The suit was filed after shareholder-approved plans for the $12.3 billion acquisition of US Airways by UAL Corporation fell through.
The deal faced opposition from the US Department of Justice, which said that it would lead to increased fares and diminishing service levels. The combination would have created the world’s biggest airline.
In the suit, heard by the Delaware Chancery Court, US Airways shareholder Steven Rosenberg is challenging the US Airways board’s intention to honor an executive employment agreement.
The agreement gives the company’s chairman, chief executive, and general counsel the option to collect three times their salaries and bonuses, plus lump-sum retirement benefits, despite the failure of the deal.
According to the suit, under the agreement, if they choose to quit:
- Chairman Stephen Wolf would receive about $16 million
- CEO Rakesh Gangwal would receive about $21 million
- General Counsel Lawrence Nagin would receive $8 million.
Rosenberg charges that the board’s intention to honor the agreement is imprudent and will injure the company. He is asking the court to rescind the plan and order directors to pay the company damages.