Reference no: EM133579395

Question: In 2003, American Airlines' CEO Don Carty used the threat of bankruptcy to negotiate $1.8 billion in wage and other concessions from three employee unions. Bankruptcy would threaten employee pension plans. Carty argued for "shared sacrifice" after the airline had experienced years of billions in losses. The unions conceded to the demand. Shortly afterward, the press reported millions in retention bonuses of 200% of salary that management had approved for top executives concurrently with the union wage concessions, and an earlier retirement plan for 45 top executives that was not "subject to the claims of the creditors of the corporation in a bankruptcy." Presumably, the ben-efits were necessary to retain the executive team during its financial crisis, but Carty did not reveal that during the negotiation with the unions. The unions challenged Carty's ethics, demanded his resignation, and threatened to abrogate the ratified agreements. The retention bonuses were canceled but not the supplemental pension plan. Carty resigned and received $8.2 million after tax per the executive retirement plan. What is the ethical problem with threatening the employee pension plans? 2. Is there an ethical problem with withholding information during negotiation? 3. What is the ethical problem with arguing for "shared