Outside the world of banks, the U.S. Justice Department on Friday announced its opposition to American Airlines' proposed $20 million severance for CEO Tom Horton. The carrier, owned by parent AMR Corp. (AAMRQ), is merging with US Airways Group (LCC
); Horton became CEO when American filed for Chapter 11 bankruptcy protection in November 2011. But even though American wants to give him all that cash, plus lifetime flight benefits, Horton won't actually be joining the ranks of the unemployed: The plan is to make him chairman of the combined company after the merger.
As the Associated Press explained
, "Bankruptcy law limits severance payments to executives and aims to make sure companies can repay as much of their debt as possible." The government's objection observed that, according to previous filings by American, Horton would have received at most $6.4 million if he had left at the end of 2012. Why so much more money now? American's board should have to explain how the $20 million figure was determined, the trustee's office says. And guess who the chairman is: one Thomas W. Horton. Bankruptcy court will consider the question on June 4.