Bankrupt airline's CEO could get $20 million
After piloting American Airlines through bankruptcy, chief executive Tom Horton would receive $19.8 million in cash and stocks as part of a merger with US Airways -- if a judge allows it.
A U.S. bankruptcy judge in New York is reviewing controversial plans by American Airlines to approve a $19.8 million severance package for CEO Tom Horton -- as part of is proposed merger with US Airways (LCC).
The trustee overseeing the bankruptcy of the airline's parent company, AMR (AAMRQ), filed an objection last week, saying the agreement doesn't conform to U.S. bankruptcy law. According to The Star Telegram, Horton -- who is expected to become chairman of the combined company -- would receive a cash and stock package once the merger is finalized.
"The Employee Arrangements are on market terms, are carefully designed to incentivize employees to remain focused on consummating the Merger,” AMR reportedly said in its filing, “and will allow the Debtors to maximize the value of the Merger for the benefit of their stakeholders.”
The judge is also expected to hear arguments about the proposed merger during Wednesday's hearing -- as well as AMR's request to extend the period for its Chapter 11 reorganization plan to the end of May.
The planned merger is reportedly worth $11 billion. And The Dallas Business Journal says the new airline will create an additional $1 billion in value above what US Airways and American were worth before American's bankruptcy.
Steve Fox, a Dallas attorney specializing in executive compensation, says American's severance plan for Horton is on par with industry standards.
"Initially, people react to the amount in a negative way because, let's face it, the company went into bankruptcy," he told the Journal. "But when you dig deeper, the package is probably not out of line in terms of what other CEOs have received in connection with their departure in a merger transaction."
And industry analysts believe that, even if the judge objects to Hornton's current deal, a new compensation plan would be approved for him once the US Airways-American merger goes through.
"Instead of walking away with $20 million, he'll walk away with $15 million," airline consultant Mike Boyd told The Star Telegram.
The merger, planned to close in September, is expected to create the world's largest air carrier, with 900 routes and about 100,000 employees.
And... "he is expected to become chairman of the combined company" !!!! He's not walking away!
This on the backs of employees who have lost substantial amounts in salaries and pensions.
This is a crime.
Failure for employees = Your FIRED! Failure for CEO's with Failing Companies and Bankruptcy = Reward....is there any wonder why America is where it is!
Tired of the CEO of your company making tens of millions while you make $10 an hour? FORM A UNION! Get the rights you deserve. Management is a union or didnt you realize that? They get health insurance, dental, and a 401K plan. They get raises when the cost of living goes up. They get bonuses. They get a pension. Thats what Unions fight to get the workers.
You know the easiest way to tell a Union is good for you the worker? Your manager says its bad for you. He doesnt want to spread the wealth or give you more because thats less money he can get in bonuses.
You have got to be kidding me
Horton is a complete moron.
He couldn't manage a slushy machine at a 7/11
One Comment is one of the BEST, I've ever read on MSN...
Excellent BROOD 550....*edited*
"A WHOLE Factory of WORKERS (500) making $40,000 a year"...!!
There's your ANSWER, to many of our problems of today...
And a BANKRUPTED Company to boot...sweet geezus.!!
In Japan several Decades ago, he would or would have to commit Hari-Kari (sp)..not get 20 mil...
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A basic income policy can actually ensure a decent standard of living for everyone.
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