AMR Corp. defended the proposed $20 million severance package for CEO Tom Horton in a bankruptcy filing Thursday.The Fort Worth-based parent of American Airlines responded to objections to the severance made by the U.S. bankruptcy trustee. The compensation was proposed as part of AMR’s restructuring plan, which includes a merger with US Airways. Horton will become chairman of the newly merged company.In the filing, AMR argues that the compensation is “reasonable and well within industry metrics.”“It appropriately recognizes Mr. Horton’s role, not only in leading the restructuring and positioning the Debtors to realize extraordinary value for their stakeholders and employees, but also for his future services, which are critical to assuring that the integration process is as seamless and economically efficient as possible,” the filing states.This is the third time the U.S. trustee has objected to the cash and stock payment for Horton. Each time the judge has not ruled on the issue. The trustee has argued that the compensation does not conform with a portion of bankruptcy law that limits payments to executives.A hearing is scheduled for Thursday before U.S. Bankruptcy Judge Sean Lane to confirm or deny AMR’s restructuring plan. The judge may rule on the compensation issues then.In the filing, AMR also responded to a limited objection made by the US Airline Pilots Association, which represents US Airways pilots, arguing that the restructuring plan is not feasible. AMR said the union is not a creditor and has no legal standing in the bankruptcy proceeding.“Not one creditor or shareholder has raised any meritorious objection to the plan,” AMR said in its filing.In another filing, the third-party tabulation firm revealed certified vote totals in favor of the restructuring plan. In seven of the eight eligible voting classes, more than 97 percent voted in favor of the proposed merger with 99 percent of the shareholders voting to approve the deal.US Airways and AMR expect to close their merger by the end of September. The merger still needs approval from the Justice Department, which could issue its decision next week.
Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk