November 13, 2007 Mr. Don L. Blankenship 24406 U.S. Route 119 Belfry, KY 41514 Dear Don:
Exhibit
10.32
November
13, 2007
Xx. Xxx
X. Xxxxxxxxxxx
00000
X.X. Xxxxx 000
Xxxxxx,
XX 00000
Dear
Don:
This
letter will summarize our agreement regarding your continued employment as
Chairman, Chief Executive Officer and President of Xxxxxx Energy Company,
through December 31, 2009. Your current employment agreement
will expire December 31, 2007. I am very pleased that you will
continue your leadership of Xxxxxx and look forward to the productive years
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 Xxxxxx 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,
/s/ Xxxxx
X. Xxxxx
Admiral
Xxxxx X. Xxxxx
Chairman,
Compensation Committee
Xxxxxx
Energy Company
Acknowledged
and agreed:
/s/ Don L.
Blankenship________ 11/13/07
Xxx X.
Xxxxxxxxxxx Date
APPENDIX A
TO LETTER AGREEMENT
THIS
APPENDIX A is part of a letter agreement dated November 13, 2007 by and
between XXXXXX ENERGY COMPANY, a Delaware corporation (“Xxxxxx”), and XXX X.
XXXXXXXXXXX (the “Executive”), and relates to the Executive’s employment by
Xxxxxx for calendar years 2008 and 2009 subject to extension as set forth in
Section 7 below.
1.2. Cash Incentive Bonus
Awards – A target cash incentive bonus award for fiscal year 2008 of
$900,000 (the “2008 Cash Incentive Bonus Award”) and a target cash incentive
bonus award for fiscal year 2009 of $900,000 (the “2009 Cash Incentive Bonus
Award”), each granted pursuant to the Xxxxxx 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 2008 (for the 2008 Cash Incentive Bonus Award) and for fiscal year
2009 (for the 2009 Cash Incentive Bonus Award) using qualifying performance
criteria contained in the 2006 Plan. The target 2008 Cash Incentive Bonus Award
was granted and performance objectives set by the Compensation Committee of the
Board of Directors on November 13, 2007. The target 2009 Cash Incentive Bonus
Award shall be granted and the performance objectives set by the Compensation
Committee of the Board of Directors of Xxxxxx prior to the commencement of
fiscal year 2009. 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 Cash Incentive Bonus Awards 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 2008 Cash Incentive Bonus
Award, if payable, shall be paid on February 28, 2009 and the 2009 Cash
Incentive Bonus Award, if payable, shall be paid on February 28,
2010.
- A-1-
Unit
Awards were granted and the performance objectives were set by the Compensation
Committee on November 13, 2007 and the 2009 Performance Restricted Unit Awards
shall be granted and the performance objectives shall be set by the Compensation
Committee prior to the commencement of fiscal year 2009. Each particular
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 particular 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 particular performance objective. 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 February 28 of the year following
the completion of the fiscal year of performance to which it relates, based on
the closing market price of Xxxxxx common stock on the New York Stock Exchange
on the last trading day of the fiscal year of performance to which it relates.
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 February 28
of the year following the completion of the fiscal year of performance to which
it relates, based on the closing market price of Xxxxxx common stock on the New
York Stock Exchange on the last trading day of the fiscal year of performance to
which it relates. 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 the Executive
would vest in 10,000 restricted units. That portion of the Level 2 Performance
Restricted Unit Award that vests shall be paid on February 28 of the year
following completion of the fiscal year of performance to which it relates and
shall be based on the closing market price of Xxxxxx common stock on the New
York Stock Exchange on the last trading day of the fiscal year of performance to
which it relates and that portion of the Level 2 Performance Restricted Unit
Award which did not vest shall be forfeited. In the event the Executive
ceases to be employed on or before December 30, 2008 and is entitled to payments
and benefits under the Change in Control Agreement (as defined in Section 1.10
below), the Level 1 Performance Restricted Unit Award that relates to fiscal
year 2008 shall vest and become payable based on the closing market price of
Xxxxxx common stock on the New York Stock Exchange on the date of termination.
In the event the Executive ceases to be employed on or after January 1, 2009 and
on or before December 30, 2009 and is entitled to payments and benefits under
the Change in Control Agreement (as defined in Section 1.10 below), the Level 1
Performance Restricted Unit Award that relates to fiscal year 2009 shall vest
and become payable based on the closing market price of Xxxxxx common stock on
the New York Stock Exchange on the date of termination.
- A-2-
Each
performance objective shall consist of two levels of targeted performance, a
further enhanced level (“Level 3”) and a superior level (“Level 4”), which, for
purposes of this Section 1.5, 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. Each Performance Cash Award shall consist of a
certain number of units attributed to each performance objective earnable, in
whole or in part, by the Executive based on the achievement, in whole or in
part, of the levels of targeted performance set for each performance objective
(the “Earned Units”). The Level 3 Performance Cash Award that may be earned by
the Executive, assuming the satisfaction of Level 3 targeted performance for all
the selected performance objectives combined, shall consist of a total of 90,000
units. The Level 4 Performance Cash Award that may be earned by the Executive,
assuming the satisfaction of Level 4 targeted performance for all the selected
performance objectives combined, shall consist of an additional 200,000 units.
If Level 3 targeted performance for a given performance objective is confirmed,
as set forth above, the Executive shall earn that portion of the Level 3
Performance Cash Award that has been allocated to the achievement of the
targeted performance for such performance objective. If the targeted performance
for a given performance objective is confirmed, as set forth above, to have
fallen between Level 2 and Level 3 targeted performance for such performance
objective, the Executive shall earn that portion of the Level 3 Performance Cash
Award that is equal to the number of units allocated to Level 3 targeted
performance for such performance objective times a fraction, the numerator of
which is that amount of performance achieved over and above Level 2 targeted
performance for such performance objective and the denominator of which is the
difference between Level 3 targeted performance for such performance objective
and Level 2 targeted performance for such performance objective. If Level 4
targeted performance for a given performance objective is confirmed, as set
forth above, the Executive shall earn that portion of the Level 4 Performance
Cash Award that has been allocated to the achievement of the targeted
performance for such performance objective. If the targeted performance for a
given performance objective is confirmed, as set forth above, to have fallen
between Level 3 and Level 4 targeted performance for such performance objective,
the Executive shall earn that portion of the Level 4 Performance Cash Award that
is equal to the number of units allocated to Level 4 targeted performance for
such performance objective times a fraction, the numerator of which is that
amount of performance achieved over and above Level 3 targeted performance for
such performance objective and the denominator of which is the difference
between Level 4 targeted performance for such performance objective and Level 3
targeted performance for such performance objective. The portions of each
Performance Cash Award that are earned by the Executive shall be equal to the
product obtained by multiplying (i) the Earned Units by (ii) the closing
market price of Xxxxxx common stock on the New York Stock Exchange on the last
trading day of the fiscal year of performance to which it relates. In the event
the Executive’s employment is terminated by Xxxxxx or the Executive prior to the
end of fiscal year 2008 then both 2008 Performance Cash Awards shall be
forfeited, except for a termination which occurs on December 31, 2008, in which
case any and all earned portions of each Performance Cash Award shall be paid in
accordance with this Section 1.5. In the event the Executive’s employment is
terminated by Xxxxxx or the Executive on or after January 1, 2009 but prior to
the end of fiscal year 2009 then both 2009 Performance Cash Awards shall be
forfeited, except for a termination which occurs on December 31, 2009, in which
case any and all earned portions of each 2009 Performance Cash Award shall be
paid in accordance with this Section 1.5. Any and all earned portions of each
Performance Cash Award shall be paid on February 28 following completion of the
fiscal year of performance to which it relates. No additional Performance Cash
Award will be granted for the achievement of performance above Xxxxx 0 for any
selected performance objective. As provided in Section 11.1 of the 2006 Plan,
the aggregate maximum amount payable as Incentive Awards under the 2006 Plan
(which in the case of this letter agreement consist of the Cash Incentive Bonus
Award in Section 1.2 above, the cash incentive award in Section 1.3 above and
the Performance Cash Award in this Section 1.5) for any fiscal year shall not
exceed $10,000,000.
- A-3-
- A-4-
provision
so held to be invalid, unenforceable or otherwise illegal will be reformed to
the extent (and only to the extent) necessary to make it enforceable, valid or
legal.
SECTION
5. Governing Law. The
validity, interpretation, construction and performance of this letter agreement
will be governed by and construed in accordance with the substantive laws of the
State of Delaware, without giving effect to the principles of conflict of laws
of such State.
- A-5-