American Airlines former chief executive Tom Horton will receive almost $17 million in cash and stock compensation for guiding the carrier through its two-year bankruptcy.
According to a Securities and Exchange Commission filing made on Monday afternoon, Horton will receive $12.7 million in cash payments and 170,722 shares in the new company. Based on Monday's stock closing price of $24.60, the stock is worth $4.2 million.
Horton will also receive lifetime flight and travel benefits for himself and his wife. He will also be provided an office and office support for the next two years.
Here's what the filing said:
"In recognition of Mr. Horton’s role in the financial performance of the Company during 2013, the success and completion of AMR Corporation’s financial restructuring and emergence from bankruptcy, and the completion of the Merger, as well as compensatory arrangements with other Company executives, on December 9, 2013 the Company entered into a transition agreement with Mr. Horton (the “Transition Agreement”) providing for certain payments and benefits as Mr. Horton transitions from his role as president and chief executive officer to serving solely as the chairman of the Company’s board of directors. Pursuant to the Transition Agreement, Mr. Horton will receive (i) a cash payment equal to $5,411,772, (ii) an “alignment award” that, consistent with similar awards provided to Company executives, is intended to approximate the unvested in-the-money equity value and cash long term incentive plan expectation of a similarly-situated US Airways executive, payable in cash equal to $6,510,150 and (iii) eligibility to receive a performance bonus under the Company’s 2013 Short-Term Incentive Plan in an amount targeted at $795,849, with a maximum opportunity equal to $1,273,358. In addition, the Company granted Mr. Horton a fully-vested restricted stock unit award covering 170,722 shares of the Company’s common stock, equal to the number of shares granted to US Airways Group’s CEO for 2013. Mr. Horton will also be reimbursed for his legal fees incurred in connection with the Transition Agreement and any other prior merger-related agreements. In addition, Mr. Horton and his wife will continue to receive lifetime flight and other travel privileges, as will his eligible dependents for as long as they remain eligible dependents. Mr. Horton will be provided an office and office support for a period of two years after the closing of the Merger."
Horton's compensation was a subject of much debate in the bankruptcy court. In the intial merger agreement, Horton was to receive $19.8 million in compensation with $9,937,500 in cash and $9,937,500 in shares of the new company.
However, the bankruptcy trustee filed several objections to the compensation payment saying it did not conform to the bankruptcy code. In September, U.S. bankruptcy judge Sean Lane did not approve Horton's executive compensation although he approved the merger and restructuring plan submitted by AMR to the court.