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(Chicago Trib)   American Airlines ordered to justify the $20 million severance given to their CEO. "Because he asked for it" apparently wasn't a good enough explanation   (chicagotribune.com) divider line 51
    More: Followup, American Airlines, executive directors, Americans, AMR Corp., unsecured creditors, United States bankruptcy court, US Airways Group, explanations  
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14413 clicks; posted to Business » on 18 Mar 2013 at 11:44 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-18 11:26:28 AM  
9 votes:
Chapter 11 nulls all existing contracts and requires an almost unilateral re-write of obligations to creditors through the Chapter 11 plan, unless the case dismisses.  Even provisions such as "survives bankruptcy" are null; the power of the bankruptcy court supersedes pre-petition agreements.

The objection on its face has merit; they are committing 20 mil that could be disbursed to unsecured creditors, and instead giving it to some guy who basically lost his job.  The Trustee would be well within his powers to order a refund to be paid to creditors.  They are lucky he has only objected and not filed a motion to force turnover.
2013-03-18 12:07:30 PM  
7 votes:
Here's an idea:

20 Million golden parachute

Divided by:

Non-management employees 79,444

=

251.74 bonus check to all the employees... is it much? not really. Did they earn it? you bet...
2013-03-18 12:00:35 PM  
7 votes:
Severance pay beyond 2 weeks salary equivalent should be relegated lower than unsecured debt.
2013-03-18 11:51:54 AM  
7 votes:
Contracts can be voided in the interests of the public, especially when they are imposed by greedy unio...

...wait, it's for a CEO platinum parachute?

Contracts are sacred, invioable bonds of trust that cannot be broken under any circumstances.
2013-03-18 11:51:51 AM  
7 votes:
It added that the payments would "motivate a strong management team during the integration process" to make the merger a success.

These same people will tell you that increasing pay for the rank and file will make them lazy.
ZAZ [TotalFark]
2013-03-18 10:34:19 AM  
7 votes:
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.

In related news, Tracy Hope Davis just got kicked out of all the good country clubs.

tenpoundsofcheese

Bankruptcy court is not bound by prior negotiations, contracts, solemn vows, or even the opinion of pay consultants.
2013-03-18 12:36:03 PM  
5 votes:

CeroX: Here's an idea:

20 Million golden parachute

Divided by:

Non-management employees 79,444

=

251.74 bonus check to all the employees... is it much? not really. Did they earn it? you bet...


Another interesting way to look at it, is that 80,000 people did $250 worth of work just to  pay one guy for losing his job.
2013-03-18 11:52:55 AM  
5 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Or, alternately "a surprisingly large number of supposedly intelligent people had previously agreed to allow him to make off with an absurd sum of money regardless of his actual performance, the performance of the company as a whole and even if it is detrimental to the continuing operations of the company". I don't see why they can't just be honest about it.

Sure, it was in his contract. I can guarantee you if there were a couple hundred soon to be laid-off run-of-the-mill employees who had clauses like that in their contracts (likely collectively equalling a whole lot less than $20 million) the company would be falling all over themselves trying to find ways to invalidate those contracts.
2013-03-18 10:42:26 AM  
5 votes:
Obviously that man needs a tax cut. Can't have $20 million without a tax cut!
vpb [TotalFark]
2013-03-18 10:41:25 AM  
5 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Not very.
2013-03-18 11:48:50 AM  
4 votes:
10lbofbatshiatcrazy has zero problem with folks getting screwed out of their pensions, but god forbid the 1%er take a hit to his golden parachute, because socialism!
2013-03-18 11:33:01 AM  
4 votes:
I'd have strong words with my Union Rep.

"What the eff are we paying you for? He does all his own negotiations and look what he gets!!"

- Disgruntled Union Member
2013-03-18 01:17:27 PM  
3 votes:
DubtodaIll:  what's the point of being outraged about the fiscal operations of a corporation?l.

It's a public corporation. The shareholder's money is being used for the private benefit of a few board members and top executives who loot the company.

It's a bankrupt corporation. It's assets belong to the the creditors. Not the for the private benefit of a few board members and top executives who loot the company.

It's a merging corporation. By reducing the airline industry to a few very large players, it allows a near-monopoly in many markets, meaning it can extract unwarranted high fares from a captive audience.
2013-03-18 12:00:05 PM  
3 votes:

trotsky: vudutek: 10lbofbatshiatcrazy has zero problem with folks getting screwed out of their pensions, but god forbid the 1%er take a hit to his golden parachute, because socialism!

The thing is I have seen this attitude all over. Kinda makes you sick.


And then these idiots wonder why they lose elections...
2013-03-18 11:50:54 AM  
3 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Oh look, someone doesn't understand how bankruptcy works.  Though, I can't say that I'm particularly surprised that you're once again proudly flying your ignoramus flag.
2013-03-18 11:50:50 AM  
3 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Which would probably pass muster, if they didn't all sit on each others boards and act as consultants for each other over what should be their pay and suitable compensation.
2013-03-18 10:27:26 AM  
3 votes:
"because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.
2013-03-18 02:16:03 PM  
2 votes:

The Gordie Howe Hat Trick: Don't like it? Don't fly AA then. Really not that complicated.


Except that our government uses my tax dollars to bail these farkers out when they fail.
2013-03-18 01:08:53 PM  
2 votes:

DubtodaIll: Aside from allowing yourself to feel morally superior to someone who has been much more successful than you, what's the point of being outraged about the fiscal operations of a corporation? No one is forcing you to use the product so if you don't like the company, don't use them.  Use of technological advancements is not a right or a necessity.  If the company wants to give this guy 20 million then I don't have a problem with it.  He may have done a shiatty job as far as we know but imagine how much he'd get if he had done a better job.  If he had produced a product exactly to your liking would 20 million be justified in your eyes?  The fact of it is it doesn't need to be justified, it's their money, they can do with it as they please, and they will.


Because it's a public company and people have 401k's and other retirement plans invested in this business.  Their success or failure is far reaching.  Some people's livelihoods depend on air travel.  City's require tourists and businessmen to be able to fly in.  Interest rates are affected.  Local vendors.  Tourist stops.

No one is forcing you to fly, that is true.  But a company that large has an affect on so many other things that may not seem related at first.  Like in those little strip mall places, you have the grocery store, then a bunch of little shops like chinese food, pizza, nail salon, dollar store.  Those little guys better worry how the grocery store operates, because they live off the coat tails of that store.  If the grocery store closes, then the little guys will lose traffic and also g out of business.  So, that is why we should give a shiat about the fiscal operation of a corporation.
2013-03-18 12:50:39 PM  
2 votes:

ZAZ: Bankruptcy court is not bound by prior negotiations, contracts, solemn vows, or even the opinion of pay consultants.


Bingo.

There's a reason I have tenpoundsofcheese farkied as "ten pounds of derp".  He's either a very short-bus special Farker incapable of operating outside a Fox-Limbaugh field, or performing some truly wonderful performance art.  Unfortunately Poe's Law prevents me from knowing which one, a sort of internet Heisenberg's Uncertainty effect.
2013-03-18 12:45:07 PM  
2 votes:
Meanwhile AA has given me such crappy insurance that I had to pay almost entirely out of pocket for a surgery I had recently. Not to mention spending a lot of effort to ensure my department "gets to keep our individual voice" (ie. keep the unions out). To be fair, my department VOTED to keep the union out, but there sure was an insane amount of effort by the higher ups to convince everyone to vote no that could have been devoted to say, i don't know, improving customer service maybe?
2013-03-18 12:33:59 PM  
2 votes:

HotWingConspiracy: It added that the payments would "motivate a strong management team during the integration process" to make the merger a success.

These same people will tell you that increasing pay for the rank and file will make them lazy.


The only possible response a rational person could provide to someone saying what you have quoted with a straight face would be a swift kick in the nuts. Once the response has been provided you let them roll around on the floor for a while and consider where that interaction may have gone wrong.

I am totally not kidding about that, either.
2013-03-18 12:19:53 PM  
2 votes:
He's getting $20M "leaving" American when it merges with US Airlines.

He remains chairman of the combined company.
  cuddlebuggery.com
2013-03-18 12:16:49 PM  
2 votes:
Under the new bankruptcy laws, he isn't allowed to be given something that is more than 10 times the standard for that company's non-management employees. In this case, the mean severance package for AA would have to be something like $1.9million PER EMPLOYEE for him to legally be allowed to walk with $20m.

This is a better explination of it.
2013-03-18 12:03:17 PM  
2 votes:

MindStalker: A Shambling Mound: Sure, it was in his contract. I can guarantee you if there were a couple hundred soon to be laid-off run-of-the-mill employees who had clauses like that in their contracts (likely collectively equalling a whole lot less than $20 million) the company would be falling all over themselves trying to find ways to invalidate those contracts.

I'm sure they've already succeeded invalidating most employees PTO payouts and the like.


Well of course! Agreements with little people arent 'for realz'. Only contracts with the elite are binding, and only when it benefits the already super rich.
2013-03-18 12:01:04 PM  
2 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Why do I get the feeling you would champion the return of debtor prisons?
2013-03-18 12:00:39 PM  
2 votes:

A Shambling Mound: Sure, it was in his contract. I can guarantee you if there were a couple hundred soon to be laid-off run-of-the-mill employees who had clauses like that in their contracts (likely collectively equalling a whole lot less than $20 million) the company would be falling all over themselves trying to find ways to invalidate those contracts.


I'm sure they've already succeeded invalidating most employees PTO payouts and the like.
2013-03-18 11:55:29 AM  
2 votes:
Not sure why the creditors should be left hanging out to dry on $20M when the company is in bankruptcy.

I would call shenanigans on that.
2013-03-18 03:19:29 PM  
1 votes:

mizchief: That's kind of my point. To me, that was motivation not to be a blue-collar worker and go learn to do something valuable. If you have no ambition then a Union job is probably your best bet, just don't think that the Union bosses are out to help you as much as they are themselves.


This attitude is what is wrong with this country. It is the core of why unions are hated and management loved. It is why we are becoming a service industry focused nation with a vast wealth divide. A majority of people actually think that working on a manufacturing line or as a plumber or construction worker or many other blue collar jobs are "dirty" jobs that are beneath them. It is why college degrees are considered necessary for even the most menial of office jobs (though they are not) - and why college is no longer about education unless it is for job training.

Until every surgeon, engineer and CEO has the ability to build their own phones, sports cars, homes, and grow their own food - the mechanic, farmer, plumber and factory worker are just as valuable to society.
2013-03-18 02:44:54 PM  
1 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Then the same argument would apply to the pilots, flight attendants et al. They all had contracts but guess what, the company ran out of money and defaulted on debt so why does one man get his slice of the pie and the rest get farked?
2013-03-18 02:29:49 PM  
1 votes:

The Gordie Howe Hat Trick: mizchief: The Gordie Howe Hat Trick: Don't like it? Don't fly AA then. Really not that complicated.

Except that our government uses my tax dollars to bail these farkers out when they fail.

1. Call your congressman

2. ATSB loans turned a small profit.

I don't think highly of AA's management either. After they cajoled AA's unions into givebacks and concessions in 2004(?), the company turned an annual profit of around $210M, then gave management types $195M in bonuses.


Calling congressmen doesn't do shiat unless you have thousands of dollars to donate to their campaigns, as for every person that calls, there are 100 more that just vote for who ever they see on TV the most. This is why we must prevent them from having this much power in the first place. 

If I go to Vegas and put my life savings on black, then win, does that make me a good finical planner? If the loan wasn't risky a private bank would have made the loan, not the Feds.
2013-03-18 02:28:08 PM  
1 votes:

mizchief: hitlersbrain: mizchief: The Stealth Hippopotamus: I'd have strong words with my Union Rep.

"What the eff are we paying you for? He does all his own negotiations and look what he gets!!"

- Disgruntled Union Member

The goal of a Union is to make the Union stronger, not to increase the well-being of the individual worker. The benefits a Union provides are just placates to keep the workers working and as ubiquitous as possible so that as many workers are kept on the payroll as possible and the dues keep flowing in.

Are Union workers paid more and do they enjoy more benefits than non-union workers? Yes? Well there ya go,

Only in industries where they have the government to back up their inevitable failure. Otherwise it just becomes and averaging out where the best workers that would be getting even higher salaries because they are fought after by the competing businesses, are instead just split with the knuckle draggers that only work hard enough not to get fired.


I've worked long enough to know that competent, hard work at blue collar level jobs (and most non-management white-collar jobs) is never noticed by those at the top. Things like Unions will always be needed to give workers a decent standard of living.
2013-03-18 02:24:58 PM  
1 votes:

DubtodaIll: Aside from allowing yourself to feel morally superior to someone who has been much more successful than you, what's the point of being outraged about the fiscal operations of a corporation? ...  The fact of it is it doesn't need to be justified, it's their money, they can do with it as they please, and they will.


Aside from you demonstrating a serious lack of understanding that airlines are among the most heavily-subsidized industries on the planet, what's the point of your post?  Airlines get subsidies, tax preferences, and the federal government handles their security at no cost to them, and they still manage to lose billions of dollars every year. The feeling I get when I watch them back a dumptruck full of money to the well-appointed home of yet another failed CEO is more than just "moral outrage," it's goddamn fury at watching an infrastructurally-crucial business that is heavily supported by my tax dollars being run like a private club that I have to pay for but am not allowed to join. And watching simps like you come in here with your grossly-uninformed-yet-still-somehow-patronizing "What's the big deal?" attitude isn't helping my blood pressure, either.
2013-03-18 02:22:41 PM  
1 votes:

DubtodaIll: The fact of it is it doesn't need to be justified, it's their money, they can do with it as they please, and they will.


You're entitled to your own opinion, but not your own facts.  In bankruptcy, it's not the company's money any longer, it's the creditor's money.  And they, through the courts, get to decide how it's spent.  Thus, they do need to be prepared to justify it.
2013-03-18 02:00:20 PM  
1 votes:
The company said the proposed employee arrangements were found to be reasonable by pay consultants retained by its unsecured creditors committee.
It added that the payments would "motivate a strong management team during the integration process" to make the merger a success.


Blah blah blah blah...

Translation: He is part of a hyper rich, do nothing elite class and is thus entitled to huge amounts of money.
2013-03-18 01:56:55 PM  
1 votes:
tenpoundsofcheese (farkied: It ain't cheese): CeroX:

There ya go CEO, a company build on the backs of the employees and you "earned" your bonus... the same as everyone else...

Are you saying the current employees built the company?  I didn't know the company was that new.  Looks like they didn't do a very good job at building it since it is in bankruptcy.


Remember, boys and girls:

* If a company does well, the credit belongs to the CEO and the board of directors.
* If a company does poorly, the blame goes to the rank and file, especially if they're evul Union Thugs.
2013-03-18 01:55:04 PM  
1 votes:
i172.photobucket.com
2013-03-18 01:29:06 PM  
1 votes:

jaytkay: DubtodaIll:  what's the point of being outraged about the fiscal operations of a corporation?l.

It's a public corporation. The shareholder's money is being used for the private benefit of a few board members and top executives who loot the company.

It's a bankrupt corporation. It's assets belong to the the creditors. Not the for the private benefit of a few board members and top executives who loot the company.

It's a merging corporation. By reducing the airline industry to a few very large players, it allows a near-monopoly in many markets, meaning it can extract unwarranted high fares from a captive audience.


It's also indicative of the poor attitude the people running these businesses. If the corporation I work for goes down the tubes because of poor management, that's a problem for me. If the management is poor because they don't need to care if it's good or not, that's a problem for me. So, yes, I do care about the fiscal operations of corporations, because they affect my life.
2013-03-18 01:28:10 PM  
1 votes:

mizchief: The goal of a Union is to make the Union stronger, not to increase the well-being of the individual worker. The benefits a Union provides are just placates to keep the workers working and as ubiquitous as possible so that as many workers are kept on the payroll as possible and the dues keep flowing in.


Yeah, unions just get in the way of companies which would otherwise shower their employees with great benefits and high pay.
m00
2013-03-18 01:16:00 PM  
1 votes:

DubtodaIll: Aside from allowing yourself to feel morally superior to someone who has been much more successful than you, what's the point of being outraged about the fiscal operations of a corporation? No one is forcing you to use the product so if you don't like the company, don't use them.  Use of technological advancements is not a right or a necessity.  If the company wants to give this guy 20 million then I don't have a problem with it.  He may have done a shiatty job as far as we know but imagine how much he'd get if he had done a better job.  If he had produced a product exactly to your liking would 20 million be justified in your eyes?  The fact of it is it doesn't need to be justified, it's their money, they can do with it as they please, and they will.


This is a heavily, heavily regulated industry, which means the free market isn't at play. I can't go start m00 Airlines with a 707 I keep in a barn. Is this a good idea? Absolutely. But if the government prevents competition to a service that I more-or-less have no alternative to using, then it is my business how the money is spent.
2013-03-18 12:58:19 PM  
1 votes:
Aside from allowing yourself to feel morally superior to someone who has been much more successful than you, what's the point of being outraged about the fiscal operations of a corporation? No one is forcing you to use the product so if you don't like the company, don't use them.  Use of technological advancements is not a right or a necessity.  If the company wants to give this guy 20 million then I don't have a problem with it.  He may have done a shiatty job as far as we know but imagine how much he'd get if he had done a better job.  If he had produced a product exactly to your liking would 20 million be justified in your eyes?  The fact of it is it doesn't need to be justified, it's their money, they can do with it as they please, and they will.
2013-03-18 12:48:43 PM  
1 votes:

Elandriel: The objection on its face has merit; they are committing 20 mil that could be disbursed to unsecured creditors, and instead giving it to some guy who basically lost his job.

completely destroyed the company because of his incompetence...
FTFM...
2013-03-18 12:39:43 PM  
1 votes:

Harbinger of the Doomed Rat: tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.

Oh look, someone doesn't understand how bankruptcy works.  Though, I can't say that I'm particularly surprised that you're once again proudly flying your ignoramus flag.


Now I have a mental image of tendpoundsofhodor's room with a bunch of Derp State pennants on the walls.
2013-03-18 12:32:04 PM  
1 votes:
Give him nothing.
2013-03-18 12:23:52 PM  
1 votes:
Vulture Capitalism is a form of capitalism.
2013-03-18 12:20:46 PM  
1 votes:

ZAZ: Bankruptcy court is not bound by prior negotiations, contracts, solemn vows, or even the opinion of pay consultants.


It is if you're a bank, and while AA is not, it was part of the "too big to fail" club.
kab
2013-03-18 12:10:20 PM  
1 votes:

tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.


Wow, the CEO ballwasher brigade hit this thread in record time.
2013-03-18 11:59:04 AM  
1 votes:
www.aidthoughts.org
2013-03-18 11:57:50 AM  
1 votes:

vudutek: 10lbofbatshiatcrazy has zero problem with folks getting screwed out of their pensions, but god forbid the 1%er take a hit to his golden parachute, because socialism!


The thing is I have seen this attitude all over. Kinda makes you sick.
2013-03-18 11:52:58 AM  
1 votes:
This bozo doesn't deserve the Polish Doorknob.
2013-03-18 11:48:40 AM  
1 votes:
Just let them eat Cake!!!

and please, U.S. Government, continue to allow the airline companies to merge into each other to create even larger companies and less competition. it can only help.


God bless, Uncle Sam.

--a Patriotic Amerian.
 
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