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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
Information Required in Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
PEABODY ENERGY CORPORATION
(Name of Registrant as Specified In Its Charter)
[COMPANY NAME]
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required. | |
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
1) Title of each class of securities to which transaction applies: |
2) Aggregate number of securities to which transaction applies: |
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) Proposed maximum aggregate value of transaction: |
5) Total fee paid: |
o Fee paid previously with preliminary materials. |
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) Amount Previously Paid: |
2) Form, Schedule or Registration Statement No.: |
3) Filing Party: |
4) Date Filed: |
SEC 1913 (02-02) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
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![(PEABODY LOGO)](https://capedge.com/proxy/DEF 14A/0000950137-06-004018/c03033c0303300.gif)
1. | Election of five Class II Directors for three-year terms; | |
2. | Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006; | |
3. | Approval of an increase in the number of shares of Common Stock authorized for issuance by the Company; and | |
4. | Consideration of such other matters, including four shareholder proposals, as may properly come before the meeting. |
Very truly yours, | |
![]() | |
Gregory H. Boyce | |
President & Chief Executive Officer |
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• | Elect five Class II Directors for three-year terms; | |
• | Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006; | |
• | Approve an increase in the number of shares of Common Stock authorized for issuance by the Company from 400,000,000 shares to 800,000,000 shares; and | |
• | Consider four shareholder proposals and transact any other business that may properly come before the Annual Meeting. |
• | By visiting the website atwww.voteproxy.comand following the voting instructions provided; or | |
• | By calling1-800-PROXIESon a touch-tone telephone and following the recorded instructions. |
![]() | |
Jeffery L. Klinger | |
Vice President, General Counsel | |
and Corporate Secretary |
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Q: | Why did I receive this Proxy Statement? | |
A: | Because you are a shareholder of Peabody Energy Corporation as of March 15, 2006, the record date, and are entitled to vote at the 2006 Annual Meeting of Shareholders, the Board of Directors is soliciting your proxy to vote at the meeting. As of the record date, there were 264,634,854 shares of Common Stock outstanding. Each share of Common Stock is entitled to one vote. | |
This Proxy Statement summarizes the information you need to know to vote at the Annual Meeting. This Proxy Statement and proxy card were first mailed to shareholders on or about March 31, 2006. | ||
Q: | What am I being asked to vote on? | |
A: | You are being asked to vote on the following items: | |
• Election of Gregory H. Boyce, William E. James, Robert B. Karn III, Henry E. Lentz and Blanche M. Touhill as Class II Directors, each for a term of three years; | ||
• Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006; | ||
• Approval of an increase in the number of shares of Common Stock authorized for issuance by the Company from 400,000,000 shares to 800,000,000 shares; | ||
• Four shareholder proposals; and | ||
• Any other matter properly introduced at the meeting. | ||
Q: | What are the voting recommendations of the Board of Directors? | |
A: | The Board recommends the following votes: | |
• FOR each of the director nominees (Item 1); | ||
• FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006 (Item 2); | ||
• FOR approval of an increase in the number of shares of Common Stock authorized for issuance by the Company (Item 3); and | ||
• AGAINST the shareholder proposals (Items 4 through 7). | ||
Q: | Will any other matters be voted on? | |
A: | We are not aware of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matter is properly brought before the meeting, your proxy will authorize each of Gregory H. Boyce, Jeffery L. Klinger and Richard A. Navarre to vote on such matters in their discretion. |
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Q: | How do I vote? | |
A: | If you are a shareholder of record or hold stock through the Peabody Investments Corp. Retirement Account (or other 401(k) plans sponsored by the Company’s subsidiaries), you may vote using any of the following methods: | |
• Via the Internet, by going to the websitewww.voteproxy.com and following the instructions for Internet voting on your proxy card; | ||
• From the United States, Canada or Puerto Rico, by dialing1-800-PROXIES and following the instructions for telephone voting on your proxy card; | ||
• By completing and mailing your proxy/voting instruction card; or | ||
• By casting your vote in person at the Annual Meeting. | ||
Please be aware that if you vote over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible. The telephone and Internet voting facilities for the shareholders of record of all shares, other than those held in the Peabody Investments Corp. Employee Retirement Account (or other 401(k) plans sponsored by our subsidiaries), will close at 10:59 P.M. Central Time on May 4, 2006. The Internet and telephone voting procedures are designed to authenticate shareholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. | ||
If you participate in a Company Stock Fund under the Peabody Investments Corp. Employee Retirement Account (or other 401(k) plans sponsored by the Company’s subsidiaries), and had shares of the Company’s common stock credited to your account on March 15, 2006, you will receive a single proxy/voting instruction card with respect to all shares registered in the same name, whether inside or outside of the plan. If your accounts inside and outside of the plan are not registered in the same name, you will receive a separate proxy/voting instruction card with respect to the shares credited to your plan account. Voting instructions regarding plan shares must be received by 11:00 P.M. Central Time on May 2, 2006, and all telephone and Internet voting facilities with respect to plan shares will close at that time. | ||
Shares of common stock in the Peabody Investments Corp. Employee Retirement Account (or other 401(k) plans sponsored by the Company’s subsidiaries) will be voted by Vanguard Fiduciary Trust Company (“Vanguard”), as trustee of the plan. Plan participants should indicate their voting instructions to Vanguard for each action to be taken under proxy by completing and returning the proxy/voting instruction card, by using the toll-free telephone number or by indicating their instructions over the Internet. All voting instructions from plan participants will be kept confidential. If a plan participant fails to sign or to timely return the proxy/voting instruction card or otherwise timely indicate his or her instructions by telephone or over the Internet, the shares allocated to such participant, together with unallocated shares, will be voted in the same proportion as plan shares for which the trustee receives voting instructions. | ||
If you return your signed proxy card or vote by Internet or telephone, your shares will be voted as you indicate. If you do not indicate how your shares are to be voted on a matter, the shares represented by your properly completed proxy/voting instruction card will be voted “FOR” the nominees for director, “FOR” ratification of the appointment of Ernst & Young LLP, “FOR” approval of an increase in the number of shares of Common Stock authorized for issuance by the Company, and “AGAINST” each shareholder proposal. | ||
If your shares are held in a brokerage account in your broker’s name (also known as “street name”), you should follow the instructions for voting provided by your broker or nominee. You |
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may complete and mail a voting instruction card to your broker or nominee or, if your broker or nominee allows, submit voting instructions by Internet or telephone. If you provide specific voting instructions by mail, telephone or Internet, your broker or nominee will vote your shares as you have directed. Please note that shares in the Peabody Energy Corporation Employee Stock Purchase Plan are held in street name by A. G. Edwards & Sons, Inc., the plan administrator. | ||
Ballots will be provided during the Annual Meeting to anyone who wants to vote in person at the meeting. If you hold your shares in street name, you must request a confirmation of beneficial ownership from your broker to vote in person at the meeting. | ||
Q: | Can I change my vote? | |
A: | Yes. If you are a shareholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by: | |
• Submitting a valid, later-dated proxy; | ||
• Submitting a valid, subsequent vote by telephone or the Internet at any time prior to 10:59 P.M. Central Time on May 4, 2006; | ||
• Notifying the Company’s Corporate Secretary in writing that you have revoked your proxy; or | ||
• Completing a written ballot at the Annual Meeting. | ||
You can revoke your voting instructions with respect to shares held in the Peabody Investments Corp. Employee Retirement Account (or other 401(k) plans sponsored by the Company’s subsidiaries) at any time prior to 11:00 P.M. Central Time on May 2, 2006 by timely delivery of a properly executed, later-dated voting instruction card (or an Internet or telephone vote), or by delivering a written revocation of your voting instructions to Vanguard. | ||
Q: | Is my vote confidential? | |
A: | Yes. All proxies, ballots and vote tabulations that identify how individual shareholders voted will be kept confidential and not be disclosed to the Company’s directors, officers or employees, except in limited circumstances, including: | |
• When disclosure is required by law; | ||
• During any contested solicitation of proxies; or | ||
• When written comments by a shareholder appear on a proxy card or other voting material. | ||
Q: | What will happen if I do not instruct my broker how to vote? | |
A: | If your shares are held in street name and you do not instruct your broker how to vote, your broker may vote your shares at its discretion on routine matters such as the election of directors (Item 1) or ratification of the independent registered public accounting firm (Item 2). On non-routine matters, brokers and other nominees cannot vote without instructions from the beneficial owner, resulting in so-called “broker non-votes.” Broker non-votes will have the same effect as votes cast against the proposal to increase the Company’s authorized shares (Item 3), but will have no impact on the shareholder proposals (Items 4 though 7). | |
Q: | How will my Company stock in the Peabody Investments Corp. Employee Retirement Account or other 401(k) plans sponsored by the Company’s subsidiaries be voted? | |
A: | Vanguard, as the plan trustee, will vote your shares in accordance with your instructions if you send in a completed proxy/voting instruction card or vote by telephone or the Internet before |
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11:00 P.M. Central Time on May 2, 2006. All telephone and Internet voting facilities with respect to plan shares will close at that time. Vanguard will vote allocated shares of Company Common Stock for which it has not received direction, as well as shares not allocated to individual participant accounts, in the same proportion as plan shares for which the trustee receives voting instructions. | ||
Q: | How many shares must be present to hold the Annual Meeting? | |
A: | Holders of a majority of the shares of outstanding Common Stock as of the record date must be represented in person or by proxy at the Annual Meeting in order to conduct business. This is called a quorum. If you vote, your shares will be part of the quorum. Abstentions, “withhold” votes and broker non-votes also will be counted in determining whether a quorum exists. | |
Q: | What vote is required to approve the proposals? | |
A: | In the election of directors, the five nominees receiving the highest number of “FOR” votes will be elected. The proposal to increase the Company’s authorized shares will require the affirmative vote of a majority of shares outstanding for approval. The remaining proposals will require a majority of the votes cast for approval. Abstentions and proxies marked “withhold” will have no impact on the election of directors. Broker non-votes will have the same effect as votes cast against the proposal to increase the Company’s authorized shares (Item 3), but will have no impact on the other proposals. | |
Q: | What does it mean if I receive more than one proxy card? | |
A: | It means your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. | |
Q: | Who can attend the Annual Meeting? | |
A: | All Peabody Energy Corporation shareholders as of March 15, 2006 may attend the Annual Meeting. | |
Q: | What do I need to do to attend the Annual Meeting? | |
A: | If you are a shareholder of record or a participant in the Peabody Investments Corp. Employee Retirement Account (or other 401(k) plans sponsored by the Company’s subsidiaries), your admission card is attached to your proxy card or voting instruction form. You will need to bring this admission card with you to the Annual Meeting. | |
If you own shares in street name, you will need to ask your bank or broker for an admission card in the form of a confirmation of beneficial ownership. You will need to bring a confirmation of beneficial ownership with you to vote at the Annual Meeting. If you do not receive your confirmation of beneficial ownership in time, bring your most recent brokerage statement with you to the Annual Meeting. We can use that to verify your ownership of Common Stock and admit you to the meeting; however, you will not be able to vote your shares at the meeting without a confirmation of beneficial ownership. | ||
Q: | Where can I find the voting results of the Annual Meeting? | |
A: | We plan to announce preliminary voting results at the Annual Meeting and to publish final results in our Quarterly Report on SEC Form 10-Q for the Quarter Ended June 30, 2006. |
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2005 Compensation |
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Fees Earned | Non-Stock | |||||||||||||||||||||||
or Paid | Stock | Option | Incentive Plan | All Other | ||||||||||||||||||||
Total | in Cash | Awards | Awards | Compensation | Compensation | |||||||||||||||||||
Name | ($) | ($) | ($)(1)(2) | ($)(3) | ($) | ($) | ||||||||||||||||||
B. R. Brown | 91,157 | 65,250 | 907 | 25,000 | — | — | ||||||||||||||||||
William A. Coley | 86,519 | 60,750 | 769 | 25,000 | — | — | ||||||||||||||||||
Henry Givens, Jr. | 86,519 | 60,750 | 769 | 25,000 | — | — | ||||||||||||||||||
William E. James | 90,250 | 65,250 | — | 25,000 | — | — | ||||||||||||||||||
Robert B. Karn III | 108,368 | 82,125 | 1,243 | 25,000 | — | — | ||||||||||||||||||
Henry E. Lentz | 89,469 | 63,750 | 719 | 25,000 | — | — | ||||||||||||||||||
William C. Rusnack | 102,250 | 77,250 | — | 25,000 | — | — | ||||||||||||||||||
James R. Schlesinger | 82,750 | 57,750 | — | 25,000 | — | — | ||||||||||||||||||
Blanche M. Touhill | 89,875 | 64,875 | — | 25,000 | — | — | ||||||||||||||||||
John F. Turner(4) | 99,863 | 25,500 | 50,151 | 24,212 | — | — | ||||||||||||||||||
Sandra Van Trease | 90,743 | 64,500 | 1,243 | 25,000 | — | — | ||||||||||||||||||
Alan H. Washkowitz | 87,969 | 62,250 | 719 | 25,000 | — | — |
(1) | Awards are valued at the time of grant at fair market value. |
(2) | Dollar amounts include dividends paid on restricted stock awards as follows: Mr. Brown, $907; Mr. Coley, $769; Dr. Givens, $769; Mr. Karn, $1,243; Mr. Lentz, $719; Mr. Turner, $151; Ms. Van Trease, $1,243; and Mr. Washkowitz, $719. Dividends are paid at the same rate applicable to all outstanding shares of Common Stock. |
(3) | Awards are valued at the time of grant based onBlack-Scholes methodology, as applied with guidance from the Compensation Committee’s independent compensation consultants. |
(4) | In accordance with the Board’s compensation program, Mr. Turner received restricted stock and stock option awards upon his election to the Board of Directors in July 2005. |
2006 Compensation |
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• | The Audit Committee Chairperson will receive an annual $15,000 cash retainer. | |
• | Other Audit Committee members will receive annual $5,000 cash retainers. | |
• | Chairpersons of the Compensation and Nominating & Corporate Governance Committees will receive annual $10,000 cash retainers. | |
• | Directors who serve on more than one committee will receive an additional annual $10,000 cash retainer. |
Compensation Committee |
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• | To annually review and approve corporate goals and objectives relevant to the Company’s CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and together with the other independent members of the Board of Directors, determine and approve the CEO’s compensation levels based on this evaluation; | |
• | To annually review with the CEO, the performance of the Company’s executive officers and make recommendations to the Board of Directors with respect to the compensation plans for such officers; | |
• | To annually review and approve the CEO’s and the executive officers’ base salary, annual incentive opportunity and long-term incentive opportunity and as appropriate, employment agreements, severance agreements, change in control provisions and any special supplemental benefits; | |
• | To approve annual bonus awards for executive officers other than the CEO; | |
• | To oversee the Company’s annual and long-term incentive programs; | |
• | To periodically assess the Company’s director compensation program and, when appropriate, recommend modifications for Board consideration; | |
• | To review and make recommendations to the Board of Directors in conjunction with the CEO, as appropriate, with respect to succession planning and management development; and | |
• | To make regular reports on its activities to the Board of Directors. |
Executive Committee |
• | Amending the Company’s certificate of incorporation and bylaws; | |
• | Adopting an agreement of merger or consolidation; | |
• | Recommending to shareholders the sale, lease or exchange of all or substantially all of the Company’s property and assets; | |
• | Recommending to shareholders dissolution of the Company or revocation of any dissolution; | |
• | Declaring a dividend; | |
• | Issuing stock; and | |
• | Appointing members of Board committees. |
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Nominating and Corporate Governance Committee |
• | To identify, evaluate and recommend qualified candidates for election to the Board of Directors; | |
• | To advise the Board of Directors on matters related to corporate governance; | |
• | To assist the Board of Directors in conducting its annual assessment of Board performance; | |
• | To recommend the structure, composition and responsibilities of other Board committees; | |
• | To advise the Board of Directors on matters related to corporate social responsibility; | |
• | To ensure that the Company maintains an effective orientation program for new directors and a continuing education and development program to supplement the skills and needs of the Board of Directors; and | |
• | To make regular reports on its activities to the Board of Directors. |
Audit Committee |
• | The quality and integrity of the Company’s financial statements and financial reporting processes; | |
• | The Company’s systems of internal accounting and financial controls and disclosure controls; | |
• | The independent registered public accounting firm’s qualifications and independence; | |
• | The performance of the Company’s internal audit function and independent registered public accounting firm; and | |
• | Compliance with legal and regulatory requirements, and codes of conduct and ethics programs established by management and the Board of Directors. |
• | To appoint the Company’s independent registered public accounting firm, which shall report directly to the Audit Committee; |
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• | To approve all audit engagement fees and terms and all permissible non-audit engagements with the Company’s independent registered public accounting firm; | |
• | To ensure that the Company maintains an internal audit function and review the appointment of the senior internal audit team and/or provider; | |
• | To approve the terms of engagement for the internal audit provider; | |
• | To meet on a regular basis with the Company’s financial management, internal audit management and independent registered public accounting firm to review matters relating to the Company’s internal accounting controls, internal audit program, accounting practices and procedures, the scope and procedures of the outside audit, the independence of the independent registered public accounting firm and other matters relating to the Company’s financial condition; | |
• | To oversee the Company’s financial reporting process and to review in advance of filing or issuance the Company’s quarterly reports on Form 10-Q, annual reports on Form 10-K, annual reports to shareholders, proxy materials and earnings press releases; | |
• | To review the Company’s guidelines and policies with respect to risk assessment and risk management, and to monitor the Company’s major financial risk exposures and steps management has taken to control such exposures; and | |
• | To make regular reports to the Board of Directors regarding the activities and recommendations of the Audit Committee. |
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MEMBERS OF THE AUDIT COMMITTEE: | |
WILLIAM C. RUSNACK, CHAIR | |
ROBERT B. KARN III | |
SANDRA VAN TREASE |
• | Audit Fees: $2,672,000 (for the fiscal year ended December 31, 2005) and $2,680,000 (for the fiscal year ended December 31, 2004) for professional services rendered for the audit of the Company’s annual financial statements, review of financial statements included in the Company’s Form 10-Qs and services that are normally provided by Ernst & Young in connection with statutory and regulatory filings or engagements for those fiscal years. | |
• | Audit-Related Fees: $279,000 (for the fiscal year ended December 31, 2005) and $225,000 (for the fiscal year ended December 31, 2004) for assurance-related services for audits of employee benefit plans, due diligence services related to acquisitions or divestitures and consultation services related to proposed or newly released accounting standards. | |
• | Tax Fees: $693,000 (for the fiscal year ended December 31, 2005) and $733,000 (for the fiscal year ended December 31, 2004) for tax compliance, tax advice and tax planning services. |
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• | Individual directors may not serve on more than four other public company boards; | |
• | Individual directors are required to submit their resignation to the Board of Directors for consideration following a job change; and | |
• | The Company has adopted and will disclose stock ownership guidelines for officers and directors. |
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• | Shareholder’s name, number of shares owned, length of period held, and proof of ownership; | |
• | Name, age and address of candidate; | |
• | A detailed resume describing among other things the candidate’s educational background, occupation, employment history, and material outside commitments (e.g., memberships on other boards and committees, charitable foundations, etc.); | |
• | A supporting statement which describes the candidate’s reasons for seeking election to the Board of Directors, and documents his/her ability to satisfy the director qualifications described below; | |
• | A description of any arrangements or understandings between the shareholder and the candidate; and | |
• | A signed statement from the candidate, confirming his/her willingness to serve on the Board of Directors. |
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• | Candidates should possess broad training, experience and a successful track record at senior policy-making levels in business, government, education, technology, accounting, law, consulting and/or administration; | |
• | Candidates should possess the highest personal and professional ethics, integrity and values. Candidates also should be committed to representing the long-term interests of the Company and all of its shareholders; | |
• | Candidates should have an inquisitive and objective perspective, strength of character and the mature judgment essential to effective decision-making; | |
• | Candidates need to possess expertise that is useful to the Company and complementary to the background and experience of other Board members; and | |
• | Candidates need to be willing to devote sufficient time to Board and Committee activities and to enhance their knowledge of the Company’s business, operations and industry. |
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Amount and Nature | |||||||||
of Beneficial | Percent of | ||||||||
Name and Address of Beneficial Owner | Ownership(1)(2)(3) | Class(4) | |||||||
FMR Corp. | 35,215,620 | 13.3 | % | ||||||
82 Devonshire Street Boston, MA 02109 | |||||||||
Gregory H. Boyce | 852,546 | * | |||||||
B. R. Brown | 10,267 | * | |||||||
William A. Coley | 9,466 | * | |||||||
Irl F. Engelhardt | 1,302,479 | * | |||||||
Henry Givens, Jr. | 9,455 | * | |||||||
William E. James | 53,241 | * | |||||||
Robert B. Karn III | 25,575 | * | |||||||
Henry E. Lentz | 9,163 | * | |||||||
Richard A. Navarre | 159,535 | * | |||||||
William C. Rusnack | 25,753 | * | |||||||
James R. Schlesinger | 25,769 | * | |||||||
Blanche M. Touhill | 25,769 | * | |||||||
John F. Turner | 2,464 | * | |||||||
Sandra Van Trease | 26,253 | * | |||||||
Roger B. Walcott, Jr. | 109,899 | * | |||||||
Alan H. Washkowitz | 9,163 | * | |||||||
Richard M. Whiting | 114,535 | * | |||||||
All directors and executive officers as a group (21 people) | 3,015,257 | 1.1 | % |
(1) | Amounts shown are based on the latest available filings on Form 13G or other relevant filings made with the Securities and Exchange Commission (“SEC”). Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Unless otherwise indicated, the persons named in the table have sole voting and sole investment control with respect to all shares beneficially owned. |
(2) | Includes shares issuable pursuant to stock options exercisable within 60 days after March 1, 2006, as follows: Mr. Boyce, 809,476; Mr. Brown, 4,061; Mr. Coley, 4,061; Mr. Engelhardt, 699,772; Dr. Givens, 4,061; Mr. James, 44,851; Mr. Karn, 10,071; Mr. Lentz, 4,061; Mr. Navarre, 56,750; Mr. Rusnack, 17,251; Dr. Schlesinger, 17,251; Dr. Touhill, 17,251; Mr. Turner, 0; Ms. Van Trease, 10,071; Mr. Walcott, 40,061; Mr. Washkowitz, 4,061; Mr. Whiting, 27,539; and all directors and executive officers as a group, 1,811,140. Also includes shares of restricted stock that remain unvested as of March 1, 2006 as follows: Mr. Boyce, 40,000; Mr. Brown, 6,206; Mr. Coley, 5,394; Mr. Engelhardt, 0; Dr. Givens, 5,394; Mr. James, 870; Mr. Karn, 870; Mr. Lentz, 5,102; Mr. Navarre, 0; Mr. Rusnack, 870; Dr. Schlesinger, 870; Dr. Touhill, 870; Mr. Turner, 2,464; Ms. Van Trease, 870; Mr. Walcott, 0; Mr. Washkowitz, 5,105; Mr. Whiting, 0; and all directors and executive officers as a group 74,882. |
(3) | Amounts shown in this table and these footnotes have been adjusted to reflect the effects of the Company’s2-for-1 stock splits effected in March 2005 and February 2006. |
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(4) | An asterisk (*) indicates that the applicable person beneficially owns less than one percent of the outstanding shares. |
Long-Term Compensation | |||||||||||||||||||||||||||||
LTIP | |||||||||||||||||||||||||||||
Annual Compensation | Restricted | Securities | Payments | ||||||||||||||||||||||||||
Stock | Underlying | From Prior- | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Awards | Options | Year Grants | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | (#)(1) | (#)(1)(2) | ($)(3) | ($)(4) | ||||||||||||||||||||||
Gregory H. Boyce(5) | 2005 | 790,750 | 1,272,370 | — | 77,364 | 1,473,103 | (7) | 100,984 | |||||||||||||||||||||
Chief Executive Officer, | 2004 | 659,750 | 838,403 | — | 92,968 | — | 189,730 | ||||||||||||||||||||||
President and Director | 2003 | 162,500 | 415,000 | 40,000 | (6) | 1,322,564 | — | 216,276 | |||||||||||||||||||||
Richard A. Navarre | 2005 | 568,750 | 1,410,000 | (8) | — | 49,606 | 2,568,581 | 66,248 | |||||||||||||||||||||
Executive Vice President and | 2004 | 469,938 | 670,030 | — | 62,400 | 880,087 | 48,700 | ||||||||||||||||||||||
Chief Financial Officer | 2003 | 432,438 | 420,000 | — | 58,240 | 164,004 | 44,000 | ||||||||||||||||||||||
Richard M. Whiting | 2005 | 521,250 | 1,697,440 | (9) | — | 26,516 | 2,659,264 | 59,576 | |||||||||||||||||||||
Executive Vice President — | 2004 | 506,250 | 666,156 | — | 47,676 | 1,246,909 | 52,134 | ||||||||||||||||||||||
Sales, Marketing & Trading | 2003 | 462,200 | 410,136 | — | 60,296 | 232,331 | 48,467 |
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Long-Term Compensation | |||||||||||||||||||||||||||||
LTIP | |||||||||||||||||||||||||||||
Annual Compensation | Restricted | Securities | Payments | ||||||||||||||||||||||||||
Stock | Underlying | From Prior- | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Awards | Options | Year Grants | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | (#)(1) | (#)(1)(2) | ($)(3) | ($)(4) | ||||||||||||||||||||||
Roger B. Walcott, Jr. | 2005 | 440,500 | 490,390 | — | 22,560 | 2,508,346 | 49,033 | ||||||||||||||||||||||
Executive Vice President — | 2004 | 431,725 | 413,770 | — | 40,760 | 1,173,449 | 44,031 | ||||||||||||||||||||||
Corporate Development | 2003 | 421,225 | 374,000 | — | 56,868 | 218,672 | 43,040 | ||||||||||||||||||||||
Irl F. Engelhardt(10) | 2005 | 1,000,000 | 1,654,935 | — | 111,044 | 14,505,315 | 120,102 | ||||||||||||||||||||||
Chairman and Director | 2004 | 975,000 | 1,659,450 | — | 203,816 | 3,190,494 | 103,273 | ||||||||||||||||||||||
2003 | 875,000 | 1,500,000 | — | 164,440 | 594,484 | 94,693 |
(1) | Number adjusted to reflect2-for-1 stock splits effected by the Company in March 2005 and February 2006. |
(2) | Represents number of shares of Common Stock underlying options. |
(3) | Long-term performance awards earned in 2005 were based on achievement of performance objectives for the period January 2, 2003 to December 31, 2005. The material terms of these performance units are described under the caption “Performance Units” in the Report of the Compensation Committee on page 34 of this Proxy Statement. |
(4) | Amounts included in this column are described below in the All Other Compensation Table. |
(5) | Mr. Boyce was employed by the Company effective October 1, 2003. He was elected Chief Executive Officer Elect on March 1, 2005 and assumed the position of Chief Executive Officer on January 1, 2006. |
(6) | The restricted stock award was granted on October 1, 2003 and vests on October 14, 2009. At the close of the last trading day of 2005, the market value was $1,648,400. |
(7) | Mr. Boyce’s performance award was prorated because his employment with the Company began after the commencement of the performance period. |
(8) | Includes a retention bonus of $600,000 paid on August 31, 2005 under an employment agreement between the Company and Mr. Navarre. |
(9) | Includes a retention bonus of $1,001,020 paid on August 31, 2005 under the terms of an employment agreement between the Company and Mr. Whiting. |
(10) | Mr. Engelhardt served as Chief Executive Officer until December 31, 2005. |
Estimated Fair Value of 2005 Total Annual Compensation |
• | Cash compensation, consisting of salary and annual incentive compensation (bonus); | |
• | Estimated fair value of long-term incentive compensation granted in 2005, consisting of stock options and performance unit awards; and | |
• | Other compensation, including group term life insurance, savings plan matching payments and performance contributions, and restricted stock dividends. |
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Long-Term Incentive | ||||||||||||||||||||||||
Compensation | ||||||||||||||||||||||||
Cash Compensation | Stock | |||||||||||||||||||||||
Option | Performance | All Other | ||||||||||||||||||||||
Salary | Bonus | Awards | Unit Awards | Compensation | ||||||||||||||||||||
Name | ($) | ($) | ($)(1) | ($)(2) | ($)(3) | Total ($) | ||||||||||||||||||
Gregory H. Boyce | 790,750 | 1,272,370 | 626,793 | 990,356 | 100,984 | 3,781,253 | ||||||||||||||||||
Richard A. Navarre | 568,750 | 1,410,000 | 392,915 | 553,651 | 66,248 | 2,991,564 | ||||||||||||||||||
Richard M. Whiting | 521,250 | 1,697,440 | 200,761 | 281,991 | 59,576 | 2,761,018 | ||||||||||||||||||
Roger B. Walcott, Jr. | 440,500 | 490,390 | 170,809 | 239,884 | 49,033 | 1,390,616 | ||||||||||||||||||
Irl F. Engelhardt | 1,000,000 | 1,654,935 | 881,417 | 1,237,966 | 120,102 | 4,894,420 |
(1) | Estimated fair value of stock option awards granted in 2005 is based on the grant date fair value usingBlack-Scholesmethodology, as applied with guidance from the Compensation Committee’s independent compensation consultants. The Company cautions that the amount ultimately realized by the named executive officer from the award will likely vary based on a number of factors, including the Company’s actual operating performance, stock price fluctuations and the timing of exercise. |
(2) | Performance units with stock market performance conditions have been valued utilizingBlack-Scholesmethodology (as applied with guidance from the Compensation Committee’s independent compensation consultants) within aMonte Carlosimulation which incorporates the total shareholder return hurdles set for each grant. Performance units with internal performance conditions have been valued based on the market price at the grant date (adjusted for dividends foregone during the service period), assuming a targeted achievement rate. The Company cautions that the amount ultimately realized by the named executive officer from the award will likely vary based on a number of factors, including the performance of the Company’s common stock price relative to an industry peer group and the S&P MidCap 400 Index, the Company’s three-year Adjusted EBITDA Return on Invested Capital, and the timing of vesting. The material terms of these performance units are described under the caption “Performance Units” in the Report of the Compensation Committee on page 34 of this Proxy Statement. |
(3) | Amounts included in this column are described below in the All Other Compensation Table. |
2005 Total Compensation Received in Cash |
• | Cash compensation, consisting of salary and annual incentive compensation (bonus); | |
• | Payments pursuant to performance units granted in 2003 as described above; and | |
• | Other compensation, including group term life insurance, savings plan matching payments and performance contributions, and restricted stock dividends. |
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LTIP Payments | ||||||||||||||||||||
from Prior-Year | All Other | |||||||||||||||||||
Salary | Bonus | Grants | Compensation | Total | ||||||||||||||||
Name | ($) | ($) | ($)(1) | ($)(2) | ($) | |||||||||||||||
Gregory H. Boyce | 790,750 | 1,272,370 | 1,473,103 | (3) | 100,984 | 3,637,207 | ||||||||||||||
Richard A. Navarre | 568,750 | 1,410,000 | 2,568,581 | 66,248 | 4,613,579 | |||||||||||||||
Richard M. Whiting | 521,250 | 1,697,440 | 2,659,264 | 59,576 | 4,937,530 | |||||||||||||||
Roger B. Walcott, Jr. | 440,500 | 490,390 | 2,508,346 | 49,033 | 3,488,269 | |||||||||||||||
Irl F. Engelhardt | 1,000,000 | 1,654,935 | 14,505,315 | 120,102 | 17,280,352 |
(1) | Long-term performance awards earned in 2005 were based on achievement of performance objectives for the period January 2, 2003 to December 31, 2005. The material terms of these performance units are described under the caption “Performance Units” in the Report of the Compensation Committee on page 34 of this Proxy Statement. Under the terms of the performance awards, the Compensation Committee has the discretion to pay these amounts in cash or stock. |
(2) | Amounts included in this column are described below in the All Other Compensation Table. |
(3) | Mr. Boyce’s performance award was prorated because his employment with the Company began after the commencement of the performance period. |
Annual 401(k) | |||||||||||||||||||||||||||||
Group | Matching and | Dividends on | |||||||||||||||||||||||||||
Term Life | Performance | Restricted | |||||||||||||||||||||||||||
Insurance | Contributions | Relocation | Stock | Perquisites | |||||||||||||||||||||||||
Name | Year | ($) | ($) | ($) | ($)(1) | ($) | Total | ||||||||||||||||||||||
Gregory H. Boyce | 2005 | 2,039 | 92,145 | — | 6,800 | — | 100,984 | ||||||||||||||||||||||
2004 | 1,683 | 66,365 | 116,432 | 5,250 | — | 189,730 | |||||||||||||||||||||||
2003 | — | 16,520 | 198,506 | 1,250 | — | 216,276 | |||||||||||||||||||||||
Richard A. Navarre | 2005 | 923 | 65,325 | — | — | — | 66,248 | ||||||||||||||||||||||
2004 | 504 | 48,196 | — | — | — | 48,700 | |||||||||||||||||||||||
2003 | 459 | 43,541 | — | — | — | 44,000 | |||||||||||||||||||||||
Richard M. Whiting | 2005 | 1,301 | 58,275 | — | — | — | 59,576 | ||||||||||||||||||||||
2004 | 1,259 | 50,875 | — | — | — | 52,134 | |||||||||||||||||||||||
2003 | 735 | 47,732 | — | — | — | 48,467 |
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Annual 401(k) | |||||||||||||||||||||||||||||
Group | Matching and | Dividends on | |||||||||||||||||||||||||||
Term Life | Performance | Restricted | |||||||||||||||||||||||||||
Insurance | Contributions | Relocation | Stock | Perquisites | |||||||||||||||||||||||||
Name | Year | ($) | ($) | ($) | ($)(1) | ($) | Total | ||||||||||||||||||||||
Roger B. Walcott, Jr. | 2005 | 703 | 48,330 | — | — | — | 49,033 | ||||||||||||||||||||||
2004 | 687 | 43,344 | — | — | — | 44,031 | |||||||||||||||||||||||
2003 | 668 | 42,372 | — | — | — | 43,040 | |||||||||||||||||||||||
Irl F. Engelhardt | 2005 | 4,902 | 115,200 | — | — | — | 120,102 | ||||||||||||||||||||||
2004 | 4,773 | 98,500 | — | — | — | 103,273 | |||||||||||||||||||||||
2003 | 4,193 | 90,500 | — | — | — | 94,693 |
(1) | Dividends are paid at the same rate applicable to all outstanding shares of Common Stock. |
Individual Grants | ||||||||||||||||||||||||||||
Number of | ||||||||||||||||||||||||||||
Securities | Percent of | |||||||||||||||||||||||||||
Underlying | Options | |||||||||||||||||||||||||||
Options | Granted to | Exercise or | Grant Date | |||||||||||||||||||||||||
Granted | Employees in | Base Price | Expiration | Vesting | Fair Value | |||||||||||||||||||||||
Name | (#)(1)(2) | Fiscal Year | ($/share)(2) | Date | Dates(3) | Grant Date | ($)(4) | |||||||||||||||||||||
Gregory H. Boyce | 51,960 | 12.41 | % | 19.33 | 01/03/2015 | 01/03/06 | 01/03/05 | 393,337 | ||||||||||||||||||||
25,404 | 6.07 | % | 23.45 | 03/01/2015 | 03/01/06 | 03/01/05 | 233,456 | |||||||||||||||||||||
77,364 | 626,793 | |||||||||||||||||||||||||||
Richard A. Navarre | 38,804 | 9.27 | % | 19.33 | 01/03/2015 | 01/03/06 | 01/03/05 | 293,746 | ||||||||||||||||||||
10,802 | 2.58 | % | 23.73 | 04/01/2015 | 04/01/06 | 04/01/05 | 99,169 | |||||||||||||||||||||
49,606 | 392,915 | |||||||||||||||||||||||||||
Richard M. Whiting | 26,516 | 6.33 | % | 19.33 | 01/03/2015 | 01/03/06 | 01/03/05 | 200,761 | ||||||||||||||||||||
Roger B. Walcott, Jr. | 22,560 | 5.39 | % | 19.33 | 01/03/2015 | 01/03/06 | 01/03/05 | 170,809 | ||||||||||||||||||||
Irl F. Engelhardt | 111,044 | 26.53 | % | 20.26 | 01/25/2015 | 01/25/06 | 01/25/05 | 881,417 |
(1) | Other material terms of these options are described under the caption “Stock Options” in the Report of the Compensation Committee on page 34 of this Proxy Statement. |
(2) | The number and exercise price of all options have been adjusted to reflect the2-for-1 stock splits effected by the Company in March 2005 and February 2006. |
(3) | The options vest in three equal annual installments beginning on the first anniversary of the date of grant. |
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(4) | Represents grant date value determined usingBlack-Scholes methodology, as applied with guidance from the Compensation Committee’s independent compensation consultants. |
Shares Acquired on Exercise (#)(1) | ||||||||||||||||
Post IPO | Value | |||||||||||||||
Name | LBO Grants | Grants | Total | Realized ($) | ||||||||||||
Gregory H. Boyce | — | 160,000 | 160,000 | 4,139,780 | ||||||||||||
Richard A. Navarre | — | 62,568 | 62,568 | 1,344,840 | ||||||||||||
Richard M. Whiting | 22,612 | 157,388 | 180,000 | 4,158,707 | ||||||||||||
Roger B. Walcott, Jr. | — | 52,400 | 52,400 | 804,158 | ||||||||||||
Irl F. Engelhardt | 1,047,860 | — | 1,047,860 | $ | 28,817,885 |
(1) | Amounts adjusted to reflect the2-for-1 stock splits effected by the Company in March 2005 and February 2006. |
Number of Securities Underlying Unexercised | Value of Unexercised In-the-Money | |||||||||||||||||||||||||||||||
Options at Fiscal Year-End(1) | Options at Fiscal Year-End(2) | |||||||||||||||||||||||||||||||
Exercisable (#) | Unexercisable (#) | |||||||||||||||||||||||||||||||
LBO | Post IPO | Post IPO | ||||||||||||||||||||||||||||||
Name | Grants | Grants | Total | LBO Grants | Grants | Total | Exercisable ($) | Unexercisable ($) | ||||||||||||||||||||||||
Gregory H. Boyce | — | 752,700 | 752,700 | — | 180,196 | 180,196 | 24,073,756 | 4,850,845 | ||||||||||||||||||||||||
Richard A. Navarre | — | 6,820 | 6,820 | 388,372 | 110,618 | 498,990 | 197,695 | 17,568,066 | ||||||||||||||||||||||||
Richard M. Whiting | — | 22,710 | 22,710 | 435,208 | 78,398 | 513,606 | 719,457 | 18,618,435 | ||||||||||||||||||||||||
Roger B. Walcott, Jr. | — | — | — | 435,208 | 68,688 | 503,896 | — | 18,351,447 | ||||||||||||||||||||||||
Irl F. Engelhardt | 245,132 | 494,874 | 740,006 | 1,246,272 | 301,734 | 1,548,006 | 25,932,397 | 55,265,987 |
(1) | Amounts adjusted to reflect the2-for-1 stock splits effected by the Company in March 2005 and February 2006. |
(2) | Values are calculated based on the closing price of Peabody Energy Corporation Common Stock on the last trading day of 2005 (i.e., $41.21 per share) less the applicable exercise price, in each case adjusted to reflect the Company’s2-for-1 stock splits in March 2005 and February 2006. Stock splits do not affect the monetary value of stock options. |
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Number of Shares, | Performance or Other | Fair Value on | ||||||||||
Units or Other | Period Until | Date of | ||||||||||
Name | Rights (#)(1)(2) | Maturation or Payout | Grant ($)(3) | |||||||||
Gregory H. Boyce | 45,628 | 1/3/05-12/31/07 | 990,356 | |||||||||
Richard A. Navarre | 25,508 | 1/3/05-12/31/07 | 553,651 | |||||||||
Richard M. Whiting | 12,992 | 1/3/05-12/31/07 | 281,991 | |||||||||
Roger B. Walcott, Jr. | 11,052 | 1/3/05-12/31/07 | 239,884 | |||||||||
Irl F. Engelhardt | 57,036 | 1/3/05-12/31/07 | 1,237,966 |
(1) | The material terms of these performance units, including performance payout formulas, are described under the caption “Performance Units” in the Report of the Compensation Committee on page 34 of this Proxy Statement. |
(2) | Amounts adjusted to reflect the2-for-1 stock splits effected by the Company in March 2005 and February 2006. |
(3) | Performance units with stock market performance conditions have been valued utilizingBlack-Scholesmethodology (as applied with guidance from the Compensation Committee’s independent compensation consultants) within aMonte Carlosimulation which incorporates the total shareholder return hurdles set for each grant. Performance units with internal performance conditions have been valued based on the market price at the grant date (adjusted for dividends foregone during the service period), assuming a targeted achievement rate. |
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Number of Securities | |||||||||||||
(a) | Remaining Available for | ||||||||||||
Number of Securities | Future Issuance Under | ||||||||||||
to Be Issued upon | Weighted-Average | Equity Compensation | |||||||||||
Exercise of Outstanding | Exercise Price of | Plans (Excluding | |||||||||||
Options, Warrants | Outstanding Options, | Securities Reflected in | |||||||||||
Plan Category | and Rights | Warrants and Rights | Column (a)) | ||||||||||
Equity compensation plans approved by security holders | 10,783,786 | $ | 6.37 | 15,853,254 | |||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||
Total | 10,783,786 | $ | 6.37 | 15,853,254 |
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Estimated | Estimated | |||||||||||||||||||
Normal | Early | |||||||||||||||||||
Number of | Normal | Retirement | Early | Retirement | ||||||||||||||||
Years Credited | Retirement | Annual | Retirement | Annual Benefit | ||||||||||||||||
Name | Service (#)(2) | Age (#) | Benefit($) | Age (#) | ($)(3) | |||||||||||||||
Gregory H. Boyce | — | — | — | — | — | |||||||||||||||
Richard A. Navarre | 7.75 | 62 | 37,993 | 55 | 27,355 | |||||||||||||||
Richard M. Whiting | 26.50 | 62 | 264,786 | 55 | 169,685 | |||||||||||||||
Roger B. Walcott, Jr. | 2.58 | 62 | 24,663 | 55 | 17,757 | |||||||||||||||
Irl F. Engelhardt | 26.75 | 62 | 490,008 | 59 | (4) | 398,268 |
(1) | Future pension payments to be made pursuant to the Company’s Salaried Employees Retirement Plan. |
(2) | Due to the phase-out of the Company’s pension plan as described above, years of service may differ from years of employment. |
(3) | A 4% reduction factor applies for each year a retiree receives a benefit prior to age 62. |
(4) | Mr. Engelhardt is 59 years old. |
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Compensation Philosophy |
• | Programs will have a clear link to shareholder value. | |
• | Programs will be designed to support achievement of the Company’s business objectives. | |
• | Total compensation opportunities will be established at levels which are competitive with marketplace practices and other pertinent criteria, taking into account such factors as executive performance, level of experience and retention value. | |
• | Variable incentive pay will constitute a significant portion of each executive’s compensation. | |
• | Incentive pay will be designed to: |
• | Reflect company-wide, business unit and individual performance, based on each individual’s position and level; and | |
• | Incorporate “absolute” (internal) and “relative” (external) performance measures. |
• | Programs will be communicated so that participants understand how their decisions and actions affect business results and their compensation. |
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Compensation Program Competitiveness Study |
Annual Base Salary |
Perquisites |
Annual Incentive Plan |
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2005 Incentive Payments |
Long-Term Incentives |
Stock Options |
Performance Units |
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• | Threshold payouts (equal to 50% of the value of the performance units, as measured at the end of the performance period) begin for TSR performance at the 40th percentile of the Industry Peer Group, the 35th percentile of the S&P MidCap 400 Index and a threshold measure for three-year Adjusted EBITDA Return on Invested Capital. | |
• | Target payouts (equal to 100% of the value of the performance units, as measured at the end of the performance period) are based on performance at the 55th percentile of the Industry Peer Group, 50th percentile of the S&P MidCap 400 Index and a target measure for three-year Adjusted EBITDA Return on Invested Capital. | |
• | Maximum payouts (equal to 200% of the value of the performance units, as measured at the end of the performance period) are based on performance at the 80th percentile of the Industry Peer Group, the 75th percentile of the S&P MidCap 400 Index and a maximum measure for the three-year Adjusted EBITDA Return on Invested Capital. | |
• | Results between threshold and target payout levels, and target and maximum payout levels, are ratably adjusted. | |
• | No payments will be made if TSR is negative and performance is below the 50th percentile of the Industry Peer Group. Also, the maximum payout cannot exceed 150% of the value of the performance units (as measured at the end of the performance period) if TSR is negative and performance is above the 50th percentile of the Industry Peer Group. |
Other Plans |
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Compensation of the Chief Executive Officer and Chairman |
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Peabody | Peabody | |||||||||||||||||||||||||||||||||||
Percentile | Percentile | |||||||||||||||||||||||||||||||||||
Ranking | Ranking | |||||||||||||||||||||||||||||||||||
Among Peer | Compared | Peabody | ||||||||||||||||||||||||||||||||||
Companies- | Peabody | to Industrial | Ranking | |||||||||||||||||||||||||||||||||
Total | Ranking | Index-Total | Among | Payout as | Target | Actual Award | Actual Award | |||||||||||||||||||||||||||||
Performance | Shareholder | Among 7 Peer | Shareholder | Industrial | a % of | Award Units | Units | Value | ||||||||||||||||||||||||||||
Name | Period | Return | Companies | Return | Companies | Target | (#)(2) | (#)(2) | ($)(3) | |||||||||||||||||||||||||||
Gregory H. Boyce | 2003-2005 | 100 | % | 1 | 99.1 | % | 3 of 375 | 200 | % | 17,804 | 35,608 | $ | 1,473,103 | (4) | ||||||||||||||||||||||
Richard A. Navarre | 2003-2005 | 100 | % | 1 | 99.1 | % | 3 of 375 | 200 | % | 31,044 | 62,088 | $ | 2,568,581 | |||||||||||||||||||||||
Richard M. Whiting | 2003-2005 | 100 | % | 1 | 99.1 | % | 3 of 375 | 200 | % | 32,140 | 64,280 | $ | 2,659,264 | |||||||||||||||||||||||
Roger B. Walcott, Jr. | 2003-2005 | 100 | % | 1 | 99.1 | % | 3 of 375 | 200 | % | 30,316 | 60,632 | $ | 2,508,346 | |||||||||||||||||||||||
Irl F. Engelhardt | 2003-2005 | 100 | % | 1 | 99.1 | % | 3 of 375 | 200 | % | 175,312 | 350,624 | $ | 14,505,315 |
(1) | The index is designed to track the performance of companies included in the S&P 500 Index, excluding companies in the financial services, utility and transportation sectors. |
(2) | Number of shares has been adjusted to reflect the2-for-1 stock splits effected by the Company in March 2005 and February 2006. |
(3) | The value of the awards was calculated based on the average closing price of the Company’s Common Stock for the four-week period ended December 31, 2005 ($41.37, which has been adjusted for the February 2006 stock split). |
(4) | Mr. Boyce’s performance award was prorated because his employment with the Company began after the commencement of the performance period. |
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950137-06-004018/c03033c0303303.gif)
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950137-06-004018/c03033c0303304.gif)
Policy on Deductibility of Compensation Expenses |
Stock Ownership Guidelines |
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MEMBERS OF THE COMPENSATION | |
COMMITTEE: | |
ROBERT B. KARN III (CHAIR) | |
B. R. BROWN | |
WILLIAM E. JAMES |
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950137-06-004018/c03033c0303315.gif)
May-01 | Dec-01 | Dec-02 | Dec-03 | Dec-04 | Dec-05 | ||||||||||||||||||||||||||
Peabody Energy Corporation | $ | 100 | $ | 101 | $ | 107 | $ | 155 | $ | 304 | $ | 622 | |||||||||||||||||||
S&P© MidCap 400 Index | $ | 100 | $ | 94 | $ | 80 | $ | 108 | $ | 126 | $ | 142 | |||||||||||||||||||
Custom Composite Index (4 Stocks) | $ | 100 | $ | 65 | $ | 46 | $ | 76 | $ | 114 | $ | 182 | |||||||||||||||||||
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Fourth: (1) The total number of shares of all classes of stock that the Corporation shall have the authority to issue is 850,000,000 shares, consisting of 800,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”), 10,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”) and 40,000,000 shares of Series Common Stock, par value $0.01 per share (“Series Common Stock”). The number of authorized shares of any of the Preferred Stock, the Common Stock or the Series Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware (or any successor provision thereto), and no vote of the holders of any of the Preferred Stock, the Common Stock or the Series Common Stock voting separately as a class shall be required therefor. |
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ITEM 4 — | FORMATION OF SPECIAL COMMITTEE |
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(a) The Board shall constitute a “Majority Vote Shareholder Committee” (the “Committee”) composed of the proponent of the Proposal and other shareholders that indicate to the Company an interest in participating in the Committee; | |
(b) The purpose of the Committee will be to communicate with the Board regarding the subject matter of the Proposal; the Committee will not be authorized to act on behalf of the Board or to compel the Board to take action, and will not interfere with the Board’s authority to manage the business and affairs of the Company; and | |
(c) The independent members of the Board shall meet with the Committee no fewer than two times between the date on which the Committee is constituted and the next annual meeting of shareholders. |
• | The Board believes the so-called “majority-vote shareholder committee” is and was intended to be a misnomer, since any shareholder could join no matter how few shares they own. In reality, the Board believes the proposed committee would be a vehicle for special interest groups to gain Board access, which could then be used as a tool for harassment and disruption. | |
• | The proposed committee is unnecessary as there are other avenues available for shareholders to communicate with the Board. | |
• | The Board believes this proposal was submitted as part of a “corporate campaign” aimed at pressuring the Company into adopting policies being promoted by union officials that would |
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be detrimental to the Company and its shareholders and employees.SeeShareholder Proposals and Company’s Statements in Opposition — Introduction. | ||
• | The Board believes this vaguely worded proposal would give activists an open forum to advance their special purpose agendas at the expense of our shareholders. Once established, such a committee could continue indefinitely as the Board would have no power to end its existence without adopting a proposal that may not serve the best interests of shareholders as a whole. |
ITEM 5 — | MAJORITY VOTING |
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• | A similar majority-vote proposal was presented, but did not pass, at last year’s Annual Meeting. The Board, however, heard the concerns of shareholders voting in favor of the |
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proposal and established a new director election process which it believes is a better alternative to a majority-voting standard. | ||
• | The Board believes this proposal was submitted as part of a “corporate campaign” aimed at pressuring the Company into adopting policies being promoted by union officials that would be detrimental to the Company and its shareholders and employees.SeeShareholder Proposals and Company’s Statements in Opposition — Introduction. | |
• | The Board believes that adopting the proposal would make it easier for special interest groups to pressure the Board, to cause disruption and to push their own agendas to the detriment of the Company and its shareholders as a whole. |
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ITEM 6 — | BOARD DECLASSIFICATION |
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• | A majority of shareholders voted in favor of a similar proposal submitted by the AFL-CIO at last year’s Annual Meeting. The Board, however, believes shareholders voting in favor of the proposal may not have realized the proposal was intended to pressure the Company into adopting policies being promoted by union officials that would be detrimental to the Company and its shareholders and employees.See Shareholder Proposals and Company’s Statements in Opposition — Introduction. | |
• | A classified board structure is an important protection for shareholders in a hostile takeover situation because it allows the Company time to negotiate with a potential acquirer, to consider alternative proposals and to maximize shareholder value. | |
• | The Board continues to believe the classified structure improves its ability to protect shareholder interests and the Company’s long-term value. |
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ITEM 7 — | WATER USE |
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• | The Company is committed to the principles of environmental stewardship and complies with all laws and regulations governing its water use. | |
• | The requested report is unnecessary as reports are already prepared annually for water use at Black Mesa, and will be required to be prepared annually for water use at Prairie State after operations begin. The Company also plans to publish a corporate and social responsibility report later this year outlining the Company’s views on a variety of social and environmental issues, including water use. | |
• | The Board believes the proposal contains erroneous and incomplete information about the Company’s operations, and that preparing a report in response to such a proposal would not be in the best interests of the Company or its shareholders. |
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Eagle 2 |
Prairie State |
• | The Company met all regulatory requirements in obtaining a permit to use water from the Kaskaskia River; | |
• | The Sierra Club expressed its views to the Illinois EPA about Prairie State’s proposed water use during the permitting process; and | |
• | By issuing the permit, the Illinois EPA rejected the Sierra Club’s concerns and agreed that Prairie State’s water use will not significantly impact other water users. |
Black Mesa |
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• | You must notify the Corporate Secretary in writing at the Company’s principal executive offices between January 5, 2007 and February 4, 2007; however, if the Company advances the date of the meeting by more than 20 days or delays the date by more than 70 days, from May 5, 2007, then such notice must be received not earlier than 120 days before the date of the annual meeting and not later than the close of business on the 90th day before such date or the 10th day after public disclosure of the meeting is made; and | |
• | Your notice must contain the specific information required by the Company’s by-laws regarding the proposal or nominee, including, but not limited to, name, address, shares held, a description of the proposal or information regarding the nominee and other specified matters. |
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By Order of the Board of Directors, | |
![]() | |
Jeffery L. Klinger | |
Vice President, General Counsel | |
and Corporate Secretary |
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PEABODY ENERGY CORPORATION
May 5, 2006
PROXY VOTING INSTRUCTIONS |
MAIL — Date, sign and mail your proxy card in the
envelope provided as soon as possible.
(1-800-776-9437) from any touch-tone telephone
and follow the instructions. Have your proxy card
available when you call.
follow the on-screen instructions. Have your proxy
card available when you access the web page.
COMPANY NUMBER | |||||
ACCOUNT NUMBER | |||||
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until 11:59 PM
Eastern Time the day before the cut-off or meeting date.
â Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet.â
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” ITEMS 4 THROUGH 7.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREx
1. | Election of Directors: The undersigned hereby GRANTS authority to elect the following nominees: (see Board recommendation below): |
NOMINEES: | ||||
o | FOR ALL NOMINEES | m Gregory H. Boyce m William E. James | ||
o | WITHHOLD AUTHORITY FOR ALL NOMINEES | m Robert B. Karn III m Henry E. Lentz m Blanche M. Touhill | ||
o | FOR ALL EXCEPT (See instructions below) |
RECOMMENDATION: | The Board recommends a vote“For”all Nominees. |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark“FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:˜ |
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o |
Recommends “For"
ê | ||||||||
FOR | AGAINST | ABSTAIN | ||||||
2. | Ratification of Appointment of Independent Registered Public Accounting Firm. | o | o | o | ||||
3. | Approval of Increase in Authorized Shares of Common Stock. | o | o | o |
Recommends “Against”
ê | ||||||||
FOR | AGAINST | ABSTAIN | ||||||
4. | Shareholder Proposal regarding Formation of Special Committee. | o | o | o | ||||
5. | Shareholder Proposal regarding Majority Voting. | o | o | o | ||||
6. | Shareholder Proposal regarding Board Declassification. | o | o | o | ||||
7. | Shareholder Proposal regarding Water Use. | o | o | o | ||||
If you vote over the Internet or by telephone, please do not mail your card |
Signature of Shareholder | Date: | Signature of Shareholder | Date: |
Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | ||||||||||||||
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Friday, May 5, 2006, 10:00 A.M.
Ritz-Carlton Hotel
100 Carondelet Plaza
Clayton, Missouri 63105
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your proxy card in the
envelope provided as soon
as possible.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” ITEMS 4 THROUGH 7.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREx
1. | Election of Directors: The undersigned hereby GRANTS authority to elect the following nominees: (see Board recommendation below): |
NOMINEES: | ||||
o | FOR ALL NOMINEES | ¡ Gregory H. Boyce ¡ William E. James | ||
o | WITHHOLD AUTHORITY FOR ALL NOMINEES | ¡ Robert B. Karn III ¡ Henry E. Lentz ¡ Blanche M. Touhill | ||
o | FOR ALL EXCEPT (See instructions below) |
RECOMMENDATION: | The Board recommends a vote“For”all Nominees. |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark“FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:l |
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o |
Recommends “For"
ê | ||||||||
FOR | AGAINST | ABSTAIN | ||||||
2. | Ratification of Appointment of Independent Registered Public Accounting Firm. | o | o | o | ||||
3. | Approval of Increase in Authorized Shares of Common Stock. | o | o | o |
Recommends “Against”
ê | ||||||||
FOR | AGAINST | ABSTAIN | ||||||
4. | Shareholder Proposal regarding Formation of Special Committee. | o | o | o | ||||
5. | Shareholder Proposal regarding Majority Voting. | o | o | o | ||||
6. | Shareholder Proposal regarding Board Declassification. | o | o | o | ||||
7. | Shareholder Proposal regarding Water Use. | o | o | o |
Signature of Shareholder | Date: | Signature of Shareholder | Date: |
Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | |||
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PEABODY ENERGY CORPORATION
This proxy is solicited on behalf of the Board of Directors
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