Home > Corporate Social Responsibility > Massey’s board probes safety

Massey’s board probes safety

May 6, 2010

“Massey Energy Co.’s board is investigating how the mining company’s management handled federal safety violations over the past two years, stepping up pressure on Massey’s top executives.
Bobby R. Inman, Massey’s lead independent director, said in an interview that the directors launched their probe following last month’s mine disaster, in which an explosion killed 29 miners. …

Massey, of Richmond, Va., faces lawsuits by shareholder groups alleging that the company failed to enact promised safety improvements or to inform investors of risks related to safety issues, and by at least two families of miners killed in the accident, seeking damages under West Virginia’s wrongful-death statute.”

Source: The Wall Street Journal, May 5 2010

Observations:

    Massey Energy

  • The explosion on April 5 2010 killed 29 miners, making it the worst mining disaster in the USA in 40 years.
  • Massey’s shares dropped approx. 9%, corresponding to a market value decrease of over $400 million on the day after the mine disaster.

Implications:

  • Shareholders & WSJ seem to find the $400 million dollar loss more important that the lives of the 29 miners killed in the accident.
  • Shareholders complain about not being informed about the risk related to safety issues. Arguably the shareholders were more concerned about their financial gains than about the safety of the miners. Hopefully shareholders around the world will pressure the managers of ‘their’ companies to pay more attention to safety and less to short term profits.
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