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 [_] Confidential, for Use of the
Statement Commission Only
[X] Definitive Proxy (as permitted by Rule 14a-6(e)(2))
Statement
[_] Definitive Additional
Materials
[_] Soliciting Material
Pursuant to
Rule 14a-12
MASSEY ENERGY COMPANY
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------------
[MASSEY ENERGY COMPANY LOGO]
Massey Energy Company
4 North Fourth Street
Richmond, Virginia 23219
February 26, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders, which will be held on Tuesday, April 17, 2001, at 10:00 a.m.
Eastern Daylight Time at the Charleston Marriott Town Center, 200 Lee Street
East, Charleston, West Virginia. A map showing the Annual Meeting location is
included for your convenience on the back page of this booklet.
Information about the Annual Meeting and the various matters on which the
shareholders will act is included in the Notice of Annual Meeting and Proxy
Statement that follow. Also included is a Proxy/Voting Instruction Card and
postage-paid return envelope.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend, we hope that you will complete and return
your Proxy/Voting Instruction Card in the enclosed envelope as promptly as
possible.
Sincerely,
/s/ Don L. Blankenship
DON L. BLANKENSHIP
Chairman and Chief Executive Officer
[MASSEY ENERGY COMPANY LOGO]
MASSEY ENERGY COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 17, 2001
The Annual Meeting of Shareholders of Massey Energy Company will be held at
the Charleston Marriott Town Center, 200 Lee Street East, Charleston, West
Virginia, on Tuesday, April 17, 2001, at 10:00 a.m. Eastern Daylight Time, for
the following purposes:
1. To elect two Class II directors to hold office for three years and until
their respective successors are elected and qualified. The Board of
Directors intends to nominate as directors the two persons identified in
the attached Proxy Statement.
2. To consider and act upon a proposal to ratify the appointment of Ernst &
Young LLP as auditors for the fiscal year ending October 31, 2001.
3. To approve and adopt an amendment to the Massey Energy Company Stock
Plan for Non-Employee Directors that increases the number of shares of
Common Stock authorized to be issued under such plan from 25,000 to
100,000.
4. To approve and adopt an amendment to the Massey Energy Company 1997
Restricted Stock Plan for Non-Employee Directors that increases the
number of shares of Common Stock authorized to be issued under such plan
from 60,000 to 200,000.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed February 26, 2001, as the record date for
determining the shareholders entitled to receive notice of and to vote at the
Annual Meeting.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY/VOTING INSTRUCTION
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Roger L. Nicholson
ROGER L. NICHOLSON
Vice President, Secretary and General
Counsel
February 26, 2001
Richmond, Virginia
[MASSEY ENERGY COMPANY LOGO]
MASSEY ENERGY COMPANY
----------------
PROXY STATEMENT
February 26, 2001
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Massey Energy Company, 4 North 4th Street, Richmond,
Virginia 23219 (the "Company"), of your proxy for use at the annual meeting of
holders of the Company's common stock, $0.625 par value per share (the "Common
Stock"), to be held April 17, 2001, or at any adjournment or postponement
thereof (the "Annual Meeting"). This proxy statement and the accompanying
proxy/voting instruction card are being mailed to all shareholders on or about
March 5, 2001. The expense of the solicitation will be paid by the Company.
Some officers and regular employees may solicit proxies personally and by
telephone. Mellon Investor Services LLC has been engaged to assist in the
solicitation for which it will receive a fee of $7,500 plus expenses from the
Company. Your proxy is revocable by written notice to the Secretary of the
Company at any time prior to exercise, and it shall be suspended if you are a
shareholder of record or valid proxyholder who attends the Annual Meeting and
elects to vote in person.
On February 26, 2001, the record date fixed by the Board of Directors, the
Company had outstanding 73,829,043 shares of Common Stock. A majority of the
outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved. Shareholders
have one vote for each share on all business of the Annual Meeting, except
that shareholders have cumulative voting rights with respect to the election
of the two directors. Cumulative voting rights entitle a shareholder to give
one nominee as many votes as is equal to the number of directors to be elected
multiplied by the number of shares owned by the shareholder, or to distribute
his or her votes on the same principle among two or more nominees as the
shareholder sees fit. The two nominees for director receiving the highest
number of votes at the Annual Meeting will be elected. With respect to the
other proposals, the affirmative vote of the majority of shares represented in
person or by proxy at the Annual Meeting and entitled to vote is required for
approval.
Unless otherwise directed in the accompanying proxy/voting instruction
card, the persons named therein will vote (i) FOR the election of the two
director nominees listed below; (ii) FOR the proposal to ratify the
appointment of Ernst & Young LLP as auditors for the fiscal year ending
October 31, 2001; (iii) FOR the approval and adoption of an amendment to the
Massey Energy Company Stock Plan for Non-Employee Directors that increases the
number of shares of Common Stock authorized to be issued under such plan from
25,000 to 100,000; and (iv) FOR the approval and adoption of an amendment to
the Massey Energy Company 1997 Restricted Stock Plan for Non-Employee
Directors that increases the number of shares of Common Stock authorized to be
issued under such plan from 60,000 to 200,000.
As to any other business that may properly come before the Annual Meeting,
the persons named in the accompanying proxy/voting instruction card will vote
in accordance with their best judgment. The Company does not presently know of
any other business.
BACKGROUND INFORMATION
On November 30, 2000, the Company completed a reverse spin-off that divided
the Company into two separate publicly-traded corporations. As a result of the
reverse spin-off (the "Spin-Off"), the Company was separated into:
(1) the spun-off corporation, "new" Fluor Corporation ("New Fluor"),
which owns all of the Company's then existing businesses except for the
coal-related business conducted by A.T. Massey Coal Company, Inc. ("A. T.
Massey"); and
(2) "Old" Fluor Corporation, subsequently renamed Massey Energy Company,
which owns the coal-related business through its sole subsidiary A. T.
Massey.
The separation of the two companies was accomplished through a tax-free
dividend by the Company of the outstanding common stock of New Fluor.
Concurrent with the completion of the Spin-Off, each of the directors and
officers of the Company resigned (other than Don L. Blankenship, Martha R.
Seger and Bobby R. Inman who continue as directors of the Company). Three new
directors, James L. Gardner, E. Gordon Gee and William R. Grant, were elected
and the officers of A. T. Massey prior to the Spin-Off were appointed to
equivalent positions with the Company.
Due to the relative significance of the businesses transferred to New Fluor
following the Spin-Off, New Fluor has been treated as the "accounting
successor" for financial reporting purposes and the Company has been treated
by New Fluor as a discontinued operation despite the legal form of separation
resulting from the Spin-Off. As a result, except where noted, the information
reported in this proxy statement concerning the Company addresses the period
following the Spin-Off.
ELECTION OF DIRECTORS
Proposal 1
In accordance with the Company's Certificate of Incorporation and Bylaws,
which provide for a "classified" Board of Directors, two Class II directors
have been nominated for election at the Annual Meeting to serve a three-year
term expiring at the annual meeting in 2004 and until their respective
successors are elected and qualified. The Bylaws of the Company provide for
six directors, two serving as Class I directors, two serving as Class II
directors and two serving as Class III directors.
Each of the two nominees listed below presently serves as a Class II
director of the Company. If either of the nominees should decline or be unable
to act as a director, the persons named in the proxy will vote in accordance
with their best judgment. The Company knows of no reason why the nominees
would not be available for election or, if elected, would not be able to
serve.
Biographical
The following biographical information is furnished with respect to each of
the two nominees for election at the Annual Meeting as Class II directors and
each of the other Class I and Class III directors whose terms will continue
after the Annual Meeting.
Class I Directors--Term expires 2003:
JAMES L. GARDNER, age 49
Mr. Gardner has been a director since November 30, 2000. He is
Chairman of the Governance Committee and a member of the Executive
Committee.
Mr. Gardner is an attorney in private practice. He was Senior Vice
President and General Counsel of A.T. Massey from 1994 to February
2000.
2
E. GORDON GEE, age 56
Mr. Gee has been a director since November 30, 2000. He is a member
of the Audit and Governance Committees.
Mr. Gee is the Chancellor of Vanderbilt University. Mr. Gee also
serves as a director of Dollar General Corporation, The Ullman Fund,
Allmerica Financial Services, Hasbro, Inc., Intimate Brands, Inc.,
Glimcher Realty Trust and The Limited.
Class II Director Nominees:
WILLIAM R. GRANT, age 75
Mr. Grant has been a director since November 30, 2000. He is
Chairman of the Audit Committee and a member of the Executive,
Compensation and Governance Committees.
He is the co-founder of Galen Associates, a venture capital company.
Mr. Grant also serves as a director of Allergan, Inc., MiniMed,
Inc., Ocular Sciences, Inc. and Vasogen, PLC. He is a member of the
General Electric Advisory Board, Trustee for the Center of Blood
Research (Harvard) and Trustee, Emeritus, Mary Flager Cary
Charitable Trust.
DR. MARTHA R. SEGER, age 68
Dr. Seger has been a director since 1991. She is a member of the
Audit, Compensation and Governance Committees.
She is a Distinguished Visiting Professor of Finance, Arizona State
University and a former member of the Board of Governors of the
Federal Reserve System.
Dr. Seger also is a director of Fluor Corporation, Kroger Company,
Tucson Electric/Unisource Energy and Xerox Corporation.
Class III Directors -- Term Expires 2002:
DON L. BLANKENSHIP, age 50
Mr. Blankenship has been a director since 1996. He is Chairman of
the Executive Committee.
Mr. Blankenship has been President, Chief Executive Officer and
Chairman of the Board of the Company since November 30, 2000, and
has been President, Chief Executive Officer and Chairman of the
Board of A. T. Massey since 1992.
Mr. Blankenship is also a director of the National Mining
Association, and a member of the Governor's Mission of West Virginia
and the Norfolk Southern Advisory Board.
BOBBY R. INMAN, age 69
Admiral Inman has been a director since 1985. He is Chairman of the
Compensation Committee and a member of Executive and Governance
Committees.
Admiral Inman, U. S. Navy (retired), served as Director of the
National Security Agency and Deputy Director of the Central
Intelligence Agency.
Admiral Inman also is a director of Fluor Corporation, Science
Applications International Corporation, SBC Communications Inc.,
Temple-Inland Inc. and Xerox Corporation.
3
Stock Ownership of Directors and Executive Officers
The following information is furnished with respect to each director and
nominee for director, each person who served as Chief Executive Officer of the
Company for any portion of the last fiscal year and each of the four other
most highly compensated executive officers of the Company for the last
completed fiscal year (the "Named Executive Officers"), and all current
directors and executive officers of the Company as a group, as to ownership of
shares of Common Stock of the Company as of December 31, 2000. Except as
otherwise noted, the individual or his or her family members had sole voting
and investment power with respect to such shares.
Security Ownership of Directors and Executive Officers
Amount and Nature of Beneficial Ownership
--------------------------------------------
Shares for which
Beneficial Ownership
Shares can be Acquired Total Percent of
Beneficially within 60 Days Beneficial Class
Title of Class Name of Beneficial Owner Owned (Note 2) Ownership (Note 3)
-------------- ------------------------ ------------ -------------------- ---------- ----------
Massey Energy Class I Directors
Company Common James L. Gardner.......... 8,084 0 8,084 *
Stock $0.625 Par Value E. Gordon Gee............. 6,084 0 6,084 *
Class II Director Nominees
William R. Grant.......... 23,415 0 23,415 *
Dr. Martha R. Seger....... 4,519 0 4,519 *
Class III Directors
Don L. Blankenship (Note
1)........................ 24,542 428,757 453,299 *
Bobby R. Inman............ 6,060 0 6,060 *
Other Named Executive
Officers
B. K. Hatfield............ 20,141 111,856 131,997 *
H. D. Short............... 16,149 85,364 101,513 *
J. M. Jarosinski.......... 9,165 73,035 82,200 *
B. F. Phillips, Jr........ 10,994 64,934 75,928 *
Directors (including
nominees) and
executive officers as a
group
(12 persons).............. 141,237 856,945 998,182 1.36%
- --------
(1) This individual is also a Named Executive Officer.
(2) Represents shares under options exercisable within 60 days of December 31,
2000.
(3) Based on 73,496,939 shares outstanding on December 31, 2000, plus shares
deemed outstanding for which beneficial ownership can be acquired within
60 days by that individual or group. An asterisk (*) indicates that
ownership is less than one percent of class.
4
Stock Ownership Of Certain Beneficial Owners
Management of the Company knows of no person, except as set forth below,
who is the beneficial owner of more than 5% of the voting shares of the
Company. The table sets forth information known to the Company as of February
14, 2001, with percentage of ownership calculated using the number of
outstanding shares on February 14, 2001.
Shares Percent
Name and Address of Beneficial Owners Beneficially Owned of Class
------------------------------------- ------------------ --------
Capital Research and Management Co............... 9,813,800(1) 13.0
FMR Corp. and related entities................... 7,305,385(2) 9.7
Dodge & Cox, Inc................................. 5,551,353(3) 7.3
- --------
(1) Based on the Schedule 13G Amendment filed by Capital Research and
Management Co. on February 12, 2001 that indicates that Capital Research
and Management Co. is the beneficial owner of 9,813,800 shares at December
29, 2000. Capital Research and Management Co. holds such beneficial
interest as the result of acting as investment advisor to various
investment companies. Capital Research and Management Co. has offices at
333 South Hope Street, Los Angeles, California 90071.
(2) Based on information provided by FMR Corp. ("FMR"), Edward C. Johnson 3d
("Mr. Johnson") and Abigail P. Johnson ("Mrs. Johnson") included in their
joint Schedule 13G Amendment filed on February 14, 2001 with the
Securities and Exchange Commission wherein they reported the beneficial
ownership of 7,305,385 shares at December 31, 2000. They state that:
Fidelity Management & Research Company ("Fidelity") is the beneficial
owner of 5,758,098 shares as the result of acting as investment advisor to
various investment companies; Mr. Johnson and FMR and the funds each has
sole power to dispose of the 5,758,098 shares but neither FMR nor Mr.
Johnson has the sole power to vote or direct the voting of the shares
owned directly by the Fidelity funds, which power resides with the funds'
boards of trustees and is carried out by Fidelity; Fidelity Management
Trust Company ("FMTC") is the beneficial owner of 1,103,887 shares as a
result of its serving as investment manager of institutional accounts; Mr.
Johnson and FMR each has sole dispositive power over 1,103,887 shares,
sole power to vote 958,787 shares, and no power to vote 145,100 shares
owned by institutional accounts; and Fidelity International Limited
("FIL") is the beneficial owner of 443,400 shares. The address of FMR, Mr.
Johnson, Mrs. Johnson, Fidelity and FMTC is 82 Devonshire Street, Boston,
Massachusetts 02109. The address of FIL is Pembroke Hall, 42 Crowlane,
Hamilton, Bermuda.
(3) Based on the Schedule 13G filed by Dodge & Cox, Inc. on February 14, 2001
with the Securities and Exchange Commission that indicates Dodge & Cox,
Inc. is a registered investment advisor having the sole power to vote
5,259,303 shares, shared voting power relative to 48,500 shares and the
sole power to dispose of 5,551,353 shares at December 31, 2000. The
address of Dodge & Cox is One Sansome Street, 35th Floor, San Francisco,
California 94104.
Committees of the Board
The standing committees of the Board consist of an Audit Committee,
Executive Committee, Governance Committee and Compensation Committee. All of
the information regarding the meetings of these committees refers to meetings
that took place in fiscal year 2000, prior to the Spin-Off.
Audit Committee
The principal duties of the Audit Committee are to nominate the firm of
independent auditors for appointment by the Board; to meet with the
independent auditors to review and approve the scope of their audit engagement
and the fees related to such work; to meet with the Company's financial
management, internal audit management and independent auditors to review
matters relating to internal accounting controls, the internal audit program,
the Company's accounting practices and procedures and other matters relating
to the financial condition of the Company and its subsidiaries; to review the
work of the independent auditors that falls outside the scope of their audit
engagement for the purpose of determining the independence of the independent
auditors; and to report to the Board periodically any conclusions or
recommendations the Audit Committee may have with
5
respect to such matters. The members of the Audit Committee are William R.
Grant (Chairman), Dr. Martha R. Seger and E. Gordon Gee, each of whom is an
"independent director" under the rules of The New York Stock Exchange, the
exchange on which the Company's Common Stock is traded. The Audit Committee
held six meetings during fiscal year 2000, one of which was to review and
approve the Company's Annual Report, Form 10-K and proxy materials.
At the end of each of the regular meetings, the members met privately with
the Company's independent auditors without any Company officers or other
personnel present.
Executive Committee
The Executive Committee has all of the power and authority of the Board to
the extent permitted by Delaware law. The members of the Executive Committee
are Don L. Blankenship (Chairman), James L. Gardner, William R. Grant and
Admiral Bobby R. Inman. The Executive Committee held no meetings but took
action by unanimous written consent on nineteen occasions during fiscal year
2000.
Governance Committee
The function of the Governance Committee is to seek out, evaluate and
recommend to the Board qualified nominees for election as directors of the
Company; to recommend directors of the Company for election as members of
Committees of the Board; to recommend new Committees to the Board; and to
consider other matters including the size and composition of the Board and
Committees and other issues of corporate governance. The members of the
Governance Committee are James L. Gardner (Chairman), E. Gordon Gee, William
R. Grant, Admiral Bobby R. Inman and Dr. Martha R. Seger. During fiscal year
2000, the Governance Committee held five meetings. The Governance Committee
will give appropriate consideration to qualified persons recommended by
shareholders for nomination as directors of the Company provided that such
recommendations are accompanied by information sufficient to enable the
Governance Committee to evaluate the qualifications of the nominee.
The Company's Bylaws require that the Secretary of the Company must receive
written notice of all persons to be nominated as a director at an annual
meeting, other than nominations made at the direction of the Board of
Directors, not less than 60 nor more than 90 days prior to the annual meeting
at which the election will take place (or not later than 10 days after public
disclosure of such meeting if such disclosure occurs less than 40 days prior
to the date of such meeting). The notice must set forth (i) the shareholder's
name and address, and the number of shares of Common Stock beneficially owned
by such shareholder, (ii) such information with respect to the nominee as
would have to be included in the proxy statement if such person were a nominee
included in that proxy statement and (iii) a consent to serve as director
signed by such nominee.
Compensation Committee
The principal duties of the Compensation Committee are to review corporate
organizational structures; to review key employee compensation policies, plans
and programs; to monitor performance and compensation of employee-directors
and officers of the Company and other key employees; to prepare
recommendations and periodic reports to the Board concerning such matters; and
to function as the Committee which administers the long-term incentive
programs referred to in the Executive Compensation section hereof. The members
of the Compensation Committee are Admiral Bobby R. Inman (Chairman), William
R. Grant and Dr. Martha R. Seger, none of whom is a current or former officer
or employee of the Company or any subsidiary. The Compensation Committee held
six meetings during fiscal year 2000.
Board and Committee Attendance
During fiscal year 2000, the Board held nine meetings. Each of the
directors attended at least 75% of the aggregate number of meetings of the
Board and of the Board Committees on which he or she served.
Certain Relationships and Related Transactions
James L. Gardner, a director of the Company, is an attorney in the private
practice of law. The Company's wholly-owned subsidiary, A. T. Massey, retains
Mr. Gardner as an independent contractor to assist it in certain
6
legal matters. Mr. Gardner's consulting contract with the A. T. Massey
commenced March 1, 2000, extends through December 31, 2002 and provides, among
other things, (i) that Mr. Gardner generally is expected to work at least one
week per month, (ii) for payment to Mr. Gardner of $5,250 per month, plus $175
per hour for each hour worked in excess of 30 hours during any calendar month,
(iii) that A. T. Massey will provide family medical and dental insurance
coverage to Mr. Gardner for a period of 60 calendar months (whether or not the
contract is terminated) on the same terms and conditions as such medical and
dental coverage is provided to A. T. Massey's employees in return for payment
by Mr. Gardner of a monthly fee calculated for extended coverage under COBRA.
The amount of fees (exclusive of reimbursed costs) paid to Mr. Gardner in
fiscal 2000 was $95,812.50.
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of forms required by Section 16(a) of the Securities
Exchange Act of 1934 that have been received by the Company during and with
respect to the Company's most recent fiscal year, the Company believes that
there has been compliance with all filing requirements applicable to its
current directors, officers and beneficial owners of more than 10% of the
Company's Common Stock.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company has established challenging objectives for earnings growth and
shareholder returns for the Company. To support the alignment of management's
interests with those of the shareholders, the Compensation Committee conducts
on a regular basis, a thorough review of the Company's compensation programs
and, as a result, has approved the following executive compensation
philosophy.
Executive Compensation Philosophy
The Company's basic strategy is to establish executive compensation
programs that will attract, retain, develop and motivate the highly qualified
executive team that is needed to achieve challenging performance objectives
and build shareholder value. The Company expects superior performance, both
collectively and individually, and its compensation programs are designed to
provide superior rewards when expectations are achieved. The competitiveness
of the programs is evaluated against a mining industry peer group of companies
comparable to the Company selected by the Compensation Committee based on
advice by a compensation consulting firm. This compensation peer group
includes some but not all of the companies included in the indices as
presented in the stock performance graph found on page 16. The compensation
peer group was selected on the basis of industry, size, complexity, financial
performance history, growth and other relevant factors including executive
talent resources.
The intent of the Company's compensation philosophy is to provide the
participating executives a clear and common understanding of Company
objectives (financial and non-financial), how objectives are established and
the reward for the achievement of objectives. Individual accountability for
the achievement of pre-established personal and Company performance objectives
are reflected in the achievement of the targeted level of compensation. The
programs will provide the flexibility to meet the compensation needs of the
Company. The programs maintain an appropriate compensation mix for executives
between fixed, annual incentive and long-term incentive compensation.
Base Salary
The Company's base salary philosophy is to provide a basic level of
financial security to executives targeting the 50th percentile of competitive
pay within the compensation peer group as selected by the Compensation
Committee. The Compensation Committee will review base salaries for executives
and those of the compensation peer group on a regular basis to ensure that the
Company pays within the target.
Annual Incentive Program
Annual incentive bonuses provide an opportunity to earn significant
additional compensation for attainment of Company and individual performance
objectives. Over time, performance objectives are expected to represent above-
average performance compared to peers within the Company.
7
The annual incentive plan covers most salaried employees, including all the
Named Executive Officers. The target amount payable to each executive is based
on the Company's and the executive's actual performance. Performance criteria
for the annual incentive award for the CEO included the Company's operating
profit growth, return on assets, gross margin per ton, produced coal revenue
growth, strategic member development and strategic diversity planning. The
award of each other Named Executive Officer is reviewed and approved by the
Compensation Committee. Based upon performance in relation to earnings targets
and other strategic objectives, incentive awards, when taken together with
salary, were established at levels that put each of the Named Executive
Officers, other than Mr. Blankenship, in the 65% percentile of competitive pay
within the compensation peer group.
Long Term Incentive Program
Approximately 90 management employees, including all of the Named Executive
Officers, participate in the Company's long-term incentive program. This
program's primary purposes are to offer an incentive for the achievement of
superior operating results, to align executive officer and shareholder
interests and to foster the retention of key management personnel. It is the
Compensation Committee's intent that all amounts to be awarded under this
program qualify as performance-based compensation under Internal Revenue
Service definitions.
Under the long-term incentive program, the Compensation Committee may make
grants of the following: (i) cash incentive awards, which are based upon
meeting earnings or other financial targets established by the Compensation
Committee; (ii) stock options, which become exercisable on terms established
by the Compensation Committee and which have value only if shareholder value
is increased; and (iii) restricted stock awards.
The focus of the program is regularly reviewed and, if necessary, changed
so that the Company will remain competitive in the markets in which it
competes. The program presently emphasizes the use of cash and stock based
awards aligned to building shareholder value. Vesting of the stock based
awards is contingent upon an executive's continued employment.
Discussion of 2000 Compensation for the Chief Executive Officer
Since Mr. Blankenship became the Chief Executive Officer of A.T. Massey
Coal Company, Inc. in 1992, the Company's coal business has prospered, not
only in earnings performance but also in accumulation of reserves. These
accomplishments have occurred during challenging times in the coal industry
with fierce price competition and consolidation. During 2000, Mr. Blankenship
continued his strong leadership of the Company, successfully guiding it
through the Spin-Off of the non-coal operations. His compensation package,
which is reflected in the employment agreement that is summarized following
this report, is designed to provide significant incentives for Mr. Blankenship
to continue his strong leadership.
Conclusion
All amounts paid or accrued during fiscal year 2000 under the above-
described plans and programs are included in the tables which follow. No
member of the Compensation Committee is a former or current officer or
employee of the Company or any of its subsidiaries.
Section 162(m) of the Internal Revenue Code generally limits the corporate
tax deduction for compensation paid to executive officers named in the Summary
Compensation Table in the proxy statement to $1 million, unless certain
requirements are met. The Company intends to maximize the corporate tax
deduction. However, while the Company's incentive compensation programs are
designed to facilitate compliance with Section 162(m), the Compensation
Committee believes that the Company must attract and retain qualified
executives to manage the Company and that in some instances, the Compensation
Committee may need the flexibility to offer compensation that exceeds the
Section 162(m) threshold for deductibility.
Compensation Committee
Bobby R. Inman William R. Grant Martha R. Seger
February 23, 2001
8
Employment Contract with Don L. Blankenship
The Company entered into an employment agreement with Mr. Blankenship, the
Company's Chairman and Chief Executive Officer, effective October 1, 1998, for
a term ending October 31, 2001. Mr. Blankenship will receive a base salary of
$650,000 per year, with adjustments to $700,000 per year on January 1, 1999,
$800,000 per year on January 1, 2000 and $900,000 per year on January 1, 2001.
Mr. Blankenship's agreement provides for annual bonuses in fiscal years
1998, 1999, 2000 and 2001 with target amounts of not less than $540,000,
$625,000, $650,000 and $700,000, respectively, which will be based on meeting
predetermined performance goals and objectives established and mutually agreed
to prior to the Spin-Off by the Chairman and Chief Executive Officer of Fluor
Corporation and Mr. Blankenship and after the Spin-Off by the Compensation
Committee and Mr. Blankenship. For 1999 and 2000, Mr. Blankenship received the
target bonus. Award payments are made in accordance with standard practices of
the Company.
Mr. Blankenship will also be eligible for a long-term incentive award under
the Company's Long-Term Incentive Program (the "Long-Term Incentive Program").
Mr. Blankenship's award for each three-year performance cycle that commences
during the term will have a target value of $450,000, consisting of a cash
element that will have a target value of $67,350, 16,260 stock options, 3,170
shares of restricted stock and 1,820 restricted units.
Mr. Blankenship was granted 60,000 shadow stock units on October 1, 1998,
1999 and 2000, respectively, and will also be granted 60,000 on October 1,
2001. The units become vested if Mr. Blankenship remains continuously employed
by the Company through the expiration of the term, or his employment
terminates due to termination by the Company without "cause", or terminates
following a "change of control" (as such terms are defined in the agreement).
Upon vesting, the value of these units will be credited to Mr. Blankenship's
account under the Company's Executive Deferred Compensation Program (the
"Deferred Compensation Program"). In the event Mr. Blankenship's employment
terminates prior to the expiration of the term due to death or disability,
then any previously granted units will become vested and the units not yet
granted would be forfeited. In the event Mr. Blankenship's employment
terminates prior to the expiration of the term for any reason other than the
foregoing, then all of the units terminate and are forfeited.
Mr. Blankenship was also granted 300,000 stock appreciation rights ("SARs")
that will vest if Mr. Blankenship remains continuously employed by the Company
through the expiration of the term, or if his employment with the Company
terminates either due to termination by the Company without "cause" or
following a "change of control". In each of these cases, the value of the SARs
upon vesting will be credited to Mr. Blankenship's account in the Deferred
Compensation Program. In the event Mr. Blankenship's employment terminates
prior to the expiration of the term due to death or disability, then a portion
of the SARs (25% upon grant and an additional 25% on each of the next three
anniversaries of the grant) will vest and be credited to Mr. Blankenship's
account in the Deferred Compensation Program and the unvested SARs would be
forfeited. In the event Mr. Blankenship's employment terminates prior to the
expiration of the term for any reason other than the foregoing, then all of
the SARs terminate and are forfeited.
The Company will also provide Mr. Blankenship with an after-tax
reimbursement of up to $360,000 of certain home construction costs that become
earned and payable upon the occurrence of the same events that would cause the
vesting of the SARs. In the event that Mr. Blankenship's employment with the
Company terminates prior to the expiration of the term due to death or
disability, then payment of a portion (25% upon award and an additional 25% on
each of the next three anniversaries of the award) of the amount will be made.
The agreement also provides for certain payments in connection with the
termination of Mr. Blankenship's employment. Upon termination, the Company
will be obligated to pay Mr. Blankenship as a minimum amount all accrued and
unpaid base salary, any unpaid bonus and any benefits to which he is entitled
under the Deferred Compensation Program and Long-Term Incentive Program. Under
the Long-Term Incentive Program, if Mr. Blankenship's employment with the
Company is terminated due to death or disability, or within two years
9
following a "change of control" (as defined in the program), the stock
options, restricted stock and restricted units will become fully vested, and a
pro-rata portion of the cash component will become payable. In the event Mr.
Blankenship's employment terminates for any reason other than the foregoing,
then such stock-based awards will be forfeited to the extent they are unvested
and the cash component will be forfeited entirely.
If Mr. Blankenship's employment is terminated by the Company without cause,
the Company will be obligated to pay Mr. Blankenship, in addition to the
minimum amount, base salary for the remaining term of the agreement, annual
bonuses for the remaining term (including a pro-rata bonus for any partial
year) and the house construction cost reimbursement amount.
Mr. Blankenship is also a party to the Special Successor Development and
Retention Program (the "Successor and Retention Program") adopted by the
Company in September 1998. Pursuant to the Successor and Retention Program,
Mr. Blankenship can earn up to $1,000,000 (plus investment return on amounts
conditionally credited to Mr. Blankenship on a pro-rata basis during the term
of the program), if he remains continuously employed by the Company until July
1, 2001 and if the Company achieves certain financial objectives and Mr.
Blankenship develops an acceptable successor and senior executive management
team (50% of the award is related to the financial objective and 25% each to
the acceptable successor and acceptable senior executive management team).
Pursuant to the Successor and Retention Program, Mr. Blankenship was also
granted 11,829 shares of restricted stock and 6,861 restricted units on
December 8, 1998 and was granted 9,538 shares of restricted stock and 5,365
restricted units on March 8, 1999. The restricted shares and the restricted
units will vest 33% on each of the next three anniversaries of the grant date.
The cash amount under the Successor and Retention Program will be credited
into Mr. Blankenship's account in the Deferred Compensation Program if Mr.
Blankenship remains continuously employed until July 1, 2001, or Mr.
Blankenship's employment terminates due to death or disability, or following a
change of control. In the event Mr. Blankenship's employment terminates prior
to such vesting dates for any reason other than the foregoing, then all of the
cash amount and the unvested restricted stock and units will be forfeited.
Also, the Company is obligated upon Mr. Blankenship's retirement to provide
Mr. Blankenship title to a company-owned residence and associated property in
Sprigg, West Virginia, and to pay an amount to reimburse him for any income
taxes owed by him as a result of such title transfer. The residence is
currently valued at approximately $250,000. The Compensation Committee may
authorize such transfer before retirement so long as it is after July 1, 2001.
Also under the Successor and Retention Program, the Compensation Committee
agreed to approve Mr. Blankenship's early retirement at age 55 for the
purposes of the Company's Executive Supplemental Benefit Plan.
Mr. Blankenship, the Company, A. T. Massey and New Fluor entered into an
agreement (the "Amendment Agreement") addressing the treatment of certain
benefits under the arrangements discussed above in connection with the Spin-
Off. Under the Amendment Agreement, Mr. Blankenship confirms that his
employment agreement is not affected by the Spin-Off, except as specifically
provided in the Amendment Agreement, and that the Spin-Off is not deemed to
constitute a termination of his employment. Under the Amendment Agreement, in
connection with the Spin-Off (i) Mr. Blankenship's stock options were
increased to represent Company options according to an adjustment ratio of
3.4, so that his options are exercisable for a total of 497,862 shares of
Company Common Stock without changing the aggregate exercise price of the
options, (ii) Mr. Blankenship's SARs continue to represent an equivalent
number of SARs on Company shares but had their strike price reduced according
to the Conversion Ratio defined and calculated under the methodology described
in footnote A of the "Summary Compensation Table" set forth below, (iii) Mr.
Blankenship's shadow stock units, restricted stock and restricted units
continue to represent an equivalent number of shadow stock units, restricted
stock and restricted units on Company shares, and (iv) after the Spin-Off, the
Company paid Mr. Blankenship $5,520,000 plus an amount equal to the difference
between $719,072 and the closing market price on the first day after the Spin-
Off of 31,264 shares of New Fluor Common Stock, plus an additional $403,857,
and credited $2,778,700 to Mr. Blankenship's deferred compensation account.
The $5,520,000, the amount, if any, of the stock price
10
differential payment, and a corresponding percentage of the $403,857 payment
will not be deductible to the Company under Section 162(m) of the Code. The
payment and deferred compensation credit described in this paragraph are
designed to compensate Mr. Blankenship for the value of his stock-based
incentives attributable to the value of New Fluor Common Stock. In the
Amendment Agreement, Mr. Blankenship and New Fluor agreed to release one
another from any claims arising on or prior to the date of the Amendment
Agreement.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Other Compensation
The following table shows for the fiscal years ended October 31, 1998, 1999
and 2000, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to the
Named Executive Officers in all capacities in which they served. All
compensation relates to amounts paid before the Spin-Off; however, the persons
named below became Named Executive Officers of the Company following the Spin-
Off.
SUMMARY COMPENSATION TABLE (A)
Long Term Compensation
----------------------------------
Annual Compensation Awards(D) Payouts
------------------------------ ---------------------- -----------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Principal Fiscal Salary Bonus Compensation Awards Options/ LTIP Compensation
Position Year ($)(B) ($)(B) ($)(C) ($)(D) SARs (#)(E) Payouts ($) ($)(F)
- ------------------ ------ -------- -------- ------------ ---------- ----------- ----------- ------------
D. L. Blankenship....... 2000 $769,334 $650,000 $302,725 $1,941,341 16,260 $ 49,098 $29,981
Chairman, Chief
Executive 1999 697,908 625,000 149,494 3,404,729 16,260 134,700 51,835
Officer and President 1998 535,732 450,000 94,662 2,435,625 363,760 134,700 39,825
B. K. Hatfield.......... 2000 274,400 272,500 200,447 40,620 11,670 45,893 13,051
Executive Vice
President 1999 275,000 270,000 39,808 22,724 2,800 126,000 24,640
and Chief Operating
Officer 1998 207,000 205,000 28,634 0 2,680 126,000 19,201
H. D. Short............. 2000 230,079 257,000 14,347 40,620 11,670 45,893 11,645
Senior Vice President 1999 205,920 192,300 20,217 22,724 2,800 126,000 20,408
Group Operations 1998 184,667 197,000 18,122 0 2,680 126,000 18,481
J. M. Jarosinski........ 2000 142,100 105,000 12,256 40,620 11,670 41,522 6,300
Vice President--Finance 1999 141,667 93,000 13,388 22,724 2,800 67,500 9,878
and Chief Financial
Officer 1998 102,955 52,000 11,017 0 2,430 67,500 7,270
B. F. Phillips, Jr...... 2000 132,300 85,000 11,608 22,003 6,320 41,522 6,611
Vice President and
Treasurer 1999 134,167 92,000 16,380 20,151 2,500 114,000 11,200
1998 129,167 86,000 13,023 0 2,430 114,000 10,000
- -------
(A) With respect to restricted shares, restricted stock units, shadow stock
units, SARs and stock options (collectively, "Grants"), as a result of the
Spin-Off and following the Spin-Off, all Grants awarded to employees and
directors of Old Fluor were retained by the Company. In addition, in order
to preserve the intrinsic value of the Grants, adjustments were made to
the number of Grants and, as applicable, the ratio of the exercise price
to the market price of the Grants. In that regard, the outstanding number
of Grants were increased by multiplying the applicable amount by 4.056
(the "Conversion Ratio"). Similarly, where applicable, the exercise price
was reduced by dividing the exercise price prior to the Spin-Off by the
Conversion Ratio. The Conversion Ratio was determined in accordance with
accounting rules by taking the closing price of Old Fluor's stock on the
date of the Spin-Off ($36.50) and dividing it by the opening price for the
Company's Common Stock the first stock trading day after the Spin-Off
($9.00). The exception to the Conversion Ratio is for Mr. Blankenship,
details of which are included under "Employment Contract with Don L.
Blankenship" on page 9 of this proxy statement. These adjustments, based
upon the above noted Conversion Ratio, are not reflected in the table but
are detailed in the corresponding footnotes.
(B) Amounts shown include cash compensation earned and received by Named
Executive Officers as well as amounts earned but deferred at the election
of those officers.
11
(C) The perquisites or other personal benefits exceeding $50,000 or 25 percent
of the total perquisites and other personal benefits afforded to Named
Executive Officers were for the years and in the cases of individuals as
follows: (i) during fiscal year 2000, (a) for Mr. Blankenship, $221,035
for restricted unit payments to compensate for federal and state
withholding taxes arising from the lapse of restrictions on restricted
stock held and $9,437 for life insurance premiums; and (b) for Mr.
Hatfield, $172,239 representing forgiveness and gross-up of a bridge loan
from A. T. Massey; (ii) during fiscal year 1999, for Mr. Blankenship,
$58,060 for restricted unit payments to compensate for federal and state
withholding taxes as stated in (C)(i)(a) above; and (iii) during fiscal
year 1998, for Mr. Blankenship, $44,249 for restricted unit payments to
compensate for federal and state withholding taxes as stated in (C)(i)(a)
above.
(D) The amount reported in the table includes restricted stock and shadow
stock, and represents the market value at the date of grant, without
giving effect to the diminution in value attributable to the restrictions
on such stock. In fiscal years 1998, 1999, and 2000, Fluor Corporation
awarded 0, 26,597, and 6,570, respectively, shares of restricted stock to
all Named Executive Officers as a group. With respect to shares granted in
fiscal year 1999, 5,230 shares of restricted stock awarded vest at 10% per
year and 21,367 shares vest at the rate of 33 1/3% per year. With respect
to shares granted in fiscal year 2000, 3,400 shares of restricted stock
awarded will vest after five years and 3,170 shares vest at 10% per year.
In each of fiscal years 1998, 1999, and 2000, the Company awarded 60,000
shares of shadow stock to Mr. Blankenship. The total 180,000 shares of
shadow stock granted to Mr. Blankenship will vest upon completion of the
term of his employment agreement or sooner in certain events related to
termination of his employment. As of the end of fiscal year 2000, the
aggregate restricted stock holdings for each of the above Named Executive
Officers consisted of the following: (i) Mr. Blankenship: 28,515 shares
with a value of $998,025; (ii) Mr. Hatfield: 3,834 shares (15,555 shares
post-conversion) with a value of $134,190; (iii) Mr. Short: 3,792 shares
(15,384 shares post-conversion) with a value of $132,720; (iv) Mr.
Jarosinski: 2,109 shares (8,556 shares post-conversion) with a value of
$73,815; and (v) Mr. Phillips: 2,265 shares (9,189 shares post-conversion)
with a value of $79,295. As of the end of fiscal year 2000, aggregate
restricted stock holdings for the Company consisted of 93,706 shares
(293,009 shares post-conversion) with a value of $3,279,710 at the then
current market value, without giving effect to the diminution of value
attributable to the restrictions on such stock. Holders of restricted
stock are entitled to receive dividends paid on Common Stock. As of the
end of fiscal year 2000, the aggregate shadow stock holdings for each of
the above Named Executive Officers consisted of 180,000 shares with a
value of $6,300,000. Mr. Blankenship currently is the sole holder of the
Company's shadow stock.
(E) Post-conversion stock option and SAR award amounts for fiscal years 1998,
1999 and 2000 are as follows: (i) for Mr. Blankenship: 516,784; 55,284;
and 55,284 shares respectively; (ii) for Mr. Hatfield: 10,870; 11,356; and
47,329 shares respectively; (iii) for Mr. Short: 10,870; 11,356; and
47,329 shares respectively; (iv) for Mr. Jarosinski: 9,856; 11,356; and
47,329 shares respectively; and (v) for Mr. Phillips: 9,856; 10,140; and
25,632 shares respectively.
(F) Amounts shown in this column include Company contributions to the Coal
Company Salary Deferral and Profit Sharing Plan. The amounts contributed
for fiscal years 1998, 1999 and 2000 are as follows: (i) for Mr.
Blankenship: $2,850; $3,000; and $1,500 respectively; (ii) for Mr.
Hatfield: $2,850; $3,000; and $1,500 respectively; (iii) for Mr. Short;
$2,850; 3,000; and $1,500 respectively; (iv) for Mr. Jarosinski: $2,850;
$3,000; and $1,500 respectively; and (v) for Mr. Phillips: $2,850; $3,000;
and $1,500 respectively. Amounts shown also include contributions to the
A. T. Massey Coal Company, Inc., Executive Deferred Compensation Plan. The
amounts contributed for fiscal years 1998, 1999 and 2000 are as follows:
(i) for Mr. Blankenship: $36,975; $48,835; and $28,481 respectively; (ii)
for Mr. Hatfield: $16,351; $21,640; and $11,551 respectively; (iii) for
Mr. Short: $15,631; $17,408; and $10,145 respectively; (iv) for Mr.
Jarosinski: $4,420; $6,878; and $4,800 respectively; and (v) for Mr.
Phillips: $7,150; $8,200; and $5,111 respectively.
12
Stock Options
The following table contains information concerning the grant of stock
options and SARs made during fiscal year 2000 under the Long-Term Incentive
Program to the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR (A)
Individual Grants(A)
--------------------------------------------
Number of % of Total Grant
Securities Options Exercise Date
Underlying Granted to Price(s) Present
Options Employees in ($/Sh) Expiration Value
Name Granted (B) Fiscal Year (C)(D) Date ($)(E)
---- ----------- ------------ -------- ---------- --------
D. L. Blankenship......... 16,260 5.6% $44.3125 12/07/09 $260,340
B. K. Hatfield............ 11,670 4.0% 44.3125 12/07/09 186,850
H. D. Short............... 11,670 4.0% 44.3125 12/07/09 186,850
J. M. Jarosinski.......... 11,670 4.0% 44.3125 12/07/09 186,850
B. F. Phillips, Jr........ 6,320 2.2% 44.3125 12/07/09 101,193
- --------
(A) The Named Executive Officers received only grants of options in fiscal
year 2000; no SARs were granted in fiscal year 2000 to the Company's
management.
(B) The number of securities underlying options granted during fiscal year
2000 on a post-Spin-Off basis based on the Conversion Ratio set forth in
footnote A of the "Summary Compensation Table" above are as follows: (i)
for Mr. Blankenship, 55,284 shares; (ii) for Mr. Hatfield, 47,329 shares;
(iii) for Mr. Short, 47,329 shares; (iv) for Mr. Jarosinski, 47,329
shares; and (v) for Mr. Phillips, 25,632 shares.
(C) Options were granted with an exercise price equal to the fair market value
of the underlying Common Stock of the Company on the date of grant. All
options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of employment, and
vest 100% at the end of four years. However, if the Company's Common Stock
trades at an average of $50 per share (adjusted to $12.33 to reflect the
conversion in connection with the Spin-Off) for 20 consecutive days, 50%
of the options will immediately vest, and if the Company's Common Stock
trades at an average of $60 per share (adjusted to $14.29 to reflect the
conversion in connection with the Spin-Off) for 20 consecutive days, the
remaining 50% of the options will vest. The exercise price and tax
withholding obligations related to exercise may be paid by delivery of
already owned shares or by offset of the underlying shares, subject to
certain conditions.
(D) The Exercise Price for options granted during fiscal year 2000 on a post-
conversion basis is $10.92636 per share.
(E) The Grant Date Present Value is computed using the Black-Scholes option
pricing model based on the following general assumptions: (i) an Expected
Option Term of six years for options which expire ten years from the date
of grant which reflects a reduction of the actual 10-year life of the
option based on historical data regarding the average length of time an
executive holds an option before exercising; (ii) a Risk-Free Interest
Rate that represents the interest rate on a U.S. Treasury Strip with a
maturity date corresponding to that of the Expected Option Term; (iii)
Stock Price Volatility is calculated using daily stock prices of Fluor
Corporation over a three-year period preceding the grant date; and (iv)
Dividend Yield is calculated using yields over a three-year period
preceding the grant date. The specific option pricing model assumptions
for the grants were as follows: $44.31250 Exercise Price; 6.03% Risk Free
Interest Rate; 39.81% Stock Price Volatility; and 1.74% Dividend Yield.
Notwithstanding the fact that these options are non-transferable, no
discount for lack of marketability was taken. The option value was
discounted by approximately 3% for risk of forfeiture during the vesting
period. The actual value, if any, a Named Executive Officer may realize
will depend upon the excess of the stock price on the date the option is
exercised, so there is no assurance that the value realized by the Named
Executive Officer will be at or near the amount shown.
13
Option/SAR Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the end of fiscal year 2000:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUE
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at In-the-Money Options/SARs
Value Fiscal Year End (#) at Fiscal Year End ($)(C)
Shares Acquired Realized ------------------------------- -------------------------
Name on Exercise (#) ($) Exercisable(A) Unexercisable(B) Exercisable Unexercisable
- ---- --------------- -------- -------------- ---------------- ----------- -------------
$ $
D. L. Blankenship....... 0 $ 0 86,095 360,335 0 0
B. K. Hatfield.......... 0 0 13,870 15,110 0 0
H. D. Short............. 1,340 16,289 7,338 15,110 0 0
J. M. Jarosinski........ 0 0 4,423 14,985 0 0
B. F. Phillips, Jr...... 0 0 7,850 9,410 0 0
- --------
(A) The number of securities underlying exercisable unexercised options/SARs
at the end of fiscal year 2000 on a post-Spin-Off basis based on the
Conversion Ratio set forth in footnote A of the "Summary Compensation
Table" above are as follows: (i) for Mr. Blankenship, 292,723 shares; (ii)
for Mr. Hatfield, 56,250 shares; (iii) for Mr. Short, 29,760 shares; (iv)
for Mr. Jarosinski, 17,938 shares; and (v) for Mr. Phillips, 31,836
shares.
(B) The number of securities underlying unexercisable unexercised options/SARs
at the end of fiscal year 2000 on a post-Spin-Off basis based on the
Conversion Ratio set forth in footnote A of the "Summary Compensation
Table" above are as follows: (i) for Mr. Blankenship, 505,139 shares; (ii)
for Mr. Hatfield, 61,280 shares; (iii) for Mr. Short, 61,280 shares; (iv)
for Mr. Jarosinski, 60,773 shares; and (v) for Mr. Phillips, 38,163
shares.
(C) Market value of underlying securities at fiscal year-end, minus the
exercise price.
LONG-TERM INCENTIVE PROGRAM-AWARDS IN LAST FISCAL YEAR
No long term incentive cash awards were granted by the Company in fiscal
2000.
Pension Plans
The following table shows the estimated annual pension benefits payable to
a covered participant at normal retirement age under the A.T. Massey Coal
Company, Inc. defined benefit pension plans (the "A.T. Massey Pension Plans"),
as well as a non-qualified supplemental pension that provides benefits that
would otherwise be denied participants by reason of certain Internal Revenue
Code limitations on qualified plan benefits, based on remuneration that is
covered under the plans and years of service with A.T. Massey and its
subsidiaries.
A participant's remuneration covered by the A.T. Massey Pension Plans is
his average salary and bonus (as reported in the Summary Compensation Table)
for the highest 60 consecutive months prior to the determination date. As of
the end of the last calendar year, Mr. Blankenship's covered compensation
under the A.T. Massey Pension Plans was $160,000, his covered compensation
under the non-qualified supplemental pension was $938,303 for a combined
covered compensation amount of $1,098,303; he had been credited with eighteen
years of service. As of the end of the last calendar year, Mr. Hatfield's
covered compensation under the A.T. Massey Pension Plans was $160,000, his
covered compensation under the non-qualified supplemental pension was $282,724
for a combined covered compensation amount of $442,724; he had been credited
with twenty-one years of service. As of the end of the last calendar year, Mr.
Short's covered compensation under the A.T. Massey
14
Pension Plans was $160,000 and his covered compensation under the non-
qualified supplemental pension was $229,898 for a combined covered
compensation amount of $389,898; he had been credited with nineteen years of
service. As of the end of the last calendar year, Mr. Jarosinski's covered
compensation under the A.T. Massey Pension Plans was $160,000, his covered
compensation under the non-qualified supplemental pension was $28,140 for a
combined covered compensation amount of $188,140; he had been credited with
twelve years of service. As of the end of the last calendar year, Mr.
Phillip's covered compensation under the A.T. Massey Pension Plans was
$160,000, his covered compensation under the non-qualified supplemental
pension was $56,318 for a combined covered compensation amount of $216,318; he
had been credited with nineteen years of service. Benefits shown are computed
as a ten year certain and life annuity beginning at age 65 with no deduction
for Social Security or other offset amounts.
PENSION PLAN TABLE
Years of Service
35 or
Remuneration 10 15 20 25 30 More
------------ -------- -------- -------- -------- -------- --------
$ 400,000 $ 60,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
$ 450,000 $ 67,500 $101,250 $135,000 $168,750 $202,500 $236,250
$ 500,000 $ 75,000 $112,500 $150,000 $187,500 $225,000 $262,500
$ 550,000 $ 82,500 $123,750 $165,000 $206,250 $247,500 $288,750
$ 600,000 $ 90,000 $135,000 $180,000 $225,000 $270,000 $315,000
$ 650,000 $ 97,500 $146,250 $195,000 $243,750 $292,500 $341,250
$ 700,000 $105,000 $157,500 $210,000 $262,500 $315,000 $367,500
$ 750,000 $112,500 $168,750 $225,000 $281,250 $337,500 $393,750
$ 800,000 $120,000 $180,000 $240,000 $300,000 $360,000 $420,000
$ 850,000 $127,500 $191,250 $255,000 $318,750 $382,500 $446,250
$ 900,000 $135,000 $202,500 $270,000 $337,500 $405,000 $472,500
$ 950,000 $142,500 $213,750 $285,000 $356,250 $427,500 $498,750
$1,000,000 $150,000 $225,000 $300,000 $375,000 $450,000 $525,000
$1,050,000 $157,500 $236,250 $315,000 $393,750 $472,500 $551,250
$1,100,000 $165,000 $247,500 $330,000 $412,500 $495,000 $577,500
15
Performance Graph
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR THE PERIOD DECEMBER 1, 2000 TO JANUARY 31, 2001
Among Massey Energy Company, S&P 600 Smallcap Index and Bloomberg U.S. Coal
Index
[CHART APPEARS HERE
12/1/2000 12/31/2000 1/31/2001
--------- ---------- ---------
Massey Energy Company......................... 100 120.00 164.05
S&P 600 Smallcap Index........................ 100 109.25 113.93
Bloomberg U.S. Coal Index..................... 100 142.74 138.63
The graph above compares the performance of the Company with that of the
S&P Smallcap 600 Index and the Bloomberg U.S. Coal Index, a published industry
index. The Company is included as a composite member of the S&P 600 Smallcap
Index. The graph reflects only the performance of the Company's stock during
the period following the Spin-Off, and does not show any historic performance
for the stock of Fluor Corporation prior to the Spin-Off and the subsequent
name change to Massey Energy Company on November 30, 2000. The 5-year historic
performance of Fluor Corporation's stock prior to the Spin-Off can be found in
the proxy statement of New Fluor for the 2001 Annual Meeting of Shareholders
filed with the Securities and Exchange Commission on February 5, 2001.
The comparison of cumulative total return on investment (change in period-
end stock price plus reinvested dividends) for each of the periods assumes
that $100 was invested on December 1, 2000 in each of the Company, the S&P 600
Smallcap Index composite group and the Bloomberg U.S. Coal Index composite
group, with investment weighted on the basis of market capitalization.
Change of Control Provisions in Certain Plans
Under the Company's stock plans, including the Massey Energy Company 1999
Executive Performance Incentive Plan, Massey Energy Company 1996 Executive
Stock Plan and Massey Energy Company 1988 Executive Stock Plan, which provide
for stock options, restricted stock and SARs, restrictions on exercisability
and transferability which are premised on continued service with the Company
or its subsidiaries lapse if the
16
holder's employment is terminated for any reason within two years following a
change of control of the Company. A change of control of the Company shall be
deemed to have occurred if (i) a third person, including a "group," as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires shares of
the Company having 25% or more of the total number of votes that may be cast
for the election of directors of the Company or (ii) as a result of any cash
tender or exchange offer, merger or other business combination, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were directors of the Company before the Transaction shall cease to constitute
a majority of the Board of Directors of the Company or any successor to the
Company.
DIRECTORS' FEES
Five of the six present directors are not salaried employees of the Company
or its subsidiaries. For their services, those directors are paid an annual
retainer of $30,000 or, in the case of Chairmen of Board Committees, $34,000,
plus a fee of $2,000 for each day upon which one or more Board or Board
Committee meetings are attended. Salaried employees receive no additional
compensation for their services as directors. Directors are permitted to defer
receipt of directors' fees until their retirement or other termination of
status as a director. Deferred amounts (at the election of the director)
either accrue interest at rates fixed from time to time by the Executive
Committee or are valued as if having been invested in Common Stock of the
Company. In calendar year 2000, no directors chose to defer their directors'
fees.
Under the Stock Plan for Non-Employee Directors (the "Plan"), directors who
are not employees of the Company or its subsidiaries are eligible to receive,
when they become directors, 4,056 shares of restricted Common Stock and
restricted units in an amount determined by the Compensation Committee which
are payable in cash to assist in satisfying related income tax liabilities.
Awards are made on a date determined by the Compensation Committee following
appointment. Restrictions lapse on 20% of the shares on March 14 next
following the date of the initial award. Restrictions lapse on the balance of
the shares in four equal increments on each succeeding March 14. On November
30, 2000, three new directors were elected to the Board and, on December 28,
2000, were awarded 4,056 shares each. The value of 4,056 shares of stock was
$52,116 based on the daily weighted average of the Company's stock on December
28, 2000. This does not take into account the diminution in value attributable
to the restrictions on such stock under the Plan.
In addition to benefits available under the Plan, directors who are not
employees of the Company or its subsidiaries are eligible to receive grants of
restricted Common Stock under the 1997 Restricted Stock Plan for Non-Employee
Directors (the "1997 Plan"). The 1997 Plan provides for annual grants of 2,028
shares of restricted stock to each eligible director, which grants are made as
of the first Board meeting in any calendar year during which such director
serves as a member of the Board. Restrictions on all stock granted under this
plan lapse on the earlier of the following: (i) once such stock has been held
for at least six months and the applicable director has completed five years
of Board service, or (ii) (a) the director either attains the age for
mandatory retirement (78 years) or obtains Board approval for early
retirement, (b) the director dies or becomes permanently and totally disabled,
or (c) a change of control occurs. The first Board meeting of calendar year
2001, took place on January 16, and each director was awarded 2,028 shares of
Company stock. The value of 2,028 shares of stock was $30,798 based on the
daily weighted average of the Company's stock on January 16, 2001. This does
not take into account the diminution in value attributable to the restrictions
on such stock under the 1997 Plan.
17
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Proposal 2
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the financial
statements of the Company for the current fiscal year. For the year ended
October 31, 2000, which was prior to the Spin-Off, the Company received and
paid an allocation for certain audit and audit-related services performed by
Ernst & Young LLP for all of the businesses that made up Fluor Corporation.
Fees paid or allocated for the last annual audit were $365,000 and all other
fees paid or allocated were $284,236, including audit-related services of
$284,236. Audit-related services generally include fees for pension and
statutory audits, business acquisitions, accounting consultations, information
system assurance and advisory services and Securities and Exchange Commission
registration statements.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Board Recommendation
The Audit Committee and the Board of Directors recommend the shareholders
vote FOR such ratification.
THE AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
composed of three independent directors and operates under a written charter
adopted by the Board of Directors, a copy of which is attached to this proxy
statement as Appendix A. The Audit Committee recommends to the Board of
Directors, subject to shareholder ratification, the selection of the Company's
independent accountants. Management is responsible for the Company's internal
controls and the financial reporting process. The independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes. In this context, the Audit Committee has
met and held discussions with management and Ernst & Young LLP, the Company's
independent accountants.
Management represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and Ernst &
Young LLP.
The Audit Committee has discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Accounting Standards) (including scope of the
auditor's responsibilities, significant accounting adjustments and any
disagreements with management).
During fiscal year 2000, fees paid to Ernst & Young LLP directly by the
Company or allocated to the Company by Fluor Corporation were approximately
$649,230. This amount is comprised of the following:
Audit Fees:
$365,000 for aggregated audit fees, and
All Other Fees:
$254,236 for audit-related fees.
Under Security and Exchange Commission guidelines, the audit-related fees
would be considered non-audit services. The Company's audit fees were part of
the amount that Fluor Corporation agreed upon with the audit firm for all
services performed for all of the businesses that made up Fluor Corporation.
All fees paid to Ernst & Young LLP after the Spin-Off will be negotiated with
Ernst & Young LLP by the Company.
18
The Audit Committee has considered whether the provision of services
described above under "All Other Fees" is compatible with maintaining the
independence of Ernst & Young LLP.
The Audit Committee has also received the written disclosures and the
letter from relating to the independence of that firm as required by
Independence Standards Board Standard No. I (Independence Discussions with
Audit Committees), and has discussed with Ernst & Young LLP that firm's
independence from the Company.
Based upon the Audit Committee's discussions with management and Ernst &
Young LLP and the Audit Committee's review of the representation of management
and the report of Ernst & Young LLP to the Audit Committee, the Audit
Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Corporation's Annual Report on Form
10-K for the year ended October 31, 2000 filed with the Securities and
Exchange Commission.
William R. Grant E. Gordon Gee Martha R. Seger
February 23, 2001
ADOPTION AND APPROVAL OF AMENDMENT TO
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Proposal 3
On February 23, 2001, the Board of Directors approved and is presently
proposing for shareholder approval an amendment to the Restricted Stock Plan
for Non-Employee Directors (the "Plan") that increases the number of shares of
Common Stock authorized to be issued under the Plan from 25,000 to 100,000.
The Plan was originally adopted by the Board of Directors of Fluor Corporation
on March 14, 1995, and approved by its shareholders, to (i) provide non-
employee directors of the Company with increased levels of stock ownership,
(ii) incentive for enhancing shareholder value, and (iii) enhance the
attractiveness of the Company's non-employee director compensation package for
recruitment purposes. Pursuant to the Plan, new non-employee directors of the
Company receive a one-time award of 4,056 shares (reflecting adjustment
pursuant to the Spin-Off) restricted stock along with related restricted units
payable in cash to assist in satisfying income tax liabilities The award is
made on a date determined by the Compensation Committee following such
appointment to the Board.
LAPSE OF RESTRICTIONS. The restrictions on the shares will lapse as
follows. The restrictions will lapse on 20% of the shares on the March 14 next
following the date of the initial award. Restrictions will lapse on the
balance of the shares in four equal increments on each succeeding March 14.
Shares on which restrictions have lapsed may be sold by the director, subject
to Securities and Exchange Commission and other applicable laws and
regulations.
TERM OF PLAN. Awards of restricted stock under the Plan must be made before
March 14, 2005.
RESIGNATION, REMOVAL, DEATH OR RETIREMENT OF DIRECTOR. In the case of the
removal or resignation of a director, all shares with restrictions in effect
will be forfeited. In the case of a change of control of the Company, death or
retirement of a director, all restrictions on any shares held will immediately
lapse.
TAX CONSEQUENCES. A director who receives stock subject to restrictions
that create a substantial risk of forfeiture (within the meaning of section 83
of the Internal Revenue Code) will be deemed to have income for federal income
tax purposes, absent a contrary election, when the shares are no longer
subject to a substantial risk of forfeiture, when they become transferable
(and the rights of the transferee would not be subject to a substantial risk
of forfeiture) or when they are disposed of, whichever occurs first. The
amount of such income will be equal to the fair market value of the shares as
of the date on which the director is deemed to have income. A director may
elect, however, to include in income in the year of grant the fair market
value of the shares
19
(determined without regard to any restrictions thereon) on the date of grant.
The Company will be entitled to a deduction in the amount of the income that
is deemed to be received by the director. Directors will receive restricted
units to assist in satisfying the directors' income tax liability with respect
to the shares.
ADMINISTRATION, AMENDMENT AND TERMINATION. The Plan will be administered by
and may be amended from time to time or terminated at any time by the members
of the Board of Directors who are not eligible to participate in the Plan. No
action may be taken, however, to materially increase the total number of
shares of stock subject to the Plan, to materially increase the benefits
accruing to participants under the Plan, to withdraw administration of the
Plan from the Board members who are not eligible to participate in the Plan or
permit any such Board member to receive grants or awards, without approval of
the shareholders of the Company.
The affirmative vote of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting will be required to approve the
amendment to the Plan. Unless otherwise indicated, properly executed proxies
will be voted in favor of Proposal 3 to approve the amendment to the Plan.
The foregoing summary of the Plan is qualified in its entirety by reference
to the full text of the Plan set forth in Exhibit 10.14 of the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission
on January 29, 2001.
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT TO THE PLAN
The securities underlying the Plan are shares of Common Stock. When
initially adopted, there were 25,000 shares authorized in the Plan. Following
the Spin-Off, the Company's three new directors were each awarded 4,056 shares
of the Company's Common Stock under the Plan. There currently is not a
sufficient quantity of shares of stock in the Plan to make an award to any
additional newly-elected directors. Because the Company desires to maintain
non-employee director compensation comparable to the pre-Spin-Off levels, the
Plan needs to be replenished. The market value of the additional 75,000 total
shares of Common Stock authorized under the Plan as of February 23, 2001
assuming approval of the amendment was $1,392,270 (based on a February 23,
2001 daily weighted average of the Company's Common Stock). The Company's
Board of Directors believes that this increase is important to permit the
Company to continue to attract and retain directors of the Company.
The Board of Directors recommends a vote FOR Proposal 3.
ADOPTION AND APPROVAL OF AMENDMENT TO 1997 RESTRICTED
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Proposal 4
On February 23, 2001, the Board of Directors approved and is presently
proposing for shareholder approval an amendment to the 1997 Restricted Stock
Plan for Non-Employee Directors (the "1997 Plan") that increases the number of
shares of Common Stock authorized to be issued under the 1997 Plan from 60,000
to 200,000. The 1997 Plan was originally adopted by the Board of Directors of
Fluor Corporation on March 11, 1997, and approved by its shareholders to
replace the Fluor Corporation Retirement Plan for Outside Directors which
provided for cash payments to non-employee directors following their
retirement. The Board of Directors was of the view that the interests of the
shareholders are better served if the non-employee directors receive shares of
the Company's Common Stock over time, concurrent with service on the Board,
instead of cash payments from the Company following retirement. The 1997 Plan
provides for annual grants of 2,028 shares (reflecting adjustment pursuant to
the Spin-Off) of restricted stock to each non-employee director, which grants
will be awarded, as to any such director in respect of any calendar year, on
the date of the first board meeting that occurs concurrently with or after
such director's appointment to the Board of Directors. All shares awarded
under the 1997 Plan shall be subject to restrictions prohibiting transfer and
entailing a substantial risk that such shares will be forfeited to the Company
until such time as the restrictions lapse.
20
LAPSE OF RESTRICTIONS. The restrictions on the shares awarded to a non-
employee director under the 1997 Plan, and held by such director for at least
six months, will lapse once he or she has completed six years of service on
the Board of Directors and any of the following occurs: (i) such stock has
been held for at least six months and the applicable director has completed
five years of Board service, or (ii)(a) the director either attains the age
for mandatory retirement (78 years) or obtains Board approval for early
retirement, (b) the director dies or becomes permanently and totally disabled,
or (c) a change of control occurs. The restrictions will not lapse in relation
to any shares awarded under the 1997 Plan unless and until such shares have
been held by the non-employee director for at least six months. The duration
of the restrictions is intended to align the long-term interests of the non-
employee directors and the Company's shareholders with respect to the
performance of the Company's stock over time.
TERM OF 1997 PLAN. Awards of restricted stock under the 1997 Plan must be
made before March 11, 2007.
TAX CONSEQUENCES. A director who receives stock subject to restrictions
which create a substantial risk of forfeiture (within the meaning of Section
83 of the Internal Revenue Code) will be deemed to have received income for
Federal income tax purposes, absent a contrary election, when the shares are
no longer subject to a substantial risk of forfeiture, when they become
transferable (and the rights of the transferee would not be subject to a
substantial risk of forfeiture) or when they are disposed of, whichever occurs
first. The amount of such income will be equal to the fair market value of the
shares as of the date on which the director is deemed to have income. A
director may elect, however, to include in income in the year of the grant the
fair market value of the shares (determined without regard to any restrictions
thereon) on the date of the grant. The Company will be entitled to a deduction
in the amount of the income that is deemed to be received by the director.
ADMINISTRATION, AMENDMENT AND TERMINATION. The 1997 Plan will be
administered by and may be amended from time to time or terminated at any time
by the members of the Board of Directors who are not eligible to participate
in the 1997 Plan to the extent such approval is required by law or the
applicable rules of any securities exchange listing the Company's Common
Stock.
The affirmative vote of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting will be required to approve the
amendment to the 1997 Plan. Unless otherwise indicated, properly executed
proxies will be voted in favor of Proposal 4 to approve the amendment to the
1997 Plan.
The foregoing summary of the Plan is qualified in its entirety by reference
to the full text of the Plan set forth in Exhibit 10.12 the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
January 29, 2001.
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT TO THE 1997 PLAN
The securities underlying the 1997 Plan are shares of Common Stock. When
initially adopted, there were 60,000 shares authorized in the 1997 Plan.
Following the Spin-Off the Company's directors will each be awarded 2,028
shares of the Company's Common Stock under the 1997 Plan which will deplete
the number of shares held in the 1997 Plan much more rapidly. Because the
Company desires to maintain non-employee director compensation comparable to
the pre-Spin-Off levels, the 1997 Plan needs to be replenished. The market
value of the 140,000 additional shares of Common Stock authorized under the
1997 Plan as of February 23, 2001 assuming approval of the amendment was
$2,598,904 (based on a February 23, 2001 daily weighted average of the
Company's Stock). The Company's Board of Directors believes that this increase
is important to permit the Company to continue to attract and retain directors
of the Company.
The Board of Directors recommends a vote FOR Proposal 4.
21
OTHER BUSINESS
The Company does not intend to present any other business for action at the
Annual Meeting and does not know of any other business intended to be
presented by others.
SHAREHOLDERS' PROPOSALS FOR 2002 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
2002 annual meeting of shareholders must be received by the Company for
inclusion in the proxy statement and form of proxy/voting instruction card for
that meeting pursuant to Rule 14a-8, under the Securities Exchange Act of
1934, no later than November 30, 2001.
The Company's Bylaws require that, for other business to be properly
brought before an annual meeting by a shareholder, the Company must have
received written notice thereof not less than 60 nor more than 90 days prior
to the annual meeting (or not later than 10 days after public disclosure of
the annual meeting). The Notice must set forth (i) a brief description of the
business proposed to be brought before the annual meeting and the reasons for
conducting such business, (ii) the shareholder's name and address, and the
number of shares of Common Stock beneficially owned by the shareholder, and
(iii) any material interest of the shareholder in such business.
/s/ Roger L. Nicholson
ROGER L. NICHOLSON
Vice President, Secretary and
General Counsel
February 26, 2001
Richmond, Virginia
22
Appendix A
Subject: AUDIT COMMITTEE
A. PURPOSE AND ACTIVITIES
Statement of Policy
The Audit Committee (the "Committee") shall provide assistance to Massey
Energy Company (the "Company") Board of Directors in fulfilling their
responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the
Company, and the quality and integrity of the financial reports of the
Company. In so doing, it is the responsibility of the Committee to maintain
free and open means of communication between the Directors, the independent
auditors, the internal auditors, and the financial management of the Company.
The independent auditor for the Company is ultimately accountable to the
Board of Directors and the Committee, who have the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
independent auditor.
Responsibilities
In carrying out its responsibilities, the policies and procedures of the
Committee should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the Committee will:
. Review and recommend to the Board of Directors the independent auditors
to be selected to audit the financial statements of the Company and its
divisions and subsidiaries.
. Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors. Items to be reviewed include the required
communications as promulgated by the American Institute of Certified
Public Accountants.
. Review with the independent auditors, the Company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls and procedures
are desirable. Further, the Committee will annually receive a report
regarding the business ethics and code of conduct of the Company.
. Periodically, but no less than annually, obtain from the outside
independent auditor a formal written statement delineating all
relationships between the auditor and the Company. The Committee should
discuss with the independent auditor any disclosed relationships or
services that may impact the objectivity and independence of the
independent auditor and shall recommend to the Board of Directors any
appropriate action regarding the independence of the independent auditor.
. Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year and the coordination of such plans with
the independent auditors.
. Receive prior to each meeting, a summary of internal audit reports
completed and in process and a progress report on the internal audit
plan.
. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or government agencies.
. Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Any changes in accounting principles should be reviewed.
. Provide sufficient opportunity for the internal and independent auditors
to meet with the members of the Audit Committee without members of
management present. Among the items to be discussed in these meetings are
the independent auditors' evaluation of the Company's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
. Submit the minutes of all meetings of the Committee to, or discuss the
matters discussed at each committee meeting with, the Board of Directors.
. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
. Review and update this Charter at least annually, as conditions dictate
and submit it to the Board of Directors for approval.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is
the responsibility of management and the independent auditor. Nor is it the
duty of the Committee to conduct investigations, to resolve disagreements, if
any, between management and the independent auditor or to assure compliance
with laws and regulations and the Company's business ethics and code of
conduct.
B. MEMBERSHIP
The Committee shall be composed of at least three Directors and a nonvoting
Secretary who are independent of the management of the Company and are free of
any relationship that, in the opinion of the Board of Directors, would
interfere with their exercise of independent judgment as a Committee member.
In addition, each of the Committee members shall have a working familiarity
with basic accounting or related financial practices, and at least one member
of the Committee shall have accounting or related financial management
expertise. Current membership of the Committee is listed at the beginning of
this section.
C. MEETINGS
Meetings are scheduled quarterly, preceding quarterly meetings of the Board
of Directors, and otherwise as required. A quorum for the purpose of
conducting business at any meeting shall consist of two Directors.
FIRST AMENDMENT TO THE
MASSEY ENERGY COMPANY
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 30, 2000
---------------------------------------------------
Subject to the approval of the Company's shareholders at its 2001 annual
meeting, Article II of the Massey Energy Company Stock Plan for Non-Employee
Directors is amended, effective February 23, 2001, to revise Section 2.4 by
removing the number 25,000 and replacing it with the number 100,000.
FIRST AMENDMENT TO THE
MASSEY ENERGY COMPANY
1997 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 30, 2000
---------------------------------------------------
Subject to the approval of the Company's shareholders at its 2001 annual
meeting, Article II of the Massey Energy Company 1997 Restricted Stock Plan for
Non-Employee Directors is amended, effective February 23, 2001, to revise
Section 2.4 by removing the number 60,000 and replacing it with the number
200,000.
[MAP APPEARS HERE]
MASSEY ENERGY COMPANY
PROXY/VOTING INSTRUCTION CARD SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING APRIL 17, 2001
The undersigned, a shareholder of MASSEY ENERGY COMPANY, a Delaware
corporation, acknowledges receipt of a Notice of Annual Meeting of Shareholders,
the accompanying Proxy Statement and the Annual Report to Shareholders for the
year ended October 31, 2000; and, revoking any proxy previously given, hereby
constitutes and appoints B. K. Hatfield, J. M. Jarosinski and R. L Nicholson,
and each of them, the true and lawful agents and proxies of the undersigned with
full power of substitution in each, to vote the shares of Common Stock of MASSEY
ENERGY COMPANY standing in the name of the undersigned at the Annual Meeting of
Shareholders of MASSEY ENERGY COMPANY, on Tuesday, April 17, 2001, at 10:00
a.m., and at any adjournment or postponement thereof with respect to the
proposals listed on the reverse side.
THIS PROXY/VOTING INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREBY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR THE NOMINEES LISTED ON THE
REVERSE AND FOR PROPOSALS 2, 3 and 4.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE.
(continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
[Massey Energy
Logo]
MASSEY ENERGY COMPANY
2001 Annual Meeting of Shareholders
April 17, 2001
You are cordially invited to attend the 2001 Annual Meeting of Shareholders
which will be held on Tuesday, April 17, 2001, beginning at 10:00 a.m. at:
The Charleston Marriott Town Center
200 Lee Street East
Charleston, West Virginia
A map is included on the last page of the Notice of Annual Meeting.
ADMITTANCE TICKET
This ticket entitles you, the shareholder, and
one guest to attend the 2001 Annual Meeting.
Please bring it with you. Only shareholders
and their guests will be admitted.
We look forward to welcoming you on Tuesday, April 17.
THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE Please mark
DIRECTED, THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR THE ELECTION OF your votes as [X]
THE TWO NOMINEES AND FOR PROPOSALS 2, 3 and 4. indicated in
this sample
- ------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends that you vote FOR the nominees on Proposal 1 and FOR Proposals 2, 3 and 4.
- ------------------------------------------------------------------------------------------------------------------
1. Election of Class II Directors: William R. Grant and Martha R. Seger
FOR all nominees listed WITHHOLD AUTHORITY INSTRUCTIONS: To withhold
(except as marked to to vote for all authority to vote for any individual
the contrary) nominees listed nominee, strike a line through the
[ ] [ ] nominee's name in the list above.
- ------------------------------------------------------------------------------------------------------------------
2. Ratification of the appointment of Ernst & Young LLP as auditors for 2001.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------
3. Approval of amendment to Massey Energy Company Stock Plan for Non-Employee Directors that increases the number of
shares of Common Stock from 25,000 to 100,000.
FOR all nominees listed WITHHOLD AUTHORITY INSTRUCTIONS: To withhold
(except as marked to to vote for all authority to vote for any individual
the contrary) nominees listed nominee, strike a line through the
[ ] [ ] nominee's name in the list above.
- ------------------------------------------------------------------------------------------------------------------
4. Approval of amendment to Massey Energy Company 1997 Restricted Stock Plan for Non-Employee Directors that increases the
number of shares of Common Stock from 60,000 to 200,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE I Plan to
Please mark the box if you have [ ] Attend [ ]
written comments or an address Meeting
change on the reverse side
- ----------------------------------------
***IF YOU WISH TO VOTE BY
TELEPHONE, PLEASE READ THE
INSTRUCTIONS BELOW***
- ----------------------------------------
Signature Signature Date
------------------------------- -------------------------------- --------------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. Corporations and partnerships should sign in full corporate or
partnership name by an authorized officer.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
Vote by Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
- --------------------------------------------- -----------------------------
Telephone Mail
1-800-840-1208
Use any touch-tone telephone to vote Mark, sign and date your
your proxy. Have your proxy card in proxy card and
hand when you call. You will be prompted OR return it in the enclosed
to enter your control number, located in postage-paid envelope.
the box below, and then follow the
directions given.
- --------------------------------------------- -----------------------------
If you vote your proxy by telephone,
you do NOT need to mail back your proxy card.
You can view the Annual Report and Proxy Statement
on the internet at: www.masseyenergyco.com
http://www.masseyenergyco.com