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.