Bankruptcy Judge Sean Lane has denied a proposed $20 million severance payment for the CEO of American Airlines as part of the company's merger with US Airways, the Associated Press reported today. The judge ruled yesterday that the proposed payment to CEO Tom Horton exceeded limits that Congress set for bankruptcy cases by BAPCPA in 2005. The U.S. Trustee's office had objected to Horton's compensation. At a hearing last month, however, Judge Lane approved the plan for American Airlines parent AMR Corp. to merge with US Airways Group Inc. in a deal that would create the world's largest airline. The merger is being reviewed by U.S. antitrust regulators. Under the merger deal, the new company will be called American Airlines but run by US Airways CEO Doug Parker. Horton would serve as chairman for a few months and then leave with a severance of $19.875 million equally divided between cash and stock. The Trustee's office argued that severance payments to insiders such as CEOs cannot be more than 10 times the average severance pay for non-management employees.
