March 20, 2016

Arch Coal Paid Bonuses Days Before Bankruptcy

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Arch Coal filed for Chapter 11 bankruptcy in early January. In the days leading up to that filing, the company gave its CEO John Eaves, a bonus of $2.7 million and made payments to other top executives.

Company board members and other insiders also converted thousands of so-called phantom stocks to cash. Thaya Brooke Knight specializes in financial regulation studies at the Cato Institute, a conservative think tank. She says phantom stocks are generally used to incentivize executives.

“Now if you give a bunch of share of phantom stock on the day before you know that the stock price is going to plummet, its just a really weird time to do something like this,” Knight said.

Arch Coal declined to comment on the timing of the bonuses.