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March 15, 2013

Trustee objects to Horton's severance package

The U.S. Trustee in AMR Corp.'s Chapter 11 bankruptcy case has objected to CEO Tom Horton's $19.8 million severance payment, arguing that the company hasn't explained "why the sweeping changes to their various employee compensation programs are permissible" under federal bankruptcy rules.

According to the filing, made Friday in U.S. Bankruptcy Court in New York where AMR's case is being heard, the company has stated that it doesn't have to address the payment because the newly reorganized company will make the payment, not the current AMR.

But Trustee Tracy Hope Davis said it's not who makes the payment that is the important factor, but whether the payment conforms to restrictions placed on compensation arrangements by the U.S. Bankruptcy Code.

In the filing, Davis said "severance payment of close to $20 million defeats Congress’ intent" when it put restrictions on such compensation.

Late Friday, AMR spokesman Andrew Backover issued the following statement:

“American does not believe the objection filed by the Office of United States Trustee has merit, and we believe the relief requested in our motion is appropriate and should be granted by the Bankruptcy Court.

“The employee arrangements included in the merger agreement are structured to reasonably and appropriately compensate our employees as well as to align them with their counterparts at US Airways with the goal of moving toward market levels over the next few years. The employee arrangements were deemed reasonable and appropriate by compensation consultants retained by the Unsecured Creditors’ Committee and are in line with industry precedents and the relief requested in the motion is supported by the Unsecured Creditors’ Committee and the Ad Hoc Committee of Bondholders.

“The relief requested will appropriately motivate a strong management team during the integration process to ensure the value potential of the merger is realized and the new American is a success for all of its constituents.”

Also Friday, unions representing pilots for American Airlines and US Airways filed motions in support of the merger.

-- Jim Fuquay



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I'm happy someone had the guts to point this out


"The New American"..............

Paul Medford

19-20 million to leave a company you almost helped destroy. I think a boot in the back side is overpayment.

Send them all packing with compensation comensurate to performance of the company over the years they, allegedly, ran it.



HORTON should get a boot up his a$$.


I am happy to see someone take a stand like this. Its unconsionable that after requesting and obtaining two concessionary contracts (one of which was obtained through laying off workers some of which make at most $15 an hour and has been with the company for 20-30 years)you then doll yourself out a 20 millioin dollar severace package. How do you reward someone for being part of a management team that has lost money for 10 years and has brought a company into bankruptcy? This is a prime example of why most workers no longer take pride or show loyalty to their employeers anyone. Its a one way street. I dont begrudge anyone success but fair is fair

larry hopkins

This is unbelievable-reward a CEO with 20M for helping a major world airline go into Bankruptcy! Thank God for the bankruptcy trustee for contesting this outrage!


When Tom Horton's head hits the pillow he sees dollar signs and not the many peoples lives he has devastated.

Karma is alive and well.........


C'mon people good old Tom worked really hard. It's really hard to find a guy with his skill set - you know, how to demoralize the company workforce, and then bankrupt the company.

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