American Airlines Group Inc

The third core component of our overall compensation program is a long-term equity incentive program that focuses our executives on our performance over time and further links their interests with stockholders. Stock-based awards, coupled with performance- and time-vesting requirements, provide an appropriate incentive to our executives to remain with the Company and meet the long-term goal of significantly increasing stockholder value. Consistent with our emphasis onpay-for-performance and our commitment to long-term value creation for our stockholders, our named executive officers’ total target direct compensation is weighted heavily toward long-term equity awards.

The Compensation Committee determines the value of long-term equity awards to be granted to an executive officer based upon the executive’s level of responsibility and job classification level and the results of compensation market analyses. Historically, including for 2023, our LTIP included both performance- and time-vesting RSUs, each weighted 50% by target value.

Our 2023 LTIP for our named executive officers continued to include both performance-and time-vesting components, with the performance-vesting component weighted 50% by target value tied to attainment of total debt reduction (50% weighting) and relativepre-tax income margin improvement versus our industry peers (50% weighting), as summarized below. The performance goals align to our long-term strategy to improve profitability and reduce total debt by $15 billion by the end of 2025.

2023 Performance Metrics

The total debt reduction metric under our 2023 LTIP reflects the Company’s commitment to stockholders to improve our balance sheet and reduce leverage levels. In 2021, we announced a five-year plan to pay down $15 billion of total debt. The 2023 total debt reduction metric concludes the remaining years (three, four and five) of the five-year plan and requires a reduction of $7 billion. The relativepre-tax income margin improvement metric measures American’s competitive financial performance relative to its peers and requires the Company to continue to narrow the margin gap.

Mr. Isom’s 2023 annual target grant value is significantly below the last reported values for the CEOs at Delta (2022) and United (2023), our two closest peers. The values for the other named executive officers were set in connection with their promotions to be competitive with their peers at our competitor airlines.

In September 2023, the Compensation Committee also granted to Mr. Johnson aone-time promotion grant of 181,554 RSUs valued at $2.4 million in connection with his appointment as the Company’s Vice Chair and Chief Strategy Officer in May 2023. This grant, which vests ratably over three years, was awarded to reflect Mr. Johnson’s leadership during and the Company’s success in enduring and emerging from the pandemic and the significant increase in responsibility associated with his new position. It was intended to create incentives for Mr. Johnson to remain with the Company and to assist with the successful design, implementation and execution of its post-pandemic strategies and the implementation of the management succession plan. In connection with that award, Mr. Johnson entered into an agreement to not compete for 18 months following termination of employment for any reason and irrespective of whether Mr. Johnson would be entitled to severance. In July 2023, the Compensation Committee approved a grant of 39,905 RSUs and 65,323 RSUs to Ms. Aiyar and Mr. Raja, respectively, in connection with the expansion of their roles to Executive Vice President and Chief Legal Officer and Executive Vice President and Chief Commercial Officer, respectively. These grants include both performance-and time-vesting components, with the performance-vesting component weighted 50% by target value tied to attainment of total debt reduction (50% weighting) and relativepre-tax income margin improvement versus our industry peers (50% weighting).

See below for a full discussion of Mr. Isom’s 2023 target annual compensation andnon-recurring awards and the Compensation Committee’s process.

Equity Grant Policy

The Compensation Committee has adopted an equity grant policy to standardize the timing, practices and procedures in granting equity awards. The policy provides that equity awards, other than new hire and promotion grants, will be granted once per year at a regularly scheduled meeting of the Compensation Committee. We have made exceptions to our equity grant policy in unique circumstances, such as during the restriction period imposed by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the payroll support agreement under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (“PSP2”) and the payroll support agreement under section 7301 of the American Rescue Plan Act of 2021 (“PSP3,” and collectively, the “CARES Act and related legislation”).