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Exhibit 10.34
EMPLOYMENT AGREEMENT
AGREEMENT, as of the date set forth on the signature page
hereof, by and between Peabody Energy
Corporation, a Delaware corporation (the
"Company") and the undersigned executive
(the "Executive").
RECITALS
In order to induce Executive to serve in the executive team
position set forth on the signature page
hereof, the Company desires to provide
Executive with compensation and other
benefits on the terms and conditions set
forth in this Agreement.
Executive is willing to accept such employment and perform
services for the Company, on the terms and
conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as
follows:
1.
Employment.
1.1 Subject to
the terms and conditions of this
Agreement, the Company agrees to employ
Executive during the Term hereof in the
executive team position set forth on the
signature page hereof. In such
capacity, Executive shall report to Irl F.
Engelhardt (the "CEO"), 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, as it exists from time to time,
and as are assigned by the Board of
Directors of the Company (the "Board") and
the CEO.
1.2 Subject to
the terms and conditions of this
Agreement, Executive hereby accepts
employment in the executive team position
set forth on the signature page hereof
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commencing as of the date hereof (the
"Commencement 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, subject at all times
to review and control of the Board or
the CEO.
1.3 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 his immediate family
with respect to which Executive or such
family member 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
or other property may exceed 5% of the
equity of any entity, without the prior
approval of the CEO or the Board) or from
serving, subject to the prior approval
of the CEO or the Board, 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 duties
hereunder. For purposes of the preceding
sentence, any approval by the CEO or
the Board required therein shall not be
unreasonably withheld.
2. Term
of Employment. Executive's term of employment
under this Agreement (the "Term of
Employment") shall commence on the
Commencement Date and, subject to
termination by the terms hereunder, shall have
an initial term of three years (the
"Initial Term"), which, beginning on the
first anniversary of the Commencement Date,
shall extend thereafter on a
day-to-day basis for an "evergreen"
three-year term.
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3.
Compensation.
3.1 Salary.
During the Term of Employment, the Company
shall pay Executive a base salary ("Base
Salary") at an initial rate as set
forth on the signature page hereof. Base
Salary shall be payable in accordance
with the ordinary payroll practices of the
Company. During the Term of
Employment, the Board and the CEO 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 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.
3.2 Annual
Bonus. In addition to his Base Salary,
Executive shall, commencing with the 2003
fiscal year and continuing each fiscal
year thereafter, be eligible to receive an
annual cash bonus (the "Bonus")
during the term of his employment hereunder
to be developed by the Board, based
on achievement of performance targets
established by the Board in consultation
with the CEO as soon as practicable at the
beginning of the fiscal year for
which the performance targets relate. A
Bonus award shall be payable to
Executive at the time bonuses are paid to
executive officers in accordance with
the Company's policies and practices as set
by the Board in consultation with
the CEO. Notwithstanding the foregoing,
with respect to the 2003 fiscal year,
Executive shall receive a Bonus equal to
the sum of (i) the amount equal to the
prorated target bonus to which Executive is
entitled at current place of
employment, plus (ii) an amount equal to
the Bonus to which Executive would have
been entitled, had he been employed by the
Company during the entire 2003 fiscal
year (assuming the discretionary portion of
such Bonus is paid at target),
multiplied by a fraction the numerator of
which is the number of days in the
period beginning on the Commencement Date
and ending on the last day of the 2003
fiscal
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year and the denominator of which is 365.
Executive's Bonus target for the
portion of the 2003 fiscal year during
which Executive is employed by the
Company is set forth on the signature page
hereof.
3.3 Additional
Lump-sum Payment. In the event Executive
(a) remains in the Company's employ until
Executive attains age fifty-five (55),
(b) terminates employment under section 6.1
on or after age fifty-two, or (c)
dies or becomes disabled, the Company shall
pay Executive (or, in the event of
Executive's death, Executive's estate)
$800,000 in a lump sum as soon as
administratively feasible following the
termination of Executive's employment
with the Company.
3.4 Signing
Bonus and Deferred Compensation Account. (a)
As of the Commencement Date, the Company
grants Executive, as a signing bonus
(the "Signing Bonus"), an amount equal to
the fair market value of 20,000 shares
of the Company's common stock (based on the
average closing price for the
Company's common stock as reported on the
New York Stock Exchange during the
30-day period immediately preceding the
Commencement Date), to be reflected on
the Company's accounting records as
deferred compensation payable to Executive
in a lump sum (with any earnings thereon,
as described below) as soon as
administratively feasible following the
termination of Executive's employment
with the Company. Notwithstanding the
foregoing, the Signing Bonus (and any
earnings thereon) initially shall
constitute unvested and forfeitable deferred
compensation and shall become vested and
nonforfeitable on the date on which
Executive attains age 55 or, if earlier, on
the fifth anniversary of the date on
which Executive becomes the Company's chief
executive officer; provided,
however, that in the event Executive's
employment with the Company is terminated
before the Signing Bonus (and any earnings
thereon) becomes vested and
nonforfeitable pursuant
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to the immediately preceding clause, the
Signing Bonus (and any earnings
thereon) shall be subject to the
following:
(1) In the
event Executive's employment with the Company is
terminated (i) by Executive for Good Reason, (ii) by the
Company
without Cause, or (iii) as a result of Executive's death or
Disability,
the Signing Bonus (and any earnings thereon) shall become vested
and
nonforfeitable as of the date of such termination; and
(2) In the
event Executive's employment with the Company is
terminated for any other reason, the Signing Bonus (and any
earnings
thereon) shall be immediately forfeited.
(b) In the
event Executive's employment with the Company
is terminated before Executive reaches age
55, the amount payable by the Company
under this Section 3.4 (unless the Signing
Bonus is otherwise forfeited pursuant
to Section 3.4(a) hereof) shall be equal to
the greater of (i) the value of the
Signing Bonus as of the Commencement Date,
as determined under Section 3.4(a)
hereof, plus interest thereon, which shall
accrue annually, during the period
beginning on the Commencement Date and
ending on the date of payment (if any) of
the Signing Bonus, at a rate equal to
twelve month LIBOR plus 2, as adjusted on
each anniversary date of the Commencement
Date, and (ii) an amount equal to the
fair market value of 20,000 shares of the
Company's common stock as of the date
of termination of Executive's employment
with the Company (based on the average
closing price for the Company's common
stock as reported on the New York Stock
Exchange during the 30-day period
immediately preceding the date of such
termination).
(c) In the
event Executive's employment with the Company
is terminated after Executive reaches age
55 but before Executive reaches age
62, the amount payable by the Company under
this Section 3.4 (unless the Signing
Bonus is otherwise forfeited pursuant to
Section 3.4(a) hereof) shall be equal
to the greater of (i) the amount to which
Executive would
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have been entitled under Section 3.4(b)
with interest accruing to the date of
termination, without any forfeiture, (ii)
an amount equal to $1,600,000 reduced
by .333% for each month that the
termination date occurs before reaching age 62,
or (iii) an amount equal to the fair market
value of 20,000 shares of the
Company's common stock as of the date of
termination of Executive's employment
with the Company (based on the average
closing price for the Company's common
stock as reported on the New York Stock
Exchange during the 30-day period
immediately preceding the date of such
termination).
(d) In the
event Executive's employment with the Company
is terminated after Executive age 62, the
provisions of the immediately
preceding paragraph shall apply; provided,
however, that the amount described in
Section 3.4(c)(ii) hereof shall be equal to
$1,600,000.
(e)
Notwithstanding anything herein to the contrary,
Executive shall not be deemed to have any
beneficial ownership interest in any
reserve, account, fund or other asset of
the Company and shall be an unsecured
general creditor of the Company for
purposes of this Section 3.4. For purposes
of valuing any shares under this section
3.4, an adjustment shall be made to
account for the new number or new kind of
shares of the Company or other
securities of the Company due to a merger,
consolidation, recapitalization
event, reclassification, stock split, stock
dividend, combination of shares, or
otherwise.
4.
Employee Benefits.
4.1
Equity-Based Compensation. Simultaneously with the
execution of this Agreement, the Company
and Executive are entering into the
Restricted Stock Grant Agreement, and the
Option Grant Agreement in the forms
attached hereto as Exhibits A and B,
respectively
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(together with any other agreement approved
by the Board and designated by the
Board an "Ancillary Document" for purposes
of this Agreement, the "Ancillary
Documents").
4.2 Employee
Benefit Programs, Plans and Practices;
Perquisites. 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,
including the Continuation Benefits (as
defined herein), Directors and Officers
("D&O") insurance policy, which covers
claims arising out of actions or inactions
occurring during the Term of
Employment, in accordance with the D&O
insurance policy, and other employee
benefits which the Company may make
available to its senior executives from time
to time in its discretion. The Company
shall also provide Executive with
perquisites which the Company may make
available to its senior executives from
time to time in its discretion.
4.3 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
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.
6.
Termination of Employment.
6.1
Termination Not for Cause or for Good Reason. (a) The
Company or Executive may terminate
Executive's Term of Employment at any time
for any reason by written notice at least
thirty (30) days in advance. If the
Executive's employment is terminated (i) by
the
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Company other than for Cause (as defined in
Section 6.2(b) hereof), Disability
(as defined in Section 6.3 hereof) or death
or (ii) by Executive for Good Reason
(as defined in Section 6.1(b) hereof),
then:
(1) the
Company, as liquidated damages and in lieu of any other
damages therefor, shall (A) continue to pay to Executive Base
Salary
for a period ending on the third anniversary date of such
termination
(the "Continuation Period"), with such payments to be made in
accordance with the terms of Section 3.1 and (B) pay to Executive
an
additional amount equal to three (3) times the higher of (x)
Executive's target Bonus for the year of termination (as
established by
the Board under Section 3.2 hereof), or (y) the annualized average
of
the actual Bonus awards paid to Executive in the three-year
period
prior to such termination (or the total period of Executive's
employment with the Company, if less than three years) (the
"Severance
Payments"). The Severance Payments shall be made in substantially
equal
installments over the Continuation Period in accordance with
Company
payroll practices, unless the CEO or the Board approves payment in
a
lump sum;
(2) the
Company shall pay to Executive (i) any unpaid Bonus earned
by Executive with respect to the year immediately preceding the
year of
termination, if any, and (ii) a prorated bonus (the "Prorated
Bonus")
for the
year of termination, payable when such bonuses are paid to
other senior executives of the Company, calculated as the Bonus
Executive would have received in such year based on the
Company's
actual performance multiplied by a fraction, the numerator of which
is
the number of business days during the year of termination that
Executive was employed and the denominator of which is the total
number
of business days during the year of termination;
(3) the
Company shall also continue to provide Executive during
the Continuation Period with qualified and nonqualified defined
contribution pension, life insurance, medical and other benefits
set
forth on the signature page hereof (collectively, the
"Continuation
Benefits"); provided, however, that the Company shall not be
obligated
to provide any benefits under tax qualified plans which are not
permitted by the terms of such plan or by applicable law or
could
jeopardize the plan's tax status; 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
Continuation Period;
and;
(4)
Executive's equity-based compensation (including any options
and restricted stock) shall be governed by applicable terms and
conditions of the relevant Ancillary Documents.
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(5)
Reimbursable expenses incurred by Executive prior to the
termination of his employment with the Company and not
previously
reimbursed by the Company shall be reimbursed pursuant to Section
5
hereof.
Notwithstanding the foregoing, if Executive
breaches any provision of Section 11
hereof, the remaining balance of the
Severance Payments, the Prorated Bonus and
any Continuation Benefits shall be
forfeited.
(b) For
purposes of this Agreement, "Good Reason" shall
mean (i) a reduction by the Company in
Executiv
