The Annual Meeting of Stockholders of Westmoreland Coal Company will be held at the Corporate Offices of Westmoreland Coal Company,our corporate offices located at 2 North Cascade Avenue, 2^nd Floor, Colorado Springs, Colorado, 80903 on Thursday, August 16, 2007May 20, 2010 at 8:30 a.m. Mountain Daylight Time, for the following purposes:

Only stockholders of record at the close of business on July 3, 2007March 26, 2010 will be entitled to notice of and to vote at the meeting and any postponement or adjournment of the meeting. The proxy statement that follows contains more detailed information as to the actions proposed to be taken.

This proxy statement is solicited on behalf ofbeing furnished by the Board of Directors of Westmoreland Coal Company a Delaware corporation (“Westmoreland” orto holders of our common stock and depositary shares in connection with the “Company”), for usesolicitation by the Board of Directors of proxies to be voted at the Annual Meeting of Stockholders of Westmoreland Coal Company to be held at our corporate offices located at 2 North Cascade Avenue, 2^nd Floor, Colorado Springs, Colorado, 80903 on August 16, 2007.Thursday, May 20, 2010 at 8:30 a.m. Mountain Daylight Time, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders and this proxy statement.

This proxy statement and the enclosed proxy voter card relating to the Annual Meeting of Stockholders are first being mailed and made available to stockholders on our website on or about March 29, 2010.  As of March 26, 2010, the record date, members of Westmoreland Coal Company’s management and directors are the record and beneficial owners of a total of 267,853 shares (approximately 2.5%) of Westmoreland Coal Company’s outstanding common stock and 7,850 (approximately 1.2%) of Westmoreland Coal Company’s outstanding depositary shares.  It is management’s intention to vote all of its shares in favor of each matter to be considered by the stockholders.

QUESTIONS AND ANSWERS ABOUT THE 2010 ANNUAL MEETING OF STOCKHOLDERS

Who can vote at the meeting?

Only stockholders who owned our common stock or depositary shares, each of which represents one quarter of a share of Series A Convertible Exchangeable Preferred Stock, $1.00 par value (“depositary shares”) of record at the close of business on March 26, 2010 are entitled to vote. Each holder of common stock is entitled to one vote per share. Each holder of depositary shares is entitled to one vote per share. The common stock and depositary shares will vote separately on Proposal No. 1 (only common) and Proposal No. 2 (only depositary), but will vote together as a single class on Proposal No. 3. There were 10,619,309 shares of common stock and 640,515 depositary shares outstanding on March 26, 2010.

What constitutes a quorum for the meeting?

The holders of a majority of the aggregate voting power of the common stock and depositary shares outstanding on the record date, present in person or by proxy at the meeting, shall constitute a quorum to conduct business at the meeting. Abstentions and “broker non-votes” (shares held by a broker or nominee that does not have discretionary authority to vote on a particular matter and has not received voting instructions from its client) are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the annual meeting.

How do I vote?

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Via the Internet at www.proxyvote.com; 

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By phone at 1-800-690-6903; or 

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By completing and mailing in a paper proxy card.

If your shares are registered directly in your name with Computershare Trust Company, our transfer agent, you are considered a stockholder of record with respect to those shares and the proxy card and voting instructions have been sent directly to you by Broadridge Financial Solutions, Inc. If, like most stockholders, you hold your shares in “street name” through a stockbroker, bank or other nominee rather than directly in your own name, you may not vote your shares in person at the meeting without obtaining authorization from your stockbroker, bank or other nominee, and you need to submit voting instructions to your stockbroker, bank or other nominee in order to cast your vote.  Generally, you will receive instructions from your stockbroker, bank or other nominee that you must follow in order to have your shares voted.

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We encourage you to register your vote via the Internet. If you attend the meeting, you may also submit your vote in person and any votes that you previously submitted – whether via the Internet, by phone or by mail – will be superseded by the vote that you cast at the meeting. Whether your proxy is submitted by the Internet, by phone or by mail, if it is properly completed and submitted and if you do not revoke ait prior to the meeting, your shares will be voted at the meeting in the manner set forth in this proxy statement or as otherwise specified by you.

Can I change my vote after I return my proxy card?

Yes. Even after you have submitted your proxy card, you may change your vote at any time before its exercisethe proxy is exercised by either filing with our Secretary a written notice to the Secretary of the Company, by executing and deliveringrevocation or a duly executed proxy withcard bearing a later date or by voting in person at the meeting. The Companypowers of the proxy holders will paybe suspended if you attend the expensemeeting in person and so request. However, attendance at the meeting will not, by itself, revoke a previously granted proxy. If you want to change or revoke your proxy and you hold your shares in “street name,” contact your broker or the nominee that holds your shares. Any written notice of this solicitation. This proxy statement and the enclosed proxy were firstrevocation sent to stockholdersus must include the stockholder’s name and must be received prior to the meeting to be effective.

What vote is required to approve each item?

The election of directors (Proposals 1 and 2) requires that each director receive the affirmative vote of a plurality of the Companyvotes cast with respect to that director at the annual meeting. This means that, with respect to each Proposal, the nominees who receive the largest number of “FOR” votes cast will be elected.  Neither broker non-votes nor abstentions will have any effect on the election of directors.  The affirmative vote of all stockholders, having a majority of the votes present in person or about July 24, 2007.represented by proxy at the meeting and entitled to vote on the matter, are necessary to ratify the appointment of Ernst & Young LLP (Proposal 3). Abstentions will have the same effect as a vote against this proposal.  Cumulative voting is not permitted for any of the proposals included in this proxy statement.

How are broker non-votes treated? What is the effect of not casting my vote?

Morris W. Kegley and Jennifer S. Grafton were named by our Board of Directors (the “Board”) as proxy holders. They will vote all proxies, or record an abstention or withholding, in accordance with the directions on the proxy. If no contrary direction is given, the shares will be voted as recommended by the Board. If you hold your shares in street name through a stockbroker, bank or other nominee rather than directly in your own name, your broker or nominee is not permitted to exercise voting discretion with respect to the election of directors. If you do not give your broker or nominee specific instructions, your shares will not be voted on this matter. As brokers may vote on the ratification of our auditors, shares represented by such “broker non-votes” will be voted in favor of Proposal 3.

If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of directors (Proposals 1 and 2). In the past, if you held your shares in street name and you did not indicate how you wanted your shares voted in the election of directors, your bank or broker was allowed to vote those shares on your behalf in the election of directors as they felt appropriate.  However, recent changes in stock exchange rules removed the ability of your bank or broker to vote your uninstructed shares in the election of directors on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote in the election of directors, no votes will be cast on your behalf. Your bank or broker will, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of our independent registered public acc ounting firm (Proposal 3).

How are you handling solicitation of votes?

The accompanying proxy is solicited on behalf of our Board. In addition to solicitations by mail, the Company’sour directors, officers, and employees may solicit proxies by telephone,e-mail facsimile, and personal interview, but will receive no additional compensation for doing so. The CompanyWe will also request brokerage houses, custodians, nominees, and fiduciaries to forward copies of the proxy material to those persons for whom they hold shares and request instructions for voting the proxies. The CompanyWe will reimburse those brokerage houses and other persons for their reasonable expenses for such services.

Do I have any rights of record at the close of business on July 3, 2007 (“record date”) will beappraisal?

Under Delaware law, stockholders are not entitled to votedissenters’ rights on any proposal referred to herein.

Where can I find the voting results of the meeting?

We will announce preliminary general voting results at the meeting and any postponementpublish final detailed voting results on a Form 8-K that we will file within four business days after the meeting.

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How do I submit a stockholder proposal for the 2011 annual meeting?

Any proposal that a stockholder wishes to be considered for inclusion in our proxy statement and proxy card for the 2011 Annual Meeting of Stockholders (the “2011 Annual Meeting”) must be submitted to the Secretary at our offices, 2 North Cascade Avenue, 2nd Floor, Colorado Springs, Colorado 80903, no later than December 7, 2010. In addition, such proposals must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934.

If a stockholder wishes to present a proposal before the 2011 Annual Meeting, but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, such stockholder must give written notice to the Secretary at the address noted above. The Secretary must receive such notice no earlier than January 21, 2011 and no later than February 20, 2011, and the stockholder must comply with the provisions of our bylaws.

Does the Company offer an opportunity to receive future proxy materials electronically?

Yes. If you are a stockholder of record or adjournmenta member of the meeting. On401(k) plan, you may, if you wish, receive future proxy statements and annual reports online rather than receiving proxy materials in paper form. If you elect this feature, you will receive an e-mail message notifying you when the record date, the Company had outstanding 9,119,705 shares of Common Stockmaterials are available, along with a par value of $2.50 per shareweb address for viewing the materials and 640,515 Depositary Shares (each of which representsinstructions for voting by telephone or on the Internet. If you have more than one quarter of a share of Series A Convertible Exchangeable Preferred Stock with a par value of $1.00 per share).

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If you vote ononline, you may sign up for electronic delivery at that time; or

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You may sign up at any matter on which the holders of Common Stock are entitled to vote, except that, when six or more quarterly dividends are accumulated and unpaid — as is presently the case — the holders of the Series A Preferred Stock do not vote with the holders of Common Stock for the election of directors and instead vote separately to elect two directors.FOR THIS REASON, ONLY HOLDERS OF COMMON STOCK WILL BE PERMITTED TO VOTE ON PROPOSAL 1 AND ONLY HOLDERS OF SERIES A PREFERRED STOCK WILL BE PERMITTED TO VOTE ON PROPOSAL 2.We refer to the candidates nominated for electiontime by the holders of our Common Stock as the Common Stockholder Nominees and the candidates nominated for election by the holders of our Series A Preferred Stock as the Depositary Stockholder Nominees.

If you received this proxy statement as if each Depositary Share voted directly and had one vote.

How can I get electronic access to the proxy card for holdersmaterials and the annual report?

This proxy statement and our 2009 Annual Report are available atwww.proxyvote.com.

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DIRECTORS, DIRECTOR NOMINEE AND EXECUTIVE OFFICERS

Director Information

All our directors bring to our Board a wealth of Depositary Shares. If you own both Common Stockleadership experience derived from their service as executives of corporations. Certain individual qualifications and Depositary Shares, you will be sent both proxy cards and you should complete both proxy cards if you wish to vote your respective interests in both the Common Stock and Depositary Shares.

Keith E. Alessi currently serves as a director and un-revoked proxies received by the Company priorour President and Chief Executive Officer.  Since he began working for us in 2007, he has assumed various roles including Executive Chairman and Interim President and Interim Chief Executive Officer.  In addition to the Annual Meeting will be voted in accordancehis work with the stockholders’ specifications marked thereon. In the absence of a specific direction from the stockholder, the proxies will be voted for the election of all named director nominees, for Proposal 3 (the approval of the rights offering), for Proposal 4 (the approval of the standby purchase agreement, as amended, and related matters), for Proposal 5 (the adoption of the 2007 Equity Incentive Plan for Employees and Non-Employee Directors), and for Proposal 6 (the amendment of our certificate of incorporation).

Mr. Klingaman was identifiedAlessi’s wealth of experience in turnaround management, including his roles as a candidate by Mr. Killen, a directorVice-Chairman of the Company,Farm Fresh and Christopher K. Seglem, who was Chairman, Chief Executive Officer of Jackson Hewitt and Telespectrum Worldwide, Inc., gives him unique insights into the hurdles, challenges and opportunities we face and provides him the necessary leadership experience to lead us during this integral transition period.  In addition, Mr. Alessi has extensive public company board experience, including chairing numerous audit committees and serving on compensation, corporate governance and nominating committees.

Thomas J. Coffeyhas been a Partner of B2B CFO Partners, LLC, a professional financial services organization, since 2005.  Prior to 2005, Mr. Coffey was Vice President-Finance, Global Infrastructure Services from 1999 to 2005 and Vice President-Operations Analysis from 1998 to 1999 of Unisys Corporation, a technology services company.

Mr. Coffey has over 25 years of financial and operational management experience working with both public and private companies. He has served as the Chief Financial Officer of a public company, worldwide divisional Chief Financial Officer of a global technology company and a Partner with a Big 4 accounting firm.  His extensive experience is invaluable to our Board’s responsibility for financial and accounting issues.

Michael R. D’Appolonia is President and Chief Executive Officer of Kinetic Systems, Inc., a global provider of process and mechanical solutions to the electronics, solar and biopharmaceutical industries. From 1986 to 2006, Mr. D’Appolonia was President of the Company at the timeNightingale & Associates, LLC, a global management consulting firm providing financial and operational restructuring services. Mr. D’Appolonia is a member of the nomination. board of directors of Exide Technologies, Inc.  In addition, he was a member of the board of directors of The Washington Group International, Inc. from 2001 to 2007.

Mr. Klingaman has significantD’Appolonia’s experience as Chief Executive Officer of a large global organization brings to our Board the perspective of a leader facing the same set of current external economic, social and governance issues.  In addition, Mr. D’Appolonia brings to the Board an extensive knowledge of the Company’s business, having served from 1980construction industry and alternative energy solutions, including solar power and storage solutions for solar and wind energy. Mr. D’Appolonia also has extensive public company board experience, including chairing a compensation committee and serving on audit, corporate governance and nominating committees.

Richard M. Klingaman has been a consultant to 1993 as a director of Westmoreland Resources, Inc., which is now 80%-owned by the Company.natural resources and energy industries since May 1992.  Prior to consulting, Mr. Klingaman was a Senior Vice President ofsenior executive with Penn Virginia Corporation, a natural resources company that owned 39.6%specializing in coal, oil, natural gas, timber, lime and limestone.

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Mr. Klingaman’s decades of December 31, 1991. Mr. Klingaman retired from Penn Virginia Corporation in 1992.

William M. Sternhas been Executive Vice President of Stern Brothers & Company, a broker-dealer since 1999, and has been employed in various capacities, including as a senior executive, in the banking industry for several decades.

Mr. Stern’s current leadership of a broker-dealer, past senior management experience with various banking organizations and trust services) from 1990 until 2003.expertise in financial markets and financial analysis is valuable to our Board’s discussions and oversight of the Company’s capital and liquidity needs. In addition, Mr. Gardner received a BachelorStern vice-chaired the Equity Committee during the Fremont General Company bankruptcy.

Frank T. Vicino, Jr.is the President of Arts degreeF. Vicino Drywall Inc. and F. Vicino and Co. Inc., contracting and construction companies located in Economics from Duke University and a J.D. and MastersSouth Florida.

Mr. Vicino is the largest individual shareholder of Business Administration fromour depositary shares at 17.0% of the University of Virginia. Notwithstanding these discussions, Tontine has not named Mr. Gardneroutstanding shares.  As such, he is uniquely qualified to represent the depositary shareholders as one of its two designees,the preferred stock directors due to his commitment to the goal of maximizing stockholder value.

Executive Officer Information

Keith E. Alessi, our President and Chief Executive Officer, is discussed above under “Director Information.”

Kevin A.Paprzycki joined Westmoreland as Controller and Principal Accounting Officer in June 2006 and was named Chief Financial Officer in April 2008. Prior to Westmoreland, he was Corporate Controller at Applied Films Corporation from 2005 to 2006. Mr. Gardner has not been chosenPaprzycki became a certified public accountant in 1994 and a certified financial manager and certified management accountant in 2004.

Morris W. Kegley joined Westmoreland in October 2005 as Assistant General Counsel and was named General Counsel in August 2007.  Prior to beWestmoreland, he worked in the legal department of Peabody Energy Company from 2004 to 2005. He is a director.

Todd A. Myers joined Westmoreland in January 1, 2004 to the present, none of it, its affiliates,2000 as Vice President, Marketing and any immediate family member of any of its affiliates has accepted any consulting, advisory, or other compensatory fee or payment from Tontine, or, to its knowledge, any affiliate of Tontine or any entity of which Tontine or any affiliate thereof owns 5% or more, and (D) there are no contracts, arrangements, understandings, or relationships (legal or otherwise) between Silverhawk and Tontine with respect to the voting of any shares of Common Stock.

John V. O’Laughlin joined Westmoreland in February 2001 as Vice President, and was promoted to Vice President of Coal Operations in May 2005.  Prior to Westmoreland, Mr. O’Laughlin was Vice President of Mine Operations for Washington Group International, formerly known as Morrison-Knudsen Co.

CORPORATE GOVERNANCE

We are committed to maintaining the Board in a conference call on November 30, 2006. Tontine has owned more

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Risk is inherent with every business, and how well a business manages risk can ultimately influence its success.  We face a number of risks, including economic risks, operational risks, environmental and regulatory risks, and others, such as the impact of competition and weather conditions. Management is responsible for the day-to-day management of risks that we face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management.  In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The Board believes that establishing the right “tone at the top” and that full and open communication between management and the Board is essential for effective risk management and oversight. Our Chairman talks regularly with our CEO to discuss strategy and the risks facing us. Senior management attend the quarterly board meetings and are available to address any questions or concerns raised by the Board on risk management-related matters. Each quarter, the Board receives presentations from senior management on strategic matters involving our operations and is provided extensive materials that highlight the various factors that could lead to risk in our organization. The Board has held nine meetings during 2006. Alla strategic planning session with senior management to discuss strategies, key challenges, and risks and opportunities for us.

While the Board is ultimately responsible for our risk oversight, our Audit Committee and Compensation and Benefits Committee assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. The Compensation and Benefits Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs, as well as succession planning for our directors attended in person, or by telephone, all of the meetingsand executive officers.

Committees of the Board of Directors and all

As of the date of this proxy statement, our Board has five directors and the following five standing committees: (1) Audit; (2) Compensation and Benefits; (3) Nominating and Corporate Governance; (4) Pricing; and (5) Executive. The current committee membership, the number of meetings during the last fiscal year and the function of each of the standing committees are described below.  Each of the standing committees, except for the Pricing and Executive Committee, operate under a written charter adopted by the Board. Allof the committee charters are available on our website at www.westmoreland.com. During fiscal year 2009, the Board held byeight meetings. Each director serving during fiscal year 2009 attended at least 75% of the aggregate of all committees on which they served during 2006Board and which wereapplicable standing committee meetings held during the time they were members of the Board. All directors attended our 2006 annual meeting of stockholders. Resolutions adopted by the Board provideperiod that directorshe served as a director. Directors are expected to attend the annual me eting of stockholders. All directors attended the last annual meeting of stockholders.

(1)The Pricing Committee acted only by unanimous written consent in February 2006. Mr. James Sight was elected to the Board at our 2006 annual meeting and resigned from the Board in November 2006. Mr. Christopher K. Seglem was elected to the Board at our 2006 annual meeting and resigned from the Board in May 2007. Mr. Michael Armstrong was elected to our Board at our 2006 annual meeting and resigned from the Board in July 2007. Messrs. Thomas W. Ostrander and Donald A. Tortorice were elected to the Board at our 2006 annual meeting and are currently serving as directors; they were not nominated for re-election at the 2007 annual meeting. Mr. Seglem served as Chairman of the Board through May 1, 2007. In May 2006, Mr. Killen was named Vice-Chairman, and effective May 2, 2007, Mr. Killen was named interim, non-executive Chairman of the Board.

Audit Committee

The Audit Committee provides oversight of the Boardquality and integrity of Directors met six times during 2006.our accounting, auditing and financial reporting practices. The committee is comprisedexercises its oversight obligations through regular meetings with management, the director of Messrs. Coffey (Chairman), Ostrander,internal controls and Stern. Mr. Tortorice was also a member of the Audit Committee until May 2006 when he became the Chairman of the Compensation and Benefits Committee. The Audit Committee, which reports to the Board of Directors, approves the appointment of our independent registered public accounting firm, monitors the independence and directs the performanceErnst & Young LLP. The Audit Committee is also responsible for oversight of our registered publicrisks relating to accounting firm, and monitors the integrity of ourmatters, financial reporting process and systems of internal controls regarding finance, accounting, and legalregulatory compliance. It also reviewsTo satisfy these oversight responsibilities, the committee separately meets with our registered publicChief Financial Officer, Director of Internal Controls, Ernst & Young LLP and management. The committee also receives periodic reports regarding issues such as the status and findings of audits being conducted by the internal and independent auditors, the status of material litigation, accounting firm the audit plan for our company, our internal accounting controls,changes that could affect our financial statements and the registered public accounting firm’s report to the Audit Committee.proposed audit adjustments. The Board of Directors has determined that Thomas J. Coffey is an “audit committee financial expert” as defined in Item 407(d)(5) ofRegulation S-K.

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Audit Committee Report

Management is responsible for our internal controls and the financial reporting process. Ernst & Young LLP is our independent registered public accounting firm and is responsible for performing an independent audit of our consolidated financial statements in accordance with generally accepted auditing standards and for issuing audit reports on the consolidated financial statements and the assessment of the effectiveness of internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes on behalf of the Board.

In this context, the committee has discussed with Ernst & Young the matters required by Statement of Auditing Standards No. 114,The Auditors Communication With Those Charged With Governance,and has received from and discussed with Ernst & Young the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and discussed with Ernst & Young their independence from Westmoreland and its management.

The Audit Committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls and the overall quality of our financial reporting. The Audit Committee also has also determined that each member ofreviewed and discussed the audited financial statements with management.

Based on the reviews and discussions described above, the Audit Committee including Mr. Coffey, is “independent” underrecommended to the American Stock Exchange’s listing standards, Section 10ABoard that the audited financial statements and assessment of internal controls over financial reporting be included in our Annual Report on Form 10-K for the Securities Exchange Act of 1934, as amended, or the Exchange Act, andRule 10A-3 thereunder. A copy of thefiscal year ended December 31, 2009. The Audit Committee Charter can be found in the Investor Relations section ofhas selected Ernst & Young LLP as our web site at www.westmoreland.com.

Thomas J. Coffey, Chairman

Richard M. Klingaman

William M. Stern

Compensation and Benefits Committee

The Compensation and Benefits Committee of the Board of Directors met six times during 2006. The committee was comprised of Messrs. Killen (Chairman), Armstrong, Stern, and Tortorice until May 2006 and Messrs. Tortorice (Chairman), Armstrong (until his resignation in July 2007), and Klingaman thereafter. Each member of the Compensation and Benefits Committee is “independent” under the American Stock Exchange’s listing standards. This committee is responsible for assuring that the Board, of Directors, various committee chairpersons and committee members, our Chief Executive Officer, other executive officers, and our key management are compensated appropriately and in a manner consistent with our approved compensation strategy, internal equity considerations, competitive practice, and any relevant laws or regulations.  The processesIn addition, the committee reviews our compensation programs to ensure that our programs are not incentivizing imprudent risk-taking, as well as overseeing succession planning. In accordance with its charter, the committee may retain and procedures followed by our Compensationterminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, form and Benefits Committee in consideringdelegate authority to subcommittees and determining executive and director compensation are described below under the heading “Executive and Director Compensation Processes”. A copy of the Compensation and Benefits Committee Charter may be found on the Investor Relations section of our website at www.westmoreland.com.

During 2006,2009, each of Messrs. Armstrong, Killen, Klingaman, Stern,Coffey and TortoriceD’Appolonia served on our Compensation and Benefits Committee. None of these directors was a current or former officer or employee of our company, and none had any related person transaction involving our company.

Compensation Committee Risk Assessment

In early 2010, utilizing various risk assessment tools provided by Buck Consulting, the committee thoroughly reviewed our compensation policies and practices for all employees, including executive officers. As part of the risk assessment, the committee reviewed our compensation programs for certain design features that have been identified by experts as having the potential to encourage excessive risk-taking such as compensation mix overly weighted toward annual incentives and unreasonable goals or thresholds. The committee determined that, for all employees, our compensation programs do not encourage excessive risk and instead encourage behaviors that support sustainable value creation.  The committee, with the assistance of Buck Consulting, intends to continue, on an on-going basis, a process followedof thoroughly reviewing our compensation policies and programs to determine if any risk mitigation programs should be put into place to further discourage imprudent risk-ta king activities.

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Compensation Committee Report

The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on this review and discussion, the Compensation and Benefits Committee recommended to the Board that the Compensation Discussion and Analysis, provided below, be included in this proxy statement.

Michael R. D’Appolonia, Chairman

Thomas J. Coffey

Richard M. Klingaman

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee identifies and recommends individuals qualified to be nominated as members of the Board and considers director candidates brought to the Board by stockholders. The committee also provides oversight on corporate governance matters and provides for the evaluation of Board, committee, and individual director performance.  The committee regularly assesses the mix of skills and industry experience currently represented on the Board, whether any vacancies on the Board are expected due to retirement or otherwise, the skills represented by retiring directors, and additional skills highlighted during the Board self-assessment process that could improve the overall quality and ability of the Board to carry out its functions. In the event vacancies are anticipated, or arise, the Nominating and Corporate Governance Committee to identify and evaluate director candidates when a vacancy exists or is anticipated includes invitations to Board members for recommendations, the collection of information about individuals recommended, meetings to evaluate biographical information and background material relating toconsiders various potential candidates for director and interviews of selected candidatesemploys the same process for evaluating all can didates, including those submitted by membersstockholders. The committee is responsible for ensuring all director nominees undergo a thorough background check prior to nomination or appointment as a director and to review any adverse findings prior to such nomination or appointment.  Candidates may come to the attention of the committee through current Board members, professional search firms, stockholders or other persons.

The committee initially evaluates a candidate based on publicly available information and any additional information supplied by the party recommending the candidate. If the candidate appears to satisfy the selection criteria and the Board.

In considering whether to recommend any particular candidate for inclusion in the Board’s slate of recommended director nominees, the Nominating and Corporate Governance Committee takes into consideration a number of criteria which include the candidate’s integrity,include:  professional work experience; skills; expertise; diversity; personal and professional integrity; character; temperament; business acumen, knowledgejudgment; time availability in light of our business and industry, maturity, experience, diligence, potentialother commitments; dedication; conflicts of interest, willingness to serve as a directorinterest; and regularly attend and participate in Board meetings, and the ability to act in the interests of all stockholders.public company experience. The committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee.  The committee focuses on issues of diversity, such as diversity of education, professional experience and differences in viewpoints and skills. The committee does not have a formal policy with respect to diversity; however, the Board and the committee believe that it is essential that the Board members represent divers e viewpoints. With respect to the nomination of continuing directors for re-election, the individual’s contributions to the Board are also considered. We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a composite mix of skills, experience, and knowledge that will assure that the Board can continue to fulfill its responsibilities.

On March 1, 2010, the Board adopted a retirement policy for directors mandating that directors elected to the Board at our annual meeting will be required to retire from the Board at the first annual meeting of stockholders following the director’s 75th birthday.  The Board grandfathered all current directors who will turn 75 prior to the 2010 annual meeting, making the new retirement policy only applicable to current and future directors who will turn 75 following our 2010 annual meeting.

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders

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Stockholders also have the right under our bylaws to nominate director candidates directly, without any action or recommendation on the part of the Corporate Governance and Nominating Committeecommittee or the Board, by following the procedures set forth in Section 2.6, “Advance Notice of Nominees,” in our bylaws. Among other things, a stockholder wishing to nominate a director candidate for election as a director must give notice to us within the specified time period specified in such section, and the notice must includethat includes the information about the stockholder and the proposed nominee required inby the bylaws. Any stockholder wishing to nominate a candidate for election to the Board without any action or recommendation ofpursuant to the Nominating and Corporate Governance Committee or the Boardbylaw provision must strictly comply with the procedures specified in Section 2.6 of the bylaws. Candidates nominated by stockholders in accordance with thethese procedures set forth in the bylaws will not be included in our proxy statement for the next annual meeting.

The Board has provided a process that permits stockholders to communicate directly with the Board. Stockholders wishing to communicate with us, including the Board, generally are asked to contact the Vice President-Corporate Relations, Diane S. Jones, at Westmoreland Coal Company, 2 North Cascade Ave., 14th Floor, Colorado Springs, Colorado 80903, diane.jones@westmoreland.com,(719) 448-5814, who is primarily responsible for receiving, managing, monitoring, and responding to stockholder communications.

The compensation of our company and (2) the Board affirmatively determines that he does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

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Annual Retainer and Meeting Fees

Our non-employee directors, except for settingour Chairman of the salaries and incentive compensation of our executive officers. The committee’s objective is to oversee and administer compensation programs that attract, retain, reward, and motivate highly qualified executive officers to perform their duties in a competent and efficient manner, increase our long-term profitability, and build stockholder value. The Compensation and Benefits Committee establishes our overall compensation strategy to ensure that our executives are rewarded appropriately and that executive compensation supports Westmoreland’s business strategy and objectives. In discharging its duties, the Compensation and Benefits Committee reviews and determines the compensation, including base salaries, annual incentives, long-term incentives, and other benefits, of our Chief Executive Officer, our Chief Financial Officer, and the three most highly-compensated executive officers other than our Chief Executive Officer and Chief Financial Officer. We refer to these five officers as our named executive officers. The Compensation and Benefits Committee also determines the compensation for other key executives who are not identified in this report.

Long-Term Compensation

Pursuant to establish the agenda2007 equity plan, each non-employee director is entitled to receive, upon his or her election/ re-election to the Board, a grant of restricted stock equal to $30,000 in value with a one-year restriction on resale. Under the 2007 plan, each non-employee director has historically received, as an initial grant upon his or her first joining the Board, equity equal to $60,000 in value. However, in 2010, the Board amended the 2007 plan to eliminate the initial equity award as peer and survey data did not demonstrate comparable initial director grants and the Board did not feel that such an initial grant was necessary to incentivize new directors.

2009 Outstanding Equity Awards at Fiscal Year-End for Compensation and Benefits Committee meetings and in the preparationDirectors

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Table of the SEC. The number of shares beneficially owned by a person includes shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of May 15, 2007. The shares issuable pursuant to these options are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’sour officers and directors and persons who own more than ten percent of a registered class of the Company’sour equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 45 with the SEC and the American Stock Exchange. Officers, directors, and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.NYSE Amex. To the knowledge of management, based solely on its review of such reports, furnished tono person who at any time during the Company, all Section 16(a) filing requirements applicable to the Company’s officers, directors, and greater than ten percent beneficial owners were complied with during thefiscal year ended December 31, 2006.

As of December 31, 2006 the Company2009, we had stock options and stock appreciation rights (“SARs”) outstanding from three shareholder-approved stock plans for employees that were approved by shareholdersstockholders, one stockholder-approved plan for employees and three stock incentive plansnon-employee directors and one plan for non-employee directors that arewas not approved by shareholders.stockholders. The value of a SAR2000 Nonemployee Directors’ Stock Incentive Plan is equal to the appreciation in the market value of a share of the Company’s common stock between the date of grantonly plan not approved by stockholders and the date of exercise.

Westmoreland Coal Company has experienced dramatic changes since its inception in 1854.  Originally focused on underground mining in the Appalachian Basin, we have since divested ourselves of all eastern mining properties and assets, moved our headquarters to the West and purchased five surface coal mining operations.  Since 2001, we have dramatically refocused our energies on becoming an energy company focused on niche coal markets where we take advantage of long-term coal contracts and rail transportation advantages.  To understand our company and the way in which we compensate our executives, it is important to understand our business environment over the last several years and the recent struggles that produces approximately 30 million tonswe have faced.  We believe that fully understanding who we are as a company and the steps we have taken over the last several years to position ourselves to forge ahead into the next decade will provide insight into our past compensation practices and the steps we intend to take in the future to align the pay of coalour executives with creating long-term stockholder value.

Business Environment

Our business is unusual in that a high proportion of our revenues, and generates 1.6 million megawatt hours of electrictherefore cash flows, are contractually set or limited by contractual relationships.  For example, our ROVA power annually. We also broker coal for others, operate power facilities for othersfacility is under contract to provide electricity to its sole customer under contracts that run through 2019.  Under the terms of the contract, the rate at which we are paid is set for the contract term and provide repairmanagement can only affect profitability of the ROVA division through cost control.  Similarly, our Jewett and maintenance servicesRosebud mines are under long-term contracts that set the terms under which the remaining coal reserves at those mines will be sold.  Once again, management must focus on cost control, standardization, and efficiency in order to utility, independent power,generate cash and industrial generation facilities. Weprofits. These circumstances make it incumbent upon management to exercise strong financial and reporting controls as so many of the key drivers in the business are not controllable. Additionally, since a large pro portion of our coal sales are contractually committed to specific customers, if a

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customer should suffer an unexpected event that prevents them from accepting coal deliveries, we have nowhere to sell the committed coal.  Coupled with these long-term contracts, we have been mining coal for over 150burdened by substantial post-retirement health care liabilities to retirees, and have struggled to generate enough cash at our operating subsidiaries to fund the cost of corporate overhead and these post-retirement liabilities.  Our lack of liquidity has limited our opportunity to consider options that might grow the business.

In 2007, we hired Mr. Keith E. Alessi as Interim Chief Executive Officer at a difficult time in our history when we were not producing cash flows sufficient to fund our operations. Shortly after Mr. Alessi’s arrival, it was discovered that we were facing our second major accounting restatement in two years. Between 1992The Board charged Mr. Alessi with standardizing our operations, implementing procedures and 2001controls, reducing corporate overhead, stabilizing cash flow and setting a new, focused strategic vision.  From 2007 through the end of 2008, management radically overhauled the business through staffing changes, elimination of unnecessary perquisites and compensation structures, settling of numerous outstanding litigations, consolidating and leveraging benefits across all business units, standardizing and streamlining financial and business reporting and restructuring all of our major debt arrangements.  Additionally, a new long-term contract was entered into with our sole customer at the Jewett mine.

The Compensation and Benefits Committee (the “Committee”) recognized the unique difficulties presented by our business model and the transition period we transitioned from primarily underground coal production, mostwere undergoing with new leadership and understood the complexity of which wasimplementing substantive business growth in troubled economic times that include very tight credit markets.  As such, the Committee sought to put into place a compensation structure that recognized the difficulty of the tasks that management would face.  The Committee did not feel that traditional incentive measurements, such as earnings or cash flow, were appropriate drivers of incentive compensation, as these measurements could not be realistically improved in the Eastern United States,short term.  Therefore, individual project-based accountabilities for senior managers were set and up to current production from surface mines45% of their incentive bonuses were tied to achievement of these goals.

Fiscal 2009 – The Year in Montana, North Dakota, and Texas. Working in combination with others, we also diversified into the production of independent power, and we brought eight projects to commercial operations during this period. Our principal power production facility today is in North Carolina. We now employ approximately 1,300 people in seven states and our Company is ranked as the ninth largest coal producer in the country based on tons of coal mined in 2006.

In 2009, a number of financial challengessevere and adverse business conditions arose that could not have been anticipated when we set our fiscal year 2009 budgets.  First, there was a catastrophic failure at our largest customer’s power plant that resulted in the plant being shut down for over six months.  In the past two decades. Bysame time period, a second large customer also experienced extended down time at its power facility.  Finally, at the late 1980’send of the third quarter, our underground mining operations were characterized by depleted reservesROVA I power plant experienced an unanticipated outage following a scheduled outage, resulting in lost power sales.  These outages combined with overall reduced volume as a result of general economic conditions resulted in significant reductions in revenues and high costs causingcash flows.  In addition, due to the outages, general economic conditions, and atypical weather conditions that lowered overall coal sales in 2009, we faced several covenant violations of our major debt instruments in 2009, which required the paym ent of penalties and resulted in all of our outstanding debt being reclassified to current. Despite these adverse conditions, our management team was able to:

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Mitigate potential debt-related issues through the negotiation of reasonable covenant waivers with our WML lenders and the refinancing of our revolving and term debt with First Interstate Bank;

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Freeze the pension plans and eliminate retiree health care benefits for non-union employees, while implementing an enhanced 401(k) plan to minimize the effects of the pension freeze;

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Achieve significant operating losses. Coal markets were soft and prices declining. We also faced high and growingcost containment of our post-retirement medical costs for retired members ofobligations through successful negotiations with the United Mine Workers of America, or UMWA. HowAmerica;

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Implement administrative and healthcare network improvements for our retiree population resulting in substantial cost savings and reduced retiree medical liabilities;

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Successfully implementing the Indian Coal Production Tax Credit transaction; and

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Continue standardization of processes and procedures to finance a turnaround itself posed a very substantial challenge. By the early 1990’s the Company was in default on various bank covenantseliminate redundancies and could not pay dividends on our preferred stock. In response, we initiated a plan to transform our company into a profitable enterprise by shutting down non-performing operations, monetizing existing assets wherever possible, capping UMWA post-retirement medical costs, such as transitioning all non-union employees to the extent possiblesame health, welfare and reinvesting available proceeds in a newpaid leave plans.

These measures that management implemented during 2009 were taken into account when the individual performance component of annual incentive compensation was considered.

Fiscal 2010 – The Year Ahead

In light of the unique nature of our business, plan and strategy emphasizing western surface mining, and independent power production. Our financial situation forced us to rely primarily on asset based financing, which limited the amount of free cash available to us from operations. As a result,fact that we have been cash constrained overno true comparables given the past two decades. In recognitioncost-plus nature of this, managementour long-term contracts and the Compensation and Benefitschanging compensation landscape, the Committee, have kept cashwith the assistance of Buck Consultants (a newly-hired Committee compensation levels relatively low and flat. This has meant often deferring or limiting pay increases and the pay-out of certain incentive compensation earned.

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General Compensation Practices and Philosophy

Our current philosophy is to compensate executives with competitive market for talent.

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Provide a compensation program takes into considerationthat emphasizes direct compensation as opposed to perquisites and other benefits.

The Committee is responsible for setting the total mix of components that encompass our stagecompensation program, which currently includes base salary, annual incentive and long-term compensation.  As has been our historical practice, in general, our compensation components are targeted as follows:  60% base salary, 25% incentive compensation and 15% long-term compensation in the form of equity.  This compensation mix has been appropriate due to our past economic hardships and the transitional nature of the business.  In 2009, utilizing peer and survey data, we analyzed and determined that our total cash compensation program was competitive with said data and felt that maintaining the current mix of cash components was appropriate at that time.  Due to the methodologies for evaluating equity and the poor performance of our stock, we were unable to perform a solid analysis of the available data, which might have resulted in an adjustment of our long - -term equity compensation component. While we feel that the components are the proper mix of compensation for attracting and retaining key executives, increasing our long-term profitability and building stockholder value, the Committee, with the assistance of Buck Consultants, will be analyzing our compensation components to determine if our current allocation of components is the most appropriate for meeting our objectives and business cycle, the marketplacestrategy.

Compensation Methodology

Peer Comparisons and Survey Data

In 2009, compensation was evaluated using national, broad-based industry survey data, internal equity for similar positions and proxy data of a meaningful peer group for benchmark analysis. In creating our past practices,peer group, we noted that there are very few comparably-sized publicly-traded coal companies to align ourselves with for comparative purposes. In addition, a third of our executive team comes from segments other than mining. With these two factors in mind, we benchmarked ourselves relative to a peer group of companies with similar revenue and employee base.  Revenue and employee base are used as reference points to determine the composition of the peer group because they provide a reasonable basis for comparing like positions and scopes of responsibilities. The companies included in the peer group differ from those listed in the indices used to prepare our stock price performance graph, which can be found in our 2009 Annual Report to Stockholders. We felt that t he companies listed in the compensation peer group more closely represent the employment markets in which we compete for executive talent. In 2009, our peer group consisted of the following companies, as compared to our coal segment:

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In 2009, we used Economic Research Institute, CompAnalyst and Hay Group market data as additional comparison points. Total market data was compared with individual pay for each position, and “compa-ratios” were determined. Compa-ratios are an individual’s current salary divided by the reference point of the market data. For example, if an individual’s salary is $125,000 and the mid-point of the market data for that position was $100,000, the compa-ratio for that individual would be 125%, meaning such person is earning 25% greater than the average of the market.

Internal Pay Equity

The Committee considers internal pay equity when making compensation decisions. However, the Committee does not use a fixed ratio or formula when comparing compensation among executive officers. Our CEO is compensated at a higher level than other executive officers due to his significantly greater level of experience, accountability and talentsresponsibility.  Mr. Alessi’s total cash compensation was 4.52 times greater than the average of our four other named executive officers, which differential includes his 2009 special discretionary bonus. We feel that each individualMr. Alessi’s cash compensation for 2009 as compared to the other named executive bringsofficers is appropriate based on his significant contributions in refocusing our business since 2007 and the relatively modest cash compensation of our executive team.  Since joining us in 2007, Mr. Alessi has received no base pay increases, modest special discretionary bonuses and has forfeited over 60% of his initial equity grant.  Our next highest paid named executive officer makes 1.29 times our lowest paid named executive officer.  We believe such internal pay equity highlights the reasonableness of the dispersion of pay to our company.

Compensation Administration and the Compensation and Benefits Committee, a committeeRole of the Board of Directors consisting of three independent directors, administers our executive compensation program. Management in Determining Executive Compensation

The Compensation and Benefits Committee establishes our overall compensation strategy to ensure that our executives are rewarded appropriately and that executive compensation supports our business strategy and objectives.

While the Committee has the responsibility to monitor and approve all compensation program in achieving desired results.

Role of Compensation Consultants

The Committee has the authority to retain consultants directly; however, the Committee did not retain a consultant for fiscal year 2009.  For 2009, the Committee, through management, obtained survey information from an executive compensation consulting firm, the Hay Group, for executives in the mining industry.  This survey data, together with proxy data from companies in similar industries and/or below target, depending upon various measures of performance. As a result,similar size, was studied by management and the Committee during 2009.  In February 2010, the Committee hired Buck Consulting to serve as the Committee’s compensation consultant to assist the Committee in thoroughly reviewing our executive compensation program is designed to result in compensation to our executives that can be significantly above target in times of relatively superior performance and significantly below target in times of relatively poor performance. Base salary and incentive pay performance targets have typically reflected our cash and equity constraints.

Our executive compensation program consists of three main elements:

Long-Term Incentive

Long-term incentive awards are designed to compensatealign the interests of our named executive officers atexecutives with those of our stockholders.  In 2009, we moved from options to restricted stock units with a fixed levelthree-year vest to more appropriately incentivize our executives.  Long-term equity awards for 2009 were made on July 1, 2009 based on a tiered system that provides an identical number of compensationrestricted stock units to executives in that serves astier, which awards are between approximately 20% and 40% of such executive’s base salary compensation.  To determine the number of restricted stock units awarded to a retention tool throughout the executive’s career. In determining base salaries, the Compensation and Benefits Committee considers each executive’s role and responsibility, unique skills, future potential with our company, salary levels for similar positions in our target market, and internal pay equity. Our compensation philosophy is to target base salaries at the 60th percentile for each named executive officer since our incentivein a given tier, the Committee multiplies the assigned percentage of base salary compensation, levels have typically been far below target and market median levels. As described