American Airlines Board Demands Non-Compete In Exchange For CEO’s Millions

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Based on past performance he better ditch the stock as soon as possible. Nobody wants a penny stock in their portfolio.

  2. @ Gary — How could Isom possibly be better than Ed Bastian, CEO of the world’s most profitable, most premium airline?

  3. Working in the high-tech industry, I’ve been surprised by how essentially the same team of engineers could produce absolute junk or cutting edge products, in the same market and at similar pricing. The key difference being the culture and vision of the leadership that’s driving the team. In that regard, a CEO who has a track record of delivering the latter deserves to be obscenely compensated. I wonder how AA’s board came to the conclusion that Mr. Isom is such a leader.

  4. Why do you think perhaps that AA has the greatest potential to be better then the other US domestic carriers?

  5. “I wonder how AA’s board came to the conclusion that Mr. Isom is such a leader.”

    AA’s board members are already vesting in AA stock and much fear further deterioration after making a change or announcement. $$$

  6. As an alternative the Board could hire a competent CEO who doesn’t view everything through an ULCC lens…

  7. World’s Best Airline CEO? That’s freaking hilarious. Who voted…AA’s Board?!?!?! He’s not even the best CEO among major US airlines.

  8. Robert Isom had his work cut out for him after the disaster Parker (Former CEO) left for him. He deserves credit for improving things but not $26,000,000.

  9. AA should take a note from Qantas. Robert Isom should be apologizing to AA customers for Doug Parker’s many failures.

  10. Regardless of how long it took the BoD to realize how much damage Kirby and Nocella could inflict, I guess the realization came a bit late.

  11. Such an idiot airline best ceo please who voted the board or Robert himself please cant even take care of contracts! 26mil while rappers and attendants qualify for food stamps! So lame how much undeserving these idiots get!!!

  12. Y’all (comment section) are missing a few points.

    1) He isn’t being “paid” $26 Million. Like 85% of that is tied up in stock that he cannot sell and is performance based.

    2) AA has a MASSIVE domestic/North American feeder network and “could” greatly improve it’s long haul and ultra long haul network. IF their planes get deliver on time, and they continue to make a profit so they can pay down debt, and their recently enriched employees do better at their jobs and aren’t so cranky and stingy.

    Alot of “if’s”, but the potential is really there. Really. United can’t touch AA’s domestic network, and Deltas planes are old AF and in general their hubs are in cities that aren’t growing (minus ATL to a degree and STL of course).

  13. Isom is one of the worst airline CEOs. Return to profitability has come on the backs of hardworking employees who haven’t received more than pennies raises – pilots excluded – in years. Isom continues to preach that AA cares for people along life’s journey but he only cares about enriching himself. He is a joke.

  14. WHAAAAATTTT? Isom was named best airline CEO? By whom? Who was on the nominations committee and who voted? Captain Kangaroo, Howdy Doody, Joe (President Paw Paw), Jethro Bodine? American Airlines can’t endear themselves to the public with all that Dale Carnegie Training can offer and all the gold in Fort Knox! Lessee…how much profit sharing has AA given to their employees for their hard(?) work? How’s their customer relations doin’? Hmmmm. How much was the nominations committee and voters bribed? “Judge Judy” once said “Don’t spit on my cupcake and tell me it’s frosting.”

  15. All Parker and Isom have done is basically erase the American Airlines brand. The waste we see everyday at our company is discussing. The decisions we see made are not business friendly. Their egos hurt our brand, business passengers don’t want to fly though Philly or Charlotte. They want New York. The financial capital of the U.S. They have demoralized the hard working dedicated employees of American Airlines. We all wish Bob Crandell was back. True giants of the airline industry are gone, leaving us with greedy Medicare wannabes.

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