On April 30, U. S. Airway’s (LCC) Senior Vice President of Public Affairs, C. A. Howlett, was quoted as saying “Our major goal in Washington right now is to have Washington do no harm. We need Washington to allow the industry to function as a private industry; that’s how we really serve the communities.”
We’re not quibbling with Howlett’s point, but working for a publicly-traded company in a private industry has some nice personal benefits, as evidenced by the 10-Q and attachments that U.S. Airways filed October 20. In return for sticking around for a few months, Howlett can collect a few extra bucks – more than a million of them, in fact.
In Exhibit 10.1, a September 13, 2010 letter to Howlett that was filed yesterday, the company disclosed its agreement concerning Howlett’s “potential retirement from the Company.” By signing the agreement, the parties agreed that Howlett’s November 28, 2007 Executive Change in Control and Severance Benefits Agreement would be amended so that he would get the severance payments and benefits spelled out in his Change in Control agreement upon the earliest of 1) the end of his employment (unless he was terminated for misconduct) prior to March 14, 2012; 2) his retirement on March 14, 2011; or 3) if there’s a change in control of the company. The agreement provides that he and the company may
“…mutually agree in writing to extend the Retirement Date; provided, however, that the Retirement Date may not be extended beyond a date that would cause the severance payments and benefits to be paid later than March 14, 2012.”
The agreement states that Howlett doesn’t get any benefits if he leaves after March 14, 2012.
So how does the new agreement differ from the old one? For starters, in exchange for signing a release, Howlett will get 200% of his target bonus and Long Term Incentive Plan (LTIP) payments, rather than the 100% rates set out in the earlier agreement. Furthermore, he has as much as 36 months to exercise his stock appreciation rights, options, and other equity awards, rather than the 18 months he had under the 2007 agreement. An added benefit is that all of Howlett’s unvested equity interests will vest when he retires.
Thankfully, Schedule A to the new agreement crunches the numbers for us. Howlett’s Total Pre-Tax Cash Payment (base salary + Annual Incentive Plan (AIP) + LTIP + 24 months of COBRA premiums) will be $1,359,562.11, less taxes and withholding.
The filing states that the company is giving Howlett the new agreement “in consideration for [him] agreeing to remain in the employment to the Company until March 14, 2011,” as well as his agreement to serve as a consultant for two years after he retires. In exchange for working 40 hours over 5 days per month to provide “network/relationship maintenance visits in Washington D.C. and Philadelphia,” Howlett will get $143,917 a year, a Sky Harbor Airport —Red parking card, and $300 per hour for any work he does over 40 hours per month.
Howlett’s retirement fund will be a little cushier, thanks to the new agreement, but what can he do with the extra time on his hands? Well, Schedule A addresses that, too:
“Travel Benefits: You and any eligible dependents are entitled to lifetime, —top priority, first class, positive space pleasure travel benefits, Chairman’s Preferred status, US Airways Club membership and 12 passes annually for family/friend travel, as awarded as part of the America West/US Airways merger in September 2005. The Company has provided a tax gross-up payment to you for these lifetime travel benefits.”
So if you get bumped from a U.S. Airways flight in the coming months, look around: You might just spot Howlett on his way to someplace fun, ready to spend a bit of that extra cash.
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