When Tom Horton leaves the merged American Airlines Group in a little over a year, he will leave with just shy of $20 million in compensation.  Half of that will be cash, half will be in stock.  Between now and then, Horton will continue to serve as CEO of American Airlines until the merger deal closes in about 6 months or so.  His duties will include preparing the company for integration and providing leadership on merger activities as well as being a careful conservator of the business itself.

After the merger deal closes, Doug Parker will take on those responsibilities for the combined airlines will operate as American Airlines Group.  Horton will continue on as non-executive chairman of the board for American Airlines Group and serve in that role until the first annual shareholder meeting after that (expected to be May 2014.)

Horton has served as Chairman and CEO of AMR for just over a year to date.  He has arguably done a very good job on the cost restructuring of AMR during bankruptcy.  He has basically served best as the man he is:  an excellent CFO.

A $20 million kiss goodbye is too much.  The rewards here are inconsistent with length of term and inconsistent with his role in the merger.  I strongly suspect this merger took as long as it did because the AMR board has been pushing hard to compensation like this for Horton and others.

This deal is also a bad example to be set for unions who just got beat up very badly in the bankruptcy process.  It’s a bad example for all employees and it will be very hard for them to swallow this, I think.  Sorry but when a company has entered into bankruptcy and you had a role in that direction (and Horton did have a role in it), you shouldn’t be rewarded this way for brutally abusing both creditors and employees to reposition the company.  Bankruptcy means you are unable to pay your debts and need to reorganize yourself to do so.  Let’s not forget that.

High compensation should come after successful performance of the company.  That period of performance should be between 3 and 5 years after the merger.  I think this compensation will badly hurt feelings among the unions and potentially put Doug Parker in a very sticky place on his first day as CEO of the new company.

And, frankly, I think there is too much credit taking and too much “setting the record” straight going on with Horton.  Methinks he doth protest too much.  And I think he doesn’t acknowledge his role in what happened in the first place.  See this Dallas Morning News Story.  I find myself asking when does someone in AMR leadership take responsibility for what has happened with employees and the company.

I also think it poor sport to publicly accuse your replacement of poor behavior on the very day your endorse his abilities.

Filed under: Airline News by ajax