UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Soliciting Material Pursuant to §240.14a-12
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Per unit or other underlying value of transaction computed pursuant to Exchange Act
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the date of its filing.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Date Filed:
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STEVEN F. LEER
Chairman and Chief Executive Officer
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March 22,
2010
Dear fellow stockholder:
You are cordially invited to attend our annual meeting of
stockholders on Thursday, April 22, 2010. We will hold the
meeting at 10:00 a.m., Central Time, in the lower level
auditorium at our headquarters located at CityPlace One, One
CityPlace Drive, St. Louis, Missouri 63141. You can find
maps with directions to our headquarters near the back of the
proxy statement that accompanies this letter.
In connection with the annual meeting, we have enclosed a notice
of the meeting, a proxy statement and a proxy card. We have also
enclosed a copy of our annual report for 2009 which contains
detailed information about us and our operating and financial
performance.
I hope that you will be able to attend the meeting, but I know
that not every stockholder will be able to do so. Whether or not
you plan to attend, I encourage you to vote your shares. You may
vote by telephone or on the Internet, or complete, sign and
return the enclosed proxy card in the postage-prepaid envelope,
also enclosed. The prompt execution of your proxy will be
greatly appreciated.
Sincerely,
Steven F. Leer
Chairman of the Board and Chief Executive Officer
1 CityPlace Drive,
Suite 300 St. Louis,
Missouri 63141 t:
(314) 994-2700
One CityPlace Drive, Suite 300
St. Louis, Missouri 63141
March 22,
2010
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
The annual meeting of stockholders of Arch Coal, Inc. will be
held in the lower level auditorium at our headquarters located
at CityPlace One, One CityPlace Drive, St. Louis, Missouri
63141 on Thursday, April 22, 2010 at 10:00 a.m.,
Central Time. At the annual meeting, stockholders will consider
the election of four nominees for director, the ratification of
the appointment of our independent registered public accounting
firm, the approval of an amendment and restatement of the Arch
Coal, Inc. 1997 Stock Incentive Plan, the Section 162(m)
approval of Arch Coals Incentive Compensation Plan for
Executive Officers, and any other business properly introduced
at the meeting.
By order of the Board of Directors
Robert G. Jones
Senior Vice President-Law, General Counsel and
Secretary
PROXY
STATEMENT
TABLE OF
CONTENTS
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A-1
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B-1
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PROXY AND
VOTING INFORMATION
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Why am I
receiving these proxy materials?
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Our board of directors is soliciting proxies for the 2010 annual
meeting of stockholders. On or about March 22, 2010, we
expect to begin mailing these proxy materials to all
stockholders of record at the close of business on
February 22, 2010. On the record date, there were
162,474,101 shares of our common stock outstanding.
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Where and
when is the annual meeting?
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We will hold the annual meeting on Thursday, April 22,
2010, at 10:00 a.m., Central Time, in the lower level
auditorium at our headquarters located at CityPlace One, One
CityPlace Drive, St. Louis, Missouri 63141. You can find
maps with directions to our headquarters under Directions
to the Annual Meeting in this proxy statement.
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What am I
being asked to vote on at the meeting?
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We are asking our stockholders to elect the four nominees for
director named in this proxy statement, to ratify the
appointment of our independent registered public accounting
firm, to approve an amendment and restatement of the Arch Coal,
Inc. 1997 Stock Incentive Plan and to approve Arch Coals
Incentive Compensation Plan for Executive Officers for purposes
of Section 162(m).
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How many
votes do I have?
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You have one vote for each share of our common stock that you
owned at the close of business on the record date. These shares
include:
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Shares registered directly in your name with our transfer agent,
for which you are considered the stockholder of
record;
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Shares held for you as the beneficial owner through a broker,
bank, or other nominee in street name; and
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Shares credited to your account in our employee thrift plan.
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What is
the difference between holding shares as a stockholder of
record and as a beneficial owner?
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If your shares are registered directly in your name with our
transfer agent, you are considered the stockholder of
record with respect to those shares. We have sent these
proxy materials directly to you.
If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial
owner of the shares held in street name. Your broker, bank
or other nominee who is considered the stockholder of record
with respect to those shares has forwarded these proxy materials
to you. As the beneficial owner you have the right to direct
your broker, bank or other nominee
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on how to vote your shares by using the voting instruction card
included in the mailing or by following their instructions for
voting by telephone or the Internet.
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How can I
vote my shares?
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You can vote by proxy or in person.
If you are a stockholder of record, you may vote by telephone,
Internet, or mail. Our telephone and Internet voting procedures
are designed to authenticate stockholders by using individual
control numbers that can be found on the proxy card.
You can vote by calling the toll-free telephone number on your
proxy card. Telephone voting is available 24 hours a day,
7 days a week, until 11:59 p.m., Eastern Time, on the
day before the meeting. If you vote by telephone, you do not
need to return your proxy card.
You can vote via the Internet. The web site for Internet voting
is on your proxy card. Internet voting is available
24 hours a day, 7 days a week, until 11:59 p.m.,
Eastern Time, on the day before the meeting. If you vote via the
Internet, you do not need to return your proxy card.
If you choose to vote by mail, simply mark your proxy card, date
and sign it, and return it in the postage-paid envelope provided.
If you submit your proxy using any of these three methods,
Steven F. Leer or Robert G. Jones will vote your shares in the
manner you indicate. You may specify whether your shares should
be voted for all, some, or none of the nominees for director and
for or against any other proposals properly introduced at the
annual meeting. If you vote by telephone or Internet and choose
to vote with the recommendation of our board of directors, or if
you vote by mail, sign your proxy card, and do not indicate
specific choices, your shares will be voted FOR the
election of all four nominees for director and FOR
ratification of the appointment of our independent registered
public accounting firm, the approval of an amendment and
restatement of the Arch Coal, Inc. 1997 Stock Incentive Plan and
the Section 162(m) approval of Arch Coals Incentive
Compensation Plan for Executive Officers.
If any other matter is presented, your proxy will authorize
Steven F. Leer or Robert G. Jones to vote in accordance with
their best judgment. At the time this proxy statement was
printed, we knew of no matters to be considered at the annual
meeting other than those referenced in this proxy statement.
If you wish to give a proxy to someone other than Steven F. Leer
or Robert G. Jones, you may strike out their names on the proxy
card and write in the name of any other person, sign the proxy,
and deliver it to the person whose name has been substituted.
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How can I
revoke my proxy?
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You may revoke a proxy in any one of the following three ways:
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Submit a valid, later-dated proxy;
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Notify Robert G. Jones, our secretary, in writing before the
annual meeting that you have revoked your proxy; or
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Vote in person at the annual meeting.
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If you are a stockholder of record, you may attend the annual
meeting and cast your vote in person.
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If I hold
shares in street name, how can I vote my shares?
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You can submit voting instructions to your broker, bank or other
nominee. In most instances, you will be able to do this by
telephone, over the Internet, or by mail. Please refer to the
voting instruction card included with these materials by your
broker, bank or other nominee.
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How do I
vote my shares in the dividend reinvestment plan or the direct
stock purchase plan?
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If you participate in our dividend reinvestment plan or our
direct stock purchase plan, your proxy will also serve as an
instruction to vote the whole shares you hold under those plans
in the manner indicated on the proxy. If your proxy is not
received, the shares you hold in those plans will not be voted.
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How do I
vote my shares held in the employee thrift plan?
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If you are both a registered stockholder and a participant in
our employee thrift plan, you will receive a single proxy card
that covers shares of our common stock credited to your plan
account as well as shares of record registered in exactly the
same name. Accordingly, your proxy card also serves as a voting
instruction for the trustee of the plan. If your plan account is
not carried in exactly the same name as your shares of record,
you will receive separate proxy cards for individual and plan
holdings. If you own shares through this plan and you do not
return your proxy by April 12, 2010, the trustee will vote
your shares in the same proportion as the shares that are voted
by the other participants in the plan. The trustee will also
vote unallocated shares of our common stock held in the plan in
direct proportion to the voting of allocated shares in the plan
for which voting instructions have been received unless doing so
would be inconsistent with the trustees duties.
Yes. Voting tabulations are confidential except in extremely
limited circumstances. Such limited circumstances include
contested solicitation of proxies, when disclosure is required
by law, to defend a claim against us or to assert a claim by us
and when a stockholders written comments appear on a proxy
or other voting material.
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What
quorum is required for the annual meeting?
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In order to have a valid stockholder vote, a quorum must exist
at the annual meeting. For us, a quorum exists when stockholders
holding a majority of the outstanding shares of our common stock
are present or represented at a meeting. For these purposes,
shares that are present or represented by proxy at the annual
meeting will be counted toward a quorum, regardless of whether
the holder of the shares or proxy fails to vote on a particular
matter or whether a broker with discretionary voting authority
fails to exercise such authority with respect to any particular
matter.
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Election of four directors (Proxy Item No. 1)
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The nominees who receive the most votes for the available
positions will be elected. If you indicate withhold
authority to vote for a particular nominee on your proxy
card, your vote will not count either for or
against the nominee. Abstentions are not counted in
the election of directors and do not affect the outcome.
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Ratification of the appointment of independent
registered public accounting firm (Proxy Item No. 2)
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The affirmative vote of a majority of the shares present and
entitled to vote at the meeting is required for ratification of
the appointment of Ernst & Young LLP as our independent
registered public accounting firm.
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Approval of an Amendment and Restatement
of the Arch Coal, Inc. 1997 Stock Incentive Plan (Proxy
Item No. 3)
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The affirmative vote of a majority of the shares present and
entitled to vote at the meeting is required for the approval of
an amendment and restatement of the Arch Coal, Inc. 1997 Stock
Incentive Plan; provided that the total vote cast on the
proposal represents over 50% in interest of all of our
securities entitled to vote on the proposal.
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Section 162(m) Approval of Arch Coals
Incentive Compensation Plan for Executive Officers (Proxy
Item No. 4)
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The affirmative vote of a majority of the shares present and
entitled to vote at the meeting is required for the Section
162(m) approval of Arch Coals Incentive Compensation Plan
for Executive Officers; provided that the total vote cast on the
proposal represents over 50% in interest of all of our
securities entitled to vote on the proposal.
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If a broker indicates on its proxy that it does not have
authority to vote certain shares held in street
name, the shares not voted are referred to as broker
non-votes. Broker non-votes occur when brokers do not have
discretionary voting authority to vote certain shares held in
street name on particular proposals under the rules
of the New York Stock Exchange, and the beneficial
owner of those shares has not instructed the broker how to
vote on those proposals. If you are a beneficial owner, your
broker, bank or other nominee is permitted to vote your shares
for or against routine matters such as the
ratification of the appointment of our independent registered
public accounting firm, even if the holder does not receive
voting instructions from you. Brokers are not permitted to
exercise discretionary voting authority to vote your shares for
or against non-routine matters such as the election
of directors, the approval of an amendment and restatement of
the Arch Coal, Inc. 1997 Stock Incentive Plan and
Section 162(m)
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approval of Arch Coals Incentive Compensation Plan for
Executive Officers if the holder does not receive voting
instructions from you. Shares represented by proxies that are
marked vote withheld with respect to the election of
any nominee will not be considered in determining whether such
nominee has received the affirmative vote of a plurality of the
shares. Shares represented by proxies that are marked
abstain with respect to any other mater to be voted
upon at the annual meeting will have the effect of a negative
vote.
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Where can
I find the voting results?
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We intend to announce preliminary voting results at the annual
meeting. We will publish the final results in a Current Report
on
Form 8-K,
which we expect to file within four business days after the
annual meeting is held. You can obtain a copy of the
Form 8-K
by logging on to our website at archcoal.com, by calling the
Securities and Exchange Commission at 800-SEC-0330 for the
location of the nearest public reference room, or through the
EDGAR system at sec.gov. Information on our website does not
constitute part of this proxy statement.
5
CORPORATE
GOVERNANCE PRACTICES
We are dedicated to being a market-driven global leader in the
coal industry and to creating superior long-term stockholder
value. It is our policy to conduct our business with integrity
and an unrelenting passion for providing the best value to our
customers. All of our corporate governance materials, including
the corporate governance guidelines, our code of conduct and
board committee charters, are published under Corporate
Governance in the Investors section of our website at
archcoal.com. Information on our website does not constitute
part of this proxy statement. The board of directors regularly
reviews these materials, Delaware law, the rules and listing
standards of the New York Stock Exchange and SEC regulations, as
well as best practices suggested by recognized governance
authorities, and modifies the materials as warranted.
It is the board of directors objective to have an
overwhelming majority of directors who are independent. We have
adopted in our corporate governance guidelines the criteria
established by the New York Stock Exchange for determining
whether a director is independent. The board of directors has
determined, in its judgment, that ten of the twelve members of
the board of directors meet the New York Stock Exchange
standards for independence. Other than Steven F. Leer and John
W. Eaves, who are executive officers, each member of our board
of directors satisfies the independence standards in the
corporate governance guidelines. The independent members of the
board of directors meet regularly without any members of
management present. These sessions are normally held following
or in conjunction with regular board meetings. Mr. James R.
Boyd, chairman of the Nominating and Corporate Governance
Committee and lead director, serves as the presiding director
during executive sessions.
All members of our Audit, Nominating and Corporate Governance
and Personnel and Compensation committees must be independent
directors as defined by our corporate governance guidelines.
Members of the Audit Committee must also satisfy a separate
Securities and Exchange Commission independence requirement,
which provides that they may not accept, directly or indirectly,
any consulting, advisory or other compensatory fee from us or
any of our subsidiaries other than their directors
compensation.
All of our employees, including our chief executive officer, our
chief financial officer and each of the other executives named
in this proxy statement, and directors must act ethically at all
times and in accordance with the policies comprising our code of
conduct, which is published under Corporate
Governance in the Investors section of our website at
archcoal.com. We intend to post amendments to or waivers from
(to the extent applicable to one of our directors or executive
officers) the code of conduct on our website.
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Our code of conduct reflects our policy that all of our
employees, including the executives named in this proxy
statement, and directors must avoid any activity that creates,
or may create, a conflict of interest, that might interfere with
the proper performance of their duties or that might be hostile,
adverse or competitive with our business. In addition, each of
our directors and executive officers is encouraged to notify our
board of directors when confronted with any situation that may
be perceived as a conflict of interest, even if the person does
not believe that the situation would violate our code of conduct
or corporate governance guidelines. Our board of directors will
then determine, after consultation with counsel, whether a
conflict of interest exists. Directors who have a material
personal interest in a particular issue may not vote on any
matters with respect to that issue.
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Board
of Directors Risk Oversight
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The entire board of directors is responsible for oversight of
the companys risk management processes. Our Vice President
of Enterprise Risk Management oversees risk management efforts,
provides quarterly reports to our audit committee and provides
reports to our board of directors at least once per year. In
addition, our board of directors and its standing committees
periodically request supplemental information or reports as they
deem appropriate.
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Board
of Directors Leadership Structure
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Our certificate of incorporation and bylaws provide for a board
of directors that is divided into three classes as equal in size
as possible. The classes have three-year terms, and the term of
one class expires each year in rotation at that years
annual meeting. The size of the board of directors can be
changed by a two-thirds vote of its members and is currently set
at 12 members. Vacancies on the board of directors may be filled
by a majority of the remaining directors. A director elected to
fill a vacancy, or a new directorship created by an increase in
the size of the board of directors, serves for the remainder of
the full term of the class of directors in which the vacancy or
newly created directorship occurred. As a matter of policy, the
board of directors will submit the nomination of a director
elected to fill a vacancy to the vote of our stockholders at the
next annual meeting.
Mr. Leer has served as both the chairman of our board of
directors and our chief executive officer since being appointed
as chairman in April 2006. Mr. Boyd served as the chairman
of our board of directors from 1998 until April 2006 and has
served as our lead director since stepping down as the chairman
of our board of directors. The responsibilities of the lead
director include consulting with the chairman of the board of
directors regarding agendas for board meetings and presiding
over meetings of the board of directors during executive
sessions of the independent directors.
Our board of directors has no fixed policy with respect to the
separation of the offices of chairman of the board of directors
and chief executive officer. Our board of directors retains the
discretion to make this determination on a
case-by-case
basis from time to time as it deems to be in the best interest
of the company and our stockholders at any given time. We
believe our current board leadership structure is appropriate
because it recognizes that in most cases one person should speak
for and lead the company
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and the board of directors in order to promote unified
leadership and direction. In addition, the board of directors
believes that Mr. Leer has served effectively as a liaison
between the board of directors and management by serving the
company in both capacities. Our governance structure provides
effective oversight of the board of directors through a strong
and independent lead director, as well as the following:
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ten of the twelve members of our board of directors are
independent;
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the board of directors has established and follows robust
corporate governance guidelines, which are publicly available on
our website;
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our Nominating and Corporate Governance Committee, Personnel and
Compensation Committee and Audit Committee are all composed
solely of independent directors; and
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our independent directors meet regularly in scheduled executive
sessions.
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Qualifications
and Diversity
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Our corporate governance guidelines provide that our Nominating
and Corporate Governance Committee and board of directors will
nominate candidates for our board of directors who possess the
following principal qualities: strength of character, an
inquiring and independent mind, practical wisdom, and mature
judgment. In addition to these qualities, the selection criteria
for nomination include recognized achievement, an ability to
contribute to some aspect of our business, and the willingness
to make the commitment of time and effort required of a director.
As described in more detail below, our board of directors
believes that each of our directors meet such criteria and has
attributes and experience that make him or her well qualified to
serve on our board of directors. While we do not have a formal
diversity policy, in order to find the most valuable talent
available to meet these criteria, our board of directors
generally considers candidates diverse in geographic origin,
gender, ethnic background, and professional experience (private,
public, and non-profit), pursuant to our corporate governance
guidelines. Our goal is to include board members with the skills
and characteristics that taken together will assure a strong
board of directors.
Our directors have diverse backgrounds and provide experience
and expertise in a number of critical areas. The Nominating and
Corporate Governance Committee considers the particular
experience, attributes, reputation and qualifications of
directors standing for re-election and potential nominees for
election, as well as the needs of our board of directors as a
whole and its individual committees. In nominating candidates
for election by our stockholders, both the Nominating and
Corporate Governance Committee and the board of directors act
pursuant to these guidelines. Both the Nominating and Corporate
Governance Committee and the board of directors assess the
effectiveness of corporate governance policies, including with
respect to diversity, through completion of an annual evaluation
process.
The Nominating and Corporate Governance Committee has identified
nine areas of expertise that are particularly relevant to
service on the board of directors and has identified the
directors whose key areas of
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expertise qualify them for each of the listed categories. The
categories identified by the Nominating and Corporate Governance
Committee are:
CEO/Senior Management
Experience working as a
chief executive officer or senior officer of a major public or
private company or non-profit entity.
Energy
Extensive knowledge and experience in
the energy industry, either as a senior executive of an energy
company, as a senior executive of a customer of an energy
company or through legal or regulatory experience on energy
matters.
Environmental and Safety
A thorough
understanding of safety and environmental issues and energy
industry regulations.
Finance and Accounting
Senior executive level
experience in financial accounting and reporting, auditing,
corporate finance
and/or
internal controls.
Governance/Board
Prior or current experience
as a board member of a major organization (private, public or
non-profit).
Government Relations
Experience in or a
strong understanding of the workings of government and public
policy on a local, state and national level.
Human Resources and Compensation
Senior
executive level experience or membership on a board compensation
committee with an extensive understanding of compensation
programs, particularly compensation programs for executive level
employees and incentive based compensation programs.
Marketing
Senior executive level experience
in marketing combined with a strong working knowledge of our
markets, customers and strategy.
Strategic Planning
Senior executive level
experience in strategic planning for a major public, private or
non-profit entity.
The following is a list of our directors, their ages as of
February 22, 2010, their occupation during the last five
years and certain other biographical information, including the
areas of expertise where each director or nominee is most
skilled:
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Director
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Areas of Expertise
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Occupation and Other Information
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James R. Boyd
Age 63
Director since 1990
Term ends 2011
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CEO/Senior Management, Energy, Environmental and Safety, Finance
and Accounting, Governance/Board, Marketing, Human Resources and
Compensation, Strategic Planning
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Mr. Boyd served as chairman of the board of directors from 1998
to April 2006, when he was appointed our lead director. Mr. Boyd
served as Senior Vice President and Group Operating Officer of
Ashland Inc. from 1989 until his retirement in 2002. Mr. Boyd
also serves on the board of directors of Halliburton Inc.
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Director
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Areas of Expertise
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Occupation and Other Information
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Frank M. Burke
Age 70
Director since 2000
Term ends 2012
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CEO/Senior Management,
Energy, Finance and Accounting, Governance/Board, Human
Resources and Compensation, Strategic Planning
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Mr. Burke has served as Chairman, Chief Executive Officer and
Managing General Partner of Burke, Mayborn Company, Ltd., a
private investment and consulting company, since 1984. Mr. Burke
also serves on the board of directors of Corrigan Investments,
Inc. and is a member of the National Petroleum Council.
|
John W. Eaves
Age 52
Director since 2006
Term ends 2011
|
|
CEO/Senior Management, Energy, Environmental and Safety,
Governance/Board, Government Relations, Marketing, Human
Resources and Compensation, Strategic Planning
|
|
Mr. Eaves has been our President and Chief Operating Officer
since April 2006. From 2002 to April 2006, Mr. Eaves served as
our Executive Vice President and Chief Operating Officer. Mr.
Eaves also serves on the board of directors of ADA-ES, Inc. and
COALOGIX.
|
Patricia F. Godley
Age 61
Director since 2004
Term ends 2012
|
|
Energy, Environmental and Safety, Governance/Board, Government
Relations, Human Resources and Compensation, Strategic Planning
|
|
Since 1998, Ms. Godley has been a partner with the law firm of
Van Ness Feldman, practicing in the areas of economic and
environmental regulation of electric utilities and natural gas
companies. Ms. Godley is also a director of the United States
Energy Association.
|
Douglas H. Hunt
Age 57
Director since 1995
Term ends 2011
|
|
CEO/Senior Management, Energy, Environmental and Safety, Human
Resources and Compensation, Strategic Planning
|
|
Since 1995, Mr. Hunt has served as Director of Acquisitions of
Petro-Hunt, LLC, a private oil and gas exploration and
production company.
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10
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Director
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|
Areas of Expertise
|
|
Occupation and Other Information
|
|
Brian J. Jennings
Age 49
Director since 2006
Term ends 2010
|
|
CEO/Senior Management, Energy, Finance and Accounting, Human
Resources and Compensation, Strategic Planning
|
|
Since February 2009, Mr. Jennings has been President and Chief
Executive Officer of Rise Energy Partners, L.P. From February
2007 to June 2008, Mr. Jennings served as Chief Financial
Officer of Energy Transfer Partners GP, L.P., the general
partner of Energy Transfer Partners, L.P., a publicly-traded
partnership owning and operating intrastate and interstate
natural gas pipelines. From March 2004 to December 2006, Mr.
Jennings served as Senior Vice President-Corporate Finance and
Development and Chief Financial Officer of Devon Energy
Corporation.
|
Steven F. Leer
Age 57
Director since 1992
Term ends 2010
|
|
CEO/Senior Management, Energy, Environmental and Safety, Finance
and Accounting, Governance/Board, Government Relations,
Marketing, Human Resources and Compensation, Strategic Planning
|
|
Mr. Leer has been our Chief Executive Officer since 1992. From
1992 to April 2006, Mr. Leer also served as our President. In
April 2006, Mr. Leer became Chairman of the board of directors.
Mr. Leer also serves on the boards of the Norfolk Southern
Corporation, USG Corp., the Business Roundtable, the BRT, the
University of the Pacific, Washington University and is past
chairman of the Coal Industry Advisory Board. Mr. Leer is past
chairman and continues to serve on the boards of the Center for
Energy and Economic Development, the National Coal Council and
the National Mining Association.
|
Thomas A. Lockhart
Age 74
Director since 2003
Term ends 2012
|
|
CEO/Senior Management, Energy, Environmental and Safety,
Government Relations, Strategic Planning
|
|
Mr. Lockhart has been a member of the Wyoming State House of
Representatives since 2000. Mr. Lockhart also serves on the
board of directors of Blue Cross Blue Shield of Wyoming.
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11
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|
|
|
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Director
|
|
Areas of Expertise
|
|
Occupation and Other Information
|
|
A. Michael Perry
Age 73
Director since 1998
Term ends 2011
|
|
CEO/Senior Management,
Energy, Finance and Accounting, Governance/Board,
Government Relations,
Strategic Planning
|
|
Mr. Perry served as Chairman of Bank One, West Virginia, N.A.
from 1993 and as its Chief Executive Officer from 1983 until his
retirement in 2001. Mr. Perry also serves on the board of
directors of Champion Industries, Inc. and Portec Rail Products,
Inc.
|
Robert G. Potter
Age 70
Director since 2001
Term ends 2010
|
|
CEO/Senior Management, Environmental and Safety, Finance and
Accounting, Governance/Board, Marketing, Human Resources and
Compensation, Strategic Planning
|
|
Mr. Potter was Chairman and Chief Executive Officer of Solutia,
Inc. from 1997 until his retirement in 1999. Mr. Potter also
serves on the board of directors of Stepan Company. He is also
an investor in and a board member of several private companies.
|
Theodore D. Sands
Age 64
Director since 1999
Term ends 2010
|
|
Energy, Finance and Accounting, Governance/Board, Human
Resources and Compensation, Strategic Planning
|
|
Since 1999, Mr. Sands has served as President of HAAS Capital,
LLC, a private consulting and investment company. Mr. Sands also
serves on the board of directors of Terra Nitrogen Corporation.
|
Wesley M. Taylor
Age 67
Director since 2005
Term ends 2012
|
|
CEO/Senior Management, Energy, Environmental and Safety,
Governance/Board, Government Relations, Human Resources and
Compensation, Marketing, Strategic Planning
|
|
Mr. Taylor was President of TXU Generation, a company engaged in
electricity infrastructure ownership and management. Mr. Taylor
served at TXU for 38 years prior to his retirement in 2004.
Mr. Taylor also serves on the board of directors of FirstEnergy
Corporation.
|
12
|
|
|
Board
Meetings and Committees
|
The board of directors has the following five committees:
Nominating and Corporate Governance, Finance, Personnel and
Compensation, Audit and Energy and Environmental Policy. The
table below contains information concerning the membership of
each of the committees and the number of times the board of
directors and each committee met during 2009. Each director
attended at least 75% of the total number of meetings of the
board of directors and of the committees on which he or she
serves. In addition, all directors are expected to attend the
annual meeting of stockholders, and all of them attended last
years annual meeting.
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|
Nominating and
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|
|
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|
Energy and
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|
|
|
|
Corporate
|
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|
Personnel and
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|
Environmental
|
|
|
Board of Directors
|
|
Governance
|
|
Finance
|
|
Compensation
|
|
Audit
|
|
Policy
|
|
Mr. Boyd
|
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|
|
5
|
|
|
|
|
|
|
|
|
Mr. Burke
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|
|
|
|
|
|
|
|
|
5
|
|
|
Mr. Eaves
|
|
|
|
|
|
|
|
|
|
|
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|
Ms. Godley
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|
|
|
|
|
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|
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5
|
Mr. Hunt
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|
|
|
|
|
|
|
|
|
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|
Mr. Jennings
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|
|
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|
|
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|
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Mr. Leer
|
|
5
|
|
|
|
|
|
|
|
|
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|
Mr. Lockhart
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|
|
|
|
|
|
|
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Mr. Perry
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|
|
|
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|
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|
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|
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Mr. Potter
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|
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5
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|
Mr. Sands
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5
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Mr. Taylor
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5
|
Number of 2009 meetings
|
|
9
|
|
5
|
|
6
|
|
5
|
|
9
|
|
5
|
|
|
|
Nominating
and Corporate Governance Committee
|
The Nominating and Corporate Governance Committee is responsible
for the following items:
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|
|
|
|
identifying individuals qualified to become directors and
recommending candidates for membership on the board of directors
and its committees, as described under the heading
Nomination Process for Election of Directors;
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|
developing and recommending the corporate governance guidelines
to the board of directors;
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reviewing and recommending compensation of non-employee
directors; and
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|
reviewing the effectiveness of board governance, including
overseeing an annual assessment of the performance of the board
of directors and each of its committees.
|
The board of directors has determined, in its judgment, that the
Nominating and Corporate Governance Committee is composed
entirely of independent directors as defined in the New York
Stock Exchange listing standards and operates under a written
charter adopted by the board of directors, a copy
13
of which is published under Corporate Governance in
the Investors section of our website at archcoal.com.
The Finance Committee reviews and approves fiscal policies
relating to our financial structure, including our debt, cash
and risk management policies. The Finance Committee also reviews
and recommends to the board of directors appropriate action with
respect to significant financial matters, including dividends on
our capital stock, major capital expenditures and acquisitions,
and funding policies of our employee benefit plans.
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Personnel
and Compensation Committee
|
The Personnel and Compensation Committee is responsible for the
following items:
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|
reviewing and recommending to the board of directors our
management compensation programs;
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|
reviewing and recommending to the board of directors the
participation of executives and other key management employees
in the various compensation plans; and
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|
monitoring our succession planning and management development
practices.
|
The board of directors has determined, in its judgment, that the
Personnel and Compensation Committee is composed entirely of
independent directors as defined in the New York Stock Exchange
listing standards and operates under a written charter adopted
by the entire board of directors, a copy of which is published
under Corporate Governance in the Investors section
of our website at archcoal.com. The report of the Personnel and
Compensation Committee can be found under Personnel and
Compensation Committee Report in this proxy statement.
The Audit Committee is responsible for the following items:
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monitoring the integrity of our consolidated financial
statements, internal accounting, financial controls, disclosure
controls and financial reporting processes;
|
|
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|
confirming the qualifications and independence of our
independent registered public accounting firm;
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evaluating the performance of our internal audit function and
our independent registered public accounting firm; and
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|
reviewing our compliance with legal and regulatory requirements.
|
The Audit Committee is directly responsible for the appointment,
compensation and oversight of the work of our independent
registered public accounting firm. The board of directors has
determined, in its judgment, that the Audit Committee is
composed entirely of independent directors as defined in the New
York Stock Exchange listing standards and
Rule 10A-3
of the Securities Exchange Act of 1934 and operates
14
under a written charter adopted by the board of directors, a
copy of which is published under Corporate
Governance in the Investors section of our website at
archcoal.com.
The board of directors has also determined, in its judgment,
that Mr. Burke and Mr. Jennings are audit
committee financial experts and that each member of the
Audit Committee is financially literate. Our
corporate governance guidelines do not currently restrict the
number of audit committees of public companies on which members
of our Audit Committee may serve. The board of directors has
determined that none of the members of the Audit Committee
currently serves on the audit committees of more than three
public companies. The report of the Audit Committee can be found
under Audit Committee Report in this proxy statement.
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|
|
Energy
and Environmental Policy Committee
|
The Energy and Environmental Policy Committee reviews, assesses
and provides advice to the board of directors on current and
emerging energy and environmental policy trends and developments
that affect or could affect us. In addition, the Energy and
Environmental Policy Committee makes recommendations concerning
whether and to what extent we should become involved in current
and emerging energy and environmental policy issues.
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|
Compensation
Committee Interlocks and Insider Participation
|
The identities of the directors who served on the Personnel and
Compensation Committee during 2009 are set forth under the
report of the Personnel and Compensation Committee under
Personnel and Compensation Committee Report in this
proxy statement. None of the directors who served on the
Personnel and Compensation Committee during 2009 has been an
officer or employee of ours. None of our executives has served
on the board of directors or compensation committee of any other
entity that has or has had one or more executives serving as a
member of our board of directors or compensation committee.
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Nomination
Process for Election of Directors
|
The Nominating and Corporate Governance Committee has
responsibility for assessing the need for new directors to
address specific requirements or to fill a vacancy. The
committee initiates a search for a new candidate seeking input
from our chairman and from other directors. The committee may
retain an executive search firm to identify potential
candidates. All candidates must meet the requirements specified
in our corporate governance guidelines. Candidates who meet
those requirements and otherwise qualify for membership on our
board of directors are identified, and the committee initiates
contact with preferred candidates. The committee regularly
reports to the board of directors on the progress of the
committees efforts. The committee meets to consider and
approve final candidates who are then presented to the board of
directors for consideration and approval. Our chairman or the
chairman of the Nominating and Corporate Governance Committee
may extend an invitation to join the board of directors.
Stockholder recommendations should be submitted in writing to
Robert G. Jones, our secretary, and should include information
regarding nominees required under our bylaws. Individuals
recommended by
15
stockholders will receive the same consideration received by
individuals identified to the Nominating and Corporate
Governance Committee through other means.
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Communicating
with the Board of Directors
|
Our board of directors has established procedures intended to
facilitate stockholder communication directly with the board of
directors, the non-employee directors or the Audit Committee.
Such communications may be confidential or anonymous, and may be
reported by phone to our confidential hotline at
866-519-1881
or by writing to the individual directors or group in care of
Arch Coal, Inc., One CityPlace Drive, Suite 300,
St. Louis, Missouri 63141, Attention: Senior Vice
President-Law, General Counsel and Secretary. All such
communications are promptly communicated to the chairman of the
Audit Committee or our Director of Internal Audit, as
appropriate.
ELECTION
OF DIRECTORS (PROXY ITEM NO. 1)
The terms of four directors (Messrs. Jennings, Leer, Potter
and Sands) will expire at the annual meeting. Our board of
directors has nominated each of those individuals for
re-election for a three-year term that will expire in 2013. The
board of directors is not aware that any nominee will be
unwilling or unable to serve as a director. All nominees have
consented to be named in the proxy statement and to serve if
elected. If, however, a nominee is unavailable for election,
your proxy authorizes us to vote for a replacement nominee if
the board of directors names one. As an alternative, the board
of directors may reduce the number of directors to be elected at
the meeting.
The board of directors recommends a vote
FOR
these nominees.
16
RATIFICATION
OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
(PROXY ITEM NO. 2)
Ernst & Young LLP was our independent registered
public accounting firm for 2009. The Audit Committee has
appointed Ernst & Young LLP as our independent
registered public accounting firm for 2010. The Audit Committee
and the board of directors are requesting that stockholders
ratify this appointment as a means of soliciting
stockholders opinions and as a matter of good corporate
governance. If the stockholders do not ratify the selection of
Ernst & Young LLP, the Audit Committee will consider
any information submitted by stockholders in connection with the
selection of the independent registered public accounting firm
for the next fiscal year. Even if the selection is ratified, the
Audit Committee, in its discretion, may direct the appointment
of a different independent registered public accounting firm at
any time during the year if the Audit Committee believes such a
change would be in our best interests and the best interests of
our stockholders.
Representatives of Ernst & Young LLP will attend the
annual meeting and will have the opportunity to make a statement
if they desire to do so and to respond to appropriate questions.
During 2009 and 2008, Ernst & Young LLP charged fees
for services rendered to us as follows:
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Fee
|
|
Service
|
|
2009
|
|
|
2008
|
|
|
Audit
(1)
|
|
$
|
1,732,370
|
|
|
$
|
1,409,809
|
|
Audit-related
(2)
|
|
|
|
|
|
|
22,238
|
|
Tax
(3)
|
|
$
|
43,584
|
|
|
|
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All Other
|
|
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|
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(1)
|
|
Audit services performed by Ernst
& Young LLP in 2009 and 2008 included the annual
financial statement audit (including required quarterly reviews)
and other procedures performed by Ernst & Young LLP to
form an opinion on our consolidated financial statements and to
issue their consent to include their audit opinion in
registration statements we filed with the SEC. Audit services in
2009 also included comfort letters delivered by Ernst
& Young LLP in connection with our concurrent common
stock and senior note offerings completed in July 2009.
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(2)
|
|
Audit-related services performed by
Ernst & Young LLP in 2008 included a review of certain
performance conditions associated with our
performance-contingent phantom stock award payouts and
agreed-upon
procedures related to certain excise tax refunds.
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(3)
|
|
Tax services performed by Ernst
& Young LLP in 2009 include tax planning related to
our acquisition of the Jacobs Ranch mining complex and other tax
planning issues.
|
The Audit Committee has adopted an audit and non-audit services
pre-approval policy that requires the committee, or the chairman
of the committee, to pre-approve services to be provided by our
independent registered public accounting firm. The Audit
Committee will consider whether the services to be provided by
the independent registered public accounting firm are prohibited
by the SECs rules on
17
auditor independence and whether the independent registered
public accounting firm is best positioned to provide the most
effective and efficient service. The Audit Committee is mindful
of the relationship between fees for audit and non-audit
services in deciding whether to pre-approve such services. The
Audit Committee has delegated to the chairman of the committee
pre-approval authority between committee meetings, and the
chairman must report any pre-approval decisions to the committee
at the next regularly scheduled committee meeting. All non-audit
services performed by Ernst & Young LLP in 2009 and
2008 were pre-approved in accordance with the procedures
established by the Audit Committee.
The board of directors recommends a vote
FOR
ratification of the appointment of Ernst & Young LLP
as our independent registered public accounting firm.
18
APPROVAL
OF AN AMENDMENT AND RESTATEMENT OF THE
ARCH COAL, INC. 1997 STOCK INCENTIVE PLAN
(PROXY ITEM NO. 3)
The Company currently maintains the Arch Coal, Inc. 1997 Stock
Incentive Plan, as amended and restated December 5, 2008
(the Current Plan). The board of directors believes
that the Current Plan has been effective in attracting and
retaining highly-qualified employees and that the awards granted
under the Current Plan have provided an incentive that aligns
the economic interests of plan participants with those of our
stockholders. The Personnel and Compensation Committee (the
Committee), with the assistance of Hewitt
Associates, has reviewed the Current Plan to determine whether
it remains a flexible and effective source of incentive
compensation in terms of the number of shares of stock available
for awards and in terms of its design, as well as whether it
generally conforms with best practices in todays business
environment.
Based on its review, the Committee recommended that the Current
Plan be amended and restated to:
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add 4,500,000 shares of the Companys stock to the
reserve available for new awards;
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explicitly prohibit repricing of any outstanding grants of stock
options or stock appreciation rights without stockholder
approval;
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|
provide a set of designated financial or other performance
metrics that may be used to make performance-based awards under
the Restated Plan;
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|
allow the Committee to grant awards to non-employee directors of
the Company and any participating subsidiary; and
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|
revise the definition of a Change in Control to
eliminate triggers that might occur even where there is no sale
or other transaction that actually results in a change in
control of the Company.
|
Accordingly, the board of directors approved and recommends that
the Companys stockholders approve the Arch Coal, Inc. 1997
Stock Incentive Plan, as amended and restated effective
January 1, 2010 (the Restated Plan). Upon
approval of the Restated Plan by the Companys
stockholders, the Restated Plan will replace the Current Plan
and no new awards will be made under the terms of the Current
Plan. However, any outstanding awards previously granted under
the Current Plan will continue in effect after approval of the
Restated Plan and will not be deemed amended or modified by the
adoption and approval of the Restated Plan. If the Restated Plan
is not approved by the Companys stockholders, the Current
Plan will remain in effect according to its terms and the
Company may continue to grant awards under that plan.
Stockholder approval of the Restated Plan also is desired to
ensure the tax deductibility by the Company of certain
performance-based awards granted under the Restated Plan for
purposes of Section 162(m) of the United States Internal
Revenue Code of 1986, as amended (the Code), and to
meet the listing requirements of the New York Stock Exchange.
19
The material features of the Restated Plan are summarized below.
The summary is qualified in its entirety by reference to the
specific provisions of the Restated Plan, the full text of which
is set forth as Appendix A to this proxy statement.
The Restated Plan is administered by the Committee. Subject to
the express provisions of the Restated Plan, the Committee has
the authority, in its discretion, to interpret the Restated
Plan, establish rules and regulations for its operation, select
employees of the Company and its subsidiaries to receive awards
and determine the form and amount and other terms and conditions
of such awards.
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Summary
of Award Terms and Conditions
|
Awards under the Restated Plan may include incentive stock
options, nonqualified stock options, stock appreciation rights,
restricted shares of common stock, restricted stock units,
performance share or unit awards and other stock-based awards.
The Committee may grant to a participant options to purchase
Company common stock that qualify as incentive stock options for
purposes of Section 422 of the Code (incentive stock
options), options that do not qualify as incentive stock
options (nonqualified stock options) or a
combination thereof. The terms and conditions of stock option
grants, including the quantity, price, vesting periods, and
other conditions on exercise will be determined by the Committee.
The exercise price for stock options will be determined by the
Committee in its discretion, but may not be less than 100% of
the fair market value of one share of the Companys common
stock on the date when the stock option is granted.
Additionally, in the case of incentive stock options granted to
a holder of more than 10% of the total combined voting power of
all classes of stock of the Company on the date of grant, the
exercise price may not be less than 110% of the fair market
value of one share of common stock on the date the stock option
is granted. On February 22, 2010, the market price per
share of the Companys common stock was $22.44 based on the
closing price of the common stock on the New York Stock Exchange
on such date.
Stock options must be exercised within a period fixed by the
Committee that may not exceed ten years from the date of grant,
except that in the case of incentive stock options granted to a
holder of more than 10% of the total combined voting power of
all classes of stock of the Company on the date of grant, the
exercise period may not exceed five years. The Restated Plan
provides for earlier termination of stock options upon the
participants termination of service, unless extended by
the Committee, but in no event may the options be exercised
after the scheduled expiration date of the options.
At the Committees discretion, payment for shares of common
stock on the exercise of stock options may be made in cash,
shares of the Companys common stock held by the
participant or in any other
20
form of consideration acceptable to the Committee (including one
or more forms of cashless or net
exercise).
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Stock
Appreciation Rights
|
The Committee may grant to a participant an award of stock
appreciation rights, which entitles the participant to receive,
upon its exercise, a payment equal to (i) the excess of the
fair market value of a share of common stock on the exercise
date over the stock appreciation right exercise price,
multiplied by (ii) the number of shares of common stock
with respect to which the stock appreciation right is exercised.
The exercise price for a stock appreciation right will be
determined by the Committee in its discretion, but may not be
less than 100% of the fair market value of one share of the
Companys common stock on the date when the stock
appreciation right is granted. Stock appreciation rights must be
exercised within a period fixed by the Committee that may not
exceed ten years from the date of grant. Upon exercise of a
stock appreciation right, payment may be made in cash, shares of
Company stock or a combination of cash and stock.
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Restricted
Shares and Restricted Units
|
The Committee may award to a participant shares of common stock
subject to specified restrictions (restricted
shares). Restricted shares are subject to forfeiture if
the participant does not meet certain conditions such as
continued employment over a specified forfeiture period
and/or
the
attainment of specified performance targets over the forfeiture
period.
The Committee also may award to a participant units representing
the right to receive shares of common stock in the future
subject to the achievement of one or more goals relating to the
completion of service by the participant
and/or
the
achievement of performance or other objectives (restricted
units). The terms and conditions of restricted share and
restricted unit awards are determined by the Committee.
For participants who are subject to Section 162(m) of the
Code, the performance targets described in the preceding two
paragraphs may be established by the Committee, in its
discretion, based on one or more of the following measures (the
Performance Goals):
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Operating Income
|
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Net Income
|
Debt Reduction
|
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Earnings Per Share
|
Cash Flow
|
|
Cost Reduction
|
EBITDA
|
|
Environmental Compliance
|
Safety Performance
|
|
Operating Cost Per Ton
|
Production Rates
|
|
Total Shareholder Return
|
Financial Return Measures
|
|
|
The Performance Goals may be measured with respect to the
Company or any one or more of its subsidiaries, divisions or
affiliates, either in absolute terms or as compared to another
company or companies, or an index established or designated by
the Committee. The above terms will have the same meaning as in
the Companys financial statements, or if the terms are not
used in the Companys financial
21
statements, either as applied pursuant to generally accepted
accounting principles or as used in the industry, as applicable.
|
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|
Performance
Stock and Performance Unit Awards
|
The Committee may grant awards in the form of performance stock
or performance units to participants under such terms and
conditions as the Committee deems appropriate. A performance
award entitles a participant to receive a payment from the
Company, the amount of which is based upon the attainment of
predetermined performance targets over a specified award period.
Performance awards may be paid in cash, shares of common stock
or a combination thereof, as determined by the Committee.
Award periods will be established at the discretion of the
Committee. The performance targets also will be determined by
the Committee. With respect to participants subject to
Section 162(m) of the Code, the applicable performance
targets will be established, in the Committees discretion,
based on one or more of the Performance Goals described under
the section titled
Restricted Shares and Restricted
Units
. To the extent that a participant is not subject
to Section 162(m) of the Code, when circumstances occur
that cause predetermined performance targets to be an
inappropriate measure of achievement, the Committee, at its
discretion, may adjust the performance targets or the amount or
value of the performance award.
The Committee may grant equity-based or equity-related awards,
referred to as other stock-based awards, other than
options, stock appreciation rights, restricted shares,
restricted units, or performance awards. The terms and
conditions of each other stock-based award will be determined by
the Committee. Payment under any other stock-based awards will
be made in common stock or cash, as determined by the Committee.
|
|
|
Effect
of a Change in Control
|
In the event of a change in control of the Company
(as defined in the Restated Plan), all awards of options and
stock appreciation rights will become fully vested and
exercisable and awards of restricted shares, restricted share
units and other stock-based awards (other than performance
units) will be deemed fully vested. With respect to performance
unit awards, the Committee will determine whether and in what
manner those awards will be paid upon a change in control.
However, the Committee has the discretion to provide for
different vesting, exercisability or other terms in connection
with a change in control for specific awards, and those terms
will be set forth in the applicable award agreement.
|
|
|
Eligibility
and Limitation on Awards
|
The Committee may grant awards to any employee or director of
the Company or any of its participating subsidiaries. While the
selection of participants is within the discretion of the
Committee, it is currently expected that participants will be
primarily officers and salaried management level employees, as
well as non-employee directors of the Company. It is presently
contemplated that approximately 60 persons will be eligible
to receive awards under the Restated Plan.
22
The maximum awards that can be granted under the Restated Plan
to a single participant in any calendar year are
(i) 350,000 shares in the form of options or stock
appreciation rights, (ii) 100,000 shares in the form
of restricted shares or restricted units,
(iii) 200,000 shares in the form of performance stock
or performance unit awards, and (iv) 100,000 shares or
$3,000,000 in cash value in the form of other stock-based awards.
|
|
|
Awards
Granted under the Restated Plan
|
The future amounts that will be received by participants under
the Restated Plan are not determinable. The stock awards granted
to the Companys named executive officers under the
Restated Plan and outstanding as of December 31, 2009 are
set forth in the Outstanding Equity Awards at Fiscal Year-End
Table found under Executive and Director
Compensation. As of February 22, 2010, (i) the
Companys executive officers as a group (ten officers) held
outstanding stock option grants for 3,263,980 shares,
(ii) the Companys non-employee directors as a group
(ten directors) did not hold any outstanding stock option
grants, and (iii) our employees other than our executive
officers (175 employees) held outstanding stock option
grants for 1,421,381 shares.
|
|
|
Shares Subject
to the Restated Plan
|
The number of shares of the Companys common stock reserved
for issuance with respect to awards under the Current Plan is
18,000,000, of which approximately 2,905,938 shares remain
available for new awards. The board of directors has authorized,
subject to stockholder approval, an additional
4,500,000 shares of the Companys common stock to be
available for new awards under the Restated Plan, so that the
aggregate number of shares reserved for issuance under the
Restated Plan is 22,500,000, with approximately
7,405,938 shares being available for new awards.
Shares of common stock underlying awards granted under the
Restated Plan or the Current Plan that expire or are forfeited
or terminated for any reason (as a result, for example, of the
lapse of an option or a forfeiture of restricted shares), as
well as any shares underlying an award that is settled in cash
rather than stock, will be available for future grants under the
Restated Plan. In addition, shares of stock that are used as
full or partial payment on the exercise of an award will be
available for future grants. Shares to be issued under the
Restated Plan will be authorized but unissued shares of common
stock or shares of stock reacquired by the Company.
|
|
|
Anti-Dilution
Protections
|
In the event of any reorganization, merger, or consolidation,
subdivision or consolidation of shares of stock or other capital
readjustment, payment of stock dividend, stock split, spin-off,
combination of shares or recapitalization or other increase or
reduction of the number of shares of stock outstanding, or any
similar event, the Committee shall appropriately adjust
(i) the number of shares of stock available under the
Restated Plan, (ii) the number of shares of stock available
under any individual or other limitations under the Restated
Plan, (iii) the number of shares of stock subject to
outstanding awards and (iv) the per-share exercise or other
purchase price under any outstanding award.
23
|
|
|
Amendment
and Termination
|
The board of directors may suspend, terminate, modify or amend
the Restated Plan, provided that any amendment that would
(i) increase the aggregate number of shares of stock which
may be issued under the Restated Plan, (ii) change the
method of determining the exercise price of option awards, or
(iii) materially modify the eligibility requirements for
the Restated Plan, will be subject to the approval of our
stockholders, except for modifications or adjustments relating
to the anti-dilution protection described above. No suspension,
termination, modification or amendment of the Restated Plan may
terminate a participants existing award or materially and
adversely affect a participants rights under such award
without the participants consent. However, these
provisions do not limit the board of directors authority
to amend or revise the Restated Plan to comply with applicable
laws or governmental regulations.
The Restated Plan specifically prohibits the repricing of stock
options or stock appreciation rights without stockholder
approval. For this purpose, a repricing means any of
the following (or any other action that has the same effect as
any of the following): (i) changing the terms of a stock
option or stock appreciation right to lower its exercise price;
(ii) any other action that is treated as a
repricing under generally accepted accounting
principles; and (iii) repurchasing for cash or canceling a
stock option or stock appreciation right at a time when its
exercise price is greater than the fair market value of the
underlying stock in exchange for another award, unless the
cancellation and exchange occurs in connection with a change in
capitalization or similar change. Such cancellation and exchange
would be considered a repricing regardless of
whether it is treated as a repricing under generally
accepted accounting principles and regardless of whether it is
voluntary on the part of the participant.
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|
|
Federal
Income Tax Consequences
|
The federal income tax consequences of the issuance and exercise
of awards under the Restated Plan are as described below. The
following information is only a summary of the tax consequences
of the awards, and participants should consult with their own
tax advisors with respect to the tax consequences inherent in
the ownership or exercise of the awards, and the ownership and
disposition of any underlying securities.
Incentive Stock Options.
A participant who is
granted an incentive stock option will not recognize any taxable
income for federal income tax purposes on either the grant or
exercise of the incentive stock option. If the participant
disposes of the shares purchased pursuant to the incentive stock
option more than two years after the date of grant and more than
one year after the exercise of the option by the participant
(the required statutory holding period),
(i) the participant will recognize long-term capital gain
or loss, as the case may be, equal to the difference between the
selling price and the exercise price; and (ii) the Company
will not be entitled to a deduction with respect to the shares
of stock so issued. If the holding period requirements are not
met, any gain realized upon disposition will be taxed as
ordinary income to the extent of the lesser of (1) the
excess of the fair market value of the shares at the time of
exercise over the exercise price, and (2) the gain on the
sale. Also in that case, the Company will be entitled to a
deduction in the year of disposition in an amount equal to the
ordinary income recognized by the participant. Any additional
gain will be taxed as short-term or long-term capital gain
depending upon the holding period for the stock. A sale for less
than the exercise price results in a capital loss.
24
The excess of the fair market value of the shares on the date of
exercise over the exercise price is, however, includable in the
participants income for alternative minimum tax purposes.
Nonqualified Stock Options.
A participant who
is granted a nonqualified stock option under the Restated Plan
will not recognize any income for federal income tax purposes on
the grant of the option. Generally, on the exercise of the
option, the participant will recognize taxable ordinary income
equal to the excess of the fair market value of the shares on
the exercise date over the option price for the shares, subject
to certain limits on the deductibility of compensation under the
Code. The Company generally will be entitled to a deduction on
the date of exercise in an amount equal to the ordinary income
recognized by the participant. Upon disposition of the shares
purchased pursuant to the stock option, the participant will
recognize long-term or short-term capital gain or loss, as the
case may be, equal to the difference between the amount realized
on such disposition and the basis for such shares, which basis
includes the amount previously recognized by the participant as
ordinary income.
Stock Appreciation Rights.
A participant who
is granted stock appreciation rights will normally not recognize
any taxable income on the receipt of the award. Upon the
exercise of a stock appreciation right, (i) the participant
will recognize ordinary income equal to the amount received (the
increase in the fair market value of one share of our stock from
the date of grant of the award to the date of exercise), and
(ii) the Company will be entitled to a deduction on the
date of exercise in an amount equal to the ordinary income
recognized by the participant.
Restricted Stock.
A participant will not be
taxed at the date of an award of restricted shares, but will be
taxed at ordinary income rates on the fair market value of any
restricted shares as of the date that the restrictions lapse,
unless the participant, within 30 days after transfer of
such restricted shares to the participant, elects under
Section 83(b) of the Code to include in income the fair
market value of the restricted shares as of the date of such
transfer. The Company will be entitled to a corresponding
deduction, subject to certain limits on the deductibility of
compensation under the Code. Any disposition of shares after the
restrictions lapse will be subject to the regular rules
governing long-term and short-term capital gains and losses,
with the basis for this purpose equal to the fair market value
of the shares at the end of the restricted period (or on the
date of the transfer of the restricted shares, if the employee
elects to be taxed on the fair market value upon such transfer).
To the extent dividends are payable during the restricted period
under the applicable award agreement, any such dividends will be
taxable to the participant at ordinary income tax rates and will
be deductible by the Company unless the participant has elected
to be taxed on the fair market value of the restricted shares
upon transfer, in which case they will thereafter be taxable to
the participant as dividends and will not be deductible by the
Company.
Restricted Share Units.
A participant will
normally not recognize taxable income upon an award of
restricted share units, and the Company will not be entitled to
a deduction until the lapse of the applicable restrictions. Upon
the lapse of the restrictions and the issuance of the underlying
shares, the participant will recognize ordinary taxable income
in an amount equal to the fair market value of the common stock
received and the Company will be entitled to a deduction in the
same amount, subject to certain limits on deductibility of
compensation under the Code. Any disposition of shares after
restrictions lapse will be subject to the regular rules
governing long-term and short-term capital gains and losses,
with the basis for this purpose equal to the fair market value
of the shares at the end of the restricted period.
25
Performance Awards and Other Stock-Based
Awards.
Normally, a participant will not
recognize taxable income upon the grant of performance awards or
other stock-based awards under the Restated Plan. Subsequently,
when the conditions and requirements for the grants have been
satisfied and the payment determined, any cash received and the
fair market value of any common stock received will constitute
ordinary income to the participant. The Company also will then
be entitled to a deduction in the same amount, subject to
certain limits on deductibility of compensation under the Code.
The Restated Plan will be effective as of January 1, 2010,
if approved by the stockholders of the Company. If not approved
by the stockholders, no awards will be made under the Restated
Plan and the Current Plan will continue in effect, subject to
its existing terms and conditions.
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|
|
Securities
Authorized for Issuance Under Equity Compensation
Plans
|
The Current Plan, which was approved by our stockholders, is the
sole plan under which the Company currently is authorized to
issue shares of its common stock to employees. The following
table shows the number of shares of common stock to be issued
upon vesting of restricted stock units or exercise of options
outstanding under the Current Plan at December 31, 2009,
the weighted average exercise price of such options, and the
number of shares of common stock remaining available for future
issuance under the Current Plan at December 31, 2009,
excluding shares to be issued upon exercise of outstanding
options. No warrants or rights had been issued under the Current
Plan as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of Securities to be
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities to be Issued
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Upon Exercise)
|
|
|
Equity compensation plans approved by security holders
|
|
|
3,988,835
|
|
|
$
|
25.17
|
|
|
|
2,905,938
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,988,835
|
|
|
$
|
25.17
|
|
|
|
2,905,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of the Restated Plan will require the affirmative vote
of a majority of the shares present and entitled to vote at the
meeting, provided that the total vote cast on the proposal
represents over 50% in interest of all of our securities
entitled to vote on the proposal and assuming the presence of a
quorum. If the stockholders do not approve the Restated Plan, it
will not be implemented, but the Company reserves the right to
adopt such other compensation plans and programs as it deems
appropriate and in the best interests of the Company and its
stockholders.
26
The Board of
Directors recommends a vote
FOR
the proposal
to approve the Restated Plan.
SECTION 162(m)
APPROVAL OF ARCH COALS INCENTIVE COMPENSATION PLAN
FOR EXECUTIVE OFFICERS
(PROXY ITEM NO. 4)
Upon the recommendation of the Personnel and Compensation
Committee, the board of directors has re-approved, subject to
stockholder re-approval, the material terms of the performance
goals, including the Performance Measures (described
below), under the Companys Incentive Compensation Plan for
Executive Officers (the Executive Incentive Plan).
We are asking our stockholders to re-approve the material
performance terms, including the Performance Measures,
applicable to performance-based awards under the Executive
Incentive Plan to preserve our ability to take a federal tax
deduction for certain compensation awards. This summary of the
material performance terms of the Executive Incentive Plan is
qualified in its entirety by reference to the specific
provisions of the Executive Incentive Plan, the full text of
which is set forth as Appendix B to this proxy statement.
Section 162(m) of the Internal Revenue Code imposes an
annual limit of $1.0 million on the tax deduction that is
available to public companies for compensation paid to each of
the chief executive officer and the other three most highly
compensated executive officers, other than the chief financial
officer, unless the compensation is performance-based. In order
to qualify for this exception, however, the performance-based
compensation must be paid based on the achievement of one or
more performance objectives that have been disclosed to and
approved by the Companys stockholders within the past five
years. The material performance terms, including the Performance
Measures, used for performance-based awards under the Executive
Incentive Plan were most recently approved by our stockholders
at the Annual Meeting in 2005. Therefore, these material
performance terms must be re-approved this year in order to
maintain our ability to grant awards that are eligible for
deduction as compensation expense in the Companys
U.S. federal tax returns.
Our board of directors has determined that it would be in the
best interests of the Company and its stockholders to
re-approve, and the board of directors hereby recommends
re-approval of, the material performance terms under the
Executive Incentive Plan in order to preserve the tax
deductibility of certain performance-based compensation payable
by the Company under the Executive Incentive Plan. We are not
asking stockholders to re-approve the Executive Incentive Plan
itself. If this proposal is not adopted, we will continue to be
able to grant performance awards under the Executive Incentive
Plan, but certain awards to executive officers may no longer be
fully tax deductible by the Company.
For each calendar year, the Personnel and Compensation Committee
of the board of directors (the Committee) will
establish the applicable performance objectives in writing
within ninety (90) days after
27
the beginning of the calendar year. The performance objectives
selected will be relative or absolute measures of any one or
more of the following (the Performance Measures):
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Operating Income
|
|
Net Income
|
Debt Reduction
|
|
Earnings Per Share
|
Cash Flow
|
|
Cost Reduction
|
EBITDA
|
|
Environmental Compliance
|
Safety Performance
|
|
Operating Cost Per Ton
|
Production Rates
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|
Total Shareholder Return
|
Financial Return Measures
|
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|
The above terms have the same meaning as in the Companys
financial statements, or if the terms are not used in the
Companys financial statements, as applied pursuant to
generally accepted accounting principles or as used in the
industry, as applicable. As determined by the Committee, the
Performance Measures may be applied (i) to the
Companys stand-alone performance or performance relative
to one or more other companies or indices, or (ii) to a
business unit, geographic region, one or more separately
incorporated entities, or the Company as a whole.
Purpose.
The purpose of the Executive
Incentive Plan is to provide an opportunity for our executive
officers to earn annual cash incentive compensation through the
achievement of pre-established performance goals in a manner
that will permit the full deduction by the Company of such
compensation under the Internal Revenue Code.
Selection of Participants.
For each calendar
year, the Committee will determine in writing the participants
who will be eligible to receive an incentive award under the
Executive Incentive Plan for such period. Only senior executive
officers of the Company are eligible to participate in the
Executive Incentive Plan (ten individuals as of the date of this
Proxy Statement). The Committee will make its determination of
participants within ninety (90) days after the beginning of
the calendar year, or at such other time as required by
Section 162(m) of the Internal Revenue Code.
Extraordinary or Unusual Events.
The Committee
may, in its discretion, disregard the impact of any
extraordinary or unusual event in determining whether a
performance objective has been attained or may make appropriate
adjustments in any performance objective to reflect such
extraordinary or unusual event, except to the extent such
discretion would not comply with Section 162(m) of the Code.
Maximum Incentive Award Payable.
The maximum
incentive award payable under the Executive Incentive Plan to
any participant for any calendar year is $3,000,000.
Discretion to Reduce Rewards.
The Committee,
in its sole and absolute discretion, may reduce the amount of
any award otherwise payable to a participant.
Amendment and Termination of the Executive Incentive
Plan.
The Committee may amend or terminate the
Executive Incentive Plan at any time, except that no amendment
or termination will be
28
made which would adversely affect any payment of an incentive
award previously earned by a participant, unless the participant
consents to such amendment or termination.
Vote
Required
The affirmative vote of a majority of the shares present and
entitled to vote at the meeting is required for the
Section 162(m) approval of the Executive Incentive Plan,
provided that the total vote cast on the proposal represents
over 50% in interest of all of our securities entitled to vote
on the proposal and assuming the presence of a quorum at the
Annual Meeting.
Board
Recommendation
The Board of Directors recommends a vote
FOR
the proposal to re-approve the material performance terms under
the Executive Incentive Plan.
EXECUTIVE
AND DIRECTOR COMPENSATION
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Compensation
Discussion and Analysis
|
We believe that our success in creating long-term value for our
stockholders depends on our ability to attract, motivate and
retain highly talented executives. We encourage sustained
long-term profitability and increased stockholder value by
linking executive compensation to our achievement of financial
and operating performance. We use equity-based awards and other
mechanisms to align the long-term interests of our executives
with those of our stockholders. We have designed elements of our
executive compensation program to increase the likelihood that
we will retain key employees.
We have determined the type and amount of compensation for each
executive after considering a variety of factors, including the
executives position and level of responsibility within our
organization, comparative market data and other external
market-based factors. Our Personnel and Compensation Committee
(the Committee) uses this information when
establishing compensation in order to achieve a comprehensive
package that emphasizes
pay-for-performance
and is competitive in the marketplace.
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Our
Compensation Philosophy
|
The Committee believes that an effective executive compensation
program should encompass the following fundamental objectives:
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Compensation should be competitive.
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Compensation should vary with our performance.
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Compensation should align the long-term interests of our
executives with those of our stockholders.
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Compensation should provide a retention incentive.
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29
We have designed our executive compensation program around these
beliefs.
The Committee uses current compensation levels, performance,
long-term career goals, future leadership potential and
succession planning, among other factors, in determining
appropriate compensation levels for our executives. The
Committee does not use a formula to weight these factors.
However, the Committee believes these factors provide context
within which to assess the significance of comparative market
data and to differentiate the level of compensation among our
executives.
Annually, the Committee reviews the design of our executive
compensation program. In doing so, the Committee assesses
whether compensation programs used in prior years have
successfully achieved our compensation objectives. The Committee
also considers the extent to which our compensation program is
designed to achieve our long-term financial and operating goals.
The Committee has retained the consultants listed below under
Role of Compensation Consultants to help analyze
certain comparative market data. Certain members of management
participate in this process by assembling and summarizing data
used by the Committee.
After the end of the performance period to which a particular
incentive award relates, the Committee reviews our performance
relative to the applicable performance targets and recommends
payouts based on that performance. The Committee retains
discretion to recommend payouts that are above or below actual
performance levels for the applicable performance period. For
purposes of determining the amount of a payout to recommend, the
Committee may also consider infrequent or non-recurring items
that are not reflective of ongoing operations or the effects of
major corporate transactions or other items that the Committee
determines, in its judgment, significantly distort the
comparability of our actual performance against the performance
targets.
Our chief executive officer and vice president of human
resources provide the Committee with compensation
recommendations for our executives, other than the chief
executive officer, including base salary, annual cash incentive
opportunity and long-term incentive opportunities. Management
provides a current market value for each proposed element and
for the total targeted value, as well as the median market value
for the executives peers. Management obtains the
comparative market information primarily from materials provided
by our compensation consultant. Neither our chief executive
officer nor the vice president of human resources recommends his
or her own base salary or targeted payouts under our annual or
long-term incentive awards.
Annually, the Committee reviews the performance of our chief
executive officer and makes recommendations to the board of
directors regarding his compensation. In doing so, the Committee
uses information provided by our compensation consultant and
certain historical financial and operating performance data
provided by management. Historically, the Committee has not
considered accrued pension benefits, deferred compensation,
thrift plan amounts or existing stock ownership in makings its
recommendations. The Committee believes that the compensation
opportunities granted to our chief
30
executive officer, while higher in the aggregate than
compensation granted to our other executives, is appropriate
taking into consideration our chief executive officers
overall leadership responsibilities.
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Role of
Compensation Consultants
|
During 2009, the Committee consulted with Watson Wyatt Company,
and the Committee retained Hewitt Associates in September 2009.
The compensation consultants provided the Committee with
information concerning compensation practices, mix of
compensation elements and comparative market data, which the
Committee used to assess and determine appropriate levels of
executive compensation relative to the marketplace. In doing so,
the compensation consultants have provided the Committee with
comparative data for a peer group and for the S&P Midcap
400 Index by executive position, along with other relevant
industry data.
The peer companies included in the information provided by our
compensation consultants included those public companies with
which we most directly compete on the basis of customers,
investors and executive talent. For 2009, those companies
included the following:
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|
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Alpha Natural Resources, Inc.
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|
Cleveland-Cliffs, Inc.
|
CONSOL Energy, Inc.
|
|
Foundation Coal Holdings, Inc.
|
International Coal Group, Inc.
|
|
Martin Marietta Materials
|
Massey Energy Company
|
|
Minerals Technologies, Inc.
|
Patriot Coal Corporation
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|
Vulcan Materials Co.
|
Peabody Energy Corporation
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|
The Committee regularly assesses the appropriateness of the peer
group used to benchmark our compensation programs.
In 2010, Hewitt Associates spun off its executive compensation
practice into an independent entity named Meridian Compensation
Partners, LLC, and the Committee has retained Meridian as its
independent executive compensation consultant.
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|
Elements
of Our Compensation Program
|
We use the following compensation elements to achieve the
compensation objectives established by the Committee:
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|
base salary;
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|
|
short- and long-term incentive opportunities; and
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|
certain limited perquisites and other benefits.
|
The Committee believes that a higher percentage of total
compensation for those executives with a greater ability to
influence the achievement of our financial and operating
objectives should be variable and, therefore, subject to greater
risk. In general, as the position and amount of responsibility
for an executive increase, a greater percentage of that
executives total compensation will be variable. As a
result, executives with the highest level and amount of
responsibility generally have the lowest percentage of their
31
total compensation fixed as base salary and the highest
percentage of their total compensation dependent upon short- or
long-term incentive awards.
The following table shows the allocation of total targeted
compensation for each of the executives named in this proxy
statement for each of the last three years:
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% of Target 2007
Compensation
(1)
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% of Target 2008
Compensation
(1)
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% of Target 2009
Compensation
(1)
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Fixed
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Performance-Based
(2)
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Fixed
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Performance-Based
(2)
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Fixed
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Performance-Based
(2)
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Base
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Long-
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Base
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Long-
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Base
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Long-
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Salary
|
|
|
Annual
|
|
|
Term
|
|
|
Salary
|
|
|
Annual
|
|
|
Term
|
|
|
Salary
|
|
|
Annual
|
|
|
Term
|
|
|
Steven F. Leer
|
|
|
18
|
%
|
|
|
18
|
%
|
|
|
64
|
%
|
|
|
18
|
%
|
|
|
18
|
%
|
|
|
64
|
%
|
|
|
18
|
%
|
|
|
18
|
%
|
|
|
64
|
%
|
John T. Drexler
|
|
|
50
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
13
|
%
|
|
|
62
|
%
|
|
|
23
|
%
|
|
|
14
|
%
|
|
|
63
|
%
|
John W. Eaves
|
|
|
19
|
%
|
|
|
15
|
%
|
|
|
66
|
%
|
|
|
19
|
%
|
|
|
15
|
%
|
|
|
66
|
%
|
|
|
19
|
%
|
|
|
15
|
%
|
|
|
66
|
%
|
Paul A. Lang
|
|
|
25
|
%
|
|
|
13
|
%
|
|
|
62
|
%
|
|
|
23
|
%
|
|
|
14
|
%
|
|
|
63
|
%
|
|
|
23
|
%
|
|
|
14
|
%
|
|
|
63
|
%
|
David N. Warnecke
|
|
|
25
|
%
|
|
|
13
|
%
|
|
|
62
|
%
|
|
|
23
|
%
|
|
|
14
|
%
|
|
|
63
|
%
|
|
|
23
|
%
|
|
|
14
|
%
|
|
|
63
|
%
|
|
|
|
(1)
|
|
For purposes of determining total
compensation, we have included base salary, targeted annual cash
incentives and the value of targeted long-term incentive awards.
We have not considered the increased value of other compensation
elements such as pension plans, nor have we assigned cash values
to perquisites.
|
|
(2)
|
|
In determining the percentages
shown above, the annual cash incentives and the long-term
incentive awards are assumed to be paid at target levels.
|
Base Salary
We provide each executive
with an annual base salary. Base salaries for our executives
depend on the executives experience and scope of
responsibilities as well as the median market data for
comparable job positions. We increase base salary primarily in
response to notable achievements or for changes in scope of
responsibilities. In addition, we may increase base salary to
remain competitive in the marketplace.
At the beginning of 2009, upon the recommendation of the
Committee, the board of directors approved increases in the
annual base salaries for our executives. In making its
recommendations, the Committee considered market data provided
to the Committee by management and by our compensation
consultant.
Annual Cash Incentive Program
We provide
approximately 275 key employees, including the executives named
in this proxy statement, the opportunity to earn additional cash
compensation through annual cash incentive awards, either under
the Companys Incentive Compensation Plan for Executive
Officers or the Companys Incentive Compensation Plan for
Management Employees. The Committee intends for our annual cash
incentive program to focus our organization on meeting certain
financial and operating objectives by rewarding those key
employees with the greatest ability to influence our results.
Early each year the Committee considers whether annual cash
incentives should be awarded. If so, the Committee recommends to
the board of directors the group of employees eligible to
receive an award for that year. Annual cash incentive awards
contain various incentive levels based on the participants
accountability and impact on our performance, with target
opportunities established as a percentage of base salary.
32
The following table shows the target opportunities available to
the executives named in this proxy statement as a percentage of
their base salaries and the actual payouts as a percentage of
their base salaries each of the last three years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
Actual Payout
|
|
|
|
|
|
Actual Payout
|
|
|
|
|
|
Actual Payout
|
|
|
|
Target as % of
|
|
|
as % of Base
|
|
|
Target as % of
|
|
|
as % of Base
|
|
|
Target as % of
|
|
|
as % of Base
|
|
Name
|
|
Base Salary
|
|
|
Salary
|
|
|
Base Salary
|
|
|
Salary
|
|
|
Base Salary
|
|
|
Salary
|
|
|
Steven F. Leer
|
|
|
100
|
%
|
|
|
88
|
%
|
|
|
100
|
%
|
|
|
181
|
%
|
|
|
100
|
%
|
|
|
74
|
%
|
John T. Drexler
|
|
|
50
|
%
|
|
|
35
|
%
|
|
|
50
|
%
|
|
|
83
|
%
(1)
|
|
|
60
|
%
|
|
|
44
|
%
|
John W. Eaves
|
|
|
80
|
%
|
|
|
70
|
%
|
|
|
80
|
%
|
|
|
145
|
%
|
|
|
80
|
%
|
|
|
59
|
%
|
Paul A. Lang
|
|
|
50
|
%
|
|
|
42
|
%
|
|
|
60
|
%
|
|
|
100
|
%
|
|
|
60
|
%
|
|
|
67
|
%
|
David N. Warnecke
|
|
|
50
|
%
|
|
|
56
|
%
|
|
|
60
|
%
|
|
|
111
|
%
|
|
|
60
|
%
|
|
|
44
|
%
|
|
|
|
(1)
|
|
In accordance with the terms of the
plan, the payout for Mr. Drexler was prorated to account
for Mr. Drexlers promotion to Senior Vice President
and Chief Financial Officer in April 2008.
|
Payouts under our annual cash incentive program depend upon our
earnings before interest, taxes, depreciation and amortization
(EBITDA), earnings per share, safety and environmental
performance and, for some employees, our production costs per
ton. Some or all of these performance measures may be used for
our other key employees, and the performance measures may differ
for various groups or classifications of employees. By
identifying meaningful performance measures and by assigning
certain measures greater weight, we are able to more closely
align compensation to the achievement of those business
objectives over which particular employees have the greatest
impact.
We generally establish the financial performance levels based on
budgeted earnings for the upcoming year, and the target levels
are generally consistent with the range of earnings that we
provide to investors. We generally establish safety and
environmental performance targets based on our prior performance
history with the objective of promoting improvements in those
areas. In order to inspire performance above the targets we set
and to acknowledge certain levels of performance below those
targets, annual cash incentive awards contain threshold, target
and maximum levels for each performance measure. Payouts under
the awards depend upon the achievement of our objectives.
The following table shows the relative weighting of the
performance measures and the threshold, target and maximum
levels of performance established for annual incentive awards to
the executives named in this proxy statement for the 2009 fiscal
year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Goals
|
|
|
|
Relative
|
|
|
|
|
|
|
|
|
|
|
Performance Measure
|
|
Weighting
(1)
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Adjusted EBITDA
|
|
|
50
|
%
|
|
$
|
441,700,000
|
|
|
$
|
568,000,000
|
|
|
$
|
694,000,000
|
|
Earnings per share
|
|
|
20
|
%
|
|
$
|
0.83
|
|
|
$
|
1.24
|
|
|
$
|
1.66
|
|
Safety
|
|
|
15
|
%
|
|
|
1.87
|
|
|
|
1.78
|
|
|
|
1.67
|
|
Environmental
|
|
|
15
|
%
|
|
|
16 NOVs
|
|
|
|
15 NOVs
|
|
|
|
13 NOVs
|
|
Production costs per ton
|
|
|
|
|
|
$
|
14.07
|
|
|
$
|
13.79
|
|
|
$
|
13.24
|
|
33
|
|
|
(1)
|
|
The relative weighting reflected in
the table above applies to the executives named in this proxy
statement other than Paul A. Lang. With respect to
Mr. Lang, the relative weighting is as follows: adjusted
EBITDA 40%, earnings per
share 10%, safety 15%,
environmental 15% and production costs per
ton 20%.
|
The performance goals are defined and evaluated based on the
following:
|
|
|
|
|
Adjusted EBITDA is determined based on our earnings
before interest, taxes, depreciation and amortization,
determined on a consolidated basis in accordance with generally
accepted accounting principles;
|
|
|
|
Earnings per share is determined based on our
earnings per share of our common stock outstanding, determined
on a consolidated basis in accordance with generally accepted
accounting principles;
|
|
|
|
Safety is determined based on our historical
performance;
|
|
|
|
Environmental is determined based on our historical
performance; and
|
|
|
|
Production costs per ton is determined based on
budgeted per ton operating cost excluding taxes, royalties,
depletion and change in inventory, etc.
|
If the target level of performance is achieved with respect to a
particular performance measure, the applicable payout percentage
for that performance measure will equal 100%. Achievement at the
threshold performance level results in an applicable payout
percentage of 25%, while performance below threshold level
results in a payout percentage of 0% for that performance
measure. By contrast, achievement at or above the maximum
performance level results in an applicable payout percentage of
200%. We may prorate payouts under the annual cash incentive
awards for performance levels that fall between the threshold,
target and maximum performance levels.
In addition, the financial performance measures of adjusted
EBITDA, earnings per share and production cost per ton require
achievement of at least the threshold level for the adjusted
EBITDA goal. Accordingly, for 2009, if adjusted EBITDA of at
least $441.7 million was not achieved, the applicable
payout percentage for each of adjusted EBITDA, earnings per
share and production costs per ton would have been 0%.
In early 2010, the Committee evaluated the level of achievement
of the various performance measures and made the following
determinations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Goals
|
|
|
|
|
|
|
Applicable Payout
|
|
|
|
|
|
Weighted Payout
|
|
Performance Measure
|
|
Actual Performance
|
|
|
Percentage
|
|
|
Relative
Weighting
(1)
|
|
|
Percentage
|
|
|
Adjusted
EBITDA
(2)
|
|
$
|
445 million
|
|
|
|
27
|
%
|
|
|
50
|
%
|
|
|
13.5
|
%
|
Earnings per share
|
|
$
|
0.28
|
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
Safety
|
|
|
1.38
|
|
|
|
200
|
%
|
|
|
15
|
%
|
|
|
30
|
%
|
Environmental
|
|
|
11 NOVs
|
|
|
|
200
|
%
|
|
|
15
|
%
|
|
|
30
|
%
|
Production costs per ton
|
|
$
|
12.97
|
|
|
|
200
|
%
|
|
|
|
|
|
|
40
|
%
|
34
|
|
|
(1)
|
|
The relative weighting reflected in
the table above applies to the executives named in this proxy
statement other than Paul A. Lang. With respect to
Mr. Lang, the relative weighting is as follows: adjusted
EBITDA 40%, earnings per
share 10%, safety 15%,
environmental 15% and production costs per
ton 20%.
|
|
(2)
|
|
Adjusted EBITDA is determined based
on our earnings before interest, taxes, depreciation and
amortization, determined on a consolidated basis in accordance
with generally accepted accounting principles.
|
Based on the actual performance as set forth above, the
Committee determined the amount of each executive officers
annual cash incentive award and recommend that the board of
directors approve the following payouts under the 2009 annual
cash incentive awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Payout
|
|
|
|
|
|
|
Target as % of
|
|
|
as % of Base
|
|
|
Dollar Amount
|
|
Name
|
|
Base Salary
|
|
|
Salary
|
|
|
of Payout
|
|
|
Steven F. Leer
|
|
|
100
|
%
|
|
|
74
|
%
|
|
$
|
624,800
|
|
John T. Drexler
|
|
|
60
|
%
|
|
|
44
|
%
|
|
$
|
158,800
|
|
John W. Eaves
|
|
|
80
|
%
|
|
|
59
|
%
|
|
$
|
314,600
|
|
Paul A. Lang
|
|
|
60
|
%
|
|
|
67
|
%
|
|
$
|
252,700
|
|
David N. Warnecke
|
|
|
60
|
%
|
|
|
44
|
%
|
|
$
|
163,200
|
|
In addition, the board of directors, upon the recommendation of
the Committee, established an annual cash incentive program for
2010 identifying those individuals eligible to participate, the
target opportunity for each participant and the performance
measures that will be used. The overall design of the 2010
annual cash incentive program is generally consistent with the
program approved by the board of directors for 2009.
Long-Term Incentive Program
Our
long-term incentive program is designed to achieve the
compensation objectives established by the Committee. The
Committee intends for our long-term incentive program to promote
decision-making that creates long-term value for our
stockholders. The Committee believes that an effective long-term
incentive program should also create strong retention incentives
for those key employees who are most likely to influence our
long-term performance. In addition, we attempt to align the
long-term interests of our executives with those of our
stockholders by tying a portion of total compensation to
appreciation in the value of our common stock.
The Committee has retained flexibility in the types of awards
that it may use to implement our long-term incentive program. We
have used performance units and performance-contingent phantom
stock in order to promote the achievement of our long-term
financial and operating performance objectives. In addition, we
have used restricted stock, restricted stock units, stock
options and other awards tied to the value of our common stock
in order to align the long-term interests of our executives and
our stockholders and for retention purposes. In determining the
aggregate value of long-term awards and the mix of those awards
for our executives, the Committee considers the executives
scope of responsibility, peer group market data, market
competition for the particular position, relative internal
equity and leadership continuity.
35
The following table shows the types of awards that we have
generally included as a component of our long-term incentive
program for each of the last three years and for 2010, and the
percentage of targeted long-term compensation associated with
each award:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Objective
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
Performance units
|
|
|
|
|
|
|
|
|
|
|
50
|
%
|
|
|
50
|
%
|
Restricted stock units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
Performance-contingent phantom stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a description of each of these types of awards:
Performance Units
Beginning in 2009, we
used performance units as a component of our long-term incentive
program in order to motivate our executives to focus on our
financial and operating performance over a multi-year period.
Performance units generally provide an opportunity for key
employees to earn additional compensation upon the successful
achievement of our objectives over a three-year period. The
Committee has also retained discretion to further align the
long-term interests of our stockholders and executives by
providing that payouts under performance units may be in the
form of cash, stock or a combination of the two.
Payouts under the performance units granted will depend upon our
achievement of certain financial and operating performance
objectives over a three-year period. The board of directors,
upon the recommendation of the Committee, determined that our
safety and environmental performance remains a critical measure
of our long-term success. In redesigning our long-term incentive
program for 2009, we evaluated potential performance measures
within and outside our industry. Relative total shareholder
return has become a preferred long-term performance measure by
stockholders because it rewards management for outperforming
industry competitors and is directly aligned with stockholder
value. As such, to more closely align the interests of our
executives and our stockholders, the Committee recommended that
the board of directors replace EBITDA as the financial measure
historically used by our board of directors with a measure of
our total stockholder return relative to a peer group consisting
of coal industry competitors. For these purposes, we will
determine total stockholder return as the compound total
stockholder return assuming reinvestment of dividends over the
relevant performance period, and our performance will be
assessed on a relative basis versus the external benchmark.
Restricted Stock Units and Restricted
Stock
Prior to 2007, we used restricted
stock units as a component of our long-term incentive program
designed to align the long-term interests of our stockholders
and our executives and for retention purposes. In addition, from
time to time we grant restricted stock and restricted stock
units to certain key employees as an additional retention
incentive. Restricted stock units and restricted stock can
provide a significant retention incentive since they have real,
current value that an executive may forfeit if his or her
employment terminates before the awards vest. In addition,
restricted stock units and restricted stock satisfy our
compensation objectives by promoting long-term decision-making
that results in appreciation in the value of our common stock.
We have historically used restricted stock units rather than
restricted stock because recipients could elect to defer receipt
of the common stock and the corresponding tax obligation upon
vesting.
36
When awarded in the past, we have generally conditioned receipt
of the common stock underlying these awards on the
executives continued employment. Restricted stock units
and restricted stock usually vests ratably over a period of
time, generally three or four years. Certain restricted stock
awards that we have granted in the past cliff vest at the end of
a specified period in order to provide an additional retention
incentive. In determining the conditions associated with these
types of awards, the Committee considers the market competition
for the executives position, the ability of the executive
to influence our long-term financial and operating performance
and succession planning. The Committee has retained discretion
whether or not to consider the number of shares of our common
stock held by an executive in recommending subsequent awards of
restricted stock units or restricted stock.
Stock Options
In 2009, the board of
directors, upon the recommendation of the Committee, determined
to use stock options as 50% of the value of the long-term
incentive program. In making its recommendation, the Committee
determined that long-term stock price appreciation was
reflective of our achievement of the long-term performance
objectives established by our board of directors. We used stock
options as the sole component of our long-term incentive program
for 2007 and 2008.
Stock options represent the opportunity to buy shares of our
common stock at a fixed price at a future date. Under the terms
of our stock incentive plan, the exercise price of stock options
cannot be less than the fair market value of a share of our
common stock on the date of grant. As such, stock options have
value for our executives only if the price of our common stock
increases after the date of grant.
In the past, our board of directors has generally approved stock
options grants in connection with our annual performance
assessment and evaluation process. Our policy is to issue stock
options on the dates on which the awards are approved and to set
the exercise prices of those awards equal to the closing market
price of our common stock on that date. In order to provide some
retention incentive, our stock options generally vest over a
stated period measured from the date of grant. Depending upon
the strength of the retention incentive intended by the
Committee, stock options may vest over three or four years. As
is typical, the stock options we grant expire after ten years,
except in limited circumstances.
Performance-Contingent Phantom Stock
On
occasion, we have used performance-contingent phantom stock in
order to provide our executives with an opportunity to receive
additional compensation for exceptional long-term financial
performance.
Perquisites and Other Benefits
We
provide various perquisites and other benefits to our executives
for a variety of different reasons, including our intent to
attract and retain executives with a comprehensive compensation
package. Many of these perquisites and other benefits are not
tied to any formal performance objectives. We provide the
following perquisites to our executives:
Financial, Estate and Tax Planning
Services
We provide our executives with
financial, estate and tax planning services in order to assist
them with the complexities of the various compensation
arrangements that we maintain, retirement planning and
compliance with our stock ownership guidelines.
37
Club Membership Dues
We provide a
limited number of executives with memberships for dining
and/or
country clubs. We intend for these club memberships to provide
access to facilities that our executives may use for more
private business and business entertainment meetings.
Other Perquisites
We provide certain
executives with a number of other perquisites, including limited
personal use of our corporate aircraft. For more information
about these perquisites, including the incremental cost to us
for providing those perquisites, you should see the table
included as a footnote to the Summary Compensation Table below.
In December 2009, the board of directors, upon the
recommendation of the Committee, determined that beginning
January 1, 2010, executives will not receive any tax gross
up payments on perquisites.
Participation in Benefit Plans and Other Compensation
Arrangements
Each of our executives is
eligible to participate in the same health and welfare plans as
our other eligible employees. These plans include medical and
dental insurance, life, travel and accidental death and
dismemberment insurance, short- and long-term disability
coverage and participation in our qualified defined benefit
pension plan and qualified defined contribution plan. In
addition, each of our executives is eligible to participate in
our supplemental retirement plan and non-qualified deferred
compensation plan, and each of our executives is subject to an
employment agreement.
The following is a summary of certain benefit plans and other
compensation arrangements available to our executives but for
which our other employees may not be eligible:
Supplemental Retirement Plan Benefits
We
sponsor a tax-qualified defined benefit plan covering all of our
eligible employees, including our executives. The Internal
Revenue Code limits the amount of qualified retirement benefits
we may provide for certain employees. As a result, we sponsor a
supplemental retirement plan that provides eligible employees,
including the executives named in this proxy statement, with
additional retirement benefits that would otherwise be available
under our defined benefit pension plan but for the limitations
contained in the Internal Revenue Code. For more information
about our defined benefit pension plan and our supplemental
retirement plan, including the accumulated benefits attributable
to the executives named in this proxy statement, you should see
Pension Benefits below.
Non-Qualified Deferred Compensation
Plan
We sponsor a tax-qualified defined
contribution plan covering all of our eligible employees,
including the executives named in this proxy statement. Under
this plan, eligible employees may contribute up to 50% of their
base salaries to the plan, subject to certain limitations
contained in the Internal Revenue Code. We contribute one dollar
for each dollar contributed by our employees, up to a maximum of
6% of employees base salaries. The Internal Revenue Code
limits the amount certain of our employees may contribute to our
defined contribution plan in any tax year. As a result, we
sponsor a non-qualified deferred compensation plan that allows
eligible employees, including the executives named in this proxy
statement, to defer receipt of a portion of their base salaries
and certain annual and long-term cash incentive awards not
subject to these limits. The deferred compensation plan provides
higher-paid employees with the full company matching
contribution to which they would otherwise be entitled under our
defined contribution plan but for the limitations contained in
the Internal Revenue Code. For more information about our
deferred compensation plan, including information about
38
amounts attributable to the executives named in this proxy
statement, you should see Non-Qualified Deferred
Compensation below.
Employment Agreements
In order to
provide certain key employees, including the executives named in
this proxy statement, with some financial security in the event
their employment with our organization is terminated without
cause or under certain circumstances following a change of
control, we provide those employees with employment agreements.
Those agreements provide for cash payments to the key employees
in the event their employment with us is terminated under
certain circumstances. We believe that the employment agreements
we maintain with our key employees provides a meaningful
mechanism by which to retain those individuals who are most
capable of affecting our future performance. In December 2009,
the board of directors, upon the recommendation of the
Committee, determined that no tax gross up provision is to be
included in any employment agreement entered into after
January 1, 2010. For more information about the employment
agreements with the executives named in this proxy statement,
you should see Potential Payments Upon Termination of
Employment or
Change-in-Control
below.
Stock Ownership Guidelines
Our board of
directors has adopted stock ownership guidelines that are
intended to promote meaningful stock ownership by our
executives. These guidelines specify a number of shares of our
common stock, including unvested restricted stock, unvested
restricted stock units, shares held through our qualified
defined contribution plan and hypothetical shares of our common
stock held through our non-qualified deferred compensation plan,
that our executives must have accumulated by January 1,
2009 or, if elected after January 1, 2004, within five
years of becoming an executive. The specific share holding
requirements are determined based on a multiple of base salary
ranging from one to three times, with the higher multiples
applicable to the executives having the highest levels of
responsibility. As of December 31, 2009, each of the
individuals who has been an executive for at least five years
satisfied the stock ownership goal adopted by the board of
directors.
|
|
|
Impact
of Tax Considerations on Compensation
|
The Internal Revenue Code limits the amount of the tax deduction
we are entitled to take for compensation paid to the executives
named in this proxy statement for a particular year unless the
compensation meets specific standards. We may deduct
compensation in excess of $1 million if compensation is
performance-based and is paid pursuant to a plan
that meets certain requirements. In developing, implementing and
administering our executive compensation program, the Committee
considers the impact of these limits and balances the desire to
maximize the deductibility of compensation with the goal of
attracting, motivating and retaining highly-talented executives.
We generally seek to maximize the tax deductibility of all
elements of compensation. However, in light of the need to
maintain flexibility in administering our executive compensation
program, the Committee retains discretion to recommend to the
board of directors compensation in excess of the limits, even if
a portion of it may not be deductible.
39
Summary
Compensation Table
The following table is a summary of compensation information for
our chief executive officer, our chief financial officer and
each of the other three most highly compensated executives for
each of the last three years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
(1)
|
|
($)
|
|
($)
(2)
|
|
($)
(2)
|
|
($)
(3)
|
|
($)
(4)
|
|
($)
(5)
|
|
($)
|
|
Steven F. Leer,
|
|
|
2009
|
|
|
$
|
850,000
|
|
|
|
|
|
|
$
|
|
|
|
$
|
1,365,391
|
|
|
$
|
624,800
|
|
|
$
|
561,205
|
|
|
$
|
146,881
|
|
|
$
|
3,548,277
|
|
Chairman and Chief
|
|
|
2008
|
|
|
|
850,000
|
|
|
|
|
|
|
|
1,715,060
|
|
|
|
4,234,402
|
|
|
|
3,037,000
|
|
|
|
122,273
|
|
|
|
200,760
|
|
|
|
10,159,495
|
|
Executive Officer
|
|
|
2007
|
|
|
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
1,879,068
|
|
|
|
1,272,800
|
|
|
|
198,008
|
|
|
|
102,634
|
|
|
|
4,252,510
|
|
John T. Drexler,
|
|
|
2009
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
421,470
|
|
|
|
158,800
|
|
|
|
49,604
|
|
|
|
47,498
|
|
|
|
1,037,372
|
|
Senior Vice President
|
|
|
2008
|
|
|
|
298,632
|
|
|
|
|
|
|
|
|
|
|
|
856,170
|
|
|
|
407,000
|
|
|
|
|
(6)
|
|
|
93,078
|
|
|
|
1,654,880
|
|
and Chief Financial
Officer
(7)
|
|
|
2007
|
|
|
|
207,270
|
|
|
|
|
|
|
|
|
|
|
|
122,870
|
|
|
|
104,432
|
|
|
|
7,251
|
|
|
|
12,436
|
|
|
|
454,259
|
|
John W. Eaves,
|
|
|
2009
|
|
|
|
535,000
|
|
|
|
|
|
|
|
|
|
|
|
863,137
|
|
|
|
314,600
|
|
|
|
219,889
|
|
|
|
82,785
|
|
|
|
2,015,411
|
|
President, Chief
|
|
|
2008
|
|
|
|
535,000
|
|
|
|
|
|
|
|
1,143,373
|
|
|
|
2,725,705
|
|
|
|
1,674,000
|
|
|
|
26,170
|
|
|
|
114,800
|
|
|
|
6,219,048
|
|
Operating Officer and Director
|
|
|
2007
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
1,217,404
|
|
|
|
690,400
|
|
|
|
68,185
|
|
|
|
125,440
|
|
|
|
2,601,429
|
|
Paul A. Lang,
|
|
|
2009
|
|
|
|
380,000
|
|
|
|
|
|
|
|
421,500
|
|
|
|
444,977
|
|
|
|
252,700
|
|
|
|
141,035
|
|
|
|
45,152
|
|
|
|
1,685,364
|
|
Senior Vice
|
|
|
2008
|
|
|
|
365,000
|
|
|
|
|
|
|
|
|
|
|
|
885,027
|
|
|
|
946,700
|
|
|
|
539
|
|
|
|
41,131
|
|
|
|
2,238,397
|
|
President Operations
|
|
|
2007
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
872,096
|
|
|
|
205,740
|
|
|
|
49,422
|
|
|
|
37,273
|
|
|
|
1,514,531
|
|
David N. Warnecke,
|
|
|
2009
|
|
|
|
370,000
|
|
|
|
|
|
|
|
|
|
|
|
433,058
|
|
|
|
163,200
|
|
|
|
166,895
|
|
|
|
40,830
|
|
|
|
1,173,983
|
|
Vice President-
|
|
|
2008
|
|
|
|
360,000
|
|
|
|
|
|
|
|
263,450
|
|
|
|
872,649
|
|
|
|
1,123,750
|
|
|
|
17,665
|
|
|
|
38,876
|
|
|
|
2,676,390
|
|
Marketing and Trading
|
|
|
2007
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
878,452
|
|
|
|
233,300
|
|
|
|
49,686
|
|
|
|
35,196
|
|
|
|
1,546,634
|
|
|
|
|
(1)
|
|
Amounts shown include amounts that
the executives named in this proxy statement elected to defer,
on a discretionary basis, pursuant to our deferred compensation
plan.
|
|
(2)
|
|
Amounts shown represent the
aggregate grant date fair value of all stock or stock option
awards, as applicable, made to each executive during the year
indicated. We have determined the grant date fair value in
accordance with FASB ASC Topic 718 (formerly referred to as
Statement of Financial Accounting Standards No. 123R,
Share-Based Payment
). The determination of the grant date
fair value is subject to certain estimates and assumptions
described in Note 16 to our consolidated financial
statements for the year ended December 31, 2009 and under
the heading Stock-Based Compensation in the section
entitled Critical Accounting Policies included in
our Annual Report on
Form 10-K
for the year ended December 31, 2009. Amounts shown do not
necessarily represent the actual value that may ultimately be
received by the executives.
|
40
|
|
|
(3)
|
|
Amounts shown include the following
payouts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash
|
|
Performance
|
Name
|
|
Year
|
|
Incentive Awards
|
|
Unit Awards
|
|
Steven F. Leer
|
|
|
2009
|
|
|
$
|
624,800
|
|
|
$
|
0
|
|
|
|
|
2008
|
|
|
|
1,537,000
|
|
|
|
1,500,000
|
|
|
|
|
2007
|
|
|
|
700,800
|
|
|
|
572,000
|
|
John T. Drexler
|
|
|
2009
|
|
|
|
158,800
|
|
|
|
0
|
|
|
|
|
2008
|
|
|
|
247,000
|
|
|
|
160,000
|
|
|
|
|
2007
|
|
|
|
73,432
|
|
|
|
31,000
|
|
John W. Eaves
|
|
|
2009
|
|
|
|
314,600
|
|
|
|
0
|
|
|
|
|
2008
|
|
|
|
774,000
|
|
|
|
900,000
|
|
|
|
|
2007
|
|
|
|
350,400
|
|
|
|
340,000
|
|
Paul A. Lang
|
|
|
2009
|
|
|
|
252,700
|
|
|
|
0
|
|
|
|
|
2008
|
|
|
|
366,700
|
|
|
|
580,000,
|
|
|
|
|
2007
|
|
|
|
145,900
|
|
|
|
59,840
|
|
David N. Warnecke
|
|
|
2009
|
|
|
|
163,200
|
|
|
|
0
|
|
|
|
|
2008
|
|
|
|
390,600
|
|
|
|
733,150
|
|
|
|
|
2007
|
|
|
|
153,300
|
|
|
|
80,000
|
|
|
|
|
|
|
Amounts shown include amounts that
the executives named in this proxy statement elected to defer,
on a discretionary basis, pursuant to our deferred compensation
plan.
|
|
(4)
|
|
Amounts shown represent the changes
in the actuarial present value of the accumulated benefits for
the executives named in this proxy statement under our defined
benefit pension plans, including our supplemental retirement
plan, computed in accordance with FASB ASC Topic 715 (formerly
referred to as Statement of Financial Accounting Standards
No. 87,
Employers Accounting for Pensions
).
The present value of accumulated benefits is subject to certain
actuarial assumptions described in Note 13 to our
consolidated financial statements for the year ended
December 31, 2009 and under the heading Employee
Benefit Plans in the section entitled Critical
Accounting Policies included in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
|
|
(5)
|
|
Amounts shown include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credits Under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matching
|
|
Deferred
|
|
|
|
Financial
|
|
Club
|
|
|
|
|
|
|
|
|
|
|
Contribution to
|
|
Compensation
|
|
Dividend
|
|
Planning
|
|
Membership
|
|
Tax
|
|
|
|
|
Name
|
|
Year
|
|
Plan
|
|
Plan
|
|
Equivalents
|
|
Services
|
|
Dues
|
|
Reimbursement
|
|
Other*
|
|
Total
|
|
Steven F. Leer,
|
|
|
2009
|
|
|
$
|
13,142
|
|
|
$
|
40,324
|
|
|
$
|
11,718
|
|
|
$
|
16,260
|
|
|
$
|
8,250
|
|
|
$
|
18,093
|
|
|
$
|
39,093
|
|
|
$
|
146,881
|
|
Chairman and
|
|
|
2008
|
|
|
|
12,545
|
|
|
|
35,587
|
|
|
|
11,781
|
|
|
|
13,608
|
|
|
|
9,675
|
|
|
|
17,245
|
|
|
|
100,320
|
|
|
|
200,760
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
|
12,250
|
|
|
|
33,431
|
|
|
|
2,376
|
|
|
|
9,016
|
|
|
|
11,860
|
|
|
|
15,399
|
|
|
|
18,302
|
|
|
|
102,634
|
|
John T. Drexler,
|
|
|
2009
|
|
|
|
11,132
|
|
|
|
7,575
|
|
|
|
|
|
|
|
12,104
|
|
|
|
7,344
|
|
|
|
9,343
|
|
|
|
|
|
|
|
47,498
|
|
Senior Vice
|
|
|
2008
|
|
|
|
10,343
|
|
|
|
|
|
|
|
|
|
|
|
6,328
|
|
|
|
49,560
|
|
|
|
26,847
|
|
|
|
|
|
|
|
93,078
|
|
President and Chief Financial
Officer
(7)
|
|
|
2007
|
|
|
|
12,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,436
|
|
John W. Eaves,
|
|
|
2009
|
|
|
|
14,630
|
|
|
|
20,490
|
|
|
|
7,812
|
|
|
|
8,868
|
|
|
|
9,000
|
|
|
|
13,180
|
|
|
|
8,805
|
|
|
|
82,785
|
|
President, Chief
|
|
|
2008
|
|
|
|
12,780
|
|
|
|
17,093
|
|
|
|
7,808
|
|
|
|
12,100
|
|
|
|
8,760
|
|
|
|
15,387
|
|
|
|
40,872
|
|
|
|
114,800
|
|
Operating Officer and Director
|
|
|
2007
|
|
|
|
12,827
|
|
|
|
14,315
|
|
|
|
28,421
|
|
|
|
13,802
|
|
|
|
15,780
|
|
|
|
23,942
|
|
|
|
16,353
|
|
|
|
125,440
|
|
Paul A. Lang,
|
|
|
2009
|
|
|
|
14,560
|
|
|
|
9,196
|
|
|
|
|
|
|
|
10,812
|
|
|
|
|
|
|
|
8,984
|
|
|
|
1,600
|
|
|
|
45,152
|
|
Senior Vice
|
|
|
2008
|
|
|
|
13,518
|
|
|
|
7,964
|
|
|
|
283
|
|
|
|
10,434
|
|
|
|
|
|
|
|
8,221
|
|
|
|
711
|
|
|
|
41,131
|
|
President Operations
|
|
|
2007
|
|
|
|
13,036
|
|
|
|
5,337
|
|
|
|
450
|
|
|
|
10,266
|
|
|
|
|
|
|
|
7,771
|
|
|
|
413
|
|
|
|
37,273
|
|
David N. Warnecke,
|
|
|
2009
|
|
|
|
14,100
|
|
|
|
9,071
|
|
|
|
|
|
|
|
9,163
|
|
|
|
|
|
|
|
7,496
|
|
|
|
1,000
|
|
|
|
40,830
|
|
Vice President
|
|
|
2008
|
|
|
|
13,341
|
|
|
|
8,001
|
|
|
|
272
|
|
|
|
9,934
|
|
|
|
|
|
|
|
7,328
|
|
|
|
|
|
|
|
38,876
|
|
Marketing and Trading
|
|
|
2007
|
|
|
|
12,878
|
|
|
|
3,463
|
|
|
|
432
|
|
|
|
9,234
|
|
|
|
|
|
|
|
5,681
|
|
|
|
3,509
|
|
|
|
35,196
|
|
|
|
|
*
|
|
Other items shown in the table
above include reimbursement of the costs of annual physical
examinations and personal use of corporate aircraft in 2009 and
2008 for Messrs. Leer and Eaves. We determined the
aggregate incremental cost of
|
41
|
|
|
|
|
financial planning services, club
membership dues and annual physical examinations by reference to
our actual
out-of-pocket
costs for such benefits or a prorated portion of our actual
out-of-pocket
costs in the event such costs were not separately identifiable.
For 2009, the incremental costs of the personal use of corporate
aircraft for Messrs. Leer, Eaves and Lang were $33,074,
$8,805 and $1,600, respectively. We determined the aggregate
incremental cost of the personal use of corporate aircraft by
reference to a
cost-per-flight-hour
charge developed by a nationally-recognized and independent
service. This
flight-hour
charge reflects the direct operating costs of the aircraft,
including fuel, additives and lubricants, airport fees and
assessments, as well as aircraft landing and parking, customs
and permit fees, in-flight supplies and food, and flight
planning and weather services. In addition, the
flight-hour
charge provides for periodic engine and auxiliary power unit
overhauling, outside labor and maintenance parts for the
airframe, engine and avionics, crew travel expenses and other
miscellaneous costs.
|
|
|
|
(6)
|
|
The value of
Mr. Drexlers pension account decreased $2,264 during
2008.
|
|
(7)
|
|
Mr. Drexler was appointed
Senior Vice President and Chief Financial Officer effective
April 30, 2008 after having served previously as our Vice
President-Finance and Accounting.
|
|
|
|
Grants
of Plan-Based Awards for the Year Ended December 31,
2009
|
The following table shows information relating to the grants of
certain equity and non-equity awards made to the executives
named in this proxy statement during 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
Estimated Future Payouts Under
|
|
Shares of
|
|
Number of
|
|
|
|
Fair Value
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Stock or
|
|
Securities
|
|
Exercise or Base
|
|
of Stock and
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Underlying
|
|
Price of Option
|
|
Option
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
(1)
|
|
Options
(#)
(2)
|
|
Awards ($/Sh)
|
|
Awards
(3)
|
|
Steven F. Leer
|
|
|
02/19/09
|
(4)
|
|
$
|
31,875
|
|
|
$
|
850,000
|
|
|
$
|
1,700,000
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
02/19/09
|
(5)
|
|
|
223,125
|
|
|
|
1,487,500
|
|
|
|
2,975,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,200
|
|
|
|
14.05
|
|
|
|
1,365,391
|
|
John T. Drexler
|
|
|
02/19/09
|
(4)
|
|
|
8,100
|
|
|
|
216,000
|
|
|
|
432,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
(5)
|
|
|
74,250
|
|
|
|
495,000
|
|
|
|
990,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,650
|
|
|
|
14.05
|
|
|
|
421,470
|
|
John W. Eaves
|
|
|
02/19/09
|
(4)
|
|
|
16,050
|
|
|
|
428,000
|
|
|
|
856,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
(5)
|
|
|
140,438
|
|
|
|
936,250
|
|
|
|
1,872,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,350
|
|
|
|
14.05
|
|
|
|
863,137
|
|
Paul A. Lang
|
|
|
02/19/09
|
(4)
|
|
|
8,550
|
|
|
|
228,000
|
|
|
|
456,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
(5)
|
|
|
78,375
|
|
|
|
522,500
|
|
|
|
1,045,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,200
|
|
|
|
14.05
|
|
|
|
444,977
|
|
|
|
|
02/19/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
421,500
|
|
David N. Warnecke
|
|
|
02/19/09
|
(4)
|
|
|
8,325
|
|
|
|
222,000
|
|
|
|
444,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
(5)
|
|
|
76,313
|
|
|
|
508,750
|
|
|
|
1,017,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,400
|
|
|
|
14.05
|
|
|
|
433,058
|
|
|
|
|
(1)
|
|
Amounts represent the number of
shares of restricted stock or restricted stock units we granted
to the executives named in this proxy statement during 2009. You
should see the information under the heading Elements of
Our Compensation Program in the
sub-section
entitled Compensation Discussion and Analysis for
more information about our restricted stock and restricted stock
unit awards.
|
|
(2)
|
|
Amounts represent the number of
stock options we granted to the executives named in this proxy
statement during 2009. You should see the information under the
heading Elements of Our Compensation Program in the
sub-section
entitled Compensation Discussion and Analysis for
more information about our stock option awards.
|
|
(3)
|
|
Amounts represent the grant date
fair value of restricted stock, restricted stock units or stock
options we awarded to the executives named in this proxy
statement for 2009 determined in accordance with FASB ASC Topic
718 (formerly referred to as Statement of Financial Accounting
Standards No. 123R,
Share-Based Payment
). The
determination of grant date fair
|
42
|
|
|
|
|
value is subject to certain
estimates and assumptions described in Note 16 to our
consolidated financial statements for the year ended
December 31, 2009 and under the heading Stock-Based
Compensation in the section entitled Critical
Accounting Policies included in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
|
|
(4)
|
|
Amounts represent the potential
amounts payable to the executives named in this proxy statement
under the annual cash incentive awards for 2009 assuming
threshold, target and maximum levels of performance. Amounts
paid to the executives named in this proxy statement under our
annual cash incentive awards for 2009 have been included under
the column entitled Non-Equity Incentive Plan
Compensation in the Summary Compensation Table.
|
|
(5)
|
|
Amounts represent the potential
amounts payable in 2012 to the executive officers named in this
proxy statement under performance units awarded in 2009 assuming
threshold, target, and maximum levels of performance for
2009-2011
performance period. You should see the information under the
heading Elements of Our Compensation Program in the
sub-section
entitled Compensation Discussion and Analysis for
more information about our performance unit awards.
|
43
|
|
|
Outstanding
Equity Awards at December 31, 2009
|
The following table shows information relating to the equity
awards previously made to the executives named in this proxy
statement which remain outstanding at December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Plan Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Market
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Value of
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Shares or
|
|
|
Shares, Units
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
That
|
|
|
Units of
|
|
|
or Other
|
|
|
Other Rights
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Stock That
|
|
|
Rights That
|
|
|
That Have
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options (#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
Vested
($)
(1)
|
|
|
Vested (#)
|
|
|
($)
|
|
|
Steven F. Leer
|
|
|
218,900
|
(2)
|
|
|
|
|
|
|
|
|
|
$
|
9.08
|
|
|
|
02/28/12
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
218,900
|
(3)
|
|
|
|
|
|
|
|
|
|
|
11.30
|
|
|
|
04/25/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,200
|
(4)
|
|
|
|
|
|
|
14.05
|
|
|
|
02/19/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,700
|
(5)
|
|
|
44,350
|
(5)
|
|
|
|
|
|
|
32.99
|
|
|
|
02/22/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,367
|
(6)
|
|
|
84,733
|
(6)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,100
|
(7)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/21/18
|
|
|
|
32,550
|
(8)
|
|
|
724,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
568,867
|
|
|
|
399,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,550
|
|
|
|
724,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John T. Drexler
|
|
|
2,074
|
(2)
|
|
|
|
|
|
|
|
|
|
$
|
9.08
|
|
|
|
02/28/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,074
|
(3)
|
|
|
|
|
|
|
|
|
|
|
11.30
|
|
|
|
04/25/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,650
|
(4)
|
|
|
|
|
|
|
14.05
|
|
|
|
02/19/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,400
|
(10)
|
|
|
|
|
|
|
|
|
|
|
16.10
|
|
|
|
07/22/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,800
|
(5)
|
|
|
2,900
|
(5)
|
|
|
|
|
|
|
32.99
|
|
|
|
02/22/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,550
|
(6)
|
|
|
3,100
|
(6)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,467
|
(11)
|
|
|
22,933
|
(11)
|
|
|
|
|
|
|
56.84
|
|
|
|
04/24/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
28,365
|
|
|
|
92,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Eaves
|
|
|
71,900
|
(2)
|
|
|
|
|
|
|
|
|
|
|
9.08
|
|
|
|
02/28/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,200
|
(12)
|
|
|
|
|
|
|
|
|
|
|
10.98
|
|
|
|
02/22/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,900
|
(3)
|
|
|
|
|
|
|
|
|
|
|
11.30
|
|
|
|
04/25/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,350
|
(4)
|
|
|
|
|
|
|
14.05
|
|
|
|
02/19/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,467
|
(5)
|
|
|
28,733
|
(5)
|
|
|
|
|
|
|
32.99
|
|
|
|
02/22/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,667
|
(6)
|
|
|
53,333
|
(6)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,750
|
(7)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/21/18
|
|
|
|
21,700
|
(8)
|
|
|
482,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
246,134
|
|
|
|
255,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,700
|
|
|
|
482,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul A. Lang
|
|
|
|
|
|
|
67,200
|
(4)
|
|
|
|
|
|
|
14.05
|
|
|
|
02/19/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,167
|
(5)
|
|
|
20,583
|
(5)
|
|
|
|
|
|
|
32.99
|
|
|
|
02/22/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,300
|
(6)
|
|
|
28,600
|
(6)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/19
|
|
|
|
30,000
|
(9)
|
|
|
667,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
50,467
|
|
|
|
116,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
667,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David N. Warnecke
|
|
|
|
|
|
|
65,400
|
(4)
|
|
|
|
|
|
|
14.05
|
|
|
|
02/19/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,467
|
(5)
|
|
|
20,733
|
(5)
|
|
|
|
|
|
|
32.99
|
|
|
|
02/22/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,100
|
(6)
|
|
|
28,200
|
(6)
|
|
|
|
|
|
|
52.69
|
|
|
|
02/21/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/21/18
|
|
|
|
5,000
|
(13)
|
|
|
111,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
55,567
|
|
|
|
114,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
111,250
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated using the closing price
for our common stock as reported on the New York Stock Exchange
on December 31, 2009.
|
44
|
|
|
(2)
|
|
Stock options vested at the rate of
25% per year, with vesting dates of February 28, 2003,
February 28, 2004, February 28, 2005 and
February 28, 2006.
|
|
(3)
|
|
Stock options vested at the rate of
25% per year, with vesting dates of April 25, 2003,
April 25, 2004, April 25, 2005 and April 25, 2006.
|
|
(4)
|
|
Stock options vest at the rate of
25% per year, with vesting dates of February 19, 2010,
February 19, 2011, February 19, 2012 and
February 19, 2013.
|
|
(5)
|
|
Stock options vest at the rate of
33
1
/
3
%
per year, with vesting dates of February 22, 2008,
February 22, 2009 and February 22, 2010.
|
|
(6)
|
|
Stock options vest at the rate of
33
1
/
3
%
per year, with vesting dates of February 21, 2009,
February 21, 2010 and February 21, 2011.
|
|
(7)
|
|
One-half of the stock options vest
on each of February 21, 2011 and February 21, 2012.
|
|
(8)
|
|
One-half of the restricted stock
units vest on each of February 21, 2011 and
February 21, 2012.
|
|
(9)
|
|
Restricted stock vest on
February 19, 2013.
|
|
(10)
|
|
Stock options vested at the rate of
33
1
/
3
%
per year, with vesting dates of July 22, 2005,
July 22, 2006 and July 22, 2007.
|
|
(11)
|
|
Stock options vested at the rate of
33
1
/
3
%
per year, with vesting dates of April 24, 2009,
April 24, 2010 and April 24, 2011.
|
|
(12)
|
|
Stock options vested at the rate of
33
1
/
3
%
per year, with vesting dates of February 22, 2002,
February 22, 2003 and February 22, 2004.
|
|
(13)
|
|
Restricted stock vests on
February 21, 2011.
|
|
|
|
Option
Exercises and Stock Vested for the Year Ended December 31,
2009
|
The following table shows information relating to the exercise
or vesting of certain equity awards previously made to the
executives named in this proxy statement during 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise
($)
(1)
|
|
|
Vesting
(#)
(2)
|
|
|
on Vesting
($)
(3)
|
|
|
Steven F. Leer
|
|
|
|
|
|
$
|
|
|
|
|
2,100
|
|
|
$
|
26,061
|
|
John T. Drexler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Eaves
|
|
|
|
|
|
|
|
|
|
|
1,266
|
|
|
|
15,711
|
|
Paul A. Lang
|
|
|
|
|
|
|
|
|
|
|
20,832
|
|
|
|
298,525
|
|
David N. Warnecke
|
|
|
|
|
|
|
|
|
|
|
800
|
|
|
|
9,928
|
|
|
|
|
(1)
|
|
Amounts shown represent the value
realized upon exercise of outstanding stock options calculated
by multiplying the number of shares acquired upon exercise by
the difference between the option exercise price and the fair
market value of our common stock on the date of exercise.
|
|
(2)
|
|
Amounts shown represent the portion
of outstanding restricted stock and restricted stock units that
vested during 2009, including shares that the executive elected
to defer, on a discretionary basis, under our deferred
compensation plan as follows: 2,100 shares for
Mr. Leer and 1,266 shares for Mr. Eaves.
|
|
(3)
|
|
Amounts shown represent the value
realized upon vesting of restricted stock and restricted stock
units calculated by multiplying the number of shares or units
that vested during 2009 by the fair market value of our common
stock on the date of vesting.
|
45
Defined Benefit Pension Plan.
We sponsor a
defined benefit pension plan covering all of our eligible
employees, including our executives. Employees become eligible
to participate in the plan after working 1,000 hours. We
credit each participant in the plan with a cash balance account.
Participants become vested in their cash balance accounts after
serving three years with us. Upon retirement or upon termination
of employment following three years of service with us,
participants or their beneficiaries may elect to receive
benefits in a lump sum, in installments over a period of time or
at a later date. Under the terms of the plan, normal retirement
occurs on the first day of the month following the date a
participant turns 65.
We credit each participants cash balance account with a
monthly interest amount based on the U.S. Treasury rate,
subject to a minimum rate of 4.25%. In addition, we may provide
transition credits to employees who participated in certain
predecessor plans for a period up to the number of years of
credited service with the predecessor plan, subject to certain
maximum amounts depending upon the particular plan. The
transition contribution rates range from 1% to 4% of
compensation, depending upon the participants age at the
end of the year. Annually, we also credit each
participants cash balance account with an amount,
reflected as a percentage of compensation, based on the
participants age at the end of the year. For purposes of
determining the contribution amount, compensation includes
salary, regular wages, overtime pay, earned vacation pay,
short-term incentive compensation payments and amounts
contributed by the participant to a qualified profit-sharing or
cafeteria plan maintained by us, subject to certain limits
imposed under the Code. The following table shows the
percentages of compensation we contribute to each
participants account, based on the participants age
at the end of the year:
|
|
|
|
|
|
|
Contribution Rate
|
|
Age at End of Year
|
|
(% of Compensation)
|
|
|
Less than 30
|
|
|
3
|
%
|
30-39
|
|
|
4
|
%
|
40-44
|
|
|
5
|
%
|
45-49
|
|
|
6
|
%
|
50-54
|
|
|
7
|
%
|
55 and over
|
|
|
8
|
%
|
Supplemental Retirement Plan.
We sponsor a
supplemental retirement plan covering all of our eligible
employees, including our executives, whose retirement benefits
under our defined benefit pension plan are limited by the Code.
Under our supplemental retirement plan, each eligible employee
is entitled to receive a lump sum amount equal to the difference
between the amount that would have been paid under our defined
benefit pension plan but for the limitations contained in the
Code and the actual amount that the employee is entitled to
receive under our defined benefit pension plan after taking into
account the limitations imposed by the Code. Subject to the
limitations contained in the Code, benefits under the
supplemental retirement plan commence on the same date an
eligible employee is entitled to begin receiving benefits under
the defined benefit pension plan.
46
The following table shows information relating to the
accumulated benefits to which the executives named in this proxy
statement are entitled under our defined benefit pension plans
at December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
Present Value of
|
|
Payments During
|
|
|
|
|
Credited Service
|
|
Accumulated Benefit
|
|
Last Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)
(1)
|
|
($)
(2)
|
|
($)
|
|
Steven F. Leer
|
|
Arch Coal, Inc. Retirement Account Plan
|
|
|
29
|
|
|
$
|
530,969
|
|
|
$
|
|
|
|
|
Arch Coal, Inc. Supplemental Retirement Plan
|
|
|
29
|
|
|
|
1,899,650
|
|
|
|
|
|
John T. Drexler
|
|
Arch Coal, Inc. Retirement Account Plan
|
|
|
12
|
|
|
|
85,167
|
|
|
|
|
|
|
|
Arch Coal, Inc. Supplemental Retirement Plan
|
|
|
12
|
|
|
|
31,943
|
|
|
|
|
|
John W. Eaves
|
|
Arch Coal, Inc. Retirement Account Plan
|
|
|
27
|
|
|
|
342,353
|
|
|
|
|
|
|
|
Arch Coal, Inc. Supplemental Retirement Plan
|
|
|
27
|
|
|
|
517,806
|
|
|
|
|
|
Paul A. Lang
|
|
Arch Coal, Inc. Retirement Account Plan
|
|
|
25
|
|
|
|
293,330
|
|
|
|
|
|
|
|
Arch Coal, Inc. Supplemental Retirement Plan
|
|
|
25
|
|
|
|
181,999
|
|
|
|
|
|
David N. Warnecke
|
|
Arch Coal, Inc. Retirement Account Plan
|
|
|
26
|
|
|
|
440,301
|
|
|
|
|
|
|
|
Arch Coal, Inc. Supplemental Retirement Plan
|
|
|
26
|
|
|
|
241,049
|
|
|
|
|
|
|
|
|
(1)
|
|
Under our defined benefit pension
plans, certain executives named in this proxy statement have
been credited with additional years of service attributable to
employment with one or more predecessor entities as follows:
Mr. Leer 16 years,
Mr. Eaves 15 years,
Mr. Lang 13 years and
Mr. Warnecke 13 years. In addition to
an annual credit to our defined benefit pension plans, each of
the executives except for Mr. Eaves and Mr. Drexler
receives a transition credit ranging from 1% to 4% of his
compensation as a result of the additional years of service.
|
|
(2)
|
|
Amounts shown for each named
executive represent the actuarial present value of the named
executives accumulated benefit under our defined benefit
pension plans as of December 31, 2009, computed in
accordance with FASB ASC Topic 715 (formerly known as Statement
of Financial Accounting Standards No. 87,
Employers Accounting for Pensions
). The present
value of accumulated benefits is subject to certain actuarial
assumptions described in Note 14 to our consolidated
financial statements for the year ended December 31, 2009
and under the heading Employee Benefit Plans in the
section entitled Critical Accounting Policies
included in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
|
|
|
|
Non-Qualified
Deferred Compensation
|
We maintain a deferred compensation plan that allows an eligible
employee to defer receipt of his or her base salary
and/or
annual incentive payment until the date or dates elected by the
participant. The amounts deferred are invested in cash accounts
that mirror the gains
and/or
losses of a number of different investment funds, including a
hypothetical investment in shares of our common stock. The
deferred compensation plan offers participants a wide-range of
publicly-available investment funds, including international,
U.S. equity, bond and money market funds. These investment
funds are substantively similar to the investment alternatives
offered to participants of our defined contribution plan. The
plan does not offer any above-market rates of return to our
executives.
Participants in the plan may defer up to 85% of their base
salaries and up to 100% of their annual incentive awards. The
plan also allows participants to defer receipt of up to 100% of
the shares issuable under any restricted stock units or
performance-contingent phantom stock awards granted to
executives under our long-term incentive program. Participants
are always vested in their deferrals to the plan and any related
earnings. We contribute one dollar for each dollar of base
salary deferred by participants in the plan, up to a maximum of
6% of the participants base salaries. We have established
a grantor trust to fund our obligations under the deferred
compensation plan. The trust has purchased corporate-owned life
47
insurance to offset these obligations. Participants have an
unsecured contractual commitment by us to pay the amounts due
under the deferred compensation plan.
Under the plan, we credit each participants account with
the number of units equal to the number of shares or units that
the participant could purchase or receive with the amount of
compensation deferred under the plan on the date we credit the
participants account, based upon the fair market value of
the underlying investment on that date. We will pay the amount
of compensation deferred under the plan to the participant (or
to his or her designated beneficiary in the event of death) in
annual installments or in a lump sum, at the participants
election, following the participants termination of
employment or on the date or dates specified by the participant
in his or her payment election. The amount we pay will be based
on the number of units credited to each participants
account, valued on the basis of the fair market value of an
equivalent number of shares or units of the underlying
investment on the date payment occurs. We may also pay a
participant the amount of compensation deferred under the plan
prior to the date the participant initially elected to receive
payment if we determine that the employee has a demonstrated
financial hardship.
The following table shows information relating to the activity
in the deferred compensation plan accounts for the executives
named in this proxy statement during 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
Aggregate
|
|
|
Aggregate Balance
|
|
|
|
Last Fiscal Year
|
|
|
Last Fiscal Year
|
|
|
in Last Fiscal Year
|
|
|
Withdrawals/
|
|
|
at Last Fiscal Year
|
|
Name
|
|
($)
|
|
|
($)
(1)
|
|
|
($)
|
|
|
Distributions ($)
|
|
|
End
($)
(2)
|
|
|
Steven F. Leer
|
|
$
|
776,899
|
|
|
$
|
40,324
|
|
|
$
|
3,570,312
|
|
|
$
|
|
|
|
$
|
13,622,297
|
|
John T. Drexler
|
|
|
18,000
|
|
|
|
7,575
|
|
|
|
10,234
|
|
|
|
|
|
|
|
46,591
|
|
John W. Eaves
|
|
|
323,805
|
|
|
|
20,490
|
|
|
|
1,124,780
|
|
|
|
|
|
|
|
4,175,233
|
|
Paul A. Lang
|
|
|
47,431
|
|
|
|
9,196
|
|
|
|
68,117
|
|
|
|
|
|
|
|
379,519
|
|
David N. Warnecke
|
|
|
45,498
|
|
|
|
9,071
|
|
|
|
64,883
|
|
|
|
|
|
|
|
457,795
|
|
|
|
|
(1)
|
|
Amounts shown represent credits we
made under our deferred compensation plan to the named
executives account that are intended to provide the named
executive with the full company matching contributions to which
they would otherwise be entitled under our defined contribution
plan but for certain limitations contained in the Code. We have
included these amounts in the column entitled All Other
Compensation contained in the Summary Compensation Table.
|
|
(2)
|
|
Amounts shown include the following
that we have reported as compensation for 2009 in the Summary
Compensation Table: Mr. Leer $40,324;
Mr. Drexler $7,575;
Mr. Eaves $20,490;
Mr. Lang $9,196; and
Mr. Warnecke $9,071.
|
|
|
|
Potential
Payments Upon Termination of Employment or
Change-in-Control
|
We maintain certain agreements or arrangements with each of the
executives named in this proxy statement that provide for the
payment or acceleration of certain benefits in the event that
such executives employment is terminated without cause or
following a
change-in-control.
In addition to the benefits described below, the executives
named in this proxy statement would also be entitled to receive
certain benefits under our defined benefit pension plan,
supplemental retirement plan and deferred compensation plan. You
should see the
sub-section
entitled Pension Benefits for more information on
the benefits accumulated under our defined benefit pension plan
and our supplemental retirement plan that are
48
attributable to each of the executives named in this proxy
statement and the
sub-section
entitled Non-Qualified Deferred Compensation for
more information on the aggregate balance maintained under our
deferred compensation plan by each of the executives named in
this proxy statement.
|
|
|
Potential
Payments Upon Termination of Employment
|
We maintain employment agreements with each of our executives,
including the executives named in this proxy statement, and
certain other key employees. Each of the employment agreements
has a term of one year that is automatically extended for
successive one-year periods unless either party terminates the
agreement upon at least one year notice prior to the end of any
one-year term. Under the employment agreements and certain other
arrangements we have with the executives named in this proxy
statement, we may be required to provide compensation in the
event of a termination of employment or a change in control of
the company. As a condition to each executives entitlement
to receive payments under the employment agreements, the
executive is required to execute a waiver of claims against us
and to abide by certain non-disclosure, non-competition and
non-solicitation requirements. These restrictions prohibit
executives from engaging in any business that competes with any
of our business operations for a period of six months following
the date of termination and from soliciting for employment,
hiring or retaining any of our employees for a period of one
year following the date of termination.
Voluntary termination and termination for
cause
Each of the executives named in this
proxy statement may terminate his or her employment at any time.
In addition, we may terminate the employment of the executives
named in this proxy statement for cause at any time. Under the
terms of the employment agreements with the executives named in
this proxy statement, a termination is for cause if it is for
any of the following reasons:
|
|
|
|
|
a willful and continual failure to perform his or her duties;
|
|
|
|
gross misconduct that is materially and demonstrably detrimental
to us; or
|
|
|
|
the commission of a felony.
|
If we terminate an executives employment for cause or if
an executive terminates his or her employment for any reason
prior to a change of control or for other than good reason
following a change of control, then we will pay the executive an
amount equal to the executives accrued and unpaid base
salary and unused vacation time. If we terminate an
executives employment for cause or if the executive
terminates his or her employment for any reason without our
consent, then all of the unexpired, unvested restricted stock,
restricted stock units, performance units, stock options,
performance-contingent phantom stock or other awards granted to
the executive under our stock incentive plan that remain
outstanding on the date of termination shall automatically be
forfeited. If we terminated each of the executives named in this
proxy statement for cause or if each of the executives named in
this proxy statement terminated his employment on
December 31, 2009, then the executives would not have been
entitled to receive any amounts from us.
Termination without cause prior to a change of
control
Each of the executives named in
this proxy statement may be entitled to certain benefits if we
terminate the executives employment for reasons other
49
than cause. If we terminate an executive without cause prior to
a change of control, then under the terms of the employment
agreement we will pay the executive a lump sum cash amount equal
to the following:
|
|
|
|
|
one times (two times for Mr. Leer) the executives
annual base salary;
|
|
|
|
12 times (18 times for Mr. Leer) the effective monthly
COBRA rate;
|
|
|
|
12 times (24 times for Mr. Leer) the applicable monthly
life insurance premium rate;
|
|
|
|
a pro-rata portion of any amounts to which the executive would
be entitled under our annual cash incentive awards or our
long-term cash and equity-based incentive awards;
|
|
|
|
one times the higher of the executives annual cash
incentive award for the most recent year or the average annual
cash incentive award for the three preceding years;
|
|
|
|
the matching contribution under our defined contribution plan
and executive deferred compensation plan and the annual cash
balance credit amounts under our defined benefit plans as if the
executive continued to participate in those plans for a period
of 12 months (24 months for Mr. Leer) and the
amount of any related income taxes; and
|
|
|
|
the value of any unused vacation time.
|
In addition, if we terminate an executive for reasons other than
for cause prior to a change of control, all unexpired stock
options held by the executive on the date of termination will
immediately vest and become exercisable by the executive in
accordance with the terms of our stock incentive plan and
related stock option award agreements. Also, we have agreed to
reimburse the executives named in this proxy statement for the
cost of financial counseling services (up to a maximum of
$5,000) for a period of 12 months (24 months for
Mr. Leer), the cost of reasonable outplacement services for
a period of 12 months (24 months for Mr. Leer)
and the amount of any excise taxes imposed on the executive
under the Code.
50
The following table shows the amounts each of the executives
named in this proxy statement would receive if we terminated his
employment for reasons other than for cause prior to a change of
control on December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Leer
|
|
|
John T. Drexler
|
|
|
John W. Eaves
|
|
|
Paul A. Lang
|
|
|
David N. Warnecke
|
|
|
Cash payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
$
|
2,729,267
|
|
|
$
|
576,000
|
|
|
$
|
1,052,467
|
|
|
$
|
626,867
|
|
|
$
|
625,300
|
|
Healthcare coverage
|
|
|
27,726
|
|
|
|
18,484
|
|
|
|
18,484
|
|
|
|
18,484
|
|
|
|
18,484
|
|
Life insurance premiums
|
|
|
3,978
|
|
|
|
842
|
|
|
|
1,252
|
|
|
|
889
|
|
|
|
866
|
|
Incentive
awards
(1)
|
|
|
1,345,833
|
|
|
|
381,000
|
|
|
|
740,083
|
|
|
|
402,167
|
|
|
|
391,583
|
|
Retirement benefits
|
|
|
1,253,017
|
|
|
|
123,310
|
|
|
|
293,758
|
|
|
|
225,825
|
|
|
|
245,289
|
|
Financial counseling and outplacement services
|
|
|
30,000
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
20,000
|
|
Accrued salary and accrued vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax and gross up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
1,690,840
|
|
|
|
521,930
|
|
|
|
1,068,870
|
|
|
|
551,040
|
|
|
|
536,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,080,661
|
|
|
$
|
1,641,567
|
|
|
$
|
3,194,914
|
|
|
$
|
1,845,272
|
|
|
$
|
1,837,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For purposes of estimating the
amounts payable by us under our annual cash incentive awards or
our long-term cash and equity-based incentive awards, we have
assumed that we achieved target levels of performance under
those awards.
|
Termination in connection with a change of
control
Each of the executives named in this
proxy statement may be entitled to certain benefits if we
terminate the executives employment for reasons other than
cause following a change of control or if the executive
terminates his or her employment for good reason during the two
years following a change of control. Under the terms of the
employment agreements with the executives named in this proxy
statement, a termination is for good reason if it is for any of
the following reasons:
|
|
|
|
|
a material diminution in position, title, duties,
responsibilities or authority;
|
|
|
|
a reduction in base salary or a failure to increase base salary
by a percentage that is similar to the average percentage
increase in base salary for other officers;
|
|
|
|
(i) the discontinuation of an incentive, retirement, stock
ownership or health and welfare plan, (ii) the adoption of
changes to those plans that would adversely affect participation
or materially reduce benefits or (iii) the reduction of
incentive compensation levels;
|
|
|
|
the relocation of our executive offices outside the
St. Louis metropolitan area or the failure to pay
relocation expenses, including the amount of any loss on the
sale of a personal residence;
|
|
|
|
a material breach of the employment agreement; or
|
|
|
|
a failure to require a successor to assume the employment
agreement.
|
51
Under the terms of the employment agreements with the executives
named in this proxy statement, a change of control means any of
the following:
|
|
|
|
|
a consolidation, merger or similar transaction in which we do
not survive or in which shares of our common stock are converted
into cash, securities or other property, other than a merger in
which the holders of our common stock immediately prior to the
merger maintain substantially the same proportionate ownership
of the common stock of the surviving entity immediately after
the merger;
|
|
|
|
the sale, lease, exchange or other transfer of all or
substantially all of our assets;
|
|
|
|
the approval by our stockholders of a plan of liquidation or
dissolution; or
|
|
|
|
the failure of our directors to constitute a majority of our
board of directors at any time during any two consecutive years.
|
If we terminate an executive for reasons other than for cause
following a change of control or if the executive terminates his
or her employment for good reason during the two years following
a change of control, then under the terms of the employment
agreement we will pay the executive a lump sum cash amount equal
to the following:
|
|
|
|
|
two times (three times for Mr. Leer) the executives
highest annual base salary during the preceding three years;
|
|
|
|
18 times the effective monthly COBRA rate;
|
|
|
|
24 times (36 times for Mr. Leer) the applicable monthly
life insurance premium rate;
|
|
|
|
the full amount of any long-term cash awards and a pro-rata
portion of any amounts to which the executive would be entitled
under our annual cash incentive awards;
|
|
|
|
two times (three times for Mr. Leer) the higher of the
executives annual cash incentive award for the most recent
year or the average annual cash incentive award for the three
years preceding the date of termination;
|
|
|
|
the matching contribution under our defined contribution plan
and nonqualified executive deferred compensation plan and the
annual credit amounts under our defined benefit plans as if the
executive continued to participate in those plans for a period
of 24 months (36 months for Mr. Leer) and the
amount of any related income taxes; and
|
|
|
|
the value of any unused vacation time.
|
In addition to the foregoing, if we terminate an executive for
reasons other than for cause following a change of control, all
unexpired stock options held by the executive on the date of
termination will immediately vest and become exercisable by the
executive in accordance with the terms of our stock incentive
plan and related equity award agreements. Also, we have agreed
to reimburse the executives named in this proxy statement for
the cost of financial counseling services (up to a maximum of
$5,000) for a period of 24 months (36 months for
Mr. Leer), the cost of reasonable outplacement services for
a
52
period of 24 months (36 months for Mr. Leer) and
the amount of any excise taxes imposed on the executive under
the Code.
The following table shows the amounts each of the executives
named in this proxy statement would receive if we terminated
their employment on December 31, 2009 for reasons other
than for cause following a change of control or if each of the
executives named in this proxy statement terminated his or her
employment on December 31, 2009 for good reason following a
change of control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Leer
|
|
|
John T. Drexler
|
|
|
John W. Eaves
|
|
|
Paul A. Lang
|
|
|
David N. Warnecke
|
|
|
Cash payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
$
|
5,637,800
|
|
|
$
|
1,152,000
|
|
|
$
|
2,104,933
|
|
|
$
|
1,253,733
|
|
|
$
|
1,250,600
|
|
Healthcare coverage
|
|
|
27,726
|
|
|
|
27,726
|
|
|
|
27,726
|
|
|
|
27,726
|
|
|
|
27,726
|
|
Life insurance premiums
|
|
|
5,967
|
|
|
|
1,685
|
|
|
|
2,504
|
|
|
|
1,778
|
|
|
|
1,732
|
|
Incentive
awards
(1)
|
|
|
850,000
|
|
|
|
216,000
|
|
|
|
428,000
|
|
|
|
228,000
|
|
|
|
222,000
|
|
Retirement benefits
|
|
|
1,801,084
|
|
|
|
220,271
|
|
|
|
523,305
|
|
|
|
404,124
|
|
|
|
416,309
|
|
Financial counseling and outplacement services
|
|
|
30,000
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
20,000
|
|
Accrued salary and accrued vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax and gross
up
(2)
|
|
|
|
|
|
|
420,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
1,690,840
|
|
|
|
521,930
|
|
|
|
1,068,870
|
|
|
|
551,040
|
|
|
|
536,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
10,043,417
|
|
|
$
|
2,579,961
|
|
|
$
|
4,175,338
|
|
|
$
|
2,486,401
|
|
|
$
|
2,474,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For purposes of estimating the
amounts payable by us under our annual cash incentive awards, we
have assumed that we achieved target levels of performance under
those awards. Payouts under performance units would be triggered
upon a change of control and, accordingly, we have not included
those payouts in the table above. Instead, payouts under
performance units have been included in the table below under
the heading Potential Payments Upon
Change-in-Control.
|
|
(2)
|
|
We have assumed that the effective
federal income tax rate is 35% and that the effective state
income tax rate is 6%.
|
Retirement, death and disability
In the event
an executives employment is terminated as a result of his
or her retirement, death or disability, then we will pay the
executive an amount equal to the executives accrued and
unpaid base salary, unused vacation time and all other amounts,
including payouts under our annual cash incentive awards, that
the executive has earned but which have not yet been paid. If an
executives employment is terminated as a result of his or
her retirement, death or disability, then all of the vested
stock options that remain outstanding will remain exercisable
for a period of one year from the date of termination and any
restricted stock, restricted stock units, performance units,
unvested stock options, performance-contingent phantom stock or
other awards granted to the executive under our stock incentive
plan that remain outstanding on the date of termination are
forfeited.
53
The following table shows the amounts each of the executives
named in this proxy statement would receive if the employment of
the executive terminated on December 31, 2009 as a result
of his retirement, death or disability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Leer
|
|
|
John T. Drexler
|
|
|
John W. Eaves
|
|
|
Paul A. Lang
|
|
|
David N. Warnecke
|
|
|
Cash payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Healthcare coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
awards
(1)
|
|
|
850,000
|
|
|
|
216,000
|
|
|
|
428,000
|
|
|
|
228,000
|
|
|
|
222,000
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial counseling and outplacement services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued salary and accrued vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax and gross up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
850,000
|
|
|
$
|
216,000
|
|
|
$
|
428,000
|
|
|
$
|
228,000
|
|
|
$
|
222,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For purposes of estimating the
amounts payable by us under our annual cash incentive awards, we
have assumed that we achieved target levels of performance under
those awards.
|
|
|
|
Potential
Payments Upon
Change-in-Control.
|
Under the terms of our stock incentive plan and the agreements
governing the various awards outstanding at December 31,
2009, the executives named in this proxy statement would be
entitled to certain benefits in the event a change in control
occurs. Under the terms of our stock incentive plan, all
outstanding stock options will become fully exercisable and will
remain exercisable for the original term of the options, all
outstanding restricted stock and restricted stock units will
become fully vested and be distributed to the executive and all
of the performance units and performance-contingent phantom
stock will be paid out in the event a change of control occurs.
Under the terms of the stock incentive plan, a change in control
means any change in control that would be required to be
reported as such with the Securities and Exchange Commission,
including without limitation any of the following:
|
|
|
|
|
a consolidation or merger in which we do not survive or in which
shares of our common stock are converted to cash, securities or
other property, other than a merger in which the holders of our
common stock immediately prior to the merger maintain more than
50% of the ownership of common stock of the surviving
corporation immediately after the merger;
|
|
|
|
the sale, lease, exchange or other transfer of all or
substantially all of our assets;
|
54
|
|
|
|
|
the adoption by our board of directors of a plan of liquidation
or dissolution; or
|
|
|
|
the acquisition by any person of more than 20% of our
outstanding common stock.
|
The following table shows the amounts each of the executives
named in this proxy statement would receive if we had undergone
a change of control on December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Leer
|
|
|
John T. Drexler
|
|
|
John W. Eaves
|
|
|
Paul A. Lang
|
|
|
David N. Warnecke
|
|
|
Cash payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Healthcare coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
awards
(1)
|
|
|
2,975,000
|
|
|
|
999,000
|
|
|
|
1,872,500
|
|
|
|
1,045,000
|
|
|
|
1,017,500
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial counseling and outplacement services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued salary and accrued vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax and gross up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units and restricted
stock
(2)
|
|
|
724,238
|
|
|
|
|
|
|
|
482,825
|
|
|
|
667,500
|
|
|
|
111,250
|
|
Stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,699,238
|
|
|
$
|
999,000
|
|
|
$
|
2,355,325
|
|
|
$
|
1,712,500
|
|
|
$
|
1,128,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For purposes of estimating the
amounts payable by us under performance unit awards, we have
assumed that we achieved maximum levels of performance under
those awards.
|
|
(2)
|
|
For purposes of estimating the
amounts payable under the stock incentive plan in the event of a
change of control, we have calculated the value of accelerated
vesting of restricted stock units and restricted stock by
multiplying the number of shares underlying unvested restricted
stock units outstanding at December 31, 2009 by the closing
price of our common stock on December 31, 2009.
|
|
|
|
Director
Compensation for the Year Ended December 31, 2009
|
Our director compensation program is designed to compensate our
non-employee directors, through a simple and understandable
structure, for the amount of work required for a company of our
size and scope and to align the interests of our non-employee
directors with the long-term interests of our stockholders.
Directors who are employees do not receive separate retainers or
attendance fees for their service as directors.
The Nominating and Corporate Governance Committee (the
Committee) periodically reviews the compensation
structure and amounts for our non-employee directors. Our human
resources department supports the Committee by researching the
structures and amounts of compensation programs sponsored by
other similarly-sized public companies and compiling the results
of that research for the Committee. From time to time, the
Committee may engage a compensation consultant to provide survey
or proxy data on the structure and amount of director
compensation for other companies. In January 2010, the
55
Committee engaged Pearl Meyer & Partners to conduct an
evaluation of our non-employee director compensation program. In
connection therewith, Pearl Meyer was instructed to conduct
interviews with certain members of our board of directors and
management regarding our current
non-director
compensation program, review non-employee director compensation
for both our identified peer group and a broad range of
companies and report the results of such research and make
recommendations regarding our compensation program. Pearl
Meyers report is expected to be finalized and presented to
the Committee in the first half of 2010.
The following table sets forth compensation paid to each
non-employee director during 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
All Other
|
|
|
|
|
|
|
or Paid
|
|
|
Compensation
|
|
|
|
|
Name
|
|
in
Cash
(1)
|
|
|
($)
(2)
|
|
|
Total ($)
|
|
|
James R. Boyd
|
|
$
|
180,000
|
|
|
$
|
6,000
|
|
|
$
|
186,000
|
|
Frank M. Burke
|
|
|
185,000
|
|
|
|
6,000
|
|
|
|
191,000
|
|
Patricia F. Godley
|
|
|
165,000
|
|
|
|
|
|
|
|
165,000
|
|
Douglas H. Hunt
|
|
|
150,000
|
|
|
|
6,000
|
|
|
|
156,000
|
|
Brian J. Jennings
|
|
|
155,000
|
|
|
|
|
|
|
|
155,000
|
|
Thomas A. Lockhart
|
|
|
155,000
|
|
|
|
1,732
|
|
|
|
156,732
|
|
A. Michael Perry
|
|
|
155,000
|
|
|
|
4,000
|
|
|
|
159,000
|
|
Robert G. Potter
|
|
|
170,000
|
|
|
|
|
|
|
|
170,000
|
|
Theodore D. Sands
|
|
|
160,000
|
|
|
|
|
|
|
|
160,000
|
|
Wesley M. Taylor
|
|
|
160,000
|
|
|
|
|
|
|
|
160,000
|
|
|
|
|
(1)
|
|
Amounts shown include amounts that
the directors elected to defer, on a discretionary basis,
pursuant to our deferred compensation plan for non-employee
directors described below. In lieu of equity awards,
non-employee directors must defer 50% of the annual retainer
into a hypothetical investment in our common stock pursuant to
our deferred compensation plan for non-employee directors
described below. This policy is intended to align the interests
of our directors with the long-term interests of our
stockholders by tying a portion of the annual retainer to the
performance of our common stock. In addition, non-employee
directors must defer 100% of the new director fee into a
hypothetical investment in our common stock pursuant to our
deferred compensation plan for non-employee directors described
below. This policy is intended to quickly align the interests of
new directors with the long-term interests of our stockholders
by tying a portion of the directors wealth to the
performance of our common stock.
|
|
(2)
|
|
Amounts shown represent
contributions under our director matching gift program.
|
Deferred Compensation Plan.
Our board of
directors has adopted a deferred compensation plan for
non-employee directors. Under the plan, non-employee directors
may choose to defer receipt of any or all of the compensation
paid to them in a cash account that mirrors the gains
and/or
losses of a number of different investment funds, one of which
is a hypothetical investment in shares of our common stock.
Non-employee directors must defer 50% of the annual retainer and
100% of the new director fee into a hypothetical investment in
our common stock in order to more closely align the interests of
our directors with the long-term interests of our stockholders.
We credit each non-employee directors account with the
number of units equal to the number of shares or units that the
non-employee director could purchase or receive with the amount
of compensation deferred under the plan on the date we credit
the non-employee directors account, based upon the fair
market value of the underlying investment on that date.
56
When a director terminates his or her service as a director, we
will pay the amount of compensation deferred under the plan to
the director (or to his or her designated beneficiary in the
event of death) in annual installments or in a lump sum, at the
directors election. The amount we pay will be based on the
number of units credited to each directors account, valued
on the basis of the fair market value of an equivalent number of
shares or units of the underlying investment on the date payment
occurs. We may also pay a director the amount of compensation
deferred under the plan prior to the termination of a
directors service as a director if the board of directors
determines that the director has a demonstrated financial
hardship.
Other Compensation Arrangements.
In addition
to the compensation elements described above, we sponsor a
director matching gift program. Under our matching gift program,
we donate $2.00 for each dollar contributed by a director to
accredited institutions of higher education up to a maximum of
$6,000 each year. We have included the matching gifts paid on
behalf of each of our non-employee directors for 2009 in the
table above. We have included the matching gifts paid on behalf
of Mr. Leer in the column titled All Other
Compensation in the Summary Compensation Table. During
2009, we did not pay any matching gifts on behalf of
Mr. Eaves. We reimburse each director for their travel
expenses incurred in connection with attendance at board and
committee meetings and other matters related to service on our
board of directors and for the costs of attending continuing
education seminars. We also pay the premiums for directors
liability insurance and travel accident insurance for each
director. These amounts are not included in the table above
since they are deemed to be business-related payments and not
perquisites. We do not maintain a directors retirement
plan, and non-employee directors do not participate in our
health, welfare or benefit plans.
Stock Ownership Guidelines.
In order to more
closely align the interests of our non-employee directors with
the long-term interests of our stockholders and in lieu of
granting equity awards to our directors, our board of directors
has adopted stock ownership guidelines for non-employee
directors. The guidelines establish a goal for each of our
non-employee directors to own a number of shares of our common
stock equal in value to five times the portion of the annual
retainer that the directors are not required to defer, or
$300,000. Each non-employee director is expected to satisfy this
goal by April 27, 2011 or, if elected after April 27,
2006, within five years of becoming a director. As of
December 31, 2009, each of the non-employee directors who
has been on our board of directors for at least five years
satisfied the stock ownership goal adopted by the board of
directors. You should see the table under the heading
Security Ownership of Directors and Executive
Officers for more information about the beneficial
ownership of our common stock by our non-employee directors.
57
PERSONNEL
AND COMPENSATION COMMITTEE REPORT
The Personnel and Compensation Committee is comprised entirely
of independent directors and has the responsibility for
reviewing and recommending changes in our executive compensation
policies and programs to the board of directors. The committee
also reviews and makes recommendations for all compensation
payments to our chief executive officer and other executives,
which are approved by the board of directors as a whole.
The Personnel and Compensation Committee has reviewed and met
with management to discuss the disclosures contained in the
section of this proxy statement entitled Executive and
Director Compensation Compensation Discussion and
Analysis. Based on that review and discussions with
management, the Personnel and Compensation Committee recommended
to the board of directors, and the board of directors approved,
including the disclosures contained in the section entitled
Compensation Discussion and Analysis in this proxy
statement and, by incorporating that section by reference, in
the Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
Securities and Exchange Commission.
Personnel and
Compensation Committee
Robert G. Potter, Chairman
Frank M. Burke
Douglas H. Hunt
Thomas A. Lockhart
Theodore D. Sands
Wesley M. Taylor
58
AUDIT
COMMITTEE REPORT
The Audit Committee oversees the Companys financial
reporting process on behalf of the board of directors.
Management is primarily responsible for the financial statements
and reporting process, including the systems of internal
controls, while the independent registered public accounting
firm is responsible for performing an independent audit of our
financial statements in accordance with auditing standards
generally accepted in the United States and expressing an
opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States.
In this context, the Audit Committee has reviewed the
Companys audited consolidated financial statements and has
met with and held discussions with management, our internal
auditors and with Ernst & Young, LLP, the
Companys independent registered public accounting firm, to
discuss those financial statements and related matters. The
Audit Committee reviewed with our internal and independent
auditors the overall scope and plans for their respective
audits. The Audit Committee also met, at least quarterly, with
the auditors, with and without management present, to discuss
the results of their examinations, their evaluations of the
Companys internal controls and the overall quality of the
Companys financial reporting. The Audit Committee also
reviewed with the independent auditors their judgment as to the
quality and the appropriateness of the Companys accounting
principles and financial controls and such other matters as are
required to be discussed with the Audit Committee under auditing
standards generally accepted in the United States.
The Companys independent registered public accounting firm
also provided to the Audit Committee the written disclosures and
the letter proscribed by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent
registered public accounting firms communications with the
Audit Committee concerning independence, and the Audit Committee
discussed with the independent auditors that firms
independence, including those matters required to be discussed
by Statement on Auditing Standards No. 61. The Audit
Committee considered whether the performance by
Ernst & Young LLP of non-audit services was compatible
with their independence.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the board of directors, and
the board of directors approved, including the audited
consolidated financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
Securities and Exchange Commission. The Audit Committee has
retained Ernst & Young LLP as the Companys
independent registered public accounting firm for 2010.
While the Audit Committee has the responsibilities and powers
set forth in its charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
Companys financial statements are complete and accurate or
are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent
auditor.
Audit Committee
Frank M. Burke, Chairman
James R. Boyd
Patricia F. Godley
Brian J. Jennings
Thomas A. Lockhart
A. Michael Perry
Robert G. Potter
59
SECURITY
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of February 22, 2010,
information concerning the beneficial ownership of our common
stock by each director, each of the executives named in this
proxy statement and all current directors and executive officers
as a group. Under rules of the Securities and Exchange
Commission, persons who have power to vote or dispose of
securities, either alone or jointly with others, are deemed to
be the beneficial owners of such securities. Each person
reflected in the table below has both sole voting and investment
power with respect to the shares included in the table, except
as described in the footnotes below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Shares
|
|
|
Options
|
|
|
Amount
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Owned
|
|
|
Exercisable
|
|
|
and Nature
|
|
|
|
|
|
Stock-
|
|
|
Total
|
|
|
|
Directly or
|
|
|
Within 60
|
|
|
of Beneficial
|
|
|
Percent
|
|
|
Based
|
|
|
Stock-Based
|
|
Name of Beneficial Owner
|
|
Indirectly
(1)
|
|
|
Days
(2)
|
|
|
Ownership
|
|
|
of Class
|
|
|
Items
(3)
|
|
|
Ownership
|
|
|
James R. Boyd,
Director
(4)
|
|
|
87,090
|
|
|
|
|
|
|
|
87,090
|
|
|
|
|
*
|
|
|
89,070
|
|
|
|
176,160
|
|
Frank M. Burke,
Director
(4)
|
|
|
100,000
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
*
|
|
|
42,212
|
|
|
|
142,212
|
|
John W. Eaves, President, Chief Operating Officer and Director
|
|
|
224,393
|
|
|
|
334,122
|
|
|
|
558,515
|
|
|
|
|
*
|
|
|
21,700
|
|
|
|
580,215
|
|
Patricia F. Godley, Director
|
|
|
1,000
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
*
|
|
|
28,822
|
|
|
|
29,822
|
|
Douglas H. Hunt,
Director
(4)
|
|
|
22,000
|
|
|
|
|
|
|
|
22,000
|
|
|
|
|
*
|
|
|
53,410
|
|
|
|
75,410
|
|
Brian J. Jennings, Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
19,038
|
|
|
|
19,038
|
|
Steven F. Leer, Chairman and Chief Executive
Officer
(4)
|
|
|
509,399
|
|
|
|
707,134
|
|
|
|
1,216,533
|
|
|
|
|
*
|
|
|
32,550
|
|
|
|
1,249,083
|
|
Thomas A. Lockhart, Director
|
|
|
200
|
|
|
|
|
|
|
|
200
|
|
|
|
|
*
|
|
|
17,877
|
|
|
|
18,077
|
|
A. Michael Perry, Director
|
|
|
12,588
|
|
|
|
|
|
|
|
12,588
|
|
|
|
|
*
|
|
|
26,729
|
|
|
|
39,317
|
|
Robert G. Potter,
Director
(4)
|
|
|
21,000
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
*
|
|
|
47,802
|
|
|
|
68,802
|
|
Theodore D. Sands, Director
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
*
|
|
|
39,363
|
|
|
|
64,363
|
|
Wesley M. Taylor, Director
|
|
|
15,636
|
|
|
|
|
|
|
|
15,636
|
|
|
|
|
*
|
|
|
13,769
|
|
|
|
29,405
|
|
John T. Drexler, Senior Vice President and Chief Financial
Officer
|
|
|
2,917
|
|
|
|
48,728
|
|
|
|
51,645
|
|
|
|
|
*
|
|
|
1,842
|
|
|
|
53,487
|
|
Paul A. Lang, Senior Vice President, Operations
|
|
|
56,566
|
|
|
|
102,150
|
|
|
|
158,716
|
|
|
|
|
*
|
|
|
|
|
|
|
158,716
|
|
David N. Warnecke, Vice President-Marketing and Trading
|
|
|
27,534
|
|
|
|
106,750
|
|
|
|
134,284
|
|
|
|
|
*
|
|
|
2,966
|
|
|
|
137,250
|
|
All of our directors and executive officers as a group
(20 persons)
|
|
|
1,320,343
|
|
|
|
1,843,410
|
|
|
|
3,163,753
|
|
|
|
2.0
|
%
|
|
|
449,787
|
|
|
|
3,613,540
|
|
|
|
|
*
|
|
Less than one percent of the
outstanding shares.
|
|
(1)
|
|
Includes, for executive officers,
shares of restricted stock, shares of our common stock that the
executives have elected to defer under our deferred compensation
plan for executive officers and indirect interests in shares of
our common stock held under our defined contribution plan.
|
|
(2)
|
|
Represents shares of our common
stock that could be acquired by exercising stock options through
April 22, 2010.
|
|
(3)
|
|
Includes, for directors, indirect
interests in shares of our common stock held under our deferred
compensation plan for non-employee directors. Includes, for
executive officers, unvested restricted stock units awarded to
executives under our equity-based compensation plans and
indirect interests in shares of our common stock held under our
deferred compensation plan for executive officers. While
restricted stock units and indirect interests in shares of our
common stock under our deferred compensation plans may not be
voted or transferred, we have included them in the table as they
represent an economic interest in our common stock that is
subject to the same market risk as ownership of actual shares of
our common stock.
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60
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(4)
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|
Includes, for Mr. Boyd,
2,090 shares and, for Mr. Leer, 2,020 shares held
jointly with such persons spouse and for which such person
shares voting and investment power. Includes, for
Mr. Burke, 40,000 shares held by Burke, Mayborn Co.,
Ltd. for which Mr. Burke has voting and investment power
and 60,000 shares held in Mr. Burkes SEP-IRA
account for which Mr. Burke has sole voting and investment
power. Includes, for Mr. Hunt, 145,100 shares held by
the Lyda Hunt-Herbert Trusts Douglas Herbert Hunt
under which Mr. Hunt is a beneficiary but for which
Mr. Hunt has no voting or investment power. Includes, for
Mr. Potter, 16,500 shares held by the Robert G. Potter
Trust dated 11/05/92, Robert G. Potter, as trustee, for which
Mr. Potter has voting and investment power and
1,000 shares held by Mr. Potters spouse.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows all persons or entities that we know
were beneficial owners of more than five percent of
our common stock on February 22, 2010.
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|
Amount and Nature of
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Percent
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Name and Address of Beneficial Owner
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|
Beneficial Ownership
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|
of Class
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|
FMR LLC
82 Devonshire Street
Boston, Massachusetts 02109
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22,817,263
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(1)
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14.0
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%
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BlackRock, Inc.
40 East
52
nd
Street
New York, New York 10022
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|
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15,021,034
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(2)
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|
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9.2
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%
|
Capital World Investors
333 South Hope Street
Los Angeles, California 90071
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|
|
8,376,168
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(3)
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5.2
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%
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|
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(1)
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|
Based on its filings with the
Securities and Exchange Commission, Fidelity
Management & Research Company, a subsidiary of FMR LLC
and an investment adviser registered under Section 203 of
the Investment Advisors Act of 1940, is the beneficial owner of
21,582,318 shares of our common stock as a result of acting
as investment advisor to various investment companies registered
under the Investment Company Act of 1940. Edward C. Johnson 3d
and FMR LLC, through its control of Fidelity
Management & Research Company, each has sole power to
dispose of the 21,582,318 shares of common stock. Neither
FMR LLC nor Edward C. Johnson 3d has the sole power to vote or
direct the voting of the shares owned directly by the funds,
which power resides with the funds board of trustees.
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Strategic Advisers, Inc., a
wholly-owned subsidiary of FMR LLC and an investment adviser
registered under Section 203 of the Investment Advisors Act
of 1940, provides investment advisory services to individuals.
Strategic Advisers, Inc. is the beneficial owner of
6,620 shares of our common stock. Pyramis Global Advisors
Trust Company, an indirect wholly-owned subsidiary of FMR
LLC and a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, is the beneficial owner of
292,260 shares of our common stock. FIL Limited and various
foreign-based subsidiaries of FMR LLC provide investment
advisory and management services to a number of
non-U.S.
investment companies and certain institutional investors. FIL
Limited, which is a qualified institution under
Rule 13d-1(b)(1)(ii),
is the beneficial owner of 936,065 shares of our common
stock. Partnerships controlled predominantly by members of the
family of Edward C. Johnson 3d, or trusts for their benefit, own
shares of voting stock of FIL Limited with the right to cast
approximately 47% of the total votes which may be cast by all
such holders.
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|
(2)
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|
Based on its filings with the
Securities and Exchange Commission, BlackRock, Inc. has the sole
voting power and sole dispositive power over
15,021,034 shares of our common stock.
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(3)
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|
Based on its filings with the
Securities and Exchange Commission, Capital World Investors is
the beneficial owner of 8,276,168 shares of our common
stock as a result of acting as investment advisor to various
investment companies registered under the Investment Company Act
of 1940. Capital World Investors has the sole voting power over
2,000,000 shares of our common stock and the sole
dispositive power over 8,376,168 shares of our common stock.
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61
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and any persons
beneficially holding more than ten percent of our common stock
to report their ownership of common stock and any changes in
that ownership to the Securities and Exchange Commission and the
New York Stock Exchange. The Securities and Exchange Commission
has established specific due dates for these reports, and we are
required to report in this proxy statement any failure to file
by these dates. Based solely on a review of the copies of the
reports furnished to us and written representations that no
other such statements were required, we believe that all such
reports of our directors and executive officers were filed on a
timely basis.
STOCKHOLDER
PROPOSALS FOR THE 2011 ANNUAL MEETING
If you wish to submit proposals for possible inclusion in our
2011 proxy materials, we must receive them at our principal
executive offices no later than the close of business on
November 19, 2010. Proposals should be addressed to Robert
G. Jones, Senior Vice President-Law, General Counsel and
Secretary, Arch Coal, Inc., One CityPlace Drive, Suite 300,
St. Louis, Missouri 63141.
If you wish to nominate directors
and/or
propose proper business from the floor for consideration at the
2011 annual meeting of stockholders, our bylaws provide that:
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you must notify our secretary in writing;
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your notice must have been received at our headquarters not
earlier than January 29, 2011 and not later than
February 18, 2011; and
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your notice must contain the specific information required in
our bylaws.
|
We will send copies of these requirements to any stockholder who
writes to us requesting this information. Please note that these
three requirements apply only to matters that you wish to bring
before your fellow stockholders at the 2011 annual meeting of
stockholders without submitting them for possible inclusion in
our 2011 proxy materials.
62
INTERNET
AVAILABILITY OF PROXY MATERIALS
Important
Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be held on April 22,
2010
The notice of annual meeting, proxy statement and our 2009
annual report may be viewed online under Annual
Reports in the Investors section of our website at
http://investor.archcoal.com/annuals.cfm.
Information on our website does not constitute part of this
proxy statement. You may find more information about the date,
time and location of the annual meeting of stockholders, as well
as the items to be voted on by stockholders at the annual
meeting, in the section of this proxy statement entitled
Proxy and Voting Information. There, you will also
find information about attending the annual meeting and voting
your proxy, including where you may find the individual control
numbers necessary to vote your shares by telephone or over the
Internet.
If you are a stockholder of record and are interested in
receiving future proxy statements and annual reports
electronically, you should contact our transfer agent by
accessing your account at amstock.com and selecting
Shareholder Account Access. If you hold shares of
our common stock through a broker, bank or other nominee, please
refer to the instructions provided by that entity for
instructions on how to elect this option.
PROXY
SOLICITATION
We are paying the cost of preparing, printing, and mailing these
proxy materials. We will reimburse brokerage firms, banks and
others for their reasonable expenses in forwarding proxy
materials to beneficial owners and obtaining their instructions.
Proxies will be solicited by mail and also may be solicited by
our executive officers and other employees personally, by
telephone or by electronic means, but such persons will not be
specifically compensated for such services. It is contemplated
that brokerage firms, banks, custodians, fiduciaries and other
nominees will be requested to forward the soliciting material to
the beneficial owners of stock held of record by such persons,
and we will reimburse them for their reasonable expenses
incurred. If we decide to retain a proxy solicitor, we will pay
the fees charged by the proxy solicitor.
63
DIRECTIONS
TO THE ANNUAL MEETING
From downtown St. Louis: Take Highway 40 West approximately
14 miles to Interstate 270 North (Exit #25). Continue
approximately two miles on Interstate 270 North to Olive
Boulevard (Exit #14). Take Olive Boulevard East one mile to
CityPlace Drive. Turn North on CityPlace Drive and continue to
our headquarters at CityPlace One.
From Lambert International Airport: Take Highway
70 West approximately three miles to Interstate 270 South
(Exit #232). Continue approximately six miles on Interstate
270 South to Olive Boulevard (Exit #14). Take Olive
Boulevard East one mile to CityPlace Drive. Turn North on
CityPlace Drive and continue to our headquarters at CityPlace
One.
By order of the Board of Directors,
Robert G. Jones
Senior Vice President Law, General Counsel and
Secretary
March 22, 2010
Appendix A
ARCH
COAL, INC.
1997 STOCK INCENTIVE PLAN
(As Amended and Restated on January 1, 2010)
SECTION 1
Statement of Purpose
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1.1.
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The Arch Coal, Inc. 1997 Stock Incentive Plan (the
Plan) has been established by Arch Coal, Inc. in
order to:
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(a)
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attract and retain executive, managerial and other salaried
employees, as well as non-employee Directors;
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(b)
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motivate Participants, by means of appropriate incentives, to
achieve long-range goals;
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(c)
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provide incentive compensation opportunities that are
competitive with those of other major corporations; and
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(d)
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further identify a Participants interests with those of
the Companys other stockholders through compensation based
on the Companys common stock; thereby promoting the
long-term financial interest of the Company and its Related
Companies, including the growth in value of the Companys
equity and enhancement of long-term stockholder return.
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SECTION 2
Definitions
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2.1.
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Unless the context indicates otherwise, the following terms
shall have the meaning set forth below:
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(a)
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Acquiring Corporation.
The term
Acquiring Corporation shall mean the surviving,
continuing successor or purchasing corporation in an acquisition
or merger with the Company in which the Company is not the
surviving corporation.
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(b)
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Award.
The term Award shall mean
any award or benefit granted to any Participant under the Plan,
including, without limitation, the grant of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Stock, Performance Units, Merit Awards, Phantom
Stock Awards and Stock acquired through purchase under
Section 12.
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(c)
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Award Agreement.
The term Award
Agreement shall mean any written agreement, contract, or
other instrument or document evidencing any Award, which shall
not become effective until executed or acknowledged by a
Participant.
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A-1
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(d)
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Board.
The term Board shall mean
the Board of Directors of the Company acting as such but shall
not include the Committee or other committees of the Board
acting on behalf of the Board.
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(e)
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Cause.
The term Cause shall mean
(a) the continued failure by the Participant to
substantially perform his or her duties with the Company (other
than any such failure resulting from his or her incapacity due
to physical or mental illness), or (b) the engaging by the
Participant in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise.
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(f)
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Change in Control.
A Change in
Control shall be deemed to have occurred upon any of the
following events: (1) consummation of any consolidation or
merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of Stock
would be converted into cash, securities or other property,
other than a merger in which the holders of the Stock
immediately prior to the merger will have more than 50% of the
ownership of common stock of the surviving corporation
immediately after the merger, (2) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company, (3) adoption of any plan or proposal for the
liquidation or dissolution of the Company, or (4) when any
person (as defined in Section 13(d) of the
Exchange Act), other than a Significant Stockholder, or any
subsidiary of the Company or employee benefit plan or trust
maintained by the Company or any of its subsidiaries, shall
become the beneficial owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of more than
20% of the Stock outstanding at the time, without the prior
approval of the Board.
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(g)
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Code.
The term Code means the
Internal Revenue Code of 1986, as amended. A reference to any
provision of the Code shall include reference to any successor
provision of the Code.
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(h)
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Committee.
The term Committee
means the Personnel & Compensation Committee of the
Board.
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(i)
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Company.
The term Company means
Arch Coal, Inc., a Delaware corporation.
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(j)
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Date of Termination.
A Participants
Date of Termination shall be the date on which his
or her employment or service with all Employer and Related
Companies terminates for any reason; provided that, for purposes
of this Plan only, a Participants employment or service
shall not be considered terminated by reason of the
Participants leave of absence from an Employer or a
Related Company that is approved in advance by the
Participants Employer. Notwithstanding the above, to the
extent any Award constitutes nonqualified deferred compensation
which is subject to the limitations and restrictions of Code
Section 409A, a Participants Date of
Termination shall be the date he or she has a
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A-2
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separation from service as determined in accordance with the
rules promulgated under Code Section 409A and the
resolutions of the Board regarding such determination.
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(k)
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Director.
The term Director shall
mean a member of the Board of Directors of the Employer.
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(l)
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Disability.
Except as otherwise provided by
the Committee, a Participant shall be considered to have a
Disability during the period in which he or she is
unable, by reason of a medically determined physical or mental
impairment, to carry out his or her duties with an Employer,
which condition, in the discretion of the Committee, shall
generally be an event which qualifies as a long term
disability under applicable long term disability benefit
programs of the Company.
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(m)
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Employee.
The term Employee shall
mean a person with an employment relationship with an Employer.
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(n)
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Employer.
The Company and each Subsidiary
which, with the consent of the Company, participates in the Plan
for the benefit of its eligible Employees and Directors are
referred to collectively as the Employers and
individually as an Employer.
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(o)
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Exchange Act.
The term Exchange
Act means the Securities Exchange Act of 1934, as amended.
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(p)
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Exercise Price.
The term Exercise
Price means (1) with respect to each share of Stock
subject to an Option, the price fixed by the Committee in the
applicable Award Agreement at which such share may be purchased
from the Company pursuant to the exercise of such Option, which
price at no time may be less than 100% of the Fair Market Value
of the Stock on the date the Option is granted, except as
permitted and contemplated by Section 21 of the Plan, and
(2) with respect to each share of Stock subject to a Stock
Appreciation Right, the price as specified in accordance with
Section 7.1(b) of the Plan.
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(q)
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Fair Market Value.
The Fair Market
Value of the Stock on any given date shall be the last
sale price, regular way, or, in case no such sale takes place on
such date, the average of the closing bid and asked prices,
regular way, of the Stock, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE or, if
the Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Stock is listed or
admitted to trading or, if the Stock is not listed or admitted
to trading on any national securities exchange, the last quoted
sale price on such date or, if not so quoted, the average of the
high bid and low asked prices in the
over-the-counter
market on such date, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System or such
other system then in use,
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A-3
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or, if on any such date the Stock is not quoted by any such
organization, the average of the closing bid and asked prices on
such date as furnished by a professional market maker making a
market in the Stock. If the Stock is not publicly held or so
listed or publicly traded, Fair Market Value per
share of Stock shall mean the Fair Market Value per share as
reasonably determined by the Committee.
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(r)
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Immediate Family.
With respect to a particular
Participant, the term Immediate Family shall mean,
whether through consanguinity or adoptive relationships, the
Participants spouse, children, stepchildren, siblings and
grandchildren.
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(s)
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Incentive Stock Option.
The term
Incentive Stock Option shall mean any Incentive
Stock Option granted under the Plan.
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(t)
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Merit Award.
The term Merit Award
shall mean any performance-based Award granted under
Section 10 or Section 11 of the Plan or any other
performance-based Award other than Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock, Restricted Stock
Units, or Stock Appreciation Rights.
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(u)
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Non-Employee Director.
The term
Non-Employee Director shall mean a person who
qualifies as such under
Rule 16b-3(b)(3)
under the Exchange Act or any successor provision, and who also
qualifies as an outside director under
Section 162(m) of the Code.
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(v)
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Non-Qualified Stock Option.
The term
Non-qualified Stock Option shall mean any
Non-Qualified Stock Option granted under the Plan.
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(w)
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NYSE.
The term NYSE refers to the
New York Stock Exchange, Inc.
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(x)
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Option.
The term Option shall mean
any Incentive Stock Option or Non-Qualified Stock Option granted
under the Plan.
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(y)
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Participant.
The term Participant
means an Employee or Director who has been granted an award
under the Plan.
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(z)
|
Performance-Based Compensation.
The term
Performance-Based Compensation shall have the
meaning ascribed to it in Section 162(m)(4)(C) of the Code.
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(aa)
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Performance Goals.
The term Performance
Goals means the goals established by the Committee under
an Award which, if met, will entitle the Participant to payment
under such Award and will qualify such payment as
Performance-Based Compensation as that term is used
in Code Section 162(m)(4)(C). Such goals will be based upon
such specified levels of achievement as the Committee may from
time to time determine with respect to one or more of the
following: operating income; net income; debt reduction;
earnings per share; cash flow; cost reduction; earnings before
interest, taxes, depreciation and amortization (EBITDA);
environmental compliance; safety performance; production rates;
operating cost per ton; total shareholder return; financial
return measures; provided, any one of
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A-4
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which may be measured with respect to the Company or any one or
more of its Subsidiaries and divisions and either in absolute
terms or as compared to another company or companies, or an
index established or designed by the Committee.
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(bb)
|
Performance Period.
The term Performance
Period shall mean the period over which applicable
performance is to be measured.
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(cc)
|
Performance Stock.
The term Performance
Stock shall have the meaning ascribed to it in
Section 10 of the Plan.
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(dd)
|
Performance Units.
The term Performance
Units shall have the meaning ascribed to it in
Section 11 of the Plan.
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(ee)
|
Phantom Stock Award.
The term Phantom
Stock Award shall mean any Phantom Stock Award granted
under the Plan.
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(ff)
|
Plan.
The term Plan shall mean
this Arch Coal, Inc. 1997 Stock Incentive Plan as the same may
be from time to time amended or revised.
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(gg)
|
Related Companies.
The term Related
Companies means any Significant Stockholder and their
subsidiaries; and any other company during any period in which
it is a Subsidiary or a division of the Company, including any
entity acquired by, or merged with or into, the Company or a
Subsidiary.
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(hh)
|
Restricted Period.
The term Restricted
Period shall mean the period of time for which shares of
Restricted Stock or Restricted Stock Units are subject to
forfeiture pursuant to the Plan or during which Options and
Stock Appreciation Rights are not exercisable.
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(ii)
|
Restricted Stock.
The term Restricted
Stock shall have the meaning ascribed to it in
Section 8 of the Plan.
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(jj)
|
Restricted Stock Units.
The term
Restricted Stock Units shall have the meaning
ascribed to it in Section 9 of the Plan.
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(kk)
|
Retirement.
Retirement of a
Participant shall occur when a Participants Date of
Termination occurs on or after the date on which the Participant
attains age 55 and such Participant has not been terminated
for Cause.
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(ll)
|
SEC.
SEC means the Securities and
Exchange Commission.
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(mm)
|
Significant Stockholder.
The term
Significant Stockholder shall mean any shareholder
of the Company who, immediately prior to the Effective Date,
owned more than 5% of the common stock of the Company.
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(nn)
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Stock.
The term Stock shall mean
shares of common stock, $.01 par value per share, of the
Company.
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A-5
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(oo)
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Stock Appreciation Rights.
The term
Stock Appreciation Rights shall mean any Stock
Appreciation Right granted under the Plan.
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(pp)
|
Subsidiary.
The term Subsidiary
shall mean any present or future subsidiary corporation of the
Company within the meaning of Code Section 424((f).
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(qq)
|
Tax Date.
The term Tax Date shall
mean the date a withholding tax obligation arises with respect
to an Award.
|
SECTION 3
Eligibility
|
|
3.1.
|
Subject to the discretion of the Committee and the terms and
conditions of the Plan, the Committee shall determine and
designate from time to time, the Employees, Directors or other
persons as contemplated by Section 21 of the Plan who will
be granted one or more Awards under the Plan.
|
SECTION 4
Operation and Administration
|
|
4.1.
|
The Plan, as amended and restated herein, has been adopted by
the Board to be effective as of January 1, 2010, subject to
approval by the shareholders of the Company. To the extent
required pursuant to Section 162(m) of the Code, the Plan
shall be resubmitted to shareholders for reapproval no later
than at the first shareholders meeting that occurs during
the fifth year following the year of the initial approval and
thereafter at five year intervals, in each case, as may be
required to qualify any Award hereunder as Performance-Based
Compensation. The Plan shall be unlimited in duration and remain
in effect until termination by the Board; provided however, that
no Incentive Stock Option may be granted under the Plan after
January 1, 2020.
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|
4.2.
|
Plenary authority to administer, manage and control the
operation and administration of the Plan shall be vested in the
Committee, which authority shall include, but shall not be
limited to:
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|
(a)
|
Subject to the provisions of the Plan, the authority and
discretion to select Employees and Directors to receive Awards,
to determine the time or times of receipt, to determine the
types of Awards and the number of shares covered by the Awards,
to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such Awards. In making
such Award determinations, the Committee may take into account
the nature of services rendered by the respective Employee or
Director, his or her present and potential contribution to the
Companys success and such other factors as the Committee
deems relevant.
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(b)
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Subject to the provisions of the Plan, the authority and
discretion to determine the extent to which Awards under the
Plan will be structured to conform to the requirements
applicable to Performance-Based Compensation as described in
Code Section 162(m),
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A-6
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and to take such action, establish such procedures, and impose
such restrictions at the time such awards are granted as the
Committee determines to be necessary or appropriate to conform
to such requirements.
|
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(c)
|
The authority and discretion to interpret the Plan and the
Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, to determine the
terms and provisions of any agreements made pursuant to the
Plan, to make all other determinations that it deems necessary
or advisable for the administration of the Plan and to correct
any defect or supply any omission or reconcile any inconsistency
in the Plan or in any Award, in each case, in the manner and to
the extent the Committee deems necessary or advisable to carry
it into effect.
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|
4.3.
|
Any interpretation of the Plan by the Committee and any decision
made by it under the Plan shall be final and binding on all
persons. The express grant in the Plan of any specific power to
the Committee shall not be construed as limiting any power or
authority of the Committee. Provided, however, that except as
otherwise permitted under Treasury Regulation
1.162-27(e)(2)(iii)(C), the Committee may not increase any Award
once made if payment under such Award is intended to constitute
Performance-Based Compensation.
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|
4.4.
|
The Committee may only act at a meeting by unanimous consent if
comprised of two members, and otherwise by a majority of its
members. Any determination of the Committee may be made without
a meeting by the unanimous written consent of its members. In
addition, the Committee may authorize one or more of its members
or any officer of an Employer to execute and deliver documents
and perform other administrative acts pursuant to the Plan.
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|
4.5
|
No member or authorized delegate of the Committee shall be
liable to any person for any action taken or omitted in
connection with the administration of the Plan unless
attributable to his or her own fraud or gross misconduct. The
Committee, the individual members thereof, and persons acting as
the authorized delegates of the Committee under the Plan, shall
be indemnified by the Employers against any and all liabilities,
losses, costs and expenses (including legal fees and expenses)
of whatsoever kind and nature which may be imposed on, incurred
by, or asserted against, the Committee or its members or
authorized delegates by reason of the performance of any action
pursuant to the Plan if the Committee or its members or
authorized delegates did not act in willful violation of the law
or regulation under which such liability, loss, cost or expense
arises. This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance
policy, contract with the indemnitee or the Companys
By-laws.
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4.6.
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Notwithstanding any other provision of the Plan to the contrary,
but without giving effect to Awards made pursuant to
Section 21, the maximum number of shares of Stock with
respect to which any Participant may receive any Award of
(i) an Option or a Stock Appreciation Right under the Plan
during any calendar year is 350,000; (ii) the maximum
number of shares with respect to which any Participant may
receive Awards of Restricted Stock or Restricted Stock Units
during any calendar year is 100,000; (iii) the maximum
number of shares with respect to which
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A-7
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any Participant may receive Merit Awards during any calendar
year is 200,000; and (iv) the maximum number of shares or
cash value with respect to which any Participant may receive
other Awards during any calendar year is 100,000 or $3,000,000,
respectively (including the Awards described in
Sections 4.6(i) through 4.6(iii), which may be further
granted pursuant to this Section 4.6(iv)).
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4.7.
|
To the extent that the Committee determines that it is necessary
or desirable to conform any Awards under the Plan with the
requirements applicable to Performance-Based
Compensation, as that term is used in Code
Section 162(m)(4)(C), it may, at or prior to the time an
Award is granted, establish Performance Goals for a particular
Performance Period. If the Committee establishes Performance
Goals for a Performance Period, it may approve a payment from
that particular Performance Period upon attainment of the
Performance Goal.
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SECTION 5
Shares Available Under the Plan
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5.1.
|
The shares of Stock with respect to which Awards may be made
under the Plan shall be shares of currently authorized but
unissued or treasury shares acquired by the Company, including
shares purchased in the open market or in private transactions.
Subject to the provisions of Section 16, the total number
of shares of Stock available for grant of Awards shall not
exceed 22,500,000 shares of Stock. Except as otherwise
provided herein, if any Award shall expire or terminate for any
reason without having been exercised in full, the unissued
shares of Stock subject thereto (whether or not cash or other
consideration is paid in respect of such Award) shall again be
available for the purposes of the Plan. Any shares of Stock
which are used as full or partial payment to the Company upon
exercise of an Award shall be available for purposes of the Plan.
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SECTION 6
Options
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6.1.
|
The grant of an Option under this Section 6
entitles the Participant to purchase shares of Stock at a price
fixed at the time the Option is granted, or at a price
determined under a method established at the time the Option is
granted, subject to the terms of this Section 6. Options
granted under this Section 6 may be either Incentive Stock
Options or Non-Qualified Stock Options, and subject to
Subsection 6.6 and Sections 15 and 20, shall not be
exercisable for at least six months from the date of grant, as
determined in the discretion of the Committee. An
Incentive Stock Option is an Option that is intended
to satisfy the requirements applicable to an incentive
stock option described in Section 422(b) of the Code.
A Non-Qualified Option is an Option that is not
intended to be an incentive stock option as that
term is described in Section 422(b) of the Code.
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A-8
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6.2.
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The Committee shall designate the Employees and Directors to
whom Options are to be granted under this Section 6 and
shall determine the number of shares of Stock to be subject to
each such Option. To the extent that the aggregate Fair Market
Value of Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any
calendar year (under all plans of the Company and all Related
Companies) exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options, but only to the extent required by
Section 422 of the Code.
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6.3.
|
The determination and payment of the purchase price of a share
of Stock under each Option granted under this Section shall be
subject to the following terms of this Subsection 6.3:
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(a)
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The purchase price shall be established by the Committee or
shall be determined by a method established by the Committee at
the time the Option is granted; provided, however, that in no
event shall the price per share be less than the Fair Market
Value per share on the date of the grant except as otherwise
permitted by Section 21 of the Plan;
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(b)
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The full purchase price of each share of Stock purchased upon
the exercise of any Option shall be paid at the time of such
exercise and, as soon as practicable thereafter, a certificate
representing the shares so purchased shall be delivered to the
person entitled thereto; and
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(c)
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The purchase price shall be paid either in cash, in shares of
Stock (valued at Fair Market Value as of the day of exercise),
through a combination of cash and Stock (so valued) or through
such cashless exercise arrangement as may be approved by the
Committee and established by the Company.
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6.4.
|
Except as otherwise expressly provided in the Plan, an Option
granted under this Section 6 shall be exercisable in
accordance with the following terms of this Subsection 6.4.
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(a)
|
The terms and conditions relating to exercise of an Option shall
be established by the Committee and shall be set forth in the
applicable Award Agreement, and may include, without limitation,
conditions relating to completion of a specified period of
service, achievement of performance standards prior to exercise
of the Option, or achievement of Stock ownership objectives by
the Participant. No Option may be exercised by a Participant
after the expiration date applicable to that Option.
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(b)
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The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right, if
any.
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6.5.
|
The exercise period of any Option shall be determined by the
Committee and shall be set forth in the applicable Award
Agreement but the term of any Option shall not extend more than
ten years after the date of grant.
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A-9
SECTION 7
Stock Appreciation Rights
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7.1.
|
Subject to the terms of this Section 7, a Stock
Appreciation Right granted under the Plan entitles the
Participant to receive, in cash or Stock (as determined in
accordance with Subsection 7.4), value equal to all or a portion
of the excess of: (a) the Fair Market Value of a specified
number of shares of Stock at the time of exercise; over
(b) a specified price which shall not be less than 100% of
the Fair Market Value of the Stock at the time the Stock
Appreciation Right is granted, or, if granted in tandem with an
Option, the exercise price with respect to shares under the
tandem Option.
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7.2.
|
Subject to the provisions of the Plan, the Committee shall
designate the Employees and Directors to whom Stock Appreciation
Rights are to be granted under the Plan, shall determine the
exercise price or a method by which the price shall be
established with respect to each such Stock Appreciation Right,
and shall determine the number of shares of Stock on which each
Stock Appreciation Right is based. A Stock Appreciation Right
may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in
connection with an Option. If a Stock Appreciation Right is
granted in connection with an Option then, in the discretion of
the Committee, the Stock Appreciation Right may, but need not,
be granted in tandem with the Option.
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7.3.
|
The exercise of Stock Appreciation Rights shall be subject to
the following:
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(a)
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If a Stock Appreciation Right is not in tandem with an Option,
then the Stock Appreciation Right shall be exercisable in
accordance with the terms established by the Committee in
connection with such rights and as set forth in the applicable
Award Agreement but, subject to Sections 15 and 20, shall
not be exercisable for six months from the date of grant and the
term of any Stock Appreciation Right shall not extend more than
ten years from the date of grant; and may include, without
limitation, conditions relating to completion of a specified
period of service, achievement of performance standards prior to
exercise of the Stock Appreciation Rights, or achievement of
objectives relating to Stock ownership by the
Participant; and
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(b)
|
If a Stock Appreciation Right is in tandem with an Option, then
the Stock Appreciation Right shall be exercisable only at the
time the tandem Option is exercisable and the exercise of the
Stock Appreciation Right will result in the surrender of the
corresponding rights under the tandem Option.
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7.4.
|
Upon the exercise of a Stock Appreciation Right, the value to be
distributed to the Participant, in accordance with Subsection
7.1, shall be distributed in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash, or in a
combination of Stock or cash, in the discretion of the Committee.
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A-10
SECTION 8
Restricted Stock
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8.1.
|
Subject to the terms of this Section 8, Restricted Stock
Awards under the Plan are grants of Stock to Participants, the
vesting of which is subject to certain conditions established by
the Committee and set forth in the applicable Award Agreement,
with some or all of those conditions relating to events (such as
continued service or satisfaction of performance criteria)
occurring after the date of the grant of the Award, provided,
however, that to the extent that vesting of a Restricted Stock
Award is contingent on continued service, the required service
period shall generally (unless otherwise determined by the
Committee) not be less than one year following the grant of the
Award unless such grant is in substitution for an Award under
this Plan or a predecessor plan of the Company or a Related
Company. To the extent, if any, required by the General
Corporation Law of the State of Delaware, a Participants
receipt of an Award of newly issued shares of Restricted Stock
shall be made subject to payment by the Participant of an amount
equal to the aggregate par value of such newly issued shares of
Stock.
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8.2.
|
The Committee shall designate the Employees and Directors to
whom Restricted Stock is to be granted, and the number of shares
of Stock that are subject to each such Award. The Award of
shares under this Section 8 may, but need not, be made in
conjunction with a cash-based incentive compensation program
maintained by the Company, and may, but need not, be in lieu of
cash otherwise awardable under such program.
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8.3.
|
Shares of Restricted Stock granted to Participants under the
Plan shall be subject to the following terms and conditions:
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(a)
|
Restricted Stock granted to Participants may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Restricted Period;
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(b)
|
The Participant as owner of such shares shall have all the
rights of a stockholder, including but not limited to the right
to vote such shares and, except as otherwise provided in the
Award Agreement or as provided by the Plan, the right to receive
all dividends and other distributions paid on such shares.
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(c)
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Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the
Participant but, at the discretion of the Committee, each such
certificate may be deposited with the Company with a stock power
endorsed in blank or in a bank designated by the Committee;
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(d)
|
The Committee may award Restricted Stock as Performance-Based
Compensation, which shall be Restricted Stock that will be
earned (or for which earning is accelerated) upon the
achievement of Performance Goals established by the Committee
and the Committee may specify the number of shares that will be
earned upon achievement of different levels of performance;
except as otherwise provided by the Committee, achievement of
maximum targets during the Performance Period shall result in
the Participants earning of the full
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amount of Restricted Stock comprising such Performance-Based
Compensation and, in the discretion of the Committee,
achievement of the minimum target but less than the maximum
target, the Committee may result in the Participants
earning of a portion of the Award; and
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(e)
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Except as otherwise provided by the Committee and set forth in
the applicable Award Agreement, any Restricted Stock which is
not earned by the end of a Restricted Period or Performance
Period, as the case may be, shall be forfeited. If a
Participants Date of Termination occurs prior to the end
of a Restricted Period or Performance Period, as the case may
be, the Committee may determine, in its sole discretion, that
the Participant will be entitled to settlement of all or any
portion of the Restricted Stock as to which he or she would
otherwise be eligible, and may accelerate the determination of
the value and settlement of such Restricted Stock or make such
other adjustments as the Committee, in its sole discretion,
deems desirable. Subject to the limitations of the Plan and the
Award of Restricted Stock, upon the vesting of Restricted Stock,
such Restricted Stock will be transferred free of all
restrictions to the Participant (or his or her legal
representative, beneficiary or heir).
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SECTION 9
Restricted Stock Units
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9.1.
|
Subject to the terms of this Section 9, a Restricted Stock
Unit entitles a Participant to receive shares for the units at
the end of a Restricted Period, or at a later date if
distribution has been deferred, to the extent provided by the
Award with the vesting of such units to be contingent upon such
conditions as may be established by the Committee and set forth
in the Award Agreement (such as continued service or
satisfaction of performance criteria) occurring after the date
of grant of the Award, provided, however, that to the extent
that the vesting of a Restricted Stock Unit is contingent on
continued service, the required employment period shall
generally not be less than one year following the date of grant
of the Award unless such grant is in substitution for an Award
under this Plan or a predecessor plan of the Company or a
Related Company. Notwithstanding the foregoing, Restricted Stock
Units may be settled in the form of Stock, or cash or a
combination of both, as the Committee may determine. The amount
of any cash to be paid in lieu of shares of Stock shall be
determined on the basis of the Fair Market Value of the Stock on
the date any such payment is processed. The Award of Restricted
Stock Units under this Section 9 may, but need not, be made
in conjunction with a cash-based incentive compensation program
maintained by the Company, and may, but need not, be in lieu of
cash otherwise awardable under such program.
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9.2.
|
The Committee shall designate the Employees and Directors to
whom Restricted Stock Units shall be granted and the number of
units that are subject to each such Award. During any period in
which Restricted Stock Units are outstanding and have not been
settled in Stock, the Participant shall not have the rights of a
stockholder, but, in the discretion of the Committee,
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A-12
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may be granted the right to receive a payment from the Company
in lieu of a dividend in an amount equal to any cash dividends
that might be paid during the Restricted Period.
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9.3
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Except as otherwise provided by the Committee, any Restricted
Stock Unit which is not earned by the end of a Restricted Period
shall be forfeited. If a Participants Date of Termination
occurs prior to the end of a Restricted Period, the Committee,
in its sole discretion, may determine that the Participant will
be entitled to settlement of all, any portion, or none of the
Restricted Stock Units as to which he or she would otherwise be
eligible, and may accelerate the determination of the value and
settlement of such Restricted Stock Units or make such other
adjustments as the Committee, in its sole discretion, deems
desirable.
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9.4
|
Notwithstanding anything to the contrary in this Section 9,
an election to defer receipt of shares at the end of a
Restricted Period may be made by a Participant only in
accordance with the terms of a separate written nonqualified
deferred compensation plan sponsored by the Company and only to
the extent made in accordance with the election timing rules
under Code Section 409A. Unless otherwise subject to such a
deferral election, Restricted Stock Units shall be settled on or
after the last day of the Restricted Period set forth in the
Award Agreement, but in no event later than the March 15th of
the calendar year following the calendar year in which the
Restricted Period ends. Any acceleration of the settlement of a
Restrict Stock Unit Award described in Section 9.3 shall be
made only to the extent permissible under Code Section 409A.
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SECTION 10
Performance Stock
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10.1.
|
Subject to the terms of this Section 10, an Award of
Performance Stock provides for the distribution of Stock to a
Participant upon the achievement of performance objectives,
which may include Performance Goals, established by the
Committee and set forth in the applicable Award Agreement.
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10.2.
|
The Committee shall designate the Employees and Directors to
whom Awards of Performance Stock are to be granted, and the
number of shares of Stock that are subject to each such Award.
The Award of shares of Performance Stock under this
Section 10 may, but need not, be made in conjunction with a
cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise
awardable under such program.
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10.3.
|
Except as otherwise provided by the Committee and set forth in
the applicable Award Agreement, any Award of Performance Stock
which is not earned by the end of the Performance Period shall
be forfeited. If a Participants Date of Termination occurs
prior to the end of a Performance Period, the Committee, in its
sole discretion, may determine that the Participant will be
entitled to settlement of all, any portion, or none of the
Performance Stock as to which he or she would otherwise be
eligible, and may accelerate the determination of the value and
settlement of such Performance Stock or make such other
adjustments as the Committee, in its sole discretion, deems
desirable.
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A-13
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10.4
|
Except as otherwise provided by the Committee under
Section 10.3 or in an Award Agreement, settlement of any
earned Performance Stock shall occur on or after the last day of
the Performance Period, but in no event later than the March
15th of the calendar year following the calendar year in which
the Performance Period ends. Any acceleration of the settlement
of a Performance Share described in Section 10.3 shall be
made only to the extent permissible under Code Section 409A.
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SECTION 11
Performance Units
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11.1.
|
Subject to the terms of this Section 11, the Award of
Performance Units under the Plan entitles the Participant to
receive value for the units at the end of a Performance Period
to the extent provided under the Award. The number of
Performance Units earned, and value received from them, will be
contingent on the degree to which the performance measures set
forth in the Award Agreement. are met.
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11.2.
|
The Committee shall designate the Employees and Directors to
whom Performance Units are to be granted, and the number of
Performance Units to be subject to each such Award.
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11.3.
|
For each Participant, the Committee will determine the value of
Performance Units, which may be stated either in cash or in
units representing shares of Stock; the performance measures
used for determining whether the Performance Units are earned;
the Performance Period during which the performance measures
will apply; the relationship between the level of achievement of
the performance measures and the degree to which Performance
Units are earned; whether, during or after the Performance
Period, any revision to the performance measures or Performance
Period should be made to reflect significant events or changes
that occur during the Performance Period; and the number of
earned Performance Units that will be settled in cash
and/or
shares of Stock.
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11.4.
|
Settlement of Performance Units shall be subject to the
following:
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(a)
|
The Committee will compare the actual performance to the
performance measures established for the Performance Period and
determine the number of Performance Units as to which settlement
is to be made;
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(b)
|
Settlement of Performance Units earned shall be wholly in cash,
wholly in Stock or in a combination of the two, as determined by
the Committee, and shall be distributed in the form set forth in
the Award Agreement. If the Award Agreement does not provide for
a form of payment, payment shall be made in a single lump sum
payment. Except as otherwise provided by the Committee under
Section 11.5 or in an Award Agreement, settlement of any
earned Performance Units shall occur on or after the last day of
the Performance Period, but in no event later than the March
15
th
of
the calendar year following the calendar year in which the
Performance Period ends. Any acceleration of the settlement of a
Performance Unit described in Section 11.5 shall be made
only to the extent permissible under Code
Section 409A; and
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A-14
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(c)
|
Shares of Stock distributed in settlement of Performance Units
shall be subject to such vesting requirements and other
conditions, if any, as the Committee shall determine, including,
without limitation, restrictions of the type that may be imposed
with respect to Restricted Stock under Section 8.
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11.5.
|
Except as otherwise provided by the Committee and set forth in
the applicable Award Agreement, any Award of Performance Units
which is not earned by the end of the Performance Period shall
be forfeited. If a Participants Date of Termination occurs
prior to the end of a Performance Period, the Committee, in its
sole discretion, may determine that the Participant will be
entitled to settlement of all, any portion, or none of the
Performance Units as to which he or she would otherwise be
eligible, and may accelerate the determination of the value and
settlement of such Performance Units or make such other
adjustments as the Committee, in its sole discretion, deems
desirable.
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SECTION 12
Stock Purchase Program
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12.1.
|
The Committee may, from time to time, establish one or more
programs under which Employees and Directors will be permitted
to purchase shares of Stock under the Plan, and shall designate
the Employees and Directors eligible to participate under such
Stock purchase programs. The purchase price for shares of Stock
available under such programs, and other terms and conditions of
such programs, shall be established by the Committee. The
purchase price may not be less than 75% of the Fair Market Value
of the Stock at the time of purchase (or, in the
Committees discretion, the average Stock value over a
period determined by the Committee), and further provided that
if newly issued shares of Stock are sold, the purchase price may
not be less than the aggregate par value of such newly issued
shares of Stock.
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12.2.
|
The Committee may impose such restrictions with respect to
shares purchased under this Section 12, as the Committee,
in its sole discretion, determines to be appropriate. Such
restrictions may include, without limitation, restrictions of
the type that may be imposed with respect to Restricted Stock
under Section 8.
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SECTION 13
Stock Awards
|
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13.1.
|
The Committee may from time to time make an Award of Stock under
the Plan to selected Employees or Directors for such reasons and
in such amounts as the Committee, in its sole discretion, may
determine. The consideration to be paid by an Employee or
Director for any such Award, if any, shall be fixed by the
Committee from time to time, but, if required by the General
Corporation Law of the State of Delaware, it shall not be less
than the aggregate par value of the shares of Stock awarded to
him or her.
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A-15
SECTION 14
Phantom Stock Awards
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14.1.
|
The Committee may make Phantom Stock Awards to selected
Employees and Directors which may be based solely on the value
of the underlying shares of Stock, solely on any earnings or
appreciation thereon, or both. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority
to determine the number of hypothetical or target shares as to
which each such Phantom Stock Award is subject and to determine
the terms and conditions of each such Phantom Stock Award. There
may be more than one Phantom Stock Award in existence at any one
time with respect to a selected Employee or Director, and the
terms and conditions of each such Phantom Stock Award may differ
from each other.
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14.2.
|
The Committee shall establish and shall set forth in the
applicable Award Agreement the vesting or performance measures
for each Phantom Stock Award on the basis of such criteria and
to accomplish such objectives as the Committee may from time to
time, in its sole discretion, determine. Such measures may be
based on years of service or periods of employment, or the
achievement of individual or corporate performance objectives,
but shall, in each instance, be based upon one or more of the
business criteria as determined pursuant to Section 4.7.
The vesting and performance measures determined by the Committee
shall be established at the time a Phantom Stock Award is made.
Phantom Stock Awards may not be sold, assigned, transferred,
pledged, or otherwise encumbered, except as provided in
Section 17, during the Performance Period.
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14.3.
|
Settlement of Phantom Stock earned shall be wholly in cash,
wholly in Stock or in a combination of the two, as determined by
the Committee, and shall be distributed in the form set forth in
the Award Agreement. If the Award Agreement does not provide for
a form of payment, payment shall be made in a single lump sum
payment. Except as otherwise provided by the Committee under
Section 14.4 or in an Award Agreement, settlement of any
earned Phantom Stock shall occur on or after the last day of the
Performance Period, but in no event later than the March
15
th
of
the calendar year following the calendar year in which the
Performance Period ends. Any acceleration of the settlement of
Phantom Stock described in Section 14.4 shall be made only
to the extent permissible under Code Section 409A.
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14.4.
|
Except as otherwise provided by the Committee and set forth in
the applicable Award Agreement, any Award of Phantom Stock which
is not earned by the end of the Performance Period shall be
forfeited. If a Participants Date of Termination occurs
prior to the end of a Performance Period, the Committee, in its
sole discretion, may determine that the Participant will be
entitled to settlement of all or a portion of the Phantom Stock
for which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of
Phantom Stock or make such other adjustment as the Committee, in
its sole discretion, deems desirable.
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SECTION 15
Termination of Service
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15.1.
|
If a Participants service is terminated by the
Participants Employer for Cause, all of the
Participants unvested Awards, including any unexercised
Options, shall be forfeited.
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15.2.
|
Except as may be set forth in the applicable Award Agreement,
with respect to Awards made prior to July 22, 2004, if a
Participants Date of Termination occurs by reason of
death, Disability or Retirement, all Options and Stock
Appreciation Rights outstanding immediately prior to the
Participants Date of Termination shall immediately become
exercisable and shall be exercisable until one year from the
Participants Date of Termination and thereafter shall be
forfeited if not exercised, and all restrictions on any Awards
outstanding immediately prior to the Participants Date of
Termination shall immediately lapse. Except as may be set forth
in the applicable Award Agreement, for Awards made after
July 22, 2004, if a Participants Date of Termination
occurs by reason of death or Disability, (i) all unvested
Awards outstanding immediately prior to the Participants
Date of Termination shall continue to vest as if such
Participant had remained in the service of the Company and
(ii) all vested Options and Stock Appreciation Rights shall
remain exercisable and, in each case, such Awards shall be
exercisable until one year from the later of the
(i) Participants Date of Termination or (ii) the
vesting date of such Award and thereafter shall be forfeited.
Except as may be set forth in the applicable Award Agreement,
for Awards made after July 22, 2004, if a
Participants Date of Termination occurs by reason of
Retirement, (i) all unvested Awards outstanding immediately
prior to the Participants Date of Termination shall be
forfeited and (ii) all vested Options and Stock
Appreciation Rights shall remain exercisable and shall be
exercisable until one year from the Participants Date of
Termination and thereafter shall be forfeited. Options and Stock
Appreciation Rights which are or become exercisable at the time
of a Participants death may be exercised by the
Participants designated beneficiary or, in the absence of
such designation, by the person to whom the Participants
rights will pass by will or the laws of descent and distribution.
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15.3.
|
Except as may be set forth in the applicable Award Agreement,
for Awards made prior to July 22, 2004, if a
Participants Date of Termination occurs by reason of
Participants employment being terminated by the
Participants Employer for any reason other than Cause, or
by the Participant with the written consent and approval of the
Participants Employer, the Restricted Period shall lapse
on a proportion of any Awards outstanding immediately prior to
the Participants Date of Termination (except that, to the
extent that an Award of Restricted Stock, Restricted Stock
Units, Performance Units, Performance Stock and Phantom Stock is
subject to a Performance Period), such proportion of the Award
shall remain subject to the same terms and conditions for
vesting as were in effect prior to the Date of Termination and
shall be determined at the end of the Performance Period. The
proportion of an Award upon which the Restricted Period shall
lapse shall be a fraction, the denominator of which is the total
number of months of any Restricted Period applicable to an Award
and the numerator of which is the number of months of such
Restricted Period which elapsed prior to the Date of
Termination. Except as may be set
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A-17
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forth in the applicable Award Agreement, for Awards made after
July 22, 2004, if a Participants Date of Termination
occurs by reason of Participants service being terminated
by the Participants Employer for any reason other than
Cause, or by the Participant with the written consent and
approval of the Participants Employer, (i) all
unvested Awards outstanding immediately prior to the
Participants Date of Termination shall be forfeited and
(ii) all vested Options and Stock Appreciate Rights shall
remain exercisable as provided in Section 15.4.
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15.4.
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Options and Stock Appreciation Rights which are or become
exercisable by reason of the Participants service being
terminated by the Participants Employer for reasons other
than Cause or by the Participant with the consent and approval
of the Participants Employer, shall be exercisable until
60 days from the Participants Termination Date and
shall thereafter be forfeited if not exercised.
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15.5.
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Except to the extent the Company shall otherwise determine, if,
as a result of a sale or other transaction (other than a Change
in Control), a Participants Employer ceases to be a
Related Company (and the Participants Employer is or
becomes an entity that is separate from the Company), the
occurrence of such transaction shall be treated as the
Participants Date of Termination caused by the
Participants service being terminated by the
Participants Employer for a reason other than Cause.
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15.6.
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Notwithstanding the foregoing provisions of this
Section 15, the Committee may, with respect to any Awards
of a Participant (or portion thereof) that are outstanding
immediately prior to the Participants Date of Termination,
determine that a Participants Date of Termination will not
result in forfeiture or other termination of the Award, or may
extend the period during which any Options or Stock Appreciation
Rights may be exercised, but shall not extend such period beyond
the expiration date set forth in the Award. In no event may an
Option or Stock Appreciation Right be extended to a date which
is more than ten years from the date of grant.
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SECTION 16
Adjustments to Shares
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16.1.
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If the Company shall effect a reorganization, merger, or
consolidation, or similar event or effect any subdivision or
consolidation of shares of Stock or other capital readjustment,
payment of stock dividend, stock split, spin-off, combination of
shares or recapitalization or other increase or reduction of the
number of shares of Stock outstanding without receiving
compensation therefor in money, services or property, then the
Committee shall appropriately adjust (i) the number of
shares of Stock available under the Plan, (ii) the number
of shares of Stock available under any individual or other
limitations under the Plan, (iii) the number of shares of
Stock subject to outstanding Awards and (iv) the per-share
price under any outstanding Award to the extent that the
Participant is required to pay a purchase price per share with
respect to the Award.
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16.2.
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If the Committee determines that an adjustment in accordance
with the provisions of Subsection 16.1 would not be fully
consistent with the purposes of the Plan or the purposes of the
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A-18
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outstanding Awards under the Plan, the Committee may make such
other adjustments, if any, that the Committee reasonably
determines are consistent with the purposes of the Plan
and/or
the
affected Awards.
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16.3.
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To the extent that any reorganization, merger, consolidation, or
similar event or any subdivision or consolidation of shares of
Stock or other capital readjustment, payment of stock dividend,
stock split, spin-off, combination of shares or recapitalization
or other increase or reduction of the number of shares of Stock
hereunder is also accompanied by or related to a Change in
Control, the adjustment hereunder shall be made prior to the
acceleration contemplated by Section 20.
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SECTION 17
Transferability and Deferral of Awards
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17.1.
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Awards under the Plan are not transferable except by will or by
the laws of descent and distribution. To the extent that a
Participant who receives an Award under the Plan has the right
to exercise such Award, the Award may be exercised during the
lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this Section 17, the
Committee may, subject to any restrictions under applicable
securities laws, permit Awards under the Plan (other than an
Incentive Stock Option) to be transferred by a Participant for
no consideration to or for the benefit of the Participants
Immediate Family (including, without limitation, to a trust for
the benefit of a Participants Immediate Family or to a
Partnership comprised solely of members of the
Participants Immediate Family), subject to such limits as
the Committee may establish, provided the transferee shall
remain subject to all of the terms and conditions applicable to
such Award prior to such transfer.
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17.2.
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The Committee may permit a Participant to elect to defer payment
under an Award under such terms and conditions as the Committee,
in its sole discretion, may determine; provided that, any such
deferral election must be made in accordance with the terms of a
separate written nonqualified deferred compensation plan
sponsored by the Company and only to the extent made in
accordance with the election timing rules under Code
Section 409A.
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SECTION 18
Award Agreement
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18.1.
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Each Participant granted an Award pursuant to the Plan shall
sign an Award Agreement which signifies the offer of the Award
by the Company and the acceptance of the Award by the
Participant in accordance with the terms of the Award and the
provisions of the Plan. Each Award Agreement shall reflect the
terms and conditions of the Award. Participation in the Plan
shall confer no rights to continued service with an Employer nor
shall it restrict the right of an Employer to terminate a
Participants service at any time for any reason, not
withstanding the fact that the Participants rights under
this Plan may be negatively affected by such action.
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A-19
SECTION 19
Tax Withholding
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19.1
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All Awards and other payments under the Plan are subject to
withholding of all applicable taxes, which withholding
obligations shall be satisfied (without regard to whether the
Participant has transferred an Award under the Plan) by a cash
remittance, or with the consent of the Committee, through the
surrender of shares of Stock which the Participant owns or to
which the Participant is otherwise entitled under the Plan
pursuant to an irrevocable election submitted by the Participant
to the Company at the office designated for such purpose. The
number of shares of Stock needed to be submitted in payment of
the taxes shall be determined using the Fair Market Value as of
the applicable tax date rounding down to the nearest whole share.
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SECTION 20
Change in Control
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20.1.
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After giving effect to the provisions of Section 16
(relating to the adjustment of shares of Stock), and except as
otherwise provided in the Plan or the Agreement reflecting the
applicable Award, upon the occurrence of a Change in Control:
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(a)
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All outstanding Options (regardless of whether in tandem with
Stock Appreciation Rights) shall become fully exercisable and
may be exercised at any time during the original term of the
Option;
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(b)
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All outstanding Stock Appreciation Rights (regardless of whether
in tandem with Options) shall become fully exercisable and may
be exercised at any time during the original term of the Option;
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(c)
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All shares of Stock subject to Awards shall become fully vested
and be distributed to the Participant; and
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(d)
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Performance Units may be paid out in such manner and amounts as
may be reasonably determined by the Committee.
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The accelerated payment of any Award upon a Change in Control as
described in this Section 20.1 shall occur only to the
extent such payment would not result in an adverse tax
consequence to the Participant under Code Section 409A. In
addition, Performance Units shall be paid in accordance with the
terms of the Award Agreement.
SECTION 21
MERGERS / ACQUISITIONS
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21.1
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In the event of any merger or acquisition involving the Company
and/or
a
Subsidiary of the Company and another entity which results in
the Company being the survivor or the surviving direct or
indirect parent corporation of the merged or acquired entity,
the Committee may grant Awards under the provisions of the Plan
in substitution for awards held by employees or former employees
of such other entity under any plan of such entity immediately
prior to such merger or acquisition upon such terms and
conditions as the Committee, in its discretion, shall
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A-20
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determine and as otherwise may be required by the Code to ensure
such substitution is not treated as the grant of a new Award for
tax or accounting purposes.
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21.2
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In the event of a merger or acquisition involving the Company in
which the Company is not the surviving corporation, the
Acquiring Corporation shall either assume the Companys
rights and obligations under outstanding Awards or substitute
awards under the Acquiring Corporations plans, or if none,
securities for such outstanding Awards. In the event the
Acquiring Corporation elects not to assume or substitute for
such outstanding Awards, and without limiting Section 20,
the Board shall provide that any unexercisable
and/or
unvested portion of the outstanding Awards shall be immediately
exercisable and vested as of a date prior to such merger or
consolidation, as the Board so determines. The exercise
and/or
vesting of any Award that was permissible solely by reason of
this Section 21.2 shall be conditioned upon the
consummation of the merger or consolidation. Unless otherwise
provided in the Plan or the Award, any Awards which are neither
assumed by the Acquiring Corporation nor exercised on or prior
to the date of the transaction shall terminate effective as of
the effective date of the transaction.
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SECTION 22
Termination and Amendment
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22.1
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The Board may suspend, terminate, modify or amend the Plan,
provided that any amendment that would (a) increase the
aggregate number of shares of Stock which may be issued under
the Plan, (b) change the method of determining the exercise
price of Options, other than to change the method of determining
Fair Market Value of Stock as set forth in Section 2.1(o)
of the Plan, or (c) materially modify the requirements as
to eligibility for participation in the Plan, shall be subject
to the approval of the Companys stockholders, except that
any such increase or modification that may result from
adjustments authorized by Section 16 does not require such
approval. No suspension, termination, modification or amendment
of the Plan may terminate a Participants existing Award or
materially and adversely affect a Participants rights
under such Award without the Participants consent.
Notwithstanding any provision herein to the contrary, the Board
may amend or revise this Plan to comply with applicable laws or
governmental regulations.
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22.2
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Notwithstanding any provision herein to the contrary, the
repricing of Options or Stock Appreciation Rights is prohibited
without prior approval of the Companys stockholders. For
this purpose, a repricing means any of the following
(or any other action that has the same effect as any of the
following): (a) changing the terms of an Option or Stock
Appreciation Right to lower its Exercise Price; (b) any
other action that is treated as a repricing under
generally accepted accounting principles; and
(c) repurchasing for cash or canceling an Option or Stock
Appreciation Right at a time when its Exercise Price is greater
than the Fair Market Value of the underlying Stock in exchange
for another Award, unless the cancellation and exchange occurs
in connection with a change in capitalization or similar change
under Section 21 above. Such cancellation and exchange as
described in clause (c) of the preceding sentence would be
considered a repricing regardless of whether it is
treated as a repricing under generally accepted
accounting principles and regardless of whether it is voluntary
on the part of the Participant.
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A-21
Appendix B
ARCH COAL, INC.
INCENTIVE COMPENSATION PLAN
FOR
EXECUTIVE OFFICERS
Effective: January 1,
2010
B-1
ARCH
COAL, INC.
INCENTIVE COMPENSATION PLAN
FOR EXECUTIVE OFFICERS
The purpose of the Arch Coal, Inc., Incentive Compensation Plan
for Executive Officers (as amended from time to time, the
Plan) is to provide an opportunity for Executive
Officers of Arch Coal, Inc. to earn additional annual cash
incentive compensation through the achievement of
pre-established performance goals. The Plan, as amended and
restated herein, shall be effective as of January 1, 2010.
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A.
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Award Opportunities
means the range of
potential Payouts established by the Committee, in its
discretion, for an Executive Officer during any Plan Year.
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B.
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Code
means the Internal Revenue Code of 1986,
as amended from time to time.
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C.
|
Committee
means the Personnel &
Compensation Committee of the Board of Directors of Arch Coal,
Inc.
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D.
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Company
means Arch Coal, Inc. and its
subsidiaries that fall within the Controlled Group within the
meaning of Code section 414(b), (c), (m) or (o).
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E.
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Executive Officer
means the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief
Financial Officer and each Vice President and other officer of
the company selected by the Committee to participate in the Plan.
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F.
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Maximum Opportunity
shall be the maximum
annual incentive Payout that an Executive Officer is eligible to
receive under this Plan.
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G.
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Payout
means the amount earned, if any, by an
Executive Officer for a Plan Year in accordance with
Section 5. A Payout is not earned until it is calculated,
then approved by the Committee.
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H.
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Performance Measures
means the Company
performance objectives approved by the Committee within
90 days of the beginning of each Plan Year. Performance
Measures may include, but are not limited to, the following:
(i) operating income; (ii) net income; (iii) debt
reduction; (iv) earnings per share; (v) cash flow;
(vi) cost reduction; (vii) earnings before interest,
taxes, depreciation and amortization (EBITDA);
(viii) environmental compliance; (ix) safety
performance; (x) production rates; (xi) operating cost
per ton; (xii) total shareholder return;
(xiii) financial return measures. As determined by the
Committee, the Performance Measures may be applied (A) to
the Companys stand-alone performance or relative to one or
more other companies or indices or (B) to a business unit,
geographic region, one or more separately incorporated entities,
or the Company as a whole.
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I.
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Permanent and Total Disability
means the
permanent inability to perform each of the material duties of an
individuals occupation because of an illness, disease or
injury.
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B-2
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J.
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Plan Year
means the calendar year.
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K.
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Retire
or
Retirement
means
voluntary termination of employment at age 55 or older with
at least 10 years of service with the Company.
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A.
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The Committee may establish, from time to time, Award
Opportunities for Executive Officers.
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B.
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The Committee may, in its discretion, elect to prorate an Award
Opportunity for an Executive Officer who begins participating in
the Plan after the beginning of a Plan Year based on a ratio,
expressed as the percentage of the number of days remaining in
the Plan Year on the date the Executive Officer begins
participating in the Plan and 365.
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C.
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Participants will cease to participate in the Plan effective as
of the date they no longer hold an Executive Officer position.
The Committee may, in its discretion, elect to prorate any Award
Opportunity established for an individual who ceases to hold an
Executive Officer position for which a Payout has not yet been
earned based on a ratio, expressed as the percentage of the
number of days elapsed from the beginning of the Plan Year to
the date the individual ceases to hold an Executive Officer
position and 365.
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A.
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Within 90 days of the beginning of each Plan Year, the
Committee shall determine (i) the Executive Officers who
shall be eligible to receive Award Opportunities for such Plan
Year, (ii) the Performance Measures applicable to each such
Executive Officers Award Opportunities and (iii) the
formula for computing the amount payable to each Executive
Officer if the Performance Measures are achieved (such formula
shall comply with the requirements applicable to
performance-based compensation plans under Section 162(m) of the
Code and the related Treasury regulations).
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B.
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The Maximum Opportunity for an Executive Officer for any Plan
Year shall not exceed $2,500,000. All Award Opportunities are
intended to comply with the exception for
performance-based compensation under
Section 162(m) of the Code and the related Treasury
regulations and shall be administered in accordance with
Section 162(m) and such regulations. If any Plan provision
is found not to be in compliance with Section 162(m) of the
Code, that provision shall be deemed modified as necessary to so
comply.
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A.
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Payouts shall be calculated and approved by the Committee at the
end of each Plan Year based on the Award Opportunities of each
Executive Officer and the achievement of the Performance
Measures set by the Committee with respect to Executive Officers
for the Plan Year. Regardless of the Companys performance
relative to the Performance Measures selected by the Committee
for a particular Plan Year but subject to Section 162(m)
and related regulations, the Committee shall retain the
discretion to approve a Payout that is less
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B-3
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than the calculated Payout established by the Committee for an
Executive Officer based on such Executive Officers
individual performance or on such other factors that the
Committee determines appropriate. In no event will a reduction
of one Executive Officers Payout for a Plan Year result in
an increase of another Executive Officers Payout for the
same Plan Year. No Payout to an Executive Officer under this
Plan may exceed the Maximum Opportunity established by the
Committee for such Executive Officer for such Plan Year. The
Committee may, in its discretion, make appropriate adjustments
to account for any infrequent or non-recurring items that it
determines, in its discretion, are not reflective of the
Companys ongoing operations or the effects of major
corporate transactions or other items that the Committee
determines, in its discretion, significantly distort the
comparability of the Companys performance against the
Performance Measures established by the Committee for a
particular Plan Year.
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B.
|
Except with respect to a reduction in force or pursuant to any
written agreement between the Company and the Executive Officer,
any rights an Executive Officer may have to receive a Payout
will be forfeited if the Executive Officers employment is
terminated or the Executive Officer Retires or ceases to hold an
Executive Officer position prior to the date of approval of the
Payout. The Committee shall have the discretion to make a Payout
notwithstanding termination, Retirement or cessation prior to
the date of approval of the Payout but will have no obligation
to do so, and no prior payments to others in this regard shall
vest any rights in the Employee or entitle him or her to rely on
the fact of payment.
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C.
|
The Payout, if any, calculated and approved in accordance with
Section 5.A. shall be made by the Company to the Executive
Officer within a reasonable period, which in most cases will be
thirty (30) days after the Committees approval of the
Payout. However, in no event will a Payout for a Plan Year be
made later than the 15th day of the third month following
the last day of the Plan Year. The Company shall deduct from any
Payout paid under the Plan the amount of any taxes required to
be withheld by the federal or any state or local government.
|
In the event an Executive Officer dies or becomes Permanently
and Totally Disabled, such Executive Officer or his or her
designated beneficiary (or his or her estate in the event he or
she dies without previously having designated a beneficiary in
writing to the Company) shall be entitled to receive any Payout
earned by such Executive Officer that has not yet been paid. In
addition, the Committee may, in its discretion, elect to prorate
any Award Opportunity established for the Executive Officer but
for which a Payout has not yet been earned based on a ratio,
expressed as the percentage of the number of days elapsed from
the beginning of the Plan Year to the date the Executive Officer
dies or becomes Permanently and Totally Disabled and 365. A
Payout made in accordance with this Section 6 shall be paid
at the time described in Section 5 on the date other
Payouts related to the same Plan Year are paid.
B-4
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7.
|
AMENDMENT
OR TERMINATION OF THE PLAN
|
The Committee reserves the right to terminate or amend the Plan,
in whole or in part, or waive any provision thereof at any time
and from time to time, provided that no amendment, termination
or waiver shall adversely affect any Payout previously earned by
an Executive Officer.
B-5
Arch Coal, Inc.
One CityPlace Drive
St. Louis, Missouri 63141
March 22, 2010 Dear fellow stockholder:
The annual meeting of stockholders of Arch Coal, Inc. will be held on April 22,
2010, at 10:00 a.m., Central time, in the lower level auditorium located at One
CityPlace Drive, St. Louis, Missouri 63141.
It is important that your shares be represented at this meeting. Whether or not you
plan to attend the meeting, please review the enclosed proxy materials, complete the
attached proxy form below, and return it promptly in the envelope provided or vote
electronically or by telephone as instructed on the reverse side hereof.
ARCH COAL, INC.
This proxy is solicited on behalf of the Board of Directors of Arch
Coal, Inc. for the annual meeting of stockholders to be held on April
22, 2010
As an alternative to completing this form, you may enter your vote instruction by telephone
at 1-800-PROXIES, or via the Internet at WWW.VOTEPROXY.COM and follow the simple instructions. Use
the Company Number and Account Number shown on your proxy card.
The undersigned hereby appoints STEVEN F. LEER and ROBERT G. JONES, and each of them, with
power of substitution, as the proxy of the undersigned to represent the undersigned and to vote
all shares of common stock which the undersigned would be entitled to vote, if personally present
at the annual meeting of stockholders of Arch Coal, Inc. to be held at its headquarters at
CityPlace One, One CityPlace Drive, St. Louis, Missouri 63141, at 10:00 a.m., Central time, on
Thursday, April 22, 2010, in the lower level auditorium, and at any adjournments thereof, with all
powers the undersigned would possess if present at such meeting on the matters set forth on the
reverse side hereof and all other matters properly coming before the meeting.
If the undersigned is a participant in the Arch Coal, Inc. Employee Thrift Plan and this
proxy card is received on or before April 12, 2010, then this card also provides voting
instructions to the trustee of such plan to vote at the annual meeting, and any adjournments
thereof, all shares of Arch Coal common stock held in the undersigneds plan account as specified
upon the matters set forth on the reverse side hereof and all other matters properly coming before
the meeting. If the undersigned is a participant in one of these plans and does not instruct the
trustee by April 12, 2010, then the trustee will vote the undersigneds plan account shares in
proportion to the votes of the other participants in that plan. In addition, the trustee will vote
unallocated shares in the plan in direct proportion to voting by allocating shares for which
instructions have been received.
PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING YOUR PROXY BY TELEPHONE OR INTERNET. The
Proxies cannot vote your shares unless you vote.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING YOUR SHARES.
|
ANNUAL MEETING OF STOCKHOLDERS OF
ARCH COAL, INC.
April 22, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
:
The Notice of Meeting and proxy
statement are available at
http://investor.archcoal.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope
provided.
EDM333DDDDDDDDDD1DDD fl
DMEE1D
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS, FOR
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, FOR THE
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE ARCH COAL, INC. 1997 STOCK INCENTIVE PLAN AND
FOR THE SECTION 162(M) APPROVAL OF ARCH COAL INC.S INCENTIVE COMPENSATION PLAN FOR EXECUTIVE
OFFICERS .
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
1. Election of Directors:
NOMINEES:
FOR ALL NOMINEES
Brian J. Jennings
Steven F. Leer
Robert G. Potter
Theodore D. Sands
WITHHOLD AUTHORITY FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark
FOR ALL
EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here: ^
FOR AGAINST ABSTAIN
2. Ratification of the appointment of independent registered public I I I I I I
accounting firm
>
> >
> >
>
3. Approval of an amendment and restatement of the Arch Coal, Inc. I I I I I I
1997 Stock Incentive Plan
4. Section 162(m) approval of Arch Coal, Inc.s Incentive Q Q Q
Compensation Plan for Executive Officers
This proxy, when properly executed, will be voted in the manner directed herein. If no direction
is made, this proxy will be voted FOR each nominee, FOR ratification of the appointment of the
independent registered public accounting firm, FOR the approval of the amendment and restatement
of the Arch Coal, Inc. 1997 Stock Incentive Plan and FOR the Section 162(m) approval of Arch Coal,
Inc.s Incentive Compensation Plan for Executive Officers. The board of directors recommends a
vote FOR each nominee, FOR ratification of the appointment of the independent registered public
accounting firm, FOR the approval of the amendment and restatement of the Arch Coal, Inc. 1997
Stock Incentive Plan and FOR the Section 162(m) approval of Arch Coal, Inc.s Incentive
Compensation Plan for Executive Officers.
Arch Coal, Inc. encourages you to take advantage of the convenient ways by which you can vote your
shares. You can vote your shares electronically through the Internet or by telephone. This
eliminates the need to return the proxy card.
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
If you vote over the Internet or by telephone, please do not mail your card.
To change the address on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to the registered name(s) on the
account may not be submitted via this method.
Please check here if you plan to attend the meeting:
Signature of Stockholder
Note:
Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each ho
lder should sign.
^H il h If h i i i l i fll b dl hid ffi ii &n
bsp; fll il
Date:
Signature of Stockholder
Date:
g n . pp y jy g When signing as executor, administrator, attorney, trustee or
guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly
authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
|
ANNUAL MEETING OF STOCKHOLDERS OF
ARCH COAL, INC.
April 22, 2010
PROXY VOTING INSTRUCTIONS
INTERNET
Access
www.voteproxy.com
and follow the on-screen
instructions. Have your proxy card available when you access the web page, and use the Company
Number and Account Number shown on your proxy card.
TELEPHONE
Call toll-free
1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from foreign countries from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call and use the Company Number and Account Number shown on
your proxy card.
Vote online/phone until 11:59 PM ESTthe day before the meeting.
MAIL
Sign, date and mail your proxy card in the envelope provided as soon as possible.
IN PERSON
You may vote your shares in person by attending the Annual Meeting.
COMPANY NUMBER
ACCOUNT NUMBER
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
:
The Notice of
Meeting and proxy statement
are available at http://investor.archcoal.com
Please detach along perforated line and mail in the envelope provided IF you are
not voting via telephone or the Internet.
EDM333DDDDDDDDDD1DDD fl
DMEE1D
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS, FOR
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, FOR THE
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE ARCH COAL, INC. 1997 STOCK INCENTIVE PLAN AND
FOR THE SECTION 162(M) APPROVAL OF ARCH COAL, INC.S INCENTIVE COMPENSATION PLAN FOR
EXECUTIVE OFFICERS .
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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1. Election of Directors:
FOR ALL NOMINEES
NOMINEES:
O Brian J. Jennings O Steven F. Leer O Robert G.
Potter O Theodore D. Sands
WITHHOLD AUTHORITY FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark
FOR
ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here: ^
FOR AGAINST ABSTAIN
2. Ratification of the appointment of independent registered public I I I I I I
accounting firm
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3. Approval of an amendment and restatement of the Arch Coal, Inc. I I I I I I
1997 Stock Incentive Plan
4. Section 162(m) approval of Arch Coal, Inc.s Incentive Q Q Q
Compensation Plan for Executive Officers
This proxy, when properly executed, will be voted in the manner directed herein. If no direction
is made, this proxy will be voted FOR each nominee, FOR ratification of the appointment of the
independent registered public accounting firm, FOR the approval of the amendment and restatement
of the Arch Coal, Inc. 1997 Stock Incentive Plan and FOR the Section 162(m) approval of Arch Coal,
Inc.s Incentive Compensation Plan for Executive Officers. The board of directors recommends a
vote FOR each nominee, FOR ratification of the appointment of the independent registered public
accounting firm, FOR the approval of the amendment and restatement of the Arch Coal, Inc. 1997
Stock Incentive Plan and FOR the Section 162(m) approval of Arch Coal,
Inc.s Incentive
Compensation Plan for Executive Officers.
Arch Coal, Inc. encourages you to take advantage of the convenient ways by which you can vote your
shares. You can vote your shares electronically through the Internet or by telephone. This
eliminates the need to return the proxy card.
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
If you vote over the Internet or by telephone, please do not mail your card.
Please check here if you plan to attend the meeting:
To change the address on your
account, please check the box at right
and indicate your new address in the
address space above. Please note that
changes to the registered name(s) on
the account may not be submitted via
this method.
Signature of Stockholder
^^
Note:
Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign.
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Signature of Stockholder
Date:
Date:
g n . pp y jy g When signing as executor, administrator, attorney, trustee or
guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly
authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
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