American Airlines drops executive bonus plan

[Pyrrho]

http://www.suntimes.com/output/business/cst-fin-amer19.html

DALLAS--After sharp criticism from its rank-and-file, American Airlines dropped a plan Friday to award bonuses to six top executives if they stay at the embattled airline until 2005.

But the airline is leaving in place a supplemental pension plan for a broader group of top executives that would be protected even if American filed for bankruptcy.

The plan had caused an uproar among American employees, who learned of the perks this week as they approved deep wage cuts and other concessions that the company said it needed to avoid bankruptcy.

Prior to dropping this plan, what American Airlines did has been common practice among companies that file for bankruptcy in the United States. Almost without exception, such companies offer lucrative retention bonuses to executives, while at the same time eliminating jobs. Also, stockholders are left with worthless holdings and virtually no voice in the bankruptcy proceedings.

The company I work for has been in bankruptcy twice during my time there. Each time, numerous people lost their jobs; each time, executives received retention bonuses and other benefits directly as a result of the bankruptcies; bonuses and benefits they would not have received had the company remained solvent. Many of them have received them twice, now. It boggles the mind -- would you keep the management of a company that went bankrupt? Would you pay them extra money to stay?

 

[Frank Newgent]

Yes, why not? Some other large corporation employing tens of thousands may be willing to offer six and seven figure bonuses plus lucrative retention dividends. With the number of bankruptcy filings hitting an all-time high, competiton is tough in keeping talented top executives.

 

[Mel]

I know I feel a lot safer flying just knowing that the top honchos are making more money. Maybe they're onto something???

 

[Lemastre]

Protect us from "talented" executives!

Yes, why not? . . . competiton is tough in keeping talented top executives.

Extra pay for executives may be okay when their company is succeeding, but when they've taken it into bankruptcy and are asking the rank and file to take pay cuts it's ludicrous. Executives today expect to get rich regardless of how their company performs. Getting fired and/or leaving your firm in bankruptcy are two of the commoner ways of doing it. It's absurd to hear bandits like Don Carty asking his troops to take cuts, knowing that he's hiding a plan to line his pockets with the money the troops give up. The major "talent" exhibited by these guys is in devising schemes to rip off their companies and stockholders.

 

[Pyrrho]

See, when the practice during bankruptcy is to reward top executives with retention bonuses and other financial gains, IMO there is an incentive to file for bankruptcy. Executives should not reap rewards of any kind when the company goes bust. If they leave, tough. There are plenty of men and women in corporations who are ready, willing, and able to step into those positions.

 

[corplinx]

I have worked for a company that seemed to hire a new VP every time they layed off 10 people. So I have a little of that "us vs them" angst.

However.............. the very top execs at a company take a big chance by staying on at a bankrupt company. If they stay on and the company tanks, that is not an impressive entry on their resume. Offering retention bonuses is common practice and I expect it to stay.