When other CEOs were cutting their pay at the start of the pandemic in order to share sacrifice, American Airlines CEO Doug Parker’s pay wasn’t cut. He takes all of his pay in stock and told employees that the stock is worth less and that was his pay cut (as though he isn’t the one responsible for share price, which lagged before the pandemic).
American Airlines laid off the most workers during the pandemic, and once federal bailout rules allow for it they’ve told employees to expect to be laid off again. The airline has the most debt. And Parker was just rewarded with a $7 million pay day.
February 16, 2021 Top 5 Stock Grants:
|Shares Granted||Value At Grant Date|
(Here’s Parker’s theory of how to value stock.)
My first thought was that the American Airlines board doesn’t know what it is doing – Parker chided their lack of airline experience in the fall – but he likely earned the money.
That’s because Parker uniquely realized he could get more money from taxpayers than from customers and spent ‘all his time’ lobbying for bailouts in DC last summer and fall. That yielded $3 billion of your money for his airline, while only spending $400 million of that ‘payroll support’ on workers they’d furloughed. A $7 million payday is cheap for $2.5 billion net in taxpayer cash.
Parker earns half of what Uber and Lyft execs make.
More proof that there is almost never a real penalty for failure in top jobs. Screw up, reduce shareholder value, make acquisitions that are worth 20% of what you paid 5 years later…. If you’re in the C-Suite, no matter what happens, you’ll never have to work again.
The grandstanding about executive comp vs. layoffs needs to end. Executive comp is market-based; AA wants Doug Parker to be CEO, so they need to pay him market or he’ll leave. If he leaves, they’ll have to replace him with someone who will similarly require a level of comp consistent with market to join (not to mention the issue of changing CEOs in the middle of a pandemic). While unfortunate optically, in both respects the Board are doing what they think is best for American shareholders, which is their sole mandate.
Bezos has more money than god, his workers are one step up from Medieval serfs. This airline is just practicing business as usual in the post-1980 America.
I came here to say the same thing as Roy but he said it better so I’m just going to quote him so people don’t miss it- “More proof that there is almost never a real penalty for failure in top jobs. Screw up, reduce shareholder value, make acquisitions that are worth 20% of what you paid 5 years later…. If you’re in the C-Suite, no matter what happens, you’ll never have to work again.”
Also you shouldn’t get taxpayer money if you’re going to pay your CEOs like this.
Parker is CEO and Chairman of the Board. This is typical board governance dysfunction where the chairman exerts his huge power in picking the board members who approve his comp package. The chair trades the perks of being a director for a subservient group of board members who rubberstamp his pay demands.
The notion that the free market for executive compensation is at work is the fantasy story that boards pitch to their shareholders. The third party “experts” in compensation feed this fantasy because they collude in the process in return for big fees.
This is more evidence, on top of growing bookings and fewer covid cases and deaths, that airlines don’t need more aid in the covid bill that is being currently negotiated.
The irony is that Parker is given stock options, when AAL performance is garbage tier compared to the other majors over the past five years. Clearly the board doesn’t give a shit about what he does.
@John On the contrary, the AA Board Members don’t want to see Parker paid less. That could mean a cut to the THEIR pay and benefits. Their interests are tightly aligned to his.
Shareholders love the whole setup too because their CEO has the brass balls to put the big squeeze on DC.
Frequent flyers should love this game too because the major airlines can largely maintain their fleets and all the routes they serviced pre-COVID. God forbid that the only airline left standing would be Frontier.
Who are the losers in this game? The average taxpayer who might take one trip a year, if that. Clearly not anybody who reads this blog.
“You just don’t understand executive compensation…”
Parker is a buffoon.
He should quit AA and go teach a diversity class…..that’s his passion.
@ Gary — This is disgusting. Our entire country is disgusting.
Its a public company and one thing has nothing to do with the other. Just because flight attendants and other staff are unneeded by the airline doesn’t mean executive compensation changes. These companies don’t work for employees. These companies work for their shareholders. That’s the problem with the $7 million dollar compensation for the CEO. It has screwed and unfairly penalized shareholders. The CEO’s performance does not warrant $7 million nor is it justified to secure good management because many other airlines are in bad shape and it can retain management for less.
The biggest issue with public companies is that management often disproportionately benefits itself at the expense of shareholders. The work executives do often is not worth their grand pay packages. Of course we don’t want government setting executive compensation and telling a company how it must be run, but shareholders need to be given more rights and more say. The stock exchanges like NYSE and NASDAQ should have executive compensation rules. Furthermore, all public corporations should be banned from political or charitable donations. If you want to donate, use your capital gains or dividends to donate. Corporation management should not rob shareholders of their earnings to fund arbitrary political causes and “charities” with shareholder money.
Republicans – “let’s give a $1.5T tax cut to corporations and the top 1%”
Also Republicans – “no possible way in hell we can increase the minimum wage that hasn’t moved in 12 years and isn’t indexed to inflation”.
Truly a bankrupt party.
@UA-NYC When the ship hits the fan you can be sure it will be the fault of the Democrats.
Just ask any Republican. I can hear the drums beating already.
Capitalism for thee. Socialism for me Companies are people too!!!
@Jackson Waters Your argument will not go far with these particular shareholders. A year ago the American Airlines share price was $15.97. Today it closed at $22.17 for a one year increase of $6.20 or 38.8%. If the CEO had been paid nothing the airline would have saved slightly more than a penny per share. I am shedding no tears for the shareholders. They made out like bandits.
Rank and file taxpayers, on the other hand, did not do so well.
“American Airlines board doesn’t know what it is doing” – This is painfully obvious from the fact that Parker still has a job.
Those tax cuts to corporations fueled the lowest unemployment rates in history and a surge in minimum wages paid by corporations. Bank of America for instance has a $20 minimum wage across the company due to the tax cuts savings. Corporate tax cuts also produced tremendous shareholder returns. 401Ks and IRAs are a way for the middle class to share in the great wealth generation of companies and many households benefit from their portfolio returns. If 1 worker out of a family of 4 has a 401K, it benefits them all. The wife or husband will benefit/inherit. And then the kids.
You’re right about individual taxes. 90% of those making over $2 million a year are leftists so it is illogical why the GOP doesn’t support taxing the 1% higher federally. It’s because it’s really a uniparty with the Dems who play games like wrestling. They are deciding things in the back in their favor. $45 million to the Kennedy center and 500 million to Sudan comes to mind. You don’t actually think Sudan will get the money. Just to the govt. official for a payoff while it is sent to politicians secret accounts in the U.S. Dems unfortunately want to kill small businesses that provide countless jobs. They want to tax everyone making 100K and up. Yeah, raise taxes on individuals making $2 million and up and lower taxes for everyone else with those making under 200K individual at zero.
If you know economics, you know that $15 minimum wage will lead to layoffs and robots replacing cashiers. 40 million illegal aliens do provide an oversupply of cheap labor and force down the market wage. They also cost 400 billion a year in benefits to them and their kids. If strict border security /immediate deportations/mandatory e-verify and strict enforcement were part of $15, make it $20. The $400 billion in savings could provide tax cuts to small businesses that keep employees on earning the higher minimum wage. Conservative small businesses should really be hiring their families so money stays in pocket. They should also only be hiring their own for the same reasons.
Ask your Dem politicians if they support monthly direct payments of $1200 for all citizens 18 and above. They will say we can’t afford it (despite printing $10 trillion last year). The real reason is they can hide the grift behind welfare programs that would be eliminated if all citizens 18 and up got monthly checks instead of just welfare babies. It’s all a scam on the American public.
@Jackson Waters (aka formerly Jackson Wayerson) – what a joke, you sound like a classic trickle-downer…they didn’t pay for themselves as promised (shocker – https://www.npr.org/2019/12/20/789540931/2-years-later-trump-tax-cuts-have-failed-to-deliver-on-gops-promises). It was the equivalent of a company buying back stock at the peak of the market – asinine. The stock market was already at record highs (thanks to Trump riding the coattails of the Obama economy – https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years).
As to your claim about 90% of those making over $2mm being on the left – any facts to back it up? Highly doubtful.
Don’t sucker yourself into believing the “millions and millions of jobs lost” claim by Rand Paul – https://www.factcheck.org/2021/01/paul-distorts-cbos-estimate-on-impact-of-15-minimum-wage/. Your “illegal aliens” also do the jobs American citizens don’t want, don’t fool yourself.
“Welfare babies” – great coded language, yeah you’re basically just another racist below the surface…not surprising based on your past posting history and constant name changing.
This post is no misinformed. Like,
I’m so many ways. Yawn for sure.
Good foe them. If you don’t like the airline you work for find another or maybe you’re in the wrong business.
They probably should have gotten more money.
The world has become a consortium of Ali Baba’s 40 Thieves …………. AND LIARS.
We have become used to the belief that lying is okay and long as it results in money.
Pull the handle and ride the spiral!!
Way to misinform others – Doug Parker is not paid a cash salary, yes he has stock but please paint the full picture