Shareholders call on Massey Energy to fire Don Blankenship

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"Shareholders call on Massey Energy to fire Don Blankenship"

Massey

Shareholders are calling on Massey Energy to seek the immediate resignation of chairman and CEO Don Blankenship in the aftermath of the West Virginia disaster that killed 29 miners, the worst in forty years. Brad Johnson has the story in this repost.

The Change to Win Investment Group “” a union pension fund group with over $200 billion in assets “” believes the Upper Big Branch mine explosion is the “tragic consequence of the board’s failure to challenge Chairman and CEO Blankenship’s confrontational approach to regulatory compliance.” New York State Comptroller Thomas P. DiNapoli, who controls about $14.1 million of Massey stock as the trustee of the New York State Common Retirement Fund, blasted Massey’s “callous disregard for the safety of its employees” as a “failure both of risk management and effective board oversight”:

Massey’s cavalier attitude toward risk and callous disregard for the safety of its employees has exacted a horrible cost on dozens of hard-working miners and their loved ones. This tragedy was a failure both of risk management and effective board oversight. Blankenship must step down and make room for more responsible leadership at Massey.

Early this morning, the last of the 29 bodies of the miners killed were recovered from the mine. Yesterday, Standard & Poors upgraded Massey to a “buy,” saying the tragedy’s “financial effect” was “immaterial.”

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31 Responses to Shareholders call on Massey Energy to fire Don Blankenship

  1. Reese Emory says:

    I thought the board of directors makes those decisions.
    We don’t close the public schools in america when there is a shooting.

  2. Leif says:

    Reese Emory, #1: No, and we don’t fire the CEO of Ford when you crash your car. We do however punish you if you are negligent and cause bodily injury or death. For instance DDI or knowingly driving without breaks or speeding and killing bystanders. Wake up and think.

  3. catman306 says:

    Someone here reported that JP Morgan Chase puts up quite a bit of the money that funds mountain-top removal. At least they are having a good year.

    http://news.bbc.co.uk/2/hi/business/8619955.stm

  4. Jeff Huggins says:

    Bravo. This is as it should be. More and more major shareholders should insist on Blankenship’s dismissal. Any major shareholder group that doesn’t do that will share responsibility for any further casualties under Blankenship’s irresponsible leadership. Simple as that.

  5. Mark says:

    Nick Anderson’s political cartoon on Massey Energy’s priorities.

    http://blogs.chron.com/nickanderson/archives/and041110b1.jpg

    [JR: Thanks!]

  6. Bob Wallace says:

    Reese –

    “I thought the board of directors makes those decisions.
    We don’t close the public schools in america when there is a shooting.”

    No, but if there’s a school shooting in America and it is found that the principal was grossly negligent in seeing that there were adequate safety measures in place you can bet that the principal is toast.

    Especially if is found that the principal was warned over and over that he/she was endangering students and staff.

    School board meets -> Principal fired.

    Closing the “school”. This Massey-owned “school” is closed for a long time. They almost certainly could have avoided this disaster had they just followed the rules.

  7. mike roddy says:

    Blankenship hasn’t changed- it just happened to come up tails for him this time with the mine explosion. This was obviously bound to happen, unless nobody was paying attention to the thousands of safety violations.

    The Board, and the shareholders, knew the kind of man he was all along. Everything was OK as long as they were getting their dividend checks, but now that he’s in the newspapers they’ve suddenly figured out that he’s a bad guy, and are getting all self righteous.

    Sure Blankenship should go to jail. But so should the Board, for criminal negligence. The only reason they won’t is that they represent unearned income “investors”, while Blankenship is a bad person who does their dirty work for them. The Board members don’t slobber in public, wear nice suits, and use proper English. They are actually worse than Blankenship, who was only following their instructions (“Make as much money for us as you can, but take the heat for what you have to do in order to maximize our returns”).

  8. Chris Dudley says:

    Jeff (#4),

    The Obama administration has ultimate responsibility since it had the authority to close the mine and didn’t. The board had a responsibility to the shareholders to try to keep operating and shareholders have no responsibility at all. The board, and Blankenship have a perfect excuse: they had been allowed to keep running by the Obama administration despite clear knowledge that the danger was high. Basically, they can say that they don’t make the rules.

  9. Leif says:

    Chris Dudley, #8: They did in fact make the rules. They had their bought and paid for man on the inside installed by The Shrub. The pair made sure that the proper judges were installed, that there were insufficient inspectors as well as a goodly number of those being incompetent or poorly trained. (Perhaps even bought off as well!) The Shrub had 8 years to grease the wheels. A new administration cannot be expected to right all wrongs in a year and a bit. Especially given a bankrupt Nation, a couple of wars, and an opposition party that just says NO to new judges, reforms. and any possible solution that may be helpful to the workers. Even now, imagine the howls from the Right should any attempt be made to close that mine down.

  10. Bob Wallace says:

    Chris – I believe your are wrong there.

    A few years back the fines for safety violations were significantly increased and Massey decided their best strategy was to appeal essentially every violation that was written up. They intentionally clogged up the process.

    As I understand it, a mine cannot be closed as long as the violations are being appealed.

    Shortly after taking office Obama added four more judges to the ten hearing the appeals. They were working their way through the backlog, but obviously four weren’t enough….

  11. Jeff Huggins says:

    Chris (Comment 8)

    Do you believe that?

  12. Jeff Huggins says:

    Chris (Comment Eight), sorry, I’m not sure how the face ended up there. It must be something about an “8″ and a “)”

    Be Well,

    Jeff

  13. Bob Wallace says:

    Chris – you might want to read this. It does a fair job of explaining how Massey blocked the legal process by appealing violation write-ups.

    http://www.huffingtonpost.com/2010/04/09/obama-administration-miss_n_532386.html

    Any authority to close a mine exists via a legal process and if that process is faulty or is being gamed the administration’s hands would have been tied.

  14. Neven says:

    shareholders have no responsibility at all.

    Indeed, that’s a huge problem.

  15. Chris Dudley says:

    Leif (#9),

    No matter how bad the prior administration, after a year, you can’t blame them for things that happen on your watch over which you have direct authority. Howls are no reason not to carry out your duty which President Obama failed to do.

  16. Chris Dudley says:

    Jeff (#11),

    Strategies like divestment can help out in ending an injustice. But that is shareholders taking on a new responsibility, not finally owing up to an existing one. Really, that is more activists trying to influence shareholders.

    People who invest in, say, racketeering operations, do have responsibility but investing in a limited liability legal entity pretty much absolves you.

  17. Chase says:

    These shareholders aren’t thinking big enough. He should be in prison.

  18. Chris Dudley says:

    Bob,

    Thanks for the link. That makes it pretty clear that the MSHA had more authority than it was exerting. So, it is their lack of initiative that left the mine open while operating unsafely.

  19. Chris Dudley says:

    Bob (#10),

    Should have responded to both posts at once. The Governor of WV is shutting down all mines today so there is clearly authority to close mines beyond the particular enhanced oversight mechanism that seems to be coming up as an excuse. And, obviously, the Obama administration has had time to change the rule that ties appeals to safety actions in any case. The safety of miners is just a low priority for an administration that took a quarter million dollars from the coal lobby. They are effective in other areas so the failure is particularly disappointing.

  20. Chris Dudley says:

    It occurs to me that if the price of coal were a little higher, more could be spent on safety. One way to get to a higher price would be to shut down the least safe mines so that the supply of coal is reduced. Then the safer mines could budget for even better safety. Jobs lost at the shutdown mines could be replaced with silicon refining at higher pay and much improved working conditions. Tennessee is already doing this kind of thing. Virginia, West Virginia and Kentucky could get this going with stimulus money very easily.

  21. mike roddy says:

    Chris, #20:

    There may be a problem. Mountaintop removal mining destroys mountains and slowly poisons those downstream, but site fatalities are rare. This could increase pressure to do more MTM.

    However, if EPA steps up like they appear to be doing and MTM is phased out, the price of coal will rise, which will be a great thing for alternative energy.

  22. Bob Wallace says:

    Chris #19 You seem to have a need to place blame inside the White House rather than make any attempt to understand the mine safety system, the problems being caused by mine operators in getting existing regulations enforced, and the difficulties in changing existing law when the opposing party has been opposing everything, especially putting more regulations on business.

    That’s your choice. I’m sorry you’ve made it.

  23. Chris Dudley says:

    Bob (#22),

    The rule you are worried about appears to be a MSHA rule, not a law. This could have been changed by now by the administration. In any case, there is other authority to close mines so the review rule excuses are just blame shifting.

    In any case, President Obama appears to be starting to accept the blame for the accident. That is a good start though it is sad that it happens under such horrid circumstances. Hope he’ll return the coal lobby money he accepted as well and start closing unsafe and environmentally damaging mines using authority he already has. He had over $15 million unspent at the end of the campaign so returning a quarter million to the coal lobby should not be that big a deal.

  24. Chris Dudley says:

    Mike (#21),

    I expect that Wyoming will be the last hold out of coal mining, not more MTR, the science is really against MTR.

  25. Reese Emory says:

    This web site praises China as a leader in energy

    BEIJING (AP) — A former Communist Party official was executed Friday for trying to cover up a tin mine accident that killed 81 people in 2001, the government announced.

  26. Leif says:

    Chris, here is a thought. Instead of returning the money how about a petition to give that money to a worthy cause. Center for American Progress comes to mind. But any number of other worthy Global Warming awareness groups would qualify and would be a fitting “in your face move” and generate worthy press to boot.

  27. Chris Dudley says:

    Leif (#26),

    That might work though I think it sends a stronger message to return to sender. CAP does not disclose its corporate donors so it might be getting additional coal money if the money were passed to them.

  28. Richard Brenne says:

    Great discussion here by all (except #1).

    This is a metaphor for our entire planet. Business as usual takes precedence over the safety of everyone, including all future generations.

    Our blankenship is coming in. . .

  29. Chris Dudley says:

    #28

    A lot of think tanks are secretive about where they get money. But, what we do know of CAP’s funding is that it looks a lot like democratic party funding sources. Given that the the coal lobby donates there and they paid for the primary debates, there is a non-negligible chance they contribute to CAP as well. The word ‘might’ is important since there is also a chance that they don’t. Coal is an especially tricky lobby.

  30. Chris Dudley says:

    Looks like my #29 is responding to a deleted comment.

  31. Chris Dudley says:

    With the administration ready to charge Goldman Sachs with fraud, lets hope it can break free of the thrall of the coal industry and start shutting down a few mines.