Tuesday, January 19, 2016

Government watchdog objects to bankrupt Alpha's plan to give executives up to $11.9M in bonuses

A government watchdog has filed objections to a proposal by Alpha Natural Resources—which earlier this month filed for bankruptcy protection—to pay executive bonuses of up to $11.9 million in 2016, Benjamin Storrow reports for the Casper Star Tribune. The U.S. Trustee, a division of the Justice Department, argues that "the bankrupt coal company cannot justify the additional pay at a time when it has recorded steep losses and sought to cut retiree benefits. A hearing on Alpha’s proposals to pay executive bonuses and cut medical and life insurance benefits for 4,580 nonunion miners and their spouses is scheduled for Thursday."

Alpha, which last recorded a profit in 2011, "has argued the bonuses are necessary to retain key executives during its Chapter 11 proceedings," Storrow writes. "But in court filings submitted Friday, the trustee’s office challenged that argument. The government noted Alpha’s request to pay bonuses coincided with a $1.3 billion loss in 2015 and a plan to save $3 million annually by cutting retiree benefits."

The watchdog wrote, “According to Alpha, these executives need these bonuses as an incentive to do the very jobs they were hired to do, that they are already highly compensated for with generous salaries, and which their fiduciary duties compel them to do. Such bonuses cannot be justified under the facts and circumstances of this case.”

Storrow writes, "Executives will receive a total of $3.4 million if they meet a 'threshold' performance level, $6.8 million if they meet a so-called 'target' level and as much as $11.9 million if they exceed expectations. The government questioned the size of those bonuses, noting they exceeded what Alpha executives received in the years leading up to its bankruptcy filing." (Read more)

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