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Parker should be rewarded for being the anti-Smisek, but that doesn’t mean this grant is fair, especially in light of the gutted benefits for retirees.
American Airlines chief executive Doug Parker earned about $20.9 million in 2013 executive compensation at the airline and its merger partner, US Airways, according to a filing on Friday.
Parker, who was CEO of US Airways for most of last year, earned $5.5 million at US Airways and another $15.5 million at American, most of which was a restricted stock grant. His compensation while leading US Airways was about the same as it was in 2012.
“And as we announced in January, our board has set my 2014 target compensation at levels approximately 20 percent lower than the target compensation of those two CEOs,” he added.
In 2013, Parker’s salary at US Airways was $550,000 and he will earn $700,000 in salary this year at American.
Parker’s 2013 compensation at American included a $15.4 million restricted grant he was given when the merger closed on December 9. The restriction prohibits the stock from being sold immediately.
Half of the shares will vest on December 16, 2015, and if the carrier has received its single operating certificate from the Federal Aviation Administration, another 25 percent will vest on that date. If American does not receive their certificate by that point, 25 percent will vest on the certificate date or December 9, 2016, whichever comes first. The remaining 25 percent will vest when the board determines that $1 billion in merger synergies have been achieved for fiscal year 2015 and fiscal year 2016.
Several executives at the former US Airways were also given stock grants with the same restrictions as Parker’s grants. The stock was awarded in return for waiving contract terms that would have allowed them to resign from American and receive large severance packages that could have been worth more than the stock award.
According to the filing, former American CEO Tom Horton received more than $19 million in executive compensation in 2013, including $11.9 million in a cash severance payment. Horton will step down as non-executive chairman at American prior to the carrier’s first shareholder meeting on June 4 in New York.
Separately, a federal judge gave final approval of American Airlines’ settlement agreement with the U.S. Department of Justice on Friday.
Judge Colleen Kollar-Kotelly evaluated comments filed during a public comment period in her ruling but found that the agreement, which forces American to divest take-off and landing slots and gates at several airports, should be approved.
“The Court concludes that the proposed final judgment is in the public interest,” Kollar-Kotelly wrote.
American said it was pleased with the court’s ruling.
“Together, American Airlines and US Airways have created a strong global competitor that provides better access to more destinations than we could ever provide independently,” the company said in a statement.
Likewise, the Justice Department said it was satisfied.
“By increasing the presence of low-cost carriers at key constrained airports across the country … consumers will have more choices to fly at more competitive airfares,” Assistant Attorney General Bill Baer said in a news release. “With the settlement, the department is requiring an unprecedented number of divestitures in this industry that will provide enhanced competition across the nation.”
In the merger, American and US Airways gave up 102 slots at Reagan National in Washington, D.C., 34 at LaGuardia Airport in New York, and two slots each at Boston Logan, Chicago O’Hare, Los Angeles International, Miami International and Dallas Love Field. Southwest Airlines, JetBlue and Virgin America have picked up most of the slots so far, but the process is not complete.