Exhibit 10.2
AMENDMENT TO THE
AMR CORPORATION 1998 LONG TERM INCENTIVE PLAN, AS AMENDED
WHEREAS, AMR Corporation (the "Corporation") adopted
the AMR Corporation 1998 Long Term Incentive Plan, as
Amended (the "LTIP") to foster and promote the long-term
financial success of the Company;
WHEREAS, when the LTIP was initially adopted, the grant
of stock appreciation rights would have resulted in adverse
financial accounting charges for the Corporation as compared
to the grant of stock options;
WHEREAS, such stock appreciation rights had
historically been used primarily in connection with stock
options grants to executive officers subject to the
reporting requirements under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), who prior
to amendments to the rules under such Section 16 of the 1934
Act adopted in the 1990s, were generally required to hold
the stock received upon the exercise of an option for a
period of at least six months to avoid being subject to the
disgorgement requirements under the short-swing profit
provisions of such Section 16;
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WHEREAS, for the above reasons, the LTIP currently
permits the grant of stock appreciation rights in tandem
with a grant of stock options, such that an employee may be
granted a stock appreciation right to the extent that the
employee has also been granted a corresponding stock option;
WHEREAS, due to changes in the financial accounting
rules that took effect as of January 1, 2006, there is no
longer any difference between the accounting treatment of a
stock option and a stock appreciation right settled in
shares of stock;
WHEREAS, because the use of stock settled stock
appreciation rights would convey a substantially comparable
incentive for the recipient of a stock option award, the
Corporation believes that affording the Compensation
Committee of the Board of Directors the right to award stock
appreciation rights independently of any stock option would
be in the best interests of the Corporation, its
shareholders and its employees; and
WHEREAS, the Company has reserved the right to amend
the LTIP under Section 13 thereof.
NOW, THEREFORE, the Plan is hereby amended in the
manner set forth below:
1. Section 1(v) of the LTIP is amended to delete the
definition of Stock Appreciation Right, and to insert in
lieu thereof a new definition of such term, to read as
follows:
"Stock Appreciation Right" means the right pursuant to
an award granted under Section 6 below which entitles
the grantee to receive, upon the exercise thereof in
whole or in part, an amount in shares of Stock equal in
value to the excess of the Fair Market Value (on the
date of exercise) of one share of Stock over the base
price per share specified with respect to the Stock
Appreciation Right, multiplied by the number of shares
in respect of which the Stock Appreciation Right shall
have been exercised. The number of shares to be issued
shall be calculated on the basis of the Fair Market
Value of the shares on the date of exercise, with any
fractional share being payable in cash based on the
Fair Market Value on the date of exercise.
Notwithstanding the foregoing, the Committee may elect,
at any time and from time to time, in lieu of issuing
all or any portion of the shares of Stock otherwise
issuable upon any exercise of any such Stock
Appreciation Right, to pay the grantee an amount in
cash or other marketable property of a value equivalent
to the aggregate Fair Market Value on the date of
exercise of the number of shares of Stock that the
Committee is electing to settle in cash or other
marketable property.
2. Section 6 of the LTIP is amended to delete such
section in its entirety, and to insert in lieu thereof a new
Section 6, to read as follows:
Section 6. Stock Appreciation Rights.
(a) Stock Appreciation Rights may be granted
alone, in addition to, or in tandem with, other awards
granted under the Plan. Any Stock Appreciation Right
granted under the Plan shall be in such form as the
Committee may from time to time approve. Stock
Appreciation Rights may be granted in conjunction with
all or part of any Stock Option granted under the Plan.
In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of
the grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only
at the time of grant of such Stock Option.
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A Stock Appreciation Right or applicable portion
thereof granted with respect to a given Stock Option
shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option,
subject to such provisions as the Committee may specify
at grant where a Stock Appreciation Right is granted
with respect to less than the full number of shares
covered by a related Stock Option.
A Stock Appreciation Right may be exercised by a
grantee, subject to Section 6(b), in accordance with
the procedures established by the Committee from time
to time for such purposes. Upon such exercise, the
grantee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b).
Stock Options relating to exercised Stock Appreciation
Rights, and Stock Appreciation Rights related to any
exercised Stock Option, shall no longer be exercisable
to the extent that the related Stock Appreciation
Rights or Stock Option, as the case may be, have been
exercised.
(b) Terms and Conditions. Stock Appreciation
Rights shall be subject to such terms and conditions,
not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee,
including the following:
(i) Stock Appreciation Rights shall be
exercisable at such time and subject to such
conditions as the Committee shall specify, except
that any Stock Appreciation Right granted in
tandem with a Stock Option (or portion thereof)
shall be exercisable only at such time or times
and to the extent that the Stock Options to which
they relate shall be exercisable in accordance
with the provisions of Section 5 and this
Section 6 of the Plan.
(ii) Upon the exercise of a Stock
Appreciation Right, a grantee shall be entitled to
receive an amount in shares of Stock (or, solely
to the extent determined by the Committee, cash)
equal in value to the excess of the Fair Market
Value (on the date of exercise) of one share of
Stock over the base price per share specified with
respect to the Stock Appreciation Right,
multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been
exercised. When payment is to be made in shares,
the number of shares to be paid shall be
calculated on the basis of the Fair Market Value
of the shares on the date of exercise, with any
fractional share being payable in cash based on
the Fair Market Value on the date of exercise.
Notwithstanding anything in this Section 6(b)(ii)
to the contrary, the base price in respect of any
Stock Appreciation Right shall not be less than
the Fair Market Value of the Stock on the date the
Stock Appreciation Right is granted, or in the
case of a Stock Appreciation Right granted in
tandem with a Stock Option, the Fair Market Value
on the date the related Stock Option was granted.
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(iii) Stock Appreciation Rights shall be
transferable only to the extent that Stock Options
may be transferable under Section 5(e) of the
Plan.
(iv) Upon the exercise of a Stock
Appreciation Right, regardless of whether granted
on a stand-alone basis or in tandem with any Stock
Option, only the number of shares of Stock
actually issued in connection with the exercise of
such Stock Appreciation Right (and not the
corresponding number of shares of Stock related to
the Stock Appreciation Right (or portion thereof)
being exercised) shall be treated as issued under
the Plan and, for the purpose of the limitation
set forth in Section 3 of the Plan on the number
of shares of Stock issuable under the Plan, the
remaining number of shares of Stock related to
such exercised Stock Appreciation Right (or
portion thereof), including the corresponding
number of shares related to any tandem Stock
Option cancelled upon such exercise, shall again
be available for issuance under the Plan.
3. The amendment made hereby shall be effective as of
July 19, 2006. Except as otherwise modified herein, the
provisions of the LTIP shall continue in full force and
effect, without amendment.
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