RESTATED EMPLOYMENT
AGREEMENT
This AGREEMENT
(the “Agreement”) is entered into as of
December 31, 2008 (the “Commencement Date”) by and
between Peabody Energy Corporation, a Delaware corporation (the
“Company”), and Alexander C. Schoch
(“Executive”). This Agreement is a continuation, in the
form of a complete restatement to incorporate updated provisions
and new legal requirements, of the most recent employment agreement
between the Company and Executive dated October 16, 2006 (the
“Prior Agreement”).
To induce
Executive to continue to serve as the Company’s Executive
Vice President Law and Chief Legal Officer, the Company desires to
continue to provide Executive with compensation and other benefits
on the terms and subject to the conditions set forth in this
Agreement.
Executive is
willing to accept such continued employment and to continue to
perform services for the Company, on the terms and subject to the
conditions hereinafter set forth.
It is therefore
hereby agreed by and between the parties as follows:
1.1
Subject to the terms and conditions of this Agreement, the Company
agrees to continue to employ Executive during the term hereof as
Executive Vice President Law and Chief Legal Officer. In such
capacity, Executive shall report to the Chairman and Chief
Executive Officer of the Company (the “Chairman and
CEO”) and shall have the customary powers, responsibilities
and authority of executives holding such positions in corporations
of the size, type and nature of the Company, as it exists from time
to time, and as are assigned by the Chairman and CEO.
1.2
Subject to the terms and conditions of this Agreement, Executive
hereby accepts continued employment as Executive Vice President Law
and Chief Legal Officer, measured from the date of the Prior
Agreement, and agrees, subject to any period of vacation or other
approved leave, to continue to devote his or her full business time
and efforts to the performance of services, duties and
responsibilities in connection therewith, subject at all times to
review and control of the Chairman and CEO.
1.3
Subject to Executive’s compliance with all of the provisions
of the Company’s code of conduct and other policies, nothing
in this Agreement shall preclude Executive from engaging in
charitable work and community affairs, from delivering lectures,
fulfilling speaking engagements or teaching at educational
institutions, from managing any investment made by him or her or
his or her immediate family with respect to which Executive is not
substantially involved with the management or operation of the
entity in which Executive has invested (provided that no such
investment in publicly traded equity securities may exceed
five
percent (5%) of
the equity of any entity without the prior written approval of the
Chairman and CEO) or from serving, subject to the prior written
approval of the Chairman and CEO, as a member of boards of
directors or as a trustee of any other corporation, association or
entity, to the extent that any of the above activities do not
materially interfere with the performance of his or her duties
hereunder. For purposes of the preceding sentence, any approval by
the Chairman and CEO required therein shall not be unreasonably
withheld.
2. Term
of Employment . Executive’s term of employment (the
“Term of Employment”) commenced on the date of the
Prior Agreement and, subject to termination as provided herein, has
a one (1)-year term. On a daily basis, the Term of Employment shall
be automatically extended by one additional day unless
Executive’s employment hereunder has terminated under
Section 6.
3.1
Salary . During the Term of Employment, the Company shall
pay Executive a base salary (“Base Salary”) at the
initial rate of $380,000. Such Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company.
During the Term of Employment, the Compensation Committee of the
Board (the “Compensation Committee”) and/or the
Chairman and CEO shall review Executive’s Base Salary in good
faith, at least annually, in accordance with the Company’s
customary procedures and practices regarding the salaries of senior
executives, and may increase Executive’s Base Salary
following such review. “Base Salary” for all purposes
herein shall be deemed to be a reference to the Base Salary in
effect as of any date that requires the determination of
Executive’s Base Salary hereunder.
(a) In addition to
Base Salary, Executive shall be eligible to receive an annual cash
bonus (the “Bonus”) in accordance with a program
developed by the Board, based on achievement of performance targets
established by the Compensation Committee and/or the Chairman and
CEO as soon as practicable at or after the beginning of the
calendar year to which the performance targets relate.
Executive’s Bonus opportunity for the 2008 fiscal year is 80%
of his or her Base Salary. Executive’s maximum Bonus
opportunity for the 2008 fiscal year is 160% of his Base Salary.
The Compensation Committee and/or the Chairman and CEO shall review
Executive’s Bonus opportunity in good faith from time to time
in accordance with the Company’s customary procedures and
practices regarding the bonus opportunities of senior executives,
and may adjust Executive’s Bonus opportunity following such
review. “Bonus” for all purposes herein, except as
otherwise specifically stated, shall be deemed to be a reference to
the Bonus opportunity in effect as of any date that requires the
determination of Executive’s Bonus hereunder.
(b) A Bonus award
for any calendar year shall be payable to Executive at the time
bonuses are paid to executive officers for such calendar year in
accordance with the Company’s policies and practices, but in
no event later than March 15 of the calendar year following
the later of (i) the calendar year in which the Bonus is
earned or (ii) the calendar year in which the Bonus is no
longer subject to a substantial risk of forfeiture
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within the
meaning of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”), and the Treasury regulations
and other guidance in effect thereunder (collectively,
“Section 409A”).
3.3
Equity-Based Compensation . Any outstanding stock option or
other equity-based incentive agreements as of the date hereof shall
remain in full force and effect and shall not be affected by this
Agreement. Executive shall be eligible to receive, from time to
time during the Term of Employment, equity-based compensation
awards under the Company’s equity incentive plan(s) (the
“Long-Term Incentive Awards”). Any such Long-Term
Incentive Awards shall be governed by separate grant agreements.
The grant date value for Executive’s Long-Term Incentive
Awards for the 2008 fiscal year is 150% of his or her Base Salary,
with a maximum potential payout level for Performance Units to be
determined in accordance with the performance matrix set forth in
the 2008 Performance Units Agreement. The Compensation Committee
and/or the Chairman and CEO shall review the grant date value of
Executive’s Long-Term Incentive Awards in good faith from
time to time in accordance with the Company’s customary
procedures and practices regarding the long-term incentive awards
of senior executives, and may adjust the grant date value of future
Long-Term Incentive Awards to Executive following such review.
“Long-Term Incentive Award” for all purposes herein,
except as otherwise specifically stated, shall be deemed to be a
reference to the grant date Long-Term Incentive Award value in
effect as of any date that requires the determination of
Executive’s Long-Term Incentive Award value hereunder or
under any grant agreement.
4.1
Employee Benefit Programs, Plans and Practices; Perquisites
. The Company shall provide Executive with employee benefits and
perquisites at a level (a) commensurate with his or her
position in the Company and (b) at least as favorable to
Executive as the arrangements the Company provides to its other
senior executives that are in effect and open to new participants
on the Commencement Date, including retirement benefits, health and
welfare benefits, the Continuation Benefits (as defined in
Section 6.2(b)(ii)(B)(II)), directors and officers insurance
and/or an indemnification agreement that covers claims arising out
of actions or inactions occurring during the Term of Employment,
and other employee benefits and perquisites which the Company may
make available to its senior executives from time to time in its
discretion on and after the Commencement Date. Executive’s
rights under any employee benefit plans or programs of the Company
as of the Commencement Date shall continue in accordance with plan
or program terms as in effect at any given time.
4.2
Vacation . Executive shall be entitled to the number of
business days paid vacation in each calendar year as determined in
accordance with the Company’s applicable vacation policies,
which shall be taken at such times as are consistent with
Executive’s responsibilities hereunder.
5. Expenses
. Subject to prevailing Company policy or guidelines, the Company
will reimburse Executive for all reasonable expenses incurred by
Executive in carrying out his or her duties on behalf of the
Company, provided that payment or reimbursement of expenses shall
be made promptly and in no event later than December 31 of the
year following the year in which such expenses were incurred, the
amount of such expenses eligible for payment or
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reimbursement
in any year shall not affect the amount of such expenses eligible
for payment or reimbursement in any other year and no such right to
payment or reimbursement shall be subject to liquidation or
exchange for another benefit.
6.
Termination of Employment .
6.1
Termination of Employment for Any Reason . Except as
otherwise specifically provided in this Agreement, the Company or
Executive may terminate Executive’s Term of Employment at any
time for any reason by written notice to the other party at least
thirty (30) days in advance of the date of termination of
Executive’s employment. In the event of a termination of
Executive’s employment for any reason during the Term of
Employment, the Company shall pay to Executive:
(a) within five
(5) business days following the date of termination of
Executive’s employment, a lump sum that includes:
(i) Executive’s Base Salary earned on or prior to the
date of such termination but not yet paid to Executive in
accordance with the Company’s customary procedures and
practices for the payment of executive salaries; (ii) any
business expenses incurred by Executive and properly submitted for
reimbursement, but not yet reimbursed by the Company under
Section 5 above as of the date of such termination; and
(iii) any vacation time accrued but unused as of the date of
such termination;
(b) any benefits
accrued and vested under any of the Company’s employee
benefit programs, plans and practices on or prior to the date of
termination of Executive’s employment; and
(c) if
Executive’s employment terminates due to retirement (as
defined for the applicable plan):
(i) if the
employment termination date precedes the payment date for the Bonus
earned during the calendar year immediately prior to the calendar
year of employment termination, the Bonus Executive earned during
the calendar year immediately prior to the calendar year of
employment termination; and
(ii) a prorated
bonus for the calendar year of termination of Executive’s
employment, calculated as the Bonus Executive would have received
in such year based on actual performance multiplied by a fraction,
the numerator of which is the number of business days that
Executive was employed during the calendar year of termination and
the denominator of which is the total number of business days
during the calendar year of termination.
Any bonus due
under paragraph (i) or (ii) above shall be payable when
annual bonuses are paid to other senior executives of the Company,
but in no event later than March 15 of the calendar year
following the later of (A) the calendar year in which the
bonus is earned or (B) the calendar year in which the bonus is
no longer subject to a substantial risk of forfeiture within the
meaning of Section 409A.
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The amounts
described in (a) and (b) above are collectively referred
to herein as the “Accrued Obligations” and shall be
paid in accordance with the terms of such Company programs, plans
and practices. The Accrued Obligations shall be paid in addition to
any amounts payable under any other provision of this
Section 6 due to the termination of Executive’s
employment. Any business expenses incurred by Executive before his
or her employment termination date and properly submitted for
reimbursement before or within ninety (90) days after the
employment termination date shall be processed and paid in
accordance with Section 5.
6.2
Termination by the Company without Cause or Termination by
Executive for Good Reason .
(a)
Notice Requirements .
(i) General
. Except as otherwise provided in paragraph (ii) below with
respect to a Good Reason termination, the Company or Executive may
terminate Executive’s Term of Employment at any time for any
reason by written notice to the other party at least thirty
(30) days in advance of the date of termination of
Executive’s employment.
(ii) Good
Reason Notice Requirements and Cure Period . If Executive
terminates his or her employment during the Term of Employment for
Good Reason (as defined in Section 6.2(d) hereof), Executive
shall provide written notice to the Company at least forty-five
(45) days in advance of the date of termination, such notice
shall describe the conduct Executive believes to constitute Good
Reason and the Company shall have the opportunity to cure the Good
Reason within thirty (30) days after receiving such notice. If the
Company cures the conduct that is the basis for the potential
termination for Good Reason within such thirty (30)-day period,
Executive’s notice of termination shall be deemed withdrawn.
If Executive does not give notice to the Company as described in
this Section 6.2(a)(ii) within ninety (90) days after an
event giving rise to Good Reason, Executive’s right to claim
Good Reason termination on the basis of such event shall be deemed
waived.
(i) Severance
Payment . If Executive’s employment is
terminated:
(A) by the Company
for a reason other than Cause (as defined in Section 6.3(b)
hereof), Disability (as defined in Section 6.4 hereof) or
death, or
(B) by Executive
for Good Reason (as defined in Section 6.2(d)
hereof),
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and such
termination constitutes a Separation from Service (as defined in
Section 6.2(c) hereof), the Company, as severance, shall pay to
Executive an amount (the “Severance Payment”) equal to
the total of:
(I) one
(1) times Executive’s Base Salary; plus
(II) an additional
amount equal to one (1) times the annual average of the actual
Bonus awards paid to Executive by the Company for the three
(3) calendar years preceding the date of Executive’s
employment termination (or, if Executive has not been employed by
the Company for three (3) full calendar years as of the date
his or her employment is terminated, for the two (2) calendar
years or one (1) calendar year, as applicable, for which he or she
has been so employed and eligible to receive a Bonus);
plus
(III) six percent
(6%) of Executive’s Base Salary (to compensate Executive for
Company contributions he or she otherwise might have received under
the Company’s retirement plan).
The Company
shall pay to Executive (x) one-half ( 1 / 2
) of such Severance Payment in a
lump sum payment on the earlier to occur of Executive’s death
or the first business day immediately following the six (6)-month
anniversary of Executive’s Separation from Service and
(y) the remaining one-half ( 1 / 2
) of the Severance Payment in six
(6) substantially equal monthly payments beginning on the first day
of the month next following the initial lump sum
payment.
(ii) Unpaid
Bonus, Prorated Bonus and Continuation Benefits . In addition,
if Executive’s employment is terminated:
(A) by the Company
for a reason other than Cause (as defined in Section 6.3(b)
hereof), Disability (as defined in Section 6.4 hereof) or
death, or
(B) by Executive
for Good Reason (as defined in Section 6.2(d)
hereof),
and such
termination constitutes a Separation from Service, the following
provisions shall apply:
(I) Unpaid
Bonus and Prorated Bonus . The Company shall pay to Executive
(aa) any unpaid Bonus earned by Executive with respect to the
year immediately preceding the year of termination, if any, and
(bb) a prorated bonus (the “Prorated Bonus”) for
the calendar year of termination of Executive’s employment,
calculated as the Bonus Executive would have
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received in
such year based on actual performance multiplied by a fraction, the
numerator of which is the number of business days during the
calendar year of termination that Executive was employed and the
denominator of which is the total number of business days during
the calendar year of termination. The unpaid Bonus and the Prorated
Bonus shall be payable when annual bonuses are paid to other senior
executives of the Company, but in no event later than March 15
of the calendar year following the later of (1) the calendar
year in which the Bonus is earned or (2) the calendar year in
which the Bonus is no longer subject to a substantial risk of
forfeiture within the meaning of Section 409A.
(II)
Continuation Benefits . Executive shall be entitled to
continuation of life insurance, group health coverage (including
medical, dental, and vision benefits), accidental death &
dismemberment coverage, and the health care flexible spending
account (to the extent required to comply with COBRA continuation
coverage requirements) (collectively, the “Continuation
Benefits”) in accordance with the applicable plan terms for a
period of one (1) year following the date of Executive’s
Separation from Service (the “Benefit Continuation
Period”); provided , however , that Executive
pays the full cost of his or her coverage under such plans, except
that Executive shall pay only the required contributions for any
health care continuation coverage required to be provided to or on
behalf of Executive under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), on
the same basis as any other plan participant electing similar COBRA
continuation coverage under the Company health plan; and
provided , further , that any such coverage shall
terminate to the extent that Executive is offered or obtains
comparable benefits from any other employer during the Benefit
Continuation Period. Executive shall be reimbursed by the Company,
on an after-tax basis, for his or her cost of the Continuation
Benefits (except that the reimbursement for his or her required
contributions for COBRA health care continuation coverage shall be
reduced by an amount equal to the cost paid by an active employee
for similar coverage under the Company health plan). The amount of
expenses eligible for reimbursement or Continuation Benefits
provided during one calendar year shall not affect the expenses
eligible for reimbursement or amount of Continuation Benefits
provided during a subsequent calendar year (except with respect to
health plan maximums imposed on the reimbursement of expenses
referred to in Code Section 105(b)), the right to reimbursement or
Continuation Benefits may not be exchanged or substituted for other
forms of compensation to Executive, and any
reimbursement
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or payment
under the Continuation Benefits arrangements will be paid in
accordance with applicable plan terms and no later than the last
day of the calendar year following the calendar year in which
Executive incurred the expense giving rise to such reimbursement or
payment.
(iii)
Forfeiture . Notwithstanding the foregoing, if Executive
breaches any provision of Section 13 hereof, the remaining
balances of the Severance Payment, the Prorated Bonus, and any
Continuation Benefits shall be forfeited.
(c) “
Separation from Service .” For purposes of this
Agreement, the term “Separation from Service” means a
“separation fr
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