Eric Galatas, WYOMING NEWS SERVICE – Arch Coal paid top executives over $8 million in bonuses one business day before filing for bankruptcy in January, according to a new report from Environment and Energy Daily.
Twelve company insiders also received almost 88,000 “phantom stock” derivatives worth more than $70,000 the same day.
Report coauthor Dylan Brown says the bankruptcy court will review all transactions taking place within 90 days of filing.
“The phantom stock, as well as the bonuses themselves, are within that 90-day time frame,” says Brown. “But the Friday before the bankruptcy filing obviously raises even more red flags.”
According to court documents, bonuses went to seven corporate officers, and CEO John Eaves received $2.78 million.
Arch Coal declined requests for comment, but Brown says it isn’t uncommon for companies to refrain from talking publicly during ongoing legal proceedings.
The company has not been accused of wrongdoing by any state or federal agency.
Like much of the coal industry, Arch has struggled, facing falling coal prices and demand, cheap natural gas and looming regulations. The company lost nearly $3 billion in 2015.
And recently, JP Morgan Chase joined Citigroup and Morgan Stanley in dropping financial support for new coal-fired power plants.
Brown says given the new economic reality in coal-producing states, compensation decisions deserve a second look.
“If these executives are making millions of dollars while fewer and fewer people are working in Wyoming and mining coal, what does that say to the average worker?” Brown asks. “The question in Wyoming should be whether these bonuses for these executives are justified.”
Court documents show Arch also paid more than $22,000 to a golf club and a separate country club in St. Louis, Mo., where the company is headquartered, the day before filing for bankruptcy protections.