Correspondence between Jeff Brundage and Alan M.

Mr. Brundage
 
I am well aware of American's various compensation plans and most importantly the unfair way they are distributed.  To compare the AIP plan with it's unreachable goals and the possibility of profit sharing to your executive compensation package is insulting.  If AIP was truly designed to reward us based on our professionalism and contributions to American, we certainly would see more payouts.
 
The responsibilities of Flight Attendants has increased while our salaries have not kept up with the cost of living.  We are drastically understaffed and while the executives at American can walk away with close to $200 million they will not recall flight attendants who are on furlough and desperately needed.  So much for putting the employee or the customer first.
 
Clearly Mr. Arpey and Mr. Grinstein are two completely different types of executives.  When Mr. Grinstein thanked the employee's of Delta for a job well done, he was sincere as he led by example.  A sincere thank you goes along way.  However, if you are going to talk the talk you must walk the walk.  
 
While AMR may follow widely accepted principles of corporate governance.  It does not make it an ethical program.  Just because everyone else is doing it, does not make it right.   AMR is just like any other corporation in this country, executive compensation is way out of line.  Bottom line, we were told that we would all share in the sacrifices necessary to save and make American Airlines successful.  We the employees of American have done all the sacrificing and the executives have reaped the rewards.  
 
Your email to me is just a group of words.  It is hard to trust people who do not lead by example. The size-able reward accepted by over 800 of you 2 weeks ago has created a large rift between upper management and labor.  That is another difference between Mr. Arpey and Mr. Grinstein.  Mr. Grinstein attempted and succeeded in healing that division.  The executives at American have just poured salt in a wound.  Mr. Brundage at this point a band-aid is not going to fix it.  This issue is a serious one and requires major surgery.  We can only stay on life support for so long.  I urge you to find ways to being the healing.
 
Regards,
 
Alan M.  
 
 

"Brundage, Jeff" <[email protected]> wrote:
Dear Mr. M:
 
Please allow me to reply in response to your e-mail to Gerard Arpey.
 
First, thank you for taking the time to share your views.
 
As you know, our compensation structures vary depending on experience, responsibilities, training, qualifications, and workgroup. Our goal is to ensure that American employees, including management, are compensated in line with similar positions.  American worked closely with employees and the unions during the restructuring process in 2003 to address our financial and competitive challenges while maintaining fair compensation levels and valuable benefits. These include the best-funded defined benefit plan in the airline industry and other retirement benefits that provide meaningful retirement security to our employees.
 
There’s no question that all of American’s employees have helped make the company stronger, both through restructuring and our ongoing, collective efforts to enhance customer service, improve productivity, increase revenues and implement a variety of programs to streamline and simplify our operations.  
 
Our compensation programs, including AIP and profit sharing, are designed to reward employees for their professionalism and contributions to AA’s success.  We currently are accruing funds in anticipation of improved financial performance that could trigger profit-sharing payments to employees. Should AMR meet recent market analyst projections, these payments could equal as much as three weeks additional pay for employees. Ultimately, we all benefit when we can compete effectively and pursue opportunities to grow.
 
In terms of executive compensation, AMR follows widely-accepted principles of corporate governance. Our independent Board of Directors relies on stock-based plans as part of its management compensation structure to closely align executive pay with performance. This structure places a significant portion of AA’s senior managements’ compensation “at risk.” These programs pay out only if the company meets performance goals.  
 
We make comprehensive pay information available to employees on the “Pay” page on Jetnet, and I encourage you to take a few moments to familiarize yourself with our compensation policies and philosophy.
 
In your e-mail, you reference Delta Airlines and the decision of Delta CEO Gerry Grinstein to decline a bonus this year. In fact, Grinstein has followed the example set by Mr. Arpey when he declined a salary increase and stock grants upon his promotion to CEO and later as CEO and Chairman as well as grants under the Performance Share Plan for 2003-2005.  It is increasingly clear that American’s employees, indeed all shareholders and stakeholders, have faired far better than their counterparts at Delta following that carrier’s decision to cut costs and shed its financial obligations through the bankruptcy courts.
 
American has chosen a different path than our competitors.  We have the right strategy in place to create a strong financial foundation that will create long-term value and deliver benefits to shareholders, customers and employees.  At the end of the day, our ability to work together to move the airline forward will determine our collective success.
 
Regards,
 
 
Jeff Brundage