Judge Denies American Airlines' CEO's $20M Severance – For Now

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A federal bankruptcy judge denied American Airlines’ plan to give its CEO a $20 million severance package, saying bankruptcy law prevents such rich “golden parachutes.”

But the airline says it will continue to push for CEO Tom Horton to get the payoff. And the judge left the door open to reconsider the request in future, or for the company to approve the windfall for Horton once its merger with US Airways (LCC, Fortune 500) is complete.

Horton is losing his CEO position when American and US Airways merge, which is expected to take place later this year. US Airways CEO Doug Parker, who pushed for the deal that Horton initially opposed, will get the corner office instead, although Horton will hold the position as non-executive chairman for a year.

Horton became CEO the day American parent AMR (AAMRQ, Fortune 500) filed for bankruptcy in November 2011, having served as president of the Dallas-based airline before then.

The $20 million payday, which would be half in cash and half in stock in the new merged airline, was opposed by the bankruptcy court trustee, who is appointed to protect the interests of creditors in the case.

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