Unfortunately, the four workers missing after an explosion in a West Virginia coal mine didn’t survive, bringing the final death toll to 29. As a result, the incident is the worst since a 1970 explosion in a Kentucky mine left 38 dead. Now, investors in the Massey Energy Company, which owns the mine, are calling for the head of CEO Don Blankenship—and criticizing the company’s board for its “minimal oversight” of Blankenship’s regime.
Not the First Time Investors Raised Concerns
The CtW Investment Group, which owns less than 1% of Massey stock, had written to the board in March with concerns that the board’s failure to exercise oversight of Blankenship exposes the company and its shareholders “to unnecessary legal, regulatory and reputational risks.” (Interesting that CtW didn’t seem so concerned about the risks that workers were exposed to under Blankenship’s management.) The board didn’t bother to respond to these concerns.
Renewed Calls for Blankenship’s Resignation
In the wake of the recent tragedy, CtW has renewed its calls for Blankenship’s resignation and for the board to exercise “independent oversight” of the company’s management. In a letter dated April 12, CtW expresses disappointment with the board’s failure to respond to its prior requests for Blankenship to resign. It notes that former board members had also raised concerns with the board’s “unwillingness to confront the company’s poor risk management” and “confrontational handling of environmental and regulatory matters.” Bottom line: CtW believes that Massey, under Blankenship’s leadership, has placed short-term production and profits ahead of prudent risk management with “devastating consequences.”
New York State Comptroller Thomas DiNapoli also called for Blankenship’s resignation. As the trustee of a New York retirement fund that owns over 300,000 shares of Massey stock, DiNapoli criticized the company’s “callous disregard for the safety of its employees.” He said, “Blankenship must step down and make room for responsible management at Massey.”
What about the Board’s Responsibility?
It seems clear that Blankenship has to go. But what about the board of directors? It’s just as clear that they dropped the ball and didn’t properly oversee the company’s management. Blankenship was allowed to place safety last because the board let him.
We’ll have to wait and see what—if any—changes take place to Massey’s management structure. It’ll also be interesting to see if state and/or federal authorities go after Blankenship and the board once their investigations into the explosion are done.