American Airlines CEO to be paid in stock

  • Associated Press
  • Wednesday, April 22, 2015 4:46pm
  • Business

DALLAS — The CEO of American Airlines received compensation valued at $12.3 million last year and will stop drawing a salary and instead be paid entirely in company stock.

CEO Doug Parker said Wednesday that the change started immediately and would make his compensation more in line with shareholder interests.

American Airlines Group Inc. disclosed his compensation and the other changes in filings with the Securities and Exchange Commission.

In 2014, a year of record profit for American and its predecessor companies, about 40 percent of Parker’s compensation was paid in cash. He drew a $687,884 salary, got maximum incentive payments of $4.2 million, stock awards valued at $7 million, and $414,092 in other payments including $215,862 to help move from Phoenix to Dallas.

In 2013, Parker was paid compensation valued at nearly $21 million, according to regulatory filings. Most of the pay was in American stock awards, but Parker also got salary, bonuses and stock awards from US Airways, which he led until the two airlines merged in December 2013.

Parker said Wednesday that he asked American’s board of directors to stop paying him a salary and annual bonus and to put all of his compensation in the form of restricted stock, some of which will be tied to company performance.

“I believe this is the right way for my compensation to be set — at risk, based entirely on the results achieved, and in the same currency that our shareholders receive,” he wrote in a letter to employees.

Parker’s deal seems to cut against a trend in CEO pay. Stock grants were attractive just after the financial crisis of 2008 but are less appealing now after a long rally in the stock market — the shares are less likely to rise. Cash payments to CEOs in 2014 grew at the fastest rate in at least four years, according to a study that the Hay Group conducted for The Wall Street Journal.

Parker won’t be the only CEO working for little or no salary. Facebook Inc.’s Mark Zuckerberg gets only $1 in salary, although the social media co-founder is a billionaire. The CEO of car-auction company Copart Inc. got $22.9 million last year, all in stock options except a $1 salary and $18,000 in car privileges.

Aaron Boyd, the director of governance research at Equilar, said paying the CEO in stock instead of cash “is usually meant as a demonstration to employees and shareholders that the CEO is really committed to the growth of the stock price.”

Parker was the CEO of much-smaller US Airways when he engineered the merger that created American Airlines Group, now the world’s biggest airline company by passenger traffic. Both airlines had gone through bankruptcy. Together they have prospered as mergers reduced competition, the remaining airlines limited the supply of seats to boost fares, and jet fuel prices fell sharply in the second half of last year.

American, based in Fort Worth, Texas, earned a record $2.9 billion in 2014. Shareholders did well too — the stock jumped 112 percent, second only to Southwest’s gain among the largest U.S. airlines.

The shares rose 4 cents to close at $51.40 on Wednesday. They have lost 4 percent this year.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.