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 Section 240.14a-11(c)
or Section 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 Rule 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:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:
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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
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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 The Warwick
Hotel, The Variety Room, 3rd Floor, 1701 Locust Street,
Philadelphia, Pennsylvania, on Tuesday, June 6, 1995 at
10:00 a.m. Philadelphia time, to:
1. Elect a Board of Directors for the ensuing year;
2. Approve adoption of the 1995 Long-Term Incentive Stock
Plan; and
3. 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 17, 1995 will be entitled to notice of and to vote at
the meeting. The proxy statement which follows contains more
detailed information as to the actions proposed to be taken.
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 28, 1995
WESTMORELAND COAL COMPANY
700 The Bellevue
200 South Broad Street
Philadelphia, Pennsylvania 19102
April 28, 1995
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,
1995. 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. This proxy statement and the
enclosed proxy were first sent to shareholders of the
Company on or about April 28, 1995.Shareholders of record at
the close of business on April 17, 1995 ("record date") will
be entitled to vote at the meeting. On the record date, the
Company had outstanding 6,960,966 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.The presence in person or by
proxy of the holders of a majority of the outstanding shares
of stock of the Company entitled to vote at the meeting will
constitute a quorum. Directors are elected by the
affirmative vote of a plurality of the votes of the shares
present in person or by proxy at the meeting. In all other
matters, the affirmative vote of a majority of the shares
present in person or by proxy at the meeting is required for
approval.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.A shareholder may, with respect to the proposal to
adopt the 1995 Long-Term Incentive Stock Plan (i) vote for
approval, (ii) vote against approval or (iii) abstain from
voting on the proposal. An abstention from voting on the
proposal has the effect of a vote against adoption of the
proposal. In the absence of a specific direction from the
shareholder, proxies will be voted for the adoption of the
proposal.If a proxy indicates that all or a portion of the
votes represented by the proxy are not being voted with
respect to a particular matter (a "broker nonvote"), that
broker nonvote will have no effect on the outcome of the
vote. However, broker nonvotes and abstentions are counted
for the purpose of determining the presence of a quorum.
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, 1994:
Number of Shares and Nature of Beneficial Ownership (1)
Name and Address of Percentage of Percentage of
Beneficial Owner Common Stock Common Stock Depositary Shares Depositary Shares
Penn Virginia
Equities 1,754,411 (2) 25.2%
Corporation
800 The Bellevue
200 South Broad Street
Philadelphia, PA 19102
Mellon Bank Corporation 352,617 (3) 5.1%
Mellon Bank Center
Pittsburgh, PA 15258
Riverside Capital
Advisers, Inc. 605,000 (4) 26.3%
2320 Northeast 9th Street
Suite 300
Fort Lauderdale, FL 33304
<FN>
(1) Based on information as of December 31, 1994 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) 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 The Boston Company
Advisors, Inc. Mellon reports that it has sole voting power
with respect to 58,000 shares of common stock, and it has
shared voting power with respect to 294,617 shares of common
stock held as Trustee of the Westmoreland Coal Company and
Affiliated Companies Employees' Savings/Retirement Plan (the
"Plan"), including 7,901 shares issuable upon conversion of
4,626 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 58,000 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.
(4) Riverside Capital Advisers, Inc. ("Riverside") reported
that at December 31, 1994, it was deemed to own 605,000
depositary shares as a result of its having sole voting
power and sole dispositive power over such shares held in
fourteen customer accounts for which it provides investment
advice. The Schedule 13G filed by Riverside assumed that
1.708 shares of common stock are issuable upon conversion of
each depositary share.
</FN>
The following table sets forth information as of February
27, 1995 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,
Named Executive Officers Percentage of Depositary
and Persons as a Group Common Stock Common Stock (2) Shares (2)
Lennox K. Black 1,757,411 (3)(7) 25.2% -
Brenton S. Halsey 8,192 (7)(9) - -
Pemberton Hutchinson 1,600 - 3,200
William R. Klaus 7,866 (7)(9) - -
E. B. Leisenring, Jr. 40,162 (8) - -
Christopher K. Seglem 37,970 (4)(6) - 181 (5)
Edwin E. Tuttle 15,092 (7) - -
Ronald W. Stucki 10,154 (4)(6) - 152 (5)
Francis J. Boyle - - -
Theodore E. Worcester 11,462 (4)(6) - -
Matthew S. Sakurada 7,288 (4)(6) - -
Directors and Executive
Officers of the Company
as a Group 1,948,543 (4)(6)
(7)(9) 27.6% 3,614
<FN>
(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.
Seglem-4,522, Mr. Stucki-154, Mr. Worcester-1,462 and Mr.
Sakurada-3,907; shares vested in the directors and executive
officers as a group totalled 18,874. These shares are
included in the 294,617 shares of common stock reported as
beneficially owned by Mellon in footnote 3 on Page 3, supra.
(5) Represents shares held by Mellon as Trustee of the
Westmoreland Coal Company and Affiliated Companies
Employees' Savings/Retirement Plan. Shares vested in the
directors and executive officers as a group totalled 414 and
are included in the 4,626 depositary shares held by the Plan
of the Company's depositary shares, as reported in footnote
3 on Page 3, 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. Seglem-33,448, Mr.
Stucki-10,000, Mr. Worcester-10,000, and Mr. Sakurada-3,371;
shares which may be purchased under these Plans for
the group as a whole totalled 99,326.
(7) Includes shares which may be purchased under the 1991
Non-Qualified Stock Option Plan for Non-Employee Directors
as follows: Messrs. Halsey, Klaus, Leisenring and Tuttle-
4,500 each; Mr. Black-3,000; in total, 21,000.
(8) In addition, Mr. Leisenring's wife and children owned a
total of 2,005 shares in which he disclaims beneficial
ownership.
(9) Includes shares held under the Westmoreland Directors'
Deferred Compensation Plan as follows: Mr. Halsey-2,152 and
Mr. Klaus-1,837; 3,989 in total, which may not be voted.
</FN>
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. 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.
As two of the current nominees will reach mandatory
retirement age in the coming year and two more in the year
following, the Board has begun a search for their
replacements. It is the intention to add two new members to
the Board, as they are identified, in the coming year and
the year following (resulting in a temporary increase in the
total number of directors), in order to allow for a proper
and smooth transition period, and so that the Company can
have the benefit of contributions from the new directors
with respect to its planning and implementation for the
future.
Director of
Business Experience During Past the Company Committee
Name Five Years and Other Directorships Age Since Memberships (1)
Lennox K. Black Chairman of the Board and Chief 65 1992 Executive;
Executive Officer, Teleflex, Compensation
Incorporated, equipment manufacturer and Benefits
(since 1982); Chairman of the Board
and Chief Executive Officer, Penn
Virginia Corporation (effective
May 1, 1992)
Director of Teleflex, Incorporated,
Chairman of the Board of Penn
Virginia Corporation (effective
May 1, 1992), Director of The Pep
Boys and Quaker Chemical Corporation
Brenton S. Halsey Retired Chairman Emeritus 68 1977 Compensation
(since July 1992), Chairman and Benefits;
(through July 1, 1992), Chairman and Independent
Chief Executive Officer (through Directors
October 31, 1990), James River
Corporation, manufacturer of consumer
products, food packaging and printing
papers
Director of First Union Corporation
Pemberton Hutchinson(2) Chairman of the Board of 64 1977 Executive
the Company (since January 1992);
Chief Executive Officer (January 1989
through June 1993); President of the
Company (June 1981 through June 1992)
Director of Mellon Bank Corporation,
Teleflex, Incorporated and The Pep Boys
William R. Klaus Partner, Pepper, Hamilton & 69 1973 Executive;
Scheetz, attorneys Compensation
and Benefits;
Audit;
Independent
Directors
E. B. Leisenring, Jr. Chairman of the Board of the 69 1952 Executive;
Company (1978 through January 1992); Audit
Chairman of the Board of Penn Virginia
Corporation (1978 through April 1992)
Director of SKF-USA Inc., Norfolk
Southern Corporation, Pico Products,
Inc. and Chairman of The Philadelphia
Contributionship
Christopher K. Seglem(2) Chief Executive Officer of the 48 1992 Executive
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 (December 1990 through
June 1992); Senior Vice President of
the Company (November 1988 through
December 1990); General Counsel
(January 1988 through December 1990)
and Secretary (January 1988 through
May 1990) of the Company
Edwin E. Tuttle Formerly Vice Chairman of Elf 68 1978 Executive;
Atochem North America, Inc. Audit;
(successor to Pennwalt Corporation), Independent
a diversified chemical company (1990) Directors
Director of CoreStates Bank, N.A.
and General Accident Insurance Company
of America
<FN>
(1) See "Information About the Board and Committees"
following.
(2) Although reported in the Company's 1994 Annual Report
and Form 10-K, the Securities and Exchange Commission's
proxy rules also require a description of a bankruptcy
petition filed during the past five years with respect to a
corporation of which a director nominee was an executive
officer at or within two years before the time of filing,
giving rise to this footnote: The Company filed a "pre-
packaged" plan of reorganization under the Federal
bankruptcy laws on November 8, 1994 to facilitate the sale
of the assets of its subsidiary, Criterion Coal Company, a
portion of the proceeds of the sale of which were to be used
to repay maturing long-term debt. The Company's plan of
reorganization was confirmed on December 16, 1994. Mr.
Hutchinson was an executive officer of the Company within
two years before the time of the filing. Mr. Seglem held the
executive offices indicated at and within two years before
the time of the filing, and upon the Company's emergence
from bankruptcy on December 22, 1994.
</FN>
Information About the Board and Committees
The Board of Directors held 13 meetings during 1994. 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 twice during
1994. 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), Klaus
and Black, met three times during 1994. 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 1994.The Committee of Independent
Directors, composed of Messrs. Tuttle (chairman), Halsey and
Klaus, met one time during 1994. This Committee is composed
of directors who are not and have never beenofficers or
employees of the Company or of Penn Virginia Corporation
(see "Transactions with Other Companies" below). It reviews
matters involving transactions or issues between the Company
and Penn Virginia Corporation, to determine that the terms
and conditions of settlement are fair and reasonable to the
Company and no less favorable than if negotiated with an
unaffiliated company.The Board of Directors does not have a
standing nominating committee.
Executive Compensation
The following table sets forth information for 1994, 1993
and 1992 as to the person who held the position of Chief
Executive Officer during 1994 and the other four most highly
compensated executive officers at the end of 1994, whose
total salary and bonus for 1994 exceeded $100,000.
SUMMARY COMPENSATION TABLE (4)
Annual Compensation Long Term
Other Compensation All
Annual Stock Options Other
Name and Compen- (#Common Compen-
Principal Positions Year Salary Bonus (1) sation Shares) sation (3)
Christopher K. Seglem, 1994 290,004(6) 203,003 0 16,000 12,295
Chief Executive Officer 1993 270,504 175,621 0 52,000 12,792
and President 1992 216,846 0 0 40,000 5,002
Ronald W. Stucki, 1994 180,011(6) 108,006 0 13,000 3,859
Senior Vice President- 1993 162,124 93,438 1,532 12,000 3,712
Operations 1992 97,688 0 0 20,000 26,067
Francis J. Boyle, 1994 176,952(5)(6) 93,725 19,244(2) 13,000 3,239
Senior Vice President, 1993 81,387 40,542 17,868 12,000 0
Chief Financial 1992 -N/A- -N/A- -N/A- -N/A- -N/A-
Officer and Treasurer
Theodore E. Worcester, 1994 156,208(6) 93,725 0 13,000 3,784
Senior Vice President 1993 143,568 81,083 0 12,000 3,385
and General Counsel 1992 130,008 0 0 20,000 5,172
Matthew S. Sakurada, 1994 150,762 93,725 0 13,000 3,633
President of 1993 116,065 44,800 0 0 2,649
Westmoreland 1992 102,980 0 0 0 2,378
Energy, Inc.
<FN>
(1) The amounts presented in the bonus column for 1994
represent total bonuses earned for 1994 based on
accomplishment of strategic objectives. Of the total amount
for each individual, 35 percent was paid in the first
quarter of 1995. Payment of the remaining 65 percent will be
deferred until the earliest to occur of (a) such year in
which an operating profit is generated, (b) March 31, 1997
or (c) upon sale, merger or liquidation of the Company,
provided that the individual is employed by the Company at
the time the 65 percent would be paid, or if not employed,
such employment was terminated by reason other than
voluntary resignation (which would include a decision to not
accept relocation of employment), or other than for
discharge due to gross or willful misconduct.
(2) Other Annual Compensation in 1994 represents the
grossed-up amount reimbursed to Mr. Boyle for the payment of
taxes, with respect to the reimbursement of temporary living
costs discussed in footnote 5 below.
(3) All Other Compensation for the named executive officers
in 1994 consisted of directors' fees and Company
contributions to the 401(k) salary savings plan (the "Plan")
for the four Plan quarters ending November 30, 1994. Mr.
Seglem received directors' fees of $8,450. Amounts
contributed to the Plan during 1994 on behalf of the named
executives included: Mr. Seglem-$3,845, Mr. Stucki-$3,859,
Mr. Boyle-$3,239, Mr. Worcester-$3,784 and Mr. Sakurada-
$3,633. (For the calendar year 1994, the amount contributed
by Mr. Seglem and the Company matching contribution on his
behalf were greater than the corresponding amounts
contributed by and on behalf of the other named executives.
As contributions on behalf of the named executives may be
made at varying amounts throughout the year, the November
30, 1994 amounts, as in Mr. Seglem's case, may not precisely
reflect the magnitude of contributions on behalf of one
executive in comparison to the others.)
(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 (included
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 approximately 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, including the present value of
executive benefits, in a lump sum cash distribution at the
time of termination.
(5) Mr. Boyle's salary for 1994 includes $20,744 of
reimbursement for temporary living costs, including periodic
transportation to and from his permanent home.
(6) Salary increases were not granted to Messrs. Seglem,
Stucki, Boyle and Worcester in 1994. The larger amounts
reflected in comparison to 1993 are due to the increases in
1993 being in effect for only part of 1993, but for all of
1994.
</FN>
The following table presents information regarding options
to purchase common shares granted to the named executive
officers in 1994:
Option/SAR Grants in Last Fiscal Year
Potential
Individual Grants realizable
value
Number of Percent of Exercise Expiration
Securities total options or base date Grant Date
Name Underlying granted to price Present Value*
Options employees per share
Granted in fiscal year
Christopher K. Seglem 16,000 14.9% $6.50 12/19/2002 $55,162
Ronald W. Stucki 13,000 12.1% $6.50 12/19/2002 $44,819
Francis J. Boyle 13,000 12.1% $6.50 12/19/2002 $44,819
Theodore E. Worcester 13,000 12.1% $6.50 12/19/2002 $44,819
Matthew S. Sakurada 13,000 12.1% $6.50 12/19/2002 $44,819
<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 monthly closing
market prices for December 1991 through December 1994; and (d) a
dividend yield which represents the quarterly dividends paid divided by
the quarterly closing market prices, annualized for the 12 quarters from
December 1991 through December 1994.
</FN>
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, 1994:
Aggregated Option/SAR Exercises In Last Fiscal Year
and FY-End Option/SAR Values
Number of Value of Unexercised
Securities Underlying In-the-Money
Name Unexercised Options at Options at
December 31, 1994 December 31, 1994
Exercisable Unexercisable Exercisable Unexercisable
Christopher K. Seglem 33,448 88,000 -0- $16,000
Ronald W. Stucki 10,000 35,000 -0- $15,250
Francis J. Boyle -0- 25,000 -0- $15,250
Theodore E. Worcester 10,000 35,000 -0- $15,250
Matthew S. Sakurada 3,371 13,000 -0- $ 3,250
No member of the named executive officer group exercised any
options during 1994, or held any unexercised SARs as of
December 31, 1994.
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, 1993, no contribution is required or
permitted to this Plan for 1994, 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
$ 25,000 $ 3,000 $ 6,000 $ 9,000
50,000 7,204 14,408 21,612
100,000 15,704 31,408 47,112
150,000 24,204 48,408 72,612
200,000 32,704 65,408 98,112
250,000 41,204 82,408 123,612
300,000 49,704 99,408 149,112
Years of service credited under the Plan for the following
individuals are: Mr. Seglem-14 years, Mr. Stucki-14 years,
Mr. Boyle-1 year, Mr. Worcester-4 years and Mr. Sakurada-16
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 two other executive officers. 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 1994 the attendance fee for the Chairman of the
Board of Directors was $1,300, for each committee chairman
was $750 and for each director attending a Board or
committee meeting was $650. The attendance fees paid to Mr.
Seglem are included in the All Other Compensation column of
the Summary Compensation Table.Throughout 1994, 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.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 it 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. Mr. Hutchinson is also
receiving benefit payments from the Company's SERP (see
discussion under Retirement Plan, supra).
Compensation Committee Interlocks and Insider Participation
in Compensation Decisions
Messrs. Halsey, Klaus and Black served on the Compensation
and Benefits Committee during 1994. There were no
compensation committee interlocks or insider participation
in compensation decisions affecting executive officers.No
member of this Committee was an officer or employee of the
Company. No executive officer of the Company served either
as a member of the compensation committee or as a director
of a company, one of whose executive officers served on the
Company's Compensation and Benefits Committee, or as a
member of the compensation committee of a company, one of
whose executive officers served as a Director of 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, 1994, the
Compensation & Benefits Committee considered quantitative,
qualitative and comparative factors.Quantitative factors
considered included (i) the substantial progress in
implementing the plan to dispose of underperforming and non-
core assets and others, most significantly, those of the
Company's Criterion subsidiary, to generate cash, (ii) the
paying off of obligations to the Company's long-term
creditors and guarantors with the proceeds of sale, thereby
resolving short-term liquidity issues and placing the
Company in a substantially debt-free status, (iii)
successful completion of a voluntary Chapter 11 non-
impairment bankruptcy proceeding, from which the Company
successfully emerged in six weeks, and during which it was
able to conclude the sale of its Criterion properties,
settle certain other economic claims on terms advantageous
to the Company, and substantially eliminate its debt
obligations and (iv) the Company's disengagement from the
coal export and the brokered coal businesses.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, his overall
management abilities, initiatives and planning for the
future and his extraordinary efforts put forth by means of
diligence, hard work and exceptionally long
hours.Comparative factors considered were compensation paid
to chief executive officers of comparably sized companies,
and particularly to those of companies in the coal and
independent power industries and other work-out
situations.Other factors considered that were unique to 1994
were (i) the significant cash raised, (ii) the liabilities
that were transferred or assigned, (iii) the improvement in
the Company's position with respect to amounts due from a
company whose coal it has brokered, and (iv) the overall
profit generated for 1994.With respect to the other named
executive officers, the Committee considered the
quantitative and comparative factors mentioned above, as
well as the evaluations by Mr. Seglem of the officers'
performances.These factors were considered for purposes of
determination of base salary and bonus. No base salary
increases were granted to Messrs. Seglem, Stucki, Boyle or
Worcester in 1994 due to the Company's financial and
operational positions, and the need to conserve cash during
the year. On assuming the position of President of
Westmoreland Energy, Inc., the Company's cogeneration
subsidiary, Mr. Sakurada's base salary was increased on an
annualized basis to reflect his additional duties and
responsibilities.The Company has a 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 difficult circumstances within which the Company is
currently operating, thereby requiring performance and
results to be evaluated more on strategic, rather than
financial, criteria. Retention of key management personnel
during this difficult period is a major factor of this bonus
program. The current bonus plan defers the major portion of
the award until the earliest to occur of certain events.
(See Summary Compensation Table and footnote 1 thereto,
supra.) 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 earned. Bonuses were awarded in 1995 for
1994 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 1994 took into account that bonuses had not been
awarded for 1992 and that a substantial amount of the
bonuses awarded for 1993 remains "at risk". Of total bonuses
awarded for 1994, only 35 percent has been paid in 1995, and
payment of the remaining 65 percent deferred.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 December 19, 1994,
the Committee awarded options to Mr. Seglem to acquire
16,000 shares of the Company's common stock, and to each of
Messrs. Stucki, Boyle, Worcester and Sakurada, it awarded
options to acquire 13,000 shares of common stock, an
aggregate of 68,000 options. The option exercise price for
the options granted on December 19, 1994 was $6.50, 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
William R. Klaus
Lennox K. Black
Performance Graph
The following Performance Graph compares the cumulative
total shareholder return on the Company's common stock for
the five-year period December 31, 1989 through December 31,
1994 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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG WESTMORELAND COAL COMPANY, THE S & P 500 INDEX
AND THE DOW JONES COAL INDEX
THE ACTUAL GRAPH HAS BEEN OMITTED AND INSTEAD IS PRESENTED
IN TABULAR FORM AND APPENDED TO THIS REPORT.
* $100 INVESTED ON 12/31/89 IN STOCK OR INDEX- INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
NOTE: The companies comprising the DJ COAL INDEX were
Pittston Coal Company, Penn Virginia Corporation, Ashland
Coal Incorporated, Addington Resources and Cyprus AMAX
Minerals.
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 1994 the Company paid
royalties under these leases in the amount of $11,019,000.
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.In January 1995, the Company released its rights
in certain coal reserves in West Virginia to an indirect
subsidiary of Penn Virginia Corporation (and assignee of
PVRC) in exchange for $3 million of cash and a guarantee by
Penn Virginia Corporation of certain environmental
reclamation and remediation obligations of a third party to
whom the Company, in a related transaction, had sold
operating assets of its Hampton, West Virginia Division,
those terms considered fair and reasonable to the Company
and no less favorable than if negotiated with an
unaffiliated company.Pursuant to an agreement dated as of
July 9, 1992 by and among the Company, Penn Virginia
Corporation and Penn Virginia Equities Corporation
("Equities"), Equities was granted certain registration
rights with respect to the 1,754,411 shares of the Company's
common stock with it owns. The right to demand such
registration expires on July 9, 1995. Equities did by letter
dated March 13, 1995 make written request to the Company for
registration of such shares with the Securities and Exchange
Commission in accordance with the provisions of the
Securities Act of 1933. Equities has offered to withdraw
this demand if the Company will agree to extend the time
within which such a demand might be made. The Company and
Equities continue to discuss the extended period of time
within which Equities may make such demand that would be
agreeable to both parties, and hope to have this matter
resolved in the near future.
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 1994 all
filing requirements applicable to its officers, directors
and greater than ten percent beneficial owners were complied
with.
1995 Long-Term Incentive Stock Plan
On February 1, 1995 the Board of Directors of the Company
adopted the Westmoreland Coal Company 1995 Long-Term
Incentive Stock Plan (the "Plan"), subject to shareholder
approval. The Board of Directors believes that the Plan will
enable the Company to attract and retain qualified officers
and other salaried employees and to align the interests of
Plan participants with the Company's shareholders.The Plan
provides for the grant of three types of incentive awards:
incentive stock options ("ISOs"), non-qualified stock
options ("NQSOs") and restricted stock (collectively, the
"awards"). Options give the participant the right to
purchase from the Company a specified number of shares of
the Company's common stock for a specified price during a
specified period. Options may be either ISOs, which are
entitled to favorable tax treatment, under provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), or
NQSOs. Restricted stock is an award payable in shares of
common stock, granted subject to risk of forfeiture if the
employee ceases to be employed by the Company during a
specified period, or if specified performance criteria are
not met.Under the Plan, awards are granted by the Company's
Compensation & Benefits Committee (the "Committee"), which
is composed of three or more directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, and
an "outside director" for purposes of Section 162(m) of the
Code and related regulations. The total number of shares of
the Company's common stock reserved and available for awards
under the Plan will be 350,000, of which no more than
100,000 may be granted in the form of restricted stock. No
participant may receive options during the life of the Plan
representing more than 90,000 shares. There are
approximately 25 officers and employees currently eligible
to participate in the Plan.The Committee will select the
employees to whom awards may be granted and the number of
shares subject to each award. Awards under the Plan are
generally for no consideration other than services as an
employee. The Committee has the discretion to determine
whether to grant ISOs, NQSOs and/or restricted stock to a
participant and the terms and conditions of each award. In
the event that the Committee determines that a stock
dividend, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, spin-off,
combination or other similar corporate transaction may
affect the rights of participants, the Committee may adjust
the awards outstanding, or to be granted, and the conditions
thereof.The Plan may be amended by the Board of Directors,
but any amendment that would (i) materially increase the
aggregate number of shares that may be issued under the
Plan, except for adjustments as set forth in the preceding
paragraph, (ii) materially modify the requirements for
eligibility to participate in the Plan, or (iii) materially
increase the benefits accruing to participants, would
require shareholder approval.Furthermore, any amendment,
alteration, suspension, discontinuance or termination of the
Plan which would impair the rights of any participant to
whom an award has been granted will require the consent of
the participant.ISOs and NQSOs granted under the Plan may
not have an exercise price less than the fair market value
of a share of common stock on the date of grant of such
option; however, the exercise price for ISOs granted to ten
percent shareholders may not be less than 110 percent of the
fair market value of a share on the date it was granted.
ISOs and NQSOs shall expire not later than ten years after
the date of grant; however, ISOs granted to a ten percent
shareholder shall expire not later than five years after the
date of grant.Restricted stock may be granted subject to
such restrictions as the Committee may impose. Such stock
will cease to be subject to forfeiture at the end of the
restriction period, if the participant remains an employee
throughout the restriction period, and, if applicable, any
performance criteria are met during the restriction period,
although the Committee may determine in any instance to
waive restrictions or forfeiture conditions in whole or in
part resulting from terminations due to specified
causes.Awards granted under the Plan are not transferable
except by will or by the laws of descent and distribution,
and during the life of the participant are exercisable only
by him, or his guardian or legal representative.In the event
of a change of control of the Company, all restricted stock
will be deemed fully vested, and any option that was not
previously exercisable and vested will become fully
exercisable and vested.The Committee has full and final
authority to administer the Plan, including but not limited
to (i) determining the terms and conditions of any award
granted, (ii) determining the form of award agreement, which
need not be identical for each person, (iii) correcting any
defect or supplying any omission or reconciling any
inconsistency in the Plan and construing and interpreting
the Plan and any award, rules and regulations, award
agreement or other instrument thereunder, and (iv) making
all other decisions and determinations required under the
Plan or as it may deem necessary or advisable.No awards have
yet been granted under the Plan, and there is no intention
to grant such awards until the Plan has been approved by the
shareholders.Within a reasonable time after approval of the
Plan by shareholders, it is the intention to register the
350,000 shares of common stock issuable under the Plan,
pursuant to the Securities Act of 1933, as amended.The
Company has been advised by counsel that under present
federal tax laws, the federal income tax consequences of
ISOs, NQSOs and restricted stock are as follows:
Incentive Stock Options. A participant recognizes no income
and the Company receives no deduction for federal income tax
purposes when an ISO is granted or exercised. If a
participant holds the shares acquired on exercise of an ISO
for more than two years after the date the ISO is granted
and more than one year after the date the shares are issued
to the participant, pursuant to the exercise of the ISO, any
gain or loss, measured by the difference between the
exercise price and the sale price, realized on the
subsequent sale of the shares, will be long-term capital
gain or loss. The Company will not be entitled to take a
deduction as a result of such a sale. The capital gain
realized upon the sale of shares acquired on the exercise of
ISOs granted under the Plan may be subject to the
alternative minimum tax generally applicable to capital
gains. If the participant sells the shares before the
holding periods have elapsed, he will generally have
ordinary income in the year of sale equal to the excess of
the fair market value of the shares at the time he exercised
the ISO over the exercise price. The Company may then be
entitled to a deduction in the amount of ordinary income
recognized by the participant. The gain, if any, in excess
of the amount of ordinary income recognized by the
participant will be short-term or long-term capital gain,
depending upon the length of time the shares were held.
Non-Qualified Stock Options. A participant recognizes no
income and the Company receives no deduction upon the grant
of a NQSO. Upon exercise of a NQSO, a participant must
include as ordinary income the excess of the fair market
value of the stock on the date of exercise over the exercise
price, and the Company will receive a deduction at the same
time and in the same amount. The Company will be required to
withhold federal income taxes and other taxes. The holding
period for capital gain or loss treatment will begin to run
at that time. The gain or loss will be measured by the
difference between the sale price and the fair market value
of the shares on the date of exercise, and if such shares
have been held for more than one year, the participant will
be entitled to long-term capital gain treatment.
Restricted Stock. A participant recognizes income and the
Company receives a corresponding compensation deduction only
at the time that the substantial risk of forfeiture lapses.
At such time, the participant is subject to withholding
requirements and the Company's deduction would be in the
amount of the then fair market value of the stock.The value
of a share of the Company's common stock, as defined in the
Plan, was $ 4.625 on April 3, 1995.The Plan will terminate
on February 1, 2005, unless sooner terminated by the
Board.The Board of Directors recommends that the
shareholders vote FOR the adoption of the 1995 Long-Term
Incentive Stock Plan.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick were the Company's independent auditors
for the year 1994. 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 1996 annual
meeting of shareholders of the Company must be received by
the Company at its principal executive offices no later than
December 28, 1995 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 1994, 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 judgement.By order
of the Board of Directors.
Philip D. Weinstock
Secretary
APPENDIX
1) PROXY CARD
2) PERFORMANCE GRAPH
3) 1995 INCENTIVE STOCK OPTION PLAN
(1):
WESTMORELAND COAL COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING -- JUNE 6, 1995
The undersigned hereby constitutes and appoints
Pemberton Hutchinson,
Christopher K. Seglem and Philip D. Weinstock and
each of them, as true
P and lawful agents and proxies with power of
substitution, to represent
R the undersigned and to vote all shares of stock
held by the undersigned
O at the annual meeting of shareholders to be held
at The Warwick Hotel,
X The Variety Room, 3rd Floor, 1701 Locust
Street, Philadelphia,
Y Pennsylvania, on Tuesday, June 6, 1995 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.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
ANNUAL MEETING
OF
WESTMORELAND COAL COMPANY
TUESDAY, JUNE 6, 1995
10:00 A.M.
THE WARWICK HOTEL
THE VARIETY ROOM
3RD FLOOR
1701 LOCUST STREET
PHILADELPHIA, PA
/X/ PLEASE MARK YOUR 1283
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
PROPOSALS 1 AND 2.
FOR WITHHELD
1. Election of / / / /
Directors
(see reverse)
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to / / / / / /
approve adoption
of 1995 Long-Term
Incentive Stock
Plan
3. In their discretion, upon such other matters
as may properly come before the meeting.
RECEIPT OF THE 1994 ANNUAL REPORT
AND NOTICE OF MEETING AND PROXY
STATEMENT DATED APRIL 28, 1995 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.
FOLD AND DETACH HERE
(2)
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, 1989 through December 31,
1994 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*
1990 1991 1992 1993 1994
COMPANY 93 91 51 24 31
S&P 500
INDEX 97 126 136 150 152
DOW JONES
COAL INDEX 94 93 84 124 122
<FN>
* $100 invested on 12/31/89 in stock or index -
including reinvestment of dividends.
Fiscal year ending December 31.
NOTE: The companies comprising the DJ COAL INDEX were
Pittston Coal Company, Penn Virginia Corporation, Ashland
Coal Incorporated, Addington Resources and Cyprus AMAX
Minerals.
</FN>
(3)
WESTMORELAND COAL COMPANY
1995 LONG-TERM INCENTIVE STOCK PLAN
SECTION 1. Purpose. The purpose of the 1995 Long-Term
Incentive Stock Plan (the "Plan") of the Company is (a) to
align
the interests of shareholders and employees of the Company
by
encouraging and creating ownership of Common Stock of
Westmoreland Coal Company by officers and other salaried
employees of the Company; (b) to enable the Company to
attract
and retain qualified officers and employees who contribute
to the
Company's success by their ability and ingenuity; and (c) to
provide meaningful long-term incentive opportunities for
officers
and other employees who are responsible for the success of
the
Company and who are in a position to make significant
contributions toward its objectives.
SECTION 2. Definitions. In addition to the terms
defined
elsewhere in the Plan, the following shall be defined terms
under
the Plan:
2.01. "Award" means any Option, Restricted Stock, or
any
other right or interest relating to Shares, granted under
the
Plan.
2.02. "Award Agreement" means any written agreement,
contract, or other instrument or document evidencing an
Award.
2.03. "Board" means the Board of Directors of
Westmoreland
Coal Company.
2.04. "Change of Control" and related terms are
defined in
Section 9.
2.05. "Code" means the Internal Revenue Code of 1986,
as
amended from time to time. References to any provision of
the
Code shall be deemed to include successor provisions thereto
and
regulations thereunder.
2.06. "Committee" means the Compensation and Benefits
Committee of the Board of Directors, or such other Board
committee as may be designated by the Board to administer
the
Plan, or any subcommittee of either; provided, however, that
the
Committee, and any subcommittee thereof, shall consist of
three
or more directors, each of whom is a "disinterested person"
within the meaning of Rule 16b-3 and an "outside director"
under
Section 162(m) of the Code.
2.07. "Company" means Westmoreland Coal Company and
each of
its Subsidiaries, together with any successor thereto.
2.08 "Date of Grant" means the date on which an Award
is
granted.
2.09. "Exchange Act" means the Securities Exchange Act
of
1934, as amended from time to time. References to any
provision
of the Exchange Act shall be deemed to include successor
provisions thereto and regulations thereunder.
2.10. "Fair Market Value" means, with respect to
Shares or
Awards, the fair market value of such Shares or Awards
determined
by such methods or procedures as shall be established from
time
to time by the Committee. Unless otherwise determined by
the
Committee, the Fair Market Value of Shares as of any date
shall
be the closing sales price on that date of a Share as
reported in
the New York Stock Exchange Composite Transaction Report;
provided, that if there were no sales on the valuation date,
the
Fair Market Value shall be the closing price on the nearest
date
after the valuation date.
2.11. "Incentive Stock Option" means an Option that is
intended by the Committee to meet the requirements of
Section 422
of the Code.
2.12. "Non-Qualified Stock Option" means an Option
that is
not intended by the Committee to be an Incentive Stock
Option,
and is designated as such, or represents that part of an
Option
in excess of the amount qualifying as an Incentive Stock
Option,
under provisions of the Code.
2.13. "Option" means a right, granted to an individual
who
meets the eligibility requirements under Section 5, to
purchase
Shares at a specified price during specified time periods.
An
Option may be either an Incentive Stock Option or a Non-
Qualified
Stock Option.
2.14. "Participant" means a person who has been
granted an
Award under the Plan.
2.15. "Plan" is defined in Section 1.
2.16 "Restricted Stock" means an Award, payable in
Shares,
that is granted subject to a risk of forfeiture if the
Participant ceases to be employed by the Company during a
specified period (the "restriction period"), or if
performance
criteria specified by the Committee are not met. A
Restricted
Stock Award may provide a vesting schedule under which
vesting
could occur at an earlier date than otherwise established if
specified performance criteria are met before the end of the
restriction period. The restriction period and the vesting
schedule shall be determined by the Committee in its
discretion.
2.17. "Rule 16b-3" means Rule 16b-3, as from time to
time
amended, promulgated by the Securities and Exchange
Commission
under Section 16 of the Exchange Act.
2.18. "Shares" means the Common Stock, $2.50 par
value, of
Westmoreland Coal Company and such other securities of
Westmoreland Coal Company as may be substituted for Shares
or
such other securities pursuant to Section 10.
2.19. "Subsidiary" means any corporation with respect
to
which the Company owns, directly or indirectly, 50 percent
or
more of the total combined voting power of all classes of
stock.
In addition, any other related entity may be designated by
the
Board as a Subsidiary.
2.20. "Ten Percent Shareholder" means a person who on
the
Date of Grant owns, either directly or within the meaning of
the
attribution rules in section 425(d) of the Code, stock
possessing
more than 10 percent of the total combined voting power of
all
classes of stock of his or her employer corporation or of
its
parent or subsidiary corporations, as defined respectively
in
sections 425(e) and 425(f) of the Code.
SECTION 3. Administration.
3.01. Authority of the Committee. The Plan shall be
administered by the Committee. The Committee shall have
full and
final authority to take the following actions and any other
necessary actions in administering the Plan, unless
precluded in
this document:
(i) to select and designate persons to whom
Awards shall
be granted;
(ii) to designate Subsidiaries;
(iii) to determine the type or types of Awards to
be
granted to each person eligible under Section 5;
(iv) to determine the number of Awards to be
granted,
the number of Shares to which an Award will relate, the
terms
and conditions of any Award granted under the Plan
(including, but not limited to, any exercise price, grant
price, or purchase price, any restriction or condition, any
schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement
of an Award, and waivers or accelerations thereof, and
waiver
of performance or other conditions relating to an Award,
based in each case on such considerations as the Committee
shall determine), and all other matters to be determined in
connection with an Award;
(v) to determine whether, to what extent, and
under what
circumstances an Award may be settled, or the exercise price
of an Award may be paid, in cash, Shares, other Awards, or
other property, or an Award may be canceled, forfeited, or
surrendered;
(vi) to prescribe the form of each Award
Agreement,
which need not be identical for each Participant;
(vii) to adopt, amend, suspend, waive, and
rescind rules
and regulations relating to the Plan and appoint such agents
as the Committee may deem necessary or advisable to
administer the Plan;
(viii) to correct any defect or supply any
omission or
reconcile any inconsistency in the Plan and to construe and
interpret the Plan and any Award, rules and regulations,
Award Agreement, or other instrument hereunder; and
(ix) to make all other decisions and
determinations as
may be required under the terms of the Plan or as the
Committee may deem necessary or advisable for the
administration of the Plan.
3.02. Manner of Exercise of Committee Authority.
Unless
authority is specifically reserved to the Board under the
terms
of the Plan, or applicable law, the Committee shall have
sole
discretion in exercising such authority under the Plan. Any
action of the Committee with respect to the Plan shall be
final,
conclusive, and binding on all persons, including the
Company,
Subsidiaries, Participants, any person claiming any rights
under
the Plan from or through any Participant, and shareholders.
The
express grant of any specific power to the Committee, and
the
taking of any action by the Committee, shall not be
construed as
limiting any power or authority of the Committee. A
memorandum
signed by all members of the Committee shall constitute the
act
of the Committee without the necessity, in such event, to
hold a
meeting. The Committee may delegate to officers or managers
of
the Company the authority, subject to such terms as the
Committee
shall determine, to perform administrative functions under
the
Plan.
3.03. Limitation of Liability. Each member of the
Committee
shall be entitled to, in good faith, rely or act upon any
report
or other information furnished to him by any officer or
other
employee of the Company or by a professional retained by the
Company to assist in the administration of the Plan. No
member
of the Committee, nor any officer or employee of the Company
acting on behalf of the Committee, shall be personally
liable for
any action, determination, or interpretation taken or made
in
good faith with respect to the Plan, and all members of the
Committee and any officer or employee of the Company acting
on
their behalf, shall, to the extent permitted by law, be
fully
indemnified and protected by the Company with respect to any
such
action, determination, or interpretation.
SECTION 4. Shares Subject to the Plan. Subject to
adjustment as provided in Section 10, the total number of
Shares
reserved and available for Awards under the Plan shall be
350,000, but no more than 100,000 can be granted in the form
of
Restricted Stock. If any Shares to which an Award relates
are
forfeited or the Award is terminated without a distribution
of
Shares, any Shares counted against the number of Shares
reserved
and available under the Plan with respect to such Award
shall, to
the extent of any such forfeiture or termination, again be
available for Awards under the Plan; provided, however, that
such
Shares shall be available for issuance only to the extent
permitted under Rule 16b-3.
SECTION 5. Eligibility. Awards may be granted only to
individuals who are officers or other salaried employees
(including employees who are also directors) of the Company.
No
Award shall be granted to any non-employee director. An
Incentive Stock Option shall not be granted to a Ten Percent
Shareholder except on such terms concerning the option price
and
conditions of exercise as described in Section 6.03. with
respect
to such person.
SECTION 6. Specific Terms of Awards.
6.01. General. Awards may be granted on the terms and
conditions set forth in this Section 6. In addition, the
Committee may impose on any Award or the exercise thereof,
at the
date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the
Plan, as
the Committee shall determine, including without limitation
the
acceleration of vesting of any Awards or terms requiring
forfeiture of Awards in the event of termination of
employment by
the Participant.
6.02. Restricted Stock. The Committee is authorized
to
grant Restricted Stock to persons eligible under Section 5
on the
following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock
shall
be subject to such restrictions as the Committee may impose,
which restrictions may lapse separately or in combination at
such times, under such circumstances, in such installments,
or otherwise as the Committee shall determine.
(ii) Vesting Conditions. Restricted Stock shall
cease
to be subject to forfeiture at the end of the restriction
period if the Participant remains an employee of the Company
throughout the restriction period, and if applicable, any
performance criteria specified by the Committee are met
during the restriction period (or, if the Committee so
provides, vesting could occur at an earlier date than
otherwise established if the preestablished performance
criteria are met at an earlier date). Notwithstanding the
aforesaid, the Committee may determine in any individual
case, that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the
event of terminations resulting from specified causes.
(iii) Certificates of Shares. Restricted Stock
granted
under the Plan may be evidenced in such manner as the
Committee shall determine. As soon as reasonably possible
after vesting has occurred, the Company will cause a
certificate of shares registered in the name of the
Participant to be issued and delivered to the Participant.
(iv) Rights of Shareholders. A Participant shall
have
no rights as a shareholder (including the right to vote, or
to receive dividends) until the Restricted Stock has vested
and certificates of shares are registered in his or her
name.
6.03 Options. The Committee is authorized to grant
Options
to persons eligible under Section 5 on the following terms
and
conditions:
(i) Exercise Price. The exercise price per Share
purchasable under an Option shall be determined by the
Committee; provided, however, that such exercise price shall
be not less than the Fair Market Value of a Share on the
Date
of Grant of such Option. Additionally, the exercise price
per Share of any Incentive Stock Options granted to a Ten
Percent Shareholder shall not be less than 110 percent of
the
Fair Market Value of a Share on the Date of Grant of such
Option.
(ii) Time and Method of Exercise. The Committee
shall
determine the time or times at which an Option may be
exercised in whole or in part, the methods by which such
exercise price may be paid or deemed to be paid, the form of
such payment, including, without limitation, cash, Shares,
other Awards or awards issued under other Company plans, or
other property (including notes or other contractual
obligations of Participants to make payment on a deferred
basis, such as through "cashless exercise" arrangements),
and
the methods by which Shares will be delivered or deemed to
be
delivered to Participants. Options shall expire not later
than ten years after the date of grant. Incentive Stock
Options granted to a Ten Percent Shareholder shall expire
not
later than five years after the Date of Grant.
(iii) Incentive Stock Options. The terms of any
Incentive Stock Option granted under the Plan shall comply
in
all respects with the provisions of Section 422 of the Code,
including but not limited to the requirements that no
Incentive Stock Option shall be granted more than ten years
after the effective date of the Plan. Anything in the Plan
to the contrary notwithstanding, no term of the Plan
relating
to Incentive Stock Options shall be interpreted, amended, or
altered, nor shall any discretion or authority granted under
the Plan be exercised, so as to disqualify either the Plan
or
any Incentive Stock Option under Section 422 of the Code.
SECTION 7. Certain Provisions Applicable to Awards.
7.01. Maximum Individual Option Grants. For purposes
of
qualifying for Section 162(m) of the Code, no Participant
may
receive Options during the life of the Plan covering or
representing more than 90,000 Shares.
7.02. Term of Awards. The term of each Award shall be
for
such period as may be determined by the Committee; provided,
however, that in no event shall the term of any Award
granted
exceed a period of ten years from the Date of Grant.
SECTION 8. General Restrictions Applicable to Awards.
8.01. Restrictions Under Rule 16b-3.
8.01.1. Nontransferability. Awards which
constitute
derivative securities (including any option or other award
in the nature of a right) shall not be transferable by a
Participant except by will or the laws of descent and
distribution or, if then permitted under Rule 16b-3,
pursuant
to a qualified domestic relations order as defined under the
Code or Title I of the Employee Retirement Income Security
Act of 1974, as amended, or the rules thereunder. Incentive
Stock Options and, if then required by Rule 16b-3, any other
derivative security granted under the Plan, shall be
exercisable during the lifetime of a Participant only by
such
Participant or his guardian or legal representative.
8.01.2. Compliance with Rule 16b-3. It is the
intent of
the Company that this Plan comply in all respects with Rule
16b-3 in connection with any Award granted to a person who
is
subject to Section 16 of the Exchange Act. Accordingly, if
any provision of this Plan or any Award Agreement does not
comply with the requirements of Rule 16b-3 as then
applicable
to any such person, such provision shall be construed or
deemed amended to the extent necessary to conform to such
requirements with respect to such person.
8.02. Share Certificates. All certificates for Shares
delivered under the Plan pursuant to any Award or the
exercise
thereof shall be subject to such stop-transfer order and
other
restrictions as the Committee may deem advisable under
applicable
federal or state laws, rules and regulations thereunder, and
the
rules of any national securities exchange on which Shares
are
listed. The Committee may cause a legend or legends to be
placed
on any such certificates to make appropriate reference to
such
restrictions or any other restrictions that may be
applicable to
Shares, including under the terms of the Plan or any Award
Agreement. In addition, during any period in which Awards
or
Shares are subject to restrictions under the terms of the
Plan or
any Award Agreement, the Committee may require the
Participant to
enter into an agreement providing that certificates
representing
Shares issuable or issued pursuant to an Award shall remain
in
the physical custody of the Company or such other person as
the
Committee may designate.
SECTION 9. Change of Control Provisions.
Notwithstanding
any other provision of the Plan, the following acceleration
and
valuation provisions shall apply in the event of a "Change
in
Control" as defined in this Section 9:
9.01. Acceleration and Cash-Out Rights. In the event
of a
"Change in Control," as defined in Section 9.02,
automatically in
the case of Participants subject to Section 16 of the
Exchange
Act, and unless otherwise determined by the Board in writing
at
or after grant but prior to the occurrence of the Change of
Control in the case of Participants not subject to Section
16 of
the Exchange Act.
(i) All Restricted Stock shall be deemed fully
vested;
and
(ii) Any Option that was not previously
exercisable and
vested shall become fully exercisable and vested.
9.02. Change of Control. For purposes of Section
9.01, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20 percent
or more of either (i) the then outstanding shares of Common
Stock of the Company (the "Outstanding Company Common
Stock")
or (ii) combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control; (i)
any acquisition by the Company or any of its subsidiaries,
(ii) any acquisition by any employee benefit plan (or
related
trust) sponsored or maintained by the Company or any of its
subsidiaries or (iii) any acquisition by any corporation
with
respect to which, following such acquisition, more than 75
percent of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or
indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners; respectively, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such acquisition in
substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities, as the case may be; or
(b) Individuals who, as of the effective date of
the
Plan, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by
a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened solicitation to which Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act applies or
other actual threatened solicitation of proxies or consents;
or
(c) Approval by the shareholders of the Company
of a
reorganization, merger or consolidation, in each case, with
respect to which all or substantially all of the individuals
and entities who were the beneficial owners, respectively,
of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization,
merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 75 percent of,
respectively, the then outstanding shares of common stock
and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such reorganization, merger or consolidation in
substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
SECTION 10. Adjustment Provisions. In the event
that
the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Shares, or other
property), recapitalization, stock split, reverse stock
split,
reorganization, merger, consolidation, spin-off,
combination,
repurchase, or share exchange, or other similar corporate
transaction or event, affects the Shares such that an
adjustment
is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the rights of
Participants
under the Plan, then the Committee shall, in such manner as
it
may deem equitable, adjust any or all of (i) the number and
kind
of Shares which may thereafter be issued in connection with
Awards, (ii) the limit on the number of Shares subject to
Option
Grants for any Participant, (iii) the number and kind of
Shares
issued or issuable in respect of outstanding Awards, and
(iv) the
exercise price, grant price, or purchase price relating to
any
Award or, if deemed appropriate, make provision for a cash
payment with respect to any outstanding Award; provided,
however,
in each case, that, with respect to Incentive Stock Options,
no
such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1)
of
the Code. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or
nonrecurring
events (including, without limitation, events described in
the
preceding sentence) affecting the Company or the financial
statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles.
SECTION 11. Changes to the Plan and Awards.
11.01. Changes to the Plan. The Board may amend,
alter,
suspend, discontinue or terminate the Plan; provided,
however,
that, without the consent of an affected Participant, no
amendment, alteration, suspension, discontinuation, or
termination of the Plan may impair the rights of such
Participant
under any Award theretofore granted to him. Notwithstanding
the
foregoing, without the approval of the shareholders of
Westmoreland Coal Company, no amendment may be made that
would
(i) materially increase the aggregate number of Shares that
may
be issued under the Plan, except by operation of section 10,
(ii)
materially modify the requirements for eligibility to
participate
in the Plan, or (iii) materially increase the benefits
accruing
to Participants.
SECTION 12. General Provisions.
12.01. No Rights to Awards. No Participant or
employee
shall have any claim to be granted any Award under the Plan,
and
there is no obligation for uniformity of treatment of
Participants and employees.
12.02. No Shareholder Rights. No Award shall confer
on any
Participant any of the rights of a shareholder of the
Company
unless and until Shares are duly issued or transferred to
the
Participant in accordance with the terms of the Award.
12.03. Tax Withholding. The Company is authorized to
withhold from any Award granted, any payment relating to an
Award
under the Plan, including from a distribution of Shares, or
any
payroll or other payment to a Participant, amounts for
withholding and other taxes due with respect thereto, its
exercise, or any payment thereunder, and to take such other
action as the Committee may deem necessary or advisable to
enable
the Company and Participants to satisfy obligations for the
payment of withholding taxes and other tax liabilities
relating
to any Award. This authority shall include authority to
withhold
or receive Shares or other property and to make cash
payments in
respect thereof in satisfaction of Participant's tax
obligations.
12.04. No Right to Employment. Nothing contained in
the
Plan or any Award Agreement shall confer, and no grant of an
Award shall be construed as conferring, upon any employee
any
right to continue in the employ of the Company or to
interfere in
any way with the right of the Company to terminate his
employment
at any time or increase or decrease his compensation from
the
rate in existence at the time of granting of an Award.
12.05. Unfunded Status of Awards. The Plan is
intended to
constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to
a
Participant pursuant to an Award, nothing contained in the
Plan
or any Award shall give any such Participant any rights that
are
greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the
creation
of trusts or make other arrangements to meet the Company's
obligations under the Plan to deliver cash, Shares, other
Awards,
or other property pursuant to any award, which trusts or
other
arrangements shall be consistent with the "unfunded" status
of
the Plan unless the Committee otherwise determines with the
consent of each affected Participant.
12.06. Other Compensatory Arrangements. The Company
shall
be permitted to adopt other or additional compensation
arrangements (which may include arrangements which relate to
Awards), and such arrangements may be either generally
applicable
or applicable only in specific cases.
12.07. Fractional Shares. No fractional Shares shall
be
issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards, or
other
property shall be issued or paid in lieu of fractional
Shares or
whether such fractional Shares or any rights thereto shall
be
forfeited or otherwise eliminated.
12.08. Governing Law. The validity, construction, and
effect of the Plan, any rules and regulations relating to
the
Plan, and any Award Agreement shall be determined in
accordance
with the laws of the State of Delaware, without giving
effect to
principles of conflicts of laws, and applicable federal law.
SECTION 13. Effective Date. The Plan shall become
effective
on February 1, 1995; provided, however, that within one year
after such date, the Plan shall have been approved by the
affirmative vote of the holders of a majority of the Shares
present or represented and entitled to vote (and the
affirmative
vote of a majority of the Shares voting) at a meeting of the
Company's shareholders, or any adjournment thereof. The
termination date of the Plan shall be February 1, 2005.