PERFORMANCE UNITS AGREEMENT
Exhibit 10.36
2007 Award
THIS AGREEMENT, dated January 2, 2007 (the “Grant Date”), is made by and between
PEABODY ENERGY CORPORATION, a Delaware corporation (the “Company”), and the undersigned
employee of the Company or a Subsidiary (as defined below) or an Affiliate (as defined below) of
the Company (“Grantee”).
WHEREAS, the Company wishes to afford the Grantee the opportunity to participate in future
increases in Company value;
WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined) appointed to administer the Plan has
determined that it would be to the advantage and best interest of the Company and its stockholders
to grant the Performance Units provided for herein to the Grantee as an incentive for increased
efforts during his or her term of office with the Company or its Subsidiaries or Affiliates, and
has advised the Company thereof and instructed the undersigned officer to issue said Performance
Units;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the meanings
specified below. Capitalized terms not otherwise defined in this Agreement shall have the meanings
specified in the Plan.
Section 1.1 — “Affiliate” shall mean any other Person directly or indirectly
controlling, controlled by, or under common control with the Company. For the purposes of this
definition, the term “control” (including, with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”), as applied
to any Person, means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
Section 1.2 — “Board of Directors” or “Board” shall mean the Board of
Directors of the Company.
Section 1.3 — “Cause” shall mean (i) any material and uncorrected breach by Grantee of
the terms of his or her employment agreement with the Company, if any, including, but not limited
to, engaging in action in violation of any restrictive covenants therein, (ii) any willful fraud or
dishonesty of Grantee involving the property or business of the Company, (iii) a deliberate or
willful refusal or failure of Grantee to comply with any major corporate policy of the Company that
is communicated to Grantee in writing or (iv) Grantee’s conviction of, or plea of nolo contendere
to, any felony if such conviction shall result in his or her imprisonment;
provided that, with respect to clauses (i), (ii) and (iii) above, Grantee shall have 10 days
following written notice of the conduct which is the basis for the potential termination for Cause
within which to cure such conduct to prevent termination for Cause by the Company. In the event
that Grantee is terminated for failure to meet performance goals, as determined by the CEO, such
termination shall be considered a termination for Cause for all purposes relating to these
Performance Units.
Section 1.4 — “Committee” shall mean the Compensation Committee of the Company, duly
appointed by the Board as the Administrator under Section 2 of the Plan.
Section 1.5 — “Common Stock” shall mean the common stock of the Company, par value
$0.01.
Section 1.6 — “FMV per Share” shall mean the average of the closing prices of the
shares of Common Stock for the 4 weeks immediately preceding the Determination Date (as defined
below); notwithstanding the foregoing, in the event of a Change of Control, “FMV per Share” shall
mean the per share value of equity based on amounts paid in the Change of Control.
Section 1.7 — “Good Reason” shall mean (i) a reduction by the Company in Grantee’s
base salary, (ii) a material reduction in the aggregate program of employee benefits and
perquisites to which Grantee is entitled (other than a reduction which affects all executives),
(iii) relocation by more than 50 miles from Grantee’s workplace, (iv) any material diminution or
material adverse change in Grantee’s duties, responsibilities or reporting relationships, which
causes Grantee to fall below the level of the executive team, or (v) a material decline in
Grantee’s bonus opportunity.
Section 1.8 — “Incentive Amount” shall mean the Dollar amount payable to Grantee
hereunder with respect to the Performance Units, if any, as calculated in Article IV.
Section 1.9 — “Performance Units” shall mean the units granted on a performance basis
under this Agreement. The value of each Performance Unit shall be equal to the FMV per Share as of
the relevant Determination Date (as defined below).
Section 1.10 — “Person” shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
Section 1.11 — “Plan” shall mean the Peabody Energy Corporation 2004 Long-Term Equity
Incentive Plan, as from time to time amended.
Section 1.12 — Pronouns - The masculine pronoun shall include the feminine and neuter,
and the singular the plural, where the context so indicates.
Section 1.13 — “Retirement” shall mean retirement on or after age 55 with at least ten
(10) years of service with the Company.
Section 1.14 — “Subsidiary” shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of commonly
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controlled corporations other than the last corporation in the unbroken chain then owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.15 — “Termination of Employment” shall mean a termination of the Grantee’s
employment with the Company, a Subsidiary or an Affiliate (regardless of the reason therefor) that
constitutes a “separation from service” as defined in Section 409A of the Internal Revenue Code of
1986, as amended, or applicable guidance or regulations issued thereunder.
ARTICLE II
GRANT OF PERFORMANCE UNITS
GRANT OF PERFORMANCE UNITS
Section 2.1 — Grant of Performance Units. For good and valuable consideration, the
Company hereby grants to the Grantee the number of Performance Units set forth on the signature
page hereof upon the terms and subject to the conditions set forth in this Agreement.
Section 2.2 — No Obligation of Employment. Nothing in this Agreement or in the Plan
shall confer upon the Grantee any right to continue in the employ of the Company or any Subsidiary
or Affiliate or interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate the employment of the
Grantee at any time for any reason whatsoever, with or without Cause.
Section 2.3 — Adjustments in Performance Units. In the event that shares of Common
Stock are, from time to time, changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of a merger, consolidation,
recapitalization event, reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee shall make an appropriate and equitable adjustment in the number and kind
of Performance Units, or other consideration payable hereunder, and the applicable FMV per Share.
Any such adjustment made by the Committee shall be final and binding upon the Grantee, the Company
and all other interested persons.
ARTICLE III
VESTING OF PERFORMANCE UNITS
VESTING OF PERFORMANCE UNITS
Section 3.1 — Performance Units. Unless otherwise provided in this Article III, the
Performance Units shall vest on the 15th of each calendar month, in equal monthly increments, over
the period beginning on the Grant Date and ending on December 31, 2009 (the “Performance
Cycle”).
Section 3.2 — Effect of Certain Events. Notwithstanding the foregoing Section 3.1,
during the Performance Cycle:
(a) upon a Termination of Employment on account of death or Disability, all Performance
Units shall become immediately vested and the Grantee shall be entitled to the Incentive
Amount calculated pursuant to Section 4.1 hereof with respect to the vested Performance
Units;
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(b) upon the earliest of (i) a Termination of Employment on account of Retirement, (ii)
a Termination of Employment by the Company without Cause, or by the Grantee for Good Reason,
or (iii) a Change of Control, the Performance Units shall cease to vest, any and all
Performance Units that remain unvested shall terminate immediately, and the Grantee shall be
entitled to the Incentive Amount calculated pursuant to Section 4.1 hereof with respect to
the vested Performance Units; and
(c) upon the earlier of (i) a Termination of Employment by the Company for Cause, and
(ii) a Termination of Employment by the Grantee without Good Reason, all Performance Units
shall terminate and the Grantee shall not be entitled to any Incentive Amount hereunder
(unless such Incentive Amount previously became due hereunder).
ARTICLE IV
PAYMENT OF INCENTIVE AMOUNT
PAYMENT OF INCENTIVE AMOUNT
Section 4.1 — Determination of Incentive Amount. The Incentive Amount payable to the
Grantee hereunder shall be determined on the earliest to occur of the following events or as soon
as administratively practicable thereafter (the “Determination Date”): (i) December 31,
2009; (ii) a Termination of Employment on account of death, Disability or Retirement; (iii) a
Termination of Employment by the Company without Cause, or by the Grantee for Good Reason; or (iv)
a Change of Control. Any subsequent occurrence of an event described in Article III hereof shall
not constitute a Determination Date, and no further payment shall be made to the Grantee hereunder.
The Incentive Amount shall be equal to the sum of:
(a) Fifty percent (50%) times the number of Performance Units that are vested as of the
Determination Date pursuant to Article III hereof, multiplied by the FMV per Share as of the
Determination Date, and further multiplied by the percentage specified in Exhibit A hereto
with respect to the achievement of such applicable EBITDA ROIC targets as set forth in
Exhibit A hereto; plus
(b) Fifty percent (50%) times the number of Performance Units that are vested as of the
Determination Date pursuant to Article III hereof, multiplied by the FMV per Share as of the
Determination Date, and further multiplied, in the event the Determination Date is December
31, 2009, by the applicable percentage based on the matrix below (the “Applicable
Percentage”):
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TSR Percentile S&P
Applicable Percentage
80%ile |
100 | % | 110 | % | 130 | % | 140 | % | 176 | % | 188 | % | 200 | % | 200 | % | ||||||||||||||||
75%ile |
100 | % | 110 | % | 130 | % | 140 | % | 176 | % | 188 | % | 200 | % | 200 | % | ||||||||||||||||
65%ile |
84 | % | 94 | % | 114 | % | 124 | % | 160 | % | 172 | % | 184 | % | 184 | % | ||||||||||||||||
60%ile |
76 | % | 86 | % | 106 | % | 116 | % | 152 | % | 164 | % | 176 | % | 176 | % | ||||||||||||||||
55%ile |
68 | % | 78 | % | 98 | % | 108 | % | 144 | % | 156 | % | 168 | % | 168 | % | ||||||||||||||||
50%ile |
60 | % | 70 | % | 90 | % | 100 | % | 136 | % | 148 | % | 160 | % | 160 | % | ||||||||||||||||
45%ile |
53 | % | 63 | % | 83 | % | 93 | % | 129 | % | 141 | % | 153 | % | 153 | % | ||||||||||||||||
40%ile |
47 | % | 57 | % | 77 | % | 87 | % | 123 | % | 135 | % | 147 | % | 147 | % | ||||||||||||||||
35%ile |
40 | % | 50 | % | 70 | % | 80 | % | 116 | % | 128 | % | 140 | % | 140 | % | ||||||||||||||||
| 35 | %ile | 40 | %ile | 50 | %ile | 55 | %ile | 70 | %ile | 75 | %ile | 80 | %ile | 85 | %ile |
TSR Percentile — Industry
where:
“TSR Percentile — Industry” represents the Company’s average total shareholder
return (based on the average of the closing prices of the shares of Common Stock for the 4
weeks immediately preceding the Determination Date) expressed as a percentage of an industry
peer group index (weighted at 60% of the total award opportunity hereunder), which peer
group shall include such companies as shall be selected by the Committee in its sole
discretion from time to time; and
“TSR Percentile — S&P” represents the Company’s average total shareholder return
(based on the closing price of the shares of Common Stock on the Determination Date)
expressed as a percentage of the Standard & Poor 500 Mid Cap Index (weighted at 40% of the
total award opportunity hereunder).
Notwithstanding the foregoing, in the event the Company’s average total shareholder return as of
the applicable Determination Date (based on the average of the closing prices of the shares of
Common Stock for the 4 weeks immediately preceding the Determination Date) is negative, (i) no
Incentive Amount shall be paid hereunder if the TSR Percentile — Industry (as defined above) is
less than fifty percent (50%) as of that same date, and (ii) the Applicable Percentage shall not
exceed one hundred fifty percent (150%) if the TSR Percentile — Industry (as defined above) equals
or exceeds fifty percent (50%) as of that same date.
Section 4.2 — Form and Time of Payment. Subject to the timing rules set forth in
subsections (a) and (b) below, the Incentive Amount shall be paid to the Grantee in Common Stock as
soon as administratively practicable after the Determination Date.
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(a) Change of Control. If the Determination Date is triggered by a Change of
Control, the Incentive Amount shall be paid to the Grantee at the time of or as soon as
administratively practicable after the Change of Control. Notwithstanding the definition
set forth in the Plan, for purposes of this Agreement the term “Change of Control” means:
(i) any Person (other than a Person holding securities representing 10% or more
of the combined voting power of the Corporation’s outstanding securities as of May
22, 2001, the Corporation, any trustee or other fiduciary holding securities under
an employee benefit plan of the Corporation, or any corporation owned, directly or
indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation), becomes the beneficial
owner, directly or indirectly, of securities of the Corporation representing 50% or
more of the combined voting power of the Corporation’s then-outstanding securities
(provided, however, that if any Person is considered to own more than 50% of the
total voting power of the stock of the Corporation, the acquisition of additional
stock by the same Person is not considered to cause a change in the control of the
Corporation);
(ii) during any period of twelve consecutive months (not including any period
prior to May 22, 2001), individuals who at the beginning of such period constitute
the Board, and any new director (other than (A) a director nominated by a Person who
has entered into an agreement with the Corporation to effect a transaction described
in clause (i), (iii) or (iv) or (B) a director nominated by any Person (including
the Corporation) who publicly announces an intention to take or to consider taking
actions (including, but not limited to, an actual or threatened proxy contest) which
if consummated would constitute a Change in Control) whose election by the Board or
nomination for election by the Corporation’s shareholders was approved by a vote of
at least three-fourths (3/4) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least a
majority thereof;
(iii) consummation of any merger, consolidation, plan of arrangement,
reorganization or similar transaction or series of transactions in which the
Corporation is involved, other than such a transaction or series of transactions
which would result in the shareholders of the Corporation immediately prior thereto
continuing to own (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power of
the securities of the Corporation or such surviving entity (or the parent, if any)
outstanding immediately after such transaction(s) in substantially the same
proportions as their ownership immediately prior to such transaction(s); or
(iv) the consummation of a sale or disposition by the Corporation of all or
substantially all of the Corporation’s assets, other than a liquidation of the
Corporation into a wholly owned subsidiary (provided, however, that a transfer of
assets by the Corporation is not treated as a change in the ownership of such
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assets if the assets are transferred to: (A) a shareholder of the Corporation
(immediately before the asset transfer) in exchange for or with respect to its
stock; (B) an entity of which the Corporation owns, directly or indirectly, 50% or
more of the total value or voting power; (C) a Person, or more than one Person
acting as a group, that owns, directly or indirectly, 50% or more of the total value
or voting power of all the outstanding stock of the Corporation; or (D) an entity of
which a Person or group described in clause (C) above owns, directly or indirectly,
at least 50% of the total value or voting power).
As used in this Section, the term “Person” (including a “group”) has the meaning provided
under Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (or any
successor section thereto).
(b) Specified Employee. If the Determination Date is triggered by a
Termination of Employment and the Grantee is a “specified employee” (as such term is defined
in Code Section 409A and the applicable regulations or other guidance issued thereunder, but
generally meaning one of the Company’s key employees within the meaning of Code Section
416(i)), the Incentive Amount shall be paid to the Grantee six months after the
Determination Date.
Section 4.3 — Conditions to Issuance of Stock Certificates. The shares of Common
Stock deliverable upon payment of the Incentive Amount may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock deliverable hereunder prior to fulfillment
of all of the following conditions:
(a) The obtaining of approval or other clearance from any state or federal governmental
agency which the Committee shall, in its absolute discretion, determine to be necessary or
advisable; and
(b) The lapse of such reasonable period of time following the Determination Date as the
Committee may from time to time establish for reasons of administrative convenience.
Section 4.4 — Rights as Stockholder. The Grantee shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares of Common Stock
deliverable hereunder unless and until certificates representing such shares shall have been issued
by the Company to the Grantee.
ARTICLE V
MISCELLANEOUS
MISCELLANEOUS
Section 5.1 — Administration. The Committee has the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken
and all interpretations and determinations made by the Committee shall be final and binding
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upon the Grantee, the Company and all other interested persons. No member of the Committee
shall be personally liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Performance Units. In its absolute discretion, the Board of Directors
may at any time and from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement.
Section 5.2 — Performance Units Not Transferable. Neither the Performance Units nor
any interest or right therein or part thereof shall be liable for the debts, contracts or
engagements of the Grantee or his or her successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether
such disposition is voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect; provided, however,
that this Section 5.2 shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3 — Withholding. No later than the date as of which an amount payable
hereunder first becomes includible in the Grantee’s gross income for tax purposes, the Grantee
shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment
of, any applicable withholding taxes.
Section 5.4 — Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary, and any notice to be given
to the Grantee shall be addressed to him or her at the address given beneath his or her signature
hereto. By a notice given pursuant to this Section 5.4, either party may hereafter designate a
different address for notices to be given to him, her or it. Any notice which is required to be
given to the Grantee shall, if the Grantee is then deceased, be given to the Grantee’s personal
representative if such representative has previously informed the Company of his, her or its status
and address by written notice under this Section 5.4. Any notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the United States Postal
Service.
Section 5.5 — Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
Section 5.6 — Applicability of Plan. The Performance Units and the shares of Common
Stock issued to the Grantee, if any, shall be subject to all of the terms and provisions of the
Plan, to the extent applicable to the Performance Units and such shares. In the event of any
conflict between this Agreement and the Plan, the terms of the Plan shall control.
Section 5.7 — Amendment. This Agreement may be amended only by a writing executed by
the parties hereto that specifically states that it is amending this Agreement.
Section 5.8 — Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved by arbitration. Arbitrators shall be selected,
and arbitration shall be conducted, in accordance with the rules of the American Arbitration
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Association. The Company shall pay any legal fees in connection with such arbitration in the
event that the Grantee prevails on a material element of his or her claim or defense.
Section 5.9 — Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement regardless of the law that
might be applied under principles of conflicts of laws.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.
| GRANTEE | PEABODY ENERGY CORPORATION | |||||
| By | ||||||
[Grantee] |
||||||
| Its | ||||||
| Grantee’s Taxpayer Identification | Aggregate number of Performance Units | |||||||||||
Number:
|
granted hereunder: | |||||||||||
| - | - | |||||||||||
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