As Don Blankenship prepares to give up control of Massey Energy after the nation's worst mining disaster in four decades, angry shareholders who have been agitating for the coal executive's ouster aren't sure whether to celebrate or lament.
That's because corporate filings are revealing the staggering cost of his departure -- a golden parachute that will provide Blankenship with $2.7 million upon retirement, a free house for life, millions more in deferred compensation, and a "salary continuation retirement benefit" of $18,241-a-month that will continue for 10 years after his departure at the end of the year.
"The fact of the matter is, the company absolutely needs him to leave. You want to say, anything's worth it because the company has no future with him," said Per W. Olstad, a lawyer with CtW Investment Group, a shareholder group that has pushed for Blankenship to step down. "But it's an egregious payout. It's way beyond what he's earned. Given how destructive his mismanagement has been, he simply does not deserve it."
Twenty-nine miners died in the April explosion at Massey's Upper Big Branch mine in West Virginia, and critics have claimed that Blankenship's bottom-line management style contributed to safety risks. In SEC documents submitted by investors who made a failed bid to take control of Massey in 2006, Blankenship was repeatedly criticized for his approach to safety. In June 2007, two Massey board members resigned, saying they were stepping down in part because of Blankenship's "poor risk management" and the company's "confrontational handling" of regulatory matters.
The full breadth of Blankenship's retirement package is still not known, but the web site Footnoted.com laid out some of the terms in an item posted this morning, including what it says is a $5.7 million pension, generous stock options, and $27.2 million from a deferred-compensation account, "a combination of pay he set aside and interest Massey has promised to pay him on those sums." The web site also noted that the free housing Blankenship has enjoyed during his tenure as CEO will continue into his retirement, as will the company's agreement to handle any income taxes he would owe for getting use of the house.
All this comes after a tenure which saw the controversial coal boss receive $38.2 million total compensation in the last three years alone, $26.7 million of it in cash, Footnoted reports.
Massey Energy officials declined to comment directly on the terms of Blankenship's retirement. But the press release issued by the company notes that the coal mining giant has done very well under Blankenship's tenure.
Blankenship took over as CEO in 2000 after running a Massey subsidiary since 1992. The company's release says that during the decade since Massey became a public company, "Mr. Blankenship has driven the growth of what is now Massey Energy from 3,662 Members (employees) in 2000 to over 7,300 today. In addition, the market capitalization of the company has risen from about $758 million in 2000 to about $5 billion today, while annual revenue has risen from about $1.08 billion in 2000 to $2.7 billion in 2009."
"I am deeply grateful to Don for the decisive leadership he has provided to Massey and we appreciate his success in building this company," board member Bobby R. Inman said in the release. "We all wish him even greater success in the future."