Airline execs reap millions after merger

Doug Parker (right), chief executive officer of the newly formed American Airlines Group Inc., with Tom Horton, outgoing chief executive officer of AMR Corp.
Doug Parker (right), chief executive officer of the newly formed American Airlines Group Inc., with Tom Horton, outgoing chief executive officer of AMR Corp. (Bloomberg)
Posted: December 14, 2013

Top executives and investors do well in megamergers, and the American Airlines-US Airways Group merger that closed Monday offers more proof.

Tom Horton, the outgoing chief executive of AMR Corp., American's former parent company, will receive nearly $17 million in cash and stock when he leaves the company in mid-2014, plus a lifetime of free flights on American for himself, his wife, and "eligible dependents," and an office and support staff for two years.

American's new CEO, Doug Parker, will receive 626,637 shares of stock worth $15.9 million, based on Thursday's closing price of $25.45 a share.

His top lieutenant, president Scott Kirby, will receive 447,598 shares worth $11.4 million, while chief operating officer Robert Isom will get 313,318 shares valued at $7.9 million, according to a company filing with the Securities and Exchange Commission.

Chief financial officer Derek Kerr, executive vice president of people and communications Elise Eberwein, and executive vice president of corporate affairs Stephen Johnson were each granted 268,559 shares, worth $6.8 million, by American's board of directors Monday, the day the merger closed.

The shares, called "restricted stock units," can be redeemed if the officers remain at American until the end of 2015 and if the company meets key merger integration milestones, including a single operating certificate and $1 billion in cost and merger revenue savings, the filing said.

In a message to employees, Parker said that the board would set his compensation in January and that he would request that his total pay be "at least 15 percent below" his peers at Delta and United.

"I should be held accountable for American's performance and my pay should reflect that accountability," Parker said. "I will ask that my target compensation be 80 to 90 percent performance based - pay that could be worthless if we don't perform."

When US Airways, Philadelphia's dominant airline, and American fully merge the two airlines' reservations systems, aircraft fleet, frequent flier programs, and workforces - which could take 18 to 24 months - the new American, based in Fort Worth, Texas, will be the world's largest airline by passenger traffic.

According to the SEC filing, Horton will receive $11,921,922 in cash, plus a known bonus of $795,840 that could reach a maximum $1,273,358. He will receive 170,772 shares of American stock worth $4.3 million based on Thursday's closing price.

"Irrespective of how transparent I am about my compensation," Parker said in a message to 100,000 employees of the new American, "my compensation is still a significant expense to our company. With that comes high expectations, and with those expectations comes responsibility.

"The new leadership team and I understand and accept that responsibility - to our shareholders, to our customers, and to each one of you."


lloyd@phillynews.com

215-854-2831

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