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Acpa's Response To Arbitrator's Award


FA@AC

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The only thing negotiations are about is getting the best deal....period.

Anything else is pure BS....

You shouldn't care if Osama Bin Ladin was the MEC chair when it was negotiated, or Sadam Hussain was the Negots Chair.....

The fact is that ACPA was hijacked by a very small, very vocal minority. This group lacks street smarts, negot skills or just plain common sense. The ACPA forum is a cess pool that has about 50-80 pilots who post the vast majority of the "opinions" on the forum. Most of the opinions are ill-informed or just plain ignorant. Hearing and reading about the junior pilots ranting about BW and the Negots committee 1 is laughable. They probably don't even know what was in TA1.

When people say they would still vote down TA1 (having seen the FOS agreement) it tells me that this isn't about what's right, it's about who's right.....

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A couple of things wrong with the myth of Lee Iacocca:

quote

As for that $1 salary, Iacocca earned $868,000 in 1980, placing him 100th on Forbes' annual Best Paid CEOs list. His 1986 total compensation of $20.5 million--on the back of a boatload of options--placed him at No. 1.

unquote

He may have received only $1 in salary to start, but he tied his future to the gain in the value of Chrysler stock of which he was awarded millions of options.

Exactly my point. He did well because the company did well, and one of the big reasons the company did well was that he provided the leadership that showed they were all in it together. How can a true leader take the the bonuses that I understand CR gets and then ask the other employees to bite the bullet?

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Well the point about Iacocca is that he got a lot more than the $1 and the PR covered up the reality. It is estimated that he received a lot of his personal bills such as medical, housing, transportation, schools all paid directly by Chrysler and then he received stock options and stock grants each year.

Iacocca did not suffer too badly while at the same time triming the workforce by lay-offs and firings whilst bringing in his own team of people from Chrysler.

It is just to point out that the $1 per year is just PR.

Also to maybe point out that about the time that he was cashing his stock the company was heading for bankruptcy again and as soon as he left he engineered the take-over by Daimler, while getting paid as a consultant to Daimler.

Maybe Iacocca just had a better PR department than CR.

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It turns out I might have picked a bad example. :) However, the point remains the same. Here is an article on executive compensation.

http://www.cbc.ca/news/canada/story/2012/06/04/air-canada-shareholders.html?cmp=rss

In 2011 CR received a 4 million dollar salary and in addition to salary this year he will receive a 5 million dollar retention bonus. In 2011 executive salaries rose by 18 to a high of 47%. And by the way, the company lost 92 cents a share.

I am not blaming management for all the problems with the airline but I am saying that when things are tough the leadership of a company should be sharing the pain with the hoi polloi. It is my firm belief that if that doesn't happen, as in the case at AC, it is a failure in leadership.

Having said that though, it is still in the best interest of the company to work with the leadership that exists even when it isn't perfect. CR and executives still hold positions of responsibility in the company and to make it about us against them is in nobody's best interest. There is lots of blame to go around for the state the company is in.

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It turns out I might have picked a bad example. :) However, the point remains the same. Here is an article on executive compensation.

http://www.cbc.ca/ne...rs.html?cmp=rss

In 2011 CR received a 4 million dollar salary and in addition to salary this year he will receive a 5 million dollar retention bonus. In 2011 executive salaries rose by 18 to a high of 47%. And by the way, the company lost 92 cents a share.

I am not blaming management for all the problems with the airline but I am saying that when things are tough the leadership of a company should be sharing the pain with the hoi polloi. It is my firm belief that if that doesn't happen, as in the case at AC, it is a failure in leadership.

Having said that though, it is still in the best interest of the company to work with the leadership that exists even when it isn't perfect. CR and executives still hold positions of responsibility in the company and to make it about us against them is in nobody's best interest. There is lots of blame to go around for the state the company is in.

I don't think it's a bad example, GDR. I remember Clive Beddoe took a $1 salary after WestJet posted its first loss (2005?). He still made a few hundred thousand in stock options and whatnot but its the perception that counted. I think that's what you're getting at...

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http://www.cbc.ca/ne...rs.html?cmp=rss

In 2011 CR received a 4 million dollar salary

Never quote the CBC if you want facts. CR's 'salary' in 2011 was $800,000 the rest was bonus and stock options.

from the CBC article:

Base salaries remained mostly steady but each executive saw large gains in share and options-based awards while non-equity incentives fell.

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Never quote the CBC if you want facts. CR's 'salary' in 2011 was $800,000 the rest was bonus and stock options.

from the CBC article:

Base salaries remained mostly steady but each executive saw large gains in share and options-based awards while non-equity incentives fell.

Option based awards eh. As we can see from the chart below the stock was at about 4.00 at the beginning of 2011 and declined steadily over the year to 1.00 and still CR is able to supplement his 800,000 salary with 3.2 million in share and option-based awards.

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi

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There may be some misunderstanding as to the manner of calculation of executive compensation. As per the Air Canada proxy circular for 2012, the CEO's compensation has three components:

1. base salary

2. guaranteed portion of Annual Incentive Plan

3. quarterly "milestone" (retention bonus) payment due under original employment agreement.

In 2011, the total of salary and AIP was $1,725,000. The milestone payment was $2,274,027.

To my mind, the substantive issue is why payments were made under the Annual Incentive Plan which is intended to reward performance. Payment under the plan is premised upon achievement of the EBITDAR target. If the target is achieved, then executives including the CEO are to receive a percentage of their annual salary as a "bonus". For the CEO, this bonus is equal to 100% of his base salary.

The Plan specifically states that NO bonus is payable unless the results are within 90% of target. Of course (surprise!!)---that is a "discretionary" restriction. In 2011, Air Canada achieved 90% of the targeted EBITDAR. Upon the recommendation of the CEO, the Board decided to pay the performance bonus. If the company had achieved 95% of the target, the bonus would have been 50%----a significant "penalty" for missing the target. Notwithstanding, it appears that the bonus was GREATER than 50%!! I suggest that is a reward for failure!!

Remember the OTP bonus to employees? For equivalency to the manner of calculating executive compensation, if you got $100 for 90% OTP, you should have received $150. for 80% OTP!

But how foolish of me----expecting some form of rational consistency.

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Perhaps Dagger can enlighten us re "Share Options" but are they worthless if the stock does not appreciate in value?

Options usually have an exercise date, a termination date and a strike price - the strike price is what the individual pays to buy one share of stock. For example, an option might have a strike price of $1, the individual therefore pays $1 to buy 1 share of stock, regardless of what the stock is trading at. If the stock is trading at $1.50, then the individual has a paper profit of $0.50 upon using one option to acquire one unit of stock. If the stock is trading at less than the strike price, the individual sits on the options until they exercise or expire. Unlike warrants given to all shareholders, there is no market I am aware of for trading stock options. So they can expire and prove to be 100% worthless to the recipient.

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Further to Dag's explanation, options have to be granted at "fair market value". If the stock is trading at $10, a company can't issue options at $5.

For example, WJA stock options granted as of last Friday would have a strike price of $16.01 and would likely expire in 3-5 years. If someone was granted 10,000 options and the stock rises to $19.00, the owner would pocket $2.99 x 10,000 or $29,900, after paying WJA the $16.01 for the shares.

When it comes to stock options, the real money is usually made when options are acquired prior to an IPO and sold thereafter.

Page 48 of the document below provides a record of AC share prices in 2009.

http://www.aircanada.com/en/about/investor/documents/2010_AIF.pdf

:cool:

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When it comes to stock options, the real money is usually made when options are acquired prior to an IPO and sold thereafter.

Yup. Just ask the hundreds of WestJet pilots who have had TONS of options expire worthless.

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It's not like WJ exec were raking it in either over that period.....

Those that took options over the past 3-4 years are probably fairly happy campers theses days.

No guts, no glory.

:cool:

These days the options will buy a small economy car. Not a "honkin big truck" like the old days. :biggrin1:

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.... there is no market I am aware of for trading stock options. So they can expire and prove to be 100% worthless to the recipient.

?? Er ...here are some quotes for options on WJA :Scratch-Head: ( http://www.m-x.ca/ne...ymbol=WJA*#cote )

But ... I'm sure you meant to specify Employee Incentive Stock Options (or penny stocks like AC? :stirthepot:)

POLICY 4.4 INCENTIVE STOCK OPTIONS

....2.8 Terms of the Plan

The following must be included in all incentive stock option plans:

(a) a condition that the option is non-assignable and non-transferable; ....

http://www.tmx.com/e...f/Policy4-4.pdf

Here's a question, though - If an employee wants/needs to cash out a gain on options before they're exercisable, what's to prevent him from simply writing and selling new calls, 'covering' them indirectly with the Incentive Options in his employee account?

Cheers, IFG :b:

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