Wednesday, April 23, 2003

The Foolish view of AMR A friend referred me to this wonderful commentary on the Motley Fool about the financial shenanigans played by the AMR board and how they affect stockholders and AMR employees. Among the highlights: First, at the end of last year, AMR canceled a plan that deferred compensation for executives. This meant that money the company had retained was paid out to executives in a lump sum. Certainly, it's their money, but this act doesn't jibe with the company's need to retain as much cash as possible to stave off a liquidity crunch. Second, as was disclosed in a securities filing last week, AMR last October partially funded a secular trust to protect some pension benefits for 45 executives in case of company bankruptcy. These arrangements lie outside the grasp of creditors, while the company's own pension fund does not. And finally, its directors approved retention bonuses for top executives if they remain with the company through 2005, bonuses that range from 150% to 200% of their base salaries. ...The proper basis for such actions ought to be: "Is this the right thing to do?" At a time when the majority of employees and shareholders are in danger of losing everything they have in AMR, an answer other than "no" would be unacceptable. Executives taking cash out of a company while they cry that the company is running out of cash is, frankly, unforgivable. 1:09:24 PM    Oh yeah? [] Putting the Carty before the horsey So now it's a free-for-all. As the frontman for AMR, Donald Carty is taking the brunt of the criticism for the contract renegotiation debacle. This sentiment, while understandable, is misguided. For some reason, AMR employees think Carty alone is responsible for the lying and sneaking. He was almost certainly party to it but to think he is the only guilty party is naive. Why do these employees think removing Carty will fix anything? It's revenge, pure and simple. The employees aren't alone in blaming Carty, though. In a fit of disingenuousness of mammoth proportions, AMR directors are now turning on their own. An unnamed source in the Dallas Morning News quotes a board member as saying Some board members feel betrayed... The board was told by the CEO that labor was fully informed of the details. Puh-leeeeze. Don't think for a minute any of the board members didn't know what was going on. Now that the execs have been caught, Carty is being pressured to fall on his sword. The problem is, firing Carty will do nothing to prevent further subterfuge and executive enrichment. Only good corporate governance and shareholder reform will accomplish that. 11:44:56 AM    Oh yeah? []