American chief took pay cut in '04

Date: April 22, 2005
Type: Media Article

Arpey is among lower-paid CEOs in airline industry

From: The Dallas Morning News
Author: Eric Torbenson

American Airlines Inc. chairman and chief executive Gerard Arpey took a 3.1 percent pay cut from his base salary in 2004 as the Fort Worth carrier lost $761 million, according to the company's annual proxy statement released Friday.

Mr. Arpey earned $518,837 and no bonus, but he did receive $130,061 in long-term compensation tied to the stock performance of American parent AMR Corp. He also got 172,000 long-term options priced at $8.88 per share, and currently owns about 1.1 million shares of AMR.

In July, Mr. Arpey declined to take a raise approved by the board that would have increased his annual pay to $625,000. He earned $535,275 in 2003, and also received no bonus.

The figures make Mr. Arpey among the less-well paid chief executives in the industry. Continenal Airlines Inc. chairman and chief executive Larry Kellner received $865,508 in pay and declined a $783,000 bonus. He also received $2.9 million related to his employment contract, according to the Houston airline's proxy statement released Friday.

Southwest Airlines Co. chairman Herb Kelleher received $649,000 in pay and bonuses, and chief executive Gary Kelly earned $542,436.

AMR's board this week approved a 1.5 percent raise for officers and non-union staff, matching a contractual increase due unionized employees next month.

At its annual meeting May 18, AMR faces one shareholder proposal from advocate Evelyn Y. Davis that would limit the terms of outside directors to six years. AMR is asking shareholders to vote against it, arguing the company needs experienced outside directors.

Shares of AMR dropped 40 cents to $10.21.

E-mail etorbenson@dallasnews.com

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