We’re barely a week into 2018 and American Airlines’ CEO Doug Parker has already made $19.2MN.
Parker is not paid a cash salary. Rather, he is paid in company stock and stock options, a practice that began in his first full year as AA CEO in 2015. He is also an “at will” employee, like most of the company’s 100,000 workers. But with that risk comes great reward potential.
That $19.2MN is more than the $11.3MN he earned in 2017. How did he do it? Per Fortune:
Parker exercised 437,356 stock appreciation rights on Tuesday with strike prices of $8.14 and $8.84 — about one-sixth of the sale price.
These options date back to 2008. Last year, his “measly” $11.3MN salary was tied to a margin of only about $4/share. This year we are looking at $48/share.
In order to avoid “insider trading” accusations, AA leaders like Parker have a prearranged trading plan to exercise equity awards. Parker typically does this each year in January.
His pay is not just in stock or stock options, but in bonuses tied to stock price. With AA, like the much of the stock market, doing well, Parker could make another $20MN this year in bonuses.
But he’s off to a roaring start.