How Stupid is American Airline's Management?

[Frostillicus]

Does anyone want to try to justify American’s decision to offer retention bonuses in the millions of dollars to six key executives, including the CEO, while at the same time asking their workers to accept pay cuts of over 15% in order to prevent a bankruptcy filing? To me, this is another example of those in power enriching themselves while sticking it to the rest of us. Welcome to Dick Cheney’s America!

[Duckster]

This has been going on for year with big corporation, even before Cheney’s time.
What is particularly galling is the pilots, flight attendants, mechanics all took pay cuts while the execs got bonuses. The execs then got caught and had their bonuses rolled back.

But the execs did not take a pay cut! So they still screwed the rank and file.

[december]

*Originally posted by Frostillicus *
**Does anyone want to try to justify American’s decision to offer retention bonuses in the millions of dollars to six key executives, including the CEO, while at the same time asking their workers to accept pay cuts of over 15% in order to prevent a bankruptcy filing? To me, this is another example of those in power enriching themselves while sticking it to the rest of us. Welcome to Dick Cheney’s America! **

Even free market supporter Megan McCardle thinks the management was entirely wrong.

But if you’re looking for someone to blame, blame the executives.

They asked the unions to make big concessions – like 15% of salary – while paying the top 45 executives retention bonuses worth up to twice their base pay, and taking steps to shelter the executive supplemental pension from bankruptcy. And they didn’t tell the unions. Too bad for them they had to file with the SEC the same day that voting closed on the concessions deals. The unions, angry that they hadn’t been told about the safety net for the executives before being asked to hand back major concessions, scuttled the deal.

Some of it seems to be legit. There were a lot of executives who were eligible for retirement who wanted to take their retirement in a lump sum and get out before the collapse – the company needed them, and it’s unlikely they could have been persuaded to risk their pensions. But the retention bonuses sound like a warm personal gift from the executives to themselves before the bankruptcy court cut their salaries to “junior fryolator operator”.

And even if it were totally legit, not telling the unions gave a loaded weapon to anyone agitating against the concessions.

The executives are getting what they deserve, and will hopefully soon be out on the tarmac. The shareholders and employees, unfortunately, aren’t. The unions can probably count on the bankruptcy court to cut them a fair deal. But the shareholdes are going to lose everything.

If you live near one of the American executives, and you happen to see an angry mob on the way to their house – don’t just wave at them. Take some time out to draw them a map.

[John_Mace]

Yeah, if only Dick Cheny weren’t VP, things like this would never happen.

[Early_Out]

I’d just like to know how I can get in on one of these deals. Shoot, I’m willing to run a major corporation into the ground for a fraction of what some of these CEOs get paid, though admittedly, I’d have trouble doing it as quickly as they have. Where do I submit my resume?

[msmith537]

*Originally posted by Frostillicus *
Does anyone want to try to justify American’s decision to offer retention bonuses in the millions of dollars to six key executives, including the CEO, while at the same time asking their workers to accept pay cuts of over 15% in order to prevent a bankruptcy filing? To me, this is another example of those in power enriching themselves while sticking it to the rest of us. Welcome to Dick Cheney’s America! **

Wait? So corporate executives are now getting themselves rich at the expense of their employees?:eek:
You know, since I am not an employee or a customer of American Airlines, I don’t really feel that these guys are “sticking it to me”.
I now will attempt to justify the decision. There are people out there (including myself) who are only out there for their own self interest. Those people work to position themselves so as to reap the maximum possible benefit from their labor. They use these rewards to enrich themselves and the people they care about (which do not include coworkers).

So the simple answer to “why would they give themselves bonuses” is “because they can”.

Is this the right thing to do? Not really, but it’s expected that people generally act in their own self interest. I have to admit that if I was on a sinking ship, I would probably try to make sure I was able to load my lifeboat with as many of those big blue DiCaprio diamonds as possible (metaphoricly speaking).

Agency issues (ensuring your management acts in the interest of the company, not their own) have been a problem facing companies since the beginning of time. It has nothing to do with Chaney or Bush or Clinton or whoever else people feel to use as a scapegoat.

[AZCowboy]

OK, so they have seen the error of their ways.

And yet, the harm has been done.

I only wish this sort of thing was an isolated event.