Massey Mine Disaster | The Finlay Centre for Corporate & Public Governance

Massey’s Board Key to Safety Questions

With the tragic news that there were no survivors of the explosion at the Massey Energy coal mine in Montcoal, West Virginia, and all 29 miners were lost, attention will soon turn to the causes of the disaster. The company’s board of directors should not be permitted to escape scrutiny in that regard or to invoke an implausible claim, like the Lehman Brothers board did, that it had no idea what was really happening in the company. Indeed, there were plenty of red flags to alert Massey’s board to the point where it may well be in possession of information that could prove vital for regulators and investigators.

Over the years, Massey has developed a reputation as something of a serial safety violator in the mining industry. More than 800 citations, many involving gas and ventilation, have been issued against the company since 2008 alone. These are the kind of matters which the board’s committee on safety issues is required to take note of and to act upon.

The committee is composed of seven independent directors. Company filings claim that its purpose is to:

“review and make recommendations regarding safety, environmental, political, and social trends and issues as they may affect our operations and the operations of our subsidiaries,” among other things.

This is not an incidental committee for the board. Seven of nine directors sit on the committee. The unusually high number of directors suggests that the board has consciously decided to give serious attention to safety concerns. How it manifested its purported concern is a question the families of many victims will be asking.

The committee is also required on a quarterly basis to make a report to the full board regarding the company’s compliance with “worker safety and environmental compliance, rules, regulations and goals.”

There will be considerable interest in these reports. They will give a clue as to how the company viewed the safety issues that made their way into the Massey boardroom and what, if anything, company management and directors might have done to prevent the Upper Big Branch site from becoming the worst mining tragedy in more than 40 years.

Massey Mining Disaster Shows How Not to Handle a Crisis

More than 20 hours since the horrific explosion that killed 25 and has left others missing at the Massey Energy mine in Montcoal, West Virginia, the company’s web site still shows a photo of a smiling vice president of safety and training, and boasts that 2009 was another “record setting year for safety.” It is amazing that a company listed on the NYSE with sales last year of more than $2 billion does not understand that a web site needs to be a tool to quickly and accurately inform during times of crisis, not a device that seems hideously disconnected from reality. This does a terrible disservice to the families affected. Unbelievably, many still have not been contacted by the company and are not being kept aware of developments on any systematic basis. If there is one lesson gained from previous mining disasters, it is that family members of victims should not just be left to figure things out on their own.

So far, the company has issued only written statements and has not been available to reporters, according to CNN. It will be interesting to see whether Don L. Blankenship, the company CEO who also holds the positions of president and board chairman, comes forward to face the media and what will become apparent in the culture and governance of the company that might have contributed to the deadliest mining disaster in a quarter-century. We know one thing about the board so far: none of the eight independent directors could have bothered to look at how Massey is handling the crisis in its online presence or, if they have, they don’t understand anything about the nature of a crisis. The unease of investors in that connection is also being registered in the stock price, which is down nearly ten percent in morning trading.

Update: April 9, 2010

Massey Energy has finally updated the home page of its web site to remove the inapproprate graphics and text noted above. It is unfortunate that such a large organization took so long to show the sensitivity that should have been evident at the outset of the tragedy.