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Bankrupt Patriot Coal seeks employee bonuses

CHARLESTON, W.Va. -- Bankrupt Patriot Coal this week sought court approval to distribute more than $6 million in bonuses to corporate executives and salaried employees, a move that was quickly condemned by the United Mine Workers union.

In a court filing, Patriot lawyers said the payments to about 225 workers - part of the company's normal employee retention and incentive programs -- are needed to keep Patriot from losing key salaried officials until it emerges from bankruptcy.

UMW President Cecil Roberts called the bonus pay proposal "a finger in the eye" to thousands of union miners and pensioners at risk of losing health-care benefits as part of Patriot's financial reorganization.

"While Patriot is handing out cash to managers and executives, thousands of retirees and widows the company is responsible for are worried about having to choose between buying groceries or getting the prescription drugs they need to live," Roberts said.

Janine Orf, a spokeswoman for Patriot, said the company's salaried employees "have incurred substantial reductions in compensation and benefits" since the bankruptcy filing. Patriot's top executives and management team are not among those who would benefit from the proposed bonuses, Orf said.

"Even with these plans, participating employees' compensation opportunities will be well below their [pre-bankruptcy] historical compensation as well as market levels," Orf said. "Given the magnitude of the tasks ahead, Patriot cannot afford to lose these key employees."

Word of Patriot's proposal came in a Tuesday court filing, on the eve of another major UMW protest outside the St. Louis headquarters of Peabody Energy, one of the companies union leaders say formed Patriot Coal only to shed retiree pension and health-care liabilities.

About 1,000 people from several states participated in the latest protest, and 10 of them were arrested after they sat down in the street in front of Peabody's office building and refused to move, The Associated Press reported. On Jan. 29, Roberts and nine others were arrested at the same location. Union leaders have promised to keep coming back for more such events.

Patriot's bankruptcy has jeopardized the pension and health-care benefits for about 10,000 retirees and another 10,000 dependents. About half of the retirees live in the Illinois coal basin in Illinois, Indiana and Kentucky. Another nearly 40 percent live in West Virginia, according to court records.

Last July, Patriot filed for Chapter 11 bankruptcy, seeking to reorganize amid what the company called "unsustainable labor-related legacy liabilities" that include pension and health-care payments and strip-mine reclamation costs.

UMW officials say Patriot was essentially a "company created to fail," to give Peabody Energy and Arch Coal a way to shed obligations to fund union pensions and health-care benefits in the nation's eastern coalfields, while profiting from their giant, nonunion surface mines out west.

Peabody formed Patriot as a spin-off company where Peabody tucked union mines in West Virginia and the Midwest, along with pension and health-care obligations for union retirees. Patriot later bought another company, Magnum Coal, which had been similarly spun off by Arch Coal when it got rid of most of its Appalachian operations and their related pension and health-care liabilities. Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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