UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under § 240.14a-12
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AMERICAN AIRLINES GROUP INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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May 1, 2017
To Our Stockholders:
On behalf of the Board of Directors of American Airlines Group Inc., we invite you to attend the 2017 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 14, 2017 at 9:00 a.m. local time. The attached Notice of 2017 Annual Meeting of Stockholders and Proxy Statement describes the formal business to be transacted and procedures for voting at the meeting.
It is important that your shares be represented at the Annual Meeting and, 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. If you are a stockholder of record, you can do this by telephone or over the Internet as directed by the instructions provided in the proxy
materials or, if you received our proxy materials by mail, by completing, dating, signing and returning the enclosed proxy card. If your shares are held in street name by a broker, banker or other nominee, we request that you direct your
broker, bank or other nominee how to vote your shares by returning a voting instruction form in accordance with the instructions provided by your broker, bank or other nominee. Of course, voting in advance does not prevent you from attending the
Annual Meeting and voting your shares in person. If you choose to attend the Annual Meeting in person, you may revoke your proxy and cast your vote at the meeting. However, if you are a street name holder and want to vote in person at
the Annual Meeting, you will need to obtain proof of ownership as of April 17, 2017 and a proxy to vote the shares from your broker, bank or other nominee.
If you plan to attend the Annual Meeting, are a stockholder of record and received our proxy materials electronically, you will need
to bring evidence of your share ownership to the meeting. If you plan to attend the Annual Meeting, are a stockholder of record and received our proxy materials by mail, please mark your proxy card in the space provided for that purpose. An
admission ticket is included with the proxy card for each such stockholder of record. If you are a stockholder planning to attend the Annual Meeting and you hold your shares in a brokerage account or otherwise through a third party in street
name, please ask the broker, bank or other nominee that holds your shares to provide you with evidence of your share ownership. Please be sure to bring evidence of your share ownership or the admission ticket to the meeting.
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. If your shares are registered directly in your name with our stock registrar and transfer agent, American Stock Transfer & Trust Company, LLC, you can make this
election by going to its website (
www.amstock.com
) and (1) clicking Client Login, then Shareholders & Investors, then Manage My Accounts, then select the type of AccountUS Shareholder or Non Shareholder, then Login to
Transact, (2) entering the information required to gain access to your account, and (3) clicking Receive Company Mailing via
E-Mail,
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.
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Sincerely,
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W. Douglas Parker
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Chairman of the Board of Directors and
Chief Executive Officer
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The accompanying Proxy Statement is dated May 1, 2017, and is first being released
to stockholders of American Airlines Group Inc. on or about May 1, 2017.
NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
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DATE AND TIME:
Wednesday, June 14, 2017
9:00 a.m., local time
PLACE:
Latham & Watkins LLP
885
Third Avenue
New York, New York 10022
RECORD DATE:
April 17,
2017
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MEETING
AGENDA
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1
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A proposal to elect 13 directors to
serve until the 2018 annual meeting of stockholders and until their respective successors have been duly elected and qualified
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2
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A proposal to ratify the appointment of
KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017
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3
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A proposal to consider and approve, on
a non-binding, advisory basis, executive compensation as disclosed in the attached Proxy Statement (say-on-pay)
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4
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A proposal to consider and approve, on
a non-binding, advisory basis, the frequency of the advisory vote to approve executive compensation
(say-on-pay
frequency)
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5
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One stockholder proposal regarding an
independent Board Chairman, if properly presented
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6
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Such other business as properly may
come before the 2017 Annual Meeting of Stockholders (the Annual Meeting) or any adjournments or postponements of the Annual Meeting
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Vote in advance of
the meeting
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Vote in person at
the meeting
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Vote your shares at
www.proxyvote.com.
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See page
4Requirements to Attend Annual Meeting
for details on admission requirements to attend the Annual Meeting.
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Call toll-free number
1-800-690-6903
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Sign, date and return the enclosed proxy card or voting instruction
form.
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Internet and telephone voting procedures are described on page 5 of the
Proxy Statement and on the proxy card.
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Important notice regarding the availability of proxy materials for the Annual Meeting:
Our 2016 Proxy Statement and Annual Report on Form 10-K are available at
www.proxyvote.com
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By Order of the Board of Directors of American Airlines Group Inc.,
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Caroline B. Ray
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Corporate Secretary
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PLEASE READ THE ACCOMPANYING PROXY STATEMENT CAREFULLY.
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
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PROXY STATEMENT
TABLE OF CONTENTS
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American Airlines Group
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PROXY STATEMENT
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ii
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PROXY STATEMENT
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American Airlines Group
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PROXY STATEMENT SUMMARY
This summary contains highlights about our Company and the upcoming 2017 Annual Meeting of Stockholders. 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 statement and the Annual Report on Form
10-K
for the year ended December 31, 2016 that
accompanies this proxy statement before voting.
2017 Annual Meeting of Stockholders
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Date and Time:
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Wednesday, June 14, 2017 at 9:00 a.m., local
time
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Location:
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Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022
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Record Date:
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April 17, 2017
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Proxy Mail Date:
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On or about May 1, 2017.
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Voting Matters and Board Recommendations
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Matter
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Board Recommendation
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Election of Directors (page 7)
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FOR each Director Nominee
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Ratification of Public Accounting Firm
(page 17)
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FOR
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Say-on-Pay
(page 18)
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FOR
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Say-on-Pay
Frequency
(page 20)
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FOR
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Stockholder Proposal (page 21)
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AGAINST
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2016 In Review
The American Airlines team again produced outstanding results in 2016. Air Transport World named American as its 2017 Airline of the Year, citing our 2016 performance, the teams integration work, operational and customer
service improvements and the significant investments we are making in our product. This recognition is entirely due to the great work of our approximately 120,000 team members. Some of our major accomplishments in 2016 are listed below.
2016 financial performance.
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We realized
pre-tax
profit of $4.3 billion, or $5.1 billion excluding net special charges. That was the second-best year in American Airlines
history, second only to 2015. See Annex A for a reconciliation of
pre-tax
profit excluding net special charges, a
non-GAAP
measure.
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We paid total cash dividends of $224 million ($0.10 per share per quarter) and returned $4.4 billion to our stockholders through our share repurchase programs. Since the programs began in
July 2014 through March 31, 2017, we have returned more than $10.2 billion to our stockholders through share repurchases and dividends.
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We invested in our people.
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We instituted a profit sharing program across all of our workgroups that pays 5% of our
pre-tax
profit excluding special items and paid $314 million
under the program in early 2017.
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We reached interim pay agreements with the
TWU-IAM
Association to provide pay increases for our mainline maintenance and fleet service personnel as we
continue negotiations for a joint collective bargaining agreement (JCBA). Additionally, we reached ratified five-year JCBAs for our dispatchers, flight crew training instructors, simulator pilot instructors and flight simulator
engineers.
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We announced industry-leading pay packages for pilots at our wholly-owned regional airlines Envoy, PSA and Piedmont in order to attract and retain the best pilots. As a result, we doubled both the
first-year total compensation for new regional pilots and the monthly rate of hiring for pilots at those airlines.
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We invested over $20 million to provide capability building opportunities to over 18,000 team members and leaders in the important areas of leadership development, enhanced customer service,
and teamwork.
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We invested in our products and our operations.
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We invested approximately $4.4 billion in new aircraft, including 55 new mainline and 42 new regional aircraft, and retired 71 mainline and 41 regional aircraft. As a result of our ongoing
fleet renewal program, we have the youngest fleet of the major U.S. network carriers. With these new deliveries, our mainline average age has dropped to approximately ten years, further widening the age gap between American and our peers.
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We hired additional personnel and invested in new equipment and technology to support our operations. In the fourth quarter of 2016, we achieved our best monthly completion factor,
on-time
performance and baggage handling performance since the Merger.
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American Airlines Group
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PROXY STATEMENT
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1
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We redesigned our AAdvantage
®
loyalty program to award mileage credits based on the price of tickets purchased, enabling elite members to
earn even more miles based on their status level. During 2016, the AAdvantage
®
program was named Best Elite Program in the Americas by the Freddie Awards.
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We became the first U.S. carrier to introduce Premium Economy, a new class of service on international flights with more legroom, wider seats and enhanced meal service and amenity kits. Premium
Economy debuted on our new Boeing
787-9s
and we will expand it to most other international wide-body aircraft by the end of next year.
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We made several other customer experience improvements, including the reintroduction of free snacks in the main cabin, the launch of complimentary
in-flight
entertainment and the redesign and upgrade of many Admirals Club lounges. We also continued to expand
lie-flat
Business Class seats on our international fleet and announced plans to install fast,
satellite-based Internet connectivity on hundreds of aircraft.
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In March 2017, we agreed to make a $200 million equity investment in China Southern Airlines, the largest airline in China, creating a strong foundation for a long-term relationship between
two of the worlds biggest carriers.
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We made tremendous progress in integrating our airline.
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We integrated all mainline pilots and our mainline fleet into a single scheduling system, allowing us to schedule pilots and aircraft seamlessly across the network.
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Corporate social responsibility.
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American received, for the 16th consecutive year, the highest possible ranking by the Human Rights Campaign in the 2017 Corporate Equality Index, a nationally recognized benchmark of Americas
top workplaces for inclusion of LGBT employees.
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American Airlines employees participated in more than 19,000 volunteer events in their communities, contributing more than 125,000 hours of volunteer time in the communities where they live and
where American provides service. In addition, as part of the Companys Flights for 50 awards program, American employees donated more than 20 million frequent flier miles to nonprofit organizations in their communities.
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The Environmental Protection Agency announced American is now ranked 45th on their Fortune 500 list of the largest green power users.
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Our Commitment to Stockholder Engagement and Governance
We welcome and value communication with our stockholders. Over the past year, we engaged with our stockholders and in response to that engagement we
codified our existing practices regarding 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. We also amended our bylaws to allow for the selection of the Lead Independent Director by only the independent directors of the Board. The Companys robust Lead Independent Director role promotes active and independent
oversight of management by the Board and ensures that the Board maintains accountability to our stockholders.
The following corporate
governance and Board practices ensure accountability and enhance effectiveness in the boardroom:
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Our Governance Best
Practices
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✓
Annual Board elections
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Majority voting standard
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12 of 13 director nominees are independent
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Robust Lead Independent Director role with responsibilities that comport with leading governance practices
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Routine review of Board leadership structure
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Regular executive sessions held without management present
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Stockholder right to proxy access
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✓
Annual Board, committee and director evaluations
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Annual review of Board and committee composition
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All members of the Audit Committee are designated financial experts
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Diverse Board
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Significant stock ownership requirements for directors and senior vice presidents and above
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Comprehensive risk management with Board and committee oversight
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Commitment to corporate social responsibility
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Executive CompensationHow We Link Pay and Performance
Our CEO has demonstrated his commitment to fair pay, paying for performance and aligning executive interests with that of our stockholders,
including initiating the following exceptional actions with respect to his compensation.
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In 2014, because many of our represented employees were not yet paid at the same rates as their peers at Delta and United, Mr. Parkers 2014 total target direct compensation was set
significantly below the average for his peers at Delta and United. Mr. Parkers 2016 total target direct compensation remains at approximately 22% below his peers at Delta and United (using the most recent publicly available data).
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Beginning in May 2015, at Mr. Parkers request, our Compensation Committee determined to
provide 100% of his direct compensation in the form of equity incentives in lieu of base salary and annual cash incentive compensation. That helped the
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2
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PROXY STATEMENT
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American Airlines Group
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Compensation Committee advance its commitment to paying for performance and further aligned Mr. Parkers interests with that of our stockholders.
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Also at his request, in 2016, our Compensation Committee agreed to eliminate Mr. Parkers employment agreement so that he is no longer contractually entitled to receive a set level of
compensation and benefits and is no longer protected by the change in control and severance provisions of that employment agreement.
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Our executive compensation programs are designed to be performance-based and link our executives pay opportunity to the execution of Company strategies and to enhance the interests of our stockholders.
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Our other named executive officers total compensation packages are heavily weighted towards variable cash awards and long-term equity incentives.
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Our annual cash incentive program is based on
pre-established
pre-tax
income targets (excluding special items).
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Our 2016 equity incentive program for our named executive officers incorporated both performance- and time-vesting components, with the performance-vesting component weighted at least 50% by value,
in order to further align management and stockholder interests. The performance-vesting component consisted of restricted stock units that will be earned, if at all, not earlier than the third anniversary of the grant date based on our relative
three-year
pre-tax
income margin excluding special items as compared to that of a
pre-defined
group of airlines. We believe a relative
pre-tax
income margin maintains a focus on profitability and operating efficiency and is an effective measure of relative financial performance in our industry.
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For 2017 awards, the Compensation Committee has incorporated a three-year relative total stockholder return (TSR) modifier into the performance-vesting component of the restricted stock units in
addition to the relative three-year pre-tax income margin measure. We believe that adjusting performance achievement positively or negatively based on relative TSR demonstrates our commitment to generating returns for our stockholders and will
further align management with stockholder interests.
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In April 2017, at their request, all of the executive officers who were party to change in control and severance benefit agreements voluntarily terminated their agreements. As a result, none of our
executive officers are now contractually entitled to any cash severance or continued health benefits upon any termination, nor are we contractually obligated to provide a
gross-up
to cover any excise taxes
incurred by any named executive officer under Section 4999 of the Internal Revenue Code.
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We are committed to
compensation governance best practices.
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What We Do
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What We Do NOT Do
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✓
ClawbackPolicy
for all incentive compensation paid to our executive officers, including payouts under our cash incentive programs and all equity
awards.
✓
StockOwnership Guidelines
that further align our
executive officers long-term interests with those of our stockholders.
✓
IndependentCompensation Consultant
that is directly engaged by the Compensation Committee to advise on executive and director compensation
matters.
✓
AnnualCompensation Risk Assessment
to identify any elements of our compensation program design or
oversight processes that carry elevated levels of adverse risk to the Company.
✓
EquityAward Grant Policy
that establishes objective, standardized criteria for the timing of equity awards granted to our employees.
✓
TallySheet Review
. We conduct a comprehensive overview of all compensation, including a historical
overview of total compensation targets and actual payouts as well as current vested and unvested stock holdings.
✓
At-WillEmployment
. Our executive officers are all
at-will
employees and none of our executive
officers have an employment agreement.
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×
NoSeverance or Change in Control Agreements
. None of our executive officers have a severance or change in control agreement.
×
NoExcessive Perquisites.
Perquisites and other personal benefits are not a significant portion of any executive officers compensation. We do not provide company cars, personal club memberships, home security protection, private jet travel
for personal use or protection on home sale loss in a relocation.
×
NoGuaranteed Bonuses
. Our executive officers bonuses are performance-based and 100% at risk.
×
NoActive Executive Retirement Plans
. We do not maintain any active executive-only or supplemental retirement plans.
×
NoHedging or Pledging
. We prohibit our executive officers from engaging in hedging transactions or using our stock as collateral for loans.
×
NoExcise Tax
Gross-Ups
. We do not provide any executive officer with any tax
gross-ups
to cover excise taxes in connection with a change in control.
×
NoPayouts of Dividends
accrued on unvested awards unless and until the awards vesting conditions are satisfied.
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American Airlines Group
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PROXY STATEMENT
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3
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THE MEETING
Purpose, Place, Date and Time
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. The Annual Meeting will be held at the offices of Latham & Watkins LLP, located at 885 Third Avenue, New York, New York 10022, on Wednesday, June 14, 2017 at
9:00 a.m., local time, for the purposes described in the accompanying Notice of Annual Meeting.
The approximate date on which we are
first sending the Notice of Annual Meeting and accompanying proxy materials to stockholders, or sending a Notice Regarding the Availability of Proxy Materials and posting the proxy materials at
www.proxyvote.com
, is May 1, 2017.
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., American refers to AAGs wholly-owned subsidiary American Airlines, Inc., US Airways Group refers to
US Airways Group, Inc., a former wholly-owned subsidiary of AAG which merged with and into AAG on December 30, 2015, and US Airways refers to US Airways, Inc., a former wholly-owned subsidiary of US Airways Group which merged with
and into American on December 30, 2015. The Merger refers to the merger of AMR Merger Sub, Inc., a wholly-owned subsidiary of AMR Corporation, with and into US Airways Group on December 9, 2013. AMR Corporation was renamed
American Airlines Group Inc. upon the closing of the Merger; references to AMR in this Proxy Statement mean AAG prior to the closing of the Merger.
Record Date; Stockholders Entitled to Vote
Stockholders of record at the close of business on April 17, 2017 (the record date) are entitled to receive notice of and to vote
at the Annual Meeting. On the record date, there were 493,637,491 shares of our common stock, $0.01 par value per share (Common 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 25.2 million of the issued and outstanding shares of Common Stock were held in the Disputed Claims Reserve established in accordance with
Section 7.3 of AMRs fourth amended joint plan of reorganization (as amended, the Bankruptcy Plan). Pursuant to Section 7.3(c) of the Bankruptcy Plan, the shares held in the Disputed Claims Reserve will be voted by the
disbursing agent holding these shares proportionally in the same manner 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 for ten days prior to the Annual Meeting for any purpose germane to the Annual Meeting between 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. The stockholder list will also be available at the Annual Meeting for examination by any stockholder present at the Annual Meeting.
Your vote is very important. You are encouraged to vote as soon as possible.
Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting to be held on June 14, 2017
The Notice of Annual Meeting, this Proxy Statement and our Annual Report on
Form 10-K
for the fiscal
year ended December 31, 2016 are available at
www.proxyvote.com
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Requirements to Attend
Annual Meeting
Stockholders who attend the Annual Meeting must check in at the registration desk in the lobby of the offices of
Latham & Watkins LLP, located at 885 Third Avenue, New York, New York 10022. At
check-in,
you must provide:
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an admission ticket or other proof of ownership of our stock as of April 17, 2017 that is acceptable to us; and
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valid government-issued picture identification.
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You can find your
admission ticket 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 drivers 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 to the Annual Meeting.
Quorum
The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock as of the record date is necessary to constitute a quorum at the Annual Meeting.
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 believe that Proposal 2 is routine and that Proposals
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4
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PROXY STATEMENT
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American Airlines Group
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1, 3, 4 and 5 are
non-discretionary.
If the broker, bank or other nominee that holds your shares in street name returns a proxy card without
voting on a
non-discretionary
proposal because it did not receive voting instructions from you on that proposal, this is referred to as a broker
non-vote.
Broker
non-votes
are considered in determining whether a quorum exists at the Annual Meeting. The effect of broker
non-votes
on the outcome of each proposal
to be voted on at the Annual Meeting is explained below.
Vote Required to Approve Each Proposal
With respect to Proposal 1 (Election of Directors), our Second Amended and Restated Bylaws (the Bylaws) provide that 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. Brokers do not have discretionary authority to vote on
this proposal. Abstentions and broker
non-votes
are not considered votes cast FOR or AGAINST a nominees 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 the
policy adopted by the Board of Directors. Within approximately 90 days after certification of the election results of the stockholder vote, our Corporate Governance and Nominating Committee (or other committee as directed by the Board of
Directors) 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 Form
8-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), Proposal 4 (Advisory Vote on the Frequency of the Advisory Vote to Approve Executive Compensation) and
Proposal 5 (Stockholder Proposal Regarding Independent Board Chairman) 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. Brokers do not have
discretionary authority and are not entitled to vote on Proposals 3 through 5. As a result, broker
non-votes
will have no effect on the outcome of Proposals 3 through 5. Because brokers have discretionary
authority to vote on Proposal 2, broker
non-votes
are not expected to result on Proposal 2. With respect to Proposal 4 (Advisory Vote on the Frequency of the Advisory Vote to Approve Executive Compensation),
if none of the frequency alternatives (one year, two years or three years) receives a majority vote, we will consider the frequency that receives the highest number of votes by stockholders to be the frequency that has been approved by our
stockholders.
Voting of Proxies
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 for
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. 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, we encourage you to submit a proxy by mail by completing your proxy card, by telephone or over the Internet, even if you plan to attend the 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.
All properly executed proxies received by us by 11:59 p.m., Eastern Time, on
Tuesday, June 13, 2017, and not revoked will be voted at the Annual Meeting in accordance with the directions noted in each proxy. 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 a
non-binding,
advisory basis, of executive compensation as disclosed in this Proxy Statement, 1 YEAR for the frequency of the advisory vote on executive compensation and AGAINST the stockholder proposal regarding an independent Board
Chairman.
If any other matters properly come before the Annual Meeting, the persons named as proxies 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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American Airlines Group
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PROXY STATEMENT
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5
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Revocation of Proxies
Any stockholder delivering a proxy has the power to revoke it at any time before it is voted by:
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giving notice of revocation to our Corporate Secretary, at American Airlines Group Inc., 4333 Amon Carter Blvd., MD 5675, Fort Worth, Texas 76155 (by mail or overnight delivery);
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executing and delivering to our Corporate Secretary a proxy card relating to the same shares bearing a later date;
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submitting a new proxy prior to the time at which the Internet and telephone voting facilities close; or
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voting in person at the Annual Meeting.
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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 13, 2017, 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
17, 2017 and a proxy to vote the shares from such broker, bank or other nominee.
Solicitation of Proxies
In addition to soliciting proxies through the mail, we may solicit proxies through our directors, officers and employees in person
and by
e-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. to assist in the solicitation for an anticipated fee of $25,000, plus expenses.
Inspector of Election
All votes at the Annual Meeting will be counted by Broadridge Financial Solutions, Inc., our inspector of election. The inspector of election will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes.
Electronic Delivery of Proxy Materials
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. If your shares are registered directly in your name with our stock registrar and transfer agent, American Stock
Transfer & Trust Company, LLC (AST), you can make this election by going to ASTs website (
www.astfinancial.com
) and (1) clicking Client Login, then Shareholders & Investors, then Manage My Accounts,
then select the type of AccountUS Shareholder or Non Shareholder, then Login to Transact; (2) entering the information required to gain access to your account; and (3) clicking Receive Company Mailing via
E-Mail,
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.
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 an
e-mail
notification, you will receive by mail a simple Notice Regarding the 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 or
e-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 Form
10-K
for the year ended December 31, 2016), we encourage you
to sign up for electronic delivery of the Notice Regarding Availability of Proxy Materials using the instructions described above.
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 the 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 the 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 the 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.
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 the Availability of Proxy Materials, please notify your broker, direct your written request to Caroline B. Ray, Corporate Secretary, American Airlines Group
Inc., 4333 Amon Carter Blvd., MD 5675, Fort Worth, Texas 76155. Stockholders who currently receive multiple copies of the proxy statement and annual report, or Notice Regarding the Availability of Proxy Materials, at their address and would like to
request householding of their communications should contact their broker.
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6
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PROXY STATEMENT
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American Airlines Group
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PROPOSAL 1ELECTION OF DIRECTORS
Election of Directors
Our Board of Directors has 13 members. W. Douglas Parker serves as Chairman of the Board of Directors, and John T. Cahill serves as our Lead
Independent Director.
Upon the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors has nominated
the 13 director candidates listed below under the section Directors and Director Nominees. Each nominee is currently a director of the Company.
If elected as a director at the Annual Meeting, each of the nominees will serve a
one-year
term expiring at the 2018 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. If any of the nominees should be
unavailable to serve for any reason (which is not anticipated), the Board of Directors may designate a substitute nominee or nominees (in which event the persons named on the proxy card will vote the shares represented by all valid proxies for the
election of the substitute nominee or nominees), allow any vacancies to remain open until a suitable candidate or candidates are located or reduce the size of the Board of Directors.
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 Directors and Director Nominees for a
one-year
term expiring at the 2018 annual meeting of stockholders and until his
or her successors have been duly elected and qualified.
Directors and Director Nominees
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Name
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Age
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Director
Since
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Principal Occupation
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Independent
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AC
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CC
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CGNC
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FC
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James F. Albaugh
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66
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2013
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Advisor to a global advisory and asset management firm; former Senior Advisor to The Blackstone Group L.P. and President and Chief Executive Officer of The Boeing
Companys Commercial Airplanes business unit
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✓
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M
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M
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Jeffrey D. Benjamin
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55
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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 Director
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59
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2013
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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.
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✓
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M
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M
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Michael J. Embler
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53
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2013
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Former Chief Investment Officer of Franklin Mutual Advisers LLC
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✓
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M
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M
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Matthew J. Hart
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65
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2013
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Former President and Chief Operating Officer of Hilton Hotels Corporation; former Chief Financial Officer of Hilton Hotels
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✓
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C
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Alberto Ibargüen
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73
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2013
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President and Chief Executive Officer of the John S. and James L. Knight Foundation; former Chairman of Miami Herald Publishing Co
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✓
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M
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M
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Richard C. Kraemer
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73
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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
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65
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2015
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Operating Partner at Marvin Traub Associates; former Vice-Chairman of Macys, Inc.
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✓
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M
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M
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Martin H. Nesbitt
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54
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2015
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Co-Chief
Executive Officer of The Vistria Group, LLC; former President and Chief Executive Officer of PRG Parking
Management
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✓
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M
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M
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Denise M. OLeary
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59
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2013
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Private Venture Capital Investor; former General Partner at Menlo Ventures
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✓
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M
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M
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W. Douglas Parker
Chairman
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55
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2013
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Chairman and Chief Executive Officer of American Airlines Group Inc. and American Airlines, Inc.
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No
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Ray M. Robinson
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69
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2013
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Non-Executive
Chairman of Citizens Trust Bank; former President of the Southern Region at AT&T
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✓
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C
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Richard P. Schifter
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64
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2013
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Senior Advisor at TPG Capital, L.P.; former Partner at TPG and Arnold & Porter LLP
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✓
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C
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AC = Audit Committee CC = Compensation Committee CGNC = Corporate
Governance and Nominating Committee FC = Finance Committee
M = Member C =
Chairman
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American Airlines Group
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PROXY STATEMENT
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7
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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 perspective 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. Our Board of Directors currently includes two African American, one Hispanic and two female directors.
Additional information regarding our director nominees, including their ages, 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. There are no family relationships among the directors and
our executive officers.
James F. Albaugh
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Independent
Director Since:
2013
Age:
66
Committees:
Compensation; Corporate Governance and Nominating
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Select Business Experience:
Senior Advisor to Perella Weinberg Partners, a global advisory and asset management firm
(2016-Present)
Senior Advisor to The Blackstone Group L.P., a private equity and financial services firm
(2012-2016)
President and Chief Executive Officer of The Boeing Companys (Boeing)
Commercial Airplanes business unit (2009-2012)
President and Chief Executive Officer of Boeings Integrated Defense Systems business (2002-2009)
Joined Boeing in 1975 and held various other executive positions prior to July 2002,
including President and Chief Executive of Space and Communications and President of Space Transportation
Current Public Company Directorships
Harris Corporation, a technology company, defense contractor and information technology
services provider (2016-Present)
Past Public Company
Directorships
B/E Aerospace, Inc. (2014- April 2017)
TRW Automotive
Holdings Corp. (2006-2015)
Other Leadership Experience and
Service:
Member of the boards of directors of the following private entities: Aloft Aeroarchitects (formerly PATS Aerospace), Belcan Corporation and the Fred Hutchinson Cancer Research Center; Chairman of the National Aeronautic Association;
past President of the American Institute of Aeronautics and Astronautics; past Chairman of the Aerospace Industries Association; elected member of the International Academy of Aeronautics; elected member of the National Academy of Engineering;
member of the board of trustees of Willamette University and the Columbia University School of Engineering; and former member of Boeings Executive Council for over ten years.
Key Experience/Director Qualifications
: Executive leadership experience
in the airplane and airline industry, including experience with complex systems, contracts and governmental oversight, as well as accounting and financial literacy and public company board and corporate governance experience.
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Jeffrey D. Benjamin
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Independent
Director Since:
2013
Age:
55
Committees:
Compensation; Finance
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Select Business Experience:
Senior Advisor to Cyrus Capital Partners, L.P., a registered investment advisor
(2008-Present)
Consultant to Apollo Management, L.P. (Apollo Management), a private
investment fund (2008-present)
Senior Advisor to Apollo Management (2002-2008)
Current Public Company Directorships
Caesars Entertainment Corp., a casino-entertainment company (2008-Present)
A-Mark
Precious Metals, Inc., a full-service
precious metals trading company (2014-Present)
Past Public
Company Directorships
Chemtura Corporation (2010-2017)
Spectrum Group
International, Inc. (2009-2014)
Exco Resources, Inc. (2005-2016)
Other Leadership Experience and Service:
Member of the boards of directors of the following private entities: ImOn Communications LLC, Higher
Learning Technologies Corporation, NRG Media, LLC and Rackspace Hosting Inc.
Key Experience/Director Qualifications
: Experience in the investment industry, accounting and financial literacy, corporate governance expertise and extensive experience serving on the boards of directors of public and
private companies.
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8
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PROXY STATEMENT
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American Airlines Group
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John T. Cahill
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Lead Independent Director
Director Since:
2013
Age:
59
Committees:
Audit; Corporate Governance and Nominating
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Select Business Experience:
Vice Chairman of The Kraft Heinz Company (Kraft Heinz), a food and beverage
company (2015-Present)
Chairman and Chief Executive Officer of Kraft Foods Group, Inc. (Kraft Foods
Group), until its merger with H.J. Heinz Company (2014-2015)
Non-Executive
Chairman of Kraft Foods Group from
(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 Directorships
Kraft Heinz (2015-Present)
Colgate-Palmolive
Company, a consumer products company (2005-Present)
Past Public
Company Directorships
Kraft Foods Group (2012-2015)
Legg Mason, Inc.
(2009-2014)
The Pepsi Bottling Group, Inc. (Pepsi Bottling) (1999-2007)
Frontier Holdings,
Inc. (1984-1985)
Other Leadership Experience and Service:
Former Industrial Partner at Ripplewood Holdings LLC; spent nine years with Pepsi Bottling, 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 accounting and financial expertise and public company board and corporate governance experience.
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Michael J. Embler
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Independent
Director Since:
2013
Age:
53
Committees:
Audit; Finance
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Select Business Experience:
Chief Investment Officer of Franklin Mutual Advisers LLC (Franklin Mutual
Advisers), an asset management company (2005 to 2009)
Head of Franklin Mutual Advisers Distressed Investment Group (2001-2005)
Current Public Company Directorships
NMI Holdings, Inc.,
a mortgage insurance provider (2012-Present)
Past Public Company
Directorships
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; and member of the board of trustees of The Mohonk Preserve.
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 and service as a director.
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American Airlines Group
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PROXY STATEMENT
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9
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Matthew J. Hart
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Independent
Director Since:
2013
Age:
65
Committees:
Audit
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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 Directorships
American Homes 4
Rent, a company real estate investment trust (2012-Present)
Air Lease Corporation, an aircraft leasing company (2010-Present)
Past Public Company Directorships
B. Riley Financial,
Inc. (2009-2015)
US Airways Group (2006-2013)
America West
Holdings Corporation (2004-2005)
Kilroy Realty Corporation (1997-2008)
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.; and member of the boards of
directors of the following private entities: Checchi Capital Advisers, LLC and Heal the Bay.
Key Experience/Director Qualifications
: Financial expertise, risk management experience, extensive experience as a senior operating and
finance executive for large public companies, including companies in the travel industry, mergers and acquisitions experience, service as a public company director and airline experience.
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Alberto Ibargüen
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Independent
Director Since:
2013
Age:
73
Committees:
Audit; Compensation
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Select Business Experience:
President and Chief Executive Officer of the John S. and James L. Knight Foundation, a
non-profit
corporation dedicated to journalism and the arts (2005-Present)
Chairman of Miami Herald Publishing Co., a publishing company (1998-2005)
Past Public Company Directorships
PepsiCo, Inc.
(2005-2016)
AMR Corporation (2008-2013)
NCL Corporation Ltd.
(2006-2008)
AOL, Inc. (2011-2015)
Other Leadership Experience and Service:
Former publisher of The Miami
Herald and of El Nuevo Herald; former member of the advisory committee of the Public Company Accounting Oversight Board; and former chairman of the board of directors of the following
non-profit
organizations:
the Public Broadcasting Service (PBS), Newseum Institute and the World Wide Web Foundation.
Key Experience/Director Qualifications
: Media and financial expertise, food and beverage products and philanthropic experience, executive
leadership experience, and extensive experience serving as a director and member of board committees.
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10
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PROXY STATEMENT
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American Airlines Group
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Richard C. Kraemer
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Independent
Director Since:
2013
Age:
73
Committees:
Compensation
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Select Business Experience:
President of Chartwell Capital, Inc., a private investment company
(2006-Present)
Current Public Company
Directorships
Knight Transportation, Inc., a provider of full truckload transportation and logistics
services (2012-Present)
Past Public Company
Directorships
US Airways Group (2005-2013)
America West
Holdings Corporation (1992-2005)
UDC Homes Inc. (1985-1996)
Other Leadership Experience and Service:
Member of the board of directors of the College of William & Mary Business School
Foundation; served as an officer of UDC Homes Inc. for over twenty years, including 11 years as President and two years as Chief Executive Officer.
Key Experience/Director Qualifications
: Financial expertise, corporate governance, human resources and labor relations expertise, experience
in developing strategy for and managing a large public company, success as an investor and airline experience.
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Susan D. Kronick
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Independent
Director Since:
2015
Age:
65
Committees:
Corporate Governance and Nominating; Finance
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Select Business Experience:
Operating Partner at Marvin Traub Associates, a New York based retail consulting firm
(2012-Present)
Vice Chairman of Macys, Inc. (Macys), a department store
(2003-2010)
Group President, Regional Department Stores of Macys (2001-2003)
Chairman and Chief
Executive Officer of Burdines/Macys Florida (1997-2001)
Current Public Company Directorships
Hyatt Hotels Corporation, a hospitality company (2009-Present)
Past Public Company Directorships
Pepsi Bottling
(1999-2010)
Other Leadership Experience and Service:
Member
of the board of directors of the following
non-profit
organizations: the John S. and James L. Knight Foundation and the Miami City Ballet.
Key Experience/Director Qualifications
: Marketing and operational
expertise, as well as experience serving as a public company director and experience in building industry leading brands as a result of the various management positions held with Macys.
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American Airlines Group
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PROXY STATEMENT
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11
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Martin H. Nesbitt
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Independent
Director Since:
2015
Age:
54
Committees:
Audit; Finance
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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 (known as The Parking
Spot), an owner and operator of
off-airport
parking facilities (1996-2012)
Current Public Company Directorships
Norfolk Southern Corporation, a public rail transportation company
(2013-Present)
Jones Lang LaSalle Incorporated, a public commercial real estate company
(2011-Present)
Past Public Company Directorships
Pebblebrook Hotel
Trust (2009-2010)
Other Leadership Experience and Service:
Member of the board of directors of PRG Parking Management (known as The Parking Spot); former officer of the Pritzker Realty Group, L.P.; former Vice President and Investment Manager at LaSalle Partners, one of the predecessor corporations of
Jones Lang LaSalle Incorporated; Trustee of Chicagos Museum of Contemporary Art; and Chairman of the Barack Obama Foundation.
Key Experience/Director Qualifications
: Executive leadership, operational and financial experience, as well as public company board
experience.
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Denise M. OLeary
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Independent
Director Since:
2013
Age:
59
Committees:
Compensation; Corporate Governance and Nominating
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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 Directorships
Medtronic plc, a medical technology company (2000-Present)
Calpine Corporation,
a wholesale power producer (2016-Present)
Past Public Company
Directorships
US Airways Group (2005-2013)
Chiron Corporation
(2002-2006)
America West Holdings Corporation (1998-2005)
Other Leadership Experience and Service:
Member of the boards of
directors of the following private entities: Connect for Health Colorado and Galvanize, Inc.; member of the boards of trustees of the Bonfils-Stanton Foundation and the University of Denver; member of the Smithsonian National Board; and former
member of the boards of directors of the following private entities: Lucile Packard Childrens Hospital, Stanford Hospital & Clinics, the Denver Foundation, the Corporation for Supportive Housing and the University of Colorado Hospital
Authority.
Key Experience/Director Qualifications
: Financial
expertise, experience in the oversight of risk management, human resources expertise, extensive service as a public company director, success as an investor and airline industry expertise.
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12
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PROXY STATEMENT
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American Airlines Group
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W. Douglas Parker
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Chairman
Director Since:
2013
Age:
55
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Select Business Experience:
Chairman of the board of directors of AAG (2014-Present)
Chief Executive
Officer of AAG and American (2013-Present)
Chairman of the board of directors of and Chief Executive Officer of US Airways Group and US Airways (2005-2013)
Current Public Company Directorships
AAG (2013-Present)
Past Public Company Directorships
US Airways Group
(2005-2013)
America West Holdings Corporation (1999-2005)
Pinnacle West
Capital Corporation, a holding company that, provides wholesale and retail electric services primarily in Arizona (2007-2012)
Other Leadership Experience and Service:
Former Chairman of the board of directors of and Chief Executive Officer of America West and AWA;
Chairman of Airlines for America; former Senior Vice President and Chief Financial Officer of AWA; and member of the Board of Advisors for the Cox School of Business at Southern Methodist University.
Key Experience/Director Qualifications
: Financial, airline, marketing,
human resources and labor relations experience, as well as 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 experience as a public
company director.
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Ray M. Robinson
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Independent
Director Since:
2013
Age:
69
Committees:
Corporate Governance and Nominating
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Select Business Experience:
Non-executive
Chairman of the board of directors
of Aarons, Inc. (Aarons), a
lease-to-own
retailer (2014-Present)
Director and
non-executive
Chairman of Citizens
Bancshares Corporation and its subsidiary, Citizens Trust Bank, an African American-owned bank (2003-present)
Held several executive positions at AT&T from 1968-2003, including President of the
Southern Region, its largest region, President and Chief Executive Officer of AT&T Tridom, Vice President of Operations for AT&T Business Customer Care, Vice President of AT&T Outbound Services and Vice President of AT&T Public
Relations
Current Public Company Directorships
Aarons
(2002-Present)
Acuity Brands, Inc., a public lighting solutions company (2001-Present)
Fortress
Transportation and Infrastructure, a public company that invests in transportation infrastructure and equipment
Past Public Company Directorships
Avnet, Inc. (2000-2017; Mr. Robinson resigned from the Avnet, Inc. board of
directors effective May 1, 2017)
AMR Corporation (2005-2013)
RailAmerica Inc. (2009-2011)
Other Leadership Experience and Service:
Member of the board of
directors of the Georgia Aquarium; and Vice Chairman of the East Lake Community Foundation.
Key Experience/Director Qualifications
: Extensive technology, banking, communications, strategic and executive leadership experience, as well
as experience serving as a public company director.
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American Airlines Group
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PROXY STATEMENT
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13
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Richard P. Schifter
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Independent
Director Since:
2013
Age:
64
Committees:
Finance
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Select Business Experience:
Senior Advisor to TPG, a private equity firm (2013-Present)
Partner at TPG
(1994-2013)
Partner (1986-1994) and associate (1979-1986) at Arnold & Porter LLP, a
law firm
Current Public Company Directorships
LPL Financial
Holdings, Inc., a public company broker-dealer, custodian for registered investment advisors and consultant to retirement plans (2005-Present)
EverBank Financial Corp., a bank holding company (2010-Present)
Past Public Company Directorships
Republic
Airways Holdings Inc. (2009-2013)
Midwest Airlines, Inc. (2007-2009)
US Airways Group (2005-2006)
America West
(1994-2005)
Ryanair, PLC (1996-2003)
Other Leadership Experience and Service:
Member of the board of
directors of Youth, I.N.C. (Improving
Non-Profits
for Children) and the American Jewish International Relations Institute; member of the board of overseers of the University of Pennsylvania Law School; former
member of the boards of directors of the following private entities: Direct General Corporation, American Beacon Advisors, Inc., ProSight Specialty Insurance Holdings, Inc. and Ariel Holdings, Ltd.
Key Experience/Director Qualifications
: Substantial experience with
airline management, as well as financial experience, legal experience and public company board of directors and corporate governance experience.
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14
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PROXY STATEMENT
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American Airlines Group
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BOARD COMPOSITION
How We Build a Board That is Right for American Airlines
Each of the 13 current nominees for director recommended for election at the Annual Meeting is a current member of the Board of Directors. The
effectiveness of the Board of Directors and the recruitment of directors are overseen by the Corporate Governance and Nominating Committee. In evaluating candidates for director, the Corporate Governance and Nominating Committee considers the
qualifications described below. Based on the Corporate Governance and Nominating Committees evaluation of each of the current nominees qualifications and his or her prior performance as a director, the Corporate Governance and Nominating
Committee determined to recommend the 13 directors for election. The Corporate Governance and Nominating Committee received no nominations from stockholders for the Annual Meeting.
Consistent with its charter, the Corporate Governance and Nominating Committee proposes for nomination 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 term strategic plan, are committed to our
success and have the ability to work effectively with the Companys Chief Executive Officer and other members of the Board of Directors. 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 Board of Directors objective that it be composed of individuals who have, among other things, a diversity of skills, expertise and perspective 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 Nominating 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, operations, mergers and acquisitions, the airplane and airline industry, accounting, financial literacy, finance, banking, investment, asset
management and restructuring, capital markets, capital management, risk management, legal analysis, customer service, consumer marketing, communications, labor relations, human resources, leadership assessment and diversity, safety, investing,
information technology and community service. The Corporate Governance and Nominating 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 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.
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 Companys Board, and other directors should not serve on more than four boards of public companies, other than the Companys 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, the Board of Directors confirms that at least a majority of the Board
of Directors is independent in accordance with the NASDAQ definition of independence and that the members of the Board of Directors, as a group, maintain the requisite qualifications under applicable NASDAQ listing standards for service on the
Audit, Compensation, and Corporate Governance and Nominating Committees.
Stockholder Recommendations or
Nominations of Director Candidates
The Board welcomes recommendations from its stockholders for good director candidates that they
believe will help the Company increase stockholder value. We encourage stockholders with any such director candidate recommendations to contact us directly prior to going through the formal director nomination procedures described below.
Under our Bylaws, any stockholder wishing to nominate a director should submit in writing the candidates name, biographical information,
business qualifications and other information required by the Bylaws, to Ray M. Robinson, Chair of the Corporate Governance and Nominating Committee, American Airlines Group Inc., 4333 Amon Carter Blvd., MD 5675, 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.
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 years annual meeting of stockholders. For the 2018 annual
meeting of stockholders, notice must be delivered no sooner than February 14, 2018 and no later than March 16, 2018. All qualified submissions will be reviewed
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American Airlines Group
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PROXY STATEMENT
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15
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by the Corporate Governance and Nominating 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.
In addition, our Bylaws permit certain of our stockholders who have beneficially owned 3% or more of our outstanding common stock continuously for
at least three years to submit nominations to be included in the Companys proxy materials for up to 20% of the total number of directors then serving. Notice of proxy access director nominations for the 2018 annual meeting of stockholders must
be delivered to our Corporate Secretary at our principal executive offices no earlier than December 2, 2017 and no later than the close of business on January 1, 2018. The notice must be 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 2018 annual meeting of stockholders and must otherwise be in compliance with our Bylaws.
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16
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PROXY STATEMENT
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American Airlines Group
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PROPOSAL 2RATIFICATION 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 firms 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, 2017, and our Board of Directors has directed that KPMGs 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 firms lead engagement partner rotates every five years. The Audit Committee and its Chair
are directly involved in the selection of KPMGs 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 KPMGs appointment for the fiscal year
ending December 31, 2017 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 Companys 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 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, 2017.
Independent Registered Public Accounting Firm Fees
The following table presents fees billed for professional services rendered by KPMG, AAGs principal accountant for the audit of the financial
statements of AAG and its subsidiaries as of and for the fiscal years ended December 31, 2016 and 2015, as well as fees billed in this period for other services rendered by KPMG.
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Fiscal Year 2016
($)
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Fiscal Year 2015
($)
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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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1,243,000
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543,000
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Tax Fees
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826,000
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712,000
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All Other Fees
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Total
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5,984,000
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5,170,000
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Audit Fees are for professional services rendered for the audits of the annual financial statements
included in our Annual Report on Form
10-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 Form
10-Q.
Audit-Related Fees are for 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 attest services.
Tax Fees
primarily include fees for professional services related to (i) expatriate tax services and (ii) bankruptcy-related tax services.
There were no fees that fall into the classification of All Other Fees for the fiscal years ended December 31, 2016 and 2015.
Policy on Audit Committee
Pre-Approval
The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent registered public accounting
firm. The Audit Committee
pre-approves
all audit and permissible
non-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 delegated
pre-approval
authority to its Chair. Under this delegation, the Chair must report any
pre-approval
decision he or she makes to the Audit Committee at its next meeting following such approval.
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American Airlines Group
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PROXY STATEMENT
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17
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PROPOSAL 3ADVISORY 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 a
non-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.
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 corporate objectives and stockholder interests. Our compensation programs are designed to be flexible and complementary and to collectively meet our compensation
objectives. At the 2016 annual meeting of stockholders, our stockholders overwhelmingly approved the compensation of our named executive officers (with an approval representing over 97% of the shares represented in person or by proxy at the meeting
and entitled to vote).
Highlights of our compensation program include:
A commitment to
pay-for-performance
with a
substantial portion of each executive officers compensation being at risk and aligned with stockholder interests, as shown by the following:
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100% of Mr. Parkers direct compensation is provided in the form of equity incentives, the majority of which vest based upon the achievement of performance objectives, underscoring our
commitment to paying for performance and further aligning his interests with that of our stockholders. At his request, Mr. Parker no longer receives any base salary and no longer participates in the Companys Short-term Incentive Program.
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In 2016, at Mr. Parkers request, our Compensation Committee agreed to eliminate his employment agreement, so that he is no longer contractually entitled to receive a set level of
compensation and benefits and is no longer protected by the change in control and severance provisions of the employment agreement.
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For 2016, on average, 87% of the total target compensation of our other named executive officers was variable, at risk and tied directly to measurable performance. Consistent with this focus, the
largest portion of our 2016 executive compensation was in the form of performance-based annual cash incentives tied to
pre-established
pre-tax
income targets and
long-term equity incentives that reward stock performance and are tried to our relative three-year
pre-tax
income margins.
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In 2017, at their request, all executive officers who were party to change in control and severance benefit agreements voluntarily terminated their agreements. As a result, none of our executive
officers are now contractually entitled to any cash severance or continued health benefits upon any termination, nor are we contractually obligated to provide a
gross-up
to cover any excise taxes incurred by
any named executive officer under Section 4999 of the Internal Revenue Code (the Code).
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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. Consistent with his commitment to keep his total target direct compensation below his peers, Mr. Parkers 2016 total target direct compensation remained
significantly below his peers at Delta and United (using the most recent publicly available data).
A continued
commitment to good compensation governance practices
, whereby compensation packages for our executive officers are established by our Compensation Committee that consists solely of independent, outside directors, and are consistent with market
practice and reasonable in light of our corporate and each individual executives performance.
Clawback
provisions
for all incentive compensation paid to our executive officers and stock ownership guidelines that further align their long-term interests with those of our stockholders, as well as good disclosure practices.
Mitigating compensation risk
by, among other things, providing a compensation package that focuses on both short- and
long-term goals and requiring a substantial stock ownership commitment, encouraging our executives to focus on the Companys 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 42.
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, 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:
RESOLVED, that AAGs stockholders approve, on a
non-binding,
advisory basis, the compensation of AAGs 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.
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18
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PROXY STATEMENT
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American Airlines Group
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The
say-on-pay
vote is
advisory, and therefore not binding on us, our Compensation Committee or the Board of Directors. 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 has adopted a policy providing for an annual
say-on-pay
advisory vote. Unless the Board of Directors modifies its policy on the frequency of future
say-on-pay
advisory votes, we bring these proposals to our stockholders annually and the next
say-on-pay
advisory vote will be held at the 2018 annual meeting of stockholders.
The Board of Directors unanimously recommends that the stockholders vote FOR the
approval of executive compensation.
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American Airlines Group
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PROXY STATEMENT
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19
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PROPOSAL 4ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE TO
APPROVE EXECUTIVE COMPENSATION
(SAY-ON-PAY
FREQUENCY)
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 enables our stockholders to indicate how frequently they would like the Company to hold a
non-binding,
advisory vote on
the compensation of our named executive officers, as disclosed pursuant to the SECs compensation disclosure rules. By voting on this proposal, stockholders may indicate whether they would prefer an advisory vote on named executive officer
compensation once every one, two or three years.
Our Board of Directors has determined that holding a
say-on-pay
vote on executive compensation every year is the most appropriate alternative for the Company, and therefore recommends that you vote for a
one-year
interval for the advisory vote on executive compensation.
In formulating its
recommendation, our Board of Directors considered that an advisory vote every year on executive compensation allows our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the
proxy statement every year. Additionally, an advisory vote every year on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive
compensation philosophy, policies and practices.
The frequency vote on executive compensation is advisory and therefore not binding on
the Company, the Compensation Committee or our Board of Directors. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and will consider the outcome of this advisory vote when determining how often the
Company should submit to stockholders an advisory vote to approve the compensation of its named executive officers.
The Board of Directors unanimously recommends the approval of an advisory vote to approve
executive compensation to be held every 1 YEAR.
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20
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PROXY STATEMENT
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American Airlines Group
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PROPOSAL 5STOCKHOLDER PROPOSAL REGARDING AN INDEPENDENT BOARD
CHAIRMAN
A stockholder has informed the Company that he intends to present the proposal set forth below at our Annual Meeting. If
the stockholder (or his qualified representative) is present at the Annual Meeting and properly submits the proposal for a vote, then the stockholder proposal is voted upon at the Annual Meeting.
In accordance with federal securities laws, the stockholder proposal is presented below as submitted by the stockholder, is quoted verbatim and is
in italics. 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 of Directors Statement in Opposition, which follows
the stockholder proposal, the Board of Directors unanimously recommends that you vote AGAINST the stockholder proposal.
Stockholder Proposal
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach,
CA 90278, who owns 70 shares of our common stock, has advised the Company that he intends to propose the following resolution from the floor. The proposed resolution and statements in support thereof are set forth below. 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 is necessary for approval of the proposal.
Shareholders request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require the Chair of the Board
of Directors, whenever possible, to be an independent member of the Board. The Board would have the discretion to phase in this policy for the next CEO transition, implemented so it does not violate any existing agreement. If the Board determines
that a Chair who was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent
director is available and willing to serve as Chair. This proposal requests that all the necessary steps be taken to accomplish the above.
Caterpillar reversed itself by naming an independent board chairman in October 2016. Caterpillar had opposed a shareholder proposal for an independent board chairman as recent as its June 2016 annual meeting. Wells Fargo also
reversed itself and named an independent board chairman in October 2016.
According to Institutional Shareholder Services 53% of
the Standard & Poors 1,500 firms separate these 2 positions 2015 Board Practices, April 12, 2015. This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix. Our
clearly improvable corporate governance (as reported in 2016) is an added incentive to vote for this proposal:
GMI Analyst said
the corporate governance profile American Airlines is highlighted by the combination of the CEO/Chair positions, overworked directors, and directors whose prior board service raised concerns about the boards integrity.
Specifically, 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 Group board, which filed for Bankruptcy in 2004. In addition, Messrs. Benjamin and Robinson served on the boards of 4 public companies and are thus considered
overworked. Despite being considered overworked, Mr. Benjamin also served on our Executive Pay Committee and Mr. Robinson served on our Nomination Committee.
Limits on shareholder control include our companys lack of a full majority director election standard requiring automatic removal of
directors who fail to receive a majority of votes cast in uncontested elections. In 2014, it was reported the company would take a write down of $600 million for charges mostly related to fuel hedging.
Returning to the core topic of this proposal from the context of our clearly improvable corporate performance,
Please vote to enhance shareholder value:
Independent Board Chairman Proposal 5.
Board of Directors Statement in Opposition
The Board of Directors has considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our
stockholders. As more fully described below, in conducting its review the Board considered:
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The Companys leadership structure, both as currently constructed and from a historical perspective.
We believe that our leadership structure has served the Company and its stockholders
very well. We review our leadership structure regularly, and are not opposed, in principle, to having an independent director serve as Chairman. However, the Board believes that adopting this proposal is unnecessary at this point in time and would
unduly restrict the Boards flexibility to put in place the optimal leadership structure for the needs of the Company.
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American Airlines Group
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PROXY STATEMENT
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21
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Feedback from our stockholders.
Mr. Chevedden presented the same proposal last year and it was opposed by a significant majority of our stockholders. We engage frequently with our
stockholders, and following receipt of that proposal last year, the Company sought out and received input from its stockholders through engagement, which included at times Mr. Cahill, our Lead Independent Director. Through this engagement, we
learned that there was significant stockholder support for our leadership structure once the actual role of our Lead Independent Director in practice was discussed in more depth. Thus, following this engagement, we codified and improved disclosure
of our existing practices regarding 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. In addition, our Lead Independent Director is now appointed by a vote of only the independent directors of the Company (as opposed to the full Board).
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Our other strong corporate governance policies and practices.
The Company has implemented numerous governance protective measures and adheres to them. Moreover, our history does not give
rise to any of the concerns that typically underlie opposition to a combined role of CEO and Chairman and our stockholders accordingly were not opposed substantively to our retention of this centralized leadership structure.
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Accordingly, the Board of Directors unanimously recommends a vote
AGAINST
this proposal, as discussed more
thoroughly below.
The Companys current leadership structure is in the best interests of its stockholders
The Company has always strived to maintain high corporate governance standards and takes this responsibility seriously. The Board of Directors is
currently led by Doug Parker, our Chairman and Chief Executive Officer (CEO), and John T. Cahill, our Lead Independent Director. The Board of Directors periodically reviews the Companys leadership structure and may modify it as
appropriate, given the specific circumstances then facing the Company. We have carefully considered and approved our current leadership structure, and we firmly believe that Mr. Parkers combined role is appropriate and in the best
interests of the Company and its stockholders. Importantly, we believe that our current leadership structure strikes the right balance between effective and efficient Company leadership and active oversight by
non-management
directors.
Having one individual serve as both CEO and Chairman allows consistent
communication and coordination throughout the Company, effective and efficient implementation of corporate strategy and is integral in unifying our employees behind a single vision. Mr. Parker is eminently qualified to fill this combined role
and the Board believes doing so is optimal for the Company and its stockholders. Mr. Parkers decades of experience in the airline industry, including more than 15 years of experience as the chairman and chief executive officer of publicly
held airlines (including the Company) make him uniquely well positioned to lead the Companys business, operations and strategy. This multifaceted role is best served by placing him at the helm of both the management team as well as the Board.
As Chairman, Mr. Parker discusses all material matters with the Board, and provides regular and fulsome disclosure of all aspects
of our business, both good and bad. During Mr. Parkers service as our Chairman and CEO, his compensation has remained significantly below his peers at Delta and United, and his employment agreement was terminated. Moreover,
Mr. Parkers compensation is now provided 100% in the form of equity incentives, which aligns his interests completely with those of our stockholders; notably, each of these changes was made at his request.
The concentration of responsibility and authority in our CEO is effectively balanced by our strong Lead Independent Director position. As Lead
Independent Director, Mr. Cahill serves as a liaison between the Chairman of the Board and the independent directors. He has the authority to call meetings of the independent directors and communicate directly with our stockholders.
Mr. Cahill also ensures that the Board has proper input into Board meeting agendas and schedules, as well as information sent to the Board. Effective oversight is also provided by the independence of all of our other directors, each of whom has
significant experience in leadership roles at public companies and other large, complex organizations, and by the four principal committees of the Board of Directors, each of which consists solely of independent directors.
Our governing documents provide for a well
thought-out
selection process for each of the Chairman and Lead
Independent Director positions, which our Board believes buttresses a structure designed to maximize leadership unity while still ensuring effective oversight and accountability to our stockholders. Pursuant to our Bylaws, the full Board of
Directors is responsible for filling the positions of Chairman and CEO, while the Lead Independent Director is designated solely by the independent directors of the Board. The full Board or the independent directors of the Board, as applicable, are
charged with selecting the best candidates to lead the Company and, equally as importantly, for removing and replacing such persons as and when they deem necessary or appropriate.
We believe that adopting a policy at this point in time that
requires
an independent Chairman would unduly restrict the Board in determining
the leadership structure that is in the best interests of the Company and its stockholders. The Board has deep knowledge of the strategic goals of the Company, the unique opportunities and challenges facing the Company and the various capabilities
of the Companys directors and senior management. Rather than imposing an artificial constraint upon this fundamental decision on Board leadership, we believe that the Board is well positioned to determine in the future, as it has done in the
past, the right leadership structure that is in the best interest of the Company and its stockholders.
The Companys current
leadership structure was created with significant input from the Companys stockholders
Our current leadership structure was
put in place in connection with the merger of AMR and US Airways Group in December 2013. The Merger was consummated at the same time the Company confirmed its Plan of Reorganization and emerged from Chapter 11
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22
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|
PROXY STATEMENT
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|
American Airlines Group
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bankruptcy. The Company regularly communicated with its stockholders during the Chapter 11 process and received input as to the most effective leadership structure for the post-emergence Company.
Following a thoughtful and deliberative process, the Board decided to appoint Mr. Parker as our Chairman and Chief Executive Officer following a transition period during which these roles were separated.
Also, in connection with the Merger, we established the role of Lead Independent Director and Mr. Cahill, an experienced leader of large,
complex businesses, was recruited to serve in this role.
Following stockholder engagement, we have codified and improved disclosure
of our existing practices regarding the authority and role of the Lead Independent Director
Mr. Chevedden presented the same
proposal last year and it was opposed by a significant majority of our stockholders. Following its receipt, we engaged with our stockholders, which included at times Mr. Cahill, our Lead Independent Director. Through this engagement, we learned
that there was significant stockholder support for our current leadership structure once the actual role in practice was discussed in more depth. Thus, following this engagement, we revised our Bylaws and Governance Guidelines to codify and improve
the disclosure of our existing practices regarding the authority and role of the Lead Independent Director and to provide that the Lead Independent Director is appointed by a vote of only the independent directors of the Company.
The Companys robust Lead Independent Director role promotes active and independent oversight of management by the Board and ensures that the
Board maintains accountability to our stockholders. Under the revised Bylaws and the Governance Guidelines, the Lead Independent Directors duties include, but are not limited to:
|
|
presiding at all meetings of the Board at which the Chairman of the Board is not present, including executive sessions of the independent directors;
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|
serving as a liaison between the Chairman of the Board and the independent directors;
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|
ensuring that the Board has proper input into the types and forms of information sent to the Board;
|
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|
establishing Board meeting agendas and ensuring that the Board has proper input into meeting agendas and schedules to assure that there is sufficient time for discussion of all agenda items;
|
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|
calling meetings of the independent directors;
|
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|
consulting and communicating directly with major stockholders, as requested by such stockholders;
|
|
|
acting as a sounding board and advisor to the Chairman of the Board; and
|
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|
guiding the CEO succession planning process in conjunction with the Compensation Committee.
|
The proposal is not necessary to ensure effective oversight of management and accountability to stockholders because the company has implemented protective measures and adheres to them
We believe that the composition of the Board of Directors, the roles of our independent committees of the Board of Directors and our Lead
Independent Director and our overall corporate governance practices and policies all come together to maintain effective oversight of management and ensure accountability to stockholders. We have a number of key corporate governance measures in
place to ensure that our Board of Directors acts independently and to maintain accountability to our stockholders, including the following:
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12 of the 13 members of our Board are independent, the one exception being Mr. Parker;
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Mr. Cahill has served as Lead Independent Director since 2013, and regularly presides over executive sessions of the Board of Directors without the CEO;
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our Lead Independent Director is designated solely by the independent directors of the Board;
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all four Board committees are independent;
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we conduct annual director elections which are subject to a majority voting standard;
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we conduct annual Board and committee assessments;
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we provide for proxy access; and
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we have significant stock ownership requirements for our directors and for senior vice presidents and above.
|
We believe that adopting a policy at this time to restrict the Board of Directors discretion in selecting the best Chairman would deprive the
Board of Directors of the valuable flexibility to exercise its business judgment in selecting the most qualified and appropriate individual to lead the Board of Directors. We further believe that adopting such a policy now would not provide any
benefit to the Company or its stockholders, particularly given the strong Lead Independent Director position held by Mr. Cahill, the recent changes to our Governance Guidelines, which codify our existing practices regarding the authority and
role of the Lead Independent Director, and the fact that the position is designated only by the independent directors of the Board of Directors.
For these reasons, the Board of Directors unanimously urges stockholders to vote AGAINST the
proposal regarding the establishment of an independent board chairman on a prospective basis.
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|
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American Airlines Group
|
|
|
PROXY STATEMENT
|
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|
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23
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information regarding the beneficial ownership of our Common Stock as of April 17, 2017, by
(1) each of our directors and nominees for director, (2) each of the individuals named in the section entitled Executive CompensationSummary Compensation Table on page 55 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.
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|
|
|
|
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AAG Common Stock Beneficially Owned
(1)
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|
Name of Beneficial Owner and Relationship to
Company
|
|
Amount and Nature
of Beneficial Ownership
|
|
|
Percent
of Class
|
|
W. Douglas Parker
Chairman and Chief Executive Officer
|
|
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1,244,383
|
(2)
|
|
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*
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Derek J. Kerr
Executive Vice President and Chief Financial Officer
|
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372,925
|
(3)
|
|
|
*
|
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Robert D. Isom, Jr.
President
|
|
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424,215
|
(4)
|
|
|
*
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Maya Leibman
Executive Vice President and Chief Information Officer
|
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89,749
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(5)
|
|
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*
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Stephen L. Johnson
Executive Vice PresidentCorporate Affairs
|
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379,787
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(6)
|
|
|
*
|
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J. Scott Kirby
Former President
|
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692,842
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(7)
|
|
|
*
|
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James F. Albaugh
Director
|
|
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11,737
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(8)
|
|
|
*
|
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Jeffrey D. Benjamin
Director
|
|
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50,615
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(9)
|
|
|
*
|
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John T. Cahill
Director
|
|
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40,615
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(10)
|
|
|
*
|
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Michael J. Embler
Director
|
|
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15,615
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(11)
|
|
|
*
|
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Matthew J. Hart
Director
|
|
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70,783
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(12)
|
|
|
*
|
|
Alberto Ibargüen
Director
|
|
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42,029
|
(13)
|
|
|
*
|
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Richard C. Kraemer
Director
|
|
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72,005
|
(14)
|
|
|
*
|
|
Susan D. Kronick
Director
|
|
|
6,380
|
(15)
|
|
|
*
|
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Martin H. Nesbitt
Director
|
|
|
6,380
|
(16)
|
|
|
*
|
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Denise M. OLeary
Director
|
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81,669
|
(17)
|
|
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*
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Ray M. Robinson
Director
|
|
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27,277
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(18)
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|
|
*
|
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Richard P. Schifter
Director
|
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18,656
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(19)
|
|
|
*
|
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All directors and executive officers as a group (19
persons)
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|
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3,413,923
|
(20)
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|
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*
|
|
*
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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 shares of our Common Stock that may be issued upon the exercise of stock options that are exercisable within 60 days of April 17, 2017 and restricted stock units (RSUs) that vest within 60 days of
April 17, 2017. Pursuant to SEC rules and regulations, all shares not currently outstanding that are subject to stock options exercisable within 60 days of April 17, 2017 and RSUs that vest within 60 days of April 17, 2017 are deemed
to be outstanding for the purpose of computing Percent of Class held by the holder of the class but are not deemed to be outstanding for the purpose of computing the Percent of Class held by any other stockholder. Beneficial
ownership as reported in the table excludes shares of Common Stock that may be issued upon the exercise of stock appreciation rights (SARs), whether or not they are exercisable within 60 days of
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24
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|
PROXY STATEMENT
|
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American Airlines Group
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|
April 17, 2017. The number of shares that will be received upon exercise of such SARs is not currently determinable, and therefore is not included in the table above, because each SAR gives
the holder the right to receive an amount in excess of the market price of one share of stock at the date of exercise over the exercise price and such amount is not determinable until the date of exercise.
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(2)
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Includes 1,001,726 shares held directly and 242,657 shares underlying unvested RSUs that vest within 60 days of April 17, 2017. Excludes 296,987 unvested RSUs that will not vest within 60 days
of April 17, 2017. Excludes the following vested SARs: (a) 294,748 SARs at an exercise price of $7.62; (b) 240,536 SARs at an exercise price of $8.14; and (c) 196,820 SARs at an exercise price of $8.84.
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(3)
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Includes 306,031 shares held directly and 66,894 shares underlying unvested RSUs that vest within 60 days of April 17, 2017. Excludes 72,148 unvested RSUs that will not vest within 60 days of
April 17, 2017. Excludes the following vested SARs: (a) 117,287 SARs at an exercise price of $7.62; and (b) 95,714 SARs at an exercise price of $8.14.
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(4)
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Includes 343,942 shares held directly and 80,273 shares underlying unvested RSUs that vest within 60 days of April 17, 2017. Excludes 125,839 unvested RSUs that will not vest within 60 days of
April 17, 2017.
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(5)
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Includes 31,035 shares held directly, 1,038 shares held indirectly for the benefit of Ms. Leibmans spouse, and 57,676 shares underlying unvested RSUs that vest within 60 days of
April 17, 2017. Excludes 73,920 unvested RSUs that will not vest within 60 days of April 17, 2017.
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(6)
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Includes 312,893 shares held directly and 66,894 shares underlying unvested RSUs that vest within 60 days of April 17, 2017. Excludes 72,148 unvested RSUs that will not vest within 60 days of
April 17, 2017. Excludes the following vested SARs: 117,287 SARs at an exercise price of $7.62.
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(7)
|
Mr. Kirby ceased serving as the President of American Airlines Group Inc., effective as of August 29, 2016. Amounts shown reflect his beneficial ownership of our Common Stock as of such
date. Includes 433,745 shares held directly and 259,097 shares underlying RSUs, which accelerated in connection with his termination of service. Excludes the following vested SARs: (a) 31,500 SARs at an exercise price of $45.01; and (b) 37,500 SARs
at an exercise price of $46.11.
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(8)
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Includes 7,124 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(9)
|
Includes 11,002 shares held directly, 35,000 shares held indirectly for the benefit of the Jeffrey Benjamin 2009 Family Trust and 4,613 shares underlying unvested RSUs that vest within 60 days of
April 17, 2017.
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(10)
|
Includes 11,002 shares held directly, 25,000 shares held indirectly for the benefit of the John Tobin Cahill Revocable Trust and 4,613 shares underlying unvested RSUs that vest within 60 days of
April 17, 2017.
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(11)
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Includes 11,002 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(12)
|
Includes 59,495 shares held directly, 2,550 shares held indirectly for the benefit of Mr. Harts children, 4,125 shares underlying stock options and 4,613 shares underlying unvested RSUs
that vest within 60 days of April 17, 2017.
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(13)
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Includes 37,416 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(14)
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Includes 61,392 shares held directly, 6,000 shares held indirectly for the benefit of Chartwell Capital Investments, and 4,613 shares underlying unvested RSUs that vest within 60 days of
April 17, 2017.
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(15)
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Includes 1,767 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(16)
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Includes 1,767 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(17)
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Includes 77,056 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(18)
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Includes 22,664 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(19)
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Includes 14,043 shares held directly and 4,613 shares underlying unvested RSUs that vest within 60 days of April 17, 2017.
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(20)
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Includes 2,645,890 shares held directly, 1,038 shares held indirectly for the benefit of an officers spouse, 35,000 shares held indirectly for the benefit of the Jeffrey Benjamin 2009 Family
Trust, 25,000 shares held indirectly for the benefit of the John Tobin Cahill Revocable Trust, 2,550 shares held indirectly for the benefit of a directors children, 6,000 shares held indirectly for the benefit of Chartwell Capital Investments,
4,125 shares underlying stock options and 694,320 shares underlying unvested RSUs that vest within 60 days of April 17, 2017, held by our executive officers and directors as a group. Excludes 779,230 shares underlying unvested RSUs that will
not vest within 60 days of April 17, 2017, and excludes 1,062,392 vested SARs.
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American Airlines Group
|
|
|
PROXY STATEMENT
|
|
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25
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|
The following table sets forth information regarding the beneficial ownership of our Common Stock as
of April 17, 2017 for each person known to us to be the beneficial owner of more than 5% of our outstanding Common Stock.
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Common Stock Beneficially Owned
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature
of Beneficial Ownership
|
|
|
Percent of Class
|
|
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
|
|
|
70,518,419
|
(a)
|
|
|
13.6
|
%
|
Warren E. Buffet and Berkshire Hathaway Inc.
3555 Farnam Street
Omaha, NE 68131
|
|
|
45,544,854
|
(b)
|
|
|
8.8
|
%
|
PRIMECAP Management Company
177 E. Colorado Blvd., 11th Floor
Pasadena, CA 91105
|
|
|
45,221,791
|
(c)
|
|
|
8.7
|
%
|
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
30,365,440
|
(d)
|
|
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5.9
|
%
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
|
|
|
29,327,648
|
(e)
|
|
|
5.7
|
%
|
(a)
|
The amount shown and the following information are derived solely from the Schedule 13G/A filed by T. Rowe Price Associates, Inc. on February 6, 2017. T. Rowe Price Associates, Inc. has sole
dispositive power with respect to all of such shares and sole voting power with respect to 24,132,850 of such shares.
|
(b)
|
The amount shown and the following information are derived solely from the Schedule 13G/A filed on February 14, 2017 by Warren E. Buffet, Berkshire Hathaway Inc. and certain other reporting
persons. In the Schedule 13G/A, Mr. Buffet reports that he has shared power to vote or direct to vote and shared power to dispose of or direct the disposition of 45,544,854 shares. Berkshire Hathaway Inc. reports that it has shared power to
vote or direct to vote and shared power to dispose of or direct the disposition of 45,544,854 shares.
|
(c)
|
The amount shown and the following information are derived solely from the Schedule 13G/A filed by PRIMECAP Management Company on February 9, 2017. PRIMECAP Management Company has sole
dispositive power with respect to all of such shares and sole voting power with respect to 17,302,716 of such shares.
|
(d)
|
The amount shown and the following information are derived solely from the Schedule 13G/A filed by The Vanguard Group on February 9, 2017. The Vanguard Group has sole voting power with respect
to 712,788 of such shares, shared voting power with respect to 30,001 of such shares, sole dispositive power with respect to 29,631,148 of such shares and shared dispositive power with respect to 734,292 of such shares.
|
(e)
|
The amount shown and the following information are derived solely from the Schedule 13G filed by BlackRock, Inc. on January 30, 2017. BlackRock, Inc. has sole dispositive power with respect to
all of such shares and sole voting power with respect to 26,305,134 of such shares.
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|
|
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26
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Governance Overview
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 Nominating Committee and are posted on
our website at
www.aa.com
under the links Investor Relations
Corporate Governance.
Board Leadership and Structure
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 AAGs leadership structure and may modify the structure as it deems appropriate, given the specific circumstances then facing the Company.
The Board of Directors is currently led by Mr. 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 Board 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 service as
a director of other large public companies. This experience makes him uniquely well positioned to lead AAGs business, operations and strategy.
The combination of the Chief Executive Officer and Chairman roles allows consistent communication and coordination throughout the Company, effective and efficient implementation of corporate strategy and is important in unifying our
employees behind a single vision. The combination of the Chief Executive Officer and Chairman roles is balanced by our strong Lead Independent Director position, by the independence of all of our other directors, each of whom has significant
experience in leadership roles at public companies 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
The Board of Directors recognizes the importance of strong independent Board leadership. As such, the independent directors of the Board elect periodically a Lead Independent 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 over the past
year, we amended our Bylaws to allow for the selection of the Lead independent Director by only the independent directors of the Board, and codified our existing practices regarding 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 Lead Independent Directors duties
include
the following significant
responsibilities:
|
|
✓
Presidesat
all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
✓
Servesas
liaison between the Chairman and the independent directors;
✓
Ensuresthat the Board has proper input into the types and forms of information sent to the Board;
✓
EstablishesBoard meeting agendas;
✓
Ensuresthat the Board has proper input into meeting agendas and schedules to assure that there is sufficient time for discussion of all
agenda items;
✓
Hasthe authority to call meetings of the independent directors;
✓
Consultsand communicates directly with major stockholders, as requested by such stockholders;
✓
Actsas a
sounding board and advisor to the Chairman; and
✓
Guidesthe CEO succession planning process in conjunction with the Compensation Committee.
|
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|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
27
|
|
The independent directors of the Board have elected Mr. Cahill to serve as the Boards Lead
Independent Director. Mr. Cahill has been a member and the Lead Independent Director of the Board of Directors since December 2013. He also serves as a member of our Audit Committee and Corporate Governance and Nominating Committee.
Mr. Cahills 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 Director of our Board of Directors.
Director Independence
The Governance Guidelines contain standards for determining director independence that meet or exceed the applicable rules of the SEC and listing
standards of the NASDAQ Stock Market (NASDAQ). The Governance Guidelines define an independent director as one who:
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is not an executive officer or employee of the Company or any other individual having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director;
|
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|
is not, and has not at any time during the past three years been, employed by the Company;
|
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has not accepted, and does not have any spouse, parent, child or sibling, whether by blood, marriage or adoption, any person residing in such individuals 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 of Directors 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;
|
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|
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 recipients consolidated gross revenues for that year, or $200,000, whichever is more, other than (A) payments arising
solely from investments in the Companys 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 Companys outside auditor, and was not, and does not have a Family Member who was, a partner or employee of the
Companys outside auditor who worked on the Companys 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 Nominating Committee reports annually to the full Board of Directors on these matters.
Pursuant to the
Governance Guidelines, the Corporate Governance and Nominating Committee and the Board of Directors undertake an annual review of director independence. Based on the Corporate Governance and Nominating Committees review in April 2017, the
Board of Directors affirmatively determined that all of our directors are independent under the standards provided in the Governance Guidelines and under applicable NASDAQ listing standards, except for Mr. Parker, our Chairman and Chief
Executive Officer, who is an employee.
The following types and categories of transactions, relationships and arrangements were
considered by our Board of Directors in making its independence determinations:
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Each of Ms. Kronick and Messrs. Albaugh, Cahill and Nesbitt serves as a member on the board of directors of companies that engage in ordinary course commercial transactions with AAG involving
goods or services other than air transportation.
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Messrs. Albaugh, Benjamin and Schifter serve as senior advisors to Perella Weinberg Partners, Cyrus Capital Partners and TPG, respectively. These funds may have investments in us and/or
companies with which we do business in the ordinary course. Messrs. Albaugh, Benjamin and Schifter are not partners in or executive officers of such companies, nor are they deemed to beneficially own the securities held by such companies.
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Mr. Ibargüen is the President and Chief Executive Officer of the John S. and James L. Knight Foundation, which purchases air carrier services from us in the ordinary course of business.
The payments from the foundation to AAG were significantly below 1% of AAGs revenues during each applicable year.
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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.
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PROXY STATEMENT
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American Airlines Group
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Board Tenure a
nd Diversity
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 November 2015, we added two new directors to our Board,
Ms. Kronick and Mr. Nesbitt. Our remaining directors joined our Board in December 2013 at the effective date of the Merger. Five directors were designated by the Search Committee appointed by the Debtors Official Committee of
Unsecured Creditors in the voluntary cases commenced by AMR under chapter 11 of title 11 of the Code (the Chapter 11 Cases) and certain creditors. Two directors were designated by AMR prior to the effective date of the Merger and were
determined to be reasonably acceptable to the Search Committee and three directors were designated by US Airways Group prior to the effective date of the Merger. The Board of Directors also strongly believes that the current mix of directors
provides the Company with an appropriate balance of knowledge, experience and capability, allowing us to leverage the deep company experience and knowledge of AMR and US Airways Group 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, our Board
of Directors is diverse in many ways, with differing geographic, business and racial backgrounds. Our Board of Directors currently includes two African American, one Hispanic and two female directors.
Board Self-Evaluation
Our Governance Guidelines and Corporate Governance and Nominating Committee charter provide that the Corporate Governance and Nominating Committee
must conduct an annual 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 committees 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 overall
make-up
and composition of the Board of Directors and its committees.
Board Meetings
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 with only independent directors of the Board of Directors
present. During 2016, the Board of Directors held eight (8) meetings, seven (7) of which were
in-person
meetings that included executive sessions comprised of only independent directors. In 2016,
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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American Airlines Group
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PROXY STATEMENT
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Committees
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 2016 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 at
www.aa.com
under the links Investor Relations Corporate Governance.
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Audit Committee
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Primary Responsibilities
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Members in 2016:
Matthew J. Hart (Chair)
John T. Cahill
Michael J. Embler
Alberto Ibargüen
Martin H. Nesbitt
Meetings in 2016:
5
The Board of Directors has determined that each member is independent under SEC and NASDAQ rules and the Governance Guidelines.
Each member is a financial expert under applicable SEC rules and has the financial management expertise required by NASDAQ listing standards.
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Oversee the Companys internal accounting function; report to the Board of Directors
with respect to other auditing and accounting matters
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
Pre-approve
audit and permitted
non-audit
services provided by the independent auditor
Oversee the Companys risk management policies that relate to the financial control
environment, financial reporting and disclosure controls and procedures for compliance with significant applicable legal, ethical and regulatory requirements that impact the Companys financial statements
Establish and
maintain procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters
Review and approve all significant conflicts of interest and related party transactions in accordance with Company policies
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Compensation Committee
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Primary Responsibilities
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Members in 2016:
Richard C. Kraemer (Chair)
James F. Albaugh
Jeffrey D. Benjamin
Alberto Ibargüen
Denise M. OLeary
Meetings in 2016:
8
The Board of Directors has determined that each member is independent under NASDAQ rules and the Governance Guidelines, is a
non-employee
director as defined by Rule
16b-3
under the Exchange Act and qualifies as an outside director within the meaning of Section 162(m) of
the Code.
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Review and approve the Companys overall compensation strategy and policies,
including performance goals for executive officers
Review the relationship between the Companys compensation strategy and risk
management policies; oversee succession planning and workforce diversity
Evaluate the performance of the Companys 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
Companys incentive and stock plans and other employee benefit plans, including establishing guidelines, interpreting plan documents, selecting participants, approving grants and awards and making all other decisions regarding the operation of
such plans
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PROXY STATEMENT
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American Airlines Group
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Corporate Governance and
Nominating Committee
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Primary Responsibilities
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Members in 2016:
Ray M. Robinson (Chair)
James F. Albaugh
John T. Cahill
Susan D. Kronick
Denise M. OLeary
Meetings in 2016:
3
The Board of Directors has determined that each member is independent under NASDAQ rules and the Governance
Guidelines.
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Oversee all aspects of the Companys 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 of
Directors, including the committees
Identify individuals qualified to become members of the Board of Directors and recommend the selection of director nominees
Review and assess the Governance Guidelines, which among other things, sets forth the
responsibilities and authority of our Lead Independent Director, and recommend any changes deemed appropriate to the Board
Take actions with respect to incumbent directors who fail to receive the required vote
for reelection in uncontested elections
Review and evaluate, with the Companys management, the Companys governance-related risks and risk management practices
Oversee the Companys political contributions and lobbying activities; periodically
review reports on the Companys corporate and Political Action Committee political contributions
Review the compensation of the
non-employee
members of the Board of Directors and making recommendations regarding changes to the full Board
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Finance Committee
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Primary Responsibilities
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Members in 2016:
Richard P. Schifter (Chair)
Jeffrey D. Benjamin
Michael J. Embler
Susan D. Kronick
Martin H. Nesbitt
Meetings in 2016:
12
The Board of Directors has determined that each member is
independent under NASDAQ rules and the Governance Guidelines.
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Oversee of the Companys financial affairs and capital spending
Recommend to the
Board financial policies and courses of action that will effectively accommodate the Companys goals and operating strategies
Supervise the Companys dividend and share repurchase program
Review, approve
and/or recommend to the Board of Directors our annual budget and financing plans and other matters related to the Companys financial and strategic planning.
Oversee the Companys financial risk management practices
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Compensation Committee Process for Executive 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. 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,
significant
non-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 Committees 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
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American Airlines Group
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PROXY STATEMENT
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31
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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 PresidentPeople and Communications 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.
During 2016, Willis Towers Watson assisted the Compensation Committee 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 2016 was approximately $189,394.
Also during 2016, specialized teams at Willis Towers Watson provided actuarial valuation and consulting services relating to health and welfare
plans, retirement plans (including for Canada), workers compensation and aviation/property and casualty, for aggregate fees of approximately US $4.1 million and CAD $378,454. The Willis 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, the Compensation Committee assessed whether the services provided by Willis Towers Watson raised any conflicts of interest pursuant to applicable SEC and NASDAQ rules and concluded that no such conflicts of interest existed.
Corporate Governance and Nominating Committee Process for Director Compensation.
The Corporate Governance and Nominating
Committees charter gives the Corporate Governance and Nominating Committee the authority and responsibility for reviewing the compensation of the
non-employee
members of the Board of Directors and making
recommendations regarding changes to the full Board of Directors. The Corporate Governance and Nominating Committee also periodically reviews the compensation paid to
non-employee
directors for their service
on the Board of Directors and its committees and recommends any changes to the full Board of Directors for its approval.
The Corporate
Governance and Nominating Committee generally receives proposals and information from outside consultants and publications in connection with its review of director compensation. In January 2016, Willis Towers Watson assisted the Corporate
Governance and Nominating Committee in reviewing director compensation. The Corporate Governance and Nominating Committee has authority to retain and terminate any outside advisors, such as compensation consultants and legal counsel, and to
determine their compensation.
Board Role in Risk Oversight
The Board of Directors is responsible for the Companys ongoing assessment and management of material risks impacting our business. The Board
of Directors oversees an enterprise-wide approach to risk management, 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
managements assessment of the related risk 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 committees function. 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 consider the risks within their area of responsibility.
For example, our most significant strategic, financial and
operations risks are frequently reviewed by the full Board of Directors. The Board of Directors oversees the management of the largest risks we face, including risks associated with safety, the
day-to-day
operation of the airline and the interruption of airline service, revenue production, our information technology systems 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 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
Financial Officer, Executive Vice PresidentCorporate Affairs, Senior Vice President, General Counsel and Chief Compliance Officer, Vice President and Controller, Vice President and Deputy General Counsel, Corporate Secretary and 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 or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.
The Compensation Committee oversees 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,
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32
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PROXY STATEMENT
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American Airlines Group
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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 PresidentPeople and Communications 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 meet periodically with the Finance Committee to discuss and advise on
elements of these risks.
Risk Assessment with Respect to Compensation Practices
Management and the Compensation Committee, with the support of the 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.
Our basis for this conclusion includes that our compensation programs, and especially our executive compensation programs, are designed to include
the following features:
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Formulaic annual and long-term incentive plan awards with maximum
pay-out
caps or guidelines instead of discretionary
pay-out
decisions. The AAG Short-term Incentive Program includes an individual modifier component that is subject to the Compensation Committees discretion and can only be implemented by a resolution of
the Compensation Committee or within limited bounds approved by the Compensation Committee.
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Equity incentive awards contain defined, overlapping and concurrent performance or time based vesting periods that are intended to extend the measurement of
pre-defined
goals or time periods to incentivize long-term rather than short-term results.
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Our incentive compensation plans include a diverse and blended set of
pre-established
goals and metrics that focus on a variety of areas across the Company
and may include financial and/or the achievement of individual goals. In addition, the goals established in our executive compensation programs are not subject to adjustment without Compensation Committee approval.
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Our senior executives are all
at-will
employees and have modest severance and retirement benefits, which together act to minimize excessive risk-taking
behaviors.
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Mr. Parkers direct compensation is solely in the form of equity incentives. All of Mr. Parkers equity incentives are subject to staggered service-vesting conditions that
incentivize sustained long-term appreciation of our stock price and, in the case of more than half of the equity incentives, are also subject to performance-vesting conditions tied to financial metrics that incentivize long-term, industry-leading
financial performance.
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We maintain stock ownership guidelines and a clawback policy for executive officers that further reduce undue risk-taking incentives. Senior executives have actual stock ownership that is well
in excess of the required minimum.
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Actual performance results for incentive programs for employees at the level of director and above are reviewed and verified by a variety of departments (including finance, human resources,
operations and legal) and are also reviewed by our internal auditor. These results are reported to the Compensation Committee, the Audit Committee and the Board of Directors.
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Our Insider Trading Policy and Authorization to Trade process monitors employee transactions in Company stock, including transactions from recently separated employees.
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Our Company and our compensation profile do not include any of the following risk characteristics: a business unit which carries a significant portion of our risk profile; a business unit with
compensation structured differently than other units within the Company; a business unit that is significantly more profitable than other units within the Company; a business unit where compensation expense is a significant percentage of the
business units revenue; or compensation programs that vary significantly from our overall risk and reward structure of the Company, such as when bonuses are awarded upon accomplishment of a task, while the income and risk to the Company from
that completed task extend over a significantly longer period of time. For director and above employees, all our performance-based compensation programs are based on overall corporate performance, rather than the performance of any business
unit or group.
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The Company maintains separate bonus programs for two organizations that are based on that organizations performance; however, the number of participants and the payments under these programs
are small and capped and no executives participate in the programs.
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For a discussion of the principles underlying our compensation policies for our executive officers who are named in the Executive CompensationSummary Compensation Table, see the
section entitled Compensation Discussion and Analysis beginning on page 42.
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Annual Meeting Attendance
Our Governance Guidelines provide that each of our directors is expected to attend our annual meeting of stockholders, except where unusual
circumstances arise. Twelve of the 13 directors who were then serving in office attended our 2016 annual meeting of stockholders.
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American Airlines Group
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PROXY STATEMENT
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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.
Communications with the Board of Directors and
Non-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 5675
Dallas/Fort Worth International Airport, Texas 75261
Our Vice President and Deputy General Counsel, or someone acting on his behalf, 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 Nominating 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 Nominating Committee. As provided in our Governance Guidelines, our Lead Independent Director, Mr. Cahill, has been designated as the primary director representative for
consultation and direct communication with our stockholders.
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PROXY STATEMENT
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American Airlines Group
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CORPORATE SOCIAL RESPONSIBILITY
We, along with our customers, investors, employees and other stakeholders, understand that a modern approach to running our airline must be aligned
with a commitment to corporate social responsibility. We believe that integrating social and environmental value into our business as part of that commitment generates long-term value for our business, our stockholders and the global community at
large. In addition to our overall dedication to ethical and accountable business practices, our corporate social responsibility commitments include the areas of environmental sustainability, diversity and inclusion and community connections.
We take responsibility and sustainability seriously. For further information on these and dozens of other social responsibility
initiatives, please see our Corporate Responsibility Report, available on our website at
www.aa.com
.
Environmental Sustainability
As a global airline, we believe it is our responsibility to manage our environmental footprint and have taken a number of actions that mitigate our
greenhouse gas emissions, such as:
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Aggressively retiring older aircraft and replacing them with new, more fuel-efficient aircraft. Our fleet is the youngest among the top U.S. network airlines. By the end of 2017 we expect the
average age of our aircraft to be less than 10 years old. Aircraft like the Boeing 787 Dreamliner improve fuel efficiency by up to 20% over similarly sized aircraft they replace through new engines, increased use of lightweight composite materials,
more efficient systems applications and modern aerodynamics.
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Purchasing renewable energy to minimize our indirect emissions. The Environmental Protection Agency announced American is now ranked 45th on their Fortune 500 list of the largest green power users.
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Reducing fuel consumption through our Fuel Smart Program, which is an
employee-led
effort to safely reduce fuel consumption. Initiatives include reducing
usage of the auxiliary power unit, optimizing planned aircraft arrival fuel, washing engine components for maximum efficiency and reducing aircraft weight by removing unnecessary items.
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Working with the Federal Aviation Administration (the FAA) and vendors to facilitate efficient airspace procedures, which also reduce aircraft emissions.
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Replacing existing cargo containers with lightweight versions. Through this initiative, we have achieved more than 500,000 gallons in fuel savings and a reduction of more than 5,000 metric tons in
carbon dioxide emissions.
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Replacing older, inefficient ground support equipment with new, more fuel-efficient ground support equipment, including alternative-fuel and electric powered equipment.
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Seeking certification of our buildings to the U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) standard, to the extent feasible. Our new headquarters
under construction in Fort Worth, Texas is designed to meet LEED Gold standard. Other facilities meeting LEED Gold standard include our Philadelphia International Airport (PHL) Terminal F Baggage Claim Building and San Francisco
International Airport (SFO), Terminal 2. Our facilities meeting LEED Silver standard include our PHL ground support equipment shop and SFO Admirals Club in Terminal 2.
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Launching a partnership with Ocean Park to assist with evaluating alternative jet fuels and identifying the most promising companies and technologies.
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Diversity and Inclusion
We believe that diversity and inclusion are a key way that our Company achieves success and are committed to maintaining a workplace where all
employees feel they can prosper. Highlights of our ongoing practices and recognition in this area include:
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Maintaining a Diversity Advisory Council, composed of two representatives from each of our 20 Employee Business Resource Groups, which fosters interaction and engagement on a number of social and
cultural issues.
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Receiving the 2016 Top 25 Honors Award by our Diversity Advisory Council and being recognized by the Association of Employee Resource Groups & Councils.
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Receiving, for the 16th consecutive year, the highest possible ranking by the Human Rights Campaign in the 2017 Corporate Equality Index, a nationally recognized benchmark of Americas top
workplaces for inclusion of LGBT employees.
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Receiving the top score of 100 on the 2016 Disability Equality Index
®
and being named a 2016 DEI Best Places to Work.
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Promoting supplier inclusion through our Supplier Diversity Program, which proactively seeks out diverse suppliers, such as women-, minority- or LGBT-owned businesses, as well as small businesses
that are owned by the disadvantaged, veterans, service-disabled veterans and those with HUBZone certification. In addition, American was recognized for its Supplier Diversity Program; recognition in this regard includes 2016 WE USA 100 Corporation
of the Year, 2016 Corporate 101: Most Admired Companies and 2017 LGBTQ Business Equality Excellence Award.
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Receiving recognition from diversity-focused magazines in 2016, including Top Employer from Black EOE Journal, Professional Womans Magazine, HISPANIC Network Magazine and DIVERSEability
Magazine.
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American Airlines Group
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PROXY STATEMENT
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35
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Community Connections
We are committed to developing relationships with and supporting the communities where we operate. Key achievements in 2016 include:
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Our employees participated in more than 19,000 volunteer events in their communities, contributing more than 125,000 hours of volunteer time in the communities where they live and where we provide
service. In addition, as part of the Companys Flights for 50 awards program, our employees donated more than 20 million frequent flier miles to nonprofit organizations in their communities.
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Raising more than $2.5 million for veteran and military initiatives at the annual American Airlines Skyball event in Dallas-Fort Worth, our premier fundraising event to support the Airpower
Foundation, a
non-profit
that supports all branches of our military, veterans and their families, and more than $1.3 million for the Susan G. Komen Young Investigator Grant program.
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Awarding more than $750,000 in scholarships through the American Airlines Education Foundation to nearly 300 children of employeesmore money than ever before.
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Supporting the Cystic Fibrosis Foundation for the 32nd Annual Celebrity Ski Cystic Fibrosis event, which raised over $1 million. With these funds, this successful partnership has now raised
over $35 million towards medical research for new treatment drugs developed to manage and eventually cure cystic fibrosis.
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Supporting our new partnership with Stand Up to Cancer (SU2C), a unique cancer charity model that assembles collaborative (not competitive) teams of researchers who are united in their
goal to eliminate all cancer. As of the end of 2016, we have raised $1.4 million for SU2C. We also launched the Miles to Stand Up program, which gives AAdvantage
®
miles for donations of
$25 or more.
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Looking ahead, we intend to support Warlicks Warriors, the charity of Peter Warlick, an American Airlines officer and aviation industry leader who has been diagnosed with amyotrophic lateral
sclerosis (ALS). We have committed to fund $1 million toward the charitys research efforts to find a cure, including from funds raised through our Dallas-Fort Worth Charity Golf Event that we launched in 2016.
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Codes of Ethics
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 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. 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 Companys 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 Companys
non-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 Companys
political engagements is provided by our Executive Vice PresidentCorporate 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 at
www.aa.com
.
|
|
|
|
|
36
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
DIRECTOR COMPENSATION
The table below provides information regarding compensation we paid to our
non-employee
directors in 2016.
The compensation elements are described in the narrative following the table. W. Douglas Parker, our Chairman and Chief Executive Officer, is not included in the table because he is an employee and receives no compensation for his service as
Chairman or as a member of the Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid
in Cash
($)
(a)
|
|
|
Stock
Awards
($)
(b)(c)
|
|
|
Option
Awards
($)
(c)
|
|
|
Change in
Pension Value
and
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
(d)
|
|
|
Total
($)
|
|
James F. Albaugh
|
|
|
130,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28,808
|
|
|
|
308,808
|
|
Jeffrey D. Benjamin
|
|
|
130,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,568
|
|
|
|
335,568
|
|
John T. Cahill
|
|
|
160,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,988
|
|
|
|
362,988
|
|
Michael J. Embler
|
|
|
130,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,080
|
|
|
|
299,080
|
|
Matthew J. Hart
|
|
|
135,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
45,403
|
|
|
|
330,403
|
|
Alberto Ibargüen
|
|
|
130,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,296
|
|
|
|
305,296
|
|
Richard C. Kraemer
|
|
|
135,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,690
|
|
|
|
335,690
|
|
Susan D.
Kronick
(e)
|
|
|
127,774
|
|
|
|
220,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,466
|
|
|
|
366,240
|
|
Martin H.
Nesbitt
(e)
|
|
|
127,774
|
|
|
|
220,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,930
|
|
|
|
395,704
|
|
Denise M. OLeary
|
|
|
130,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,678
|
|
|
|
341,678
|
|
Ray M. Robinson
|
|
|
135,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,615
|
|
|
|
306,615
|
|
Richard P. Schifter
|
|
|
135,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,368
|
|
|
|
317,368
|
|
(a)
|
The amounts represent the aggregate dollar amount of all fees the directors earned or were paid in 2016 for service as a director, including annual retainer, committee, chair, meeting and lead
independent director fees.
|
(b)
|
The amounts represent the aggregate grant date fair value, as calculated in accordance with ASC Topic 718, of 4,613 RSUs granted to each director on June 8, 2016, which will vest fully on
June 8, 2017, subject to the continued service of the director through the vesting date. Additionally, for Ms. Kronick and Mr. Nesbitt, represents the aggregate grant date fair value of an additional
pro-rated
grant of 1,767 RSUs on January 27, 2016 in connection with their initial appointment to the Board. See footnote (e) below.
|
(c)
|
The table below shows the aggregate number of outstanding options and stock awards held by each of our directors at December 31, 2016.
|
|
|
|
|
|
|
|
|
|
Name
|
|
Options
|
|
|
RSUs
|
|
James F. Albaugh
|
|
|
-
|
|
|
|
4,613
|
|
Jeffrey D. Benjamin
|
|
|
-
|
|
|
|
4,613
|
|
John T. Cahill
|
|
|
-
|
|
|
|
4,613
|
|
Michael J. Embler
|
|
|
-
|
|
|
|
4,613
|
|
Matthew J. Hart
|
|
|
4,125
|
|
|
|
4,613
|
|
Alberto Ibargüen
|
|
|
-
|
|
|
|
4,613
|
|
Richard C. Kraemer
|
|
|
4,125
|
|
|
|
4,613
|
|
Susan D. Kronick
|
|
|
-
|
|
|
|
4,613
|
|
Martin H. Nesbitt
|
|
|
-
|
|
|
|
4,613
|
|
Denise M. OLeary
|
|
|
4,125
|
|
|
|
4,613
|
|
Ray M. Robinson
|
|
|
-
|
|
|
|
4,613
|
|
Richard P. Schifter
|
|
|
-
|
|
|
|
4,613
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
37
|
|
(d)
|
The amounts include (i) the value of flight privileges received in 2016, (ii) tax reimbursements that we paid to our directors in 2017 for flight privileges provided to them in 2016 and
(iii) reimbursements of tax interest and tax preparation fees payable by each director as a result of an administrative error by the Company in reporting 2015 income and an additional
gross-up
to make
each director whole for the taxes on such reimbursed amounts. Amounts also include the portion of the premiums paid by us on behalf of Messrs. Hart, Kraemer and Schifter and Ms. OLeary for a life insurance policy under the America West
Directors Charitable Contribution Program, which is described more fully below in the section entitled Legacy Director Compensation Programs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Flight
Privileges
($)
|
|
|
Tax
Gross-Up
on Flight
Privileges
($)
|
|
|
Tax
Reimbursement
and
Gross-Up
($)
|
|
|
Insurance
Premiums
($)
|
|
James F. Albaugh
|
|
|
9,225
|
|
|
|
9,225
|
|
|
|
10,358
|
|
|
|
-
|
|
Jeffrey D. Benjamin
|
|
|
20,881
|
|
|
|
20,881
|
|
|
|
13,806
|
|
|
|
-
|
|
John T. Cahill
|
|
|
20,407
|
|
|
|
20,407
|
|
|
|
12,174
|
|
|
|
-
|
|
Michael J. Embler
|
|
|
6,283
|
|
|
|
6,283
|
|
|
|
6,514
|
|
|
|
-
|
|
Matthew J. Hart
|
|
|
8,902
|
|
|
|
8,902
|
|
|
|
15,537
|
|
|
|
12,062
|
|
Alberto Ibargüen
|
|
|
11,523
|
|
|
|
11,523
|
|
|
|
2,250
|
|
|
|
-
|
|
Richard C. Kraemer
|
|
|
14,685
|
|
|
|
14,685
|
|
|
|
9,304
|
|
|
|
12,016
|
|
Susan D. Kronick
|
|
|
9,233
|
|
|
|
9,233
|
|
|
|
-
|
|
|
|
-
|
|
Martin H. Nesbitt
|
|
|
23,965
|
|
|
|
23,965
|
|
|
|
-
|
|
|
|
-
|
|
Denise M. OLeary
|
|
|
7,408
|
|
|
|
7,408
|
|
|
|
42,896
|
|
|
|
3,966
|
|
Ray M. Robinson
|
|
|
6,439
|
|
|
|
6,439
|
|
|
|
8,737
|
|
|
|
-
|
|
Richard P. Schifter
|
|
|
9,015
|
|
|
|
9,015
|
|
|
|
2,322
|
|
|
|
12,016
|
|
(e)
|
Ms. Kronick and Mr. Nesbitt were appointed to the Board on November 11, 2015 and received a prorated grant of 1,767 RSUs on January 27, 2016 for the partial quarter in which
they served during the fourth quarter of 2015. These awards fully vested on June
8, 2016.
|
Director Compensation
The Corporate Governance and Nominating Committee periodically reviews 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 committees compensation consultant, Willis Towers Watson.
Annual Retainers
Effective January 27, 2016, at the recommendation of Willis Towers Watson and the
Corporate Governance and Nominating Committee, the Board of Directors approved increasing the annual retainer for service on the Board of Directors by $10,000, the annual retainer for service on the Compensation, Corporate Governance and Nominating,
or Finance Committees by $2,500 and the annual retainer for service as Chair of the Compensation, Corporate Governance and Nominating, and Finance Committees by $5,000. These increases were made following review of the market analysis presented by
Willis Towers Watson which indicated that the Companys total direct compensation has been below the median provided by the Fortune 150 and below the average provided by United and Delta.
Giving effect to these changes, the compensation for our
non-employee
directors included the following
cash-based annual retainers:
|
|
an annual retainer of $100,000 for service on the Board of Directors;
|
|
|
an annual retainer of $15,000 for service on each of the Audit, Compensation, Corporate Governance and Nominating, or Finance Committees;
|
|
|
an annual retainer of $20,000 for service as the Chair of each of the Audit, Compensation, Corporate Governance and Nominating, or Finance Committees; and
|
|
|
an additional annual retainer of $30,000 for service as our Lead Independent Director.
|
Annual Grants of RSUs
Effective January 27, 2016, at the recommendation of Willis Towers Watson and
the Corporate Governance and Nominating Committee, the Board of Directors also approved increasing the annual equity grant value by $10,000. Accordingly, on the date of the 2016 annual meeting of stockholders, each continuing
non-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 RSUs 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 the
non-employee
director through the vesting date.
|
|
|
|
|
38
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
Under our director compensation policy, the cash retainers payable to new directors and RSU awards
granted to any directors first appointed on dates other than an annual meeting are prorated. In addition to a partial cash retainer for their service during a portion of 2015, Ms. Kronick and Mr. Nesbitt, who were appointed to the Board on
November 11, 2015, received prorated grant of 1,767 RSUs on January 27, 2016 that vested on the date of our 2016 annual meeting, consistent with the annual grants made to our directors in 2015.
Other Compensation
As
is customary in the airline industry, during the period of time they serve on the Board of Directors,
non-employee
directors are entitled to complimentary personal air travel for the
non-employee
director and his or her immediate family members on American and American Eagle; 12 round-trip or 24
one-way
passes for complimentary air travel for the
non-employee
directors family and friends each year, as well as American Airlines Admirals Club
®
membership, and AAdvantage
®
Executive Platinum and ConciergeKey
SM
program status.
Non-employee
directors will receive a tax
gross-up
for imputed taxable income related to these flight privileges. In addition, these benefits (except for the tax
gross-up)
will be provided (i) for a
non-employee
directors lifetime if he or she has served for seven or more years or has otherwise vested in such benefits by virtue of the Merger 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 reasonable
out-of-pocket
expenses incurred in connection with attendance at meetings upon submission of receipts.
Some of our current directors are eligible to continue participation under certain legacy programs related to service for predecessor companies, as
described below.
Legacy Director Compensation Programs
Following the closing of the Merger, certain legacy director compensation programs continue to be in effect, including the America West
Directors Charitable Contribution Program (the Charitable Contribution Program).
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. Under 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 are participants in the
Charitable Contribution Program are: Ms. OLeary and Messrs. Hart, Kraemer, Parker and Schifter. 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 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.
Stock
Ownership Guidelines
We adopted stock ownership guidelines for our
non-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 directors 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 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 Nominating 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 a
non-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.
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
39
|
|
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Relationships and Related Party Transactions
Since January 1, 2016, the Company has not participated in, nor is there currently planned, any transaction or series of similar transactions
with any of the Companys directors, nominees, executive officers, holders of more than 5% of Common Stock or any member of such persons immediate family that is required to be reported under Regulation
S-K
Item 404(a) of the rules of the SEC.
We have entered into indemnity agreements with our
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 For 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 Company policies.
A conflict of interest occurs when an individuals private interest interferes, or appears to interfere, in any way with the interests of the
Company. Our Codes of Ethics requires our employees, including 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 Compliance Officer, as applicable. Once the Chair of the Audit Committee or the Chief 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 at
www.aa.com
under the links Investor Relations Corporate Governance.
|
|
|
|
|
40
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
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, 2016 (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 Public Company Accounting Oversight Board Auditing Standard No. 1301.
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 KPMGs communications with the Audit Committee concerning independence, has discussed with KPMG its independence and has considered the compatibility of the
non-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 Form
10-K
for the year ended December 31, 2016, for filing with the SEC.
|
Respectfully submitted,
|
|
Audit Committee
|
Matthew J. Hart (Chair)
|
John T. Cahill
|
Michael J. Embler
|
Alberto Ibargüen
|
Martin H. 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 SECs 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.
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
41
|
|
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This section discusses the principles underlying our compensation policies for our named executive officers who for 2016 are:
|
|
W. Douglas Parker, our Chairman and Chief Executive Officer;
|
|
|
Derek J. Kerr, our Executive Vice President and Chief Financial Officer;
|
|
|
Robert D. Isom, Jr., our President;
|
|
|
Maya Leibman, our Executive Vice President and Chief Information Officer;
|
|
|
Stephen L. Johnson, our Executive Vice PresidentCorporate Affairs; and
|
|
|
J. Scott Kirby, our former President.
|
As described more fully below,
our compensation strategy is designed to provide a total compensation package that will not only attract and retain high-caliber executive officers and employees, but one that will also align employee contributions with our corporate objectives and
stockholders interests.
Executive Succession Planning
To support our operational and overall corporate strategy as we transition away from our extremely successful integration following the Merger, in
2016 our Board of Directors engaged in intensive discussions regarding executive succession. Following conversations with our executives regarding career expectations and their marketability, the Board of Directors concluded that it would not be
able to retain all members of our then existing executive team in their roles for an extended period and chose to proactively establish a team and structure that would best serve the Company for the longer term future.
As a result of our Board of Directors succession planning analysis, Mr. Isom, who was then serving as our Executive Vice President and
Chief Operating Officer, was promoted to President effective August 29, 2016, and Mr. Kirby transitioned out of that role, ceasing his service as our President as of such date. The Board of Directors believes that the resulting executive
team, consisting of a streamlined structure with Mr. Isom taking on an expanded role, is well-prepared to lead the Company over the long-term and to continue to deliver value to our stockholders. In connection with Mr. Kirbys
separation, we entered into a Transition and Separation Agreement with him, which acknowledged his significant contributions to our team over 20 years, including his service as a key executive through the Merger and the 2005 merger of America West
and US Airways. The terms of Mr. Kirbys Transition and Separation Agreement are described below under Change in Control Severance BenefitsKirby Separation.
Executive Summary
2016 In Review
The American Airlines team again produced outstanding results in 2016. Air Transport World named
American as its 2017 Airline of the Year, citing our 2016 performance, the teams integration work, operational and customer service improvements, and the significant investments we are making in our product. This recognition is entirely due to
the great work of our 120,000 team members. Some of our major accomplishments in 2016 are listed below.
2016 financial
performance.
|
|
We realized
pre-tax
profit of $4.3 billion, or $5.1 billion excluding net special charges. That was the second-best year in American Airlines
history, second only to 2015. See Annex A for a reconciliation of
pre-tax
profit excluding net special charges, a
non-GAAP
measure.
|
|
|
We paid total cash dividends of $224 million ($0.10 per share per quarter) and returned $4.4 billion to our stockholders through stock repurchases. Since the program began in July 2014
through March 31, 2017, we have returned more than $10.2 billion to our stockholders through share repurchases and dividends.
|
We invested in our people.
|
|
We instituted a profit sharing program across all of our workgroups that pays 5% of our
pre-tax
profit excluding special items and paid $314 million
under the program in early 2017.
|
|
|
We reached interim agreements with the
TWU-IAM
Association to provide pay increases for our mainline maintenance and fleet service personnel as we continue
negotiations for a joint collective bargaining agreement. Additionally, we reached ratified five-year JCBAs for our dispatchers, flight crew training instructors, simulator pilot instructors and flight simulator engineers.
|
|
|
We announced industry-leading pay packages for pilots at our wholly-owned regional airlines Envoy, PSA and Piedmont in order to attract and retain the best pilots. As a result, we doubled both the
first-year total compensation for new regional pilots and the monthly rate of hiring for pilots of those airlines.
|
|
|
We invested over $20 million to provide capability building opportunities to over 18,000 team members and leaders in the important areas of leadership development, enhanced customer service,
and teamwork.
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42
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PROXY STATEMENT
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American Airlines Group
|
We invested in our products and our operations.
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We invested approximately $4.4 billion in new aircraft, including 55 new mainline and 42 new regional aircraft and retired 71 mainline and 41 regional aircraft. As a result of our ongoing
fleet renewal program, we have the youngest fleet of the major U.S. network carriers. With these new deliveries, our mainline average age has dropped to approximately ten years, further widening the age gap between American and our peers.
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We hired additional personnel and invested in new equipment and technology to support our operations. In the fourth quarter of 2016, we achieved our best monthly completion factor,
on-time
performance, and baggage handling performance since the Merger.
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We redesigned our AAdvantage
®
loyalty program to award mileage credits based on the price of tickets purchased, enabling elite members to
earn even more miles based on their status level. During 2016, the AAdvantage
®
program was named Best Elite Program in the Americas by the Freddie Awards.
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We became the first U.S. carrier to introduce Premium Economy, a new class of service on international flights with more legroom, wider seats, and enhanced meal service and amenity kits. Premium
Economy debuted on our new Boeing
787-9s
and we will expand it to most other international wide-body aircraft by the end of next year.
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We made several other customer experience improvements including the reintroduction of free snacks in the main cabin, the launch of complimentary
in-flight
entertainment and the redesign and upgrade of many Admirals Club lounges. We also continued to expand
lie-flat
Business Class seats on our international fleet and announced plans to install fast
satellite-based Internet connectivity on hundreds of aircraft.
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In March 2017, we agreed to make a $200 million equity investment in China Southern Airlines, the largest airline in China, creating a strong foundation for a long-term relationship between
two of the worlds biggest carriers.
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We made tremendous progress in integrating our airline.
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We integrated all mainline pilots and our mainline fleet into a single scheduling system, allowing us to schedule pilots and aircraft seamlessly across the network.
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Corporate social responsibility.
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American received, for the 16th consecutive year, the highest possible ranking by the Human Rights Campaign in the 2017 Corporate Equality Index, a nationally recognized benchmark of Americas
top workplaces for inclusion of LGBT employees.
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American Airlines employees participated in more than 19,000 volunteer events in their communities, contributing more than 125,000 hours of volunteer time in the communities where they live and
where American provides service. In addition, as part of the Companys Flights for 50 awards program, American employees donated more than 20 million frequent flier miles to nonprofit organizations in their communities.
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The Environmental Protection Agency announced American is now ranked 45th on their Fortune 500 list of the largest green power users.
|
Commitment to Pay for Performance; Competitive Compensation
CEO compensation
.
From the time of the Merger, Mr. Parker has demonstrated his commitment to fair pay, paying for performance and aligning executive interests with that of our stockholders, including initiating the
following exceptional actions with respect to his compensation:
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In 2014, because many of our represented employees were not yet paid at the same rates as their peers at Delta and United, Mr. Parkers 2014 total target direct compensation was set at
22% below the average for his peers at Delta and United, which the Compensation Committee determined was the appropriate level to honor his wishes while providing incentive for him to attain stockholder value.
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Effective May 1, 2015, at Mr. Parkers request, our Compensation Committee determined to provide 100% of his direct compensation in the form of equity incentives in lieu of base
salary and annual cash incentive compensation. That helped the Committee advance its commitment to paying for performance and further aligned Mr. Parkers interests with that of our stockholders.
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Also at his request, in April 2016, our Compensation Committee agreed to eliminate his employment agreement and our obligations under the agreement such that Mr. Parker is no longer
contractually entitled to receive a set level of compensation and benefits and is no longer protected by the change in control and severance provisions of that employment agreement. However, notwithstanding the elimination of Mr. Parkers
employment agreement, he has agreed to remain obligated with respect to the employment agreement covenants that required post termination confidentiality and
non-solicitation
of employees.
|
For 2016, Mr. Parkers total target direct compensation, which was provided solely in the form of long-term
equity incentives, was set approximately 22% below the average total direct compensation of his peers at Delta and United (using the most recent publicly available data), consistent with the positioning our Compensation Committee had approved in
2014. This positioning continues to honor Mr. Parkers public commitment that his compensation be set below that of his peers at least until the Companys line employees enjoyed compensation equivalent to their counterparts at United
and Delta.
Our other named executive officers compensation
.
The target direct compensation provided to our other named executive officers is competitive with that of the other large network airlines. For 2016,
our other named executive officers received an
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American Airlines Group
|
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|
PROXY STATEMENT
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43
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|
approximate
3-4%
merit-based increase to their total target direct compensation over 2015 levels as part of the 3% budgeted increase for the broader
support staff and management team population. In addition, between 85% and 89% of their 2016 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.
In addition, in April 2017, at their request, all of the executive officers who were party to change in control and severance benefits agreements
voluntarily terminated their agreements, which provided for severance payments upon qualifying terminations. These agreements were entered into with US Airways Group prior to 2010 and were assumed in connection with the Merger. As a result of the
voluntary forfeiture of these agreements, none of our named executive officers are contractually entitled to any cash severance or continued healthcare benefits upon any termination, nor are we contractually obligated to provide a
gross-up
to cover any excise taxes incurred by them under Section 4999 of the Code.
Pay mix.
The pie charts below show the target mix of each element of the 2016 total compensation package for (i) our Chief Executive
Officer and (ii) our other named executive officers, showing our strong emphasis on variable pay, which could 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 and operating efficiency.
For 2016, we retained the overall structure and performance metrics under our annual cash incentive program and long-term incentive program from our
2015 program. As in 2015, our 2016 annual cash incentive program was based on
pre-established
adjusted
pre-tax
income targets, subject to the Compensation
Committees discretion to increase an award by up to 50% or reduce an award to zero based on individual performance. We believe that
pre-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 in
pre-tax
profit in 2016 and no incentive would be earned if
pre-tax
profit was below $3.5 billion. The Committee is committed to setting rigorous goals under the short-term incentive program and set these levels following consideration of broad market factors, including
the fuel price environment and our institution of a profit sharing program across all of our workgroups beginning in 2016. Our 2016 long-term incentive program for our named executive officers incorporated both performance- and time-vesting equity
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 Companys 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, if at all, not earlier than the third anniversary of the grant date based on our relative three-year
pre-tax
income margin as compared to that of a
pre-defined
group of airlines. The number of shares earned will vary between 50% and 200% of the target number of
performance-vesting RSUs depending on our relative performance, and no shares will be earned if threshold performance is not achieved. Relative
pre-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.
For 2017 awards, the
Compensation Committee has incorporated a three-year relative TSR modifier into the performance-vesting component of the restricted stock units in addition to the relative three-year pre-tax income margin measure. Incorporating the effect of this
TSR modifier (±25%), the payout range remains unchanged from 2016 (with the number of shares earned varying between 50% and 200% of the target number of performance-vesting RSUs depending on our relative performance with respect to both
performance measures); provided, that if the Companys absolute TSR over the measurement period is negative, no upward adjustment would be made to the payout based on this modifier and the maximum number of shares that may be earned will be
capped at 160%. We believe that adjusting performance achievement positively or negatively based on relative TSR demonstrates our commitment to generating returns for our stockholders and will further align management with stockholder interests.
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44
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
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:
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What We
Do
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|
What We Do NOT Do
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✓
Clawback Policy
for all incentive compensation paid to our executive officers, including payouts under our cash incentive programs and all equity awards.
✓
Stock
Ownership Guidelines
that further align our executive officers long-term interests with those of our stockholders.
✓
Independent Compensation Consultant
that is directly engaged by the Compensation Committee to advise on executive and director compensation matters.
✓
Annual Compensation Risk Assessment
to identify any elements of our compensation program design or oversight
processes that carry elevated levels of adverse risk to the Company.
✓
Equity Award Grant Policy
that establishes objective, standardized criteria for the timing of equity awards granted to our employees.
✓
Tally Sheet Review
. We conduct a comprehensive overview of all compensation, including a historical overview
of total compensation targets and actual payouts as well as current vested and unvested stock holdings.
✓
At-Will
Employment
. Our executive officers are all
at-will
employees and none of our executive officers have an employment
agreement.
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×
No Severance or Change in Control Agreements
. None of our executive officers have a severance or change in control agreement.
×
No Excessive Perquisites.
Perquisites and other personal benefits are not a significant portion of any
executive officers compensation. We do not provide company cars, personal club memberships, home security protection, private jet travel for personal use or protection on home sale loss in a relocation.
×
No Guaranteed Bonuses
. Our executive officers bonuses are performance-based and 100% at
risk.
×
No Active Executive Retirement Plans
. We do not maintain any active executive-only or supplemental
retirement plans.
×
No Hedging or Pledging
. 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 any executive officer with any tax
gross-ups
to cover excise taxes in connection with a change in control.
×
No Payouts of Dividends
accrued on unvested awards unless and until the awards vesting conditions are satisfied.
|
2016 Compensation Objectives and Programs
The philosophy underlying our overall executive compensation program is to provide an attractive, flexible and market-based total compensation
program tied to performance and aligned with the interests of our stockholders. We intend for our compensation programs to motivate the management team to maximize 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 term sustainable levels of income and profitability.
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 profitability and investor returns.
To continue to attract and retain high-caliber executive officers, the Compensation Committee set total 2016 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
3-4%
higher than 2015 levels for our named executive officers other than our CEO while setting our CEOs total target direct compensation to approximately 22% below the compensation
for his peers at Delta and United (using the most recent publicly available data).
Stockholder Approval
of 2016 Executive Compensation
At our 2016 annual meeting of stockholders, our stockholders voted, in a
non-binding
advisory vote, to approve the compensation of our named executive officers (with an approval representing over 97% of the shares represented in person or by proxy at the meeting and entitled to vote).
Our Compensation Committee reviewed the result of the stockholders advisory vote on executive compensation and, in light of the approval by a substantial majority of stockholders, did not implement changes to the executive compensation
programs as a result of the vote.
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 Committee
is comprised of five independent directors, each of whom is a
non-employee
director under
Rule 16b-3
of the Exchange Act and an outside
director for purposes of Section 162(m) of the Code. The Compensation Committees overarching goal is to create executive compensation programs that align management and stockholder interests over the long-term and that allow us to
recruit and retain a highly capable management team. The Compensation Committee considers management input on executive compensation programs but relies on its outside 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.
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American Airlines Group
|
|
|
PROXY STATEMENT
|
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45
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|
Some of the elements we consider when designing compensation policies include attrition, diversity,
and executive development needs. 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 also provides input and recommendations based on his direct knowledge of the other named executive
officers individual performance and contributions given the scope of their responsibilities.
Use of Compensation Consultants
The Compensation Committee retained Willis Towers Watson as its independent compensation consultant beginning in 2014. 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, it reports directly to the Compensation Committee with respect to its executive compensation consulting advice. Management also engaged Willis Towers Watson in 2016 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 GovernanceCommittees beginning on page 30.The Compensation Committee has assessed whether the services provided by Willis Towers Watson or any other
relationships raised any conflicts of interest pursuant to SEC and NASDAQ rules, and has concluded that no such conflicts of interest exist.
Use of Market Data and Tally Sheets
In order to ensure a competitive design for our executive compensation
program, our Compensation Committee, with advice and analysis from Willis Towers Watson, reviews our program against those of our largest competitors, Delta and United. In addition, in 2016, we validated the total target direct compensation of our
top executives against Willis Towers Watsons database of similarly sized companies.
For 2016, our annual review of executive
compensation also included tally sheets for our executive officers. Each tally sheet provides a historical overview of total compensation targets and actual payouts, current vested and unvested stockholdings, retirement payouts, as applicable, and
airline and general industry benchmarks, as well as estimated upcoming short- and long-term incentive payments. The Compensation Committee used these tally sheets to provide a comprehensive picture of each executive officers historical,
current and estimated future compensation.
Executive Compensation Mix with an Emphasis on
Performance-Based Pay
As described above, following the Merger, the Compensation Committee implemented an executive compensation
structure that includes both fixed and performance-based pay. Specifically, our executive compensation structure consists of three core components which align management and stockholder interests:
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a base salary paid in cash;
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an annual incentive program paid in cash based on achievement of annual profitability targets; and
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a long-term equity incentive program in the form of restricted stock units (RSUs) that incorporate both performance- and time-vesting components.
|
The overarching goal is to align executive and stockholder interests, so the executive compensation programs emphasize pay for performance (such
that compensation is paid only if we meet
pre-determined
performance targets) and equity-based compensation tied to our stock performance. For 2016, our named executive officers fixed compensation was in
the
0-15%
range, reflecting a heavy weighting on variable or performance-based compensation vesting over multiple time periods, with Mr. Parkers direct compensation provided 100% in the form of
equity.
Base Salary
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. Parkers direct compensation for 2016 was provided 100% in the form of long-term equity
incentives and he was not eligible for any base salary.
In 2016, our other named executive officers were eligible for a
3-5%
salary increase over 2015 levels, consistent with merit increases in the total direct compensation for the general management employee population. The new base salary levels for Messrs. Kerr, Isom, Johnson and
Kirby and Ms. Leibman were set at $607,056, $639,600, $607,056, $700,000 and $607,056, respectively. In setting base salaries, the Compensation Committee also reviewed these levels against Willis Towers Watsons database of
similar-sized
companies and considered that they generally fell in the 25
th
to 50
th
percentile, though it did
not specifically benchmark to this range.
In connection with Mr. Isoms promotion to President on August 29, 2016, the
Compensation Committee approved an increase in his base salary to $700,000 effective as of October 18, 2016, consistent with the level previously established for Mr. Kirby.
While we aim to establish competitive compensation, our greater focus is on establishing a culture where creating value for our stockholders is
always at the forefront of our leadership teams decision-making. We believe that our reduced emphasis on fixed
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46
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|
PROXY STATEMENT
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American Airlines Group
|
compensation, achieved through below-median base salaries combined with higher levels of target cash incentives and equity compensation, allows us to retain our management team and recruit from
other network airlines and general industry, and also emphasizes our
pay-for-performance
philosophy.
Annual Cash Incentive Program
The second core component of our overall compensation program is a short-term cash incentive program. Following the Merger, we implemented an annual
cash incentive program based on
pre-established
adjusted
pre-tax
income targets. We believe that
pre-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 2016, the named executive officers (other than Mr. Parker, who received his compensation entirely in the form of
long-term equity incentives, as discussed above) participated in the American Airlines Group Inc. 2016 Short-term Incentive Program (the 2016 STIP). As under the 2015 Short-term Incentive Program, payouts under the 2016 STIP were tied to
the achievement of
pre-established
adjusted
pre-tax
income goals (excluding special items, profit sharing and annual incentive programs and related payroll taxes and
401(k) company contributions). The Committee is committed to setting rigorous goals under the STIP. In 2015, we achieved an adjusted
pre-tax
income of approximately $6.5 billion, which was higher than the
level of
pre-tax
income that AMR and US Airways Group, combined, had ever earned in their history. This record level of
pre-tax
income benefited greatly from broader
market factors in 2015, most significantly, the highly favorable fuel price environment, which we did not anticipate would continue for 2016. In addition, in 2016, we unilaterally instituted a profit sharing program across all of our workgroups that
pays 5% of our
pre-tax
profit excluding special items. In consideration of these factors, the Committee set the following threshold, target, and maximum performance levels for the financial metrics, as well as
the corresponding annual incentive funding levels:
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2016 Adjusted Pre-tax
Income ($)(in billions)
|
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|
Funding Level
(% of Target)
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<Threshold
|
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|
<3.5
|
|
|
|
0
|
%
|
Threshold
|
|
|
3.5
|
|
|
|
50
|
%
|
Target
|
|
|
5.0
|
|
|
|
100
|
%
|
Maximum
|
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|
7.0
|
|
|
|
200
|
%
|
Any performance falling between threshold, target and maximum levels would result in an adjustment of funding level
based on straight-line interpolation. The 2016 target bonus opportunities for the participating named executive officers were initially set at the same levels as in 2015 as shown in the table below.
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Named Executive Officer
|
|
2016 Target Payout Level
as a Percentage of Base Salary
|
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Derek J. Kerr
|
|
|
125
|
%
|
Robert D. Isom, Jr.
|
|
|
125
|
%
|
Maya Leibman
|
|
|
125
|
%
|
Stephen L. Johnson
|
|
|
125
|
%
|
J. Scott Kirby
|
|
|
175
|
%
|
In connection with Mr. Isoms promotion to President on August 29, 2016, the Compensation Committee
approved increasing Mr. Isoms target bonus opportunity to 175% of base salary, consistent with the level initially set for Mr. Kirby. Mr. Isoms payout under the 2016 STIP was prorated based on eight months served as Chief
Operating Officer and four months served as President.
Under the program, the Compensation Committee could, in its discretion, increase
the amount of an award based on individual performance by up to 50% or decrease it to zero. The aggregate effect of the individual performance modifier for all participants, however, could not result in an increase to the aggregate program incentive
amount. In addition, in no event could an individual payout exceed 200% of the applicable target opportunity.
In 2016, we achieved an
adjusted
pre-tax
income of approximately $5.5 billion, which corresponded to achievement at 125% of the target level under the 2016 STIP. The following table shows the 2016 target goal, actual performance
and funding level for the 2016 STIP.
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Performance Goal
|
|
2016 Target
Performance Goal
($)(in billions)
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|
Actual
Performance
($)(in billions)
|
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|
Funding
Level
(% of target)
|
|
2016 Adjusted
Pre-tax
Income
(a)
|
|
|
5.0
|
|
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|
5.5
|
|
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|
125
|
%
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|
(a)
|
Represents income before income taxes for the year ended December 31, 2016, excluding special items (as detailed in the Current Report on Form
8-K
filed
by AAG on January 27, 2017) and profit sharing and annual incentive programs and related payroll taxes and 401(k) company contributions.
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American Airlines Group
|
|
|
PROXY STATEMENT
|
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47
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Based on the funding level as described above, and subject to the discretion of the Compensation
Committee, each named executive officer other than Messrs. Parker and Kirby received a bonus at 125% of target under the 2016 STIP. The Compensation Committee did not modify any named executive officers bonus amount based on the individual
modifier. The dollar amounts of the bonuses paid to our named executive officers under the 2016 STIP are set forth in the Summary Compensation Table on page 55.
Because Mr. Kirby separated from the Company prior to the end of 2016, he was not eligible to receive an annual incentive under the 2016 STIP.
However, he received his target short-term incentive as a part of his severance benefit as described in more detail below under Change in Control and Severance Benefits.
The 2017 Short-term Incentive Program is substantially similar to the design used in 2016.
Long-Term Incentive Programs
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 the interests of recipients and stockholders. Stock-based 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 maximizing stockholder value.
The Compensation Committee determines the number of awards to be granted to an executive
officer based upon the executives level of responsibility and job classification level and the results of compensation market analyses.
For 2016, our long-term incentive program was substantially similar in structure to our 2015 program. The Compensation Committee approved grants of RSUs to each named executive officer that incorporate both performance- and
time-vesting components, each weighted 50% by value (other than with respect to Mr. Parker whose annual grant was weighted approximately 54% performance-vesting by value), in order to further align management and stockholder interests.
Two-thirds
of the time-vesting RSUs vest in April 2017 and the remaining
one-third
vest in April 2018, subject to each executives continued employment with the Company. The performance-vesting RSUs may vest in April 2019 subject to the Companys achievement of
pre-tax
income margin, excluding special charges, over the three-year period from January 1, 2016 to December 31, 2018. Our performance is measured relative to the weighted average
pre-tax
income margin of a peer group comprised of Delta, United, Southwest, JetBlue, Alaska, Spirit and Virgin America. Based on this performance metric, the number of shares of our Common Stock issuable in respect
of each RSU upon vesting may range from 0 to 2 as follows:
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Performance Relative to Peer Group
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Number of Shares to be Issued per Vested RSU
|
150% or higher
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2.0
|
100%
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|
1.0
|
50%
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|
0.5
|
Less than 50%
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|
0.0
|
Negative Pre-Tax Income Margin that is
Better than Peer Group Average
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Capped at 1.0
|
Linear interpolation will be used to determine the number of shares of Common Stock to be issued for performance
attained between 50% and 100% and between 100% and 150% of the peer group weighted average
pre-tax
income margin.
As discussed above, Mr. Parkers direct compensation for 2016 was provided 100% in the form of long-term equity incentives, having foregone his base salary and short-term cash incentive at his request commencing in May
2015. The Compensation Committee determined to set the grant date fair value of Mr. Parkers annual equity grant at $11 million to approximate 80% of the total target direct compensation of the average of his peers at United and
Delta, consistent with the positioning our Compensation Committee had approved in 2014. As in 2014, the Compensation Committee determined that this level of total direct compensation appropriately incentivized Mr. Parker to attain stockholder
value while honoring his previous request that his compensation be set significantly below that of his peers at least until the Companys line employees enjoyed compensation equivalent to their counterparts at United and Delta. In determining
to approve this level of compensation, the Compensation Committee noted that his 2015 total target direct compensation had dropped to 39% below his peers as a result of recent compensation increases at United and Delta (using the most recent
publicly available data).
For the other named executive officers, the Compensation Committee determined to award target grant values
with a 3% increase over 2015 target grant values, consistent with the 3% budgeted increase in total direct compensation applicable to the broader support staff and management team population.
In connection with Mr. Isoms promotion to President, in October 2016, our Compensation Committee granted Mr. Isom 39,263 RSUs that vest in
three equal annual installments from date of grant, subject to his continued employment with the Company. The size of the RSU grant was determined by subtracting the value of the RSU grant made to Mr. Isom in April 2016 from the target value for an
annual grant of RSUs determined by the Compensation Committee in 2016 for the role of President.
Please see the Grants of Plan-Based
Awards table below for a description of the grants awarded to our named executive officers during 2016.
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48
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PROXY STATEMENT
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American Airlines Group
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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, promotion or special purpose grants, will be granted once per year at the second regularly scheduled meeting of the Compensation Committee or at an
Equity Incentive Committee meeting (with respect to awards to
non-executive
employees) or at a special meeting held for this purpose as close in time to the regularly scheduled meeting as possible.
2014 Equity Awards
Each of
our named executive officers 2014 annual equity grants were comprised 50% of time-vesting and 50% of performance-vesting RSUs. The performance-vesting RSUs could vest between April 2016 and April 2017 based on the issuance of a single
operating certificate by the FAA and our achievement of at least $1 billion in net synergies with respect to fiscal years 2015 or 2016, both of which were significant milestones to the integration of American and US Airways and to our
continuing success. As a result of the Compensation Committees assessment of our achievement of such performance goals in December 2015, these performance-vesting RSUs vested with respect to
one-third
in
April 2016 and with respect to the remaining
two-thirds
in April 2017.
Change in Control and Severance Benefits
Change in control and severance benefits help to fulfill our objective of attracting
and retaining key managerial talent and are a customary component of executive compensation. In particular, such arrangements may reinforce and encourage our named executive officers continued attention and dedication to their assigned duties
without the distraction arising from the possibility of a change in control, and allow and encourage them to focus their attention on obtaining the best possible outcome for stockholders without being influenced by their personal concerns regarding
the possible impact of various transactions on the security of their jobs and benefits. Information on the estimated payments and benefits that our named executive officers would have been eligible to receive pursuant to their existing arrangements
as of December 31, 2016, are set forth in Potential Payments Upon Termination or Change in Control beginning on page 60.
While we have historically provided change in control severance benefits to our named executive officers for the reasons described above, as a
result of their own initiative and as discussed more fully below, as of April 2017, none of our executive officers are party to any individual employment or severance agreement providing change in control or severance benefits.
Mr. Parker
As required
by the terms of the Agreement and Plan of Merger with US Airways Group, we assumed the employment agreement Mr. Parker had entered into with US Airways Group 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. Parkers request, our Compensation Committee agreed to eliminate
Mr. Parkers 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. Parkers 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. Parkers termination of employment for
any reason other than misconduct, certain of Mr. Parkers 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. Parkers employment had been terminated as of December 31, 2016, the value of the accelerated portion of his 2016 RSU award would have been $1,824,000.
Former US Airways NEOs
We
also assumed the executive change in control and severance benefits agreements of Messrs. Kerr, Isom, Johnson and Kirby, each of whom served at US Airways Group prior to the Merger. Each of these agreements was entered into with US Airways Group
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, 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 a
gross-up
to cover any excise taxes incurred by them under Section 4999 of the Code.
Prior to the termination of the agreements, they provided that in the event of a qualifying termination in connection with a change in control, the
named executive officer would be entitled to receive a multiple of his salary, equity award acceleration, lifetime flight privileges and certain other benefits. The severance benefits provided under the executive change in control and severance
benefits agreements prior to their termination are more fully described in the section entitled Executive CompensationPotential Payments upon Termination or Change in Control beginning on page 60.
Equity Incentive Plans
In
addition to the change in control and severance benefits described above, pursuant to the grant agreements under the Companys 2013 Incentive Award Plan (the AAG 2013 IAP), the US Airways Group 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
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
49
|
|
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, 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 CompensationPotential
Payments upon Termination or Change in Control beginning on page 60.
Kirby Separation
On August 29, 2016, Mr. Kirby ceased serving as our President, and in connection with his separation, we entered into a Transition and
Separation Agreement with him. Pursuant to the agreement, Mr. Kirby received $3,850,000 in cash (representing two times his base salary plus his target short term incentive), less withholdings for taxes, payable in a cash lump sum and
accelerated vesting of 259,097 restricted stock units, which represented the accelerated vesting of 157,456 restricted stock units that otherwise would have vested based solely on continued service through April 2017 or April 2018, as the case may
be, 52,775 restricted stock units that would have vested in April 2018 based on Company performance achievement of 96%, which constituted actual performance through June 30, 2016, and 48,866 restricted stock units that would have vested in
April 2019 based on Company performance achievement of 87%, which constituted actual performance through June 30, 2016. The agreement also provided for the reimbursement of reasonable attorneys fees related to its negotiation, not to
exceed $10,000. In consideration for the separation payments and benefits provided to Mr. Kirby, the agreement provided for a full release of claims against the Company and American and includes a
two-year
nonsolicitation covenant and customary covenants related to confidentiality and cooperation. Mr. Kirby also previously vested into lifetime travel privileges in connection with the merger of US
Airways Group and America West, and he will continue to be entitled to the positive space flight privileges described under Other Benefits and PerquisitesEnhanced Benefits below.
Mr. Kirbys separation from the Company was a result of the executive succession planning process undertaken by our Board of Directors in
2016 rather than his performance as our President. While our Board of Directors believes that the resulting executive team will be sustainable and effective over the long-term, it regarded Mr. Kirbys longstanding service as a member of
our team to have been integral to the Companys prior success, including with respect to the Merger and the 2005 merger of America West and US Airways. Accordingly, in connection with Mr. Kirbys departure, our Compensation Committee
intended to provide him with a severance arrangement that was fair and reasonable from a market perspective while appropriately recognizing his outstanding performance and significant contributions to our team over 20 years. In approving
Mr. Kirbys severance arrangement, the Committee considered the severance arrangements of other terminated named executive officers of Fortune 250 companies over the last four years, which averaged over $10 million in cash and equity
acceleration, ranging up to $50 million in total. The Committee also considered the fact that the severance arrangement provided to AMRs former CEO upon his departure from American in connection with the Merger was valued at approximately
$20 million in cash and equity acceleration.
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 employees.
Enhanced Benefits
We
continue to provide certain enhanced benefits to our named executive officers. These benefits and perquisites provide convenience and support services that allow our executives to more fully focus attention on carrying out their responsibilities to
our stockholders. These benefits and perquisites are common in the airline industry and consequently are necessary for us to be competitive in recruiting and retaining talented executives. 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 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, 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 named executive officers related to those flight privileges, which is consistent
with industry practice.
The positive space flight privileges provided to the named executive officers include unlimited reserved travel
in any class of service for the executive and his or her immediate family, including eligible dependent children, for personal purposes. The executive officer and his or her immediate family, including eligible dependent children, also have access
to our Admirals Club
®
travel lounges at various airports. The executives are also eligible for 12 free round-trip passes or 24 free
one-way
passes each year for reserved travel for
non-eligible
family members and friends, and we cover the income tax liability related to these flight privileges. The named executive officers are required to pay any
international fees and taxes, if applicable.
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 also
pay the full cost of their annual physicals and additional diagnostic tests recommended by the provider.
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50
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|
PROXY STATEMENT
|
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American Airlines Group
|
Mr. Parker is a participant in the Charitable Contribution Program, under which US Airways Group
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 by Mr. Parker. For a more
detailed description of the charitable contribution program, see the narrative above under the Director Compensation table. Three 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.
For additional information on any individual
benefits provided to the named executive officers on an individual basis, see the section entitled Executive CompensationSummary Compensation Table beginning on page 55.
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, Support Personnel and Officers (the AMR Retirement Benefit Plan) and the Supplemental Executive Retirement Program for Officers of American Airlines, Inc. (the AMR
Non-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 AMR
Non-Qualified
Plan was frozen.
For further details regarding
AMRs legacy retirement plans, see the sections entitled Executive CompensationPension Benefits
beginning on page
59 and Executive
CompensationNon-Qualified
Deferred Compensation beginning on page 60 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 Nominating Committee. Executives have five years from the later of the effective time of the Merger 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.
Stock Ownership Guidelines
|
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|
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|
|
Position/Levels
|
|
Multiple of
Base Salary
|
|
|
Fixed
Shares
|
|
Chief Executive Officer
|
|
$
|
4,305,000
|
(a)
|
|
|
116,667
|
|
President
|
|
|
3x
|
|
|
|
54,167
|
|
Chief Operating Officer
|
|
|
3x
|
|
|
|
50,000
|
|
Executive Vice President
|
|
|
3x
|
|
|
|
47,917
|
|
|
(a)
|
With respect to Mr. Parker, the multiple of base salary was set at a level equal to six times his base salary in effect immediately prior to May 1, 2015, because effective as of such
time, Mr. Parker no longer received any base salary.
|
|
Clawback Policy
We have adopted a clawback policy that applies to all executive officers and covers all compensation under the cash incentive programs and all
equity awards. The policy applies in the event our financial statements are restated as a result of material
non-compliance
with financial reporting rules and provides the Board of Directors 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 policies and will recommend to the Board of Directors any changes to the
current policy that are necessary or appropriate in light of guidance issued by the SEC.
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|
American Airlines Group
|
|
|
PROXY STATEMENT
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51
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Prohibition on Hedging and Pledging
Our insider trading policy prohibits our executive officers and directors from hedging the economic risk of security ownership. In addition, our
executive officers and directors are prohibited from pledging Company securities to secure margin or other loans.
Section 280G/Section 4999 Policy
We do not provide any tax
gross-ups
to cover excise taxes under Section 4999 in connection with a change in control.
Tax Considerations
Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to the
Chief Executive Officer or the next three most highly compensated executive officers (other than the Chief Financial Officer). Performance-based compensation arrangements may qualify for an exemption from the deduction limit if they satisfy various
requirements under Section 162(m) of the Code. The Compensation Committee considers the impact of this rule when developing and implementing executive compensation programs and may attempt to structure the programs to comply with these
requirements. However, the Compensation Committee believes that it is important to preserve flexibility in designing compensation programs and has adopted, and may continue to adopt, compensation components that do not meet the requirements for an
exemption from Section 162(m) of the Code. The Compensation Committee also considers the manner in which compensation is treated for accounting purposes when developing and implementing executive compensation programs.
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52
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
COMPENSATION COMMITTEE REPORT
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 our Annual Report on Form
10-K
for the year ended December 31, 2016.
Respectfully submitted,
Compensation Committee
Richard C. Kraemer (Chair)
James F. Albaugh
Jeffrey D. Benjamin
Alberto Ibargüen
Denise OLeary
This report of the Compensation Committee is not deemed to be soliciting material
or to be filed with the SEC or subject to the SECs 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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|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
53
|
|
EXECUTIVE OFFICERS
The following table lists AAGs executive officers as of May 1, 2017, including their ages and principal occupations.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
|
Title
|
W. Douglas Parker
|
|
|
55
|
|
|
Chairman and Chief Executive Officer
|
Robert D. Isom, Jr.
|
|
|
53
|
|
|
President
|
Elise R. Eberwein
|
|
|
51
|
|
|
Executive Vice PresidentPeople and Communications
|
Stephen L. Johnson
|
|
|
60
|
|
|
Executive Vice PresidentCorporate Affairs
|
Derek J. Kerr
|
|
|
52
|
|
|
Executive Vice President and Chief Financial Officer
|
Beverly Goulet
|
|
|
62
|
|
|
Executive Vice President and Chief Integration Officer
|
Maya Leibman
|
|
|
51
|
|
|
Executive Vice President and Chief Information Officer
|
Below is certain information as of May 1, 2017, regarding our executive officers other than W. Douglas Parker.
For similar information regarding Mr. Parker as of May 1, 2017, see the section entitled Proposal 1: Election of Directors beginning on page 7.
Robert D. Isom, Jr.
Robert Isom is President for AAG and American, a position he has held since August 2016. He also serves on the board of directors of American, a
position he has held since August 2016. From 2013 to 2016, Mr. Isom served as Executive Vice President and Chief Operating Officer for AAG and American, after holding those same positions at US Airways from 2007 to 2013. Prior to joining US
Airways, Mr. Isom served as Chief Restructuring Officer for GMAC, LLC. Before that, he was Senior Vice President, Ground Operations and Airport Customer Service, for Northwest Airlines. Mr. Isom also served as Vice President,
International, and Vice President, Finance, for Northwest Airlines. Between 1995 and 2000, he was with America West and held executive roles in revenue management, operations and finance. Mr. Isom started his career at The Procter &
Gamble Company.
Elise R. Eberwein
Elise Eberwein is Executive Vice
PresidentPeople and Communications for AAG and American, positions she has held since December 2013. Previously, Ms. Eberwein served as Executive Vice PresidentPeople, Communications and Public Affairs for US Airways, her role since
2009. Ms. Eberwein has nearly 30 years of industry experience and joined America West in 2003 as Vice President, Corporate Communications, from Denver-based Frontier Airlines. She began her career as a flight attendant for TWA and held a
variety of positions at TWA in operations, marketing and communications.
Stephen L. Johnson
Stephen Johnson is Executive Vice
PresidentCorporate Affairs for AAG and American, positions he has held since December 2013. He also serves on the board of directors of American, a position he has held since December 2013 and on the board of directors of WIZZ Air Holdings
PLC, a European airline company that trades on the London Stock Exchange. Previously, Mr. Johnson served as Executive Vice PresidentCorporate and Government Affairs for US Airways, his role since 2009. From 2003 to 2009, Mr. Johnson
was a partner at Indigo Partners LLC, a private equity firm specializing in acquisitions and strategic investments in the airline, air finance and aerospace industries. Between 1995 and 2003, Mr. Johnson held a variety of positions with America
West prior to its merger with US Airways Group, including Executive Vice PresidentCorporate. Prior to joining America West, Mr. Johnson served as Senior Vice President and General Counsel at GPA Group plc. He was also an attorney at
Seattle-based law firm Bogle & Gates, where he specialized in corporate and aircraft finance and taxation.
Derek J. Kerr
Derek J. Kerr is Executive
Vice President and Chief Financial Officer for AAG and American, positions he has held since December 2013. Previously, Mr. Kerr served as Executive Vice President and Chief Financial Officer for US Airways, a role that he began in 2009. Prior
to that, he was Senior Vice President and Chief Financial Officer of America West, a role he began in 2002. He joined America West in 1996 as senior director, planning, and was promoted to Vice President, Financial Planning and Analysis, in 1998. In
2002, Mr. Kerr was promoted to Senior Vice President, Finance, adding responsibility for purchasing and fuel administration. Prior to joining America West, Mr. Kerr served in various financial planning and analysis positions with Northwest
Airlines. Previously, Mr. Kerr was a flight test coordinator/control engineer with Northrop Corporations
B-2
Division.
Beverly Goulet
Beverly Goulet is Executive Vice President and Chief Integration Officer for AAG and American, positions she has held since November 2015.
Previously from February 2013 to November 2015, she served as Senior Vice President and Chief Integration Officer. From November 2011 to December 2013, she served as Chief Restructuring Officer of AMR Corporation. Ms. Goulet joined American in
1993 as Associate General CounselCorporate Finance. She was appointed Managing DirectorCorporate Development in 1999 and Vice PresidentCorporate Development and Treasurer in 2002, a position she held until February 2013.
Maya Leibman
Maya Leibman is Executive Vice President and Chief Information Officer for AAG and American, positions she has held since November 2015. Previously,
she served as Senior Vice President and Chief Information Officer from January 2012 to November 2015. Prior to her role as Chief Information Officer, Ms. Leibman was President of the AAdvantage loyalty program from 2010 to 2012. From 2001
to 2010, Ms. Leibman held several positions in the Information Technology department, culminating in the position of Vice President, Business Operations Systems from 2006 to 2010. Ms. Leibman joined American in 1994 in the Revenue
Management department.
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|
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54
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides compensation earned by our named executive officers in the years ended December 31, 2016, 2015 and 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
(b)
|
|
|
Option
Awards
($)
(c)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
(d)
|
|
|
Change in
Pension Value
and
Non-
Qualified
Deferred
Compensation
Earnings
($)
(e)
|
|
|
All Other
Compensation
($)
(f)
|
|
|
Total
($)
|
|
W. Douglas Parker
(a)
|
|
|
2016
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
140,763
|
|
|
|
11,140,763
|
|
Chairman and Chief
|
|
|
2015
|
|
|
|
231,538
|
|
|
|
-
|
|
|
|
10,330,000
|
|
|
|
-
|
|
|
|
387,450
|
|
|
|
-
|
|
|
|
469,559
|
|
|
|
11,418,547
|
|
Executive Officer
|
|
|
2014
|
|
|
|
687,884
|
|
|
|
-
|
|
|
|
7,000,000
|
|
|
|
-
|
|
|
|
4,200,000
|
|
|
|
-
|
|
|
|
414,092
|
|
|
|
12,301,976
|
|
Derek J. Kerr
|
|
|
2016
|
|
|
|
600,936
|
|
|
|
-
|
|
|
|
2,575,000
|
|
|
|
-
|
|
|
|
948,525
|
|
|
|
-
|
|
|
|
66,521
|
|
|
|
4,190,982
|
|
Executive Vice
|
|
|
2015
|
|
|
|
584,178
|
|
|
|
-
|
|
|
|
2,920,000
|
|
|
|
-
|
|
|
|
1,350,317
|
|
|
|
-
|
|
|
|
366,448
|
|
|
|
5,220,943
|
|
President and Chief
|
|
|
2014
|
|
|
|
563,860
|
|
|
|
-
|
|
|
|
2,500,000
|
|
|
|
-
|
|
|
|
2,443,750
|
|
|
|
-
|
|
|
|
122,156
|
|
|
|
5,629,766
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Isom,
Jr.
|
|
|
2016
|
|
|
|
641,306
|
|
|
|
-
|
|
|
|
4,635,000
|
|
|
|
-
|
|
|
|
1,176,667
|
|
|
|
-
|
|
|
|
99,141
|
|
|
|
6,552,114
|
|
President
|
|
|
2015
|
|
|
|
609,577
|
|
|
|
-
|
|
|
|
3,500,000
|
|
|
|
-
|
|
|
|
1,409,027
|
|
|
|
-
|
|
|
|
650,014
|
|
|
|
6,168,618
|
|
|
|
|
2014
|
|
|
|
591,254
|
|
|
|
-
|
|
|
|
3,000,000
|
|
|
|
-
|
|
|
|
2,550,000
|
|
|
|
-
|
|
|
|
130,332
|
|
|
|
6,271,586
|
|
Maya Leibman
|
|
|
2016
|
|
|
|
600,936
|
|
|
|
-
|
|
|
|
2,575,000
|
|
|
|
-
|
|
|
|
948,525
|
|
|
|
31,652
|
|
|
|
95,814
|
|
|
|
4,251,927
|
|
Executive Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen L. Johnson
|
|
|
2016
|
|
|
|
600,936
|
|
|
|
-
|
|
|
|
2,575,000
|
|
|
|
-
|
|
|
|
948,525
|
|
|
|
-
|
|
|
|
96,025
|
|
|
|
4,220,486
|
|
Executive Vice
|
|
|
2015
|
|
|
|
584,178
|
|
|
|
-
|
|
|
|
2,920,000
|
|
|
|
-
|
|
|
|
1,350,317
|
|
|
|
-
|
|
|
|
236,537
|
|
|
|
5,091,032
|
|
President Corporate
|
|
|
2014
|
|
|
|
566,067
|
|
|
|
-
|
|
|
|
2,500,000
|
|
|
|
-
|
|
|
|
2,443,750
|
|
|
|
-
|
|
|
|
174,655
|
|
|
|
5,684,472
|
|
Affairs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Scott Kirby
(g)
|
|
|
2016
|
|
|
|
475,625
|
|
|
|
-
|
|
|
|
4,635,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,292,744
|
|
|
|
9,403,369
|
|
Former President
|
|
|
2015
|
|
|
|
660,375
|
|
|
|
-
|
|
|
|
5,250,000
|
|
|
|
-
|
|
|
|
2,062,444
|
|
|
|
-
|
|
|
|
328,964
|
|
|
|
8,301,783
|
|
|
|
|
2014
|
|
|
|
642,512
|
|
|
|
-
|
|
|
|
4,500,000
|
|
|
|
-
|
|
|
|
3,575,000
|
|
|
|
-
|
|
|
|
62,273
|
|
|
|
8,779,785
|
|
(a)
|
On April 20, 2015, the Compensation Committee adjusted the compensation program from Mr. Parker to provide 100% of his direct compensation in the form of equity incentives. Effective as
of May 1, 2015, the Company no longer paid Mr. Parker a cash base salary, and he ceased participation in the Companys annual cash incentive program. Mr. Parkers April 2016 equity grant was set at a level intended to, among
other things, capture the value of his forgone base salary, target cash incentive opportunity under the 2016 Short-term Incentive Program and the value of his 401(k) match.
|
(b)
|
Amounts in this column represent the aggregate grant date fair value, as calculated in accordance with ASC Topic 718, of RSUs granted by us during each of the fiscal years ending December 31,
2016, 2015 and 2014, respectively, to the named executive officers. The grant date fair value, as calculated in accordance with ASC Topic 718, of RSUs is equal to the number of shares underlying the RSUs, multiplied by the closing price of our
Common Stock on the date of grant. See also Note 14 to our consolidated financial statements in our 2016 Annual Report on Form
10-K.
With respect to the performance-based RSUs granted during fiscal year 2016,
the grant date fair value is calculated based on the probable outcome of the performance condition. The aggregate maximum fair value of the 2016 performance-based RSUs assuming the highest level of achievement of the performance conditions is as
follows: Mr. Parker $11,880,000, Mr. Kerr $2,575,000, Mr. Isom $3,090,000, Ms. Leibman $2,575,000, Mr. Johnson $2,575,000 and Mr. Kirby $4,635,000.
|
(c)
|
We did not grant any options or SARs to any of our named executive officers during any of the three preceding fiscal years.
|
(d)
|
For 2016, amounts represent payments under the AAG 2016 Short-term Incentive Program. For additional information on these payouts, see the section entitled Compensation Discussion and
AnalysisAnnual Cash Incentive Program beginning on page 47.
|
(e)
|
Amount represents the change in the actuarial present value of the accumulated benefit under the AMR Retirement Benefit Plan and the AMR
Non-Qualified
Plan
from January 1, 2016 to December 31, 2016. Both of these plans were frozen as of October 2012. For additional information on these plans, see the section entitled Compensation Discussion and AnalysisAMR Legacy Retirement
Programs beginning on page 51 and Pension Benefits on page 59.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
55
|
|
(f)
|
The following table provides the amounts of other compensation, including perquisites, paid to, or on behalf of, named executive officers during 2016 included in the All Other
Compensation column. Perquisites and other personal benefits are valued on the basis of the aggregate incremental cost to the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Douglas
Parker ($)
|
|
|
Derek J.
Kerr ($)
|
|
|
Robert D.
Isom, Jr. ($)
|
|
|
Maya
Leibman ($)
|
|
|
Stephen L.
Johnson ($)
|
|
|
J. Scott
Kirby ($)
|
|
Dividends
(a)
|
|
|
85,005
|
|
|
|
31,984
|
|
|
|
35,210
|
|
|
|
28,757
|
|
|
|
31,984
|
|
|
|
131,593
|
|
Flight
Privileges
(b)
|
|
|
25,750
|
|
|
|
10,150
|
|
|
|
23,539
|
|
|
|
25,573
|
|
|
|
25,695
|
|
|
|
289,826
|
|
Life Insurance Premiums
(c)
|
|
|
9,210
|
|
|
|
1,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,677
|
|
Medical Examinations
|
|
|
-
|
|
|
|
2,762
|
|
|
|
3,663
|
|
|
|
3,586
|
|
|
|
-
|
|
|
|
4,234
|
|
Financial Advisory Services
|
|
|
-
|
|
|
|
4,500
|
|
|
|
4,500
|
|
|
|
4,143
|
|
|
|
4,500
|
|
|
|
-
|
|
Gross-Up
Payments
(d)
|
|
|
20,798
|
|
|
|
850
|
|
|
|
17,654
|
|
|
|
19,180
|
|
|
|
19,271
|
|
|
|
839
|
|
401(k)
|
|
|
-
|
|
|
|
14,575
|
|
|
|
14,575
|
|
|
|
14,575
|
|
|
|
14,575
|
|
|
|
14,575
|
|
Severance
Payments
(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,850,000
|
|
|
(a)
|
Amounts represent dividends accrued and paid on RSUs upon vesting that were not reflected in the grant date fair value of the RSU award.
|
|
|
(b)
|
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 24
one-way
passes for
non-eligible
family members and friends. Amounts for Messrs. Parker, Isom and Johnson and
Ms. Leibman represent the actual value of travel utilized by those named executive officers and their respective eligible dependents during 2016. Amount for Mr. Kerr represents the 2016 annuitized value of his lifetime flight benefits.
Amount for Mr. Kirby represents the value of his lifetime flight benefits. Messrs. Kerr and Kirby previously vested into lifetime travel privileges in connection with the merger of US Airways Group and America West.
|
|
|
(c)
|
Amounts represent premium payments made by the Company on behalf of each named executive officer as follows: (i) with respect to Messrs. Parker, Kirby and Kerr, premium payments made by the
Company in excess of the amount of premiums paid for employees generally with respect to coverage of the named executive officer under a life insurance policy and (ii) with respect to Mr. Parker only, the portion of premiums paid by the
Company attributable to Mr. Parker for a life insurance policy under the America West Directors Charitable Contribution Program.
|
|
|
(d)
|
Amount represents tax
gross-up
payments with respect to flight privileges and life insurance.
|
|
|
(e)
|
Amount represents cash payments made to Mr. Kirby in connection with his separation from the Company on August 29, 2016.
|
|
(g)
|
Mr. Kirbys employment terminated on August 29, 2016.
|
|
|
|
|
|
56
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
Grants of Plan-Based Awards in 2016
The following table provides information regarding grants of plan-based awards made to our named executive officers during the year ended
December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
(#)
|
|
|
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
($)
(c)
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
W. Douglas Parker
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,983
|
|
|
|
143,965
|
|
|
|
287,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,940,000
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,637
|
(d)
|
|
|
|
|
|
|
|
|
|
|
5,060,000
|
|
Derek J. Kerr
|
|
|
|
|
|
|
379,410
|
|
|
|
758,820
|
|
|
|
1,517,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,603
|
|
|
|
31,205
|
|
|
|
62,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,287,500
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,205
|
(d)
|
|
|
|
|
|
|
|
|
|
|
1,287,500
|
|
Robert D. Isom, Jr.
|
|
|
|
|
|
|
470,667
|
|
|
|
941,333
|
|
|
|
1,882,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,723
|
|
|
|
37,445
|
|
|
|
74,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,545,000
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,445
|
(d)
|
|
|
|
|
|
|
|
|
|
|
1,545,000
|
|
|
|
|
10/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,263
|
(e)
|
|
|
|
|
|
|
|
|
|
|
1,545,000
|
|
Maya Leibman
|
|
|
|
|
|
|
379,410
|
|
|
|
758,820
|
|
|
|
1,571,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,603
|
|
|
|
31,205
|
|
|
|
62,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,287,500
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,205
|
(d)
|
|
|
|
|
|
|
|
|
|
|
1,287,500
|
|
Stephen L. Johnson
|
|
|
|
|
|
|
379,410
|
|
|
|
758,820
|
|
|
|
1,571,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,603
|
|
|
|
31,205
|
|
|
|
62,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,287,500
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,205
|
(d)
|
|
|
|
|
|
|
|
|
|
|
1,287,500
|
|
J. Scott Kirby
|
|
|
|
|
|
|
612,500
|
|
|
|
1,225,000
|
|
|
|
2,450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,084
|
|
|
|
56,168
|
|
|
|
112,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,317,500
|
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,168
|
(d)
|
|
|
|
|
|
|
|
|
|
|
2,317,500
|
|
(a)
|
Reflects potential payouts under the AAG 2016 Short-term Incentive Program. With respect to Mr. Isom, the amounts have been prorated based on eight months served as Chief Operating Officer and
four months served as President. For each named executive officer, total payments for 2016 were 125% of his or her target bonus opportunity. See the Summary Compensation Table on page 55.
|
(b)
|
Represents the performance-vesting portion of each named executive officers 2016 RSU awards that vest on April 20, 2019, subject to the executives continued employment, based on
the Companys achievement of a
pre-tax
income margin for the three years ending December 31, 2018 relative to the
pre-tax
income margin over the same period
for a
pre-defined
group of airlines. The number of shares that will be issued with respect to the performance-vesting RSUs varies between 50% and 200% depending on the Companys relative performance, and
no shares will be issued if threshold performance is not achieved.
|
(c)
|
For a description of the assumptions made to arrive at these amounts, please see Note 14 to our consolidated financial statements in our 2016 Annual Report on Form
10-K.
|
(d)
|
Represents the time-vesting portion of each named executive officers 2016 RSU awards that vest, subject to the executives continued employment, with respect to
two-thirds
of the shares on April 20, 2017 and with respect to
one-third
of the shares on April 20, 2018.
|
(e)
|
Represents the grant of time-vesting RSU awards made to Mr. Isom upon his promotion to President, which vest, subject to his continued employment, with respect to
one-third
of the shares on each of October 18, 2017, 2018, and 2019.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
57
|
|
Outstanding Equity Awards at 2016 Fiscal
Year-End
The following table provides information regarding all outstanding equity awards
held by each of our named executive officers as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/Stock Appreciation Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units
of
Stock
That Have
Not Vested
(#)
|
|
|
Market
Value of
Shares or
Units
of
Stock
That Have
Not Vested
($)
(j)
|
|
|
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
($)
(j)
|
|
W. Douglas Parker
|
|
|
294,748
|
|
|
|
-
|
|
|
|
7.62
|
|
|
|
4/11/2019
|
|
|
|
122,636
|
(a)
|
|
|
5,725,875
|
|
|
|
143,966
|
(e)
|
|
|
6,721,772
|
|
|
|
|
240,536
|
|
|
|
-
|
|
|
|
8.14
|
|
|
|
4/20/2018
|
|
|
|
31,843
|
(b)
|
|
|
1,486,750
|
|
|
|
112,143
|
(f)
|
|
|
5,235,957
|
|
|
|
|
196,820
|
|
|
|
-
|
|
|
|
8.84
|
|
|
|
4/9/2018
|
|
|
|
32,264
|
(c)
|
|
|
1,506,406
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
45.01
|
|
|
|
4/11/2017
|
|
|
|
96,792
|
(d)
|
|
|
4,519,218
|
|
|
|
|
|
|
|
|
|
Derek J. Kerr
|
|
|
117,287
|
|
|
|
-
|
|
|
|
7.62
|
|
|
|
4/11/2019
|
|
|
|
31,205
|
(a)
|
|
|
1,456,961
|
|
|
|
31,205
|
(e)
|
|
|
1,456,961
|
|
|
|
|
95,714
|
|
|
|
-
|
|
|
|
8.14
|
|
|
|
4/20/2018
|
|
|
|
10,180
|
(g)
|
|
|
475,304
|
|
|
|
30,541
|
(f)
|
|
|
1,425,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,522
|
(c)
|
|
|
537,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,569
|
(d)
|
|
|
1,614,027
|
|
|
|
|
|
|
|
|
|
Robert D. Isom, Jr.
|
|
|
117,287
|
|
|
|
-
|
|
|
|
7.62
|
|
|
|
4/11/2019
|
|
|
|
39,263
|
(h)
|
|
|
1,833,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,445
|
(a)
|
|
|
1,748,307
|
|
|
|
37,445
|
(e)
|
|
|
1,748,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,216
|
(g)
|
|
|
570,365
|
|
|
|
36,649
|
(f)
|
|
|
1,711,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,827
|
(c)
|
|
|
645,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,483
|
(d)
|
|
|
1,936,841
|
|
|
|
|
|
|
|
|
|
Maya Leibman
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,205
|
(a)
|
|
|
1,456,961
|
|
|
|
31,205
|
(e)
|
|
|
1,456,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,880
|
(i)
|
|
|
367,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,144
|
(g)
|
|
|
380,243
|
|
|
|
24,433
|
(f)
|
|
|
1,140,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,218
|
(c)
|
|
|
430,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,655
|
(d)
|
|
|
1,291,212
|
|
|
|
|
|
|
|
|
|
Stephen L. Johnson
|
|
|
117,287
|
|
|
|
-
|
|
|
|
7.62
|
|
|
|
4/11/2019
|
|
|
|
31,205
|
(a)
|
|
|
1,456,961
|
|
|
|
31,205
|
(e)
|
|
|
1,456,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,180
|
(g)
|
|
|
475,304
|
|
|
|
30,541
|
(f)
|
|
|
1,425,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,522
|
(c)
|
|
|
537,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,569
|
(d)
|
|
|
1,614,027
|
|
|
|
|
|
|
|
|
|
J. Scott
Kirby
(k)
|
|
|
31,500
|
|
|
|
-
|
|
|
|
45.01
|
|
|
|
4/11/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(a)
|
Two-thirds
of the RSUs vested on April 20, 2017 and, subject to continued employment,
one-third
will vest on
April 20, 2018.
|
(b)
|
100% of the RSUs vested on April 20, 2017.
|
(c)
|
100% of the RSUs vested on April 22, 2017.
|
(d)
|
Represents performance-vesting RSUs with respect to which the performance conditions were achieved and certified to by the Compensation Committee in December 2015. 100% of the RSUs vested on
April 22, 2017.
|
(e)
|
Represents RSUs that will vest, subject to continued employment, on April 20, 2019 based on the Companys achievement of a
pre-tax
income margin
for the three years ending December 31, 2018 relative to the
pre-tax
income margin over the same period for a
pre-defined
group of airlines. The number of shares
that will be issued with respect to the performance-vesting RSUs varies between 50% and 200% depending on the Companys relative performance, and no shares will be issued if threshold performance is not achieved.
|
(f)
|
Represents RSUs that will vest, subject to continued employment, on April 15, 2018, and in the case of Mr. Parker, April 20, 2018, based on the Companys achievement of a
pre-tax
income margin for the three years ending December 31, 2017 relative to the
pre-tax
income margin over the same period for a
pre-defined
group of airlines. The number of shares that will be issued with respect to the performance-vesting RSUs varies between 50% and 200% depending on the Companys relative performance, and no
shares will be issued if threshold performance is not achieved.
|
(g)
|
100% of the RSUs vested on April 15, 2017.
|
(h)
|
Subject to continued employment,
one-third
will vest on October 18, 2017,
one-third
will vest on
October 18, 2018 and
one-third
will vest on October 18, 2019.
|
(i)
|
Subject to continued employment,
one-third
will vest on November 23, 2017 and
one-third
will vest on
November 23, 2018.
|
(j)
|
The market value of RSUs was calculated by multiplying $46.69, the closing price of a share of our Common Stock on December 30, 2016, by the number of unvested RSUs outstanding under the
award.
|
(k)
|
Mr. Kirbys employment terminated on August 29, 2016.
|
|
|
|
|
|
58
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
Options Exercised and Stock Vested
The following table provides information regarding all exercises of SARs and the vesting of RSUs held by the named executive officers during the
year ended December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized
on Exercise
($)
(a)
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
on Vesting
($)
(b)
|
|
W. Douglas Parker
|
|
|
683,430
|
|
|
|
22,306,618
|
|
|
|
185,121
|
|
|
|
7,284,219
|
|
Derek J. Kerr
|
|
|
-
|
|
|
|
-
|
|
|
|
66,052
|
|
|
|
2,585,389
|
|
Robert D. Isom, Jr.
|
|
|
70,000
|
|
|
|
1,086,400
|
|
|
|
74,733
|
|
|
|
2,928,084
|
|
Maya Leibman
|
|
|
-
|
|
|
|
-
|
|
|
|
61,311
|
|
|
|
2,425,273
|
|
Stephen L. Johnson
|
|
|
-
|
|
|
|
-
|
|
|
|
66,052
|
|
|
|
2,585,389
|
|
J. Scott Kirby
|
|
|
18,000
|
|
|
|
49,140
|
|
|
|
377,069
|
(c)
|
|
|
14,194,444
|
|
(a)
|
Represents the market price at the time of exercise of SARs, net of the exercise price.
|
(b)
|
Represents the closing market price of a share of our Common Stock on the date of vesting, multiplied by the number of shares that vested.
|
(c)
|
Amount includes the value of the accelerated vesting of 259,097 RSUs held by Mr. Kirby in connection with his separation from the Company on August 29, 2016.
|
Pension Benefits
The following table summarizes the present value of the accumulated pension benefits of Ms. Leibman, the only named executive officer who participated in the AMR Retirement Benefit Plan and the AMR
Non-Qualified
Plan as of December 31, 2016. On October 31, 2012, in connection with the Chapter 11 Cases, credited service and benefit accruals under the AMR Retirement Benefit Plan and all benefit
accruals under the defined benefit portion of the AMR
Non-Qualified
Plan were frozen for all participants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Name
|
|
Number of Years of
Credited Service (#)
|
|
|
Present Value of
Accumulated Benefit
($)
|
|
|
Payments During
Last Fiscal Year ($)
|
|
Maya Leibman
|
|
AMR Retirement Benefit Plan
|
|
|
5.261
|
|
|
|
244,975
|
|
|
|
-
|
|
|
|
AMR
Non-Qualified
Plan
|
|
|
5.261
|
|
|
|
44,126
|
|
|
|
-
|
|
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 Companys 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 plans 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 participants 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 participants 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 AMR
Non-Qualified
Plan was determined using one of four formulasthe formula that provides the participant the greatest 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 AMR
Non-Qualified
Plan pursuant to the Social Security Offset Formula where a participants annual benefit
at normal retirement will equal the difference between (i) the product of (a) 2% of the participants final average compensation times (b) the participants years of credited service, and (ii) the product of (a) 1.5% of the
participants estimated annual Social Security benefit times (b) the participants years of credited service, up to a maximum of 33.3 years of service.
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
59
|
|
AMR
Non-Qualified
Plan
The AMR
Non-Qualified
Plan supplemented the AMR Retirement Benefit Plan and the AA 401(k) Plan for
participants whose compensation exceeds the maximum recognizable compensation limit allowed under the Code.
The AMR
Non-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 AMR
Non-Qualified
Plan was also frozen at January 1, 2002. All benefit accruals under the defined benefit portion of the AMR
Non-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 the
MP-2016
projection scale. The amounts payable under the AMR
Non-Qualified
Plan are calculated using the November 2016 segment rates and the 2017 417(e) unisex mortality table prescribed by the IRS. Retirement benefits for both plans are then discounted to
December 31, 2016 using an interest-only discount rate of 4.1%. At December 31, 2015, the same mortality table was used, but it was projected using the
MP-2015
scale. Also, the amounts under the AMR
Non-Qualified
Plan were calculated using November 2015 segment rates and the present value of benefits under both plans was calculated using a 4.5% interest rate. 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 the
non-qualified
deferred compensation earned by Ms. Leibman under the AMR
Non-Qualified
Plan for 2016. The defined contribution component of the AMR
Non-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 ($)
|
|
|
Aggregate
Balance at
December 31,
2016 ($)
|
|
Maya Leibman
|
|
|
-
|
|
|
|
-
|
|
|
|
9,227
|
|
|
|
-
|
|
|
|
154,979
|
|
Discussion Regarding
Non-Qualified
Deferred Compensation Table
The defined contribution component of the AMR
Non-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 AMR
Non-Qualified
Plan mirror the AA 401(k) Plan investment options available to all participating employees. The defined contribution
component of the AMR
Non-Qualified
Plan was frozen to new participants as of December 31, 2014 and frozen to Company matching contributions as of December 31, 2015.
Potential Payments Upon Termination or Change in Control
This section describes payments that would be made to our named executive officers upon a change in control or following a qualifying termination of
employment. The narrative and tables below describe specific benefits to which each named executive officer is entitled under his or her executive change in control and severance benefits agreement, if any, and general plans that may apply to any
executive officer participating in those plans, along with estimated amounts of benefits assuming termination and/or a change in control as of December 31, 2016, other than Mr. Kirby, who separated from the Company on August 29, 2016.
Amounts shown for Mr. Kirby reflect actual amounts paid in connection with his separation.
Arrangements for 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 Companys obligations thereunder, including certain benefits in the event of 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.
Executive Change in Control Agreements for Messrs. Kerr, Isom and Johnson
Upon the closing of the Merger, we assumed the executive change in control and severance benefits agreements entered into between US Airways Group
and Messrs. Kerr, Isom and Johnson (the Executive CIC Agreements), as described below, which we were a party to as of December 31, 2016.
|
|
|
|
|
60
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
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 forfeiture of these agreements, our executive officers, including Messrs. Kerr, Isom and Johnson, are no longer
contractually entitled to any cash severance or continued healthcare benefits upon any termination.
Prior to the termination of the
Executive CIC Agreements, these agreements provided benefits to the executives upon a termination of employment by us for any reason (other than misconduct or disability) or by the executive with good reason, in each case
within 24 months following a change in control (each as defined in the Executive CIC Agreements) or, subject to certain conditions described below, prior to a change in control in contemplation of that change in control.
Conditions on Payment and Offsets
. As a condition of receiving benefits under the agreement, the executive was required to sign a general
waiver and release of claims against us and related parties. In addition, any severance benefits under the agreement could have been reduced by any other severance benefits or other benefits we had to pay in connection with the executives
termination of employment by law, under a written employment or severance agreement with us (currently there are none), or any policy or practice that would provide for the executive to remain on the payroll for a period of time after notice of
termination of employment. Furthermore, the executives benefits under the agreement would terminate immediately and the executive would be required to reimburse us for amounts paid under the agreement if the executive (i) violated any
proprietary information or confidentiality obligation to us, (ii) solicited our employees within one year of termination, (iii) made any untrue or disparaging statement or criticism of us within five years of termination, or
(iv) failed to return all of our property.
Termination Benefits
. In the event of any termination, the covered executive was
entitled to receive all accrued but unpaid salary and other benefits through the termination date and, except as to termination for misconduct, any unpaid incentive payment under the annual cash incentive program with respect to any fiscal year
completed prior to termination.
Upon termination within 24 months of a change in control under the conditions described above, the
covered executive was entitled to receive:
|
|
a payment equal to two times the greater of the executives then-current annual base salary or the annual base salary immediately preceding a change in control;
|
|
|
a payment equal to the greater of (i) 200% of the executives then-current target incentive award under the annual incentive program or (ii) the executives actual incentive
award under the annual incentive program for the immediately preceding year;
|
|
|
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;
|
|
|
extended exercisability of all vested stock options, SARs, or other similar stock awards for 18 months following the executives termination of employment, but not beyond the maximum term of
the awards; and
|
|
|
a tax
gross-up
payment in an amount that would have an
after-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 agreements also provided that termination benefits were to be provided to an executive who had been terminated prior
to a change in control (if it can 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. The benefits and payments provided in
these circumstances were identical to those described above except that (i) payments and benefits due upon the change in control were offset by any amounts received as a result of the executives termination prior to the change in control
and (ii) instead of extended exercisability of stock awards and acceleration of equity vesting, the executive would receive an amount equal to the intrinsic value of any stock award (other than exercisable grants) forfeited at the time of
termination that would have vested on the change in control, based on the value of the award as of the date of the change in control, and, as to exercisable grants, the difference between that stock awards exercise price and the value of the
stock underlying the award on the date of the change in control.
The Executive CIC Agreements provided that upon a change in control,
the executives 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. Messrs. Kerr and Kirby previously became entitled to lifetime flight privileges in connection with the merger of US Airways Group and America West. Mr. Isom previously became
entitled to lifetime flight privileges to replace a similar benefit provided by his previous employer that was forfeited when he commenced employment with US Airways Group. Mr. Johnson became entitled to lifetime flight privileges upon the
closing of the Merger.
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 SARs vest upon retirement, and the vesting of the RSUs may be accelerated by the Compensation Committee in its discretion upon retirement.
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
61
|
|
SARs granted under the 2011 Plan and the 2008 Plan provide for (i) an
18-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.
Commencing May 2015, at his request, 100% of Mr. Parkers direct compensation is in the form of equity incentives. Mr. Parker has
agreed to no longer receive any base salary and no longer participates in the AAG 2015 STIP, the value of which has been captured in Mr. Parkers 2015 target equity incentive compensation. In connection with this adjustment, the
Compensation Committee provided that in the event of Mr. Parkers 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. Parkers
base salary and cash incentive award that otherwise would have been earned by him through the termination date.
2005 Equity
Incentive Plan
SARs and stock options granted under the 2005 Plan provide for a longer exercise period following termination of
employment, if the executives 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.
2016 Short-Term Incentive Plan
Under the 2016 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 $20,000 per month for Messrs. Parker, Isom, Johnson and Kerr. In addition, US Airways Group obtained
supplemental, portable, individual level term life insurance policies with various insurance carriers for each of Messrs. Parker, Kirby and Kerr, in each case owned by the executive. The policies pay a death benefit equal to the coverage amount
under each policy upon the death of the executive to a named beneficiary designated by the executive. The death benefits under these policies are fully insured and would be paid by the respective insurance carriers.
Kirby Separation Agreement
In connection with Mr. Kirbys separation from the Company in August 2016, we entered into a Transition and Separation Agreement with him, pursuant to which he was entitled to certain severance payments and benefits, as
quantified in the applicable table below. The terms of Mr. Kirbys Transition and Separation Agreement are described under Compensation Discussion and AnalysisChange in Control Severance BenefitsKirby Separation.
|
|
|
|
|
62
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
Estimated Potential Payments
The estimated amounts of the respective benefits for each of our named executive officers, assuming the triggering event occurred on
December 31, 2016 (except for Mr. Kirby), are provided in the tables below.
W. Douglas Parker
The following table provides the termination and/or change in control benefits payable to Mr. Parker assuming termination of employment
occurred on December 31, 2016. The table below reflects the termination and/or change in control benefits payable to Mr. Parker under general plans in which he participates, as well as certain accelerated vesting of RSUs, as described
below. Except for insured benefits, all payments will be made by AAG.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and
Payments Upon Termination
|
|
Change in
Control
($)
|
|
|
Qualified
Termination
following a
Change in
Control
($)
(a)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Any
Other
Termination
($)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested RSUs
(b)
|
|
|
25,195,978
|
|
|
|
25,195,978
|
|
|
|
25,195,978
|
|
|
|
25,195,978
|
|
|
|
1,824,000
|
(c)
|
Extended SAR Exercise Period
(d)
|
|
|
-
|
|
|
|
-
|
|
|
|
11,454
|
|
|
|
11,454
|
|
|
|
-
|
|
Benefits and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000,000
|
(e)
|
|
|
-
|
|
|
|
-
|
|
Flight
Privileges
(f)
|
|
|
-
|
|
|
|
613,194
|
|
|
|
531,140
|
|
|
|
613,194
|
|
|
|
613,194
|
|
Total
|
|
|
25,195,978
|
|
|
|
25,809,172
|
|
|
|
27,738,572
|
|
|
|
25,820,626
|
|
|
|
2,437,194
|
|
(a)
|
Represents a termination of employment by us for any reason (other than cause or disability) or by Mr. Parker with good reason within 24 months following a change in
control of AAG.
|
(b)
|
Aggregate value of unvested RSUs is calculated at a price of $46.69, the closing price of our Common Stock on December 30, 2016, multiplied by the number of unvested RSUs outstanding under
each award.
|
(c)
|
Represents the vesting of the portion of Mr. Parkers RSU awards that accounts for the value of Mr. Parkers base salary and cash incentive award that otherwise would have been
earned by him through the termination date.
|
(d)
|
Amount reflects the incremental aggregate value due to the extension of the exercise period of SARs. SARs granted under 2008 Plan and 2011 Plan allow for an extension up to an 18 months (not beyond
the maximum term of the awards) upon qualifying terminations after a change in control, and SARs granted under the 2005 Plan, 2008 Plan and 2011 Plan allow for a three-year extension for both death and disability.
|
(e)
|
Amount represents the life insurance proceeds payable to the Mr. Parkers estate under his life insurance policy upon a termination due to death.
|
(f)
|
Based on the terms of the
non-revenue
travel policy for senior executives currently in effect. Reflects the present value of future travel calculated using a
discount rate of 4.1% and
RP-2014
Employee Table, without collar or quartile adjustments, decreased by 3.5% at all ages, projected generationally with Scale
MP-2016,
and
assumes a 1% annual increase in the cost of travel.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
63
|
|
Derek J. Kerr
The following table provides the termination and/or change in control benefits payable to Mr. Kerr under his Executive Change in Control
Agreement and under the termination and change in control benefits generally provided for all named executive officers described above, assuming termination of employment on December 31, 2016, while his Executive Change in Control Agreement was
in effect. In April 2017, at his request, Mr. Kerr voluntarily terminated his Executive CIC Agreement and as a result he is no longer contractually entitled to any cash severance or continued healthcare benefits upon any termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and
Payments Upon Termination
|
|
Change in
Control
($)
|
|
|
Qualified
Termination
following a
Change
in
Control
($)
(a)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Any Other
Termination
($)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
-
|
|
|
|
1,214,113
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Annual Incentive Award
|
|
|
-
|
|
|
|
1,517,641
|
(b)
|
|
|
948,525
|
(c)
|
|
|
948,525
|
(c)
|
|
|
-
|
|
Acceleration of Unvested RSUs
(d)
|
|
|
6,967,174
|
|
|
|
6,967,174
|
|
|
|
6,967,174
|
|
|
|
6,967,174
|
|
|
|
-
|
|
Extended SAR Exercise Period
(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Benefits and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Benefits
(f)
|
|
|
-
|
|
|
|
62,528
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Life Insurance
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500,000
|
(g)
|
|
|
-
|
|
|
|
-
|
|
Flight Privileges
(h)
|
|
|
-
|
|
|
|
210,231
|
|
|
|
161,440
|
|
|
|
210,231
|
|
|
|
210,231
|
|
280G Tax
Gross-up
(i)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
6,967,174
|
|
|
|
9,971,687
|
|
|
|
9,577,139
|
|
|
|
8,125,930
|
|
|
|
210,231
|
|
(a)
|
Represents a termination of employment by us for any reason (other than misconduct or disability) or by Mr. Kerr with good reason within 24 months following a change in
control of AAG.
|
(b)
|
Amount represents the greater of (i) two times Mr. Kerrs target annual incentive award or (ii) his actual incentive award for the immediately preceding year. Amount shown is
two times Mr. Kerrs target annual incentive award under the 2016 STIP.
|
(c)
|
Amount represents the amount of the annual incentive award earned by Mr. Kerr under the 2016 STIP.
|
(d)
|
Aggregate value of unvested RSUs is calculated at a price of $46.69, the closing price of our Common Stock on December 30, 2016, multiplied by the number of unvested RSUs outstanding under
each award.
|
(e)
|
Amount reflects the incremental aggregate value due to the extension of the exercise period of SARs. The Executive Change in Control Agreements allowed for an extension up to 18 months (not beyond
the maximum term of the awards) upon a qualified termination after a change in control on awards granted under the 2005 Plan, 2008 Plan and 2011 Plan. The 2005 Plan, 2008 Plan and 2011 Plan allow for an extension up to three-years (not beyond the
maximum term of the awards) for both death and disability.
|
(f)
|
Amount reflects the value of 2016 COBRA premiums for group medical, dental and vision coverage for 24 months.
|
(g)
|
Amount represents the life insurance proceeds payable to Mr. Kerrs estate under his life insurance policy upon a termination due to death.
|
(h)
|
Based on the terms of the
non-revenue
travel policy for senior executives currently in effect. Reflects the present value of future travel calculated using a
discount rate of 4.1% and
RP-2014
Employee Table, without collar or quartile adjustments, decreased by 3.5% at all ages, projected generationally with Scale
MP-2016,
and
assumes a 1% annual increase in the cost of travel.
|
(i)
|
Assumes that Mr. Kerr is entitled to full reimbursement of (i) any excise taxes that are imposed upon Mr. Kerr as a result of the change in control, (ii) any income and excise
taxes imposed upon him as a result of the reimbursement of the excise tax amount, and (iii) any additional income and excise taxes that are imposed upon him as a result of his reimbursement for any excise or income taxes. Also assumes a
Section 4999 excise tax rate of 20%, a 39.6% federal income tax rate, and a 2.35% additional Medicare tax rate. Because it is assumed the SARs are cashed out, the value of SARs is calculated based on the difference between the closing price of
our Common Stock on the last trading day of 2016, and the SARs respective exercise price. To the extent the SARs would be assumed by the surviving entity and converted to SARs with respect to surviving entitys stock, the value
attributable to the SARs could differ. The calculations were performed assuming that no amounts will be discounted as attributable to reasonable compensation and no value will be attributed to execution of a noncompetition agreement.
|
|
|
|
|
|
64
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
Robert D. Isom, Jr.
The following table provides the termination and/or change in control benefits payable to Mr. Isom under his Executive Change in Control
Agreement and under the termination and change in control benefits generally provided for all named executive officers described above, assuming termination of employment on December 31, 2016, while his Executive Change in Control Agreement was
in effect. In April 2017, at his request, Mr. Isom voluntarily terminated his Executive CIC Agreement and as a result he is no longer contractually entitled to any cash severance or continued healthcare benefits upon any termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and
Payments Upon Termination
|
|
Change in
Control
($)
|
|
|
Qualified
Termination
following a
Change
in
Control
($)
(a)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Any Other
Termination
($)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
-
|
|
|
|
1,400,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Annual Incentive Award
|
|
|
-
|
|
|
|
2,450,000
|
(b)
|
|
|
1,176,667
|
(c)
|
|
|
1,176,667
|
(c)
|
|
|
-
|
|
Acceleration of Unvested RSUs
(d)
|
|
|
10,193,734
|
|
|
|
10,193,734
|
|
|
|
10,193,734
|
|
|
|
10,193,734
|
|
|
|
-
|
|
Extended SAR Exercise Period
(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Benefits and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Benefits
(f)
|
|
|
-
|
|
|
|
39,992
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Life Insurance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Flight Privileges
(g)
|
|
|
-
|
|
|
|
346,550
|
|
|
|
266,840
|
|
|
|
346,550
|
|
|
|
346,550
|
|
280G Tax
Gross-up
(h)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
10,193,734
|
|
|
|
14,430,276
|
|
|
|
11,637,241
|
|
|
|
11,716,951
|
|
|
|
346,550
|
|
(a)
|
Represents a termination of employment by us for any reason (other than misconduct or disability) or by Mr. Isom with good reason within 24 months following a change in
control of AAG.
|
(b)
|
Amount represents the greater of (i) two times Mr. Isoms target annual incentive award or (ii) his actual incentive award for the immediately preceding year. Amount shown is
two times Mr. Isoms target annual incentive award under the 2016 STIP.
|
(c)
|
Amount represents the amount of the annual incentive award earned by Mr. Isom under the 2016 STIP.
|
(d)
|
Aggregate value of unvested RSUs is calculated at a price of $46.69, the closing price of our Common Stock on December 30, 2016, multiplied by the number of unvested RSUs outstanding under
each award.
|
(e)
|
Amount reflects the incremental aggregate value due to the extension of the exercise period of SARs. The Executive Change in Control Agreements allowed for an extension up to 18 months (not beyond
the maximum term of the awards) upon a qualified termination after a change in control on awards granted under the 2005 Plan, 2008 Plan and 2011 Plan. The 2005 Plan, 2008 Plan and 2011 Plan allow for an extension up to three-years (not beyond the
maximum term of the awards) for both death and disability.
|
(f)
|
Amount reflects the value of 2016 COBRA premiums for group medical, dental and vision coverage for 24 months.
|
(g)
|
Based on the terms of the
non-revenue
travel policy for senior executives currently in effect. Reflects the present value of future travel calculated using a
discount rate of 4.1% and
RP-2014
Employee Table, without collar or quartile adjustments, decreased by 3.5% at all ages, projected generationally with Scale
MP-2016,
and
assumes a 1% annual increase in the cost of travel.
|
(h)
|
Assumes that Mr. Isom is entitled to full reimbursement of (i) any excise taxes that are imposed upon Mr. Isom as a result of the change in control, (ii) any income and excise
taxes imposed upon him as a result of the reimbursement of the excise tax amount, and (iii) any additional income and excise taxes that are imposed upon him as a result of his reimbursement for any excise or income taxes. Also assumes a
Section 4999 excise tax rate of 20%, a 39.6% federal income tax rate, and a 2.35% additional Medicare tax rate. Because it is assumed the SARs are cashed out, the value of SARs is calculated based on the difference between the closing price of
our Common Stock on the last trading day of 2016, and the SARs respective exercise price. To the extent the SARs would be assumed by the surviving entity and converted to SARs with respect to surviving entitys stock, the value
attributable to the SARs could differ. The calculations were performed assuming that no amounts will be discounted as attributable to reasonable compensation and no value will be attributed to execution of a noncompetition agreement.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
65
|
|
Maya Leibman
The following table provides the termination and/or change in control benefits payable to Ms. Leibman under the termination and change in
control benefits generally provided for all named executive officers described above, assuming termination of employment on December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and
Payments Upon Termination
|
|
Change in
Control
($)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Any Other
Termination
($)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Award
|
|
|
-
|
|
|
|
948,525
|
(a)
|
|
|
948,525
|
(a)
|
|
|
-
|
|
Acceleration of Unvested RSUs
(b)
|
|
|
6,524,459
|
|
|
|
6,524,459
|
|
|
|
6,524,459
|
|
|
|
-
|
|
Benefits and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Flight
Privileges
(c)
|
|
|
-
|
|
|
|
261,643
|
|
|
|
396,864
|
|
|
|
396,864
|
|
Total
|
|
|
6,524,459
|
|
|
|
7,734,627
|
|
|
|
7,869,848
|
|
|
|
396,864
|
|
(a)
|
Amount represents the amount of the annual incentive award earned by Ms. Leibman under the 2016 STIP.
|
(b)
|
Aggregate value of unvested RSUs is calculated at a price of $46.69, the closing price of our Common Stock on December 30, 2016, multiplied by the number of unvested RSUs outstanding under
each award.
|
(c)
|
Based on the terms of the
non-revenue
travel policy for senior executives currently in effect. Reflects the present value of future travel calculated using a
discount rate of 4.1% and
RP-2014
Employee Table, without collar or quartile adjustments, decreased by 3.5% at all ages, projected generationally with Scale
MP-2016,
and
assumes a 1% annual increase in the cost of travel.
|
|
|
|
|
|
66
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
Stephen L. Johnson
The following table provides the termination and/or change in control benefits payable to Mr. Johnson under his Executive Change in Control
Agreement and under the termination and change in control benefits generally provided for all named executive officers described above, assuming termination of employment on December 31, 2016, while his Executive Change in Control Agreement was
in effect. In April 2017, at his request, Mr. Johnson voluntarily terminated his Executive CIC Agreement and as a result he is no longer contractually entitled to any cash severance or continued healthcare benefits upon any termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and
Payments Upon Termination
|
|
Change in
Control
($)
|
|
|
Qualified
Termination
following a
Change
in
Control
($)
(a)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Any Other
Termination
($)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
-
|
|
|
|
1,214,113
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Annual Incentive Award
|
|
|
-
|
|
|
|
1,517,641
|
(b)
|
|
|
948,525
|
(c)
|
|
|
948,525
|
(c)
|
|
|
-
|
|
Acceleration of Unvested RSUs
(d)
|
|
|
6,967,174
|
|
|
|
6,967,174
|
|
|
|
6,967,174
|
|
|
|
6,967,174
|
|
|
|
-
|
|
Extended SAR Exercise Period
(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Benefits and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Benefits
(f)
|
|
|
-
|
|
|
|
39,640
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Life Insurance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Flight Privileges
(g)
|
|
|
-
|
|
|
|
423,292
|
|
|
|
288,864
|
|
|
|
423,292
|
|
|
|
423,292
|
|
280G Tax
Gross-up
(h)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
6,967,174
|
|
|
|
10,161,860
|
|
|
|
8,204,563
|
|
|
|
8,338,991
|
|
|
|
423,292
|
|
(a)
|
Represents a termination of employment by us for any reason (other than misconduct or disability) or by Mr. Johnson with good reason within 24 months following a new
change in control of AAG.
|
(b)
|
Amount represents the greater of (i) two times Mr. Johnsons target annual incentive award or (ii) his actual incentive award for the immediately preceding year. Amount shown is
two times Mr. Johnsons target annual incentive award under the 2016 STIP.
|
(c)
|
Amount represents the amount of the annual incentive award earned by Mr. Johnson under the 2016 STIP.
|
(d)
|
Aggregate value of unvested RSUs is calculated at a price of $46.69, the closing price of our Common Stock on December 30, 2016, multiplied by the number of unvested RSUs outstanding under
each award.
|
(e)
|
Amount reflects the incremental aggregate value due to the extension of the exercise period of SARs. The Executive Change in Control Agreements allowed for an extension up to 18 months (not beyond
the maximum term of the awards) upon a qualified termination after a change in control on awards granted under the 2005 Plan, 2008 Plan and 2011 Plan. The 2005 Plan, 2008 Plan and 2011 Plan allow for an extension up to three-years (not beyond the
maximum term of the awards) for both death and disability.
|
(f)
|
Amount reflects the value of 2016 COBRA premiums for group medical, dental and vision coverage for 24 months.
|
(g)
|
Based on the terms of the
non-revenue
travel policy for senior executives currently in effect. Reflects the present value of future travel calculated using a
discount rate of 4.1% and
RP-2014
Employee Table, without collar or quartile adjustments, decreased by 3.5% at all ages, projected generationally with Scale
MP-2016,
and
assumes a 1% annual increase in the cost of travel.
|
(h)
|
Assumes that Mr. Johnson is entitled to full reimbursement of (i) any excise taxes that are imposed upon Mr. Johnson as a result of the change in control, (ii) any income and
excise taxes imposed upon him as a result of the reimbursement of the excise tax amount, and (iii) any additional income and excise taxes that are imposed upon him as a result of his reimbursement for any excise or income taxes. Also assumes a
Section 4999 excise tax rate of 20%, a 39.6% federal income tax rate, and a 2.35% additional Medicare tax rate. Because it is assumed the SARs are cashed out, the value of SARs is calculated based on the difference between the closing price of
our Common Stock on the last trading day of 2016, and the SARs respective exercise price. To the extent the SARs would be assumed by the surviving entity and converted to SARs with respect to surviving entitys stock, the value
attributable to the SARs could differ. The calculations were performed assuming that no amounts will be discounted as attributable to reasonable compensation and no value will be attributed to execution of a noncompetition agreement.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
67
|
|
J. Scott Kirby
The following table reflects actual amounts paid or payable to Mr. Kirby in connection with his separation from the Company on August 29,
2016 under his Transition and Separation Agreement.
|
|
|
|
|
Executive Benefits and
Payments Upon Termination
|
|
Termination
($)
|
|
Cash Severance
(a)
|
|
|
3,850,000
|
|
Acceleration of Unvested RSUs
(b)
|
|
|
9,576,225
|
|
Extended SAR Exercise Period
(c)
|
|
|
24,501
|
|
Flight
Privileges
(d)
|
|
|
289,826
|
|
Total
|
|
|
13,740,552
|
|
(a)
|
Represents two times the sum of Mr. Kirbys base salary and target short term incentive under the 2016 STIP payable in a single cash lump sum.
|
(b)
|
259,097 RSUs held by Mr. Kirby accelerated as of his termination date, consisting of (i) 157,456 RSUs that otherwise would have vested based solely on continued service through April 2017 or
April 2018, as the case may be, (ii) 52,775 RSUs that would have vested in April 2018 based on Company performance achievement of 96%, which constitutes actual performance through June 30, 2016, and continued service through April 2018 and
(iii) 48,866 RSUs that would have vested in April 2019 based on Company performance achievement of 87%, which constitutes actual performance through June 30, 2016, and continued service through April 2019. Aggregate value of unvested RSUs is
calculated at a price of $36.17, the closing price of our Common Stock on August 29, 2016.
|
(c)
|
Amount reflects the incremental aggregate value due to the extension of the exercise period of Mr. Kirbys SARs to their original expiration date. Assumes (i) a stock price of
$36.17, the closing price of our Common Stock on August 29, 2016, on the date of extension; (ii) annual interest rates of .29% at three months and .45% at seven months; (iii) 49.5% volatility over three months and 40.2% volatility over
seven months; and (iv) a 1.11% dividend yield.
|
(d)
|
Mr. Kirby previously vested into lifetime travel privileges in connection with the merger of US Airways Group and America West. Amount is based on the terms of the
non-revenue
travel policy for senior executives currently in effect. Reflects the present value of future travel calculated using a discount rate of 4.1% and
RP-2014
Employee
Table, without collar or quartile adjustments, decreased by 3.5% at all ages, projected generationally with Scale
MP-2016,
and assumes a 1% annual increase in the cost of travel.
|
|
|
|
|
|
68
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
EQUITY COMPENSATION PLAN INFORMATION
Equity Compensation Plan Information
The following table provides information about our Common Stock that may be issued under all of our existing equity compensation plans as of
December 31, 2016, which include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
(i)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
|
|
(ii)
Weighted Average
Exercise Price
of Outstanding
Options, Warrants
and Rights
($)
|
|
|
(iii)
Number of Securities
Remaining
Available
for Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (i))
|
|
Equity Compensation Plans
Approved by Security Holders
(a)
|
|
|
5,186,705
|
|
|
|
-
|
|
|
|
33,256,154
|
|
Equity Compensation Plans
Not Approved by Security Holders
(b)
|
|
|
2,095,188
|
|
|
|
13.08
|
(c)
|
|
|
-
|
(d)
|
Total
|
|
|
7,281,893
|
|
|
|
13.08
|
|
|
|
33,256,154
|
|
(a)
|
The AAG 2013 IAP was approved by the Bankruptcy Court in connection with the Bankruptcy Plan and further approved by the Board of Directors on December 9, 2013. Under Delaware law, as part of
the reorganization the AAG 2013 IAP was deemed to be approved by our stockholders. The AAG 2013 IAP replaces and supersedes the 2011 Plan. No additional awards will be made under the 2011 Plan or the other US Airways Group plans. The AAG 2013 IAP
authorizes the grant of awards for the issuance of 40,000,000 shares plus any shares underlying awards granted under the AAG 2013 IAP, or any US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a
payment being made in the form of shares. In addition, any shares that were available for issuance under the 2011 Plan as of the effective date of the AAG 2013 IAP may be used for awards under the AAG 2013 IAP; provided, that awards using such
available shares under the 2011 Plan shall not be made after the date awards or grants could have been made under the 2011 Plan and shall only be made to individuals who were not providing services to AAG prior to the Merger. Consists of 5,186,705
RSUs.
|
(b)
|
US Airways Group had three equity compensation plans, the 2011 Plan, the 2008 Plan and the 2005 Plan, all three of which were approved by US Airways Groups stockholders prior to the Merger,
but have not been approved by our stockholders. These plans have shares that may become issuable pursuant to the exercise of outstanding options and SARs and the vesting of RSUs. As a result of the Merger, all outstanding equity awards under these
plans were converted into awards exercisable for shares of our Common Stock. Consists of 2,082,813 SARs and 12,375 options.
|
(c)
|
Represents the weighted average exercise price of the outstanding options and SARs. The weighted average remaining term of these outstanding options and rights is 1.6 years.
|
(d)
|
No shares are available for future grant under these plans.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
69
|
|
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, 2016, 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.
|
|
|
|
|
70
|
|
PROXY STATEMENT
|
|
American Airlines Group
|
OTHER MATTERS
Stockholder Proposals
Rule
14a-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 2018 annual meeting of stockholders, our Corporate Secretary must receive the proposal at our principal
executive offices no later than January 1, 2018. The proposal must comply with the SEC regulations under Rule
14a-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 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 2018 annual meeting of stockholders, notice must be delivered no sooner than February 14, 2018 and no later than March 16, 2018. 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 on page 15 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 stock continuously for at least three years to submit nominations to be included in the Companys proxy materials for up to 20% of the total number of
directors then serving. Notice of proxy access director nominations for the 2018 annual meeting of stockholders must be delivered to our Corporate Secretary at our principal executive offices no earlier than December 2, 2017 and no later than
the close of business on January 1, 2018. 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 2018 annual
meeting of stockholders and must otherwise be in compliance with our Bylaws.
Annual Report and Available
Information
Our Annual Report on Form
10-K
for the year ended December 31, 2016
accompanies this Proxy Statement but does not constitute a part of the proxy soliciting materials.
A copy of our Annual Report on Form
10-K
for the year ended December
31, 2016, 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, Corporate Secretary, American Airlines Group Inc., 4333 Amon
Carter Blvd., MD 5675, Fort Worth, Texas 76155.
Copies also may be obtained without charge through the SECs website at
www.sec.gov
.
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
71
|
|
ANNEX A
Reconciliation of Certain GAAP to
Non-GAAP
Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
|
|
($) (in millions, except share and
per share amounts)
|
|
|
|
|
AAG GAAP
Pre-tax
Income As Reported
|
|
|
4,299
|
|
|
|
4,616
|
|
|
|
|
|
AAG
Pre-tax
Special Items
(1)
|
|
|
772
|
|
|
|
1,674
|
|
|
|
|
|
AAG
Pre-tax
Income
Excluding Special Items
|
|
|
5,071
|
|
|
|
6,290
|
|
|
|
-19
|
%
|
(1)
|
For a detailed description of the AAG
Pre-tax
Special Items, refer to pages
98-99
of AAGs Annual Report on Form
10-K
for the year ended December 31, 2016 filed on February 22, 2017.
|
|
|
|
|
|
|
|
|
|
American Airlines Group
|
|
|
PROXY STATEMENT
|
|
|
|
A-1
|
|
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 the cut-off date or the day
before the date of the 2017 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 via e-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 the cut-off date or the day before the date of the
2017 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:
E28777-P87994-Z69526 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
AMERICAN AIRLINES GROUP INC.
The Board of Directors recommends you vote FOR the following
proposals, all of which are
proposed by American Airlines Group Inc.:
1. A proposal to elect 13 directors to serve until the 2018 Annual Meeting
of Stockholders of American Airlines Group Inc. and until their respective
successors have
been duly elected and qualified. For Against Abstain
Nominees are:
1a. James
F. Albaugh ! ! ! For Against Abstain
1b. Jeffrey D. Benjamin ! ! ! 2. A proposal to ratify the appointment of KPMG LLP as the independent ! ! !
registered public accounting firm of American Airlines Group Inc. for
the fiscal year ending
December 31, 2017.
1c. John T. Cahill ! ! !
3. A proposal to consider
and approve, on a non-binding, advisory
1d. Michael J. Embler ! ! ! basis, executive compensation of American Airlines Group Inc. as ! ! !
disclosed in the proxy statement.
1e. Matthew J. Hart ! ! ! The Board of Directors recommends
you vote 1 YEAR 1 Year 2 Years 3 Years Abstain
on the following proposal, which is proposed by
American Airlines Group Inc.:
1f. Alberto Ibargüen ! ! ! 4. A proposal to consider and
approve, on a ! ! ! !
non-binding, advisory basis, the frequency of the
advisory vote to approve executive compensation
1g. Richard C. Kraemer ! ! !
of American Airlines Group Inc.
1h. Susan D. Kronick ! ! ! The Board of Directors recommends you vote AGAINST the For Against Abstain
following stockholder proposal:
1i. Martin H. Nesbitt ! ! ! 5. A stockholder proposal
regarding an independent Board Chairman. ! ! !
1j. Denise M. OLeary ! ! ! If any other matters properly come before the 2017 Annual Meeting of Stockholders
or any adjournments or postponements thereof, the persons named as proxies will
vote upon those matters according to their judgment. The Board of Directors of
1k. W. Douglas Parker ! ! ! American Airlines Group Inc. is not aware of any other business to be presented
to a vote of the stockholders at the 2017 Annual Meeting of Stockholders.
1l. Ray M. Robinson
! ! ! For address changes and/or comments, please check this box and write !
them on the back where indicated.
1m. Richard P. Schifter ! ! ! Please indicate if you plan to attend this meeting. ! !
Yes No
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners)
Date
V.1.1
ADMISSION TICKET
American Airlines Group Inc.
2017 ANNUAL MEETING OF STOCKHOLDERS
Wednesday, June 14, 2017
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:
From Penn Station or Port Authority Bus Terminal: Take the E train uptown and get off at Lexington Avenue/53rd Street. Penn Station is where you would arrive if you were traveling
on Amtrak.
From Grand Central Terminal: Take the #6 train uptown and get off at 51st Street.
Note: If you plan on attending the 2017 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 2017 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 2017 Annual
Meeting of Stockholders and require special assistance, please contact Caroline Ray at 817-931-2321 to request any listening or visual aid devices by June 2, 2017.
Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Stockholders:
The Notice, Proxy Statement, Form of Proxy and Annual Report are available at www.proxyvote.com.
E28778-P87994-Z69526
AMERICAN AIRLINES GROUP INC.
4333 AMON CARTER BLVD.
FORT WORTH, TX 76155
NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 14, 2017
Proxy Solicited by the Board of Directors for the 2017 Annual Meeting of Stockholders to be held on June 14, 2017.
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 2017 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 14, 2017, 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 AND 3, 1 YEAR ON PROPOSAL 4 AND AGAINST PROPOSAL 5. ANY ADDITIONAL
BUSINESS AS MAY PROPERLY COME BEFORE THE 2017 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 2017 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 13, 2017. 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 11, 2017.
Address Changes/Comments:
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
V.1.1
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