UPDATE 1-Massey's Blankenship gets $12 mln retirement payout

* To get $2 mln payment in December, $10 mln in 2011

* To consult for Massey for 2 years

NEW YORK, Dec 7 (Reuters) - Massey Energy MEE.N CEO Don Blankenship, who is stepping down eight months after a deadly blast at one of the company's mines, will receive a $12 million cash payout as part of his retirement package.

Massey said in a filing with the U.S. Securities and Exchange Commission on Tuesday that Blankenship will receive a $2 million cash payment on Dec. 31 and $10 million in cash in July 2011.

He will also receive additional cash from the company in lieu of his bonus and other incentive payments that he was due for 2010, the company said, but did not disclose a sum for these payments.

Blankenship will also provide consulting services to Massey for two years for a $5,000 monthly retainer. He will receive health care for that period as well.

Massey, based in Richmond, Virginia, has been under increasing scrutiny by federal mine safety regulators since the April 5 explosion at its Big Branch Mine in West Virginia. 29 miners died in the blast, which was the deadliest U.S. coal mining disaster in 40 years.

The company’s financial results have suffered since April, and Massey has said it was weighing strategic options, sparking market speculation that one of its peers may look to buy it.

Blankenship announced his resignation on Friday, at the end of a week in which Massey shut down a Kentucky mine for safety violations and a judge ruled that Blankenship must face two lawsuits holding him personally responsible for the blast at the Upper Big Branch mine in West Virginia.

Blankenship, an outspoken advocate for coal, has attracted the ire of environmentalists for Massey’s surface, or mountain-top, mining in Appalachia, which they blame for water pollution. He has also been criticized by trade unions because of Massey’s use of nonunion labor. (Reporting by Michael Erman; Editing by Bernard Orr)