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