Third Point, the activist hedge fund firm run by outspoken manager Daniel Loeb, is continuing its bombardment of Massey Energy Company. Loeb is running a slate of two nominees, including himself, for seats on the coal company’s board because he feels it’s moving too slow with a share buyback program (AIN, 4/24). He is also now railing against its CEO’s compensation and management perks, while offering to use some of the savings to reward the coal company’s mine workers.
In a letter to shareholders, Loeb decries what he calls “Massey’s Air Force,"--his multi-million dollar Challenger 601 jet. His letter questions the need for an aircraft with a 3,000 mile range for a company whose business is only in Central Appalachia. “If elected to the board of directors, we will urge the board to get rid of the Challenger 601 luxury jet and review the use of the other aircraft. We think a good place to put the cost savings from the luxury jet would be a program to reward and retain the company’s miners,” the letter says.
Loeb also makes several attacks against Massey CEO Donald Blankenship. “For the year ended December 31, 2005, Massey’s CEO was paid $33.7 million, more than four times the average compensation of $8.1 million for the competitors’ CEOs,” Loeb wrote. Loeb also came out against Blankenship living in a company paid house, which would become his when he leaves. “What kind of example does it set when a CEO who makes $33.7 million in a single year is given free housing while the company is having difficulty retaining its mine workers?”
The hedge fund also questioned Massey’s dealing with a vendor owned by Blankenship’s nephew. “The company should promptly disclose to stockholders not only a detailed explanation of the reasons for any such approval, but also meaningful facts that indicate the significance of the company’s relationship to the executive’s relative or his business.,” Loeb wrote.
Loeb declined to comment and calls to Blankenship’s office were referred to Massey’s investor relations department. An official there did not comment.