Human Capital & Careers

US Air Officials Have $45 Million Incentive to Quit

Potential severance packages contain lump sums equal to three times their respective salaries and bonuses.
CFO StaffAugust 20, 2001

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(Copyright (c) 2001, Dow Jones & Company, Inc.)

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 Securities and Exchange Commission, Monday’s Wall Street Journal reported.

The potential severance packages were triggered by US Airways’ shareholder approval of the proposed acquisition of US Airways (U) by UAL Corp. (UAL). 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 chief executive 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.

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