A coal company is facing a firestorm of scrutiny following a proposal to hand out $11.9 million worth of bonuses to their top executives while cutting the life and medical insurance benefits of their lower-level employees.
Alpha Natural Resources filed for Chapter 11 bankruptcy in August of 2015. They filed a motion for the bonuses in December that asked for upwards of $14 million to be doled out as performance bonuses if the company meets certain goals for financial performance and safety.
According to the Lexington Herald Leader, the members of the company who would be eligible for the bonuses are the members of senior management, including CEO Kevin Crutchfield.
The company released a statement in regards to the proposal that outlined their reasoning for the bonuses.
“Successfully navigating Alpha’s restructuring process has been and continues to be the primary focus of our senior management team and maintaining that strong leadership throughout this process is viewed as essential in the eyes of both the board and Alpha’s constituencies,” according to a statement from the company. “This proposal will only become effective upon a full vetting and approval by the court.”
The company sent an email to its employees to notify them of their plans to cut many benefits they receive. Proposed changes include:
- Eliminating short-term disability insurance
- Eliminating an employee wellness program
- Revoking health benefits shortly after employment ends
- No longer matching 401k retirement program contributions
- Less paid vacation time
Alpha stated that 4,500 employees would be affected. They hoped to induce the proposed changes at the end of 2015 but have to wait until the court rules on the matter.
While Alpha Natural Resources chose to restructure their budget with the use of benefits cuts and bonus payouts, small businesses have to find a different approach when they’re in trouble. The use of cloud computing technology by small businesses is expected to double by 2020, which is exactly what smaller enterprises need to deal with budget crises and restructuring.
Thankfully, there is federal oversight on such issues as they pertain to corporations like Alpha.
According to the Casper Star Tribune, a government watchdog agency has stepped in and filed an objection to the proposal. The U.S. Trustee, a branch of the Justice Department, argues that the company can’t justify the large bonuses at a time when they are attempting to cut retiree benefits and have recorded steep losses.
The U.S. Trustee agency is in place for cases such as these, in hopes they will deter large corporations from undercutting their employees.