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April , 2024
To Our Stockholders:
April , 2018
To Our Stockholders:
On behalf of the Board of Directors of American Airlines Group Inc., we invite you to attend the 20182024 Annual Meeting of Stockholders to be held at the offices of Latham & Watkins LLP, located at 885 Third Avenue, New York, New York 10022, on Wednesday, June 13, 2018,5, 2024, at 9:00 a.m. local time. , Central Time. As with our recent meetings, this year’s Annual Meeting will be a virtual meeting of stockholders, conducted via live audio webcast. The virtual format provides the opportunity for participation by a broader group of our stockholders and enables stockholders to participate fully, and equally, from any location around the world. You can attend the Annual Meeting via the Internet by registering at www.proxydocs.com/AAL using the control number which appears on your Notice of Internet Availability of Proxy Materials, your proxy card (printed in the gray box), and the instructions that accompanied your proxy materials. You will have the ability to submit questions in advance of, and real-time during, the Annual Meeting via the meeting website.
The attached Notice of 20182024 Annual Meeting of Stockholders and Proxy Statement describes the formal business to be transacted and detailed procedures for attending, submitting questions, and voting at the virtual meeting. We have produced an interactive proxy
statement that will provide our stockholders with better capability to navigate through the document, making key information easier to find and evaluate. The interactive proxy statement is accessible at www.proxydocs.com/AAL prior to and during the Annual Meeting.
It is important that your shares be represented at the Annual Meeting and, regardless of whether or not you plan to attend, the Annual Meeting in person, we request that you vote in advance on the matters to be presented at the meeting. Annual Meeting as described in these proxy materials.
Thank you for your continued support.
Sincerely,
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Chairman of the Board
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The accompanying Proxy Statement is dated April , 2018,2024, and is first being released to stockholders of American Airlines Group Inc. on or about April , 2018.2024.
NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
DATE AND TIME: Wednesday, June 9:00 a.m.
RECORD DATE: April |
MEETING AGENDA | |||||||
1 | A proposal to elect 11 directors to serve until the 2025 Annual | |||||||
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3 | A proposal to approve, on a non-binding, advisory basis, executive | |||||||
4 | A proposal to amend our Certificate of Incorporation to allow future | |||||||
5 | A proposal to amend our Certificate of Incorporation to allow all
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For additional detailsinstructions on Internetvoting in advance of and telephone voting and attendance atduring the virtual meeting, please see page 2i of the Proxy Statement.Statement, which is incorporated by reference into this notice.
Important notice regarding theof internet availability of proxy materials for the Annual Meeting:
Our Proxy Statement and 20172023 Annual Report on Form10-K are available atwww.proxyvote.com.www.proxydocs.com/AAL prior to and during the Annual Meeting.
You can help us reduce costs and the impact on the environment by electing to receive and access future copies of our proxy statements, annual reports and other stockholder materials electronically.electronically by e-mail. If your shares are registered directly in your name with our stock registrar and transfer agent, American Stock Transfer &Equiniti Trust Company, LLC, you can make this election by going to its website (www.astfinancial.comequiniti.com/us) or by following the instructions provided when voting over the Internet. If you hold your shares in a brokerage account or otherwise through a third party in “street name,” please refer to the information provided by your broker, bank or other nominee for instructions on how to elect to receive and view future annual meeting materials electronically.
By Order of the Board of Directors of American | ||
Corporate Secretary
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PLEASE READ THE ACCOMPANYING PROXY STATEMENT CAREFULLY.
REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOUR VOTE IS IMPORTANT AND WE
ENCOURAGE YOU TO VOTE BY SUBMITTING A PROXY OR VOTING INSTRUCTIONS PROMPTLY.
This summary contains highlights about our Companycompany and the upcoming 20182024 Annual Meeting of Stockholders (the “Annual Meeting”). This summary does not contain all of the information that you should consider in advance of the meeting and we encourage you to read the entire proxy statementProxy Statement and the Annual Report on Form10-K for the year ended December 31, 20172023 that accompanies this proxy statementProxy Statement before voting.
20182024 Annual Meeting of Stockholders
Date and Time: Wednesday, June 5, 2024 at 9:00 a.m., Central Time |
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Voting Matters and
Board Recommendations
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2024 Proxy Statement
Submitting Questions at the Virtual Annual Meeting | ||||||
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2017 In Review
2017 was a great year for American Airlines thanks to the work of our over 120,000 full-time equivalent team members.
We are focused on four long-term strategic objectives to guide our thinking and decisions and keep the entire team focused on managing American for the long-term. They are: Create a World-Class Customer Experience, Make Culture a Competitive Advantage, Ensure Long-Term Financial Strength and Think Forward, Lead Forward.
Create a World-Class Customer Experience
We are delivering value to all customers, especially premium customers, as well as driving operational excellence and strengthening our network by growing where we have a competitive advantage. During 2017:
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Make Culture a Competitive Advantage
American is creating an environment that cares for frontline team members, develops innovative, inspiring, and caring leaders, and equips our team with the tools to support our customers.
Ensure Long-Term Financial Strength
To ensure our long-term competitiveness in the global aviation industry, we are focused on capturing the efficiencies created by the merger, delivering on American’s earnings potential, and creating value for our stockholders. In the four full years since the merger closed, the company’s cumulativepre-tax earnings were $15.2 billion, or $19.4 billion excluding net special items.
See Annex A for a reconciliation ofpre-tax profit excluding net special items, anon-GAAP measure.
Think Forward, Lead Forward
We are committed tore-establishing American as an industry leader by creating an action-oriented culture that moves quickly to bring products to market, embraces technological change and quickly seizes upon new opportunities for our network and our product.
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Our Commitment to Sustainability
Stockholder Engagement and Governance Highlights
We welcome and value communication with our stockholders. We engage in proactive dialogue with our largest stockholders year-round to gain an understanding of their perspectives on a wide range of matters, which we regularly share with the Board of Directors of the Company (the “Board”). In 2023, we contacted stockholders representing approximately 40% of outstanding shares, and held discussions with investors representing nearly 20% of our outstanding shares. We also held engagements with the leading proxy advisor firms. We utilized these engagement sessions to focus on our recent board refreshment plan and other governance-related matters, our climate strategy, and executive compensation, particularly in the context of our recent CEO and senior management succession planning process and our emergence from the COVID-19 pandemic. We also discussed the Company’s long-term strategy and recent operating and financial performance.
Stockholders may communicate directly with our Board as set forth under “Communications with the Board and Non-Management Directors” on page 41 and can find information about our 2023 stockholder engagement feedback under “Stockholder Engagement” on pages 41 and 61. The following corporate governance and Board practices ensure accountability and enhance effectiveness in the boardroom:
Our Governance Best Practices
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✓ ✓ Stockholder engagement policy and outreach program ✓ Commitment to sustainability and social responsibility ✓ Stock ownership guidelines for directors and executive officers |
ii |
2024 Proxy Statement
Board Refreshment and Board Leadership Structure |
The Board believes that thoughtful refreshment of the members of the
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Voting Matters and Board Recommendations
Matter | Board Recommendation | Page | ||
1. Election of directors | FOR each | 6 | ||
2. Ratification of public accounting firm | FOR | 19 | ||
3. A proposal to | FOR | 21 | ||
4. A proposal to amend our Certificate of Incorporation to allow future amendments to the Bylaws by our stockholders by simple majority vote | FOR | 23 | ||
5. A proposal to amend our Certificate of Incorporation to allow all other provisions of the Certificate of Incorporation to be amended in the future by simple majority vote | FOR | 24 | ||
6. Advisory vote on a stockholder proposal | AGAINST | 25 |
iii |
2024 Proxy Statement
Executive Compensation—How We Link Pay and Performance
2024 Director Nominees (Proposal 1)
Our CEO and other executive officersdirector nominees have demonstrated their commitment to fair paydiligently execute their fiduciary duties on behalf of our stockholders, and pay for performance by initiatingwe recommend that our stockholders elect each of the following exceptional actions with respect to their compensation.
Name | Age | Director Since | Principal Occupation | Independent | AC | CC | CGPRC | FC | SC | |||||||||
Adriane M. Brown | 65 | 2021 | Managing Partner at Flying Fish Partners; former President and Chief Operating Officer at Intellectual Ventures Management; former President and Chief Executive Officer of Honeywell Transportation Systems | ✓ | M |
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John T. Cahill | 66 | 2013 | Vice Chairman of The Kraft Heinz Company; former Chairman and Chief Executive Officer of Kraft Foods Group and of The Pepsi Bottling Group | ✓ | M |
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Michael J. Embler | 60 | 2013 | Private investor; former Chief Investment Officer of Franklin Mutual Advisers | ✓ |
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Matthew J. Hart | 72 | 2013 | Former President and Chief Operating Officer of Hilton Hotels; former Chief Financial Officer of Hilton Hotels | ✓ | C |
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Robert D. Isom CEO | 60 | 2022 | Chief Executive Officer and President of American Airlines Group Inc. and American Airlines, Inc. | ✖ |
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Susan D. Kronick | 72 | 2015 | Former Operating Partner at Marvin Traub Associates; former Vice Chairman of Macy’s | ✓ |
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Martin H. Nesbitt | 61 | 2015 | Co-Chief Executive Officer of The Vistria Group; former President and Chief Executive Officer of PRG Parking Management | ✓ | M |
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Denise M. O’Leary | 66 | 2013 | Private venture capital investor; former General Partner at Menlo Ventures | ✓ |
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Vicente Reynal | 49 | 2022 | Chairman, Chief Executive Officer and President of Ingersoll Rand | ✓ |
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Gregory D. Smith Independent Chairman | 57 | 2022 | Former Executive Vice President and Chief Financial Officer of The Boeing Company | ✓ |
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Douglas M. Steenland | 72 | 2020 | Senior Advisor to The Blackstone Group; Former President and Chief Executive Officer of Northwest Airlines Corporation | ✓ |
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CC = Compensation Committee | M = Member | |
CGPRC = Corporate Governance and SC = Safety Committee | C = Committee Chair |
The Board unanimously recommends that the stockholders vote “FOR” each of the nominees shown in the chart above. |
iv |
2024 Proxy Statement
Ratification of Appointment of KPMG LLP (Proposal 2)
The Board has been historically setdirected that KPMG’s appointment for the fiscal year ending December 31, 2024 be submitted to our stockholders for ratification at below the averageAnnual Meeting. KPMG is well qualified to act as our independent registered public accounting firm and has a deep understanding of our operations and accounting practices. The Audit Committee considered the qualifications, performance, and independence of KPMG, the quality of its discussions with KPMG, and the fees charged by KPMG for his peers at Deltathe level and United.
its stockholders.
Our executives’ compensation is heavily weighted towards variable cash and long-term equity incentives, linking our executives’ pay opportunity to the execution of Company strategies and enhancing the interests of our stockholders.
The Board unanimously recommends that the |
Approval of Executive Compensation (Proposal 3)
Our 2017 equityexecutive compensation program is heavily performance-based and directly linked with our established goals of delivering record operational results, continuing to close our margin gap with our largest competitors, and reducing total debt by $15 billion by the end of 2025. Our 2023 long-term incentive program for our named executive officers incorporates(“LTIP”) incorporated both performance- and time-vesting components, with half of the target value consisting of the performance-vesting component weighted at least 50% by value.component. The performance-vesting component consistsis tied to attainment of restricted stock units that will be earned not earlier than the third anniversary of the grant date based on ourtotal debt reduction (50% weighting) and relative three-yearpre-tax income margin excluding special items as compared to that of apre-defined group of airlines andimprovement versus our three-year relative TSR.
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2024 Proxy Statement
We are committed to effective compensation governance, as demonstrated by the following compensation policies and practices:
What We Do
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✓ ✓Link Pay to Performance with performance goals tied to improving the reliability, profitability and accountability of our
✓Performance-Based Long-term Equity Incentives with a Three-year Performance Period to promote long-term focus. ✓Independent Compensation Consultant that is directly engaged by the Compensation Committee to advise on executive and director tion matters.
✓ Robust Stock Ownership Guidelines that align our executive officers’ long-term interests with those of our stockholders. ✓ Annual Compensation Risk Assessment to identify any elements of our compensation program design or oversight processes that carry elevated levels of adverse risk.
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✖ No Excessive Perquisites. Perquisites and other personal benefits are in line with industry standards. ✖No Payouts of Dividends on Unvested Awards. Unless and until an award’s vesting conditions are satisfied, no dividends or dividend equivalents accrued on the award are paid. ✖No Repricing of Awards Without Stockholder Approval. Under our equity plan, awards may not be repriced without stockholder approval if the effect would be to reduce the exercise price for the shares underlying the award. |
The Board unanimously recommends that the stockholders vote “FOR” the approval of executive compensation. |
vi |
2024 Proxy Statement
Approval of an Amendment to Our Certificate of Incorporation Regarding Future Bylaw Amendments (Proposal 4)
At our 2023 annual meeting of stockholders, our stockholders passed a stockholder-sponsored proposal requesting that the Board take the steps necessary to eliminate each stockholder voting requirement in our Certificate of Incorporation that calls for a greater than simple majority vote.
In response to this request, and after carefully considering the advantages and disadvantages of maintaining the supermajority voting provisions in our Certificate of Incorporation, the Board has determined that it is in the best interests of the Company and its stockholders to amend our Certificate of Incorporation to eliminate the supermajority voting requirement for amendments to the Bylaws by our stockholders (the “Bylaw Voting Threshold Amendment”).
The Board unanimously recommends that the stockholders vote “FOR” the approval of the proposal to amend our Certificate of Incorporation to allow our Bylaws to be amended by our stockholders by simple majority vote. |
Approval of an Amendment to Our Certificate of Incorporation Regarding Other Future Charter Amendments (Proposal 5)
In response to shareholder action at our 2023 annual meeting of stockholders, and after carefully considering the advantages and disadvantages of maintaining the supermajority voting provisions in our Certificate of Incorporation, the Board has determined that it is in the best interests of the Company and its stockholders to amend our Certificate of Incorporation to eliminate the supermajority voting provisions (the “Supermajority Elimination Amendment”).
The Board unanimously recommends that the stockholders vote “FOR” the approval of the proposal to amend our Certificate of Incorporation to allow all other provisions of the Certificate of Incorporation to be amended by simple majority vote. |
Advisory Vote on a Stockholder Proposal (Proposal 6)
The Treasurer for the State of Illinois, as Trustee of the Bright Start College Savings Trust, has informed the Company that it intends to present a proposal at our Annual Meeting. The address of the stockholder and the number of the Company’s securities that the stockholder owns will be provided to stockholders promptly upon request. If the stockholder (or their “qualified representative”) is present at the Annual Meeting and properly submits the proposal for a vote, then the stockholder proposal will be voted upon at the Annual Meeting. In accordance with federal securities laws, the stockholder proposal is presented under Proposal 6 as submitted by the stockholder and is quoted verbatim. The Company disclaims all responsibility for the content of the proposal and the supporting statement, including other sources referenced in the supporting statement.
For the reasons stated in the Board’s Statement in Opposition, which follows the stockholder proposal under Proposal 6, the Board unanimously urges stockholders to vote “AGAINST” the stockholder proposal.
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What are Proposals 4 and 5 and how does the Board recommend stockholders vote?
As set forth in Proposal 4, the Board of Directors has approved the Charter Amendment to permit stockholders who hold, in the aggregate, at least 20% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders. While the Board of Directors recognizes that providing a stockholder right to call special meetings is consistent with corporate governance best practices, the Board of Directors also believes that special meetings of stockholders should be extraordinary events that are held only when strategic concerns or other similar considerations require that the matters to be addressed not be delayed until the next annual meeting. The Board of Directors believes that an ownership threshold of at least 20% is appropriate based on the Company’s current size and stockholder composition, as it would provide the Company’s stockholders with a meaningful right to request a special meeting, while mitigating the risk that corporate resources are wasted to serve the narrow self-interests of a few minority stockholders.
This proxy season, the Company received a stockholder proposal for consideration at the Annual Meeting requesting that the Company take the steps necessary to
permit stockholders who hold at least 10% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders. The stockholder’s proposal is set forth in Proposal 5. The Corporate Governance and Nominating Committee and the Board of Directors carefully considered the stockholder proposal and determined that, while a 10% ownership threshold to call a special meeting of stockholders would not be in the best interest of our stockholders, establishing an ownership threshold of at least 20%, along with appropriate procedural requirements, would achieve a reasonable balance between enhancing stockholder rights and adequately protecting the long-term interests of the Company and its stockholders.
We are recommending that our stockholders approve the Charter Amendment, as set forth in Proposal 4, in order to allow stockholders who hold, in the aggregate, at least 20% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders. We are recommending that our stockholders vote against the stockholder proposal in Proposal 5 because a lower 10% ownership threshold will unduly risk giving a stockholder or small group of stockholders a disproportionate amount of influence over the Company’s affairs.
For these reasons, the Board of Directors unanimously urges stockholders to vote“FOR” Proposal 4, the amendment to our Certificate of Incorporation to enable stockholders who hold at least 20% of our outstanding common stock to call special meetings, and“AGAINST” Proposal 5, the proposal to permit stockholders who hold at least 10% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders.
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2024 Proxy Statement
TABLE OF CONTENTS
PROXY STATEMENT SUMMARY | i | |
THE MEETING | 1 | |
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2024 Proxy Statement
We are furnishing this Proxy Statement to our stockholders in connection with the solicitation by the Board of Directors of proxies to be voted at the Annual Meeting and any adjournments or postponements of that meeting. When used in this Proxy Statement, the terms “we,” “us,” “our,” “the Company” or “American” refer to American Airlines Group Inc. (“AAG”) and its consolidated subsidiaries.
The Annual Meeting will be held at the offices of Latham & Watkins LLP, located at 885 Third Avenue, New York, New York 10022,in a virtual format via live audio webcast on Wednesday, June 13, 2018,5, 2024, at 9:00 a.m., local time,Central Time, for the purposes described in the accompanying Notice of Annual Meeting. Stockholders can register to attend the meeting via the Internet at www.proxydocs.com/AAL by using the control number which appears on the Notice of Internet Availability of Proxy Materials, the proxy card (printed in the gray box), and the instructions that accompanied your proxy materials.
The approximate date we are first sending the Notice of Annual Meeting and accompanying proxy materials to stockholders, or sending a Notice Regarding theof Internet Availability of Proxy Materials and posting the proxy materials atwww.proxyvote.comwww.proxydocs.com/AAL, is April , 2018.2024.
When used in this Proxy Statement, the terms “we,” “us,” “our” and “the Company” refer to American Airlines Group Inc. and its consolidated subsidiaries. “AAG” refers to American Airlines Group Inc. (which previous to the merger with US Airways in 2013 was AMR Corporation) and “American” refers to AAG’s wholly-owned subsidiary American Airlines, Inc.
Record Date; Stockholders Entitled to Vote
Stockholders of record at the close of business on April 16, 20189, 2024 (the “record date”“Record Date”) are entitled to receive notice of and to vote at the Annual Meeting. On the record date,Record Date, there were 656,045,635 shares of our common stock, $0.01 par value per share (“Common Stock”),Stock outstanding and eligible to be voted at the Annual Meeting. Each share of Common Stock entitles its owner to one vote on each matter submitted to the stockholders. As of the record date, approximately 24.5 million of the issued and outstanding shares of Common Stock were held in the Disputed Claims Reserve established in accordance with AMR Corporation’s fourth amended joint plan of reorganization. Pursuant to the plan, the shares held in the Disputed Claims Reserve will be voted by the disbursing agent holding these shares in the same proportion as the other outstanding shares of Common Stock are voted.
A list of the names of stockholders entitled to vote at the Annual Meeting will be available to stockholders for ten days prior to the Annual Meeting for any purpose germane to the Annual Meeting betweenMeeting. Please contact our Corporate Secretary at Corporate.Secretary@aa.com if you wish to examine the hours of 9:00 a.m. and 5:00 p.m., local time, at our headquarters, 4333 Amon Carter Blvd., Fort Worth, Texas 76155.list prior to the Annual Meeting. The stockholder list will also be available atduring the virtual Annual Meeting for examination by any stockholder present at the Annual Meeting.stockholder.
Your vote is very important. You are encouraged to vote as soon as possible.
RequirementsVirtual Stockholder Meeting
The virtual meeting format enables stockholders to Attendparticipate fully, and equally, from any location around the world, at little to no cost. We designed the format of our Annual Meeting
Stockholders to ensure that our stockholders who attend our Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting and to enhance stockholder access, participation and communication through online tools. Our directors will also attend the meeting.
Access to the Audio Webcast of the Annual Meeting. The live audio webcast of the Annual Meeting must checkwill begin promptly at 9:00 a.m., Central Time. Online access to the audio webcast will open approximately 30 minutes prior to the start of the Annual Meeting to allow time for you to log in and test the computer audio system. We encourage our stockholders to access the meeting prior to the start time.
Log in Instructions. Stockholders can register to attend the virtual meeting at www.proxydocs.com/AAL. Stockholders will need their control number which appears on the Notice of Internet Availability of Proxy Materials, the proxy card (printed in the gray box), and the instructions that accompanied your proxy materials. In the event that you do not have a control number, please contact your broker, bank or other nominee as soon as possible and no later than Wednesday, May 29, 2024, so that you can be provided with a control number and gain access to the meeting. Once registered, stockholders will receive an e-mail with a unique link, and instructions on how to attend the meeting one hour prior to the start of the meeting.
Submitting questions at the registration deskvirtual Annual Meeting. Our stockholders will be able to submit questions during the Annual Meeting by registering to attend the virtual meeting at www.proxydocs.com/AAL. Stockholders will need their unique control number which appears on their Notice of Internet Availability of Proxy Materials, the proxy card (printed in the lobbygray box), and the instructions that accompanied the proxy materials.
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2024 Proxy Statement
As part of the officesAnnual Meeting, and as time permits, we will hold a live Q&A session, during which we intend to answer questions submitted during the meeting in accordance with the Annual Meeting’s Rules of Latham & Watkins LLP, locatedConduct which are pertinent to the Company and the meeting matters. Answers to any such questions that are not addressed during the meeting will be published following the meeting on the Company’s website at 885 Third Avenue, New York, New York 10022. Atcheck-in, you must provide:www.aa.com under the links “Investor Relations”—“Annual Shareholders Meeting”—“2024 Annual Meeting of Stockholders Q&A.” Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered once. In order to promote fairness, efficient use of the Company’s resources and to ensure all stockholders are responded to, we will respond to up to three questions from a single stockholder.
You can find your admission ticketConduct will be posted on your proxy card or with your voting instruction form. A copy of a statement from your broker showing your stock ownership is an acceptable form of proof of ownership. A driver’s license or passport is an acceptable form of government-issued picture identification. If you fail to provide the required admission ticket or proof of ownership and valid government-issued picture identification, you will not be admitted www.proxydocs.com/AAL approximately two weeks prior to the Annual Meeting.Meeting.
Access to the Live Webcast of the Annual Meeting |
The live audio webcast of the virtual Annual Meeting will be available to not only our stockholders, but also our team members and other constituents. In order to attend the virtual Annual Meeting, all stockholders and other guests will need to register at www.proxydocs.com/AAL. A replay of the meeting will be made publicly available for two weeks after the meeting at the same website. We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or the meeting, please call the technical support number that will be posted on the virtual meeting platform log-in page. |
Quorum
The presence, in person or by proxy, of the holders of a majority in voting power of the Common stock issued and outstanding sharesand entitled to vote at a meeting of Common Stock as of the record datestockholders, is necessary to constitute a quorum at the Annual Meeting. Shares are considered present “in person” if voted by the holder of those shares or by proxy during the Annual Meeting.
Vote Required to Approve Each Proposal
With respect to Proposal 1 (Election of Directors), in uncontested elections of directors, such as this election, each director must be elected by the affirmative vote of a majority of the votes cast with respect to such director by the shares present in person or represented by proxy and entitled to vote for the election of directors. A majority of the votes cast means that the number of votes cast “FOR” a nominee exceeds the number of votes cast “AGAINST” that nominee. BrokersWe presently believe that brokers do not have discretionary authority to vote on this proposal. Abstentions and brokernon-votes (as defined below)below under “How to Vote Your Shares”) are not
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considered votes cast “FOR” or “AGAINST” a nominee’s election and will have no effect in determining whether a nominee has received a majority of the votes cast. In this election, an incumbent director nominee who does not receive the required number of votes for reelection is expected to tender his or her resignation to the Board of Directors in accordance with a policy adopted by the Board of Directors.our Corporate Governance Guidelines (the “Governance Guidelines”). Within approximately 90 days after certification of the election results of the stockholder vote, our Corporate Governance and NominatingCGPR Committee (or such other committee as directed by the Board) will make a recommendation to our Board of Directors)and the Board will make a determination as to whether to accept or reject the tendered resignation. Following such determination, we will publicly disclose the decision regarding any tendered resignation in a Current Report on Form8-K filed with the Securities and Exchange Commission (the “SEC”).
Approval of Proposal 2 (Ratification of Appointment of Independent Registered Public Accounting Firm), Proposal 3 (Advisory Vote to Approve Executive Compensation), and Proposal 5 (Shareholder6 (Advisory Vote on a Stockholder Proposal), will require the affirmative vote of the holders of a majority of the shares represented, in person or by proxy, and entitled to vote on the matter at the Annual Meeting, provided a quorum is present. Abstentions are considered in determining the number of votes required to obtain the necessary majority vote for the proposal and will have the same legal effect as voting against each proposal.
Approval of Proposal 4 (Management Proposal(Amendment to Approve Charter Amendment)our Certificate of Incorporation to Allow Our Bylaws to be Amended by our Stockholders by Simple Majority Vote) will require the affirmative vote of the holders of at leasttwo-thirds 80% of all shares outstanding and entitled to vote for the voting powerelection of the outstanding sharesdirectors as of the record date.Record Date. Abstentions are considered in determining the number of votes required to obtain the necessary majority vote for the proposal and will have the same legal effect as voting against Proposal 4. Brokers do not have discretionary authority
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2024 Proxy Statement
Approval of Proposal 5 (Amendment to our Certificate of Incorporation to Allow all Other Provisions of the Certificate of Incorporation to be Amended by Simple Majority Vote) will require the affirmative vote of the holders of at least two-thirds of all shares outstanding and are not entitled to vote on Proposals 3 throughfor the election of directors as of the Record Date. Abstentions are considered in determining the number of votes required to obtain the necessary majority vote for the proposal and will have the same legal effect as voting against Proposal 5.
Brokernon-votes (as defined below) will have no effect on the outcome of Proposals 1, 3 and 5 but will have6, and will have the same legal effect as a vote against Proposal 4. Because“AGAINST” Proposals 4 and 5. We presently believe that brokers will have discretionary authority to vote on Proposal 2 and, as such, brokernon-votes are not expected on Proposal 2.
Voting of ProxiesHow to Vote Your Shares
A proxy is a legal designation of another person to vote your shares on your behalf. If you are a stockholder of record, you may submit a proxy forvote your shares by using the toll-free number or the website provided on your proxy card. You also may submit a proxy in writing by simply filling out, signing and dating your proxy card and mailing it in the prepaid envelope included with the proxy materials. shares:
• | over the Internet at www.proxydocs.com/AAL prior to the day of the virtual Annual Meeting (and during the virtual Annual Meeting by registering at www.proxydocs.com/AAL); or |
• | by telephone using the toll-free number 1-866-570-3320 prior to the day of the virtual Annual Meeting; or |
• | by filling out, signing and dating your proxy card and mailing it in the prepaid envelope. |
You will need to follow the instructions when you submit a proxy using any of these methods to make sure your shares will be voted at the Annual Meeting. You also may vote by submitting a ballot in person if you attend the Annual Meeting. However, weWe encourage you to submit a proxyvote in advance by telephone, over the Internet or by mail by completing your proxy card, by telephone or over the Internet, even if you plan to attend the virtual Annual Meeting.
If your shares are held in “street name” through a broker, bank or other nominee, you may instruct your broker, bank or other nominee to vote your shares by following the instructions that the broker, bank or other nominee provides to you with the proxy materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone and over the Internet. If you hold shares through a broker, bank or other nominee and wish to vote your shares at the Annual Meeting, you must obtain a legal proxy from your broker, bank or other nominee and present it to the inspector of election with your ballot when you vote at the Annual Meeting. In any case, voting in advance by phone, Internet or mail or through your broker, bank or other nominee will not prevent you from voting in person at the Annual Meeting provided you follow the instructions set forth below.
If your shares are held by a broker, bank or other nominee in “street name” and you do not provide the broker, bank or other nominee with specific voting instructions, the broker, bank or other nominee that holds your shares generally may vote on “routine” proposals but cannot vote on“non-discretionary”(non-routine) proposals. We presently believe that Proposal 2 is routine and that Proposals 1, 3, 4, 5 and 56 arenon-discretionary.
Most brokers offer the ability for stockholders to submit voting instructions over the Internet, by telephone or by mail by completing a voting instruction card after you have read these proxy materials. If you hold shares through a broker, bank or other nominee and wish to vote your shares at the Annual Meeting, you will need your unique control number which appears on the instructions that accompanied the proxy materials. In any case, voting in advance over the Internet, by telephone or by mail will not prevent you from voting at the virtual Annual Meeting.
If the broker, bank or other nominee that holds your shares in “street name” returns a proxy card without voting on anon-discretionary proposal because it did not receive voting instructions from you on that proposal, this is referred to as a “brokernon-vote.” “Brokernon-votes” are considered in determining whether a quorum exists at the Annual Meeting. TheAs noted in “Vote Required to Approve Each Proposal” above, broker non-votes will have no effect of brokernon-votes on the outcome of each proposalProposals 1, 3 and 6, and will have the same effect as a vote “AGAINST” Proposals 4 and 5. We presently believe that brokers will have discretionary authority to be votedvote on Proposal 2 and, as such, broker non-votes are not expected on Proposal 2.
Revoking or Changing Your Vote
Stockholders may revoke or change their votes at any time before exercise at the Annual Meeting is explained above. by the following methods (your last instruction received by us will be counted):
• | giving notice of revocation to our Corporate Secretary, at American Airlines Group Inc., MD8B503, 1 Skyview Drive, Fort Worth, Texas 76155 (by mail or overnight delivery); |
• | executing and delivering to our Corporate Secretary, at the address noted above, a proxy card relating to the same shares bearing a later date; |
• | voting over the Internet or by telephone prior to the time the voting facilities close; or |
• | logging onto and voting at the virtual Annual Meeting. |
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2024 Proxy Statement
If your shares are held in “street name,” you must contact your broker, bank or other nominee to revoke or change your vote. The revocation or change must be made by the broker, bank or other nominee before the Annual Meeting.
Authority of Proxies
All properly executed proxiesproper votes received by us by 11:59 p.m., Eastern Time, on Tuesday, June 12, 2018,4, 2024, and not revoked will be voted at the Annual Meeting in accordance with the directions noted in each proxy.noted. In the absence of such instructions, shares represented by a signed and dated proxy card will be voted “FOR” the election of all director nominees, “FOR” the ratification of the appointment of the independent registered public accounting firm, “FOR” the approval, on anon-binding, advisory basis, of executive compensation as disclosed in this Proxy Statement, “FOR” the Charter Amendmentapproval of an amendment to enableour Certificate of Incorporation to allow our Bylaws to be amended by our stockholders who hold at least 20%by simple majority vote, “FOR” the approval of an amendment to our Certificate of Incorporation to allow all other provisions of our outstanding common stockCertificate of Incorporation to call special meetings,be amended by simple majority vote and “AGAINST” the shareholder proposal to enable stockholders who hold at least 10% of our outstanding common stock to call special meetings.stockholder proposal.
If any other matters properly come before the Annual Meeting, the persons named as proxies on the proxy card will vote upon those matters according to their judgment. The Board of Directors knows of no other items of business that will be presented for consideration at the Annual Meeting other than those described in this Proxy Statement.
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Any stockholder delivering a proxy has the power to revoke it at any time before it is voted by:
If you revoke your proxy other than by voting in person at the Annual Meeting, we must receive the notice of revocation or new proxy by 11:59 p.m., Eastern Time, on Tuesday, June 12, 2018, the date prior to the date of the Annual Meeting.
If your shares are held in “street name,” you must contact your broker, bank or other nominee to revoke your vote. The revocation must be made by the broker, bank or other nominee before your proxy is voted at the Annual Meeting. If you want to vote at the Annual Meeting, but your shares are held in “street name” by a broker, bank or other nominee, you will need to obtain proof of ownership as of April 16, 2018 and a proxy to vote the shares from such broker, bank or other nominee.
In addition to soliciting proxiesvotes through the mail, we may solicit proxiesvotes through our directors, officers and employees in person and bye-mail, telephone or facsimile. We may also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record by them. We will pay all expenses incurred in connection with the solicitation of proxies. In addition, we have retained MacKenzie Partners, Inc.Innisfree M&A Incorporated to assist in the solicitation for an anticipated fee of $25,000, plus expenses.
All votes at the Annual Meeting will be counted by Broadridge Financial Solutions,Mediant, Inc., our inspector of election. The inspector of election will separately tabulate affirmative and negative votes, abstentions and brokernon-votes.
Important Notice Regarding theof Internet Availability of Proxy Materials for the Annual Meeting to be held on June 13, 2018
The Notice of Annual Meeting, this Proxy Statement and our Annual Report onForm 10-K for the fiscal year ended December 31, 20172023 are available atwww.proxyvote.com.www.proxydocs.com/AAL prior to and during the Annual Meeting.
Electronic Delivery of Proxy Materials
In order to eliminate the mailing of a paper notice and to speed your ability to access the proxy materials (including our Annual Report on Form 10-K for the year ended December 31, 2023), we encourage you to sign up for electronic delivery of the Notice of Internet Availability of Proxy Materials using the instructions described below. Stockholders can help us reduce costs and the impact on the environment by electing to receive and access future copies of our proxy statements, annual reports and other stockholder materials electronically.electronically by e-mail. If your shares are registered directly in your name with our stock registrar and transfer agent, American Stock Transfer &Equiniti Trust Company, LLC, (“AST”), you can make this election by going to AST’s website (www.astfinancial.com) andequiniti.com/us/ast-access, (1) clicking Client Login, then Shareholders & Investors, then Manage My Accounts, then selecton “Login” under the type of Account—USheading “Individuals”, (2) clicking on Shareholder or Non Shareholder, then Login to Transact; (2)Central, (3) entering the information required to gain access to your account;account and (3)(4) clicking Receive Company Mailing viaE-Mail, ore-Consent. You may also make this election by following the instructions provided when voting over the Internet. If you hold your shares in a brokerage account or otherwise through a third party in “street name,” please refer to the information provided by your broker, bank or other nominee for instructions on how to elect to receive and view future annual meeting materials electronically.
This year, we intend both to mail our proxy materials to certain stockholders and to use the “Notice and Access” method of providing proxy materials to certain stockholders. Under the Notice and Access method, if you have not opted to receive ane-mail notification, you will receive by mail a simple “Notice Regarding theof Internet Availability of Proxy Materials,” which will direct you to a website where you may access proxy materials online. You will also be told how to request proxy materials (at no charge) via mail ore-mail, as you prefer. In order to eliminate the mailing of a paper notice and to speed your ability to access the proxy materials (including our Annual Report on Form10-K for the year ended December 31, 2017), we encourage you to sign up for electronic delivery of the Notice Regarding Availability of Proxy Materials using the instructions described above.
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2024 Proxy Statement
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports, or Notices Regarding theof Internet Availability of Proxy Materials, with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report, or Notice Regarding theof Internet Availability of Proxy Materials, addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. In accordance with these rules, only one proxy statement and annual report, or Notice Regarding theof Internet Availability of Proxy Materials, will be delivered to multiple stockholders sharing an address unless we have received contrary instructions from one or more of the stockholders. Stockholders who currently receive multiple copies of the proxy statement and annual report, or Notice of Internet Availability of Proxy Materials, at their address and would like to request “householding” of their communications should contact their broker if they are beneficial owners or direct their request to our Corporate Secretary at the address provided on page 3 of this Proxy Statement if they are registered holders.
If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, or Notice Regarding theof Internet Availability of Proxy Materials, please notify your broker, if you are a beneficial owner or, if you are a registered holder, direct your written request to Caroline B. Ray, Corporate Secretary, American Airlines GroupBroadridge Financial Solutions, Inc., 4333 Amon Carter Blvd., MD 5675, Fort Worth, Texas 76155. Stockholders who currently receive multiple copiesHouseholding Department, 51 Mercedes Way, Edgewood, New York 11717 or call Broadridge at 1-866-540-7095.
If requested, we will also promptly deliver, upon oral or written request, a separate copy of the proxy statement and annual report, or Notice Regarding theof Internet Availability of Proxy Materials to any stockholder residing at theiran address and would like to request “householding” of their communications should contact their broker.
which only one copy was mailed.
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2024 Proxy Statement
PROPOSAL 1—ELECTION OF DIRECTORS
Upon the recommendation of the Corporate Governance and NominatingCGPR Committee, the Board of Directors has nominated the 1211 director candidates listed below under the section “Director Nominees.” Each nominee is currently a director of the Company.
The authorized number of directors is currently set at 13,12 and the Board currently consists of 1312 members. Richard P. SchifterMr. Benjamin will not stand forre-election at the Annual Meeting. The Board has approved reducing the authorized number of directors to 1211 effective as of the Annual Meeting. If elected as a director at the Annual Meeting, each of the nominees will serve aone-year term expiring at the 20192025 annual meeting of stockholders and until his or her successor has been duly elected and qualified.
Each of the nominees has consented to serve as a director, if elected.
The Board of Directors unanimously recommends that the stockholders vote “FOR” the proposal to elect the directors of the Company listed below under the section “Director Nominees” for aone-year term expiring at the 2019 annual meeting of stockholders and until his or her successors have been duly elected and qualified.
Name
| Age
| Director Since
| Principal Occupation
| Independent
| AC
| CC
| CGNC
| FC
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James F. Albaugh | 67 | 2013 |
Advisor and consultant to financial services and investment firms; former President and Chief Executive Officer of The Boeing Company’s Commercial Airplanes business unit
| ✓ | M | M | ||||||||||
Jeffrey D. Benjamin
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56
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2013
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Senior advisor to Cyrus Capital Partners, L.P.
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✓
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M
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M
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John T. Cahill Lead Independent
| 60 | 2013 |
Vice Chairman of The Kraft Heinz Company; former Chairman and Chief Executive Officer of Kraft Foods Group, Inc. and of The Pepsi Bottling Group, Inc.
| ✓ | M | M | ||||||||||
Michael J. Embler |
54 |
2013 |
Private Investor; Former Chief Investment Officer of Franklin Mutual Advisers LLC
| ✓ | M | M | ||||||||||
Matthew J. Hart | 66 | 2013 |
Former President and Chief Operating Officer of Hilton Hotels Corporation; former Chief Financial Officer of Hilton Hotels
| ✓ | C | |||||||||||
Alberto Ibargüen | 74 | 2013 |
President and Chief Executive Officer of the John S. and James L. Knight Foundation; former Chairman of Miami Herald Publishing Co
| ✓ | M | M | ||||||||||
Richard C. Kraemer
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74
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2013
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President of Chartwell Capital, Inc.
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✓
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C
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Susan D. Kronick | 66 | 2015 |
Operating Partner at Marvin Traub Associates; former Vice-Chairman of Macy’s, Inc.
| ✓ | M | M | ||||||||||
Martin H. Nesbitt | 55 | 2015 |
Co-Chief Executive Officer of The Vistria Group, LLC; former President and Chief Executive Officer of PRG Parking Management
| ✓ | M | M | ||||||||||
Denise M. O’Leary |
60 |
2013 |
Private Venture Capital Investor; former General Partner at Menlo Ventures
| ✓ | M | M | ||||||||||
W. Douglas Parker Chairman |
56 |
2013 |
Chairman and Chief Executive Officer of American Airlines Group Inc. and American Airlines, Inc.
| ✗ | ||||||||||||
Ray M. Robinson | 70 | 2013 |
Non-Executive Chairman of Citizens Trust Bank; former President of the Southern Region at AT&T
| ✓ | C |
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| The Board unanimously recommends that the stockholders vote “FOR” the proposal to elect each director of the Company listed below under the section “Director Nominees” for a one-year term expiring at the 2025 annual meeting of stockholders and until his or her successor has been duly elected and qualified.
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2024 Proxy Statement
Board DiversityDirector Nominees
The Corporate Governance and Nominating Committee seeks to recommend individuals to the Board of Directors with, among other things, a diversity of skills, expertise and perspectives appropriate for the business and operation of the Company. The Corporate Governance and Nominating Committee also recognizes the benefits of racial and gender diversity in the boardroom, including better reflecting our diverse customer and employee base and the healthy debate that stems from different viewpoints that may result from diverse backgrounds. Accordingly, our Board of Directors is diverse in many ways, with differing geographic, business and racial backgrounds. Nearly 40% of our Board of Directors is diverse based on gender or ethnicity.
Qualifications and Principal Occupations
Additional informationInformation regarding our director nominees, including their qualifications and principal occupations, (which have continued for at least the past five years unless otherwise noted), as well as the key experience and qualifications that led the Board to conclude each nominee should serve as a director, is provided below. The categories of key skills are:
There are no family relationships among the directors and our executive officers.
Independent
Director Since:
Committees:
Key
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Adriane Brown
Select Business Experience: • • President and
• Various roles, including President and Chief Executive Officer of • Various roles, most recently Vice President and
Current Public Company • • Axon Enterprise, Inc., a law-enforcement technology company •
Past Public Company • • • Harman International (2013-2017)
Other Leadership Experience and Service: Member of the
Key Experience/Director Qualifications:
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2024 Proxy Statement
Independent Director Since: 2013 Committees: Audit; Finance Key Skills and Experience:
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Select Business Experience: •
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• Chairman and Chief Executive Officer of Kraft Foods Group, Inc. (“Kraft Foods Group”), until its merger with H.J. Heinz Company • Non-Executive Chairman of Kraft Foods Group (March 2014-December 2014) • Executive Chairman of Kraft Foods Group (2012-2014) • Executive Chairman, North American Grocery of Kraft Foods, Inc., the former parent of Kraft Foods Group (January 2012-December 2012)
Current Public Company • Kraft Heinz, a food and beverage company (2015-Present) • Colgate-Palmolive Company, a consumer products company
Past Public Company • Kraft Foods Group (2012-2015) • Legg Mason, Inc. (2009-2014) • The Pepsi Bottling Group, Inc. • Frontier Holdings, Inc. (1984-1985)
Other Leadership Experience and Service: Former Industrial Partner at Ripplewood Holdings LLC; spent nine years with The Pepsi Bottling Group, Inc., culminating in the position of Chairman and Chief Executive Officer; and worked at PepsiCo, Inc. for nine years in a variety of leadership positions.
Key Experience/Director Qualifications: Leadership and operations experience in executive leadership roles at global public companies, as well as airline experience, investment, accounting and financial expertise, experience in | |||||
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2024 Proxy Statement
Independent Director Since: 2013 Committees: Finance; Safety Key Skills and Experience:
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Select Business Experience: • Chief Investment Officer of Franklin Mutual Advisers, LLC (“Franklin Mutual Advisers”), an asset management company • Head of Franklin Mutual Advisers’ Distressed Investment Group
Current Public Company • NMI Holdings, Inc., a mortgage insurance provider (2012-Present) • Ventas, Inc., a healthcare REIT (2022- Present) Past Public Company Directorships: • Taubman Centers, Inc., a shopping mall REIT
• CIT Group Inc. (2009-2016) • Dynegy Inc. (2011-2012) • AboveNet Inc. (2003-2012) • Kindred Healthcare Inc. (2001-2008)
Other Leadership Experience and Service: Worked at Nomura Holding America Inc. for almost a decade in positions of increasing responsibility culminating in the position of Managing Director;
Key Experience/Director Qualifications: Experience in finance, asset management and restructurings, capital markets and capital management, experience as a senior executive, perspective as an institutional investor, success as an investor and service as a director of global public and private companies. | |||||
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2024 Proxy Statement
Independent Director Since: 2013 Committees: Audit (Chair); Safety Key Skills and Experience:
| Matt Hart Select Business Experience: • President and Chief Operating Officer of Hilton Hotels Corporation (“Hilton”), a hotel developer and operator, until its acquisition by a private equity firm (2004-2007) • Executive Vice President and Chief Financial Officer of Hilton (1996-2004)
Current Public Company • AMH (formerly American Homes 4 • Air Lease Corporation, an aircraft leasing company (2010-Present)
Past Public Company • B. Riley Financial, Inc. (2009-2015) • US Airways Group, Inc. (2006-2013) • Kilroy Realty Corporation (1997-2008) • America West Holdings Corporation (2004-2005)
Other Leadership Experience and Service: Former Senior Vice President and Treasurer of The Walt Disney Company; former Executive Vice President and Chief Financial Officer of Host Marriott Corp.; member of the Advisory Board of INTELITY, Inc.; and member of the
Key Experience/Director Qualifications: Financial expertise, risk management experience, extensive experience as a senior operating and finance executive for large global public companies, including companies in the consumer travel industry, investment and mergers and acquisitions experience, service as a public company director and airline experience. | |||
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2024 Proxy Statement
Chief Executive Officer Director Since: 2022 Key Skills and Experience:
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Select Business Experience: • • President of AAG and • • Executive Vice President and Chief Operating Officer of
Current Public Company Directorships: • AAG (2022-Present) Past Public Company •
Other Leadership Experience and Service:
Key Experience/Director Qualifications:
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Independent
Director Since: 2015
Committees:
Key Skills and Experience:
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Sue Kronick
Select Business Experience: • Operating Partner at Marvin Traub Associates, a New York based retail consulting firm • Vice Chairman of Macy’s, Inc. (“Macy’s”), • Group President, Regional Department Stores of Macy’s (2001-2003) • Chairman and Chief Executive Officer of Burdines/Macy’s Florida (1997-2001)
Current Public Company • Hyatt Hotels Corporation, a hospitality company (2009-Present)
Past Public Company • The Pepsi Bottling Group, Inc. (1999-2010)
Other Leadership Experience and Service: Member of the board of directors of
Key Experience/Director Qualifications: Financial, marketing and operational expertise, as well as experience serving as a global public company director and building industry leading brands as a result of the various executive management positions held with Macy’s. |
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2024 Proxy Statement
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Independent
Director Since: 2015
Committees: Audit;
Key Skills and Experience:
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Marty Nesbitt
Select Business Experience: • Co-Chief Executive Officer of The Vistria Group, LLC, a private-equity investment firm (2013-Present) • President and Chief Executive Officer of PRG Parking Management
Current Public Company • • Center Point Energy, Inc., a public Past Public Company Directorships: • Jones Lang LaSalle Incorporated, a public commercial real estate company
• Pebblebrook Hotel Trust (2009-2010) • Norfolk Southern Corporation (2013-2018)
Other Leadership Experience and Service:
Key Experience/Director Qualifications: Executive leadership, operational, financial and investment experience, as well as global public company board experience. | |||||||
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Independent
Director Since: 2013
Committees:
Key Skills and Experience:
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Denise O’Leary
Select Business Experience: • Private venture capital investor (1997-Present) • Partner (1987-1996) and associate (1983-1987) at Menlo Ventures, a venture capital firm
Current Public Company • Medtronic plc, a medical technology company (2000-Present)
Past Public Company • Calpine Corporation • US Airways Group, Inc. (2005-2013) • Chiron Corporation (2002-2006) • America West Holdings Corporation (1998-2005)
Other Leadership Experience and Service:
Key Experience/Director Qualifications: Executive leadership experience in the investment industry, financial expertise, experience in the oversight of risk management, human resources expertise, extensive service as a global public company director, success as an investor and airline industry expertise. | |||||||
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2024 Proxy Statement
Director Since:
Committees: Compensation; CGPR Key Skills and Experience:
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Vicente Reynal
Select Business Experience: • Chairman of the board of directors of • Chief Executive Officer and President of • • President, Chief Executive Officer—Industrials Segment of Gardner Denver (2015-2016) • Various roles, including Group • Vice President Global Operations and Supply Chain at Thermo Fisher Scientific Inc. • Business Unit Manager, Aerospace Aftermarket at Honeywell Transportation Systems, a manufacturing company (1998-2002)
Current Public Company •
Past Public Company •
Other Leadership Experience and Service:
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Member of the board of directors of
Key Experience/Director Qualifications:
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Independent Chairman of the Board Director Since: 2022 Key Skills and Experience:
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Select Business Experience: • Chief Financial Officer and Executive Vice President of Enterprise Operations of The Boeing Company (“Boeing”) (2020-2021; 2012-2021); Interim Chief Executive Officer of Boeing (2019-2020); Vice President of Finance and Corporate Controller of Boeing (2010-2012); and Vice President of Financial Planning and Analysis of Boeing (2008-2010) • Vice President of Investor Relations of Raytheon Company (2004-2008) Current Public Company Directorships: • Intel Corporation, a technology company (2017-Present) Other Leadership Experience and Service: Member of the boards of directors of the Lurie Children’s Hospital Foundation, Northwestern Memorial Healthcare and Sierra Nevada Space. Key Experience/Director Qualifications: Financial expertise and extensive experience as a senior executive for a large global public company, risk management experience, extensive industry experience as executive officer of airplane manufacturer, extensive experience as a global business leader, with experience in regulatory affairs, as well as experience serving as a public company director. | |||||
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2024 Proxy Statement
Independent Director Since: 2020 Committees: Compensation; Finance (Chair) Key Skills and Experience:
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Select Business Experience: • Senior Advisor to The Blackstone Group L.P. (2009-Present) • Chief Executive Officer of Northwest Airlines Corporation (2004-2008) • President of Northwest Airlines Corporation (2001-2004) • Senior Partner of law firm that is now DLA Piper LLP (1984-1991) Current Public Company Directorships: • Hilton Worldwide Holdings, Inc., a hotel management company (2010-Present) Past Public Company Directorships: • American International Group, Inc., an insurance company (2009-2023) • London Stock Exchange Group (2021-2023) • Performance Food Group (2012-2019) • Travelport LLC (2012-2019) Other Leadership Experience and Service: Member of the board of trustees of the Brookings Institute, board of directors of the Middle East Investment Initiative and board of visitors of the Duke University Fuqua Business School; former Chairman of the Air Transport Association. Key Experience/Director Qualifications: Former airline president and CEO, extensive experience as a global business leader, with experience in finance, safety, restructuring and regulatory affairs, as well as experience serving as a public company director. | |||||
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2024 Proxy Statement
How We Build a Board Thatthat is Right for American Airlines
Each of the 1211 current nominees for director recommended for election at the Annual Meeting is a current member of the Board of Directors.Board. The effectiveness of the Board of Directors and the recruitment of directors are overseen by the Corporate Governance and NominatingCGPR Committee. In evaluating candidates for director, the committeeCGPR Committee considers the qualifications described below. Based on its evaluation of each of the current nominees’ qualifications and his or her prior performance as a director, the committeeCGPR Committee determined to recommend each nominee for election. The committeeCGPR Committee received no nominations from stockholders for the Annual Meeting.
Consistent with its charter, the Corporate Governance and NominatingCGPR Committee proposes for nomination of existing directors and new candidates who have the highest personal and professional integrity, have demonstrated exceptional intelligence and judgment, have proven leadership skills, as well as the requisite skills necessary to advance our long termlong-term strategic plan, are committed to our success and have the ability to work effectively with the Company’s Chief Executive Officer and other members of the Board of Directors.Board. Also, a nominee must possess skills, experience and expertise appropriate to best serve the long-term financial interests of our stockholders.
The Corporate Governance Guidelines (the “Governance Guidelines”) specify that it is the objective of the Board of Directors that it be composed of individuals who have, among other things, a diversity of skills, expertise and perspective, due to, among other things, age, gender, racial and ethnic diversity, appropriate for the business and operation of the Company. The Board of Directors currently includes a group of individuals who have demonstrated success and leadership in a variety of fields and endeavors, with a broad diversity of experience, opinions, perspectives, professions, skills, expertise, education, geographic representation and backgrounds. The Corporate Governance and NominatingCGPR Committee and the Board of Directors believe that the Board of Directors is, and should continue to be, comprised of persons who can contribute experience in public company board service and corporate governance and areas such as strategic planning, leadership of large, complex organizations, international and global operations, the airline, travel and transportation industry, finance, accounting, financial literacy, finance and investment, (including, capital markets and capital management), risk management, legal analysis and regulatory, customer service, marketing and consumer products, media and communications, labor relations and human resources (including leadership assessment and diversity), real estate and facilities, safety, information technology, and community service and nonprofit.sustainability. The Corporate Governance and NominatingCGPR Committee does not assign specific weight to particular criteria and no particular criterion is necessarily applicable to all prospective nominees.
The Corporate Governance and Nominating Committee recognizes the benefits of diversity in the boardroom, including better reflecting our diverse customer and employee base and the healthy debate that stems from different viewpoints that may result from diverse backgrounds. Accordingly, our Board of Directors is diverse in many ways, with differing geographic, business, gender and racial backgrounds.
The Governance Guidelines also require that any directors who also serve as chief executive officers of public companies should not serve on more than two boards of public companies other than the Company’s Board, and other directors should not serve on more than four boards of public companies, other than the Company’s Board.
The Corporate Governance and Nominating Committee periodically evaluates the performance of the Board of Directors, its committees and the directors in an effort to facilitate the continuous improvement of the Board of Directors, as well as to assess the specific qualifications, experiences and perspectives of future director candidates that would be most valuable and have the most impact on our success.
In accordance with applicable NASDAQ listing standards of The Nasdaq Stock Market (“Nasdaq”), the Board of Directors confirms that at least a majority of the Board of Directors is independent in accordance with the NASDAQNasdaq definition of independence and that the members of the Board, of Directors, as a group, maintain the requisite qualifications under applicable NASDAQNasdaq listing standards for service on the Audit, Compensation and CorporateCGPR Committees.
Board Refreshment and Succession Planning
The Board believes that thoughtful refreshment of the members of the Board is important to ensure that the Board continues to meet the changing needs of the Company and that new viewpoints and perspectives are regularly considered. The Board and CGPR Committee regularly evaluate the composition of the Board and its committees in an effort to develop a long-term succession plan for the Board and its leadership. The Company’s Governance Guidelines do not provide for an absolute limit on the length of time that a director may serve, but the CGPR Committee and Nominating Committees.the Board consider the overall tenure of the Board during succession planning discussions and director nomination decisions. The Governance Guidelines also state that the retirement age for non-employee directors is 75. No individual is eligible for election to the Board after his or her 75th birthday. A special thank you to Jeffrey Benjamin, who will not be standing for re-election at the Annual Meeting, for his dedication to the Company and his extensive contributions during his service on our Board.
The active work of our CGPR Committee to add engaged and dynamic leaders to our Board has resulted in four of our ten independent director nominees having joined our Board in or following 2020, representing 40% of our independent director nominees. With these additions, and the retirement of Mr. Benjamin, the average tenure of our director nominees is 6.1 years. Additional biographical information on each nominee is set out above beginning on page 7.
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2024 Proxy Statement
In addition, as a culmination of the Board’s CEO succession planning over several years, in December 2021, we announced that Robert Isom would succeed Doug Parker as the CEO of the Company and be appointed as a member of our Board effective March 31, 2022. As part of this plan, the Board determined that it was important to retain Mr. Parker in the role of Chairman of the Board in order to ensure a successful transition in leadership. This allowed Mr. Isom to focus on executing on our strategy and operations, and Mr. Parker to devote his time and attention to matters of Board oversight and governance and providing continued advisory support to the management team throughout the transition.
In February 2023, following the successful transition of our CEO role, we announced that Mr. Parker would retire from our Board on April 30, 2023 and Greg Smith would serve as the Company’s Independent Chairman effective April 30, 2023. By separating the roles of Chairman and CEO, our CEO is able to continue to focus on executing on our strategy and operations, and our Independent Chairman can devote time and attention to matters of Board oversight and governance.
Board Diversity and Tenure
The CGPR Committee recognizes the benefits of diversity in the boardroom, including better reflecting our diverse customer and employee base and the healthy debate that stems from different viewpoints that may result from diverse backgrounds. Accordingly, our Board is diverse in many ways, with differing geographic, business, gender and racial backgrounds. Over 45% of our Board nominees are diverse based on gender or ethnicity.
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2024 Proxy Statement
The demographic information presented below is as of the date of this Proxy Statement and is based on voluntary self-identification by each nominee. Additional biographical information on each nominee is set out above beginning on page 7.
RACE/ETHNICITY | ||||||||||||||||||||||
African American or Black | ● | ● | ||||||||||||||||||||
Hispanic or Latinx | ● | |||||||||||||||||||||
White | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||
GENDER | ||||||||||||||||||||||
Male | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||
Female | ● | ● | ● | |||||||||||||||||||
BOARD TENURE | ||||||||||||||||||||||
Years | 3 | 10 | 10 | 10 | 2 | 8 | 8 | 10 | 1 | 2 | 3 | |||||||||||
Age | 65 | 66 | 60 | 72 | 60 | 72 | 61 | 66 | 49 | 57 | 72 |
Stockholder Recommendations or Nominations of Director Candidates
The Board welcomes recommendations from its stockholders for good director candidates that they believe will helpmeet the Company increase stockholder value.standards described above under “How We Build a Board that is Right for American Airlines.” We encourage stockholders with any such director candidate recommendations to contact us directly prior to going through the formal director nomination procedures described below. The CGPR Committee has a policy of considering candidates who are recommended by stockholders for membership to the Board in the same manner as candidates recommended by members of the Board.
Under our Bylaws, any stockholder wishing to nominate a director should submit in writing the candidate’s name, biographical information, business qualifications and other information required by the Bylaws, to Ray M. Robinson,Martin H. Nesbitt, Chair
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of the Corporate Governance and NominatingPublic Responsibility Committee, American Airlines Group Inc., 4333 Amon Carter Blvd., MD 5675,MD8B503, 1 Skyview Drive, Fort Worth, Texas 76155. All submissions must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director, if elected, and must otherwise be in compliance with our Bylaws.
The Bylaws require that written nominations be received by the Company no sooner than 120 days and no later than 90 days prior to the first anniversary of the preceding year’s annual meeting of stockholders. For the 20192025 annual meeting of stockholders, notice must be delivered no sooner than February 13, 20195, 2025 and no later than March 15, 2019.7, 2025. All qualified submissions will be reviewed by the Corporate Governance and NominatingCGPR Committee at the next appropriate meeting. The Corporate Governance and Nominating Committee has a policy of considering candidates who are nominated by stockholders for membership to the Board of Directors in the same manner as candidates recommended by members of the Board of Directors.
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2024 Proxy Statement
In addition, our Bylaws permit certain of our stockholders who have beneficially owned 3% or more of our outstanding common stockCommon Stock continuously for at least three years to submit nominations to be included in the Company’s proxy materials for up to 20% of the total number of directors then serving. Notice of proxy access director nominations for the 20192025 annual meeting of stockholders must be delivered to our Corporate Secretary at our principal executive offices no earlier than December 1, 2018November , 2024 and no later than the close of business on December 31, 2018., 2024. The notice must set forth the information required by our Bylaws with respect to each proxy access director nomination that eligible stockholder or stockholders intend to present at the 20182025 annual meeting of stockholders and must otherwise be in compliance with our Bylaws.
Any notice of director nomination other than through proxy access must include the additional information required by Rule 14a-19(b) under the Exchange Act and otherwise comply with our Bylaws. In connection with the 2025 annual meeting of stockholders, we intend to file a proxy statement and a WHITE proxy card with the SEC in connection with our solicitation of proxies for that meeting.
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2024 Proxy Statement
PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ratification of Independent Registered Public Accounting Firm
Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. Our Audit Committee annually reviews the independent registered public accounting firm’s qualifications, performance, fees and independence. Following its review, our Audit Committee has selected KPMG LLP (“KPMG”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018,2024, and our Board of Directors has directed that KPMG’s appointment be submitted to our stockholders for ratification at the Annual Meeting.
KPMG has served as our independent registered public accounting firm since 2014. The Audit Committee believes it is important for the independent registered public accounting firm to maintain its objectivity and independence. In accordance with SEC rules and KPMG policies, the firm’s lead engagement partner rotates every five years. The Audit Committee and its Chair are directly involved in the selection of KPMG’s new lead engagement partner. Furthermore, in order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm.
The Board of Directors has directed that KPMG’s appointment for the fiscal year ending December 31, 20182024 be submitted to our stockholders for ratification at the Annual Meeting. The Audit Committee and the Board of Directors believe that the continued retention of KPMG to serve as the Company’s independent external auditor is in the best interests of the Company and its stockholders. If the stockholders do not ratify the appointment of KPMG, the Audit Committee will reconsider the appointment.
A representative of KPMG is expected to be present at the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires to do so, and the representative is also expected to be available to respond to appropriate questions from stockholders.
The Audit Committee and the Board unanimously recommend that the stockholders vote “FOR” the proposal to ratify the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2024. |
The Audit Committee and the Board of Directors unanimously recommend that the stockholders vote “FOR” the proposal to ratify the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2018.
Independent Registered Public Accounting Firm Fees
The following table presents fees billed for professional services rendered by KPMG, AAG’s principal accountantindependent registered public accounting firm for the audit of the financial statements of AAG and its subsidiaries as of and for the fiscal years ended December 31, 20172023 and 2016,2022, as well as fees billed in this period for other services rendered by KPMG.
Fiscal Year 2017 ($) | Fiscal Year 2016 ($) | Fiscal Year 2023 ($) | Fiscal Year 2022 ($) | ||||||||||||||||||||
Audit Fees
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3,915,000
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3,915,000
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Audit-Related Fees
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971,000
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1,243,000
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Tax Fees
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654,000
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826,000
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All Other Fees
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| –
|
|
| –
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| - |
| 23,000 | |||||||||||||
Total
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5,540,000
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|
5,984,000
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| 6,130,000 |
| 5,575,000 |
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2024 Proxy Statement
“Audit Fees” are for professional services rendered for the audits of the annual financial statements included in our Annual Report on Form10-K (including fees for the audits of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, as amended) and quarterly reviews of the financial statements included in our quarterly reports on Form10-Q.
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“Audit-Related Fees” are for professional services rendered in connection with securities offerings and other SEC filings, significant auditing work on transactions and consultations concerning financial accounting and reporting standards and attestattestation services.
“Tax Fees” for the fiscal year ended December 31, 2022 primarily include fees for professional services related to (i) expatriaterendered in connection with tax services and (ii) bankruptcy-related taxcompliance services. There were no fees that fall into the classification of “Tax Fees” for the fiscal year ended December 31, 2023.
“All Other Fees” for the fiscal year ended December 31, 2022 included conference registration fees. There were no fees that fall into the classification of “All Other Fees” for the fiscal yearsyear ended December 31, 2017 and 2016.2023.
Policy on Audit CommitteePre-Approval
The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent registered public accounting firm. The Audit Committeepre-approves all audit and permissiblenon-audit services provided by our independent registered public accounting firm, including audit services, audit-related services, tax services and other services. The Audit Committee has delegatedpre-approval authority to its Chair. Under this delegation, the Chair must report anypre-approval decision he or she makes to the Audit Committee at its next meeting following such approval.
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2024 Proxy Statement
PROPOSAL 3—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION(SAY-ON-PAY)
Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), allows our stockholders to vote to approve, on anon-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC.SEC, commonly known as a “say-on-pay” vote. The Board of Directors has adopted a policy providing for an annualsay-on-pay advisory vote. Unless the Board of Directors modifies its policy on the frequency of futuresay-on-pay advisory votes, we will bring these proposals to our stockholders annually and the nextsay-on-pay advisory vote will be held at the 20192025 annual meeting of stockholders.
Our Compensation Committee and the Board of Directors believe that our compensation practices align our executive compensation structure with stockholders’ interests and current market practices. Our compensation strategy is designed to provide a total compensation package that will attract and retain high-caliber executives and align their objectives, incentives and contributions with our corporate objectives and stockholder interests, as well as to be flexible and complementary to meet our compensation objectives. At the 20172023 annual meeting of stockholders, our stockholders overwhelmingly approved the compensation of our named executive officers (withwith an approval representing over 97%approximately 96% of the shares represented in person or by proxy at the meeting and entitled to vote).vote on the proposal.
Highlights of ourOur executive compensation program include:
A commitmentis heavily performance-based and directly linked with our established goals of delivering record operational results, continuing topay-for-performance close our margin gap with a substantial portion of each executive officer’s compensation being “at risk”our largest competitors, and aligned with stockholder interests, as shownreducing total debt by $15 billion by the following:
Ensuring competitive pay, with the target direct compensation provided to our named executive officers being competitive with that of the other large network airlines, except for our Chief Executive Officer. Mr. Parker’s 2017 total target directmanagement team against the backdrop of significant reductions in compensation remained below his peers at Delta and United (usingduring the most recent publicly available data as of June 2017).pandemic.
A continued commitmentContinued Commitment to good compensation governance practices, where compensationGood Compensation Governance Practices. Compensation packages for our executive officers are (i) established by our Compensation Committee that consists solely of independent outside directors, and are(ii) consistent with market and industry practice, and (iii) reasonable in light of our corporate and each individual executive’s performance.
Clawback provisions for allProvisions. The Company’s clawback policy requires the recoupment of incentive compensation paiddetermined to ourbe erroneously awarded to executive officers in the event of an accounting restatement but also continues to provide the Compensation Committee with broad discretion as to what actions may be taken based on the circumstances, including recovery of compensation paid under the Company’s STIP, LTIP and other equity incentive awards.
Robust Stock Ownership Guidelines. We maintain stock ownership guidelines that further align theirour executives’ long-term interests with those of our stockholders, as well as good disclosure practices.stockholders.
Mitigating Compensation Risk. We mitigate compensation riskby among other things, providing a compensation package that focuses on both short- and long-term goals and requiringrequires a substantial stock ownership commitment, encouragingwhich encourages our executives to focus on the Company’s success both during the immediate fiscal year and for the future.
For more information about our compensation practices and philosophy, see the section entitled “Compensation Discussion and Analysis” beginning on page 50.48.
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We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a“say-on-pay” proposal,vote gives stockholders the opportunity to express their views on the named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our executive officers and our philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to vote “FOR” the following resolution at the Annual Meeting:
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2024 Proxy Statement
“RESOLVED, that AAG’s stockholders approve, on anon-binding, advisory basis, the compensation of AAG’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC in the Compensation Discussion and Analysis section, the compensation tables, narrative discussion and any related material disclosed in this Proxy Statement for the Annual Meeting.”
Thesay-on-pay vote is advisory, and therefore not binding on us, our Compensation Committee or the Board of Directors.Board. However, the Board of Directors and Compensation Committee value the opinions of our stockholders and will consider the outcome of this advisory vote when making future decisions about executive compensation.
The Board of Directors unanimously recommends that the stockholders vote “FOR” the approval of executive compensation.
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| The Board unanimously recommends that the stockholders vote “FOR” the approval of executive compensation.
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2024 Proxy Statement
PROPOSAL 4—APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION TO ENABLE STOCKHOLDERS WHO HOLD AT LEAST 20% OFALLOW OUR OUTSTANDING COMMON STOCKBYLAWS TO CALL SPECIAL MEETINGSBE AMENDED IN THE FUTURE BY SIMPLE MAJORITY VOTE
TheAt our 2023 annual meeting of stockholders, the stockholders voted on a stockholder-sponsored proposal requesting that the Board of Directors has approved an amendmenttake the steps necessary to eliminate each stockholder voting requirement in our Restated Certificate of Incorporation (the “Charter Amendment”) to permit stockholdersor Bylaws that calls for a greater than simple majority vote. The proposal passed with the support of record who hold,a majority of the votes cast at the meeting.
The Board has carefully considered the advantages and disadvantages of maintaining the supermajority voting provisions in our Certificate of Incorporation, including the aggregate,provision requiring the affirmative vote of the holders of at least 20%80% of the voting power of the shares outstanding sharesand entitled to vote for the election of the Company to call a special meeting of stockholders, subject to the requirements and procedures set forthdirectors in the Company’s Bylaws, as now or hereinafter in effect. Currently, only the Chairman of the Board of Directors, the Chief Executive Officer of the Company or the Board of Directors may call a special meeting of stockholders. The description in this proxy statement of the proposed Charter Amendment is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the proposed Charter Amendment, which is attached to this proxy statement as Annex B.
The ability oforder for our stockholders to call special meetingsamend our Bylaws. While this provision is increasingly considered an important aspect of good corporate governance. While the Board of Directors recognizesdesigned to ensure that providing a stockholder right to call special meetings is consistent with corporate governance best practices, the Board of Directors also believes that special meetings of stockholders should be extraordinary events that are held only when strategic concerns or other similar considerations require that the matters to be addressed not be delayed until the next annual meeting. Moreover, because special meetings are expensive and time-consuming for the Company and potentially disruptive to its normal business operations, the Board of Directors believes that a small percentage of stockholders should not be entitled to utilize the right to call a special meeting for their own interests, which may not be shared by the majority of the Company’s stockholders. Finally, the Company has an established process by which stockholders may communicate directly with the Board of Directors, including thenon-management directors, throughout the year on any topics of interest to stockholders. The Board of Directors and the Company will continue to maintain existing governance mechanisms that afford management and the Board of Directors the ability to respond to the concerns of all stockholders, regardless of the level of share ownership.
The Company also reminds stockholders that the power to call a special meeting of stockholders has historically been a tool for acquirers in the hostile merger and acquisition context. Potential acquirers seeking to take over the Company for an inadequate price could use a special meeting of stockholders to increase their negotiating leverage or to avoid negotiating at all with the Board, which has the legal duty to protect the interests of all stockholders. This concern is heightened when certain hedge fundsstockholders are fully protected by requiring any amendments to our Bylaws to be supported by a significant portion of our stockholders, the Board recognizes that there are different perspectives on this matter and, others who wish to promote their short-term interests could also borrow shares from other stockholders for the sole purpose of meeting the required threshold necessary to call a special meeting of stockholders.
In light ofafter weighing these considerations, has determined that it is in the Board of Directors believes that establishing an ownership threshold of at least 20%, along with specified procedural requirements and limitations, for stockholders to call a special meeting achieves a reasonable balance between enhancing stockholder rights and adequately protecting the long-termbest interests of the Company and its stockholders. The Boardstockholders to amend our Certificate of Directors believes that an ownership threshold of at least 20% is appropriate based onIncorporation to eliminate the Company’s current size and stockholder composition, as it would provide the Company’s stockholders with a meaningful right to request a special meeting, while mitigating the risk that corporate resources are wasted to serve the narrow self-interests of a few minority stockholders. A 20% special meeting ownership threshold is in line with market practice and, in fact, is less restrictive than the majority of the special meeting rights adopted by companies in the S&P 500. However, unlike a number of other companies, including some in our industry, stockholders arenot subject to aone-year holding periodsupermajority voting requirement with respect to their stock to exercise this right.
The Board has approvedfor amendments to the Bylaws to establishby our stockholders (the “Bylaw Voting Threshold Amendment”). The Board recommends that stockholders approve the procedural and disclosure requirements in connection with permitting stockholders who hold, in the aggregate, at least 20% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders. The requirements set forth in the amendments to the Bylaws include that:Bylaw Voting Threshold Amendment.
separate and independent from the Supermajority Elimination Amendment in Proposal 5 because the vote required to approve this proposal is different than that required to approve Proposal 5.
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Our Board believes that the requirements described above are important to, among other things, avoid duplicative and unnecessary special meetings regarding matters recently considered by stockholders or that stockholders will imminently consider at an upcoming stockholder meeting. The effectiveness of the amendments to the Bylaws related to special meetings is subject to the approval of the Charter Amendment. A complete copy of the Company’s Bylaws are filed as Exhibit 99.2 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2018.
An affirmative vote of the holders of at leasttwo-thirds 80% of the voting power of the shares outstanding sharesand entitled to vote for the election of directors as of the Record Date is required to adopt the Charter Amendment.Proposal 4. If approved, this proposal would become effective upon the filing of a certificate of amendment setting forth the CharterBylaw Voting Threshold Amendment with the Secretary of State of Delaware, which we intend to do if, and promptly after, the required stockholder approval is obtained.
The Board has also approved an amendment to the Bylaws to remove the corresponding supermajority amendment threshold from the Bylaws, the effectiveness of which is subject to stockholder approval of the Bylaw Voting Threshold Amendment at the 2024 Annual Meeting of Stockholders and the filing of the certificate of amendment setting forth the Bylaw Voting Threshold Amendment. If the foregoing events occur, such amendment to the Bylaws will be effective immediately following the filing of the Bylaw Voting Threshold Amendment with the Secretary of State of Delaware.
The description in this Proposal of the Bylaw Voting Threshold Amendment to eliminate the supermajority voting requirement in the Certificate of Incorporation with respect to amendments to the Bylaws by our stockholders is qualified in its entirety by reference to the text of the Bylaw Voting Threshold Amendment, which is attached to this Proxy Statement as Appendix A.
The Board unanimously recommends that the stockholders vote “FOR” the approval of the proposal to amend our Certificate of Incorporation to allow our Bylaws to be amended by simple majority vote. |
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2024 Proxy Statement
PROPOSAL 5—APPROVE AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ALLOW ALL OTHER PROVISIONS OF THE CERTIFICATE OF INCORPORATION TO BE AMENDED BY SIMPLE MAJORITY VOTE
At our 2023 annual meeting of stockholders, the stockholders voted on a stockholder-sponsored proposal requesting that the Board take the steps necessary to eliminate each stockholder voting requirement in our Certificate of Incorporation or Bylaws that calls for a greater than simple majority vote. The proposal passed with the support of a majority of the votes cast at the meeting.
The Board has carefully considered the advantages and disadvantages of Directors unanimously recommendsmaintaining the supermajority voting provisions in our Certificate of Incorporation, including the provisions requiring the affirmative vote of the holders of at least two-thirds of the voting power of the shares outstanding and entitled to vote for the election of directors in order for our stockholders to amend certain provisions of our Certificate of Incorporation (including, among other things, provisions related to the size and terms of our Board, vacancies on the Board, stockholder consents, special meetings of stockholders and the requirements to amend the Certificate of Incorporation). While the supermajority voting provisions are designed to ensure that you vote “FOR” the amendmentinterests of all stockholders are fully protected by requiring any amendments to our Certificate of Incorporation to enablebe supported by a significant portion of our stockholders, who holdthe Board recognizes that there are different perspectives on this matter and, after weighing these considerations, has determined that it is in the best interests of the Company and its stockholders to amend our Certificate of Incorporation to eliminate the supermajority voting provisions (the “Supermajority Elimination Amendment”). The Board recommends that stockholders approve the Supermajority Elimination Amendment.
This proposal is separate and independent from the Bylaw Voting Threshold Amendment in Proposal 4 because the vote required to approve this proposal is different than that required to approve Proposal 4.
An affirmative vote of the holders of at least 20%two-thirds of ourthe voting power of the shares outstanding common stockand entitled to call special meetings.vote for the election of directors as of the Record Date is required to adopt Proposal 5. If approved, this proposal would become effective upon the filing of a certificate of amendment setting forth the Supermajority Elimination Amendment with the Secretary of State of Delaware, which we intend to do if, and promptly, after the required stockholder approval is obtained.
The description in this Proposal of the Supermajority Elimination Amendment to eliminate the supermajority provisions in the Certificate of Incorporation is qualified in its entirety by reference to the text of the Supermajority Elimination Amendment, which is attached to this Proxy Statement as Appendix A.
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| The Board unanimously recommends that the stockholders vote “FOR” the approval of the proposal to amend our Certificate of Incorporation to allow all other provisions of the Certificate of Incorporation to be amended by simple majority vote.
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2024 Proxy Statement
PROPOSAL 6—ADVISORY VOTE ON A STOCKHOLDER PROPOSAL
PROPOSAL 5—SHAREHOLDER PROPOSAL TO ENABLE STOCKHOLDERS WHO HOLD AT LEAST 10% OF OUR OUTSTANDING COMMON STOCK TO CALL SPECIAL MEETINGS
A stockholderThe Treasurer for the State of Illinois, as Trustee of the Bright Start College Savings Trust, has informed the Company that he intendsof their intention to present the proposal set forth below at our Annual Meeting. The name and address of the stockholder and the number of the Company’s securities that the stockholder ownowns will be provided to stockholders promptly upon request. If the stockholder (or histheir “qualified representative”) is present at the Annual Meeting and properly submits the proposal for a vote, then the stockholder proposal will be voted upon at the Annual Meeting. In accordance with the federal securities laws, the stockholder proposal is presented below as submitted by the stockholder and is quoted verbatim and is in italics.verbatim. The Company disclaims all responsibility for the content of the proposal and the supporting statement, including other sources referenced in the supporting statement.
For the reasons stated in the Board’s Statement in Opposition, which follows the stockholder proposal, the Board unanimously urges stockholders to vote “AGAINST” the stockholder proposal. Stockholder Proposal Resolved:Shareholders of American Airlines Group Inc. (“American” or the “Company”) ask the Board of Directors Supporting Statement American’s operations have meaningful environmental and social impacts that For example, the For the reasons stated in the Board of Directors’unanimously recommendsto commission an independent, third-party audit of how effectively American is implementing its various environmental and social commitments, including its commitment to reduce greenhouse gas (“GHG”) emissions, and compliance with American’s Safety Policy and Human Rights Statement. The audit should identify whether there are areas of misalignment between those commitments and American’s actions and provide recommendations for promoting greater alignment. A report on the audit, prepared at reasonable cost and omitting confidential and proprietary information, should be made available on American’s website.you vote “AGAINST”present potentially material risks to investors. Accordingly, American has made several commitments designed to manage such impacts and mitigate exposures to associated financial, regulatory, reputational, and legal risks. While these commitments are important, evidence suggests there is a gap between policy creation and policy implementation.stockholder proposal.
Proposal 5—Special Shareholder Meeting Improvement
Resolved, Shareowners ask our boardSustainability Accounting Standards Board (“SASB”) identifies GHG emissions as a material risk for airlines.1 While American has stated its commitment to take the steps necessary (unilaterally if possible)goals of the Paris Agreement and aims to amend our bylaws and each appropriate governing document to give holders inreach net zero GHG emissions by 2050,2 there are concerns about American’s net zero plan. Fifteen percent of American’s net zero pathway involves the aggregateuse of 10%carbon offsets,3which are plagued by findings of our outstanding common stock the power to call a special shareowner meeting (or the closest percentage to 10% according to state law). This proposal does not impact our board’s current power to call a special meeting.
Special meetings allow shareowners to vote on important matters, such as electing new directors that can arise between annual meetings. This proposal topic won more than 70%-support at Edwards Lifesciences and SunEdison in 2013.
American Airlines shareholders currently do not have the full right to call a special meeting that is available under Delaware law. Plus the current shareholder right to call a special meeting is further restricted by 2500-words of tedious text in our bylaws.
A shareholder ability to call a special meeting would put shareholders in a better position to ask for improvement in our board of directors after the 2018 annual meeting.
For instance, Mr. Ibargüen was designated a “flagged director” due to his involvement with the AMR Corporation board, which filed for Chapter 11 Bankruptcy in 2011. Mr. Benjamin was designated a “flagged director” due to his involvement with the Caesars Entertainment board, which placed its largest operating unit into bankruptcy in 2015. Mr. Schifter was designated a “flagged director” due to his involvement with the US Airways board, which filed for bankruptcy in 2004. This is worse because Mr. Ibargüen and Mr. Benjamin controlled 40% of our Executive Pay Committee.
Limits on shareholder influence include our company’soverstated benefits,4 lack of a full majority director election standard requiring automatic removalstandardization, and conflicted third-party verifiers.5American also committed to align its lobbying activities with Paris goals and to report on the lobbying alignment of directors who failits trade associations.6 No such assessment has yet been disclosed, making it difficult to receive a majority of votes cast in uncontested elections. In 2014, it was reportedassess how American Airlines took a $600 million loss on fuel hedging.
Please vote to increase management accountability to shareholders:
Special Shareholder Meeting Improvement—Proposal 5
is implementing its net zero commitment.
1 | https://sasb.org/standards/materiality-finder/find/?industry%5B0%5D=TR-AL |
2 | https://www.aa.com/content/images/customer-service/about-us/corporate-governance/esg/aag-esg-report-2021.pdf at 7. |
3 | https://s202.q4cdn.com/986123435/files/images/esg/aa-sustainability-report-2022.pdf#page=12&zoom=100,60,514 |
4 | https://www.science.org/doi/10.1126/science.ade3535; https://www.source-material.org/vercompanies-carbon-offsetting-claims-inflated-methodologies-flawed/ |
5 | https://www.courthousenews.com/wp-content/uploads/2023/05/berrin-vs-delta.pdf |
6 | American Airlines - 2021 ESG Report (aa.com) |
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2024 Proxy Statement
BoardAmerican reported that workplace injury rates rose by 22% from 2020 to 20229without a credible explanation, amid numerous recent reports of Directors’safety incidents.10
According to the Safety Policy, “[b]eing accountable to each other means reporting hazards, threats, safety concerns, risks, and incidents immediately.”11 However, a 2023 OSHA whistleblower investigation found that American retaliated against flight attendants who reported that fuel fumes in aircraft cabins were causing illness.12
Finally, American’s Human Rights Statement commits the Company to respect the International Labour Organization’s core conventions and fundamental principles,13 which include freedom of association and the right to bargain collectively. Yet American recently threatened to discipline flight attendants for wearing shirts bearing union logos, prompting a union grievance.14
Although American’s environmental and social commitments are laudable, evidence suggests implementation of various commitments is uneven, undermining risk management. An independent audit would allow the Company and shareholders to better evaluate compliance with stated policies and management of potential risks.
The Board’s Statement in Opposition
The Board of Directors has carefully considered this proposal and believesconcluded that its adoption is unnecessary in light of American’s existing environmental and social disclosures, recent internal and external audits of those disclosures and robust oversight of our environmental and social practices and initiatives. We believe that it is not in the best interests of stockholders in light of the special meeting right that we have already approved and are asking our stockholders to adopt atconduct a third-party audit, as requested by the Annual Meeting, whichproposal, that will allow stockholders who hold, in the aggregate, at least 20% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders (the “Special Meeting Right”).divert limited corporate resources and potentially undermine our existing safety assurance programs. Accordingly, the Board unanimously recommends a voteAGAINST this proposal for the following reasons.
Our annual Sustainability Report provides regular, measurable information regarding our environmental and safety efforts that holds us accountable for the success of this work.
We are committed to providing regular and transparent information to our stockholders about our sustainability initiatives, including our strategies, oversight mechanisms and results of our sustainability efforts. We release an annual Sustainability Report, available on our website1, in which we describe, among other things, our coordinated approach to addressing climate change and meeting our goal of net zero greenhouse gas (“GHG”) emissions by 2050. Our Sustainability Report annually states our goals and reports on our progress towards meeting those goals. In 2023, we took the additional step of engaging our independent accountant, KPMG LLP, to provide assurance on certain 2022 greenhouse gas emissions data, as disclosed in our 2022 Sustainability Report. We believe this annual public disclosure ensures public accountability as we work to address climate-related risks.
We are also committed to the safety and security of our customers and team members. Our annual Sustainability Report provides extensive disclosure regarding our Safety Management System (“SMS”), an organization-wide approach to identifying and managing risk that emphasizes safety management as a fundamental business process across our Company. Core to our SMS is maintaining and strengthening a culture where all team members and contractors are encouraged to ask questions and report safety hazards, concerns and incidents without fear of retaliation. The annual Sustainability Report also includes the disclosure of safety metrics, including the number of safety incidents, that allow
7 | https://sasb.org/standards/materiality-finder/find/?industry%5B0%5D=TR-AL |
8 | https://www.aa.com/content/images/customer-service/about-us/corporate-governance/aag-commitment-to-safety.pdf |
9 | https://s202.q4cdn.com/986123435/files/images/esg/aa-sustainability-report-2022.pdf |
10 | https://www.nytimes.com/2023/10/05/health/heat-exposure-workers-osha.html; https://www.foxbusiness.com/economy/osha-fines-american-airlines-subsidiary-15k-after-worker-sucked-plane-engine-dies; https://www.washingtonpost.com/travel/2023/11/02/flight-attendants-toxic-uniforms-verdict/; https://www.politico.com/news/2023/09/05/sweltering-plane-cabins-are-travelers-newest-misery-00113720 |
11 | https://www.aa.com/content/images/customer-service/about-us/corporate-governance/aag-commitment-to-safety.pdf |
12 | https://www.dol.gov/newsroom/releases/osha/osha20230104-1 |
13 | https://www.aa.com/i18n/customer-service/about-us/human-rights-statement.jsp |
14 | https://www.paddleyourownkanoo.com/2023/10/18/lawyer-representing-american-airlines-flight-attendants-serves-company-with-cease-and-desist-and-threatens-to-sue-airline/ |
1 | https://news.aa.com/esg/ |
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2024 Proxy Statement
stockholders to track our progress and hold the Company accountable for our efforts. In 2022, we engaged our internal audit function to review the safety and other non-financial metrics disclosed in our Sustainability Report. That internal review resulted in a set of new, documented controls that are in place today.
Our governance is designed to ensure accountability for our management of environmental and safety risks and commitments.
The Board is responsible for the oversight of Directors recommends that the Company’s stockholders oppose this proposalongoing assessment and instead adopt the Special Meeting Right in Proposal 4, which protects the long-term interestsmanagement of material risks impacting our business. The CGPR Committee has primary responsibility for overseeing our environmental sustainability efforts, including our efforts to address climate change, and dedicates significant time to evaluating climate risks and opportunities. The CGPR Committee is also responsible for oversight of the CompanyCompany’s implementation of our Human Rights Policy. At the management level, our CEO formally oversees our climate change strategy and its stockholdersworks with our dedicated Vice President for Sustainability, as well as other team members, to direct the implementation of our climate change and related sustainability goals.
The Board’s Safety Committee oversees implementation of, and compliance with, our Safety Policies, as well as the Company’s culture related to safety. The Safety Committee is in linealso charged with market practice.reviewing the Company’s safety management systems, including our approach to handling and response to safety incidents. The Safety Committee works with our CEO, Chief Operating Officer and Vice President for Safety to set safety expectations and oversee compliance with our Safety Policies.
The Board of Directors believes that allowing stockholders who hold, inOf particular relevance to the aggregate, at least 20%stockholder proposal, the Audit Committee of the voting powerBoard reviewed the results of both the 2022 internal audit of the outstanding shares of the CompanyCompany’s environmental and social disclosures and work by our independent accountant, KPMG LLP, in 2023 to call a special meeting of stockholders achieves a reasonable balance between enhancing stockholder rightsprovide assurance on certain 2022 GHG emissions.
We conduct regular audits and adequately protecting the long-term interests of the Company and its stockholders. After careful consideration, on February 20, 2018, the Board of Directors:
At the Annual Meeting, we are recommending that our stockholders approve the Charter Amendment, in order to allow stockholders who hold, in the aggregate, at least 20% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders.
A 20% special meeting ownership threshold is in line with market practice and, in fact, is less restrictive than the majority of the special meeting rights adoptedaudited by companies in the S&P 500. As of March 27, 2018, we understand that 302 of the companies included in the S&P 500 afford stockholders the right to call a special meeting. Of those companies, 67% have set the ownership threshold for allowing stockholders to call a special meeting at 25% or greater, while only 16% have adopted a 10% ownership threshold.
A 20% ownership threshold provides a procedural safeguard against abuse, corporate waste and investors with short-term goals. A lower 10% ownership threshold will risk giving a stockholder or small group of stockholders a disproportionate amount of influence over the Company’s affairs.
Our Special Meeting Right as set forth in Proposal 4 strikes the appropriate balance between ensuring that stockholders have the ability to call a special meeting to act on extraordinary and urgent matters, while at the same time protecting against a misuse of this right by one stockholder or a small number of stockholders whose interests may not be aligned with the remaining 90% of our stockholders.
Failure to aggregate sufficient stock ownership to reach the 20% ownership threshold is a strong indicator that sufficient interest among the majority of stockholders does not exist to call a special meeting. Lowering this threshold risks giving a single stockholder or a very small group of stockholders a disproportionate amount of influence over the Company’s affairs.
Convening a special meeting of stockholders imposes significant costs, both administrative and operational. Our Board members, management and employees must devote a significant amount of time and attention to preparing for a special meeting, which distracts them from their primary focus of operating our business in the best interest of stockholders in order to maximize long-term financial returns. In addition, with each special meeting, we must incur significant expenses in order to prepare the disclosures required for such meeting, print and distribute materials, solicit proxies and tabulate votes. As a result, special meetings of stockholders should be limited to circumstances where a substantial number of stockholders believe a matter is sufficiently urgent and extraordinary to justify calling a special meeting.
The Company’s Special Meeting Right also serves as a protective mechanism against investors with short-term goals. Event-driven hedge funds or other activists may pursue a special meetingthird parties with the goal of being disruptive toensuring compliance with our business or to propose matters that facilitate their own short-term exit strategies over the long-term interests of the restsafety standards.
On a regular and ongoing basis, we perform safety audits of our stockholders. A 20% special meeting threshold ensures that a special meeting may only be called by a stockholder or groupown operations and those of stockholders with a substantial stakeour contractors against the safety standards in our Company. SMS. Our regular safety audits are based on the risk level inherent to the activities of each group, and we perform out-of-cycle audits when an incident occurs or we otherwise have evidence that there may be a gap in a specific activity leading to a possible safety concern.
Since launching our continuous Pilot Line Operations Safety Audit (“LOSA”) program in 2017, we have been sending highly trained pilot observers onto the flight deck to better understand how pilot practice reflects our expectations. We are also the only U.S. airline to implement a Cabin LOSA program, designed to help us keep the cabin safe for crew members and passengers. Observing our frontline team members in action and gathering safety-related data on environmental conditions, operational complexities and crew performance in real time provides us with valuable insights for enhancing safety and resilience.
The Special Meeting Right appropriately safeguards stockholder interestsFAA oversees American’s safety program, including the wide range of audits we perform. They do this through ongoing surveillance and prevents corporate waste, while atby participation in our regularly scheduled safety meeting. Also, on a biannual basis, American undergoes the same time ensuringInternational Air Transport Association’s Operational Safety Audit, which is an internationally recognized evaluation system designed to assess the operational management and control systems of an airline. And as a contractor for the U.S. Department of Defense (“DoD”), American is also subject to the DoD’s biannual operational safety audit.
We believe this interlocking and continuous system of audits, reviews of audit findings and development of mitigation plans is effective in detecting and reducing safety risks. Layering in an additional audit, as the proponent suggests, we believe is likely to cause confusion and introduce an ill-advised distraction from the vigilance that stockholders havewe exercise every day which is designed to oversee, assess and mitigate the abilityrisk in our operations.
We stand by our Human Rights Statement and respect the freedom of association of all employees.
We pride ourselves on conducting business in a socially responsible and ethical manner that is consistent with human rights principles. Our comprehensive Human Rights Statement, which is available on our website2, applies to call special meetings when appropriate.
all team members and contractors, employees of our wholly owned carriers and our suppliers and other business relationships.
2 | https://www.aa.com/i18n/customer-service/about-us/human-rights-statement.jsp |
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2024 Proxy Statement
The Company’s Special Meeting Right set forthWe continuously evaluate our operations and supply chain to identify, assess and address human rights risks and to engage key stakeholders. We are steadfast in Proposal 4 will provide our stockholders with a meaningful rightcommitment to call a special meeting.
The 20% ownership threshold provided in the Special Meeting Right as set forth in Proposal 4 will provide our stockholders a meaningful right to call a special meeting. Based on our current stockholder base, any tworunning every aspect of our three largest stockholders could act together to callbusiness in a special meeting, and a combination of three or fewer of our top five stockholders could do the same.manner that respects fundamental human rights.
Under a 10% ownership threshold as proposed in this proposal, either of our two largest stockholders couldindividually call a special meeting, which the Board believes is inappropriate.
We are committed to strong and effective corporate governance policies and practices, and provide sufficient avenues for stockholders to meaningfully engage in Company affairs.
Our existing governance policies and practices provide stockholders with numerous avenues to address and discuss our business and governance policies with the Board, and ensure that our Board of Directors acts independently and maintains accountability to our stockholders. This includes the following:
In addition, we strive to maintain an open dialogue with our stockholders and believe investor input enables the Board to more effectively evaluate our governance practices. Our Board and management have found this engagement constructive and informative, and we plan to continue these engagement efforts.
In light of our existing policiespublic commitment to sustainability, safety and practiceshuman rights and the Special Meeting Right, theour transparent and robust oversight of, and reporting on, our progress, our Board believeshas determined that the adoption of this proposalconducting a third-party audit is unnecessary, will not make a meaningful difference inonly serve to divert time and resources away from furthering our stockholders’ ability to engage with the Board or influence our business or governance policies but will risk giving a small group of stockholders a disproportionate amount of influence over the Company’s affairs.
For the above reasons, the Board of Directors doesgoals, and is not believe that it is in the best interests of the Company or its stockholders to adopt this proposal.
For these reasons, the Board of Directors unanimously urges stockholders to vote “AGAINST” the proposal to permit stockholders who hold at least 10% of the voting power of the outstanding shares of the Company to call a special meeting of stockholders.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information regarding the beneficial ownership of our Common Stock as of April , 2018,9, 2024, by (1) each of our directors and nominees for director, (2) each of the individuals named in the section entitled “Executive Compensation—Summary Compensation Table” beginning on page 6568 and (3) all of our directors and executive officers as a group, based in each case on information furnished to us by these persons. We believe that each of the named individuals and each director and executive officer included in the group has sole voting and investment power with regard to the shares shown, except that certain individuals may share voting and investment power with their spouses and except as otherwise noted.
AAG Common Stock Beneficially Owned(1) | ||||||||||||||||||||
Name of Beneficial Owner and Relationship to Company | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||||||||||||
Robert Isom Chief Executive Officer and Director | 912,782 | (2) | * | |||||||||||||||||
| 754,777 | (3) | * | |||||||||||||||||
Priya Aiyar
| 264,039 | * | ||||||||||||||||||
Devon May Chief Financial Officer | 151,153 | (5) | * | |||||||||||||||||
Vasu Raja Chief Commercial Officer | 83,510 | (6) | * | |||||||||||||||||
Jeff Benjamin
Director | 111,818 | * | ||||||||||||||||||
Adriane Brown Director | 28,411 | (8) | * | |||||||||||||||||
John Cahill Director | 186,818 | (9) | * | |||||||||||||||||
Mike Embler
Director | 69,818 | * | ||||||||||||||||||
Matt Hart Director | 76,424 | (11) | * | |||||||||||||||||
Sue Kronick Director | 52,583 | (12) | * | |||||||||||||||||
Marty Nesbitt
Director | 52,583 | * | ||||||||||||||||||
Denise O’Leary Director | 127,872 | (14) | * | |||||||||||||||||
Vicente Reynal Director | 19,008 | (15) | * | |||||||||||||||||
Greg Smith
Independent Chairman | 37,094 | * | ||||||||||||||||||
Doug Steenland Director | 29,736 | (17) | * | |||||||||||||||||
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All directors and executive officers as a group | 3,214,569 | (18) | * |
* | Represents less than 1% of the outstanding shares of our Common Stock. |
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(1) | Beneficial ownership as reported in the table has been determined in accordance with SEC rules and regulations and includes |
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(2) | Includes 912,782 shares |
Includes |
(4) | Includes 207,482 shares held directly and |
Includes |
Includes |
Includes |
Includes |
(9) | Includes 150,806 shares held indirectly for the benefit of the John Tobin Cahill Revocable Trust, 25,552 shares held indirectly for the benefit of the Ladson Court Trust V and |
(10) | Includes |
(11) | Includes |
(12) | Includes |
(13) | Includes |
(14) | Includes |
(15) | Includes |
(16) | Includes |
(17) | Includes |
(18) | Includes |
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The following table sets forth information regarding the beneficial ownership of our Common Stock as of April , 20189, 2024 for each person known to us to be the beneficial owner of more than 5% of our outstanding Common Stock.
Common Stock Beneficially Owned | ||||||||||
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355
| 75,371,075 | (a) | 11.49% | |||||||
Blackrock, Inc. 55 East 52nd Street New York, NY 10055
| 38,064,291 | (b) | 5.80% | |||||||
PRIMECAP Management Company 177 E. Colorado Blvd., 11th Floor Pasadena, CA 91105
| 37,047,931 | (c) | 5.65% |
(a) |
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The amount shown and the following information are derived solely from the Schedule 13G/A filed by |
(b) | The amount shown and the following information are derived solely from the Schedule 13G/A filed by BlackRock, Inc. on |
The amount shown and the following information are derived solely from the Schedule 13G/A filed by PRIMECAP Management Company on February |
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Maintaining leading governance practices is and has been a long-standing priority, and we regularly assess and refine our corporate governance policies and procedures to take into account evolving best practices.
Our Board of Directors has adopted the Governance Guidelines to facilitate our mission and to establish general principles and policies by which the Board of Directors manages its affairs. The Governance Guidelines are reviewed periodically by the Corporate Governance and NominatingCGPR Committee and are posted on our website atwww.aa.comunder the links “Investor Relations”—“Corporate Governance.”
Board Leadership and StructureStructure—Separate Chairman and CEO Roles
Pursuant to our Bylaws, the Board of Directors is responsible for filling the positions of Chairman and Chief Executive Officer, and the independent members of the Board of Directors elect the Lead Independent Director, with the persons they deem qualified, as well as for removing and replacing such persons as and when the Board of Directors may deem necessary or appropriate. The Board of Directors periodically reviews AAG’s leadership structure and may modify the structure as it deems appropriate, given the specific circumstances then facing the Company.
The BoardAs a culmination of Directors is currently led by Mr.the Board’s CEO succession planning, in December 2021, we announced that Robert Isom would succeed Doug Parker our Chairman and Chief Executive Officer, and Mr. Cahill, our Lead Independent Director. We believe that our current leadership structure strikes an appropriate balance between effective and efficient Company leadership and oversight by independent directors.
The Boardas the CEO of Directors believes that having Mr. Parker serve as both Chairman and Chief Executive Officer is the most effective leadership structure for the Company at this time. Mr. Parker has over 30 years of experience in the airline industry, over 15 years of experience as an airline Chairman and Chief Executive Officer, mergers and acquisitions experience and prior servicebe appointed as a director of other large public companies. This experience makes him uniquely well positionedAAG effective March 31, 2022. The Board determined that it was important to lead AAG’s business,retain Mr. Parker in the role of Chairman of the Board in order to ensure a successful transition in leadership. Mr. Parker retired from the Board on April 30, 2023. Also in February 2023, we announced the appointment of Greg Smith as the Company’s Independent Chairman effective April 30, 2023. By separating the roles of Chairman and CEO, our CEO is able to focus on executing on our strategy and operations, and strategy.
The combinationour Board Chairman, who is an independent director, can devote his time and attention to matters of the Chief Executive OfficerBoard oversight and Chairman roles allows consistent communication and coordination throughoutgovernance. John Cahill served as the Company, effective and efficient implementation of corporate strategy and is important in unifying our team members behind a single vision. The combination of the Chief Executive Officer and Chairman roles is balanced by our strong Lead Independent Director position, bythrough the independenceeffective date of allthe election of Mr. Smith as our other directors, eachIndependent Chairman.
Board Meetings
The Board conducts its business through meetings of whom has significant experience in leadership roles at public companiesthe full Board and other large, complex organizations and by the four principal committees of the Board of Directors, each of which consists solely of independent directors.
Lead Independent Director Responsibilities
Board. The Board of Directors recognizes the importance of strong independent Board leadership. All of our directors are independent under the standards providedregularly meets in the Governance Guidelines and under applicable NASDAQ listing standards, except for Mr. Parker, our Chairman and Chief Executive Officer. Additionally, theexecutive session with only independent directors of the Board elect periodically a Lead Independentpresent. Each Director when the Chairman is not independent. The Board believes that the Lead Independent Director provides the Company and the Board with the same independent leadership, oversight and benefits that would be provided by an independent Chairman. As a result of our stockholder engagement, in 2017 we amended our Bylawsexpected to allow for the selection of the Lead independent Director by only the independent directorsattend all meetings of the Board and codified our existing practices regardingof each committee of which the authority and role of the Lead Independent Director to enhance transparency and ensure that the appropriate balance of authority, already characteristic of our governance practices, is memorialized in our governing documents.
The independent directors of the Board have elected Mr. Cahill to serve as the Board’s Lead Independent Director. Mr. Cahill has been a member and the Lead Independent DirectorCompany’s annual meeting of stockholders, except where unusual circumstances arise. During 2023, the Board held eight meetings, five of which included executive sessions comprised of only independent directors. In 2023, each incumbent director attended at least 75% of the aggregate number of meetings of the Board and of Directors since December 2013. He also serves as a member of ourthe committees on which he or she served.
Committees
The Board has five standing, principal committees: the Audit Committee, the Compensation Committee, the CGPR Committee, the Finance Committee and Corporate Governancethe Safety Committee. The primary responsibilities, membership and Nominating Committee. Mr. Cahill’s extensive leadership and operations experience in executive leadership roles at global public companies, including as Vice Chairman of Kraft Heinz, Chairman and Chief Executive Officer of Kraft Foods Group and Chairman and Chief Executive Officer of Pepsi Bottling, his accounting and financial expertise and public company board and corporate governance experience, make him qualified to serve as Lead Independent Directormeeting information for the committees of our Board during 2023 are summarized below. Copies of Directors.the charters of the Audit Committee, Compensation Committee, CGPR Committee and Safety Committee are available on our website at www.aa.com under the links “Investor Relations”—“Corporate Governance.”
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The Governance Guidelines contain standards for determining director independence that meet or exceed the applicable rules of the SEC and Nasdaq listing standards of the NASDAQ Stock Market (“NASDAQ”).standards. The Governance Guidelines define an “independent” director as one who:
• | is not an executive officer or employee of the Company or any other individual having a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director; |
• | is not, and has not at any time during the past three years been, employed by the Company; |
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2024 Proxy Statement
• | has not accepted, and does not have any spouse, parent, child or sibling, whether by blood, marriage or adoption, any person residing in such individual’s home, or any relative supported financially (each, a “Family Member”) who has accepted, any compensation from the Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence, other than (A) compensation for Board or committee service, (B) compensation paid to a Family Member who is an employee (other than an executive officer) of the Company, or (C) benefits under a tax-qualified retirement plan or non-discretionary compensation; |
• | is not a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer; |
• | is not, and does not have a Family Member who is, a partner in, or a controlling stockholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than (A) payments arising solely from investments in the Company’s securities and (B) payments under non-discretionary charitable contribution matching programs; |
• | is not, and does not have a Family Member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company served on the compensation committee of such other entity; |
• | is not, and does not have a Family Member who is, a current partner of the Company’s outside auditor, and was not, and does not have a Family Member who was, a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years; and |
• | satisfies any additional requirements for independence promulgated from time to time by Nasdaq. |
The Governance Guidelines also provide that the Board of Directors will consider all other relevant facts and circumstances, including issues that may arise as a result of any director compensation (whether direct or indirect), any charitable contributions we make to organizations with which a director is affiliated and any consulting arrangement between the Company and a director. The Corporate Governance and NominatingCGPR Committee reports annually to the full Board of Directors on these matters.
Pursuant to the Governance Guidelines, the Corporate Governance and NominatingCGPR Committee and the Board of Directors undertake an annual review of director independence. Based on the Corporate Governance and Nominating
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CGPR Committee’s review in April 2018,March 2024, the Board of Directors affirmatively determined that all of our directors are independent under the standards provided in the Governance Guidelines and under applicable NASDAQNasdaq listing standards, except for Mr. Parker,Isom, who serves as our Chairman and Chief Executive Officer,Officer. Mr. Parker, who isserved as Chairman until April 30, 2023, was determined by the Board in 2023 as not an employee.independent director, due to his prior service as our Chief Executive Officer.
The following types and categories of transactions, relationships and arrangements were considered by our Board of Directors in making its independence determinations.determinations in 2024. Excluded were ordinary course air transportation by corporations or other organizations where the director’s interest solely arises from such person’s position as a director or advisor to such other corporation or organization. All of the reviewed transactions and arrangements were entered into in the ordinary course of business and none of the business transactions, donations or grants involved an amount that exceeded the greater of 5% of the recipient entity’s revenues or $200,000.
services other than air transportation. The Board of Directors has concluded that these transactions and arrangements do not impair the directors’ exercise of independent judgment in carrying out their responsibilities as directors.
The Board Tenurealso considered Mr. Smith’s prior role as Chief Financial Officer of Boeing, which is one of our significant commercial partners. In light of the fact Mr. Smith retired from Boeing in July 2021, before his appointment as a director, and has no continuing role with Boeing, our Board determined that this past relationship does not impair his exercise of independent judgment in carrying out his responsibilities as a director.
Board Diversity and Tenure
Our Board believes that diversity is an important aspect of an effective board. The CGPR Committee seeks to recommend individuals to the Board with, among other things, a diversity of skills, experience, expertise and perspective appropriate for the business and operation of the Company. We recognize the benefits of racial and gender diversity in the
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2024 Proxy Statement
boardroom, including better reflecting our diverse customer and employee base and the healthy debate that stems from different viewpoints that may result from diverse backgrounds. Accordingly, our Board is diverse in many ways, with differing geographic, business and racial backgrounds. Over 45% of our Board nominees are diverse based on gender or ethnicity.
We believe that fresh perspectives and new ideas are critical to a forward-looking and strategic Board. At the same time, given the extremely complex nature of our business, it is equally important to benefit from the valuable experience and institutional knowledge that longer-serving directors bring to the boardroom. In September 2022, Mr. Reynal joined our Board. Mr. Reynal was identified to the Company by a third-party search firm. Previously, in January and March 2022, respectively, Mr. Smith and Mr. Isom joined our Board, and prior to that in October 2020 and February 2021, respectively, Mr. Steenland and Ms. Brown joined our Board and in November 2015, we added two new directors to our Board, Ms. Kronick and Mr. Nesbitt.Nesbitt joined our Board. Our remaining directors joined our Board in December 2013 at the effective date of the merger with US Airways. The Board of Directors strongly believes that the current mix of directors provides the Company with an appropriate balance of knowledge, experience and capability, allowing us to leverage deep company experience and knowledge in addition to new viewpoints and innovative ideas among newer directors.
Our Board of Directors believes that diversity is an important aspect of an effective board. The Corporate Governance and Nominating Committee seeks to recommend individuals to the Board of Directors with, among other things, a diversity of skills, experience, expertise and perspective appropriate for the business and operation of the Company. We recognize the benefits of racial and gender diversity in the boardroom, including better reflecting our diverse customer and employee base and the healthy debate that stems from different viewpoints that may result from diverse backgrounds. Accordingly,nominees, six have served on our Board of Directors is diverse in many ways, with differing geographic, businessfor ten or fewer years and racial backgrounds. Nearly 40% ofanother five have been on our Board of Directors is diverse based on gender or ethnicity.for less than five years.
Board Self-Evaluation
Our Governance Guidelines and Corporate Governance and NominatingCGPR Committee charter provide that the Corporate Governance and NominatingCGPR Committee must conduct an annuala periodic assessment of the performance of the Board, of Directors, including the committees, and provide the results to the full Board of Directors for discussion. The purpose of the review is to increase the effectiveness of the Board of Directors as a whole and of each of the committees. The assessment includes an evaluation of the Board of Directors and each committee’s contribution as a whole, of specific areas in which the Board, of Directors, the applicable committee and/or management believe better contributions could be made and of the overallmake-up and composition of the Board of Directors and its committees.
The Board of Directors conducts its business through meetings of the full Board of Directors and committees of the Board of Directors. The Board of Directors regularly meets in executive session with only independent directors of the Board of Directors present. During 2017, the Board of Directors held six meetings, five of which werein-person meetings that included executive sessions comprised of only independent directors. In 2017, each incumbent director attended at least 75% of the aggregate number of meetings of the Board of Directors and of the committees on which he or she served.
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The Board of Directors currently has four standing, principal committees: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Finance Committee. The primary responsibilities, membership and meeting information for the committees of our Board of Directors during 2017 are summarized below. A copy of the charter of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee is available on our website atwww.aa.comunder the links “Investor Relations”—“Corporate Governance.”
Audit Committee | ||
Members in Matt Hart (Chair) Adriane Brown John Cahill
Marty Nesbitt
Meetings in
The Board | Primary Responsibilities • Oversee the Company’s internal accounting function; report to the Board
• Appoint or replace the independent auditor; oversee the work of the independent auditor for the purpose of preparing or issuing an audit report or related work, including determining the scope of annual audits and fees to be paid
• Oversee the Company’s risk management policies that relate to the financial control environment, financial reporting and disclosure controls
• Establish and maintain procedures for compliance with significant applicable legal, ethical and regulatory requirements
• Review and approve all significant conflicts of interest and related party transactions in accordance with Company policies
• Review
• Pre-approve audit and permittednon-audit services provided by the independent auditor
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Compensation Committee | ||||||||
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Members in
Jeff Benjamin
Meetings in
The Board |
Primary Responsibilities • Review and approve the Company’s overall compensation strategy and policies, including performance goals for executive officers
• Review the relationship between the Company’s compensation strategy and risk management
• Together with the Board, oversee leadership succession planning • Evaluate the performance of the Company’s Chief Executive Officer and approve his compensation and other terms of employment
• Evaluate the performance of and determine the compensation and other terms of employment of the other executive officers and other members of senior management
• Administer the Company’s incentive and stock plans, including establishing guidelines, interpreting plan documents, selecting participants, approving grants and awards and making
• Review the Company’s workforce diversity and inclusion
• Review the compensation of the non-employee members of the Board and make recommendations regarding changes to the full Board • Retain outside advisors;
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2024 Proxy Statement
Corporate Governance and | ||
Members in
Sue Kronick
Meetings in
The Board |
Primary Responsibilities • Oversee all aspects of the Company’s corporate governance functions, including the procedures for compliance with significant applicable legal, ethical and regulatory requirements that impact corporate governance
• Conduct an annual review of director independence and the performance of the Board,
• Identify individuals qualified to become members of the Board
•
• Review and assess the Governance Guidelines and recommend any changes deemed appropriate to the Board • Oversee the stockholder engagement process and significant stockholder relations issues, including consideration of stockholder proposals • Oversee the Company’s Environmental, Social and Governance (“ESG”) and sustainability efforts, including the risks and opportunities of climate change • Oversee the Company’s lobbying activities, major advocacy priorities, principal trade association memberships and political contributions, if any, and
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Finance Committee | ||
Members in
Mike Embler
Meetings in
The Board | Primary Responsibilities • Oversee the Company’s financial affairs and capital spending
• Recommend to the Board financial policies and courses of action that will effectively accommodate the Company’s goals and operating strategies
•
• Oversee the Company’s financial risk management practices
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Safety Committee | ||
Members in 2023: Adriane Brown (Chair) Mike Embler Matt Hart Sue Kronick Meetings in 2023: 2 (inaugural meeting in July 2023) The Board has determined that each member is independent under Nasdaq rules and the Governance Guidelines. | Primary Responsibilities • Oversee the Company’s policies, programs and practices with respect to operational safety and compliance, and matters affecting the safety of the Company’s customers and employees including security and public health • Oversee the Company’s procedures for compliance with significant applicable legal, ethical and regulatory requirements related to safety |
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2024 Proxy Statement
Compensation Committee Process for Executive Compensation.Compensation
The Compensation Committee charter gives the Compensation Committee the authority and responsibility to review and approve our overall compensation strategy and policies, including performance goals for executive officers. The Compensation Committee is responsible for reviewing and approving the compensation and other terms of employment of the Chief Executive Officer and for evaluating his performance. The Compensation Committee also evaluates, after receiving input from the Chief Executive Officer, the compensation and other terms of employment of the other executive officers, including in the case of internal promotions and new hires of executive officers. The Compensation Committee administers our incentive compensation, stock, bonus and other similar plans and programs; approves awards under those plans; reviews and, based upon the recommendation of the Chief Executive Officer, approves the adoption of, amendment to, or termination of executive compensation and benefit plans; and determines the general design and terms of, and may delegate authority to executive officers to administer, significantnon-executive compensation and benefits plans. The Compensation Committee may delegate all or a portion of its authority to administer our compensation and benefits plans to a subcommittee, to another committee of the Board of Directors or to one or more executive officers, provided that any such delegation does not include the authority to make stock incentive grants to any executive officer. The Compensation Committee has delegated to an Equity Incentive Committee, consisting of the Chief Executive Officer, the authority to make equity grants to employees who are not executive officers within guidelines established by the Board of Directors or the Compensation Committee.
Each year, the Compensation Committee reviews the annual incentive program results from the prior year, establishes the performance goals for the current year, evaluates our executive officers’ individual performance and approves the Compensation Committee’s report for our proxy statement. The Compensation Committee has adopted an equity grant policy to standardize the timing, practices and procedures in granting equity awards. The policy provides that equity grants, other than new hire, promotion or special purpose grants, will be granted once per year at the second regularly scheduled meeting of the Compensation Committee, at a meeting of a subcommittee to which certain authority to grant equity awards has been delegated or at a special meeting held for this purpose as close in time to the regularly scheduled meeting as possible. Throughout the year, as needed or appropriate, the Compensation Committee considers merit increases in base salaries for executive officers and approves compensation for internal promotions and new hires of executive officers. The Compensation Committee also monitors and evaluates our benefit plans and agreements with executive officers and management employees throughout the year and recommends adjustments as needed.
The Compensation Committee generally receives information from the Chief Executive Officer, the Executive Vice President—Chief People and Communications,Officer, the Senior Vice President—PeopleManaging Director—Global Compensation and compensation consultants engaged by the Compensation Committee in connection with its determinations regarding executive compensation. The Compensation Committee has sole authority to retain and terminate any outside advisors, such as compensation consultants and legal counsel, and to determine executive compensation.counsel.
During 2017, Willis Towers Watson assistedSince July 2019, the Compensation Committee has engaged Korn Ferry as its compensation consultant to assist in determining our executive compensation and reviewing and analyzing proposed compensation programs for our executive officers. The total annual expense for the executive compensation advising services provided to us by Willis Towers Watson during 2017 was approximately $183,772.
Also during 2017, specialized teams at Willis Towers Watson provided actuarial valuationAfter review and consulting services relating to retirement plans (including for Canada), health and welfare plans and workers compensation and contractual liability and risk services relating to aviation/property and casualty, for aggregate fees of approximately $7.0 million. The Willis
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Towers Watson personnel who performed actuarial valuation and consulting services for us operated separately and independently of the Willis Towers Watson personnel who performed executive compensation-related services for us. While the decision to engage Willis Towers Watson for such other services was made by management,consultation with Korn Ferry, the Compensation Committee assessed whether the services provided by Willis Towers Watson raised any conflictsdetermined that Korn Ferry is independent and there is no conflict of interest resulting from retaining Korn Ferry pursuant to applicable SEC and NASDAQ rules and concluded that no such conflicts of interest existed.Nasdaq rules.
The Board of Directors is responsible for the oversight of the Company’s ongoing assessment and management of material risks impacting our business. The Board of Directors oversees the Company’s enterprise-wide approach to risk management, which is designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and to enhance stockholder value. A fundamental part of risk management is not only understanding the risks we face and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate. Management is responsible for establishing our business strategy, identifying and assessing the related risks and establishing appropriate risk management practices. The Board, of Directors, either directly or through one or more of its committees, reviews our business strategy and management’s assessment of the related riskrisks and discusses with management the appropriate level of risk. The Board relies on each Board committee to oversee management of specific risks related to that committee’s function. The Corporate GovernanceCGPR Committee and Nominatingthe Audit Committee, periodically reviews the Company’s governance-related risk management practices, and with management’s assistance, the committee hashave developed and coordinated the Board’s current risk oversight program. The Board of Directors has not established a separate risk committee because the Board of Directors believes that the most significant risks we face are most properly directly overseen by the full Board of Directors or, in certain cases, the appropriate standing committee which considercommittee.
The Board oversees and reviews the risks within their areamanagement of responsibility.
For example, our most significant strategic, financial and operations risks are frequently reviewed byoperational risks: the full Board of Directors. The Board of Directors oversees the management of the largest risks we face, including risks associated with safety, theday-to-day operation of the airline and the interruption of airline service, revenue production, our information technology systems, and business risks related to cyber-security, and labor issues and costs.
The Audit Committee oversees our risk management policies that relate to the financial control environment, financial reporting and disclosure controls, data privacy, cybersecurity risks and other information technology risks, and our procedures for compliance with significant applicable legal, ethical and regulatory requirements that impact our financial statements. The Audit Committee meets regularly with our internal auditors, independent auditors, Chief Executive Officer, Chief Financial Officer, Executive Vice President—Corporate Affairs, Senior Vice President, General CounselController, Chief Legal Officer and Chief Compliance Officer, Vice President and Controller, Vice President and Deputy General Counsel, Corporate Secretary, Chief Ethics and Compliance Officer, Chief Digital and Information Officer, Chief Information Security Officer, and Chief Privacy Officer and the Company’s external advisors. The Audit Committee receives regular risk and internal controls assessment reports from the independent auditors and internal auditors. The Audit Committee also establishes and maintains procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls
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2024 Proxy Statement
or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.
The AuditCGPR Committee also reviews cyber-securityoversees our governance-related risks and other risks relevantrisk management policies, programs and practices with respect to the Company’s computerized information system controlssustainability strategy, including environmental and security.climate change risks and other public and corporate social responsibility issues that reflect the Company’s values and character and impact the Company’s reputation among its stakeholders.
The Compensation Committee oversees compensation risk management by participating in the creation of, and approving, compensation structures that create incentives that encourage an appropriate level of risk-taking behavior consistent with our business strategy, as is further described in the section entitled “Risk Assessment with Respect to Compensation Practices” below. The Compensation Committee also works with the Chief Executive Officer and Executive Vice President—the Chief People and CommunicationsOfficer to oversee risks associated with the retention of our most senior executives.
The Finance Committee oversees financial risk by working with senior management to evaluate elements of credit risk, advising on financial strategy, capital structure and liquidity needs and reviewing our financial risk management policies and practices. Our Chief Executive Officer, President and Chief Financial Officer and other senior financial executives meet periodically with the Finance Committee to discuss and advise on elements of these risks.
The Safety Committee oversees our risk management policies, programs and practices with respect to operational safety and compliance, matters affecting the safety of our customers and employees, including security and public health and the Company’s safety culture. The Safety Committee meets regularly with the Chief Operating Officer, the Vice President of Safety Systems, Efficiency and Compliance, and other responsible officers to discuss and advise on developing safety risks and standards.
Risk Assessment with Respect to Compensation Practices
Management and the Compensation Committee, with the support of the Committee’s compensation consultant, have reviewed the compensation policies and practices for our employees as they relate to our risk management and, based upon these reviews, we believe that any risks arising from such policies and practices are not reasonably likely to have a material adverse effect on us in the future.
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Our basis for this conclusion includes that our compensation programs and especially our executive compensation programs, are designed to include the following features:
• | Formulaic annual and long-term incentive plan awards with maximum pay-out caps or guidelines instead of discretionary pay-out decisions. |
• | Equity incentive awards are subject to performance- or time-based vesting periods that are intended to incentivize long-term rather than short-term results. |
• | Our incentive compensation plans include a set of pre-established goals and metrics that focus on areas of priority for the Company and may include financial, operational, ESG, total stockholder return (“TSR”) and/or the achievement of individual goals. The 2023 STIP included financial goals (adjusted pre-tax income—60% weighting), customer operational goals (on-time departure and controllable completion factor—30% weighting) and ESG goals (diversity, equity and inclusion –10% weighting). The 2023 LTIP included total debt reduction and relative adjusted pre-tax income margin improvement goals. In addition, the goals established in our executive compensation programs are not subject to adjustment without Compensation Committee approval. |
• | All of our performance-based compensation programs are based on overall corporate performance, rather than the performance of any business unit or group. |
• | For a discussion of the principles underlying our compensation policies for our executive officers who are named in the “Executive Compensation—Summary Compensation Table,” see the section entitled “Compensation Discussion and Analysis” beginning on page 48. |
Oversight of Sustainability and Related Matters
We strive to operate a sustainable business that has the ability to serve our stakeholders over the long-term. We have long recognized the importance of environmental and social issues and have developed an integrated and transparent approach to oversight, management, measurement, assurance and reporting of these issues.
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2024 Proxy Statement
We periodically conduct sustainability-focused materiality assessment processes, most recently in early 2023, that serve as the foundation of our analysis of areas of risk and opportunity. And, through ongoing engagement across our Company and with a broad range of external stakeholders, we validate and, as needed, refine our assessment based on the input we receive and changes in our operating environment. We also continually monitor trends, standards and practices relevant to our industry, and look to widely-adopted external reporting frameworks, including the Taskforce on Climate-related Financial Disclosures, as key indicators of stakeholder perspectives on the most significant environmental, social and governance risks and opportunities for our company.
In 2023, these activities affirmed our focus on the following priority issues:
• | Safety |
• | Human capital |
• | Customer satisfaction and operational performance |
• | Climate change and fuel efficiency |
Driving progress across all these issues is a key objective for American. Many of these issues are not new for our Company—indeed, a key reason American has thrived for nearly a century is because we have long recognized the importance of these issues. At the same time, we recognize that the business landscape is evolving rapidly and that we must be ready to address new areas if and when they emerge. Over time we have worked to develop a more integrated approach to our management of key risks and opportunities. We will continue to seek stakeholder input while also closely monitoring emerging practices and trends.
Safety. Our commitment to safety, security and continuous improvement is at the foundation of our operations. Our Chief Executive Officer retains ultimate responsibility and authority for American’s safety culture and performance, while the Board’s Safety Committee has formal oversight responsibilities for safety. The Board receives regular updates on key safety performance metrics and programs throughout the year.
Human capital. Our Compensation Committee has oversight responsibility for our human capital issues, including team member compensation, benefits, engagement, talent development and diversity, equity and inclusion (“DEI”). Our Board receives updates on these topics quarterly, and our full Board reviews union relations regularly in its meetings.
Customer satisfaction and operational performance. We fly to more than 300 destinations in the United States and internationally, and we are committed to providing our customers with a world-class travel experience and running a reliable operation. We continued to rigorously measure and track our operational performance and customer satisfaction in 2023, efforts that led to further improvements in our operations and the services we provide. Our full Board reviews customer satisfaction and operational performance regularly in its meetings.
Climate change and fuel efficiency. The CGPR Committee has primary responsibility for oversight of the Company’s sustainability strategy (including climate change risks and opportunities), objectives, efforts, progress and achievements. In 2022, we formally assigned responsibility for oversight of our climate change strategy at the management level to our Chief Executive Officer.
As we reported in our Annual Report on Form 10-K, we have established ambitious goals to achieve net zero greenhouse gas (“GHG”) emissions by 2050. We have also set an intermediate science-based target to drive progress toward that goal. Our strategy for reaching net zero emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, increasingly powered by lower-carbon fuel. Achieving our ambitious climate goals will require significant action and investments by governments, manufacturers and other stakeholders. We are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our progress.
We are committed to providing regular and transparent information about our strategies and performance on the sustainability issues that are most important to our company and our stakeholders. We have produced an annual report on these topics since 2007, and we intend to continue providing our stakeholders with information on our sustainability performance annually. We align our reporting with the recommendations of the Task Force on Climate-related Financial Disclosures, and we monitor evolving disclosure standards for best practices. Our most recent such report is available at www.aa.com/esgreport but is not incorporated by reference into this Proxy Statement.
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2024 Proxy Statement
In 2023, the Company was named to the Dow Jones Sustainability World Index for the first time, one of only two passenger airlines included in the index. The Company was also named to the Dow Jones Sustainability North America Index for the third year in a row. The recognition is a testament to the Company’s ongoing commitment to sustainability, including our efforts to transition to a low-carbon airline over time, invest in our team members, and provide regular and transparent ESG disclosures.
Codes of Ethics
Our employees, including our principal executive officer, principal financial officer, principal accounting officer, and our directors are governed by one of two codes of ethics of the Company (collectively, the “Codes of Ethics”). The Codes of Ethics have been approved by our Board and require our employees and directors to conduct Company business in the highest legal and ethical manner. The Codes of Ethics meet the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K and the requirements of a code of business conduct and ethics under applicable Nasdaq listing standards. The full texts of the Codes of Ethics and further details regarding the scope of each of the Codes of Ethics are available on our website at www.aa.com under the links “Investor Relations”—“Corporate Governance.” We will also provide a copy of the Codes of Ethics to stockholders, free of charge, upon request to our Corporate Secretary. Any amendments to or waivers from the Codes of Ethics will be posted at this location on our website as required by applicable SEC and Nasdaq rules.
Public Policy Engagement and Political Participation
Engagement in the political, legislative and regulatory process is important to the success of the Company. Compliance and oversight of our public policy and political engagement is provided by our Executive Vice President and Chief Government Affairs Officer, who reports to the Chief Executive Officer. At the Board level, the CGPR Committee is responsible for reviewing and assessing the Company’s public policy and political activities. The Company’s Statement on Public Policy Engagement and Political Participation is available at www.aa.com/esg, but is not incorporated by reference into this Proxy Statement.
We do not use corporate funds to contribute to candidates, political party committees or political action committees, including Super PACs and political committees organized under Section 527 of the Internal Revenue Code to promote the election or defeat of candidates for office. We do not use corporate funds to make independent political expenditures or electioneering communications. If the Company makes payments to other tax-exempt organizations, such as 501(c)(4)s, that the recipient may use for political purposes, we will publicly disclose those payments on our corporate website. On rare occasions, we may use corporate funds to support or oppose state and local ballot initiatives if we believe an initiative would materially affect our business or the transportation infrastructure in the communities we serve. If we make any such contribution, we will disclose the amount and recipient on our corporate website.
As part of our public policy engagement, we are members of several trade and industry associations, and we disclose on our corporate website a full list of the Company’s trade association memberships for which our fees exceed $25,000. We also disclose the non-deductible portion of the dues we pay our major trade associations.
For further information, please see our Statement on Public Policy Engagement and Political Participation, available on our website at www.aa.com under the links “About us”—“Corporate Governance.”
Prohibition on Hedging and Pledging
Our insider trading policy prohibits the members of our Board, our executive officers, managing directors and director-level employees and our other employees with any regular access to material non-public information, from hedging the economic risk of security ownership. This prohibition includes options trading on any of the stock exchanges or futures exchanges, as well as customized derivative or hedging transactions with third parties, such as zero-cost collars and forward sale contracts with respect to Company securities. In addition, the goals established in our executive compensation programs are not subject to adjustment without Compensation Committee approval.
Our Governance Guidelines provide that each of our directors is expected to attend our annual meetingAnnual Meeting of stockholders, except where unusual circumstances arise. TwelveAll of the 13 directors who were then serving in officeon our Board at the time attended our 20172023 annual meeting of stockholders.
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2024 Proxy Statement
Director Continuing Education
Non-employee directors are encouraged to attend seminars, conferences and other director education programs periodically. We reimburse the directors for the costs associated with these seminars and conferences, including related travel expenses. Management also conducts a comprehensive orientation process for new directors. In addition, directors receive continuing education through educational sessions at meetings and mailings between meetings.
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Communications with the Board ofand Non-Management Directors andNon-Management Directors
The Board of Directors has approved procedures to facilitate communications between the directors and employees, stockholders and other interested third parties. Pursuant to these procedures, a person who desires to contact the Board, of Directors, a standing committee of the Board of Directors or a director may do so in writing to the following address:
American Airlines Group Inc.
The Board of Directors
P.O. Box 619616, MD 5675MD8B503
Dallas/1 Skyview Drive,
Fort Worth, International Airport, Texas 7526176155
Our Vice President and Deputy General Counsel, or someone acting on his behalf,We will review the communications with the directors, a standing committee of the Board of Directors or an officer, in each case depending on the facts and circumstances outlined in the communication. The Corporate Governance and NominatingCGPR Committee also reviews with senior management the nature of the communications and our responses to them. Any communication relating to a stockholder nominee for a position on the Board of Directors or a stockholder proposal for business to be considered at any annual meeting of stockholders or included in any proxy statement will be sent to the Chair of the Corporate Governance and NominatingCGPR Committee. As provided in our Governance Guidelines, our LeadOur Independent Director, Mr. Cahill,Chair has been designated as the primary director representative for consultation and direct communication with our stockholders.
Stockholder Engagement
Our stockholder engagement program is designed to share relevant updates with our investors and to better understand their perspectives on key challenges at the Company and in the broader airline industry and capital markets. These conversations play a critical role in informing our corporate governance practices, executive compensation program, and sustainability initiatives and reporting, among other topics. In 2023, we contacted stockholders representing approximately 40% of outstanding shares, and held discussions with investors representing nearly 20% of our outstanding shares. We also held engagements with the leading proxy advisor firms. Our Vice President, Deputy General Counsel & Corporate Secretary led the majority of our off-season engagements with involvement from our Vice President, Investor Relations, Vice President, Sustainability and other members of management as appropriate. Greg Smith, our Independent Chairman, and Denise O’Leary, our Compensation Committee Chair, also participated in select engagements.
Detailed stockholder feedback received during our 2023 engagement program was shared directly with the Board’s CGPR and Compensation Committees , which helped inform American’s decision-making processes and disclosures. Additionally, we shared the most impactful takeaways from these engagements with the full Board to supplement the reports from those Committee Chairs. We plan to continue discussions with stockholders during the 2024 proxy season.
2023 Engagement Feedback
During our engagements with stockholders, we received feedback on American’s corporate governance and leadership practices, sustainability initiatives and investments and executive compensation program and actions. Please see “Compensation Discussion and Analysis—Stockholder Engagement on Executive Compensation” on page 61, for a discussion of engagements related to our executive compensation program.
Governance and Leadership Feedback: Stockholders recognized that American implemented a comprehensive leadership team transition during the pandemic amidst an extremely challenging operating environment. Investors were interested to learn about our approach to Board and executive succession planning, including the processes that led to appointing Robert Isom as CEO and electing Greg Smith as our first Independent Chair. We also discussed how we use Board refreshment to ensure that we have the right combination of diverse skills, perspectives, and experiences to effectively oversee American’s strategy and drive long-term stockholder value creation. Specifically, we highlighted the
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2024 Proxy Statement
addition of four new independent directors since 2020 – Vicente Reynal (2022), Greg Smith (2022), Adriane Brown (2021), and Doug Steenland (2020) – and the retirement of three longer-tenured directors in 2023 – Doug Parker, James Albaugh, and Ray Robinson. We also discussed our Board’s ongoing work to continue to identify potential director candidates with the appropriate skills for our Company.
Sustainability is atIn addition, we shared recent changes to the corestructure and leadership of our businessBoard committees. In 2023, American separated the oversight of compliance with safety policies and the management of the associated risks (formerly addressed by the now CGPR Committee) to a new, standalone Safety Committee, chaired by Adriane Brown. We also refreshed the leadership of two committees – Doug Steenland was appointed Finance Committee Chair and Martin Nesbitt was appointed CGPR Committee Chair. Several of our discussions focused on the Board’s oversight of risk management against the backdrop of this committee structure.
Sustainability Feedback: Stockholders were interested in discussing aspects of our strategy that relate to climate change and our Board has reviewedteam members. An area of particular interest was our support of, and is committed to our efforts. We are creating a vibrant future for American, our customers, our team members, our shareholders, and the communities we serve by creating the best network, working with the best partners with the best networks around the world, delivering the right products, and making investments and managing risks to position us for long-term success and to maximize shareholder value over the long run. Since the merger, we have made significant commitments to the future by substantially completing our integration, making significant investments in, the technological and industry potential for scaling the production of sustainable aviation fuel. Stockholders also expressed an interest in understanding more about how we consider, align, and measure progress towards climate and DEI goals in our teamcompensation program. We also received positive feedback from stockholders regarding the quality and transparency of our product, reducing our environmental footprint, retiring and refinancing higher cost debt, and returning capital to our investors. To ensure we meet our long-term goals, we will be guided by these four strategic objectives:Sustainability Report.
These strategic objectives, described in more detail beginning on page i and below, demonstrate that we are playing the long game – building an airline our customers, our team members, and our shareholders can count on for decades to come.
We are committed to delivering a world-class product by creating value for everyone who flies with us, driving operational excellence, and strengthening our network, including expanding where we have a competitive advantage. We are making unprecedented investments in improving our customers’ experience in the air and on the ground – including more, and more convenient, service to places our customers want to travel, a historic fleet renewal, innovative onboard products, and new airport facilities. Customers see the youngest and most fuel-efficient fleet in the industry, and also have more choice than ever through the introduction of Premium Economy and Basic Economy products, enhanced premium service, re-imagined airport lounges, and more consistency throughout our fleet. Our unified onboard experience is also being upgraded with faster satellite-based internet connectivity and power at every seat.
Our customers have access to many more destinations around the world through our global network and partnerships with foreign airlines, including our joint businesses with Japan Airlines, British Airways, Iberia and Finnair, and codesharing arrangements with LATAM, Qantas, Cathay Pacific and other carriers. And we will continue to expand our reach and service to our customers traveling internationally with our proposed joint businesses with LATAM and Qantas and our strategic partnership and codesharing arrangement with China Southern.
Caring for our Employees and Communities.We have the best team in the airline industry. Every day, we rely on terrific American team members around the world, and we know that our team members are key to our sustainability objectives. We are committed to continually improving our team’s capabilities, for today and for the future, and to developing a team that is more diverse, and to improving inclusion. We are focused on developing innovative, inspiring and caring leaders who will continue to help American make our corporate culture into a defining characteristic of our organization—as well as a competitive advantage. We will do this by creating an environment that cares for our frontline team members, our colleagues who are most responsible for taking care of our customers.
We are committed to delivering training that provides our team members with the skills they need to take care of our customers and comfortably work in a constantly changing environment, and making available the latest tools and technology that our team members need to do their jobs. For example, we recently provided our innovative Elevate the Everyday Experience training to 35,000 frontline team members, and launched training for leaders that emphasizes supporting team members who directly serve customers.
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We are committed to providing industry-leading compensation and benefits and supporting our team members and the communities where they live.
Diversity and Inclusion.We are committed to improving our diversity and inclusion efforts to provide us with expanded sources of ideas and to better reflect our customer base and the communities we serve. Highlights of our ongoing practices and recognition in this area include:
2024 Proxy Statement
We are proud of the diversity and inclusion initiatives already in place at American, but we know we can do even better. We are eager to become global leaders in inclusion and diversity—and we are energized by the actions we plan to take as a result.
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The Environment.As a global airline, we believe it is our responsibility to manage the impact that our operations has on the environment. We have taken a number of actions that reduce our environmental footprint, such as:
We therefore take sustainability seriously. We have a team of high-level managers and subject-matter experts who meet on a regular basis to monitor global trends, determine our response to stakeholder inquiries and assess risks and opportunities around specific sustainability issues, and help prepare our annual Corporate Responsibility Report. This team will also review our policies and reports with, and make recommendations to our Chief Executive Officer and other senior leadership members and to the Corporate Governance and Nominating Committee, which oversees sustainability matters for the Board.
For further information on these and dozens of other social responsibility initiatives, please see our Corporate Responsibility Report, available on our website atwww.aa.com.
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Our employees, including our principal executive officer and principal financial and accounting officer, and our directors are governed by one of two codes of ethics of the Company (collectively, the “Codes of Ethics”). The Codes of Ethics require our employees and directors to conduct Company business in the highest legal and ethical manner. The Codes of Ethics meet the requirements of a “code of ethics” as defined by Item 406 of RegulationS-K and the requirements of a code of business conduct and ethics under applicable NASDAQ listing standards. The full texts of the Codes of Ethics and further details regarding the scope of each of the Codes of Ethics are available on our website atwww.aa.com under the links “Investor Relations”—“Corporate Governance.” We will also provide a copy of the Codes of Ethics to stockholders, free of charge, upon request to our Corporate Secretary. We intend to post amendments to or waivers from the Codes of Ethics as required by applicable SEC and NASDAQ rules at this location on our website.
Public Policy Advocacy and Political Contributions
Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has adopted Policies on Public Policy Advocacy and Political Contributions that set forth the ways by which the Company participates in the political, legislative and regulatory process. The Company does not make direct contributions to candidates for federal political office, and although the Company generally does not make direct contributions to candidates for state and local political office, we have not adopted a policy against such contributions. All political contributions comply with applicable laws, and we disclose our contributions publicly as required by law. The Company’s Policies on Public Policy Advocacy and Political Contributions also set forth the trade and industry associations that we participate in that support our public advocacy efforts. Employees may also voluntarily participate in the political process by joining the Company’snon-partisan political action committee, the American Airlines Political Action Committee (PAC), which is governed by comprehensive federal, state and local regulations that require the filing of monthly reports with the Federal Election Commission among other reporting and disclosure requirements. Compliance and oversight over the Company’s political engagements is provided by our Executive Vice President—Corporate Affairs and the Corporate Governance and Nominating Committee of the Board.
For further information, please see our Policies on Public Policy Advocacy and Political Contributions, available on our website atwww.aa.com.
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The table below provides information regarding compensation we paid to ournon-employee directors in 2017.2023. The compensation elements are described in the narrative following the table. Doug Parker,Robert Isom, our Chairman and Chief Executive Officer and a director, is not included in the table because he is an employeea “named executive officer” for 2023 and receives nohis compensation for his service as Chairman or as a memberis disclosed in the “Executive Compensation—Summary Compensation Table” beginning on page 68 of the Board of Directors.this Proxy Statement.
Name
| Fees Earned or Paid in Cash ($)(a)
| Stock Awards ($)(b)
| All Other Compensation ($)(c)
| Total ($)
| ||||||||||||||||||||||||
Name | Fees Earned or Paid in Cash ($)(a) | Stock Awards ($)(b) | All Other Compensation ($)(c) | Total ($) | ||||||||||||||||||||||||
Jim Albaugh
|
| 130,000
|
|
| 150,000
|
|
| 30,050
|
|
| 310,050
|
| ||||||||||||||||
Jim Albaugh(d) | ||||||||||||||||||||||||||||
Jim Albaugh(d) | ||||||||||||||||||||||||||||
Jeff Benjamin
|
| 130,000
|
|
| 150,000
|
|
| 46,982
|
|
| 326,982
|
| ||||||||||||||||
Jeff Benjamin | ||||||||||||||||||||||||||||
Adriane Brown | ||||||||||||||||||||||||||||
Adriane Brown | ||||||||||||||||||||||||||||
John Cahill | ||||||||||||||||||||||||||||
John Cahill
|
| 160,000
|
|
| 150,000
|
|
| 38,682
|
|
| 348,682
|
| ||||||||||||||||
Mike Embler
|
| 130,000
|
|
| 150,000
|
|
| 31,476
|
|
| 311,476
|
| ||||||||||||||||
Mike Embler | ||||||||||||||||||||||||||||
Matt Hart
|
| 135,000
|
|
| 150,000
|
|
| 30,072
|
|
| 315,072
|
| ||||||||||||||||
Matt Hart | ||||||||||||||||||||||||||||
Alberto Ibargüen
|
| 130,000
|
|
| 150,000
|
|
| 3,708
|
|
| 283,708
|
| ||||||||||||||||
Rich Kraemer
|
| 135,000
|
|
| 150,000
|
|
| 39,122
|
|
| 324,122
|
| ||||||||||||||||
Sue Kronick | ||||||||||||||||||||||||||||
Sue Kronick
|
| 130,000
|
|
| 150,000
|
|
| 18,806
|
|
| 298,806
|
| ||||||||||||||||
Marty Nesbitt
|
| 130,000
|
|
| 150,000
|
|
| 60,716
|
|
| 340,716
|
| ||||||||||||||||
Marty Nesbitt | ||||||||||||||||||||||||||||
Denise O’Leary
|
| 130,000
|
|
| 150,000
|
|
| 12,362
|
|
| 292,362
|
| ||||||||||||||||
Denise O’Leary | ||||||||||||||||||||||||||||
Ray Robinson
|
| 135,000
|
|
| 150,000
|
|
| 17,364
|
|
| 302,364
|
| ||||||||||||||||
Doug Parker(d) | ||||||||||||||||||||||||||||
Doug Parker(d) | ||||||||||||||||||||||||||||
Rick Schifter
|
| 135,000
|
|
| 150,000
|
|
| 35,408
|
|
| 320,408
|
| ||||||||||||||||
Vicente Reynal | ||||||||||||||||||||||||||||
Vicente Reynal | ||||||||||||||||||||||||||||
Ray Robinson(d) | ||||||||||||||||||||||||||||
Ray Robinson(d) | ||||||||||||||||||||||||||||
Greg Smith | ||||||||||||||||||||||||||||
Greg Smith | ||||||||||||||||||||||||||||
Doug Steenland | ||||||||||||||||||||||||||||
Doug Steenland | 140,000 | 150,000 | 17,630 | 307,630 |
(a) | The amounts represent the aggregate dollar amount of all fees the directors earned or were paid in |
(b) | The amounts represent the aggregate grant date fair value, as calculated in accordance with |
(c) | The amounts include (i) the value of flight privileges received in |
Name
| Flight Privileges ($)
| Tax Gross-Up on Flight Privileges ($)
| Insurance Premiums ($)
| |||||||||
Jim Albaugh
|
| 15,025
|
|
| 15,025
|
|
| -
|
| |||
Jeff Benjamin
|
| 23,491
|
|
| 23,491
|
|
| -
|
| |||
John Cahill
|
| 19,341
|
|
| 19,341
|
|
| -
|
| |||
Mike Embler
|
| 15,738
|
|
| 15,738
|
|
| -
|
| |||
Matt Hart
|
| 9,005
|
|
| 9,005
|
|
| 12,062
|
| |||
Alberto Ibargüen
|
| 1,854
|
|
| 1,854
|
|
| -
|
| |||
Rich Kraemer
|
| 13,553
|
|
| 13,553
|
|
| 12,016
|
| |||
Sue Kronick
|
| 9,403
|
|
| 9,403
|
|
| -
|
| |||
Marty Nesbitt
|
| 30,358
|
|
| 30,358
|
|
| -
|
| |||
Denise O’Leary
|
| 4,198
|
|
| 4,198
|
|
| 3,966
|
| |||
Ray Robinson
|
| 8,682
|
|
| 8,682
|
|
| -
|
| |||
Rick Schifter
|
| 11,696
|
|
| 11,696
|
|
| 12,016
|
|
|
|
| 43 |
2024 Proxy Statement
Name | Flight Privileges ($) | Tax Gross-Up on Flight Privileges ($) | Insurance Premiums ($) | Charitable ($) | ||||||||||||||||
Jim Albaugh(d) | 178,765 | (e) | 13,528 | (e) | 25,000 | |||||||||||||||
Jeff Benjamin | 20,374 | 20,374 | ||||||||||||||||||
Adriane Brown | 5,592 | 5,592 | ||||||||||||||||||
John Cahill | 16,284 | 16,284 | ||||||||||||||||||
Mike Embler | 13,241 | 13,241 | ||||||||||||||||||
Matt Hart | 5,559 | 5,559 | 12,062 | |||||||||||||||||
Sue Kronick | 10,207 | 10,207 | ||||||||||||||||||
Marty Nesbitt | 23,296 | 23,296 | ||||||||||||||||||
Denise O’Leary | 4,692 | 4,692 | 3,966 | |||||||||||||||||
Doug Parker(d) | 265,746 | (e) | 19,035 | (e) | 6,240 | |||||||||||||||
Vicente Reynal | 15,826 | 15,826 | ||||||||||||||||||
Ray Robinson(d) | 384,929 | (e) | 23,174 | (e) | 25,000 | |||||||||||||||
Greg Smith | 23,404 | 23,404 | ||||||||||||||||||
Doug Steenland | 8,815 | 8,815 |
(d) | Mr. Parker retired from the Board on April 30, 2023, and Messrs. Albaugh and Robinson did not stand for re-election at the 2023 annual meeting of stockholders. |
(e) | For Messrs. Albaugh, Parker and Robinson, includes $13,528, $19,035 and $23,174, respectively, for the value of flight privileges received in 2023, and $165,237, $246,711 and $361,755, respectively, for the value of lifetime flight privileges available to them upon their retirement from Board service. The service of Messrs. Albaugh, Parker and Robinson on our Board exceeded seven years as of the date of their retirement from our Board. As a result, they were entitled to lifetime flight privileges. The value of the lifetime flight privileges reflects the present value of future travel calculated using a discount rate of 5.3% and Pri-2012 Employee Table, with white collar adjustments, increased by 3.0% at all ages, and then projected generationally from 2012 with Scale MP-2021, and assumes the annual level of usage is the same as the director’s actual usage for 2023 with a valuation based on imputed income and a 1% annual increase in the cost of travel. |
Director Compensation
The Corporate Governance and NominatingCompensation Committee will periodically reviewsreview the overall compensation of our directors in consultation with the Board of Directors and with the assistance of our management and, from time to time, the committee’sassistance of the Compensation Committee’s compensation consultant, Willis Towers Watson.consultant. The committeeCompensation Committee has authority to retain and terminate any outside advisors, such as compensation consultants and legal counsel, and to determine their compensation.
Annual Retainers and Grants of RSUs
RSUs. For 2017,2023, the compensation for ournon-employee directors included the following cash-based annual retainers:
• | an annual retainer of $100,000 for service on the Board; |
• | an annual retainer of $15,000 for service on each of the Audit, Compensation, CGPR, Finance or Safety Committees; and |
• | an annual retainer of $25,000 for service as the Chair of the Audit Committee and an annual retainer of $20,000 for service as the Chair of each of the Compensation, CGPR, Finance or Safety Committees. |
On the date of the 20172023 annual meeting of stockholders, each continuingnon-employee director received a number of RSUs equal to $150,000 divided by the closing price of our Common Stock on the date of the annual meeting. The RSUsEach of the RSU awards granted to our non-employee directors will vest fully on the earlier of the first anniversary of the date of grant or the date of the next annual meeting of stockholders, subject to the continued service of thenon-employee director through the vesting date.
In January 2018, Willis Towers Watson, independent compensation consultant toconnection with the Board, presented to the Board a comprehensive market analysis of the Company’snon-executive director compensation program prepared by the firm. Following this review,Board’s CEO succession planning, on June 8, 2022, the Board approved increasing the retainer payable to Mr. Parker for his service as non-employee Chairman of the Board, consisting of a quarterly cash retainer of $250,000, payable in arrears, and a grant of 185,758 RSUs vesting in full upon the earlier of (i) the first anniversary of the date of grant or (ii) the Company’s annual meeting of stockholders in 2023, subject to Mr. Parker’s continued service to the
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2024 Proxy Statement
Company through the vesting date or acceleration by the Board in accordance with the terms of the 2013 Plan. The Board determined that this grant was necessary to retain Mr. Parker in the role of Chairman of the Board in order to ensure a successful transition in leadership following the most challenging time in our industry’s history.
In February 2023, we announced the retirement of Mr. Parker from the Board on April 30, 2023 and election of Greg Smith as the Company’s Independent Chairman effective April 30, 2023. The Board has approved for Mr. Smith’s service as Independent Chairman an additional annual RSU grant with a grant date fair value of $200,000. Mr. Cahill also received an additional annual retainer of $30,000 for the Chair of the Audit Committee by $5,000. No other changes to the director compensation program were made.his service as Lead Independent Director through April 30, 2023.
Other Compensation
Compensation. As is customary in the airline industry, duringwe provide our directors with flight benefits. During the period of time they serve on the Board, of Directors,non-employee directors are entitled to complimentary personal air travel for thenon-employee director and his or her immediate family members on American and American Eagle, 12 round-trip or 24one-way passes for complimentary air travel for thenon-employee director’s family and friends each year, as well as American Airlines Admirals Club® membership, and AAdvantage® Executive Platinum and ConciergeKeySM program status.Non-employee directors will receive a taxgross-up for imputed taxable income related to these flight benefits. In addition, these travel benefits (except for the taxgross-up) will be provided (i) for anon-employee director’s lifetime if he or she has served as a director for seven or more years or has otherwise vested in such benefits by virtue of the merger with US Airways or service with a predecessor airline or (ii) for five years if he or she has served for less than seven but more than two years.Non-employee directors will also be reimbursed for all reasonableout-of-pocket expenses incurred in connection with attendance at meetings upon submission of receipts.
Some ofIn addition, the company purchases tickets to certain sporting and other events in advance for business purposes. On occasion, unused tickets purchased are made available for personal use by our current directors are eligibleor other employees. These tickets typically result in no incremental cost to continue participation under certain legacy programs related to service for predecessor companies, as described below.the company.
Legacy Director Compensation Programs
Following the closing of the merger with US Airways, the America West Directors’ Charitable Contribution Program (the “Charitable Contribution Program”), a legacy director compensation program, continues to be in effect.
In 1994, America West established the Charitable Contribution Program under which all directors of America West were invited to participate. This program was discontinued for new directors following the merger between America West and US Airways in 2005. UnderDuring 2023, the Charitable Contribution Program, upon the death of a participant, America West (or its successor) is required to donate $1 million to one or more qualifying charitable organizations chosen by the participant. All participants serving as directors of America West at the time of the merger became vested in the Charitable Contribution Program, and the Charitable Contribution Program may not be terminated with respect to these individuals. The current directors who arewere participants in the Charitable Contribution Program arewere Messrs. Hart Kraemer,and Parker and Schifter and Ms. O’Leary. The charitable contributions will be substantially funded by life insurance proceeds from policies maintained by us on the lives of the participants. Under the terms of the Charitable Contribution Program, America West was allowed to place joint life insurance on two directors. The life insurance policies currently in place under the Charitable Contribution Program are structured as joint policies on the lives of two directors and the insurance benefits are payable at the death of
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the last survivor. Individual directors derive no direct financial benefit from the Charitable Contribution Program because all insurance proceeds are to be paid by us, and all tax deductions for the charitable contributions accrue solely to us.
We adopted stock ownership guidelines for ournon-employee directors in January 2014.Non-employee directors are required to hold a number of shares of stock equal to the lesser of either (i) five times the director’s annual cash retainer or (ii) 15,000 shares of our Common Stock. Ownership is determined based on the combined value of the following director holdings: (a) shares owned outright or by immediate family members residing in the same household or in a trust for the benefit of the director or an immediate family member; (b) Common Stock, stock units or other stock equivalents obtained through the exercise of SARs/stock appreciation rights (“SARs”)/stock options or vesting of equity awards; (c) unvested equity awards granted under any equity and deferral plans; and (d) other stock or stock equivalent awards determined by the Corporate Governance and NominatingCGPR Committee.Non-employee directors have five years from the later of: (i) the date the guidelines were adopted and (ii) the date the individual became a director to comply with the stock ownership guidelines. Under the stock ownership guidelines, until anon-employee director has reached the minimum ownership guideline, such director may not sell or otherwise dispose of the shares of Common Stock acquired upon the exercise, vesting or settlement of any equity awards except to the extent such sales do not cumulatively exceed 50% of such shares.
Each of our directors with a compliance date before the date of this Proxy Statement owns shares that exceed the minimum stock ownership guidelines.
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| 45 |
2024 Proxy Statement
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Relationships and Related Party Transactions
Since January 1, 2017,2023, the Company has not participated in, nor is there currently planned, any transaction or series of similar transactions with any of the Company’s directors, nominees, executive officers, holders of more than 5% of Common Stock or any member of such person’s immediate family that is required to be reported under RegulationS-K Item 404(a) of the rules of the SEC.SEC, other than the following: in October 2023, the Company committed to a donation of $2,500,000, to be paid over a five-year period, to a non-profit organization founded by our former Chairman, Doug Parker, called Breaking Down Barriers, whose mission is to remove the barriers that exist for underrepresented young adults to have rewarding careers in aviation, particularly as pilots. This donation was approved by the Audit Committee in accordance with the Company’s policies.
We have entered into indemnity agreements with our executive officers and directors that provide, among other things, that we will indemnify each such officer or director, under the circumstances and to the extent provided for in the indemnity agreements, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings in which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company.
Policies and Procedures Forfor Review and Approval of Related Person Transactions
We believe that business decisions and actions taken by our officers, directors and employees should be based on the best interests of the Company and must not be motivated by personal considerations or relationships. We attempt to analyze all transactions in which we participate and in which a related person may have a direct or indirect material interest, both due to the potential for a conflict of interest and to determine whether disclosure of the transaction is required under applicable SEC rules and regulations. Related persons include any of our directors or executive officers, certain of our stockholders and immediate family members of any of the above persons. The Audit Committee is responsible for reviewing and approving all significant conflicts of interest and related party transactions in accordance with our Companycompany policies.
A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with the interests of the Company. Our Codes of Ethics requiresrequire our employees, including our Chief Executive Officer, Chief Financial Officer, Corporate Controller, who is our principal executive officer, principal financial and accounting officer, and our directors who may have a potential or apparent conflict of interest to fully disclose all the relevant facts to either the Chair of the Audit Committee or the Chief Ethics and Compliance Officer, as applicable. Once the Chair of the Audit Committee or the Chief Ethics and Compliance Officer receives notice of a conflict of interest, they will report the relevant facts to our internal auditors. The internal auditors will then consult with the Audit Committee and a determination will be made as to whether the activity is permissible. The full texts of our Codes of Ethics are available on our website atwww.aa.com under the links “Investor Relations”“About Us”—“Corporate Governance.”
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2024 Proxy Statement
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee has reviewed and discussed with our management our audited consolidated financial statements for the fiscal year ended December 31, 20172023 (the “Audited Financial Statements”).
The Audit Committee has discussed with KPMG, our independent registered public accounting firm, the matters required to be discussed with the Audit Committee under the applicable requirements of the Public Company Accounting Oversight Board Auditing Standard No. 1301.and the Securities and Exchange Commission.
The Audit Committee has received the written disclosures and the letter from KPMG regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence, has discussed with KPMG its independence and has considered the compatibility of thenon-audit services provided by KPMG with respect to maintenance of that independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, of Directors, and the Board of Directors has approved, that the Audited Financial Statements be included in our Annual Report on Form10-K for the year ended December 31, 2017,2023, for filing with the SEC.
Respectfully submitted,
Audit Committee
Matt Hart (Chair)
Adriane Brown
John Cahill
Mike Embler
Alberto Ibargüen
Marty Nesbitt
This report of the Audit Committee is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.
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| 47 |
2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
This section discusses our performance and the principles underlying our compensation policies for our “named executive officers,” who for 2017 are:2023 were:
– | Robert Isom, our Chief Executive Officer and Director; |
– | Steve Johnson, our Vice Chair and Chief Strategy Officer; |
– | Priya Aiyar, our Executive Vice President and Chief Legal Officer; |
– | Devon May, our Executive Vice President and Chief Financial Officer; and |
– | Vasu Raja, our Executive Vice President and Chief Commercial Officer. |
American has executed significant Board and senior leadership team succession since 2021:
– | In December 2021, American announced that Mr. Isom would succeed Doug Parker as CEO, effective March 2022 |
– | Mr. Parker remained Chairman to ensure a successful transition before retiring from the Board in April 2023 |
– | Effective April 2023, Greg Smith was elected as American’s Independent Chairman, succeeding Mr. Parker |
– | In tandem with the CEO transition, American made additional updates to rebuild and retain our broader senior leadership team to lead our next chapter and drive stockholder value: |
• | Mr. Raja was promoted to Senior Vice President and Chief Revenue Officer in June 2020 and to Executive Vice President and Chief Commercial Officer in April 2022 |
• | Mr. May was promoted to Senior Vice President of Finance and Investor Relations in February 2022 and to Executive Vice President and Chief Financial Officer in January 2023 |
• | Ms. Aiyar was promoted to Executive Vice President and Chief Legal Officer in April 2022 |
• | Mr. Johnson was promoted to Vice Chair and Chief Strategy Officer in May 2023 |
To successfully lead American through the critical post-pandemic chapter, our Chairmanleadership team established a targeted list of primary goals to improve the reliability, profitability and Chief Executive Officer;
Reliability
– | Operated nearly two million flights with an average load factor of 83.5% |
– | Delivered on-time performance that was record-setting for American and best among the major network airlines, including during the summer peak travel period |
– | Produced a full-year completion factor that was record-setting for American and best among the major network airlines, with the lowest number of cancellations since the merger with US Airways |
– | Achieved our best-ever completion factor and on-time departures as well as our lowest mishandled baggage rate over the November and December holidays |
– | Reached new, long-term collective bargaining agreements with three of our workgroups, providing those team members with significantly improved wages and other benefits |
48 |
2024 Proxy Statement
As described more fully below,
Profitability
– | Achieved record 2023 revenue of approximately $53 billion, an increase of more than $22 billion compared to 2021 |
– | On a GAAP basis, reversed our pre-tax loss in 2021 of over $2.5 billion and produced pre-tax income of $186 million in 2022 and pre-tax income of more than $1.1 billion in 2023 |
– | Excluding pre-tax net special items,(1) reversed our pre-tax loss in 2021 of nearly $7 billion and produced pre-tax income of $458 million in 2022 and nearly $2.5 billion in 2023 |
See Appendix B for a Reconciliation of Non-GAAP Pre-Tax Income (Loss) Excluding Net |
Accountability
– | Enhanced liquidity: |
• | Generated GAAP operating cash flow of $3.8 billion and the airline’s highest full-year free cash flow(2) of $1.8 billion in 2023 |
• | Ended 2023 with approximately $10.4 billion of total available liquidity(3) |
– | Strengthened the balance sheet: |
• | Reduced total debt(4) by $3.2 billion in 2023 |
• | Achieved more than 75% of the way towards our 2025 total debt reduction goal of $15 billion |
– | Improved credit ratings. Fitch and S&P provided double-notch upgrades, and Moody’s provided a single-notch upgrade |
(1) | See Appendix B for details on the components of pre-tax net special items and for a reconciliation of pre-tax income (loss) excluding net special items, a non-GAAP measure. |
(2) | See Appendix B for a reconciliation of free cash flow, a non-GAAP measure. |
(3) | Total available liquidity includes unrestricted cash and short-term investments, and undrawn capacity under our credit facilities. |
(4) | Total debt includes debt, finance and operating lease liabilities and pension obligations. |
Our 2023 executive compensation strategyprogram is designed to provide a totalimplement our strategy
Our executive compensation package that will not only attractprogram is heavily performance-based and retain high-caliber executive officers and employees, but one that will also align employee contributionsdirectly linked with our corporate objectivesestablished goals of delivering record operational results, continuing to close our margin gap with our largest competitors and stockholders’ interests.
2017 was a great year for American Airlines thanks to the work of our over 120,000 full-time equivalent team members. We are focused on four long-term strategic objectives to guide our thinking and decisions and keep the entire team focused on managing American for the long-term. They are: Create a World-Class Customer Experience, Make Culture a Competitive Advantage, Ensure Long-Term Financial Strength and Think Forward, Lead Forward.
Create a World-Class Customer Experience.We are delivering value to all customers, especially premium customers, as well as driving operational excellence and strengthening our networkreducing total debt by growing where we have a competitive advantage. During 2017:
Our 2023 LTIP for our named executive officers incorporated both performance- and time-vesting components, with half of the target value consisting of the performance-vesting component. The performance-vesting component is tied to inductattainment of total debt reduction (50% weighting) and relative pre-tax income margin improvement versus our industry peers (50% weighting). The performance-vesting component of the 2023 LTIP will be earned, if at all, following the completion of a total of 20 new MAX aircraft, which are replacing older, less fuel efficient aircraft.
Make Culture a Competitive Advantage.American is creating an environment that cares for frontline team members, developing innovative, inspiring, and caring leaders, and equipping our team with the tools to support our customers.
Company’s annual target direct compensation:
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2024 Proxy Statement
Ensure Long-Term Financial Strength.To ensure our long-term competitiveness in the global aviation industry, we are focused on capturing the efficiencies created by the merger, delivering on American’s earnings potential, and creating value for stockholders. In the four full years since the merger closed, the company’s cumulativepre-tax earnings were $15.2 billion, or $19.4 billion excluding net special items.
See Annex A for a reconciliation ofpre-tax profit excluding net special items, anon-GAAP measure.
Think Forward, Lead Forward.We are committed tore-establishing ourselves as an industry leader by creating an action-oriented culture that moves quickly to bring products to market, embraces technological change and quickly seizes upon new opportunities for our network and our product. During 2017:
Our Commitment to Fair Pay and Pay for Performance
Our CEO and other executive officers have demonstrated their commitment to fair pay and pay for performance by initiating the following exceptional actions with respect to their compensation.
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Competitive Compensation; Emphasis on Pay for Performance
For 2017, Mr. Parker’s total target direct compensation, which was provided solely in the form of long-term equity incentives, was set 3% higher than his 2016 total target direct compensation consistent with the budgeted increase for the broader support staff and management population. This resulted in total target direct compensation that was below the average total direct compensation of his peers at Delta and United (using the most recent publicly available data as of June 2017).
The target direct compensation provided to our other named executive officers is competitive with that of the other large network airlines. For 2017, our other named executive officers received a 2.8% merit-based increase to their total target direct compensation over 2016 levels consistent with the budgeted increase for the broader support staff and management team population, other than Mr. Isom, who received a 6.3% increase in connection with his promotion to President in 2016. In addition, between 85% and 90% of their 2017 total target compensation was comprised of variable pay. As a result, the compensation ultimately realized by our other named executive officers will be significantly determined by our financial performance and the performance of our stock, and is therefore closely aligned with the interests of our stockholders.
Pay mix. The pie charts below show the target mix of each element of the 2017 total compensation package for (i) our Chief Executive Officer and (ii) our other named executive officers, showing our strong emphasis on variable pay, which can only be earned based on the key performance objectives discussed in the section below.
Key Performance Objectives
We design our annual and long-term incentives to include performance metrics that focus on profitability, operating efficiency and investor returns.
For our 2017 annual cash incentive program, we retained the overall structure and performance metrics under our 2016 annual cash incentive program. As in 2016, our 2017 annual cash incentive program was based onpre-established adjustedpre-tax income targets. We believe thatpre-tax income is an effective way to capture cost management and revenue performance. Under the program, the short-term incentive target payment was payable if we earned $5.0 billion inpre-tax profit in 2017, which the Committee believed would be a challenging goal, and no incentive would be earned ifpre-tax profit was below $3.0 billion. The Committee is committed to setting rigorous goals under the short-term incentive program and set these levels following consideration of budgeted performance, taking into account fuel price environment and other broad market factors, as well as plan design considerations. In 2017, we achieved an adjustedpre-tax income of approximately $4.2 billion, which corresponded to achievement at 79.1% of the target level under the 2017 cash incentive program. Based on the funding level, each participating executive officer received a bonus at 79.1% of target.
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For 2017, we introduced relative TSR as a new metric under the performance-vesting component of our long-term incentive program. Our 2017 long-term incentive program for our named executive officers incorporates both performance- and time-vesting RSU components, with the performance-vesting component weighted at least 50% by value to further align management and stockholder interests. Because they are delivered in shares of our Company’s stock, the value of RSUs that comprise our executives’ equity incentives is directly aligned with stockholder returns. Moreover, the performance-vesting component of the RSUs will be earned not earlier than the third anniversary of the grant date based on our relative three-yearpre-tax income margin as compared to that of apre-defined group of airlines. Our three-year TSR relative to that of the samepre-defined group of airlines will be used to adjust upward or downward by up to 25%, any shares earned based on our relativepre-tax income margin performance. Relativepre-tax income margin maintains a focus on profitability and operating efficiency, and we believe it is an effective measure of relative financial performance in our industry. We believe that adjusting performance achievement positively or negatively based on relative TSR demonstrates our commitment to generating returns for our stockholders and further aligns management interests with stockholder interests.
Under the performance-vesting component of the RSUs, the number of shares earned will vary between 50% and 200% of the target number of performance-vesting RSUs originally awarded, depending on our relative performance on bothpre-tax income margin and three-year TSR, and no shares will be earned if threshold performance on thepre-tax income margin measure is not achieved. In addition, if the Company’s absolute TSR over the measurement period is negative, no upward adjustment will be made to the payout based on this modifier, and the maximum number of shares that may be earned will be capped at 160%.
Effective Compensation Governance
We are committed to good compensation governance and have adopted compensation policies and practices in furtherance of our commitment, including the following:
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20172023 Compensation Objectives and Programs
Pay-for-Performance Philosophy
The philosophy underlying our overall executive compensation program is to provide an attractive, flexible and market-based total compensation program that is both tied to our performance and aligned with the interests of our stockholders. We intend for our compensation programs to motivate the management team to maximizeenhance stockholder value over time without creating unnecessary or excessive risk-taking that would have an adverse effect on stockholder value and potentially detract from our ability to reach long termlong-term sustainable levels of income and profitability.
Our 2023 executive compensation programs emphasized variable compensation in the form of short-term cash incentives and long-term equity incentives. The following table provides our 2023 annual target direct compensation for each named executive officer. Mr. Isom’s target annual direct compensation is significantly below the last reported value for the CEO of United (2023) and for the CEO of Delta (2022), our two closest peers.
Named Executive Officer | Base Salary ($) | STIP Target (%) | STIP Target ($) | LTIP Target ($) | Total Target Direct Compensation ($) | ||||||||||||||||||||
Robert Isom | 1,300,000 | 200 | % | 2,600,000 | 11,250,000 | 15,150,000 | |||||||||||||||||||
Steve Johnson | 850,000 | 150 | % | 1,275,000 | 3,875,000 | 6,000,000 | |||||||||||||||||||
Priya Aiyar | 730,000 | 125 | % | 912,500 | 2,360,000 | 4,002,500 | |||||||||||||||||||
Devon May | 775,000 | 125 | % | 968,750 | 2,360,000 | 4,103,750 | |||||||||||||||||||
Vasu Raja | 775,000 | 125 | % | 968,750 | 2,860,000 | 4,603,750 |
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2024 Proxy Statement
The graphics below show the mix of each element of the 2023 annual target direct compensation package for Mr. Isom and the average for our other named executive officers.
Commitment to Effective Compensation Governance
We are committed to good compensation governance and have adopted compensation policies and practices in furtherance of our commitment, including the following:
What We Do | What We Do NOT Do | |||||
✓ 91% of CEO’s Annual Target Compensation is At-Risk and 74% is in the form of Long-term Equity Incentives that foster alignment with stockholders. ✓Link Pay to Performance with performance goals tied to improving the reliability, profitability and accountability of our operations to create long-term stockholder value. ✓ Performance-Based Long-term Equity Incentives with a Three-year Performance Period to promote long-term focus. ✓ Independent Compensation Consultant that is directly engaged by the Compensation Committee to advise on executive and director compensation matters. ✓ Robust Stock Ownership Guidelines that align our executive officers’ long-term interests with those of our stockholders. ✓ Annual Compensation Risk Assessment to identify any elements of our compensation program design or oversight processes that carry elevated levels of adverse risk. ✓ Minimum Vesting Requirements. Subject to limited exceptions, no awards granted under our equity plan may vest until the first anniversary of the date of grant. ✓ Clawback Policy that mandates recoupment of erroneously awarded incentive compensation to executive officers on accounting restatement consistent with SEC and Nasdaq requirements and goes beyond by providing the Compensation Committee with discretion to recover additional compensation paid under the Company’s STIP, LTIP and other equity incentive awards based on circumstances. ✓Extensive Stockholder Engagement to solicit investor feedback on our compensation program. | ✖ No Guaranteed Bonuses. Our executive officers’ bonuses are 100% performance-based. ✖ No Active Executive Retirement Plans. We do not maintain any active executive-only or supplemental retirement plans. ✖ No Hedging or Pledging of our Stock. We prohibit our executive officers from engaging in hedging transactions or using our stock as collateral for loans. ✖ No Excise Tax Gross-Ups. We do not provide gross ups on excise taxes in connection with a change in control. ✖ No Excessive Perquisites. Perquisites and other personal benefits are in line with industry standards. ✖ No Payouts of Dividends on Unvested Awards. Unless and until an award’s vesting conditions are satisfied, no dividends or dividend equivalents accrued on the award are paid. ✖ No Repricing of Awards Without Stockholder Approval. Under our equity plan, awards may not be repriced without stockholder approval if the effect would be to reduce the exercise price for the shares underlying the award. |
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2024 Proxy Statement
We believe the current structure of our executive compensation program has been effective at retention of key talent and rewarding the achievement of corporate and individual goals. As we move away from merger integration and toward meeting our performance objectives, our programs are structured to emphasize pay for performance with a focus on sustainable profitability and investor returns.
To continue to attract and retain high-caliber executive officers, the Compensation Committee set total 2017 compensation levels for our named executive officers following review of compensation levels paid at companies with a comparable global presence, complexity, operations, revenue and market capitalization to us, including Delta and United. The Committee determined to set total target direct compensation at 2.8% higher than 2016 levels for our named executive officers, consistent with our budgeted increase for the broader support staff and management population, other than for Mr. Isom, who received a 6.3% increase to his target direct compensation in connection with his promotion to President in 2016.
Stockholder Approval of 20172022 Executive Compensation
At our 20172023 annual meeting of stockholders, our stockholders voted, in anon-binding advisory vote, to approve the compensation of our named executive officers (with an approval representing over 97%approximately 96% of the shares represented in person or by proxy at the meeting and entitled to vote)vote on the proposal). Our Compensation Committee reviewed the result of the stockholders’ advisory vote on executive compensation and used it as a guide in light of the approval by a substantial majority of stockholders, did not implement changes to theestablishing our executive compensation programs as a result of the vote.program.
Determination of Executive Compensation
Role of the Compensation Committee and Management in Compensation Decisions
The Compensation Committee administers the compensation program for all officers, including the named executive officers. The Compensation Committeeofficers, and is comprised of fivefour independent directors, each of whom is a“non-employee director” underRule 16b-3 of the Exchange Act and an “outside director” for purposes of Section 162(m) of the Code.directors. The Compensation Committee’s overarching goal is to create executive compensation programs that align management and stockholder interests over the long-term and that allowto compensate our executives fairly and appropriately, commensurate with their peers at our competitors. This allows us to recruit and retain a highly capable management team. TheIn creating such programs, the Compensation Committee considers stockholder input, management input on executive compensation programs but relies onand the perspective and guidance of its outside consultant. The independent compensation consultant Willis Towers Watson, for perspective and leading practice guidance. Willis Towers Watson also provides leading practice data for the airline industry and Fortune 500 companies generally.of similar size and revenue to us.
Some of the elements we consider when designing our compensation policiesprograms include attrition, diversity,establishing fair and executive development needs. Managementappropriate compensation consistent with market and industry norms, retention, linking compensation to performance, and aligning our programs with the interests of our stockholders. In addition to providing input on our regular compensation programs, management also will from time to time bring matters to the attention of the Compensation Committee that might require alterations to compensation policies, especially when they have identified specific circumstances that require additional executive talent or unique executive skills that we may not currently have in place. Our Chief Executive Officer and Cole Brown, our Chief People Officer, also providesprovide input and recommendations based on his or her direct knowledge of the other named executive officers’ individual performance and contributions givenconsidering the scope of their responsibilities.
Use of Compensation ConsultantsConsultant
TheFor 2023, the Compensation Committee retained Willis Towers WatsonKorn Ferry as its independent compensation consultant beginning in 2014.consultant. The Compensation Committee has sole authority with regard to the decision to retain Willis Towers Watson and while Willis Towers Watson interacts with management from time to time in order to best coordinate with and deliver services to the Compensation Committee, itterms of engagement of the compensation consultant. The compensation consultant reports directly to the Compensation Committee with respect to its executive compensation consulting advice. Management also engaged Willis Towers Watson in 2017 to perform other services for the Company that are not part of the executive compensation services provided to the Compensation Committee or the director compensation services provided to the Corporate Governance and Nominating Committee. For a description of these services and fee information, see the section entitled “Information About the Board of Directors and Corporate Governance—Committees” beginning on page 35. The Compensation Committee has assessed whether the services provided by Willis Towers WatsonKorn Ferry or any other relationships raisedcreated any conflicts of interest pursuant to SEC and NASDAQNasdaq rules, and has concluded that no such conflicts of interest exist.
During 2023, Korn Ferry provided the following services for or at the request of the Compensation Committee:
• | reviewed management’s materials prepared for the Compensation Committee; |
• | assisted the Compensation Committee in the design of the executive compensation program, including structure, metric selection, payout opportunities, and establishment of performance targets; |
• | benchmarked compensation levels for senior executives and non-executive directors; |
• | conducted an annual review of the compensation peer group; |
• | attended Compensation Committee meetings; and |
• | responded to various other requests from the Compensation Committee. |
In 2023, in addition to the executive compensation services Korn Ferry performed for or at the request of the Compensation Committee, Korn Ferry provided limited executive search services and broad-based compensation products to the Company.
Use of Market Data and Tally Sheets
In order to ensure a competitive design for our executive compensation program, in 2023, our Compensation Committee, with advice and analysis from Willis Towers Watson, reviewsits compensation consultant, reviewed our program against those of our largest competitors, Delta and United. In addition, in 2017, we validated the total target direct compensation of our top executives against Willis Towers Watson’s database of similarly sized companies.
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2024 Proxy Statement
For 2017,Delta, United, and Southwest Airlines, with an emphasis on Delta and United, our annual review of executive compensation also included tally sheets for our executive officers. Each tally provides an overview of total compensation targets as well as estimated upcoming short- and long-term incentive payments.closest peers. The Compensation Committee used these forward-lookingalso reviewed a broader spectrum of compensation summary sheets to provide a comprehensive picturepay data, including survey data consisting of each executive officers’ estimated future compensation.Korn Ferry and Equilar Top 25 including 79 organizations with revenue greater than $15 billion with data for 1,972 incumbents.
Executive Compensation Mix with an Emphasis on Performance-Based Pay
For 2023, the Compensation Committee continued the performance-based STIP and the performance-based components of our LTIP programs for the named executive officers, as described more fully below. As described above,a result, in 2023, our executive compensation structure includesincluded both fixed and performance-based pay. Specifically, our 2023 executive compensation structure consistsconsisted of three core components which alignaligned management and stockholder interests:
• | a base salary paid in cash; |
• | an annual incentive program paid in cash based on achievement of profitability, operational and diversity, equity and inclusion (“DEI”) targets; and |
• | a long-term equity incentive program in the form of RSUs that incorporate both performance- and time-vesting components. |
The overarching goal iswas to align executive and stockholder interests, so the executive compensation programs emphasize pay for performance (such that compensation is paid only if we meetpre-determined performance targets) and align executive and stockholder interests through cash and equity-based compensation tied to our stockoperational (including DEI) and financial performance. For 2017, our named executive officers’ fixed compensation was in the0-15% range, reflecting a heavy weighting on variable or performance-based compensation vesting over multiple time periods, with Mr. Parker’s direct compensation provided 100% in the form of long-term equity incentives.
Base salaries provide a secure, consistent amount of fixed pay that compensates executives for their scope of responsibility, competence and performance.
As discussed above, Mr. Parker’s direct compensation for 2017Isom’s 2023 base salary remained at the same level as in 2022. Mr. Johnson’s base salary was provided 100%increased by 9.7% to the level set forth in the form of long-term equity incentives and he was not eligible for any base salary.
In 2017, our other named executive officers were eligible for a 2.5% salary increase over 2016 levels, consistent with merit increases in the total direct compensation for the general management employee population. Mr. Isom’s 2017 base salary reflected a 2.5% increase over his 2016 base salary of $700,000, which was approved in October 2016table below in connection with his promotion to President.appointment as the Company’s Vice Chair and Chief Strategy Officer in May 2023. The 2017 base salary levels for Messrs. Kerr, Johnson and Ms. Leibman were set at $622,233, and the base salary level for Mr. Isom was set at $717,500, effective April 2017. In setting base salaries the Compensation Committee also reviewed thesefor Ms. Aiyar and Messrs. May and Raja were increased by 16.8%, 15.8% and 19.2%, respectively, in connection with their promotions to Executive Vice President and to levels against Willis Towers Watson’s database ofsimilar-sized companiesthat are more competitive with greater than $20 billion in total revenues and corporate roles regressed to $40 billion in total revenues and considered that they generally felltheir peers at our competitor airlines, as set forth in the 25th to 30th percentile, though it did not specifically benchmark to this range.table below.
While we aim to establish competitive compensation, our greater focus is on establishing a culture where creating long-term value for our stockholders is always at the forefront of our leadership team’s decision-making. We believe that our reduced emphasis on fixed compensation, achieved through below-median base salaries combined with higher levels of target variable cash incentives and equity compensation, allows us to retain our management team and recruit from other network airlines and general industry while also emphasizing ourpay-for-performance philosophy.
Named Executive Officer | 2023 Base Salary ($) | |||
Robert Isom | 1,300,000 | |||
Steve Johnson | 850,000 | |||
Priya Aiyar | 730,000 | |||
Devon May | 775,000 | |||
Vasu Raja | 775,000 |
The second core component of our overall compensation program ishas been a short-term cash incentive program. Following the mergerThe STIP is designed to align management with US Airways, we implemented an annualour goals to run a reliable operation, to return to profitability and to continue to build on our momentum on DEI goals, as summarized further below.
The target cash incentive program based onpre-established adjustedpre-tax income targets. We believe thatpre-tax income is an effective way to capture cost management and revenue performance. Annual incentives also serve as a retention tool as employees generally must remain employed through the payment date in order to receive payment of any potential annual incentive program awards.
For 2017, theopportunities for each named executive officers (other thanofficer are set forth below. Mr. Parker, who receivedJohnson’s target payout level was increased from 125% to 150% of base salary in connection with his compensation entirely inpromotion to the form of long-term equity incentives, as discussed above) participated inCompany’s Vice Chair and Chief Strategy Officer. Our other named executive officers’ target cash incentive opportunities remained unchanged from the American Airlines Group Inc. 2017 Short-term Incentive Program (the “2017 STIP”). Payoutsprior year.
Named Executive Officer | Target Payout Level as a Percentage of Base Salary | |||
Robert Isom | 200 | % | ||
Steve Johnson | 150 | % | ||
Priya Aiyar | 125 | % | ||
Devon May | 125 | % | ||
Vasu Raja | 125 | % |
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2024 Proxy Statement
2023 STIP
Under the 2023 STIP, adjusted pre-tax income (which, under the 2017terms of the STIP, were tied to the achievement ofpre-established adjustedpre-tax income goals (excludingis calculated by excluding net special items, expenses associated with profit sharing and annual incentive programsSTIP and related payroll taxes and 401(k) company contributions) accounted for 60% of the plan’s weighting, while operational reliability accounted for 30% of the plan’s weighting and DEI accounted for 10% of the plan’s weighting, as set forth below.
The Company remains intently focused on profitability and reliability, and the footprint of these two areas continue to comprise 90% of the STIP. To further the Company’s commitment to increasing stockholder value, the Compensation Committee increased focus on profitability, by adjusting the weighting upward from 50% to 60%. The Committeeoperational component, making up 30% of the STIP, focused on controllable completion factor and on-time departures, the foundational operational metrics that determine reliability. Diversity, equity and inclusion (DEI) engagement and education was implemented as part of the STIP in order to ensure our workplace culture is committeda competitive advantage that provides team members access to setting rigorous goals under the STIP. For 2017, the Committee maintained the targetpre-tax income level at $5.0 billion. The Committee believed this target would be a
continuous learning, awareness and knowledge.
Performance Metric | Metric Weighting | |||||
| PROFITABILITY | |||||
| 60% | |||||
RELIABILITY | ||||||
Mainline Controllable Completion Factor (“CCF”) | 15% | |||||
Mainline On-time Departure (“D-0”) | 5% | |||||
Regional CCF | 7.5% | |||||
Regional D-0 | 2.5% | |||||
| DEI | |||||
| 10% |
challengingThreshold, target and maximum goals for adjusted pre-tax income are shown below, along with the associated payouts as a percentage of target. The adjusted pre-tax income goal for 2017, as itof $2.5 billion was significantly above the budgetedset in January 2023 following a pre-tax income loss excluding net special item projections for 2017, taking into account a varietyitems of factors, including higher forecasted fuel prices in 2017 than 2016. The Committee also determined to lower the threshold level from $3.5 billion under our 2016 STIP to $3.0 billion for 2017 in order to make the funding formula more symmetric around target, while maintaining a reasonable minimum payout target. As we have disclosed to our investors, we believe that American should be able to produce targetpre-tax income of around $5 billion, and that is where the Committee has set the target under the incentive plan. However, we are a cyclical business, and in extremely challenging years, we are likely to generate around $3 billion in profit and in exceptional years, we should produce aroundnearly $7 billion in profit. In consideration2021 and our 2022 pre-tax income excluding net special items of these factors, the Committee set the following threshold, target, and maximum performance levels$458 million (See Appendix B for the financial metrics, as well as the corresponding annual incentive funding levels:a reconciliation of pre-tax income (loss) excluding net special items, a non-GAAP measure).
2017 Adjusted Pre-tax Income ($)(in billions) | Funding Level (% of Target) | |||||||||
<Threshold
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| <3.0
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|
| 0
| %
| ||||
Threshold
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| 3.0
|
|
| 50
| %
| ||||
Target
|
| 5.0
|
|
| 100
| %
| ||||
Maximum
|
| 7.0
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| 200
| %
|
Below- Performance | Threshold Performance | Target Performance | Maximum Performance | |||||
Adjusted Pre-tax Income | <$1.0 billion | $1.0 billion | $2.5 billion | $4.0 billion | ||||
Payout as a Percentage of Target | 0% | 50% | 100% | 200% |
Any performance falling between threshold, target and maximum levels would result in an adjustment of funding level based on straight-line interpolation. The 2017 target bonus opportunitiesIn addition, for any payout under the participatingSTIP, the threshold adjusted pre-tax income goal of $1.0 billion would need to be attained. Payouts for the named executive officers were settied solely to our corporate performance.
For fiscal year 2023, we attained adjusted pre-tax income of $2.9 billion, an achievement level of 125.1% of target. Adjusted pre-tax income represents pre-tax income for the year ended December 31, 2023, excluding net special items (See Appendix B for a reconciliation of pre-tax income excluding net special items, a non-GAAP measure), expenses associated with profit sharing and the STIP and related payroll taxes and 401(k) company contributions. The Company excludes expenses associated with profit sharing and the STIP from the calculation of adjusted pre-tax income as these items are themselves calculated based on the measure. The STIP goals are established at the samebeginning of the performance period and account for these adjustments.
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2024 Proxy Statement
The following table shows actual performance in respect of our operational goals (as a percentage of target levels).
Operational Performance Goal | Threshold Performance | Target Performance | Maximum Performance | Actual Performance | Achievement Level (as a % of Target) | |||||||||||||||
Mainline CCF | 99.3 | % | 99.5 | % | 99.7 | % | 99.9 | % | 200.0 | % | ||||||||||
Mainline D-0 | 61.0 | % | 63.0 | % | 65.0 | % | 63.3 | % | 115.8 | % | ||||||||||
Regional CCF | 99.3 | % | 99.5 | % | 99.7 | % | 99.9 | % | 200.0 | % | ||||||||||
Regional D-0 | 69.0 | % | 71.0 | % | 73.0 | % | 75.9 | % | 200.0 | % |
We also achieved our DEI goals (weighted 10%) at an achievement level of 200%. Based on these weightings and the actual attainment levels, aswhich were reviewed by a third party internal audit consulting firm, each named executive officer received an STIP award equal to 150.86% of target under the 2023 STIP, resulting in 2017 as shownthe dollar amounts set forth in the table below, with Mr. Isom’s target bonus opportunity reflecting the same target bonus opportunity approved in October 2016 in connection with his promotion to President.below.
Named Executive Officer | 2023 STIP Payout ($) | |||||||
Robert Isom |
| 3,922,360 | ||||||
Steve Johnson | 1,787,085 | |||||||
Priya Aiyar | 1,376,634 | |||||||
Devon May | 1,461,495 | |||||||
Vasu Raja | 1,461,495 |
Historically, underReporting of STIP Program Payouts
As we disclosed in our short-term incentive program,proxy statement last year, for 2022 the Compensation Committee could, in its discretion, increasere-established the amount of an award based on individual performance by up to 50% or decrease it to zero, provided that the aggregate effectperformance-based STIP. In light of the individual performance modifier for all participants, however, could not result in an increase tounprecedented business challenges resulting from the aggregate program incentive amount. In addition, in no event could an individual payout exceed 200% ofCOVID-19 pandemic, the applicable target opportunity. For 2017, payouts for2020 STIP had been terminated and our named executive officers did not participate in the 2021 STIP. Accordingly, no payouts were determined solely based on the achievement of the corporate performance objectives, without regard to individual performance.
In 2017, we achieved an adjustedpre-tax income of approximately $4.2 billion, which corresponded to achievement at 79.1% of the target levelmade under the 2017 STIP. The following table shows the 2017 target goal, actual performance and funding level for the 2017 STIP.
Performance Goal
| 2017 Target Performance Goal ($)(in billions)
| Actual Performance ($)(in billions)
| Funding Level (% of target)
| ||||||||||||
2017 AdjustedPre-tax Income(a)
|
| 5.0
|
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| 4.2
|
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| 79.1
| %
|
Based on the funding level as described above, each named executive officer other than Mr. Parker received a bonus at 79.1% of target under the 2017 STIP. The dollar amounts of the bonuses paidSTIP to our named executive officers for 2020 or 2021. While the Compensation Committee re-established the STIP program for 2022, it reset both the STIP program and the Company’s 2022 profit sharing programs for front-line employees to a 12-month cycle commencing at the end of the first quarter of 2022 and running through the first quarter of 2023. This change was made to incentivize performance beginning at the point in time when the most significant impacts of the pandemic had finally concluded.
For 2023, the Compensation Committee resumed our standard calendar year performance-based STIP, reflecting the stabilization of our business following our emergence from the pandemic.
In compliance with SEC reporting requirements, payments under both programs, one of which was almost entirely attributable to performance in 2022, are included in the Summary Compensation Table total compensation for 2023. No portion of the payout under either program was included in the Summary Compensation Table total compensation for 2022. As a result, the 2023 Summary Compensation Table includes two STIP payments due to how they fell on the adjusted calendar applied to the programs.
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2024 Proxy Statement
2022 STIP
For the period from April 1, 2022 through April 1, 2023, the target adjusted pre-tax income goal (weighted 50%) was set at $400 million, at a time when we were just emerging from the pandemic. The goal for this period was set on the heels of very challenging financial results in 2021 and the first quarter of 2022 – a pre-tax loss excluding net special items of nearly $7 billion for fiscal year 2021, and a pre-tax loss excluding net special items of nearly $2 billion for the first fiscal quarter of 2022 (See Appendix B for a reconciliation of pre-tax income (loss) excluding net special items, a non-GAAP measure).
For the period from April 1, 2022 through April 1, 2023, we attained adjusted pre-tax income of $2.8 billion, an achievement level of 200% of target. Adjusted pre-tax income represents pre-tax income, excluding net special items, expenses associated with profit sharing and the STIP and related payroll taxes and 401(k) company contributions.
The following table shows actual performance in respect of our operational goals (as a percentage of target levels).
Operational Performance Goal (weighting %) | Threshold Performance | Target Performance | Maximum Performance | Actual Performance | Achievement Level (as a % of Target) | |||||||||||||||
Mainline CCF (15%) | 99.1 | % | 99.4 | % | 99.7 | % | 99.3 | % | 92.2 | % | ||||||||||
Mainline D-0 (15%) | 63.0 | % | 64.5 | % | 66.0 | % | 61.3 | % | 0.0 | % | ||||||||||
Regional CCF (5%) | 99.1 | % | 99.4 | % | 99.7 | % | 99.9 | % | 200.0 | % | ||||||||||
Regional D-0 (5%) | 69.0 | % | 70.0 | % | 71.0 | % | 74.2 | % | 200.0 | % |
We also achieved our DEI goals (weighted 10%) at an achievement level of 144% of target. Based on these weightings and the actual attainment levels, which were reviewed by a third party internal audit consulting firm, each named executive officer received an STIP award equal to 148.3% of target under the 20172022 STIP, areresulting in the dollar amounts set forth in the “Summary Compensation Table” on page 65.table below.
The 2018 Short-term Incentive Program is substantially similar to the design used in 2017.
Named Executive Officer | 2022 STIP Payout ($) | |||
Robert Isom | 3,855,800 | |||
Steve Johnson | 1,483,040 | |||
Priya Aiyar | 1,353,274 | |||
Devon May | 879,417 | |||
Vasu Raja | 1,436,695 |
The third core component of our overall compensation program is a long-term equity incentive program that focuses our executives on our performance over time and further links thetheir interests of recipients andwith stockholders. Stock-based
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awards, coupled with performance- and time-vesting requirements, provide an appropriate incentive to our executives to remain with the Company and meet the long-term goal of maximizingsignificantly increasing stockholder value. Consistent with our emphasis on pay for performancepay-for-performance and our commitment to long-term value creation for our stockholders, our named executive officers’ total target direct compensation is weighted heavily toward long-term equity awards, with Mr. Parker’s total target direct compensation comprised 100% of long-term equity awards.
The Compensation Committee determines the numbervalue of shareslong-term equity awards to be granted to an executive officer based upon the executive’s level of responsibility and job classification level and the results of compensation market analyses.
For 2017, Historically, including for 2023, our long-term incentive programLTIP included both performance- and time-vesting components,RSUs, each weighted 50% by value (other than with respecttarget value.
Our 2023 LTIP for our named executive officers continued to Mr. Parker),include both performance-and time-vesting components, with the performance-vesting component incorporating TSRweighted 50% by target value tied to attainment of total debt reduction (50% weighting) and relative pre-tax income margin improvement versus our industry peers (50% weighting), as summarized
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2024 Proxy Statement
below. The performance goals align to our long-term strategy to improve profitability and reduce total debt by $15 billion by the end of 2025.
2023 Performance Metrics
The total debt reduction metric under our 2023 LTIP reflects the Company’s commitment to stockholders to improve our balance sheet and reduce leverage levels. In 2021, we announced a newfive-year plan to pay down $15 billion of total debt. The 2023 total debt reduction metric introduced for 2017. Mr. Parker’s annual grant was weighted approximately 54% performance-vestingconcludes the remaining years (three, four and 46% time-vesting by value, reflecting the relative proportions from 2015 when he began to be compensated solely in equity awards. At that time, the value of his base salary was added to his time-vesting award and his target STI value was added to his performance-vesting award, resulting in a split of 54% performance-vesting awards and 46% time-vesting awards.
Two-thirdsfive) of the time-vesting RSUs vest in April 2018five-year plan and the remainingone-third vest in April 2019, subject to each executive’s continued employment with the Company. As under our 2016 long-term incentive program, the performance-vesting RSUs vest based on the Company’s achievementrequires a reduction of $7 billion. The relative pre-tax income margin excluding special charges, over a three-yearimprovement metric measures American’s competitive financial performance period, but for 2017, we introduced a TSR modifier pursuant to which the number of shares vesting will be increased or decreased by up to 25% based on the Company’s relative TSR ranking. The maximum number of shares that may be issued in respect of each performance-vesting RSU, taking into account the Company’s relative TSR ranking, remains at 200%, as under our prior program.Pre-tax income margin is measured over the three-year period from January 1, 2017 to December 31, 2019, relative to its peers and requires the weighted averagepre-tax incomeCompany to continue to narrow the margin of a peer group comprised of Delta, United, Southwest, JetBlue, Alaska and Spirit. TSR is measured based on the20-day average stock price prior to April 25, 2017 and the20-day average stock price ending on April 25, 2020, calculated assuming reinvestment of dividends, and is ranked relative to the same peer group of airlines. Based on these performance metrics, the number of shares of our Common Stock issuable in respect of each performance-vesting RSU upon vesting may range from 0 to 200% as follows:gap.
Pre-Tax Income Margin
| Payout (as a
| TSR Modifier
| Number of Shares to be Issued per
| |||||||||
150% or higher
| 160%
| 1 or 2 ranking = 125%
| 200%
| |||||||||
100%
| 100%
| 3, 4 or 5 ranking = 100%
| 100%
| |||||||||
50%
| 66 2/3%
| 6 or 7 ranking = 75%
| 50%
| |||||||||
Less than 50%
| 0%
| 0%
|
In
Mr. Isom’s 2023 annual target grant value is significantly below the event that the Company’spre-tax income margin was negativelast reported values for the performance period,pre-tax income achievement would be cappedCEOs at 100%Delta (2022) and United (2023), and in the event the Company’s TSR was negativeour two closest peers. The values for the performance period, the TSR modifier would be capped at 100%.
Linear interpolation will be used to determine the payouts for performance attained between 50% and 100% and between 100% and 150% of the peer group weighted averagepre-tax income margin.
For ourother named executive officers were set in connection with their promotions to be competitive with their peers at our competitor airlines.
Named Executive Officer | 2023 Annual Target Grant Value ($) | |||
Robert Isom | 11,250,000 | |||
Steve Johnson | 3,875,000 | |||
Priya Aiyar | 2,360,000 | |||
Devon May | 2,360,000 | |||
Vasu Raja | 2,860,000 |
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2024 Proxy Statement
In September 2023, the Compensation Committee determinedalso granted to award targetMr. Johnson a one-time promotion grant values with a 3% increase over 2016 target grant values, consistent with the budgeted increase in total direct compensation applicable to the broader support staff and management team population, with the exception of Mr. Isom, who received a 7.9% increase to his 2016 grant value181,554 RSUs valued at $2.4 million in connection with his promotionappointment as the Company’s Vice Chair and Chief Strategy Officer in May 2023. This grant, which vests ratably over three years, was awarded to Presidentreflect Mr. Johnson’s leadership during and the Company’s success in 2016. Forenduring and emerging from the pandemic and the significant increase in responsibility associated with his new position. It was intended to create incentives for Mr. Parker, this resulted in annual target compensation set at $11,330,000, which was belowJohnson to remain with the averageCompany and to assist with the successful design, implementation and execution of his peers at Deltaits post-pandemic strategies and United (using the most recent public available data as of June 2017). The number of shares subject to each RSU award was determined by dividing the target grant value by our closing stock price on the date of grant.
Please see the Grants of Plan-Based Awards table below for a descriptionimplementation of the grants awardedmanagement succession plan. In connection with that award, Mr. Johnson entered into an agreement to our named executive officers during 2017. For the performance-vesting componentnot compete for 18 months following termination of the RSU grants, the values included in the Summary Compensation Tableemployment for any reason and the Grantsirrespective of Plan-Based Awards Table reflect the accounting grant date fair value of the grants.whether Mr. Johnson would be entitled to severance. In accordance with accounting rules, a Monte Carlo simulation is used to capture the impact of the TSR metric. The Monte Carlo simulation takes into account several factors, including the volatility of our stock price and the correlation between our stock price performance and the stock price performance of our peer group. Because the grant date fair
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value of the award could fluctuate based on these various factors,July 2023, the Compensation Committee approved settinga grant of 39,905 RSUs and 65,323 RSUs to Ms. Aiyar and Mr. Raja, respectively, in connection with the numberexpansion of shares subjecttheir roles to each awardExecutive Vice President and Chief Legal Officer and Executive Vice President and Chief Commercial Officer, respectively. These grants include both performance-and time-vesting components, with the performance-vesting component weighted 50% by referencetarget value tied to the closing stock price on the dateattainment of grant, rather than the grant date fair value. Astotal debt reduction (50% weighting) and relative pre-tax income margin improvement versus our industry peers (50% weighting).
See below for a result, the grant date fair values reported in the Summary Compensation Tablefull discussion of Mr. Isom’s 2023 target annual compensation and non-recurring awards and the Grants of Plan-Based Awards Table are approximately 5% to 6% higher than the target grant values approved by the Compensation Committee. Furthermore, these values do not reflect amounts actually realizable by our named executive officers, which will depend on our relativepre-tax income margin and total shareholder return performance over three years.Committee’s process.
Equity Grant Policy
The Compensation Committee has adopted an equity grant policy to standardize the timing, practices and procedures in granting equity awards. The policy provides that equity awards, other than new hire and promotion or special purpose grants, will be granted once per year at the seconda regularly scheduled meeting of the Compensation Committee or at an Equity Incentive Committee meeting (withCommittee. We have made exceptions to our equity grant policy in unique circumstances, such as during the restriction period imposed by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the payroll support agreement under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (“PSP2”) and the payroll support agreement under section 7301 of the American Rescue Plan Act of 2021 (“PSP3,” and collectively, the “CARES Act and related legislation”).
Non-Recurring Compensation Elements Reported in 2023
Our 2023 Summary Compensation Table reflects multiple key executive leadership transitions during, and our response, to severe industry disruptions caused by the pandemic.
The COVID-19 pandemic was the most challenging time in our industry’s history. It resulted in drastic disruptions in global demand for air travel and a severe decline in our business. Despite these challenges, we remained consistent in our approach and philosophy that our executive compensation programs provide fair pay and pay for performance, support retention, and align with the interests of stockholders. Those circumstances required a thoughtful approach to ensure the fairness of our compensation programs, especially with respect to awards tonon-executive employees) or at a special meeting held for this purpose as closepromotions.
The CARES Act and related legislation required that, beginning in time to the regularly scheduled meeting as possible.
2015 Equity Awards
Our named executive officers’ 2015 annual equity grants were comprised of both time-vestingMarch 2020, we implement significant reductions and performance-vesting RSUs. The performance-vesting RSUs vested basedcaps on the Company’s achievementtotal compensation of apre-tax income margin formany of our most senior and most impactful team members. Over the three years ending December 31, 2017 relative tothat it was in effect (the “CARES restriction period”), thepre-tax income margin over the same period for apre-defined group of airlines. Based on our achievement of 85.9% relative CARES Act and related legislation presented extraordinary incentive and retention challenges, including:
• | The legislation did not include anyexceptions to provide for compensation increases that we and our competitors have customarily offered in connection with officer-level promotions. |
• | The compensation limitations applied only to airline employees and did not apply to newly hired employees, hence any of our named executive officers could have left the Company for a position at another employer, even another airline, without being subject to any compensation restrictions. |
Against this peer group, which was certified bybackdrop, the Compensation Committee and the Board executed a comprehensive succession plan that resulted in the appointment of a new senior management team, completing an initiative that had begun before the onset of the pandemic. In furtherance of that plan, the Compensation Committee undertook multiple key executive transitions and promotions to significantly expanded roles which would be effected, but could not be compensated for, during the pandemic. The execution of this succession plan included the promotion of Mr. Isom as our new CEO, Mr. May as our CFO, Ms. Aiyar as our Chief Legal Officer, and Mr. Raja as our Chief Commercial Officer.
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The amounts reported in the Summary Compensation table reflect several non-recurring items that are unrelated to 2023 annual compensation. They include non-recurring compensation elements associated with those executive promotions which occurred over the prior three years during the CARES restriction period and cash incentive program payouts that are almost entirely attributed to 2022 but were paid in 2023, significantly increasing the reported compensation in this year’s Summary Compensation Table. These amounts reflect the Compensation Committee’s judgments as to the best way to achieve its strategic, retention and incentive objectives.
Compensation Reported for Mr. Isom in the 2023 Summary Compensation Table
The Board’s CEO succession planning process began in 2016 when Mr. Isom was promoted to President and was completed when he was appointed Chief Executive Officer in March 2022, one year before the expiry of the CARES legislation compensation limits. Despite this, because Mr. Isom’s promotion occurred one year before the expiry of the CARES legislation compensation limits, in compliance with those regulations, his total annual compensation remained capped at $5.0 million. Mr. Isom’s total compensation in 2022 (as reported in the Summary Compensation Table) was $4.9 million, considerably below what his CEO peers at Delta and United earned in 2022 ($9.6 million and $9.8 million, respectively), and even at a level materially below what he earned in 2019 for his service as President ($7.1 million). The Compensation Committee recognized the critical need to retain Mr. Isom as the Board’s long-standing choice for CEO and the most important element of the broad senior leadership succession plan. The Compensation Committee and the Board also recognized the acute retention challenges created by Mr. Isom’s performance and significantly increased profile as an executive leader of a large, complex enterprise.
In September 2023, following a year-long process in close consultation with its independent compensation consultant, the Compensation Committee took action to address Mr. Isom’s compensation as CEO. In setting his compensation, the Compensation Committee considered:
• | That Mr. Isom had been promoted to CEO in 2022 but had not been compensated as such for over 18 months. |
• | Compensating Mr. Isom fairly and appropriately for his service as CEO, including relative to his peers at Delta and United, and addressing the concern that Mr. Isom’s equity holdings were significantly below those peers. |
• | Aligning Mr. Isom’s compensation and incentives with Company performance and the interests of our stockholders, recognizing that his long-term incentive compensation had not increased since 2020, notwithstanding his subsequent promotion from President to CEO. |
• | Creating appropriate incentives for Mr. Isom to continue to lead our positive business momentum following the Company’s successful post-pandemic transformation, which has driven profitability, strong operational reliability and a strengthened financial position. |
• | Acknowledging Mr. Isom’s outstanding leadership during and as we emerged from the pandemic, his qualifications and capability for the CEO role, and his successful execution of the comprehensive management succession plan. |
To address the foregoing considerations and ensure Mr. Isom’s retention, the Compensation Committee:
• | Established Mr. Isom’s 2023 total target annual compensation at $15.2 million to reflect his promotion to CEO, including an annual target LTIP grant of $11.3 million. Approximately 91% of Mr. Isom’s annual target compensation is at risk and half of his 2023 LTIP grant is subject to performance-vesting conditions tied to attaining the Company’s total debt reduction goal and relative pre-tax income margin improvement versus the Company’s industry peers over a three-year performance period. The Compensation Committee determined that these compensation arrangements were appropriate given the significant increase in responsibility associated with his new position, to increase incentives for Mr. Isom to remain with the Company and successfully design, implement and execute our post-pandemic strategies. Mr. Isom’s annual compensation was set at a level $1.7 million below the last-reported annual target compensation of the CEO of Delta (2022). |
• | Granted to Mr. Isom $11.0 million in awards which reflects the difference between Mr. Isom’s new CEO target compensation and the amount of compensation he actually received following his promotion to CEO on March 31, 2022. This amount includes a one-time cash payment of $2.75 million and a one-time grant of 631,699 RSUs valued at $8.25 million, subject to the same terms and conditions and vesting as the 2023 LTIP grant, except that two-thirds of the RSUs are subject to attaining the Company’s total debt reduction goal and relative pre-tax income margin improvement versus the Company’s industry peers. In practical effect, Mr. Isom was paid for service as the Company’s CEO for both 2022 and 2023 during 2023 but in a form that has a significant |
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performance-based equity component and will incentivize Mr. Isom to continue to build on the Company’s momentum and strong operating and financial performance for the next three years. Further, the equity-based component provides Mr. Isom an opportunity to increase his ownership of Company stock and further his alignment with stockholders. |
• | Requested and Mr. Isom agreed to enter into an agreement that included a covenant to not compete with the Company for 24 months following termination of employment for any reason, to further incentivize his commitment to the Company and ensure his retention. The non-compete restriction applies irrespective of whether Mr. Isom would be entitled to severance, adding new protections for the Company and its investors. Given Mr. Isom’s performance at the Company and his profile in the airline industry, the Compensation Committee and Mr. Isom considered that a meaningful and material commitment. |
The following table presents the components of Mr. Isom’s total compensation as reported in the Summary Compensation Table for 2023 consisting of: (i) his 2023 annual compensation, (ii) his 2022 STIP payout that was almost entirely attributed to 2022 but was paid in and reported as 2023 compensation, and (iii) the non-recurring incentives awarded to Mr. Isom in connection with his promotion to CEO in March 2022.
Compensation Reported for Ms. Aiyar and Messrs. May and Raja
During the CARES restriction period:
• | Mr. Raja was promoted to Senior Vice President and Chief Revenue Officer in June 2020 and to Executive Vice President and Chief Commercial Officer in April 2022. |
• | Mr. May was promoted to Senior Vice President of Finance and Investor Relations in February 2022 and to Executive Vice President and Chief Financial Officer in January 2023. |
• | Ms. Aiyar was promoted to Executive Vice President and Chief Legal Officer in April 2022. |
These executives had been identified as key members of our next generation leadership team and each of these promotions was an important element of the Company’s comprehensive senior leadership succession plan. However, we were unable to provide immediate compensation increases or equity awards in connection with their promotions, despite each executive’s total compensation being significantly below their predecessors at American and their peers at Delta and United.
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At the time of those promotions, in recognition of the acute retention challenge and the need for each executive to be compensated fairly and appropriately for their new responsibilities, we granted retention awards to Ms. Aiyar and Messrs. May and Raja. Those awards reflected amounts customarily established by the Company for similar promotions and were payable in April 2023 subject to each executive’s continued employment through that date. The amounts paid under those retention awards were consistent with the CARES Act and related legislation limitations and our compensation philosophy. The payments to Ms. Aiyar and Messrs. May and Raja were $1.2 million, $2.4 million and $4.5 million, respectively.
Stockholder Engagement on April 10, 2018, 0.859Executive Compensation
As more fully described under “Information About the Board of Directors and Corporate Governance—Stockholder Engagement” starting on page 41, in 2023, we contacted stockholders representing approximately 40% of our outstanding shares, and held discussions with investors representing nearly 20% of common stock were eligibleour outstanding shares. We also held engagement sessions with leading proxy advisory firms. Greg Smith, our Independent Chairman, and Denise O’Leary, our Compensation Committee Chair, participated in select engagements.
We discussed our executive compensation program in all off-season engagements. We engaged in productive dialogue with investors who wanted to vest in respect of each RSU. These RSUs vested on April 15, 2018,better understand our CEO compensation program, and in particular, the casecontext for the non-recurring compensation that we awarded to Mr. Isom in 2023 and its relationship to the timing of his appointment as CEO in March 2022. We highlighted that our CEO’s compensation level had been considerably below-market as compared to his peers at Delta and United during the COVID-19 pandemic and the acute retention challenges we faced during that period.
Stockholders expressed no major concerns with respect to the Committee’s determination of Mr. Parker, April 20, 2018.Isom’s go-forward target annual compensation quantum and program structure. A few stockholders inquired about how we expect to evolve the measures in our STI and LTI programs as we continue to make progress on our strategic priorities and debt reduction goals.
ChangeStockholders acknowledged the unique circumstances facing American and its Board of Directors in Controlexecuting a long-term CEO and senior management succession plan during the COVID-19 pandemic and against the backdrop of the retention challenges imposed by the CARES Act legislation restrictions. They also acknowledged that the context of Mr. Isom’s promotion to CEO during this unique time period would serve as an important part of their analysis. Stockholders understood the Board’s concern that Mr. Isom had served as CEO from March 2022 until September 2023 without an increase in compensation. They also understood the Committee’s determination to structure Mr. Isom’s compensation largely as time- and performance-vested equity to increase his incentives and further his alignment with stockholders. They also recognized the value in Mr. Isom’s agreement to a 24-month non-competition and non-solicitation period following departure from American, regardless of whether he is entitled to severance.
Lastly, stockholders encouraged us to provide detailed, transparent disclosure regarding the considerations in establishing the quantum, mix and performance conditions of Mr. Isom’s non-recurring award, which we have provided in this proxy statement. Please see “–Non-Recurring Compensation Elements Reported in 2023” on page 58.
Severance Benefits and Post Termination Restrictive Covenants
Change in control and severance benefits are a customary component of executive compensation, which are generally used to reinforce and encourage executives’ continued attention and dedication to their assigned duties without the distraction arising from the possibility of a change in control. While we have historically provided changeBeginning in control severance benefits pursuant to employment agreements or change2023, following consultation with its independent compensation consultant and in controlline with market practices, the Compensation Committee approved entering into severance agreements with our executive officers that are triggered on certain involuntary terminations of their employment. These agreements were only entered into with those executives who also agreed to post-termination restrictive covenants to protect the Company and its investors.
Messrs. Isom, Johnson and May and Ms. Aiyar have agreed to these post-employment restrictive covenants, including non-competition for a period of 24 months in the case of Mr. Isom and 18 months in the case of the other executives, and non-solicitation for a period of 24 months following the date the executive terminates employment with the Company. These restrictive covenants are in place irrespective of whether these executives receive severance in connection with their termination of employment.
Mr. Isom’s severance agreement provides that in the event his employment is terminated by the Company without “cause” or he resigns for “good reason” (each as defined in the severance agreements, and collectively, an “Involuntary
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Termination”), he will be entitled to: (i) a cash severance payment equal to 24 months of his base salary plus two times his annual target cash incentive (payable in substantially equal installments over 24 months), (ii) a payment equal to 24 months’ COBRA premiums and (iii) continued vesting of outstanding equity awards for 24 months following the termination date, except as set forth in Mr. Isom’s grant agreements described below. In addition, Messrs. Johnson and May and Ms. Aiyar have entered into severance agreements that provide that in the event of an Involuntary Termination, the executive will be entitled to: (i) a cash severance payment equal to 18 months of the executive’s base salary plus 1.5 times the executive’s annual target cash incentive (payable in substantially equal installments over 18 months), (ii) a payment equal to 18 months’ COBRA premiums and (iii) continued vesting of outstanding equity awards for 18 months following the termination date, except, in the case of Mr. Johnson, which is subject to acceleration as set forth in his grant agreements described below. The agreements also provide for travel privileges for the executive and eligible family members, pursuant to the terms of the Company’s travel policy for officers during the 18-month period following the termination date. If the executive has become eligible for retiree travel, the executive will continue to be eligible to receive retiree travel privileges in accordance with the terms of our retiree travel policy. Messrs. Isom, Johnson, and May previously vested into lifetime travel benefits. Each severance agreement also provides for acceleration of equity awards in the event of an Involuntary Termination within the 24 month period following a change in control, with equity awards subject to performance-vesting conditions vesting at the greater of target or the expected attainment level based on performance as of the termination date. The severance agreements require entering into an effective release of claims.
Pursuant to the grant agreements under our equity incentive plans, our employees, including our named executive officers, are entitled to full acceleration of their RSUs in the event of (i) a termination due to death or “disability” or (ii) a “change in control” (each, as defined in the applicable plan and award agreements). In addition, subject to compliance with the post-employment restrictive covenants and delivery of an effective release of claims, because Mr. Johnson is retirement eligible (age of 55 and has ten or more years of service), under his grant agreements the vesting of each time-vesting RSU award granted to Mr. Johnson will accelerate in full in the event of his separation from service from the Company (other than a termination by the Company for these reasons,“cause”), with performance-vesting RSUs remaining outstanding and eligible to vest based on actual performance through the end of the performance period. Subject to compliance with the post-employment restrictive covenants and delivery of an effective release of claims, Mr. Isom’s grant agreements provide that RSUs granted to Mr. Isom will remain outstanding and will continue to vest upon termination (not including termination by the Company for “cause”), provided that equity awards granted within 12 months prior to the termination will only remain eligible to vest on a pro-rated basis and performance-vesting RSUs remain subject to the performance conditions.
Under the STIP, if an employee separates from service with us and our affiliates while actively employed due to death or disability prior to the payment of the award, but is otherwise eligible for the award, the employee will be treated as discussed more fully below, ashaving been actively employed on the date of April 2017, nonepayment of our executive officers is a party to any individual employment or severance agreement providing change in control or severance benefits. the award.
Information on the estimated payments and benefits that our named executive officers would have been eligible to receive in the event of a termination or change in control as of December 31, 20172023 pursuant to ourtheir equity plans, 2017awards, the STIP and other arrangements are set forth in “Potential Payments Upon Termination or Change in Control” beginning on page 71.73.
Mr. Parker
As required by the terms of the merger agreement with US Airways, we assumed the employment agreement Mr. Parker had entered into with US Airways prior to 2010, which provided for severance payments upon qualifying terminations, including certain terminations following a change in control, and termination other than for misconduct or a resignation for good reason. In April 2016, at Mr. Parker’s request, our Compensation Committee agreed to eliminate Mr. Parker’s employment agreement, and Mr. Parker is no longer contractually entitled to the change in control and severance protections provided by the employment agreement.
In connection with the replacement of Mr. Parker’s cash compensation with equity compensation starting on May 1, 2015, the Compensation Committee determined that in light of the fact the equity awards granted to Mr. Parker in lieu of his cash compensation are subject to extended vesting periods, in the event of Mr. Parker’s termination of employment for any reason other than misconduct, certain of Mr. Parker’s equity incentives will vest to the extent necessary to keep Mr. Parker whole for the value of the base salary or annual target cash incentive Mr. Parker otherwise would have received through his termination date. If Mr. Parker’s employment had been terminated as of December 31, 2017, the value of the accelerated portion of his 2017 RSU award would have been $4,262,000.
Former US Airways Executive Officers
We also assumed the executive change in control and severance benefits agreements of Messrs. Kerr, Isom and Johnson, and Ms. Eberwein, each of whom served at US Airways prior to the merger with US Airways. Each of these agreements was entered into with US Airways prior to 2010 and provided for severance payments upon qualifying terminations. In April 2017, at their request, all of our executive officers who were party to change in control and severance benefits agreements, including each of Messrs. Kerr, Isom and Johnson, and Ms. Eberwein, voluntarily terminated their agreements. As a result of the voluntary forfeiture of these agreements, our executive officers are no longer contractually entitled to any cash severance or continued healthcare benefits upon any termination, nor are we contractually obligated to provide agross-up to cover any excise taxes incurred by them under Section 4999 of the Code.
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Equity Incentive Plans
In addition to the change in control and severance benefits described above, pursuant to the grant agreements under the Company’s 2013 Incentive Award Plan (the “AAG 2013 IAP”), the US Airways Group, Inc. 2011 Incentive Award Plan (the “2011 Plan”) and the US Airways Group, Inc. 2008 Equity Incentive Plan (the “2008 Plan”), our employees are entitled to full acceleration of their SARs and RSUs in the event of a termination due to death or disability or a change in control, as well as full acceleration of SARs upon retirement. SARs granted under the 2011 Plan, the 2008 Plan and the US Airways Group, Inc. 2005 Equity Incentive Plan (the “2005 Plan”) are also subject to extended exercise periods in the event of certain terminations as described in the section entitled “Executive Compensation—Potential Payments upon Termination or Change in Control” beginning on page 71.
Other Benefits and Perquisites
We maintain broad-based employee benefit plans in which all employees, including the named executive officers, participate, such as group life and health insurance plans and a 401(k) plan. These benefits are provided as part of the basic conditions of employment that we offer to other U.S.-based team members.
EnhancedOther Benefits
We continue to provide certain enhanced benefits to our named executive officers. These benefits provide convenience and support servicesofficers that allow our executives to more fully focus attention on carrying out their responsibilities to our stockholders. These benefits are common in the airline industry and consequently are necessary for us to be competitive in recruiting and retaining talented executives.industry. The incremental cost to us of providing these benefits is not material.
Following standard airline industry practice, we provide certain flight privileges to our employees. Free flights on our airline are available to all employees, and “positive space” flight privileges are provided to our senior executives, including the named executive officers. We believe that providing such flight privileges for the named executive officers is consistent with airline industry practice and that competitive flight privileges are needed for the recruitment and retention of the most senior employees. By providing positive space flight privileges to our executives, we are able to offer a unique and highly-valued benefit at a low cost. This benefit also encourages executives to travel on the airline frequently, and while doing so, meet and listen to employees, solicit feedback from employees and customers,
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audit aircraft and facility appearance and quality, and monitor operational performance throughout the domestic and international route system. In addition, as in prior years, we cover the income tax liabilities of our senior executives, including the named executive officers, related to those flight privileges, which is consistent with industry practice.
The positive space flight privileges provided to our officers, including the named executive officers, include unlimited reserved travel in any class of service for the executiveofficer and his or her immediate family, including eligible dependent children, for personal purposes. The executive officerOfficers and his or hertheir immediate family,families, including eligible dependent children, also have access to our Admirals Club® travel lounges at various airports. The executivesairports and have AAdvantage Executive Platinum status. Officers are also eligible for 12 free round-trip passes or 24 freeone-way passes each year for reserved travel fornon-eligible family members and friends, and we cover the income tax liability related to these flight privileges. The named executive officersOfficers are required to pay any international fees and taxes, if applicable. In addition, each of Messrs. Isom, Johnson and May are vested into the foregoing lifetime travel benefits and are entitled to continued receipt of these benefits upon their termination of employment, other than coverage of income tax liability. Mr. Raja is eligible for lifetime space available travel benefits.
We also offer our named executive officers perquisites in the form of financial advisory services and executive physicals. We will reimburse up to $4,500 annually for their personal tax planning, estate planning and retirement planning services from a certified financial planner, certified public accountant, or attorney. We will pay the full cost of their annual physicals and additional diagnostic tests recommended by the provider.
Mr. Parker is a participant in the Charitable Contribution Program, under which US Airways paid annual premiums on a joint life insurance policy. Under the program established by America West in 1994, a $1 million death benefit will be donated to one or more qualifying charitable organizations chosen In 2023, we also reimbursed legal expenses incurred by Mr. Parker. For a more detailed descriptionIsom in connection with the negotiation of the charitable contribution program, see the narrative above under the Director Compensation table. Two of our named executive officers with grandfathered benefits receive enhanced life insurance benefits and cash payments to cover their income tax liabilities associated with taxable life insurance benefits.his CEO compensation.
For additional information on any individual benefits provided to the named executive officers on an individual basis, see the section entitled “Executive Compensation—Summary Compensation Table” beginning on page 65.68.
AMR Legacy Retirement Programs
As a former AMR executive, Ms. Leibman participates in certain retirement plans we assumed from AMR in connection with the merger, including the Retirement Benefit Plan of American Airlines, Inc. for Agent, Management, Specialist,
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Support Personnel and Officers (the “AMR Retirement Benefit Plan”) and the Supplemental Executive Retirement Program for Officers of American Airlines, Inc. (the “AMRNon-Qualified Plan”). All benefits under the AMR Retirement Benefit Plan were frozen for all employees as of October 31, 2012. Effective upon the freeze of benefit accruals under the AMR Retirement Benefit Plan, AMR began making matching contributions under the American Airlines, Inc. 401(k) Plan (the “AA 401(k) Plan”) to eligible employees, including Ms. Leibman, up to 5.5% of eligible earnings. Like the AMR Retirement Benefit Plan, as of October 31, 2012, the defined benefits portion of the AMRNon-Qualified Plan was frozen.
For further details regarding AMR’s legacy retirement plans, see the sections entitled “Executive Compensation—Pension Benefits” beginning on page 69 and “ExecutiveCompensation—Non-Qualified Deferred Compensation” beginning on page 70 and the accompanying narrative discussion and footnotes that follow those tables.
Continuing Focus on Leading Practices
Stock Ownership Guidelines
We have implemented stock ownership guidelines for our executive officers. Executives are required to hold a number of shares of stock equal to the lesser of either (i) a fixed number of shares or (ii) a number of shares with a total value equal to a designated multiple of their base salary, as provided in the table below. Ownership is determined based on the combined value of the following executive holdings: (a) shares owned outright or by immediate family members residing in the same household or in a trust for the benefit of the executive or an immediate family member; (b) Common Stock, stock units or other stock equivalents obtained through the exercise of SARs/stock options or vesting of equity awards; (c) unvested equity awards granted under any equity and deferral plans; and (d) other stock or stock equivalent awards determined by the Corporate Governance and NominatingCGPR Committee. Executives have five years from the later of the effective time of the merger with US Airways or the time of hire to comply with the ownership guidelines. Under the guidelines, until an executive has reached the minimum ownership guideline, such executive may not sell or otherwise dispose of shares of Common Stock acquired upon the exercise, vesting or settlement of any equity awards granted by us except to the extent such sales do not cumulatively exceed 50% of such shares. Each of our executive officers currently owns shares that substantially exceed the minimum ownership guidelines. The stock ownership guidelines are set forth below.
Stock Ownership Guidelines
Position/Levels | Multiple of Base Salary | Fixed Shares | ||||||||||
Chief Executive Officer | 116,667 | |||||||||||
Vice Chair; Executive Vice President | ||||||||||||
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Clawback Policy
We haveEffective October 2023, our Board adopted a Policy for Recovery of Erroneously Awarded Compensation (the “Clawback Policy”) to implement final clawback policy thatrules issued by the SEC. The Clawback Policy applies to allour current and former executive officers and covers allsubjects their incentive-based compensation under the cash incentive programs and all equity awards. The policy appliesreceived on or after October 2, 2023 to clawback in the event our financial statements are restated as a result ofcompany is required to prepare an accounting restatement to correct its materialnon-compliance noncompliance with any financial reporting requirement under U.S. securities laws. In these circumstances, the Clawback Policy requires the Company to recover, reasonably promptly, the portion of incentive-based compensation that is deemed to have been
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erroneously awarded, unless the Compensation Committee (which administers the policy) determines that recovery would be impracticable and that one or more of the allowable impracticability conditions under SEC rules and provideshas been met. Recovery is required whether or not the Board of Directorsapplicable officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement. In addition to these requirements, the Clawback Policy continues to provide the Compensation Committee with broad discretion as to what actions may be taken based on circumstances leading to the restatement, including recovery of incentive-based compensation received by an executive officer during the three-year period preceding the restatement in excess of what the executive officer would have been paid under the restatement. The Compensation Committee is monitoring regulatory developments with respect to compensation recoupment policiesCompany’s STIP or LTIP and will recommend toother equity incentive awards.
Prohibition on Hedging and Pledging
As described more fully under the section “Information About the Board of Directors any changes to the current policy that are necessary or appropriate in light of guidance issued by the SEC.
and Corporate Governance—Prohibition on Hedging and Pledging,
Our insider trading policy prohibits” we prohibit our executive officers and directors from engaging in hedging the economic risk of security ownership. In addition,transactions or using our executive officers and directors are prohibited from pledging Company securities to secure margin or otherstock as collateral for loans.
Section 280G/Section 4999 Policy
We do not provide any taxgross-ups to cover excise taxes under Section 4999 in connection with a change in control.
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Tax Considerations
Section 162(m) of the Code disallows a tax deduction to public companies for compensation in excess of $1 million paid to “covered employees.” Prior to the Tax Cuts and Jobs Act of 2017, covered employees included the Chief Executive Officer and the next three most highly compensated executive officers serving at the end of the fiscal year (other than the Chief Financial Officer), and performance-based compensation arrangements could qualify for an exemption from the deduction limit if they satisfy various requirements under Section 162(m) of the Code. As part of the Tax Cuts and Jobs Act of 2017, the ability to rely on this “qualified performance-based compensation” exception was eliminated, and the definition of covered employees was expanded to generally include all named executive officers. Although we maintain compensation plans that were intended to permit the award of deductible compensation as qualified performance-based compensation under Section 162(m) prior to the Tax Cuts and Jobs Act of 2017, subject to the Act’s transition relief rules, we may no longer take a deduction for any compensation paid to our covered employees in excess of $1 million.
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REPORT OF THE COMPENSATION COMMITTEE REPORTOF THE BOARD OF DIRECTORS
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in our Annual Report on Form10-K for the year ended December 31, 2017.2023.
Respectfully submitted,
Compensation Committee
Rich KraemerDenise O’Leary (Chair)
Jim Albaugh
Jeff Benjamin
Alberto IbargüenVicente Reynal
Denise O’Leary
This report of the Compensation Committee is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act or the Exchange Act.
Doug Steenland
This report of the Compensation Committee is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act or the Exchange Act. |
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The following table lists AAG’s executive officers as of April , 2018,2024, including their ages and principal occupations.
Name | Age | Title | ||||||
Robert D. Isom, Jr |
| Chief Executive Officer and Director | ||||||
Stephen L. Johnson |
| 67 | Vice Chair and Chief | |||||
Priya R. Aiyar |
| Executive Vice President and Chief Legal Officer | ||||||
Devon E. May |
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| Executive Vice President and Chief Financial Officer | ||||||
Vasu S. Raja |
| Executive Vice President and Chief | ||||||
David G. Seymour | 59 | Executive Vice President and Chief Operating Officer |
Below is certain information as of April , 2018,2024, regarding our executive officers other(other than Doug Parker.Robert Isom). For similar information regarding Mr. ParkerIsom as of April , 2018,2024, see the section entitled “Proposal 1: 1—Election of Directors” beginning on page 5.6.
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| Priya R. Aiyar
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Priya R. Aiyar is Executive Vice President and Chief Legal Officer. She was most recently Senior Vice President and General Counsel, positions she held since September 2019, when she joined AAG. Previously, she was a partner at Willkie Farr & Gallagher LLP, a role she began in September 2017. From 2015 to 2017, Ms. Aiyar was Acting General Counsel at the U.S. Department of Treasury, after having served as the Deputy General Counsel from 2013 to 2015. From 2009 to 2013, Ms. Aiyar held a variety of positions with the U.S. Federal government, including as Deputy General Counsel at the U.S. Department of Energy and Legal Advisor to the Chairman of the Federal Communications Commission. Earlier she was a partner at Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC. She began her legal career as a clerk to Judge Merrick Garland of the U.S. Court of Appeals for the D.C. Circuit and to Justice Stephen Breyer of the U.S. Supreme Court. |
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2024 Proxy Statement
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David G. Seymour | ||
David G. Seymour is Executive Vice President and Chief Operating Officer. He was most recently Senior Vice President, Operations, a position he held since |
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2024 Proxy Statement
The following table provides compensation earned by our named executive officers in the years ended December 31, 2017, 20162023, 2022 and 2015.2021. See the “Compensation Discussion and Analysis – Non-Recurring Compensation Elements Reported in 2023” section on page 58 for a discussion of the non-recurring compensation elements reported in the Summary Compensation Table for 2023.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(b) | Non-Equity Incentive Plan Compensation ($)(c) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(d) | All Other Compensation ($)(e) | Total ($) | ||||||||||||||||||||||||
Doug Parker(a) | 2017 | - | - | 11,974,000 | - | - | 201,486 | 12,175,486 | ||||||||||||||||||||||||
Chairman and Chief | 2016 | - | - | 11,000,000 | - | - | 140,763 | 11,140,763 | ||||||||||||||||||||||||
Executive Officer | 2015 | 231,538 | - | 10,330,000 | 387,450 | - | 469,559 | 11,418,547 | ||||||||||||||||||||||||
Derek Kerr | 2017 | 616,396 | - | 2,792,000 | 615,264 | - | 84,806 | 4,108,466 | ||||||||||||||||||||||||
Executive Vice | 2016 | 600,936 | - | 2,575,000 | 948,525 | - | 66,521 | 4,190,982 | ||||||||||||||||||||||||
President and Chief | 2015 | 584,178 | - | 2,920,000 | 1,350,317 | - | 366,448 | 5,220,943 | ||||||||||||||||||||||||
Financial Officer | ||||||||||||||||||||||||||||||||
Robert Isom | 2017 | 710,769 | - | 5,263,000 | 993,235 | - | 126,877 | 7,093,881 | ||||||||||||||||||||||||
President | 2016 | 641,306 | - | 4,635,000 | 1,176,667 | - | 99,141 | 6,552,114 | ||||||||||||||||||||||||
2015 | 609,577 | - | 3,500,000 | 1,409,027 | - | 650,014 | 6,168,618 | |||||||||||||||||||||||||
Maya Leibman | 2017 | 616,396 | - | 2,792,000 | 615,264 | 41,220 | 93,933 | 4,158,813 | ||||||||||||||||||||||||
Executive Vice | 2016 | 600,936 | 2,575,000 | 948,525 | 31,652 | 95,814 | 4,251,927 | |||||||||||||||||||||||||
President and Chief | ||||||||||||||||||||||||||||||||
Information Officer | ||||||||||||||||||||||||||||||||
Steve Johnson | 2017 | 616,396 | - | 2,792,000 | 615,264 | - | 122,536 | 4,146,196 | ||||||||||||||||||||||||
Executive Vice | 2016 | 600,936 | - | 2,575,000 | 948,525 | - | 96,025 | 4,220,486 | ||||||||||||||||||||||||
President Corporate | 2015 | 584,178 | - | 2,920,000 | 1,350,317 | - | 236,537 | 5,091,032 | ||||||||||||||||||||||||
Affairs |
Name and Principal Position during Fiscal 2023 | Year | Salary ($) | Bonus ($) | Stock Awards ($)(a) | Non-Equity Incentive Plan Compensation ($)(b) | All Other Compensation ($)(c) | Total* ($) | ||||||||||||||||||||||||||||
Robert Isom | 2023 | 1,300,000 | 2,750,000 | (d) | 19,500,000 | 7,778,160 | 110,002 | 31,438,162 | |||||||||||||||||||||||||||
Chief Executive Officer | 2022 | 1,162,083 | - | 3,653,000 | - | 71,566 | 4,886,649 | ||||||||||||||||||||||||||||
and Director | 2021 | 766,146 | - | 4,180,000 | - | 55,214 | 5,001,360 | ||||||||||||||||||||||||||||
Steve Johnson | 2023 | 826,346 | - | 6,046,000 | 3,270,125 | 64,613 | 10,207,084 | ||||||||||||||||||||||||||||
Vice Chair and | 2022 | 735,616 | - | 2,695,000 | - | 63,492 | 3,494,108 | ||||||||||||||||||||||||||||
Chief Strategy Officer | 2021 | 643,624 | - | 2,825,000 | - | 54,701 | 3,523,325 | ||||||||||||||||||||||||||||
Priya Aiyar | 2023 | 693,250 | 1,185,069 | (e) | 3,101,000 | 2,729,908 | 47,838 | 7,757,065 | |||||||||||||||||||||||||||
Executive Vice President and Chief Legal Officer | |||||||||||||||||||||||||||||||||||
Devon May | 2023 | 738,075 | 2,445,527 | (e) | 2,360,000 | 2,340,912 | 53,788 | 7,938,302 | |||||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||||||||||||||||||||||||||
Vasu Raja | 2023 | 731,250 | 4,468,169 | (e) | 4,073,000 | 2,898,190 | 47,425 | 12,218,034 | |||||||||||||||||||||||||||
Executive Vice President and Chief Commercial Officer |
As discussed in the |
Name | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total Regular Compensation ($) | |||||||||||||||||||||
Robert Isom | 2023 | 1,300,000 | - | 11,250,000 | 3,922,360 | 110,002 | 16,582,362 | |||||||||||||||||||||
Steve Johnson | 2023 | 826,346 | - | 3,675,000 | 1,787,085 | 64,613 | 6,353,044 | |||||||||||||||||||||
Priya Aiyar | 2023 | 693,250 | - | 2,360,000 | 1,376,634 | 47,838 | 4,477,722 | |||||||||||||||||||||
Devon May | 2023 | 738,075 | - | 2,360,000 | 1,461,495 | 53,788 | 4,613,358 | |||||||||||||||||||||
Vasu Raja | 2023 | 731,250 | - | 2,860,000 | 1,461,495 | 47,425 | 5,100,170 |
Amounts in this column represent the aggregate grant date fair value, as calculated in accordance with ASC Topic 718, of RSUs granted by the Company during each of the fiscal years ending December 31, |
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2024 Proxy Statement
(b) | The STIP payouts for both the |
| (c) |
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The following table provides the amounts of other compensation, including perquisites, paid to, or on behalf of, named executive officers during |
Doug Parker ($) | Derek Kerr ($) | Robert Isom ($) | Maya Leibman ($) | Steve Johnson ($) | ||||||||||||||||
Dividends(a)
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141,962
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50,700
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60,841
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40,560
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50,700
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Flight Privileges(b)
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26,107
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8,612
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24,729
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19,442
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29,992
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Life Insurance Premiums(c)
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9,210
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1,700
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-
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-
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-
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Medical Examinations
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3,142
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3,594
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3,410
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-
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-
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Financial Advisory Services
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-
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4,500
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4,500
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4,500
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4,500
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Gross-Up Payments(d)
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21,065
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850
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18,547
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14,581
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22,494
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401(k) Company Contributions
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-
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14,850
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14,850
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14,850
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14,850
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Robert Isom ($) | Steve Johnson ($) | Priya Aiyar ($) | Devon May ($) | Vasu Raja ($) | ||||||||||||||||
Flight Privileges(1) | 20,591 | 23,979 | 11,287 | 17,793 | 8,988 | |||||||||||||||
Medical Examinations | 5,118 | - | 5,436 | - | 9,046 | |||||||||||||||
Financial Advisory Services | 50,700 | (3) | 4,500 | 4,500 | 4,500 | 4,500 | ||||||||||||||
Gross-Up Payments(2) | 15,443 | 17,984 | 8,465 | 13,345 | 6,741 | |||||||||||||||
401(k) Company Contributions | 18,150 | 18,150 | 18,150 | 18,150 | 18,150 |
Amounts represent flight privileges provided for unlimited,top-priority reserved travel in any class of service, for the named executive officer and his or her immediate family, and up to 12 round-trip or 24one-way passes fornon-eligible family members and friends. Amounts | 2023. |
Amount represents tax gross-up payments with respect to | flight privileges. |
Amount | the negotiation of his CEO compensation that were reimbursed by the Company. |
(d) | Reflects a one-time cash payment to Mr. Isom. |
(e) | Reflects payments under cash retention agreements that were entered into with Ms. Aiyar and Messrs. May and Raja, respectively, in prior years payable subject to each employee’s continued service through April 1, 2023. |
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2024 Proxy Statement
Grants of Plan-Based Awards in 20172023
The following table provides information regarding grants of plan-based awards made to our named executive officers during the year ended December 31, 2017.2023.
Name | Grant Date |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(a) |
Estimated Future Payouts Under Equity Incentive Plan Awards(b) | All Other Stock Awards: Number of Shares of Stock or Units (#)(c) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(d) | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(a) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(b) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doug Parker | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 65,632 | 131,264 | 262,528 | 6,762,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 111,817 | 5,212,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derek Kerr | 388,895 | 777,791 | 1,555,582 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 14,225 | 28,449 | 56,898 | 1,466,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 28,449 | 1,326,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert Isom | 627,813 | 1,255,625 | 2,511,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 26,819 | 53,637 | 107,274 | 2,763,000 | 9/20/2023 | 107,676 | 430,704 | 861,408 | (c) | 5,625,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 53,637 | 2,500,000 | 9/20/2023 | 105,283 | 421,133 | 842,266 | (d) | 5,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maya Leibman | 388,895 | 777,791 | 1,555,582 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 14,225 | 28,449 | 56,898 | 1,466,000 | 9/20/2023 | 430,704 | (e) | 5,625,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 28,449 | 1,326,000 | 9/20/2023 | 210,566 | (f) | 2,750,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steve Johnson | 388,895 | 777,791 | 1,555,582 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 14,225 | 28,449 | 56,898 | 1,466,000 | 9/20/2023 | 35,176 | 140,704 | 281,408 | (c) | 1,837,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/25/2017 | 28,449 | 1,326,000 | 9/20/2023 | 140,704 | (e) | 1,837,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/20/2023 | 181,554 | (g) | 2,371,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Priya Aiyar | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 21,423 | 85,693 | 171,386 | (c) | 1,180,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/12/2023 | 4,988 | 19,953 | 39,906 | (d) | 370,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 85,693 | (e) | 1,180,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/12/2023 | 19,952 | (f) | 370,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Devon May | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 21,423 | 85,693 | 171,386 | (c) | 1,180,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 85,693 | (e) | 1,180,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vasu Raja | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 25,962 | 103,848 | 207,696 | (c) | 1,430,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/12/2023 | 8,166 | 32,662 | 65,324 | (d) | 606,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 103,848 | (e) | 1,430,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/12/2023 | 32,661 | (f) | 606,500 |
(a) | Reflects potential payouts under the |
(b) | For solely time-based RSU awards |
(c) | Represents the performance-vesting portion of the named executive officers’ 2023 annual RSU awards that vest on the third anniversary of the grant date, subject to the executive’s continued service and based on the Company’s achievement of (i) total debt reduction from year-end 2022 to year-end 2025 and (ii) pre-tax income margin improvement relative to the pre-tax income margin improvement for a pre-defined group of airlines based on 2023-2025 pre-tax income margin over a 2019 baseline. The number of shares that will be issued with respect to the performance-vesting RSUs varies between 25% and 200% depending on the Company’s performance, and no shares will be issued if threshold performance is not achieved. |
(d) | Represents the performance-vesting portion of the named executive officers’ 2023 one-time and promotion RSU awards that vest on the third anniversary of the grant date, subject to the executive’s continued service and based on the Company’s achievement of (i) total debt reduction from year-end 2022 to year-end 2025 and (ii) pre-tax income margin improvement relative to the pre-tax income margin improvement for a pre-defined group of airlines based on 2023-2025 pre-tax income margin over a 2019 baseline. The number of shares that will be issued with respect to the performance-vesting RSUs varies between 25% and 200% depending on the Company’s performance, and no shares will be issued if threshold performance is not achieved. |
(e) | Represents the time-vesting portion of the named executive officers’ 2023 annual RSU awards that vest, subject to the executive’s continued employment, with respect to 66.66% on the first anniversary of the grant date and with respect to 33.33% of the shares on the second anniversary of the grant date. |
(f) | Represents the time-vesting portion of the named executive officers’ 2023 one-time and promotion RSU awards that vest, subject to the executive’s continued employment, with respect to 66.66% on the first anniversary of the grant date and with respect to 33.33% of the shares on the second anniversary of the grant date. |
(g) | Represents Mr. Johnson’s promotion RSU grant that vests over three years, with one-third of the shares vesting on each of the first, second and third anniversaries of the grant date. |
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2024 Proxy Statement
Outstanding Equity Awards at 20172023 FiscalYear-End
The following table provides information regarding all outstanding equity awards held by each of our named executive officers as of December 31, 2017.2023.
Option/Stock Appreciation Awards | Stock Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(h) | IAP Award: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | IAP Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(h) | Grant Date | Number of (#) | Market Value of ($)(j) | Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Market or Payout Not Vested ($)(j) | |||||||||||||||||||||||||||||||||||||||
Doug Parker | 294,748 | - | 7.62 | 4/11/2019 | 111,817 | (a) | 5,817,839 | 131,264 | (f) | 6,829,666 | ||||||||||||||||||||||||||||||||||||||||||
240,536 | - | 8.14 | 4/20/2018 | 40,879 | (b) | 2,126,934 | 143,965 | (g) | 7,490,499 | |||||||||||||||||||||||||||||||||||||||||||
196,820 | - | 8.84 | 4/9/2018 | 96,369 | (c) | 5,014,079 | ||||||||||||||||||||||||||||||||||||||||||||||
Derek Kerr | - | - | - | - | 28,449 | (a) | 1,480,201 | 28,449 | (f) | 1,480,201 | ||||||||||||||||||||||||||||||||||||||||||
10,402 | (b) | 541,216 | 31,205 | (g) | 1,623,596 | |||||||||||||||||||||||||||||||||||||||||||||||
26,245 | (c) | 1,365,527 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Robert Isom | - | - | - | - | 53,637 | (a) | 2,790,733 | 53,637 | (f) | 2,790,733 | 9/20/2023 | 430,704 | (a) | 5,917,873 | 430,704 | (b) | 5,917,873 | |||||||||||||||||||||||||||||||||||
26,175 | (d) | 1,361,885 | 9/20/2023 | 210,566 | (c) | 2,893,177 | 421,133 | (d) | 5,786,367 | |||||||||||||||||||||||||||||||||||||||||||
12,482 | (b) | 649,438 | 37,445 | (g) | 1,948,263 | 2/24/2022 | 21,539 | (e) | 295,946 | 172,312 | (f) | 2,367,567 | ||||||||||||||||||||||||||||||||||||||||
31,494 | (c) | 1,638,633 | 2/16/2021 | 46,914 | (g) | 644,598 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Maya Leibman | - | - | - | - | 28,449 | (a) | 1,480,201 | 28,449 | (f) | 1,480,201 | ||||||||||||||||||||||||||||||||||||||||||
Steve Johnson | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Steve Johnson | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Steve Johnson | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Steve Johnson | 9/20/2023 | 140,704 | (a) | 1,933,273 | 140,704 | (b) | 1,933,273 | |||||||||||||||||||||||||||||||||||||||||||||
10,402 | (b) | 541,216 | 31,205 | (g) | 1,623,596 | 9/20/2023 | 181,554 | (h) | 2,494,552 | - | - | |||||||||||||||||||||||||||||||||||||||||
3,940 | (e) | 204,998 | 2/24/2022 | 15,891 | (e) | 218,342 | 127,123 | (f) | 1,746,673 | |||||||||||||||||||||||||||||||||||||||||||
20,996 | (c) | 1,092,422 | 2/16/2021 | 31,706 | (g) | 435,640 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Steve Johnson | 117,287 | - | 7.62 | 4/11/2019 | 28,449 | (a) | 1,480,201 | 28,449 | (f) | 1,480,201 | ||||||||||||||||||||||||||||||||||||||||||
Priya Aiyar | 7/12/2023 | 19,952 | (c) | 274,140 | 19,953 | (d) | 274,154 | |||||||||||||||||||||||||||||||||||||||||||||
10,402 | (b) | 541,216 | 31,205 | (g) | 1,623,596 | 5/2/2023 | 85,693 | (a) | 1,177,422 | 85,693 | (b) | 1,177,422 | ||||||||||||||||||||||||||||||||||||||||
26,245 | (c) | 1,365,527 | 12/12/2022 | 73,943 | (h) | 1,015,977 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
11/16/2021 | 26,462 | (h) | 363,588 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
2/16/2021 | 6,079 | (h) | 83,525 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Devon May | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Devon May | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Devon May | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Devon May | 5/2/2023 | 85,693 | (a) | 1,177,422 | 85,693 | (b) | 1,177,422 | |||||||||||||||||||||||||||||||||||||||||||||
12/12/2022 | 58,685 | (h) | 806,332 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
11/16/2021 | 21,001 | (h) | 288,554 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Vasu Raja | 7/12/2023 | 32,661 | (c) | 448,762 | 32,662 | (d) | 448,776 | |||||||||||||||||||||||||||||||||||||||||||||
5/2/2023 | 103,848 | (a) | 1,426,872 | 103,848 | (b) | 1,426,872 | ||||||||||||||||||||||||||||||||||||||||||||||
12/12/2022 | 24,882 | (h) | 341,879 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
11/16/2021 | 8,736 | (h) | 120,033 | - | - |
(a) | Represents the time-vesting portion of the |
(b) | Represents the performance-vesting portion of the |
Represents |
(d) | Represents the performance-vesting portion of the named executive officers’ 2023 one-time and promotion RSU awards that vest on the third anniversary of the grant date, subject to the executive’s continued service and based on the Company’s achievement of |
Represents the time-vesting portion of the RSU awards granted on February 24, 2022, with 80% of the time-vesting shares vesting on February 24, 2023, the first anniversary of the grant date and 20% of the time-vesting shares vesting on February 24, 2024, the second anniversary of the grant date, subject to continued service. |
(f) | Represents the performance-vesting portion of the RSUs granted on February 24, 2022, that will vest, subject to continued service, on February 24, 2025, based on the Company’s achievement of (i) total debt reduction from year-end 2021 to year-end 2024 and (ii) pre-tax income margin improvement relative to the pre-tax income margin improvement for a pre-defined group of airlines based on 2024 pre-tax income margin over a 2019 baseline. The number of shares that will be issued with respect to the performance-vesting RSUs varies between 20% and 200% depending on the Company’s performance, and no shares will be issued if threshold performance is not achieved. Based on our expected attainment level as of December 31, 2023, 160% of the target number of RSUs is shown. |
(g) | Represents time-vesting RSU awards. 40% of the shares underlying grant vested on February 16, 2022, the first anniversary of the grant date, 40% of the shares underlying grant vested on February 16, 2023, the second anniversary of the grant date, and 20% of the shares underlying grant vested on the February 16, 2024, the third anniversary of the grant date. |
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2024 Proxy Statement
(h) | Represents time-vesting RSU awards that vest over three years, with one-third of the shares vesting on each of the first, second and third anniversaries of the grant date. |
(j) | The market value of RSUs was calculated by multiplying |
|
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Options Exercised and Stock Vested
The following table provides information regarding all exercises of SARs and the vesting of RSUs held by the named executive officers during the year ended December 31, 2017.2023. Our named executive officers did not hold any options or SARs during 2023.
Option Awards | Stock Awards | Stock Awards | ||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(a) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(b) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(a) | ||||||||||||||||||||||
Doug Parker
|
|
90,000
|
|
|
359,100
|
|
|
242,657
|
|
|
10,963,916
|
| ||||||||||||||||
Derek Kerr
|
|
213,001
|
|
|
8,977,211
|
|
|
77,074
|
|
|
3,463,023
|
| ||||||||||||||||
Robert Isom
|
|
117,287
|
|
|
4,384,188
|
|
|
105,577
|
|
|
4,836,606
|
| ||||||||||||||||
Maya Leibman
|
|
-
|
|
|
-
|
|
|
69,760
|
|
|
3,150,290
|
| ||||||||||||||||
Robert Isom | ||||||||||||||||||||||||||||
Robert Isom | ||||||||||||||||||||||||||||
Robert Isom | 240,026 | 3,806,677 | ||||||||||||||||||||||||||
Steve Johnson
|
|
-
|
|
|
-
|
|
|
77,074
|
|
|
3,463,023
|
| ||||||||||||||||
Steve Johnson | ||||||||||||||||||||||||||||
Steve Johnson | ||||||||||||||||||||||||||||
Steve Johnson | 158,818 | 2,520,656 | ||||||||||||||||||||||||||
Priya Aiyar | ||||||||||||||||||||||||||||
Priya Aiyar | ||||||||||||||||||||||||||||
Priya Aiyar | ||||||||||||||||||||||||||||
Priya Aiyar | 102,553 | 1,402,276 | ||||||||||||||||||||||||||
Devon May | ||||||||||||||||||||||||||||
Devon May | ||||||||||||||||||||||||||||
Devon May | ||||||||||||||||||||||||||||
Devon May | 83,385 | 1,128,972 | ||||||||||||||||||||||||||
Vasu Raja | ||||||||||||||||||||||||||||
Vasu Raja | ||||||||||||||||||||||||||||
Vasu Raja | ||||||||||||||||||||||||||||
Vasu Raja | 43,115 | 605,702 |
(a) |
Represents the closing market price of a share of our Common Stock on the date of vesting, multiplied by the number of shares that vested. |
The following table summarizes the present value of the accumulated pension benefits of Ms. Leibman, the only named executive officer who participated in the AMR Retirement Benefit Plan and the AMRNon-Qualified Plan as of December 31, 2017. On October 31, 2012, in connection with the Chapter 11 Cases, credited service and benefit accruals under both the AMR Retirement Benefit Plan and the defined benefit portion of the AMRNon-Qualified Plan were frozen for all participants (including Ms. Leibman).
Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||
Maya Leibman | AMR Retirement Benefit Plan | 5.261 | 279,820 | - | |||||||||||||
AMRNon-Qualified Plan
|
| 5.261
|
|
| 50,501
|
|
| -
|
|
Discussion Regarding the Pension Benefits Table
AMR Retirement Benefit Plan
The AMR Retirement Benefit Plan is a defined benefit plan that complies with ERISA and qualifies for an exemption from federal income tax under the Code. On January 1, 2002, all participants were given the choice to either continue accruing credited service in the AMR Retirement Benefit Plan or to freeze their AMR Retirement Benefit Plan credited service and begin to earn additional benefits in the Company’s defined contribution plan. Ms. Leibman elected the second option, so her credited service was frozen at January 1, 2002. On October 31, 2012, credited service and benefit accruals were frozen for all plan participants in connection with the Chapter 11 Cases. Effective upon the freeze of benefit accruals, affected employees received a replacement benefit under the AA 401(k) Plan in the form of matching employee contributions up to 5.5% of eligible earnings.
The AMR Retirement Benefit Plan was only available to employees hired prior to January 1, 2002 who had also completed 1,000 hours of service in one year prior to that date. To vest in the plan’s benefits, a participant must also (i) complete at least five years of service, (ii) reach age 65, or (iii) be permanently and totally disabled. Normal retirement age under the plan is 65. However, participants with at least ten years of retirement eligible service may retire at age 60 and receive unreduced benefits. Participants with at least 15 years of retirement eligible service may retire at age 55, but their benefits are reduced 3% for each year that the participant’s age is below age 60. Participants who terminate before age 60 with more than ten but less than 15 years of retirement eligible service may receive reduced retirement benefits starting at age 60. These benefits are reduced 3% for each year that the participant’s age is below age 65. AMR Retirement Benefit Plan benefits are paid as a monthly annuity and the participant may elect the form of annuity payments. Payment options include single life, joint and survivor, guaranteed period or level income. For the level income payment option, the monthly payments are reduced for the receipt of social security benefits.
The benefit payable to all participants (including Ms. Leibman) under the AMR Retirement Benefit Plan and the AMRNon-Qualified Plan was determined using one of four formulas—the formula that provides the participant the greatest
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2024 Proxy Statement
benefit is used. For purposes of the table above, we therefore have assumed that Ms. Leibman will receive benefits under the AMR Retirement Benefit Plan and the AMRNon-Qualified Plan pursuant to the “Social Security Offset Formula” where a participant’s annual benefit at normal retirement will equal the difference between (i) the product of (a) 2% of the participant’s final average compensation times (b) the participant’s years of credited service, and (ii) the product of (a) 1.5% of the participant’s estimated annual Social Security benefit times (b) the participant’s years of credited service, up to a maximum of 33.3 years of service.
AMRNon-Qualified Plan
The AMRNon-Qualified Plan supplemented the AMR Retirement Benefit Plan and the AA 401(k) Plan for participants whose compensation exceeded the maximum recognizable compensation limit allowed under the Code.
The AMRNon-Qualified Plan had two components: (i) a defined benefit component for participants in the AMR Retirement Benefit Plan before it was frozen, and (ii) a defined contribution component for officers who participate in the AA 401(k) Plan. The defined contribution component is discussed below under the“Non-Qualified Deferred Compensation Table” and the accompanying narrative.
As described above, in 2002, Ms. Leibman elected to freeze her AMR Retirement Benefit Plan credited service. As a result of this election, her credited service in the AMRNon-Qualified Plan was also frozen at January 1, 2002. All benefit accruals under the defined benefit portion of the AMRNon-Qualified Plan were frozen for all participants as of October 31, 2012 in connection with the Chapter 11 Cases.
Present Value Calculations
The values of accrued benefits under the AMR Retirement Benefit Plan are determined using the RP2014 Mortality Tables, adjusted to reflect Company specific mortality experience based on a 2014 experience study, and projected generationally using theMP-2017 projection scale. The amounts payable under the AMRNon-Qualified Plan are calculated using the November 2017 segment rates and the 2018 417(e) unisex mortality table prescribed by the IRS. Retirement benefits for both plans are then discounted to December 31, 2017 using an interest-only discount rate of 3.6%. The present value is the amount today that, with fixed interest earned over time, will equal the employees’ accrued retirement benefit at retirement. The present values for active employees generally assume retirement at age 60, which is the age when unreduced benefits may be available. The present value for terminated employees generally assumes retirement at the earliest age the officer is eligible to retire.
Nonqualified Deferred Compensation
The following table provides information with respect to thenon-qualified deferred compensation earned by Ms. Leibman under the AMRNon-Qualified Plan for 2017. The defined contribution component of the AMRNon-Qualified Plan was frozen to new participants as of December 31, 2014 and frozen to Company matching contributions as of December 31, 2015.
Executive Contributions in Last Fiscal Year ($) | Company Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions in Last Fiscal Year ($) | Aggregate Balance at December 31, 2017 ($) | |||||||||||||||||||||
Maya Leibman
|
| -
|
|
| -
|
|
| 35,065
|
|
| -
|
|
| 190,044
|
|
Discussion RegardingNon-Qualified Deferred Compensation Table
The defined contribution component of the AMRNon-Qualified Plan supplemented the AA 401(k) Plan for Ms. Leibman because her compensation exceeded the maximum recognizable compensation limit allowed under the Code. Contributions vested after three years of service, and participants are entitled to a distribution of their accounts upon a separation from the company. Investment options for the AMRNon-Qualified Plan mirror the AA 401(k) Plan investment options available to all participating employees. The defined contribution component of the AMRNon-Qualified Plan was frozen to new participants as of December 31, 2014 and frozen to Company matching contributions as of December 31, 2015.
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|
Potential Payments Upon Termination or Change in Control
This section describesquantifies payments that would be made to our named executive officers upon a change in control or following acertain qualifying terminationterminations of employment.
Mr. Parker
In April 2016, at his request the Compensation Committee approved the elimination of the Amended and Restated Employment Agreement with Mr. Parker dated November 28, 2007 and the Company’s obligations thereunder, including certain benefits in the event of For a change in control or termination. Therefore, Mr. Parker is entitled only to termination and/or change in control benefits payable to Mr. Parker under general plans in which he participates, as well as certain accelerated vesting of RSUs, as described below.
Messrs. Kerr, Isom and Johnson
Upon the closing of the merger with US Airways, we assumed the executive change in control and severance benefits agreements entered into between US Airways and Messrs. Kerr, Isom and Johnson (the “Executive CIC Agreements”). In April 2017, at their request, all of our executive officers, including each of Messrs. Kerr, Isom and Johnson, who were party to Executive CIC Agreements voluntarily terminated their agreements. As a result of the voluntary forfeituredescription of these agreements, our executive officers, including Messrs. Kerr, Isombenefits, please see “Compensation Discussion and Johnson, are no longer contractually entitled to any cash severance or continued healthcare benefits upon any terminationAnalysis – Severance Benefits and are entitled only to termination and/or change in control benefits under general plans in which they participate, as described below.Post Termination Restrictive Covenants.”
Prior to the termination of the agreements, the agreements provided that in the event of a termination by the Company (other than for “misconduct” or disability) or by the executive for “good reason”, in each case, within 24 months following a change in control, then subject to the execution of a release of claims and continued compliance with certain conditions, the named executive officer would have been entitled to receive: (i) a payment equal to two times the greater of the executive’s then-current annual base salary or the annual base salary immediately preceding a change in control; (ii) a payment equal to the greater of (x) 200% of the executive’s then-current target incentive award under the annual incentive program or (y) the executive’s actual incentive award under the annual incentive program for the immediately preceding year; (iii) a lump sum payment equal to the value of 24 months of COBRA continuation coverage premiums for healthcare benefits for the executive and eligible dependents, provided the executive was eligible to elect COBRA continuation coverage upon his termination; (iv) extended exercisability of all vested stock options, SARs, or other similar stock awards for 18 months following the executive’s termination of employment, but not beyond the maximum term of the awards; and (v) a taxgross-up payment in an amount that would have anafter-tax value equal to taxes that are imposed if any severance payments due the executive are considered to be greater than 110% of the amount that would cause any portion of the payments to be “excess parachute payments” subject to excise tax under Section 4999 of the Code.
The executive would also have been eligible to receive similar termination benefits upon a termination (if it could reasonably be demonstrated that the termination was at the request of a third party effecting the change in control) by us for any reason other than misconduct or disability, with certain modifications. In addition, the agreements also provided that upon a change in control, outstanding stock awards held pursuant to the 2005 Plan, or any successor plan, would become fully vested and exercisable and the executive would be entitled to top priority, first class, positive space flight privileges for the executive and his or her dependents, for the life of the executive.
AAG 2013 IAP, 2011 Incentive Award Plan and 2008 Equity Incentive Plan
Pursuant to the terms of grant agreements under the AAG 2013 IAP, the 2011 Plan and the 2008 Plan, all SARs and RSUs held by the named executive officers are fully accelerated in the event of either of the following: (i) termination by reason of death or “disability” or (ii) a “change in control” (each, as defined in the applicable plan and award agreements). In addition, the vesting of the RSUs may be accelerated by the Compensation Committee in its discretion upon retirement.
SARs granted under the 2011 Plan and the 2008 Plan provide for (i) an18-month exercise period following termination of employment within 24 months following a change in control and (ii) a three-year exercise period following termination of employment due to death (or if the executive dies within three months after termination of employment other than for cause), disability, or “retirement,” but in each case not beyond the maximum term of the awards.
As of May 2015, at his request, 100% of Mr. Parker’s direct compensation is in the form of equity incentives. Mr. Parker ceased receiving any base salary and ceased his participation in the AAG 2015 STIP, the value of which was captured in Mr. Parker’s 2015 target equity incentive compensation. In connection with this adjustment, the Compensation Committee provided that in the event of Mr. Parker’s termination of employment for any reason prior to the vesting of his 2015 RSUs,
|
|
a portion of his equity award will vest to account for the value of Mr. Parker’s base salary and cash incentive award that otherwise would have been earned by him through the termination date.
2005 Equity Incentive Plan
SARs granted under the 2005 Plan provide for a longer exercise period following termination of employment, if the executive’s employment is terminated due to death (or if the executive dies within three months after termination of employment other than for cause), disability, or retirement. Retirement means termination of employment after age 65, or between the ages of 55 and 65 under rules established by the Compensation Committee. Currently, the Compensation Committee has not established any rules for retirement between the ages of 55 and 65.
2017 Short-Term Incentive Plan
Under the 2017 STIP, if an employee separates from service with us and our affiliates while actively employed due to death or disability prior to the payment of the award, but is otherwise eligible for the award, the employee will be treated as having been actively employed on the date of payment of the award.
Long-Term Disability and Life Insurance Benefits
Upon termination of employment and eligibility under long-term disability coverage for officers, a named executive officer would receive disability benefits in the amount of 66 2/3% of his base monthly salary, subject to a maximum of $20,000 per month. Benefits begin 90 days after the executive becomes disabled and continue until the executive reaches Social Security retirement age (or is no longer disabled). In the event of eligibility, assuming no offsets, we estimate that these benefits would be $20,000 per month for Messrs. Parker, Isom, Johnson and Kerr. In addition, US Airways obtained supplemental, portable, individual level term life insurance policies with various insurance carriers for each of Messrs. Parker and Kerr, in each case owned by the executive. The policies pay a death benefit equal to the coverage amount under each policy upon the death of the executive to a named beneficiary designated by the executive. The death benefits under these policies are fully insured and would be paid by the respective insurance carriers.
|
|
The estimated amounts of the respective benefits for each of our named executive officers, assuming the triggering event occurred on December 31, 2017,2023, are provided in the table below. The table below reflects the termination and/or change in control benefits payable to each named executive officer under generalagreements and plans in which he or she participates that were in effect as well as certain accelerated vesting of RSUs, as described below. Except for insured benefits, all payments will be made by AAG.the end of the fiscal year, and in the case of Mr. May, the severance agreement he entered into in February 2024.
Executive Benefits and Payments Upon Termination | Change in Control ($) | Death ($) | Disability ($) | Any Other Termination ($) | ||||||||||||
Doug Parker | ||||||||||||||||
Acceleration of Unvested RSUs(a) | 28,099,738 | 28,099,738 | 28,099,738 | 4,262,000 | (b) | |||||||||||
Life Insurance(c) | - | 2,000,000 | - | - | ||||||||||||
Flight Privileges(d) | - | 624,978 | 718,221 | 718,221 | ||||||||||||
Total | 28,099,738 | 30,724,716 | 28,817,959 | 4,980,221 | ||||||||||||
Derek Kerr | ||||||||||||||||
Annual Incentive Award(e) | - | 615,264 | 615,264 | - | ||||||||||||
Acceleration of Unvested RSUs(a) | 6,714,263 | 6,714,263 | 6,714,263 | - | ||||||||||||
Life Insurance(c) | - | 1,500,000 | - | - | ||||||||||||
Flight Privileges(d) | - | 135,887 | 187,759 | 187,759 | ||||||||||||
Total | 6,714,263 | 8,965,414 | 7,517,286 | 187,759 | ||||||||||||
Robert Isom | ||||||||||||||||
Annual Incentive Award(e) | - | 993,235 | 993,235 | - | ||||||||||||
Acceleration of Unvested RSUs(a) | 11,447,901 | 11,447,901 | 11,447,901 | - | ||||||||||||
Flight Privileges(d) | - | 286,684 | 378,281 | 378,281 | ||||||||||||
Total | 11,447,901 | 12,727,820 | 12,819,417 | 378,281 | ||||||||||||
Maya Leibman | ||||||||||||||||
Annual Incentive Award(e) | - | 615,264 | 615,264 | - | ||||||||||||
Acceleration of Unvested RSUs(a) | 6,601,462 | 6,601,462 | 6,601,462 | - | ||||||||||||
Flight Privileges(d) | - | 250,283 | 378,573 | 378,573 | ||||||||||||
Total | 6,601,462 | 7,467,009 | 7,595,299 | 378,573 | ||||||||||||
Steve Johnson | ||||||||||||||||
Annual Incentive Award(e) | - | 615,264 | 615,264 | - | ||||||||||||
Acceleration of Unvested RSUs(a) | 6,714,263 | 6,714,263 | 6,714,263 | - | ||||||||||||
Flight Privileges(d) | - | 265,912 | 385,501 | 385,501 | ||||||||||||
Total | 6,714,263 | 7,595,439 | 7,715,028 | 385,501 |
Executive Benefits and Payments Upon Termination | Change in Control ($) | Involuntary ($) | Involuntary ($) | Death ($) | Disability ($) | Any Other Qualifying ($)(f) | ||||||||||||||||||
Robert Isom | ||||||||||||||||||||||||
Base Salary(a) | - | 2,600,000 | 2,600,000 | - | - | - | ||||||||||||||||||
Annual Incentive Award(b) | - | 5,200,000 | 5,200,000 | 3,922,360 | 3,922,360 | - | ||||||||||||||||||
COBRA(c) | - | 54,875 | 54,875 | - | - | - | ||||||||||||||||||
Acceleration of Unvested RSUs(d) | 23,823,401 | 15,389,935 | 23,823,401 | 23,823,401 | 23,823,401 | 9,041,151 | ||||||||||||||||||
Flight Privileges(e) | - | 268,043 | 268,043 | 170,308 | 268,043 | 268,043 | ||||||||||||||||||
Total | 23,823,401 | 23,512,853 | 31,946,319 | 27,916,069 | 28,013,804 | 9,309,194 | ||||||||||||||||||
Steve Johnson | ||||||||||||||||||||||||
Base Salary(a) | - | 1,275,000 | 1,275,000 | - | - | - | ||||||||||||||||||
Annual Incentive Award(b) | - | 1,912,500 | 1,912,500 | 1,787,085 | 1,787,085 | - | ||||||||||||||||||
COBRA(c) | - | 40,854 | 40,854 | - | - | - | ||||||||||||||||||
Acceleration of Unvested RSUs(d) | 8,761,753 | 8,761,753 | 8,761,753 | 8,761,753 | 8,761,753 | 8,761,753 | ||||||||||||||||||
Flight Privileges(e) | - | 295,231 | 295,231 | 197,802 | 295,231 | 295,231 | ||||||||||||||||||
Total | 8,761,753 | 12,285,338 | 12,285,338 | 10,746,640 | 10,844,069 | 9,056,984 | ||||||||||||||||||
Priya Aiyar | ||||||||||||||||||||||||
Base Salary(a) | - | 1,095,000 | 1,095,000 | - | - | - | ||||||||||||||||||
Annual Incentive Award(b) | - | 1,368,750 | 1,368,750 | 1,376,634 | 1,376,634 | - | ||||||||||||||||||
COBRA(c) | - | 13,105 | 13,105 | - | - | - | ||||||||||||||||||
Acceleration of Unvested RSUs(d) | 4,366,228 | 2,313,445 | 4,366,228 | 4,366,228 | 4,366,228 | - | ||||||||||||||||||
Flight Privileges(e) | - | 18,775 | 18,775 | - | - | - | ||||||||||||||||||
Total | 4,366,228 | 4,809,075 | 6,861,858 | 5,742,862 | 5,742,862 | - | ||||||||||||||||||
Devon May | ||||||||||||||||||||||||
Base Salary(a) | - | 1,162,500 | 1,162,500 | - | - | - | ||||||||||||||||||
Annual Incentive Award(b) | - | 1,453,125 | 1,453,125 | 1,461,495 | 1,461,495 | - | ||||||||||||||||||
COBRA(c) | - | 45,964 | 45,964 | - | - | - | ||||||||||||||||||
Acceleration of Unvested RSUs(d) | 3,449,730 | 1,869,135 | 3,449,730 | 3,449,730 | 3,449,730 | - | ||||||||||||||||||
Flight Privileges(e) | - | 317,273 | 317,273 | 227,649 | 317,273 | 317,273 | ||||||||||||||||||
Total | 3,449,730 | 4,847,997 | 6,428,592 | 5,138,874 | 5,228,498 | 317,273 | ||||||||||||||||||
Vasu Raja | ||||||||||||||||||||||||
Base Salary | - | - | - | - | - | - | ||||||||||||||||||
Annual Incentive Award(b) | - | - | - | 1,461,495 | 1,461,495 | - | ||||||||||||||||||
COBRA | - | - | - | - | - | - | ||||||||||||||||||
Acceleration of Unvested RSUs(d) | 4,213,194 | - | 4,213,194 | 4,213,194 | 4,213,194 | - | ||||||||||||||||||
Flight Privileges(e) | - | - | - | - | - | - | ||||||||||||||||||
Total | 4,213,194 | - | 4,213,194 | 5,674,689 | 5,674,689 | - |
(a) | On an involuntary termination, represents 24 months of base salary for Mr. Isom and 18 months of the executive’s base salary for Ms. Aiyar and Messrs. Johnson and May. |
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2024 Proxy Statement
(b) | On an involuntary termination, represents two times Mr. Isom’s annual target cash incentive and 1.5 times the executive’s annual target cash incentive for Ms. Aiyar and Messrs. Johnson and May. On death or disability, amount represents the amount of the annual incentive award earned by each named executive officer under the 2023 STIP which was attained at 150.86% of target. |
(c) | On an involuntary termination, in the case of Mr. Isom, represents a payment equal to 24 months’ COBRA premiums, and for Ms. Aiyar and Messrs. Johnson and May, a payment equal to 18 months’ COBRA premiums. |
(d) | Aggregate value of unvested RSUs is calculated at a price of |
Each of Messrs. Isom, Johnson and May are vested into positive space flight lifetime travel benefits and are entitled to continued receipt of these benefits upon their termination of employment, other than coverage of income tax liability. Mr. Raja is eligible for lifetime space available travel benefits, which does not result in any incremental cost to the |
Represents for Messrs. Isom and Johnson, the |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Parker,Isom, who served as CEO as of December 31, 2023.
We offer competitive compensation to our CEO. American’steam members. As one of the world’s largest airlines, some of our unique characteristics may make comparisons to the pay ratios at other airlines or companies difficult. We employ over 130,000 team members; our route network is vast and unique; and we insource more of our flying and services than our U.S. peers. For example, American operates three wholly-owned regional airlines, and approximately 22% of our total workforce is employed by those airlines. Additionally, our pay ratio includes approximately 16% part-time and temporary team members. In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented approximately 34% of our total operating expenses. Approximately 87% of our employees as of December 31, 2023 were represented by various labor unions responsible for negotiating the collective bargaining agreements covering their compensation and job duties, among other things. The Company’s employment footprint is quite diverse—with some positions requiring initial education and licensing requirements as well as ongoing certification work. Compensation for positions with more rigorous requirements for continued employment and that draw from smaller applicant pools generally utilize higher pay bands than those positions with fewer educational and training requirements and larger applicant pools.
For 2017,2023, the median annual total compensation of all team members across American (other than our CEO) was
|
|
$62,394, $67,788, while the annual total compensation of our CEO was $12,175,486,$31,438,162, as includedoutlined in the “Summary Compensation Table” above. Based on this information, the ratio of the annual total compensation of our CEO to the median annual total compensation of all employees was estimated to be 195464 to 1.1, calculated in accordance with SEC rules. This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
In addition to the required pay ratio calculation above, we have calculated an alternative pay ratio using an adjusted amount of total compensation for Mr. Isom that removes the non-recurring elements of his compensation as set forth under “Compensation Discussion and Analysis— Non-Recurring Compensation Elements Reported in 2023”. When calculated in this manner, Mr. Isom’s adjusted total compensation for 2023 is $16,582,362 and the ratio of the annual total compensation of Mr. Isom to the median annual total compensation of all employees was estimated to be 245 to 1.
This alternative pay ratio is not a substitute for the pay ratio calculated in accordance with the SEC disclosure rules, but we believe it is helpful in fully evaluating the ratio of Mr. Isom’s annual total compensation to the median of the annual total compensation of all American Airlines employees.
Determining the Median Employee
The Company chose December 31, 20172023 as the date for establishing the employee population used in identifying the median employee and 20172023 as the measurement period.
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2024 Proxy Statement
We captured all full time,full-time, part-time and temporary employees located in the U.S. as of that date,December 31, 2023 with nonzero W-2 earnings, including team members employed at our three wholly owned subsidiaries, and all international team members, consisting of approximately 138,512139,532 individuals. As permitted by SEC rules, under the 5% “de minimis” exemption, we excluded 6,487 non-U.S. employees. The jurisdictions in which we excluded employees and their employee populations were as follows: Antigua and Barbuda (26); Argentina (475); Aruba (38); Australia (7); Bahamas (148); Barbados (65); Belize (26); Bermuda (19); Brazil (509); Canada (478); Cayman Islands (1); Chile (201); China (29); Colombia (84); Costa Rica (74); Dominican Republic (443); Ecuador (11); El Salvador (35); France (155); Germany (91); Greece (2); Grenada (30); Guatemala (46); Haiti (26); Honduras (46); Hong Kong (4); India (8); Ireland (61); Israel (6); Italy (24); Jamaica (95); Japan (57); Korea, Republic of (6); Mexico (1,160); Netherlands (12); Netherlands Antilles (4); Nicaragua (23); Peru (467); Portugal (7); Saint Kitts and Nevis (35); Sint Maarten (2); Spain (131); Switzerland (6); Trinidad and Tobago (445); Turks and Caicos Islands (1); United Kingdom (862); and Uruguay (6).
We identified the median team member using eligible earnings as defined by our profit sharing program which consists primarilyset forth in Box 5 of base wages and excludes items such as cash incentive pay, Company paid employee expenses or allowances, disability, severance, and benefit pay earned during the measurement periodW-2 for each employee. For purposes of this calculation, we included the $1,000 bonus paid to all team members as a result of recently legislated tax reform and profit sharing payments.2023. We annualized earnings for permanent employees who joined in 2017, so these employees were assumed to have worked forless than the entire year. We selected the employee with earnings closest to the median after excluding seven employees closer to the median as they were either affiliated with a regional airline or had a pension, both of which we determined were not representative of the broader population. The annual total compensation of the median employee and the annual total compensation of the CEO were calculated in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K.
Pay Ratio Comparisons
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
As the world’s largest airline, some of our unique characteristics may make comparisons to the pay ratios at other airlines or companies difficult. We employ over 130,000 team members, more than any other U.S. airline; our route network is vast and unique; and we insource more of our flying and services than our U.S. peers. For example, American operates three wholly-owned regional airlines, and approximately 20% of our total workforce is employed by those airlines. Additionally, our pay ratio includes approximately 6,400 international team members.
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2024 Proxy Statement
(1) | See Appendix B for details on the components of pre-tax net special items and for a reconciliation ofpre-tax income (loss) excluding net special items, anon-GAAP measure. |
Value of Initial Fixed $100 Investment Based on: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total: Mr. Isom ($) (1) | CAP: Mr. Isom ($) (2) | Summary Compensation Table Total: Mr. Parker ($) (1) | CAP: Mr. Parker ($) (2) | Average Summary Compensation Table Total for Non-CEO NEOs ($) (1) | Average CAP: Non-CEO NEOs ($) (2) | AAG Total Stockholder Return ($) (3) | Peer Group Total Stockholder Return ($) (3) | Net Income (Loss) ($) (in millions) | Adjusted Pre-Tax Margin % (4) | ||||||||||||||||||||||||||||||||||||||||
2023 | 31,438,162 | 33,817,502 | - | - | 9,530,121 | 9,827,888 | 48.08 | 61.60 | 822 | 4.7 | % | |||||||||||||||||||||||||||||||||||||||
2022 | 4,886,649 | 3,507,095 | 6,537,694 | 3,881,181 | 3,400,714 | 2,422,634 | 44.52 | 48.04 | 127 | 0.9 | % | |||||||||||||||||||||||||||||||||||||||
2021 | - | - | 7,238,011 | 8,128,613 | 3,892,813 | 4,197,060 | 62.85 | 74.23 | (1,993 | ) | (23.2 | %) | ||||||||||||||||||||||||||||||||||||||
2020 | - | - | 10,663,866 | (614,164 | ) | 4,245,970 | 736,998 | 55.19 | 75.55 | (8,885 | ) | (70.7 | %) |
(1) | Amounts reported in these columns represent the total compensation as reported in the Summary Compensation Table for Messrs. Isom and Parker for each year where they served as CEO and the average of the total compensation as reported in the Summary Compensation Table for our remaining NEOs for the relevant fiscal year, which captures the individuals indicated in the table below for each fiscal year: |
Year | CEO | Non-CEO NEOs | ||
2023 | Robert Isom | Steve Johnson, Priya Aiyar, Devon May and Vasu Raja | ||
2022 | Robert Isom and Doug Parker | Derek Kerr, Steve Johnson, Maya Leibman and David Seymour | ||
2021 | Doug Parker | Robert Isom, Derek Kerr, Steve Johnson and Maya Leibman | ||
2020 | Doug Parker | Robert Isom, Derek Kerr, Steve Johnson and Maya Leibman |
(2) | Compensation Actually Paid (“CAP”) to Mr. Isom and the remaining NEOs for 2023 reflects the following adjustments from total compensation reported in the Summary Compensation Table: |
76 |
2023 | ||||||||
Adjustments | Mr. Isom ($) | Average Non-CEO NEOs ($) | ||||||
Deduction for amounts reported under the “Stock Awards” column of Summary Compensation Table for Fiscal Year 2023 (“FY23”) | (19,500,000 | ) | (3,895,000 | ) | ||||
Year-end Fair Value of Equity Awards Granted in FY23 | 20,515,276 | 3,842,580 | ||||||
Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | 610,517 | 167,907 | ||||||
Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the FY23 based on change from Prior Year-end to Vesting Date | 753,546 | 182,279 | ||||||
Total Adjustments | 2,379,339 | 297,766 |
Fair value or change in fair value, as applicable, of equity awards in the Compensation Actually Paid columns was determined by reference to (1) for time-based RSU awards, the closing price of a share of our Common Stock on the applicable year-end date(s) or, in the case of vesting dates, the closing price of a share of our Common Stock on the applicable vesting dates, and (2) for performance-based RSU awards, the same valuation methodology as time-based RSU awards exceptyear-end values are multiplied by a factor reflecting achievement of the probable outcome of the applicable performance conditions as of the measurement date (which as of December 31, 2023 was 160% for the 2022 grants and 100% for the 2023 grants). |
(3) | Pursuant to the SEC rules, TSR reflects an initial investment of $100 on December 31, 2019, and that all dividends, if any, were reinvested. The Peer Group Total Stockholder Return represents the cumulative TSR of the ARCA Airline Index (the “Peer Group TSR”). |
(4) | Adjusted pre-tax margin is anon-GAAP measure and excludes net special items. See Appendix B for a reconciliation ofpre-tax margin excluding net special items, anon-GAAP measure. |
77 |
78 |
79 |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about our Common Stock that may be issued under all of our existing equity compensation plans as of December 31, 2017,2023, which includeconsists of the following:2023 Incentive Award Plan (the “2023 Plan”) and the 2013 Incentive Award Plan (the “2013 Plan”).
Plan Category
| (i) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
| (ii) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($)
| (iii) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (i))
| (i) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (ii) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($) | (iii) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (i)) | |||||||||||||||||||||
Equity Compensation Plans Approved by Security Holders(a)
|
|
4,324,405 |
|
|
- |
|
|
32,681,442 |
| ||||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders(b)
|
|
1,151,404 |
|
|
8.08 |
(c) |
|
- |
(d) | ||||||||||||||||||
Equity Compensation Plans Approved by Security Holders(a) | |||||||||||||||||||||||||||
Equity Compensation Plans Approved by Security Holders(a) | |||||||||||||||||||||||||||
Equity Compensation Plans Approved by Security Holders(a) | 14,234,700 | (b) | - | 9,501,204 | |||||||||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders | |||||||||||||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders | |||||||||||||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders | |||||||||||||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders | - | - | - | ||||||||||||||||||||||||
Total
|
|
5,475,809
|
|
|
8.08
|
|
|
32,681,442
|
| ||||||||||||||||||
Total | |||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||
Total | 14,234,700 | - | 9,501,204 |
(a) | On May 10, 2023, our stockholders approved the 2023 Plan which replaced the 2013 Plan. The |
(b) | Consists of |
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2024 Proxy Statement
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2017, none of our directors, officers or greater than 10% beneficial owners failed to file on a timely basis any reports required by Section 16(a) of the Exchange Act.
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Rule14a-8 of the Exchange Act provides that certain stockholder proposals must be included in the proxy statement for an annual meeting of stockholders. For a stockholder proposal to be considered for inclusion in the proxy statement for our 2019 annual meeting2025 Annual Meeting of stockholders,Stockholders, our Corporate Secretary (Priya Aiyar, Corporate Secretary, at American Airlines Group Inc., MD8B503, 1 Skyview Drive, Fort Worth, Texas 76155) must receive the proposal at our principal executive offices no later than December 31, 2018., 2024. The proposal must comply with the SEC regulations under Rule14a-8 of the Exchange Act regarding the inclusion of stockholder proposals in our proxy materials.
Pursuant to the Bylaws, in order for a stockholder to present a proposal at an annual meeting of stockholders, other than proposals to be included in the proxy statement as described above, the stockholder must deliver proper notice to our Corporate Secretary at our principal executive offices (please see the address above) not more than 120 days and not less than 90 days prior to the anniversary date of the immediately preceding annual meeting or, if the date of the annual meeting is more than 30 days before or after such anniversary date, not later than the 90th day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of the date of such annual meeting was first made. For the 2019 annual meeting2025 Annual Meeting of stockholders,Stockholders, notice must be delivered no sooner than February 13, 20195, 2025 and no later than March 15, 2019.7, 2025. Stockholders are advised to review the Bylaws, which contain additional requirements with respect to advance notice of stockholder proposals. Additional information with regard to director recommendations or nominations for director candidates can be found beginning on page 1817 and we encourage stockholders to review the procedures and deadlines relating thereto before taking action.
In addition, our Bylaws permit certain of our stockholders who have beneficially owned 3% or more of our outstanding common stockCommon Stock continuously for at least three years to submit nominations to be included in the Company’s proxy materials for up to 20% of the total number of directors then serving. Notice of proxy access director nominations for the 2019 annual meeting2025 Annual Meeting of stockholdersStockholders must be delivered to our Corporate Secretary at our principal executive offices (please see the address above) no earlier than December 1, 2018November , 2024 and no later than the close of business on December 31, 2018., 2024. The notice must set forth the information required by our Bylaws with respect to each proxy access director nomination that eligible stockholder or stockholders intend to present at the 2019 annual meeting2025 Annual Meeting of stockholdersStockholders and must otherwise be in compliance with our Bylaws.
Any notice of director nomination other than through proxy access must include the additional information required by Rule 14a-19(b) under the Exchange Act and otherwise comply with our Bylaws. In connection with the 2025 annual meeting of stockholders, we intend to file a proxy statement and a WHITE proxy card with the SEC in connection with our solicitation of proxies for that meeting.
Annual Report and Available Information
Our Annual Report on Form10-K for the year ended December 31, 20172023 accompanies this Proxy Statement but does not constitute a part of the proxy soliciting materials.A copy of our Annual Report on Form10-K for the year ended December 31, 2017,2023, including financial statements and financial statement schedules but without exhibits, is available to any person whose vote is solicited by this proxy upon written request to Caroline B. Ray,the Corporate Secretary, American Airlines Group Inc., 4333 Amon Carter Blvd., MD 5675,MD8B503, 1 Skyview Drive, Fort Worth, Texas 76155.Copies also may be obtained without charge through the SEC’s website atwww.sec.gov.
Cautionary Statement Regarding Forward-Looking Statements
Certain of the statements contained in this Proxy Statement should be considered forward-looking statements within the meaning of the Securities Act, the Exchange Act, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that
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2024 Proxy Statement
are not historical facts. These forward-looking statements are based on the Company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (especially in Part I, Item 1A. Risk Factors and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations), and other risks and uncertainties listed from time to time in the Company’s other filings with the SEC. There may be other factors of which the Company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. The Company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement.
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2024 Proxy Statement
APPENDIX A
ANNEX AProposal 4: Bylaw Voting Threshold Amendment
Reconciliation of Certain GAAP toNon-GAAP Financial InformationARTICLE X
2014
| 2015
| 2016
| 2017
| Cumulative
| |||||||||||||||||||||
($) (in millions) | |||||||||||||||||||||||||
AAG GAAPPre-tax Income As Reported
|
|
3,212
|
|
|
4,616
|
|
|
4,299
|
|
|
3,084
|
|
|
15,211
|
| ||||||||||
AAGPre-tax Special Items(1)
|
|
956
|
|
|
1,674
|
|
|
772
|
|
|
756
|
|
|
4,158
|
| ||||||||||
AAGPre-tax Income Excluding Special Items
|
|
4,168
|
|
|
6,290
|
|
|
5,071
|
|
|
3,840
|
|
|
19,369
|
|
AMENDMENT OF BYLAWS
|
|
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICAN AIRLINES GROUP INC.
[●], 2018
The undersigned duly authorized officer of American Airlines Group Inc., a Delaware corporation, hereby certifies the following:
1. The nameIn furtherance and not in limitation of the corporation is American Airlines Group Inc. (the “Corporation”). The Corporation was originally incorporated underpowers conferred upon it by the name AA Inc. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of Statelaws of the State of Delaware, on February 16, 1982. On March 10, 1982, the name of the Corporation was changed to AMR Corporation. On December 9, 2013, in accordance with the provisions of Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware (as the same exists or may hereafter be amended, the “DGCL”), the Corporation filed with the Secretary of State of the State of Delaware an Amended and Restated Certificate of Incorporation. On December 9, 2013, in accordance with Sections 242 and 303 of the DGCL, the Corporation filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Amended and Restated Certificate of Incorporation, which amendment changed the name of the Corporation to American Airlines Group Inc. (and effected conforming changes). On December 9, 2013, in accordance with Sections 245 and 303 of the DGCL, the Corporation filed with the Secretary of State of the State of Delaware a Restated Certificate of Incorporation, which integrated the Amended and Restated Certificate of Incorporation and the Certificate of Amendment to the Amended and Restated Certificate of Incorporation.
2. The following amendment to the Restated Certificate of Incorporation is hereby adopted:
The second and third sentences of Article VIII shall be deleted in their entirety and replaced with the following:
Unless otherwise required by law, special meetings of the stockholders for any purpose or purposes may be called only (i) by the Chairman of the Board of Directors (ii)shall have the power to adopt, amend, alter or repeal the Bylaws as provided for therein. The Bylaws also may be adopted, amended, altered or repealed by the Board of Directors, (iii) by the Chief Executive Officer, or (iv) by the Secretaryaffirmative vote of the Corporation, following his or her receiptholders of one or more written demands to call a special meeting of the stockholders from stockholders of record who hold, in the aggregate, at least 20%80%a majority of the voting power of the outstanding shares entitled to vote for the election of Directors.
Proposal 5: Supermajority Elimination Amendment
ARTICLE XIII
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed in this Certificate of Incorporation or the DGCL, and all rights herein conferred upon stockholders are granted subject to such reservation; provided, however, that, notwithstanding any other provision of this Certificate of Incorporation (but in addition to any other vote that may be required by applicable law or this Certificate of Incorporation), the affirmative vote of the Corporation determinedholders of at least two-thirdsa majority of the voting power of the outstanding shares entitled to vote for the election of Directors shall be required to amend, alter, change or repeal, or to adopt any provision as part of this Certificate of Incorporation inconsistent with the purpose and intent of Section 6 of Article IV, Article V, Article VIII and Article X of this Certificate of Incorporation or this Article XIII.
* * * * *
A-1 |
2024 Proxy Statement
APPENDIX B
Reconciliation of Certain GAAP to Non-GAAP Financial Information
We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”) to understand and evaluate our current operating performance and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. Management uses these non-GAAP financial measures to evaluate the Company’s current operating performance and to allow for period-to-period comparison. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand our core operating performance.
The tables below present the reconciliations of the following GAAP measures to their non-GAAP measures:
• | Pre-Tax Income (Loss) (GAAP measure) to Pre-Tax Income (Loss) Excluding Net Special Items (non-GAAP measure); |
• | Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Net Special Items (non-GAAP measure); |
• | Net Income (GAAP measure) to Net Income Excluding Net Special Items (non-GAAP measure); and |
• | Basic and Diluted Earnings Per Share (GAAP measure) to Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items (Non-GAAP measure). |
12 Months Ended December 31, | ||||||||||||
Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items | 2023 | 2022 | 2021 | |||||||||
(in millions, other than percentages) | ||||||||||||
Pre-tax income (loss) as reported | $ | 1,121 | $ | 186 | $ | (2,548 | ) | |||||
Pre-tax net special items: |
|
|
|
|
|
|
|
|
| |||
Mainline operating special items, net (1) | 971 | 193 | (4,006 | ) | ||||||||
Regional operating special items, net (2) | 8 | 5 | (449 | ) | ||||||||
Nonoperating special items, net (3) | 362 | 74 | 60 | |||||||||
|
|
|
|
|
| |||||||
Total pre-tax net special items | 1,341 | 272 | (4,395 | ) | ||||||||
Pre-tax income (loss) excluding net special items | $ | 2,462 | $ | 458 | $ | (6,943 | ) | |||||
Calculation of Pre-Tax Margin |
|
|
|
|
|
|
|
|
| |||
Pre-tax income (loss) as reported | $ | 1,121 | $ | 186 | $ | (2,548 | ) | |||||
Total operating revenues as reported | $ | 52,788 | $ | 48,971 | $ | 29,882 | ||||||
Pre-tax margin | 2.1 | % | 0.4 | % | (8.5 | %) | ||||||
Calculation of Pre-Tax Margin Excluding Net Special Items |
|
|
|
|
|
|
|
|
| |||
Pre-tax income (loss) excluding net special items | $ | 2,462 | $ | 458 | $ | (6,943 | ) | |||||
Total operating revenues as reported | $ | 52,788 | $ | 48,971 | $ | 29,882 | ||||||
Pre-tax margin excluding net special items | 4.7 | % | 0.9 | % | (23.2 | %) |
B-1 |
2024 Proxy Statement
12 Months Ended December 31, 2023 | ||||
Reconciliation of Net Income Excluding Net Special Items | (in millions, except share and per share amounts) | |||
Net income as reported | $ | 822 | ||
Net special items: | ||||
Total pre-tax net special items (1), (3) | 1,341 | |||
Net tax effect of net special items | (304 | ) | ||
|
| |||
Net income excluding net special items | $ | 1,859 | ||
Reconciliation of Basic and Diluted Earnings Per Share Excluding Net Special Items | ||||
Net income excluding net special items | $ | 1,859 | ||
Shares used for computation (in thousands): | ||||
Basic | 653,612 | |||
|
| |||
Diluted | 719,669 | |||
|
| |||
Earnings per share excluding net special items: | ||||
Basic | $ | 2.84 | ||
|
| |||
Diluted (4) | $ | 2.65 | ||
|
| |||
|
|
Three Months Ended March 31, 2022 | ||||
Reconciliation of Pre-Tax Loss Excluding Net Special Items | (in millions) | |||
Pre-tax loss as reported | $ | (2,086 | ) | |
Pre-tax net special items: | ||||
Mainline operating special items, net (1) | 157 | |||
Nonoperating special items, net (3) | 3 | |||
|
| |||
Total pre-tax net special items | 160 | |||
Pre-tax loss excluding net special items | $ | (1,926 | ) |
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1) | Mainline operating special items |
The twelve months ended December 31, 2023 mainline operating special items, net principally included $989 million of one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million.
The three months ended March 31, 2022 and twelve months ended December 31, 2022 mainline operating special items, net principally included a non-cash impairment charge to write down the carrying value of the Company’s retired Airbus A330 fleet to the estimated fair value due to the market conditions for certain used aircraft. The Company retired its Airbus A330 fleet in 2020 as discussed below.
The twelve months ended December 31, 2021 mainline operating special items, net principally included $4.2 billion of Payroll Support Program (“PSP”) financial assistance, offset in part by $168 million of salary and medical costs associated with certain team members who opted into voluntary early retirement programs offered as a result of reductions to the Company’s operation due to the COVID-19 pandemic.
(2) | Regional operating special items |
The twelve months ended December 31, 2021 regional operating special items, net principally included $539 million of PSP financial assistance, offset in part by a $61 million charge associated with the regional pilot retention program which provides for, among other things, a cash retention bonus paid in the fourth quarter of 2021 to eligible captains at the wholly-owned regional airlines included on the pilot seniority list as of September 1, 2021 and a $27 million non-cash impairment charge to write down regional aircraft resulting from the retirement of the remaining Embraer 140 fleet earlier than planned.
B-2 |
2024 Proxy Statement
(3) | Nonoperating special items |
Principally included charges associated with debt refinancings and extinguishments as well as mark-to-market net unrealized gains and losses associated with certain equity investments.
(4) The twelve months ended December 31, 2023 diluted earnings per share gives effect to, among other things, the Company’s outstanding 6.5% senior convertible notes by (a) adding back to earnings $47 million of interest expense related to such convertible notes, net of estimated profit sharing, short-term incentive and tax effects and (b) including in the diluted shares outstanding, 61.7 million shares issuable in respect to such convertible notes.
Free Cash Flow
Our free cash flow summary is presented in the table below, which is a non-GAAP measure that management believes is useful information to investors and others in evaluating our ability to generate cash from our core operating performance that is available for use to reinvest in the business or to reduce debt. We define free cash flows as net cash provided by operating activities less net cash used in investing activities, adjusted for (1) net sales of short-term investments and (2) change in restricted cash. We believe that calculating free cash flow as adjusted for these items is more useful for investors because short-term investment activity and restricted cash are not representative of activity core to our operations. This non-GAAP measure may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. Our calculation of free cash flow is not intended, and should not be used, to measure the residual cash flow available for discretionary expenditures because, among other things, it excludes mandatory debt service requirements and certain other non-discretionary expenditures.
Year Ended December 31, 2023 | ||||
(in millions) | ||||
Net cash provided by operating activities | $ | 3,803 | ||
Adjusted net cash used in investing activities (1) | (1,997 | ) | ||
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Free cash flow | $ | 1,806 | ||
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(1) The following table provides a reconciliation of adjusted net cash used in investing activities for the year ended December 31, 2023 (in millions): |
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Net cash used in investing activities | $ | (502 | ) | |
Adjustments: | ||||
Net sales of short-term investments | (1,538 | ) | ||
Decrease in restricted cash | 43 | |||
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Adjusted net cash used in investing activities | $ | (1,997 | ) | |
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B-3 |
2024 Proxy Statement
P.O. BOX 8016, CARY, NC 27512-9903
PRELIMINARY – SUBJECT TO COMPLETION
Scan QR for
digital voting
American Airlines Group Inc. For Stockholders of record as of April 9, 2024 | Internet: www.proxypush.com/AAL • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote | |||
Wednesday, June 5, 2024 9:00 AM, Central Time Annual Meeting to be held live via the internet - please visit www.proxydocs.com/AAL for more details. | Phone: 1-866-570-3320 • Use any touch-tone telephone • Have your Proxy Card ready • Follow the simple recorded instructions | |||
Mail: • Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid envelope provided | ||||
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: 9:00 AM, Central Time, June 5, 2024. | Virtual: You must register to attend the meeting online and/or participate at www.proxydocs.com/AAL |
This proxy is being solicited on behalf of the Board of Directors
The undersigned hereby appoints Robert D. Isom and Stephen L. Johnson (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of American Airlines Group Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS’ RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the provisionsBoard of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the Corporation’s Bylawsreverse side) and who otherwise comply with such other requirements and procedures set forth in the Corporation’s Bylaws, as nowreturn this card.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Copyright © 2024 BetaNXT, Inc. or hereinafter in effect.
3. This Certificate of Amendment of the Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 of the DGCL.
4. This Certificate of Amendment of the Restated Certificate of Incorporation shall become effective immediately upon filing of this Certificate of Amendment with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed on its behalf on this [●] day of [●], 2018.affiliates. All Rights Reserved
American Airlines Group Inc. Annual Meeting of Stockholders |
Please make your marks like this:
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
FOR ON PROPOSALS 1, 2, 3, 4 AND 5
AGAINST ON PROPOSAL 6
PROPOSAL | YOUR VOTE | BOARD OF DIRECTORS RECOMMENDS | ||||||||||
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AMERICAN AIRLINES GROUP INC.
4333 AMON CARTER BLVD.
FORT WORTH, TX 76155
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on thecut-off date or the day before the date of the 2018 Annual Meeting of Stockholders. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on thecut-off date or the day before the date of the 2018 Annual Meeting of Stockholders. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E46139-P02700-Z71795 KEEP THIS PORTION FOR YOUR RECORDS
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FOR | AGAINST | ABSTAIN | ||||||||||||||||||
1.01 Adriane Brown | ☐ | ☐ | ☐ | |||||||||||||||||
FOR | ||||||||||||||||||||
| 1.02 John Cahill | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.03 Mike Embler | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.04 Matt Hart | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.05 Robert Isom | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.06 Sue Kronick | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.07 Marty Nesbitt | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.08 Denise O’Leary | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.09 Vicente Reynal | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.10 Greg Smith | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
| 1.11 Doug Steenland | ☐ | ☐ | ☐ | ||||||||||||||||
FOR | ||||||||||||||||||||
FOR | AGAINST | ABSTAIN | ||||||||||||||||||
2. |
☐ | ☐ | ☐ | ||||||||||||
3. | Advisory vote to | (Say-on-Pay) | ☐ | ☐ | ☐ | |||||||||
4. | Approve and adopt an amendment of the | by simple majority vote | ☐ | ☐ | ☐ | |||||||||
FOR | ||||||||||||||
5. | ||||||||||||||
allow all other provisions of the Certificate of Incorporation to be amended in the future by simple majority vote | ☐ | ☐ | ☐ | FOR | ||||||||||
6. | Advisory vote on a stockholder proposal requesting a third-party audit of how effectively American Airlines Group Inc. is implementing its environmental and social commitments | ☐ | ☐ | ☐ | AGAINST | |||||||||
If any other matters properly come before the |
You must register to attend | ||||||||||||||
the meeting online and/or participate at www.proxydocs.com/AAL Authorized Signatures must be completed for your instructions to be executed. Please sign exactly as your name(s) the Proxy/Vote Form. |
ADMISSION TICKET
American Airlines Group Inc.
2018 ANNUAL MEETING OF STOCKHOLDERS
Wednesday, June 13, 2018
9:00 a.m. local time
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
This admission ticket admits only the named stockholder.
Directions to Latham & Watkins LLP:
Latham & Watkins LLP is located at 885 Third Avenue, New York, New York 10022. This address is on Third Avenue between 53rd and 54th Streets. If arriving by taxi from any location, provide instruction to go to 53rd Street and Third Avenue to make the destination clear.
From Subway: The nearest subway stop to Latham & Watkins is the E or M train (Lexington Ave/53rd Street Station) or the #6 train (51st Street Station).
From Rail/Bus Station:
Note: If you plan on attending the 2018 Annual Meeting of Stockholders in person, please bring, in addition to this admission ticket, a proper form of identification. The use of video or still photography at the 2018 Annual Meeting of Stockholders is not permitted. For the safety of attendees, all bags, packages and briefcases are subject to inspection. Your compliance is appreciated. If you plan to attend the 2018 Annual Meeting of Stockholders and require special assistance, please contact Caroline Ray at817-931-2321 to request any listening or visual aid devices by June 1, 2018.
Important Notice Regarding the Availability of Proxy Materials for the 2018 Annual Meeting of Stockholders:
The Notice, Proxy Statement, Form of Proxy and Annual Report are available atwww.proxyvote.com.
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E46140-P02700-Z71795
AMERICAN AIRLINES GROUP INC.
4333 AMON CARTER BLVD.
FORT WORTH, TX 76155
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 13, 2018
Proxy Solicited by the Board of Directors for the 2018 Annual Meeting of Stockholders to be held on June 13, 2018.
The undersigned hereby appoints W. Douglas Parker and Stephen L. Johnson, and each of them, as proxies, with full power of substitution, to vote all the shares of common stock of American Airlines Group Inc. that the undersigned is entitled to vote at the 2018 Annual Meeting of Stockholders of American Airlines Group Inc., to be held at Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 on Wednesday, June 13, 2018, at 9:00 a.m., local time, and at any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF YOU DO NOT STATE OTHERWISE, YOUR PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSALS 2, 3 AND 4, AND “AGAINST” PROPOSAL 5. ANY ADDITIONAL BUSINESS AS MAY PROPERLY COME BEFORE THE 2018 ANNUAL MEETING OF STOCKHOLDERS OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSON VOTING THE PROXY. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO COMMENCEMENT OF VOTING AT THE 2018 ANNUAL MEETING OF STOCKHOLDERS OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
If you vote by telephone or the Internet, please DO NOT mail back this proxy card. Proxies submitted by telephone or the Internet must be received by 11:59 pm, Eastern Time, on June 12, 2018.Employees/Participants Holding Shares of American Airlines Group Inc. common stock under the Envoy Air Inc. 401(k) Plan: This card also constitutes your voting instructions to the appointed investment manager for those shares held in the 401(k) plan. If the investment manager receives timely voting instructions from you, it will vote your American Airlines Group Inc. shares held in the 401(k) plan as you have instructed. In order for your vote to be counted, your voting instructions must be received by 11:59 pm, Eastern Time, on June 10, 2018.
Signature (and Title if applicable) | ||||
Date | ||||
Signature (if held jointly) | Date |
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side