Airbubba
20th Aug 2001, 17:06
Now that the US Airways-UAL deal is dead, Wolfman and his buddies will cry all the way to the bank...
_________________________________________
August 20, 2001
US Air Executives Could Receive
Severances Totaling $45 Million
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
Come Oct. 12, the three top executives of US Airways Group Inc. will have 30 days to consider quitting and receiving a total of $45 million in "liquidated damages" and retirement benefits, according to a proxy statement filed with the U.S. Securities and Exchange Commission.
The potential severance packages were triggered by US Airways' shareholder approval of the proposed acquisition of US Airways by UAL Corp. Although the planned merger ran into Justice Department opposition last month and ultimately was scuttled, the vote last October served as the change-of-control provision that will offer the three men a chance to step down and cash in.
Chairman Stephen Wolf, Rakesh Gangwal, chief executive, and Lawrence Nagin, general counsel, could elect to receive lump sums from US Airways equal to three times their respective salaries and bonuses, the proxy said. They also stand to receive continued pension, health insurance, travel and fringe benefits for three years (four years for Mr. Wolf).
Finally, they could gain lump-sum payments of retirement benefits that assume 30 years of service at US Airways for Mr. Wolf, 25 years for Mr. Gangwal and 20 years for Mr. Nagin, according to the proxy. The three executives joined US Airways, Arlington, Va., in 1996.
In the case of Mr. Wolf, 60 years old, the total payment, excluding the value of his equity holdings and vesting options, would be about $16 million. Mr. Wolf received $600,000 in salary last year, no bonus and nearly $7.7 million in other compensation. Mr. Gangwal, 48, could receive about $21 million if he quits. The CEO last year received a salary of $675,000 and other compensation of nearly $7.5 million. Mr. Nagin, 60, could take away more than $8 million.
A spokesman said the three men and the company declined to comment on whether any of the executives plan to step down in October. The question surely will come up at US Airways' annual shareholder meeting on Sept. 19. Messrs. Wolf and Gangwal are standing for re-election to the company's board, according to the proxy.
"For them not to stand for election would be an indication they're not going to stick around," said Judy Fischer, managing director of Executive Compensation Advisory Services, a consulting firm. "That would not be good for the company at this time of instability, and when decisions need to be made.''
Ms. Fischer last year was critical that shareholder consent, rather than a consummation of the merger, was the change-of-control provision that triggered the severance packages and the vesting of stock options and some restricted shares. "It's a splendid opportunity to collect a lot of money for something that didn't happen," she said. US Airways said this language has existed in executive-employment contracts at the company since the 1980s.
Mr. Gangwal last week outlined to investment analysts how US Airways hopes to cut costs and restore profitability as a stand-alone company. The plan envisions, among other things, employee concessions and deployment of large numbers of regional jets, and was quickly denounced by union leaders. During his presentation, Mr. Gangwal pointed out that the nation's sixth-largest airline has made big strides since he and the other executives came aboard.
But US Airways still labors under costs that are 20% higher than those at the five largest carriers. Its route network is more regional than national, and it faces growing competition from low-fare carriers and larger airlines' regional jets. The company had a loss of $195 million during the first half of this year and has said it expects to post a loss of more than $160 million, excluding write-downs, in the current quarter. Its stock hit a new 52-week low of $15.02 Friday, trading down 7.6% in 4 p.m. New York Stock Exchange composite trading.
Mr. Wolf has made a career of sprucing up laggard airlines and selling them at substantial profit for himself and other shareholders. He previously ran UAL's United Airlines, Republic and Flying Tiger airlines and arranged for the sale of all three.
_________________________________________
August 20, 2001
US Air Executives Could Receive
Severances Totaling $45 Million
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
Come Oct. 12, the three top executives of US Airways Group Inc. will have 30 days to consider quitting and receiving a total of $45 million in "liquidated damages" and retirement benefits, according to a proxy statement filed with the U.S. Securities and Exchange Commission.
The potential severance packages were triggered by US Airways' shareholder approval of the proposed acquisition of US Airways by UAL Corp. Although the planned merger ran into Justice Department opposition last month and ultimately was scuttled, the vote last October served as the change-of-control provision that will offer the three men a chance to step down and cash in.
Chairman Stephen Wolf, Rakesh Gangwal, chief executive, and Lawrence Nagin, general counsel, could elect to receive lump sums from US Airways equal to three times their respective salaries and bonuses, the proxy said. They also stand to receive continued pension, health insurance, travel and fringe benefits for three years (four years for Mr. Wolf).
Finally, they could gain lump-sum payments of retirement benefits that assume 30 years of service at US Airways for Mr. Wolf, 25 years for Mr. Gangwal and 20 years for Mr. Nagin, according to the proxy. The three executives joined US Airways, Arlington, Va., in 1996.
In the case of Mr. Wolf, 60 years old, the total payment, excluding the value of his equity holdings and vesting options, would be about $16 million. Mr. Wolf received $600,000 in salary last year, no bonus and nearly $7.7 million in other compensation. Mr. Gangwal, 48, could receive about $21 million if he quits. The CEO last year received a salary of $675,000 and other compensation of nearly $7.5 million. Mr. Nagin, 60, could take away more than $8 million.
A spokesman said the three men and the company declined to comment on whether any of the executives plan to step down in October. The question surely will come up at US Airways' annual shareholder meeting on Sept. 19. Messrs. Wolf and Gangwal are standing for re-election to the company's board, according to the proxy.
"For them not to stand for election would be an indication they're not going to stick around," said Judy Fischer, managing director of Executive Compensation Advisory Services, a consulting firm. "That would not be good for the company at this time of instability, and when decisions need to be made.''
Ms. Fischer last year was critical that shareholder consent, rather than a consummation of the merger, was the change-of-control provision that triggered the severance packages and the vesting of stock options and some restricted shares. "It's a splendid opportunity to collect a lot of money for something that didn't happen," she said. US Airways said this language has existed in executive-employment contracts at the company since the 1980s.
Mr. Gangwal last week outlined to investment analysts how US Airways hopes to cut costs and restore profitability as a stand-alone company. The plan envisions, among other things, employee concessions and deployment of large numbers of regional jets, and was quickly denounced by union leaders. During his presentation, Mr. Gangwal pointed out that the nation's sixth-largest airline has made big strides since he and the other executives came aboard.
But US Airways still labors under costs that are 20% higher than those at the five largest carriers. Its route network is more regional than national, and it faces growing competition from low-fare carriers and larger airlines' regional jets. The company had a loss of $195 million during the first half of this year and has said it expects to post a loss of more than $160 million, excluding write-downs, in the current quarter. Its stock hit a new 52-week low of $15.02 Friday, trading down 7.6% in 4 p.m. New York Stock Exchange composite trading.
Mr. Wolf has made a career of sprucing up laggard airlines and selling them at substantial profit for himself and other shareholders. He previously ran UAL's United Airlines, Republic and Flying Tiger airlines and arranged for the sale of all three.