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 ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Westmoreland Coal Company
(Name of Registrant as Specified in its Charter)
Philip D. Weinstock
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(x) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(i)(3).
( ) 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:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how
it was determined.
( ) 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:
WESTMORELAND COAL COMPANY
700 The Bellevue
200 South Broad Street
Philadelphia, Pennsylvania 19102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The annual meeting of shareholders of Westmoreland Coal Company will be
held at Hotel Atop The Bellevue, 19th Floor, The Rose Garden, Broad and
Walnut Streets, 1415 Chancellor Court, Philadelphia, Pennsylvania, on
Monday, June 6, 1994 at 10:00 a.m. Philadelphia time, to:
1. Elect a Board of Directors for the ensuing year; and
2. Transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on April 27, 1994
will be entitled to notice of and to vote at the meeting. The proxy
materials will be mailed to such shareholders on or about April 29, 1994.
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON.
Philip D. Weinstock
Secretary
April 29, 1994
WESTMORELAND COAL COMPANY
700 The Bellevue
200 South Broad Street
Philadelphia, Pennsylvania 19102
April 29, 1994
PROXY STATEMENT
General Information
The enclosed proxy is solicited on behalf of the Board of Directors of
Westmoreland Coal Company ("Company") for use at the annual meeting of
shareholders to be held on June 6, 1994. The proxy may be revoked by a
shareholder at any time before its exercise by written notice to the
Secretary of the Company, by executing and delivering a proxy with a later
date or by voting in person at the meeting. The expense of this
solicitation will be paid by the Company. Some officers and regular
employees may solicit proxies personally and by telephone.
Shareholders of record at the close of business on April 27, 1994 (the
"record date") will be entitled to vote at the meeting. On the record
date, the Company had outstanding 6,955,477 shares of common stock with a
par value of $2.50 each and 2,300,000 depositary shares (each of which
represents one quarter of a share of Series A convertible exchangeable
preferred stock with a par value of $1.00 each). The common stock and the
depositary shares constitute all of the Company's voting securities. Each
outstanding share will entitle the holder to one vote on all business of
the meeting.
Share Ownership
Except as set forth in the following table, no person or entity known to
the Company beneficially owned more than 5% of the Company's voting
securities as of December 31, 1993:
Number of Shares and Nature of Beneficial Ownership (1)
Name and
Address of Percentage of Percentage of
Beneficial Common Common Depositary Depositary
Owner Stock Stock Shares Shares
Penn Virginia 1,754,411(2) 25.2%
Equities Corp.
800 The Bellevue
200 S. Broad St.
Philadelphia, PA
19102
Norwest Corp 273,600 (3) 11.9%
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota
55479
Mellon Bank Corp. 463,000 (4) 6.7%
Mellon Bank Center
Pittsburgh, PA
15258
(1) Based on information as of December 31, 1993 contained in filings
made with the Securities and Exchange Commission ("Commission") or
furnished to the Company by the respective shareholders. Except as
indicated below, the Company is informed that the respective beneficial
owners have sole voting power and sole investment power with respect to
the shares shown opposite their names.
(2) Penn Virginia Equities Corporation is a wholly-owned subsidiary of
Penn Virginia Corporation ("Penn Virginia"). Lennox K. Black, a director
of the Company, is Chairman of the Board and Chief Executive Officer of
Penn Virginia. (See "Transactions with Other Companies" below.)
(3) According to its Schedule 13G dated February 4, 1994 and filed with
the Commission, Norwest Corporation ("Norwest") reported that, acting in
a fiduciary or representative capacity and held in a number of separate
accounts through its subsidiaries, Norwest Colorado, Inc. and Norwest
Bank Colorado, National Association, it was deemed to own 273,600
depositary shares. Norwest further reported that it had sole voting
power over 220,300 shares, shared voting power over 4,000 shares and sole
dispositive power over 271,100 shares.
(4) The shares are held in a number of separate accounts by Mellon Bank
Corporation ("Mellon") through its wholly-owned subsidiaries, Mellon
Bank, N.A. and Mellon Capital Management Corporation. Mellon reports
that it has sole voting power with respect to 62,000 shares of common
stock, and shared voting power with respect to 10,000 shares of common
stock. In addition, Mellon is trustee of the Westmoreland Coal Company
and Affiliated Companies Employees' Savings/Retirement Plan (the "Plan"),
which holds 387,425 shares of the Company's common stock (including 5,919
shares issuable upon conversion of 3,466 depositary shares).
Under the Plan, employees can direct voting of shares held in their
accounts; in the absence of direction by employees, the trustee may vote
such shares. Mellon further reports that it has sole dispositive power
with respect to 62,000 shares of common stock, but has shared dispositive
power with respect to 18,000 shares of common stock. The Schedule 13G
filed by Mellon assumed that 1.708 shares of common stock are issuable
upon conversion of each depositary share. Mr. Hutchinson, Chairman of
the Board of the Company, is a director of Mellon Bank Corporation and
Mellon Bank/PSFS.
The following table sets forth information as of February 25, 1994
concerning stock ownership of individual directors and named executive
officers, and of the executive officers and directors of the Company as a
group:
Number of Shares and
Nature of Beneficial Ownership (1)
Names of Directors, Percentage
Named Executive Common of Common Depositary
Officers and Stock Stock (2) Shares (2)
Persons as a Group
Lennox K. Black 1,755,911 (3)(7) 25.2% -
Brenton S. Halsey 6,692 (7)(9) - -
A. Linwood Holton 8,121 (7)(9)(10)(11) - -
Pemberton Hutchinson 37,011 (4)(6) - -
William R. Klaus 6,786 (7)(9) - -
E. B. Leisenring, Jr. 38,662 (7)(8) - -
Christopher K. Seglem 17,591 (4)(6) - 54 (5)
Edwin E. Tuttle 8,687 (7) - -
Ronald W. Stucki 153 (4) - 142 (5)
Charles J. Brown, III 11,953 (4)(6) - -
Joseph W. Lee 9,890 (4)(6) - 76 (5)
Theodore E. Worcester 721 (4) - -
Directors and
Executive Officers
of the Company
as a Group 1,927,200 (4)(6)(7)(9) 27.6% 365 (5)
(1) This information is based on information furnished to the Company by
individual directors and executive officers. Except as indicated below,
the Company is informed that the respective beneficial owners have sole
voting power and sole dispositive power with respect to the shares
opposite their names.
(2) Percentages represent the percentage owned of the Company's common
stock. Percentages of less than 1% are not reflected. No individual or
group presented in the table held as much as 1% of the Company's
depositary shares.
(3) Principally represents beneficial ownership by Penn Virginia
Equities Corporation, a wholly-owned subsidiary of Penn Virginia of
1,754,411 shares, of which Mr. Black disclaims beneficial ownership in
his individual capacity. This presentation is made solely because Mr.
Black is also Penn Virginia's Chairman of the Board and Chief Executive
Officer.
(4) Includes shares held by Mellon as trustee of the Westmoreland Coal
Company and Affiliated Companies Employees' Savings/Retirement Plan
vested as follows: Mr. Hutchinson-10,808, Mr. Seglem-4,143, Mr. Stucki-
153, Mr. Brown-436, Mr. Lee-2,004 and Mr. Worcester-721; shares vested in
the directors and executive officers as a group totalled 23,779. These
shares are included in the 387,425 shares of common stock reported as
beneficially owned by Mellon in footnote 4 on Page 2, supra.
(5) Represents shares held by Mellon as trustee of the Westmoreland Coal
Company and Affiliated Companies Employees' Savings/Retirement Plan.
These shares are included in the 3,466 depositary shares held by the Plan
of the Company's depositary shares, as referred to in footnote 4 on Page
2, supra.
(6) Includes shares which may be purchased under the 1982 and 1985
Westmoreland Incentive Stock Option and Stock Appreciation Rights Plans
as follows: Mr. Hutchinson-24,603, Mr. Seglem-13,448, Mr. Brown-11,512,
and Mr. Lee-7,886; shares which may be purchased under these Plans for
the group as a whole totalled 76,952.
(7) Includes shares which may be purchased under the 1991 Non-Qualified
Stock Option Plan for Non-Employee Directors as follows: Messrs. Halsey,
Holton, Klaus, Leisenring and Tuttle-3,000 each; Mr. Black-1,500; in
total, 16,500.
(8) In addition, Mr. Leisenring's wife, children and grandchildren owned
a total of 2,205 shares in which he disclaims beneficial ownership.
(9) Includes shares held under the Westmoreland Directors' Deferred
Compensation Plan as follows: Mr. Halsey-2,152, Mr. Holton-3,797 and Mr.
Klaus-1,837; 7,786 in total, which may not be voted.
(10) In addition, Mr. Holton's son owned 20 shares of Company common
stock in which Mr. Holton disclaims beneficial ownership.
(11) Mr. Holton will not be eligible to stand for re-election, in
accordance with the policy adopted by the Board of Directors in 1990 that
no Director may stand for re-election at the annual meeting of
shareholders following his 70th birthday.
ELECTION OF DIRECTORS
Nominees for Election to Board of Directors
The seven persons named in the following table, all of whom are now
directors of the Company, have been designated as nominees for election
to the Board for a one-year term. All of these directors were elected by
the shareholders of the Company. The persons named in the proxy, who
shall be appointed by shareholders as their agents to vote their shares
of stock, intend to vote for the election of these nominees. Penn
Virginia Corporation ("Penn Virginia"), under the terms of an Agreement
dated July 9, 1992 by and among itself, Penn Virginia Equities
Corporation and the Company, retains the right, under specified
conditions, to designate no less than two persons to be included in the
slate of nominees recommended by the Company's Board of Directors to the
Company's shareholders for election as directors at each annual
shareholders' meeting until July 9, 1994. Penn Virginia currently has
designated only one such person, Lennox K. Black, for this shareholders'
meeting. Each nominee has consented to being named and to serve if
elected. If any should decline or be unable to serve, the persons named
in the proxy will vote for the election of such substitute nominee as
shall have been designated by the Board of Directors. The Company has no
reason to believe that any nominee will decline or be unable to serve.
A shareholder may, with respect to the election of directors (i) vote for
the election of all named director nominees, (ii) withhold authority to
vote for all named director nominees or (iii) vote for the election of
all named director nominees other than any nominee(s) with respect to
whom the shareholder withholds authority to vote by so indicating in the
appropriate space on the proxy. In the absence of a specific direction
from the shareholder, proxies will be voted for the election of all named
director nominees.
If a proxy indicates that all or a portion of the votes represented by
such proxy are not being voted with respect to a particular matter, such
non-votes will not be considered present and voting on that particular
matter, but will be considered present for purposes of determining
whether a quorum exists at the meeting. The affirmative vote of a
plurality of the votes present in person or by proxy at the meeting and
voting in the election of directors is required in the election of
directors.
Name Business Experience Age Director Committee
During Past Five of the Memberships (1)
Years and Other Company
Directorships Since
Lennox K. Black Chairman of the 64 1992 Executive;
Board and Chief Compensation
Executive Officer, and Benefits
Teleflex, Inc.,
equipment manufacturer
(since 1982); Chairman
of the Board and Chief
Executive Officer,
(effective May 1, 1992)
Director of Teleflex, Inc.
Chairman of the Board of
Penn Virginia Corp.
(effective May 1, 1992),
Director of The Pep Boys,
Quaker Chemical Corporation and
Envirite Corp.
Brenton S. Halsey Retired Chairman 67 1977 Compensation
Emeritus(since July and Benefits
1992), Chairman
(through July 1, 1992),
Chairman and Chief
Executive Officer
(through Oct. 31, 1990),
James River Corp.,
manufacturer of consumer
products, food packaging
and printing papers
Director of First
Union Corp.
Pemberton Chief Executive 63 1977 Executive
Hutchinson Officer (January 1989
through June 1993);
Chairman of the
Board of the Company
(since January 1992);
President of the
Company (June 1981
through June 1992);
Director of Mellon Bank
Corp., Mellon Bank/PSFS,
Teleflex, Inc. and
The Pep Boys
William R. Klaus Partner, Pepper, 68 1973 Executive;
Hamilton & Scheetz, Compensation
attorneys and
Benefits;
Director of First Audit
Fidelity Bank, N.A.
E. B. Chairman of the 68 1952 Executive;
Leisenring, Jr. Board of the Company Audit
(1978 through Jan. 1992);
Chairman of the Board
of Penn Virginia
Corp.(1978 through
April 1992)
Director of First Fidelity
Bank, N.A.,
SKF-USA Inc., Norfolk
Southern Corp. and
Chairman of the
Philadelphia
Contributionship
Christopher K. Chief Executive 47 1992 Executive
Seglem Officer of the Company
(since June 1993);
President of the
Company (since June
1992); Chief Operating
Officer of the Company
(June 1992 through
June 1993); Executive
Vice President of the
Company (Dec. 1990
through June 1992);
Senior Vice President
of the Company
(Nov. 1988 through
Dec. 1990); General
Counsel (Jan. 1988
through Dec. 1990) and
Secretary (Jan. 1988
through May 1990) of
the Company
Edwin E. Tuttle Formerly Vice Chairman 67 1978 Executive;
of Elf Atochem Audit
North America, Inc.
(successor to Pennwalt
Corp.), a diversified
chemical company (1990);
Chairman and Chief
Executive Officer,
Pennwalt Corp.
(1978-1989)
Director of CoreStates
Bank, N.A. and
General Accident
Insurance Company
of America
(1) See "Information About the Board and Committees" following.
Information About the Board and Committees
The Board of Directors held 14 meetings during 1993. Each director
attended more than 75% of the aggregate of the total number of meetings
of the Board of Directors and of the total number of meetings held by all
committees on which he served during the time he was in office.
The Audit Committee of the Board of Directors, composed of Messrs. Tuttle
(chairman), Klaus and Leisenring, met three times during 1993. This
Committee, which reports to the Board of Directors, reviews the adequacy
of the Company's internal accounting controls and oversees the
implementation of management recommendations. It also reviews with the
Company's independent auditors the audit plan for the Company, the
internal accounting controls, financial statements and management
letter. It also recommends to the Board the selection of independent
auditors for the Company.
The Compensation and Benefits Committee of the Board of Directors,
composed of Messrs. Halsey (chairman), Holton, Klaus and Black, met three
times during 1993. This Committee reviews the Company's and its
subsidiaries' employee benefit programs and management compensation and
it reports its recommendations to the Board of Directors.
The Executive Committee of the Board of Directors, composed of Messrs.
Leisenring (chairman), Hutchinson, Tuttle, Klaus, Black and Seglem did
not meet during 1993.
The Board of Directors does not have a standing nominating committee.
Executive Compensation
The following table sets forth information for 1993, 1992 and 1991 as to
all persons who held the position of Chief Executive Officer during 1993
and the other four most highly compensated executive officers at the end
of 1993, whose total salary and bonus for 1993 exceeded $100,000.
SUMMARY COMPENSATION TABLE (4)(6)
Annual Compensation Long Term
Other Compensation All
Name and Annual Stock Options Other
Principal Compen- (# Common Compen-
Positions Year Salary Bonus(1) sation(2) Shares) sation (3)
Pemberton
Hutchinson, 1993 268,546 0 0 0 12,792
Chief 1992 310,008 0 0 50,000 12,800
Executive 1991 310,008 0 0 0 12,703
(through
June 1993)
Officer
and Chairman
of the Board
Christopher 1993 270,504 175,621 0 52,000 12,792
K. Seglem, 1992 216,846 0 0 40,000 5,002
Chief 1991 196,692 0 0 0 4,231
Executive
Officer
(June 1993
to the present)
and President
Ronald 1993 162,124 93,438 1,532 12,000 3,712
W. Stucki, 1992 97,688 0 0 20,000 26,067
Senior Vice 1991 -NA- -NA- -NA- -NA- -NA-
President
- - -Operations
Charles J 1993 157,677 0 0 0 1,526
Brown, III, 1992 157,668 0 0 25,000 1,571
President of 1991 150,156 12,344 0 5,371 718
Westmoreland
Energy, Inc. (5)
Joseph 1993 155,457 84,868 0 12,000 2,478
W. Lee, 1992 150,000 0 0 25,000 3,744
President 1991 134,804 11,144 0 0 3,166
of
Westmoreland
Coal Sales
Company, Inc.
Theodore 1993 143,568 81,083 0 12,000 3,385
E. Worcester, 1992 130,008 0 0 20,000 5,172
Senior Vice 1991 125,016 0 0 0 20,216
President
and General
Counsel
<FN>
(1) The amounts presented in the bonus column for 1993 represent total
bonuses earned for 1993 based on accomplishment of strategic objectives.
Of the total amount for each individual, 20 percent will be paid in the
second quarter of 1994. Payment of the remaining 80 percent will be
deferred until the earliest to occur of (a) such year in which a profit
is generated, (b) March 31, 1996 or (c) upon sale, merger or liquidation
of the Company, provided that the individual is employed by the Company
at the time the 80 percent would be paid, or if not employed, such
employment was terminated by reason other than voluntary resignation or
other than for discharge due to gross or willful misconduct.
(2) Other Annual Compensation represents the grossed-up amount
reimbursed to Mr. Stucki in 1993 for the payment of taxes.
(3) All Other Compensation for the named executive officers in 1993
consisted of directors' fees and Company contributions to the 401(k)
salary savings plan (the "Plan"). Messrs. Hutchinson and Seglem each
received directors' fees of $8,450. Amounts contributed to the Plan
during 1993 on behalf of the named executives included: Mr. Hutchinson-
$4,342, Mr. Seglem-$4,342, Mr. Stucki-$3,712, Mr. Brown-$1,526, Mr. Lee-
$2,478 and Mr. Worcester-$3,385.
(4) The Company has an Executive Severance Policy, amended with the
consent of the participants, which covers all of the executive officers
named above and two other executive officers, and provides that in the
event of termination of such person's employment with the Company or its
subsidiaries for reasons set forth in the Policy, or from a change-in-
control of the Company, as defined in the Policy, such executive officer
will be entitled to a severance award. This award shall include an
amount equal to twice the executive officer's annual average cash
compensation, defined as the greater of the annualized base salary at the
time of severance plus the amount of bonus awarded (including amounts
deferred) in that year or the annual average of the executive officer's
most recent five calendar years of base salary and bonus awarded
(including amounts deferred), including the year of termination. The
severance award will be paid in equal monthly installments over a period
of 24 months following the date of termination, unless the executive
officer elects to receive the present value of his total severance in a
lump sum cash distribution at the time of termination.
(5) Mr. Brown terminated employment as an executive officer of the
Company in April 1994. The Company is currently in negotiations for a
definitive purchase agreement for acquisition of its cogeneration
operations. Mr. Brown would not be employed by a prospective purchaser on
terms and conditions comparable to those of his current employment.
Therefore, he was entitled to payment under his Severance Agreement with
the Company. Pursuant to the terms of his Severance Agreement, he
received a lump sum cash settlement in the amount of $500,276.
(6) For further information regarding executive officers, see
"Transactions with Other Companies" below.
The following table presents information regarding options to purchase
common shares granted to the named executive officers in 1993:
Option/SAR Grants in Last Fiscal Year
Potential
realizable
Individual Grants value
Number of Percent of Exercise Expiration
Securities total options or base date Grant Date
Name Underlying granted to price Present
Options employees per share Value*
Granted in fiscal
year
Christopher 40,000 38.1% $8.75 6/2/2001 $151,900
K. Seglem
Christopher 12,000 11.4% $5.75 12/8/2001 $ 29,394
K. Seglem
Ronald 12,000 11.4% $5.75 12/8/2001 $ 29,394
W. Stucki
Jospeh W. Lee 12,000 11.4% $5.75 12/8/2001 $ 29,394
Theodore 12,000 11.4% $5.75 12/8/2001 $ 29,394
E. Worcester
<FN>
* This calculation was made using the Black - Scholes option pricing
model. The model assumes: (a) an option term of 8 years, which
represents the length of time between the grant date of options under the
Company's incentive stock option plans and the expiration date of the
options; (b) an interest rate that represents the zero-coupon Government
Bond yield available on the grant date and maturing at the end of the
option term; (c) stock volatility based on quarterly closing market
prices for December 1988 through December 1993; and (d) a dividend yield
which represents the quarterly dividends paid divided by the quarterly
closing market prices, annualized for the 20 quarters from December 1988
through December 1993.
The following table presents information regarding the number of
unexercised options to purchase common shares and the number of
unexercised stock appreciation rights at December 31, 1993:
Aggregated Option/SAR Exercises In Last Fiscal Year
and FY-End Option/SAR Values
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised
Name Options at SARs at
December 31, 1993 December 31, 1993
Exercisable Unexercisable Exercisable Unexercisable
Pemberton
Hutchinson 24,603 50,000 -0- -0-
Christopher
K. Seglem 13,448 92,000 -0- -0-
Ronald W.
Stucki -0- 32,000 -0- -0-
Charles J.
Brown, III 11,512 25,000 -0- -0-
Joseph
W. Lee 7,886 37,000 8,194 -0-
Theodore
E. Worcester -0- 32,000 -0- -0-
<FN>
No member of the named executive officer group exercised any options or
SARs during 1993. None of the options or SARs were in-the-money, as
their exercise prices exceeded the stock market price of the Company's
underlying common stock at year-end.
Retirement Plan
The Company sponsors a Retirement Plan (the "Plan") for eligible
employees of the Company and its subsidiaries to which employees make no
contributions. All employees whose terms and conditions of employment
are not subject to collective bargaining and who work 1,000 or more hours
per year are eligible for participation in the Plan. Eligible employees
become fully vested after five years of service, or in any event, upon
attaining age 65.
In general, the Plan provides for payment of annual retirement benefits
to eligible employees equal to 1.2% of any employee's average annual
salaried compensation (over the sixty most highly compensated consecutive
months of employment) plus .5% of such average annual compensation in
excess of the employee's pay used to determine Social Security retirement
benefits ("covered compensation") for each year of service to a maximum
of 30 years. The Plan also provides for disability benefits and for
reduced benefits upon retirement prior to the normal retirement age of
65.
No amounts are included in the salary compensation column of the Summary
Compensation Table above in respect of Plan contributions by the Company
and its subsidiaries because the Plan is a qualified defined benefit
plan. Based on the most recent actuarial valuation, dated December 1,
1992, no contribution is required or permitted to this Plan for 1993, due
to the full funding limitations imposed under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). The basis upon which
benefits are computed is a straight-life annuity; payments are available
in other forms on an actuarially reduced basis equivalent to a straight-
life annuity. Benefit amounts set forth in the table below are not
subject to any deduction for Social Security benefits or other offset
amounts.
The following table shows estimated annual retirement benefits, which are
representative of an employee currently age 65 whose salary remained
unchanged during his or her last five years of employment and whose
benefit will be paid for the life of the employee:
Compensation Annual Benefit for Years of Service Credited
10 20 30 or more
<c.
$25,000 $ 3,034 $ 6,069 $ 9,103
50,000 7,284 14,569 21,853
100,000 15,784 31,569 47,353
150,000 24,284 48,569 72,853
200,000 32,784 65,569 98,353
250,000 41,284 82,569 123,853
300,000 49,784 99,569 149,353
<FN>
Years of service credited under the Plan for the following individuals
are: Mr. Hutchinson-31 years, Mr. Seglem-13 years, Mr. Stucki-13 years,
Mr. Brown-6 years, Mr. Lee-19 years and Mr. Worcester-3 years.
The current compensation covered by the Plan for any named executive
officer in the Summary Compensation Table is that amount reported in the
Salary column, subject to limitations imposed by the Internal Revenue
Code.
The annual benefit presented in the above table reflects the inclusion of
a Supplemental Executive Retirement Plan (the "SERP"), established by the
Company, effective January 1, 1992, which currently covers all of the
executive officers named above, and one other executive officer. Senior
management and certain other key individuals shall be eligible to
participate in the SERP.
To become vested in the SERP, a participant must attain age 55 and
generally complete 10 years of service. The SERP is a non-qualified plan
which supplements the Retirement Plan by not being limited by Internal
Revenue Code requirements on annual compensation that may be considered
in determining a participant's annual benefit and the amount of annual
benefit payable to the participant. Bonus amounts are included in a
participant's compensation under the SERP, although excluded under the
Retirement Plan. Benefits are payable out of the Company's general
assets, and shall commence and be payable at the same time and in the
same form as the Retirement Plan.
Compensation of Directors
Throughout 1993 the attendance fee for each director attending Board and
committee meetings was $650 for directors and $750 for committee chairmen
attending their respective committee meetings. The attendance fees paid
to Messrs. Hutchinson and Seglem are included in the All Other
Compensation column of the Summary Compensation Table.
Throughout 1993, the annual retainer fee to each outside director was
$15,000, of which $9,000 was paid in cash, and the $6,000 remaining could
be used to purchase stock of the Company, or at the director's election
could also be paid in cash.
Effective January 1, 1994, the attendance fee for the Chairman of the
Board of Directors was increased from $650 to $1300.
Mr. Hutchinson retired as an employee of the Company as of December 31,
1993. For the period January 1, 1994 to the Annual Meeting of
Shareholders in 1995, he has agreed to provide consulting services to the
Board of Directors as the Company may request, for which he will receive
$1,250 per month. Such services may include advice with respect to
matters of corporate strategy and shareholder relationships.
Compensation Committee Interlocks and Insider Participation
Messrs. Halsey, Holton, Klaus and Black served on the Compensation and
Benefits Committee during 1993. No member of this Committee was an
officer or employee of the Company.
Mr. Hutchinson was Chief Executive Officer of the Company through May 31,
1993. Although Mr. Hutchinson is a director of Teleflex, Incorporated,
of which Mr. Black is Chairman and Chief Executive Officer, Mr. Black
was not elected to this Committee until June 2, 1993, subsequent to the
date on which Mr. Hutchinson stepped down from his executive position
with the Company.
Compensation & Benefits Committee Report on Executive Compensation
In determining the compensation for the Company's Chief Executive Officer
for the year ended December 31, 1993, the Compensation & Benefits
Committee considered quantitative, qualitative and comparative factors.
Quantitative factors considered were (i) the creation and adoption of a
strategic plan to restore the Company to profitability and provide for
its long term viability and health, (ii) the negotiation of a mutually
beneficial labor agreement with the United Mine Workers of America,
without a strike, (iii) reduction of corporate overhead and improved
structure and (iv) increased productivity and reduced costs in the
Company's coal operations.
The qualitative factors considered included uncontrollable factors
affecting the Company's performance, the Chief Executive Officer's
knowledge of and experience with the Company's business operations, his
leadership qualities affecting the Company's relationships with
customers, suppliers, employees, collective bargaining organizations and
the communities within which the Company has operations and his overall
management abilities.
Comparative factors considered were compensation paid to chief executive
officers of comparably sized companies, and particularly to those of
companies in the coal industry.
With respect to the other named executive officers, the Committee
considered the quantitative and comparative factors mentioned above, as
well as the evaluations by Messrs. Seglem and Hutchinson of the officers'
performances.
These factors were considered for purposes of determination of base
salary and bonus. Mr. Hutchinson's base salary was not increased for
1993. When he stepped down from the position of Chief Executive Officer,
effective May 31, 1993, he agreed to take a reduction in salary on an
annualized basis, in line with the new and specialized duties he
undertook. On assuming the position of Chief Executive Officer,
effective June 1, 1993, Mr. Seglem's base salary was increased on an
annualized basis to reflect his additional duties and responsibilities.
Base salary increases were also granted to Messrs. Stucki, Lee and
Worcester in 1993. The Company has a bonus program designed to compensate
management for performance and results and to place a substantial portion
of the total compensation package "at risk". The bonus program
recognizes the critical and troubling circumstances within which the
Company is currently operating, thereby requiring performance and results
to be evaluated by strategic, rather than financial, criteria. No part of
these bonuses is paid, if at all, sooner than the calendar year following
the year of performance, and total bonuses awarded are included in
compensation tables for the year of performance. Mr. Hutchinson was not
awarded a bonus for 1993. Bonuses were awarded in 1994 for 1993
performance to Mr. Seglem (who under the program was eligible for a bonus
of up to 70 percent of his base pay) and to other named executive
officers (who were eligible for bonuses of up to 60 percent of their base
pay). The award of bonuses for 1993 took into account that bonuses had
not been awarded for 1992 or for 1991, except that Mr. Lee had been paid
a bonus for the portion of 1991 prior to his election as an executive
officer, and except that Mr. Brown was not a named executive officer in
1991. Of total bonuses awarded for 1993, only 20 percent will be paid in
1994, and payment of the remaining 80 percent will be deferred until the
earliest to occur of certain events. (See Summary Compensation Table and
footnote 1 thereto, supra.)
The Committee believes that stock options are an important feature of
executive compensation. Stock option awards made to executive officers
are designed to align the interests of management more closely with those
of the shareholders of the Company by increasing stock ownership by
management. The value of the stock options is directly tied to the value
of a share of the Company's common stock. On June 2, 1993, the Committee
awarded Mr. Seglem options to acquire 40,000 shares of the Company's
common stock, and on December 8, 1993, it awarded options to acquire
12,000 shares of common stock to each of Messrs. Seglem, Stucki, Lee and
Worcester, an aggregate of 48,000 options. The option exercise prices
for the options granted on June 2, 1993 and on December 8, 1993 were
$8.75 and $5.75, respectively, and represented the closing price of the
Company common stock on the New York Stock Exchange as of the close of
business on the day the options were granted, requiring an increase in
common stock value before any value would be created by the options.
The Committee believes that the combination of bonuses and grants of
stock options is necessary to attract and retain senior management of the
caliber to best serve the Company.
Brenton S. Halsey, Chairman
A. Linwood Holton, Jr.
William R. Klaus
Lennox K. Black
Performance Graph
The Performance Graph, which compares the cumulative total shareholder
return on the Company's common stock for the five-year period December
31, 1988 through December 31, 1993 with the cumulative total return over
the same period of the Standard & Poor's 500 Stock Index and the
companies comprising the Dow Jones Coal Index, is omitted and is
represented by the following table:
Comparison of Five Year Cumulative Total Return*
<c. <c.
1989 1990 1991 1992 1993
Company 152 140 139 78 37
S&P 500 132 128 166 179 197
Dow Jones 141 132 132 119 175
Coal Index
<FN>
*$100 invested on 12/31/88 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
Note: The companies comprising the DJ COAL INDEX were Westmoreland Coal
Company, Pittston Coal Company, Penn Virginia Corporation, Ashland Coal
Company, Addington Resources and Cyprus AMAX Inc.
Transactions with Other Companies
The Company leases coal reserves and land on which the Company has built
coal preparation plants and other structures from Penn Virginia Resources
Corporation ("PVRC"), a wholly-owned subsidiary of Penn Virginia
Corporation, of which Mr. Black is Chairman of the Board and Chief
Executive Officer. During 1993 the Company paid royalties under these
leases in the amount of $11,699,000. The Company believes that at the
time the leases of coal reserves and land were entered into with PVRC,
and when certain of their terms were renegotiated, pursuant to the
provisions thereof, the leases were on terms fair and reasonable to the
Company and no less favorable to the Company than if the leases were from
unaffiliated companies.
An affiliate of the Company entered into a partnership agreement with CRW
Energy Corporation ("CRW") in 1986. Mr. Charles J. Brown, an executive
officer since 1987, is the sole shareholder of CRW. The partnership
holds an indirect interest in a Ft. Drum, New York cogeneration project.
The Company had also loaned funds to another partnership, of which an
affiliate of the Company and CRW were partners. In 1993, the Company and
Mr. Brown, on behalf of CRW, agreed that the amount of CRW's portion of
the loan was $111,000, and that, beginning in 1994, payments received by
CRW as its partnership portion of the cash distributions from the Fort
Drum, New York cogeneration project would be remitted to the Company to
pay down the outstanding amount due from CRW. The loan is non-interest
bearing. As reported in footnote 5 on Page 10, supra, Mr. Brown
terminated employment with the Company in April 1994.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than ten
percent of a registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the
Company believes that during 1993 all filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners
were complied with, except that 800 shares of common stock sold by Mr.
Leisenring's wife in June 1993 were inadvertently not timely reported.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick were the Company's independent auditors for the year
1993. A representative of that firm will be present at the annual
meeting and will have the opportunity to make a statement, if he desires
to do so, and to respond to appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
Any proposal submitted by shareholders for inclusion in the Company's
proxy statement and proxy for the 1995 annual meeting of shareholders of
the Company must be received by the Company at its principal executive
offices no later than December 1, 1994 and must comply in all other
respects with applicable rules and regulations of the Securities and
Exchange Commission relating to such inclusion.
* * *
Upon the written request of any person who on the record date was a
record owner of Company stock, or who represents in good faith that he
or she was on such date a beneficial owner of such stock entitled to vote
at the annual meeting, the Company will send to such person, without
charge, a copy of its Annual Report on Form 10-K for 1993, as filed with
the Securities and Exchange Commission. Requests for this Report should
be directed to Francis J. Boyle, Senior Vice President, Chief Financial
Officer and Treasurer, Westmoreland Coal Company, 700 The Bellevue, 200
South Broad Street, Philadelphia, Pennsylvania 19102.
OTHER BUSINESS
The Board of Directors has no present intention of bringing any other
business before the meeting and has not been informed of any other
matters that are to be presented to the meeting. If any other matters
properly come before the meeting, however, the persons named in the
enclosed proxy will vote in accordance with their best judgment.
By order of the Board of Directors.
Philip D. Weinstock
Secretary
Following is the Company's Proxy Card sent to Shareholders:
Westmoreland Coal Company
Proxy Solicited on Behalf of the Board of Directors
Annual Meeting - June 6, 1994
The undersigned hereby constitutes and appoints Pemberton Hutchinson,
Christopher K. Seglem and Philip D. Weinstock and each of them, as true
and lawful agents and proxies with power of substitution, to represent
the undersigned and to vote all shares of stock held by the undersigned
at the annual meeting of shareholders to be held at Hotel Atop The
Bellevue, 19th Floor, The Rose Garden, Broad and Walnut Streets, 1415
Chancellor Court, Philadelphia, Pennsylvania On Monday, June 6, 1994 at
10:00 A.M., and at any adjournments thereof, on all matters coming before
said meeting as noted on the reverse side of this card.
Election of Directors. Nominees:
Lennox K. Black, Brenton S. Halsey, Pemberton Hutchinson,
William R. Klaus, E.B. Leisenring, Jr., Christopher K. Seglem,
Edwin E. Tuttle.
(x) Please mark your votes as in this example.
This proxy when properly executed by the shareholder will be voted in the
manner directed herein. If no direction is made, this proxy will be voted
FOR proposal 1.
1. Election of Directors For ( ) Withheld ( ) 2. In their
discretion, upon
such other matters
as may properly
come before the
meeting.
For, except vote withheld from the following nominee(s)
________________________________
Receipt of the 1993 Annual Report
And Notice of Meeting and Proxy
Statement Dated April 29, 1994 are
Hereby Acknowledged.
Signature(s) _____________________ Date __________
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.