Report: AA CEO Doug Parker Has Already Taken Home More Than $19 Million in 2018
Jeff Edwards January 08, 2018
According to Fortune, the chief of the world’s largest airline has collected more cash in the first few days of the new year than in all of 2017.
American Airlines CEO Doug Parker reportedly exercised an option in his contract on Wednesday that earned the 56-year-old airline executive a $19.2 million windfall. The amount dwarfs the $11.3 million he earned in 2017. According to Fortune, Parker now stands to make in excess of $31 million this year.
The one-time payout is said to be part of the CEO’s preplanned trading schedule which allowed Parker to cash in stock appreciation rights (SARS) granted in 2008 and due to expire this year. Parker’s very good beginning to the new year is thanks in part to a risky decision he made in 2015. In April of that year, he announced to AA employees that he would forgo his salary and in the future, instead be compensated in company shares.
“I believe this is the right way for my compensation to be set – at risk, based entirely on the results achieved, and in the same currency that our shareholders receive,” Parker told American Airlines workers at the time. “The target amount will remain approximately 20 percent below my peers at Delta and United until all of our team members have joint contracts that compensate as well or better than those airlines.”
This year, it appears that the gamble by the former US Airways chief has paid off in spades. The decision also appears to be very good news for stakeholders as well. Parker told investors he expects that in the future, the once-struggling airline will earn upwards of $7 billion a year. He also predicted that the airline would never again post a loss or be forced to enter bankruptcy protection.
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His salary is typical of Corporate America. The corporate leadership takes gets a small salary with bonus incentives to what they bring to the bottom line. Who pays for this. The entire company. His incentive is to cut anything that effects the bottom line. Doug Parker is the worse kind of CEO. Who is paying for his huge wind fall. The flying public by cutting all the passenger amenities. Slash and burn the loyal flyer program, cutting food quality, charging outrageous fees for everything. Ask the AA employees they are not happy either. AA will look back one day and wander what happened to its loyal customers. AA is holding all frequent flyer award seats for revenue so you can not make complete flights with out buying segments. AA has a monopoly at DFW controlling 4 of the 5 terminals and has over 85% of all flights in and out of DFW.
Parker makes his money from stock options. Over the past 17 years, investors have foolishly undervalued the shares of the airlines that he has run. When the share prices rise over the years, he exercises his options before they expire. He then pockets millions. These shares are from when US Airways was trading in single digits.