The bankruptcy court has approved the US Airways / American Airlines merger as of yesterday without approving the controversial Tom Horton Grand Compensation Plan.  This approval means that the two companies can continue progress towards putting together a complete reorganization plan that defines the merger in the exit from bankruptcy.

It’s well known that I disagree with a $20 million compensation plan for Tom Horton.  In fact, I think that Tom Horton remaining onboard as non-executive chairman is an equally bad idea.  It’s notable that despite Jeff Smisek’s strong personality, the United merger really didn’t get traction and coalesce until Glenn Tilton left the company as non-executive chairman.

Tom Horton has worked too hard to stay out front of this and claim it as his own success.  The news story he gave the Dallas Morning News as an execlusive was, in my opinion, offensive towards anyone else who had a hand in the merger and who came to the table with clean hands.

I think $20 million to lead a company for effectively 2 years (and let’s not forget that Mr. Horton has been receiving an exceptional base salary as CEO already) in which its successful exit from bankruptcy is facilitated by US Airways is way too excessive.

Pay the man $10 million, cash money, to leave upon the deal closing.  Even that is kind of blood money as it  amounts to $5 million / year cash money for 2 years of Chairman/CEO service.  That’s a great paycheck by any standard and certainly so for someone leading an enterprise that had fundamentally failled while under his CFO leadership.

Whether or not the $20 million package is legal or not doesn’t really concern me at this point.  If we’re upset about a $27 million house in London at the beginning of this bankruptcy, we should be pretty upset about a $20 million compensation package given to this CEO.

At least AA will realize a profit on the house.

Filed under: Mergers and Bankruptcy by ajax