AMR Corp. Chief Executive Officer Tom Horton will receive $19.9 million in compensation as the parent of American Airlines merges with US Airways Group Inc. and he steps aside.
Horton will receive the half-cash, half-stock payment when the deal closes, AMR said today in a regulatory filing. He will remain chairman until the combined airline’s first shareholder meeting and in that role will receive non-employee director compensation, according to the filing.
US Airways CEO Doug Parker, 51, will run the new airline as AMR leaves bankruptcy reorganization and merges with Tempe, Arizona-based US Airways. Horton, 51, became CEO in November 2011 after Fort Worth, Texas-based AMR filed for Chapter 11 protection.
Horton’s compensation was evaluated by both airlines’ boards and advisers to the unsecured creditors committee in AMR’s bankruptcy, said Jack Butler, an attorney for the creditors. It was approved by the AMR board.
Payments to executives in previous airline mergers were part of the consideration, as well as Horton’s tenure as American CEO and his past positions there, and the expected recoveries in the bankruptcy, he said.
“This is a highly successful restructuring that has resulted in what we believe will be a transaction that maximizes recoveries for unsecured creditors and other stakeholders,” Butler said.
AMR’s board agreed that Horton’s payment “is reasonable and appropriate,” the company said in the filing.
The merger should close in the third quarter, according to the airlines. AMR will seek bankruptcy court approval of the deal at a March hearing, a company lawyer, Stephen Karotkin, said today at a hearing in Manhattan.
AMR’s $460 million of 6.25 percent convertible notes due in October 2014 rose 4.75 cents to 105 cents on the dollar at 4:42 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt has risen more than fivefold since AMR’s Chapter 11 filing.
The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).