American bankruptcy trustee questions $20M severance for CEO

[Traderd]

http://www.chicagotribune.com/busin...0m-severance-for-ceo-20130318,0,2869469.story

"The U.S. trustee overseeing American Airlines' bankruptcy has asked the carrier to justify its offer of $19.9 million in severance pay to Chief Executive Tom Horton, part of compensation linked to its merger with US Airways Group."

"Trustee Tracy Hope Davis said in a filing on Friday to the U.S. Bankruptcy Court in New York that American had not explained why that level of severance pay and "sweeping changes" to various employee pay programs were permissible under the bankruptcy code."

 

[PBRstreetgang]

Send the puke home with a 6 month pie of the month subscription, loaded with fecal coliform and very small basket of Imodium.

 

[bizicmo]

First off I'm guessing he has a contract that requires some sorta payout like this, good for him you get what you can get.
Secondly I feel the BOD made the biggest mistake by not making this a $40 to $50 million payout. How are they going to attact the top talent if they are not willing to make the top payouts to their executives? As we all know executives are far more valuable and effective at adding value to the company as a whole. For every dollar they decrease the regular workers payroll and then add to the executive payroll is adding value to the company while its a breakeven to total payroll. By not paying him more the company is actually decreasing the overall value of the company.

 

[PBRstreetgang]

First off I'm guessing he has a contract that requires some sorta payout like this, good for him you get what you can get.
Secondly I feel the BOD made the biggest mistake by not making this a $40 to $50 million payout. How are they going to attact the top talent if they are not willing to make the top payouts to their executives? As we all know executives are far more valuable and effective at adding value to the company as a whole. For every dollar they decrease the regular workers payroll and then add to the executive payroll is adding value to the company while its a breakeven to total payroll. By not paying him more the company is actually decreasing the overall value of the company.

It's BK, all bets are off, I hope they send him home with nothing but a pie of the month parting gift. There I no way he or any of the idiot trust that currently waste office space in the front offices of Americas Airlines deserve, based on performance any thing other than a mild case of Ebola.

 

[waveflyer]

Rewarding failure and over-rewarding position vs accomplishment is stifling this entire country.

 

[jonjuan]

Rewarding failure and over-rewarding position vs accomplishment is stifling this entire country.

Spot on. That perfectly sums up the current WH administration. Thank you, wave.

 

[doh]

This sums up the last 12 administrations at least! The current office holder is a d-bag, but the previous administrations going back to at least Nixon weren't a whole lot better...

 

[johnsonrod]

C'mon, Horton deserves a lot more cash! Destroying value and employee morale is a full-time job. Wasn't Tilton at UAL paid something like $50 million to leave? I know Horton's former boss Arpey made a lot more money trashing the airline............

 

[FoxHunter]

First off I'm guessing he has a contract that requires some sorta payout like this, good for him you get what you can get.
Secondly I feel the BOD made the biggest mistake by not making this a $40 to $50 million payout. How are they going to attact the top talent if they are not willing to make the top payouts to their executives? As we all know executives are far more valuable and effective at adding value to the company as a whole. For every dollar they decrease the regular workers payroll and then add to the executive payroll is adding value to the company while its a breakeven to total payroll. By not paying him more the company is actually decreasing the overall value of the company.

You must be kidding. Over 30 years the average CEO pay has grown 127 times as fast as the average worker. The average airline pilot pay has dropped 30-40% when adjusted for inflation.

A couple of weeks ago it was announced that the CEO of American Express pay would be $28.5 million this year. That works out to $548,076.92 a week. Sounds good but in 2007 he earned $50,126,585 or $963,792.79 a week. In the last week the news media said the CEO of Boeing will be paid $27.5 million this year or $528,846.15 a week. Must be a reward for the great job he did with the introduction of the 787. It is not only the CEOs. Ina Drew the former CIO of JP Morgan Chase earned a reported $14 million or $269,230.77 a week in 2011. She lost her job because her department lost $6 billion with bad trades.

You say they get paid what the are worth. That is pure hogwash. Executive pay is set by the BOD. The average BOD member earns $240,000 according to a news story about Warren Buffet paying Bill Gates $1800 a year to sit on his Board. Most if not all BOD members are CEOs or hold other very senior positions with other companies. Most graduated from Yale or Harvard or other well known universities. Just human nature to take care of their own. I'll scratch your back and you can scratch mine.

Imagine what pilot pay, working conditions, and benefits would be if each airline had a pilot board made up of pilots from other airlines that would set pilot pay and conditions. My guess the pay would at least double.

Why has CEO pay risen to the level it has today? I would say the incentives have changed. If you google the historic income tax rates in the USA you will find the only time rates were lower than today we're the first couple of years after income tax was introduced. Then the mid 20s until 1932. From 1932 until around 1980 the top rates were much higher. In 1960 the top rate was 91%, 1965 70%, 1969 77%, 1971-1981 70%, 1982-1986 50%, 1988-1990 28%.
In the 50s, 60s, and 70s there was little incentive for a huge payday. In 1965 any earning over $200,000 were subject to a tax of 77%. The $200,000 in 1965 is equal to $1,474,000 today.

 

[bizicmo]

You must be kidding. Over 30 years the average CEO pay has grown 127 times as fast as the average worker. The average airline pilot pay has dropped 30-40% when adjusted for inflation.

A couple of weeks ago it was announced that the CEO of American Express pay would be $28.5 million this year. That works out to $548,076.92 a week. Sounds good but in 2007 he earned $50,126,585 or $963,792.79 a week. In the last week the news media said the CEO of Boeing will be paid $27.5 million this year or $528,846.15 a week. Must be a reward for the great job he did with the introduction of the 787. It is not only the CEOs. Ina Drew the former CIO of JP Morgan Chase earned a reported $14 million or $269,230.77 a week in 2011. She lost her job because her department lost $6 billion with bad trades.

You say they get paid what the are worth. That is pure hogwash. Executive pay is set by the BOD. The average BOD member earns $240,000 according to a news story about Warren Buffet paying Bill Gates $1800 a year to sit on his Board. Most if not all BOD members are CEOs or hold other very senior positions with other companies. Most graduated from Yale or Harvard or other well known universities. Just human nature to take care of their own. I'll scratch your back and you can scratch mine.

Imagine what pilot pay, working conditions, and benefits would be if each airline had a pilot board made up of pilots from other airlines that would set pilot pay and conditions. My guess the pay would at least double.

Why has CEO pay risen to the level it has today? I would say the incentives have changed. If you google the historic income tax rates in the USA you will find the only time rates were lower than today we're the first couple of years after income tax was introduced. Then the mid 20s until 1932. From 1932 until around 1980 the top rates were much higher. In 1960 the top rate was 91%, 1965 70%, 1969 77%, 1971-1981 70%, 1982-1986 50%, 1988-1990 28%.
In the 50s, 60s, and 70s there was little incentive for a huge payday. In 1965 any earning over $200,000 were subject to a tax of 77%. The $200,000 in 1965 is equal to $1,474,000 today.

But how will they get top talent without top pay. You point out Ina drew, they should have been offering more money for that position and they could have avoided that loss. If your only offering 14 million a year for that position, that is the type of results you get. Remember these often recycled executives are the most important people in the world of business. If we don't offer the executives these large pay packages then they won't have any incentive to work. The companies would fail and soon everyone will be out of work. These are the only people in the world that can run these companies. If we risk negotiating their salaries down they might decide to not work companies will fail thus throwing the world into chaos.

 

[FoxHunter]

But how will they get top talent without top pay. You point out Ina drew, they should have been offering more money for that position and they could have avoided that loss. If your only offering 14 million a year for that position, that is the type of results you get. Remember these often recycled executives are the most important people in the world of business. If we don't offer the executives these large pay packages then they won't have any incentive to work. The companies would fail and soon everyone will be out of work. These are the only people in the world that can run these companies. If we risk negotiating their salaries down they might decide to not work companies will fail thus throwing the world into chaos.

Talent, you're kidding. I suggest you read Retirement Heist by Ellen Schultz and Who Stole The American Dream? by Hedrick Smith. Both books provide an excellent history of the last 30+ years. This month the Swiss passed a law that requires shareholder approval of executive compensation of any publicly traded company. Sounds like the USA needs the same law. Doubtful because we have the best Congress money could buy. Your talented executive have destroyed manufacturing in this country, shipped those jobs to China and other places. I wonder how World War II would have worked out if in the 20s and 30s American executives had sent manufacturing to low cost countries like Japan, Germany, and Italy. I've lived and worked in Third World countries in Asia and Africa. Guess what? The USA is headed to join the due to these "Talented Executives". They all have a very small group of very, very, wealthy that control money and political power, then they have a small middle class, and then the 47%.
American industries are filled with zero in the way of ethics, short term employees interested in short term results. Why do you think almost every US Airline has been in Chapter 11.

 

[bizicmo]

Talent, you're kidding. I suggest you read Retirement Heist by Ellen Schultz and Who Stole The American Dream? by Hedrick Smith. Both books provide an excellent history of the last 30+ years. This month the Swiss passed a law that requires shareholder approval of executive compensation of any publicly traded company. Sounds like the USA needs the same law. Doubtful because we have the best Congress money could buy. Your talented executive have destroyed manufacturing in this country, shipped those jobs to China and other places. I wonder how World War II would have worked out if in the 20s and 30s American executives had sent manufacturing to low cost countries like Japan, Germany, and Italy. I've lived and worked in Third World countries in Asia and Africa. Guess what? The USA is headed to join the due to these "Talented Executives". They all have a very small group of very, very, wealthy that control money and political power, then they have a small middle class, and then the 47%.
American industries are filled with zero in the way of ethics, short term employees interested in short term results. Why do you think almost every US Airline has been in Chapter 11.

I've read retirement heist, the only thing I got from that is join a unionized workforce. Why has every US airline been in chapter 11? They don't pay their executives enough to get the top talent.

 

[bizicmo]

With the shipping of jobs to other countries, that's capitalism. It's called capitalism for a reason, those with capital win and everyday workers lose, otherwise it would be called workerism or something.

 

[bizicmo]

And yes it takes very talented people to sell out a large group of jobs and convince the general public that everyone is better off.

 

[FoxHunter]

And yes it takes very talented people to sell out a large group of jobs and convince the general public that everyone is better off.

Yes it is sad that most CEOs and senior management come from the same mold that produced Bernie Madoff.

 

[FoxHunter]

With the shipping of jobs to other countries, that's capitalism. It's called capitalism for a reason, those with capital win and everyday workers lose, otherwise it would be called workerism or something.

Not only do the everyday workers lose. The country and the economy lose. History will tell but there is no guarantee the USA will exist 50-100 years from now.

 

[FoxHunter]

I've read retirement heist, the only thing I got from that is join a unionized workforce. Why has every US airline been in chapter 11? They don't pay their executives enough to get the top talent.

The top talent was there. That is why they walked away wealthy. You are correct that union members have a level of protection. The rest just have to live with the transfer of the value of their benefits from them to senior management. We are talking about companies like Verizon, AT&T, UPS, FedEx, DuPont, IBM, GE. According to the book Retirement Heist pension funds in the USA had a $250 Billion dollar surplus in 1999. That surplus was transferred by various methods to benefit a select few. General Electric had a $25 Billion surplus in their pension fund. They managed to change that to an under funded pension, and then freeze or eliminate the pensions.

 

[OHGOON]

First off I'm guessing he has a contract that requires some sorta payout like this, good for him you get what you can get.
Secondly I feel the BOD made the biggest mistake by not making this a $40 to $50 million payout. How are they going to attact the top talent if they are not willing to make the top payouts to their executives? As we all know executives are far more valuable and effective at adding value to the company as a whole. For every dollar they decrease the regular workers payroll and then add to the executive payroll is adding value to the company while its a breakeven to total payroll. By not paying him more the company is actually decreasing the overall value of the company.

You write for the Onion don't you?

Reducing the value of the company by not paying themselves more....Priceless!! :laugh:

maybe there is a future for you on the Daily Show...

 

[Mamma]

Bizicmo, I want to go fishing with you! You are hauling them in right and left! It's not just your bait but I admire the technique. Good work!

 

[PBRstreetgang]

I've read retirement heist, the only thing I got from that is join a unionized workforce. Why has every US airline been in chapter 11? They don't pay their executives enough to get the top talent.

You are too stupid for air, the companies went into BK to steal the pay and workrules, from its very own employees, negotiated in good faith. As well as trash contracts with other companies also negotiated in good faith. Airline management are the worst of the worst in the CEO world, the very bottom of the barrel, see J.Orenstein a convicted felon, he was just stupid enough to get caught, the rest are just slightly more crafty.

 

[tomgoodman]

Bizicmo, I want to go fishing with you! You are hauling them in right and left! It's not just your bait but I admire the technique. Good work!

Awww, I think you just splashed the water with an oar.

 

[tankerhead]

Awww, I think you just splashed the water with an oar.

Nope, they'll hit it anyway.

 

[bizicmo]

You are too stupid for air, the companies went into BK to steal the pay and workrules, from its very own employees, negotiated in good faith. As well as trash contracts with other companies also negotiated in good faith. Airline management are the worst of the worst in the CEO world, the very bottom of the barrel, see J.Orenstein a convicted felon, he was just stupid enough to get caught, the rest are just slightly more crafty.

You just further proved my point, airline management is the worst they aren't paying enough to get the proper talent. They need to be offering more in pay and comp to get the people that aren't felons and poor managers.

 

[CASHMAN797]

I believe PBRstreetgang's reference to airline management as the "worst" relates to the lack of business ethics. The solution is not so simple as raising airline management compensation for results. CEO pay doesn't correlate to performance in numerous American companies today.

 

[PBRstreetgang]

You just further proved my point, airline management is the worst they aren't paying enough to get the proper talent. They need to be offering more in pay and comp to get the people that aren't felons and poor managers.

Ethics cannot be purchased. The airline industry attracts the bottom of the barrel as far as CEOs are concerned. I had this explained to me by a successful electronics industry CEO. In the CEO world the brightest and best, rise to the top of the profit margin column, and the CEOs who spent their MBA years drunk, sleeping in the bushes drift to the bottom of the profit margin column. Since the airlines historically have the bottom of the profit column numbers and since management cannot even figure out how to price their product so to as make a profit, they must use the stacked deck of the legal system to insure a profit. Has any other industry had to resort to BK to manage profit margins? The airline industry is run by shysters and outright theives, and some are even convicted felons. The industry is run by criminal retards, and overseen by the FAA, many who, are washed up from the bottom of the airline industry....

 

[labbats]

Ethics cannot be purchased. The airline industry attracts the bottom of the barrel as far as CEOs are concerned. I had this explained to me by a successful electronics industry CEO. In the CEO world the brightest and best, rise to the top of the profit margin column, and the CEOs who spent their MBA years drunk, sleeping in the bushes drift to the bottom of the profit margin column. Since the airlines historically have the bottom of the profit column numbers and since management cannot even figure out how to price their product so to as make a profit, they must use the stacked deck of the legal system to insure a profit. Has any other industry had to resort to BK to manage profit margins? The airline industry is run by shysters and outright theives, and some are even convicted felons. The industry is run by criminal retards, and overseen by the FAA, many who, are washed up from the bottom of the airline industry....

Agreed. Good post.

 

[General Lee]

Ethics cannot be purchased. The airline industry attracts the bottom of the barrel as far as CEOs are concerned. I had this explained to me by a successful electronics industry CEO. In the CEO world the brightest and best, rise to the top of the profit margin column, and the CEOs who spent their MBA years drunk, sleeping in the bushes drift to the bottom of the profit margin column. Since the airlines historically have the bottom of the profit column numbers and since management cannot even figure out how to price their product so to as make a profit, they must use the stacked deck of the legal system to insure a profit. Has any other industry had to resort to BK to manage profit margins? The airline industry is run by shysters and outright theives, and some are even convicted felons. The industry is run by criminal retards, and overseen by the FAA, many who, are washed up from the bottom of the airline industry....

Totally stupid post. The current DL CEO and team run circles around your "electronic company" CEO. The stock is up more than 200% from a few years ago (hit $17 a share, up from $5 a share at merger---most pilots got between 3000 and 3800 shares too---thanks!). They thought outside the box, bought a refinery, which should contribute $50-60 million in savings per quarter. They also found a way to lower DCI costs, which was pure genius. (That is why PBR is upset)

So, not all airline CEOs are bad. Some Brasilia FOs like PBR are bitter, though. Too bad....


Bye Bye---General Lee

 

[PBRstreetgang]

Totally stupid post. The current DL CEO and team run circles around your "electronic company" CEO. The stock is up more than 200% from a few years ago (hit $17 a share, up from $5 a share at merger---most pilots got between 3000 and 3800 shares too---thanks!). They thought outside the box, bought a refinery, which should contribute $50-60 million in savings per quarter. They also found a way to lower DCI costs, which was pure genius. (That is why PBR is upset)

So, not all airline CEOs are bad. Some Brasilia FOs like PBR are bitter, though. Too bad....


Bye Bye---General Lee

Wow,
Who came in 3rd in the Special Olympics, Genny! Given the past history, they will come after pilots, again and again. Don't worry your mom's job at Waffle House is safe, so you will still get free waffles in your basement "apartment"
Too bad you are retarded enough, so you will never have a real job, don't worry,
The parks need trash picked up too, so you are safe too!

 

[General Lee]

Wow,
Who came in 3rd in the Special Olympics, Genny! Given the past history, they will come after pilots, again and again. Don't worry your mom's job at Waffle House is safe, so you will still get free waffles in your basement "apartment"
Too bad you are retarded enough, so you will never have a real job, don't worry,


AHAHAHAHA! You and "Uncle Steve" can have a blast in Twin Falls. I hope you're studying up for your Brasilia upgrade sometime in 2015. Bye!


Bye Bye---General Lee

 

[PBRstreetgang]

Wow,
Who came in 3rd in the Special Olympics, Genny! Given the past history, they will come after pilots, again and again. Don't worry your mom's job at Waffle House is safe, so you will still get free waffles in your basement "apartment"
Too bad you are retarded enough, so you will never have a real job, don't worry,


AHAHAHAHA! You and "Uncle Steve" can have a blast in Twin Falls. I hope you're studying up for your Brasilia upgrade sometime in 2015. Bye!


Bye Bye---General Lee

Try again!