Friday, May 20, 2016

Executives Running Collapsing Coal Companies Award Themselves Millions While Laying Off Workers

by Alejandro Davila Fragoso May 18, 2016

Executives of the top coal-producing companies in the country got compensation increases while their companies spiraled into bankruptcy, laid off workers, or tried to slash employee benefits, a new report finds.

Most top executives for Peabody Energy, Arch Coal, and Alpha Natural Resources got compensation increases worth in total millions of dollars as the companies went into massive debt often due to fruitless expansions, the report released Tuesday by Public Citizen, an advocacy organization, found. In conjunction with the report, Public Citizen also sent letters to Peabody Energy, Arch Coal, and Alpha Natural Resources chief executive officers urging them to invest their multi-million dollar bonuses in a trust fund for laid off workers.


As profits shrank, executives paid themselves more, laid off staff, and cut worker benefits. Public outcry over executives receiving multi-million compensation packages as business collapse has been a common recurrence in the past decade, particularly after the financial crisis of 2008. Then the spotlight fell on banks, which were awarding billions in salaries, bonuses, and other benefits despite the implosion or near-implosion of the companies. As happened then, it’s unlikely that executives will be asked to forgo any of the compensation.

According to the report, Gregory H. Boyce, former Peabody Energy chief executive officer, got nearly $11 million in compensation packages in 2014, an increase of some $1.5 million from two years prior. Boyce got this increase the same year the company pushed to withdraw from its collective bargaining agreement with the United Mine Workers of America, which provided health coverage for retired mine workers.

Peabody Energy, the world’s largest privately-owned coal company, filed for bankruptcy last month.


Meanwhile, John W. Eaves, Arch Coal chief executive officer, got nearly $7.5 million in 2014, an increase of some $3 million from the year before. Arch Coal, the second-largest coal producer in the country, filed for bankruptcy in January, some four years after a $3.4 billion deal to acquire International Coal Group, a mining company. As the company struggles, it has fired 230 employees from a Wyoming mine. However, during the year ahead of its bankruptcy, Arch Coal paid five executives almost $20 million, according to the report, and paid more $18.5 million to bankruptcy advisers.

For its part, Alpha Natural Resources paid its chief executive officer nearly $8 million in compensation. The fourth-largest coal company in the country filed for bankruptcy a year later. Since then, Alpha has petitioned the court to break contracts with the United Mine Workers of America to modify retiree health care benefits while it paid a total of $28.4 million in bankruptcy advisory fees. It also announced plans to lay off hundreds of workers in central Appalachia, the Associated Press reported, citing tough market conditions. In February, the company said lenders offered $500 million for its core assets. It could emerge from bankruptcy in June.


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