Merger Approved by Judge, Horton's Parachute Rejected

[spectator]

I forgot NOTHING.

So, let's see.
Parker can decide to wait and anger the ENTIRE new AA/US workforce by making the payment after the merger for someone who is going out the door anyway?

Let me think for just a few minutes about the odds of Parker choosing to import that toxicity into the new merged company, esp. since Parker has already addressed the issue of executive compensation during the transition when making profits is absolutely critical.

 

[Rogallo]

Let me think for just a few minutes about the odds of Parker choosing to import that toxicity into the new merged company,

Will he or won't he be business as usual at AA?

Thoughts?

 

[eolesen]

They have a choice -- honor Horton's contract, or have him stick around. I'm sure he'd gladly stick around as Chairman like Tilton did.

This is the airline labor asked for. Their pound of flesh isn't free, and the board has their reasons for having him stick around beyond the closing. Both boards and the unions agreed to this.

 

[dfw gen]

Washout

 

[ContUNITEus]

I just read the article, and I must say that I am just ecstatic about this slap in Horton's face. Wish they would also impose pay cuts on DP and Co., limiting his income to less than 100,000.00 a year. I'll tell ya, that'll certainly make the new AA profitable.

 

[robbedagain]

I just read the article, and I must say that I am just ecstatic about this slap in Horton's face. Wish they would also impose pay cuts on DP and Co., limiting his income to less than 100,000.00 a year. I'll tell ya, that'll certainly make the new AA profitable.

+10000 i hear ya on that

 

[Chuck Schalk]

Hortons parachute was rejected only while in bankruptcy nothing will prevent the new company and the board of directors giving the golden parachute back and more and mark this post, it will happen!

Upper managment always gets theirs and we get it in the shorts!

Labor is docile as a whole and in the near future better wake up before we are back to working 7 days a week, no overtime, and little to no benefits. We have given back the absolute core of being in a union and being considered middle class yet we all act like everything is OK!

 

[FWAAA]

My guess is that like Michael Myers, the $20 million payoff will again come back to life later on. The unsecured creditors agreed to pay it and Parker agreed to pay it. By the terms of the bankruptcy code, a bankrupt company can't enter into a contract to pay such a large compensation package, but as others have said, nothing to stop new AA from granting him lots and lots of new stock the day after AA emerges from Ch 11.

 

[MCI transplant]

My guess is that like Michael Myers, the $20 million payoff will again come back to life later on. The unsecured creditors agreed to pay it and Parker agreed to pay it. By the terms of the bankruptcy code, a bankrupt company can't enter into a contract to pay such a large compensation package, but as others have said, nothing to stop new AA from granting him lots and lots of new stock the day after AA emerges from Ch 11.

This is true, but the question in my mind is, are they legally required to do so? -----In other words, has the B/K judge in fact voided his severance package? (Contract?) Or just modified it?

 

[FWAAA]

This is true, but the question in my mind is, are they legally required to do so? -----In other words, has the B/K judge in fact voided his severance package? (Contract?) Or just modified it?

Excellent question, and I believe that the answer is no, the new AA won't be legally required to do so. I'd guess that the contract containing his exit package has some language dealing with contingencies like "what if the bk judge disallows the $20 million?" but I haven't read it. Over the next few weeks/months we'll probably learn a lot more about it.

 

[ContUNITEus]

While I agree that in the end he'll still be able to somehow steal all that money from the employees with the help of Doug's lawyer team, I still think that this is a huge SYMBOLIC slap in Horton's face. To me what matters is sort of this public humiliation that ensued as a result of him and his team truly believing that he rightfully deserved this package, when obviously, under the law, he did not, and someone in the capacity of protecting the law pointed it out.

We'll see how it goes from here on.

 

[eolesen]

Oh, please. The guy is 50 and can easily retire without thinking twice based off what he made from the AT&T deal. Somehow, I don't think he really cares about what other people think.

The fact is that this area was untested waters with regard to the 2005 bankruptcy law changes.

Prior to now, it's been anyone's guess as to how far they could push the envelope. Now, it's a little clearer, and the next company to file will get to learn from this ruling.

 

[Bob Owens]

Excellent question, and I believe that the answer is no, the new AA won't be legally required to do so. I'd guess that the contract containing his exit package has some language dealing with contingencies like "what if the bk judge disallows the $20 million?" but I haven't read it. Over the next few weeks/months we'll probably learn a lot more about it.

Can a contract that violates the law be enforcable?
The intent of the law was clear in that they intended to make sure that executives do not see a disproportionate windfall through BK. What you are talking about is language that attempts to "evade" the law.

I know, I'm not a lawyer, you dont tell me how to fix airplanes and I should not try and interpret the law. There is one flaw to your arguement, airplanes arent designed so everybody can fix them but the law is supposed to be designed so everyone can understand and obey them.

 

[Bob Owens]

Oh, please. The guy is 50 and can easily retire without thinking twice based off what he made from the AT&T deal. Somehow, I don't think he really cares about what other people think.

The fact is that this area was untested waters with regard to the 2005 bankruptcy law changes.

Prior to now, it's been anyone's guess as to how far they could push the envelope. Now, it's a little clearer, and the next company to file will get to learn from this ruling.

Really? Well if he has more money than he will ever need then why is he still "working"? They like being in control. Its all about Ego.

 

[eolesen]

Can a contract that violates the law be enforcable?
The intent of the law was clear in that they intended to make sure that executives do not see a disproportionate windfall through BK. What you are talking about is language that attempts to "evade" the law.

Is the contract violating the intent or the letter of the law? The intent of the law was to avoid someone going into bankruptcy, emerging, and getting a windfall by staying around.

It's a little less clear that it was intended to also cover a merger or hostile takeover.

If you read the Judge's written ruling, the only violation of the law would be if he were paid by AMR.

He was never going to be paid by AMR. He will be paid by NewCo. And the judge says that the company would be free to do so, subject to approval by the new board.