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April 12, 2013

Judge issues written decision on why he didn't approve AMR CEO Horton's $20 million severance package

U.S. Bankruptcy Judge Sean Lane outlined his reasons for not approving AMR chief executive Tom Horton's $20 million severance package as part of the merger agreement in a written decision filed on Thursday night.

Lane, who did not approve or reject the compensation agreement at a March 27 hearing, wrote that it was premature for the court to consider the severance package without a reorganization plan for American Airlines' parent company.

AMR has until May 29 to file its reorganization plan with the court. The Fort Worth-based carrier also argued during the hearing that Horton's severance payment would be made by the newly-merged American-US Airways and not by AMR.

"Once created, Newco can make a severance payment to Mr. Horton without any approval from this Court. Although the Court is constrained by Section 503’s requirements in considering the proposed severance now, Newco will not have such restrictions and instead will answer only to its shareholders. It is unclear what purpose would be served by the Court’s approval of the severance if Newco could later veto the severance through a vote of its board. Indeed, under this proposed amendment, there is little reason for the Court to be involved at all," Lane wrote.

In his ruling, Lane approved the merger agreement with the exception of Horton's severance package.

"The Court's written approval of the merger agreement allows us to continue progressing forward with our planned merger with US Airways," said American spokesman Mike Trevino. "It’s American Airlines' current intention to address Mr. Horton's compensation arrangement in the plan of reorganization."

-Andrea Ahles


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Nobody deserves $20 million for not working, least of all the fired CEO of a corporation who has driven his company into bankruptcy.


They should have hired me. I would have driven AA into bankruptcy for a mere $10 million.


I thought it was Arpey who drove the company into the ground....Thanks Arpey!!!!


Why should a CEO, who ran a company into the ground, laid workers off and cut salaries, be limited to only 10 times the severance pay of non-management employees?

Without this guy, American Airlines would not be a "Great American company."


I didn't have to understand how someone who led a corp in Bankruptcy could receive such a huge settlement


Like it or not, Tom Horton stood his ground and fought to keep AA on the right course through bankruptcy in order to maximize its value for shareholders and creditors. By doing so, US was not allowed to simply swoop in like a vulture and snatch AA at a bargain basement price. Guaranteed, all AAers are far better off for that alone.

Since this severance was decided upon by all parties and will be paid by the new AA, there really isn't much to discuss. Horton will be paid with or without the court's blessing.


Judge Lane, like all smart judges, avoided making a decision that the court did not have to make.

The AMR and US Airways Boards' willingness to pay Tom Horton that severance package and, generally, the ridiculous over-compensation of executives throughout the American industry has become the American way. Ownership and management are separate in publicly held and publicly supported entities (e.g. big hospitals and universities, both private and public); i.e. management spends other people's money pretty much as it sees fit, with wide leeway to transfer big cuts of the shareholder's loot to management under the guise of "compensation."

It's not a matter of whether Tom Horton has been a good or a bad manager, whether AMR profits soared or it fell into insolvency. What is important is that Tom Horton worked, wormed, weaseled or married his way into the crony capitalist class. They think they are not merely high achievers who should be rewarded with substantially greater compensation for their talent and effort. They see themselves as categorically better than the rest of us and deserving of wealth befitting their status as modern day barons. They have the power to scratch each others' backs and to make that vision reality.

We have an economy increasingly works very well for the small class of the super-rich and top executives, adequately for the professionals and upper-middle management that the top tier needs, and worse and worse for the overwhelming majority: ordinary workers.

This is nothing new. Eras like the Gilded Age have come and gone. The privileged classes think feudalism is a good thing! Hopefully things will find their way back into balance without a cataclysm. If not, then off with their heads! Just keep pushing it, you greedy S.O.B.s.


Why did the Judge say no? American said it WAS OK - after all, the executive team does know all things! Imagine the humiliation having this headline splashed on every major newspaper in the United States.


Why does a person who filed for Bankruptcy the first day of his appointment, stay with the Company less than a year, deserve a $20 mill reward? He did nothing. Pathetic that CEO's get away with this.


What a joke, those money sucker, selfish, unqualified, hypocrites so called CEO's don't deserve anything but a kick on the back. Almost all employees got pay cut, lost vocation days, sick days, pension plan etc. etc. n they still wana fill up their pocket before they kicked out, what a shame, they don't deserve a penny, just kick them out from their office, only with the under garment.


He took over after the company filed for bankruptcy, so he isn't responsible. I still agree with the denial of this amount of money. Many long-term employees were terminated under his watch.

Bill Wigley

What I dont' really understand here..A company goes Bankrupt, and yet the company he sent into Bankruptcy wants to give him $20 million?? What is it I am not comprending here


The final obsenity would take place to the remaining employees if/when this payout is made. Greed apparently has no bounds.

forlorn hope

You only have to read Mike Travino's (spokesman for for American Airline s) statement to see the arrogance from AA HDQ. He wants the shareholders and employees alike to understand that AA has every intention of pursuing Hortons' severance. Indeed, using corporate attorneys instead of making Horton responsible to seek payment using his own personal funds and attorneys.


hey andrea. tell your rednecks from texas what a skycap is. oh wait you probably don't know being from a hick state. we accept tips!!!!!!! also we in lousiana hate Texans. we love when our state troopers pull all you rednecks over. please stay out of our state! and take back your Mexicans! they are not welcome here!


Horton dd not drive the company into bankruptcy. He was hired to bring AA out of bankruptcy, which he's done by getting contracts from all the unions and helping create the largest US air carrier.

Or was he in his office eating Cheetos. I forget.

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