Release Date: May 20, 2003
Chantilly, VA A majority of Massey Energy (NYSE: MEE) shareholders voted in favor of a "Golden Parachute" proposal at the company's annual meeting on May 20.
The proposal, presented by Amalgamated Bank's LongView Fund, seeks shareholder approval for executive severance agreements that are at least 2.99 times annual compensation. Such generous severance packages are known as "golden parachutes."
The measure passed with 72% of the votes cast. Last year, 47% of shareholder votes were cast in favor of a similar provision. "The vote count this year is going to be very hard for the board to ignore," said Melissa Moye, Chief Economist for Amalgamated's Trust and Investment Services Group.
Massey's board opposed the proposal in 2002, but did not recommend a vote for or against the measure this year, stating, "the Board recognizes that the question of whether the Company should enter such an agreement is an appropriate one for consideration by the Company's shareholders."
"Although LongView opposes excessive executive severance packages across the board, we believe there is particular cause for concern at Massey," said Moye, noting that the executive severance package calls for guaranteed compensation for four years. "Under the current policy, had CEO Don Blankenship been terminated early in his contract, he would have been paid as much as four times his annual compensation. Further, Massey's financial restatements would indicate special shareholder oversight is needed to ensure enhanced corporate accountability."
An SEC review led Massey to restate its 2001 results to a net loss of $5.4 million, or 7 cents a share. The company had previously reported a loss of $1.1 million, or 1 cent a share, for 2001. In 2002, the company posted a net loss of $32.6 million, or 44 cents a share, compared with the loss of $32 million, or 40 cents a share, previously reported.
In 2003, AB LongView proposals have received nine majority votes to date, including majority support for golden parachute proposals at Union Pacific, AK Steel and Sprint. The AB LongView fund owns 56,906 shares of Massey stock.
Amalgamated Bank, "America's Labor Bank," invests workers' retirement savings through its LongView funds. With $6 billion in assets, LongView is one of the most active corporate governance advocates in the market. Amalgamated Bank can be found online at www.amalgamatedonline.com.
