CHICAGO (Reuters) - Peabody Energy Corp asked a U.S. judge on Wednesday to allow it to pay up to $11.9 million in bonuses for six top executives if the global coal producer meets performance targets and emerges from Chapter 11 bankruptcy protection.
The incentive package, which for the first time includes targets for cleaning up coal pits, would raise the pay for the company’s chief executive officer to $3.9 million from $1 million if all targets are met.
Peabody said in a filing with U.S. Bankruptcy Court in St. Louis on Wednesday that the incentives for its executive leadership team will help the company maximize the value of its estate for the benefit of all stakeholders.
U.S. courts often give bankrupt companies the nod to make special bonus payments to senior management for meeting performance goals, although the plans are sometimes defeated by opposition from the U.S. bankruptcy watchdog and unions.
Rival coal producer Alpha Natural Resources Inc received court approval to pay up to $6.8 million to 15 participants after arguing that the incentives were essential to ensuring a successful reorganization. Alpha emerged from bankruptcy in July.
For Peabody, the bonuses would be distributed to Chief Executive Officer Glenn Kellow, the presidents of its Australia and Americas units and the heads of the company’s finance, marketing and legal departments.
In 2014, Kellow received a bonus of nearly $1 million as chief operating officer, according to the company’s most recent proxy statement.
If Peabody meets all of its targets, which include operating performance, cash flow and land reclamation, Kellow would receive a cash bonus of about $2.9 million.
Peabody has heightened its focus on mine cleanups this year as part of a push to reduce $1.14 billion of environmental liabilities before it emerges from bankruptcy.
If the company fails to meet any targets the executives will only get their base salaries, which range from $444,000 to $1 million, according to the filing.
Peabody argues the plan’s maximum value falls in the lower half of a group of plans for bankrupt companies of its size. The most costly plans were valued at more than $16 million at the high end, according to Peabody.
However, the most valuable plans had an average of 48 participants, and Peabody’s proposal would pay nearly $2 million on average per participant, more than double other large plans, according to the court filing.
Reporting by Tracy Rucinski; editing by Tom Hals, G Crosse