Coal company CEOs run companies into the ground while being paid huge bonuses, report shows
May 24, 2016
As America’s largest coal producers were driving their coal companies into the ground through bad investments and overproduction, their CEOs pocketed huge bonuses while laying off hundreds of workers, according to a Public Citizen report.
Bonuses and money spent on bankruptcy lawyers by the four companies – Alpha Natural Resources, Arch Coal, Cloud Peak Energy, and – is nearly a quarter of a billion dollars, the report, released Wednesday, shows.
“It is unfortunate that the political discourse has been framed by this fictitious ‘war on coal’ narrative, when the truth reveals an industry hampered largely by market forces and poor financial decisions,” said Tyson Slocum, director of Public Citizen’s Energy Program. “We need an honest dialogue about the future of our energy system and how to prioritize investing in coal mining communities that have been hurt by the transition.”
When faced with bankruptcy and falling profits, these companies and their lobbying trade associations have pointed fingers at mine workers, unions, environmental regulations and the federal government rather than accepting blame for their own decisions, Slocum said. What’s worse, he said, is that these companies made up for their losses by cutting worker benefits while continuing to give out bonuses for their top executives.
Some key findings of the report include:
- Huge compensation packages were delivered to CEOs after the companies committed themselves to producing more metallurgical coal − even as its price slumped from $160.39 per short ton in 2011 to $100.85 in 2014.
- After Alpha Natural Resources went bankrupt in 2015, it increased lobbying spending by 190 percent during the fourth quarter of 2015 while attempting to eliminate health care benefits for its workers. Since then, Alpha has petitioned the court to break contracts with the United Mine Workers to modify retiree health care benefits and paid a total of $28.4 million in bankruptcy advisory fees.
- After filing for bankruptcy earlier this year, Arch Coal laid off 230 employees from its Black Thunder Mine while paying five executives almost $20 million and spending more than $18.5 million on bankruptcy advisers.
- After filing for bankruptcy in March 2016, Peabody paid bankruptcy advisers $27.5 million through April 2016, with some advisers being paid as much as $1,075 per hour – about what the average Wyoming household earns in a week.
- Cloud Peak Energy, the only one of the top four companies that hasn’t declared bankruptcy, is in a more stable financial position likely in part because it has long taken advantage of a loophole allowing the company to value coal at low domestic prices for royalty purposes and then resell it abroad for higher international prices.
Public Citizen is sending a letter to the CEOs of Peabody Energy, Arch Coal, and Alpha Natural Resources urging them to invest their multimillion-dollar bonuses in a trust fund for the workers they’ve laid off, Slocum said.
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