May 17, 2016
Report: Coal Execs Pocketed Windfall While Driving Companies Into the Ground
Public Citizen Calls on CEOs to Divert Bonuses Into Trust for Laid-Off Workers
WASHINGTON, D.C. − As America’s largest coal producers were driving their coal companies into the ground through bad investments and overproduction, their CEOs pocketed outrageous bonuses while laying off hundreds of workers, according to a new report (PDF) released today by Public Citizen. All told, bonuses and money spent on bankruptcy lawyers by the four companies – Alpha Natural Resources, Arch Coal, Cloud Peak Energy and Peabody Energy – topped out at nearly a quarter of a billion dollars.
In conjunction with the report, Public Citizen is sending a letter (PDF) 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 have laid off.
When faced with bankruptcy and falling profits, these companies and their lobbying trade associations have been quick to point fingers at mine workers, unions, environmental regulations and the federal government rather than accepting blame for their own decisions. What’s worse, as the report outlines, these companies compensated for their losses by repeatedly cutting worker benefits while continuing to dole out bonuses for their top executives.
The report and letter coincide with the kick-off of a series of public hearings organized by the U.S. Department of the Interior as part of its formal review of the federal coal program. The first hearing will be today in Casper, Wyo., with additional hearings scheduled over the next eight weeks in Salt Lake City, Utah; Knoxville, Tenn.; Pittsburgh, Pa.; Seattle, Wash.; and Grand Junction, Colo.
Some key findings of today’s report (PDF) include:
- Outrageous 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 mil-lion 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 has not 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.
“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.”