Judge Denies $20 Million Severance Package for AA Chief

CEO of AMR Thomas Horton
CEO of AMR Thomas Horton

In the wake of the March 27th approval of the merger of AMR with US Airways, the same judge dismissed a proposed severance package of $19.9 million for AMR Chief Executive Officer Thomas Horton.

Judge Sean Lane of the US Bankruptcy court in Manhattan released his decision last Thursday to disallow the large severance package after approval of last month’s $11 billion merger between American Airline’s parent company and US Airways, explaining that the payoff was against federal bankruptcy law.

Lane made the suggestion that Horton’s severance pay be better addressed during the discussion of AMR’s reorganization plan. This plan has not yet been submitted, and will need the approval of creditors.

Tracy Hope Davis, trustee of the US Department of Justice and monitor of the bankruptcy proceedings was equally against Horton’s large payout.

“It’s American Airlines’ current intention to address Mr. Horton’s compensation arrangement in the plan of reorganization,” said Mike Trevino, a spokesman for American.

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]businessdistrict.com