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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: March 29, 2006
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-2691 13-1502798
(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 March 29, 2006, Thomas W. Horton ("Mr. Horton") accepted
an employment offer from American Airlines, Inc.
("American"). The Executive will be the Executive Vice
President, Finance and Planning and the Chief Financial
Officer of American and its parent corporation, AMR
Corporation ("AMR"). A brief description of the material
terms of the Executive's Employment Agreement (the
"Agreement") is contained in Item 5.02 below (which
description is incorporated into this Item 1.01 by reference)
and the Agreement is attached as Exhibit 10.1.
Item 5.02 Departure of Directors or Principal Officers;
Election of Directors; Appointment of Principal
Officers
On March 29, 2006, the Company issued a press release
announcing the appointment of Mr. Horton as Executive Vice
President, Finance and Planning and Chief Financial Officer
("CFO") of AMR and American. Prior to this appointment, Mr.
Horton had served at AT&T Corp. as Vice Chairman and CFO from
January 2005 to January 2006 and Senior Vice President and
CFO from June 2002 to January 2005. From August 1985 to June
2002, he served in a variety of management positions at
American and AMR, including Senior Vice President Finance and
CFO from January 2000 to June 2002. A copy of the press
release announcing Mr. Horton's appointment is attached as
Exhibit 99.1 and is incorporated by reference.
On March 29, 2006, AMR and American entered into the
Agreement with Mr. Horton. The Agreement has a three year
term. Pursuant to the Agreement, Mr. Horton will receive an
annual base salary of $600,000 and an annual target bonus
equal to 108% of his salary. Mr. Horton will also receive,
among other things, the following stock or stock-based
compensation awards: (i) 33,000 deferred shares, vesting on
the first anniversary of his employment with American; (ii)
69,000 performance shares under AMR's 2004 - 2006 Performance
Share Plan for Officers and Key Employees, as amended and
restated as of March 29, 2006, payable in 2007 if certain
performance criteria are met; (iii) 77,600 performance units
under AMR's 2005 - 2007 Performance Unit Plan (or its
successor plan), payable in 2008 if certain performance
criteria are met; and (iv) options to purchase up to 59,200
shares of AMR's common stock, vesting equally over a period
of five years (the overall term of the option grant is ten
years). Mr. Horton will be eligible to participate in AMR's
and American's management employee and executive benefit
programs, including American's defined benefit retirement
plans for management personnel and American's Supplemental
Executive Retirement Plan (the "SERP"), and he will receive
an annual personal allowance (as a replacement for the
automobile lease and other personal allowances eliminated in
2003) of at least $27,000 per year. Pursuant to the
Agreement, he will receive up to 3.9 years of additional age
and service credit under the SERP. Upon termination of the
Agreement without cause or by Mr. Horton for good reason,
among other things, all of Mr. Horton's stock and stock-based
compensation will immediately vest (subject to satisfaction
of certain performance criteria for the performance shares
and performance units); he will receive the 3.9 additional
years of credited service under the SERP; and he will be
entitled to two years of his salary and bonus.
Item 1.01 Entry into a Material Definitive Agreement
On March 29, 2006, the Board of Directors (the "Board") of
AMR Corporation (the "Corporation") approved the amendment
and restatement of various compensation programs. The
programs as amended and restated are as follows:
a. The 2003-2005 Performance Share Plan for Officers and
Key Employees, and the related 2003-2005 Performance Share
Agreement (collectively the "2003-2005 Performance Share
Plan");
b. The 2004-2006 Performance Share Plan for Officers and
Key Employees, and the related 2004-2006 Performance Share
Agreement (collectively the "2004-2006 Performance Share
Plan"); and
c. The Deferred Share Award Agreement (the "2004 Deferred
Share Plan").
The amendment and restatement of the 2003-2005 Performance
Share Plan will result in a distribution of cash and stock
upon the attainment of the performance criteria outlined
therein. The anticipated distribution date is April 2006.
The amendment and restatement of the 2004-2006 Performance
Share Plan will result in a distribution of cash and stock
upon the attainment of the performance criteria outlined
therein. The anticipated distribution date is April 2007.
The amendment and restatement of the 2004 Deferred Share Plan
will result in a distribution of stock upon the recipient
being employed by a wholly owned subsidiary of the
Corporation on the vesting date. The anticipated distribution
date is July 2007.
The Board also made certain grants to the executive officers
of the Corporation under the 2003-2005 Performance Share Plan
and the 2004-2006 Performance Share Plan. These grants
replaced unit grants under earlier plans.
The Board also approved the 2006-2008 Performance Share Plan
for Officers and Key Employees (the "2006-2008 Performance
Share Plan"). The 2006-2008 Performance Share Plan will
result in a distribution of stock upon the attainment of the
performance criteria outlined therein. Awards under the 2006-
2008 Performance Share Plan will be made in July 2006. The
anticipated distribution date is April 2009.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit 10.1 Employment Agreement dated March 29, 2006,
between AMR Corporation, American Airlines,
Inc. and Thomas W. Horton
Exhibit 99.1 Press release of
AMR Corporation dated March 29, 2006
Exhibit 99.2 2003-2005 Performance Share Plan for
Officers and Key Employees, as Amended
and Restated March 29, 2006
Exhibit 99.3 Form of 2003-2005 Performance Share
Agreement, as Amended and Restated March
29, 2006 (with awards to executive
officers noted)
Exhibit 99.4 2004-2006 Performance Share Plan for
Officers and Key Employees, as Amended
and Restated March 29, 2006
Exhibit 99.5 Form of 2004-2006 Performance Share
Agreement, as Amended and Restated March 29,
2006 (with awards to executive officers noted)
Exhibit 99.6 2006-2008 Performance Share Plan for
Officers and Key Employees
Exhibit 99.7 Deferred Share Award Agreement as
Amended and Restated March 29, 2006
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.
American Airlines, Inc.
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: March 31, 2006
Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT among AMR Corporation, a
Delaware corporation ("AMR"), American Airlines, Inc., a Delaware
corporation ("American") and Thomas W. Horton (the "Executive")
is dated as of the 29th day of March, 2006 (the "Agreement").
IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the date
hereof.
2. Employment Period. American hereby agrees to employ the
Executive, and the Executive hereby agrees to serve American and
AMR, subject to the terms and conditions of this Agreement, for
the period commencing on the Effective Date and ending on the
third anniversary thereof (the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, the Executive shall serve as the Executive
Vice President, Finance and Planning and Chief Financial Officer
of American and AMR with such duties and responsibilities as are
customarily assigned to such positions, provided that the
Executive shall have responsibility for planning, strategy and
pricing issues. The Executive shall report directly and
exclusively to the Chairman and Chief Executive of AMR and
American.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his business
attention and time to the business and affairs of American and/or
AMR and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary") at a rate of not less than
$600,000 payable in accordance with American's normal payroll
policies. The Executive's Annual Base Salary shall be reviewed
at least annually by the Compensation Committee of the AMR Board
of Directors ("Compensation Committee") pursuant to its normal
performance review policies for senior executives. Annual Base
Salary shall not be reduced after any increase and the term
Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(ii) Annual Bonus. With respect to each fiscal year ending
during the Employment Period, the Executive shall be eligible to
receive an annual bonus ("Annual Bonus") with a target of 108% of
the Executive's Annual Base Salary (the "Reference Bonus"). The
actual Annual Bonus, which could be higher or lower (including
zero) than the Reference Bonus, shall be based on the attainment
of performance objectives as determined by the Compensation
Committee and shall be paid, subject to any effective deferral
elections that may be made by the Executive pursuant to any
deferred compensation plans that American may maintain, within
two and a half months following the end of the fiscal year for
which the Annual Bonus is earned. The Executive understands that
an Annual Bonus may not be paid with respect to any fiscal year
in the event the performance criteria established under the
applicable bonus plan are not satisfied (as determined by the
Compensation Committee).
(iii) Equity-Based Grants. On the Effective Date,
AMR shall grant the Executive (A) 33,000 deferred shares ("DSs"), which
shall vest on the first anniversary of the Effective Date, except
as otherwise provided herein, (B) 59,200 stock options with a
fair market value exercise price as of the Effective Date and a
ten year term, which shall vest in five equal annual
installments, except as otherwise provided herein, (C) 69,000
units under AMR's 2004-2006 Performance Unit Plan (or its
successor plan), with a projected distribution in April 2007, and
(D) 77,600 units under AMR's 2005-2007 Performance Unit Plan (or
its successor plan), with a projected distribution in April 2008.
With respect to the performance plans referenced in clauses (C)
and (D), the Executive understands that there may be no
distribution under such plans in the event the performance
criteria established thereunder are not satisfied (as determined
by the Compensation Committee).
(iv) Other Employee Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under savings and retirement plans that are
tax-qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), in plans that are supplemental
to any such tax-qualified plans, and welfare benefit plans,
practices, policies and programs provided by American or AMR
(including, without limitation, medical, prescription, dental,
vision, disability, salary continuance, group life and
supplemental group life, accidental death, travel accident
insurance, sick leave and vacation plans, practices, policies and
programs), on a basis that is no less favorable than those
generally applicable or made available to other senior executives
of American . The Executive shall be eligible for participation
in fringe benefits and perquisite plans, practices, policies and
programs (including, without limitation, expense reimbursement
plans, practices, policies and programs) on a basis that is no
less favorable than those generally applicable or made available
to other senior executives of American. The Executive shall be
provided with one and one/third additional years of age and
service credit for each year worked during the Employment Period
(for up to a maximum 3.9 years of additional age and service
credit) for all purposes of American's Supplemental Executive
Retirement Program (the "SERP") all with the effect that
Executive shall be deemed to have served continuously with
American since August 1985. The additional age and service credit
under the SERP shall not be provided if the Executive's
employment is terminated by American for Cause or by the
Executive without Good Reason during the Employment Period. The
Executive shall also be provided with reasonable relocation
benefits, consistent with those provided by American to its
senior staff as of the Effective Date, which shall include,
without limitation, the purchase by American of the Executive's
primary residence at appraised value. Executive shall also
receive an annual perquisite allowance of at least $27,000, such
allowance shall be subject to adjustment by the Compensation
Committee in a manner that is consistent with adjustments made to
the perquisite allowance for other senior staff employed by
American. Upon the Effective Date, the Executive's entry-on-duty
date for purposes of determining seniority and all other benefits
normally accruing for members of American's senior staff shall be
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August 19, 1985 (except as provided in Section 5(d) of this
Agreement).
4. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If American
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may provide the Executive with
written notice in accordance with Section 10(b) of this Agreement
of its intention to terminate the Executive's employment. In
such event, the Executive's employment with American shall
terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"); provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with
American on a full-time basis for 180 consecutive days as a
result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by
American or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. American may terminate the Executive's employment
during the Employment Period either with or without Cause. For
purposes of this Agreement, "Cause" shall mean:
(i) the Executive is convicted of, or pleads guilty or nolo
contendere to a charge of commission of, a felony; or
(ii) the Executive has engaged in willful gross neglect or
willful gross misconduct in carrying out his duties, which results
in material economic harm to AMR or American or in reputational harm
causing quantifiable material injury to AMR or American.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of AMR or American. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the AMR Board of Directors (the
"Board") or upon the instructions of the Board or the Chairman of
AMR or based upon the advice of counsel for AMR or American
shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of AMR
or American. The cessation of employment of the Executive shall
not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in clause (ii)
above, and specifying the particulars thereof in detail.
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(c) Good Reason. The Executive's employment may be terminated
by the Executive with or without Good Reason. For purposes of
this Agreement, "Good Reason" shall mean in the absence of a
written consent of the Executive:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) of this
Agreement, or any other action by AMR or American which results
in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial or inadvertent action not taken in bad faith and
which is remedied by AMR or American, as the case may be, within
30 days after receipt of notice thereof given by the Executive;
(ii) any failure by AMR or American to comply with
any of the provisions of Section 3(b) of this Agreement (including
but not limited to, a failure to honor an equity award that is due
and payable), other than (A) an isolated, insubstantial or
inadvertent failure not occurring in bad faith and which is
remedied by AMR or American, as the case may be, within 30 days
after receipt of notice thereof given by the Executive or (B) an
instance where an equity award is settled in marketable property
having equivalent value;
(iii) any requirement by AMR or American that the
Executive's services be rendered primarily at a location or locations
other than DFW, Texas; or
(iv) any failure by AMR or American to comply with
Section 9(c) of this Agreement.
(d) Notice of Termination. Any termination by American for
Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 10(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall
be not more than 30 days after the giving of such notice). The
failure by the Executive or American to set forth in the Notice
of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or American, respectively, hereunder or preclude the
Executive or American, respectively, from asserting such fact or
circumstance in enforcing the Executive's or American's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by American for Cause,
or by the Executive with or without Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein
within 30 days of such notice, as the case may be, (ii) if the
Executive's employment is terminated by American other than for
Cause or Disability, the Date of Termination shall be the date on
which American notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the
case may be.
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(f) Resignation. Upon termination of the Executive's
employment for any reason, the Executive agrees to resign, as of
the Date of Termination, to the extent applicable, from any positions
that the Executive holds with AMR and American and their affiliated
companies, the Board (and any committees thereof) and the Board
of Directors (and any committees thereof) of any of their
affiliated companies.
5. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause, Death or Disability. If, during
the Employment Period, American shall terminate the Executive's
employment other than for Cause, death or Disability or the
Executive shall terminate employment for Good Reason:
(i) American shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination (except for
subparagraph B. hereof) the aggregate of the following amounts:
A. the sum of (1) the Executive's accrued Annual Base Salary
and any accrued vacation pay through the Date of Termination,
(2) the Executive's business expenses that have not been
reimbursed by the Company as of the Date of Termination that were
incurred by the Executive prior to the Date of Termination in
accordance with the applicable policy at American, and (3) the
Executive's Annual Bonus earned for the fiscal year immediately
preceding the fiscal year in which the Date of Termination occurs
if such bonus has been determined but not paid as of the Date of
Termination (the sum of the amounts described in clauses (1)
through (3), shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the product of (1) the Reference Bonus, and (2) a fraction,
the numerator of which is the number of days in the fiscal year
in which the Date of Termination occurs (the "Termination Year")
through the Date of Termination, and the denominator of which is
365 (the "Pro Rata Bonus") if the Compensation Committee
determines that the applicable performance criteria under the
annual bonus plan for the Termination Year have been satisfied.
The Pro Rata Bonus shall be paid to the Executive at the same
time annual bonus payments for the Termination Year are paid to
the senior staff of American; and
C. the amount equal to the product of (1) two and (2) the
sum of (x) the Executive's Annual Base Salary and (y) the Reference
Bonus; and
(ii) the Executive shall receive age and service credit under all
retirement and welfare benefit plans, programs, agreements and
arrangements of American from the Date of Termination through
the third anniversary of the Effective Date (the "Continuation
Period") as if Executive had remained employed for such period;
and
(iii) any equity-based awards, DSs and performance units
granted to the Executive shall vest and become free of
restrictions immediately, and any stock options granted to the
Executive shall be exercisable for the remainder of their ten
year term, without regard to any provisions relating to earlier
termination of the stock options based on termination of
5
employment. With respect to performance units granted to the
Executive, they shall be distributed (in accordance with the
terms of the applicable grant agreement) when they become due in
the normal course based on a determination of the Compensation
Committee that the performance criteria established under the
applicable performance unit plan have been satisfied; and
(iv) American shall pay the costs of providing to the Executive
and his eligible dependents COBRA coverage for medical and dental
benefits for the maximum period then allowed under American's
health and welfare plans (collectively "Welfare Benefits"); and
(v) to the extent not theretofore paid or provided, American
shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Company and its
affiliated companies through the Date of Termination (such other
amounts and benefits shall be hereinafter referred to as the
"Other Benefits"). As used in this Agreement, the term
"affiliated companies" shall include any company controlled by,
controlling or under common control with AMR.
Notwithstanding the foregoing provisions of this Section 5(a), to
the extent required in order to comply with Section 409A of the
Code, cash amounts that would otherwise be payable under this
Section 5(a) during the six-month period immediately following
the Date of Termination shall instead be paid, with interest on
any delayed payment at the applicable federal rate provided for
in Section 7872(f)(2)(A) of the Code ("Interest"), on the first
business day after the date that is six months following the
Executive's "separation from service" within the meaning of
Section 409A.
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations, (ii) the timely
payment or provision of Other Benefits (as qualified hereafter)
and (iii) payment of the Pro Rata Bonus,. Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination and the Pro Rata Bonus shall be paid to the
Executive's estate or beneficiary, as applicable, on the date
specified in Section 5(a)(i)(B). With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this
Section 5(b) shall be those death benefits as in effect on the
date of the Executive's death which American customarily pays or
provides in the event of the death of a member of its senior
staff. American shall pay the costs of providing to the
Executive's eligible dependents (as of the date of death) COBRA
coverage for medical and dental benefits for the maximum period
then allowed under American's health and welfare plans. Stock
options, DSs and performance units previously granted to the
Executive shall be exercisable, vested and/or distributed, as the
case may be, in accordance with the terms of the applicable grant
agreement for a termination due to the Executive's death. With
respect to performance units granted to the Executive, they shall
be distributed (in accordance with the terms of the applicable
grant agreement) when they become due in the normal course based
on a determination of the Compensation Committee that the
performance criteria established under the applicable performance
unit plan have been satisfied
6
(c) Disability. If the Executive's employment is terminated by
American by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for (i) payment of
Accrued Obligations, (ii) the timely payment or provision of
Other Benefits (as qualified hereafter) and (iii) payment of the
Pro Rata Bonus; provided, that to the extent required in order to
comply with Section 409A of the Code, amounts and benefits to be
paid or provided under this Section 5(c) shall be paid, with
Interest, or provided to the Executive on the first business day
after the date that is six months following the Executive's
"separation from service" within the meaning of Section 409A.
Accrued Obligations shall be paid to the Executive or Executive's
legal representative, as applicable, in a lump sum in cash within
30 days of the Date of Termination and the Pro Rata Bonus shall
be paid to the Executive or Executive's legal representative, as
applicable, on the date specified in Section 5(a)(i)(B). With
respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(c) shall be those
disability benefits as in effect on the date of the Executive's
Disability which American customarily pays or provides in the
event of the Disability of a member of its senior staff. American
shall pay the costs of providing to the Executive's eligible
dependents (as of the date of Disability) COBRA coverage for
medical and dental benefits for the maximum period then allowed
under American's health and welfare plans. Stock options, DSs and
performance units previously granted to the Executive shall be
exercisable, vested and/or distributed, as the case may be, in
accordance with the terms of the applicable grant agreement for a
termination due to the Executive's Disability. With respect to
performance units granted to the Executive, they shall be
distributed (in accordance with the terms of the applicable
grant agreement) when they become due in the normal course based
on a determination of the Compensation Committee that the
performance criteria established under the applicable performance
unit plan have been satisfied.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated by American for Cause or the
Executive terminates his employment without Good Reason during
the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to
pay to the Executive (i) the Accrued Obligations through the Date
of Termination and (ii) Other Benefits, in each case to the
extent theretofore unpaid. Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination, provided, that to the extent required in order to
comply with Section 409A of the Code, amounts and benefits to be
paid or provided under this sentence of Section 5(d) shall be
paid, with Interest, or provided to the Executive on the first
business day after the date that is six months following the
Executive's "separation from service" within the meaning of
Section 409A. For purposes of determining years of age or service
credit under any retirement or health or welfare plans maintained
by American (including retiree medical and travel plans), upon a
termination of Executive's employment by American for Cause or
the Executive without Good Reason, during the Employment Period,
(i) no additional years of age or service credit shall be accrued
in whole or in part pursuant to Section 3(b)(iv) and (ii) the
Executive's employment period with American will be deemed to be
from August 19,1985 until June 12, 2002, and any accrual of
credited age or service for Executive's employment during the
Employment Period shall be determined in accordance with
American's then existing policies regarding the accrual of such
service after a break-in-service.
6. Full Settlement. American's obligation to make the
payments provided for in this Agreement and otherwise to perform
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its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which American or AMR may have against the Executive or others;
provided, American may withhold applicable taxes from any such
payments. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of
the amounts payable to the Executive under any of the provisions
of this Agreement and, such amounts shall not be reduced whether
or not the Executive obtains other employment. American agrees
to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur
as a result of any contest by AMR or American, any of their
affiliates or their respective predecessors, successors or
assigns, the Executive, his estate, beneficiaries or their
respective successors and assigns of the validity or
enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement);
provided, that the Executive prevails on at least one material
claim.
7. Change in Control; Tax Reimbursement. AMR and American
shall enter into with Executive as of the Effective Date a change
in control agreement (the "CIC Agreement"). The CIC Agreement
shall have terms and conditions similar to those contained in
similar agreements with other members of American's senior staff.
Among other things, there will be provisions in the CIC Agreement
for (i) the payment of (2 X the Executive's Annual Base Salary
and Reference Bonus) and (ii) the reimbursement of any excise
taxes paid by Executive as a result of a change in control of AMR.
8. Confidential Information; Non-Solicit of Employees;
Non-Compete. (a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which
shall have been obtained by the Executive during the Executive's
employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it or as may be required by applicable
law, court order, a regulatory body or arbitrator or other
mediator.
(b) In consideration of the Company's obligations hereunder:
(i) During the one-year period following the
Executive's termination of employment during the Employment
Period for any reason (the "Restricted Period"), the Executive
will not, directly or indirectly, on behalf of the Executive or
any other person, become associated with, whether as a principal,
partner, employee, consultant or shareholder (other than as a
holder of 5% or less of the outstanding voting shares of any
publicly traded company), a Competitor. For purposes of this
Section 8(b) a "Competitor" shall mean any entity (A) that is
engaged in the commercial airline business or (B) that controls
another entity that is engaged in the commercial airlines
business.
8
(ii)During the Restricted Period, the Executive shall
not, directly or indirectly, solicit or encourage any person to
leave his or her employment with the Company or assist in any way
with the hiring of any Company employee by any other business.
(c) The Executive acknowledges that the Company would
be irreparably injured by a violation of this Section 8 and the
Executive or the Company, as applicable, agrees that the Company
or the Executive, as applicable, in addition to any other
remedies available to it for such breach or threatened breach,
shall be entitled, without posting a bond, to a preliminary
injunction, temporary restraining order, or other equivalent
relief, restraining the Executive or the Company (including its
executive officers and directors), as applicable, from any actual
or threatened breach of this Section 8.
9. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives, heirs or legatees.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Miscellaneous. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas and
venue shall be in the State District Court for Tarrant County,
Texas (or, if jurisdiction is under the federal court system, the
U. S. District Court for the Northern District of Texas, Fort
Worth Division), without reference to principles of conflict of
laws. If, under any such law, any portion of this Agreement is
at any time deemed to be in conflict with any applicable statute,
rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto. The captions of this
Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other parties
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: At the most recent address on file at the Company.
If to the Company: AMR Corporation/ American Airlines, Inc.
9
4333 Amon Carter Blvd. MD 5618
Fort Worth, TX 76155
Attention: General Counsel
Or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to
Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be
a waiver of such provision or right or any other provision or
right of this Agreement, except as set forth in Section 4(c).
(f) Except as otherwise expressly provided herein,
from and after the Effective Time, this Agreement shall supersede
any other employment, severance or change of control agreement
between the parties and between the Executive with respect to the
subject matter hereof . Any provision of this Agreement that by
its terms continues after the expiration of the Employment Period
or the termination of the Executive's employment shall survive in
accordance with its terms
(g) If any compensation or benefits provided by this
Agreement may result in the application of Section 409A of the
Code, the Company shall, in consultation with the Executive,
modify the Agreement in the least restrictive manner necessary in
order to exclude such compensation from the definition of
"deferred compensation" within the meaning of such Section 409A
or in order to comply with the provisions of Section 409A, other
applicable provision(s) of the Code and/or any rules, regulations
or other regulatory guidance issued under such statutory
provisions and without any diminution in the value of the
payments to the Executive.
10
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from the
Boards of Directors of AMR and American, each has caused these
presents to be executed in its name on its behalf, all as of the
day and year first above written.
THOMAS W. HORTON
/s/ Thomas W. Horton
AMR CORPORATION
By /s/ Gerard J. Arpey
Name: Gerard J. Arpey
Title: Chairman, President and CEO
AMERICAN AIRLINES, INC.
By /s/ Gerard J. Arpey
Name: Gerard J. Arpey
Title: Chairman, President and CEO
Exhibit 99.1
CONTACT: Al Becker
Corporate Communications
Fort Worth, Texas
817-967-1577
corp.comm@aa.com
FOR RELEASE: Wednesday, March 29, 2006
AMR CORPORATION APPOINTS THOMAS W. HORTON
EXECUTIVE VICE PRESIDENT - FINANCE AND PLANNING AND CFO
AMR Also Announces Other Key Executive Appointments
That Further Strengthen Its Management Team And Provide For
Succession As AMR Prepares For A Greater Role
In The Global Aviation Marketplace
FORT WORTH, Texas - In a move that brings added
strength and experience to its strategic leadership team as
the company becomes a stronger global competitor, AMR
Corporation, the parent company of American Airlines, today
announced the appointment of Thomas W. Horton as Executive
Vice President - Finance and Planning and Chief Financial
Officer.
Horton returns to AMR and American from AT&T, where he
most recently had been Vice Chairman and Chief Financial
Officer after joining that company from AMR as CFO in June
2002. Since then, Horton has played a pivotal role in
strengthening AT&T's core business and building value for
its shareholders. He was credited with improving AT&T's
cost structure and reducing debt by more than two-thirds.
He also had responsibility for corporate strategy and
ultimately, the structuring of AT&T's successful merger with
SBC.
In his new role as AMR's Executive Vice President -
Finance and Planning, Horton will also be CFO, responsible
for all of the Company's finance functions, including
financial planning, treasury, corporate development,
accounting, tax, investor relations, a business unit that
provides investment services, and purchasing. In addition,
Horton will have overall responsibility for all planning
functions led by Henry C. Joyner, American's Senior Vice
President - Planning. These include capacity planning,
revenue
-- more --
management, corporate real estate, international planning,
activities related to American's membership in the global
oneworld alliance, and fleet planning.
"All of us at AMR are thrilled to welcome Tom Horton
back to the leadership team," said Gerard Arpey, AMR's
Chairman and CEO. "Tom is an executive of extraordinary
insight and ability who served our Company with distinction
in many roles, including Chief Financial Officer, before
going on to do great things at AT&T. His broad knowledge of
the challenging airline industry and keen understanding of
the financial markets will be enormous assets to AMR as we
continue the vital work of restoring the Company to
sustained profitability in a global aviation marketplace."
With the expected retirement of two key executives in
the next few years, American also announced today several
other major appointments to further strengthen the
management team and develop more refined lines of succession
in several critical areas as the airline positions itself to
become a stronger and more vibrant global competitor. Those
planning retirement are Peter J. Dolara, American's Senior
Vice President - Miami, the Caribbean and Latin America, who
pioneered the airline's services in those regions and guided
their growth into some of the most successful portions of
American's network; and William F. Quinn, President of
American Beacon Advisors, AMR's investment services unit,
who founded that enterprise in 1986 and grew the business to
a point where today it manages more than $45 billion in
pension assets and short-term cash assets on behalf of
American and outside clients. Mindful of these changes,
American announced the following:
Two senior international appointments were made to
address the changes that will result from Dolara's future
retirement and to better position American globally for long-
term competitive success. Craig S. Kreeger was named Senior
Vice President - International, and C. David Cush was
appointed Senior Vice President - Global Sales. At present,
Kreeger is responsible for all sales and ground operations
activities in Europe and Asia as Vice President - Europe and
Pacific Division, based in London. Cush currently is Vice
President and General Sales Manager, responsible for leading
American's domestic sales team and for developing all sales
policies worldwide, including those relating to key
distribution systems. Under the transition that will take
place when Dolara retires, Kreeger will become responsible
for all ground operations in
-- more --
Latin America, Europe and Asia, and Cush will be responsible
for all sales activities worldwide, including those in Latin
America, Europe and Asia.
Douglas G. Herring, currently American's Vice President
and Controller, will become President of American Beacon
Advisors, eventually succeeding Quinn, who will continue as
the unit's chief executive officer and chairman, and remain
on the American Beacon Mutual Fund Board.
Isabella (Bella) Goren was named Senior Vice President
- - Customer Relationship Marketing and Reservations. In this
new role, Goren will continue to oversee the full range of
on-line customer interactions, including expanding customer
relationships through personalized service via the AA.com
Web site, and the operation of American's reservations
centers. In addition, Goren will be responsible for the
airline's industry-leading AAdvantage travel awards program,
led by Kurt Stache, President of AAdvantage.
Brian McMenamy was appointed Vice President and
Controller to succeed Herring. McMenamy is currently
American's Managing Director - Airline Profitability and
Financial Analysis.
Dolara and Quinn, the two executives planning
retirement, are remaining in their respective roles so they
can work closely with their successors in the coming years
to ensure a smooth and successful transition of leadership
in their important areas of responsibility.
"The willingness of Peter Dolara and Bill Quinn to
remain in their posts and help with the transition is yet
another expression of the complete dedication and commitment
that has distinguished their outstanding careers," Arpey
said. "All of us at American are deeply appreciative of
their support.
"The executive moves we are announcing today will
strengthen American for the long-term future and reflect
well on the depth of the Company's management team," Arpey
said. "These are times of unprecedented challenge and
change in the airline industry, and the appointments we are
announcing today will put American in an even stronger
position to continue the substantial progress that has
already been made under the tenets of our Turnaround Plan."
###
Current AMR Corp news releases can be accessed on the
Internet:
The address is: http://www.aa.com
EXHIBIT 99.2
2003 - 2005 PERFORMANCE SHARE PLAN
FOR OFFICERS AND KEY EMPLOYEES, AS AMENDED AND RESTATED
AS OF MARCH 29, 2006
Purpose
The purpose of the 2003 - 2005 AMR Corporation Performance Share
Plan ("Plan") for Officers and Key Employees is to provide greater
incentive to officers and key employees of the subsidiaries and
affiliates of AMR Corporation ("AMR" or the "Corporation") to
achieve the highest level of individual performance and to meet or
exceed specified goals which will contribute to the success of the
Corporation.
The Plan is adopted under the 2003 Employee Stock Incentive Plan
(the "ESIP").
Definitions
For purposes of the Plan, the following definitions will control:
"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.
"Committee" is defined as the Compensation Committee, or its
successor, of the AMR Board of Directors (the "Board").
"Comparator Group" is defined as the six major U.S. based carriers
including AMR Corporation, Continental Airlines, Inc., Delta Air
Lines, Inc., Northwest Airlines Corp., Southwest Airlines Co., and
UAL Corporation.
"Measurement Period" is defined as the three year period beginning
January 1, 2003, and ending December 31, 2005.
"Total Shareholder Return (TSR)" is defined as the rate of return
reflecting stock price appreciation plus reinvestment of dividends
over the Measurement Period. The average Daily Closing Stock
Price (adjusted for splits and dividends) for the three months
prior to the beginning and ending points of the Measurement Period
will be used to smooth out market fluctuations.
"Daily Closing Stock Price" is defined as the stock price at the
close of trading (4:00 PM EST) of the National Exchange on which
the stock is traded.
"National Exchange" is defined as one of the New York Stock
Exchange (NYSE), the National Association of Stock Dealers and
Quotes (NASDAQ), or the American Stock Exchange (AMEX).
Accumulation of Award
Any distribution under the Plan will be determined by (i) the
Corporation's TSR rank within the Comparator Group and (ii) the
terms and conditions of the award agreement between the
Corporation and the employee. The distribution percentage of a
target award, based on rank, is specified below:
Granted Target Award - Percent of Target Based on Rank
Rank 6 5 4 3 2 1
Payout % 0% 50% 75% 100% 135% 175%
In the event that a carrier (or carriers) in the Comparator Group
ceases to trade on a National Exchange at any point in the
Measurement Period, the following distribution percentage of a
target award, based on rank and the number of remaining
comparators, will be used accordingly.
5 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 5 4 3 2 1
Payout % 50% 75% 100% 135% 175%
4 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 4 3 2 1
Payout % 75% 100% 135% 175%
3 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 3 2 1
Payout % 50% 135% 175%
Administration
The Committee will 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. The distribution percentage
of a target award, if any, will be determined based on an audit of
AMR's TSR rank by the General Auditor of American Airlines, Inc.
("American"). A summary of awards under the Plan will be provided
to the Board at the first regular meeting following determination
of the awards. Awards, if any, will be distributed in cash and
stock. The Committee will determine the precise allocation between
cash and stock on April 19, 2006. The Cash Payment will be made on
April 28, 2006, and any such payment will be based upon the Fair
Market Value of the Corporation's Common Stock on April 19, 2006,
or such date the award is approved for payment by the Committee.
The Stock Distribution under this Plan will be distributed on
April 20, 2006, or on the business day that immediately follows
the date on which the Committee approves the distribution of an
award.
General
Neither this Plan nor any action taken hereunder will 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 will 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 an award as
may have been expressly awarded by the Committee subject to the
terms and conditions of the award agreement between the
Corporation and the employee.
In the event of any act of God, war, natural disaster, aircraft
grounding, revocation of operating certificate, terrorism, strike,
lockout, labor dispute, work stoppage, fire, epidemic or
quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of the Corporation,
whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation or its
Subsidiaries or its Affiliates, the Committee, in its sole
discretion, may (i) terminate or (ii) suspend, delay, defer (for
such period of time as the Committee may deem necessary), or
substitute any awards due currently or in the future under the
Plan, including, but not limited to, any awards that have accrued
to the benefit of participants but have not yet been paid, in any
case to the extent permitted under Proposed Treasury Regulation
1.409A-3(d) and/or 1.409A-3(e), or successor guidance thereto.
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 and, (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 its
Affiliates 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 failure by the employee to abide by
the foregoing obligations will result in the award being forfeited
in its entirety.
The Committee may amend, suspend, or terminate the Plan at any
time.
EXHIBIT 99.3
2003 - 2005 PERFORMANCE SHARE AGREEMENT
AS AMENDED AND RESTATED AS OF MARCH 29, 2006
This performance share agreement ("Agreement") is amended and
restated as of March 29, 2006, by and between AMR Corporation, a
Delaware corporation (the "Corporation"), and an officer or key
employee of one of the Corporation's Subsidiaries (the "Employee"
or the "Recipient") as identified in the e-mail or mail
notification sent to the Employee on April _, 2006 (the
"Notification").
WHEREAS, pursuant to the 2003 - 2005 Performance Share Plan
for Officers and Key Employees, as amended and restated as of
March 29, 2006 (the "Plan") and as adopted by the Board of
Directors of the Corporation (the "Board"), the Compensation
Committee of the Board (the "Committee") has determined to make an
award (the "Award" as set forth in the Notification) to the
Employee (subject to the terms of the Plan and this Agreement),
as an inducement for the Employee to remain an employee of one of
the Corporation's Subsidiaries during the time frame of 2003 -
2005 and to retain and motivate such Employee during such
employment.
This Agreement sets forth the terms and conditions attendant
to the Award under the Plan.
1. Grant of Award. Subject to the terms and conditions of
this Agreement, the Recipient is hereby granted an Award as of the
"Grant Date" set forth in the Notification. The Award will vest,
if at all, in accordance with Section 2 of this Agreement. On the
date the Award vests (if at all), Recipient will receive a
combination of cash and the Corporation's Common Stock. The
Committee will determine the amount of the Award to be paid in
cash (the "Cash Award") and the amount of the Award to be settled
in shares of the Corporation's Common Stock (the "Stock
Distribution"). The Cash Award will be paid on April 28, 2006
(such Cash Award will be made pursuant to the Annual Incentive
Plan). The Stock Distribution will occur on April 20, 2006 (such
Stock Distribution will be made from and pursuant to the 2003
Employee Stock Incentive Plan, the "ESIP"). The sum of the Cash
Award and the Stock Distribution will equal the product of (a)
the Fair Market Value of the Common Stock on April 19, 2006 and
(b) the number of shares of Common Stock comprising the Award.
2. Vesting.
(a) The Award will vest, if at all, in accordance with
Schedule A, attached hereto and made a part of this Agreement.
(b) In the event Recipient's employment with one of the
Corporation's Subsidiaries is terminated prior to the end of the
three year measurement period set forth in Schedule A (the
"Measurement Period") due to the Recipient's death, Disability (as
defined in section 409A(a)(2)(C) of the Internal Revenue Code of
1986, as amended, (the "Code")), Retirement or termination not for
Cause (each an "Early Termination") the Award will vest, if at
all, on a pro-rata basis and will be paid to the Employee (or, in
the event of the Employee's death, the Employee's designated
beneficiary for purposes of the Award, or in the absence of an
effective beneficiary designation, the Employee's estate). The
pro-rata basis will be a percentage where the denominator is 36
and the numerator is the number of months from January 1, 2003
through the month of Early Termination, inclusive. The pro-rata
basis will be paid to the Recipient at the same time as Cash
Awards and Stock Distributions are made to then current employees
who have Awards under the Plan, subject to Section 2(f) of this
Agreement.
(c) In the event Recipient's employment with one of the
Corporation's Subsidiaries is terminated for Cause, or if the
Recipient terminates his/her employment with such Subsidiary, each
occurring prior to April 20, 2006, the Award will be forfeited in
its entirety.
(d) If prior to April 20, 2006, the Recipient becomes an
employee of a Subsidiary that is not wholly owned, directly or
indirectly, by the Corporation, or if the Recipient begins a leave
of absence without reinstatement rights, then in each case the
Award will be forfeited in its entirety.
(e) [Intentionally omitted]
(f) Notwithstanding the provisions of Section 2(b), if the
Employee is a person subject to section 409A(a)(2)(B)(i) of the
Code, any payment on account of Retirement or termination not for
Cause of the Employee will be delayed until the sixth month
anniversary of the date of separation from employment due to
Retirement or termination not for Cause.
3. Transfer Restrictions. This Award is non-transferable
otherwise than by will or by the laws of descent and distribution,
and may not otherwise be assigned, pledged or hypothecated and
will not be subject to execution, attachment or similar process.
Upon any attempt by the Recipient (or the Recipient's successor in
interest after the Recipient's death) to effect any such
disposition, or upon the levy of any such process, the Award may
immediately become null and void, at the discretion of the
Committee.
4. Miscellaneous. This Agreement (a) will be binding upon
and inure to the benefit of any successor of the Corporation, (b)
will be governed by the laws of the State of Texas and any
applicable laws of the United States, and (c) may not be amended
without the written consent of both the Corporation and the
Recipient. No contract or right of employment will be implied by
this Agreement.
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 Airlines, Inc. ("American") or its Affiliates to any
unauthorized party and (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
the Corporation 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 failure by the Employee to abide by
the foregoing obligations will result in the Award being forfeited
in its entirety.
The Employee will not have the right to defer any of the
Cash Payment or the Stock Distribution. Except as provided in
this Agreement, the Committee and Corporation will not accelerate
the Cash Payment or the Stock Distribution.
Any Cash Award will be net of applicable withholding and
social security taxes. The Employee will pay to the Corporation
timely any and all such taxes on account of the Stock
Distribution. The failure by the Employee to pay timely such taxes
will result in a withholding from any and all payments from the
Corporation or any Subsidiary to the Employee in order to satisfy
such taxes.
6. Adjustments in Awards. In the event of a Stock
dividend, Stock split, merger, consolidation, re-organization, re-
capitalization or other change in the corporate structure of the
Corporation, appropriate adjustments may be made by the Board of
Directors to the Award.
7. Incorporation of ESIP Provisions. Capitalized terms not
otherwise defined herein (inclusive of Schedule A) will have the
meanings set forth for such terms in the ESIP.
8. American Jobs Creation Act. Amendments to this
Agreement may be made by the Corporation, without the Employee's
consent, in order to ensure compliance with the American Jobs
Creation Act of 2004.
9. Prior 2003/2005 Performance Unit Agreement
In consideration of this amended and restated Agreement, the
Employee irrevocably agrees that any prior award granted to the
Employee under the 2003/2005 Performance Unit Plan, as hereby
amended and restated, is hereby forfeited in its entirety and will
hereafter be of no further effect and such prior award is replaced
in its entirety with the Award granted under this Agreement.
IN WITNESS HEREOF, the Recipient and the Corporation
have executed this Performance Share Agreement as of the day,
month and year set forth above.
RECIPIENT AMR CORPORATION
_____________________________ _____________________
Charles D. MarLett
Corporate Secretary
Daniel Garton - 77,000 shares
Gary Kennedy - 63,000 shares
Charles MarLett - 33,250 shares
2003 - 2005 PERFORMANCE SHARE PLAN
FOR OFFICERS AND KEY EMPLOYEES, AS AMENDED AND RESTATED
AS OF MARCH 29, 2006
Purpose
The purpose of the 2003 - 2005 AMR Corporation Performance Share
Plan ("Plan") for Officers and Key Employees is to provide greater
incentive to officers and key employees of the subsidiaries and
affiliates of AMR Corporation ("AMR" or the "Corporation") to
achieve the highest level of individual performance and to meet or
exceed specified goals which will contribute to the success of the
Corporation.
The Plan is adopted under the 2003 Employee Stock Incentive Plan
(the "ESIP").
Definitions
For purposes of the Plan, the following definitions will control:
"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.
"Committee" is defined as the Compensation Committee, or its
successor, of the AMR Board of Directors (the "Board").
"Comparator Group" is defined as the six major U.S. based carriers
including AMR Corporation, Continental Airlines, Inc., Delta Air
Lines, Inc., Northwest Airlines Corp., Southwest Airlines Co., and
UAL Corporation.
"Measurement Period" is defined as the three year period beginning
January 1, 2003, and ending December 31, 2005.
"Total Shareholder Return (TSR)" is defined as the rate of return
reflecting stock price appreciation plus reinvestment of dividends
over the Measurement Period. The average Daily Closing Stock
Price (adjusted for splits and dividends) for the three months
prior to the beginning and ending points of the Measurement Period
will be used to smooth out market fluctuations.
"Daily Closing Stock Price" is defined as the stock price at the
close of trading (4:00 PM EST) of the National Exchange on which
the stock is traded.
"National Exchange" is defined as one of the New York Stock
Exchange (NYSE), the National Association of Stock Dealers and
Quotes (NASDAQ), or the American Stock Exchange (AMEX).
Accumulation of Award
Any distribution under the Plan will be determined by (i) the
Corporation's TSR rank within the Comparator Group and (ii) the
terms and conditions of the award agreement between the
Corporation and the employee. The distribution percentage of a
target award, based on rank, is specified below:
Granted Target Award - Percent of Target Based on Rank
Rank 6 5 4 3 2 1
Payout % 0% 50% 75% 100% 135% 175%
In the event that a carrier (or carriers) in the Comparator Group
ceases to trade on a National Exchange at any point in the
Measurement Period, the following distribution percentage of a
target award, based on rank and the number of remaining
comparators, will be used accordingly.
5 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 5 4 3 2 1
Payout % 50% 75% 100% 135% 175%
4 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 4 3 2 1
Payout % 75% 100% 135% 175%
3 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 3 2 1
Payout % 50% 135% 175%
Administration
The Committee will 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. The distribution percentage
of a target award, if any, will be determined based on an audit of
AMR's TSR rank by the General Auditor of American Airlines, Inc.
("American"). A summary of awards under the Plan will be provided
to the Board at the first regular meeting following determination
of the awards. Awards, if any, will be distributed in cash and
stock. The Committee will determine the precise allocation between
cash and stock on April 19, 2006. The Cash Payment will be made on
April 28, 2006, and any such payment will be based upon the Fair
Market Value of the Corporation's Common Stock on April 19, 2006,
or such date the award is approved for payment by the Committee.
The Stock Distribution under this Plan will be distributed on
April 20, 2006, or on the business day that immediately follows
the date on which the Committee approves the distribution of an
award.
General
Neither this Plan nor any action taken hereunder will 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 will 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 an award as
may have been expressly awarded by the Committee subject to the
terms and conditions of the award agreement between the
Corporation and the employee.
In the event of any act of God, war, natural disaster, aircraft
grounding, revocation of operating certificate, terrorism, strike,
lockout, labor dispute, work stoppage, fire, epidemic or
quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of the Corporation,
whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation or its
Subsidiaries or its Affiliates, the Committee, in its sole
discretion, may (i) terminate or (ii) suspend, delay, defer (for
such period of time as the Committee may deem necessary), or
substitute any awards due currently or in the future under the
Plan, including, but not limited to, any awards that have accrued
to the benefit of participants but have not yet been paid, in any
case to the extent permitted under Proposed Treasury Regulation
1.409A-3(d) and/or 1.409A-3(e), or successor guidance thereto.
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 and, (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 its
Affiliates 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 failure by the employee to abide by
the foregoing obligations will result in the award being forfeited
in its entirety.
The Committee may amend, suspend, or terminate the Plan at any
time.
EXHIBIT 99.4
2004 - 2006 PERFORMANCE SHARE PLAN
FOR OFFICERS AND KEY EMPLOYEES, AS AMENDED AND RESTATED
AS OF MARCH 29, 2006
Purpose
The purpose of the 2004 - 2006 AMR Corporation Performance Share
Plan ("Plan") for Officers and Key Employees is to provide greater
incentive to officers and key employees of the subsidiaries and
affiliates of AMR Corporation ("AMR" or the "Corporation") to
achieve the highest level of individual performance and to meet or
exceed specified goals during the time frame 2004 to 2006 which
will contribute to the success of the Corporation.
The Plan is adopted under the 1998 Long Term Incentive Plan (the
"LTIP") as amended.
Definitions
For purposes of the Plan, the following definitions will control:
"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.
"Committee" is defined as the Compensation Committee, or its
successor, of the AMR Board of Directors (the "Board").
"Comparator Group" is defined as the seven U.S. based carriers
including AMR Corporation, Continental Airlines, Inc., Delta Air
Lines, Inc., JetBlue Airways, Northwest Airlines Corp., Southwest
Airlines Co., and US Airways Group, Inc.
"Corporate Objectives" is defined as being the objectives
established by the Committee at the beginning of each fiscal year
during the Measurement Period.
"Measurement Period" is defined as the three year period beginning
January 1, 2004, and ending December 31, 2006.
"Total Shareholder Return (TSR)" is defined as the rate of return
reflecting stock price appreciation plus reinvestment of dividends
over the Measurement Period. The average Daily Closing Stock
Price (adjusted for splits and dividends) for the three months
prior to the beginning and ending points of the Measurement Period
will be used to smooth out market fluctuations.
"Daily Closing Stock Price" is defined as the stock price at the
close of trading (4:00 PM EST) of the National Exchange on which
the stock is traded.
"National Exchange" is defined as one of the New York Stock
Exchange (NYSE), the National Association of Stock Dealers and
Quotes (NASDAQ), or the American Stock Exchange (AMEX).
Accumulation of Award
Any distribution under the Plan will be determined by (i) the
Corporation's TSR rank within the Comparator Group, (ii) (for
senior officers of American Airlines, Inc. "American") the
Corporation's attainment of the Corporate Objectives and (iii) the
terms and conditions of the award agreement between the
Corporation and the employee. The distribution percentage of a
target award pursuant to the TSR metric and based on rank, is
specified below:
Granted Target Award - Percent of Target Based on Rank
Rank 7 6 5 4 3 2 1
Payout % 0% 25% 50% 75% 100% 135% 175%
In the event that a carrier (or carriers) in the Comparator Group
ceases to trade on a National Exchange at any point in the
Measurement Period, the following distribution percentage of a
target award, based on rank and the number of remaining
comparators, will be used accordingly.
6 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 6 5 4 3 2 1
Payout % 0% 50% 75% 100% 135% 175%
5 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 5 4 3 2 1
Payout % 50% 75% 100% 135% 175%
4 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 4 3 2 1
Payout % 75% 100% 135% 175%
3 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 3 2 1
Payout % 50% 135% 175%
At the end of each fiscal year during the Measurement Period, the
Committee will determine whether the Corporate Objectives have
been achieved. At the end of the Measurement Period, the Committee
will determine the distribution of an Award based upon the TSR
metric and, with respect to senior officer awards, the Corporate
Objectives.
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. The distribution percentage
of a target award, if any, will be determined based on an audit of
AMR's TSR rank by the General Auditor of American. A summary of
awards under the Plan shall be provided to the Board at the first
regular meeting following determination of the awards. Awards, if
any, will be distributed in cash and stock. The Committee will
determine the precise allocation between cash and stock on April
18, 2007. The cash payment will be made on April 30, 2007, and any
such payment will be based upon the Fair Market Value of the
Corporation's Common Stock on April 18, 2007, or such date the
award is approved for payment by the Committee. Stock to be
distributed under this Plan will be distributed on April 19, 2007,
or on the business day that immediately follows the date on which
the Committee approves the distribution of an award.
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 an
award as may have been expressly awarded by the Committee subject
to the terms and conditions of the award agreement between the
Corporation and the employee.
In the event of any act of God, war, natural disaster, aircraft
grounding, revocation of operating certificate, terrorism, strike,
lockout, labor dispute, work stoppage, fire, epidemic or
quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of the Corporation,
whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation or its
Subsidiaries or its Affiliates, the Committee, in its sole
discretion, may (i) terminate or (ii) suspend, delay, defer (for
such period of time as the Committee may deem necessary), or
substitute any awards due currently or in the future under the
Plan, including, but not limited to, any awards that have accrued
to the benefit of participants but have not yet been paid, in any
case to the extent permitted under Proposed Treasury Regulation
1.409A-3(d) and/or 1.409A-3(e), or successor guidance thereto.
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 and, (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 the Corporation 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 failure by the
employee to abide by the foregoing obligations shall result in the
award being forfeited in its entirety.
The Committee may amend, suspend, or terminate the Plan at any
time.
EXHIBIT 99.5
2004 - 2006 PERFORMANCE SHARE AGREEMENT
AS AMENDED AND RESTATED AS OF MARCH 29, 2006
This performance share agreement ("Agreement") is amended and
restated as of March 29, 2006, by and between AMR Corporation, a
Delaware corporation (the "Corporation"), and an officer or key
employee of one of the Corporation's Subsidiaries (the "Employee"
or the "Recipient") as identified in the e-mail or mail
notification sent to the Employee on April __, 2006 (the
"Notification").
WHEREAS, pursuant to the 2004 - 2006 Performance Share Plan
for Officers and Key Employees, as amended and restated as of
March 29, 2006 (the "Plan") and as adopted by the Board of
Directors of the Corporation (the "Board"), the Compensation
Committee of the Board (the "Committee") has determined to make an
award (the "Award", as set forth in the Notification) to the
Employee (subject to the terms of the Plan and this Agreement), as
an inducement for the Employee to remain an employee of one of the
Corporation's Subsidiaries during the time frame of 2004 - 2006
and to retain and motivate such Employee during his/her
employment.
This Agreement sets forth the terms and conditions attendant
to the Award under the Plan.
1. Grant of Award. Subject to the terms and conditions of
this Agreement, the Recipient is hereby granted an Award as of the
"Grant Date" set forth in the Notification. The Award shall vest,
if at all, in accordance with Section 2 of this Agreement. On the
date the Award vests (if at all), Recipient will receive a
combination of cash and the Corporation's Common Stock. The
Committee will determine the amount of the Award to be paid in
cash (the "Cash Award") and the amount of the Award to be settled
in shares of the Corporation's Common Stock (the "Stock
Distribution"). The Cash Award will be paid on April 30, 2006
(such Cash Award will be made pursuant to the Annual Incentive
Plan). The Stock Distribution will occur on April 19, 2007 (such
Stock Distribution will be made from and pursuant to the 1998 Long
Term Incentive Plan, as amended (the "LTIP")). The sum of the Cash
Award and the Stock Distribution will equal the product of (a) the
Fair Market Value of the Common Stock on April 18, 2007, and (b)
the number of shares of Common Stock comprising the Award.
2. Vesting.
(a) The Award will vest, if at all, in accordance with
Schedule A, attached hereto and made a part of this Agreement.
(b) In the event Recipient's employment with one of the
Corporation's Subsidiaries is terminated prior to the end of the
three year measurement period set forth in Schedule A (the
"Measurement Period") due to the Recipient's death, Disability (as
defined in section 409A(a)(2)(C) of the Internal Revenue Code of
1986, as amended, (the "Code")), Retirement (subject to Section 4)
or termination not for Cause (each an "Early Termination") the
Award will vest, if at all, on a pro-rata basis and will be paid
to the Employee (or, in the event of the Employee's death, the
Employee's designated beneficiary for purposes of the Award, or in
the absence of an effective beneficiary designation, the
Employee's estate). The pro-rata basis will be a percentage where
the denominator is 36 and the numerator is the number of months
from January 1, 2004 through the month of Early Termination,
inclusive. This pro-rata basis will be paid to the Recipient at
the same time as Cash Awards and Stock Distributions are made to
then current employees who have Awards under the Plan, subject to
Section 2(f) of this Agreement.
(c) In the event Recipient's employment with one of the
Corporation's Subsidiaries is terminated for Cause, or if the
Recipient terminates his/her employment with such Subsidiary, each
occurring prior to April 19, 2007, the Award shall be forfeited in
its entirety.
(d) If prior to April 19, 2007, the Recipient becomes an
employee of a Subsidiary that is not wholly owned, directly or
indirectly, by the Corporation, or if the Recipient begins a leave
of absence without reinstatement rights, then in each case the
Award shall be forfeited in its entirety.
(e) In the event of a Change in Control of the Corporation
prior to the distribution of the Award, the Award will be paid
within 60 days of the date of the Change in Control. In such event,
the vesting date will be the date of the Change in Control. The
term "Change in Control" is defined for purposes of this Agreement
in Section 7.
(f) Notwithstanding the provisions of Section 2(b), if the
Employee is a person subject to section 409A(a)(2)(B)(i) of the
Code, any payment on account of Retirement or termination not for
Cause of the Employee shall be delayed until the sixth month
anniversary of the date of separation from employment due to
Retirement or termination not for Cause.
3. Transfer Restrictions. This Award is non-transferable
otherwise than by will or by the laws of descent and distribution,
and may not otherwise be assigned, pledged or hypothecated and
shall not be subject to execution, attachment or similar process.
Upon any attempt by the Recipient (or the Recipient's successor in
interest after the Recipient's death) to effect any such
disposition, or upon the levy of any such process, the Award may
immediately become null and void, at the discretion of the
Committee.
4. Miscellaneous. This Agreement (a) shall be binding upon
and inure to the benefit of any successor of the Corporation, (b)
shall be governed by the laws of the State of Texas and any
applicable laws of the United States, and (c) may not be amended
without the written consent of both the Corporation and the
Recipient. No contract or right of employment shall be implied by
this Agreement.
In the event the Employee's employment is terminated by
reason of Early or Normal Retirement and the Employee is
subsequently employed by a competitor of the Corporation, the
Corporation serves the right, upon notice to the Employee, to
declare the Award forfeited and of no further validity.
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 Airlines, Inc. ("American") or its Affiliates to any
unauthorized party and (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
the Corporation 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 failure by the Employee to abide by
the foregoing obligations shall result in the Award being
forfeited in its entirety.
The Employee shall not have the right to defer any of
the Cash Payment or the Stock Distribution. Except as provided in
this Agreement, the Committee and Corporation shall not accelerate
the Cash Payment or the Stock Distribution.
Any Cash Award will be net of applicable withholding and
social security taxes. The Employee will pay to the Corporation
timely any and all such taxes on account of the Stock
Distribution. The failure by the Employee to pay timely such taxes
will result in a withholding from any and all payments from the
Corporation or any Subsidiary to the Employee in order to satisfy
such taxes.
6. Adjustments in Awards. In the event of a Stock
dividend, Stock split, merger, consolidation, re-organization, re-
capitalization or other change in the corporate structure of the
Corporation, appropriate adjustments may be made by the Board of
Directors to the Award.
7. Incorporation of LTIP Provisions. Capitalized terms not
otherwise defined herein (inclusive of Schedule A) shall have the
meanings set forth for such terms in the LTIP. For purposes of
Section 2(e), the term "Change in Control" will mean a "change in
ownership" or "change in effective control" or "change in
ownership of the assets" of the Corporation, as determined
pursuant to Internal Revenue Service Notice 2005-1 (or successor
guidance thereto under section 409A of the Code).
8. American Jobs Creation Act. Amendments to this
Agreement may be made by the Corporation, without the Employee's
consent, in order to ensure compliance with the American Jobs
Creation Act of 2004.
9. Prior 2004/2006 Performance Unit Agreement
In consideration of this amended and restated Agreement, the
Employee irrevocably agrees that any prior award granted to the
Employee under the 2004/2006 Performance Unit Plan, as hereby
amended and restated, is hereby forfeited in its entirety and will
hereafter be of no further effect and such prior award is replaced
in its entirety with the Award granted under this Agreement.
IN WITNESS HEREOF, the Recipient and the Corporation
have executed this Performance Share Agreement as of the day,
month and year set forth above.
RECIPIENT AMR CORPORATION
_____________________________ _____________________
Charles D. MarLett
Corporate Secretary
Gerard Arpey - 236,250
Daniel Garton - 120,750
Thomas Horton - 120,750
Gary Kennedy - 89,250
Charles MarLett - 26,250
2004 - 2006 PERFORMANCE SHARE PLAN
FOR OFFICERS AND KEY EMPLOYEES, AS AMENDED AND RESTATED
AS OF MARCH 29, 2006
Purpose
The purpose of the 2004 - 2006 AMR Corporation Performance Share
Plan ("Plan") for Officers and Key Employees is to provide greater
incentive to officers and key employees of the subsidiaries and
affiliates of AMR Corporation ("AMR" or the "Corporation") to
achieve the highest level of individual performance and to meet or
exceed specified goals during the time frame 2004 to 2006 which
will contribute to the success of the Corporation.
The Plan is adopted under the 1998 Long Term Incentive Plan (the
"LTIP") as amended.
Definitions
For purposes of the Plan, the following definitions will control:
"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.
"Committee" is defined as the Compensation Committee, or its
successor, of the AMR Board of Directors (the "Board").
"Comparator Group" is defined as the seven U.S. based carriers
including AMR Corporation, Continental Airlines, Inc., Delta Air
Lines, Inc., JetBlue Airways, Northwest Airlines Corp., Southwest
Airlines Co., and US Airways Group, Inc.
"Corporate Objectives" is defined as being the objectives
established by the Committee at the beginning of each fiscal year
during the Measurement Period.
"Measurement Period" is defined as the three year period beginning
January 1, 2004, and ending December 31, 2006.
"Total Shareholder Return (TSR)" is defined as the rate of return
reflecting stock price appreciation plus reinvestment of dividends
over the Measurement Period. The average Daily Closing Stock
Price (adjusted for splits and dividends) for the three months
prior to the beginning and ending points of the Measurement Period
will be used to smooth out market fluctuations.
"Daily Closing Stock Price" is defined as the stock price at the
close of trading (4:00 PM EST) of the National Exchange on which
the stock is traded.
"National Exchange" is defined as one of the New York Stock
Exchange (NYSE), the National Association of Stock Dealers and
Quotes (NASDAQ), or the American Stock Exchange (AMEX).
Accumulation of Award
Any distribution under the Plan will be determined by (i) the
Corporation's TSR rank within the Comparator Group, (ii) (for
senior officers of American Airlines, Inc. "American") the
Corporation's attainment of the Corporate Objectives and (iii) the
terms and conditions of the award agreement between the
Corporation and the employee. The distribution percentage of a
target award pursuant to the TSR metric and based on rank, is
specified below:
Granted Target Award - Percent of Target Based on Rank
Rank 7 6 5 4 3 2 1
Payout % 0% 25% 50% 75% 100% 135% 175%
In the event that a carrier (or carriers) in the Comparator Group
ceases to trade on a National Exchange at any point in the
Measurement Period, the following distribution percentage of a
target award, based on rank and the number of remaining
comparators, will be used accordingly.
6 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 6 5 4 3 2 1
Payout % 0% 50% 75% 100% 135% 175%
5 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 5 4 3 2 1
Payout % 50% 75% 100% 135% 175%
4 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 4 3 2 1
Payout % 75% 100% 135% 175%
3 Comparators
Granted Target Award - Percent of Target Based on Rank
Rank 3 2 1
Payout % 50% 135% 175%
At the end of each fiscal year during the Measurement Period, the
Committee will determine whether the Corporate Objectives have
been achieved. At the end of the Measurement Period, the Committee
will determine the distribution of an Award based upon the TSR
metric and, with respect to senior officer awards, the Corporate
Objectives.
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. The distribution percentage
of a target award, if any, will be determined based on an audit of
AMR's TSR rank by the General Auditor of American. A summary of
awards under the Plan shall be provided to the Board at the first
regular meeting following determination of the awards. Awards, if
any, will be distributed in cash and stock. The Committee will
determine the precise allocation between cash and stock on April
18, 2007. The cash payment will be made on April 30, 2007, and any
such payment will be based upon the Fair Market Value of the
Corporation's Common Stock on April 18, 2007, or such date the
award is approved for payment by the Committee. Stock to be
distributed under this Plan will be distributed on April 19, 2007,
or on the business day that immediately follows the date on which
the Committee approves the distribution of an award.
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 an
award as may have been expressly awarded by the Committee subject
to the terms and conditions of the award agreement between the
Corporation and the employee.
In the event of any act of God, war, natural disaster, aircraft
grounding, revocation of operating certificate, terrorism, strike,
lockout, labor dispute, work stoppage, fire, epidemic or
quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of the Corporation,
whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation or its
Subsidiaries or its Affiliates, the Committee, in its sole
discretion, may (i) terminate or (ii) suspend, delay, defer (for
such period of time as the Committee may deem necessary), or
substitute any awards due currently or in the future under the
Plan, including, but not limited to, any awards that have accrued
to the benefit of participants but have not yet been paid, in any
case to the extent permitted under Proposed Treasury Regulation
1.409A-3(d) and/or 1.409A-3(e), or successor guidance thereto.
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 and, (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 the Corporation 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 failure by the
employee to abide by the foregoing obligations shall result in the
award being forfeited in its entirety.
The Committee may amend, suspend, or terminate the Plan at any
time.
EXHIBIT 99.6
2006 - 2008 PERFORMANCE SHARE PLAN
FOR OFFICERS AND KEY EMPLOYEES
Purpose
The purpose of the 2006 - 2008 AMR Corporation Performance Share
Plan ("Plan") for Officers and Key Employees is to provide
greater incentive to officers and key employees of the
subsidiaries and affiliates of AMR Corporation ("AMR" or "the
Corporation") to achieve the highest level of individual
performance and to meet or exceed specified goals which will
contribute to the success of the Corporation.
Definitions
For purposes of the Plan, the following definitions will control:
"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.
"Committee" is defined as the Compensation Committee, or its
successor, of the AMR Board of Directors.
"Comparator Group" is defined as the following seven U.S. based
carriers including, AirTran Airways, Alaska Airlines, AMR
Corporation, Continental Airlines, Inc., JetBlue Airways,
Southwest Airlines Co. and US Airways, Inc.
"Corporate Objectives" is defined as being the objectives
established by the Committee at the beginning of each fiscal year
during the Measurement Period.
"Measurement Period" is defined as the three year period
beginning January 1, 2006 and ending December 31, 2008.
"Total Shareholder Return (TSR)" is defined as the rate of return
reflecting stock price appreciation plus reinvestment of
dividends over the Measurement Period. The average Daily Closing
Stock Price (adjusted for splits and dividends) for the three
months prior to the beginning and ending points of the
Measurement Period will be used to smooth out market
fluctuations.
"Daily Closing Stock Price" is defined as the stock price at the
close of trading (4:00 PM EST) of the National Exchange on which
the stock is traded.
"National Exchange" is defined as either the New York Stock
Exchange (NYSE), the National Association of Stock Dealers and
Quotes (NASDAQ), or the American Stock Exchange (AMEX).
Accumulation of Shares
Any distribution under the Plan with respect to the shares will
be determined by (i) the Corporation's TSR rank within the
Comparator Group and/or (ii) the Corporation's attainment of the
Corporate Objectives during each year of the Measurement Period
and (iii) the terms and conditions of the award agreement between
the Corporation and the employee. The distribution percentage of
shares pursuant to the TSR metric and based on rank, is specified
below:
Granted Shares - Percent of Target Based on Rank
Rank 7 6 5 4 3 2 1
Payout % 0% 25% 50% 75% 100% 135% 175%
In the event that a carrier (or carriers) in the Comparator Group
ceases to trade on a National Exchange at any point in the
Measurement Period, the following distribution percentage of
target shares, based on rank and the number of remaining
comparators, will be used accordingly.
6 Comparators
Granted Shares - Percent of Target Based on Rank
Rank 6 5 4 3 2 1
Payout % 0% 50% 75% 100% 135% 175%
5 Comparators
Granted Shares - Percent of Target Based on Rank
Rank 5 4 3 2 1
Payout % 50% 75% 100% 135% 175%
4 Comparators
Granted Shares - Percent of Target Based on Rank
Rank 4 3 2 1
Payout % 75% 100% 135% 175%
3 Comparators
Granted Shares - Percent of Target Based on Rank
Rank 3 2 1
Payout % 50% 135% 175%
At the end of each fiscal year during the Measurement Period, the
Committee will determine whether the Corporate Objectives have
been achieved. At the end of the Measurement Period the Committee
will determine the distribution of shares based upon the TSR
metric and, with respect to senior officer awards, the Corporate
Objectives. The number of shares that may vest will range from 0%
to 175% of the target award.
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. The TSR metric will be
determined based on an audit of AMR's TSR rank by the General
Auditor of American Airlines, Inc. A summary of awards under the
Plan shall be provided to the Board of Directors at the first
regular meeting following determination of the awards. The
awards will be distributed on April 16, 2008, or such date the
award is approved for distribution by the Committee.
The distribution of any shares under this Plan is subject to the
Corporation having sufficient stock in a stock plan to make such
a distribution. In the event the Corporation does not have
sufficient shares of stock in such a stock plan for the
distribution contemplated by this Plan, the Committee will have
the authority and discretion to make substitutions for such
shares, all to the effect that the employee will receive cash or
other marketable property of a value equivalent to what the
employee would have been received in a stock distribution.
Corporate Objectives will be used as a metric for determining the
distribution of shares only for senior officers of the
Corporation (or a Subsidiary thereof) unless the Committee
determines otherwise.
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 Airlines, Inc. 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 an
award as may have been expressly awarded by the Committee subject
to the terms and conditions of the award agreement between the
Corporation and the employee.
In the event of any act of God, war, natural disaster, aircraft
grounding, revocation of operating certificate, terrorism,
strike, lockout, labor dispute, work stoppage, fire, epidemic or
quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of the Corporation,
whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation or its
Subsidiaries or its Affiliates, the Committee, in its sole
discretion, may (i) terminate or (ii) suspend, delay, defer (for
such period of time as the Committee may deem necessary), or
substitute any awards due currently or in the future under the
Plan, including, but not limited to, any awards that have accrued
to the benefit of participants but have not yet been paid, in any
case to the extent permitted under proposed Treasury Regulation
1.409A-3(d) and/or 1.409A-3(e), or successor guidance thereto.
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 Airlines, Inc. or its Affiliates to any unauthorized
party and, (ii) not to make any unauthorized use of such trade
secrets or confidential or restricted information during his or
her employment with American Airlines, Inc. or its Affiliates or
after such employment is terminated, and (iii) not to solicit any
then current employees of American Airlines, Inc. 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 Airlines,
Inc. or its Affiliates is terminated. The failure by the
employee to abide by the foregoing obligations shall result in
the award being forfeited in its entirety.
The Committee may amend, suspend, or terminate the Plan at any
time.
Exhibit 99.7
DEFERRED SHARE AWARD AGREEMENT
This AGREEMENT is amended and restated as of March 29,
2006, by and between AMR Corporation, a Delaware corporation
(the "Corporation") and an officer or a key employee of one
of the Corporation's Subsidiaries (the "Employee") as
identified in the e-mail or mail notification sent to the
Employee on April x, 2006 (the "Notification").
WHEREAS, pursuant to the 2003 Employee Stock Incentive
Plan, as it may be amended from time to time (the "ESIP"),
the Compensation Committee of the Board of Directors (the
"Committee") has determined that the Employee is an officer
or key employee and has further determined to make an award
of Deferred Shares to the Employee as an inducement for the
Employee to remain with one of the Corporation's
Subsidiaries and to motivate the Employee during such
employment.
NOW, THEREFORE, the Corporation and the Employee hereby
agree as follows:
1. Grant of Award.
The Employee is hereby granted as of July 26, 2004 (the
"Grant Date") a deferred share award (the "Award"), subject
to the terms and conditions of this Agreement, as amended
and restated, with respect to the number of shares of Common
Stock set forth in the Notification (the "Shares"). Subject
to the terms and conditions of this Agreement, the Shares
covered by the Award will vest, if at all, in accordance
with Section 2 hereof, on July 26, 2007 (such date hereby
established as the "Vesting Date" of the Award).
2. Distribution of Award.
Distribution with respect to the Award, on the Vesting
Date, will occur, if at all, in accordance with the
following terms and conditions:
(a) If the Employee is on the payroll of a Subsidiary
that is wholly owned by the Corporation as of the Vesting
Date, the Shares will be distributed to the Employee on July
27, 2007.
(b) In the event the Employee's employment with a
Subsidiary of the Corporation is terminated prior to the
Vesting Date due to the Employee's death, Disability (as
defined in section 409A(a)(2)(C) of the Internal Revenue
Code of 1986, as amended, (the "Code")), Retirement or
termination not for Cause (each an "Early Termination"), the
Shares covered by the Award will vest on a pro-rata basis
and will be paid to the Employee (or, in the event of the
Employee's death, the Employee's designated beneficiary for
the purposes of the Award, or in the absence of an effective
beneficiary designation, the Employee's estate). The pro-
1
rata basis will be a percentage where the denominator is 36
and the numerator is the number of months from the Grant
Date through the month of Early Termination, inclusive. The
pro-rata Award will be paid (subject to Section 2(e) hereof)
to the Employee (or, in the event of the Employee's death,
the Employee's designated beneficiary for the purposes of
the Award, or in the absence of an effective beneficiary
designation, the Employee's estate) within 60 days after the
Employee's death, Disability, Retirement or termination not
for Cause.
(c) In the event of a Change in Control of the
Corporation (as defined in Section 5 hereof) after the
Vesting Date but prior to the distribution of the Award, the
Award will be distributed in accordance with the terms of
the ESIP.
(d) Notwithstanding the terms of Section 2(a), (b),
(c), the Award will be forfeited in its entirety if prior to
the Vesting Date:
(i) The Employee's employment with the
Corporation (or Subsidiary or Affiliate
thereof) is terminated for Cause, or if the
Employee terminates his/her employment with a
Subsidiary of the Corporation;
(ii) The Employee becomes an employee of a
Subsidiary that is not wholly owned by the
Corporation; or
(iii) The Employee takes a leave of absence without
reinstatement rights, unless otherwise agreed in
writing between the Corporation and the Employee.
(e) Notwithstanding the provisions of Section 2(b) hereof,
if the Employee is a person subject to section
409A(a)(2)(B)(i) of the Code, any payment on account of
Retirement or termination not for Cause of the Employee
shall be delayed until the sixth month anniversary of the
date of separation from employment due to Retirement or
termination not for Cause.
3. Transfer Restrictions.
Unless otherwise permitted by the Corporation, the
Award is non-transferable other than by will or by the laws
of descent and distribution, and may not be assigned,
pledged or hypothecated and will not be subject to
execution, attachment or similar process. Upon any attempt
by the Employee (or the Employee's successor in the interest
after the Employee's death) to effect any such disposition,
or upon the levy of any such process, the Award may
immediately become null and void, at the discretion of the
Corporation.
4. [Intentionally omitted]
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5. Miscellaneous.
This Agreement (a) will be binding upon and inure to
the benefit of any successor of the Corporation, (b) will be
governed by the laws of the State of Texas and any
applicable laws of the United States, and (c) may not be
amended without the written consent of both the Corporation
and the Employee. No contract or right of employment will
be implied by this Agreement.
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 Airlines,
Inc. ("American") or its Affiliates to any unauthorized
party and (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 the Corporation to join the Employee at his
or her place of employment after his or her employment with
American or its Affiliates is terminated. The failure by the
Employee to abide by the foregoing obligations shall result
in the Award being immediately forfeited in its entirety.
For purposes of Section 2(c) hereof, the term "Change
in Control" will mean a "change in ownership" or "change in
effective control", or "change in ownership of the assets"
of the Corporation, as determined pursuant to Internal
Revenue Service Notice 2005-1 (or successor guidance thereto
under section 409A of the Code).
The Employee will not have the right to defer
distribution of the Award. Except as provided in this
Agreement, the Committee and the Corporation will not
accelerate distribution of the Award.
Capitalized terms not otherwise defined herein shall
have the meanings set forth for such terms in the ESIP.
6. Adjustments in Awards.
In the event of a Stock dividend, Stock split, merger,
consolidation, re-organization, re-capitalization or other
change in the corporate structure of the Corporation,
appropriate adjustments may be made by the Board of
Directors in the number of Shares awarded.
7. Prior Deferred Unit Awards.
In consideration of this amended and restated
Agreement, the Employee irrevocably agrees that any prior
award granted to the Employee under a 2004 Deferred Unit
Agreement, as hereby amended and restated, is hereby
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forfeited in its entirety and will hereafter be of no
further effect and such prior award is replaced in its
entirety with the Award granted under this Agreement.
8. American Jobs Creation Act. Amendments to this
Agreement may be made by the Corporation, without the
Employee's consent, in order to ensure compliance with the
American Jobs Creation Act of 2004.
IN WITNESS HEREOF, the Employee and the Corporation
have executed this Deferred Unit Agreement as of the day and
year first above written.
Employee AMR CORPORATION
______________________________ __________________________
Charles D. MarLett
Corporate Secretary