The U.S. Trustee Tracy Hope Davis has objected to American Airlines CEO Tom Horton's $19.8 million severance payment, arguing that the company has not explained why such a large sum is permissible under federal bankruptcy rules, the Fort Worth Star-Telegram reported yesterday. Horton's compensation is addressed as part of the company's merger agreement with US Airways, which calls for Horton to become chairman of the combined company until its first shareholders meeting, expected in mid-2014. US Airways CEO Doug Parker will be chief executive of the combined carrier. Bankruptcy Judge Sean Lane is scheduled to rule on the merger and Horton's severance package at a March 27 hearing. In the filing made on Friday, Davis said that "a severance payment of close to $20 million defeats Congress' intent" when it put restrictions on such compensation. Those rules, Davis argues, limit payments to current employees to not more than 10 times the average of similar payments to nonmanagement employees, except in special circumstances.
