Arguing it is losing key employees wary of their future at the bankrupt coal company, Peabody Energy won approval for a bonus plan for nonexecutives that it says will help retain “mission critical” employees.
In a hearing Wednesday in bankruptcy court in St. Louis, Judge Barry Schermer ruled in favor of Peabody, saying the company’s plan “targets those that are in a position to help guide this reorganization.”
Peabody this month asked for the authority to pay out as much as $3.24 million in bonuses to keep workers in its finance, legal, sales, marketing, information technology and human resources departments from jumping ship as the company moves through bankruptcy. The majority of the 42 people targeted with retention bonuses are in Peabody’s St. Louis headquarters, a spokesman said.
The largest coal company in the country filed for Chapter 11 in April due to a high debt load and a sharp drop in coal demand in the face of low natural gas prices and tightening environmental regulations.
“The kind of people we are seeking to provide awards to under this program are mobile” and can take their skill sets to industries outside of coal mining, Peabody attorney Heather Lennox told the judge.
Objections to the program came from United Mine Workers of America pension and health care funds, which argued the payments could come at the expense of money apportioned for retiree benefits. Peabody already reduced payments to one of the retiree health funds by $70 million in a deal struck prior to its bankruptcy.
“Slashing the health benefits of aged and medically vulnerable retirees with extremely limited resources, while lavishly rewarding white-collar employees, is neither fair nor reasonable,” the UMWA argued in court filings.
Rachel Jaffe Mauceri, an attorney representing the UMWA funds, said that approving the plan now would be “premature” and would amount to “effectively preapproving one provision” of the overall bankruptcy plan, she said.
But Peabody’s lawyer said the company is losing talent “pretty continually and on an accelerated basis.” The program isn’t directed at “the inner circle” of top executives that set corporate policy, Lennox said.
“It actually goes pretty far down the ranks,” she said. “This is a pretty broad-based, egalitarian program.”
The bonuses would be payable when the company emerges from Chapter 11 bankruptcy in order to keep employees with the company.
In court filings and testimony, Peabody detailed a small exodus of employees from its global headquarters here. At least 107 salaried employees have voluntarily left Peabody’s downtown St. Louis headquarters since January 2015.
And 49 employees have left since January of this year, the majority coming from the St. Louis office. Net salaried headcount in the St. Louis office is down by 24 positions, the company said in filings.
Across the company, Peabody’s salaried head count has fallen from 1,655 in 2012 to 903 as of the end of May.
In St. Louis, Peabody last said it employed about 375 people downtown following some 50 layoffs here last June. A company spokesman said the downtown office employs about 350 people now.
The employee bonus plan will first offer $2.74 million to 42 employees who remain with the company through bankruptcy, or roughly $65,000 a person. The bonuses are based on existing salary and the highest bonus won’t exceed $134,000.
Peabody’s plan also calls for a $500,000 pool for discretionary bonuses it says will be paid to workers who become key employees. Such bonuses would be subject to bankruptcy court approval.