Exhibit 10.1
December 27, 2006
Mr. Don L.
Blankenship
24406 U.S. Route 119
Belfry, KY 41514
Dear Don:
This letter will summarize our
agreement regarding your continued employment as Chairman, Chief
Executive Officer and President of Massey Energy Company, through
December 31, 2007. Your current employment agreement will
expire December 31, 2006. I am very pleased that you will
continue your leadership of Massey and look forward to the
productive year ahead.
The specifics of your compensation
package are included on Appendix A to this letter. In
addition, you generally will continue to participate in the
employee benefit plans and arrangements (e.g., the Massey Energy
Retirement Plan, the Coal Company Salary Deferral and Profit
Sharing Plan, the welfare benefit programs and the nonqualified or
supplemental benefit programs) and be entitled to receive the
perquisites provided to you in keeping with past practice,
including, but not limited to, use of the Company’s
airplanes.
If you have any questions regarding
the terms and conditions of your employment or the proposed
compensation package included on Appendix A, please do not
hesitate to call me. If the offer details are acceptable, please
acknowledge by signing and dating one copy of this letter and
return it to me.
Sincerely,
|
|
|
|
|
Admiral Bobby
R. Inman
|
|
Chairman,
Compensation Committee
|
|
Massey Energy
Company
|
Acknowledged and agreed:
APPENDIX A TO LETTER AGREEMENT
THIS APPENDIX A is part of a
letter agreement dated December 27, 2006 by and between MASSEY
ENERGY COMPANY, a Delaware corporation (“Massey”), and
DON L. BLANKENSHIP (the “Executive”), and relates to
the Executive’s employment by Massey for calendar year 2007
subject to extension as set forth in Section 7
below.
SECTION 1. Compensation
.
1.1. Base Monthly Salary
– $83,333.
1.2. Cash Incentive Bonus
Award – A target cash incentive bonus award of $900,000
(the “Cash Incentive Bonus Award”) granted pursuant to
the Massey Energy Company 2006 Stock and Incentive Compensation
Plan, as such plan may be amended from time to time (the
“2006 Plan”) based on the achievement of certain
performance objectives for fiscal year 2007 using qualifying
performance criteria contained in the 2006 Plan. The target Cash
Incentive Bonus Award shall be granted and the performance
objectives set by the Compensation Committee of the Board of
Directors of Massey prior to the commencement of fiscal year 2007.
There shall be a threshold level of performance for each
performance objective below which no payment shall occur, a target
level of performance, and a maximum level of performance, the value
of which can be up to two and a half times the target amount, above
which no additional payment will occur. The achievement of the Cash
Incentive Bonus Award for purposes of this Section 1.2 shall
be confirmed by the Chief Financial Officer and the Compensation
Committee and may be adjusted at the sole discretion of the
Compensation Committee in a manner consistent with the
performance-based compensation rules of Section 162(m) of the
Internal Revenue Code, as amended (the “IRC”), and as
permitted by the 2006 Plan. The Cash Incentive Bonus Award, if
payable, shall be paid on or about February 29,
2008.
1.3. Long Term Incentive
Awards – A $300,000 target cash incentive award granted
pursuant to the 2006 Plan based on the achievement of a certain
performance objective using qualifying performance criteria
contained in the 2006 Plan (with a threshold level of performance
below which no payment shall occur, a target level of performance,
and a maximum level of performance, the value of which can be up to
two times the target amount, above which no additional payment will
occur); 50,000 non-qualified stock options granted under the 2006
Plan with service-based vesting; 12,700 shares of restricted stock
granted pursuant to the 2006 Plan with service-based vesting; and
7,300 restricted units granted pursuant to the 2006 Plan with
service-based vesting. The Long Term Incentive Awards will be
subject to all the terms, conditions, and performance and
service-based vesting requirements of the November 12, 2006
grants made to participants in Massey’s 2007 Long Term
Incentive Program with the following exception regarding the
non-qualified stock options, such options must be exercised by the
Executive in the first twenty days exercise is permissible for the
Executive pursuant to Massey’s trading window policy and
applicable securities laws following their vesting, otherwise they
will be automatically forfeited.
- A-1 -
1.4. Performance-Based Restricted
Unit Awards – Two performance-based restricted unit
awards (each a “Performance Restricted Unit Award”),
granted pursuant to the 2006 Plan, which shall vest based on the
achievement of certain performance objectives for fiscal year 2007
using qualifying performance criteria contained in the 2006 Plan.
The Performance Restricted Unit Awards shall be granted and the
performance objectives set by the Compensation Committee prior to
the commencement of fiscal year 2007. Each performance objective
shall consist of two levels of targeted performance, a threshold
level (“Level 1”) and an enhanced level (“Level
2”), which, for purposes of this Section 1.4, if
achieved, shall be confirmed by the Chief Financial Officer and the
Compensation Committee and which may be adjusted at the sole
discretion of the Compensation Committee in a manner consistent
with the performance-based compensation rules of
Section 162(m) of the IRC, and as permitted by the 2006 Plan.
The Level 1 Performance Restricted Unit Award shall be for a total
of 120,000 restricted units, comprised of a certain number of
restricted units attributed to each performance objective, and the
Level 2 Performance Restricted Unit Award shall be for a total of
70,000 restricted units, comprised of a certain number of
restricted units attributed to each performance objective. Both
awards shall be granted on or before December 28, 2006. If
Level 1 targeted performance for a given performance objective is
confirmed as set forth above, the Executive shall vest in that
portion of the Level 1 Performance Restricted Unit Award that has
been allocated to the achievement of the targeted performance for
such performance objective and that portion of the Level 1
Performance Restricted Unit Award that has vested shall be paid on
or about February 29, 2008 based on the closing market price
of Massey common stock on the New York Stock Exchange on the last
trading day of 2007. If Level 1 targeted performance for a given
performance objective is not confirmed as set forth above that
portion of the Level 1 Performance Restricted Unit Award that has
been allocated to the achievement of the targeted performance for
such performance objective shall be forfeited. If Level 2 targeted
performance for a given performance objective is confirmed as set
forth above, the Executive shall vest in that portion of the Level
2 Performance Restricted Unit Award that has been allocated to the
achievement of the targeted performance for such performance
objective and that portion of the Level 2 Performance Restricted
Unit Award that has vested shall be paid on or about
February 29, 2008 based on the closing market price of Massey
common stock on the New York Stock Exchange on the last trading day
of 2007. If the targeted performance for a given performance
objective is confirmed, as set forth above, to have fallen between
Level 1 and Level 2 targeted performance for such performance
objective, the Executive shall vest in that portion of the Level 2
Performance Restricted Unit Award that is equal to the number of
restricted units allocated to Level 2 targeted performance for such
performance objective times a fraction, the numerator of which is
that amount of performance achieved over and above Level 1 targeted
performance for such performance objective and the denominator of
which is the difference between Level 2 targeted performance for
such performance objective and Level 1 targeted performance for
such performance objective. For example, if the number of
restricted units allocated to Level 2 targeted performance for a
certain performance objective was 30,000 and only one-third of
Level 2 targeted performance for such performance objective was
achieved, then th
