A group calling itself the Mirant Shareholder Rights Group released several statements last week, blasting bankrupt Mirant’s board and management team for deliberately undervaluing the company’s assets and paying excessive executive compensation despite a “track record of failures.”

The group, which said it represents 200,000 investors, also accused Mirant management of abusing the bankruptcy process by filing “numerous” motions to seal documents related to asset sales, company valuations and potential litigation against its former parent company.

“While the company has lost billions of dollars and is now under Chapter 11 protection, its top executives have, and continue to be, rewarded handsomely,” the group said, citing CEO Marce Fuller’s 2004 salary of $842,000 and bonus of a more than 100%. “Despite [Mirant] remaining in bankruptcy in 2005, Ms. Fuller again will receive approximately $1.7 million in compensation,” the group said. “Additionally, if Ms. Fuller resigns or reaches a mutual agreement with Mirant to terminate her employment, she will receive a lump sum payment of $3.4 million in cash upon separation.”

Mirant earlier this year said that Fuller was resigning from the bankrupt energy supplier in exchange for $3.4 million in severance pay plus a promised 2004 short-term incentive payment of $850,000.

The shareholder group also cited COO Curtis A. Morgan’s base salary increase from $156,822 to $427,350 from 2003 to 2004 and his bonus, which went from $124,000 to $543,483. Also cited was the salary and bonus of Mirant General Counsel Douglas L. Miller. Mirant spokesman Lloyd Avram said last week that the company’s executives “are paid competitive salaries that are commensurate with other executives in this sector.”

He also noted that “about 1,700 Mirant employees shared in the bonus pool this year for a job well done in 2004. We had a number of corporate goals that were well known to our employee population that were met or exceeded this past year…”

However, Rick Doutel, a Mirant shareholder, said the company’s bankruptcy has been designed to enrich creditors and management. “What is going on at Mirant and in this bankruptcy process is astounding.”

Doutel accused the company of “attempts to suppress court filings from public scrutiny” and “efforts to hide value and enrich creditors. We believe the Mirant bankruptcy will one day serve as a case study in corporate greed,” he said.

Shareholder group spokesman Paul Syiek said the company has made many attempts to suppress court filings, including documents related to the sale of its Bowline power station in West Haverstraw, NY, a report from Charles River Associates regarding potential litigation against Southern Co. and an independent valuation of Mirant’s assets done on behalf of shareholders.

Mirant’s motion to suppress the independent valuation was denied by the court, which is holding a hearing on it on Monday. Shareholders say the company used 2003 energy prices when estimating its asset values in an effort to hide value so that it can reap rewards in the marketplace after it emerges from bankruptcy.

When Mirant filed for bankruptcy on July 14, 2003, it listed assets of $20.57 billion and consolidated debts of $11.4 billion. Based on an analysis by the Blackstone Group this spring, Mirant’s value was estimated at about $7.6 billion.

Avram wouldn’t comment on the accusations about Mirant attempting to suppress court filings or hide its asset value. “We’re not going to comment on rumors, allegations or speculation,” he said. “We have been all the way through Chapter 11, acting as an honest broker in our case. We have a fiduciary responsibility to our creditors to manage the estate of our corporation and settle the claims against the company and ensure that creditors are compensated accordingly, and we believe we have done that job.”

Mirant is expected to emerge from bankruptcy by mid year. The valuation hearing will take place this week in Fort Worth. Pending the outcome of the hearing, the company will move forward on a vote on its disclosure statement and plan of reorganization. There will then be a confirmation hearing.

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