hand wand search. |
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The use of cameras or other recording devices at the annual meeting is prohibited. |
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All stockholders will be required to check-in at the registration desk. |
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Please allow ample time for check-in. |
PROXY/VOTING INSTRUCTION CARD
AMR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF AMR CORPORATION
The undersigned hereby appoints Gerard J. Arpey, David L. Boren and Ann M. Korologos, or any of
them, proxies, each with full power of substitution, to vote the shares of the undersigned at the
Annual Meeting of Stockholders of AMR Corporation on May 19, 2010, and any adjournments or
postponements thereof, upon all matters as may properly come before the meeting. Without otherwise
limiting the foregoing general authorization, the proxies are instructed to vote as indicated
herein.
Employees/Participants Holding Shares of AMR Corporations Stock as an Investment Option Under the
$uper $aver 401(k) Plan (the Option): This card also constitutes your voting instructions to the
appointed investment manager for those shares held in the Option. Consistent with its fiduciary
duties under the Employee Retirement Income Security Act of 1974, Evercore Trust Company, N.A.
(Evercore) as investment manager of the Option, will vote the shares held in the Option for which
timely voting instructions are received as instructed by you. Your voting instructions to Evercore
are confidential. In order for your vote to be counted, Evercore must receive your voting
instructions by 11:59 p.m., Eastern time, on May 16, 2010. Any shares for
which timely instructions are not received by Evercore will be voted in the same manner and
proportion as those shares for which timely instructions are received. The number of shares you
are eligible to vote is based on your unit balance in the Option on March 22, 2010, the record date
for the determination of stockholders eligible to vote. If you have any questions regarding your
voting rights under the Option, this voting instruction card or the confidentiality of your vote,
please contact Evercore between the hours of 9:00 a.m. and 4:00 p.m., Pacific time, at
1-888-296-2891.
You are encouraged to specify your choices by marking the appropriate boxes. SEE REVERSE SIDE. You
need not mark any boxes if you wish to vote in accordance with the Board of Directors
recommendations. The proxies cannot vote your shares unless you vote your shares using the
Internet, vote by telephone or sign and return this card.
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n 14475
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(Continued and to be signed on the reverse side)
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14475 n |
2010 ANNUAL MEETING OF STOCKHOLDERS OF
AMR CORPORATION
May 19, 2010
PROXY VOTING INSTRUCTIONS
THREE WAYS TO VOTE:
As a stockholder, you can help AMR Corporation save both time
and expense by voting this proxy over the Internet or by
touch-tone telephone.
INTERNET - Access www.voteproxy.com and follow the on-screen
instructions. Have your proxy card available when you access
the web page, and use the Company Number and Account Number
shown on your proxy card.
TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in
the United States or 1-718-921-8500 from foreign countries
from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy card.
Vote online/telephone until 11:59 p.m. Eastern time the day
before the meeting.
MAIL - Sign, date and mail your proxy card
in the envelope provided as soon as possible.
If you vote your proxy by Internet or telephone, you do NOT
need to mail back your proxy card. THANK YOU FOR VOTING!
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COMPANY NUMBER
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ACCOUNT NUMBER |
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL STOCKHOLDER MEETING TO BE
HELD ON MAY 19, 2010:
Our Official Notice of Annual Meeting of Stockholders, Proxy Statement
and 2009 Annual Report to Stockholders are available on our website
located at www.aa.com/investorrelations
ê Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. ê
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n
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21333000000000001000 3
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051910 |
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The Board of Directors recommends a vote FOR proposals 1 and 2; and AGAINST proposal 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
1. Election of Directors:
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NOMINEES: |
o
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FOR ALL NOMINEES
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¡
¡
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Gerard J. Arpey
John W. Bachmann |
o
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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¡
¡
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David L. Boren
Armando M. Codina |
o
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FOR ALL NOMINEES
EXCEPT
(See instructions below)
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¡
¡
¡
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Rajat K. Gupta
Alberto Ibargüen
Ann M. Korologos |
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¡
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Michael A. Miles |
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¡
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Philip J. Purcell |
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¡
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Ray M. Robinson |
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¡
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Judith Rodin |
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¡
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Matthew K. Rose |
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¡
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Roger T. Staubach |
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INSTRUCTIONS: |
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To withhold authority to vote for any individual nominee(s), mark FOR ALL
NOMINEES EXCEPT and fill in the circle next to
each nominee you wish to WITHHOLD, as shown here: l |
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To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method.
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o |
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FOR |
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AGAINST |
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ABSTAIN |
2.
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Ratification of the selection by the Audit Committee of Ernst &
Young LLP as independent auditors for the year 2010
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o
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o
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o |
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3.
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Stockholder Proposal Relating to Cumulative Voting for the
Election of Directors
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o
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o
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o |
This proxy, when properly signed, will be voted in the manner
directed herein. If no direction is made, this proxy will be voted
FOR all of the Board of Directors nominees; FOR proposal 2; and
AGAINST proposal 3.
If you plan to attend the Annual Meeting, please mark this box: o
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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n
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
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