EXHIBIT 10.81
2004 - 2006
PERFORMANCE UNIT AGREEMENT
This performance unit agreement ("Agreement") is made as of this date,
JULY 26, 2004, by and between AMR Corporation, a Delaware corporation (the
"Corporation"), and FNAME LNAME (the "Employee"), employee number 000000.
WHEREAS, pursuant to the Performance Unit Program (the "Program") adopted
by the Board of Directors of the Corporation (the "Board"), the Compensation
Committee of the Board has determined to make a Program grant to the Employee of
performance units (subject to the terms of the 2004/2006 Performance Unit Plan
for Officers and Key Employees (the "2004 Unit Plan") and this Agreement), as an
inducement for the Employee to remain an employee of the Corporation (or a
Subsidiary or Affiliate thereof), and to retain and motivate such Employee
during such employment.
This Agreement sets forth the terms and conditions attendant to the
performance units granted under the 2004 Unit Plan.
1. Grant of Award. The Employee is hereby granted as of JULY 26, 2004,
(the "Grant Date") performance units (the "Award"), subject to the terms and
conditions of this Agreement with respect to 0,000 performance units
(collectively, the "Units"). The Units covered by the Award shall vest, if at
all, in accordance with Section 2. On the date the Units vest (if at all),
Employee will receive, net of applicable withholding or applicable social
security taxes, a payment representing the product of (i) the number of vested
Units and (ii) the average of the high and low price of the Corporation's Common
Stock, $1.00 par value per share, on a date chosen by the Board, which date
shall be as soon as practicable after the end of the Measurement Period (as
defined below).
2. Vesting.
(a) The Units will vest, if at all, in accordance with Schedule A,
attached hereto and made a part of this Agreement.
(b) In the event Employee's employment with the Corporation (or a
Subsidiary or Affiliate thereof) is terminated prior to the end of the three
year measurement period set forth in Schedule A (the "Measurement Period") due
to the Employee's death, Disability, Retirement 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 the denominator is 36 and the
numerator is the number of months from January 1, 2004 through the month of
Early Termination, inclusive. This pro-rata Award will be paid to the Employee
at or around the
1
same time as payments are made to then current employees who have been granted
Units under the 2004 Unit Plan.
(c) In the event Employee's employment with the Corporation (or any
Subsidiary or Affiliate thereof) is terminated for Cause, or if the Employee
terminates his/her employment with the Corporation (or any Subsidiary or
Affiliate thereof), each occurring prior to the payment contemplated by this
Agreement, the Award shall be forfeited in its entirety.
(d) If prior to the payment contemplated by this Agreement, the Employee
becomes an employee of a Subsidiary that is not wholly owned, directly or
indirectly, by the Corporation, or if the Employee 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 or Potential Change in Control of
the Corporation, the Award shall vest in accordance with the 2003 Employee Stock
Incentive Plan, as may be amended, or its successor
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 Employee (or the
Employee's successor in interest after the Employee's death) to effect any such
disposition, or upon the levy of any such process, the Award may immediately
become null and void, at the discretion of the Board.
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. No contract or right of employment shall be implied by this Agreement.
In the event the Recipient's employment is terminated by reason of Early
or Normal Retirement and the Recipient subsequently is employed by a competitor
of the Company, the Company reserves the right, upon notice to the Recipient, to
declare the Award forfeited and of no further validity.
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/restricted information of, American Airlines, Inc. ("American") or
its Affiliates to any unauthorized party and (ii) not to make any unauthorized
use of such trade secrets or confidential or restricted information during his
or her employment with American or its Affiliates or after such employment is
terminated, and (iii) not to solicit any then current employees of American or
any other Subsidiaries of the Corporation to join the Employee at his or her new
place of employment after his or her employment with American or its Affiliates
is terminated.
2
5. 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 may be made by
the Board of Directors in the number of Units awarded.
6. Incorporation of 2003 Plan Provisions. Capitalized terms not otherwise
defined herein (inclusive of Schedule A) shall have the meanings set forth for
such terms in the Corporation's 2003 Employee Stock Incentive Plan.
IN WITNESS HEREOF, the Employee and the Corporation have executed this
Performance Unit Agreement as of the day, month and year set forth above.
EMPLOYEE AMR CORPORATION
----------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Corporate Secretary
3
SCHEDULE A
2004 - 2006 PERFORMANCE UNIT PLAN
FOR OFFICERS AND KEY EMPLOYEES
Purpose
The purpose of the 2004 - 2006 AMR Corporation Performance Unit Plan ("Plan")
for Officers and Key Employees 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 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.
"Committee" is defined as the Compensation Committee, or its successor, of the
AMR Board of Directors.
"Comparator Group" is defined as the following seven U.S. based carriers
including AMR Corporation, Continental Airlines, Inc., Delta Air Lines, Inc.,
JetBlue Airways, Northwest Airlines Corp., Southwest Airlines Co. and US Airways
Group, Inc.
"Corporate Objectives" is defined as the being the objectives established by the
Committee at the beginning of each fiscal year during the Measurement Period.
"Measurement Period" is defined as the three year period beginning January 1,
2004 and ending December 31, 2006.
"Total Shareholder Return (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.
"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.
4
"National Exchange" is defined as either the New York Stock Exchange (NYSE), the
National Association of Stock Dealers and Quotes (NASDAQ), or the American Stock
Exchange (AMEX).
Accumulation of Units
Any payment under the Plan with respect to the Units will be determined by
(i) the Corporation's TSR rank within the Comparator Group and/or (ii) the
Corporation's attainment of the Corporate Objectives during each year of the
Measurement Period and (iii) the terms and conditions of the award agreement
between the Corporation and the employee. The distribution percentage of units
pursuant to the TSR metric and based on rank, is specified below:
Granted Shares - Percent of Target Based on Rank
Rank 7 6 5 4 3 2 1
Payout % 0% 25% 50% 75% 100% 135% 175%
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 target units, based on rank and the number
of remaining comparators, will be used accordingly.
6 COMPARATORS
Granted Shares - Percent of Target Based on Rank
Rank 6 5 4 3 2 1
Payout % 0% 50% 75% 100% 135% 175%
5 COMPARATORS
Granted Units - Percent of Target Based on Rank
Rank 5 4 3 2 1
Payout % 50% 75% 100% 135% 175%
4 COMPARATORS
Granted Units - Percent of Target Based on Rank
Rank 4 3 2 1
Payout % 75% 100% 135% 175%
5
3 COMPARATORS
Granted Units - Percent of Target Based on Rank
Rank 3 2 1
Payout % 100% 135% 175%
At the end of each fiscal year during the Measurement Period, the Committee will
determine whether the Corporate Objectives have been achieved. At the end of the
Measurement Period the Committee will determine the distribution of units based
upon the TSR metric and, with respect to senior officer awards, the Corporate
Objectives. The number of units that may vest will range from 0% to 175% of the
target award.
Administration
The Committee shall have authority to administer and interpret the Plan,
establish administrative rules, approve eligible participants, and take any
other action necessary for the proper and efficient operation of the Plan. The
TSR metric 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 of Directors at the first regular meeting following
determination of the awards. The awards will be paid in cash.
Corporate Objectives will be used as a metric for determining the distribution
of units only for senior officers of the Corporation (or a Subsidiary thereof)
unless the Committee determines otherwise.
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 American
Airlines, Inc. or an Affiliate.
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 award
agreement between the Corporation and the employee.
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
6
limited to, any awards that have accrued to the benefit of participants but have
not yet been paid.
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/restricted information of, American Airlines, Inc. or its
Affiliates to any unauthorized party and, (ii) not to make any unauthorized use
of such trade secrets or confidential or restricted information during his or
her employment with American Airlines, Inc. or its Affiliates or after such
employment is terminated, and (iii) not to solicit any then current employees of
American Airlines, Inc. or any other Subsidiaries of AMR to join the employee at
his or her new place of employment after his or her employment with American
Airlines, Inc. or its Affiliates is terminated.
The Committee may amend, suspend, or terminate the Plan at any time.
7
