Winds of Change Newsletter,
December 2005 See sidebar for table of contents
Massey settlement agreement scuttles insider trading
Associated Press, Nov. 13, 2005
CHARLESTON, W.Va. - Allegations that Massey Energy Co. executives
engaged in insider trading, illegal employment practices and flagrant
lawlessness regarding environmental regulations would be dropped under a
settlement agreement reached in a shareholder lawsuit.
The country's fourth largest coal producer has agreed to recommend
loosening voting requirements for proposed changes to company bylaws, to
increase the number of board members and establish a lower mandatory
retirement age for directors, according to the agreement.
In return, Richmond, Va.-based Massey would be released from all other
claims. Massey's insurer, Zurich American Insurance Co., has also agreed
to pay the plaintiffs' $2.5 million legal fees, according to the
In one court filing, the plaintiffs argued that their allegations "tell
the story of a publicly traded corporation that is controlled and run by
an individual CEO, with the assistance of a Board of Directors that is
beholden to him, according to his own agenda at the extreme expense of
Massey's attorneys disputed that Don Blankenship, Massey's chairman,
president and CEO, controlled the other defendants, who include timber
magnate James H. "Buck" Harless, a former board member, and Bennett
Hatfield, Massey's former chief operating officer and now president and
CEO of International Coal Group Inc.
The lawsuit alleged that Massey had twice filed false financial
statements in 2001 that artificially inflated the company's share price
and allowed company insiders to obtain about $5 million before the stock
plummeted from $22 per share to $7.
The plaintiffs also alleged that Massey officials' "flagrant
lawlessness" regarding state and federal environmental laws, resulted in
millions of dollars in fines, penalties and compensatory damage