Coal Boss Don Blankenship Has Full Support of Massey Energy Board

CEO, 3 directors could face shareholder revolt at 1st meeting after deadly blast

April 22, 2010— -- Coal boss Don Blankenship has the "full support" of his company's board of directors in the aftermath of the deadly mine explosion that killed 29 workers earlier this month, Massey Energy board members said in a public statement issued Thursday.

"During times like these, a change in senior management is not appropriate or in the best interest of our members and shareholders," said Admiral Bobby R. Inman, Massey Energy's lead independent director in a release. "Therefore, we want to emphasize that Don Blankenship has the full support and confidence of the Massey Energy Board of Directors."

The statement comes as several shareholder groups have indicated they could seek Blankenship's removal as CEO at an annual meeting scheduled for May 18, as well as the ouster of several of Blankenship's allies on the board of directors.

There have been past attempts to loosen Blankenship's firm grip on the Massey board, though none of them succeeded.

In 2006, after another deadly mine accident, a group of investors lead by the New York firm Third Point LLC sought Blankenship's ouster, accusing him in SEC filings of turning a blind eye to safety and exposing the company to massive fines for environmental damage. They also complained about the millions of dollars in compensation and perks he receives. Blankenship fended off the challenge and maintained that worker safety is a primary concern for him and for all of Massey's corporate leaders.

In the aftermath of the nation's deadliest mine disaster in more four decades, calls for Blankenship's removal have resurfaced.

Earlier this week, the Wall Street Journal reported that a group of large public pension funds wants to strip Blankenship of his board chairmanship. The newspaper identified the California Public Employees' Retirement System and the California State Teachers' Retirement System, as two large shareholders who have raised concerns. Janet Cowell, state treasurer for North Carolina, where public pension funds hold 384,515 Massey shares told the Wall Street Journal this week that the shareholders may also target Massey President Baxter F. Phillips, and board members Richard M. Gabrys and Dan R. Moore. Those three directors are up for reelection at the May 18 company meeting.

"All options are on the table," she told the newspaper.

The Board's statement of support for Blankenship comes the day after investigators met with about 100 relatives of the 29 dead miners. Blankenship told the Charleston (W.Va.) Daily Mail that the company has pledged to pay the families five times the miners' annual pay, as well as provide lifetime income for the widows, health insurance for 20 years or more and $5,000 a year for child-care.

Blankenship told the newspaper that the benefits are "by any measure are very good. We're very proud of the benefits, although we realize that doesn't help much."

The website noted that however generous those benefits might be, they represent only a fraction of the death benefit that Massey Energy has negotiated with its controversial chairman. According to the website's review of corporate filing, Blankenship's heirs would have received $8.4 million if he had died in 2009, according to the company's proxy.

As for what caused the blast, answers remain elusive. Investigators have not yet entered the mine. Conditions underground are still too hazardous. On an investor conference call Thursday, Massey officials said their crews were still trying to make the mine safe enough for federal, state, and company investigators to get inside.

Board members began their call with a moment of silence for the miners who died.

"The Massey Energy family continues to grieve for those lost in the awful tragedy at Upper Big Branch and remains fully committed to the safety of our members," the company's public statement said.

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