Tablet Business

American Airlines CEO’s salary set at $700,000

American Airlines Group’s chief executive, Doug Parker, told employees Monday that he will earn $700,000 in salary this year and could receive more in bonuses and stock awards if the carrier performs well financially.

“The compensation plan our Board approved last week has my target total compensation approximately 20 percent below my peers at Delta and United and it is over 90 percent performance based,” Parker said in a letter sent to employees. Parker, the former CEO at US Airways, took over the top job after the merger with Fort Worth-based American was completed in December.

His predecessor, Tom Horton, will receive a $400,000 stipend for serving as non-executive chairman of American Airlines. In 2012, Horton received an annual salary of $618,135 when he was chief executive. Horton also received $12.7 million in cash payments and 170,722 shares in the new company, now worth about $5.1 million, when the merger was completed.

Parker added that his annual salary is well below the average airline CEO’s pay of $850,000. But Parker’s base salary is almost 30 percent higher than the $550,000 he earned at US Airways in 2012. That year, he received a total compensation package worth $5.5 million in stock and cash.

If American earns $2.5 billion in pre-tax profit in 2014, Parker will receive a short-term incentive bonus of $1.4 million. American has not posted an annual profit since 2007, when it reported a profit of $504 million.

The long-term incentives, which could include possible stock options and awards, are still being worked out by the company’s board of directors, the letter said.

The company is scheduled to release its fourth-quarter earnings — its first financial report as a merged airline — today.