Patriot proposes bonuses in midst of bankruptcy, union protests - Business, Government Legal News from throughout WV

Patriot proposes bonuses in midst of bankruptcy, union continues protest

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The United Mine Workers of America will again protest at Peabody Coal based on their allegations that toxic assets were purposefully spun off into Patriot Coal.

The protest follows a filing by Patriot Coal requesting approximately $6 million in bonuses to be paid to about 120 executives and managers while it goes through bankruptcy reorganization. The UMWA said the move was a "callous disregard for the lives and well-being of thousands of active and retired workers and their families."

"While Patriot is handing out cash to managers and executives, thousands of retirees and widows the company is responsible for are worried about having to choose between buying groceries or getting the prescription drugs they need to live," said UMWA President Cecil Roberts. "That $6 million would pay for a month's worth of health care for retirees, dependents and widows. It's also $6 million Patriot could use to fight Peabody Energy and Arch Coal in court to get them to pay for these obligations."

According to a statement from Patriot Coal, the company's CEO and executive team will not participate in the retention and annual incentive plans filed yesterday. 

"The purpose of these plans is to motivate key employees to remain with Patriot and to achieve financial and operating performance goals that are essential to the Company becoming viable through reorganization.," Patriot stated. "A successful reorganization is critical to Patriot's survival and to saving 4,000 jobs."

Patriot said the cost of those plans is lower than most similar plans submitted in Chapter 11 bankruptcies. 

"Our employees have incurred substantial reductions in compensation and benefits since the Chapter 11 filing," Patriot continued. "It is more important than ever that Patriot retains key employees and that those employees are motivated to perform their responsibilities at the highest level possible under increasingly difficult circumstances.  Even with these plans, participating employees' compensation opportunities will be well below their pre-filing historical compensation as well as market levels."

Roberts said it's not workers' fault that Patriot went through bankruptcy, and distributing money to "well-paid executives and managers is just wrong."

"This is nothing more than a finger in the eye of those retirees and widows, as well as the active workers who are looking at the destruction of decades of collective bargaining improvements," Roberts said. "These workers put their health on the line and put their lives on the line every single day to produce coal."

In its filing, Patriot Coal said the retaining of employees was essential to the company coming out of the bankruptcy financially sound.

"Although compensation and long-term incentive prospects have diminished, it is now more important than ever for the Proposed Plan Participants both to remain in their positions and to perform their responsibilities at the highest level possible under increasingly difficult circumstances," the statement reads. "Anything less would be critically damaging to the Debtors' restructuring."

Patriot added further that compensation would still be below market price.

Roberts was recently arrested in a nonviolent civil disobedience action at the St. Louis-based Peabody Energy.

"We will not rest until we win justice for the workers who were promised health care benefits in exchange for a lifetime of hazardous work," Roberts said.

Peabody Energy has maintained that Patriot Coal was spun off in good faith. It has attributed other factors to Patriot's financial woes.

"Patriot was highly successful following its launch more than five years ago with significant assets, low debt levels and a market value that more than quadrupled in less than a year," Peabody said in an earlier statement. "At the time, trade publications cited the dream team of top management, and analysts touted a bright future based on solid prospects and a strong balance sheet."

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