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  • Profit Sharing 2017

    A piece of the Profit…Sharing


    American’s new profit sharing program will pay out in March based on what we earned in 2016. Now that we’ve shared our earnings for 2016, we know what you’re thinking – how is this going to work and what will my payout be? Let’s take a look.


    As Doug shared [LINK], the total cost of profit sharing will be about $314 million dollars, including retirement contributions and payroll taxes. This results in a payout percentage for all team members of approximately 3 percent* of an individual’s eligible earnings.
    So, let’s say your eligible earnings were $40,000 – multiply $40,000 by 3 percent to get a payout of $1,200.
    *Keep in mind, this is just an estimate. Our team is working to finalize the population’s eligible earnings so that we correctly calculate individual payouts. You will see your final profit sharing amount on the special profit sharing paycheck at the time of payout in March.
    What are eligible earnings?

    Most types of pay are considered eligible earnings, but there are special cases that aren’t included. This list isn’t all inclusive, but it does break down the most common types of pay.
    ? Eligible:


    o Base pay
    o Overtime
    o Shift differentials
    o Vacation pay
    o Sick time
    o License premiums


    ? Ineligible:


    o Incentive payments (such as Triple Play and bonuses)
    o Commissions (such as AAdvantage Cash and Barclays Crew Cash)
    o Previous award payouts (such as previous profit sharing payouts – this will come into play more next year, but a heads up for now)


    The best way to estimate your eligible earnings is to look at your year-to-date (YTD) earnings on your last paycheck of 2016. Your YTD earnings will likely be higher than your eligible earnings because your YTD total could include some of the ineligible pay types. But for most people it’ll get you pretty close.


    Want more information?

    Take a look at answers to some of the most frequently asked questions.


    1. How many people are included in this profit sharing program? Which workgroups will be included? The majority of mainline employees – more than 100,000 people – as well as employees of PSA, Piedmont and Envoy will be a part of this program. Employees at level 5 and above who participate in other at-risk compensation programs will not be included.


    2. Are international employees included?
    Yes. All international employees are eligible for the profit sharing plan. Profit sharing payments may be subject to local country rules. Any differences in your country will be communicated locally before the payout.


    3. Will the profit sharing payout be the same dollar amount for everyone?
    No. The payout will be a percentage of each eligible employee’s 2016 eligible earnings. So, the payout amounts will vary based on differences in eligible earnings.


    4. What is included in the profit sharing accrual of $314 million?
    The $314 million we reported is the total cost of the program to American and includes the estimated profit sharing payments, and related employer taxes and retirement contributions.


    5. What kind of pay is included in the calculation?
    Most types of pay are included, such as base pay, lump sums paid to those at the top of their range, overtime, shift differentials, vacation pay, license premiums, and sick time. Incentive payments (such as Triple Play, bonuses, previous year’s profit sharing payouts), expense reimbursements, and commissions (such as AAdvantage Cash and Barclays Crew Cash) are not included.


    6. When is the payout?
    We anticipate the payment will be on March 10, 2017 for U.S.-based employees and with March payroll or as soon as practical for international employees. Piedmont, PSA and Envoy will communicate payment timing separately.


    7. Do I have to remain employed at the time of the profit sharing payment in 2017 to receive it? What if I left the company midway through 2016? What if I am on a leave of absence (LOA) during 2016 or when the profit sharing payment is supposed to be paid in 2017?
    Generally, to be eligible for the 2016 profit sharing program, you must have received eligible earnings while working in an eligible position during 2016 and either remain employed through December 31, 2016 or exit the company in 2016 due to disability, death or retirement (under an official company-approved retirement program). Like active employees, employees on LOA will receive their profit sharing payouts in the same manner they received their regular payroll.


    8. Will employees on furlough be eligible for the program?
    Yes, if they received eligible earnings during 2016.


    9. Are temporary employees eligible for the program?
    No, temporary employees are not eligible to participate in the program, except where required by law.


    10. What if I transferred from a position with one of the wholly owned carriers (Envoy, Piedmont, PSA) to a position with the mainline airline (or vice versa) during 2016? Will I still be eligible to participate in the profit sharing program?
    Yes, you will be eligible to participate in the programs administered by both organizations, pro-rated for the time spent in each organization.


    11. What if I was promoted from a level 4 (or below) position to a level 5 (or above) position during 2016?
    You will be eligible to participate in the profit sharing program (for all employees through level 4), and your payout will be pro-rated for the time spent in the level 4 position. You will also be eligible for participation in the at-risk compensation plans for levels 5 and above, also pro-rated for your time spent in the level 5 position.


    12. Is there a minimum threshold before the company starts paying into the profit sharing pool?
    No. It begins with the first dollar of profit.


    13. Is there a minimum payout amount?
    No, the 2016 profit sharing program does not require individual payments to meet a minimum threshold.


    14. How will I receive my profit sharing payout?
    It’ll be a separate paycheck, but you’ll receive it the same way you’re normally paid. So, either direct deposit or paper check.


    15. How will these payouts be taxed? Profit sharing payouts for domestic U.S. employees will be taxed at supplemental rates, which for most is 25 percent. If, at the end of the year, you owed less in taxes than were withheld, you may receive a refund when you file your yearly federal taxes.

    16. I am a mainline employee eligible for a 401(k) plan. Can I defer from my profit sharing payout to my 401(k)?
    Absolutely. Any special election deferral percentage on file with Fidelity as of 4:00 p.m. ET on February 24, 2017 will be applied to your profit sharing payout. So, it is important for you to review your special election deferral percentages prior to February 24, 2017 by logging on to your account at www.netbenefits.com/aa or calling (800) 354-3412.


    17. I am a mainline employee eligible for employer matching contributions in my 401(k) plan. Will the company provide a matching contribution if I elect to contribute to the 401(k) plan from my profit sharing payment?
    Yes! If you are eligible for company matching contributions, employee contributions from your profit sharing payment will be matched in accordance with the normal company match/contribution for your group.


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