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Death benefits at Massey Energy __»

It has been a little over two weeks since the explosion at the Upper Big Branch mine in West Virginia, which killed 29 people in the worst mining accident in 40 years. On Sunday, President Barack Obama heads to Beckley, West Virginia, for a memorial service for the miners. Last Friday, Massey Energy (MEE), which owns and operates the mine, filed its annual proxy, at 5:01 p.m.

That’s one day after the Charleston (W.Va.) Daily Mail published its conversation with Massey CEO Donald L. Blankenship, who reported that the company would pay the families of those 29 miners five times their annual pay, plus lifetime income for the widows, health insurance for 20 years or more and $5,000 a year for child-care. (Article and transcripts at the link; Massey says families don’t have to settle potential legal claims to receive benefits.) Here’s an excerpt from one of the transcripts posted by the Daily Mail:

Blankenship: I’m always careful to say that they will be OK financially. I think that they will be OK if we get past the trauma and the other issues. They will get sizeable life insurance payments because it will be about five times their pay. They’ll get a workers comp check, and we will make up any difference between their workers comp amount per month and their straight time pay at Massey for life for widows. We will pay for childcare, I think, up to $5,000 a year for so many years. I don’t know each detail, but the life insurance, the ongoing medical coverage are a minimum of 20 years, in some cases for life. Full pay on a straight-time basis, large life insurance, the funeral expenses that you mentioned. So the benefits by any measure are very good. We’re very proud of the benefits, although we realize that doesn’t help much.”

That may seem generous, even in the face of the lawsuits that have already begun, but it’s a fraction of what Blankenship himself would be entitled to in similar circumstances. His family or heirs would have gotten $8.4 million if he had died on Dec. 31, according to the proxy.

That figure — roughly nine times Blankenship’s $933,369 salary last year — includes a $4 million cash death benefit, as well as accelerated stock awards and options. Perhaps most curiously, it also includes a “Special Successor Development and Retention Program” perk: “the title to a company-owned residence valued at $305,000,” in Sprigg, West Virginia — and $212,168 to make up for income taxes due on receiving the house. (See the post Michelle wrote a little two years ago about the house.) Massey’s investor relations contact, Roger Hendriksen, didn’t respond to questions about the death benefits sent by email.

We couldn’t immediately track down just what the house looks like, but we imagine it’s pretty nice: Searches at multiple real-estate Web sites didn’t turn up many homes on the market in Mingo County for more than about $170,000. A profile of Blankenship by Bloomberg News — which also recounts an ugly unemployment-benefit dispute with a former maid — suggests it’s located on the grounds of the company’s Rawl Sales & Processing Co., in his home county of Mingo near the Kentucky border, in Hatfield & McCoy territory.

Life insurance, of course, is often seen as a safety-net for widows and orphans, and it can certainly be just that. For those in the corner office, however, it has a tendency to morph into a sort of all-purpose perk. Blankenship’s heirs would get $4 million if he dies on the job, but when he retires — he’s 60 years old and eligible for full pension benefits at 62 — he could also choose to continue that benefit at Massey’s expense. Or, if he prefers, he can take $1.1 million cash at age 65, or $2.2 million paid out over 10 years at $18,241 a month.

All that, of course, is on top of the $5.7 million in pension benefits he is entitled to, and the $27 million he has accumulated in his deferred-compensation account.

By contrast, Massey said in a recent 8-K filing that it expects its entire second-quarter charge for the Upper Big Branch Mine tragedy to approximate $80 million to $150 million, “for charges related to the benefits being provided to the families of the fallen miners, costs associated with the rescue and recovery efforts, insurance deductibles, possible legal and other contingencies.”

Elsewhere, others have analyzed Blankenship’s pay, and how he stood to benefit from certain safety measures even as the company faced a blizzard of violations from mine-safety regulators. (The company has been fighting many of those citations and the related fines, and Blankenship told the Daily Mail that the company doesn’t put profits over safety.)

We’re glad to read that Massey seems to be making an effort to help the miners’ families, though it wouldn’t surprise us if reasonable people concluded the company should pay more. But it’s also clear that, when it comes to the company’s top executives, Massey Energy will spare no expense making sure “that they will be OK financially,” whatever happens.

Image source: public.resource.org via Flickr