American Airlines CEO Robert Isom was named the world’s best airline CEO. That may be debatable, but the airline’s board has awarded him a rich compensation package potentially worth over $26 million: “$1.3 million salary, $2.6 million target cash incentive, long-term incentive grant valued at $11.25 million, promotion bonus of $2.75 million and 631,699 restricted stock units.”
According to the Board’s compensation committee, Isom’s leadership is responsible for “successful post-pandemic transformation, which has driven profitability, strong operational reliability and a strengthened financial position.” Yet American’s financial performance continues to lag competitors.
Interestingly, Isom along with Chief Operating Officer David Seymour and Vice Chairman and Chief Strategy Officer Stephen Johnson now have non-compete clauses in their employment agreements, something that the airline lacked in the past and that’s cost them dearly.
In 2016 American Airlines decided that Robert Isom was heir apparent to then-Chairman and CEO Doug Parker and that left out airline President Scott Kirby so Parker fired Kirby. They did not have a non-compete in exchange for $13 million and lifetime travel as severance. Kirby immediately became President of United Airlines with a path to becoming its CEO, a role he now fills.
As journalist Ted Reed reported at the time, executives at American lacked non-competes because they didn’t have contracts and the airline thought this would be less expensive. They were too cheap, and it cost them 8 figures plus positioned a long-term insider at the helm of one of their biggest competitors.
They don’t want to make that same mistake again, but they have no problem potentially overpaying relative to performance it seems. American Airlines remains perhaps the carrier in the world with the greatest potential to be better than it is today.