Massey investors urge shareholders to withhold vote for board members over safety violations

May 12, 2010 by Ken Ward Jr.

This just in:

Investor Coalition Cites Record of Serious Safety Violations

RALEIGH – A coalition of nine public institutional investors representing approximately over $500 billion in assets under management sent a letter urging Massey Energy shareholders to withhold support from Board of Directors Baxter F. Philips, Richard M. Gabrys, and Dan R. Moore because they have failed to carry out their duties on the Safety, Environmental, and Public Policy Committee. All three current Massey Directors are up for re-election at the May 18 annual meeting of shareholders.

“Since the tragic Upper Big Branch mine (“Upper Big Branch”) explosion on April 5, 2010, federal Mine Safety and Health Administration (“MSHA”) records and media reports have revealed repeated and serious safety violations,” a letter signed by the investor coalition stated.

Massey’s safety record has significant consequences for its shareholders. Following the April 5 Upper Big Branch explosion, Massey shares lost approximately $975 million in market value during a two-day time period. The Company has said it will see second-quarter losses of between $80 million and $150 million for costs related to the explosion, including employee benefits and mine damage. Additionally, Standard & Poor’s could cut Massey’s ratings due to increased regulatory scrutiny that would impact the Company’s production.

“Massey Energy has an extensive history of persistent and serious safety violations. We believe the three board members who serve on the Safety, Environmental, and Public Policy Committee have failed to address these concerns,” stated North Carolina State Treasurer Janet Cowell. “Ultimately, that has consequences for long-term shareholder value.”

Leading proxy advisory firms RiskMetrics and Glass Lewis advised clients to withhold their support from the three Directors, citing the company’s record of safety violations, the Board’s failure to adequately oversee management, and poor corporate governance practices. The coalition letter notes that all three nominees are members of the Safety, Environmental, and Public Policy Committee responsible for “reviewing safety risks, establishing goals for safety enhancements, and reasonably informing the Board about compliance with all mine safety laws.”

In light of repeated safety violations, the investor coalition sent a letter to Massey Lead Director Admiral Bobby R. Inman last month calling on the board to direct CEO Don L. Blankenship to step down as Chairman of the Board and to undergo a comprehensive evaluation of the competencies and performance of the entire Board, including the Board’s ability to oversee management and risk.

The investor coalition collectively owns 1,362,528 shares of Massey Energy valued at over $64 million. The members of the coalition are: California State Teachers’ Retirement System, Office of Connecticut State Treasurer, Illinois State Board of Investment, Maryland State Pension and Retirement System, New York State Common Retirement Fund, New York City Employees’ Retirement System, North Carolina Department of State Treasurer, Oregon State Treasury, and Pennsylvania Treasury.

4 Responses to “Massey investors urge shareholders to withhold vote for board members over safety violations”

  1. Monty says:

    This will be interesting, to see if, yet again, the Massey board circles the wagons and insists that everything is fine, this was a horrible accident and they never put safety over profits.

  2. clay ton says:

    “U.S. Sen. Bob Casey is calling on state mining regulators to place a hold on any applications from Massey Energy to begin mining in Washington County, a day after the company purchased area coal reserves in bankruptcy court….Casey said he wants any permits stalled until the company’s safety issues are resolved in the wake of the April 5 explosion at the company’s Upper Branch Mine in West Virginia that killed 29 miners.” There many be as many as 13 million tons of recoverable coal at the Mathies Mine in Union Township, PA.

  3. Austin Hall says:

    I am thrilled to see the North Carolina Sate Treasurer Janet Cowell take action against this corporation. Massey’s corner cutting mentality for miner’s safety, dismal environmental record and total disregard for community impacts translates into a bad investment of state funds.

    North Carolina is heavily invested in Massey and I hope that a complete divestment of state funds towards this rogue corporation presents itself in the near future.

  4. […] While the United Mine Workers held some protests against Massey up in Pittsburgh this week, things on that front should really heat up next week — A variety of different protests are planned around Massey’s annual meeting on Tuesday morning in Richmond, which will also feature some institutional shareholders urging votes against top company directors. […]

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