Oh man. I really didn’t think this one could get much worse, but American CEO Gerard Arpey just found a way. Yesterday was the big annual shareholder’s meeting for the airline, and the front line employees were out in force. The main protest was over the executive compensation plan that has netted senior management (not Arpey, but others) many many millions.
How has it made them so much money? Well, it wasn’t tied to profitability but rather to stock price. I’m all for pay for performance, and yes, stock price is a component of it, but when the airline isn’t showing a profit and the lower level employees aren’t sharing in the success, it makes it a very hard sell.
So, all the employees who didn’t take part in the plan (with the exception of Arpey, of course) are seething, and management needs to do something. So yesterday at the annual meeting, with employees protesting, petitions being passed, and security measures stepped up (officially because of the Virginia Tech shootings, uh huh), how did Arpey address the issue?
According to this article, Arpey just brushed it aside.
Gerard Arpey, who heads the Fort Worth-based airline, said he understood some of the employee concerns over executive and management compensation. But he said he hoped they could â€œagree to disagreeâ€ on the issue and focus on keeping the airline profitable.
â€œThis is an issue on which we may have a hard time finding common ground,â€ he said. â€œThat doesnâ€™t mean we canâ€™t or shouldnâ€™t keep working hard to find common ground on the other issues affecting our business, because there is no debating that all of our futures are linked to the success of American Airlines.â€
Holy crap, is he crazy?!? This is clearly a big issue for the employees, and it has been for months. I think Delta understood this when they tied bonus plans for all employees to the same metrics, but Arpey doesn’t seem to think it’s worth addressing any further. The employees aren’t angry that senior management gets a share of the wealth. They’re just angry that they don’t get a piece of it as well. With such an emotional issue as this one, you’d think Arpey would be more interested in finding a way to fix the compensation structure, but no, he’s happy with it just the way it is. Oh boy.
Of course, he can’t give a decent response. Lately, AA has a lot of bad press and he always sends a spokesperson to speak for him, he never makes a public appearance himself. I think this is because he knows he is slaughtering this airline and wants to be able to move to another job after he destroys American.
I don’t think he has good leadership ability and that needs to be addressed.