Bankrupt Peabody Energy seeks approval to pay $12M in bonuses
Coal miner Peabody Energy Corp, which filed for Chapter 11 bankruptcy protection in April,asked a bankruptcy court on Wednesday to let it pay up to US$11.9 million in incentives to its executive leadership team should the group meet certain performance targets.
Peabody’s president and chief executive officer Glenn Kellow and the five other members of the executive leadership team are in line for the bonuses under the company’s short-term incentive plan. The incentives hinge on Peabody reaching its target for adjusted earnings before interest, taxes, depreciation, amortization and restructuring costs (EBITDAR) and on achieving certain safety improvement goals.
If the group meets all targets, CEO Kellow would see his pay rising to US$3.9 million from US$1 million, Reuters reports.
In April this year, Peabody declared bankruptcy after coal prices collapsed and demand stalled. Peabody had suffered a dramatic fall from grace, after paying US$5.1 billion to acquire major coal-producing assets in Australia in 2011.
In the U.S., cheap natural gas and environmental regulation had led to coal’s downfall in the electric power sector. Abroad, a slowdown in China had hurt both thermal and metallurgical coal demand. China’s demand for steel had slowed, and it is undertaking a shift away from coal because of air pollution, leaving the world’s top coal producers with a vastly smaller market than they had expected just a few years ago.
Peabody’s bankruptcy was the latest in a string of Chapter 11 filings from major coal producers, including Arch Coal, Alpha Natural Resources, Patriot Coal, and Walter Energy.
Even if incentive plan motions are sometimes defeated in court by unions or the U.S. bankruptcy watchdog, judges often allow companies to pay bonuses upon reaching certain performance metrics.
By Tsvetana Paraskova for Oilprice.com