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CEO of new American Airlines to get $700,000 salary; could get much more in stock awards

DALLAS - The CEO of the new American Airlines says he will get a salary of $700,000 this year and could get a bonus of twice that if the company is highly profitable.

But Doug Parker says the majority of his compensation will come in the form of a stock award that hasn't been determined yet.

Based on past compensation for Parker and other airline CEOs, those stock awards are likely to be valued at several million dollars. Separately, last month Parker received a retention bonus of stock that, at Monday's closing share price, could be worth $18.9 million if certain merger goals are met by late 2016.

Parker told employees Monday that his 2014 compensation would be less than that paid to CEOs at United Airlines and Delta Air Lines, which are roughly the same size as American after its merger with US Airways. He said that he requested the lower payout because union employees at the company are paid less than their counterparts at those airlines.

The board of American Airlines Group Inc. considered Parker's salary and bonuses at its first meeting last week, he said. Parker was the CEO at US Airway — with a $550,000 salary — and took on the same job at the combined company when the merger closed in December.

In a special memo to employees on Monday, Parker said his target total compensation would be about 20 per cent below that of the United and Delta CEOs and more than 90 per cent of it would be based on performance, "meaning that if American doesn't do well, it could be worth nothing."

Parker's compensation will include the base salary plus short-term and long-term incentive payouts.

The short-term bonus for 2014 has a target of twice his base salary, which he'll get if American earns $2.5 billion in pretax profit. That would be a company record, Parker said. The board will decide the amount and measurements for the long-term stock compensation later this year, he said.

While the stock payout "is not yet finalized, it will comprise the majority of my total compensation and will only hold value if American is successful," Parker said.

In 2012, the last year for which figures are available, Parker got compensation from US Airways valued at $5.5 million, most of it in stock options and grants. That same year, United CEO Jeff Smisek received compensation valued at $9.6 million and Delta CEO Richard Anderson got payouts valued at $12.6 million — in both cases, mostly in stock-based awards.

The American Airlines board also decided to pay former American CEO Tom Horton a $400,000 "stipend" for serving as chairman of the new company, it said in a regulatory filing. Horton, who led a successful bankruptcy restructuring of the airline, will step down this spring and get a severance payment of about $17 million in cash and stock, according to a previous filing.

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Follow David Koenig at http://www.twitter.com/airlinewriter

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