American Airlines' CEO contract scrapped but he will stay in role

(Reuters) - American Airlines Group Inc <AAL.O> terminated Chief Executive Douglas Parker's employment agreement on his request but said he would continue to be the chairman and CEO of the company.

Parker changed his employment status to "at will" with the termination of the agreement, the world's largest airline by traffic said on Friday.

The company said he would no longer be contractually entitled to receive a set level of compensation and benefits.

American Airlines' stock fell as much as 4.2 percent to a more than eight-month low of $34.46 in late morning trading.

"This was done at my request, because it didn't seem right to me that I should be the only person at American with an employment contract," Parker said in a letter to employees.

"The contract protected me against a number of things that I don't think I should be protected against – such as if I get fired or if unhappy shareholders gain control of the American board," he added.

Parker's compensation structure was changed in May last year. According to the revised structure, he no longer receives a base salary, an annual bonus payment or any other cash compensation, but instead receives his pay in the form of American Airlines stock grant in April each year.

Parker, who was appointed CEO of American Airlines following the merger of U.S. Airways and American Airlines in 2013, received compensation of $11.4 million in 2015, compared with $12.3 million in 2014.

Parker's 2015 compensation comprised grant of $10.3 million in American Airlines' stock, and the rest in stock dividends.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel)