Deferred Compensation Agreement between AMR Corporation and John W. Bachmann

Summary

This agreement between AMR Corporation and John W. Bachmann allows Mr. Bachmann to defer all his director's fees and retainers for 2005. Instead of receiving cash payments, his fees will be converted into Stock Equivalent Units under the company's Directors' Stock Equivalent Purchase Plan. When Mr. Bachmann leaves the board, these units will be converted to cash based on the average market value of AMR stock at that time. If he passes away before leaving the board, the payment will be made to Katharine Bachmann.

EX-10.7 2 d22731exv10w7.txt DEFERRED COMPENSATION AGREEMENT - JOHN W. BACHMANN Exhibit 10.7 December 8, 2004 Mr. John W. Bachmann Edward Jones 12555 Manchester Road St. Louis, MO 63131-3279 Dear John: This will confirm the following agreement relating to the deferral of your director's fees in 2005. 1. All director's fees and retainers ("Fees") payable to you in connection with your service on the boards of directors (including committees of such boards) of AMR Corporation and American Airlines, Inc. for the period January 1, 2005 through December 31, 2005, will be deferred and paid to you in accordance with this letter agreement. 2. Fees will be converted to Stock Equivalent Units in accordance with the Directors' Stock Equivalent Purchase Plan, a copy of which is attached hereto as Exhibit A (the "Plan"). 3. Within 30 days of the date when you cease to be a Director of AMR Corporation, the Stock Equivalent Units accrued in 2005 pursuant to the Plan will be converted to cash and paid to you by multiplying the number of such Stock Equivalent Units by the arithmetic mean of the high and the low of AMR stock ("fair market value") during the month when you ceased to be a Director of AMR Corporation. 4. In the event of your death, the number of Stock Equivalent Units as of your date of death will be multiplied by the fair market value of AMR stock during the calendar month immediately preceding your death, and the amount paid to Katharine Bachmann. If the foregoing is satisfactory to you, please indicate by signing one of the originals (two are enclosed) and returning it to me. Very truly yours, Charles D. MarLett Corporate Secretary Accepted and agreed: /s/ John W. Bachmann - -------------------------- John W. Bachmann 12/23/04 - ------------------------- Date