TEMPE, Ariz. -- The CEO of US Airways received a 44 percent increase in compensation to $5.5 million last year.
US Airways disclosed CEO Doug Parker's compensation in a regulatory filing Monday that also served as a prospectus for the company's proposed merger with American Airlines.
The merger will make Parker the CEO of the world's biggest airline.
Parker's 2012 salary was $550,000, unchanged from previous years. He got stock and option awards valued totaling $2.7 million, a cash incentive of $2.2 million, and $47,821 in other compensation.
In a note to employees, Parker said his pay was based on compensation for CEOs of other airlines and similarly sized companies and was tied to the company's performance and stock price.
"My 2012 incentive pay was driven 100 percent by our financial performance, and 2012 was a record-setting year for US Airways," Parker wrote. The company earned record net income of $637 million last year.
That triggered a maximum incentive payment of twice Parker's salary, or $1.1 million, and he got another $1.1 million incentive pay because the company's stock price rose more sharply than the shares of other airlines over a three-year period and returned 211 percent to shareholders over the three years, he said.
The stock and option awards valued on the day they were granted at $2.7 million will only pay off "if our company is successful," Parker said.
Parker said his compensation "is a significant expense for our company" that carries significant responsibility to employees, customers and shareholders.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.