EX-99 5 ar331ex993.txt AMERICAN AIRLINES EXHIBIT 99.3 EXHIBIT 99.3 2003 - 2005 PERFORMANCE SHARE AGREEMENT AS AMENDED AND RESTATED AS OF MARCH 29, 2006 This performance share agreement ("Agreement") is amended and restated as of March 29, 2006, by and between AMR Corporation, a Delaware corporation (the "Corporation"), and an officer or key employee of one of the Corporation's Subsidiaries (the "Employee" or the "Recipient") as identified in the e-mail or mail notification sent to the Employee on April _, 2006 (the "Notification"). WHEREAS, pursuant to the 2003 - 2005 Performance Share Plan for Officers and Key Employees, as amended and restated as of March 29, 2006 (the "Plan") and 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 (the "Award" as set forth in the Notification) 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 2003 - 2005 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 Recipient is hereby granted an Award as of the "Grant Date" set forth in the Notification. The Award will vest, if at all, in accordance with Section 2 of this Agreement. On the date the Award vests (if at all), Recipient will receive a combination of cash and the Corporation's Common Stock. The Committee will determine the amount of the Award to be paid in cash (the "Cash Award") and the amount of the Award to be settled in shares of the Corporation's Common Stock (the "Stock Distribution"). The Cash Award will be paid on April 28, 2006 (such Cash Award will be made pursuant to the Annual Incentive Plan). The Stock Distribution will occur on April 20, 2006 (such Stock Distribution will be made from and pursuant to the 2003 Employee Stock Incentive Plan, the "ESIP"). 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 19, 2006 and (b) the number of shares of Common Stock comprising the Award. 2. Vesting. (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 Recipient's employment with one of the Corporation's Subsidiaries is terminated prior to the end of the three year measurement period set forth in Schedule A (the "Measurement Period") due to the Recipient's death, Disability (as defined in section 409A(a)(2)(C) of the Internal Revenue Code of 1986, as amended, (the "Code")), 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, 2003 through the month of Early Termination, inclusive. The pro-rata basis will be paid to the Recipient at the same time as Cash Awards and Stock Distributions are made to then current employees who have Awards under the Plan, subject to Section 2(f) of this Agreement. (c) In the event Recipient's employment with one of the Corporation's Subsidiaries is terminated for Cause, or if the Recipient terminates his/her employment with such Subsidiary, each occurring prior to April 20, 2006, the Award will be forfeited in its entirety. (d) If prior to April 20, 2006, 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 will be forfeited in its entirety. (e) [Intentionally omitted] (f) Notwithstanding the provisions of Section 2(b), if the Employee is a person subject to section 409A(a)(2)(B)(i) of the Code, any payment on account of Retirement or termination not for Cause of the Employee will be delayed until the sixth month anniversary of the date of separation from employment due to Retirement or termination not for Cause. 3. Transfer Restrictions. This Award is non-transferable otherwise than by will or by the laws of descent and distribution, and may not otherwise be assigned, pledged or hypothecated and will 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, at the discretion of the Committee. 4. Miscellaneous. This Agreement (a) will be binding upon and inure to the benefit of any successor of the Corporation, (b) will 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 Recipient. No contract or right of employment will be implied by this Agreement. 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. The failure by the Employee to abide by the foregoing obligations will result in the Award being forfeited in its entirety. The Employee will not have the right to defer any of the Cash Payment or the Stock Distribution. Except as provided in this Agreement, the Committee and Corporation will not accelerate the Cash Payment 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. 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 may be made by the Board of Directors to the Award. 7. Incorporation of ESIP Provisions. Capitalized terms not otherwise defined herein (inclusive of Schedule A) will have the meanings set forth for such terms in the ESIP. 8. American Jobs Creation Act. Amendments to this Agreement may be made by the Corporation, without the Employee's consent, in order to ensure compliance with the American Jobs Creation Act of 2004. 9. Prior 2003/2005 Performance Unit Agreement In consideration of this amended and restated Agreement, the Employee irrevocably agrees that any prior award granted to the Employee under the 2003/2005 Performance Unit Plan, as hereby amended and restated, is hereby forfeited in its entirety and will hereafter be of no further effect and such prior award is replaced in its entirety with the Award granted under this Agreement. IN WITNESS HEREOF, the Recipient and the Corporation have executed this Performance Share Agreement as of the day, month and year set forth above. RECIPIENT AMR CORPORATION _____________________________ _____________________ Charles D. MarLett Corporate Secretary Daniel Garton - 77,000 shares Gary Kennedy - 63,000 shares Charles MarLett - 33,250 shares 2003 - 2005 PERFORMANCE SHARE PLAN FOR OFFICERS AND KEY EMPLOYEES, AS AMENDED AND RESTATED AS OF MARCH 29, 2006 Purpose The purpose of the 2003 - 2005 AMR Corporation Performance Share 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. The Plan is adopted under the 2003 Employee Stock Incentive Plan (the "ESIP"). 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 (the "Board"). "Comparator Group" is defined as the six major U.S. based carriers including AMR Corporation, Continental Airlines, Inc., Delta Air Lines, Inc., Northwest Airlines Corp., Southwest Airlines Co., and UAL Corporation. "Measurement Period" is defined as the three year period beginning January 1, 2003, and ending December 31, 2005. "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. "National Exchange" is defined as one of the New York Stock Exchange (NYSE), the National Association of Stock Dealers and Quotes (NASDAQ), or the American Stock Exchange (AMEX). Accumulation of Award 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 between the Corporation and the employee. The distribution percentage of a target award, based on rank, is specified below: Granted Target Award - Percent of Target Based on Rank Rank 6 5 4 3 2 1 Payout % 0% 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 a target award, based on rank and the number of remaining comparators, will be used accordingly. 5 Comparators Granted Target Award - Percent of Target Based on Rank Rank 5 4 3 2 1 Payout % 50% 75% 100% 135% 175% 4 Comparators Granted Target Award - Percent of Target Based on Rank Rank 4 3 2 1 Payout % 75% 100% 135% 175% 3 Comparators Granted Target Award - Percent of Target Based on Rank Rank 3 2 1 Payout % 50% 135% 175% Administration The Committee will 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 distribution percentage of a target award, if any, will be determined based on an audit of AMR's TSR rank by the General Auditor of American Airlines, Inc. ("American"). A summary of awards under the Plan will be provided to the Board at the first regular meeting following determination of the awards. Awards, if any, will be distributed in cash and stock. The Committee will determine the precise allocation between cash and stock on April 19, 2006. The Cash Payment will be made on April 28, 2006, and any such payment will be based upon the Fair Market Value of the Corporation's Common Stock on April 19, 2006, or such date the award is approved for payment by the Committee. The Stock Distribution under this Plan will be distributed on April 20, 2006, or on the business day that immediately follows the date on which the Committee approves the distribution of an award. General Neither this Plan nor any action taken hereunder will be construed as giving any employee or participant the right to be retained in the employ of American or an Affiliate. Nothing in the Plan will 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 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 Proposed Treasury Regulation 1.409A-3(d) and/or 1.409A-3(e), 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/restricted information of, 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 its Affiliates to join the employee at his or her new place of employment after his or her employment with American or its Affiliates is terminated. The failure by the employee to abide by the foregoing obligations will result in the award being forfeited in its entirety. The Committee may amend, suspend, or terminate the Plan at any time.