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? for AT guys about CEO

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Does anybody know what will happen to the AirTran CEO and senior mgt. after the merger.

Is this a "buy-out" or a "merger?" Seems to me that in the case of a buy-out that AT upper management is redundant and going away. In fact, I would think that anything beside lower management and line personnel would be redundant everywhere except at KATL and KBOS. Doesn't seem as though much would be coming along with the A/C besides pilots, slots and routes; Unless they want to waste tons of money on redundancy and infect their SWA culture.


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AirTran executives could make millions on Southwest acquisition
By Kelly Yamanouchi and Russell Grantham

The Atlanta Journal-Constitution
AirTran Airways executives would take home millions if Southwest Airlines completes its plan announced earlier this week to buy the discount carrier.Some AirTran executives could get a bonus of half their annual pay through retention agreements disclosed Thursday. Some also could see roughly a doubling of the value of their AirTran stock and option holdings as a result of Monday’s announced deal. And under their employment contracts, some AirTran executives could get golden parachutes worth double their current salaries and bonuses.
AirTran CEO Bob Fornaro could reap some of the biggest rewards from the deal.
The value of his holdings jumped nearly $2.7 million, or roughly 90 percent, according to an estimate by The Atlanta Journal-Constitution.
Likewise, Fornaro and other AirTran executives could reap more millions in cash payouts under their employment contracts as well as the retention bonuses disclosed this week.
That could equal as much as $2.6 million for Fornaro if it were based on 2009 compensation.
Under a retention bonus plan AirTran’s board of directors approved Sunday, Fornaro would get 50 percent of his salary in a lump sum once the deal closes and his monthly salary for an additional two years under a consulting contract after he leaves his CEO job.
Other AirTran insiders would see big gains as well.
The value of AirTran executives’ and directors’ holdings jumped about $7.8 million on Monday after Southwest announced its $1.4 billion deal, which offered AirTran shareholders a combination of cash and Southwest stock that was worth $7.69 per AirTran share at the end of the day. AirTran’s shares were worth $4.55 the Friday before the deal was announced.
Shareholders of Orlando-based AirTran, which has its largest hub in Atlanta, would get roughly a 70 percent gain under Southwest’s offer, based on the value of Monday’s stock-and-cash offer.
Payouts for Fornaro and other executives from the close of the deal could change based on a number of factors, including changes in compensation levels, stock prices and other factors.
Also, Fornaro has a three-year employment agreement that took effect Nov. 1, 2007, and is subject to automatic renewal for additional one-year terms unless the company or Fornaro terminates it. Some other executives have agreements with similar renewal terms. The AirTran-Southwest merger is expected to close in the first half of next year.
According to an AirTran proxy filing to the Securities and Exchange Commission earlier this year, executives including Fornaro, chief financial officer Arne Haak, executive vice president Stephen Kolski, general counsel Richard Magurno, executive vice president Steven Rossum and senior vice president Alfred Smith would get twice their previous salary and bonus, immediate vesting of stock options and grants, continued health and insurance benefits, travel benefits, and retirement benefits if the company terminates them without cause or if they decide to leave the company under certain circumstances.
Southwest "might keep some [executives], but most of them are going to end up leaving the company," said Paul Lapides, director of the Corporate Governance Center at Kennesaw State University. He added that nothing appeared out of the ordinary in the agreements, and "it looks like the transaction was well thought out and fair."
Fornaro, like other AirTran executives, is likely to reap a larger percentage gain due to the deal because it drove up AirTran’s stock price, increasing the value of stock options that were previously underwater, or nearly worthless.
Likewise, under so-called “change in control” provisions that would be triggered if Southwest completes its acquisition, AirTran executives’ and directors’ restricted AirTran stock and options that they don’t yet own would vest, or become theirs.
The AJC’s calculations compare the value of the AirTran executives’ holdings of stock, restricted stock and options as though they were fully vested on Monday and the previous Friday, before the Southwest deal was announced.
The potential lump sum under a change in control and employment termination is roughly $1 million for other top executives, based on 2009 compensation. That doesn't include the value of accelerated stock awards and some other benefits, and it doesn't take into account calculations based on different compensation periods.
Separately, AirTran's board of directors approved an employee retention plan Sunday for the Southwest deal "to ensure that AirTran will have the continued dedication and support of these employees," according to an SEC filing.
The retention plan for managerial and administrative employees allots up to $10.2 million in total retention bonuses. It does not specify how many employees would receive retention bonuses. Officers would get half their bonus when the deal closes and half 180 days later, while non-officers would get their bonus 90 days after the deal closes. But several executives are ineligible for retention bonuses.
Rossum would receive a retention bonus and consulting contract under the same terms as Fornaro.

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