Coal Boss Don Blankenship Cast as Cavalier About Worker Safety in Lawsuits
Investors Also Critical of Massey CEO's 'Extravagant' Pay, Perks
By MATTHEW MOSK and ASA ESLOCKER
Apr. 8, 2010
As more details continue to surface about the checkered safety record of the Massey Energy coal mine where 25 workers perished Monday, the lavish lifestyle and allegedly cavalier attitude of the company's controversial chief executive, as described in lawsuits and corporate documents, are now coming under intensifying scrutiny.
One miner who worked in Massey mines most of his 25-year career said working for CEO Don Blankenship was "like living under a hammer. It's all about the bottom line, we all know that." The miner, who would only agree to speak with an ABC News reporter if his name was not used, said Blankenship believes in "stretching the men to the limit … they want every ounce out of the men that they can get."
The public record describing Blankenship's bottom-line approach is long, much of it laid out in a series of investor lawsuits filed against Blankenship and his company, and in SEC documents submitted by a Wall Street investment house that made a failed bid to take control of Massey Energy four years ago. In these records, Blankenship was repeatedly criticized for both his approach to safety, and for what one investor called his "extravagant" package of pay and perks.
In just one year – 2005 -- Blankenship was paid $33.7 million in compensation, according to a 2008 lawsuit. He flies to resorts on a company-owned Challenger 601 luxury jet. And he lives in a house owned by Massey Energy that by contract becomes his property if he leaves.
Blankenship has always publicly disputed the notion that safety comes second for him or his company. At the same time, in public remarks, he has challenged his critics to have a realistic outlook about one of the nation's most dangerous professions.
The safety complaints were also the subject of increasing unease from investors, who worried Blankenship's management style was putting the future of Massey Energy at risk. In June 2007, two board members resigned from Massey's board of directors. Daniel S. Loeb and Todd Q. Swanson submitted a resignation letter saying they were stepping down in part because of Blankenship's "poor risk management" and the company's "confrontational handling" of regulatory matters.
In December 2008 a group of shareholders sued Massey Energy's board members for "blatantly disregarding their fiduciary obligations," in part because of safety violations that allowed employees to die in "preventable accidents." The suit was dismissed because a similar case, filed in West Virginia state court, had been settled, according to Barry Hill, a Wheeling attorney who represented plaintiffs in the case.
Many of these battles became grist for a book published in 2008 by freelance writer Michael Shnayerson called "Coal River." In an interview with ABC News Tuesday, Shnayerson said there's no question in his mind that Blankenship knew about the repeated safety citations at the Upper Big Branch.
"Don was and is a complete micromanager," Shnayerson said. "He knew everything that was going on at Upper Big Branch. A lot of the fault of the explosion would have to be laid at his feet."
Shnayerson described how Blankenship had a special red phone installed at Upper Big Branch so he could reach managers whenever he needed to. "It was like the line to the Kremlin, only it went to Don."
Employees at the mine were instructed to call him "Mr. B.," Shnayerson said. Blankenship would call any time coal production slowed.
Shnayerson said that, despite appearances, Blankenship is not a comic book villain, but a complex man who is respected by many in West Virginia for what is viewed as straight talk, and for his almost paternalistic treatment of his workers and colleagues.
In fact, while many Massey employees have refused to talk to reporters about the mine disaster, some have rallied to Blankenship's defense. Robin Shamblin, whose sister, Bobbie, is a miner at Upper Big Branch, where the explosion occurred, told The New York Times this week: "There is a lot of pride that Massey people feel about their work and working in the mines over all. They are happy to be working and many, not all, but many feel lucky to be working for Massey and Blankenship."
Shnayerson said that loyalty has been rewarding for some, who have worked long careers with the firm, but not for others. When Blankenship first took control of the mine, he spent more than a year trying to woo the miners to abandon their allegiance to the labor union that had represented them.
"Don made it his own personal campaign. He began flying in every week in his helicopter. He gave pep talks. He took a whole bunch of them on trips to Dollywood, where they went to concerts. He went with them and bonded with them. New cars started turning up in their driveways," Shnayerson said.
But as soon as the union was gone, Shnayerson said Blankenship shifted gears. Work hours increased from eight hours to 12 hours. Bonuses were cut. If they got injured, their jobs were at risk.
And according to federal mining data, citations and safety violations started to rise. Ellen Smith, a mine safety expert who publishes a mining industry news letter, said a number of violations at Upper Big Branch signaled significant risks, including one incident where a ventilation system was malfunctioning and sending coal dust into a primary escape shaft. Two violations were cited on the day of the explosion.
"They had so many citations," Smith said, "It appears this was an explosion or an accident waiting to happen."
In an interview with Diane Sawyer Tuesday, Blankenship said he didn't know of any steps his company could have taken to prevent the disaster and deflected suggestions that his company's coal mines are more dangerous than others.
"Eighteen of the last 20 years we've been safer than the industry average," Blankenship told Sawyer. "We're the leaders in safety innovation and continue to be more creative in the area of safety than any other company, in our opinion."
Blankenship acknowledged a record of problems but said the mine had been deemed safe by federal inspectors.
"We have lots of regulators in the industry, probably more regulators in the coal industry than any other industry in the country, and the Mine Safety and Health Administration, the state agencies, all the safety people we have on hand felt this was a safe coal mine," Blankenship said. "At the Massey level, we're doing everything we can to make all of our mines as safe as we can."
When asked by Sawyer whether Massey Energy owes anything to the families of the killed miners, Blankenship said that his company will set up a fund for the families and provide assistance for the needs of the miners children. He told her: "Anything in life has risks."