Massey sends Blankenship off in style

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Not many high-powered CEOs have provisions in their retirement agreements for 1965 Chevy pickups, but retiring Massey Energy chairman and CEO Don L. Blankenship isn't your typical high-powered CEO.

The Richmond, Va., coal producer -- in the cross hairs of regulators following the April 5 explosion at its Upper Big Branch mine in West Virginia that killed 29 -- disclosed Mr. Blankenship's retirement package in a securities filing last week. The news came days after Massey announced Mr. Blankenship, who also serves as a lightning rod for corporate governance activists, environmentalists and union leaders, would leave the company and board at the end of the month.

Tucked inside the disclosure was that Massey agreed to give back the title to a 1965 blue Chevrolet truck that Mr. Blankenship at some point had given to the company. The model, condition, mileage and accessories of the truck weren't disclosed. Chevy trucks of the same vintage are available for $15,000 or more on the Internet.

But don't go thinking that when Mr. Blankenship drives his Chevy to the levee, the levee will be dry.

For in the grand scheme of things, the 45-year-old pickup is a drop in the bucket compared to Mr. Blankenship's other lovely parting gifts.

He'll get $12 million in severance payments -- $2 million this year and $10 million in July -- as well as $5,000 a month under a two-year consulting agreement that requires him to work no more than 32 hours a month. There's also two years of medical and dental coverage, payments from five incentive plans and secretarial assistance.

"We think that's outrageous. The only positive aspect of it is that he's leaving," said Per W. Olstad of CtW Investment Group. "He's getting paid like a departing hero." The group of union pension funds is one of Massey's most enduring critics.

The retirement payments are separate from Mr. Blankenship's pension, valued at $5.7 million in a proxy statement sent to shareholders in April. That disclosure indicated Mr. Blankenship was paid $17.8 million in 2009, exercised stock options worth $2.1 million and received $930,000 when shares of restricted stock vested. The proxy also said Mr. Blankenship had $27.2 million in a deferred compensation account, which includes pay he put off receiving, company matches and earnings from investing the contributions.

Nor does the retirement include a company-owned house that Mr. Blankenship is entitled to receive under a "special successor development and retention program" agreement he signed with the company. According to the April proxy statement, the house was valued at $305,000 in 2006. The retirement arrangements announced last week give Mr. Blankenship the option to pay cash for real estate adjacent to the home site based on the real estate's fair market value.

As for his successor, Massey said it would pay new CEO Baxter F. Phillips Jr. a base salary of $1.1 million.

Mr. Phillips, who has been president for two years and joined the company in 1981, was one of three Massey directors challenged in board elections at the company's shareholders meeting in May. He and incumbents Richard M. Gabrys and Dan R. Moore were targeted by labor unions, state pension funds and other investors displeased with the company's safety and environmental record as well as the board's failure to exert control over Mr. Blankenship.

All three were re-elected by narrow margins.

Since the shareholders meeting, Massey has implemented some of the reforms shareholders were seeking. Still, Mr. Phillips' promotion did not inspire Mr. Olstad's confidence.

"It's not exactly the kind of person you'd want to repair and restore relations with investors," he said.

On Wall Street, analysts disagree whether the changing of the guard makes it more or less likely that Massey will be sold. Some believe that the company will drop those plans to shop itself now that Mr. Blankenship is gone and pursue acquisitions of its own.

Pittsburgh investment manager Jeff Mindlin believes that Massey's mines and miners would be better served by new owners and new management.

"They need to have their [current] culture extracted," said Mr. Mindlin of the Mindlin Fund. "I would like to see them owned by another company. Their bench is nothing more than Blankenship clones."

Mr. Blankenship's departure was announced after the market closed Dec. 3. Shares opened higher Monday and continued advancing throughout the week, finishing Friday at $51.98, up $1.56 for the week and 24 percent for the year. They closed at $54.69 the day of the West Virginia mine explosion, the nation's worst mining disaster in 40 years.


Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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