American parent defends CEO's $20 million severance plan

American Airlines parent company AMR Corp. is again defending a severance package worth nearly $20 million for outgoing CEO Tom Horton.

AMR insists in a Thursday bankruptcy filing that the package is "reasonable and well within industry metrics," according to the Fort Worth Star-Telegram.

"It appropriately recognizes Mr. Horton's role, not only in leading the restructuring and positioning the Debtors to realize extraordinary value for their stakeholders and employees, but also for his future services, which are critical to assuring that the integration process is as seamless and economically efficient as possible," the filing continues, according to the Star-Telegram.

Reuters says AMR's defense of the multi-million dollar package comes after "the U.S. Department of Justice's bankruptcy watchdog, the U.S. Trustee Program, filed court papers challenging the payment" last week.

Reuters adds: "The watchdog said Horton's severance payment defies bankruptcy laws that bar severance payments greater than 10 times the mean severance given to employees and that are not part of a program applicable to all workers."

Last week's filing marked the third time that Tracy Hope Davis, the U.S. Trustee for the New York region, has tried to scuttle AMR's proposed severance for Horton, according to Reuters.

The Dallas Morning News writes that AMR's unsecured creditors committee argues "the U.S. trustee's objection wrongly sees the payment as simply severance."

In AMR's filing, the Morning News quotes the committee as saying that position "entirely ignores the virtually unprecedented context" for the payment, adding it results from "a public-company merger in Chapter 11 that delivers tremendous value for economic stakeholders."

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