EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), entered into as of
November 1, 2001, by and between MASSEY ENERGY COMPANY ("Parent"), A.T. MASSEY
COAL COMPANY, INC., ("Massey"), and DON L. BLANKENSHIP (the "Executive").
WITNESSETH:
WHEREAS, Parent and Massey desire to retain the experience, abilities
and service of the Executive upon the terms and conditions specified herein; and
WHEREAS, the Executive is willing to enter into this Agreement upon the
terms and conditions specified herein;
NOW, THEREFORE, in consideration of the premises, the terms and
provisions set forth herein, the mutual benefits to be gained by the performance
thereof and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Employment. Parent and Massey hereby offer employment to the
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Executive and the Executive hereby accepts such offers, all upon the terms and
conditions set forth herein.
SECTION 2. Term. Subject to the terms and conditions of this Agreement,
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the Executive shall be employed by Parent and Massey commencing on November 1,
2001, (the "Effective Date") and terminating on April 30, 2005, (the "Primary
Term") unless sooner terminated pursuant to Section 5 of this Agreement.
SECTION 3. Duties and Responsibilities.
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A. Capacity. The Executive shall serve as Chairman and Chief Executive
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Officer of Parent and Massey. The Executive shall perform the duties ordinarily
expected of a Chairman and Chief Executive Officer and shall also perform such
other duties consistent therewith as the Organization and Compensation Committee
of Parent's Board of Directors (the "Committee") from time to time, reasonably
determines.
B. Full-Time Duties. The Executive shall devote his full business time,
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attention and energies to the business of Parent and Massey. Notwithstanding
anything herein to the contrary, the Executive shall be allowed to (a) manage
the Executive's personal investments and affairs, and (b)(i) serve on boards or
committees of civic or charitable organizations or trade associations, and (ii)
with the permission of the Committee, serve on the board of directors of any
corporation or as an advisory director of any corporation; provided that such
activities do not interfere with the proper performance of his duties and
responsibilities specified in Section SECTION 3(A).
SECTION 4. Compensation.
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A. Base Salary. During the term of this Agreement, the Executive shall
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receive a salary (the "Base Salary") of $1,000,000 per annum. The Base Salary
shall be payable by Massey in accordance with the general payroll practices of
Massey in effect from time to time.
B. Annual Incentive Bonus. The Executive shall be eligible for an
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annual bonus with a target amount of at least $700,000, $800,000, $900,000 and
$450,000, based upon company performance for fiscal years ending in 2002, 2003,
2004 and 2005, respectively. The bonus amounts will be paid in installments on
June 15 and December 15 consistent with past payment practices between Massey
and the Executive. The following table shows the target payment amounts and
payment dates for each fiscal year's performance:
FYE June 15 December 15 TOTAL
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2002 $350,000 $350,000 $700,000
2003 $400,000 $400,000 $800,000
2004 $450,000 $450,000 $900,000
2005 $450,000 N/A $450,000
The bonus payments will be based on the financial performance of
Parent, Massey or both for each of the stated fiscal years. There will be
predetermined performance goals and objectives established and mutually agreed
to by the Committee and the Executive. The award payments will be made in
accordance with standard Massey practices.
C. Long Term Incentive Award. The Executive shall participate in
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Parent's Long Term Incentive Program. The Executive will participate in the
fiscal year 2002, 2003, 2004 and 2005 performance cycles.
The Long Term Incentive Award for each cycle shall consist of a target
cash award of $300,000 (except for the half year fiscal 2005 performance cycle
for which the target cash award shall be $150,000). The amount payable under
each Long Term Incentive Award may range up to 2 times the target level as
determined by the Committee in a manner consistent with Massey's established
Long Term Incentive Program based on predetermined performance of Parent, Massey
or both over the performance cycle. Each of the cash awards will be evidenced by
an Award Agreement between Parent and the Executive pursuant to Parent's Special
Executive Incentive Plan ("SEIP").
The Long Term Incentive Program will also consist of annual grants of
50,000 non-qualified stock options, 12,700 shares of restricted stock, and 7,300
restricted stock units (except for the half year fiscal 2005 performance cycle
the Long Term Incentive Program will consist of 25,000 non-qualified stock
options, 6,350 shares of restricted stock and 3,650 restricted stock units).
Each of the stock options and restricted stock grants will be evidenced by an
Award Agreement between Parent and the Executive pursuant to the Massey Energy
Company 1996 Executive Stock Plan (the "ESP") or the Massey Energy Company 1999
Executive Performance Incentive Plan ("PIP"), as the case may be and each of the
restricted unit grants will be evidenced by an Award Agreement between Parent
and the Executive pursuant to the SEIP.
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D. Shadow Stock. As of the Effective Date the Executive shall be
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granted 1,050,000 units of shadow stock ("Units") pursuant to the Massey Energy
Company 1982 Shadow Stock Plan (the "Shadow Plan"), subject to the following
terms and conditions, and the terms and conditions of the Shadow Stock Plan. In
the event the Executive remains continuously employed by Parent or Massey from
the Effective Date until the applicable vesting date, then all restrictions on
the Units will expire and the Unit shall vest at the times and in the amounts
set forth in the following table:
Vesting Date Number of Units
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October 31, 2002 300,000 Units
October 31, 2003 300,000 Units
October 31, 2004 300,000 Units
April 30, 2005 150,000 Units
On each date that Units vest in accordance with the foregoing table,
the then value of the Units will thereupon be credited to the Executive's
account in the Massey Executive Deferred Compensation Program. In the event the
Executive's employment with Parent and Massey terminates prior to the expiration
of the Primary Term and following a "Change of Control" (as such term is
hereinafter defined) or if the Executive's employment is terminated by Parent or
Massey for reasons which do not constitute "Cause" as defined herein, then any
Units which have not vested in accordance with the foregoing table shall be
vested as of such termination date and all restrictions on the Units will expire
and the then value of the Units will thereupon be credited to the Executive's
account in the Massey Executive Deferred Compensation Program. In the event the
Executive's employment with Parent and Massey terminates prior to the expiration
of the Primary Term for any reason other than those set forth in the preceding
sentence, then all of the Executive's rights in the Units which have not
previously vested in accordance with the foregoing table shall terminate as of
the date of termination, and all rights thereunder shall cease. The Units will
be evidenced by a Shadow Stock Agreement between Parent and the Executive.
E. Stock Appreciation Rights (SARs). As of the Effective Date, the
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Executive shall be granted units of Stock Appreciation Rights (SARs) pursuant to
the Massey Energy Company 1997 Stock Appreciation Rights Plan (the "SAR Plan").
The number of shares awarded shall be 787,500. All restrictions on the SARs will
expire and the then value of the SARs will thereupon be credited to Executive's
account in the Massey Executive Deferred Compensation Program in the event that
the Executive remains continuously employed by Parent or Massey from the
Effective Date until the applicable vesting date in accordance with the
following table:
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Vesting Date Number of SARs
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October 31, 2002 225,000 SARs
October 31, 2003 225,000 SARs
October 31, 2004 225,000 SARs
April 30, 2005 112,500 SARs
In addition, all restrictions on the SARs will expire and the then
value of the SARs will thereupon be credited to the Executive's account in the
Massey Executive Deferred Compensation Plan in the event that the Executive's
employment with Parent and Massey terminates prior to the expiration of the
Primary Term following a "Change of Control" (as such term is hereinafter
defined) or the Executive's employment is terminated by Parent or Massey for
reasons which do not constitute "Cause" as defined herein.
In the event that the Executive's employment with Parent and Massey
terminates prior to the expiration of the Primary Term for any reason other than
those set forth in the preceding sentence, then all of the Executive's rights in
the SARs which have not previously vested in accordance with the foregoing table
shall terminate as of the date of termination, and all rights thereunder shall
cease. The SARs shall have a ten-year term from the Effective Date, subject to
earlier expiration in accordance with the plan documents. The SARs will be
evidenced by an SAR Agreement between Parent and the Executive.
F. Retention Stock Award. As of the Effective Date the Executive will
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be awarded 222,250 shares of restricted stock and 127,750 restricted stock
units. The grants will be evidenced by Award Agreements between Parent and the
Executive pursuant to the ESP or the PIP (in the case of the restricted stock)
and the SEIP (in the case of the restricted stock units). All restrictions on
the restricted stock and the restricted stock units will expire on April 30,
2005 if the Executive remains in the continuous employ of Parent or Massey from
the Effective Date until April 30, 2005. In addition, all restrictions on the
restricted stock and the restricted stock units will expire on the date of the
Executive's termination of employment if the Executive's employment with Parent
and Massey terminates prior to April 30, 2005 and following a "Change of
Control" (as such term is hereinafter defined) or if the Executive's employment
is terminated by Parent or Massey for reasons which do not constitute "Cause" as
defined herein. In the event that the Executive's employment with Parent and
Massey terminates prior to April 30, 2005 due to death or permanent and total
disability as defined by Massey personnel policy, then the restrictions shall
lapse as to a pro rata portion of the restricted stock and restricted stock
units in accordance with the following table and the portion as to which the
restrictions do not lapse shall terminate and all rights thereunder shall cease:
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Date of Death Pro rata Portion
or Disability to be Vested
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November 1, 2001 through 2/7
October 31, 2002
November 1, 2002 through 4/7
October 31, 2003
November 1, 2003 through 6/7
October 31, 2004
On or after November 1, 2004 7/7
In the event that the Executive's employment with Parent and Massey
terminates prior to April 30, 2005 for any reason other than those set forth in
the two preceding sentences, then all of the Executive's rights in the
restricted stock and restricted stock units shall terminate as of the date of
termination and all rights thereunder shall cease.
G. Retention Cash Award. The Executive's account in the Massey
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Executive Deferred Compensation Plan will be credited with $400,000 on each of
October 31, 2002, October 31, 2003 and October 31, 2004 and an additional
$200,000 on April 30, 2005. All restrictions on such amounts and the bookkeeping
earnings thereon shall lapse on April 30, 2005 if the Executive remains in the
continuous employ of Parent or Massey from the Effective Date until April 30,
2005. In the event the Executive's employment with Parent and Massey terminates
prior to April 30, 2005 and following a "Change in Control" (as such term is
hereinafter defined) or if the Executive's employment is terminated by Parent or
Massey for reasons which do not constitute "Cause" as defined herein, then the
date for the addition any credits to the Massey Executive Deferred Compensation
Plan referred to in the first sentence of this paragraph shall be accelerated to
such termination date and all restrictions on all such amounts (including
amounts credited before the termination date) and the bookkeeping earnings
thereon shall lapse as of such termination date. In the event that the
Executive's employment with Parent and Massey terminates prior to April 30, 2005
due to death or permanent and total disability as defined by Massey personnel
policy, all restrictions shall lapse on amounts scheduled to be credited to the
Executive's account in the Massey Executive Deferred Compensation Plan on or
before the Executive's termination date and the bookkeeping earnings thereon. In
the event that the Executive's employment with Parent and Massey terminates
prior to April 30, 2005 for any reason other than those set forth in the two
preceding sentences, then all of the Executive's rights with respect to amounts
credited or to be credited to the Executive's account in the Massey Executive
Deferred Compensation Plan pursuant to the first sentence of this paragraph
shall terminate as of the date of such termination of employment.
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H. Life Insurance Policy. The Executive's rights under the $4,000,000
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split dollar life insurance policies or program owned by Parent and in force on
the Effective Date shall be vested if the Executive remains in the continuous
employ of the Parent or Massey from the Effective Date until April 30, 2005 or,
if earlier, the termination of the Executive's employment (x) following a
"Change in Control" (as such term is hereinafter defined), (y) by Parent or
Massey for reasons which do not constitute "Cause" as defined herein or (z) due
to death or permanent and total disability as defined by Massey's personnel
policy. The Executive's rights under the $4,000,000 split dollar life insurance
policies or program owned by Parent and in force on the Effective Date shall be
determined without regard to this paragraph if the Executive's employment with
Parent and Massey terminates before April 30, 2005 for a reason other than those
set forth in items (x), (y) or (z) of the preceding sentence.
SECTION 5. Termination of Employment.
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Notwithstanding the provisions of Section 2, the Executive's employment
hereunder may terminate under any of the following conditions:
A. Death. The Executive's employment under this Agreement shall
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terminate automatically upon his death.
B. Disability. The Executive's employment under this Agreement may be
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terminated due to his Disability. "Disability" shall mean permanent and total
disability as defined by Massey personnel policy.
C. Termination by Company for Cause. The Executive's employment
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hereunder may be terminated for Cause by Parent or Massey. For purposes of this
Agreement, "Cause" means:
(1) willful and persistent failure by the Executive to
reasonably perform his duties:
(2) conviction of a misdemeanor involving moral turpitude
which materially affects the Executive's ability to perform his duties
hereunder or materially adversely affects the Executive's, the Parent's
or Massey's reputation or conviction of a felony;
(3) material dishonesty, defalcation, or embezzlement or
misappropriation of corporate assets or opportunities; or
(4) any material default by the Executive in the performance
of any covenants or agreements of the Executive set forth in this
Agreement.
Any termination of the Executive's employment for Cause under this
Section 5(C) shall be authorized by the Parent's Board of Directors (the
"Board"). The Executive shall be given notice by the Board specifying in detail
the particular act or failure to act on which the Board is relying in proposing
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to terminate him for Cause and offering the Executive an opportunity, on a date
at least 1 day after the receipt of such notice, to have a hearing, with
counsel, before the Board.
SECTION 6. Change of Control.
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A. Upon the Executive's termination of employment for any reason
(including, by way of example and not of limitation, the Executive's death or
permanent and total disability as defined by Massey personnel policy),within two
years following a Change of Control, as defined below, any restrictions on any
stock option, restricted stock, stock appreciation right, Unit or other
equity-based incentive provided under the PIP, ESP, the SAR Plan, the Shadow
Plan or any other plan of Parent (a "Stock Plan") shall lapse immediately.
B. Upon the Executive's termination of employment for any reason
(including, by way of example and not of limitation, the Executive's death or
disability as defined by Massey personnel policy), within two years following a
Change of Control, as defined below, the Executive's account in the Massey
Executive Deferred Compensation Plan shall be credited with any credits
accelerated in accordance with Section 4(G) and the Executive shall be vested in
his rights under the split dollar life insurance policies or program in
accordance with Section 4(H).
C. A Change of Control shall have the meaning set forth in the PIP as
of the Effective Date, or any definition that is more favorable to the Executive
that is set forth in any subsequent Stock Plan or that is approved by the Board
for the benefit of Massey's senior executives.
SECTION 7. Payments Upon Termination.
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A. Upon termination of the Executive's employment for any reason prior
to the expiration of the Primary Term, Parent and/or Massey shall be obligated
to pay, and the Executive shall be entitled to receive:
(1) all accrued and unpaid Base Salary under Section 4(A) to
the date of termination;
(2) any unpaid bonus under Section 4(B) or long-term incentive
award under Section 4(C) for the fiscal year or performance cycle
ending prior to the date of termination;
(3) any benefits to which he is entitled under the terms of
the Executive Deferred Compensation Program, the Long Term Incentive
Award Program, and any other applicable employee pension or benefit
plan or program, or applicable law.
B. Upon termination of the Executive's employment by Parent or Massey
without Cause pursuant to Section 5(C), Parent and/or Massey shall be obligated
to pay and the Executive shall be entitled to receive:
(1) all of the amounts and benefits described in Section 7(A);
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(2) Base Salary under Section 4(A) for the remainder of the
Primary Term, as if there had been no termination;
(3) annual bonuses under Section 4(B)for the remainder of the
Primary Term equal to the target bonus for each such fiscal year, such
bonuses to be paid at the same time annual bonuses are regularly paid
by Massey to him;
(4) accelerated vesting of Units of shadow stock and
corresponding credits to the Executive's account under the Massey
Executive Deferred Compensation Plan in accordance with Section 4(D);
(5) accelerated vesting of SARs and corresponding credits to
the Executive's account under the Massey Executive Deferred
Compensation Plan in accordance with Section 4(E);
(6) accelerated vesting of shares of restricted stock and
restricted stock units in accordance with Section 4(F);
(7) accelerated credits to the Executive's account under the
Massey Executive Deferred Compensation Plan in accordance with Section
4(G);
(8) accelerated vesting of the Executive's rights under the
split dollar life insurance policy in accordance with Section 4(H).
C. Upon termination of the Executive's employment on account of the
Executive's death or permanent and total disability as defined by Massey
personnel policy, Parent and/or Massey shall be obligated to pay, and the
Executive shall be entitled to receive:
(1) all of the amounts and benefits described in Section 7(A);
(2) accelerated vesting of a pro rata number of shares of
restricted stock and restricted stock units in accordance with Section
4(F);
(3) crediting of the Executive's account in the Massey
Executive Deferred Compensation Plan in accordance with Section 4(G);
(4) accelerated vesting of the Executive's rights under the
split dollar life insurance policy in accordance with Section 4(H).
D. In the event of any termination of employment under this Section 7,
the Executive shall be under no obligation to seek other employment, and there
shall be no offset against amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain.
SECTION 8. Amendment; Waiver. The terms and provisions of this
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Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with the terms and provisions hereof
may be waived only by a written instrument executed by each Party entitled to
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the benefits thereof. No failure or delay on the part of any party in exercising
any right, power or privilege granted hereunder shall constitute a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege granted hereunder.
SECTION 9. Entire Agreement. Except as contemplated herein, this
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Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes any and all prior written or oral
agreements, arrangements of understandings between Parent, Massey and the
Executive with respect thereto; provided, however, that this Agreement shall not
affect or impair in any way the rights and obligations of Parent and Executive
under the Special Successor Development and Retention Program established in
August, 1998.
SECTION 10. Notices. All notices or communications hereunder shall be
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in writing, addressed as follows or to any address subsequently provided to the
other party:
To Parent:
Massey Energy Company
Attention: Chief Legal Officer
4 North 4th Street
Richmond, VA 23219
To Massey:
A. T. Massey Coal Company, Inc.
Attention: Chief Legal Officer
4 North 4th Street
Richmond, VA 23219
To the Executive:
Don Blankenship
P.O. Box 895
Matewan, WV 25678
All such notices shall be conclusively deemed to be received and shall
be effective, (i) if sent by hand delivery or overnight courier, upon receipt,
(ii) if sent by telecopy or facsimile transmission, upon confirmation of receipt
by the sender of such transmission or (iii) if sent by registered or certified
mail, on the fifth day after the day on which such notice is mailed.
SECTION 11. Severability. In the event that any term or provision of
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this Agreement is found to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining terms and provisions hereof shall
not be in any way affected or impaired thereby, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained therein.
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SECTION 12. Binding Effect; Assignment. This Agreement shall be binding
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upon and inure to the benefit of the parties and their respective successors and
assigns (it being understood and agreed that, except as expressly provided
herein, nothing contained in this Agreement is intended to confer upon any other
person or entity any rights, benefits or remedies of any kind or character
whatsoever). No rights or obligations of Parent or Massey under this Agreement
may be assigned or transferred by Parent or Massey except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which Parent or Massey is not the continuing entity, or the sale or
liquidation as described of all or substantially all of the assets of Parent or
Massey, provided that the assignee or transferee is the successor to all or
substantially all of the assets of Parent or Massey and such assignee or
transferee assumes the liabilities, obligations and duties of Parent or Massey,
as contained in this Agreement, either contractually or as a matter of law.
Parent and Massey further agree that, in the event of a sale of assets or
liquidation as described in the preceding sentence, each shall take whatever
action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of Parent or Massey hereunder. In
the event of the sale, liquidation, consolidation, or merger of Massey or
substantially all the assets of Massey in which Parent does not retain an
ownership interest of more than 50%, Parent agrees to guarantee payment to
Executive of all amounts due under this or related agreements referenced herein.
SECTION 13. Governing Law; Dispute Resolution. This Agreement shall be
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governed by and construed in accordance with the laws of the Commonwealth of
Virginia (except that no effect shall be given to any conflicts of law
principles thereof that would require the application of the laws of another
jurisdiction). Any dispute or misunderstanding arising out of or in connection
with this Agreement shall first be settled, if possible, by the parties
themselves through negotiation and, failing success at negotiation through
mediation, and failing success at mediation, shall be arbitrated at Richmond,
Virginia. Unless otherwise agreed upon by Massey and the Executive, the
arbitration shall be had before three arbitrators, each party designating an
arbitrator and the two designees naming a third arbitrator experienced in
employment related controversies. The procedure shall be in accordance with the
rules and regulations of the American Arbitration Association.
SECTION 14. Headings. The headings of the sections contained in this
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Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
SECTION 15. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date set forth above.
MASSEY ENERGY COMPANY
By: /s/ Admiral Bobby R. Inman
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A.T. MASSEY COAL COMPANY, INC.
By: /s/ Roger L. Nicholson
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Executive:
/s/ Donald L. Blankenship
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Donald L. Blankenship
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