Two shareholders suing US Airways board

[Gordon Werner]

Two shareholders suing US Airways board

WILMINGTON, Del., Aug 28 (Reuters) - Two shareholders of US Airways Group Inc. (NYSE:U - news) have each sued the company and its board over employment agreements approved for three senior executives that may lead to a $45 million payout.

Steven Rosenberg and Crandon Capital Partners filed suits in Delaware Court of Chancery on Aug. 24 and Aug. 27 saying the board members breached their fiduciary duties by approving deals in which several officers of the airline would receive large cash payments in connection with US Air's failed merger with United Airlines.

The deals included lump sum retirement, health insurance, travel and other fringe benefits, payable, even though the merger was not completed, if the executives leave the company within a 30-day period one year after the deal was made.

US Airways, the No. 6 U.S. carrier, saw its proposed merger with UAL Corp's United Airlines, the second largest U.S. carrier, fall apart this summer.

As part of the shareholder approval deal last October, the executives' right to quit and get the money was triggered under a clause stating they would receive "liquidated damages" upon a change in control. The change in control provision was defined as meaning "shareholder consent by vote approving the merger."

Under the terms, chairman Stephen Wolf would receive about $16 million, chief executive Rakesh Gangwal, $21 million, and general counsel Lawrence Nagin, $8 million, the lawsuits said.

"The wrongful terms of the employment agreements not only could cost the company tens of millions of dollars, but the terms perversely encourage the executives to leave the company's employ rather than continue to serve the company loyally and diligently," said the suit by Rosenberg.

This month, Gangwal presented to Wall Street a plan to let US Airways operate as a stand-alone carrier with the tag line "US Airways - The World Class Carrier of Choice."

However, some analysts and industry experts said they were disappointed with the three-hour presentation. Pilots quickly rejected the plan, saying it undermined labor commitments.

Shares of US Airways hit a new 52-week low on Tuesday of $13.25 and were last trading down 64 cents to $13.26 on the New York Stock Exchange. The stock is down 67 percent this year.