American Airlines chief executive Doug Parker earned $12.3 million in 2014, mostly in stock awards and bonus payments, as the Fort Worth-based carrier reported record earnings last year.
According to the carrier’s proxy statement filed on Wednesday, Parker received $687,884 in base salary, $7 million in stock awards and $4.2 million in cash incentives. But his total compensation was 41 percent less than the $20.9 million he received in 2013, which included a substantial stock award bonus for the merger of American and US Airways.
The company also paid $414,092 in relocation costs for moving Parker’s family from Phoenix, where US Airways was based, to North Texas.
Parker also announced that he will no longer receive an annual cash salary or participate in the company’s cash incentive program going forward. Instead, he will be paid only with American stock.
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“This stock will have to be earned over time, and will also have to be earned by performance,” Parker said in a letter sent to employees on Wednesday. “I believe this is the right way for my compensation to be set — at risk, based entirely on the results achieved, and in the same currency that our shareholders receive.”
Under his new compensation plan, Parker received 207,672 restricted stock units this week with about one-sixth vesting each year from 2016 to 2018. The remaining half of the stock units will not vest until 2018 and Parker will only receive them if the company meets certain financial goals laid out in the plan.
The stock has almost doubled in price since American and US Airways merged in December 2013 and was recently added to the S&P 500. Shares of American (ticker: AAL) closed at $51.40, up 8 cents on the Nasdaq market on Wednesday.
American said it plans to hold its annual shareholder meeting on June 3 in New York. The company is also scheduled to release its first-quarter earnings on Friday.
The company’s four other highest-paid employees also had significant drops in compensation in 2014 compared with the previous year when they received one-time restricted stock grants in return for waiving contract terms that would have allowed them to resign and receive large severance packages possibly worth more than the stock award.
President Scott Kirby received $8.8 million last year and Chief Operating Officer Robert Isom received $6.3 million.
Parker noted that he is making less than the chief executives at rivals Delta Air Lines and United Airlines. Those CEOs both earned a higher base salary in 2013 than Parker. However, Parker’s total compensation was higher because of the additional restricted stock award he received during the merger.
“As I communicated when we merged, I don’t believe I should be paid the same as my peers at Delta and United until our team is, so my 2014 target compensation was set more than 20 percent below the target levels of my peers,” Parker said, adding that there are still several contracts that need to be negotiated this year for American mechanics, ground crew and customer service representatives.
Andrea Ahles, 817-390-7631