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Exhibit 10.8
2002 EMPLOYEE PROFIT SHARING PLAN
Purpose
The purpose of the 2002 American Airlines Employee Profit Sharing
Plan ("Plan") is to provide participating employees with a sense
of commitment to, and direct financial interest in, the success
of American Airlines, Inc.
Definitions
Capitalized terms not otherwise defined in the Plan will have the
meanings set forth in the 1998 Long Term Incentive Plan, as
amended (the "LTIP").
"AMR" is defined as AMR Corporation.
"Adjusted Investment" is defined as the sum of American's notes
payable, current maturities of long-term debt and capital leases,
long-term debt, capital leases, Present Value of Operating
Leases, and stockholders' equity, and any accounting adjustments
or extraordinary or unusual items which may be added or deducted
at the discretion of the Committee and are approved by the Board
of Directors of AMR.
"Affiliate" is defined as a subsidiary of AMR or any entity that
is designated by the Committee as a participating employer under
the Plan, provided that AMR directly or indirectly owns at least
20% of the combined voting power of all classes of stock of such
entity.
"American" is defined as AMR less AMR subsidiaries other than
American Airlines, Inc. and its subsidiaries.
"Average Adjusted Investment" is defined as the sum of Adjusted
Investment as of 12/31/01, 3/31/02, 6/30/02, and 9/30/02, divided
by four.
"Calculated Amortization of Operating Leases" is defined as the
amortization expense associated with the Capitalized Value of
Operating Leases as if such leases were accounted for as capital
leases, and is determined by the straight-line method over the
lease term.
"Capitalized Value of Operating Leases" is defined as the initial
present value of the lease payments required under American's
aircraft operating leases over the initial stated lease term,
calculated using a discount rate of Prime plus one percent.
"Committee" is defined as the AMR Incentive Compensation
Committee.
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"Fund" is defined as the profit sharing fund, if any, accumulated
in accordance with this Plan.
"Plan Earnings" is defined as the sum of American's pre-tax
income, interest expense, aircraft rental expense, and any
accruals for American's Pilot Variable Compensation Plan,
Employee Profit Sharing Plan, Incentive Compensation Plan, and
any other plan that might be created, at the discretion of the
Committee, less Calculated Amortization of Operating Leases and
any accounting adjustments or extraordinary or unusual items
which may be added or deducted at the discretion of the Committee
and approved by the Board of Directors of AMR.
"Present Value of Operating Leases" is defined as the present
value of the lease payments required under American's aircraft
operating leases over the remaining lease term, calculated using
the discount rate of Prime plus one percent. Amounts for
3/31/02, 6/30/02, and 9/30/02 are computed by determining the
difference between the Present Value of Operating Leases as of
12/31/02 and 12/31/01 and allocating that difference evenly over
the four quarters of 2002.
"Prime" is defined as the base rate on corporate loans posted by
at least 75% of the 30 largest U.S. banks which is published
daily in the Wall Street Journal.
"Qualified Earnings" is defined as base salaries paid during the
Plan year, overtime, holiday pay, skill premiums, longevity pay,
sick pay, vacation pay, shift differential, overrides and license
premiums and does not include payments such as travel and
incidental expenses, moving expenses, relocation allowance
(COLA), payouts from any retirement plan, disability payments,
workers compensation payments, imputed income from certain travel
service charges or life insurance, or other benefits provided by
American, nor does it include any special one-time monetary
awards or allowances, lump sum payments, or incentive
compensation or profit sharing payments.
"Return on Investment" or "ROI" is defined as Plan Earnings
divided by Average Adjusted Investment, stated as a percentage.
Eligibility for Participation
In order to be eligible for a profit sharing award, the
individual must:
- Have worked during the Plan year as a regular full-time or
part-time employee at American in a participating workgroup
(flight attendant, reservations, coordinator/planner, airport
agent, sky cap, support staff, management levels 04 and below).
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- Have an adjusted seniority date prior to July 1st of the
Plan year. An individual's Qualified Earnings from the time
worked at American will be included in the award calculation.
- Be employed at American or an Affiliate at the time awards
are paid. If at the time awards are paid under the Plan, an
individual has retired from American or an Affiliate, has been
laid off, is on a leave of absence with re-instatement rights, is
disabled or has died, the award which the individual otherwise
would have received under the Plan but for such retirement, lay-
off, leave, disability or death may be paid to the individual or
his/her estate in the event of death, at the discretion of the
Committee.
Notwithstanding the foregoing, however, an employee will not be
eligible to participate in the Plan if such employee is, at the
same time, eligible to participate in:
i)the 2002 American Airlines Incentive Compensation Plan for
Officers and Key Employees,
ii) the Pilot Profit Sharing Plan (as implemented in 1997),
iii) any incentive compensation, profit sharing, commission
or other bonus plan for employees of any division of
American, or
iv) any incentive compensation, profit sharing, commission
or other bonus plan sponsored by an Affiliate.
Awards under the Plan will be determined on a proportionate basis
for participation in more than one plan during a Plan year.
Employees who transfer from/to Affiliates or any other plan
described above during a Plan year, and satisfy eligibility
requirements, will receive awards from each plan on a
proportionate basis.
The Profit Sharing Fund Accumulation
Performance will be measured by ROI and the Fund will accumulate
based on that performance. The Fund is established at 1% of
Qualified Earnings when ROI is equal to 6.4%. The fund will
accumulate on a straight-line basis at the rate of 0.583% of
qualified earnings for each additional point of ROI.
The profit sharing fund will not exceed an amount equal to 8% of
Qualified Earnings at levels of ROI above 18.4%.
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Award Distribution
For eligible domestic employees (where domestic means the United
States, Puerto Rico and the U.S. Virgin Islands), individual
awards will be distributed based on an employee's Qualified
Earnings for the Plan year multiplied by the appropriate
percentage of Qualified Earnings based upon the ROI achieved for
the Plan year. The percent of Qualified Earnings used for Fund
accumulation and award distribution will be the same.
A portion of the Fund will be allocated for eligible
international employees (employees other than those in the United
States, Puerto Rico and the U.S. Virgin Islands) based on the
aggregate of all eligible international employees' Qualified
Earnings as a percentage of the aggregate of all eligible
employees' total Qualified Earnings. This portion of the Fund
will be set aside for distribution at the discretion of the
American officer(s) responsible for such international employees,
subject only to the Committee's approval.
Administration
The Plan will be administered by the Committee which is comprised
of officers of American appointed by the Board of Directors of
AMR. The Committee will have authority to administer and
interpret the Plan, establish administrative rules, determine
eligibility and take any other action necessary for the proper
and efficient operation of the Plan. The amount, if any, of the
Fund shall be based on a certification of ROI by AMR's General
Auditor. A summary of awards under the Plan shall be provided to
the Board of Directors of AMR at the first regular meeting
following determination of the awards.
Method of Payment
The Committee shall determine the method of payment of awards.
Subject to the terms of the Plan, awards shall be paid as soon as
practicable after audited financial statements for the year 2002
are available.
General
Neither this Plan nor any action taken hereunder shall be
construed as giving to any employee or participant the right to
be retained in the employ of American or an Affiliate.
Nothing in the Plan shall be deemed to give any employee any
right, contractually or otherwise, to participate in the Plan or
in any benefits hereunder, other than the right to
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receive payment of such award as may have been expressly
determined by the Committee.
In the event of any act of God, war, natural disaster, aircraft
grounding, revocation of operating certificate, terrorism,
strike, lockout, labor dispute, work stoppage, fire, epidemic or
quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of American,
whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects American or its Subsidiaries or
its Affiliates, the Committee, in its sole discretion, may (i)
terminate or (ii) suspend, delay, defer (for such period of time
as the Committee may deem necessary), or substitute any payments
due currently or in the future under the Plan, including, but not
limited to, any payments that have accrued to the benefit of
participants but have not yet been paid.
In consideration of the employee's privilege to participate in
the Plan, the employee agrees (i) not to disclose any trade
secrets of, or other confidential/restricted information of,
American or its Affiliates to any unauthorized party (ii) not to
make any unauthorized use of such trade secrets or confidential
or restricted information during his or her employment with
American or its Affiliates or after such employment is
terminated, and (iii) not to solicit any current employees of
American or any subsidiaries of AMR to join the employee at his
or her new place of employment after his or her employment with
American or its Affiliates is terminated.
The Committee may amend, suspend, or terminate the Plan at any
time.
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