<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AMR Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
AMR
P.O. BOX 619616, DALLAS/FORT WORTH INTERNATIONAL AIRPORT, TX 75261-9616
March 29, 1996
TO OUR STOCKHOLDERS,
You are cordially invited to attend the annual meeting of stockholders of
AMR Corporation, which will be held in the Galleria Ballroom of The Westin
Hotel-Galleria at 13340 Dallas Parkway, Dallas, Texas, on Wednesday, May 15,
1996, at 10:00 A.M., Central Daylight Time. An Official Notice of the Meeting,
Proxy Statement and form of proxy are enclosed with this letter.
We hope that those of you who plan to attend the annual meeting will join us
beforehand for refreshments. If you cannot be present, please execute and return
the proxy card in the enclosed envelope so that your shares will be represented.
If you plan to attend the annual meeting, please make certain that you mark the
appropriate box on the proxy card when you return it, and bring to the annual
meeting the admission ticket that is printed on the last page of the proxy
statement.
Sincerely,
[SIG]
Robert L. Crandall
CHAIRMAN OF THE BOARD
<PAGE>
AMR
P.O. BOX 619616, DALLAS/FORT WORTH INTERNATIONAL AIRPORT, TX 75261-9616
------------------------
OFFICIAL NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
The annual meeting of stockholders of AMR Corporation will be held in the
Galleria Ballroom of The Westin Hotel-Galleria at 13340 Dallas Parkway, Dallas,
Texas, on Wednesday, May 15, 1996, at 10:00 A.M., Central Daylight Time, for the
purpose of considering and acting upon the following:
(1) the election of directors;
(2) ratification of the selection of Ernst & Young LLP as independent
auditors for the Corporation for the year 1996;
(3) amendments to the Corporation's 1994 Directors Stock Incentive Plan;
and such other matters as may properly come before the meeting or any
adjournments thereof.
If you plan to attend the annual meeting, please check the appropriate box
on your proxy card when you return it, and bring to the annual meeting the
admission ticket that is printed on the last page of the proxy statement. Only
stockholders of record at the close of business on March 18, 1996, will be
entitled to attend or to vote at the meeting.
By Order of the Board of Directors,
[SIG]
Charles D. MarLett
CORPORATE SECRETARY
March 29, 1996
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU MUST HAVE AN ADMISSION CARD
(PRINTED ON THE LAST PAGE OF THE PROXY STATEMENT) OR OTHER PROOF OF SHARE
OWNERSHIP. IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE EXECUTE
AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE SO THAT YOUR SHARES
WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
AMR
P.O. BOX 619616, DALLAS/FORT WORTH INTERNATIONAL AIRPORT, TX 75261-9616
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1996
This statement and the form of proxy are being mailed to stockholders on or
around March 29, 1996, in connection with a solicitation of proxies by the Board
of Directors of AMR Corporation ("AMR" or the "Corporation") for use at the
annual meeting of stockholders to be held on May 15, 1996.
If the enclosed form of proxy is signed and returned, it will be voted as
specified in the proxy, but a stockholder who executes a proxy may revoke it at
any time before it is voted.
The Corporation will bear the cost of this solicitation. In addition to
using the mails, proxies may be solicited by directors, officers and regular
employees of the Corporation or its subsidiaries, in person or by telephone. The
Corporation will also request brokers or nominees who hold common stock in their
names to forward proxy material at the Corporation's expense to the beneficial
owners of such stock, and has retained D.F. King & Co., Inc., a firm of
professional proxy solicitors, to aid in the solicitation at an estimated fee of
$13,500 plus reimbursement of normal expenses.
OUTSTANDING STOCK AND VOTING RIGHTS
The holders of record at the close of business on March 18, 1996, of the
Corporation's common stock will be entitled to vote at the meeting. On that
date, the Corporation had outstanding 76,761,590 shares of common stock. Each
stockholder will be entitled to one vote in person or by proxy for each share of
stock held.
Directors of the Corporation are elected by a plurality of the votes cast at
the annual meeting. Any other matters submitted to vote of the stockholders will
be determined by a majority of the votes cast. Abstentions from voting
(including broker non-votes) on the election of directors or on other matters
will have no effect on the outcome of such votes, since they are determined on
the basis of votes cast, and abstentions are not counted as votes cast.
<PAGE>
STOCKHOLDER PROPOSALS
From time to time, stockholders present proposals which may be proper
subjects for inclusion in the proxy statement and for consideration at the
annual meeting. Proposals for inclusion in the 1997 proxy statement must be
received by the Corporation no later than December 1, 1996. Any such proposal,
as well as any questions related thereto, should be directed to the Corporate
Secretary of the Corporation.
PROPOSAL 1--ELECTION OF DIRECTORS
It is proposed that 12 directors be elected at the meeting, to serve until
the next annual election and until their successors are duly elected and
qualified. Directors will be elected by a plurality of the votes cast.
Unless otherwise indicated, all proxies that authorize the persons named
therein to vote for the election of directors will be voted for the election of
the nominees listed below. If any nominee should not be available for election
as a result of unforeseen circumstances, it is the intention of the persons
named in the proxy to vote for the election of such substitute nominee, if any,
as the Board of Directors may propose.
NOMINEES FOR ELECTION AS DIRECTORS
Each of the nominees for election as a director has furnished to the
Corporation the following information with respect to principal occupation or
employment, principal business directorships and beneficial ownership of
securities of the Corporation as of March 18, 1996, including grants, if any, of
securities under the Corporation's 1994 Directors Stock Incentive Plan. Each
nominee is also a director of American Airlines, Inc. ("American").
BUSINESS AFFILIATIONS AND SECURITIES OWNERSHIP
DAVID L. BOREN, President, University of Oklahoma, Norman, Oklahoma;
educational institution. He is also a director of Phillips Petroleum Company and
Texas Instruments Incorporated. From 1979 through 1994, he was a United States
Senator for Oklahoma. From 1975 through 1979, he was the Governor of Oklahoma.
Mr. Boren is 54 and was elected a director in 1994. He is a member of
the Audit and Compensation/Nominating Committees. On March 18, 1996, he was
the beneficial owner of 400 shares of the Corporation's common stock.
2
<PAGE>
EDWARD A. BRENNAN, retired Chairman, President and Chief Executive Officer,
Sears, Roebuck and Co., Chicago, Illinois; merchandising. He is also a director
of Allstate Corporation, Dean Witter, Discover & Company, Minnesota Mining and
Manufacturing Company and Unicom Corporation.
Mr. Brennan is 62 and was elected a director in 1987. He is a member of
the Executive Committee and is Chairman of the Compensation/Nominating
Committee. On March 18, 1996, he was the beneficial owner of 1,400 shares of
the Corporation's common stock.
ARMANDO M. CODINA, Chairman of the Board and Chief Executive Officer, Codina
Group, Inc., Coral Gables, Florida; real estate investments, development,
construction, property management and brokerage services. He is also a director
of BellSouth Corporation, Winn Dixie Stores, Inc., FPL Group, Inc. and American
Bankers Insurance Group, Inc.
Mr. Codina is 49 and was elected a director in 1995. He is a member of
the Audit and Compensation/Nominating Committees. On March 18, 1996, he was
the beneficial owner of 700 shares of the Corporation's common stock.
ROBERT L. CRANDALL, Chairman of the Board, President and Chief Executive
Officer, AMR Corporation, and Chairman of the Board and Chief Executive Officer,
American Airlines, Inc., Fort Worth, Texas; air transportation, information
systems and diversified services. He is also a director of Halliburton Company.
Mr. Crandall is 60. He became the Corporation's Chairman of the Board
and Chief Executive Officer on March 1, 1985. He was elected a director of
American in 1976. He is Chairman of the Executive Committee. On March 18,
1996, he was the beneficial owner of 61,000 shares of the Corporation's
common stock.
CHRISTOPHER F. EDLEY, President Emeritus and retired President and Chief
Executive Officer, United Negro College Fund, Inc., New York, New York;
non-profit fundraising organization. He is also a director of Allstate
Corporation, The Great Atlantic & Pacific Tea Company, Inc. and The Student Loan
Corporation.
Mr. Edley is 68 and was elected a director of American in 1977. He is a
member of the Audit and Compensation/Nominating Committees. On March 18,
1996, he was the beneficial owner of 1,400 shares of the Corporation's
common stock.
CHARLES T. FISHER, III, retired Chairman and President of NBD Bancorp, Inc.
and NBD Bank, Detroit, Michigan; banking. He is also a director of First Chicago
NBD Corporation, First National Bank of Chicago, NBD Bank (Michigan), General
Motors Corporation and Hughes Electronics, Inc.
3
<PAGE>
Mr. Fisher is 66 and was elected a director of American in 1968. He is a
member of the Executive and Compensation/Nominating Committees. On March 18,
1996, he was the beneficial owner of 1,400 shares of the Corporation's
common stock.
EARL G. GRAVES, Chairman of the Board and Chief Executive Officer, Earl G.
Graves, Limited, New York, New York; communications and publishing (including
publication of BLACK ENTERPRISE magazine). He is Chairman of the Board and Chief
Executive Officer of Pepsi-Cola of Washington, D.C., L.P., a Pepsi-Cola bottling
franchise. He is a general partner of Egoli Partners, L.P., which is a general
partner of New Age Beverages, the Pepsi-Cola bottling franchise in the Republic
of South Africa. He is a director of Aetna Life and Casualty Co., Chrysler
Corp., Federated Department Stores, Inc. and Rohm and Haas Co.
Mr. Graves is 61 and was elected a director in 1995. He is a member of
the Audit and Compensation/Nominating Committees. On March 18, 1996, he was
the beneficial owner of 1,000 shares of the Corporation's common stock.
DEE J. KELLY, Partner, Kelly, Hart & Hallman, P.C., Fort Worth, Texas; law
firm. He is also a director of Justin Industries, Inc.
Mr. Kelly is 67 and was elected a director in 1983. He is a member of
the Executive and Compensation/Nominating Committees. On March 18, 1996, he
was the beneficial owner of 1,400 shares of the Corporation's common stock.
ANN D. MCLAUGHLIN, Vice Chairman of The Aspen Institute, Aspen, Colorado;
public policy organization. She was President of the Federal City Council,
Washington, D.C., from 1990-1995. She was President and Chief Executive Officer
of New American Schools Development Corporation, Arlington, Virginia from 1992
through 1993. Ms. McLaughlin was visiting fellow of The Urban Institute,
Washington, D.C. from 1989 to 1992. She was Secretary of Labor from 1987 through
1989 and Undersecretary of the Department of the Interior from 1984 through
1987. She is also a director of General Motors Corporation, Kellogg Company,
Host Marriott Corporation, Union Camp Corporation, Potomac Electric Power
Company, Vulcan Materials Company, Nordstrom, Inc., Harman International
Industries, Inc., Sedgwick Group, plc and the Federal National Mortgage
Association (Fannie Mae).
Ms. McLaughlin is 54 and was elected a director in 1990. She is Chairman
of the Audit Committee and is a member of the Compensation/Nominating
Committee. On March 18, 1996, she was the beneficial owner of 1,400 shares
of the Corporation's common stock.
4
<PAGE>
CHARLES H. PISTOR, JR., retired Vice Chair, Southern Methodist University,
Dallas, Texas; educational institution. He is a former President of the American
Bankers Association; he previously served as Chairman and Chief Executive
Officer of NorthPark National Bank, Dallas and of First RepublicBank Dallas,
N.A. He is also a director of American Brands, Inc., Centex Corporation and Oryx
Energy Company.
Mr. Pistor is 65 and was elected a director in 1982. He is a member of
the Audit and Compensation/Nominating Committees. On March 18, 1996, he was
the beneficial owner of 2,200 shares of the Corporation's common stock.
JOE M. RODGERS, Chairman, The JMR Group, Nashville, Tennessee; investment
company. From 1985 until his election as a director, Mr. Rodgers was the United
States Ambassador to France. He is also a director of BellSouth
Telecommunications, Inc., Gaylord Entertainment Co., Gryphon Holdings, Inc.,
Lafarge Corporation, SunTrust Bank, Nashville, N.A., Thomas Nelson, Inc.,
Tractor Supply Company and Willis Corroon Group plc.
Mr. Rodgers is 62 and was elected a director in 1989. He is a member of
the Audit and Compensation/Nominating Committees. On March 18, 1996, he was
the beneficial owner of 1,400 shares of the Corporation's common stock.
MAURICE SEGALL, Senior Lecturer at the Massachusetts Institute of Technology
(Sloan School of Management), Boston, Massachusetts; educational institution. He
is also the retired Chairman, President and Chief Executive Officer of Zayre
Corporation, a retailing company. He is also a director of Harcourt General,
Inc.
Mr. Segall is 66 and was elected a director in 1985. He is a member of
the Executive and Compensation/Nominating Committees. On March 18, 1996, he
was the beneficial owner of 1,400 shares of the Corporation's common stock.
A plurality of the votes cast is necessary for the election of a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE.
BOARD COMMITTEES
AMR has standing Audit, Executive and Compensation/Nominating Committees
which perform the functions described below. The Board of Directors of AMR held
nine meetings in 1995. All the director nominees listed above who served
throughout 1995 attended at least 75% of the Board of Directors meetings held
that year.
The Audit Committee, composed entirely of outside directors, met four times
during 1995 with the Corporation's independent auditors, representatives of
management and the internal audit
5
<PAGE>
staff. The Committee recommends the selection of independent auditors, reviews
the scope and results of the annual audit, reviews the Corporation's
consolidated financial statements, reviews the scope of non-audit services
provided by the independent auditors and reviews reports of the independent
auditors.
The Executive Committee met two times during 1995. The Committee may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, with the exception of such powers and
authority as are specifically reserved to the Board.
The Compensation/Nominating Committee, composed entirely of outside
directors, met seven times in 1995. The Committee makes recommendations with
respect to compensation and benefit programs for the officers and directors of
the Corporation and its subsidiaries. It also makes recommendations with respect
to assignments to Board Committees and promotions, changes and succession among
the senior management of the Corporation and its subsidiaries, and recommends
suitable candidates for election to the Board. In this regard, the Committee
will consider nominees for election recommended by stockholders. Such
recommendations should be submitted in writing to the Corporate Secretary with a
suitable description of the nominee's qualifications and evidence of his or her
consent to serve.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation/Nominating Committee for 1995 were as
follows:
<TABLE>
<S> <C> <C>
Edward A. Brennan, Chairman Christopher F. Charles H. Pistor,
Edley Jr.
Howard P. Allen Charles T. Fisher, Joe M. Rodgers
III
David L. Boren Earl G. Graves Maurice Segall
Armando M. Codina Dee J. Kelly Eugene F. Williams,
Jr.
Ann D. McLaughlin
</TABLE>
No member of the Compensation/Nominating Committee is a current or former
employee or officer of the Corporation or any of its affiliates or has any
interlocking relationship with any other corporation that requires specific
disclosure under this heading. The following is a summary of certain
relationships and transactions between the Corporation and the listed members of
the Compensation/Nominating Committee in 1995:
The law firm of Kelly, Hart & Hallman, P.C. performed legal services for the
Corporation. Mr. Kelly is a partner of the firm.
The Boston Consulting Group, Inc. is a management consulting firm that
performed consulting services for the Corporation. Mr. Segall is a Senior
Advisor to the firm.
6
<PAGE>
OTHER MATTERS
During 1995, the law firm of Gibson, Dunn & Crutcher performed legal
services for American. Martin B. McNamara is a partner of the firm and is the
husband of Anne H. McNamara, Senior Vice President and General Counsel of the
Corporation.
During 1995, the law firm of Locke Purnell Rain Harrell performed legal
services for American. Russell Coleman is a partner of the firm and is the
son-in-law of Robert L. Crandall, Chairman of the Board, President and Chief
Executive Officer of the Corporation.
Aurora Investments, Inc. ("Aurora"), a subsidiary of the Corporation, owns
an equity interest in Canadian Airlines International Ltd. ("Canadian"). The
Corporation also provides airline-related services to Canadian. Douglas Carty is
Vice President, Finance of Canadian and is the brother of Donald J. Carty,
Executive Vice President of the Corporation and President of American.
COMPENSATION OF DIRECTORS
Outside directors of the Corporation receive an annual retainer of $20,000
for service on the Board of Directors, an annual retainer of $1,500 for service
on a standing Committee of the Board and $1,000 for each Board or Committee
meeting attended. Directors may defer payment of all or any part of these fees
pursuant to two deferral plans. Under the first of these deferral plans, the
Corporation will pay interest on the amount deferred at the prime rate from time
to time in effect at The Chase Manhattan Bank, N.A. Under the second deferral
plan, compensation deferred during any calendar month is converted into stock
equivalent units by dividing the total amount of deferred compensation by the
average fair market value (as defined in the Corporation's 1988 Long Term
Incentive Plan, as amended (the "LTIP")) of the Corporation's common stock
during such month. At the end of the deferral period, the Corporation will pay
to the director an amount in cash equal to the number of accumulated stock
equivalent units multiplied by the average fair market value of the
Corporation's common stock during the month in which the deferral period
terminates.
The director, the director's spouse or companion, and the director's
dependent children are provided transportation on American and reimbursement for
federal income taxes incurred thereon. During 1995, the average value of this
transportation and tax reimbursement was approximately $41,750 per director.
The Corporation provides current directors a pension benefit equal to 10% of
a director's fees and retainers from the Corporation for his or her last twelve
months of service on the Board, multiplied by the number of years of service on
the Board, up to a maximum of $20,000 per year. As discussed on pages 24 through
28 of this proxy statement, the Corporation is proposing that certain
modifications be made to the 1994 Directors Stock Incentive Plan (the "SIP"). If
those changes are
7
<PAGE>
approved by the stockholders at the Annual Meeting, directors elected after May
15, 1996 will receive, in lieu of their participation in the foregoing pension
plan, an annual grant of 150 deferred shares of the Corporation's common stock.
This grant would be in addition to any other grants that are authorized under
the SIP.
Pursuant to the SIP, outside directors each receive an annual award of 200
deferred shares of the Corporation's common stock. Generally, these shares will
be delivered to the director within six months after the director ceases to be a
member of the Board. As discussed on pages 24 through 28 of this proxy
statement, the Corporation is proposing that the SIP be modified so that the
number of shares awarded annually would be increased to 300.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation for the
past three years paid to the individuals who, as of December 31, 1995, were the
five most highly compensated directors or executive officers of the Corporation
whose aggregate current remuneration exceeded $100,000 (the "named executive
officers").
<TABLE>
<CAPTION>
AWARDS
ANNUAL COMPENSATION ---------------------------------- PAYOUTS
NAME AND ---------------------------------------------------- RESTRICTED SECURITIES -----------
PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) OPTIONS/SARS(#) PAYOUTS(4) COMPENSATION(5)
- --------- --------- --------- ----------- ----------------- ------------- ------------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Crandall 1995 $ 662,500 $ $ 36,311 $ 0 50,000 $ 300,000 $ 86,282
1994 600,000 395,000 35,629 0 0 300,000 79,732
1993 600,000 0 30,343 0 0 300,000 73,631
- -----------------------------------------------------------------------------------------------------------------------------------
Carty 1995 565,000 0 0 25,000 196,000 13,381
1994 540,000 225,000 0 176,625 18,000 186,000 13,381
1993 491,250 0 0 195,938 15,000 186,000 13,381
- -----------------------------------------------------------------------------------------------------------------------------------
Baker 1995 540,000 0 0 18,000 186,000 16,253
1994 540,000 194,400 0 176,625 18,000 186,000 15,673
1993 491,250 0 0 195,938 15,000 186,000 13,280
- -----------------------------------------------------------------------------------------------------------------------------------
Gunn 1995 406,250 0 0 5,500 60,000 15,106
1994 400,000 132,000 0 117,750 5,500 50,000 15,106
1993 362,500 0 0 130,625 5,000 39,060 14,041
- -----------------------------------------------------------------------------------------------------------------------------------
Durham 1995 360,417 0 0 5,500 60,000 9,443
1994 350,000 116,000 0 117,750 5,500 50,000 9,443
1993 304,063 0 0 130,625 5,000 50,000 9,443
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Crandall = Robert L. Crandall, Chairman, President and Chief Executive Officer of
the Corporation and Chairman and Chief Executive Officer of American
Carty = Donald J. Carty, Executive Vice President of the Corporation and
President of American
Baker = Robert W. Baker, Executive Vice President-Operations of American
Gunn = Michael W. Gunn, Senior Vice President-Marketing of American
Durham = Michael J. Durham, Senior Vice President of American and President of The
SABRE Group
(SEE NEXT PAGE FOR FOOTNOTES.)
</TABLE>
9
<PAGE>
- ------------------------
(1) The amounts shown for 1994 represent payments made in 1995 pursuant to
American's Incentive Compensation Plan for 1994 services. It is expected
that there will be payments in 1996 pursuant to American's Incentive
Compensation Plan for 1995 services; however, the amount of these payments
had not been determined as of the date of this proxy statement. See the
related discussion under Compensation/Nominating Committee Report.
(2) Reimbursement for taxes related to the payment of insurance premiums.
(3) The value of 1994 restricted stock awards disclosed in this column of the
Summary Compensation Table is based on an average closing price of AMR
common stock of $58.875 on the NYSE on the date of grant (July 25, 1994).
The 1993 award value is based on an average closing price of $65.3125 on the
date of grant (July 26, 1993). This restricted stock is subject to
forfeiture and is held by the Corporation for a minimum of two years. In
individual instances, the restriction period may be longer. Dividends may be
paid on restricted stock; however, no dividends were paid in 1995.
The following table sets forth certain information concerning restricted
stock awards:
RESTRICTED STOCK; TOTAL SHARES AND VALUE
<TABLE>
<CAPTION>
TOTAL NUMBER OF AGGREGATE MARKET VALUE
RESTRICTED SHARES OF RESTRICTED SHARES
NAME HELD AT FY-END(A) HELD AT FY-END(B)
- --------- ------------------- -------------------------
<S> <C> <C>
Crandall 60,000 $ 4,443,780
Carty 124,000 9,183,812
Baker 113,000 8,369,119
Gunn 54,500 4,036,434
Durham 51,000 3,777,213
- ---------------------------------------------------------
</TABLE>
(A) Consists of shares awarded under the Corporation's restricted stock plan
which vest in years 1996 and 1997, shares of deferred common stock issued
under the LTIP which vest at retirement (Career Equity) and shares of
deferred common stock issued under the LTIP which vest upon the
Corporation's attainment of pre-determined cash flow objectives over a
three year performance period (Performance Shares). See the related
discussion of performance shares under LTIP awards (p.14).
(B) Based on the average closing price of AMR common stock ($74.063) on the
NYSE on December 29, 1995.
(4) Represents performance returns, granted with respect to deferred shares,
which are payable annually in cash, and are based, in part, on the
Corporation's prior five year average return on investment.
10
<PAGE>
(5) The following table sets forth information concerning all other
compensation:
<TABLE>
<CAPTION>
ALL OTHER COMPENSATION
----------------------------------------------------------------------------
INTEREST CONTRIBUTIONS TO DEFINED INSURANCE
NAME YEAR DIFFERENTIAL(A) CONTRIBUTION PLANS PREMIUMS(B) TOTAL
- --------- --------- --------------- ------------------------------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Crandall 1995 $ 18,995 $ 0 $ 67,287 $ 86,282
1994 13,468 0 66,264 79,732
1993 15,295 0 58,336 73,631
- --------------------------------------------------------------------------------------------------
Carty 1995 0 0 13,381 13,381
1994 0 0 13,381 13,381
1993 0 0 13,381 13,381
- --------------------------------------------------------------------------------------------------
Baker 1995 1,993 0 14,260 16,253
1994 1,413 0 14,260 15,673
1993 1,605 0 11,675 13,280
- --------------------------------------------------------------------------------------------------
Gunn 1995 0 0 15,106 15,106
1994 0 0 15,106 15,106
1993 0 0 14,041 14,041
- --------------------------------------------------------------------------------------------------
Durham 1995 0 0 9,443 9,443
1994 0 0 9,443 9,443
1993 0 0 9,443 9,443
- --------------------------------------------------------------------------------------------------
</TABLE>
(A) Represents amounts credited but not paid in the current fiscal year and
consists of the above-market portion of interest (defined as a rate of
interest exceeding 120% of the applicable federal long-term rate, with
compounding) on deferred compensation.
(B) Represents the full amount of premiums paid under a split-dollar life
insurance arrangement whereby the Corporation will recover certain
premiums paid, except with respect to Mr. Crandall, for whom such amount
also includes premiums paid on certain long-term disability policies
($16,869) and a supplemental whole life insurance policy ($37,597).
11
<PAGE>
STOCK OPTIONS GRANTED
The following table sets forth information concerning stock options granted
during 1995 by the Corporation to the named executive officers. The hypothetical
present values of stock options granted in 1995 are calculated under a modified
Black-Scholes model, a mathematical formula used to value options. The actual
amount, if any, realized upon the exercise of stock options will depend upon the
amount by which the market price of the Corporation's common stock (NYSE) on the
date of exercise exceeds the exercise price. There is no assurance that the
hypothetical present values of stock options reflected in this table will
actually be realized.
IF THE HYPOTHETICAL PRESENT VALUES PRESENTED IN THIS TABLE REPRESENT THE
AMOUNTS ACTUALLY REALIZED UPON EXERCISE OF THE OPTIONS, THE CORRESPONDING
INCREASE IN TOTAL STOCKHOLDER VALUE WOULD BE OVER $3.0 BILLION.
<TABLE>
<CAPTION>
OPTIONS/SARS GRANTED IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------
SECURITIES % OF TOTAL HYPOTHETICAL
UNDERLYING OPTIONS/SARS PRESENT
OPTIONS/ GRANTED TO EXERCISE OR VALUE AT
SARS EMPLOYEES IN BASE PRICE EXPIRATION DATE OF
NAME GRANTED(#) FISCAL YEAR PER SHARE DATE(6) GRANT(7)
- --------- ----------- --------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Crandall 50,000 11.3 $74.6875 7/20/05 $2,014,500
Carty 25,000 5.7 74.6875 7/20/05 1,007,250
Baker 18,000 4.1 74.6875 7/20/05 725,220
Gunn 5,500 1.2 74.6875 7/20/05 221,595
Durham 5,500 1.2 74.6875 7/20/05 221,595
</TABLE>
- ------------------------
(6) Options have a term of ten years, have an exercise price equal to the
average market price of the Corporation's common stock on the date of grant
and become exercisable at the rate of 20% per year over a five-year period.
(7) The modified Black-Scholes model used to calculate the hypothetical values
at date of grant considers a number of factors to estimate the option's
present value, including the stock's historic volatility calculated using
the average daily market price of the Corporation's common stock over a
one-year period prior to the grant date, the exercise period of the option,
interest rates and the stock's expected dividend yield. The assumptions used
in the valuation of the options were: stock price volatility--25.942%,
exercise period--10 years, interest rate--6.28%, and dividend yield--0.0%.
12
<PAGE>
STOCK OPTION EXERCISES AND
DECEMBER 31, 1995 STOCK OPTION VALUE
The following table sets forth certain information concerning stock options
exercised during 1995 by the named executive officers and the number and value
of unexercised in-the-money options at December 31, 1995. The actual amount, if
any, realized upon exercise of stock options will depend upon the amount by
which the market price of the Corporation's common stock (NYSE) on the date of
exercise exceeds the exercise price. There is no assurance that the values of
unexercised in-the-money stock options (whether exercisable or unexercisable)
reflected in this table will actually be realized.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
- ------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END(8)
SHARES ------------------------ ------------------------
ACQUIRED ON VALUE EXERCISABLE / EXERCISABLE /
NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------- ----------- ------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Crandall 0 $ 0 40,000 / 60,000 $ 740,020 / 185,005
Carty 0 0 81,600 / 56,400 1,115,088 / 371,464
Baker 13,000 329,563 71,600 / 49,400 949,770 / 371,464
Gunn 9,100 171,063 20,000 / 16,900 181,571 / 130,080
Durham 3,000 60,000 31,100 / 16,900 398,158 / 130,080
</TABLE>
- ------------------------
(8) Based on the average closing price of AMR common stock ($74.063) on the NYSE
on December 29, 1995.
13
<PAGE>
LONG TERM INCENTIVE PLAN AWARDS
Under the LTIP, deferred shares of the Corporation's common stock
(performance shares) may be awarded to officers and other key
employees--including the named executive officers. Further information
concerning performance shares can be found in the Compensation/Nominating
Committee Report (the "Report") (located elsewhere herein).
<TABLE>
<CAPTION>
LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS
NUMBER OF SHARES, UNITS PERIOD UNTIL UNDER NON-STOCK PRICE BASED PLANS
OR MATURATION OR -------------------------------------------
NAME OTHER RIGHTS(#)(9) PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---------- ------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Crandall 22,500 Performance 12/31/97 0 22,500 39,375
Shares
- -------------------------------------------------------------------------------------------------
Carty 18,000 Performance 12/31/97 0 18,000 31,500
Shares
- -------------------------------------------------------------------------------------------------
Baker 12,000 Performance 12/31/97 0 12,000 21,000
Shares
- -------------------------------------------------------------------------------------------------
Gunn 5,600 Performance 12/31/97 0 5,600 9,800
Shares
- -------------------------------------------------------------------------------------------------
Durham 5,600 Performance 12/31/97 0 5,600 16,800
Shares
</TABLE>
- ------------------------
(9) Performance shares awarded to Messrs. Crandall, Carty, Baker and Gunn in
1995 were granted, pursuant to the LTIP, under the performance share program
applicable to American. Performance shares awarded to Mr. Durham in 1995
were granted, pursuant to the LTIP, under the performance share program
applicable to The SABRE Group. These programs are discussed in more detail
on pages 22 and 23 of this proxy statement.
PENSION PLAN
American's basic pension program for management personnel consists of a
fixed benefit retirement plan which complies with the Employee Retirement Income
Security Act of 1974 ("ERISA") and qualifies for federal exemption under the
Internal Revenue Code ("Code"). Officers of American are eligible for additional
retirement benefits, to be paid by American under the Supplemental Executive
Retirement Plan (the "SERP") as an operating expense. The SERP
14
<PAGE>
provides pension benefits (calculated upon the basis of final average base
salary, incentive compensation payments and performance returns) to which
officers of American would be entitled, but for the limit of $120,000 on the
maximum annual benefit payable under ERISA and the Code and the limit on the
maximum amount of compensation which may be taken into account under American's
basic pension program ($150,000 for 1995).
The following table shows typical annual benefits payable under the basic
pension program and the SERP, based upon retirement in 1995 at age 65, to
persons in specified remuneration and credited years-of-service classifications.
Annual retirement benefits set forth below are subject to reduction for Social
Security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFITS
-----------------------------------------------------
FINAL
AVERAGE CREDITED YEARS OF SERVICE
SALARY 15 20 25 30 35
- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 250,000 $ 75,000 $ 100,000 $ 125,000 $ 150,000 $ 175,000
300,000 90,000 120,000 150,000 180,000 210,000
400,000 120,000 160,000 200,000 240,000 280,000
500,000 150,000 200,000 250,000 300,000 350,000
600,000 180,000 240,000 300,000 360,000 420,000
700,000 210,000 280,000 350,000 420,000 490,000
800,000 240,000 320,000 400,000 480,000 560,000
</TABLE>
As of December 31, 1995, the named executive officers had the following
credited years of service: Mr. Crandall: 21.5; Mr. Carty: 16.5; Mr. Baker: 26.5;
Mr. Gunn: 24.5; Mr. Durham: 15.5. Benefits are shown in the above table on a
straight-life annuity basis.
To provide an incentive for Mr. Crandall to continue his services as
Chairman of the Board and Chief Executive Officer, the Corporation provides Mr.
Crandall with additional years of credited service under American's pension plan
for services rendered after 1994. The number of additional credited years will
range from two years to ten years, depending on the number of years (or portions
thereof) beyond 1995 during which Mr. Crandall continues to serve as Chairman of
the Board and Chief Executive Officer (with pro rata credit for partial years).
15
<PAGE>
CORPORATE PERFORMANCE
The following graph compares the yearly change in the Corporation's
cumulative total stockholder return on its common stock with the cumulative
total return on the published Standard & Poor's 500 Stock Index and the
cumulative total return on an index of airlines published by Standard & Poor's,
in each case over the preceding five-year period. The Corporation believes that
while total stockholder return is AN INDICATOR OF CORPORATE PERFORMANCE, it is
subject to the vagaries of the market.
CUMULATIVE TOTAL RETURNS*
ON $100 INVESTMENT ON DECEMBER 31, 1990
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMR S&P 500 S&P AIRLINES**
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 145.74 130.40 127.47
1992 139.53 140.27 113.74
1993 138.50 154.33 119.41
1994 110.08 156.29 83.19
1995 153.49 215.02 121.50
</TABLE>
- ------------------------
*Defined as stock price appreciation plus dividends paid assuming reinvestment
of dividends
**Standard & Poor's Airline Index includes American Airlines, Delta Air Lines,
United Airlines and USAir
OWNERSHIP OF SECURITIES
On December 31, 1995, directors and officers of the Corporation and
American, as a group, owned, or had been granted rights to acquire under the
stock-based compensation plans of the Corporation, 2,499,911 shares of common
stock of the Corporation (approximately 3.5% of the common stock outstanding as
of that date). Each director or officer separately, and all directors and
officers as a group, beneficially owned less than 1% of any class of equity
securities of the Corporation as of such date.
16
<PAGE>
The following firm has informed the Corporation it was the beneficial owner
of more than 5% of the Corporation's outstanding common stock at December 31,
1995.
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENT
OF BENEFICIAL OWNER AMOUNT HELD OF CLASS
- ----------------------------------------------------- --------------- ------------
Tiger Management Corporation......................... 3,952,300(10) 5.2%
<S> <C> <C>
101 Park Avenue
New York, New York 10178
</TABLE>
- ------------------------
(10) Tiger Management Corporation ("TMC"), Panther Partners, L.P. ("PPLP"),
Panther Management Company, L.P. ("PMCLP") and Julian H. Robertson, Jr.
filed a Schedule 13G on February 12, 1996. This schedule indicates that Mr.
Robertson is the ultimate controlling person of TMC and PMCLP and that PMCLP
is a general partner of PPLP. It also indicates that: (i) TMC beneficially
owns, and has shared voting and dispositive power over, 3,725,600 shares;
(ii) PPLP and PMCLP, jointly, beneficially own, and have shared voting and
dispositive power over, 210,200 shares; and (iii) Mr. Robertson, in addition
to the shares referenced in clauses (i) and (ii), beneficially owns, and has
shared voting and dispositive power over, 16,500 shares.
17
<PAGE>
EXECUTIVE TERMINATION BENEFITS AGREEMENTS/EMPLOYMENT AGREEMENTS
The Corporation has executive termination benefits agreements (the
"Agreements") with 13 officers of American, including all of the named executive
officers. The benefits provided by the Agreements are triggered by the
termination of the individual who is a party to an Agreement (i) within three
years following a change in control of the Corporation, if the individual's
employment with the Corporation is terminated other than for cause or if the
individual terminates his or her employment with "good reason" or (ii) within
one year following a change in control of the Corporation, if the individual
terminates his or her employment with the Corporation. If the individual's
employment is terminated for cause or as a consequence of death or disability,
the Agreement is not triggered. Under the terms of the Agreements, a change in
control of the Corporation is deemed to occur (i) if a third party acquires 20%
or more of the Corporation's common stock, (ii) upon the occurrence of a
transaction which requires stockholder approval and involves the acquisition of
the Corporation (through the purchase of assets or by merger or otherwise) by an
entity other than the Corporation or a subsidiary thereof or (iii) if during any
24-month period the individuals who, at the beginning of such period, constitute
the Board of Directors of the Corporation cease for any reason other than death
to constitute at least a majority thereof. The Agreements provide that upon such
termination, the individual will receive, in a lump sum payment, two times each
of the individual's annual base salary, annual award paid under American's
incentive compensation plan, annual performance return payments and certain
other miscellaneous benefits. In addition, upon a change in control, the vesting
and exercisability of stock awards will be accelerated (for example, deferred
and restricted stock will immediately vest and all stock options will become
immediately exercisable). Finally, the individual will be reimbursed for excise
taxes, if any, paid pursuant to Section 280G of the Code (or its successor
provision) and for federal income tax paid on such excise tax reimbursement.
COMPENSATION/NOMINATING COMMITTEE REPORT
(1) OVERALL POLICY
The objectives of the Corporation's compensation policies are (i) to
attract and retain the best possible executive talent, (ii) to motivate its
executives to achieve the Corporation's goals, (iii) to link executive and
stockholder interests through equity based compensation and (iv) to provide a
compensation package that appropriately recognizes both individual and corporate
contributions. With these objectives in mind, the Corporation has developed an
overall compensation strategy that links a very large portion of executive
compensation to the Corporation's financial success. The Corporation expects
that compensation payable in 1996 to the named executive officers will be fully
deductible for U.S. income tax purposes.
18
<PAGE>
The Compensation/Nominating Committee (the "Compensation Committee" or the
"Committee") is composed entirely of disinterested members of the Board of
Directors. No member of the Committee is a current or former employee or officer
of the Corporation or any of its affiliates. The Committee meets regularly
throughout the year to review general compensation issues and determines the
compensation of all of the officers of American (five of whom are also officers
of the Corporation)--including all of the named executive officers. Once a year,
the Compensation Committee conducts a comprehensive review of the Corporation's
executive compensation program. This review includes (i) an internal report
evaluating executive compensation throughout the Corporation to ensure
consistency and program effectiveness, including the relationship of executive
pay to performance and (ii) a comprehensive report from an independent
compensation consultant (retained by the Committee) evaluating the
competitiveness of executive compensation at the Corporation relative to other
major public corporations employing similar executive talent.
The key elements of an executive's compensation consist of: base salary; an
incentive compensation award (in years when American's performance warrants such
an award); performance returns; and stock compensation, which may include
deferred stock (career equity shares and/or performance shares), restricted
stock and/or stock options. The Committee also regularly reviews data on the
competitive marketplace--comparing total compensation and each element thereof
with compensation opportunities at comparable positions at other companies. The
Committee's policy is to establish compensation ranges that are approximately at
the median of those found at a comparator group made up of Fortune 500 companies
across industries with whom the Corporation and American compete for talent (the
"Comparator Group") for comparable positions.
(2) DISCUSSION
(A) BASE SALARY
The Committee reviews officers' salaries, including Mr. Crandall's, annually
and makes adjustments based on its subjective evaluation of the performance of
American and the individual. In the case of an officer with responsibility for
business units other than American, the financial results of those units is also
considered.
Effective August 1, 1995, the Committee approved an increase from $600,000
to $750,000 in Mr. Crandall's base salary (see Summary Compensation Table for
further details). This increase was based on: the Committee's subjective
evaluation of Mr. Crandall's service and strategic contributions and his
contributions to the Corporation's improved financial results; the amount of Mr.
Crandall's compensation relative to the median compensation of chief executives
of Comparator Group companies; and the fact that his base salary had not been
increased since 1989.
19
<PAGE>
(B) INCENTIVE COMPENSATION PLAN
American's incentive compensation plan was approved by the stockholders in
1989 and is reviewed annually by the Committee. The Committee also reviews the
incentive compensation plans of the Corporation's other subsidiaries.
In 1995, the American incentive compensation plan provided that participants
would be eligible to receive awards only if the following three performance
goals were met: (i) American's return on investment exceeded 8% or 9% (depending
on American's return on investment ranking relative to certain competitors),
(ii) American's profit sharing plan for non-management employees made a
distribution and (iii) the variable pay plan for pilots made a distribution.
While target bonus payments to a participant under the incentive
compensation plan are based upon an individual's job classification level at
American relative to similar levels at the Comparator Group, the actual amount
of the award is based on a subjective evaluation of each individual's
performance. For Mr. Crandall, the target bonus payment is 100% of base salary.
For Mr. Carty, the target bonus payment is 75% of base salary; for Mr. Baker,
the target bonus payment is 60% of base salary; for Messrs. Gunn and Durham, the
target bonus payment is 55% of base salary. In recognition of superior
performance, the Committee may award additional amounts in excess of the target
bonus payments, except that no bonus payment may exceed 100% of the individual's
base salary. Moreover, unless the Committee otherwise decides, the combination
of an incentive compensation award and performance return payments (described
below) for any given year may not exceed 100% of an individual's base salary. As
of the date of this proxy statement, the Committee has not reviewed the
individual performance of the named executive officers for 1995. Therefore, the
Committee has not yet determined whether any bonus will be payable to each such
officer and, if so, the amount that will be payable as a bonus. Based on
American's performance in 1995, the Committee expects that, after reviewing and
thoroughly evaluating the performance of the named executive officers, it will
approve the payment of a bonus to each such officer.
(C) STOCK BASED COMPENSATION
Under the LTIP, stock based compensation (which may include stock options,
restricted stock and deferred stock) may be granted to officers and key
employees of the Corporation and its affiliates. The purpose of equity
participation is to align further the interests between executive officers and
the Corporation's stockholders in the Corporation's growth in real value over
the long term.
STOCK OPTIONS
Stock options, which are exercisable for ten years from the date of grant,
have an exercise price equal to the average market price (NYSE) of the
Corporation's common stock on the date of grant
20
<PAGE>
and vest in 20% increments over five years. This approach is designed to provide
an incentive to create stockholder value over the long term, since the full
benefit of the stock option compensation package cannot be realized unless stock
appreciation occurs over a number of years.
The Committee determines the number of options to be granted based upon a
subjective evaluation of the executive with respect to three factors: individual
performance, the executive's ability to perform multiple functions, and the
executive's retention value to the Corporation. The number of stock options
awarded, if any, depends upon the executive's rating with respect to these
factors.(11)
On July 20,1995, the Committee granted Mr. Crandall options to purchase
50,000 shares of the Corporation's common stock at an exercise price of
$74.6875, which represents the average market price (NYSE) of the Corporation's
common stock on the date of grant. These options become exercisable at the rate
of 20% per year over a five-year period. This grant was based on: the
Committee's subjective evaluation of Mr. Crandall's service and strategic
contributions; the Corporation's improved financial results; the amount of Mr.
Crandall's compensation relative to chief executives of Comparator Group
companies; and the fact that he was last granted stock options in 1991.
CAREER EQUITY SHARES
Shares of deferred common stock have been granted, from time to time, to the
officers and key employees of the Corporation and its affiliates through the
Career Equity Program (the "Program") to retain and compensate these individuals
and to give these individuals a stake in the long-term performance of the
Corporation through stock ownership. Career equity shares are also granted to
provide retirement income competitive with the median of the Comparator Group.
The Program provides that career equity shares vest generally upon the
executive's retirement. In order to assure the Corporation of the executive's
services for his or her career and to provide appropriate levels of retirement
income, the Corporation has agreements with each named executive officer (except
Mr. Crandall) which guarantee that the value of the individual's career equity
holdings will be equal to three and one-half times the individual's final
average salary at retirement.
The Committee determines the number of career equity shares to be granted
based upon a subjective evaluation of the executive with respect to four
factors: current performance, the executive's ability to perform multiple
functions, the executive's retention value to the Corporation and the
executive's level of retirement income. The actual number of career equity
shares awarded, if any, depends upon the executive's rating with respect to
these factors.
- ------------------------
(11) See the Summary Compensation Table for information regarding the number of
stock options awarded to the named executive officers in 1995.
21
<PAGE>
The Program also provides for the annual cash payment of "performance
returns." For the named executive officers, the amount of the payment depends
upon (i) the rolling five-year average of the Corporation's return on
investment, (ii) the aggregate number of career equity shares awarded, (iii) the
percentage, if any, of this aggregate number of deferred shares determined by
the Committee to be eligible for payment of performance returns in a given year
based upon a subjective evaluation of individual performance, and (iv) the
average market price (NYSE) of the Corporation's common stock on the date of
grant. In 1995, the percentage of career equity shares used in the calculation
for the named executive officers ranged from 66% to 100%.(12)
In 1995, Mr. Crandall was awarded performance returns on approximately 55%
of his career equity shares based upon the Committee's subjective evaluation of
his service and strategic contributions to the Corporation and to ensure that
Mr. Crandall's total compensation remained competitive with the median for chief
executive officers in the Comparator Group. In 1995, Mr. Crandall requested that
he not be considered for any award of deferred stock under the Program. In
accordance with his request, no deferred stock award under the Program was made
to him.
RESTRICTED STOCK
Restricted stock awards are grants of common stock of the Corporation which
carry full stockholder privileges including the right to vote and the right to
receive any declared dividends in respect of such shares. The shares are held by
the Corporation with vesting based on the satisfaction of future service
requirements. The shares are non-transferable and are subject to risk of
forfeiture. Restricted stock awards are designed to retain the services of key
executives and, therefore, do not vest, generally, until a minimum of two years
has passed since the date of grant.
Restricted stock grants are based upon a subjective evaluation of the
executive's current performance, retention value and ability to perform multiple
functions.
In 1995, Mr. Crandall requested that he not be considered for any award of
restricted stock. In accordance with this request, no restricted stock award was
made to him.
PERFORMANCE SHARES--AMERICAN
Performance shares (other than those issued to key employees of The SABRE
Group, as discussed below) are awards of deferred stock of the Corporation,
pursuant to the LTIP, under the performance share program applicable to
American. These shares are granted contingent upon the Corporation's attainment
of pre-determined cash flow objectives over a three year "performance period."
The cash flow objective is based on the Corporation's cumulative operating cash
flow
- ------------------------
(12) See the Summary Compensation Table for information regarding the payment of
performance returns to the named executive officers in 1995.
22
<PAGE>
relative to adjusted net assets over the performance period. The percentage of
the shares granted which will vest range from 0% to 175% based upon varying
levels of cumulative operating cash flow relative to adjusted net assets over
the three year period, as well as the Corporation's standing (on the same basis)
relative to four major competitors (United, Delta, Southwest and USAir).(13) If
each competitor outperforms the Corporation with respect to this measurement, or
if the Corporation fails to achieve a certain level of cumulative operating cash
flow relative to adjusted net assets, no performance shares will be earned.
Performance share grants are based upon a subjective evaluation of the
executive's current performance, retention value and ability to perform multiple
functions.
In 1995, Mr. Crandall was issued 22,500 performance shares based upon the
Committee's subjective evaluation of Mr. Crandall's service and strategic
contributions to the Corporation.
PERFORMANCE SHARES--THE SABRE GROUP
The SABRE Group consists of certain subsidiaries, divisions and operating
units which conduct the Corporation's information technology business.
Performance shares which are issuable to key employees of The SABRE Group are
awards of deferred stock of the Corporation, pursuant to the LTIP, under the
performance share program applicable to The SABRE Group. These shares are
granted contingent upon The SABRE Group's attainment of pre-determined total
shareholder return objectives over a three year "performance period." The total
shareholder return objective is based on the increase in business value and the
amount of free cash flow generated by The SABRE Group over the performance
period. The percentage of the shares granted which will vest ranges from 0% to
300% based upon varying levels of total shareholder returns over the performance
period.(13) If The SABRE Group fails to achieve a certain level of total
shareholder return, no performance shares will be earned. Performance share
grants within The SABRE Group are based upon a subjective evaluation of the
executive's current performance, retention value, and ability to perform
multiple functions.
- ------------------------
(13) See the Long Term Incentive Plan Award Table for the number of performance
shares granted to the named executive officers in 1995.
23
<PAGE>
COMPENSATION/NOMINATING COMMITTEE
<TABLE>
<S> <C> <C>
Edward A. Brennan, Chairman Christopher F. Edley Charles H. Pistor, Jr.
Howard P. Allen Charles T. Fisher, Joe M. Rodgers
David L. Boren III Maurice Segall
Armando M. Codina Earl G. Graves Eugene F. Williams, Jr.
Dee J. Kelly
Ann D. McLaughlin
</TABLE>
PROPOSAL 2--SELECTION OF AUDITORS
Based upon the recommendation of the Corporation's Audit Committee, the
Board of Directors has selected Ernst & Young LLP to serve as the Corporation's
independent auditors for the year ending December 31, 1996. The stockholders
will be requested to ratify the Board's selection. Representatives of Ernst &
Young will be present at the Annual Meeting, will have the opportunity to make a
statement, if they desire to do so, and will be available to answer appropriate
questions. Ernst & Young's fee for accounting and audit-related services for
1995 for the Corporation and its subsidiaries was approximately $2,000,000.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares represented and entitled to
vote is required to approve the Board's selection of auditors. If the
stockholders do not ratify the selection of Ernst & Young LLP, the selection of
independent auditors will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
PROPOSAL 3--AMENDMENTS TO 1994 DIRECTORS STOCK INCENTIVE PLAN
INTRODUCTION
Increasingly, stockholders and others have been focusing their attention on
director compensation practices at large publicly held U.S. companies. The most
recent example of this heightened scrutiny is reflected in the REPORT OF THE
NACD BLUE RIBBON COMMISSION ON DIRECTOR COMPENSATION (the "NACD Report"). In the
NACD Report, the commissioners made clear their desire to see greater economic
alignment between a company's independent directors and its stockholders.
In light of this debate, the Corporation's Board retained Hewitt Associates
(an independent compensation consultant) to examine the Corporation's director
compensation practices vis-a-vis those at other large publicly-held companies.
Hewitt concluded that director compensation at the Corporation, inclusive of
equity grants under the SIP, was not competitive.
24
<PAGE>
In order (a) to make the Corporation's director compensation more
competitive, and (b) to respond to some of the concerns set forth in the NACD
Report, the Corporation has adopted a series of amendments to the SIP. The
intent of these amendments is to ensure that the Corporation will continue to
attract independent directors of the highest quality and caliber while enhancing
the economic alignment between the Corporation's independent directors and its
stockholders. A description of these changes to the SIP follows.
SUMMARY OF AMENDMENTS
The Board has adopted amendments to the SIP that would (i) increase the
annual grant of deferred stock to each non-employee director of the Corporation
(a "Director") from 200 to 300 shares, (ii) increase future annual grants, if
necessary, to keep total director compensation comparable to that paid by a
group of comparator companies, (iii) award each Director who is first elected to
the Board after May 15, 1996 (a "New Director") an additional 150 deferred
shares of the Corporation's Common Stock per year, in lieu of participation in a
pension plan and (iv) increase the number of shares of the Corporation's Common
Stock reserved for issuance under the SIP from 50,000 shares to 100,000 shares.
The SIP was approved by the Corporation's stockholders in May 1994 as a
means of (x) assisting the Corporation in attracting, retaining and motivating
the best qualified Directors, and (y) enhancing the long-term mutuality of
interest between the Corporation's Directors and its stockholders. While the SIP
has served its original purposes, the Corporation believes that the equity
component of a Director's compensation should be increased.
At page 7 of this proxy statement, the cash component of director
compensation is explained. (For purposes of the SIP, "Director Compensation" is
defined as the annual cash payments received for service on the Board and any
equity compensation received.) In addition, under the SIP, as previously
approved, a Director receives 200 shares of deferred stock each year upon
election at the Corporation's annual meeting. Generally, this stock is
distributed upon the Director's retirement, death or disability.
By increasing the annual stock grant from 200 to 300 shares per year, the
equity component of Director Compensation will increase and the mutuality of
interests between the Director and the Corporation's shareholders will be
furthered. For example, at a hypothetical value of $74.063 per share of Common
Stock (the average closing price per share of such stock on the NYSE on December
29, 1995), the current annual equity grant is 28% of Director Compensation.
Under the amended SIP, the annual equity grant will be 36% of Director
Compensation (using the same assumptions).
25
<PAGE>
In order to ensure that Director Compensation at the Corporation remains
competitive, the amended SIP will increase, pursuant to a fixed formula, the
number of shares awarded under the annual grant based upon competitive practices
at other large companies. The formula requires that every two years an
independent compensation consultant determine the median value of Director
Compensation at those ten publicly held companies that are listed immediately
above and below the Corporation in the Fortune 500 rankings (for a total of 20
companies)(the "Director Compensation Comparator Group"). This determination
will value equity and other equity based compensation pursuant to formulae set
forth in the SIP. If Director Compensation at the Corporation falls below 85% of
median Director Compensation within the Director Compensation Comparator Group,
the annual grant will be increased, in 50-share increments, until the 85%
threshold is attained. The foregoing formulae and other provisions of the
amended SIP will ensure that objective criteria are used in selecting both the
Director Compensation Comparator Group and in calculating the median value of
Director Compensation at the Director Compensation Comparator Group.
For a New Director, the amended SIP will also award an additional 150
deferred shares of the Corporation's Common Stock on a yearly basis commencing
with the New Director's initial election to the Board. The deferred shares will
be distributed to the New Director, generally, upon his or her retirement, death
or disability from the Board. This additional annual grant will be in lieu of
allowing such New Director to participate in the current pension plan for
Directors. Thus, the number of participants in the current pension plan for
Directors will be frozen, and New Directors will receive an equity award
intended to strengthen further the commonality of interests between a New
Director and the Corporation's shareholders.
Finally, to effect these changes, the SIP is being amended to increase the
number of shares authorized for issuance under its provisions from 50,000 to
100,000 shares. This increase will ensure that the Corporation has adequate
shares of stock to fulfill the objectives of the SIP.
A summary of the amended SIP follows, but this summary is qualified in its
entirety by reference to the full text of the amended SIP (inclusive of
definitions), which is attached as Exhibit A to this proxy statement.
SUMMARY OF MATERIAL PROVISIONS OF THE SIP
The SIP provides for an annual award of the contractual right to receive 300
deferred shares of the Corporation's Common Stock to each Director who is in
office on the first business day after each annual meeting of stockholders
occurring during the term of the Plan (an "Annual Award"). If a Director ceases
to be a director of the Corporation for any reason (other than death or
disability) within six months after the date of any Annual Award, the Director
shall forfeit all rights to the deferred shares awarded for that current year.
If a Director ceases to be a director due to death or
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disability within six months after the date of any Annual Award, the Director's
deferred shares shall vest. After completing six months of service as a director
following the grant of an Annual Award, the Director's right to the awarded
deferred shares shall be fully vested and nonforfeitable.
For a New Director, the SIP provides for an annual award of the contractual
right to receive 150 deferred shares of the Corporation's Common Stock. This
grant will be made on the business day immediately following the annual meeting
at which such New Director is elected to the Board (the "Election Award"). If a
New Director ceases to be a director of the Corporation for any reason (other
than death or disability) within two years after the date of the Election Award,
the New Director shall forfeit all rights to the Election Award shares which
were awarded. If a New Director ceases to be a director due to death, disability
or retirement within two years after the date of the Election Award, the
Director's Election Award shares shall vest. After completing two years of
service following the grant of the Election Award, the New Director's right to
the Election Award shares shall be fully vested and nonforfeitable. The Election
Award will be in addition to the Annual Award and will be in lieu of
participation in the Corporation's pension plan for Directors.
Beginning July 1, 1998, and thereafter at two year intervals, the
Compensation/Nominating Committee of the Board of Directors, or its successor,
will appoint an independent compensation consultant to examine director
compensation at companies within the Director Compensation Comparator Group. In
the event that Director Compensation for the Corporation's Directors is less
than 85% of the median of Director Compensation at the companies within the
Director Compensation Comparator Group, determined pursuant to the formulae set
forth in the SIP, the Annual Grant will be increased in increments of 50 shares
until Director Compensation for the Corporation's Directors is 85% of such
median.
Shares of the Corporation's Common Stock related to vested awards under the
SIP will generally be delivered to a Director six months following the date at
which the Director ceases to be a member of the Board (although a Director may
elect to defer receipt of such shares beyond such date). However, in the event
of certain tender or exchange offers of the Common Stock, or shareholder
approval of a merger or other business combination in which the Corporation or
one of its majority-owned subsidiaries does not survive as a publicly traded
corporation, shares of the Corporation's Common Stock may be delivered with
respect to vested awards while the Director is still serving on the Board.
A maximum of 100,000 shares may be issued under the SIP, subject to
appropriate adjustments in the event of certain corporate transactions,
including but not limited to reorganizations, stock dividends and splits. The
SIP will be administered by the Board of Directors. The Board may amend the SIP,
but may not amend the provisions governing the grant of Annual Awards more
frequently
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than once every six months and may not amend the SIP without shareholder
approval if such approval would be required to qualify the SIP under Rule 16b-3
(or its successor provision) of the Securities Exchange Act of 1934, as amended.
The Board may terminate the SIP at any time.
The average of the high and low sales prices of a share of Common Stock on
March 18, 1996, as reflected in the report of consolidated trading of New York
Stock Exchange issues was $91.50.
FEDERAL INCOME TAX CONSEQUENCES
At the time shares of Common Stock are transferred to the Director, an
amount equal to the fair market value of such shares will be includable in such
Director's ordinary income. The Corporation will be entitled to a tax deduction
in the amount, if any, of ordinary income recognized by the Director.
A Director's basis in any shares of Common Stock received with respect to an
Annual Award or Election Award will be equal to the ordinary income recognized
by the Director. Upon a subsequent sale or exchange of such shares, the Director
will recognize capital gain or loss to the extent of the difference between the
selling price of such shares and such Director's tax basis in such shares. Such
gain or loss will be a long-term or short-term capital gain or loss depending on
the Director's holding period for such shares.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares represented and entitled to
vote is required to approve the foregoing amendments to the SIP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
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OTHER MATTERS
The Board of Directors knows of no other matters to be acted upon at the
meeting, but if any such matters properly come before the meeting, it is
intended that the persons voting the proxies will vote in accordance with their
best judgments.
By Order of the Board of Directors,
Charles D. MarLett
CORPORATE SECRETARY
March 29, 1996
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EXHIBIT A
AMR CORPORATION
1994 DIRECTORS STOCK INCENTIVE PLAN, AS AMENDED
1. PURPOSES
The purposes of this AMR Corporation 1994 Directors Stock Incentive Plan, as
amended, (the "Plan") are to enable AMR Corporation (the "Company") to attract,
retain and motivate the best qualified directors and to enhance a long-term
mutuality of interest between the directors and stockholders of the Company by
providing the directors with a direct economic interest in the Common Stock of
the Company.
2. DEFINITIONS
Unless the context requires otherwise, the following words as used in the
Plan shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably, and that each
comprehends the others.
(a) "AMR Total Compensation" shall mean the nominal amount of cash paid to
each Eligible Director for services as a member of the Board (including, without
limitation, fees paid for service on committees or for attendance at meetings)
for the last completed fiscal year of the Company, plus the value of each equity
award made to each Eligible Director for such fiscal year, with each such equity
award valued in the same manner described below with respect to similar type
awards for purposes of determining Annual Equity Compensation; provided, that,
for purposes of determining AMR Total Compensation, the annual award of Deferred
Shares made pursuant to Section 8 hereof shall be disregarded.
(b) "Annual Equity Compensation" shall mean, with respect to each of the
companies in the Comparator Group, the sum of the values of each equity award
made to a majority of the independent directors of such company determined in
accordance with the following guidelines:
(i) any stock option shall be valued using the Black-Scholes method of
option valuation based on the following assumptions: (A) the risk free rate
of return shall be equal to the one year Treasury bill rate reported in THE
WALL STREET JOURNAL on the last business day immediately preceding the date
as of which the determination is being made; (B) the term of the option
shall be its stated term, regardless of any potential limitations on, or
conditions to the availability, of such term; (C) the stock price of the
underlying stock shall be the closing price of a share of stock (or, if
applicable, the average of the closing bid and asked prices) on the exchange
or national securities quotation system on which such shares principally
trade on the last day
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immediately preceding the date as of which such equity award was made; (D)
the stock price volatility of each company's stock shall be determined based
on the twelve month period ended on the immediately preceding June 30; and
(E) the exercise price shall be that stated in the option award and without
regard to any possible adjustment thereto;
(ii) any award of shares of stock or deferred shares of stock, or any
cash award to be valued by reference to shares of stock, shall be valued
based on the closing price of a share of such stock (or, if applicable, the
average of the closing bid and asked prices) on the exchange or national
securities quotation system on which such shares principally trade on the
last day immediately preceding the date as of which such equity award was
made, minus the amount, if any, required to be paid to receive such award
(or payment thereon);
(iii) the value of any such award shall be determined without regard to
any restrictions related thereto, including, without limitation, any
restriction requiring the continued performance of services;
(iv) if any award is made to a majority of all independent directors,
but less frequently than annually (a "Nonrecurring Award"), each independent
director shall be deemed to receive annually an award equal to the value of
the Nonrecurring Award, determined in the manner described herein, divided
by (x) the vesting period, if any, applicable to such award or (y) if no
vesting period is stated or required, five years; and
(v) if an equity award is made to some but not all independent directors
based on the fact that the directors receiving such equity award were not
eligible to participate in a retirement plan or program for independent
directors, such award shall be disregarded.
(c) "Award" shall mean any Share awarded under the Plan.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Change in Control" shall mean the occurrence of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in Section
13(d) of the Exchange Act but excluding the Company and any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee), directly
or indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of securities of the Company representing 20 percent
or more of the combined voting power of the Company's then outstanding
securities; or
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(ii) When during any period of 24 consecutive months during the
existence of the Plan, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any reason other
than death to constitute at least a majority thereof; provided, however,
that a director who was not a director at the beginning of such 24-month
period shall be deemed to have satisfied such 24-month requirement (and be
an Incumbent Director) if such director was elected by, or on the
recommendation of, or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually (because
they were directors at the beginning of such 24-month period) or by prior
operation of this paragraph; or
(iii) The occurrence of a transaction requiring stockholder approval for
the acquisition of the Company by an entity other than the Company or a
subsidiary through purchase of assets, or by merger, or otherwise.
(f) "Comparator Group" shall mean that group of 10 companies whose equity is
registered under Section 12(g) of the Exchange Act that are ranked (i)
immediately above the Company on the Fortune 500 list of companies (in terms of
revenue) and (ii) immediately below the Company on such list (for a total of 20
companies); provided, that, if any such company provides an equity award based
on a security that is not traded on an established securities market or that is
otherwise not susceptible of being accurately valued using the principles set
forth in Annual Equity Compensation, then such company shall be replaced in the
Comparator Group by the next company in the applicable ranking on the Fortune
500 list.
(g) "Consultant" shall mean an independent executive compensation consulting
firm chosen by the Directors to perform the examination set forth in Section 7.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Common Stock" shall mean the common stock of the Company, par value
$1.00, any common stock into which such common stock may be changed, and any
common stock resulting from any reclassification of such common stock.
(j) "Deferred Share" shall mean a contractual right to receive one Share at
the time and subject to the conditions set forth in Sections 6 and 8.
(k) "Disability" means disability as determined under procedures established
by the Board for purposes of the Plan.
(l) "Eligible Director" shall mean a director of the Company who is not an
officer or employee of the Company or any of its subsidiaries.
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(m) "Fair Market Value" as of any given date shall mean the mean between the
highest and lowest quoted selling prices, regular way, of a Share on the New
York Stock Exchange on such date or, if no Shares are sold on such date, on the
last preceding business day on which any such sale was reported.
(n) "New Director" shall mean an Eligible Director who is first elected to
the Board after May 15, 1996.
(o) "Share" shall mean a share of Common Stock.
3. EFFECTIVE DATE
Provided this Plan is approved by the Company's stockholders at the 1994
annual meeting of stockholders, the effective date of the Plan shall be May 18,
1994.
4. ADMINISTRATION
(a) POWERS OF THE BOARD. This Plan shall be administered by the Board. The
Board may delegate its powers and functions hereunder to a duly appointed
committee of the Board. The Board shall have full authority to interpret this
Plan; to establish, amend and rescind rules for carrying out this Plan; to
administer this Plan; and to make all other determinations and to take such
steps in connection with this Plan as the Board, in its discretion, deems
necessary or desirable for administering this Plan.
(b) DISINTERESTED STATUS. Notwithstanding the foregoing, neither the
Board, any committee thereof nor any person designated pursuant to (c) below may
take any action which would cause any Eligible Director to cease to be a
"disinterested person" for purposes of Rule 16b-3 promulgated under the Exchange
Act as then in effect or any successor provisions ("Rule 16b-3"), with regard to
this Plan or any other stock option or other equity plan of the Company. In
particular, neither the Board, any committee thereof nor any person designated
pursuant to (c) below shall have any discretion as to:
(i) the selection of Eligible Directors as eligible to receive awards
pursuant to the Plan; or
(ii) the number of Shares awarded pursuant to Sections 6 and 8.
(c) DELEGATION. The Board may designate the Corporate Secretary of the
Company, other officers or employees of the Company or competent professional
advisors to assist the Board in the administration of this Plan, and may grant
authority to such persons to execute agreements or other documents on its
behalf.
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(d) AGENTS AND INDEMNIFICATION. The Board may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of this
Plan, and may rely upon any opinion received from any such counsel or consultant
or agent. No member or former member of the Board or any committee thereof or
any person designated pursuant to paragraph (c) above shall be liable for any
action or determination made in good faith with respect to this Plan. To the
maximum extent permitted by applicable law and the Company's Certificate of
Incorporation and Bylaws, each member or former member of the Board or any
committee thereof or any person designated pursuant to (c) above shall be
indemnified and held harmless by the Company against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Company) arising from any act, or omission to
act, in connection with this Plan, unless arising from such person's own fraud
or bad faith. Such indemnification shall be in addition to any rights of
indemnification the person may have as a director, officer or employee or under
the Company's Certificate of Incorporation or Bylaws. Expenses incurred by the
Board in the engagement of any such counsel, consultant or agent shall be paid
by the Company.
5. SHARES; ADJUSTMENT UPON CERTAIN EVENTS
(a) SHARES AVAILABLE. Shares to be delivered under this Plan shall be made
available, at the discretion of the Board, either from authorized but unissued
Shares or from issued Shares reacquired by the Company. The aggregate number of
Shares that may be issued under this Plan shall not exceed 100,000 Shares,
except as provided in this Section.
(b) NO LIMIT ON CORPORATE ACTION. The existence of this Plan and the
Deferred Shares granted hereunder shall not affect in any way the right or power
of the Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting Common Stock, the dissolution or liquidation of the Company or any
sale or transfer of all or part of its assets or business, or any other
corporate act or proceeding.
(c) RECAPITALIZATION AND SIMILAR EVENTS. The Deferred Shares awarded under
Sections 6 and 8 relate to Shares of Common Stock as presently constituted, but
if and whenever the Company shall effect a subdivision, reorganization,
recapitalization or consolidation of Shares or the payment of a stock dividend
on Shares without receipt of consideration, the number and kind of Deferred
Shares to be awarded under Sections 6 and 8 and the aggregate number and kind of
shares of capital stock issuable under the Plan shall be proportionately
adjusted.
(d) NO ADJUSTMENT IF VALUE RECEIVED. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any class of
securities convertible into shares of stock of
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any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or other securities, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number of Deferred Shares to be awarded to a participant pursuant to
Sections 6 and 8.
6. DEFERRED SHARE AWARDS--ANNUAL
(a) AWARDS TO ELIGIBLE DIRECTORS. On the first business day after each
annual meeting of stockholders of the Company occurring during the term of the
Plan, each Eligible Director shall receive an award of 300 Deferred Shares.
(b) SERVICE REQUIREMENT. If any Eligible Director ceases to be a director
of the Company for any reason other than death or Disability prior to the date
which is six months after the date of any grant of Deferred Shares under Section
6(a), such Eligible Director shall forfeit any and all of his rights and
interests in such Deferred Shares to the Company and shall not be entitled to
receive any compensation therefor. In the event that an Eligible Director shall
cease to be a director due to his death or Disability prior to completing at
least six months service as a director, the beneficiary or beneficiaries of such
Eligible Director shall be entitled to receive without any restriction any
Shares issuable in respect of any Deferred Shares awarded to such Eligible
Director at the time indicated under Section 9. After completing six months of
service as a director following a grant of Shares under Section 6(a), an
Eligible Director's rights and interests in such Deferred Shares shall be
nonforfeitable.
7. ADJUSTMENT TO ANNUAL AWARDS
(a) On or about July 1, 1998, and each second July 1 thereafter, the
Consultant will examine the compensation of the independent members of the
boards of directors at each of the companies within the Comparator Group for the
last completed fiscal year of such company reported in such company's most
recent proxy statement or annual report in accordance with the following
guidelines:
(i) the Annual Equity Compensation Value, if any, for each independent
director at each company within the Comparator Group will be determined by
the Consultant;
(ii) annual cash compensation, if any, for each independent director at
each company within the Comparator Group will be valued at nominal value,
regardless of whether such cash compensation is paid or deferred (the "Cash
Compensation");
(iii) Annual Equity Compensation Value and the Cash Compensation for
each company within the Comparator Group will be summed to determine the
total annual compensation for
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each independent director at each company (excluding any non-cash and
non-equity benefits or perquisites made available to each such director)
within the Comparator Group (the "Total Compensation");
(iv) the Consultant will determine the median Total Compensation for the
Comparator Group (after having calculated, among other things, the average
director compensation within each Comparator Group company) and will
determine, further, the value of 85% of such median (the "Threshold
Compensation");
(v) if AMR total compensation for each Eligible Director is less than
the Threshold Compensation, the number of Shares referenced in Section 6(a)
shall be increased, effective as of the next following annual meeting of
shareholders, in increments of 50, until AMR Total Compensation for each
Eligible Director (as increased pursuant to this Section 7(a)(v) and as
valued in accordance with Section 7(a)(i)) is equal to, or greater than,
Threshold Compensation.
(b) The results of the Consultant's examination will be reported to the
Board no later than the first occurrence of October 31 following the
examination.
8. DEFERRED SHARE AWARDS--NEW DIRECTORS
(a) AWARDS TO NEW DIRECTORS. On the first business day after each annual
meeting of stockholders of the Company occurring during the term of the Plan,
each New Director shall receive an award of 150 Deferred Shares (such Deferred
Shares being in addition to those awarded under Section 6(a)).
(b) SERVICE REQUIREMENT. If any New Director ceases to be a director of
the Company for any reason other than death, Disability or retirement at or
after age 70 prior to the date which is two years after the date of any grant of
Deferred Shares under Section 8(a), such New Director shall forfeit any and all
of his rights and interests in such Deferred Shares to the Company and shall not
be entitled to receive any compensation therefor. In the event that a New
Director shall cease to be a director due to his death, Disability or retirement
at or after age 70 prior to completing at least two years of service as a
director, the New Director or the beneficiary or beneficiaries of such New
Director, shall be entitled to receive without any restriction any Shares
issuable in respect of any Deferred Shares awarded to such New Director at the
time indicated under Section 9. After completing two years of service as a
director following a grant of Shares under Section 8(a), a New Director's rights
and interests in such Deferred Shares shall be nonforfeitable.
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9. DISTRIBUTION; CHANGE IN CONTROL; DEFERRAL
(a) An Eligible Director who ceases to be a member of the Board (or, in the
case of a deceased Eligible Director, the beneficiary or beneficiaries of the
Eligible Director) shall receive one Share for each of the Eligible Director's
Deferred Shares which had become nonforfeitable on or before the date the
Eligible Director ceased to be a member of the Board. Upon receipt of the
Shares, the Eligible Director shall forfeit all rights to the underlying
Deferred Shares and the number of Shares eligible for distribution under Section
5(a) of the Plan shall be reduced only by the number of Shares so distributed.
Any Shares to be issued under the first sentence of this Section 9(a) shall be
transferred to the Eligible Director (or, in the case of a deceased Eligible
Director, the beneficiary or beneficiaries of the Eligible Director) six months
and one day after the last acquisition of beneficial ownership by the Eligible
Director. The Board may decide to distribute cash in lieu of Shares to the
Eligible Director. In such an event, the cash amount shall be equal to the Fair
Market Value of the Shares on the distribution date. In the event that any Award
would result in the issuance of a fractional Share, the Company shall pay the
Eligible Director (or the Eligible Director's beneficiary or beneficiaries) a
cash amount equal to the Fair Market Value of such fractional share on the
payment date in lieu of issuing any fractional Share. If any award of Deferred
Shares under Sections 6(a) or 8(a) is forfeited or is otherwise terminated prior
to distribution in the form of Shares, such Deferred Shares shall again be
available for distribution in connection with future awards under the Plan.
(b) Notwithstanding anything else contained in the Plan to the contrary, in
the event of a Change in Control the Company shall immediately distribute to
each Eligible Director (or, in the case of a deceased Eligible Director, the
beneficiary or beneficiaries of the Eligible Director) one Share for each of the
Eligible Director's Deferred Shares which were granted at least six months
before the date on which the Change of Control occurred.
(c) An Eligible Director may, at any time prior to the cessation of such
Eligible Director's service on the Board, elect in writing to voluntarily defer
receipt of any distribution under Section 9(a) for an additional period
specified in such election (the "Elective Deferral Period"); provided, however,
that any election received by the Company within one year of the date on which
such cessation of service occurs shall be void and without effect (e.g., if the
Eligible Director ceases service on the Board on May 15, 1998, an election
received by the Company after May 14, 1997, shall have no effect). Any
distribution deferred pursuant to this Section 9(c) shall be made to the
Eligible Director (or, in the case of a deceased Eligible Director, the
beneficiary or beneficiaries of the Eligible Director) within 30 days after the
end of the elective Deferral Period.
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10. NONTRANSFERABILITY OF AWARDS
No Award shall be transferable by the Eligible Director otherwise than by
will or under the applicable laws of descent and distribution prior to the time
the related Shares are issued under Section 9. During the period prior to the
transfer of any Shares in respect of an Award pursuant to Section 9, such Award
shall not be sold, assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Upon any attempt to sell, assign,
negotiate, pledge or hypothecate any Award, or in the event of any levy upon any
Award by reason of any attachment or similar process, in either case contrary to
the provisions hereof, such Award shall immediately become null and void.
11. RIGHTS AS A STOCKHOLDER
An Eligible Director shall have no rights as a stockholder with respect to
any Deferred Shares until he shall have become the holder of record of the
related Share(s), pursuant to Section 9. At the time any dividends or other
distributions are paid on or made with respect to a Share, each Eligible
Director shall be credited with that number of additional Deferred Shares as is
equal to the quotient of (i) the dollar amount of any such dividend or
distribution with respect to the Eligible Director's vested Deferred Shares (or,
in the case of any distribution made in property, the value of such property as
reported to shareholders for Federal income tax purposes) divided by (ii) the
Fair Market Value on the date such dividend or distribution is declared. Any
such additional Deferred Shares shall become nonforfeitable and payable as
provided under Section 9 as though granted on the same day as the Deferred
Shares to which they relate.
12. DETERMINATIONS
Each determination, interpretation or other action made or taken pursuant to
the provisions of this Plan by the Board shall be final and binding for all
purposes and upon all persons, including, without limitation, the Company, the
directors, officers and other employees of the Company, the Eligible Director
and their respective heirs, executors, administrators, personal representatives
and other successors in interest.
13. TERMINATION, AMENDMENT AND MODIFICATION
(a) TERMINATION AND AMENDMENT. This Plan shall terminate at the close of
business on May 19, 2004, unless sooner terminated by action of the stockholders
of the Company, or by resolution adopted by the Board, and no Awards shall be
granted under this Plan thereafter. The Board at any time or from time to time
may further amend this Plan to effect (i) amendments necessary or desirable in
order that this Plan and the Awards shall conform to all applicable laws and
regulations and (ii) any other amendments deemed appropriate. Notwithstanding
the foregoing, (y) the provisions of the Plan relating to the award of Deferred
Shares may not be amended
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more than once every six months other than to comport with changes in the Code
and the rules thereunder and (z) the Board may not effect any amendment that
would require the approval of the stockholders of the Company under Rule 16b-3
(or its successor provision) or the listing requirements of the New York Stock
Exchange (if applicable to the Company at the time such amendment is adopted or
will be effective) unless such approval is obtained.
(b) NO EFFECT ON EXISTING RIGHTS. Except as required by law, no
termination, amendment or modification of this Plan may, without the consent of
an Eligible Director or the permitted transferee of an Award, alter or impair
the rights and obligations arising under any then outstanding Award.
14. NON-EXCLUSIVITY
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
compensatory arrangements as it may, in its discretion, deem desirable.
15. GENERAL PROVISIONS
(a) NO RIGHT TO SERVE AS A DIRECTOR. This Plan shall not impose any
obligations on the Company to retain any Eligible Director as a director nor
shall it impose any obligation on the part of any Eligible Director to remain as
a director of the Company.
(b) NO RIGHT TO PARTICULAR ASSETS. Nothing contained in this Plan and no
action taken pursuant to this Plan shall create or be construed to create a
trust of any kind or any fiduciary relationship between the Company and any
Eligible Director, the executor, administrator or other personal representative
or designated beneficiary of such Eligible Director, or any other persons. Any
reserves that may be established by the Company in connection with this Plan
shall continue to be part of the general funds of the Company, and no individual
or entity other than the Company shall have any interest in such funds until
paid to an Eligible Director. To the extent that any Eligible Director or his
executor, administrator, or other personal representative, as the case may be,
acquires a right to receive any payment from the Company pursuant to this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company.
(c) LISTING OF SHARES AND RELATED MATTERS. If at any time the Board shall
determine in its discretion that the listing, registration or qualification of
the Shares covered by this Plan upon any national securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the
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<PAGE>
delivery of Shares under this Plan, no Shares will be delivered unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board.
(d) NOTICES. Each Eligible Director shall be responsible for furnishing
the Board with the current and proper address for the mailing of notices and
delivery of agreements and Shares. Any notices required or permitted to be given
shall be deemed given if directed to the person to whom addressed at such
address and mailed by regular United States mail, first-class and prepaid. If
any item mailed to such address is returned as undeliverable to the addressee,
mailing will be suspended until the Eligible Director furnishes the proper
address.
(e) SEVERABILITY OF PROVISIONS. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or non-enforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provision had not been included.
(f) INCAPACITY. Any benefit payable to or for the benefit of an
incompetent person or other person incapable of receipting therefor shall be
deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Board, the Company and other parties with respect
thereto.
(g) HEADINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of this Plan,
and shall not be employed in the construction of this Plan.
(h) CONTROLLING LAW. This Plan shall be construed and enforced according
to the laws of the State of Texas.
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<PAGE>
If you are planning to attend the Annual Meeting in person, you must bring
the admission ticket printed on this page with you. You will be asked for this
ticket at the stockholder registration desk at the Annual Meeting. If you do not
have an admission ticket, other evidence of share ownership will be necessary to
obtain admission to the Annual Meeting. See "Official Notice of Annual Meeting"
for details.
(PLEASE CUT ALONG THIS LINE)
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AMR CORPORATION
1996 ANNUAL MEETING ADMISSION TICKET
The Annual Meeting of Stockholders of AMR Corporation will be held
at 10:00 A.M., CDT, on Wednesday, May 15, 1996,
at the Galleria Ballroom of The Westin Hotel--Galleria,
13340 Dallas Parkway, Dallas, Texas
TO ATTEND THIS MEETING YOU MUST PRESENT
THIS TICKET OR OTHER PROOF OF SHARE OWNERSHIP
(Doors open at 9:00 A.M. NOTE: Cameras, tape recorders or other similar
recording devices will not be allowed in the meeting room.)
<PAGE>
AMR
<PAGE>
AMR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF AMR CORPORATION
PROXY
The undersigned hereby appoints Robert L. Crandall, Christopher F. Edley and
Charles T. Fisher, III, or any of them, proxies, each with full power of
substitution, to vote the shares of the undersigned at the Annual Meeting of
Stockholders of AMR Corporation on May 15, 1996, and any adjournments thereof,
upon all matters as may properly come before the meeting. Without otherwise
limiting the foregoing general authorization, the proxies are instructed to vote
as indicated herein.
Election of Directors, Nominees:
David L. Boren, Edward A. Brennan, Armando M. Codina,
Robert L. Crandall, Christopher F. Edley, Charles T. Fisher, III,
Earl G. Graves, Dee J. Kelly, Ann D. McLaughlin,
Charles H. Pistor, Jr., Joe M. Rodgers, Maurice Segall.
(change of address)
________________________________________
________________________________________
________________________________________
________________________________________
(If your address has changed, please provide your new
address above and mark the corresponding box on the
reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES. SEE
REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE
BOARD OF DIRECTORS' NOMINEES, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
1. Election of Directors
(see reverse).
FOR WITHHELD
/ / / /
2. Ratification of the
selection of Ernst &
Young LLP as
independent
auditors for the
year 1996.
FOR AGAINST ABSTAIN
/ / / / / /
3. Amendments to the Corporation's
1994 Directors Stock Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
For, except vote withheld from the following nominee(s):
_____________________________________
_____________________________________
Change of Address
(Please mark this box if you indicated
a change of address on the front side.) / /
Do you plan to attend the Annual Meeting?
YES NO
/ / / /
SIGNATURE(S) _________________________________ DATE ______________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
