2008/2010 PERFORMANCE SHARE AGREEMENT
2008/2010
PERFORMANCE SHARE AGREEMENT
This 2008/2010 Performance Share
Agreement (“Agreement”) is effective as of May 20, 2008, by and between AMR
Corporation, a Delaware corporation (the “Corporation”), and [FIRST NAME LAST
NAME], employee number [EMPLOYEE NUMBER] (the “Employee” or the “Recipient”), an
officer or key employee of one of the Corporation’s Subsidiaries.
WHEREAS, pursuant to the 2008/2010
Performance Share Plan for Officers and Key Employees (the “Plan”), as adopted
by the Board of Directors of the Corporation (the “Board”), the Compensation
Committee of the Board (the “Committee”) has determined to make an award to the
Employee (subject to the terms of the Plan and this Agreement), as an inducement
for the Employee to remain an employee of one of the Corporation’s Subsidiaries
during the time frame of 2008 - 2010 and to retain and motivate such Employee
during such employment.
This Agreement sets forth the terms and
conditions attendant to the Award under the Plan.
1. Grant of
Award. Subject to the terms and conditions of this Agreement,
the Plan and the AMR Corporation 1998 Long Term Incentive Plan, as amended (the
“LTIP”), the Recipient is hereby granted an Award effective as of May 20, 2008
(the “Grant Date”), in respect to [NUMBER] of shares of the Corporation’s Common
Stock (“Common Stock”). The Award shall vest, if at all, in
accordance with Section 2 of this Agreement. On or about the date the
Award vests (if at all), the Recipient will receive a payment from the
Corporation of a combination of cash and/or Common Stock. The
Committee will determine the amount of the Award to be paid in cash, if any (the
“Cash Award”), and the amount of the Award to be settled in shares of Common
Stock (the “Stock Distribution”). Any such Cash Award will be paid on
or about April 29, 2011 (such Cash Award will be made pursuant to the Annual
Incentive Plan). The Stock Distribution will be paid on or about
April 20, 2011 (such Stock Distribution will be made from shares available for
issuance under the LTIP and/or another equity compensation plan). The
sum of the Cash Award and the Stock Distribution will equal the product of: (a)
the Fair Market Value of the Common Stock on April 20, 2011, and (b) the number
of shares of Common Stock comprising the Award.
2. Vesting and
Distribution.
(a) The
Award will vest, if at all, in accordance with Schedule A, attached hereto and
made a part of this Agreement.
(b) In
the event the Employee’s employment with one of the Corporation’s Subsidiaries
is terminated prior to the end of the measurement period set forth in Schedule A
(the “Measurement Period”) due to his or her death, Disability (as defined in
Section 409A(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the
“Code”)), Retirement (subject to the second paragraph of Section 4) or
termination not for Cause (each an “Early Termination”), the Award will vest, if
at all, on a pro-rata basis and will be paid to the Employee (or, in the event
of the Employee’s death, the Employee’s designated beneficiary for purposes of
the Award, or in the absence of an effective beneficiary designation, the
Employee’s estate). The pro-rata basis will be a percentage where:
(i) the denominator of which is 36, and (ii) the numerator of which is the
number of months from January 1, 2008 through the month of Early Termination,
inclusive. The cash and/or Common Stock subject to this pro-rata
Award will be paid to the Recipient at the same time as Cash Awards and Stock
Distributions under the Plan are paid to then current employees who have Awards
under the Plan, subject to Section 2(f) of this
Agreement. Notwithstanding the foregoing, in no event will a payment
be provided to the Employee unless and until the Employee’s Retirement or
termination not for Cause constitutes a “separation from service” for purposes
of Treasury Regulation 1.409A-1(h) or successor guidance thereto.
(c) In
the event the Recipient’s employment with one of the Corporation’s Subsidiaries
is terminated for Cause, or if the Recipient terminates such employment with
such Subsidiary prior to his or her Retirement, each occurring prior to April
20, 2011, the Award shall be forfeited in its entirety.
(d) If, prior
to April 20, 2011, the Recipient becomes an employee of a Subsidiary that is not
wholly-owned, directly or indirectly, by the Corporation, or if the Recipient
begins a leave of absence without reinstatement rights, then in each case the
Award shall be forfeited in its entirety.
(e) In the
event of a Change in Control of the Corporation prior to the payment of the cash
and/or Common Stock subject to the Award, such payment will be made within 60
days of the date of the Change in Control. In such event, the vesting
date will be the date of the Change in Control. The term “Change in
Control” is defined for purposes of this Agreement in Section 7.
(f) Notwithstanding
the third sentence of Section 2(b) above, if the Employee is a “specified
employee” pursuant to Treasury Regulation 1.409A-1(i) or successor guidance
thereto, any payment on account of his or her Retirement or termination not for
Cause shall not be paid until following the earlier of: (i) the sixth month
anniversary of the date of separation from employment due to Retirement or
termination not for Cause or (ii) the date of the Employee’s death.
(g) To the
extent the Cash Award and/or Stock Distribution subject to the Award is
otherwise payable pursuant to this Agreement and except as otherwise provided
herein, such Cash Award and/or Stock Distribution will be paid on the applicable
dates and events specified herein (each a “Payment Date”); provided, however, in
no event shall any such payment be made later than the 15th day of the third
month of the calendar year immediately following the calendar year in which the
Payment Date occurs.
3. Transfer
Restrictions. This Award is non-transferable, other than by
will or by the laws of descent and distribution, and may not otherwise be
assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process. Upon any attempt by the Recipient (or
the Recipient’s successor in interest after the Recipient’s death) to effect any
such disposition, or upon the levy of any such process, the Award may
immediately become null and void and of no further validity, at the discretion
of the Committee.
4. Miscellaneous. This
Agreement (a) shall be binding upon and inure to the benefit of any successor of
the Corporation, (b) shall be governed by the laws of the State of Texas and any
applicable laws of the United States, and (c) may not be amended without the
written consent of both the Corporation and the
Employee. Notwithstanding the foregoing, this Agreement may be
amended from time to time without the written consent of the Employee pursuant
to Section 8 below and as permitted by the Plan or the LTIP (or its
successor). No contract or right of employment shall be implied by
this Agreement.
In the
event the Employee’s employment is terminated by reason of Early or Normal
Retirement and the Employee is subsequently employed by a competitor (as
determined in the Board’s discretion) of the Corporation or any of its
Subsidiaries prior to the complete payment of the cash and/or Common Stock
subject to the Award, the Corporation reserves the right, upon notice to the
Employee, to declare the Award forfeited and of no further
validity.
In consideration of the Employee’s
privilege to participate in the Plan and receive the Award under this Agreement,
the Employee agrees: (i) not to disclose any trade secrets of, or other
confidential or restricted information of the Corporation or any of its
Subsidiaries to any unauthorized party; (ii) not to make any unauthorized use of
such trade secrets or confidential or restricted information during or after his
or her employment with any Subsidiary of the Corporation; and (iii) not to
solicit any then current employees of any Subsidiary of the Corporation to join
the employee at his or her new place of employment after such employment has
terminated. The failure by the employee to abide by the foregoing
obligations shall result in his or her award being forfeited in its
entirety.
The Employee shall not have the right
to defer any payment of the Cash Award or the Stock
Distribution. Except as provided in this Agreement, the Committee and
Corporation shall not accelerate the payment of any Cash Award or the Stock
Distribution.
Any Cash Award will be net of
applicable withholding and social security taxes. The Employee will pay to the
Corporation timely any and all such taxes on account of the Stock Distribution.
The failure by the Employee to pay timely such taxes will result in a
withholding from any and all payments from the Corporation or any Subsidiary to
the Employee in order to satisfy such taxes.
Notwithstanding anything in this
Agreement or the Plan to the contrary, the Committee may elect, at any time and
from time to time, in lieu of issuing all or any portion of the Common Stock
comprising the Stock Distribution, to make substitutions for such Common Stock,
all to the effect that the employee will receive cash or other marketable
property of a value equivalent to what the Employee would have received in a
Stock Distribution. Additionally, notwithstanding anything to the
contrary contained in this Agreement or the Plan, (i) any obligation of the
Corporation to pay or distribute any shares under this Agreement or the Plan is
subject to and conditioned upon the Corporation having sufficient stock in the
LTIP or another shareholder-approved equity compensation plan to satisfy all
payments or distributions under the Plan and the LTIP, and (ii) any obligation
of the Corporation to pay or distribute cash or any other property under this
Agreement or the Plan is subject to and conditioned upon the Corporation having
the right to do so without violating the terms of any covenant or agreement of
the Corporation or any of its Subsidiaries.
To the
extent the Award is forfeited, any and all rights of the Employee under this
Agreement shall cease and terminate with respect to such forfeited Award, or
portion thereof, without any further obligation on the part of the
Corporation.
5. [Intentionally
Omitted]
6. Adjustments in
Awards. In
the event of a stock dividend, stock split, merger, consolidation,
re-organization, re-capitalization or other change in the corporate structure of
the Corporation, appropriate adjustments shall be made by the Board of Directors
to the Award.
7. Incorporation of the
Provisions of the Plan and LTIP. Capitalized terms not otherwise defined
herein shall have the meanings set forth for such terms in the Plan and the LTIP
(or its successor). For purposes of Section 2(e), the term “Change in
Control” will mean a “change in ownership” or “change in effective control” or
“change in ownership of the assets” of the Corporation, as determined pursuant
to Treasury Regulation 1.409A-3(i)(5) (or successor guidance thereto) and the
LTIP.
8. Section 409A
Compliance. This Agreement is intended to avoid, and not
otherwise be subject to, the income inclusion requirements, interest and penalty
taxes of Section 409A of the Code and the regulations and other guidance
issued thereunder, and shall be interpreted in a manner consistent with that
intent. Notwithstanding the foregoing, in the event there is a
failure to comply with Section 409A of the Code, the Board shall have the
discretion to accelerate the time of payment of a Stock Distribution or Cash
Award, but only to the extent of the amount required to be included in income as
a result of such failure. In addition
to amendments permitted by Section 4 above, amendments to this Agreement, the
Plan and/or the LTIP (or its successor) may be made by the Corporation, without
the Employee’s consent, in order to ensure compliance with Section 409A of the
Code and the regulations and other guidance issued thereunder.
9. Securities Law
Requirements. Notwithstanding any provision in this Agreement
or the Plan to the contrary, the Corporation shall not be required to make any
Stock Distribution pursuant to this Award during such period that the
Corporation reasonably anticipates that such Stock Distribution will violate
federal securities laws or other applicable law. The Corporation may
require the Recipient to furnish to the Corporation, prior to the issuance of
any shares of Common Stock hereunder, an agreement, in such form as the
Corporation may from time to time deem appropriate, in which the Recipient
represents that the shares acquired by him or her upon such exercise are being
acquired for investment and not with a view to the sale or distribution
thereof.
IN WITNESS HEREOF, this Performance
Share Agreement is entered into as of the date first above written.
Employee AMR
CORPORATION
_________________________ _____________________
Xxxxxxx X.
Xxxxxxxx
Corporate
Secretary
Schedule
A
2008/2010
PERFORMANCE SHARE PLAN
FOR
OFFICERS AND KEY EMPLOYEES
Purpose
The
purpose of the 2008/2010 Performance Share Plan for Officers and Key Employees,
as amended (the “Plan”), is to provide greater incentive to officers and key
employees of the subsidiaries and affiliates of AMR Corporation (“AMR” or the
“Corporation”) to achieve the highest level of individual performance and to
meet or exceed specified goals during the time frame 2008 – 2010, which will
contribute to the success of the Corporation.
Definitions
For
purposes of the Plan, the following definitions will control:
“Affiliate”
is defined as a subsidiary of AMR or any entity that is designated by the
Committee as a participating employer under the Plan, provided that AMR directly
or indirectly owns at least 20% of the combined voting power of all classes of
stock of such entity.
“Board”
is defined as the Board of Directors of the Corporation.
“Committee”
is defined as the Compensation Committee, or its successor, of the
Board.
“Comparator
Group” is defined as the following ten U.S. based carriers including, AirTran
Airways, Inc., Alaska Air Group, Inc., AMR Corporation, Continental Airlines,
Inc., Delta Airlines Inc., JetBlue Airways Corporation, Northwest Airlines
Corporation, Southwest Airlines Co., US Airways Group, Inc. and UAL
Corporation.
“Daily
Closing Stock Price” is defined as the stock price at the close of trading (4:00
PM EST) of the National Exchange on which the stock is traded.
“Measurement
Period” is defined as the three-year period beginning January 1, 2008 and ending
December 31, 2010.
“National
Exchange” is defined as the New York Stock Exchange (NYSE), the National
Association of Securities Dealers Automated Quotations (NASDAQ), or the American
Stock Exchange (AMEX).
“Total
Shareholder Return” or “TSR” is defined as the rate of return reflecting stock
price appreciation plus reinvestment of dividends over the Measurement
Period. The average Daily Closing Stock Price (adjusted for splits
and dividends) for the three months prior to the beginning and ending points of
the Measurement Period will be used to smooth out market
fluctuations.
Accumulation of
Shares
Any
distribution under the Plan will be determined by (i) the Corporation’s TSR rank
within the Comparator Group and (ii) the terms and conditions of the award
agreement (the “Agreement”) between the Corporation and the
employee. The distribution percentage of shares pursuant to the TSR
metric and based on rank is specified below. In the event that a
carrier (or carriers) in the Comparator Group ceases to trade on a National
Exchange at any point in the Measurement Period, the following distribution
percentage of shares originally awarded, based on rank and the number of
remaining carriers within the Comparator Group, will be used
accordingly:
|
Percent
of Original Award (Based on Rank)
|
||||||||||
|
Number
of Carriers in Comparator Group
|
Rank
|
|||||||||
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
|
|
10
|
175%
|
165%
|
150%
|
125%
|
100%
|
100%
|
75%
|
50%
|
25%
|
0%
|
|
9
|
175%
|
165%
|
150%
|
125%
|
100%
|
100%
|
75%
|
50%
|
0%
|
|
|
8
|
175%
|
165%
|
150%
|
125%
|
100%
|
100%
|
75%
|
50%
|
||
|
7
|
175%
|
165%
|
150%
|
125%
|
100%
|
100%
|
75%
|
|||
|
6
|
175%
|
165%
|
150%
|
125%
|
100%
|
100%
|
||||
|
5
|
175%
|
165%
|
150%
|
125%
|
100%
|
|||||
|
4
|
175%
|
165%
|
150%
|
125%
|
||||||
|
3
|
175%
|
165%
|
150%
|
|||||||
Administration
The
Committee shall have authority to administer and interpret the Plan and any
Agreements thereunder, establish, amend and rescind administrative rules,
approve eligible participants, and take any other action necessary for the
proper and efficient operation of the Plan and any Agreements
thereunder. The TSR metric will be determined based on an audit of
AMR’s TSR rank by the General Auditor of American Airlines, Inc. A
summary of awards under the Plan shall be provided to the Board at its first
regular meeting following determination of any such awards. The
awards will be paid on or about April 20, 2011, or such date in 2011 that the
award is approved for distribution by the Committee, but in no event later than
March 15, 2012.
The
distribution of any shares under this Plan and any Agreements thereunder is
subject to the Corporation having sufficient shares of stock in a stock plan to
make such a distribution. In the event the Corporation does not have sufficient
shares of stock in such a stock plan for the distribution contemplated by this
Plan, the Committee will have the authority and discretion to make substitutions
for such shares, all to the effect that the employee will receive cash or other
marketable property of a value equivalent to what the employee would have
received in a stock distribution. Notwithstanding anything to the
contrary contained in this Plan or any Agreement hereunder, (i) any obligation
of the Corporation to pay or distribute any shares under this Plan and any
Agreement hereunder is subject to and conditioned upon the Corporation having
sufficient stock in the Corporation’s 1998 Long Term Incentive Plan, as amended
(the “LTIP”) or another shareholder-approved equity compensation plan to satisfy
all payments or distributions contemplated by the LTIP, and (ii) any obligation
of the Corporation to pay or distribute cash or any other property under this
Plan or any Agreements hereunder is subject to and conditioned upon the
Corporation having the right to do so without violating the terms of any
covenant or agreement of the Corporation or any of its
Subsidiaries.
General
Neither
this Plan nor any action taken hereunder shall be construed as giving any
employee or participant the right to be retained in the employ of the
Corporation or any Subsidiary of the Corporation or to receive any proprietary
interest in the Corporation.
Nothing
in the Plan shall be deemed to give any employee any right, contractually or
otherwise, to participate in the Plan or in any benefits hereunder, other than
the right to receive an award as may have been expressly awarded by the
Committee subject to the terms and conditions of the Agreement between the
Corporation and the employee and the Plan. Until an employee receives
payment of cash and/or shares subject to his or her award, title to and
beneficial ownership of all benefits described in the Plan and any Agreement
thereunder shall at all times remain with the Corporation.
In the
event of any act of God, war, natural disaster, aircraft grounding, revocation
of operating certificate, terrorism, strike, lockout, labor dispute, work
stoppage, fire, epidemic or quarantine restriction, act of government, critical
materials shortage, or any other act beyond the control of the Corporation,
whether similar or dissimilar (each a “Force Majeure Event”), which Force
Majeure Event affects the Corporation or its Subsidiaries or its Affiliates, the
Committee, in its sole discretion, may (i) terminate or (ii) suspend, delay,
defer (for such period of time as the Committee may deem necessary), or
substitute any awards due currently or in the future under the Plan, including,
but not limited to, any awards that have accrued to the benefit of participants
but have not yet been paid, in any case to the extent permitted under Treasury
Regulation 1.409A-3(d) or successor guidance thereto.
In
consideration of the employee’s privilege to participate in the Plan, the
employee agrees: (i) not to disclose any trade secrets of, or other confidential
or restricted information of the Corporation or any of its Subsidiaries to any
unauthorized party; (ii) not to make any unauthorized use of such trade secrets
or confidential or restricted information during or after his or her employment
with any Subsidiary of the Corporation; and (iii) not to solicit any then
current employees of any Subsidiary of the Corporation to join the employee at
his or her new place of employment after such employment has
terminated. The failure by the employee to abide by the foregoing
obligations shall result in his or her award being forfeited in its
entirety.
The
Committee may amend, suspend, or terminate the Plan at any
time.
|
Grant
of
|
||
|
2008/2010
Performance Shares
|
||
|
Number
of
|
||
|
Performance
|
||
|
Shares
|
||
|
Officer
Name
|
Granted
|
|
|
X.X.
Xxxxx
|
230,000
|
|
|
X.X.
Xxxxxx
|
108,000
|
|
|
X.X.
Xxxxxx
|
108,000
|
|
|
X.X.
Xxxxxx
|
108,000
|
|
|
X.X.
Xxxxxxx
|
61,500
|
|
