Mon March 18, 2013
Union President Criticizes Bankrupt Patriot Coal For Seeking Executive Bonuses
On Monday, the top official with a national miners' union says bankrupt Patriot Coal's bid to cut retiree health care benefits, while seeking millions of dollars for executive bonuses, is immoral.
Patriot Coal spun off from St. Louis-based Peabody in 2007, taking with it an enormous amount of the larger company’s health care obligations. Now that Patriot has declared bankruptcy, the company is looking to cut health care coverage for retired miners.
At a press conference in St. Louis, United Mine Workers of America President Cecil Roberts said Patriot was designed to fail.
“Clearly Patriot is filing for bankruptcy, but I also believe Peabody is morally bankrupt,” Roberts told reporters. Roberts also criticized Patriot for seeking bonuses to executives while seeking these cuts.
"At the time Patriot is filing for relief, they're also asking for the opportunity to pay out $7 million in bonuses to some of the richest folks who work for them," Roberts said. "They all have jobs, they all have benefits, they all have good retirements, but they want to give them more money."
In a statement, Patriot says the bonuses are necessary.
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...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.
Roberts also criticized Peabody for its role in shifting liabilities to Patriot, calling it a scheme.
“How in the world can you pass on a promise that you made?" Roberts said."(A) multi-billion dollar company, and now they’re saying go see this company that has no money. They lied.”
Last week, Patriot announced it was suing Peabody, asking the bankruptcy court to declare that Peabody must continue to pay for the health care costs of certain retirees who were employed by Peabody entities that were transferred to Patriot when the company formed.
In a statement provided by Peabody, the company called it "unreasonable."
Our contract with Patriot Coal states that we will fund a portion of Patriot’s retiree healthcare expenses for specified retirees. We have been providing funds under this contract since the spinoff.
This contract also appropriately states that, should Patriot’s benefit obligations decrease, our funding would proportionately be reduced. Patriot is taking the untenable position that our payments should continue in full in the future even if Patriot’s expenses are reduced.Such a claim is not only unreasonable, but counter to the fundamental basis of the language in the contract. These are Patriot’s obligations and, to the extent they are reduced, we will meet our agreement with Patriot to fund the new lower levels.
Follow Chris McDaniel on Twitter: @csmcdaniel
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