DEF 14A 1 y44611def14a.htm DEFINITIVE PROXY STATEMENT DEF 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o   Preliminary Proxy Statement
 
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
þ   Definitive Proxy Statement
 
o   Definitive Additional Materials
 
o   Soliciting Material Pursuant to §240.14a-12
Alpha Natural Resources, inc.
 
(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):
þ   No fee required.
 
o   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:
 
     
 
o   Fee paid previously with preliminary materials.
 
o   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.:
 
     
 
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  (4)   Date Filed:
 
     
 


Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


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(ALPHA NATURAL RESOURCES LOGO)
 
Alpha Natural Resources, Inc.
One Alpha Place
P.O. Box 2345
Abingdon, Virginia 24212
 
April 2, 2008
 
 
Dear Stockholder:
 
You are cordially invited to attend the 2008 Annual Meeting of Stockholders of Alpha Natural Resources, Inc. The meeting will be held on May 14, 2008, at 8:30 a.m. Eastern Time at The Martha Washington Inn located at 150 West Main Street, Abingdon, Virginia 24210.
 
Information about the Annual Meeting and the various matters on which the stockholders will act is included in the Notice of Annual Meeting and Proxy Statement that follow. Also included are 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 encourage you to vote over the telephone or Internet or mark, sign, date and mail your Proxy/ Voting Instruction Card in the enclosed envelope as promptly as possible.
 
Sincerely,
 
-s- MICHAEL J. QUILLEN
 
MICHAEL J. QUILLEN
Chairman of the Board and Chief Executive
Officer


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(ALPHA NATURAL RESOURCES LOGO)
 
ALPHA NATURAL RESOURCES, INC.
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 14, 2008
 
The Annual Meeting of Stockholders of Alpha Natural Resources, Inc. (“Alpha” or the “Company”) will be held at The Martha Washington Inn located at 150 West Main Street, Abingdon, Virginia 24210, on May 14, 2008 at 8:30 a.m. Eastern Time for the following purposes:
 
1. To elect nine directors to hold office for a one-year term expiring at the Annual Meeting in 2009 and until their respective successors are elected and qualified.
 
2. To consider and act upon a proposal to amend and restate the Company’s 2005 Long-Term Incentive Plan.
 
3. To consider and act upon a proposal to approve the Company’s 2008 Annual Incentive Bonus Plan.
 
4. To consider and act upon a proposal to ratify the appointment of KPMG LLP as independent auditors for the fiscal year ending December 31, 2008.
 
5. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
 
The Board of Directors has fixed March 21, 2008, as the record date for determining the stockholders entitled to receive notice of, and to vote at, the Annual Meeting.
 
If you own shares of common stock of Alpha Natural Resources, Inc. as of March 21, 2008, you can vote those shares by completing and mailing the enclosed proxy card or by attending the Annual Meeting and voting in person. Stockholders of record also may submit their proxies electronically or by telephone as follows:
 
  •  By visiting the website at www.investorvote.com/anr and following the voting instructions provided; or
 
  •  By calling 1-800-652-VOTE (8683) in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions.
 
By Order of the Board of Directors
 
-s- Vaughn R. Groves
 
VAUGHN R. GROVES
Vice President, Secretary and General Counsel
 
IMPORTANT NOTICE: REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDERS’ MEETING TO BE HELD ON MAY 14, 2008
 
The proxy statement, annual report on Form 10-K and related materials are
available at http://ww3.ics.adp.com/streetlink/anr.
 
April 2, 2008
Abingdon, Virginia


 

 
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(ALPHA NATURAL RESOURCES LOGO)
 
ALPHA NATURAL RESOURCES, INC.
 
 
PROXY STATEMENT
To Be Held May 14, 2008
 
INFORMATION ABOUT THE ANNUAL MEETING
 
Why Am I Receiving These Proxy Materials?
 
The Board of Directors (“Board”) of Alpha Natural Resources, Inc. (“Alpha” or the “Company”) is soliciting proxies to be voted on its behalf at the 2008 Annual Meeting of Stockholders. This document includes information about the issues to be voted upon at the Annual Meeting.
 
We intend to begin mailing these proxy materials, together with our Annual Report on Form 10-K for the year ended December 31, 2007, on or about April 2, 2008 to all stockholders of record at the close of business on March 21, 2008, which our Board determined to be the record date for the Annual Meeting. On March 21, 2008, there were 66,125,297 shares of our common stock outstanding.
 
Can I Obtain an On-line Version of the Proxy Materials?
 
This proxy statement, the annual report on Form 10-K and related materials are available on-line at http://ww3.ics.adp.com/streetlink/anr.
 
Where and When Is the Annual Meeting?
 
The Annual Meeting will take place on May 14, 2008, at The Martha Washington Inn located at 150 West Main Street, Abingdon, Virginia 24210. The meeting will begin at 8:30 a.m. Eastern Time.
 
What Am I Voting on?
 
We are aware of four items to be voted on by stockholders at the Annual Meeting:
 
  •  Election of nine directors:  Mary Ellen Bowers, John S. Brinzo, Hermann Buerger, Kevin S. Crutchfield, E. Linn Draper, Jr., Glenn A. Eisenberg, John W. Fox, Jr., Michael J. Quillen, and Ted G. Wood;
 
  •  2005 Long-Term Incentive Plan:  To consider and act upon a proposal to amend and restate the Company’s 2005 Long-Term Incentive Plan;
 
  •  2008 Annual Incentive Bonus Plan:  To consider and act upon a proposal to approve the Company’s 2008 Annual Incentive Bonus Plan; and
 
  •  Independent Auditors:  Approval of a proposal to ratify the appointment of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2008.


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How Many Votes Do I Have?
 
You have one vote for each share of our common stock that you owned at the close of business on March 21, 2008. These shares include shares held directly in your name as the “stockholder of record,” and shares held for you as the beneficial owner through a broker, bank, or other nominee in “street name.”
 
If I Am a Stockholder of Record, How Can I Vote My Shares?
 
You can vote by proxy or in person.
 
How Do I Vote by Proxy?
 
If you are a stockholder of record, you may vote your proxy by telephone, Internet or regular mail. Our telephone and Internet voting procedures are designed to authenticate stockholders by using individual control numbers. Voting by telephone or Internet will help us reduce costs.
 
  •  Voting Your Proxy by Telephone.  In the U.S., Canada and Puerto Rico, you can vote your shares by telephone by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day, 7 days a week, up through the last business day before the meeting. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. If you vote by telephone, you do not need to return your proxy card.
 
  •  Voting Your Proxy by Internet.  You can also choose to vote via the Internet. The web site for record holders to Internet vote is on your proxy card. Internet voting is also available 24 hours a day, 7 days a week, up through the day before the meeting. If you vote via the Internet, you do not need to return your proxy card.
 
  •  Voting Your Proxy by Mail.  If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope provided.
 
If you vote by proxy using any of these three methods, the persons named on the enclosed proxy card (your “proxies”) will vote your shares in the manner you indicate at the Annual Meeting and at any adjournments or postponements of the Annual Meeting. You may specify whether your shares should be voted for all, some, or none of the nominees for director. If you vote by telephone or Internet and choose to vote with the recommendation of our Board, or if you vote by mail, sign your proxy card, and do not indicate specific choices, your shares will be voted “FOR” the election of all nine nominees for director, “FOR” amending and restating the Company’s 2005 Long-Term Incentive Plan, “FOR” approving the Company’s 2008 Annual Incentive Bonus Plan, and “FOR” ratifying the appointment of KPMG LLP as independent auditors for the fiscal year ending December 31, 2008.
 
If any other matter is presented, your proxies will vote in accordance with their best judgment. At the time this document went to press, we knew of no matters that needed to be acted on at the Annual Meeting other than those discussed in this document.
 
May I Revoke My Proxy?
 
If you give a proxy, you may revoke it in any one of three ways:
 
  •  Submit a valid, later-dated proxy;
 
  •  Notify our Secretary in writing before the Annual Meeting that you have revoked your proxy; or
 
  •  Vote in person at the Annual Meeting.


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How Do I Vote in Person?
 
If you are a stockholder of record, you may cast your vote in person at the Annual Meeting.
 
If I Hold Shares in Street Name, How Can I Vote My Shares?
 
You can submit voting instructions to your broker or nominee. In most instances, you will be able to do this over the Internet, by telephone, or by mail. Please refer to the voting instruction card included in these materials by your broker or nominee.
 
What Vote Is Required to Approve Each Proposal?
 
  •  Election of nine directors (Proposal 1).  The nine nominees for director receiving the highest number of affirmative votes cast in person or by proxy at the Annual Meeting will be elected. If you mark your proxy so as to withhold your vote for a particular nominee on your proxy card, your vote will not count either “for” or “against” the nominee.
 
  •  Approval of the proposal to amend and restate the Company’s 2005 Long-Term Incentive Plan (Proposal 2).  The affirmative vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote on the subject matter is required to approve the proposal to amend and restate the Company’s 2005 Long-Term Incentive Plan; provided that the total vote cast on the proposal represents over 50% in interest of all securities entitled to vote on the proposal.
 
  •  Approval of the proposal to adopt the 2008 Annual Incentive Bonus Plan (Proposal 3).  The affirmative vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote on the subject matter is required to approve the proposal to adopt the Company’s 2008 Annual Incentive Bonus Plan.
 
  •  Approval of the proposal to ratify the appointment of KPMG LLP as independent auditors for the fiscal year ending December 31, 2008 (Proposal 4).  The affirmative vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote on the subject matter is required to approve the proposal to ratify the appointment of KPMG LLP as independent auditors for the fiscal year ending December 31, 2008.
 
In order to have a valid stockholder vote, a stockholder quorum must exist at the Annual Meeting. A quorum will exist when stockholders holding a majority of the issued and outstanding shares of our common stock are present at the meeting, either in person or by proxy. Proxies received but marked as abstentions and “broker non-votes” will be counted as present for purposes of determining whether a quorum exists for the Annual Meeting. With respect to the election of directors (Proposal 1), abstentions will not be counted in the calculation of the vote. With respect to the proposal to amend and restate the Company’s 2005 Long-Term Incentive Plan (Proposal 2), the proposal to approve the Company’s 2008 Annual Incentive Bonus Plan (Proposal 3), and the proposal to ratify the appointment of KPMG LLP as independent auditors for the fiscal year ending December 31, 2008 (Proposal 4), abstentions will have the effect of negative votes. Broker non-votes will not be counted in the calculation of the votes with respect to the proposal to amend and restate the Company’s 2005 Long-Term Incentive Plan (Proposal 2). Broker non-votes occur when brokers do not have discretionary voting authority on certain proposals and the beneficial owner has not instructed the broker how to vote on these proposals.
 
Who Is Paying for the Costs of Soliciting These Proxies?
 
We are paying the cost of preparing, printing, and mailing these proxy materials. We will reimburse banks, brokerage firms, and others for their reasonable expenses in forwarding proxy materials to beneficial owners and obtaining their instructions. A few of our officers and employees may also participate in the solicitation, without additional compensation, by telephone, e-mail or other electronic


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means or in person. Additionally, The Altman Group has been retained by us to aid in the solicitation of proxies, at an estimated cost of $600.00, plus reimbursement of out-of-pocket expenses.
 
Where Can I Find the Voting Results of the Meeting?
 
We intend to announce preliminary voting results at the Annual Meeting. We will publish the final results in our Quarterly Report on Form 10-Q for the second quarter of 2008, which we expect to file in August 2008. You can obtain a copy of the Form 10-Q by logging on to our website at www.alphanr.com, by calling the Securities and Exchange Commission (“SEC”) at (800) SEC-0330 for the location of the nearest public reference room, or through the EDGAR system at www.sec.gov. Our website does not constitute part of this document.
 
PROPOSAL 1 — ELECTION OF DIRECTORS
 
In accordance with our governing instruments, our Board has nominated the nine current directors listed below for reelection at this year’s Annual Meeting to serve a one-year term expiring at the Annual Meeting in 2009 and until their respective successors are elected and qualified. Each of the nominees has consented to serve if elected. If any of the nominees should decline or be unable to serve as a director, the persons named in the accompanying proxy/voting instruction card will vote in accordance with their best judgment. We know of no reason why the nominees would not be available for election or, if elected, would not be able to serve.
 
Director Nominees
 
The following information is furnished with respect to each of the nominees for election at the Annual Meeting.
 
     
Mary Ellen Bowers
Age 51
  Ms. Bowers has been a member of our Board since May 2007 and is currently a member of each of our Audit and Nominating and Corporate Governance Committees. Ms. Bowers is also chairman of MEB Solutions, LLC, a business consulting firm, and is a professor at the University of Wisconsin, teaching Executive Leadership within the Business School Masters Program. From November 2004 to June 2007, Ms. Bowers served as Executive Vice President, Corporate Development of Manitowoc Company, Inc. (“Manitowoc”), a manufacturer of engineered capital goods and support services. Prior to joining Manitowoc, Ms. Bowers served as Vice President & General Manager, Forged Aerospace & Industrial Products at Alcoa Inc., a producer and manager of primary aluminum, fabricated aluminum and alumina facilities (“Alcoa”), from 2001 to 2004. Ms. Bowers’ service at Alcoa began in 1981 where she served in various positions, including engineering, finance and marketing with key leadership roles as Director, Alcoa Global, Business Design and Vice President & Director, Strategic Planning & Information Technology.


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John S. Brinzo
Age 66
  Mr. Brinzo has been a member of our Board since October 2006 and is currently a member of each of our Audit and Nominating and Corporate Governance Committees. From 1969 until May 2007, Mr. Brinzo was affiliated with Cleveland-Cliffs Inc., North America’s largest producer of iron ore pellets (“CCI”). At CCI, he served in various senior management positions, including Chief Financial Officer and Chief Executive Officer, a position he retired from in September 2006. In 2000, he was named as CCI’s chairman of the board of directors and served as such until May 2007. Mr. Brinzo served as chairman of the National Mining Association from 2004 to 2006. Currently, Mr. Brinzo is a director and chairman of the audit committee of The Brink’s Company, a global security services company; a director and member of the nominating and corporate governance and compensation committees of AK Steel Holding Corporation, a North American steel manufacturing company; and a director and chairman of the audit committee and member of the finance committee of Delta Air Lines, Inc., an air transportation company.
     
Hermann Buerger
Age 64
  Mr. Buerger has been a member of our Board since February 2008 and is currently a member of our Audit Committee. Until 2004, Mr. Buerger was the Regional Board Member and CEO of the Americas, Commerzbank AG, where he held various senior management positions. Mr. Buerger currently serves as a director and chairman of the audit committees for EMS Technologies, Inc., a company which designs and manufactures wireless, satellite and defense solutions, and Sapient Corporation, a consulting company. He has also served as a member of the International Advisory Board of Unibanco of Sao Paulo, Brazil, from 2002 to 2004, and of the Advisory Board of the Wharton Real Estate Center, from 1997 to 2004.

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Kevin S. Crutchfield
Age 47
  Mr. Crutchfield has served as our President since January 2007 and as a member of our Board since November 2007. Prior to that time, Mr. Crutchfield served as our Executive Vice President since our formation in November 2004. Mr. Crutchfield joined the Alpha management team as the Executive Vice President of Alpha Natural Resources, LLC and Vice President of ANR Holdings, LLC in March 2003, and also served as the Executive Vice President of ANR Holdings, LLC from November 2003 until ANR Holdings was merged with another of our subsidiaries in December 2005. From June 2001 through January 2003, he was Vice President of El Paso Corporation, a natural gas and energy provider, and President of Coastal Coal Company, a coal producer and affiliate of El Paso Corporation acquired by Alpha in 2003. Prior to joining El Paso, he served as President of AMVEST Corporation, a coal and gas producer and provider of related products and services, and held executive positions at AEI Resources, Inc., a coal producer, including President and Chief Executive Officer. Before joining AEI Resources, he served as the Chairman, President and Chief Executive Officer of Cyprus Australia Coal Company and held executive operating management positions with Cyprus in the U.S. before being relocated to Sydney, Australia in 1997. He worked for Pittston Coal Company, a coal mining company (“Pittston”), in various operating and executive management positions from 1986 to 1995 including as Vice President Operations prior to joining Cyprus Amax Coal Company, a coal producer and supplier.
     
E. Linn Draper, Jr.
Age 66
  Mr. Draper has been a member of our Board since our formation in November 2004 and is currently Lead Director and Chairman of our Compensation Committee. Mr. Draper joined American Electric Power (“AEP”), an electric utility company, as President in 1992 and served as the Chairman, President and Chief Executive Officer of AEP from 1993 until his retirement in April 2004. Prior to joining AEP, Mr. Draper worked for Gulf States Utilities Company, an electric utility company, from 1979 to 1992, serving as its chairman of the board of directors, and President and Chief Executive Officer from 1987 to 1992. He serves as a director of Temple-Inland Inc., a building products and corrugated packaging company (serving as chairman of the human resources committee and as lead director); TransCanada Corporation, a pipeline and power generation company (serving as chairman of the health, safety and environment committee and as a member of their human resources committee); and Alliance Data Systems, Inc., a data management and transaction processing company (serving as a member of the human resources committee). Mr. Draper is also non-executive chairman of the board of directors of NorthWestern Corporation, an electric and gas utility.

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Glenn A. Eisenberg
Age 46
  Mr. Eisenberg has been a member of our Board since the 2005 Annual Meeting and is currently Chairman of our Audit Committee and a member of our Nominating and Corporate Governance Committee. Mr. Eisenberg currently serves as Executive Vice President, Finance and Administration of The Timken Company, an international manufacturer of highly engineered bearings, alloy and specialty steel and components and a provider of related products and services. Prior to joining The Timken Company in 2002, Mr. Eisenberg served as President and Chief Operating Officer of United Dominion Industries, a manufacturer of proprietary engineered products, from 1999 to 2001, and as the President — Test Instrumentation Segment and Executive Vice President for United Dominion Industries from 1998 to 1999. Mr. Eisenberg also serves as a director and chairman of the audit committee of Family Dollar Stores, Inc., owners and operators of discount stores throughout the United States.
     
John W. Fox, Jr.
Age 60
  Mr. Fox has been a member of our Board since our formation in November 2004 and is currently Chairman of our Nominating and Corporate Governance Committee and a member of our Compensation Committee. Mr. Fox served as Senior Vice President, Coal Services for Norfolk Southern Company, a railroad operator, from April 2001 until his retirement in November 2003, and as Senior Vice President Coal Marketing from December 1999 to April 2001. Mr. Fox began his career with a predecessor of Norfolk Western Railroad Company in 1969.

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Michael J. Quillen
Age 59
  Mr. Quillen has served as our Chief Executive Officer and a member of our Board since our formation in November 2004 and served as our President until January 2007. He was named Chairman of the Board in October 2006. Mr. Quillen joined the Alpha management team as President and the sole manager of Alpha Natural Resources, LLC, our top-tier operating subsidiary, in August 2002, and has served as Chief Executive Officer of Alpha Natural Resources, LLC since January 2003. He also served as the President and a member of the board of directors of ANR Holdings, LLC, our former top-tier holding company, from December 2002 until ANR Holdings, LLC was merged with another of our subsidiaries in December 2005, and as the Chief Executive Officer of ANR Holdings, LLC from March 2003 until December 2005. From September 1998 to December 2002, Mr. Quillen was Executive Vice President — Operations of AMCI Metals and Coal International Inc., a mining and marketing company (“AMCI”). While at AMCI, he was also responsible for the development of AMCI’s Australian properties. Mr. Quillen has over 30 years of experience in the coal industry starting as an engineer. He has held senior executive positions in the coal industry throughout his career, including as Vice President — Operations of Pittston Coal Company, President of Pittston Coal Sales Corp., Vice President of AMVEST Corporation, Vice President — Operations of NERCO Coal Corporation, President and Chief Executive Officer of Addington, Inc. and Manager of Mid-Vol Leasing, Inc. Mr. Quillen was elected to the board of directors of Martin Marietta Materials, Inc., a leading producer of construction aggregates in the United States, in February 2008.
     
Ted G. Wood
Age 70
  Mr. Wood has been a member of our Board since January 2006 and is currently a member of our Compensation Committee. He also served as President of The United Company’s operating companies from 1998 until his retirement in 2002. Additionally, Mr. Wood served as Vice Chairman of The United Company from January 2003 until August 2003. From 1994 to 1995, Mr. Wood was President and Chief Executive Officer of KV Pharmaceutical Co. in St. Louis, Missouri. Prior to that time, he held executive positions with several pharmaceutical companies, acting as President of Boehringer Mannheim Pharmaceutical Corporation from 1992 to 1993, Executive Vice President of marketing and sales for SmithKline Beecham Corporation from 1990 to 1991 and President of Beecham Laboratories, U.S.A. from 1988 to 1989. Mr. Wood currently serves on the board of directors of King Pharmaceuticals, Inc. (serving as a member of their compensation and human resources committees). Mr. Wood served as a director of Pozen Inc., a pharmaceutical company, from 2000 until 2006 and was a member of its compensation committee.

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Required Vote
 
As set forth in Section 2.05 of our bylaws, the nine nominees for director receiving the highest number of affirmative votes cast in person or by proxy at the Annual Meeting will be elected.
 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES SET FORTH ABOVE.
 
DIRECTOR INDEPENDENCE
 
We are required to have a majority of independent directors on our Board and to have only independent directors on each of our Audit, Compensation and Nominating and Corporate Governance Committees under existing New York Stock Exchange (“NYSE”) rules and, with respect to the Audit Committee, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and rules adopted under that act.
 
Our Nominating and Corporate Governance Committee undertook an annual review of director and director-nominee independence in February 2008. The purpose of this review was to determine whether any relationships or transactions involving the directors and director-nominees, their family members and affiliates were inconsistent with a determination that the director or director nominee is independent under the independence standards in the NYSE rules and our Corporate Governance Practices and Policies and, with respect to Audit Committee members and nominees, under the independence standards for audit committee members adopted by the SEC. Based on that review, our Board has determined that each of Messrs. Brinzo, Buerger, Draper, Eisenberg, Fox, and Wood and Ms. Bowers qualify as “independent” under the independence standards in the NYSE rules, and that Ms. Bowers and each of Messrs. Brinzo, Buerger, and Eisenberg (the members of the Audit Committee) also qualify as “independent” under the independence standards for audit committee members adopted by the SEC.
 
Our Corporate Governance Practices and Policies require our Board to have regularly scheduled meetings during the year at which only the non-management directors are present, and provide that, at their discretion, the non-management directors can appoint one of their members to act as a chairman to preside at these meetings. The non-management members of our Board held 12 meetings during 2007 at which only the non-management directors were present, and Mr. Draper, our Lead Director acted as chairman at each of these meetings.
 
Lead Director
 
In October 2006, Mr. Quillen, our Chief Executive Officer, was appointed Chairman of the Board. Under our Corporate Governance Practices and Policies, in the event the director serving as Chairman of the Board is not independent, our Board must designate one of its independent members who has served on our Board for at least one year to serve as Lead Director of the Board with the following specific duties: (i) principal liaison between our Board and Chairman of the Board and between our Board and stockholders, (ii) preside over executive sessions of non-management directors and meetings of independent directors, (iii) approve with our Chairman the schedule and agendas for our Board meetings, and (iv) perform such other duties as may from time to time be delegated to the Lead Director by our Board. In October 2006, Mr. Draper was appointed Lead Director by our Board.
 
Committees of the Board of Directors
 
Our Board has three standing committees: (i) an Audit Committee, (ii) a Compensation Committee and (iii) a Nominating and Corporate Governance Committee. Each of these committees operates under a written charter adopted by our Board, copies of which are available on our website at www.alphanr.com.


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Audit Committee
 
Our Audit Committee currently consists of four directors: Ms. Bowers and Messrs. Brinzo, Buerger, and Eisenberg. The Audit Committee provides assistance to our Board in monitoring the quality, reliability and integrity of our accounting policies and financial statements, overseeing our compliance with legal and regulatory requirements and reviewing the independence, qualifications and performance of our internal and independent auditors. Among other matters enumerated in the Audit Committee Charter, the committee is generally responsible for:
 
  •  Appointing and compensating our independent auditors, including authorizing their scope of work and approving any non-audit services to be performed by them with respect to each fiscal year;
 
  •  Reviewing and discussing our annual audited and quarterly unaudited financial statements with our management and independent auditors, as well as a report by the independent auditor describing the firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the auditing firm, and all relationships between us and the independent auditor;
 
  •  Reviewing our press releases, as well as financial information and earnings guidance, if given, provided to analysts and rating agencies; and
 
  •  Reviewing and discussing risk assessment and risk management policies as well as procedures management has established to monitor compliance with our Code of Business Ethics.
 
Our Board has determined that all members of the Audit Committee are financially literate within the meaning of the SEC rules and under the current listing standards of the NYSE. Further, our Board has determined that all members of the committee are independent, within the meaning of SEC and NYSE regulations, and that Ms. Bowers and each of Messrs. Buerger, Brinzo and Eisenberg qualify as an “audit committee financial expert.”
 
Compensation Committee
 
Our Compensation Committee currently has three members: Messrs. Draper, Fox and Wood. The Compensation Committee is generally responsible for assisting our Board in all matters relating to the compensation of our directors and executive officers and overseeing our compliance with legal and regulatory requirements as they extend to matters of compensation. Among other things, our Compensation Committee is responsible for:
 
  •  Reviewing and approving our executive compensation policies and practices, as well as the corporate goals and objectives relevant to the compensation of our Chief Executive Officer and evaluating his performance in light of these goals and objectives;
 
  •  Reviewing and approving (or recommending approval by the independent directors on our Board) the compensation, including salary, bonuses and benefits, of our Chief Executive Officer, other executive officers and directors, including any employment agreements or similar arrangements; and
 
  •  Reviewing and making recommendations to our Board with respect to incentive compensation plans and equity-based plans, and administering the plans.
 
Under its charter, our Compensation Committee is authorized to delegate its responsibilities to one or more subcommittees and Company officers in accordance with restrictions set forth in the charter. Under the terms of the Alpha Natural Resources, Inc. 2005 Long-Term Incentive Plan and the Amended and Restated 2004 Long-Term Incentive Plan, our Compensation Committee is authorized to administer


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the plans and may delegate its authority thereunder to another committee of the Board or to an appropriate officer of Alpha, in accordance with law and the terms of such plans. Additionally, our Annual Incentive Bonus Plan permits our Compensation Committee, with respect to participants who it determines are not likely to be subject to Section 162(m) of the Internal Revenue Code of 1986 (as amended, the “Code”), to delegate its powers and authority under the plan to our officers as it deems necessary or appropriate. Our Compensation Committee has delegated to our Chief Executive Officer the authority to grant restricted stock and/or performance shares to non-executive employees in an annual amount of 50,000 shares and, in addition for calendar year 2008, 280,000 shares. Additionally, our committee has delegated to the Chief Executive Officer the authority to determine cash bonus award opportunities and awards paid to our non-executive employees under the Annual Incentive Bonus Plan. Our Board and Compensation Committee have also delegated to our Chief Executive Officer the authority to amend our plans, programs and arrangements that will be affected by Section 409A of the Code and the regulations issued thereunder to bring such plans, programs and arrangements into compliance with Section 409A and such regulations.
 
In addition, our human resources department supports the Compensation Committee in its work and in some cases acts pursuant to delegated authority to fulfill various functions in administering the day-to-day ministerial aspects of our compensation and benefits plans.
 
Role of Executive Management in Determining Executive Compensation.  Our Compensation Committee works with our management team in reviewing compensation matters and setting compensation for our executives, as more fully described in “Executive Compensation — Compensation Discussion and Analysis.”
 
Annual Process for Determining Total Compensation of Executive Officers.  As more fully described in “Executive Compensation — Compensation Discussion and Analysis,” our Compensation Committee, together with senior management and outside consultants engaged by the committee, conducts an annual review of our overall compensation program for executive officers and directors. With respect to executive officer compensation, our Compensation Committee reviews, among other items, each of the key components of compensation — base salary and short- and long-term incentives, both within Alpha and as compared to peers and survey data to determine whether each of these components is in line with our compensation philosophy and its related goals and objectives. Upon the recommendation of our Chief Executive Officer with respect to the compensation of each executive officer who directly reports to him, and, based on the findings of any outside consultants that may be engaged to assist in this review, our Compensation Committee then determines the compensation for all key executives and recommends approval, in the case of our Chief Executive Officer’s compensation, to the independent members of our Board.
 
Process for Determining Non-Employee Director Compensation.  Our Compensation Committee makes recommendations to the Board regarding Board compensation and benefits for non-employee directors, including cash, equity-based awards and other compensation. In determining non-employee director compensation, our Compensation Committee seeks advice from outside compensation consultants who are retained by the committee to, among other functions: (i) conduct a competitive assessment of non-employee director compensation compared to competitive practice, (ii) inform the committee of emerging trends in director pay practices, (iii) advise on stock ownership guidelines for non-employee directors, and (iv) assess the amount of compensation that is adequate to compensate our directors for their time and effort with respect to Board obligations. If, after the annual review of non-employee director compensation by our Compensation Committee, the committee determines that any changes should be made to such program, it will recommend such changes to our Board for approval.


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Outside Executive Compensation Consultants.  In November 2007, the Compensation Committee determined to directly retain Deloitte Consulting LLP (“Deloitte”), outside compensation consultants, to assist the committee and to perform functions in connection with executive compensation matters for the committee annually including: (i) conducting a competitive assessment of key executives’ total direct compensation (e.g. sum of base salary, annual bonus and long-term incentive opportunity); (ii) evaluating appropriateness of annual incentive plan targets and standards, (iii) assessing whether “pay mix” of key executives’ compensation is appropriate and competitive, (iv) comparing Alpha’s annual share utilization and earnings per share dilution for equity-based compensation to competitive practice and institutional investor guidelines, (v) comparing Alpha’s expense for stock-based compensation to its peer companies, (vi) evaluating appropriateness of welfare and perquisite programs, (vii) advising the committee regarding design changes to compensatory programs and the development of new programs based on strategic goals, competitive assessment and regulatory changes, (viii) review management proposals on behalf of the Compensation Committee, (ix) informing the committee of emerging trends in executive compensation, the institutional investor climate and corporate governance and accounting developments, (x) providing and periodically advising on stock ownership or retention guidelines for senior executives, and (xi) providing the committee with regular updates regarding changes in regulatory and legislative developments. Prior to November 2007, our senior management had retained the services of Deloitte to assist our Compensation Committee with its annual review of our compensation programs to ensure they are competitive and consistent with the committee’s stated objectives.
 
Under the terms of the current engagement letter between Deloitte and the Compensation Committee, Deloitte may be retained by management to periodically assist with special projects related to other non-executive employee compensation and benefits matters. In order to ensure that Deloitte is able to provide objective advice on executive and non-employee director compensation matters, as described above, the engagement letter with Deloitte provides that upon receiving a request for assistance by management, Deloitte will notify the Compensation Committee of such request, and seek prior approval from the Compensation Committee before commencing any work on behalf of management. Deloitte has also agreed, upon request, to assist the Compensation Committee in preparing a summary of all work performed by other Deloitte affiliates for the Company, including amounts billed by all Deloitte affiliates. Furthermore, if, in Deloitte’s opinion, a conflict of interest arises that could cause its independence to be impaired, Deloitte will immediately advise the Compensation Committee of such conflict. Deloitte has assured our Compensation Committee and management that it has established internal procedures to safeguard the objectivity of its advice to our Compensation Committee.
 
For more information regarding our Compensation Committee’s processes to determine executive officer compensation and the role of our outside compensation consultants in executive compensation matters, see “Executive Compensation — Compensation Discussion and Analysis.”
 
Nominating and Corporate Governance Committee
 
Our Nominating and Corporate Governance Committee currently has four members: Ms. Bowers and Messrs. Brinzo, Eisenberg, and Fox. The Nominating and Corporate Governance Committee assists the Board in identifying individuals qualified to become Board members and executive officers and selecting, or recommending that the Board select, director nominees for election to our Board and its committees. Our Nominating and Corporate Governance Committee is also generally responsible for:
 
  •  Developing and recommending governance policies and procedures for our Board and monitoring compliance with our Corporate Governance Practices and Policies;
 
  •  Considering questions of independence and possible conflicts of interest that may affect directors;
 
  •  Leading our Board in its annual review of its performance;


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  •  Making recommendations regarding committee purpose, structure and operation; and
 
  •  Overseeing and approving a management continuity planning process.
 
Director Nomination Procedures.  Pursuant to our Corporate Governance Practices and Policies and the committee’s charter, our Nominating and Corporate Governance Committee reviews the qualifications of proposed nominees for director to serve on our Board and recommends nominees to our Board. Our Board is ultimately responsible for proposing a slate of nominees to the stockholders for election to the Board, using information provided by the committee.
 
Our Chief Executive Officer, members of our Nominating and Corporate Governance Committee, and other members of our Board are the primary sources for the identification of prospective director nominees. Our Nominating and Corporate Governance Committee also has authority to retain third-party search firms to identify director candidates and the committee may consider proposed nominees that are identified by stockholders in the manner prescribed by our bylaws.
 
In order for a stockholder to recommend a prospective nominee for election to our Board at an Annual Meeting, our bylaws require the stockholder to be entitled to vote at the meeting, to provide a written notice to our Corporate Secretary including information specified in our bylaws and to be a stockholder of record at the time of giving the notice. See “Stockholders’ Proposals and Nominations for 2009 Annual Meeting” for a description of the procedures, required contents and applicable deadlines for the stockholders’ submission of director candidate recommendations.
 
Director and Board Qualifications.  We believe that our Board members should have the highest professional and personal ethics and values. Candidates should bring integrity, insight, energy, and analytical skills to Board deliberations. We recognize the strength and effectiveness of the Board reflects the balance, experience, and diversity of the individual directors, their commitment and, importantly, the ability of directors to work effectively as a group in carrying out their responsibilities. In selecting individual Board candidates we are mindful of our overall goal to have a Board that excels in the following areas:
 
  •  Respected within the industry and our markets;
 
  •  Proven leaders in the communities in which we do business;
 
  •  Experienced managers;
 
  •  Visionaries for the future of our business;
 
  •  Able to effectively handle crises and minimize risk;
 
  •  Dedicated to sound corporate governance; and
 
  •  Collegial.
 
We seek candidates who demonstrate an understanding of our short- and long-term goals and objectives and a commitment to enhancing stockholder value. On an individual basis, we believe that our directors should have the following qualities:
 
  •  Strength of character;
 
  •  Maturity of judgment;
 
  •  Independence of thought;
 
  •  Accounting and finance knowledge (including expertise that could qualify at least one director as an “audit committee financial expert”);


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  •  Technical expertise;
 
  •  Familiarity with our business, industry and competition;
 
  •  General business acumen; and
 
  •  Critical thinking.
 
A majority of our directors must meet the criteria for independence required by the SEC and NYSE and such candidates should be free from any relationship with management or Alpha which would create a conflict of interest or compromise their independent judgment.
 
Our Nominating and Corporate Governance Committee periodically reviews with our Board and each committee the requisite skills and characteristics of individual directors as well as the composition of our Board as a whole. From time to time we may seek to enhance our Board with one or more members who possess a specific niche area of experience or expertise.
 
Once our Nominating and Corporate Governance Committee has identified a prospective nominee, the committee evaluates the prospective nominee against the standards and qualifications set forth above, as well as any other criteria the committee may consider appropriate.
 
While our Nominating and Corporate Governance Committee has no formal process for evaluating proposed nominees, the members of the committee generally will review the resume of a proposed nominee and consult the proposed nominee’s personal references. Our Nominating and Corporate Governance Committee may also personally interview (and suggest that other members of our Board interview) the proposed nominee, if the committee considers the proposed nominee sufficiently suitable. After completing this evaluation, our Nominating and Corporate Governance Committee makes a recommendation to the full Board as to the persons who should be nominated by our Board, and the Board determines the nominees after considering the recommendation and report of the committee.
 
Messrs. Brinzo, Buerger, Crutchfield, Draper, Eisenberg, Fox, Quillen, Wood and Ms. Bowers were each recommended by our Nominating and Corporate Governance Committee to our Board for nomination for election at the Annual Meeting. All of these nominees are current directors of Alpha. Mr. Buerger was appointed to the Board in February 2008, and was initially recommended to the Nominating and Corporate Governance Committee by one of its members, Mr. Eisenberg.
 
Director Attendance
 
During 2007, our Board held 12 meetings and our Board committees held the following meetings: (i) Audit Committee, 9 meetings, (ii) Compensation Committee, 6 meetings, and (iii) Nominating and Corporate Governance Committee, 4 meetings. Under our Corporate Governance Practices and Policies, directors are expected to attend Board meetings and meetings of committees on which they serve in person or by conference telephone, and directors are encouraged to attend the Annual Meeting. Each of our directors attended 100% of the aggregate of the total number of Board and committee meetings held in 2007 during the period for which he or she was a director and served on the applicable committee and each of our directors, who were serving at the time, attended our 2007 Annual Meeting.


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Compensation of Our Directors
 
 
The following table sets forth information concerning the compensation paid by us to our directors for the year ended December 31, 2007.
 
                                                                       
                                      Change in
                 
                                      Pension
                 
                                      Value and
                 
                                      Nonqualified
                 
                              Non-Equity
      Deferred
                 
      Fees Earned or
                      Incentive Plan
      Compensation
      All Other
         
      Paid in Cash
      Stock Awards(2)
      Option Awards(3)
      Compensation
      Earnings
      Compensation
      Total
 
Name(1)
    ($)
      ($)
      ($)
      ($)
      ($)
      ($)
      ($)
 
(a)     (b)       (c)       (d)       (e)       (f)       (g)       (h)  
Mary Ellen Bowers
      57,000         109,259                                         166,259  
John S. Brinzo
      89,000         58,345                                         147,345  
Hermann Buerger(4)
                                                       
E. Linn Draper, Jr. 
      87,500 (5)       69,214         12,540                                 169,254  
Glenn A. Eisenberg
      102,000         69,214         16,540                                 187,754  
John W. Fox, Jr. 
      79,000 (5)       69,214         12,540                                 160,754  
Hans J. Mende(6)
                                                       
Ted G. Wood
      79,000         69,214                                         148,214  
                                                                       
(1) Mr. Quillen is Chairman of the Board of Alpha and Mr. Crutchfield is a member of the Board. Messrs. Quillen’s and Crutchfield’s compensation are reported in the Summary Compensation Table and the other tables set forth herein. They do not receive any additional compensation in connection with their respective service on Alpha’s Board.
 
(2) The values set forth in this column relate to restricted stock awards that were granted on May 22, 2007 to Messrs. Draper, Eisenberg, Fox and Wood and Ms. Bowers and on October 26, 2007 to Mr. Brinzo. The values are based on the amounts recognized for financial statement reporting purposes in 2007 computed in accordance with Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (“FAS 123R”)(disregarding any estimates of forfeitures related to service-based vesting conditions). See Note 18(e) of the consolidated financial statements in Alpha’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 regarding assumptions underlying the valuation of restricted stock awards, which was filed with the SEC on February 29, 2008 (“Form 10-K”).
 
As of December 31, 2007, Messrs. Draper, Eisenberg, Fox, and Wood each held 5,710 shares of restricted stock, Mr. Brinzo held 6,796 shares of restricted stock and Ms. Bowers held 4,360 shares of restricted stock. The grant date fair value of each restricted stock award granted in 2007, computed in accordance with FAS 123R, for each of Messrs. Draper, Eisenberg, Fox and Wood was $40,047, $50,012 for Mr. Brinzo, and $80,092 for Ms. Bowers.
 
(3) The values set forth in this column relate to nonqualified stock options that were granted on February 14, 2005 and April 27, 2005. The values are based on the amount recognized for financial statement reporting purposes in 2007 computed in accordance with FAS 123R (disregarding any estimates of forfeitures related to service-based vesting conditions). See Note 18(e) of the consolidated financial statements in Alpha’s Form 10-K regarding assumptions underlying the valuation of stock option awards.
 
Messrs. Draper, Eisenberg and Fox each held options to purchase 10,000 shares as of December 31, 2007. There were no option grants to non-employee directors in 2006 or 2007.
 
(4) Mr. Buerger joined our Board in February 2008 and thus did not earn any compensation from us in 2007. Mr. Buerger was granted an initial award of restricted stock as described below under “Compensation of Our Directors — Additional Information Regarding Our Director Compensation Table.”


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(5) $81,506 and $37,978 of the cash fees earned by each of Messrs. Draper and Fox, respectively, for service on our Board in 2007 were deferred into share unit accounts established under the Director Deferred Compensation Agreement (as amended and restated, the “Deferred Compensation Agreement”) of the 2005 Long-Term Incentive Plan. Under the Deferred Compensation Agreement, the number of share units credited to each share unit account is based upon the fair market value of our common stock on the applicable payment date of the fees deferred by such director. Upon termination of such director’s service on our Board, Alpha will distribute the director’s share unit account to the director in the form of shares of our common stock, which shares will be issued under the 2005 Long-Term Incentive Plan and in accordance with the terms and conditions of such plan and the Deferred Compensation Agreement.
 
In 2007, 4,229 share units were credited to Mr. Draper’s share unit account, and 2,067 share units were credited to Mr. Fox’s share unit account. The grant date fair value of each of Messrs. Draper’s and Fox’s share units awarded in 2007 was $81,506 and $37,978, respectively. The aggregate grant date fair values are based on the amount recognized for financial statement reporting purposes in 2007 computed in accordance with FAS 123R (disregarding any estimates of forfeitures related to service-based vesting conditions). See Note 18(e) of the consolidated financial statements in Alpha’s Form 10-K regarding assumptions underlying the value of the share units.
 
Messrs. Draper and Fox held share units in the amount of 7,739 and 3,392, respectively, as of December 31, 2007.
 
(6) Mr. Mende resigned from our Board effective January 3, 2007, and received no compensation in 2007 from us.
 
Additional Information Regarding Our Director Compensation Table
 
Annual Fees.  Directors who are not determined to be independent directors, do not receive additional compensation for serving as directors. Messrs. Quillen and Crutchfield are not independent based on their respective positions as our Chief Executive Officer and President. Messrs. Quillen’s and Crutchfield’s compensation is reported in the Summary Compensation Table and the other tables set forth herein.
 
Until August 2007, independent directors received (i) $30,000 as an annual retainer, (ii) a $2,000 per-meeting fee for attendance at Board meetings, (iii) a $2,000 per-meeting fee for in-person attendance at committee meetings and a $1,000 per-meeting fee for telephonic attendance at committee meetings, (iv) a $10,000 annual retainer for service as the chairman of the Audit Committee and a $2,000 annual retainer for service as the chairman of any other Board committee, (v) a $12,500 annual retainer for service as the Lead Director of our Board, (vi) upon joining the Board, an initial, one-time grant of restricted stock with a fair market value of approximately $80,000 on the grant date, and (vii) thereafter, an annual grant of restricted stock with a fair market value of approximately $40,000 for each subsequent year of service.
 
As of August 2007, independent directors now receive (i) $40,000 as an annual retainer, (ii) a $2,000 per-meeting fee for attendance at Board meetings, (iii) a $2,000 per-meeting fee for in-person attendance at committee meetings and a $1,000 per-meeting fee for telephonic attendance at committee meetings, (iv) a $10,000 annual retainer for service as the chairman of the Audit Committee and a $5,000 annual retainer for service as the chairman of any other Board committee, (v) a $12,500 annual retainer for service as the Lead Director of our Board, (vi) upon joining the Board, an initial, one-time grant of restricted stock with a fair market value of approximately $80,000 on the grant date, and (vii) thereafter, an annual grant of restricted stock with a fair market value of approximately $50,000 for each subsequent year of service. Additionally, each director is entitled to be reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at Board meetings or any committee thereof, and customary directors’ indemnification.


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Director Deferred Compensation Agreement.  Under the 2005 Long-Term Incentive Plan, our Compensation Committee adopted the Deferred Compensation Agreement to incentivize nonemployee directors by allowing them to defer all or a portion of any of their cash fees, including their annual retainer, meeting fees or other amounts earned for services performed as a member of our Board or any of its committees. Under the Deferred Compensation Agreement, any compensation that would be payable in cash may be deferred in the form of share units or cash, at the director’s election. Any deferred amounts held in an account of share units will receive the value of any dividends on the units held in the account as if such units were actual shares on a dividend record date. Deferred amounts held in a cash account will earn interest annually at the Moody’s AAA or such other rate as determined by our Compensation Committee.
 
Except as provided below, upon the director’s termination from service (a “Separation from Service”), we will distribute the director’s share unit account to the director in the form of shares in a lump sum on the six month anniversary of the date of the director’s Separation from Service (or, if sooner, the date of death).
 
Except as provided below, upon the director’s Separation from Service, we will distribute the director’s cash account to the director in the form of cash in a lump sum on the six month anniversary of the date of the director’s Separation from Service (or, if sooner, the date of death).
 
In the event of a “change in control” (as defined in the Director Compensation Agreement), the director (or his estate) will receive shares and cash in the accounts as a single lump-sum within 30 days of such change in control.
 
The Deferred Compensation Agreement is an unfunded and unsecured liability of Alpha, and benefits will be paid from our general assets. Accordingly, participants are general unsecured creditors of Alpha with respect to the benefits. During 2007, Messrs. Draper and Fox deferred a portion of their compensation in accordance with the terms of the Deferred Compensation Agreement.
 
Restricted Stock.  In 2006 and 2007, as part of our director compensation arrangements, our Board granted restricted stock awards to our non-employee directors under the 2005 Long-Term Incentive Plan. When issued, restricted shares of our common stock held by our non-employee directors are unvested and subject to forfeiture in the event the director breaches certain confidentiality covenants set forth in the restricted stock agreements. All of the shares issued to our non-employee directors have been granted pursuant to restricted stock agreements that provide for vesting six months following the cessation of a director’s service on our Board. In addition, all unvested shares automatically vest immediately prior to a “change in control” (as defined in the agreements), or if the director ceases to serve as a member of the Board as a result of permanent disability. Assuming that a triggering event occurred on December 31, 2007, the restrictions on restricted shares granted to Messrs. Brinzo, Draper, Eisenberg, Fox, Wood, and Ms. Bowers respectively, would lapse.
 
Stock Options.  In 2005, the Board granted non-qualified stock options to our non-employee directors under the 2005 Long-Term Incentive Plan. Each outstanding stock option issued to our directors has been granted pursuant to an option agreement that provides for vesting over a five year period, with 20% vesting on each of the first, second, third, fourth and fifth anniversaries of the grant date while the director continues to serve on our Board. The options generally have an exercise period of 10 years from the grant date. The option agreement provides that, in the event of a termination, other than for death, disability, normal retirement or upon a change in control, then-vested options will be exercisable by the optionee within the lesser of (i) the 90-day period commencing on the first day after the non-employee director’s last day of service or (ii) the remaining term of the option. Upon an optionee’s termination as a result of death or disability, then-vested shares will remain exercisable for the lesser of (i) the one year period commencing


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on the first day after the non-employee director’s last day of service or (ii) the remaining term of the option. Upon termination as a result of retirement at or after an optionee’s normal retirement age, then-vested shares shall remain exercisable for the lesser of (i) the three month period commencing on the first day after the retirement date (or, if such director dies during such three-month period, then the one-year period after such termination date) or (ii) the remaining term of the option. Additionally, the option agreement provides that any unvested options will vest immediately prior to the consummation of a “change in control” (as defined in the option agreement), unless previously cancelled and forfeited.
 
For the meanings of some of the defined terms used in the 2005 Long-Term Incentive Plan and the related agreements, see “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
Director Stock Ownership Guidelines.  The Board adopted stock ownership guidelines applicable to Alpha’s non-employee directors and executives effective October 26, 2006 (the “Guidelines”). Non-employee directors are encouraged to accumulate and maintain equity ownership in Alpha having a value of no less than three times the director’s annual cash Board retainer within five years of the effective date of the Guidelines, or on or before October 26, 2011. In determining if a director has satisfied this Guideline, all stock and equity interests beneficially owned by the director, or to which the director is otherwise entitled, are taken into consideration, including, without limitation, any equity grants to such director that may remain unvested. To the extent a director is elected, appointed or otherwise named to such position subsequent to the effective date of the Guidelines, the five year period referred to above will begin as of the date such director is elected, appointed, or otherwise named to such position. For purposes of the Guidelines, equity ownership is measured at the end of each fiscal year of the Company, based on the average daily stock price of our common stock during the month of December in each such fiscal year. The Nominating and Corporate Governance Committee is responsible for the administration and interpretation of the Guidelines. For a description of the stock ownership guidelines applicable to executive officers, see “Executive Compensation — Compensation Discussion and Analysis.”
 
Communications with the Board
 
Stockholders and other parties interested in communicating directly with our Board, a Board committee, the non-management directors, the independent directors or with an individual director may do so by sending an email to vgroves@alphanr.com or writing to our Board of Directors, Alpha Natural Resources, Inc., One Alpha Place, P.O. Box 2345, Abingdon, VA 24212, Attention: Vaughn R. Groves, General Counsel. Communications should specify the addressee(s) and the general topic of the communication. Our General Counsel will forward all of such communications to the appropriate addressee(s). Additionally, we have established a separate procedure which allows individuals to submit concerns about our accounting, financial reporting, internal accounting controls and auditing matters openly, confidentially or anonymously. Our Audit Committee has authorized the retention of an outside, third-party vendor, Shareholder.com, to which concerns regarding these matters may be reported. Individuals wishing to submit concerns about any accounting or auditing matters can contact Shareholder.com toll-free, at (866) 259-2480, via email at anr@openboard.info or via the internet at www.openboard.info/anr.
 
Concerns relating to possible violations of our Code of Business Ethics should be reported pursuant to the procedures outlined in that code, a copy of which is available on our website at www.alphanr.com.


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INFORMATION CONCERNING EXECUTIVE OFFICERS
 
The following table sets forth the names, ages and titles of our current executive officers.
 
             
Name
 
Age
 
Position
 
Michael J. Quillen
    59     Chairman of the Board and Chief Executive Officer
Kevin S. Crutchfield
    47     President
David C. Stuebe
    67     Vice President, Treasurer and Chief Financial Officer
Joachim V. Porco
    53     Vice President
Randy L. McMillion
    51     Vice President
Vaughn R. Groves
    51     Vice President, Secretary and General Counsel
Eddie W. Neely
    56     Vice President, Assistant Secretary and Controller
 
Each officer serves at the discretion of our Board and holds office until his or her successor is appointed or until his or her earlier resignation or removal. There are no family relationships among any of our current directors, director nominees, or executive officers.
 
Set forth below is a description of the background of the persons named above, other than Messrs. Quillen and Crutchfield, whose background is provided above in “Proposal 1 — Election of Directors:”
 
 
David C. Stuebe has served as our Vice President, Treasurer and Chief Financial Officer since our formation in November 2004. Mr. Stuebe joined the Alpha management team as the Vice President and Chief Financial Officer of Alpha Natural Resources, LLC in October 2003, and also served as the Vice President and Chief Financial Officer of ANR Holdings, LLC from November 2003 until ANR Holdings was merged with another of our subsidiaries in December 2005. Mr. Stuebe served from March 2000 to July 2003 as Senior Vice President-Finance and Administration of Hearth and Home Technologies, Inc., a wholly-owned subsidiary of HNI Corporation (“HNI”), a leading manufacturer of office systems and hearth products, and from October 1994 to March 2000 as Vice President and Chief Financial Officer of the parent, HNI. Prior to joining HNI, he served as President, Chief Executive Officer and Director of United Recycling Industries, Inc., a metals broker, precious metals recycler and non-ferrous metals producer, from 1990 to 1994, as President, Chief Executive Officer and Director of Auto Specialties Manufacturing, Inc., a manufacturer of O.E.M. truck and construction equipment components, from 1988 to 1990, and as Chairman, President and Chief Executive and Chief Financial Officer of MSL Industries, Inc., a manufacturer and distributor of fasteners, tubing, roll-form shapes, electric motors, components for electric utilities and missile components from 1981 to 1987. Mr. Stuebe’s business background also includes significant general and financial management positions with Carpetland U.S.A., Inc., a flooring sales and distribution company, and the Scholl Products Group of ScheringPlough Corporation, a diversified pharmaceutical company, as well as 13 years of audit experience with an international public accounting firm as a certified public accountant.
 
Joachim V. Porco has served as our Vice President and President of our subsidiary, Alpha Coal Sales Co., LLC, since September 2006. In 1996, he joined AMCI, where he was responsible for all international coal sales. In 2003, concurrent with our acquisition of AMCI’s U.S. coal production and marketing assets, Mr. Porco was appointed head of Alpha Energy Global Marketing, LLC. The following year he was named Executive Vice President of Metallurgical and Export Coal Sales at Alpha Coal Sales Co. Mr. Porco began his career in the coal industry with CONSOL Energy Inc., a coal producer and supplier, in 1974, where he held a number of finance and sales positions.


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Randy L. McMillion has served as our Vice President of Operations since April 2007. In May 2005, he joined Alpha as the President and Manager of our subsidiary, Brooks Run Mining Company, LLC, in charge of all southern West Virginia mining operations of Alpha until he was promoted, in March 2006, to Vice President of our subsidiary, Alpha Natural Resources, LLC. From October 1999 to May 2005, Mr. McMillion held positions with Foundation Coal Holdings, Inc. (and its predecessor — RAG American Coal), a coal producer and supplier, including President of Rockspring Development from June 2004 to May 2005, RAG American Coal — Vice President of Riverton Coal Production from April 2002 to June 2004, RAG American Coal — Senior Vice President of Eastern Operations from October 2001 to April 2002, and RAG American Coal — President of Rockspring Development from October 1999 to October 2001. Prior to October 1999, Mr. McMillion held engineering, mining and processing positions at Pittston, including Pittston’s Vice President of West Virginia Operations.
 
Vaughn R. Groves has served as our Vice President, Secretary and General Counsel since our formation in November 2004. Mr. Groves joined the Alpha management team as the Vice President, Secretary and General Counsel of Alpha Natural Resources, LLC in October 2003, and also served as the Vice President and General Counsel of ANR Holdings, LLC from November 2003 until ANR Holdings was merged with another of our subsidiaries in December 2005. Prior to that time, he served as Vice President and General Counsel of Pittston from 1996 until joining Alpha, and as Associate General Counsel of Pittston from 1991 until 1996. Before joining Pittston, he was associated with the law firm of Jackson Kelly PLLC, one of the leading mineral law firms in the Appalachian region. He is also a mining engineer and before obtaining his law degree, he worked as an underground section foreman, construction foreman and mining engineer for Monterey Coal Company.
 
Eddie W. Neely has served as our Vice President and Controller since our formation in November 2004. Mr. Neely joined the Alpha management team as the Secretary of Alpha Natural Resources, LLC in August 2002, and has also served as Vice President and Controller of Alpha Natural Resources, LLC since March 2003. From August 1999 to August 2002, he served as Chief Financial Officer of White’s Fresh Foods, Inc., a family-owned supermarket chain. Prior to joining White’s Fresh Foods, from October 1997 to August 1999, Mr. Neely was Controller for Hunt Assisted Living, LLC, a company that developed, constructed, managed, and operated assisted living facilities for the elderly. Mr. Neely served as Director of Accounting for The Brink’s Company from January 1996 until October 1997 and held various accounting and finance positions with Pittston and its subsidiaries prior to January 1996. Mr. Neely is a certified public accountant.


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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table and accompanying footnotes show information regarding the beneficial ownership of shares of our common stock as of March 21, 2008 for:
 
  •  each person who is known by us to own beneficially more than 5% of our common stock (based on their public filings with the SEC as of March 21, 2008);
 
  •  each director and nominee for director and each named executive officer in the Summary Compensation Table set forth in this document; and
 
  •  all current members of our Board and our executive officers as a group.
 
Except as otherwise indicated, the address for each person listed below is c/o Alpha Natural Resources, Inc., One Alpha Place, P.O. Box 2345, Abingdon, Virginia 24212.
 
Except as otherwise noted, the individual or his or her family members had sole voting and investment power with respect to such shares. The percentages of beneficial ownership set forth below are based on 66,125,297 shares of our common stock issued and outstanding as of March 21, 2008.
 
                 
    Amount and
       
    Nature of
    Percent
 
    Beneficial
    of Class
 
Name and Address of Beneficial Owner
  Ownership(1)     (%)  
FMR LLC(2)
    9,035,519       13.66 %
82 Devonshire Street
Boston, MA 02109
               
Bank of America Corporation(3)
    4,374,084       6.61 %
100 North Tryon Street, Floor 25
Bank of America Corporate Center
Charlotte, NC 28255
               
Chilton Investment Company, LLC(4)
    3,514,856       5.32 %
1266 East Main Street, 7th Floor
Stamford, CT 06902
               
Michael J. Quillen(5)
    370,681       *  
Mary Ellen Bowers(6)
    4,360       *  
John S. Brinzo(7)
    6,796       *  
Hermann Buerger(8)
    1,974       *  
E. Linn Draper, Jr.(9)
    11,710       *  
Glenn A. Eisenberg(9)
    11,710       *  
John W. Fox, Jr.(9)
    15,710       *  
Ted G. Wood(10)
    5,710       *  
Kevin S. Crutchfield(11)
    116,561       *  
Randy L. McMillion(12)
    89,823       *  
Joachim V. Porco(13)
    35,415       *  
David C. Stuebe(14)
    64,437       *  
All executive officers and directors as a group (14 persons)(15)
    803,359       1.21 %
 
* Less than 1% of shares outstanding.
 
(1) The shares of our common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote, or direct the voting of, such security, or investment power, which includes the power to dispose of, or to direct the disposition of, such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can


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be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock.
 
(2) The information for FMR LLC (the parent holding company and successor of FMR Corp.), Fidelity Leveraged Co Stock Fund, Fidelity Management & Research Company (“Fidelity”), Pyramis Global Advisors, LLC, Pyramis Global Advisors Trust Company, Fidelity International Limited (“FIL”; and collectively, the “Fidelity Group”) and Edward C. Johnson 3d (“Johnson”) is derived from a Schedule 13G/A, dated February 14, 2008, which was filed with the SEC to report the shares beneficially owned by such persons as of December 31, 2007. The Schedule 13G/A states that members of the Johnson family may be deemed under the Investment Company Act of 1940 to form a controlling group with respect to FMR LLC. The Schedule 13G/A further states that Johnson and FMR LLC, through its control of Fidelity, and the funds each has sole power to dispose of 8,818,416 shares owned by the funds and neither has the sole power to vote or direct the voting of shares owned directly by the funds. Fidelity, a wholly-owned subsidiary of FMR LLC, is the beneficial owner of 8,818,416 shares as a result of acting as an investment adviser to various investment companies, one of which companies, Fidelity Leveraged Co Stock Fund, owns 3,803,434 shares. Pyramis Global Advisors, LLC, an indirect wholly-owned subsidiary of FMR LLC, is the beneficial owner of 30,000 shares as a result of serving as an investment adviser to institutional accounts, non-U.S. mutual funds, or investment companies and each of Johnson and FMR LLC has sole power to vote or direct the voting, and dispose, of such shares. Pyramis Global Advisors Trust Company, an indirect wholly-owned subsidiary of FMR LLC, is the beneficial owner of 92,300 shares as a result of serving as an investment manager of institutional accounts and each of Johnson and FMR LLC have sole power to vote or direct the voting, and dispose, of those shares. FIL and various foreign-based subsidiaries beneficially owned 94,803 shares. In the Schedule 13G/A, FMR LLC and FIL state that they do not believe that they are acting as a “group” for purposes of Section 13(d) of the Exchange Act and that they are not otherwise required to attribute to each other the “beneficial ownership” of securities “beneficially owned” by the other corporation within the meaning of Rule 13d-3 promulgated under the Exchange Act. Therefore, they are of the view that the shares held by the other corporation need not be aggregated for purposes of Section 13(d).
 
(3) The information for Bank of America Corporation (the parent holding company), NB Holdings Corporation, Bank of America, NA, United States Trust Company, NA, BAC North America Holding Company, LaSalle Bank Corporation, LaSalle Bank, N.A., Columbia Management Group, LLC, Columbia Management Advisors, LLC and Banc of America Investment Advisors, Inc. (collectively, the “Bank of America Group”) is derived from a Schedule 13G filed jointly by the Bank of America Group on February 7, 2008 and reports shares beneficially owned by such persons as of December 31, 2007. As of December 31, 2007, Bank of America Corporation beneficially owned 4,374,084 shares, with shared dispositive power with respect to those shares and shared voting power with respect to 4,371,483 of those shares; NB Holdings Corporation beneficially owned 4,373,479 shares, with shared dispositive power with respect to those shares and shared voting power with respect to 4,371,483 of those shares; Bank of America, NA beneficially owned 267,871 shares, with shared voting power with respect to 264,175 shares, sole voting and dispositive power with respect to 2,000 shares, and shared dispositive power with respect to 265,871 shares; United States Trust Company, NA beneficially owned 4,107,608 shares, with sole voting power with respect to 4,107,308 shares and sole dispositive power with respect to 4,107,608 shares; BAC North America Holding Company and LaSalle Bank Corporation each beneficially owned 605 shares, with shared dispositive powers with respect to those shares; LaSalle Bank, N.A. beneficially owned 605 shares, with sole dispositive power with respect to those shares; Columbia Management Group, LLC beneficially owned 260,590 shares, with shared voting power and shared dispositive power with respect to those shares; Columbia Management Advisors, LLC beneficially owned 260,590 shares, with sole dispositive power with respect to 258,200 shares and shared dispositive with respect to 2,390 shares; and Banc of America Investment Advisors, Inc. beneficially owned 3,585 shares, with shared voting with respect to those shares.


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(4) The information for Chilton Investment Company, LLC is derived from a Schedule 13G, dated February 14, 2008, which was filed with the SEC to report the shares beneficially owned by such person as of December 31, 2007. The Schedule 13G indicates that Chilton Investment Company, LLC has sole voting and dispositive power over all of the shares it beneficially owns.
 
(5) Includes beneficial ownership of 111,579 shares of restricted stock issued under our 2005 Long-Term Incentive Plan and 218,492 shares that are held by Michael J. Quillen, L.L.C.
 
(6) Represents beneficial ownership of 4,360 shares of restricted stock issued under our 2005 Long-Term Incentive Plan.
 
(7) Represents beneficial ownership of 6,796 shares of restricted stock issued under our 2005 Long-Term Incentive Plan.
 
(8) Includes beneficial ownership of 1,974 shares of restricted stock issued under our 2005 Long-Term Incentive Plan. The stock amount shown for Mr. Buerger does not include 1,062 share units, which were credited to his share unit account under the Deferred Compensation Agreement, which is described in more detail in “Director Independence — Additional Information Regarding Our Director Compensation Table.”
 
(9) For each of Messrs. Draper, Eisenberg and Fox, includes beneficial ownership of 5,710 shares of restricted stock issued under our 2005 Long-Term Incentive Plan. Also includes 6,000 shares issuable upon exercise of options held by each of Messrs. Draper and Eisenberg, which are exercisable within 60 days of the date of this table.
 
The stock amounts shown for Messrs. Draper and Fox do not include 7,868 and 3,561 share units, respectively, which were credited to their respective share unit accounts under the Deferred Compensation Agreement, which is described in more detail in “Director Independence — Additional Information Regarding Our Director Compensation Table.”
 
(10) Represents beneficial ownership of 5,710 shares of restricted stock issued under our 2005 Long-Term Incentive Plan.
 
(11) Includes beneficial ownership of 67,755 shares of restricted stock issued under our 2005 Long-Term Incentive Plan and 43,743 shares issuable upon exercise of options held by Mr. Crutchfield that are exercisable within 60 days of the date of this table.
 
(12) Includes beneficial ownership of 41,187 shares of restricted stock issued under our 2005 Long-Term Incentive Plan. Also includes 36,000 shares issuable upon exercise of options held by Mr. McMillion that are exercisable within 60 days of the date of this table.
 
(13) Includes beneficial ownership of 26,398 shares of restricted stock issued under our 2005 Long-Term Incentive Plan.
 
(14) Includes beneficial ownership of 18,896 shares of restricted stock issued under our 2005 Long-Term Incentive Plan and 24,000 shares issuable upon exercise of options held by Mr. Stuebe that are exercisable within 60 days of the date of this table.
 
(15) Includes beneficial ownership of an additional 32,069 shares of restricted stock issued under our 2005 Long-Term Incentive Plan and an additional 22,270 shares issuable upon exercise of options that are exercisable within 60 days of the date of this table.
 
Brokerage account agreements may grant security interests in securities held at the broker to secure payment and performance obligations of the brokerage account holder in the ordinary course. Shares shown in the table for the directors, director nominees and executive officers may be subject to this type of security interest.


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EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
This Compensation Discussion and Analysis section describes the principles behind our executive compensation program and the material elements of the compensation of our (i) Chief Executive Officer (Mr. Quillen); (ii) Chief Financial Officer (Mr. Stuebe); and (iii) three most highly compensated officers (other than our Chief Executive Officer and Chief Financial Officer) at the end of fiscal year 2007— our President (Mr. Crutchfield); and two Vice Presidents (Messrs. McMillion and Porco) (collectively, the “named executive officers”).
 
Executive Compensation Philosophy and Objectives
 
Our executive compensation philosophy is to align executive pay with performance of the Company on both a short- and long-term basis. This philosophy is affected through the achievement of key objectives and priorities which influence our decisions regarding the design of our overall executive compensation program and its individual components. The objectives and priorities are to:
 
  •  Enable the attraction and retention of our named executive officers and other key employees;
 
  •  Link elements of compensation to achievement of strategic and financial objectives;
 
  •  Align our named executive officers’ and other key employees’ interests with our stockholders and other stakeholders such as our employees, customers and vendors (collectively, “stakeholders”);
 
  •  Incentivize our named executive officers and other key employees to enhance stakeholder value by rewarding for both short- and long-term performance at or above established goals;
 
  •  Reward our named executive officers and other key employees for teamwork; and
 
  •  Reward our named executive officers and other key employees for our acquisitions of targeted companies and successful integration of them.
 
Structure of Executive Compensation Program to Accomplish Philosophy and Objectives
 
Our 2007 executive compensation program principally consisted of base salary, an annual cash bonus program, and long-term incentive awards in the form of time-vested restricted stock and performance vested shares. The following table of the 2007 total direct compensation (base salary, short- and long-term incentives) paid to our named executive officers illustrates that the majority of their compensation is performance based with the portion of pay “at risk” increasing with an officer’s influence and authority over our business. This structure directly links pay of our Company’s decision-makers to performance results expected by our stockholders.
 
                         
    Pay Mix  
    Base Salary     Short Term Incentive     Long Term Incentive  
 
Quillen
    20 %     20 %     60 %
Stuebe
    31 %     23 %     46 %
Crutchfield
    23 %     20 %     57 %
McMillion
    27 %     20 %     53 %
Porco
    27 %     21 %     52 %
 
We believe the mix of compensation elements shown above provides our named executive officers with total direct compensation that is well-balanced between achieving short- and long-term performance goals, enhancing stakeholder value, and retaining top executive talent.


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Overview of Each Compensation Element
 
The following is a brief summary of each of the key components of our executive compensation program and each element, as determined for 2007, is more fully described under “2007 Executive Compensation Program” herein. Each of our compensation elements and the portion of the named executive officers’ compensation allocated to them are designed to meet the objectives of our compensation philosophy and achieve total compensation that reflects our emphasis on pay for performance. Determinations of material components of our executive compensation program (base salary, short- and long-term incentives) involve a review of internal and external factors described under “Factors Considered When Determining Total Compensation of Executive Officers” herein.
 
Base Salary.  Base salaries are reviewed annually and paid based on ongoing performance throughout the year and to attract and retain top executive talent. Our approach is to target the base salaries of our named executive officers at the median of comparative practice appropriate for our industry and market for executive talent. Providing median base salary levels allows us to attract high quality talent but still emphasize pay for performance.
 
Short-Term Incentives.  Our performance-based Annual Incentive Bonus Plan (AIB) provides cash incentives to our named executive officers to reward performance against established goals. Each named executive officer has incentive opportunities which generally target the median of comparative practice based on award levels of similarly-situated executives.
 
At the beginning of each year, our Compensation Committee of the Board establishes the financial and operational goals for Alpha’s AIB. In developing the performance criteria (and relative weighting assigned to each goal), our Compensation Committee reviews with the outside compensation consultant and management which measures are the most relevant for each named executive officer position.
 
Objectives.  The AIB is designed to fulfill the following objectives of our executive compensation philosophy:
 
  •  Provide competitive short-term incentives to achieve annual business performance goals;
 
  •  Reward contributions towards goals consistent with our business strategy;
 
  •  Enable us to attract and retain highly-qualified executive officers and other key employees; and
 
  •  Promote teamwork among our executive officers and other key employees.
 
Long-Term Incentives.  Our named executive officers receive annual grants of restricted stock and performance shares under the 2005 Long-Term Incentive Plan. Each named executive officer has incentive opportunities based on market competitive award levels and their individual role within the Company. We provide long-term incentive equity awards recognizing that similar long-term incentives are prevalent at the companies we compete with for business and executive talent.
 
Objectives.  Our long-term incentive compensation program achieves the objectives of our compensation philosophy by:
 
  •  Providing competitive long-term incentives to motivate our executives to make decisions that focus on the long-term and increase stockholder value;
 
  •  Aligning the interests of our named executive officers and other key employees with our stockholders by tying a significant portion of their compensation to stock price appreciation;
 
  •  Increasing management’s ownership stake in Alpha; and
 
  •  Encouraging and rewarding long tenure service.


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Restricted stock and performance shares are granted to our named executives because these equity awards directly tie a significant component of each executive’s compensation directly to the performance of our common stock and the achievement of our long-term strategic goals. If our common stock appreciates, so does stockholder value and the value of our named executive officers’ equity awards. Restricted stock represents 50% of the long-term incentive award value on the grant date and vests in equal installments over three years. Performance shares represent 50% of the long-term incentive award value on the grant date and vest at the end of a three year performance cycle based on achievement of financial and strategic goals.
 
Compensation Committee’s Annual Process for Determining Executive Compensation
 
Our Compensation Committee annually reviews and approves the named executive officers’ base salaries and short- and long-term incentive awards. For the named executive officers, other than the Chief Executive Officer, our Compensation Committee reviews and approves all elements of the executive compensation program taking into consideration recommendations from our Chief Executive Officer, as well as competitive market guidance and feedback provided by other members of senior management, the human resources staff, and the outside compensation consultant. Our Compensation Committee approves, and submits to the independent members of the Board for ratification and approval, all elements of compensation for our Chief Executive Officer, taking into consideration competitive market guidance, feedback provided by our outside compensation consultant, and the Board’s performance assessment of the Chief Executive Officer and recommendations.
 
Role of Executive Officers in Compensation Decisions.  Our Chief Executive Officer and our President consult with the Compensation Committee regarding each element of our executive compensation program. At the Compensation Committee’s request, the Chief Executive Officer and our President provide recommendations to the Compensation Committee related to appropriate financial performance metrics and goals for Alpha and our business units to align compensatory programs with our overall business strategy with assigned weights of performance measures correlating to an executive’s responsibilities. They review with the outside compensation consultant competitive market data for the named executive officers’ base salaries, and short- and long-term incentives. Additionally, the Compensation Committee looks to the Chief Executive Officer, with respect to other executives, for recommendations regarding executive merit increases, compensation packages for executives being hired or promoted, and a performance evaluation of the executives who report to him. Management also coordinates with the Compensation Committee to establish meeting dates, agendas, and prepare meeting materials for each Compensation Committee member.
 
Role of Outside Executive Compensation Consultants.  In the fall of 2005, the services of Deloitte Consulting LLP were retained and, in November 2007, the Compensation Committee entered into a new engagement letter with Deloitte. This outside consultant was engaged to assist our Compensation Committee with its annual review of our executive and director compensation programs as more fully described under “Director Independence — Compensation Committee.”
 
Factors Considered When Determining Total Compensation of Executive Officers
 
As part of its annual review of executive compensation, our Compensation Committee analyzes the competitiveness and appropriateness of each of the key components of compensation — base salary and short- and long-term incentives, both within Alpha and as compared to our peers and other data (described below) — to determine whether each of these components is competitively positioned and is in line with our goals and objectives.


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As more fully described below, the compensation elements are first benchmarked by element as well as in total pay levels of executives in similar positions in order to achieve our objectives of attracting and retaining highly-qualified and talented executives. The Compensation Committee then considers Company, individual and general market factors before making adjustments, if any. The Company and individual factors considered are described under “External Market Conditions and Individual Factors” and “Internal Pay Equity” below. The Compensation Committee also reviews the survey data to verify that the levels of compensation chosen for each component, as well as the total compensation, of each executive position are in line with general market practices.
 
Peer Group.  For purposes of determining the compensation of our named executive officers (other than for Messrs. Crutchfield and Porco for reasons described below), the Compensation Committee starts its annual review of each executive’s compensation by considering each component of their total direct compensation, as well as their total compensation, relative to similarly-situated executives in our peer group. An appropriate peer group of companies is determined to provide the Compensation Committee with a market reference for executive compensation practices and levels and to also provide some data on our performance relative to our peers in areas such as total stockholder return (relative to our peers) and other financial metrics. Our Compensation Committee reviews the peer group annually to ensure the companies used are similar in size and industry and are the companies we compete with for business and executive talent. All of the companies are coal producers and competitors of Alpha, both in terms of business and for executive talent. In 2007, the peer group was composed of the following companies: Peabody Energy Corporation, NACCO Industries, Inc., CONSOL Energy Inc., TECO Energy, Inc., Arch Coal, Inc., Massey Energy Company, Vectren Corporation, Walter Industries, Inc., Cleveland-Cliffs Inc., Foundation Coal Holdings, Inc., Alliance Resource Partners, L.P., International Coal Group, Inc., AMCOL International Corporation, James River Coal Company, and Westmoreland Coal Company. The Compensation Committee approved this peer group after the recommendation of its outside compensation consultant and intends to regularly review the composition of this group and make appropriate changes in the future to reflect any developments in Alpha’s business or capital structure and that of its peers.
 
Using this peer group of companies as well as the survey data (described below), our Compensation Committee assesses the market competitiveness of each element of our compensation program individually as well as the program’s overall competitiveness. The benchmarking study consists of the prevalence, design and value of each compensation element.
 
Data Used For Our President and Vice President.  For Messrs. Crutchfield’s and Porco’s positions, there was not sufficient peer group data to perform a meaningful comparative analysis between their compensation and similarly-situated executives at the peer companies. To perform the annual review of Mr. Crutchfield’s compensation, the Compensation Committee requested that our outside compensation consultants provide them with data from companies similar in size and market cap to Alpha for purposes of benchmarking each element of his compensation and total compensation against executives in a similar position to him at those companies. These companies largely included energy and manufacturing companies. In connection with performing the annual review of Mr. Porco’s compensation, the Compensation Committee, based on the recommendation of its outside consultant, relied on the survey data described below to benchmark each component of his compensation and total compensation against similarly-situated executives in those companies.
 
Survey Data.  The survey data is used by the Compensation Committee as another source by which to review and confirm that each element of our compensation program individually, as well as overall, for each executive position is in line with general market practices. This data contains more than several hundred companies in a variety of industries, including mining and manufacturing. The Compensation Committee also uses this data to review competitive compensation trends in the marketplace in order to


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maintain our ability to attract and retain qualified personnel by offering competitive compensatory programs. The Compensation Committee is presented total compensation data, including base salaries, annual cash incentives, and long-term incentive awards based on benchmark data gathered from widely recognized executive compensation surveys. This survey data represents the market of companies in which Alpha competes for executive talent. The survey data is used to ensure that the executive compensation program is competitive and generally within the range of median competitive practice for each position when Alpha and its business units achieve target goals.
 
External Market Conditions and Individual Factors.  The Compensation Committee also takes into account external market conditions, such as competition for executives for a particular position, and individual factors when establishing the total compensation for each named executive officer. The individual factors influencing the compensation levels determined for each component of the program include the executive’s level of experience, tenure, job performance, contributions to our financial results, scope of responsibilities, and complexity of the position.
 
Internal Pay Equity.  The Compensation Committee annually reviews the relationship (and disparities) between the Chief Executive Officer’s and the other named executive officers’ compensation to monitor and avoid any unjustified widening of compensation differentials. The Compensation Committee reviews the relationship between the Chief Executive Officer’s total compensation, as well as each compensation element, to the average of the other four named executive officers. For 2007, the relationships for base salary, target bonus, grant date long-term incentive value, and total compensation were 2.2, 2.9, 3.7, and 3.1, respectively. The Compensation Committee also reviews the relationship between the Chief Executive Officer’s compensation and the next most highly paid named executive officer. For 2007, the relationships for base salary, target bonus, grant date long-term incentive value, and total compensation were 1.3, 1.4, 1.5, and 1.5, respectively. To date, the Compensation Committee has not needed to make any adjustments in the Chief Executive Officer’s or the other named executives’ compensation to address any material internal pay differences in their respective compensation packages.
 
Tally Sheets.  Tally sheets quantifying the elements of each named executive officer’s compensation for each of the preceding two years are presented to, and reviewed by, the Compensation Committee each year. The tally sheets present dollar amounts for each named executive officer with regards to base salary, annual cash incentives, equity compensation, the dollar value to the executive and the cost to the Company of all perquisites and other personal benefits, and the actual and projected payout obligations under several potential severance and change-in-control scenarios. The equity component analyzed for each named executive officer includes the grant date value of awards granted in 2006 and 2007, inventory and value of all outstanding vested and unvested awards, and the value of shares owned. These tally sheets allow the Compensation Committee to see all of the named executive officers’ compensation elements and any year over year increases or decreases. Our Compensation Committee uses this information in its internal equity consideration and intends to use wealth accumulation analyses in the future to further supplement this information. After a review of the tally sheets, our Compensation Committee determined that no adjustments were warranted to the compensation arrangements of the named executives.


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2007 Executive Compensation Program
 
Determination of 2007 Base Salary.  At December 31, 2007, our named executive officers’ base salaries generally approximated the median base pay levels of peer and, in the case of Messrs. Crutchfield and Porco, comparable executives as shown in the table below.
                     
            Peer Group/Comparable
Officer     Base Salary     Median Base Salary
Quillen
    $ 675,000       $ 695,105  
Stuebe
    $ 319,608       $ 278,000  
Crutchfield
    $ 525,000       $ 444,000  
McMillion
    $ 325,000       $ 292,237  
Porco
    $ 273,000       $ 331,600  
                     
 
In May 2007, our Compensation Committee authorized cost of living increases to the annual base salaries of our named executive officers. Our Compensation Committee authorized our Chief Executive Officer to increase the base salaries of our officers who directly report to him, as he determined in his discretion, provided that the sum of such increases did not exceed four percent (4%) of the base salaries paid to such persons in 2006.
 
In connection with Mr. Crutchfield’s promotion to President in January 2007, our Compensation Committee approved a 27% increase in his base salary. Our Compensation Committee determined that this increase in base salary was warranted because of Mr. Crutchfield’s additional responsibilities in the role of President, his tenure with Alpha, and his experience in the coal industry. Additionally, in connection with Mr. McMillion’s promotion to Vice President in April 2007, our Compensation Committee approved a 44% increase in his base salary. The Compensation Committee increased Mr. McMillion’s base salary in recognition of his increased responsibilities and role within the Company and for his years of experience in the mining industry.
 
 
2007 Annual Cash Incentives.  At the beginning of 2007, the Compensation Committee approved for each named executive officer, a range of potential cash incentives which could be earned under the 2007 AIB based on a percentage of base salary, in effect at the end of the year, as shown in the table below:
 
                                         
      Range of Annual Bonus Opportunities as a % of Base Salary
Officer     Threshold Not Met     Threshold     Target     Maximum
Quillen
      0%         50%         100%         200%  
 
Stuebe
      0%         37.5%         75%         150%  
 
Crutchfield
      0%         45%         90%         180%  
 
McMillion
      0%         37.5%         75%         150%  
 
Porco
      0%         37.5%         75%         150%  
 
 
For the reasons stated above, when Mr. Crutchfield was promoted to President, our Compensation Committee approved a target bonus opportunity of 90% of base salary. Additionally, for the reasons stated above, when Mr. McMillion was promoted to Vice President, our Compensation Committee approved a target bonus opportunity of 75% of base salary (which was the opportunity level associated with that position).


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For 2007, annual cash target incentives remained unchanged from 2006 and were generally set at the median of comparative practice.
                     
      2007 Target Bonus
    Peer/Comparable Group
      Opportunity
    Median Target Bonus
Officer     (as % of Salary)     Opportunity
Quillen
      100%         119%  
Stuebe
      75%         76%  
Crutchfield
      90%         82%  
McMillion
      75%         86%  
Porco
      75%         65%  
                     
 
Financial and Operational Performance Criteria and Goals.  In 2007, for our named executive officers to be eligible to earn annual cash bonuses under the AIB, we had to meet a hurdle of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) which was $243.3 million (net income: $37.8 million; depreciation, depletion and amortization: $152.7 million; interest expense: $42.1 million; interest income: $(2.6 million); and income taxes: $13.3 million). If the EBITDA hurdle was not achieved, the AIB awards would not be earned and no annual bonus paid in 2008. If the EBITDA hurdle was achieved, then additional pre-established financial and operational goals consisting of EBITDA, return on invested capital (ROIC), safety and certain strategic/individual goals (which apply to all named executive officers other than our Chief Executive Officer) were then to be considered. For our Chief Executive Officer, the goals are weighted as follows: ROIC (20%), EBITDA (60%), and safety (20%). For our other named executives, ROIC (10%), EBITDA (50%), safety (20%), and strategic objectives (20%).
 
Rationale for Performance Criteria.  The AIB performance metrics did not change for the 2007 awards. Our Compensation Committee chose EBITDA performance goals as part of the AIB award formula because it views EBITDA to be a fundamental and widely accepted measure of profitability in the natural resource sector. Our Compensation Committee also believes that ROIC is an appropriate performance measure because it ensures that our named executive officers focus on the efficient deployment of capital (e.g., to meet stockholder expectations that we earn a return in excess of capital costs). Our Compensation Committee selected safety as a performance measure because creating a safe work environment is, and has always been, one of our core values. At the end of 2007, our Compensation Committee reviewed Alpha’s performance against each of the corporate metrics and criteria described above.
 
The Alpha financial goals chosen by the Compensation Committee (based upon management’s and the consultant’s recommendations) are intended to align the named executives’ annual incentive compensation with our goals and objectives set forth in Alpha’s business plan for the upcoming year. Our Compensation Committee considers the circumstances and challenges to be faced in the coming year, when establishing the goals.
                               
      Corporate AIB Measures
Performance Goals     ROIC     EBITDA     SAFETY
Threshold
      7.0%       $ 194.6 million(1)         4.10 NFDL(2)  
 
Target
      8.7%       $ 243.3 million(3)         3.42 NFDL(2)  
 
Maximum
      10.4%       $ 292.0 million(4)         1.71 NFDL(2)  
 
(1) Net income: $7.6 million; depreciation, depletion and amortization: $145.0 million; interest expense: $42.1 million; interest income: $(2.6 million); and income taxes: $2.5 million.
 
(2) “NFDL” means non-fatal days lost and is a standard widely used by coal companies to judge their safety records.


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(3) The GAAP reconciliation is set forth under “Financial and Operational Performance Criteria and Goals” herein.
 
(4) Net income: $73.1 million; depreciation, depletion and amortization: $155.0 million; interest expense: $42.1 million; interest income: $(2.6 million); and income taxes: $24.4 million
 
Individual Performance Goals.  With the strategic/individual goals, our Compensation Committee determined that a portion of each 2007 AIB award made to our named executive officers (other than the Chief Executive Officer) should be dependent upon goals unique to the individual named executive position. Each of our named executive officers (other than our Chief Executive Officer) establishes their own strategic goals for the year in consultation with our Chief Executive Officer. Our Chief Executive Officer does not have a portion of his annual incentive based on individual factors because our Compensation Committee believes that the Chief Executive Officer’s performance should be based on Alpha’s overall corporate performance.
 
Once finalized and incorporating our Chief Executive Officer’s comments or modifications, the goals are adopted as part of our named executive officer’s AIB award. At the end of the performance period, each named executive officer submits to our Chief Executive Officer a self-evaluation of his performance relative to such goals. Our Chief Executive Officer reviews each evaluation and makes recommendations to our Compensation Committee regarding each such named executive’s achievement of his strategic/individual goals based on an evaluation of the executive’s contribution and performance against their individual performance goals. Our Compensation Committee reviews our Chief Executive Officer’s recommendations regarding the strategic/individual component of the AIB award and, if it deems appropriate, approves the awards to each such named executive based on the achievement of such individual goals and the Company’s performance with respect to the financial and operational goals described above.
 
2007 AIB Pay-Outs.  Before approving pay-outs of AIB awards, our Compensation Committee reviews the relationship of bonuses paid to our named executives to their target bonus opportunities to ensure this relationship is commensurate with Alpha’s performance against pre-established strategic and financial goals and the individual’s performance. The below table demonstrates the relationship between the 2007 target bonus opportunity for each named executive and the actual bonus received.
                     
      2007 Target Bonus
    Actual Bonus
Officer     Opportunity     Received
Quillen
    $ 675,000       $ 735,000  
Stuebe
    $ 239,706       $ 225,000  
Crutchfield
    $ 472,500       $ 510,000  
McMillion
    $ 243,750       $ 260,000  
Porco
    $ 204,750       $ 250,000  
                     
 
The EBITDA hurdle was met for 2007 thus providing the opportunity for the AIB participants to earn a cash bonus. For 2007, it was determined that ROIC performance was achieved at 88.5% of the target goal, EBITDA performance was achieved at 96.1% of the target goal and maximum safety performance was achieved. The individual performances of our named executive officers’ strategic objectives ranged from 85% to 100%. Awards paid to our named executive officers for fiscal year 2007 performance are shown in column (g) of the Summary Compensation Table.
 
Annual Performance-Based Awards Going Forward.  Section 162(m) of the Code provides that a publicly traded corporation may not deduct compensation in excess of $1 million for amounts paid to each of its chief executive officer or to any of the four highest compensated officers other than the chief


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executive officer (collectively, “covered employees”), unless such excess compensation is “performance-based.” Among other requirements, for compensation to be “performance-based” for purposes of Section 162(m), the performance goals must be pre-established and objective.
 
The regulations under Section 162(m) contain a favorable transition rule applicable to corporations that become publicly traded. Under the transition rule, the $1 million deduction limit imposed by Section 162(m) does not apply to any remuneration paid to a covered employee pursuant to a compensation plan or agreement that existed during the period in which the corporation was not publicly held. Alpha became publicly traded on February 14, 2005 and has been relying on the transition rule with respect to awards made under the AIB since that time. The transition rule will expire not later than the stockholder meeting occurring in 2009.
 
2008 awards under the AIB will be funded at a specific level if the objective performance goal of EBITDA is achieved at 80% of target or better. The Compensation Committee considered our historical annual EBITDA performance and the probability of Alpha accomplishing this EBITDA target based on our business plan. After this evaluation, the Compensation Committee concluded that it was reasonably likely that the Company would perform at this target EBITDA level. Additionally, our Compensation Committee has reserved the right to use its discretion to reduce the bonus amounts awarded to the covered employees, but may not increase them. By funding at a specific bonus level if the performance goal is achieved and then reserving the discretion to reduce, but not increase award amounts, our Compensation Committee is maintaining its ability to accomplish two goals:
 
  •  Potentially reduce the size of the actual award pay-outs based on the same criteria it has historically used to determine award amounts such as ROIC, safety, actual EBITDA performance, and individual performance against position-specific goals; and
 
  •  Start to implement a new AIB program to maximize the tax deductibility of such awards by the Company once the initial public offering transition period has expired under Section 162(m).
 
In furtherance of these objectives, we have submitted for stockholder approval in this proxy statement Proposal 3 to approve Alpha’s 2008 Annual Incentive Bonus Plan so that awards made under this new plan will qualify as “performance-based” compensation under Section 162(m).
 
Determination of 2007 Long-Term Incentive Compensation.  In 2007, our Compensation Committee wished to emphasize the long-term performance/stakeholder value objectives of our compensation philosophy and approved a 50%/50% (restricted stock/performance share) mix for the long-term incentive component of our executive compensation program.
 
The following table sets forth the 2007 target long-term incentive values for each named executive relative to similarly situated executives at the peer companies. At the beginning of 2007, our Compensation Committee approved long-term incentives and determined to place more emphasis upon the long-term (as opposed to the short-term component) of our compensation program. To encourage long-term strategic thinking, our Compensation Committee set target award opportunities at generally around the 75th percentile relative to the peer and, in the case of Messrs. Crutchfield and Porco, comparable, executives and to achieve internal equity. Mr. Crutchfield’s Target LTI Value positions him below our Chief Executive Officer but above the other named executive officers and Mr. McMillion’s Target LTI Value is equivalent to the other named executive officers, excluding our Chief Executive Officer and President. In those instances where targets exceed the relevant peer or comparative group, the difference


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is largely due to the significant job requirements of such position (relative to similarly situated executives in those groups).
 
Each executive’s target long-term incentive value is based on competitive practice expressed as a percentage of base salary (in effect at the time of the award), which is consistent with the practices of our peers and other companies used in the data.
                 
      2007 Target LTI Value
    Peer/Comparative Group 75th
Officer     (as % of Salary)     Percentile Target LTI Value
Quillen
      300%       360%
Stuebe
      150%       132%
Crutchfield
      250%       Insufficient Comparative
Group Data Available(1)
McMillion
      200%       151%
Porco
      200%       147%
                 
(1) The comparative group data used for Mr. Crutchfield only included long-term incentive values for three companies which the Compensation Committee did not view as a sufficient basis by which to establish Mr. Crutchfield’s 2007 Target LTI Value. The value selected was based on Mr. Crutchfield’s position within the Company (relative to other executive officers).
 
The number of shares of restrictive stock subject to each of the 2007 restricted stock awards was determined by dividing 50% of the total long-term incentive value by the closing market price of our common stock on the grant date. Similarly, a target number of performance shares was determined by dividing 50% of the total long-term incentive value by the closing market price of our common stock on the grant date. Our Compensation Committee approved a change from the 2006 mix of restricted stock and performance shares (70/30) to a 2007 mix of 50/50 in order to place more compensation at risk and emphasize achieving operating income, total stockholder return (TSR) and strategic goals, such as coal acquisitions. The restricted stock and performance share components of our long-term incentive compensation program are described below. For information regarding the amount and value of the restricted stock and performance share awards granted to our named executive officers in 2007, see the Grants of Plan-Based Awards Table.
 
Restricted Stock.  The granting of time-based restricted stock achieves the following specific objectives of our compensation philosophy: (i) encourages and rewards long-term service, (ii) participants perceive it as having high value and easily understand it, (iii) aligns the interests of our named executive officers and other key employees with stockholders by tying a portion of their compensation to stock appreciation, and (iv) results in increased management ownership of our common stock.
 
The restricted stock awards granted to our named executive officers vest ratably over a three-year period, which supports our retention objective by encouraging our named executives to remain with Alpha to vest in their restricted stock. Generally, if a recipient’s employment is terminated with us, the recipient forfeits the unvested portion of their restricted stock award. The award agreements also protect our business interests by providing that if any recipients of awards breach the confidentiality obligations set forth in the agreements, such persons will forfeit the unvested portion of their award. The agreements further provide that upon a change in control (such as a sale of assets, merger, or acquisition of Alpha), the unvested portion of the awards will vest. Our Compensation Committee incorporated this provision in the award agreement to accomplish the following:
 
  •  Ensure that the actions and recommendations of senior management with respect to such transaction are in Alpha’s and our stockholders’ best interests; and


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  •  Reduce the distraction regarding the impact of such a transaction on the personal situation of a named executive officer or other key employee.
 
Performance Shares.  Performance shares align the interests of our executives with stockholders by tying vesting of the shares to achievement of established three-year financial goals and tying the value of the shares, when earned, to stock price appreciation. A new three-year performance period will start at the beginning of each year (subject to our Compensation Committee’s approval) and potential payouts at the end of the performance period will range from 0% to 150% of the target award depending on the achievement of pre-established goals. The structure of the performance share program achieves the following:
 
  •  Ensures a focus on sustained performance and improvement;
 
  •  Awards overlap to provide retention motivation on the part of our named executive officers and other key employees; and
 
  •  New performance measures can be used in subsequent performance cycles, as appropriate.
 
Rationale for Performance Criteria.  For the 2007 awards, several performance measures were considered, including revenue, total stockholder return, operating income, operating margin and ROIC as well as whether to base performance goals on our budget for the performance period or relative to peer group performance. Management recommended, and our Compensation Committee agreed, that the 2007 performance shares should be earned based on factors that reflect Alpha’s business strategy and to focus more closely on our performance relative to the performance of those peer companies that are our closest business competitors and are publicly traded.
 
Seventy percent of the performance shares will vest based on achievement of financial goals (relative total stockholder return and operating income) and the other thirty percent of the award will vest based on achievement of strategic goals (which include successful coal acquisitions and successful non-coal, downstream acquisitions). In choosing these performance measures and establishing absolute performance goals based on our internal business plan, our Compensation Committee and management believed: (i) the attainment of those performance goals would be largely under management’s control, (ii) the goals reflected the influence of the various participants, (iii) the goals supported achievement of the business plan, and (iv) the goals correlated with stockholder value.
                                           
Percentage of
                       
Performance
          Threshold
    Target
    Maximum
Share Award     Metrics     Performance     Performance     Performance
70%
    Financial     Operating Income
Relative TSR
      50%         100%         150%  
 
30%
    Strategic     Successful coal
acquisitions, successful
non-coal downstream
acquisitions and other
      50%         100%         150%  
 
 
The operating income performance goals for the 2007 performance share awards are: $99,956,000 (threshold), $199,913,000 (target) and $299,869,500 (maximum).


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Alpha’s Total Stockholder Return     Percentage of Target Shares Earned
> 90th Percentile (Maximum)
      150%  
75the Percentile
      125%  
50th Percentile (median) (Target)
      100%  
25th Percentile (Threshold)
      50%  
< 25th Percentile
      0%  
           
 
Percentage of shares awarded to the named executive officers will be based on Alpha’s TSR performance relative to the comparator group consisting of James River Coal Company, Massey Energy Company, International Coal Group, Inc., National Coal Corp., CONSOL Energy Inc., and Foundation Coal Holdings, Inc. These companies were selected as the comparator group for the TSR component of the performance shares because, like us, they all have operations in the Central Appalachian region and compete most directly with us for employee talent.
 
Except as otherwise provided in the award agreements, participants who terminate employment during the performance period will forfeit any unpaid awards. The performance share award agreements also include certain provisions which protect our business interests. The award agreements provide that if any recipients of the award breach their confidentiality obligations set forth in the agreement, such person will forfeit the award (whether earned or unearned). The performance share award agreements also provide that if, during the performance period, there is a change in control of Alpha, the award recipient will be entitled to a payout of the award at a target award level contemporaneous with the consummation of a change in control transaction. Our Compensation Committee approved of this change in control provision in the performance share award agreement for the same business reasons stated above with respect to the restricted stock agreements.
 
Long-Term Incentive Compensation Awards Going Forward.  Section 162(m) is also potentially applicable to the deductibility of awards granted under the 2005 Long-Term Incentive Plan. As described above, the regulations under Section 162(m) contain a favorable transition rule applicable to the Company, including awards under the 2005 Long-Term Incentive Plan. The Compensation Committee intends to preserve the tax deductibility of Alpha’s performance share awards under Section 162(m) after the initial public offering transition period expires. To that end, our Compensation Committee in January 2008 adopted changes to the performance share program applicable to awards granted to covered employees (which include our named executives). Under the 2008 performance share program, awards will be funded at a specific level upon achievement of an objective performance goal of a three-year cumulative EBITDA hurdle of 50% of target or better (which is based on our five-year business plan). The Compensation Committee considered our historical annual EBITDA performance and the probability of Alpha accomplishing this EBITDA target based on our five-year business plan. After this evaluation, our Compensation Committee concluded that it was reasonably likely that the Company would perform at this target EBITDA level. Before adopting EBITDA as the performance goal applicable to the 2008 performance share awards, the Compensation Committee consulted with management and the outside compensation consultant to review different performance metrics, including relative TSR, which would further our goals and objectives under Alpha’s business plan. The Compensation Committee and management engaged in a review of the accounting consequences of each considered performance metric and determined that the use of EBITDA was not only an important indicator of the Company’s performance but also minimized the possibility of having a negative accounting impact, from an expense standpoint, on our financial statements.

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Additionally, the Compensation Committee has reserved the right to use its discretion to reduce the share amounts, but may not increase them. By funding at a specific bonus level if the performance goal is achieved and then reserving the discretion to reduce, but not increase award amounts, our Compensation Committee is maintaining its ability to accomplish two goals:
 
  •  Potentially reduce the size of the actual award pay-outs based on the same criteria it has historically used to determine award amounts such as relative total stockholder return, operating income and strategic goals such as successful acquisitions; and
 
  •  Start to implement a new long-term incentive program to maximize the tax deductibility of such awards by the Company once the initial public offering transition period has expired under Section 162(m).
 
As stated above, in furtherance of these objectives, we have submitted for stockholder approval in this proxy statement Proposal 2 to amend and restate the 2005 Long-Term Incentive Plan which modifications to the plan include adding a list of objective performance criteria so that awards made under the new plan, as amended and restated, will qualify as “performance-based” compensation under Section 162(m).
 
Timing of Equity Grants.  In 2006, the Compensation Committee revisited the timing of its equity grant practices to ensure integrity in the timing of granting awards and to ensure that long-term incentive goals are established no later than 90 days after the beginning of the award cycle. Alpha has not timed, and does not intend to time, its release of material non-public information for the purpose of affecting the value of executive compensation.
 
In 2007 and 2008, our Compensation Committee approved the grant of long-term incentives to the named executive officers in January. The Compensation Committee and management believe that employees wish to know their annual compensation close to the commencement of a new year and such compensation should be established in connection with a review of their year-end performance. In order to meet employee expectations and to establish annual compensation closer in time to performance evaluations for the prior year’s performance, the Compensation Committee has approved making annual grants of long-term incentives, as well as determining all elements of compensation, to our named executive officers and other employees soon after the commencement of a new calendar year.
 
Executive Stock Ownership Guidelines
 
To further achieve the objective of more closely aligning the interests of our named executives and other key employees with those of our stockholders, our Board approved executive stock ownership guidelines. Our officers are encouraged to accumulate, over a five year period, and maintain equity ownership in Alpha having a value of no less than three times annual base salary, in the case of our Chief Executive Officer, and two times annual base salary, in the case of the other named executive officers. Under the guidelines, our named executive officers and other key employees are recommended not to sell any equity in Alpha until their applicable guideline is achieved (with certain limited exceptions). Equity awards granted as compensation to our named executive officers and key employees are included in determining whether their applicable guidelines are achieved.
 
Retention Compensation Plan
 
In November 2005, the Compensation Committee, based on the recommendation of our Chief Executive Officer, adopted the Retention Compensation Plan. At that time, we were having difficulties hiring top talent and the Compensation Committee and Chief Executive Officer were concerned about retaining our named executive officers and other key employees. In light of these concerns, our


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Compensation Committee approved the Retention Compensation Plan which is more fully described in “Executive Compensation — Additional Information Regarding Our Summary Compensation Table and Grants of Plan-Based Awards Table.”
 
Deferred Compensation Plan
 
Our Compensation Committee adopted the Deferred Compensation Plan to permit a select group of management employees to defer receipt of income which would otherwise be payable to them. This plan was approved by the Compensation Committee as another means by which to retain and attract individuals of exceptional ability by providing them with these benefits. For a more detailed description of this plan, see “Executive Compensation — Additional Information Regarding Our Nonqualified Deferred Compensation Table.”
 
Perquisites and Other Benefits
 
We provide our named executive officers and other key employees with few perquisites and, of those provided, we believe they are reasonable, competitive and consistent with our compensation program. We believe that our perquisites and other programs help us retain our named executive officers and other key employees. Our principal programs are a variable group life insurance program, supplemental disability insurance program and a vehicle allowance (with an associated tax gross-up). For information regarding these programs, see the Summary Compensation Table and “Executive Compensation — Additional Information Regarding Our Summary Compensation Table and the Grants of Plan-Based Awards Table.”
 
Employment or Change in Control Arrangements
 
In addition to the above-described programs, we maintain certain agreements and plans to accomplish our goal of retaining executive talent by providing them with certain benefits in the event their employment is terminated without cause or in connection with a change in control, among other circumstances.
 
Our Compensation Committee consulted the outside compensation consultants in connection with determining the market practices of our peers and other companies generally with respect to employment and other severance agreements with their respective executive officers. The outside compensation consultants prepared and provided the Compensation Committee with peer group data regarding severance arrangements with senior officers at those peers. The consultants also presented survey data to our Compensation Committee which related to executive severance policies and practices of 223 companies. They advised the Compensation Committee that the proposed agreement terms were consistent with market practices based on the peer and survey data. The survey data showed that 75% of the organizations participating in the survey had an executive severance policy and that, among those companies, such agreements were linked to the function of an executive’s position: with 70% for chief executive officers and 50% for executive and senior vice presidents. The survey data showed that most organizations calculate severance benefits based on pay, with 22% defining pay as base salary and bonus (with this practice most prevalent with organizations with annual sales in excess of $1 billion). Our Compensation Committee also reviewed survey data relating specifically to severance arrangements not related to a change in control, which survey data consisted of 214 companies. Of these companies, 41% had formal severance programs with the severance benefits most often determined by a fixed multiple of pay. The larger companies (annual revenues between $1 billion and $5 billion) included bonus in the definition of pay for purposes of computing benefits. Additionally, our Compensation Committee sought the advice from the consultants regarding the appropriate severance multiples described above and other associated severance benefits under each termination scenario.


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Based on a review of the above data and discussions with management, our Compensation Committee and the independent members of our Board (in the case of our Chief Executive Officer) originally approved the following employment and severance arrangements with our named executive officers and other key employees in March 2006:
 
Employment Agreements with our Chief Executive Officer and President.  For retention purposes, the Compensation Committee determined that it was in our best interests to enter into the Third Amended and Restated Employment Agreement with our Chief Executive Officer (the “CEO Employment Agreement”) and the First Amended and Restated Employment Agreement with our Executive Vice President, who was promoted to the position of President in January 2007 (together with the CEO Employment Agreement, the “Employment Agreements”). Our Compensation Committee reviewed a tally sheet prepared by the consultant which summarized the costs to the Company under each of the employment termination scenarios set forth in the proposed CEO Employment Agreement. Additionally, the Compensation Committee annually requests that the outside consultant prepare tally sheets which show the potential costs to Alpha of each of the Employment Agreements (under each of the employment termination and change in control scenarios) so that the Compensation Committee may consider these costs in connection with reviewing annual compensation for each of our Chief Executive Officer and President.
 
Below is a brief summary of the Employment Agreements. For a more detailed description of these agreements (including definitions of certain terms used therein), see “Executive Compensation — Additional Information Regarding Our Summary Compensation Table and the Grants of Plan-Based Awards Table” and “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
The Compensation Committee authorized the Employment Agreements as an inducement for our Chief Executive Officer and President to stay with the Company. Additionally, the agreements provide for payments and benefits to be made to our Chief Executive Officer and President under certain termination circumstances in order to maintain their focus on their respective roles at the Company. The Employment Agreements provide, among other matters, that if such officer’s employment is terminated by us without cause or by such officer for “good reason” other than in connection with a “change in control,” each officer would be entitled to receive, among other payments and benefits after his execution of a general release, two times his (i) base salary and (ii) target bonus.
 
Key Employee Separation Plan.  Our Compensation Committee approved the Key Employee Separation Plan (the “Separation Plan”), under which certain of our named executive officers (other than our Chief Executive Officer and President) and other key employees participate. As described above, the Compensation Committee requested that the outside compensation consultants perform a market analysis of the proposed Separation Plan to determine if it was competitive with the practices of our peers and generally with other companies based on survey data. Our consultants provided the Compensation Committee with peer group and survey data which showed that the proposed Separation Plan was in line with similar arrangements developed with key executives of those companies. Similarly, as with the Employment Agreements, the Compensation Committee annually requests that the outside consultant prepare tally sheets which show the potential costs to Alpha if employment termination and change in control scenarios provided for in the Separation Plan occur with respect to each of our executives so that the Compensation Committee may consider these costs in connection with reviewing annual compensation for each of those executive participants in the plan. For a more detailed description of the Separation Plan (including definitions of certain terms used therein), see “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”


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Our Compensation Committee’s rationale for approving the adoption of the Separation Plan was the same for the Employment Agreements. Our Compensation Committee wished to induce key employees to remain with Alpha and to maintain their focus on their respective job positions in the event of a potential “change in control” transaction. The Separation Plan provides that, if a participant executes a general release, non-disparagement and non-competition agreement and the participant’s employment is terminated by us without cause or by participant for good reason other than in connection with a change in control, the participant will be entitled to receive, among other payments and benefits, his or her base salary and target bonus multiplied by the applicable benefit factor (in the case of each of our named executive officers who participate in the Separation Plan, such factor is one and one-half).
 
Rationale for Change in Control Provisions in Employment Agreements and Separation Plan.  Under the Employment Agreements and Separation Plan, the executives are entitled to certain payments and benefits in the event their respective employment is terminated in connection with a change in control as provided therein. As discussed earlier, change in control or potential change in control transactions may result in a named executive officer not acting in our best interests by distracting them with the impact of such a transaction upon their personal situation. With the change in control provisions, the Employment Agreements and Separation Plan provide our executives with security in the event of a possible termination without cause or demotion and further align their interests with stockholders by accelerating the vesting of any unvested equity (such that they participate in the transaction on the same footing as the other stockholders). Under the Employment Agreements and Separation Plan, if their employment is terminated in connection with a change in control by us without cause or by the officer for good reason, each executive is entitled, among other benefits and payments, after the execution of a general release of claims, to a certain multiple of base salary and target bonus (in the case of our Chief Executive Officer, three, in the case of our President, two and one-half, and in the case of the other named executives, two) as well as a minimum lump sum cash payment equal to each of their pro-rata target bonus for the year in which the change in control occurs. As described above, the terms of these payments and, in particular, the multiples selected in the agreements, were reviewed by our Compensation Committee with the outside compensation consultants. The consultants advised our Compensation Committee, based on their review of the peer and survey data, that these provisions were in line with market practices.
 
Change in Control Tax Gross-Up.  If a change in control of the Company causes compensation, including performance-based compensation, or awards, including, but not limited to, the AIB awards, restricted stock or performance shares, to be paid or result in accelerating the vesting, a disqualified individual could, in some cases, be considered to have received “parachute payments” within the meaning of Section 280G and Section 4999 of the Code. Pursuant to Section 4999, a disqualified individual can be subject to a 20% excise tax on excess parachute payments. Similarly, under Section 280G, the Company is denied a deduction for excess parachute payments. We have entered into the Employment Agreements whereby, if it is determined that any payment by us to or for our Chief Executive Officer’s or President’s benefit would constitute an “excess parachute payment,” we will pay to him a gross-up payment, subject to certain limitations described below, such that the net amount retained by him after deduction of any excise tax imposed under Section 4999, and any tax imposed upon the gross-up payment, will be equal to such payments. If, however, the net after tax benefit to an executive of receiving the gross-up payment does not exceed a safe harbor amount (e.g., the maximum dollar amount that may be paid to him without imposition of an excise tax) by more than 10%, then the Company will not pay the executive a gross-up payment and such amounts will be reduced, such that they will not constitute an excess parachute payment. In addition, we also maintain the Separation Plan under which payments may be subject to Section 280G. Under the Separation Plan, any payments by us to a participant that constitute excess parachute payments will be reduced as necessary to cause such amounts not to be subject to the limitation on deduction in Section 280G, unless the net after tax benefit to the executive would be greater if such limitation was not imposed. Our Compensation Committee provided for these


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provisions in each of the Employment Agreements and Separation Plan after discussions with outside compensation consultants and a review of market practices of our peers.
 
Section 409A Tax Considerations
 
Section 409A of the Code generally provides that amounts deferred under nonqualified deferred compensation arrangements will be subject to accelerated income recognition, interest and substantial penalties unless the arrangement satisfies certain design and operational requirements. Final regulations for Section 409A were issued in April 2007, and the transition period for amending plans to comply with Section 409A ends on December 31, 2008. We have amended the majority of our compensatory arrangements and are in the process of finalizing amendments to any remaining arrangements that implicate Section 409A. The changes are intended to ensure that compensation payable under the arrangements is not subject to taxation under Section 409A, and principally include: clarifying the timing of compensatory payments and modifying health, dental, vision and other benefit coverage provisions in order to comply with Section 409A (or certain exceptions thereto). To the extent applicable, the payment and/or reimbursement of certain benefits will be subject to a six-month delay in the event the executive is a “specified employee” (within the meaning of Section 409A) at the time of separation from service. The amendments were not intended to materially increase the benefits payable under our plans and arrangements.
 
Compensation Committee Report
 
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with Alpha’s management and, based upon such review and discussion, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Annual Report on Form 10-K for the fiscal year ended December 31, 2007.
 
The Compensation Committee’s charter is available on our website at www.alphanr.com.
 
 
Respectfully submitted,
 
The Compensation Committee
 
 
E. Linn Draper, Chairman
John W. Fox, Jr.
Ted G. Wood
 
April 2, 2008


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Summary Compensation Table (2007 and 2006)
 
The following Summary Compensation Table sets forth information concerning the compensation paid by us in 2006 and 2007 to Michael J. Quillen, our principal executive officer, David C. Stuebe, our principal financial officer, and Kevin S. Crutchfield, our President, and, in 2007, for our other two most highly compensated executive officers for the last completed fiscal year.
 
                                                                                           
                                          Change in
           
                                          Pension
           
                                    Non-
    Value and
           
                                    Equity
    Nonqualified
           
                                    Incentive
    Deferred
           
                                    Plan
    Compen-
    All Other
     
Name and
                      Stock
    Option
    Compen-
    Sation
    Compen-
     
Principal
          Salary
    Bonus(1)
    Awards(2)
    Awards(3)
    sation(4)
    Earnings
    Sation
    Total
Position
    Year
    ($)
    ($)
    ($)
    ($)
    ($)
    ($)
    ($)
    ($)
(a)     (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)
Michael J. Quillen,       2007         663,462         202,500         1,360,093                 735,000                 103,872 (5)       3,064,927  
Chairman of                                                                                          
the Board and Chief       2006         637,943         130,000         5,209,125                 522,799                 90,161 (6)       6,590,028  
Executive Officer                                                                                          
                                                                                           
David C. Stuebe,       2007         314,204         95,882         332,232         50,160         225,000                 40,002 (5)       1,057,480  
Vice President,                                                                                          
Treasurer and Chief       2006         298,568         61,760         1,524,660         50,160         205,411                 36,732 (6)       2,177,291  
Financial Officer                                                                                          
                                                                                           
Kevin S.       2007         515,154         157,500         784,771         91,423         510,000                 78,789 (5)       2,137,637  
Crutchfield,                                                                                          
President       2006         383,862         79,400         2,526,851         91,423         293,856                 63,743 (6)       3,439,135  
                                                                                           
Randy L. McMillion,       2007         300,265         97,500         482,192         99,240         260,000                 48,202 (5)       1,287,399  
Vice President                                                                                          
                                                                                           
Joachim V. Porco,       2007         263,500         81,900         293,866         119,055         250,000                 47,505 (5)       1,055,826  
Vice President                                                                                          
                                                                                           
 
(1) These amounts were earned under the Retention Compensation Plan dated November 10, 2005, as amended. These amounts are bonuses earned in 2006 and 2007, but not paid until January 2007 and January 2008, respectively.
 
(2) These amounts relate to restricted stock that was granted to Mr. Quillen on March 22, 2006, January 16, 2007 and February 26, 2007, to Mr. McMillion on August 18, 2005, and to Messrs. Stuebe, Crutchfield, McMillion and Porco on March 22, 2006 and January 16, 2007.
 
The 2006 rows for Messrs. Quillen, Crutchfield and Stuebe also include stock purchased by them in 2003 in our predecessor and exchanged for shares of our common stock in February 2005. These purchases are required to be recorded as compensation for accounting purposes in accordance with FAS 123R even though they were paid for by the named executives. The values of these shares recorded as compensation expense are as follows: Mr. Quillen $4,290,799, Mr. Stuebe $1,287,288 and Mr. Crutchfield $2,145,376.
 
The values set forth in this column are based on the amounts recognized for financial statement reporting purposes in 2006 and 2007, respectively, and are computed in accordance with FAS 123R (disregarding any estimates of forfeitures related to service-based vesting conditions). See Note 18(e) of the consolidated financial statements in Alpha’s Form 10-K regarding assumptions underlying the value of stock awards.


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On January 16, 2007, February 26, 2007 (in the case of Mr. Quillen), and March 22, 2006, we also granted performance share unit awards to our named executive officers and have determined that the attainment of the performance goals associated with those awards granted March 22, 2006 is improbable. As a consequence, under FAS 123R, once we make the determination that attainment of such goals would be improbable, all prior expense is reversed in our financial statements and thus no dollar amount is recognized for financial statement reporting purposes for fiscal years 2006 or 2007 for the performance shares granted March 22, 2006. With respect to the 2007 performance share awards, the values set forth in the column are based on amounts recognized for financial statement reporting purposes in 2007 and are computed in accordance with FAS 123R (disregarding any estimates of forfeitures related to service-based vesting conditions). See Note 18(e) of the consolidated financial statements in Alpha’s Form 10-K regarding assumptions underlying the value of the 2007 performance share awards.
 
(3) These amounts relate to non-qualified stock option awards that were granted on November 10, 2004, May 12, 2005, and February 14, 2005. The values set forth in this column are based on the amounts recognized for financial statement reporting purposes in 2006 and 2007, respectively, and are computed in accordance with FAS 123R (disregarding any estimates of forfeitures related to service-based vesting conditions). See Note 18(e) of the consolidated financial statements in Alpha’s Form 10-K regarding assumptions underlying the value of stock option awards.
 
(4) These amounts relate to awards paid under the AIB.
 
(5) For Mr. Quillen, the items included in this column for 2007 are: 401(k) contributions made by us in the aggregate amount of $11,250, a vehicle allowance (and associated tax gross-up), club associated benefit, our payment of variable group life insurance in the amount of $10,550, supplemental disability insurance premiums and our contributions to his supplemental retirement plan (“SRP”) account under the Deferred Compensation Plan of $55,059.
 
For Mr. Stuebe, the items included in this column for 2007 are: 401(k) contributions made by us in the aggregate amount of $11,250, our payment of variable group life insurance premiums, our payment of supplemental disability insurance premiums and our contributions to his SRP account under the Deferred Compensation Plan of $18,497.
 
For Mr. Crutchfield, the items included in this column for 2007 are: 401(k) contributions made by us in the aggregate amount of $11,250, a vehicle allowance (and associated tax gross-up), club associated benefit, our payment of variable group life insurance and supplemental disability insurance premiums and our contributions to his SRP account under the Deferred Compensation Plan of $33,288.
 
For Mr. McMillion, the items included in this column for 2007 are: 401(k) contributions made by us in the aggregate amount of $11,250, a vehicle allowance (and associated tax gross-up), our payment of variable group life insurance and supplemental disability insurance premiums and our contributions to his SRP account under the Deferred Compensation Plan of $11,620.
 
For Mr. Porco, the items included in this column for 2007 are: 401(k) contributions made by us in the aggregate amount of $11,250, a vehicle allowance (and associated tax gross-up), our payment of variable group life insurance premiums, our payment of supplemental disability insurance premiums and our contributions to his SRP account under the Deferred Compensation Plan of $13,144.
 
For a description of the SRP accounts under the Deferred Compensation Plan and the Deferred Compensation Plan generally, see “Executive Compensation — Additional Information Regarding Our Nonqualified Deferred Compensation Table.”
 
(6) For the details relating to the amounts set forth in the 2006 rows of the “All Other Compensation” column of the table for Messrs. Quillen, Stuebe and Crutchfield, see the Summary Compensation Table in Alpha’s proxy statement filed on April 6, 2007. These amounts also include an adjustment for Messrs. Quillen and Crutchfield to account for fees paid for club associated benefits.


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Grants of Plan-Based Awards (2007)
 
The following table sets forth each grant of cash- or equity-based awards made to our named executive officers in 2007 under plans established by Alpha.
 
                                                                                                               
            Estimated Possible Payouts Under
                             
            Non-Equity Incentive
    Estimated Future Payouts Under
                       
            Plan Awards(1)     Equity Incentive Plan Awards(2)                        
                                                All Other
    All Other
           
                                                Stock
    Option
           
                                                Awards:
    Awards:
          Grant Date
                                                Number of
    Number of
    Exercise or
    Fair Value
                                                Shares of
    Securities
    Base Price
    of Stock
                                                Stock or
    Underlying
    of Option
    and Option
      Grant
    Threshold
    Target
    Maximum
    Threshold
    Target
    Maximum
    Units(3)
    Options
    Awards
    Awards(4)
Name
    Date
    ($)
    ($)
    ($)
    (#)
    (#)
    (#)
    (#)
    (#)
    ($/Sh)
    ($)
(a)     (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)     (k)     (l)
Michael J. Quillen               337,500         675,000         1,350,000                                                          
        1/16/2007                                 60,000         75,000         112,500                                 921,713  
        2/26/2007                                 2,441         3,051         4,577                                 37,495  
        1/16/2007                                                         75,000                         943,500  
        2/26/2007                                                         3,051                         45,521  
                                                                                                               
David C. Stuebe               119,853         159,804         479,412                                                          
        1/16/2007                                 14,842         18,552         27,828                                 227,995  
        1/16/2007                                                         18,552                         233,384  
                                                                                                               
Kevin C. Crutchfield               196,875         262,500         787,500                                                          
        1/16/2007                                 42,041         52,551         78,827                                 645,826  
        1/16/2007                                                         52,551                         661,092  
                                                                                                               
Randy L. McMillion               121,875         162,500         487,500                                                          
        1/16/2007                                 20,801         26,001         39,002                                 319,539  
        1/16/2007                                                         26,001                         327,093  
                                                                                                               
Joachim V. Porco               102,375         136,500         409,500                                                          
        1/16/2007                                 16,642         20,802         31,203                                 255,646  
        1/16/2007                                                         20,802                         261,689  
                                                                                                               
 
(1) The amounts shown under the columns relate to bonuses to be paid in 2008, if earned in 2007, under the AIB. For the actual amount of the 2007 AIB awards paid to our named executive officers, see the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
 
(2) The number of performance shares earned under the 2005 Long-Term Incentive Plan will be based upon a three-year performance cycle as more fully described in “Executive Compensation — Additional Information Regarding Our Summary Compensation Table and the Grants of Plan-Based Awards Table.”
 
(3) The amount set forth herein represents the number of shares of restricted stock granted to each of our named executive officers in 2007 under the 2005 Long-Term Incentive Plan.
 
(4) The full grant date fair value calculations are computed in accordance with FAS 123R for the restricted stock and performance share awards granted in 2007 under the 2005 Long-Term Incentive Plan (disregarding any estimates of forfeitures related to service-based vesting conditions). The calculation relating to the performance share awards was based on the target performance share number. See Note 18(e) of the consolidated financial statements in Alpha’s 10-K regarding assumptions underlying the value of these awards.
 
Additional Information Regarding Our Summary Compensation Table and Grants of Plan-Based Awards Table
 
Employment Contracts
 
Third Amended and Restated Employment Agreement with Michael J. Quillen.  Our indirect wholly-owned subsidiary, Alpha Natural Resources Services, LLC (“Alpha Services”), entered into a Third Amended and Restated Employment Agreement with Mr. Quillen, as amended on February 26,


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2007, to serve as our Chief Executive Officer, and to be nominated for re-election to our Board, which agreement became effective as of January 5, 2007. The current term of Mr. Quillen’s Employment Agreement ends on December 31, 2008, and the agreement term automatically renews for successive annual terms unless terminated by Mr. Quillen or us in advance of the end of the initial term or any renewal term.
 
Pursuant to the Employment Agreement, Mr. Quillen is entitled to the following: (i) a minimum annual base salary of $650,000, (ii) an annual bonus targeted at 100% of his then current base salary, with a maximum target bonus opportunity of 200% of his then current base salary, based upon achievement of certain performance and other goals, (iii) participation in our Retention Compensation Plan on the same basis as his direct reports, (iv) participation in our long-term incentive plans, including equity incentive plans, and provided further that each time our Compensation Committee or Board awards any equity securities to any senior executive officers reporting directly to Mr. Quillen, other than inducement awards to potential new employees, Mr. Quillen will receive an equity award of the same type of security granted to his direct reports targeted at 150% of the highest number of such security granted to a direct report on a particular grant and under the same terms and conditions of such award, (v) four weeks of paid vacation, or such greater amount of vacation as may be determined in accordance with our vacation policy as in effect from time to time, (vi) reimbursement of business expenses, and (vii) participation in our benefit plans on the same basis as other employees.
 
Mr. Quillen is also entitled to certain payments upon the occurrence of a change in control or certain employment termination events, including his resignation for “good reason” and termination without “employer cause.” These events and the related payouts to which Mr. Quillen may be entitled are discussed in detail under “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
Employment Agreement with Kevin S. Crutchfield.  Alpha Services entered into an Employment Agreement with Mr. Crutchfield, as amended and restated on February 26, 2007, to serve as our President, which agreement became effective as of January 1, 2006. The current term of Mr. Crutchfield’s Employment Agreement ends on December 31, 2008, and the agreement term automatically renews for successive annual terms unless terminated by Mr. Crutchfield or us in advance of the end of the initial term or any renewal term.
 
Pursuant to the Employment Agreement, Mr. Crutchfield is entitled to the following: (i) a minimum annual base salary of $525,000, (ii) an annual bonus with a threshold pay-out opportunity of 45% of his then current base salary, a target pay-out opportunity of 90% of his then current base salary, and a maximum bonus opportunity of 180% of his then current base salary, based upon achievement of certain performance and other goals, (iii) participation in our Retention Compensation Plan, (iv) participation in our long-term incentive plans, including its equity incentive plans, (v) four weeks of paid vacation, or such greater amount of vacation as may be determined in accordance with our vacation policy as in effect from time to time, (vi) reimbursement of business expenses, and (vii) participation in our benefit plans on the same basis as other employees.
 
Mr. Crutchfield is also entitled to certain payments upon the occurrence of a change in control or certain employment termination events, including his resignation for “good reason” and termination without “employer cause.” These events and the related payouts to which Mr. Crutchfield may be entitled to are discussed under “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”


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Retention Compensation Plan
 
We maintain the Retention Compensation Plan which provides each named executive officer with the following: a payment equal to 20% of his 2006 annual base salary in January 2007, a payment equal to 30% of his 2007 annual base salary in January 2008 and a payment equal to 50% of his 2008 annual base salary in January 2009, provided that such officer is employed by Alpha on the relevant payment date.
 
Stock Options, Performance Shares and Restricted Stock
 
We have adopted the 2005 Long-Term Incentive Plan, and have assumed the Amended and Restated 2004 Long-Term Incentive Plan (the “2004 Plan”), which provide for a variety of awards, including non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Code), stock appreciation rights, restricted stock awards, share unit awards, dividend equivalents, performance-based awards and other types of awards deemed by the Compensation Committee to be consistent with the purposes of the plans. These plans provide that our Compensation Committee will determine, in its discretion, any awards and specify in each agreement evidencing an award the effect on the award, if any, of the termination of employment of the award recipient or of a “change in control” of Alpha. For more information regarding the 2005 Long-Term Incentive Plan, see “Proposal 2 — Amendment and Restatement of 2005 Long-Term Incentive Plan.” Additionally, the effects of an employment termination or change in control on any of these awards are discussed in detail in “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
During 2004 and 2005, we issued non-qualified stock options under both the 2004 Plan and the 2005 Long-Term Incentive Plan. Each outstanding stock option issued to our named executive officers under the plans has been issued pursuant to an option agreement that provides for vesting over a five year period, with 20% vesting on each of the first, second, third, fourth and fifth anniversaries of the grant date while the executive continues to be employed by us.
 
During 2005, 2006 and 2007, we granted restricted stock awards and performance share awards under the 2005 Long-Term Incentive Plan. Our named executive officers were granted performance share awards entitling them to receive shares of our common stock following the end of a three year performance period that commenced on January 1, 2006, with respect to the 2006 awards, and January 1, 2007, with respect to the 2007 awards. Payout of the awards, if earned, of shares of stock following the end of the performance period will be based on an amount equal to a percentage of the executive’s annual base salary multiplied by a percentage ranging from 0% to 200%, in the case of the 2006 awards, and 0% to 150%, in the case of the 2007 awards, determined by the extent to which we achieve targeted growth in operating income and ROIC during the performance period, with respect to the 2006 awards, and relative stockholder return, operating income and strategic goals, in the case of the 2007 awards. Each of the performance share awards granted to these executives has been awarded pursuant to a performance share award agreement, which provides that the executive will not be entitled to receive any shares or other compensation with respect to the performance share awards if the executive ceases to be employed by us prior to the date shares of stock are issued to the executive following the end of the performance period, except under certain circumstances which are described under “Executive Compensation - Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
In 2005, 2006 and 2007, our named executive officers were granted restricted stock awards under our 2005 Long-Term Incentive Plan. These awards were made pursuant to restricted stock agreements that provide for vesting over a three year period, with one-third of the shares vesting on each of the first, second and third anniversaries of the applicable grant date. The agreements provide that all unvested


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shares are automatically forfeited on the date the executive ceases to be employed by us, except upon certain circumstances which are described under “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
IPO Restricted Stock Awards.  In connection with our internal restructuring and initial public offering in late 2004, certain of our named executive officers were awarded shares of restricted stock, subject to the terms of a Stockholders’ Agreement, which has subsequently been terminated, among Alpha, certain institutional former holders of our common stock and our management stockholders. The restrictions on these shares lapsed in two installments on December 31, 2005 and December 31, 2006.
 
Annual Incentive Bonus Plan
 
As described under “Executive Compensation — Compensation Discussion and Analysis,” each of our named executive officers, as well as other executive officers and key employees, are eligible to participate in the AIB. Upon our achievement of certain pre-established financial performance goals, each of the participants will be eligible to receive a cash bonus based upon their annual base salary. Achievement of the financial performance goals is measured following the completion of the year and payment of any earned bonuses is generally made within the first quarter of the year following the measurement period. In order to be eligible to receive a cash bonus under the AIB, the participant must generally be employed through the end of the year. However, in the event that a participant in the AIB terminates his or her employment during a given year as a result of retirement, death or permanent disability, our Compensation Committee, upon advice of management and in consultation with the full Board, if advisable, may approve the payment of a pro-rata portion of his or her target bonus. For more information regarding our proposed 2008 Annual Incentive Bonus Plan, see “Proposal 3 — 2008 Annual Incentive Bonus Plan.”
 
Perquisites and Other Benefits
 
We offer certain limited perquisites and other benefits to our named executive officers and certain other employees as described below:
 
Variable Group Life Insurance.  We provide our named executive officers and certain other employees with an enhanced life insurance benefit in which their life insurance coverage is three times annual base salary up to a $2 million maximum.
 
Supplemental Disability Insurance (“SDIP”).  We also pay the premiums for income protection insurance coverage for our named executive officers and selected key employees, which complements our current optional group long-term disability coverage by providing additional protection against the financial impacts of a disability. Under our optional long-term disability program, we and the employee equally split the premium cost and, to receive the SDIP benefit, an eligible employee does not have to be enrolled in the optional group long-term disability coverage. The SDIP provides a monthly benefit in the event of a disability, which, in concert with the optional long-term disability program, enables our named executive officers and other key employees to protect up to 60% of their total income, including base salary and eligible bonus compensation.
 
Vehicle Allowance.  Certain of our named executive officers and other employees receive a vehicle allowance benefit of $1,200 per month (with an associated tax gross-up).


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Outstanding Equity Awards at Fiscal Year-End 2007
 
The following table sets forth all unexercised options and stock awards, which have not vested, that were granted to our named executive officers and outstanding as of December 31, 2007.
 
                                                                                           
Option Awards     Stock Awards
                                                      Equity
                                                Equity
    Incentive
                                                Incentive
    Plan
                                                Plan
    Awards:
                  Equity
                            Awards:
    Market or
                  Incentive
                            Number of
    Payout
                  Plan
                Number
    Market
    Unearned
    Value of
                  Awards:
                of
    Value of
    Shares,
    Unearned
      Number of
    Number of
    Number
                Shares or
    Shares or
    Units or
    Shares,
      Securities
    Securities
    of Securities
                Units of
    Units of
    Other
    Units or
      Underlying
    Underlying
    Underlying
                Stock
    Stock
    Rights
    Other
      Unexercised
    Unexercised
    Unexercised
    Option
          That
    That
    That
    Rights That
      Options
    Options
    Unearned
    Exercise
    Option
    Have Not
    Have Not
    Have Not
    Have Not
      (#)
    (#)
    Options
    Price
    Expiration
    Vested(3)
    Vested(4)
    Vested(5)
    Vested(4)
Name
    Exercisable(1)
    Unexercisable(2)
    (#)
    ($)
    Date
    (#)
    ($)
    (#)
    ($)
(a)     (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)
Michael J. Quillen                                               128,561         4,175,661                  
                                                                104,027         3,378,797  
                                                                                           
David S. Stuebe       16,000         24,000                 19.00         2/13/2015                                  
                                                31,608         1,026,628                  
                                                                25,266         820,640  
                                                                                           
Kevin S. Crutchfield       29,162         43,743                 19.00         2/13/2015                                  
                                                73,533         2,388,352                  
                                                                63,342         2,057,348  
                                                                                           
Randy L. McMillion       24,000         36,000                 23.50         5/11/2015                                  
                                                38,743         1,258,373                  
                                                                30,497         990,543  
                                                                                           
Joachim V. Porco               23,567                 12.73         11/10/2014                                  
                6,000                 19.00         2/13/2015                                  
                                                27,382         889,367                  
                                                                24,188         785,626  
                                                                                           
 
 
(1) Below is the vesting information for options that are exercisable as of December 31, 2007:
 
                         
    Vesting
    Number of
    Exercisable Portion of
 
Name
  Date     Shares     Awards  
 
David C. Stuebe
    2/14/2006       8,000          
      2/14/2007       8,000       16,000  
Kevin S. Crutchfield
    2/14/2006       14,581          
      2/14/2007       14,581       29,162  
Randy L. McMillion
    5/12/2006       12,000          
      5/12/2007       12,000       24,000  


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(2) Below is the vesting information for options that are unexercisable as of December 31, 2007:
 
                         
                Unexercisable
 
    Vesting
    Number of
    Portion of
 
Name
  Date     Shares     Awards  
 
David C. Stuebe
    2/14/2008       8,000          
      2/14/2009       8,000          
      2/14/2010       8,000       24,000  
Kevin S. Crutchfield
    2/14/2008       14,581          
      2/14/2009       14,581          
      2/14/2010       14,581       43,743  
Randy L. McMillion
    5/12/2008       12,000          
      5/12/2009       12,000          
      5/12/2010       12,000       36,000  
Joachim V. Porco
    11/10/2008       11,782          
      11/10/2009       11,785       23,567  
      2/14/2008       2,000          
      2/14/2009       2,000          
      2/14/2010       2,000       6,000  
 
(3) Below is the vesting information for shares of restricted stock that are outstanding as of December 31, 2007:
 
                         
    Vesting
    Number of
       
Name
  Date     Shares     Awards  
 
Michael J. Quillen
    1/3/2008       25,255          
      1/3/2009       25,255       50,510  
      1/7/2008       25,000          
      1/7/2009       25,000          
      1/7/2010       25,000       75,000  
      1/7/2008       1,017          
      1/7/2009       1,017          
      1/7/2010       1,017       3,051  
David C. Stuebe
    1/3/2008       6,528          
      1/3/2009       6,528       13,056  
      1/7/2008       6,184          
      1/7/2009       6,184          
      1/7/2010       6,184       18,552  
Kevin S. Crutchfield
    1/3/2008       10,491          
      1/3/2009       10,491       20,982  
      1/7/2008       17,517          
      1/7/2009       17,517          
      1/7/2010       17,517       52,551  
Randy L. McMillion
    5/12/2008       4,000       4,000  
      1/3/2008       4,371          
      1/3/2009       4,371       8,742  
      1/7/2008       8,667          
      1/7/2009       8,667          
      1/7/2010       8,667       26,001  
Joachim V. Porco
    1/3/2008       3,290          
      1/3/2009       3,290       6,580  
      1/7/2008       6,934          
      1/7/2009       6,934          
      1/7/2010       6,934       20,802  
 
(4) This value was calculated based on a market price of $32.48 per share, the closing market price per share of Alpha’s common stock on December 31, 2007. In the case of column (j), the payout value reported is based on achieving performance goals at the threshold level for 2006 grants and at the target level for 2007 grants.
 
(5) This column shows the number of unvested performance shares as of December 31, 2007. The scheduled vesting date for each of the performance share awards granted in 2006 is in the first quarter of 2009, and, in the case of the 2007 performance share awards, in the first quarter of 2010, assuming, in both cases, the achievement of pre-established performance objectives. The performance share amounts presented for the 2006 performance share awards are based on achieving performance goals at threshold levels (80%). The performance share amounts presented for the 2007 performance share awards are based on achieving


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performance goals at target levels (100%). The table below sets forth the number of performance shares granted in 2006 and 2007 respectively at the levels described in the preceding sentences.
 
                 
Name
  2006   2007
 
Michael J. Quillen
    25,976       78,051  
David C. Stuebe
    6,714       18,552  
Kevin S. Crutchfield
    10,791       52,551  
Randy L. McMillion
    4,496       26,001  
Joachim V. Porco
    3,386       20,802  
 
Option Exercises and Stock Vested (2007)
 
The following table sets forth information concerning each exercise of stock options and the vesting of restricted stock awards during 2007.
 
                                         
      Option Awards     Stock Awards
      Number of
          Number of
     
      Shares
          Shares
    Value
      Acquired on
    Value Realized on
    Acquired on
    Realized on
      Exercise
    Exercise(1)
    Vesting
    Vesting(2)
Name
    (#)
    ($)
    (#)
    ($)
(a)     (b)     (c)     (d)     (e)
Michael J. Quillen
                      25,255         344,478  
                                         
David C. Stuebe
                      6,528         89,042  
                                         
Kevin S. Crutchfield
                      10,491         143,097  
                                         
Randy L. McMillion
                      8,371         128,260  
                                         
Joachim V. Porco
      39,346         467,228         3,290         44,876  
                                         
(1) The value realized upon exercise of an option is based on the difference between the market price per share of the underlying stock at exercise and the exercise price per share of the options.
 
(2) The restricted stock vested on January 3, 2007 for Messrs. Quillen, Stuebe, Crutchfield and Porco. Mr. McMillion’s restricted stock vested on January 3, 2007 and May 12, 2007. The value realized upon vesting of the restricted stock is based upon the closing market price of our common stock on the date of vesting, which was $13.64 per share on January 3, 2007 and $17.16 per share on May 11, 2007 (May 12, 2007 was not a trading day).
 
Nonqualified Deferred Compensation (2007)
 
The following table sets forth information concerning each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.
 
                                                   
                              Aggregate
      Executive
    Registrant
    Aggregate
          Balance
      Contributions in
    Contributions in
    Earnings
    Aggregate
    at Last
      Last Fiscal
    Last Fiscal
    in Last Fiscal
    Withdrawals/
    Fiscal Year
      Year
    Year(1)
    Year(2)
    Distributions(3)
    End(4)
Name
    ($)
    ($)
    ($)
    ($)
    ($)
(a)     (b)     (c)     (d)     (e)     (f)
Michael J. Quillen
              55,059         7,808                 207,536  
                                                   
David C. Stuebe
              18,497         2,708                 69,657  
                                                   
Kevin S. Crutchfield
              33,288         5,161                 135,301  
                                                   
Randy L. McMillion
              11,620         749                 24,722  
                                                   
Joachim V. Porco
              13,144         1,268                 36,012  
                                                   
(1) The SRP accounts under the Deferred Compensation Plan were established to assist the named executive officers, among others, in saving towards retirement in the event that such person is limited to the amount of his 401(k) contribution due to Internal Revenue Service regulations. Our contributions in 2007 to each named


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executive officer’s SRP account are also included in the 2007 rows of the “All Other Compensation” column of the Summary Compensation Table.
 
(2) Earnings under the SRP accounts are calculated using the Moody’s AAA corporate bond rate which is selected by us and may not be changed without the approval of our Compensation Committee. This percentage is applied to the amount currently in the SRP account for each individual named executive officer. Since these earnings are not “above market” or preferential, the 2007 earnings are not reported in the Summary Compensation Table.
 
(3) There have been no withdrawals or distributions in 2007.
 
(4) This column for Messrs. Quillen, Stuebe and Crutchfield includes our 2006 SRP contributions to their respective accounts, which are also reported in the 2006 rows of the “All Other Compensation” column of the Summary Compensation Table.
 
Additional Information Regarding Our Nonqualified Deferred Compensation Plan Table
 
Deferred Compensation Plan
 
We currently maintain the Alpha Natural Resources, Inc. and Subsidiaries Deferred Compensation Plan. The purpose of this plan is to assist us in retaining and attracting key executives and select employees by providing them with an opportunity to defer all or a portion of their income. Under the plan, an eligible employee may defer all or a portion of any bonus or incentive compensation he or she would have otherwise received during the year. This deferred compensation is 100% vested upon deferral and may be held in either a retirement account or in-service account for payout at a later date. The plan also includes a SRP account feature that provides benefits that would otherwise be denied participants by reason of certain limitations in the Code. Pursuant to this feature of the plan, we may make an annual contribution to the SRP accounts of participants that is equal to (i) 3% of his or her total annual compensation for the prior year in excess of the compensation limits established by the Internal Revenue Service relating to tax-qualified pension or profit sharing plans, plus (ii) 50% of the bonus or incentive compensation the participant deferred in the prior year (not to exceed 2% of his or her annual compensation for the prior year in excess of the compensation limits for the year). SRP contributions made by us (and interest thereon) to a participant’s account under the plan only become a vested benefit of the participant after completion of five years of service with us.
 
Potential Payments Upon Termination or Change in Control
 
The following tables set forth information concerning the change in control and severance payments to be made to each of our named executive officers in connection with a change in control or termination of employment, presuming a termination or change in control date of December 31, 2007 and a valuation of our common stock based on its closing market price on December 31, 2007 of $32.48 per share. Additional descriptions of the terms of our agreements, plans and arrangements with our named executive officers are set forth in “Executive Compensation — Compensation Discussion and Analysis” and “Executive Compensation — Additional Information Regarding Our Summary Compensation Table and Grants of Plan-Based Awards Table.”
 
The payments and benefits detailed in the tables below are in addition to any payments and benefits under our plans or arrangements which are offered or provided generally to all salaried employees on a non-discriminatory basis and any accumulated vested benefits for each named executive officer including, without limitation, under our Deferred Compensation Plan (which are shown in the Nonqualified Deferred Compensation Table) and any stock options vested as of December 31, 2007 (which are shown in the Outstanding Equity Awards at Fiscal Year-End Table).
 
A description of the plans, arrangements and agreements covered by the following tables and which provide for payments or benefits in connection with termination of employment or a change in control are


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described under “Executive Compensation — Additional Information Regarding the Tables Relating to Potential Payments Upon Employment Termination or Change in Control.”
 
The explanatory footnotes relating to the tables below are set forth after the table for Mr. Porco.
 
Michael J. Quillen
 
                                                         
                            Termination in
             
                      Termination
    Connection
             
                      without
    with a
             
    Voluntary
    Normal
    Termination
    Cause or for
    Change in
             
    Termination     Retirement     for Cause     Good Reason     Control(1)     Death     Disability  
                      (In dollars)                    
 
Compensation
                                                       
Cash Severance
                      2,700,000       4,050,000              
Pro-Rata Bonus
          675,000 (3)           675,000       675,000       675,000 (3)     675,000 (3)
CIC Bonus Payment
                            675,000              
Long Term Incentives
                                                       
Stock Options —
                                                       
Unvested & Accelerated
                                         
Restricted Stock —
                                                       
Unvested & Accelerated
                      3,355,379       4,175,661       4,175,661       4,175,661  
Performance Shares
          1,548,116 (4)           3,238,180(4 )     3,589,722       3,238,180(4 )     3,238,180(4 )
Benefits and Perquisites
                                                       
Health & Dental Insurance(5)
                      17,600       27,600              
Supplemental Disability
                                        384,070(6 )
Retiree Medical(7)
          95,525                                
Life Insurance
                      26,800(8 )     41,600(8 )     2,000,000(9 )      
Outplacement
                            15,000              
280G Tax Gross Up(10)
                            4,547,299              
Total
          2,318,641             10,012,959       17,796,882       10,088,841       8,472,911  


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David C. Stuebe
 
                                                         
                            Termination in
             
                      Termination
    Connection
             
                      without
    with a
             
    Voluntary
    Normal
    Termination
    Cause or for
    Change in
             
    Termination     Retirement     for Cause     Good Reason     Control(1)     Death     Disability  
                      (In dollars)                    
 
Compensation
                                                       
Cash Severance
                      838,971       1,118,628              
Pro-Rata Bonus
          239,706(3 )           239,706       239,706       239,706(3 )     239,706(3 )
CIC Bonus Payment
                            239,706              
Long Term Incentives
                                                       
Stock Options —
                                                       
Unvested & Accelerated
                            323,520              
Restricted Stock —
                                                       
Unvested & Accelerated
                      814,598       1,026,628       1,026,628       1,026,628  
Performance Shares
          382,593(4 )           784,305(4 )     875,174       382,593(4 )     382,593(4 )
Benefits and Perquisites
                                                       
Health & Dental Insurance(5)
                                         
Supplemental Disability
                                        27,600(6 )
Retiree Medical(7)
                                         
Life Insurance
                                  959,000(9 )      
Outplacement
                      15,000       15,000              
280G Tax Gross Up(10)
                                         
Total
          622,299             2,692,580       3,838,362       2,607,927       1,676,527  
 
Kevin S. Crutchfield
 
                                                         
                            Termination in
             
                      Termination
    Connection
             
                      without
    with a
             
    Voluntary
    Normal
    Termination
    Cause or for
    Change in
             
    Termination     Retirement     for Cause     Good Reason     Control(1)     Death     Disability  
                      (In dollars)                    
 
Compensation
                                                       
Cash Severance
    1,496,250(2 )                 1,995,000       2,493,750              
Pro-Rata Bonus
          472,500(3 )           472,500       472,500       472,500(3 )     472,500(3 )
CIC Bonus Payment
                            472,500              
Long Term Incentives
                                                       
Stock Options —
                                                       
Unvested & Accelerated
                            589,656              
Restricted Stock —
                                                       
Unvested & Accelerated
                      2,047,604       2,388,352       2,388,352       2,388,352  
Performance Shares
          861,034(4 )           1,998,938(4 )     2,144,979       1,998,938(4 )     1,998,938(4 )
Benefits and Perquisites
                                                       
Health & Dental Insurance(5)
                      19,400       19,400              
Supplemental Disability
                                        1,275,680(6 )
Retiree Medical(7)
                                         
Life Insurance
                      7,700(8 )     7,700(8 )     1,575,000(9 )      
Outplacement
                            15,000              
280G Tax Gross Up(10)
                            2,789,942              
Total
    1,496,250       1,333,534             6,541,142       11,393,779       6,434,790       6,135,470  


52


Table of Contents

Randy L. McMillion
 
                                                         
                            Termination in
             
                      Termination
    Connection
             
                      without
    with a
             
    Voluntary
    Normal
    Termination
    Cause or for
    Change in
             
    Termination     Retirement     for Cause     Good Reason     Control(1)     Death     Disability  
                      (In dollars)                    
 
Compensation
                                                       
Cash Severance
                      853,125       1,137,500              
Pro-Rata Bonus
          243,750(3 )           243,750       243,750       243,750(3 )     243,750(3 )
CIC Bonus Payment
                            243,750              
Long Term Incentives
                                                       
Stock Options —
                                                       
Unvested & Accelerated
                            323,280              
Restricted Stock —
                                                       
Unvested & Accelerated
                      986,483       1,258,373       1,258,373       1,258,373  
Performance Shares
          403,196(4 )           966,204(4 )     1,027,050       403,196(4 )     403,196(4 )
Benefits and Perquisites
                                                       
Health & Dental Insurance(5)
                      19,400       19,400              
Supplemental Disability
                                        982,550(6 )
Retiree Medical(7)
                                         
Life Insurance
                      6,400(8 )     6,400(8 )     975,000(9 )      
Outplacement
                      15,000       15,000              
280G Tax Gross Up(10)
                                         
Total
          646,946             3,090,362       4,274,503       2,880,319       2,887,869  
 
Joachim V. Porco
 
                                                         
                            Termination in
             
                      Termination
    Connection
             
                      without
    with a
             
    Voluntary
    Normal
    Termination
    Cause or for
    Change in
             
    Termination     Retirement     for Cause     Good Reason     Control(1)     Death     Disability  
                      (In dollars)                    
 
Compensation
                                                       
Cash Severance
                      716,625       955,500              
Pro-Rata Bonus
          204,750(3 )           204,750       204,750       204,750(3 )     204,750(3 )
CIC Bonus Payment
                            204,750              
Long Term Incentives
                                                       
Stock Options —
                                                       
Unvested & Accelerated
                            546,269              
Restricted Stock —
                                                       
Unvested & Accelerated
            &nbs