Massey shareholders push for change at coal company’s annual meeting

By Tim Huber, AP
Monday, May 17, 2010

Shareholders push for changes at Massey

CHARLESTON, W.Va. — Anger that came to a boil after the nation’s worst coal mining disaster in 40 years may grow more heated Tuesday at Massey Energy’s annual meeting.

After investors pass through a throng of environmental and labor protesters outside a swank hotel in Richmond, Va., they’ll find the makings of a coup inside. They’ll be asked to join a handful of fellow investors in withholding support for the company’s slate of directors.

Massey is no stranger to conflict. Its approach to workers, safety and the environment has spawned a lot of criticism over the years. Critics have been galvanized by the April 5 explosion that killed 29 at Massey’s Upper Big Branch mine in West Virginia.

The newest threat to Massey comes from within its shareholder ranks and moves beyond headstrong CEO Don Blankenship’s public spats with people such as Robert F. Kennedy Jr. over surface mining and global warming.

CtW Investment Group, a money adviser affiliated with organized labor, initiated a public campaign against Massey, blasting what it called an “alarming” regulatory record and poor corporate governance. While CtW holds no Massey shares, government investment funds from California, New York and six other states that do own stock launched their own campaign to withhold support of company-backed directors.

Few expect the directors — Richard Gabrys, Dan Moore and President Baxter Phillips — will actually be turned out, but the ripples forming now can become something bigger down the road, experts say.

“The just vote no campaigns, which have been around now almost a decade, have some effect,” said Jim Cox, a professor at Duke University School of Law.

Massey contends that this is a bad time for a change in leadership, with the industry, and the company in particular, facing regulatory and legal threats.

“We firmly believe that … major changes in Massey Energy’s corporate governance at this difficult time would do our shareholders no good, and possibly great harm,” the company wrote in a May 13 regulatory filing.

Massey’s market value fell by $975 million within two days of the explosion. The company expects to lose up to $150 million because of the disaster in the second quarter.

For some investors, it is Massey’s leadership that created an environment that fomented disaster, or at least at times put profit ahead of safety. They cite lax oversight and rules that they say favor insiders. They are critical of arrangements like the one that allows one of the company’s favored directors, Dan Moore, to sell vehicles to Massey.

“They hit almost every sort of bad governance trigger that we look for,” said Aeisha Mastagni, an investment officer with the California State Teachers’ Retirement System.

The California fund is just one of nine public sector investors blaming the three directors, members of the Safety, Environmental, and Public Policy Committee, for Massey’s safety problems.

“We believe these three directors failed to manage the many safety risks the company faces,” dissidents investors wrote.

Massey has rejected outright those allegations.

Shares tumbled nearly 10 percent Monday to $33.29. The stock has dropped more than $10 since the explosion.

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