Midwest Air severance plan pays big

[Steeler Fan]

http://www.bizjournals.com/pacific/othercities/milwaukee/stories/2007/04/16/story2.html?b=1176696000^1446905

Midwest Air severance plan pays big

Hoeksema could earn $2.6 million if ownership changes
The Business Journal of Milwaukee - April 13, 2007
by Rich Rovito
Top executives at Midwest Air Group Inc. stand to receive millions of dollars in severance pay and benefits if AirTran Holdings Inc. is successful in its effort to take over the Oak Creek airline operator.


Top executives at Midwest Air Group Inc. stand to receive millions of dollars in severance pay and benefits if AirTran Holdings Inc. is successful in its effort to take over the Oak Creek airline operator.
Timothy Hoeksema, Midwest's chairman, president and chief executive officer, would benefit the most. Under the terms of a change-of-control agreement, Hoeksema would receive $2.6 million in the event he is relieved of his duties.
Details of change-of-control agreements with Hoeksema and other top-level executives were divulged in preliminary proxy materials filed March 30 by Midwest Air Group, operator of Midwest Airlines and Midwest Connect, with the U.S. Securities and Exchange Commission.
In the filing, Midwest's board of directors noted that the company has severance agreements in place with Hoeksema; Curtis Sawyer, chief financial officer and controller; Scott Dickson, chief marketing officer; David Reeve, senior vice president of operations and president and CEO of Skyway Airlines; and Carol Skornicka, senior vice president of corporate affairs, secretary and general counsel for Midwest.
The filing shows that severance payments to Sawyer, Dickson, Reeve and Skornicka would be about $1.09 million, $1.08 million, $934,000 and $997,000, respectively.
The amounts don't include the value of options, restricted stock or long-term incentive plan awards that would vest upon a change of control, regardless of whether a termination were to occur, according to the filing.
The agreements have been in place for several years and would pertain to any change of control involving Midwest, not just the potential takeover by AirTran, Skornicka said.
Companies are required to detail retirement and severance packages under rules from the Securities and Exchange Commission that went into effect last December.
"The agreements are very standard," she said. "We just didn't expect that they would ever come into play."
While AirTran has promised to add 1,100 jobs if its takeover bid is successful, it is unlikely any of Midwest's top executives would retain their jobs.

 

[AFcitrus]

Sounds like they are getting their "house in order".

 

[FlyWolf]

Good article Steeler Fan.

 

[newnan]

Those severance packages are not in order with typical airline mgmt. They are too low, maybe that's what they are waiting/working on now. Renegotiating for more money for themselves to let this deal go through.

 

[fletch717]

Those severance packages are not in order with typical airline mgmt. They are too low, maybe that's what they are waiting/working on now. Renegotiating for more money for themselves to let this deal go through.

Those amounts don't include the stock options, which will be in the millions.

 

[CitationLover]

these are simple change in control agreements that most senior executives have at any business. they are usually funded with a grantor trust which must be immediately funded upon a "change in control" which is identified in their employment contracts. air tran would be on the hook to fund the trust within 30 days (usually). these are also called poison pills.

one of my old clients (a midlevel paper mill in south carolina) had one of these with agreements with 30 executives. midwests (which is a little smaller than this old client) actually sounds quite cheap.

there's no "house in order" going on here, this story is a nonevent.

 

[Wesb737fo]

one of my old clients (a midlevel paper mill in south carolina) had one of these with agreements with 30 executives. midwests (which is a little smaller than this old client) actually sounds quite cheap.

Did this paper mill own Dunder-Mifflin from Scranton, PA?

 

[Propsync]

Those severance packages are not in order with typical airline mgmt. They are too low, maybe that's what they are waiting/working on now. Renegotiating for more money for themselves to let this deal go through.

That's because they're not typical airline management. My opinion is that it's too high. These are the jokers that let Skyway run short to the point of cancelling flights, and still allowed Skyway guys to go over to Midwest. On top of that, training a Skyway guy costs up to four times that of a newhire from elsewhere. While I'm glad they offered a lot of guys an opportunity, they really f'ed it up grand. And at Skyway, it's just point the finger and play the blame game, instead of digging in and fixing the problem. It's incredible to me an airline this size being so inept. I kinda expect it from other places, but combined, at around 50 airplanes total, it astounds me the problems they have.

 

[Lear70]

That may seem like a lot of money, but how much do those people make annually with their regular salary plus bonuses?

If you're cashing in just shy of a Million bucks a year, that's less than 3 year's pay and little chance of obtaining an equivalent-paying position anywhere else right now.

Don't have the time to do the research, but did it also disclose the stock payout to each of them in the event the deal goes through and they get the boot?

 

[CitationLover]

Did this paper mill own Dunder-Mifflin from Scranton, PA?

no they didn't own that one.