Former AMR Corp. and American Airlines CEO Tom Horton will get most of the controversial payout granted to him as part of the merger with US Airways — almost $17 million in cash and stock.
Horton, who finished his two-year term as CEO of AMR on Monday, is getting cash awards of $6.5 million and $5.4 million, a performance bonus of $795,849 as well as 170,722 shares of AAL stock, according to federal securities filings. That stock was worth $4.2 million based on the Tuesday morning’s trading price.
“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,” the filing with the U.S. Securities and Exchange Commission states.
A $20 million severance for Horton became controversial during American Airlines’ bankruptcy and merger process, especially because employees were seeing dramatic cuts to pension benefits and the company was shrinking its workforce.
Eventually, U.S. Bankruptcy Judge Sean Lane said he couldn’t let the severance go forward as part of the bankruptcy or merger plan. However, he said the new airline would be allowed to grant Horton whatever it wanted.
That’s what happened Monday, the day the merger closed.
Former US Airways CEO and new American Airlines Group Inc. CEO Doug Parker was granted 626,637 shares of AAL stock, worth just over $15.5 million, while President Scott Kirby was given 447,598 shares. Kirby’s share is worth $11.1 million, but both Parker and Kirby’s stock allowances require vesting during the next year.
Horton and his wife will also get lifetime flight privileges on American Airlines routes, and Horton is getting an office for two years.
He will remain chairman for a year before passing that position to Parker.
Horton was appointed CEO of AMR when the company filed for bankruptcy protection on Nov. 29, 2011.
AA merger payouts
- $17 million: Severance for outgoing CEO Tom Horton.
- $15 million: Bonus for US Airways CEO Doug Parker, who now takes charge at American.
- 4.3 percent: Raise for union employees.
- 4.8 percent: Share of American equity for Transport Workers Union members.