EMPLOYMENT
AGREEMENT
AS AMENDED AND
RESTATED
THIS EMPLOYMENT AGREEMENT (this
“Agreement”), effective as of May 25, 2009 (the
“Effective Date”), is made on May 28, 2009 between
Massey Energy Company, a Delaware corporation (the
“Company”), and Michael K. Snelling (the
“Executive”). This Agreement replaces and
supersedes, as of the Effective Date, the employment agreement
between the Company and the Executive effective as of the
May 25, 2006 and amended and restated on December 23,
2008 (the “Original Agreement”).
WITNESSETH:
WHEREAS, Executive is a senior executive of the
Company or one of its Subsidiaries (as defined in Section 25) and
has made and is expected to continue to make major contributions to
the short-term and long-term profitability, growth and financial
strength of the Company; and
WHEREAS, the Board of Directors of the Company
(the “Board,” as defined in Section 25) recognized
that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in Section 25)
exists and consequently entered into a Change in Control Severance
Agreement dated May 25, 2006 with the Executive, which the
Company and the Executive amended and restated effective
January 1, 2009 (the “Change in Control
Agreement”); and
WHEREAS, the Board has determined that Executive
should be provided with certain employment rights during his
continued employment prior to the generally applicability of the
Change in Control Agreement, as well as certain severance rights in
the event his employment ends under circumstances where the Change
in Control Agreement is inapplicable; and
WHEREAS, the Board has determined that Executive
will not be entitled to payments and benefits under this Agreement
and the Change in Control Agreement with respect to the same set of
circumstances and that it is desirable to provide for appropriate
coordination, without duplication, of payment and benefit rights in
the event Executive becomes entitled to payments or benefits
pursuant to this Agreement and at the same time is entitled to
payments and benefits under the Change in Control Agreement;
and
WHEREAS, in consideration of Executive’s
continued employment with the Company, the Company desired to
provide Executive with certain compensation and benefits set forth
in this Agreement in order to ameliorate the financial and career
impact on Executive in the event Executive’s employment with
the Company is terminated for certain reasons prior to a Change in
Control; and
WHEREAS, the Company and the Executive now
desire to replace the Original Agreement, effective as of the
Effective Date.
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements hereinafter set
forth (including definitions of capitalized terms which are set
forth in Section 25 and throughout this Agreement) and intending to
be legally bound hereby, the Company and Executive agree as
follows:
1. Employment .
(a) Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive during the term
hereof as a senior executive of the Company or one of its
Subsidiaries (as defined in Section 25). In such capacity,
Executive shall report to such person as the President and Chief
Executive Officer of the Company shall determine, and shall have
the customary powers, responsibilities and authorities of
executives holding such positions in corporations of the size, type
and nature of the Company or Subsidiary which employs him, as it
exists from time to time, and as are assigned by the President and
Chief Executive Officer of the Company.
(b) Subject to the terms and conditions of this
Agreement, Executive hereby accepts such employment originally
commencing as of the Effective Date and agrees, subject to any
period of vacation and sick leave, to devote his full business time
and efforts to the performance of services, duties and
responsibilities in connection therewith.
2. Term of Agreement .
(a) Regular Term . The term of
this Agreement (the “Term”) commenced on the Effective
Date and shall continue until May 25, 2012.
(b) Termination of Agreement Upon a Change in
Control . Notwithstanding the foregoing, this
Agreement shall automatically terminate if Executive is employed by
the Company or any Subsidiary (as defined in Section 25) at the
time a Change in Control occurs.
3. Compensation .
(a) Salary . During the Term, the Company
shall pay Executive a base salary (“Base Salary”) at an
annual rate of $340,000 effective as of June 1,
2009 (subject, however, Executive’s waiver, if
any, in effect on the day before the Effective Date of part of his
otherwise payable base salary for certain purposes, which waiver
shall remain effective until revoked). Base Salary shall be payable
in accordance with the ordinary payroll practices of the Company
(but no less frequently than monthly). During the Term, the Board
shall, in good faith, review, at least annually, Executive’s
Base Salary in accordance with the Company’s customary
procedures and practices regarding the salaries of senior
executives and may, if determined by the Board to be appropriate,
increase, but not decrease, Executive’s Base Salary following
such review. “Base Salary” for all purposes herein
shall be deemed to be a reference to any such increased
amount.
(b) Annual Bonus . In addition to his
Base Salary, during the Term, Executive shall be eligible to
receive annual cash bonus awards for fiscal years 2010, 2011 and
2012 of $210,000, which amount may be increased at the discretion
of the Compensation Committee. Each annual cash bonus award shall
be subject to the terms and conditions set forth by the
Compensation Committee of the Board for each fiscal year. Except as
provided herein, the annual cash bonus awards shall be payable to
Executive at the time bonuses are paid to other similarly situated
executives of the Company and its Subsidiaries in accordance with
the Company’s policies and practices as set by the
Board.
(c) Long-term Incentive Awards . During
the Term, Executive shall be eligible to receive long-term
incentive awards as a Level 2 participant in the Company’s
long-term incentive awards program. The long-term incentive awards
shall be subject to the terms and conditions set forth by the
Compensation Committee of the Board for each long-term incentive
period. Except as provided herein, long-term cash incentive awards
shall be payable or shall vest, as the case may be, at the time
such awards are paid or vest for similarly situated executives of
the Company and its Subsidiaries in accordance with the
Company’s policies and practices as set by the
Board.
(d) Existing Equity- and Cash-Based
Compensation . Any outstanding agreement made with Executive
under the Company’s long-term cash and equity incentive
program, including, stock option, restricted stock, restricted
unit, other equity- or cash-based incentive awards or other equity-
or cash-based incentive agreements as of the Effective Date and the
date hereof (the “Ancillary Documents”) shall remain in
full force and effect and shall not be affected by this Agreement,
except as set forth in Section 6(c).
4. Employee Benefit Programs, Plans and
Practices; Perquisites .
(a) In General . The Company
shall provide Executive while employed hereunder with coverage
under such employee benefit plans (commensurate with his position
in the Company and to the extent permitted under any employee
benefit plan) in accordance with the terms thereof, Directors and
Officers insurance policy, which covers claims arising out of
actions or inactions occurring during the Term, in accordance with
the Directors and Officers insurance policy, and other employee
benefits which the Company may make available to other similarly
situated executives of the Company and its Subsidiaries from time
to time in its discretion. The Company also shall provide Executive
while employed hereunder with perquisites which the Company may
make available to other similarly situated executives of the
Company and its Subsidiaries from time to time in its
discretion.
(b) Supplemental Benefit Plan
Participation . Notwithstanding anything to the contrary in the
foregoing, Executive shall be provided participation in the A. T.
Massey, Inc. Supplemental Benefit Plan (the “SERP”),
subject to the following: (i) Executive’s retirement
benefit shall be equal to the excess of (A) the retirement
benefit amount to which he would be entitled assuming he
participated in the “Coal Company Plan” component of
the Massey Energy Retirement Plan (the “MERP”), but
determined without regard to the limits set forth in section
401(a)(17) and 415, if applicable, of the Code (as defined in
Section 25), over (B) the actuarial value (as determined
pursuant to the SERP) of his actual MERP benefit; (ii) his
SERP benefit shall not become vested unless he remains an employee
of the Company or one of its affiliates until May 24, 2014;
and (iii) any election by Executive to receive his SERP
benefit payment at the later of his “Normal Retirement
Date” (as defined in the SERP) or his “Separation from
Service” (as defined in the SERP) shall be subject to
applicable requirements under Section 409A of the Code and shall
not be effective if Executive vests in his SERP benefit earlier
than 12 months after he is designated as a participant in the
SERP.
5. Expenses . Subject to prevailing
Company policy or such guidelines as may be established by the
Board, the Company will reimburse Executive for all reasonable
expenses incurred by Executive in carrying out his duties no later
than the last day of the year following the year in which the
Executive incurs the reimbursable expense.
6. Termination of Employment .
(a) Employment Rights . Executive and the
Company acknowledge that, except as may otherwise be provided under
this Agreement or any other written agreement between Executive and
the Company or a Subsidiary or as set forth in Section 6(b), the
employment of Executive by the Company is “at will” and
may be terminated by the Company without further
compensation. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company
or Executive to have Executive remain in the employment of the
Company or any Subsidiary.
(b) Termination in a Covered Termination
. Executive shall be entitled to the payments provided in Section
6(c) on account of a Covered Termination. A
“Covered Termination” is the severance of
Executive’s employment that occurs during the Term and prior
to the occurrence of a Change in Control, under circumstances where
Executive is not entitled to any compensation, payment or benefit
under the Change in Control Agreement and due to either (i) a
termination by the Company other than for Cause (as defined in
Section 25) and other than due to Executive’s death or
Disability (as defined in Section 25) or (ii) a termination by
Executive for Good Reason (as defined in Section 25).
(c) Payments and Benefits Upon a Covered
Termination . Subject to the provisions of Sections 7, 8 and 9
hereof, in the event a Covered Termination described in Section
6(b) occurs, the Company shall pay or provide to Executive on or
beginning, as applicable, the first business day that occurs
following sixty (60) days after his Termination Date (as defined in
Section 25):
(i) a lump sum cash payment equal to
Executive’s Base Salary in effect on his Termination Date
from the day following the Termination Date to the end of the Term,
but in no event shall the aggregate amount of such payments exceed
2.5 times Executive’s Base Salary as of the Termination
Date;
(ii) a lump sum cash payment equal to
Executive’s Retention Cash Awards (as defined in Section 25)
that are unpaid as of the Termination Date;
(iii) a lump sum cash payment equal to the sum
of (A) any earned annual cash bonus award for fiscal year
2009, 2010 or 2011 that is unpaid prior to Executive’s
Termination Date (determined without regard to any requirement that
Executive remain employed until the regular payment date therefor)
and (B) the following applicable amount(s) for each of fiscal
years 2009, 2010, 2011 and 2012 that has not ended prior to
Executive’s Termination Date: (I) for 2009,
the target annual cash bonus award, (II) for 2010, $200,000,
(III) for 2011, $200,000, and (IV) for 2012,
$200,000;
(iv) a lump sum cash payment equal to the sum of
(A) any earned long-term cash incentive bonus award for a
long-term performance period that contains, as a last year of
measurement, fiscal year 2009, 2010 or 2011 and that has ended
prior to Executive’s Termination Date that is unpaid as of
the Termination Date (determined without regard to any requirement
that Executive remain employed until the regular payment date
therefor) and (B) the following applicable
amount(s):
(I) any and all target long-term cash incentive
bonus awards for each of the long-term performance periods that
contain, as the first year of measurement, fiscal year 2009 or any
earlier year and that contain, as the last year of measurement
2009, 2010 or 2011 that has not ended prior to Executive’s
Termination Date, and
(II) if Executive’s Termination Date
occurs in 2012, $75,000;
(v) all outstanding equity-based awards granted
to Executive prior to or during the Term of this Agreement but
prior to the Termination Date, including but not limited to stock
options, restricted stock and restricted units, that otherwise
would vest during the Term of this Agreement, shall automatically
be immediately vested on Executive’s Termination Date;
and
(vi) from the day following the Termination Date
to the end of the Term (the “Medical Coverage Period”),
Executive shall continue to receive on a monthly basis the medical
coverage in effect on his Termination Date (or generally comparable
coverage) for himself and, if applicable, his spouse and
dependents, as the same may be changed from time to time for
employees generally, as if Executive had continued in employment
during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to
Executive’s reasonable after-tax cost of continuing
comparable coverage, where such coverage may not be continued by
the Company (or where such continuation would adversely affect the
tax status of the plan pursuant to which the coverage is provided),
with any such cash payments to be made in accordance with the
ordinary payroll practices of the Company (not less frequently than
monthly) for employees generally for the period during which such
cash payments are to be provided.
(A) If Executive does not receive the cash
payment described in the preceding sentence, the Company shall take
all commercially reasonable efforts to provide that the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended
(COBRA), health care continuation coverage period under section
4980B of the Code (as defined in Section 25) shall commence
immediately after the Medical Coverage Period, with such
continuation coverage continuing until the end of applicable COBRA
health care continuation coverage period.
(B) If Executive would have been eligible for
post-retirement medical coverage had he retired from employment
during the Medical Coverage Period, but is not so eligible as the
result of his Covered Termination, then at the conclusion of the
benefit continuation period described in (A) above, the Company
shall take all commercially reasonable efforts to provide Executive
on a monthly basis with additional continued group medical coverage
comparable to that which would have been available to him from time
to time under the Company’s post-retirement medical program,
for as long as such coverage would have been available under such
program, or, as an alternative, the Company may elect to pay
Executive cash in lieu of such coverage in an amount equal to
Executive’s reasonable after-tax cost of continuing
comparable coverage, where such coverage may not be continued by
the Company (or where such continuation would adversely affect the
tax status of the plan pursuant to which the coverage is provided),
with any such cash payments to be made in accordance with the
ordinary payroll practices of the Company (not less frequently than
monthly) for
employees
generally for the period during which such cash payments are to be
provided.
Notwithstanding anything to the contrary herein,
in no event shall this Agreement entitle Executive to receive more
than one payment for any award granted to Executive; if any award
is earned or otherwise payable (other than as provided in this
Agreement) but unpaid, any payment with respect to such award
pursuant to this Agreement will be considered a full satisfaction
of Executive’s rights with respect to such award; and if
Executive has elected to defer the payment of one or more, or any
portion, of any payment otherwise due to be made without regard to
this Agreement into a nonqualified deferred compensation plan
maintained by the Company or any of its Subsidiaries, then in lieu
of payment directly to Executive, such payment, or the applicable
portion thereof, elected to be deferred shall be paid or credited
instead under such nonqualified deferred compensation plan if and
to the extent that payment pursuant to this Agreement would be
considered an impermissible acceleration or change in the time or
form of payment thereof in violation of the requirements of Section
409A of the Code (as defined in Section 25).
Notwithstanding the foregoing or any other
provision of this Agreement or any Change in Control Agreement, the
Company and Executive explicitly agree that Executive will not be
entitled to payments and benefits under this Agreement and under
any Change in Control Agreement with respect to the same set of
circumstances and in the event Executive becomes entitled to
payments or benefits pursuant to this Agreement and at the same
time is entitled to payments and benefits under any Change in
Control Agreement with respect to the same set of circumstances,
Executive shall only be entitled to those payments and benefits
under, and only be subject to the other applicable provisions of,
this Agreement or the Change in Control Agreement (to the total
exclusion of the payment and benefit rights and terms and
conditions of the other agreement) based solely on which agreement
provides in the aggregate, on an after-tax basis, the greatest
value to Executive when each agreement’s payments and
benefits are reasonably valued. Such valuation shall be
determined in the sole and absolute discretion of the
Company.
(d) Cessation of Employment on Account of
Disability, Cause or Death . Notwithstanding anything in this
Agreement to the contrary, if Executive’s employment
terminates on account of Disability, Executive shall be entitled
only to receive disability benefits under any disability program
maintained by the Company that covers Executive, and Executive
shall not be considered to have incurred a Covered Termination
under this Agreement and shall not receive payments and benefits
pursuant to this Section 6. If Executive’s employment
terminates on account of Cause or because of his death, Executive
shall not be considered to have incurred a Covered Termination
under this Agreement and shall not receive payments and benefits
pursuant to this Section 6.
(e) Beneficiaries . Executive shall be
entitled to select (and change, to the extent permitted under any
applicable law) a beneficiary or beneficiaries to receive any
compensation payable hereunder following Executive’s death,
and may change such election, in either case by giving the Company
written notice thereof. In the event of Executive’s death or
a judicial determination of his incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer
to his beneficiary, estate or other legal representative. If
Executive dies without having designated a beneficiary, or if the
beneficiary so designated has predeceased Executive or cannot be
located by the Company within one year after the date when
the
Company
commenced making a reasonable effort to locate such beneficiary,
then Executive's surviving spouse, or if none, then Executive's
estate shall be deemed to be his beneficiary.
7. Nonqualified Deferred Compensation Plan
Omnibus Provisions . Notwithstanding any other provision of
this Agreement, it is intended that any payment or benefit which is
provided pursuant to or in connection with this Agreement which is
considered to be nonqualified deferred compensation subject to
Section 409A of the Code (as defined in Section 25) shall be
provided and paid in a manner, and at such time, including without
limitation payment and provision of benefits only in connection
with a permissible payment event contained in Section 409A occurs
(e.g., death, disability, separation from service from the Company
and its affiliates as defined for purposes of Section 409A of the
Code), and in such form, as complies with the applicable
requirements of Section 409A of the Code to avoid the unfavorable
tax consequences provided therein for
non-compliance. Notwithstanding any other provision of
this Agreement, the Board is authorized to amend this Agreement, to
amend any election made by Executive under this Agreement and/or to
delay the payment of any monies and/or provision of any benefits in
such manner as may be determined by it to be necessary or
appropriate to comply, or to evidence or further evidence required
compliance, with Section 409A of the Code (including any transition
or grandfather rules thereunder). For purposes of this
Agreement, all rights to payments and benefits hereunder shall be
treated as rights to receive a series of separate payments and
benefits to the fullest extent allowed by Section 409A of the
Code. If Executive is a key employee (as defined in
Section 416(i) of the Code without regard to paragraph (5) thereof)
and any of the Company’s stock is publicly traded on an
established securities market or otherwise, then payment of any
amount or provision of any benefit under this Agreement which is
considered to be nonqualified deferred compensation subject to
Section 409A of the Code shall be deferred for six (6) months as
required by Section 409A(a)(2)(B)(i) of the Code (the “409A
Deferral Period”). In the event such payments are
otherwise due to be made in installments or periodically during the
409A Deferral Period, the payments which would otherwise have been
made in the 409A Deferral Period shall be accumulated and paid in a
lump sum as soon as the 409A Deferral Period ends, and the balance
of the payments shall be made as otherwise scheduled. In
the event benefits are required to be deferred, any such benefit
may be provided during the 409A Deferral Period at
Executive’s expense, with Executive having a right to
reimbursement from the Company once the 409A Deferral Period ends,
and the balance of the benefits shall be provided as otherwise
scheduled. For purposes of this Agreement, severance of
employment will be read to mean a “separation from
service” within the meaning of Section 409A of the Code where
it is reasonably anticipated that no further services would be
performed after such date or that the level of bona fide services
Executive would perform after that date (whether as an employee or
independent contractor) would permanently decrease to no more than
20 percent of the average level of bona fide services
performed over the immediately preceding thirty-six (36) month
period (or, if lesser, the period of Executive’s
service).
8. Release . Notwithstanding the
foregoing, no payments shall be made or benefits provided under
Section 6(c) unless Executive executes, and does not revoke, the
Company’s standard written release, substantially in the form
as attached hereto as Appendix A (the “Release”), of
any and all claims against the Company and all related parties with
respect to all matters arising out of Executive’s employment
by the Company (other than any claim or entitlement under an
employee benefit, long term cash or equity compensation plan,
program, arrangement or agreement which is due pursuant to the
terms of such plan, program, arrangement or agreement) or a
termination thereof. Such Release, with the period for revoking the
same having already expired, must be provided to the Company on or
after, but no later than sixty (60) days following,
Executive’s Termination Date.
9. Covenants Not to Compete and Not to
Solicit; Breach of Agreement Obligations by Executive
.
(a) Covenant Not to Compete . In the
event Executive is entitled to receive payments and benefits under
Section 6(c) above, then, for a period of one (1) year following
Executive’s Termination Date, Executive shall not directly or
indirectly engage in (whether as an employee, consultant,
proprietor, partner, director or otherwise), or have any ownership
interest in, or participate in a financing, operation, management
or control of, any person, firm, corporation or business that is a
Restricted Business in a Restricted Territory without the prior
written consent of the Board. For this purpose, ownership, whether
direct or beneficial, of no more than 5% of the outstanding
securities entitled to vote generally in the election of directors
of a publicly traded corporation shall not constitute a violation
of this provision.
(b) Covenant Not to Solicit . In the
event Executive is entitled to receive payments and benefits under
Section 6(c) above, then, for a period of one (1) year following
Executive’s Termination Date, Executive shall not: (i)
solicit, encourage or take any other action which is intended to
induce any other employee, any supplier or any customer, of the
Company or any Subsidiary to terminate his employment or
relationship with the Company or any Subsidiary; or (ii) interfere
in any manner with the contractual or employment relationship
between the Company and any such employee, supplier or customer of
the Company or any Subsidiary. The foregoing shall not prohibit
Executive or any entity with which Executive may be affiliated from
hiring a former employee of the Company or any Subsidiary;
provided, that such hiring results exclusively from such former
employee’s affirmative response to a general recruitment
effort.
(c) Interpretation . The covenants
contained herein are intended to be construed as a series of
separate covenants, one for each of the counties, parishes, towns,
cities or states or similar local governmental or political
subdivisions of the Restricted Territory. Except for geographic
coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in the preceding subsections. If,
in any judicial proce
