US AIRWAYS Struggling company defends CEO package

Stock options raise the value of the CEO's compensation.
ARLINGTON, Va. (AP) -- At a time when US Airways is seeking another round of pay concessions from its workers, the airline's board has awarded chief executive David Siegel a compensation package with a potential value of nearly $11 million.
The airline says the total figure from the company's annual proxy statement is misleading because it inflates the value of stock awards granted to Siegel and other top executives.
Union leaders called the pay package hypocritical.
According to US Airways' proxy statement filed Friday, Siegel received a salary of $600,000 and no bonus in 2003, plus other cash compensation of $98,890. He was also given 1.13 million shares of US Airways stock, valued at $8.3 million under Securities and Exchange Commission accounting rules.
Stock option
He also received an option on 669,600 shares of stock, with a strike price of $7.42 a share, valued at $1.9 million, assuming those shares increase in value 5 percent a year through 2010. Because the stock trades at less than the strike price, they now have no value.
The total compensation package, including the potential value of the options, is $10,906,010.
Airline spokesman David Castelveter said the value of the 1.13 million shares given to Siegel is misleading. Unlike most stock grants, which are redeemable immediately, Siegel cannot cash in his shares until at least 2005, Castelveter said. And the $8.3 million value is based on the stock's value of $7.34 a share on the date they were granted. US Airways, the nation's seventh-largest airline, now trades at $4 a share.
Entitled to more
Castelveter also said that Siegel's salary is less than the $750,000 a year to which he is entitled under his contract.
The company did not file a proxy statement in 2003, when it was in Chapter 11 bankruptcy protection, meaning an exact comparison of Siegel's 2003 pay to his 2002 compensation package is not possible. His compensation excluding stock options in 2002 was $1.45 million.
US Airways, which received annual pay concessions of $1 billion a year from its unions while it was in bankruptcy in 2002 and 2003, is asking employees for additional concessions to avoid a second bankruptcy filing.