UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
_____________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
earliest event
reported: January
27, 2009
AMR
CORPORATION _
(Exact
name of registrant as specified in its charter)
Delaware 1-8400 75-1825172 _
(State of
Incorporation) ( Commission File Number) (IRS
Employer Identification No.)
4333 Amon Carter
Blvd. Fort Worth,
Texas 76155
(Address
of principal executive offices) (Zip Code)
(817)
963-1234 _
(Registrant's
telephone number)
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material
Definitive Agreement
On
January 27, 2009, American Airlines, Inc. (“American”), a wholly-owned
subsidiary of AMR Corporation (the “Company”) approved the 2009 Annual Incentive
Plan (the “AIP”) for American. All U.S. based employees of American are
eligible to participate in the AIP (including the Company’s executive
officers). The AIP is American's annual bonus plan and provides for the
payment of awards in the event certain financial and/or customer service metrics
are satisfied, as further described in the AIP. A copy of the AIP is
attached as Exhibit 99.1
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Item
9.01
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Financial Statements
and Exhibits
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(c)
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Exhibits
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Exhibit
99.1 2009 Annual Incentive Plan for
American
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
AMR CORPORATION
/s/ Kenneth W.
Wimberly
Kenneth
W. Wimberly
Corporate
Secretary
Dated: February
2, 2009
EXHIBIT
INDEX
Exhibit Description
|
99.1
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2009 Annual
Incentive Plan for American
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AMERICAN
AIRLINES
2009
ANNUAL INCENTIVE PLAN
Background
As part
of the restructuring process that took place in April 2003, three new
broad-based variable compensation plans were created: the Broad Based Employee
Stock Option Plan, a new Profit Sharing Plan and the Annual Incentive Plan (the
“Plan” or “AIP”).
The
framework for the Plan was developed during the restructuring, but the specific
plan Metrics were left to the discretion of the Board of Directors (sometimes
referred to as the “Board”).
The Board
has determined that for 2009 there will be two components to the Plan – customer
service and financial. While related, the two components will be
treated separately. The financial component will provide an award if
the company meets annual financial goals. The customer service
component will provide an award if the company meets customer satisfaction and
dependability goals, regardless of its financial
performance. Providing the opportunity for a customer service payout
without meeting financial hurdles recognizes that the company’s performance in
the two areas most important to our customers – dependability and customer
satisfaction – will contribute to improved profitability.
These
broad-based compensation plans have been designed to allow all employees
throughout the American Airlines team to share in the company’s
success. The Plan provides the opportunity to share immediately in
that success by taking concrete steps in each employee’s everyday work that will
move the company towards profitability.
With
input from our employees, the unions and the Board, these broad-based variable
compensation programs will continue to evolve. Today, they form the
building blocks necessary to ensure that everyone is able to share in the
company’s success.
Definitions
Capitalized
terms not otherwise defined in the Plan will have the meanings set forth in the
2003 Employee Stock Incentive Plan (the “2003 Stock Plan”).
“AMR” is
defined as AMR Corporation.
“Affiliate”
is defined as a subsidiary of AMR or any entity that is designated by the
Committee as a participating employer under the Plan, provided that AMR directly
or indirectly owns at least 20% of the combined voting power of all classes of
stock of such entity.
“American”
is defined as AMR less AMR subsidiaries other than American Airlines, Inc. and
its subsidiaries.
“American
Airlines” is defined as American Airlines, Inc.
“American’s
Pre-Tax Earnings Margin” is a percentage and is defined as American’s earnings,
relative to its revenues, before any applicable income tax expense, excluding
any profit sharing accruals and any accruals under the Plan, and excluding any
accounting adjustments or extraordinary or unusual items as may be determined by
the Committee in its discretion, after consultation with AMR’s independent
auditors.
“Committee”
is defined as the Compensation Committee of the AMR Board of
Directors.
“CSS
Likelihood to Recommend Score” is defined as the arithmetic mean score in the
category Likelihood to Recommend of responses from passengers in all cabins, as
reported monthly in American’s on-line Customer Satisfaction Survey
“CSS
Overall Experience at the Airport Score” is defined as the arithmetic mean score
in the category Experience at the Airport of responses from passengers in all
cabins, as reported monthly in American’s on-line Customer Satisfaction
Survey.
“CSS
Overall Experience Onboard the Aircraft Score” is defined as the arithmetic mean
score in the category Experience Onboard the Aircraft of responses from
passengers in all cabins, as reported monthly in American’s on-line Customer
Satisfaction Survey.
“Customer
Team” is defined as a group of employees who deliver part of the customer
experience for American’s customers, identified for purposes of this Plan as
“Pre-Airport”, “Airport”, “In Flight” or “Overall Customer
Support”.
“Customer
Satisfaction Survey” (CSS) is defined as American’s internal customer
satisfaction survey, administered by American on a monthly basis.
“Disability”
or variants thereof is defined as such term is defined in section 409(a)(2)(C)
of the Internal Revenue Code of 1986, as amended (the “Code”) and the guidance
issued there under.
“Eligible
Earnings” is defined by the nature of the work group. For employees
who are represented by a union, the definition of Eligible Earnings will be the
definition contained in the Letter of Agreement between the union and the
company. For employees who are not represented by a union, the
definition of Eligible Earnings will be identical to the term “Qualified
Earnings” under the 2003 American Airlines Employee Profit Sharing
Plan.
"Fund" is
defined as the fund, if any, accumulated in accordance with this
Plan.
“Letters
of Agreement” is defined as the agreements reached with the Allied Pilots
Association, Association of Professional Flight Attendants and the Transport
Workers Union during the April 2003 restructuring process that defined the
framework of the Plan.
“Metric”
is defined, as appropriate, as American’s Pre-Tax Earnings Margin, Monthly
Direct D-0 Performance, CSS Likelihood to Recommend Score, CSS Overall
Experience at the Airport Score or CSS Overall Experience Onboard the Aircraft
Score.
“Monthly
Direct D-0 Performance” is defined as the percentage of scheduled system revenue
operations for a given month departing at or before scheduled departure
time. Direct D-0 is a component of total D-0 and measures delays that
occur due to factors generally within the control of Maintenance, Customer
Service, Flight and Flight Service. It does not measure delays that
occur due to factors generally outside the control of station personnel
including but not limited to delays caused by weather, Air Traffic Control,
System Operations Control and late through flights.
“Monthly
Direct D-0 Goal” is defined as the arithmetic mean of the Monthly Direct D-0
Performance for the same month in the years 2008 and 2007.
“Monthly
Likelihood to Recommend Goal” is defined as the arithmetic mean of the monthly
CSS Likelihood to Recommend Score for the same month in the years 2008 and
2007.
“Named
Executive Officers” is defined as the officers of American who are named in the
AMR proxy statement that reports compensation for the year in which awards under
the Plan are earned.
“Other
Cash Compensation Programs” is defined as cash payments to management employees
that are not predicated upon the criteria and thresholds contained in the Plan.
Per discussions and as specified in the Letters of Agreement, this term does not
include salary, stock-based compensation, severance, retirement benefits or
deferred payments of base compensation, or eligible cash bonuses from prior
years.
“Overall
Experience at the Airport Goal” is defined as the arithmetic mean of the monthly
CSS Overall Experience at the Airport Score for the same month in the years 2008
and 2007.
“Overall
Experience Onboard the Aircraft Goal” is defined as the arithmetic mean of the
monthly CSS Overall Experience Onboard the Aircraft Score for the same month in
the years 2008 and 2007.
“Plan
Year” is defined as the 2009 calendar year.
“Profit
Sharing Plan” is defined as the 2009 Employee Profit Sharing Plan.
“Target
Award” is defined as the award (stated as a percentage of Eligible Earnings) for
an eligible participant when target level is achieved on the financial
Metric. The Target Award is determined by the employee’s job
classification and level.
Plan
Metrics
As
outlined earlier, the Plan is comprised of two components: customer service and
financial.
Customer
Service Component
The
customer service component of the Plan will pay awards if certain dependability
and customer satisfaction performance Metrics are achieved. All
eligible employees will receive a $50 award for each month American’s Monthly
Direct D-0 Performance exceeds the Monthly Direct D-0 Goal.
Eligible
employees will also receive a $50 award for each month the customer satisfaction
performance Metric for their Customer Team exceeds its respective
goal. The customer satisfaction performance Metrics will vary by
employee group based upon the Customer Team in which the employee works, as
follows:
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Customer
Team
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Employee
Groups/Organization
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Customer
Satisfaction
Performance
Metric
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Pre-Airport
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Employees
engaged in marketing, selling and assisting customers in their purchase of
air travel
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CSS
Monthly Likelihood to Recommend Score exceeds the Likelihood to Recommend
Goal
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Airport
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Employees
in airport, cargo and maintenance organizations engaged in delivering the
customer experience at the airports
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CSS
Overall Experience at the Airport Score exceeds the Overall Experience at
the Airport Goal
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In
Flight
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Employees
engaged in delivering the customer experience onboard the
aircraft
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CSS
Overall Experience Onboard the Aircraft Score exceeds the Overall
Experience Onboard the Aircraft Goal
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Overall
Customer Support
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Employees
who support the frontline operations and overall customer experience
customer experience
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Average
of awards paid in the Pre-Airport, Airport and In-Flight Customer
Teams
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Employees
are assigned to Customer Teams based upon the organization in which they work,
as shown in the Appendix of this Plan. Organizational assignments to
Customer Teams will be updated by the Committee (or its delegate) as necessary
during the year in response to changes in American’s organization
structure.
The total
amount of potential awards to be paid to any employee under the customer service
component is $100 per month or $1,200 per year. Awards under the
customer service component will be paid quarterly, regardless of performance
under the financial component, according to the following schedule:
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Performance
Period
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Award
Payment Date
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January
– March 2009
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May
15, 2009
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April
– June 2009
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August
14, 2009
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July
– September 2009
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November
13, 2009
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October
– December 2009
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February
15, 2010
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Financial
Component
The
financial component of the Plan will be based upon American’s Pre-Tax Earnings
Margin for the Plan Year. The Metric has a threshold (performance
below this level earns no award), a target and a maximum as reflected
below:
American’s
Pre-Tax
Earnings
Margin
Threshold 5%
Target 10%
Maximum 15%
For
non-management, support staff and management levels 1-4, awards under the
financial component, in combination with the customer service awards, will
provide total annual Plan payouts ranging from 2.5% of Eligible Earnings at
threshold, 5% of Eligible Earnings at target and 10% of Eligible Earnings at
maximum. Award levels have a linear progression as American’s Pre-Tax
Earnings Margin increases between the threshold and target levels, and between
the target and maximum levels.
American’s
Pre-Tax Award
as a % of
Earnings
Margin Employee’s Eligible
Earnings
Threshold 5% 2.5%
Target 10% 5.0%
Maximum 15% 10.0%
For
management Levels 5 and above, none of whom participate in the Profit Sharing
Plan, the Plan is the successor to the traditional Incentive Compensation
Plan. As in the past, the awards for employees at Level 5 and above
will be determined by the senior management of AMR or, in certain instances, by
the Board; will vary by level; and will be based on an assessment of individual
performance.
If the
company does not achieve the threshold level of American’s Pre-Tax Earnings
Margin, there will be no financial performance payout. However, a participant
retains any awards earned in the Plan Year for customer service
performance. When the threshold level of American’s Pre-Tax Earnings
Margin is met, participants may be entitled to a payment under the Plan (refer
to the example below). In this case, any customer service awards
earned during the Plan Year, act as a “deposit” against the amount to be awarded
pursuant to the financial component. The amount of the
financial performance payout a participant receives will be the difference, if
any, between what is earned under the financial performance formula and what has
already been earned through the customer service awards.
For
example, assume a
$750 customer service award is earned during 2009 by an employee in the
Pre-Airport Customer Team and American achieves a 5% Pre-Tax Earnings
Margin.
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Customer Service Component
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Amount of Award
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CSS
Likelihood to Recommend Score
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$300
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Monthly
Direct D-0 Performance
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$450
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Total
Customer Service Component Payout
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$750
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Financial Component ~ Threshold award equal
to 2.5% of employee’s Eligible Earnings of $40,000, for achievement of
American’s 5% Pre-Tax Earnings Margin
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2.5%
x $40,000
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$1,000
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Less
Customer Service Component Payout
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($750)
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Total
Financial Component Payout
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$250
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Total
Annual payout is $1,000 ($750+ $250), or 2.5% of Eligible Earnings
The AIP
Letters of Agreement provide that Other Cash Compensation Programs for
management employees may be no more than 20% of the maximum possible award that
was or could have been earned by the individual management employee under the
Plan formula (the “20% Limitation”). Any payment under the 20%
Limitation shall be made by March 15, 2010.
The Board
has established a program that, based on an individual’s performance,
anticipates payouts to Level 5 and above management employees up to the 20%
Limitation. (Level 5 and above employees are not eligible for the Profit Sharing
Plan) This program is designed to commence payments at $500 million
in American’s pre-tax earnings, the same financial threshold as exists in the
Profit Sharing Plan. This is consistent with the company’s past
practice of restricting payouts under any management incentive compensation
program until payouts occur under the corresponding employee Profit Sharing
Plan. Payouts under this program will cease when the financial
threshold under the Plan (a 5% Pre-Tax Earnings Margin for American) is
achieved. Any payment under the program described in this paragraph
shall be made by March 15, 2010.
Although
the Board has determined that a program to use the flexibility provided for in
the Letters of Agreement will not commence until reaching a threshold of $500
million in American’s pre-tax earnings and will be discontinued when the
financial threshold of the Plan is achieved, the company also retains the
ability to make a payment to an individual under the 20% Limitation as provided
for in the Letters of Agreement.
The
Letters of Agreement and related discussions specify that for purposes of the
20% Limitation, Other Cash Compensation Programs does not include salary,
stock-based compensation, severance, retirement benefits or deferred payments of
base compensation, or eligible cash bonuses from prior years.
Eligibility for
Participation
Customer
Service Component
Eligibility
for the customer service component of the Plan will be determined on a
month-by-month basis. To earn an award under the customer service
component of the Plan, an individual must have been employed as a regular
full-time or part-time employee at American, in a participating workgroup
(employees in the United States, Puerto Rico and the U.S. Virgin Islands) during
the applicable month.
Employees
will be paid the customer satisfaction award based upon the organization and
Customer Team they are in as of the last day of each month. Awards
will not be prorated for employees who work in more than one Customer Team
during the month. For example, if an employee transfers from the
Pre-Airport Customer Team to the Airport Customer Team on January 20, 2009, that
employee would be eligible for customer satisfaction awards earned in the
Airport Customer Team for the month of January.
Employees
will be paid an award based upon fulfilling their schedule during the applicable
month. For Plan purposes, an individual will be considered to have
fulfilled his or her schedule if he/she actually works at least 50% of his/her
scheduled time (50% of monthly guarantee hours for flight crew or 50% of monthly
guarantee days for reserve crew) or takes scheduled vacation, which together
with his/her actual work time amounts to at least 50% of his/her schedule for
the month.
In
addition to the terms listed above, an individual will be eligible for a
prorated award if the employee fulfills his/her schedule by combining actual
hours worked with an approved FMLA, injury on duty, military, overage or
time-card leave, as provided for under the company’s policies, collective
bargaining agreement or state law as applicable. The percentage of
the payout that an individual receives for any given month will be determined
based upon the percentage of his/her schedule that is fulfilled in that
month.
If the
employee does not fulfill his/her schedule as described above, no award will be
paid.
An
individual will not be eligible to earn a customer service award if such
individual is, at the same time, eligible to participate in:
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i)
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any
incentive compensation, profit sharing, commission or other bonus plan
sponsored by an Affiliate of American,
or
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ii)
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any
commission or bonus plan, with the exception of American’s Profit Sharing
Plan or provisions of the Annual Incentive Plan, sponsored by American,
any division of American or any Affiliate of
American
|
In order
to earn a customer service award under the Plan, an individual must satisfy the
aforementioned eligibility requirements and must be an employee of American or
an Affiliate at the time an award under the Plan is paid. If an
individual has retired from American or an Affiliate, has been laid off, is on
leave of absence with reinstatement rights, is Disabled, or has died, the award
which the individual otherwise would have received under the Plan but for such
retirement, lay-off, leave, Disability, or death will be paid (subject to
schedule pro-ration described above) to the individual, or his/her estate in the
event of death.
The
Committee (or its delegate), at its discretion, may permit participation by
employees of Affiliates who have been so employed by the Affiliate since the
first day in the applicable month, if they become employed by American during
the applicable month during the Plan Year. Awards will not be
prorated for employees of Affiliates who become employed by American during the
applicable month.
Financial
Component
To earn
an award under the financial component of the Plan, an individual must have been
employed as a regular full-time or part-time employee at American, in a
participating workgroup (employees in the United States, Puerto Rico and the
U.S. Virgin Islands) during the Plan Year to be eligible to participate in the
Plan.
The
Committee (or its delegate), at its discretion, may permit participation by
employees of Affiliates who have been so employed by the Affiliate during the
Plan Year, if they become employed by American during the Plan
Year. In such instances, only eligible earnings at American will be
included in the payout calculation.
Notwithstanding
the forgoing, however, an individual will not be eligible to participate in the
Plan if such individual is, at the same time, eligible to participate
in:
|
i)
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any
incentive compensation, profit sharing, commission or other bonus plan
sponsored by an Affiliate of American,
or
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ii)
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any
commission or bonus plan, with the exception of American’s Employee Profit
Sharing Plan or provisions of the Annual Incentive Plan, sponsored by
American, any division of American or any Affiliate of
American
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In order
to earn an award under the financial component of the Plan, an individual must
satisfy the aforementioned eligibility requirements and must be an employee of
American or an Affiliate at the time such financial award under the Plan is
paid. If at the time such awards are paid under the Plan, an
individual has retired from American or an Affiliate, has been laid off, is on
leave of absence with reinstatement rights, is Disabled, or has died, the award
which the individual otherwise would have received under the Plan but for such
retirement, lay-off, leave, Disability, or death may be paid (on a pro rata
basis) to the individual, or his/her estate in the event of death, at the
discretion of the Committee (or its delegate).
Allocation of Individual
Awards
The
Committee, in consultation with the Chairman, President and CEO of American,
will approve awards for officers of American, including the Named Executive
Officers. The award for an officer will be equal to an amount
calculated in accordance with this Plan, as adjusted for individual performance;
provided, however, that the sum of all awards made to officers may not exceed
the sum of officer awards as calculated in accordance with this
Plan. Awards for the Named Executive Officers will be equal to the
award earned under the financial component of the Plan. An award
under the Plan to an officer may not exceed the amount set forth in Section 11
of the 1998 Long Term Incentive Plan, as amended.
The
Chairman, President and CEO of American, in consultation with the executive and
senior vice presidents of American, will approve awards for non-officer eligible
employees (Level 5 and above). An award for a non-officer will be
equal to an amount calculated in accordance with this Plan, as adjusted for
individual performance; provided, however, that the sum of all awards made to
non-officers may not exceed the sum of non-officer awards calculated in
accordance with this Plan.
Administration
The
Committee shall have authority to administer and interpret the Plan, establish
administrative rules, approve eligible participants, and take any other action
necessary for the proper and efficient operation of the Plan, consistent with
the Letters of Agreement reached with each of the unions. The
Committee may appoint any person or persons as it may deem necessary or
desirable to carry out any of the duties and responsibilities of the Committee
hereunder and may delegate to such person or persons such duties, and confer
upon such person or persons in writing, such powers, discretionary or otherwise,
as the Committee may deem appropriate.
The
amount, if any, of the Fund shall be audited by the General Auditor of American
based on a certification of American’s Pre-Tax Earnings Margin by AMR’s
independent auditors. For the financial component, a summary of
awards under the Plan shall be provided to the Committee at the first regular
meeting following determination of the awards. To the extent a Metric
is no longer compiled by American during a Plan Year, the Committee will
substitute a comparable performance Metric for the remainder of the Plan
Year.
Method of
Payment
The
Committee (or its delegate) will determine the method of payment of
awards. The financial component awards shall be paid (net of all
required and authorized deductions) as soon as practicable after audited
financial statements for the Plan Year are available, but no later than March
15, 2010.
General
Neither
this Plan nor any action taken hereunder shall be construed as giving any
employee or participant the right to be retained in the employ of American or an
Affiliate.
Nothing
in the Plan shall be deemed to give any employee any right, contractually or
otherwise, to participate in the Plan or in any benefits hereunder, other than
the right to receive payment of such incentive compensation as may have been
expressly awarded by the Committee.
In
consideration of the employee’s privilege to participate in the Plan, the
employee agrees (i) not to disclose any trade secrets of, or other
confidential/restricted information of, American or its Affiliates to any
unauthorized party, (ii) not to make any unauthorized use of such trade secrets
or confidential or restricted information during his or her employment with
American or its Affiliates or after such employment is terminated, and (iii) not
to solicit any then current employees of American or any other subsidiaries of
AMR to join the employee at his or her new place of employment after his or her
employment with American or its Affiliates is terminated.
The
employee shall not have the right to defer any payment under the Plan, except
under a Plan intended to comply with section 401(k) of the Internal Revenue Code
of 1986, as amended (the “Code”).
It is
intended that this Plan be exempt from regulation under the Employee Retirement
Income Security Act of 1974, as amended, as a “payroll practice” and a “bonus
program”, as described in U.S. Department of Labor Regulations 2510.3-1(b) and
2510.3-2(c), respectively. This Plan is intended to provide
“short-term deferrals”, as described in Treasury Regulation 1.409A-1(b)(4) under
section 409A of the Code or successor guidance thereto, and is intended not to
be a “nonqualified deferred compensation plan”, as described in Treasury
Regulation 1.409A-1(a)(1) under section 409A of the Code or successor guidance
thereto. In the administration and interpretation of the Plan, such
intention is to govern
Employees
are assigned to Customer Teams based upon the organization in which they work,
as shown below. Organizational assignments to Customer Teams will be
updated by the Committee (or its delegate) as necessary during the year in
response to changes in American’s organization structure.
|
Customer
Team
|
Employee
Workgroups / Organizations
|
Customer
Satisfaction Survey (CSS) Performance
Metrics
& Goal
|
|
Pre-Airport
|
Employees
engaged in marketing, selling and assisting customers in their purchase of
air travel
– AAdvantage
– Advertising
– Corporate
Communication
– Global
Sales
– Interactive
Marketing
– Reservations
|
CSS
Likelihood to Recommend Score exceeds the Monthly Likelihood to Recommend
Goal
|
|
Airport
|
Employees
in airport, cargo and maintenance organizations engaged in delivering the
customer experience at the airports
– Domestic
Airport Services
– Cargo
– Maintenance
& Engineering
o Line
Maintenance
o Base
Maintenance
o Engineering/QA
|
CSS
Overall Experience at the Airport Score exceeds the Overall Experience at
the Airport Goal
|
|
In-Flight
|
Employees
engaged in delivering the customer experience onboard the
aircraft
– Onboard
Services
– Flight
|
CSS
Overall Experience Onboard the Aircraft Score exceeds the Overall
Experience Onboard the Aircraft Goal
|
|
Overall
Customer Support
|
Employees
who support the frontline operations and overall customer experience
customer experience
– Customer
Experience
– Finance
& Planning
– Government
Affairs
– Human
Resources
– Information
Technology
– Legal
– Marketing
Performance
– Operations
Planning & Performance
– Safety,
Security & Environmental
– Technical
Operations Finance
|
Average
of awards paid in the Pre-Airport, Airport and In-Flight Customer
Teams
|