American Airlines will double the salary of company president Robert Isom when he takes over as CEO on March 31, but his total compensation package will be determined by how the debt-laden company recovers from the COVID-19 pandemic downturn.
American Airlines Group announced the pay adjustment Monday, a month before Isom is set to take over as CEO in a transition announced in December that was years in the making. Isom made a base salary of $687,139 in 2020, but that was only a fraction of the $6.25 million total compensation he was paid that year, including bonuses, stock options and awards. His base salary is now $1.3 million.
Fort Worth-based American also increased Isom’s “short-term incentive” potential to 200% of his salary, according to a regulatory filing.
American Airlines’ outgoing CEO Doug Parker announced in December that he was retiring from the position and transitioning into a role as chairman of the company’s board of directors, allowing the 60-year-old airline leader to step back while still having oversight of the company he built through the merger of American Airlines and U.S. Airways in 2013.
Isom’s 2020 base salary would have been higher, $753,824, if American hadn’t cut the salaries of top executives in half for three months in April, May and June of that year.
Parker took zero base salary from 2015 onward and has instead taken his entire compensation in stock awards and bonuses. Still, Parker made $10.6 million in total compensation in 2020 and $11.6 million in 2019, although those numbers are expected to be much lower for 2021 because of financial losses during the COVID-19 downturn.
American and other airlines are restricted in how much they can pay top executives due to provisions of the government aid they received as part of the three stimulus bills.
American Airlines, which lost $2 billion in 2021, has about $46 billion in debt after taking out billions in loans in 2020 to create more liquidity.
Chief financial officer Derek Kerr, another longtime colleague of Parker and Isom, also got a pay raise to $900,000 from the $603,000 he made in 2020.
American’s board, however, lowered the long-term incentive for Isom and Kerr “commensurately with the increases in base salary,” the company said in the regulatory filing.
Southwest Airlines’ new CEO Bob Jordan also got a pay raise when he took over for retiring Gary Kelly on Feb. 1. Kelly, like Parker, is moving into the chairman position.