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Exhibit 10.3 ARCH COAL, INC.
DEFERRED COMPENSATION PLAN
WHEREAS, Arch Coal, Inc. ("Company")
previously adopted the Arch Coal, Inc. Deferred Compensation Plan
("Plan"); and WHEREAS, effective
January 1, 2005, Company began administering the Plan with
respect to amounts deferred on and after January 1, 2005, in
accordance with a good faith interpretation of Section 409A of
the Internal Revenue Code of 1986, as amended ("Code"); and
WHEREAS, effective January 1,
2009, the Company desires to amend the Plan to incorporate
provisions consistent with the final regulations promulgated under
Code Section 409A; and WHEREAS,
with respect to deferrals (and earnings thereon) credited and
vested prior to January 1, 2005, the terms of the Plan in effect as
of December 31, 2004, shall continue to govern such benefits,
and the provisions of that "grandfathered" portion of the Plan are
set forth in a separate document;
NOW, THEREFORE, effective
January 1, 2009, the portion of the Plan which is subject to
Code Section 409A is restated as follows:
ARCH COAL, INC.
DEFERRED COMPENSATION PLAN
409A Document 1. PURPOSE
The purpose of this Arch Coal, Inc.
Deferred Compensation Plan (the "Plan") is to provide eligible key
employees of the Company with an opportunity to defer compensation
to be earned by them from the Company as a means of saving for
retirement or other future purposes.
Effective January 1, 2005, the
Company administered the Plan in accordance with a good faith
interpretation of Section 409A of the Internal Revenue Code of
1986, as amended ("Code"). However, deferrals (and earnings
thereon) made and vested prior to December 31, 2004, shall be
"grandfathered" and governed by the document in effect as of
December 31, 2004. Amounts (and earnings thereon) deferred or
vested on or after January 1, 2005, by or on behalf of a
Participant shall be governed by this 409A Document. 2.
DEFINITIONS The following
definitions shall be applicable throughout the Plan:
(a) "Accounting Date" means each
Business Day on which a calculation concerning a
Participant’s Compensation Account is performed, or as
otherwise defined by the Committee.
(b) "Beneficiary" means the
person(s) designated by the Participant in accordance with Section
11, or if no person(s) is/are so designated, the estate of a
deceased Participant.
(c) "Board" means the Board of
Directors of Arch Coal, Inc. or its designee.
(d) "Business Day" means a day
on which the New York Stock Exchange is open for trading activity.
(e) "Committee" means the
Personnel and Compensation Committee of the Board or its designee.
(f) "Common Stock" means the
common stock, $.01 par value, of Arch Coal, Inc.
(g) "Common Stock Fund" means
that investment option, approved by the Committee, in which a
Participant’s Compensation Account may be deemed to be
invested and may earn income based on a hypothetical investment in
Common Stock. (h) "Company"
means Arch Coal, Inc., its divisions, subsidiaries and affiliates.
(i) "Compensation" means any
employee compensation determined by the Committee to be properly
deferrable under the Plan.
(j) "Compensation Account(s)"
means the Retirement Account and/or the In-Service Account(s).
(k) "Corporate Human Resources"
means the Corporate Human Resources Department of the Company.
(l) "Credit Date" means the date
on which Compensation would otherwise have been paid to the
Participant or, in the case of the Participant’s designation
of investment option changes, any date within three Business Days
after the Participant’s designation is received in accordance
with the procedures established by the Committee.
(m) "Deferred Compensation"
means the Compensation elected by the Participant to be deferred
pursuant to the Plan.
(n) "Election" means a
Participant’s delivery of a written notice of election to
Corporate Human Resources electing to defer payment of all or a
portion of his or her Compensation (in accordance with rules
prescribed by the Committee) either until Termination, death or
such other time as further permitted by the Committee or the
Company. (o) "Employee" means an
individual classified by the Committee as a full-time, regular
salaried employee (which term shall be deemed to include officers)
of the Company, its present and future subsidiary corporations as
defined in Section 424 of the Internal Revenue Code of 1986,
as amended, or its affiliates.
(p) "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
(q) "Fair Market Value" means
the price of a share of Common Stock, as reported on the Composite
Tape for New York Stock Exchange issues on the date and at the time
designated by the Company.
(r) "Fiscal Year" means the
fiscal year of the Company, which is currently the annual period
commencing January 1 and ending the following December 31.
(s) "In-Service Account" means
the account(s) to which the Participant’s Deferred
Compensation is credited and from which, pursuant to
Section 9(b), distributions are made.
(t) "Participant" means an
Employee selected by the Committee to participate in the Plan and
who has elected to defer payment of all or a portion of his or her
Compensation under the Plan.
(u) "Performance-Based
Compensation" means Compensation that (i) is based on services
performed over a period of at least twelve months and
(ii) constitutes performance-based compensation as defined in
Treasury Regulations issued under Code Section 409A.
(v) "Plan" means this Arch Coal,
Inc. Deferred Compensation Plan as it now exists or as it may
hereafter be amended.
(w) "Retirement" means a
Participant’s Termination at or after age 55.
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(x) "Retirement Account"
means the account(s) to which the Participant’s Deferred
Compensation is credited and from which, pursuant to
Section 9(a), distributions are made.
(y) "Service Year" means, as
designated by the Committee, such year or portion thereof during
which the services have been rendered for which Compensation is
payable. (z) "Specified
Employee" means a key employee (as defined in Code Section 416(i)
without regard to Code Section 416(i)(5)) determined in
accordance with the meaning of such term under Code
Section 409A and the regulations promulgated thereunder and
the resolutions of the Board governing such determination. As of
January 1, 2009, the Board has determined that a Specified
Employee shall include any individual who is a participant in the
Plan or the Arch Coal, Inc. Supplemental Retirement Plan.
(aa) "Stock Unit(s)" means the
share equivalents credited to the Common Stock Fund of a
Participant’s Compensation Account pursuant to
Section 6.
(bb) "Termination" means
termination of services as an Employee, as defined under Code
Section 409A and the regulations promulgated thereunder. In
general, an Employee shall have a termination of employment upon a
decrease in the performance of services to less than 50% of the
average for the preceding 36-month period, and disregarding leave
of absences up to six months where there is a reasonable
expectation the Participant will return to active employment. 3.
SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN
CAPITALIZATION In the event
of any change in the outstanding Common Stock of the Company by
reason of any stock split, share dividend, recapitalization,
merger, consolidation, reorganization, combination, or exchange or
reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any
distribution to common shareholders other than cash dividends, the
number or kind of shares or Stock Units that may be credited under
the Plan shall be automatically adjusted so that the proportionate
interest of the Participants shall be maintained as before the
occurrence of such event. Such adjustment shall be conclusive and
binding for all purposes of the Plan. 4. ELIGIBILITY
The Committee shall have the
authority to select from management and/or highly compensated
Employees those Employees who shall be eligible to participate in
the Plan. 5. ADMINISTRATION
Full power and authority to construe,
interpret and administer the Plan shall be vested in the Company
and the Committee. This power and authority includes, but is not
limited to, selecting Compensation eligible for deferral, selecting
investment indices, establishing deferral cycles for purposes of
Section 9(b), establishing deferral terms and conditions, and
adopting modifications,
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amendments and procedures as may be deemed necessary,
appropriate or convenient by the Committee. Decisions of the
Company and the Committee shall be final, conclusive and binding
upon all parties. Day-to-day administration of the Plan shall be
the responsibility of Corporate Human Resources. 6.
PARTICIPANT ACCOUNTS
(a) Upon election to participate
in the Plan, there shall be established a Retirement Account and/or
In-Service Account, as designated by the Participant, to which
there shall be credited any Deferred Compensation, as of each
Credit Date. In addition, matching credits shall be allocated to a
Participant’s Retirement Account in accordance with
Section 6(b). Each such Compensation Account shall be credited
(or debited) on each Accounting Date with income (or loss) based
upon a hypothetical investment in any one or more of the investment
options available under the Plan, as prescribed by the Committee
for the particular compensation credited, which may include a
Common Stock Fund, as elected by the Participant under the terms of
Section 8. (b) Matching
credits will be made to the Plan on behalf of a Participant. The
matching credit will be the matching contribution that would have
been made to the Arch Coal, Inc. Employee Thrift Plan (without
regard to any applicable limitations of the Code) had the deferrals
to this Plan been contributed to the Thrift Plan, reduced by the
amount of matching contributions made on the Participant’s
behalf to the Thrift Plan; provided that:
(i) If the
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