DEF 14A 1 d870265ddef14a.htm DEF 14A 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

 

  

 Filed by a Party other than the Registrant

 

 

 

Check the appropriate box:

 

 

Preliminary Proxy Statement

  CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to ss.240.14a-12

CONSOL ENERGY 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):

 

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
   

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  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.
   

 

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Table of Contents

LOGO


Table of Contents

 

ANNUAL MEETING OF STOCKHOLDERS — MAY 8, 2020

 

 

 

LOGO

1000 CONSOL Energy Drive, Suite 100

Canonsburg, Pennsylvania 15317

Telephone (724) 416-8300

 

 

Dear Fellow Stockholder:

 

On behalf of the entire Board of Directors of CONSOL Energy Inc. (“CEIX”), we invite you to attend CEIX’s third Annual Meeting of Stockholders. The Annual Meeting will be held on May 8, 2020, at 8:00 a.m. Eastern Time, at the Hyatt Regency Pittsburgh International Airport, Earhart Room (CD), 1111 Airport Boulevard, Pittsburgh, Pennsylvania 15231.

Although we intend to hold our Annual Meeting in person, CEIX continues to monitor evolving conditions surrounding the coronavirus (“COVID-19”) outbreak. We are preparing for the possibility that the Annual Meeting may need to be held in a different location or by means of remote communication, which includes the possibility of a virtual meeting. If we determine such action is warranted, we will announce the decision via a press release on our website, www.consolenergy.com, as soon as practicable and through the filing of additional proxy materials with the Securities and Exchange Commission. As always, we encourage you to vote your shares in advance of the Annual Meeting.

You will be asked to vote on the following items for the Annual Meeting: (i) the election of our Class III directors, (ii) ratification of the appointment of our independent registered public accounting firm, (iii) advisory approval of our 2019 executive compensation program, (iv) approval of an amended and restated CEIX Omnibus Performance Incentive Plan which will increase the number of shares available under such plan by 2,350,000 million and make certain other best practices changes, and (v) amendments to our certificate of incorporation to eliminate supermajority vote requirements to be effective once our Board is fully declassified at our 2022 Annual Meeting. Detailed information about the director nominees, including their specific experience and qualifications, begins on page 12 of the proxy statement. Information about our independent registered public accounting firm begins on page 15 of the proxy statement, information about the CEIX 2020 Omnibus Performance Incentive Plan begins on page 19 of the proxy statement and information about the amendments to our Amended and Restated Certificate of Incorporation begins on page 28 of the proxy statement. Our Compensation Discussion and Analysis, which explains our 2019 compensation decisions, begins on page 32 of the proxy statement. We encourage you to read the proxy statement carefully for more information.

During 2019, we continued to focus on fostering our core values of safety, compliance, and continuous improvement, while positioning ourselves to effectively navigate volatile commodity markets and taking definitive steps toward growth and diversification. On the safety front, the Pennsylvania Mining Complex (PAMC) reduced its total recordable incident rate by 44.7% in 2019 versus 2018, and it has succeeded in maintaining an MSHA reportable incident rate that is 40% lower than the industry average during 2015-2019, even as it grew production by nearly 20% during that period. In the area of compliance, PAMC achieved an MSHA significant and substantial citation rate that was 59% lower than the industry average in 2019, and we logged our 6th consecutive year with an environmental compliance record exceeding 99.9%. Our CONSOL Marine Terminal (CMT) continued its perfect safety and compliance record and celebrated five consecutive years without an employee safety exception in June. We also made great strides toward becoming a U.S. coal industry leader in ESG, as

we published our second annual Corporate Sustainability Report in February, established the CONSOL Cares Foundation to support and strengthen the communities in which we operate, and became a Bettercoal supplier to affirm our commitment to continuous improvement in our sustainability performance.

Operationally, in spite of weakening commodity markets during much of 2019, we delivered our second-highest production year on record at the PAMC, producing and selling 27.3 million tons of coal to end-use customers on five continents, and generated terminal record revenue of $67.4 million at CMT. Overall, CONSOL generated $93.6 million of net income, approximately $406 million of adjusted EBITDA* and made net payments toward debt of nearly $184 million in 2019. Moreover, we completed several important initiatives that we believe will help to sustain and grow our business into the future. Examples include: (a) amending our revolving credit facilities and term loans to boost liquidity by $100 million, reduce interest rates, and extend maturities to at least 2023, (b) taking advantage of improving sulfur content at the PAMC to secure a term deal with one of our major domestic customers, boosting our contracted position to 95% for 2020 and 43% for 2021 (based on the midpoint of our coal sales volume guidance range), (c) beginning construction of our Itmann Mine project, which provides a compelling organic growth and diversification opportunity and is expected to produce approximately 900,000 tons of high-quality low-vol metallurgical coal once fully developed, and (d) initiating measured investments in innovative and alternative end-uses for coal, which we believe have the potential to diversify our revenue streams, expand our markets, and create value uplift for our products. Going forward in 2020, we will remain focused on safely and compliantly producing our high-quality coal at the lowest possible cost, while remaining nimble and flexible to stay in sync with dynamic market conditions, and we will continue to place the utmost priority on strengthening our balance sheet and returning capital to our shareholders in the most attractive form.

We are making our proxy materials for the Annual Meeting available to you via the Internet. We hope that this offers you convenience while allowing us to reduce the number of copies that we print.

Your vote is important to us. We hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting as promptly as possible through the Internet, by telephone or by completing and mailing a proxy card (following the process as further described in the proxy statement). Detailed instructions on “How to Vote” begin on page 8. If you plan to attend the Annual Meeting in person, please bring a valid government-issued photo identification. If your shares are held in the name of a bank, broker or other nominee, please also bring with you a letter (and a legal proxy if you wish to vote your shares) from your bank, broker or nominee confirming your ownership as of the record date.

Thank you for your investment in CEIX, and we hope you will be able to join us at this year’s Annual Meeting.

 

 

    

       Sincerely,

 

  

 

LOGO

  

 

William P. Powell

Chair of the Board

 

LOGO

 

 

         LOGO

  

 

James A. Brock

President & CEO

 

LOGO

 

*

See reconciliation of adjusted EBITDA (non-GAAP) to net income (GAAP) in Annex A to this proxy statement.


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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

 

 

LOGO

 

 

    DATE:

 

 

  

 

 

 

May 8, 2020

 

 

    

 

    TIME:

 

   

 

 

8:00 a.m. Eastern Time

 

 

 

    PLACE:

 

   

 

Hyatt Regency Pittsburgh International Airport*

Earhart Room (CD)

1111 Airport Boulevard

Pittsburgh, Pennsylvania 15231

 

 

    AGENDA:

   

 

 

1.

 

 

 

 

Elect two Class III directors for a one-year term;

 
   

2.

 

Ratify the appointment of Ernst & Young LLP as CEIX’s independent registered public accounting firm for the fiscal year ending December 31, 2020;

 

 
   

3.

 

Approve, on an advisory basis, the compensation paid to our named executive officers in 2019, as reported in this Proxy Statement;

 

 
   

4.

 

Approve the CEIX 2020 Omnibus Performance Incentive Plan;

 

 
   

5.

 

Approve amendments to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to eliminate the supermajority vote requirements for the removal of directors after our board is declassified; and

 

 
   

6.

 

Transact such other business as may properly come before the meeting and at any adjournments or postponements of the meeting.

 

 

    RECORD DATE:

   

 

 

By resolution of the Board of Directors, we have fixed the close of business on March 11, 2020 as the record date for determining the stockholders of CEIX entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof.

 

 

 

INFORMATION ABOUT THE MEETING: We are delivering our proxy materials to stockholders via the Internet. On March 27, 2020, we mailed a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to holders of record as of the record date, and posted our proxy materials on the website referenced in the Internet Notice. The Internet Notice explains how to access the proxy materials and our 2019 Annual Report, free of charge, through the website described in the Internet Notice. The Internet Notice and website also provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by e-mail for this meeting and on an ongoing basis. You may vote in person or through any of the acceptable means described in the Proxy Statement. Instructions on how to vote begin on page 8.

 

    

March 27, 2020

 

LOGO

Martha A. Wiegand

General Counsel and Secretary

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

of Stockholders to be Held on May 8, 2020:

The Proxy Statement, 2019 Annual Report, Notice of Annual Meeting of Stockholders and related materials are available free of charge at www.edocumentview.com/CEIX or may be obtained by contacting the Investor Relations department at the address and phone number on page 8 of the Proxy Statement.

 

 

*Special Notice on COVID-19: Although we intend to hold our Annual Meeting in person, CEIX continues to monitor evolving conditions surrounding the COVID-19 outbreak. We are preparing for the possibility that the Annual Meeting may need to be held in a different location or by means of remote communication, which includes the possibility of a virtual meeting. If we determine such action is warranted, we will announce the decision via a press release on our website, www.consolenergy.com, as soon as practicable and through the filing of additional proxy materials with the Securities and Exchange Commission. As always, we encourage you to vote your shares in advance of the Annual Meeting.

 


Table of Contents

 

TABLE OF CONTENTS

 

 

 

Proxy Summary      1  
Information About the Annual Meeting      6  
Proposal No. 1—Election of Class III Directors      11  

Biographies of Class III Director Nominees

  

 

12

 

Biographies of Continuing Class II Directors

  

 

13

 

Biographies of Continuing Class I Directors

  

 

14

 

Proposal No. 2—Ratification of Appointment of Independent Registered Public Accounting Firm      15  
Audit Committee and Audit Fees      16  

Audit Committee Report

  

 

16

 

Independent Registered Public Accounting Firm

  

 

17

 

Proposal No. 3—Advisory Approval of Executive Compensation      18  
Proposal No. 4—Approval of the CEIX 2020 Omnibus Performance Incentive Plan      19  
Proposal No. 5—Approval of Amendments to our Amended and Restated Certificate of Incorporation to Eliminate Supermajority Vote Requirements after our Board is Declassified      28  
Executive Officers      30  
Executive Compensation Information      32  

Compensation Discussion and Analysis

  

 

32

 

Compensation Committee Report

  

 

45

 

Summary Compensation Table

  

 

46

 

Grants of Plan-Based Awards—2019

  

 

47

 

Understanding Our Summary Compensation and Grants of Plan-Based Awards Tables

     48  

Outstanding Equity Awards at Fiscal Year-End for CEIX—2019

  

 

49

 

Option Exercises and Stock Vested Table—2019

  

 

50

 

Pension Benefits Table—2019

  

 

51

 

Understanding Our Pension Benefits Table

  

 

51

 

Potential Payments Upon Termination or Change in Control Tables

     53  

Understanding Our Change in Control and Employment Termination Tables and Information

     56  

Human Capital Management

  

 

61

 

Pay Ratio Disclosure

  

 

61

 

Board of Directors and Compensation Information      62  

Board of Directors and its Committees

  

 

62

 

Director Compensation Table—2019

  

 

69

 

Understanding Our Director Compensation Table

  

 

70

 

Beneficial Ownership of Securities      71  

Delinquent Section 16(a) Reports

  

 

73

 

Related Person Transaction Policy and Procedures and Related Person Transactions      74  
Additional Matters      77  
Appendix A—Reconciliation of Non-GAAP Measures      A-1  
Appendix B—2020 Omnibus Performance Incentive Plan (as amended and restated)      B-1  
Appendix C—Certificate of Amendment to Amended and Restated Certificate of Incorporation      C-1  
 

 

  LOGO  – 2020 Proxy Statement


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PROXY SUMMARY

 

 

 

This Proxy Summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting. On March 27, 2020, we mailed the Internet Notice to holders of record as of the record date, and posted our proxy materials on the website referenced in the Internet Notice.

2020 ANNUAL MEETING OF STOCKHOLDERS

 

DATE AND TIME:

May 8, 2020

8:00 a.m. Eastern Time

 

 

    

 

 

PLACE:

Hyatt Regency

Pittsburgh International Airport

Earhart Room (CD)

1111 Airport Boulevard

Pittsburgh, Pennsylvania 15231

* see Special Notice on COVID-19

 

 

 

    

 

RECORD DATE:

March 11, 2020

PROPOSALS REQUIRING YOUR VOTE

Stockholders are being asked to vote on the following proposals at the Annual Meeting. Your vote is very important to us. Please cast your vote immediately on all of the proposals to ensure that your shares are represented.

 

Item

 

  

Proposal

 

   Board
Recommendation
  

Page

 

 

1

  

 

Election of Class III Directors

  

 

FOR EACH
NOMINEE

   11

 

  

 

The election of two Class III director nominees, each to be elected for a one-year term ending in 2021.

 

2

  

 

Ratification of Appointment of Ernst & Young LLP

  

 

FOR

   15

 

  

 

The Audit Committee appointed Ernst & Young LLP as CEIX’s independent registered public accounting firm for fiscal year 2020. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s appointment of the independent registered public accounting firm.

 

3

  

 

Advisory Approval of 2019 Named Executive Officers’ Compensation

 

Stockholders are being asked to approve, on an advisory basis, the compensation paid to CEIX’s named executive officers in 2019. CEIX’s executive compensation programs are designed to create a direct linkage between stockholder interests and management with incentives specifically tailored to the achievement of financial, operational and stock performance goals.

  

 

FOR

   18

 

 

4

  

 

Approval of the CEIX 2020 Omnibus Performance Incentive Plan

 

Stockholders are being asked to approve an amendment and restatement of CEIX’s Omnibus Performance Incentive Plan. As amended and restated, the CEIX 2020 Omnibus Performance Incentive Plan will increase the number of authorized shares under the plan and make certain other changes to reflect best practices and current applicable law.

  

 

FOR

   19

 

 

5

  

 

Approval of Amendments to our Certificate of Incorporation to Eliminate Supermajority Vote Requirements After our Board is Declassified

 

Stockholders are being asked to approve amendments to CEIX’s Certificate of Incorporation, which amend Article VI, Section 6.2(c) and Article XI. Specifically, stockholders are being asked to approve the following changes to our Certificate of Incorporation:

 

  amend Article VI, Section 6.2(c) to permit the removal of our directors with the vote of the holders of a majority of our outstanding shares of capital stock at any point on or after the date of our Annual Meeting in 2022; and

 

  amend Article XI to permit amendments to Section 6.2 of Article VI with the vote of such number of shares of our capital stock as are required by Delaware law at any point on or after the date of our Annual Meeting in 2022.

  

 

FOR

  

 

28


 

  LOGO  – 2020 Proxy Statement       1


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   PROXY SUMMARY

 

 

CURRENT BOARD OF DIRECTORS

The following table provides summary information about our current Board of Directors as of March 11, 2020. Both of our Class III directors, whose terms expire at the Annual Meeting, are nominees for election at the Annual Meeting, each for a one-year term ending in 2021.

 

Name

Age

Director

Since

Occupation

 

Class/

 

Term

    Expiring    

    Independent    

Committee

    Memberships    

 

 

William P. Powell†    

 

 

 

 

 

64

 

 

 

 

 

 

 

2017

 

 

 

 

    Managing Partner of 535 Partners LLC

 

 

Class III

2020

 

 

Yes

 

 

  AC

  CC

  HSE

 

Sophie Bergeron

 

 

 

42

 

 

 

 

2019

 

 

    Former General Manager, Éléonore Mine of Newmont

    Corporation

 

Class I

2021

 

Yes

 

  NCG

  HSE††

 

James A. Brock

 

 

 

63

 

 

 

 

2017

 

 

    President and Chief Executive Officer of CEIX

 

Class I

2021

 

No

 

  HSE

 

John T. Mills

 

 

 

72

 

 

 

 

2017

 

 

    Former Chief Financial Officer of Marathon Oil

    Corporation

 

Class III

2020

 

Yes

 

  AC††

  CC

  HSE

 

Joseph P. Platt

 

 

 

72

 

 

 

 

2017

 

 

    General Partner of Thorn Partners LP

 

Class II

2022

 

Yes

 

  CC††

  NCG

  HSE

 

Edwin S. Roberson

 

 

 

74

 

 

 

 

2017

 

 

    Former Chief Executive Officer of Christ Community

    Health Services

 

Class II

2022

 

Yes

 

  AC

  NCG††

  HSE

 

AC    Audit Committee
CC    Compensation Committee
HSE    Health, Safety and Environmental Committee
NCG    Nominating and Corporate Governance Committee
   Chair of the Board
††    Committee Chair
 

 

BUSINESS/STRATEGIC 2019 HIGHLIGHTS

 

   

The Right Team. We have an experienced and focused senior executive team and Board of Directors that can navigate and capitalize on future opportunities in the mining and energy space.

 

   

Strong Operational Execution.

 

   

Remained committed to achieving best-in-class safety and compliance results.

 

   

Improved our total recordable incident rate at the PAMC by 44.7% and our total number of exceptions by 41.4% in 2019 compared to 2018, and achieved an MSHA significant and substantial citation rate that was 59% lower than the industry average in 2019.

 

   

Produced and sold 27.3 million tons of PAMC coal, which nearly matched 2018’s record production of 27.6 million tons, and realized total coal revenue of $1.29 billion and an average cash margin per ton sold of $16.20, even as total U.S. coal production declined by 9% and commodity markets weakened.* As of February, 2020, we were greater than 95% contracted for 2020 and 43% contracted for 2021, assuming an annual coal sales volume at the midpoint of our guidance range.

 

   

Achieved record terminal revenue of $67.4 million, terminal net income of $33.8 million, adjusted EBITDA of $44.5 million, completed a critical dumper replacement capital project and recorded a perfect safety and compliance record at CONSOL Marine Terminal.**

 

   

With our excess cash, we repurchased $52.6 million of our Senior Secured Second Lien Notes, bought back $32.7 million of CEIX common stock and purchased $0.4 million of common units of CONSOL Coal Resources LP. We also paid $124.4 million (including the February 2019 excess cash flow sweep payment) and $11.3 million of principal with respect to Term Loan B and Term Loan A, respectively.



 

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   PROXY SUMMARY

 

 

   

Positioning for the Future.

 

   

Amended our revolving credit facilities and term loans to boost liquidity by $100 million, reduce interest rates, and extend maturities to at least 2023.

 

   

Began development of our Itmann Mine project, which will expand our metallurgical coal footprint with approximately 900,000 tons/year of high-quality low-vol production once fully operational.

 

   

Acquired a 25% equity interest in CFOAM, which produces carbon foam products from coal for high-performance materials science applications, and moved forward in partnerships with Ohio University and OMNIS Bailey LLC to develop technologies that have the potential to diversify our revenue streams and create new, sustainable end-uses for coal.

 

   

Published our 2019 Corporate Sustainability Report.

 

   

Became a recognized Bettercoal supplier.

 

   

Bottom Line. Generated $93.6 million of net income and $406 million of adjusted EBITDA.**

 

*

See reconciliation of average cash margin per ton sold (non-GAAP) to average revenue per ton sold (GAAP) in Appendix A to this Proxy Statement.

 

**

See reconciliation of adjusted EBITDA (non-GAAP) to net income (GAAP) in Appendix A to this Proxy Statement.

COMPENSATION HIGHLIGHTS

 

  Independent Compensation

  Consultant

  

Continued use by our Compensation Committee of an independent compensation consultant that reports directly to the Compensation Committee.

  Say on Pay Results   

Over 99% of the shares voted at our 2019 Annual Meeting of Stockholders approved our executive compensation program.

  Compensation Program

  Design

  

Designed an overall compensation program with 85.3% of compensation for named executive officers contingent on performance goals, reinforcing our pay-for-performance culture, which aligns risk-taking with sustainability and the long-term financial health of our company.

  STIC Annual Performance   

While performance metrics under our 2019 annual plan were not met, our Compensation Committee authorized discretionary annual incentive payouts based on adjusted goals due to economic circumstances beyond the control of our named executive officers resulting in below target payouts.

  LTIC

  Performance-Based Restricted

  Stock Unit Awards (“PSUs”)

  

Met threshold performance, and exceeded target performance level for 2019 resulting in the vesting of PSUs granted to the named executive officers under the 2018 and 2016 LTIC programs.

  Pay Ratio Results   

Determined the ratio of the total annual compensation of our Chief Executive Officer (sometimes referred to as “CEO”), as compared to the total annual compensation of our median employee to be 53.3:1.

  Board Size and Director

  Compensation

  

Maintained Board size and non-employee director compensation at current levels with no increases since the inception of the company in 2017.

  Governance Practices   

Continued adherence to good governance practices, including but not limited to anti-hedging, recoupment, compensation risk assessment, and stock ownership/holding and equity grant practices.



 

  LOGO  – 2020 Proxy Statement       3


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   PROXY SUMMARY

 

 

CORPORATE GOVERNANCE HIGHLIGHTS

Our Board and management are committed to strong corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability and helps build public trust in our company. This Proxy Statement describes our governance framework, which includes the following highlights:

 

   

Independent Directors. A majority of our directors must be independent. Currently, all of our directors other than James A. Brock are independent, and our Audit, Nominating and Corporate Governance, and Compensation Committees consist exclusively of independent directors.

 

   

Majority Voting Requirement. Our Amended and Restated Bylaws (the “bylaws”) require that any nominee for election to the Board who does not receive a majority of the votes cast in favor of that director’s election to the Board in an uncontested election must tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation on the tendered resignation, and the Board then will accept or reject the offer of resignation within 90 days.

 

   

Phase-Out of Classified Board. Our organizational documents include a plan to phase-out our classified Board structure by 2022. Starting in 2022, all of our directors will be subject to annual re-election to the Board.

 

   

Proposed Charter Amendments to Eliminate Supermajority Vote Requirements. We are proposing our stockholders adopt amendments to our Certificate of Incorporation that will eliminate supermajority vote requirements with respect to the removal of directors beginning with our 2022 annual meeting.

 

   

No CEO Pay Increase for 2020. Our Chief Executive Officer declined a pay increase in 2020 as he received an increase in 2019 and because we have designed his total compensation to include a greater percentage on variable or performance-based at risk compensation rather than base salary.

 

   

Independent Chair; Lead Director. Currently, our Chair of the Board is independent of management. In addition, in the event that our Chief Executive Officer would also serve as the Chair, our corporate governance guidelines require a Lead Director position with specific responsibilities to ensure independent oversight of management.

 

   

Regular Meetings of Independent Directors. Our independent directors regularly meet in executive sessions with no members of management present.

 

   

Robust Strategy, Risk and Safety Oversight by Board and Committees. Our Board and committees have implemented a robust framework to actively oversee the strategy and risks relating to the operation and management of a publicly traded coal company. In addition, our Board has a strong commitment to the safety of our workers and the environments in which we operate and has formed a separate Board level committee to oversee these core company values.

 

   

Diversity on Board. We believe in diversity and value the benefits diversity can bring to our Board. In 2018, our Board adopted a policy regarding diversity of its members. Effective March 1, 2019, Sophie Bergeron was elected as a Class I director to fill the vacancy resulting from a retiring director.

 

   

Emphasis on Ethics Compliance. We believe strongly in our Code of Business Conduct and Ethics and training and awareness surrounding the CONSOL Ethics Compliance Hotline. Effective December 10, 2019, we updated the Code to among other things, change the “Code of Ethics Contact Person” for certain employees, clarify certain provisions relating approval of directors, executive officers and employees taking advantage of corporate opportunities and to add more specificity around the hotline. It is our policy to comply with all applicable laws and adhere to the highest level of ethical conduct, including anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act (the FCPA) and similar laws in other jurisdictions. In that regard, in 2018 we adopted a Foreign Corrupt Practices Act Policy that has been distributed to all of our employees, directors and officers. In addition to these persons certifying compliance with the policy, we provide training on compliance with the FCPA and our policy. It is important that all of our business activities reflect our commitment to the highest standards of integrity and accountability.

 

   

Stock Ownership and Retention Guidelines. As further described on pages 44 and 70, our Board has adopted stock ownership and retention guidelines that apply to the Board and our executive officers.



 

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   PROXY SUMMARY

 

 

   

Consistent Stockholder Outreach. Our management team spends a significant amount of time meeting and speaking to our stockholder base. We have initiated an integrated effort to interact and receive feedback from the proxy teams at our stockholder base to incorporate best governance, compensation and oversight practices.

 

   

Sustainability. We provide transparency into our operations through the regular publishing of corporate sustainability reports. Our Corporate Sustainability Report for 2019 was published in February 2020 and is available on our website. Copies of our Corporate Sustainability Report will also be available at the Annual Meeting.

 

   

Human Rights Policy. In February 2019, we adopted a human rights policy. This policy reinforces our commitment and responsibility to respect all human rights, including those of our employees, suppliers, vendors, subcontractors and other partners, and individuals in communities in which we operate. Our policy addresses promoting health and safety, eliminating compulsory labor and human trafficking, abolishing child labor, eliminating harassment and unlawful discrimination in the workplace, and providing competitive compensation.

 

   

Strong Commitment to Robust Corporate Governance Practices. As a relatively new public company, our Board is continuing to carefully work through and consider additional corporate governance practices to ensure that we have a strong corporate governance platform tailored to our company.

LEARN MORE ABOUT OUR COMPANY

You can learn more about our company by visiting our website, www.consolenergy.com.



 

  LOGO  – 2020 Proxy Statement       5


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INFORMATION ABOUT THE ANNUAL MEETING

 

 

 

 

LOGO

CONSOL Energy Inc.

1000 CONSOL Energy Drive, Suite 100

Canonsburg, Pennsylvania 15317

Telephone (724) 416-8300

GENERAL: Proxies are being solicited by the Board to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 8, 2020, at 8:00 a.m., Eastern Time, at the Hyatt Regency Pittsburgh International Airport, Earhart Room (CD), 1111 Airport Boulevard, Pittsburgh, Pennsylvania 15231. The specific proposals to be considered and voted upon at the Annual Meeting are summarized in the Notice of Annual Meeting of Stockholders. Each proposal is described in more detail in this Proxy Statement.

PROPOSALS, BOARD RECOMMENDATION AND VOTE REQUIRED: Stockholders are being asked to vote on the following proposals at the Annual Meeting. The table on the following page also outlines the Board’s recommendation on how to vote for each proposal and the vote required with respect to each proposal.

VOTE TABULATION: In tabulating the voting result for any particular proposal, votes that are withheld or shares that constitute broker non-votes (described below) are not considered entitled to vote on that proposal and have no effect on the outcome except in the case of Proposal No. 5, which requires the approval of the holders of at least 75% of the voting power of all of CEIX’s outstanding common stock. In the case of Proposal No. 5, broker non-votes will be considered a vote against the proposal. Abstentions have the same effect as votes against the matter, except in the case of Proposal No. 1, where abstentions would not have an effect on the outcome.

RECORD DATE AND QUORUM: The record date with respect to this solicitation is March 11, 2020. All holders of record of CEIX common stock as of the close of business on the record date are entitled to vote at the Annual Meeting and any adjournment or postponement thereof. As of the record date, CEIX had 26,029,202 shares of common stock outstanding. Each share of common stock is entitled to one vote for each matter to be voted on at the Annual Meeting. Stockholders do not have cumulative voting rights. In order to hold the Annual Meeting, a quorum representing the holders of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting must be present in person or represented by proxy.

 

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INFORMATION ABOUT THE ANNUAL MEETING

 

Item

  

Proposal

 

 

Board

Recommendation 

 

Vote Required

 

 

1

  

 

 

Election of Class III Directors

Election of two Class III director nominees, each for a one-year term ending in 2021.

 

 

 

FOR EACH
NOMINEE

 

 

 

Plurality of the votes cast. Under this plurality vote standard, the director nominees who receive the highest number of “for” votes cast are elected as directors. Under our bylaws, if a director nominee does not receive a majority of the votes cast in favor of his or her election, then the director must tender his or her resignation to the Board.

 

 

2

  

 

 

Ratification of Appointment of Ernst & Young LLP

The Audit Committee appointed Ernst & Young LLP as CEIX’s independent registered public accounting firm for fiscal year 2020. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s appointment of the independent registered public accounting firm.

 

 

 

FOR

 

 

 

Affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the matter.

 

 

3

  

 

Advisory Approval of 2019 Named Executive Officers’ Compensation

Stockholders are being asked to approve, on an advisory basis, the compensation paid to CEIX’s named executive officers in 2019. CEIX’s executive compensation programs are designed to create a direct linkage between stockholder interests and management with incentives specifically tailored to the achievement of financial, operational and stock performance goals.

 

 

 

FOR

 

 

Affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the matter.

 

4

  

 

Approval of the CEIX 2020 Omnibus Performance Incentive Plan

Stockholders are being asked to approve an amendment and restatement of CEIX’s Omnibus Performance Incentive Plan. As amended and restated, the CEIX 2020 Omnibus Performance Incentive Plan will increase the number of authorized shares under the plan and make certain other changes to reflect best practices and current applicable law.

 

 

FOR

 

 

Affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the matter.

 

5

  

 

Approval of Amendments to our Certificate of Incorporation to Eliminate Supermajority Vote Requirements After our Board is Declassified

Stockholders are being asked to approve amendments to CEIX’s Certificate of Incorporation, which amend Article VI, Section 6.2(c) and Article XI. Specifically, stockholders are being asked to approve the following changes to our Certificate of Incorporation:

  amend Article VI, Section 6.2(c) to permit the removal of our directors with the vote of the holders of a majority of our outstanding shares of capital stock at any point on or after the date of our Annual Meeting in 2022; and

  amend Article XI to permit amendments to Section 6.2 of Article VI with the vote of such number of shares of our capital stock as are required by Delaware law at any point on or after the date of our Annual Meeting in 2022.

 

 

 

FOR

 

 

Affirmative vote of the holders of at least three quarters (75%) of the voting power of all of the outstanding shares of CEIX’s Common Stock.

 

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INFORMATION ABOUT THE ANNUAL MEETING

 

PROXY MATERIALS AND INFORMATION ABOUT THE MEETING: We mailed to all stockholders of record entitled to vote at the Annual Meeting the Internet Notice on or about March 27, 2020.

We are utilizing a Securities and Exchange Commission (“SEC”) rule that allows companies to furnish their proxy materials via the Internet rather than in paper form. This rule allows a company to send some or all of its stockholders the Internet Notice regarding Internet availability of proxy materials. The Internet Notice contains instructions on how to access the proxy materials over the Internet or how to request a paper copy of proxy materials.

An electronic copy of this Proxy Statement, the 2019 Annual Report and the Notice of Annual Meeting of Stockholders are available at www.edocumentview.com/CEIX.

Copies of our 2019 Annual Report furnished to our stockholders do not contain copies of exhibits to our Annual Report on Form 10-K for the year ended December 31, 2019. You can obtain copies of these exhibits electronically at the website of the SEC at www.sec.gov or by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The exhibits are also available as part of the Form 10-K for the year ended December 31, 2019 which is available on CEIX’s corporate website at www.consolenergy.com. Stockholders may also obtain copies of our Annual Report on Form 10-K for the year ended December 31, 2019, or the exhibits thereto, without charge by contacting our Investor Relations department at CONSOL Energy Inc., Investor Relations department, 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317, Telephone (724) 416-8300.

PROXIES AND VOTING: A proxy is your legal designation of another person to vote the CEIX common shares that you owned as of the record date. The person that you designate to vote your shares is called a “proxy” and when you designate someone to vote your shares in a written document, that document is also called a “proxy” or “proxy card”. The Board has appointed several officers of the company to serve as proxies on the proxy card.

If a proxy is properly executed and is not revoked by the stockholder, the shares it represents will be voted at the Annual Meeting in accordance with the instructions provided by the stockholder. If a proxy card is signed and returned without specifying choices, the shares will be voted in accordance with the recommendations of the Board. Accordingly, if no contrary instructions are given, the proxies named by the Board intend to vote the shares represented by such proxies as follows:

 

   

in favor of the election of those persons nominated as set forth in this Proxy Statement to serve as Class III directors of CEIX (Proposal No. 1);

 

   

in favor of the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of CEIX for the fiscal year ending December 31, 2020 (Proposal No. 2);

 

   

in favor of approval, on an advisory basis, of the compensation paid to our named executive officers in 2019 (Proposal No. 3);

 

   

in favor of approval of the adoption of the CEIX 2020 Omnibus Performance Incentive Plan (Proposal No. 4);

 

   

in favor of approval of the adoption of the amendments to the Certificate of Incorporation to eliminate the supermajority vote requirements after our board is declassified (Proposal No. 5); and

 

   

in accordance with their judgment on any other matters which may properly come before the Annual Meeting.

The Board does not know of any other business to be brought before the Annual Meeting other than as indicated in the Notice of Annual Meeting of Stockholders.

HOW TO VOTE: There are four ways for stockholders of record to vote:

 

   

VIA THE INTERNET BY PROXY: Stockholders who have received the Internet Notice by mail may submit proxies over the Internet by following the instructions on the Internet Notice. Stockholders who received a voting instruction form by mail or e-mail from their bank, broker or other nominee may submit proxies over the Internet by following the instructions on the voting instruction form provided by their bank, broker or other nominee.

 

   

VIA TELEPHONE BY PROXY: Registered stockholders of record may submit proxies by telephone by calling 1-800-652-8683 and following the instructions. Stockholders must have the 15-digit control number that

 

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INFORMATION ABOUT THE ANNUAL MEETING

 

 

appears on their Internet Notice when voting. Stockholders who have received a voting instruction form by mail or e-mail from their bank, broker or other nominee should check the voting instruction form for telephone voting availability. If available, those stockholders may vote by phone by calling the number specified on the voting instruction form provided by the bank, broker or other nominee.

 

   

VIA MAIL BY PROXY: Stockholders who have received a paper copy of a proxy card or voting instruction form by mail may submit proxies by completing, signing and dating their proxy card or voting instruction form and mailing it in the accompanying pre-addressed envelope.

 

   

IN PERSON AT ANNUAL MEETING: Stockholders of record may vote in person at the Annual Meeting.

BENEFICIAL OWNERSHIP AND BROKER NON-VOTES: If you hold shares beneficially in street name, then you must provide your voting instructions to your bank, broker or other nominee. If you do not provide your bank, broker or other nominee with voting instructions, your shares may be treated as “broker non-votes.”

Generally, broker non-votes occur on a matter when a bank, broker or other nominee is not permitted to vote on that matter without instructions from the beneficial owner and such instructions are not given. Banks, brokers or other nominees that have not received voting instructions from their clients cannot vote on their clients’ behalf on “non-routine” proposals, such as Proposal Nos. 1, 3, 4 and 5, although they may vote their clients’ shares on “routine matters,” such as Proposal No. 2.

REVOCATION OF PROXY: If you are the stockholder of record of shares of our common stock as of the close of business on the record date, you can revoke your proxy at any time before its exercise by:

 

   

sending a written notice to CEIX at 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317, attention: Secretary, bearing a date later than the date of the proxy, that is received prior to the Annual Meeting, stating that you revoke your proxy;

 

   

submitting your voting instructions again by telephone or over the Internet;

 

   

signing another valid proxy card bearing a later date than the proxy initially received and mailing it so that it is received by CEIX prior to the Annual Meeting; or

 

   

attending the Annual Meeting and voting in person.

If you hold your shares through a bank, broker or other nominee, you must follow the instructions found on your voting instruction form, or contact your bank, broker or other nominee, in order to revoke your previously delivered proxy. Attendance at the Annual Meeting without a request to revoke a proxy will not by itself revoke a previously executed and delivered proxy.

 

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INFORMATION ABOUT THE ANNUAL MEETING

 

ATTENDING THE MEETING IN PERSON: Subject to space availability, all stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting in person. Because seating is limited, admission to the meeting will be on a first come, first served basis.

Registration will begin at 7:30 a.m. Eastern Time. Stockholders who attend may be asked to present valid government-issued photo identification, such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. Please also note that if you hold your shares in “street name” (that is, through a bank, broker or other nominee), a copy of a brokerage statement reflecting your stock ownership as of the record date must be provided during check-in at the registration desk at the Annual Meeting.

If you require directions to the Annual Meeting, please contact CEIX’s Investor Relations department at (724) 416-8300.

Although we intend to hold our Annual Meeting in person, CEIX continues to monitor evolving conditions surrounding the COVID-19 outbreak. We are preparing for the possibility that the Annual Meeting may need to be held in a different location or by means of remote communication, which includes the possibility of a virtual meeting. If we determine such action is warranted, we will announce the decision via a press release on our website, www.consolenergy.com, as soon as practicable and through the filing of additional proxy materials with the Securities and Exchange Commission. If we decide to hold a virtual meeting, all references to attending the Annual Meeting “in person” in this Proxy Statement shall mean attending the Annual Meeting virtually.

PROXY SOLICITATION: All costs relating to the solicitation of proxies will be borne by CEIX. Georgeson LLC has been retained by CEIX to aid in the solicitation of proxies at an estimated cost of $9,000, plus reimbursement of out-of-pocket expenses. Proxies may also be solicited by officers, directors and employees personally, by mail, or by telephone, facsimile transmission or other electronic means. None of these directors, officers or employees will receive any additional or special compensation for soliciting proxies. Upon request, CEIX will reimburse banks, brokers and other nominees for their reasonable expenses in sending proxy materials to their customers who are beneficial owners of CEIX’s common stock.

SECRECY IN VOTING: As a matter of policy, proxies, ballots and voting tabulations that identify individual stockholders are held confidentially by CEIX. Such documents are available for examination only by the inspectors of election and certain employees who assist in the tabulation of votes. The vote of any individual stockholder will not be disclosed except as may be necessary to meet applicable legal requirements.

 

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PROPOSAL NO. 1 — ELECTION OF CLASS III DIRECTORS

 

 

 

The Nominating and Corporate Governance Committee has recommended, and the Board has nominated, our current Class III directors, William P. Powell and John T. Mills, whose terms expire at the Annual Meeting, for re-election by the stockholders as Class III directors at the Annual Meeting. Upon election, each such director will serve a one-year term until the 2021 annual meeting of stockholders or until his successor is elected and qualified, or his earlier death, resignation or removal.

To be elected, each nominee must receive a plurality of the votes cast (i.e., the director nominees who receive the highest number of “for” votes cast, up to the maximum number of directors to be elected, are elected as directors). If any nominee should for any reason become unable to serve, all shares represented by valid proxies will be voted for the election of such other person as the Board may designate, as recommended by the Nominating and Corporate Governance Committee. Alternatively, the Board may reduce the number of directors to eliminate the vacancy.

Our bylaws provide that if an incumbent director receives a greater number of votes “withheld” from his or her election than votes “for” such director nominee’s election, the director must tender his or her resignation promptly to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose its decision and the underlying rationale in a press release, a filing with the SEC or other broadly disseminated means of communication within 90 days from the date of the certification of the election results.

The biographies included in this Proxy Statement below include information concerning the nominees for director and the continuing directors, including their recent employment, positions with CEIX, other directorships, board committee memberships and ages as of March 11, 2020.

 

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PROPOSAL NO. 1—ELECTION OF CLASS III DIRECTORS | Biographies of Class III Director Nominees

 

Biographies of Class III Director Nominees

 

 

 

JOHN T. MILLS

 

  

 

LOGO

 

  

 

FORMER CHIEF FINANCIAL OFFICER—MARATHON OIL CORPORATION

 

Director Since: 2017

Age: 72

  

 

Class III Director

Term expires 2020

 

CEIX Committees:

  Audit (Chair)

  Compensation

  Health, Safety and Environmental

BACKGROUND:

John T. Mills joined the Board on November 14, 2017. He currently serves as a member of our Board’s Audit Committee, which he chairs, Compensation Committee and Health, Safety and Environmental Committee. Mr. Mills previously served as a member of the board of directors of CNX from March 2006 until November 28, 2017, when CEIX separated from CNX. From December 2007 until August 2015, he served on the board of directors of Cal Dive International Inc., a marine contractor providing manned diving, derrick, pipelay and pipe burial services to the offshore oil and natural gas industry, where he served as lead independent director, and as a member of the audit, compensation, and corporate governance and nominating committees. From January 2008 through June 2010, Mr. Mills was a member of the board of directors and audit, conflicts and risk management committees of Regency GP, LLC, the general partner of Regency GP, LP, the general partner of Regency Energy Partners LP, a natural gas gathering, processing and transportation master limited partnership. Mr. Mills joined the board of directors of Horizon Offshore, Inc., a marine construction company, in June 2002 and served as the chairman of the board of directors from September 2004 until December 2007, when Horizon Offshore, Inc. was acquired by Cal Dive International, Inc. Mr. Mills was the Chief Financial Officer of Marathon Oil Corporation, an integrated energy company, from January 2002 until his retirement in December 2003. In 2011, Mr. Mills attended the Harvard Business School program “Making Corporate Boards More Effective.”

 

 

QUALIFICATIONS:

 

As a licensed attorney with over 40 years of business experience, including 16 years as an officer of Marathon Oil Corporation and U.S. Steel Corporation, Mr. Mills brings significant knowledge and experience to our Board. In particular, Mr. Mills brings an in-depth understanding of the evaluation of organic growth capital projects and acquisition and disposition opportunities, and the importance of maintaining a competitive capital structure and liquidity. In addition, having previously served as Senior Vice President, Finance and Administration, and later Chief Financial Officer of Marathon Oil Corporation, Mr. Mills has developed a wealth of financial knowledge with respect to the oversight of (i) the preparation of consolidated financial statements, (ii) internal audit functions, and (iii) public accountants, skills which are critical to our company and particularly our Audit Committee.

 

 

 

 

WILLIAM P. POWELL

 

  

 

LOGO

 

  

 

MANAGING PARTNER—535 PARTNERS LLC

 

Director Since: 2017

Age: 64

  

 

Class III Director

Term expires 2020

 

CEIX Committees:

  Audit

  Compensation

  Health, Safety and Environmental

BACKGROUND:

William P. Powell joined the Board on November 28, 2017 and has served as Chair of our Board since that time. He currently serves as a member of our Board’s Audit Committee, Compensation Committee and Health, Safety and Environmental Committee. Mr. Powell previously served as a member of the board of directors of CNX from January 2004 until November 28, 2017, when CEIX separated from CNX. Mr. Powell also previously was a director of Cytec Industries, a global specialty chemicals and materials company, from 1993 until its merger with Solvay SA in December 2015, where he served as lead independent director, as chair of the governance committee and as a member of the audit committee. From May 2001 until May 2007, Mr. Powell was a Managing Director of William Street Advisors, a New York City-based merchant banking boutique. Mr. Powell resigned from William Street Advisors to establish a family office, 535 Partners LLC, where he has served as Managing Partner since May 2007. Prior to his time at William Street Advisors, he served as a Managing Director of UBS Warburg LLC and its predecessor Dillon, Read & Co. Inc. since 1991.

 

 

QUALIFICATIONS:

 

With an MBA degree and over 30 years of financial, management and investment experience, Mr. Powell brings a wealth of knowledge to our Board. Having served on multiple public company boards for over 20 years, Mr. Powell also has significant expertise in corporate governance matters.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE ABOVE-NAMED CLASS III DIRECTOR NOMINEES FOR RE-ELECTION TO THE BOARD OF DIRECTORS.

 

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PROPOSAL NO. 1—ELECTION OF CLASS III DIRECTORS | Biographies of Continuing Class II Directors

 

Biographies of Continuing Class II Directors with Terms Expiring at the 2022 Annual

Meeting of Stockholders

 

 

 

JOSEPH P. PLATT

 

  

 

LOGO

 

  

 

GENERAL PARTNER—THORN
PARTNERS, LP

 

Director Since: 2017

Age: 72

 

  

 

Class II Director

Term expires 2022

 

CEIX Committees:

  Compensation (Chair)

  Nominating and Corporate Governance

  Health, Safety and Environmental

BACKGROUND:

Joseph P. Platt joined the Board on November 28, 2017. He currently serves as a member of our Board’s Compensation Committee, which he chairs, Nominating and Corporate Governance Committee and Health, Safety and Environmental Committee. Mr. Platt previously served as a member of the board of directors of CNX Resources Corporation (“CNX”), CEIX’s former parent, from May 2016 until November 28, 2017, when CEIX separated from CNX. He is the general partner at Thorn Partners, LP, a family limited partnership, a position he has held since 1998. Mr. Platt’s career at Johnson and Higgins, a global insurance broker and employee benefits consultant (J&H), spanned 27 years until 1997, when J&H was sold to Marsh & McLennan Companies. At the time of the sale, Mr. Platt was an owner, director and executive vice president of J&H. Mr. Platt has served on the board of directors of Greenlight Capital Re, Ltd., a property and casualty reinsurer, since 2004 and has been its lead independent director since 2007, and also serves as an independent director of BlackRock’s Multi-Asset Funds and on the boards of various other nonpublic companies and not-for-profit institutions.

 

 

 

  QUALIFICATIONS:

 

  Mr. Platt brings significant financial, compensation and risk management expertise to our Board.

 

   

 

 

 

EDWIN S. ROBERSON

 

  

 

LOGO

 

  

 

FORMER CHIEF EXECUTIVE OFFICER
CHRIST COMMUNITY HEALTH SERVICES

 

Director Since: 2017

Age: 74

  

 

Class II Director

Term expires 2022

 

CEIX Committees:

  Audit

  Nominating and Corporate Governance (Chair)

  Health, Safety and Environmental

BACKGROUND:

Edwin S. Roberson joined the Board on November 28, 2017. He currently serves as a member of our Board’s Audit Committee, Nominating and Corporate Governance Committee, which he chairs, and Health, Safety and Environmental Committee. Mr. Roberson previously served as a member of the board of directors of CNX from May 2016 until November 28, 2017, when CEIX separated from CNX. From 2014 until his retirement on December 31, 2017, Mr. Roberson served as Chief Executive Officer of Christ Community Health Services, a health system of eight clinics providing high quality healthcare to the underserved in the Memphis, Tennessee community. Prior to that, Mr. Roberson served as Chief Executive Officer of various cancer research and biotech firms, and as President of Beacon Consulting, LLC, a business consulting firm, from 2006 to 2011. From 1991 to 2006, he worked at Conwood LLC, the nation’s second-largest manufacturer of smokeless tobacco products and a major seller and distributor of tobacco products manufactured by third parties, where he served in several roles, including Chief Financial Officer and, ultimately, President. After serving in the Army from 1969 to 1971, where he was awarded two Bronze Stars in Vietnam, Mr. Roberson, a certified public accountant, began his professional career at KPMG, an international accounting and consulting firm, where he was a tax partner until 1991. Mr. Roberson also served on the board of directors of Paragon National Bank, where he was chairman of the audit committee. Mr. Roberson currently serves on the board of directors of Infocare, Inc. (US), and on the boards of directors of several private companies. Additionally, he serves on the Board of Directors of the Sycamore Institute and the Gateway for Cancer Research.

 

 

QUALIFICATIONS:

 

Mr. Roberson received a BSBA in accounting from the University of North Carolina at Chapel Hill and an MBA from the University of Georgia. Mr. Roberson brings to the Board significant leadership skills and financial, accounting and strategy expertise. Further, Mr. Roberson is a certified public accountant.

 

 

 

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PROPOSAL NO. 1—ELECTION OF CLASS III DIRECTORS | Biographies of Continuing Class I Directors

 

Biographies of Continuing Class I Directors with Terms Expiring at the 2021 Annual Meeting of Stockholders

 

 

 

SOPHIE BERGERON

 

  

 

LOGO

 

  

 

FORMER GENERAL MANAGER, ÉLÉONORE MINE

OF NEWMONT CORPORATION

 

Director Since: 2019

Age: 42

  

 

Class I Director

Term expires 2021

 

CEIX Committees:

  Nominating and Corporate Governance

  Health, Safety and Environmental (Chair)

BACKGROUND:

Sophie Bergeron joined the Board on March 1, 2019. She currently serves as a member of our Board’s Health, Safety and Environmental Committee, which she chairs, and Nominating and Corporate Governance Committee. Ms. Bergeron most recently worked for Goldcorp Inc. (now Newmont Corporation), a gold production company headquartered in Vancouver British Columbia, Canada, which she joined in 2010. At Newmont Corporation, Ms. Bergeron worked across the company’s project portfolio and mining operations in the Americas, serving as the General Manager for Newmont Corporation’s Éléonore Mine (James Bay, Québec), a position she held from April 2019 to February 2020, as the Mine General Manager, a position she held from November 2017 to April 2019, and as the Project Manager for the Century Project (Timmins, Ontario), a position she held from December 2016 to October 2017. Prior to that, Ms. Bergeron was the Operations Manager for Goldcorp’s Hoyle Pond Mine (Timmins, Ontario) from February 2015 to February 2016 and the Operations Manager for the Mine Ramp-Up (Cerro Negro, Argentina) from July 2014 to February 2015. Her other positions at Goldcorp included Director, Health and Safety from November 2012 to June 2014 and Senior Mining Manager from September 2010 to November 2012. Prior to joining Goldcorp in 2010, Ms. Bergeron held various positions with Xstrata Nickel (Xstrata), a nickel producer headquartered in Toronto, Canada. During her time at Xstrata, Ms. Bergeron rose to the position of Continuous Improvement Superintendent, completed her Six Sigma certification and earned a certificate in business optimization from Melbourne University in Australia. Ms. Bergeron is an active member of the Québec Mining Association and sits on its board of directors.

 

 

QUALIFICATIONS:

 

Through Ms. Bergeron’s education and experience, she has gained expertise in the mining sector, which provides significant value and insight to the Board, particularly with respect to operating and strategic issues. Ms. Bergeron has extensive expertise in health and safety, mine operations management and continuous improvement.

 

 

 

 

 

JAMES A. BROCK

 

  

 

LOGO

 

  

 

PRESIDENT & CHIEF EXECUTIVE
OFFICER OF CEIX

 

Director Since: 2017

Age: 63

  

 

Class I Director

Term expires 2021

 

CEIX Committees:

  Health, Safety and Environmental

 

BACKGROUND:

James A. Brock has served as our Chief Executive Officer since June 21, 2017, and as our President since December 4, 2017, and he has been a member of our Board since November 28, 2017. He currently serves as a member of our Board’s Health, Safety and Environmental Committee. Mr. Brock previously served as the Chief Operating Officer-Coal of CNX from December 10, 2010 until November 28, 2017, when CEIX separated from CNX. Mr. Brock also currently serves as Chief Executive Officer and Chairman of the board of directors of the general partner of CONSOL Coal Resources LP, a position he has held since March 16, 2015. Previously, he served as Senior Vice President-Northern Appalachia-West Virginia Operations of CNX from 2007 to 2010, and as Vice President-Operations of CNX from 2006 to 2007. Mr. Brock began his career with CNX in 1979 at the Matthews Mine and since then has served at various locations in many positions including Section Foreman, Mine Longwall Coordinator, General Mine Foreman and Superintendent. Mr. Brock’s achievements in mining were recognized with his being named 2010 Coal Safety Leader of the Year in West Virginia and his induction into the West Virginia Coal Hall of Fame in 2016. Mr. Brock also currently serves as the Treasurer of the Pennsylvania Coal Alliance board of directors, and as a member of the boards of directors of the National Coal Council, the American Coalition for Clean Coal Electricity (ACCCE) and the National Mining Association.

 

 

QUALIFICATIONS:

 

With a career in coal spanning five decades, we believe Mr. Brock’s extensive knowledge of our industry and our operations gained during his years of service with CNX, and now CEIX, provides our Board with valuable experience.

 

 

 

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PROPOSAL NO. 2 — RATIFICATION OF APPOINTMENT

OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

 

 

 

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of CEIX’s independent registered public accounting firm. The Audit Committee has appointed Ernst & Young LLP as the independent registered public accounting firm for CEIX for the fiscal year ended December 31, 2020. The Board now recommends that CEIX’s stockholders ratify this appointment.

Neither CEIX’s governing documents nor the law require stockholder ratification of the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm. However, the Board is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of CEIX and its stockholders.

Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to address the meeting and respond to appropriate questions.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020.

 

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AUDIT COMMITTEE AND AUDIT FEES

 

 

 

Audit Committee Report

The Audit Committee has reviewed and discussed with management and Ernst & Young LLP (“E&Y”), CEIX’s independent registered public accounting firm, the audited financial statements of CEIX for the fiscal year ended December 31, 2019 (the “Audited Financial Statements”). In addition, the Audit Committee has discussed with E&Y the matters required to be discussed under the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) (Auditing Standard No. 1301—Communications with Audit Committees) and the SEC relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of the registered public accounting firm’s activities or access to requested information and any significant disagreements with management.

The Audit Committee also has received the written disclosures and letter from E&Y regarding E&Y’s independence required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with the independent registered public accounting firm that firm’s independence from CEIX and its subsidiaries.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the Audited Financial Statements be included in CEIX’s Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC.

Members of the Audit Committee:

John T. Mills, Chair

William P. Powell

Edwin S. Roberson

The foregoing Audit Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing of CEIX under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that CEIX specifically incorporates the Report by reference therein.

 

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AUDIT COMMITTEE AND AUDIT FEES | Independent Registered Public Accounting Firm

 

Independent Registered Public Accounting Firm

The following table presents fees billed for professional audit services rendered by E&Y in connection with its audits of CEIX’s annual financial statements for the years ended December 31, 2019 and 2018 and fees for other services rendered by E&Y during those periods, excluding the fees billed to CONSOL Coal Resources LP (“CCR”).

 

    

2019

  (E&Y Fees)  

  

2018

  (E&Y Fees)  

Audit Fees

    

$

1,396,200

    

$

1,333,600

Audit-Related Fees

    

$

    

$

540,000

Tax Fees

    

$

    

$

All Other Fees

    

$

7,200

    

$

7,200

    

 

 

      

 

 

 

Total

    

$

1,403,400

    

$

1,880,800

                       

As used in the table above, the following terms have the meanings set forth below.

Audit Fees

The fees for professional services rendered in connection with the audit of CEIX’s annual financial statements, for the review of the financial statements included in CEIX’s Quarterly Reports on Form 10-Q, and for services that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements.

Audit-Related Fees

There were no professional services for audit-related fees in 2019. The professional services for audit-related fees in 2018 were for the pre-implementation assessment of our Oracle enterprise resource planning software that became our system of record on January 1, 2019.

Tax Fees

There were no professional services for tax-related work in 2019 or 2018.

All Other Fees

The fees for products and services provided, other than for the services reported under the headings “Audit Fees,” “Audit-Related Fees” and “Tax Fees.” These fees were for publications and online subscriptions.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services

The Audit Committee, or the Chair of the Audit Committee, must preapprove all audit and non-audit services provided to CEIX by its independent registered public accounting firm. The Audit Committee must consider whether such services are consistent with SEC rules on auditor independence. All of the services performed by E&Y in 2019 were pre-approved by the Audit Committee.

 

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PROPOSAL NO. 3 — ADVISORY APPROVAL OF

EXECUTIVE COMPENSATION

 

 

 

Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), CEIX is required to provide its stockholders with the opportunity to cast a non-binding advisory vote on compensation paid to our named executive officers. Accordingly, we ask our stockholders to vote, on an advisory basis, “FOR” the compensation paid to our named executive officers in 2019 as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, and to adopt the following resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to CEIX’s named executive officers, as disclosed in this Proxy Statement, including the “Compensation Discussion and Analysis” compensation tables and narrative discussion, is hereby APPROVED on an advisory basis.”

As described in detail in the “Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate and retain key executives who drive our success and industry leadership. We achieve these objectives through compensation that:

 

   

links a significant portion of total compensation to performance, which we believe will create long-term stockholder value;

 

   

includes stock-based compensation, which encourages our named executive officers to act as owners of CEIX;

 

   

is tied to overall corporate performance, and financial and operational goals (annual and long-term) such that our executives are paid for performance;

 

   

enhances retention in a highly competitive market by subjecting a significant portion of total compensation to multi-year vesting or performance conditions;

 

   

discourages unnecessary and excessive risk-taking; and

 

   

provides a competitive total pay opportunity.

The Compensation Committee reviews the compensation programs for our executive officers to ensure they achieve the desired goal of aligning our executive compensation structure with our stockholders’ interests and current market practices. Please read the “Compensation Discussion and Analysis” beginning on page 32, and the tabular compensation disclosures and accompanying narrative discussion beginning on page 46. The Compensation Discussion and Analysis discusses our executive compensation philosophy, programs and objectives, while the tabular compensation disclosures and accompanying narrative discussion provide detailed information on the compensation of our named executive officers.

We are asking our stockholders to indicate their support for the compensation paid to our named executive officers in 2019 as described in this Proxy Statement (including the Compensation Discussion and Analysis, the compensation tables and other related compensation disclosures required by Regulation S-K Item 402 and contained herein). This proposal is intended to give our stockholders the opportunity to express their views on the compensation paid to our named executive officers in 2019. This vote is not intended to address any specific item of compensation, but rather the overall compensation paid to our named executive officers, and the philosophy, policies and practices described in this Proxy Statement.

As an advisory vote, your vote will not be binding on CEIX, the Board or the Compensation Committee. However, our Board and our Compensation Committee, which are responsible for designing and administering CEIX’s executive compensation program, value the opinions of our stockholders and to the extent there is any significant vote against the compensation paid to our named executive officers in 2019, we will consider our stockholders’ concerns, if any, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

After our stockholders voted in 2018, on an advisory basis, on the frequency of this advisory vote on compensation, the Company elected to hold future advisory votes on compensation on an annual basis until the next stockholder advisory vote on frequency, which we expect will be conducted at our annual meeting of stockholders in 2024.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE, ON AN ADVISORY BASIS, “FOR” THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS IN 2019, AS DISCLOSED IN THIS PROXY STATEMENT, PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.

 

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PROPOSAL NO. 4 — APPROVAL OF THE CEIX 2020

OMNIBUS PERFORMANCE INCENTIVE PLAN

 

 

 

Executive Summary

The Board proposes to amend the Omnibus Performance Incentive Plan (the “Plan”) to increase the number of shares available for grant by 2,350,000 million.

The terms of the Plan are aligned with stockholders’ interests, including a minimum vesting requirement, no automatic single-trigger vesting for eligible employees upon a change in control, no liberal share counting, no use of discounted stock options or stock appreciation rights (SARs), and no use of reload options.

We maintain strict annual compensation limits on the dollar amount of any award to an individual non-employee director eligible to participate in the Plan, as well as similar dollar and annual share limits on compensation payable to any employee eligible to participate in the Plan.

We also have robust compensation governance and equity grant practices, including plan provisions that permit dividend payouts only after vesting and performance conditions are met, and forfeiture/cancellation provisions for cause terminations, as well as restrictive covenants and clawback features in all awards and we also maintain an anti-hedging and anti-pledging policy as part of our corporate governance guidelines.

While the exception to the $1 million cap on deductible compensation under Internal Revenue Code (the “Code”) Section 162(m) was repealed, we generally continue to abide by the procedural rules associated with establishing performance goals and certifying performance against such pre-established goals.

Background

We currently maintain the Plan, which was last approved in 2017 by stockholders with 100% of stockholder votes cast in favor of the Plan. Under the Plan, we have reserved a number of shares of our common stock for issuance to eligible employees (including executive officers and non-employee directors) as equity-based awards in the form of restricted stock, restricted stock units, deferred stock units, stock options, SARs and performance-based awards which may be settled in shares of company common stock or cash. The Plan was originally adopted by CONSOL Mining Corporation, effective as of November 22, 2017, and submitted to our former parent’s stockholders (CNX Resources Corporation) on November 22, 2017. The Plan is currently scheduled to expire on November 22, 2027. On March 12, 2020, our Board approved the adoption of the 2020 Omnibus Performance Incentive Plan which amends and restates the Plan originally adopted in 2017. The 2020 Omnibus Performance Incentive Plan is subject to the approval of our stockholders at the annual meeting, principally to increase the number of shares available for grant.

Material Changes to the Plan

The 2020 Omnibus Performance Incentive Plan makes the following material changes:

 

   

Increases the number of shares of our common stock available for awards under the Plan by 2,350,000 million shares.

 

   

Imposes a minimum vesting requirement on all awards (both service and performance-based).

 

   

Ensures “double trigger” vesting so that an employee participant’s award will vest only if the participant’s employment is terminated in connection with a change in control.

 

   

Adjust the individual annual maximum dollar limit on any award payable to a non-employee director from $400,000 to $500,000.

 

   

Adjust the annual dollar limit (from $4 million to $6 million) and annual share limits (from 500,000 to 750,000 for Stock Options, Stock Appreciation Rights and PSUs) on any award payable to an employee participant even though such limits are no longer required by Code Section 162(m).

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

Impact of the 2020 Omnibus Performance Incentive Plan based on Information as of February 12, 2020

 

   

As of February 12, 2020, under the current authorization, there are 22,091 shares of common stock available for grant as equity-based awards. Based on our current run rate, these shares will expire before our Annual Meeting even though the current Plan term has seven years remaining. We believe it is appropriate to increase the number of shares of our common stock available for awards under the Plan so that our company can continue the practice of granting equity-based awards. We estimate the total dilutive effect of our Plan on our stockholders (sometimes called “overhang”) resulting from the 2020 Omnibus Performance Incentive Plan would be approximately 14.38%, with the incremental overhang resulting from the requested share increase equal to approximately 7.75%. The overhang is calculated as of February 12, 2020. The table below provides updated information about our common stock subject to equity compensation plan(s) as of February 12, 2020

 

(a)  Incremental share request subject to stockholder approval

    2,350,000  
 

(b)  Shares underlying outstanding awards of restricted
shares/stock-settled restricted stock units under equity plan

 

  2,001,272

 

 

(c)  Stock Options outstanding under all equity plans

    0  
 

(d)  Shares currently available for future issuance under all equity plans

    22,091  
 

(e)  Total shares authorized for, or outstanding under, Equity awards
(a + b + c + d)

    4,373,363  
 

(f) Total common shares outstanding

    26,029,202  
 

(g)  Fully diluted overhang (e/(e+f))

    14.38%  

For the past three calendar years (2017-2019), the weighted average annual share usage was 1.4% (excluding converted awards) and 1.9% (including converted awards) of our common shares outstanding. Converted awards are awards that were originally granted by our former parent, CNX Resources Corporation from whom CEIX separated in November of 2017, made under our former parent’s plan that automatically converted into CEIX awards under the Plan as a result of the separation. If the Plan is approved, we expect the pool of requested shares to last one to two years year based on our current stock price, and due to recent volatility in the market place, specifically in the coal industry.

Purpose

The Plan is intended to serve a critical role in our pay-for-performance compensation program. In addition, our Board believes that equity-based awards aid in our ability to attract, retain and motivate our employees and non-employee directors, and it is the most direct way to align employee and non-employee Director interests with those of stockholders. As part of our pay-for-performance practices, more than 1,770 employees receive variable incentives. The portion of the variable incentive equity-based awards generally increases with compensation levels according to long-term incentive targets, generally expressed as a percentage of the individual executive’s base salary, aligning employees’ interests with those of stockholders. In addition, our executive officers receive PSUs that must be earned by meeting specific pre-established performance criteria, as described on page 40 for awards granted in February 2019. More highly compensated employees receive a portion of their variable incentive as restricted stock units (RSUs). Equity awards granted to employees are subject to forfeiture/cancellation and clawback features which encourage appropriate behavior and manage risk in our compensation program; these features are described on page 44. The value of RSUs tracks the price of our common shares.

The Plan also provides a vehicle through which we compensate our nonemployee directors who are eligible to receive an annual equity award in the form of RSUs for their service on the Board. See the description of our non-employee director compensation beginning on page 70.

The Plan is the company’s vehicle for delivering deferred equity-based awards. Since the Plan was last approved by stockholders in 2017, the amount of common stock awarded has averaged approximately 858,000 shares annually; we now have 22,091 shares remaining for awards under the Plan. The Board has determined to increase the shares of our common stock available for awards under the Plan by 2,350,000 million shares to enable the granting of Plan

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

awards in the future. The alternative would be to increase the use of cash awards, which we believe would be less aligned with stockholder interests. Therefore, the Board recommends amending the Plan to increase the number of shares of common stock available for awards under the Plan.

The additional 2,350,000 million shares authorized under the Plan would allow our company to continue its current grant practices for one to two years.

Plan Features and Grant Practices That Protect Stockholder Interests

The Plan and the company’s grant practices continue to include a number of features intended to protect the interests of stockholders.

 

What We Do

The Compensation Committee reviews the dilutive impact of our stock program, including by monitoring its “overhang” relative to its peer group of energy and coal companies.

 

With the shares requested, our overhang will be approximately 14.38%.

 

Based on data available as of February 12, 2020, we believe the rate at which CEIX grants equity-based awards relative to its outstanding shares of common stock (or run rate) is a reasonable grant practice.

 

Stock retention requirements align executive officer and stockholder interests by linking the value realized from equity-based awards to sustainable company performance. Since 2017, we have had in place stock ownership guidelines that require our senior executive officers to own a minimum number of shares of our common stock, based on a multiple of base salary. See page 44 of the Compensation Discussion & Analysis. The company has also required senior executives to hold 50% of net after-tax shares received from equity-based awards until such ownership guidelines are met. Similarly, our non-employee Directors are also subject to stock ownership guidelines. See page 70 under “Stock Ownership Guidelines” following non-employee Director Compensation.

 

Equity awards are subject to multiple separate and distinct “clawback” requirements that can result in the awards potentially being forfeited or cancelled or prior payments recouped. These clawback requirements work together to ensure that rewards realized over time appropriately reflect the time horizon of the risks taken and encourage proper conduct. These clawback requirements are discussed in detail under “Compensation Discussion and Analysis” on page 44.

 

The Plan includes minimum vesting requirements. All awards generally cannot vest earlier than the first anniversary of the grant date of the award. Certain limited exceptions are permitted.

 

While we have not yet declared any dividends on any awards, our Plan and grant practices would require that any dividends/dividend equivalents on restricted stock shares/units awarded to employees would be accrued with interest from the grant date and paid only if and when the underlying award becomes vested.

 

While Code Section 162(m) no longer applies, we continue to impose annual share and dollar limits on executive awards, and follow procedural requirements associated with the establishment of performance goals and certification of our performance against such goals, even though no longer required under the Code.

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

What We Don’t Do

Automatic vesting of awards upon a change in control (sometimes referred to as “single trigger” vesting) for eligible employees is not allowed. Instead, the Plan permits the Compensation Committee to provide for award vesting only if an employee participant’s employment is terminated in connection with a change in control (i.e., “double trigger” vesting); single trigger vesting is only permissible for non-employee directors.

 

The Plan does not include provisions frequently labeled as “liberal share counting” (e.g., the ability to re-use shares tendered or surrendered to pay the exercise cost or tax obligation of grants or the “net counting” of shares for stock option or SAR exercises). The only share re-use provisions are for awards that are cancelled or forfeited, or for awards settled in cash.

 

The use of discounted stock options or SARs, the use of dividend equivalents on stock options or SARs, and the use of reload options is prohibited.

 

The Plan broadly prohibits the repricing of stock options or SARs without stockholder approval, including the repurchase of underwater options or SARs for cash.

 

Option or equity transferability to third parties “for consideration” is not allowed. The transfer of awards, if at all, is limited to immediate family members without consideration and by the laws of descent and distribution.

 

Overview of the Plan

The following is a summary of the material terms of the Plan, as amended. It is qualified in its entirety by reference to the terms of the Plan, as amended. A copy of the Plan, marked to show the amendment and restatement approved by the Board on March 12, 2020, is attached to this proxy statement as Appendix B. The proposed amendment and restatement of the Plan will become effective only if the Plan, as amended and restated, is approved by our stockholders.

Number of Shares

The Plan, as approved by stockholders in 2017, provides that the aggregate number of shares of our common stock available for grants of awards under the Plan from and after November 22, 2017 will not exceed the sum of (i) 2,600,000 million shares plus (ii) any shares that were converted awards, originally issued by CNX Resources Corporation (our former parent), that were assumed by the company under a certain Employee Matters Agreement, when the company was spun off from our former parent on November 28, 2017. As of February 12, 2020, there were approximately 22,091 common shares available for future awards under the Plan. The 2020 Omnibus Performance Incentive Plan, if approved by stockholders, would increase the number of shares available for awards by 2,350,000 shares, to approximately 4,950,000 million shares estimated based on information available on February 12, 2020.

Under the Plan, each award, whether granted as a stock option, SAR, restricted stock share, PSU, RSU, or deferred stock unit, counts against the available share pool as one share for each share awarded.

The share re-use provisions under the Plan do not include any “liberal share counting” features. Shares covered by awards will continue to be available for awards if and only to the extent (a) the award is cancelled or forfeited or (b) the award is settled in cash. Shares used to cover the exercise price of stock options or to cover any tax withholding obligations in connection with awards will continue to be unavailable for awards under the Plan. In addition, the total number of shares covering stock-settled SARs or net-settled options will be counted against the pool of available shares, not just the net shares issued upon exercise.

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

Administration

The Plan is administered by the Board of Directors who has delegated primary responsibility for administering the Plan to the Compensation Committee. To the extent permitted by law, the Compensation Committee may designate an individual or committee (which need not consist of directors) to act as the appropriate committee under the Plan for granting awards to eligible employees who are not “officers” under Section 16 of the Securities Exchange Act; provided, however, that any awards made to non-employee directors must be approved by the Board. Under the Plan, the Compensation Committee (as a result of the Board’s delegation referred to immediately above) has authority with respect to the following:

 

   

the selection of the eligible employees to receive awards from time to time

 

   

the granting of awards in amounts as it determines

 

   

the imposition of limitations, restrictions and conditions upon awards

 

   

the certification of the attainment of performance goals, if applicable

 

   

the interpretation of the Plan and the adoption, amendment and rescission of administrative guidelines and other rules and regulations relating to the Plan

 

   

the correction of any defect or omission or reconciliation of any inconsistency in the Plan or any award granted under the Plan

 

   

the making of all other determinations and taking of all other actions necessary or advisable for the implementation and administration of the Plan

The Board administers grants of awards including stock options, RSUs and deferred stock units under the Plan to non-employee directors.

Eligibility

Except for certain non-employee director restricted stock awards as described below, “eligible employees” of CONSOL Energy Inc. and its subsidiaries may participate in the Plan, as selected by the Compensation Committee. Eligible employees are those employees of CONSOL Energy Inc. and its subsidiaries who occupy managerial or other important positions and who have made, or are expected to make, important contributions to our business, as determined by the Compensation Committee. Under an Equity Grant Practices policy adopted by the Board, the Compensation Committee has authority to delegate to the Chairman and Chief Executive Officer authorization to award grants to non-executive officers subject to terms and conditions approved by the Compensation Committee. As mentioned above, the Compensation Committee in its discretion selects which key employees will receive any awards. As noted elsewhere in this Proxy Statement, as part of our director compensation program, our Board grants RSUs and deferred stock units to non-employee directors on the day of their election or appointment as a non-employee director. Any non-employee director nominee that receives at least a majority of votes cast at the annual meeting will be elected at the annual meeting, and will be eligible to receive the restricted stock award as part of their 2020-2021 director compensation assuming that this proposal is approved.

The approximate number of eligible employees who may participate in the Plan are 360. We have historically granted equity to a broad set of employees. In order to be as efficient as possible with the use of equity, we may in the future limit the use of equity to fewer employees and use different forms of rewards for employees who would not normally receive equity compensation based on competitive market practices.

Types of Awards

The Plan permits awards of stock options, SARs, restricted stock shares PSUs and RSUs to key employees and restricted stock shares to non-employee directors, all of which are described in more detail below.

Awards of Stock Options and SARs. The Plan provides for the grant of options to purchase shares of our common stock at option prices which are not less than the fair market value of a share of our common stock at the close of business on the date of grant. (The fair market value of a share of our common stock as of February 12, 2020 was $6.98). The Plan also provides for the grant of SARs to key employees. SARs entitle the holder upon

 

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exercise to receive either cash or shares of our common stock or a combination of the two, as the Compensation Committee in its discretion may determine, with a value equal to the difference between: (i) the fair market value on the exercise date of the shares with respect to which a SAR is exercised; and (ii) the fair market value of the shares on the date of grant.

Awards of options under the Plan, which may be either incentive stock options (which qualify for special tax treatment) or non-qualified stock options, are determined by the Compensation Committee. No more than an aggregate of 750,000 shares in any one calendar year may be awarded to a participant as incentive stock options or SARs under the Plan. The terms and conditions of each option and SAR are to be determined by the Compensation Committee (or its designees) at the time of grant.

Options and SARs granted under the Plan will expire not more than 10 years from the date of grant, and the award agreements entered into with each participant will specify the extent to which options and SARs may be exercised during their respective terms, including in the event of the participant’s death, disability or termination of employment.

The Plan includes two additional limitations on stock option and SAR grants:

 

   

The Plan expressly prohibits dividend equivalents with respect to stock options and SARs.

 

   

The Plan permits non-qualified stock options and SARs to be transferable if and to the extent permitted under the applicable award agreement, but prohibits transfers to be made for consideration.

Our Board has not granted any stock options or SARs since the Plan was adopted in 2017.

Awards of Restricted Stock and Restricted Stock Units (including performance-based RSUs). Under the Plan, the Compensation Committee may award eligible employees restricted shares of our common stock, PSUs or RSUs, which represent the right to receive shares of our common stock (or cash equal to the fair market value of those shares). Each award agreement will contain the terms of the award, including any applicable conditions, which may include continued service of the participant, the attainment of specified performance goals or any other conditions deemed appropriate by the Compensation Committee. With respect to any PSU, our Plan provides that a maximum of 750,000 shares as of the grant date in any one calendar year of CEIX may be awarded to an employee participant.

Restricted stock will be held in our custody until the applicable restrictions have been satisfied. The participant cannot sell, transfer, pledge, assign or otherwise alienate or hypothecate restricted stock shares until the applicable restrictions are satisfied. Once the restrictions are satisfied, the shares will be delivered to the participant’s account, free of restrictions. During the period of restriction, the participant may exercise full voting rights with respect to the restricted stock shares. While the company has not yet granted any dividends, the Plan and our grant practice is not to pay dividends on restricted stock during the vesting period, but to accrue those dividends with interest from the grant date to be paid only if and when the underlying award becomes vested.

The award agreement for any RSUs will specify whether units that become earned and payable will be settled in shares of our common stock (with one share of common stock to be delivered for each earned and payable RSU), in cash (equal to the aggregate fair market value of the RSUs that are earned and payable), or in a combination of shares and cash. Shares of our common stock used to pay earned RSUs may have additional restrictions, as determined by the Compensation Committee. Unpaid RSUs may have dividend equivalent rights, as determined by the Compensation Committee and evidenced in the award agreement. As with restricted stock shares, our Plan and our grant practice is not to include dividend equivalent rights for awards of RSUs. Unpaid RSUs have no voting rights.

Non-Employee Director Awards. The Plan also provides for awards of RSUs to our non-employee directors as part of our director compensation program. These awards vest one year after the date of grant, or earlier in case of death, disability or a change in control. If a director terminates his service before the one-year vesting date, a prorated amount of the award vests based on the number of days the director served during the vesting period before his termination of service with the Company. No director may be granted in any one fiscal year of CEIX, calculated as of the grant date an award valued at more than $500,000. Awards may be deferred under the Company’s Deferred Compensation Plan for non-employee directors. See “Understanding Our Director Compensation Table” on page 70 for additional details about our director compensation program.

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

Cash Awards. The Plan also permits awards to be made in the form of cash with such vesting or other restrictions, if any determined by the Board (or Committee, as appropriate). If a cash award is intended to be performance-based, the individual award value to an employee participant (on the grant date) may not exceed $6 million in any one calendar year.

Minimum Vesting Conditions

The Plan, as amended and restated imposes a minimum vesting requirement so that generally all awards will vest no more quickly than the first anniversary of the grant date of the award. This requirement does not apply to (1) certain substitute awards arising from acquisitions, (2) shares delivered in lieu of fully vested cash incentive awards or (3) a maximum of five percent (5%) of our available share reserve authorized under the Plan. In addition, the minimum vesting requirement does not apply to the Compensation Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, workforce reduction, death, disability, or a change in control, in the terms of the award or otherwise.

Withholding for Payment of Taxes

The Plan provides for the withholding and payment by a participant of any payroll or withholding taxes required by applicable law. The Plan permits a participant to satisfy this requirement, with the approval of the Compensation Committee and subject to the terms of the Plan, by withholding from the participant a number of shares of our common stock otherwise issuable under the award having a fair market value equal to the amount of applicable payroll and withholding taxes. The amendment to the Plan, if approved by stockholders, would permit the company and the participant to withhold at rates up to the maximum statutory tax rates.

Adjustments for Changes in Capitalization

In the event of any change in the number of our outstanding shares of common stock by reason of any stock dividend, split, spin-off, recapitalization, merger, consolidation, combination, exchange of shares or otherwise, the aggregate number of shares of our common stock with respect to which awards may be made under the Plan, the annual limit on individual awards, the limits on incentive stock options, restricted stock, PSUs and RSUs and the terms, types of shares and number of shares of any outstanding awards under the Plan will be equitably adjusted by the Compensation Committee in its discretion to preserve the benefit of the award for us and the participant.

No Single Trigger Vesting Upon a Change in Control for Eligible Employees

The Plan permits the Board or the Compensation Committee to provide for vesting of awards to eligible employees in connection with a change in control of the company if there is also a termination of employment in connection with the change in control. This is often referred to as “double trigger” vesting. For these purposes, a termination is considered to be in connection with a change of control if it occurs upon or within two years after the change in control and is for one of the following two reasons: (i) an involuntary termination by the company without “cause” or (ii) a termination by the participant for “good reason.” “Cause” is defined in the Plan and “good reason” will be as defined in the applicable award agreement. In addition, the Board or the Compensation Committee may provide for the assumption or substitution of awards by a surviving corporation. Awards to non-employee directors may fully vest upon a change in control.

Amendment and Termination of the Plan

Our Board has the power to amend, modify or terminate the Plan on a prospective basis. Stockholder approval will be obtained for any change to the material terms of the Plan to the extent required by New York Stock Exchange listing requirements or other applicable law. The Plan, as amended and restated, automatically terminates at the close of business on November 22, 2027, following which no awards may be made under the Plan.

Option and SARs Repricing Prohibited

The Plan specifically prohibits the repricing of stock options or SARs without stockholder approval. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (A) changing the terms of a stock option or SAR to lower its exercise price; (B) any other action that is treated as a

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

“repricing” under generally accepted accounting principles; and (C) repurchasing for cash or canceling a stock option or SAR at a time when its exercise price is greater than the fair market value of the underlying stock in exchange for another award, unless the cancellation and exchange occurs in connection with change in capitalization or similar change. Such cancellation and exchange would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the eligible employee.

Federal Income Tax Treatment

The following discussion summarizes certain U.S. federal income tax consequences of awards under the Plan based on the law as in effect on the date of this document. The following discussion does not purport to cover federal employment taxes or other federal tax consequences that may be employed with awards, nor does it cover state, local or non-U.S. taxes.

Non-qualified Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a non-qualified stock option with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of a non-qualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the fair market value of the shares on the exercise date.

Incentive Stock Options. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after employment ends (twelve (12) months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the stock option were a non-qualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.

With respect to both non-qualified stock options and incentive stock options, special rules apply if a participant uses shares of common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant.

Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.

Restricted Stock and Restricted Stock Units (including performance-based RSUs (PSUs). A participant generally will not have taxable income upon the grant of restricted stock, RSUs or PSUs. Instead, the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the time of grant.

 

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PROPOSAL NO. 4—APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN

 

Deferred Stock Units. A participant will generally not have taxable income upon the grant of a deferred stock unit. Instead, the participant will recognize ordinary income not at the time of vesting, but on such future date certain to which the participant has deferred receipt of the award. Accordingly, the participant will recognize ordinary income equal to the fair market value (on the payout date following the date certain to which he has deferred the award) of the shares or cash received.

Cash Awards. A participant will generally recognize taxable income on cash paid to him at the time of vesting and or payment of the award, unless the participant has deferred receipt of the award.

Tax Consequences to the Company. We generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code, including those imposed by Section 162(m) which limits the amount of compensation that is payable to a certain senior executives to $1 million.

New Stock Plan Benefits

It is not possible to determine the benefits that will be received by executive officers, by other employees or by non-employee directors under the Plan if the Plan is approved by the stockholders. Such benefits will depend on future actions of the Compensation Committee or the Board, the fair market value of our common stock at various future dates, the extent to which performance goals set by our Compensation Committee are met and/or the individual performance of the particular executive officer or employee. And, because awards under the Plan are discretionary, they are generally not determinable at this time.

Additional Information

Securities Authorized For Issuance Under the CONSOL Energy Inc. Equity Compensation Plan

The following table summarizes CEIX’s equity compensation plan information as of December 31, 2019. The impact of the amendment based on information as of February 12, 2020 is provided on page 20.

 

Equity Compensation Plan Information

Plan Category

Number of securities to

be issued upon exercise
of outstanding options,
warrants and rights

 

Weighted-
average exercise
price of outstanding

options, warrants and

rights

Number of securities remaining

available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))

  (a) (b) (c)

 

Equity compensation plans approved by security holders as of December 31, 2019

 

646,601

(1)          

 
  —            1,340,198       

 

Equity compensation plans not approved by security holders

  —             —            —       

 

Total

 

 

 

646,601

 

(1)          

 

 

 

 

—       

 

 

 

 

 

1,340,198       

 

 

(1)

Of this total, 381,911 shares are subject to outstanding RSUs, 71,425 shares are subject to outstanding deferred stock units and 193,265 shares are subject to outstanding PSUs (assuming a target performance level payout for future years).

No options have been granted under the Plan, since it was originally adopted on November 22, 2017, to any current named executive officer, current executive officer, non-employee director or any associate of such person, nor to any other employee or person.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE CEIX 2020 OMNIBUS PERFORMANCE INCENTIVE PLAN.

 

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PROPOSAL NO. 5 — APPROVAL OF AMENDMENTS TO

THE CERTIFICATE OF INCORPORATION TO ELIMINATE

SUPERMAJORITY VOTE REQUIREMENTS

AFTER OUR BOARD IS DECLASSIFIED

 

 

 

Current Supermajority Voting Provisions

Our current Certificate of Incorporation includes two supermajority voting provisions that the Board is recommending that you consider amending:

 

   

The first supermajority provision (included in current Section 6.2(c) of Article VI) requires the affirmative vote of the holders of at least two-thirds (66 2/3%) in voting power of the outstanding shares of our capital stock to remove a director from office, with or without cause, after our board is fully declassified (which shall occur at our 2022 Annual Meeting).

 

   

The second supermajority provision (included in current Article XI) requires the affirmative consent of the holders of at least 75% of the voting power of all of the outstanding shares of our capital stock to amend current Section 6.2 of Article VI.

Nominating and Corporate Governance Committee and Full Board Considerations

The supermajority voting provisions were included in our Certificate of Incorporation in connection with CEIX’s separation from its former parent. After the spin-off, the Nominating and Corporate Governance Committee and our full Board engaged in an on-ongoing review and assessment of CEIX’s corporate governance principles and practices. In light of the timing for the Board to be fully declassified at our 2022 annual meeting, the Nominating and Corporate Governance Committee and the Board considered the relative arguments for and against maintaining the supermajority voting provisions once the Board is declassified.

Supermajority voting provisions are often argued to be tools that provide corporate governance stability, protection against large stockholders acting in their self-interest and a means of encouraging negotiation with the sitting board. On the other hand, supermajority voting provisions have been criticized as impeding director accountability and responsiveness to stockholders, contributing to stale boards and limiting shareholder rights.

After weighing the advantages and disadvantages inherent in such provisions, as a result of its review and after careful deliberations, the Board has determined it is in the best interest of CEIX and its stockholders to propose an amendment to eliminate certain provisions of our Certificate of Incorporation so that the supermajority voting provisions are no longer effective immediately upon the Board becoming declassified at our 2022 annual meeting.

Proposed Amendment

The full text of the proposed amendments are included in Appendix C. The general descriptions of the proposed amendments above are qualified in their entirety by reference to the full text of the proposed amendments included in Appendix C.

Proposed additions to our Certificate of Incorporation are indicated by underlining, and proposed deletions are indicated by strike-outs. If approved by the stockholders, the amendments would become effective when the Company files a certificate of amendment with the Secretary of State of the State of Delaware, which would occur promptly after the Annual Meeting. The elimination of the supermajority voting provisions would become effective at our 2022 annual meeting once the Board is declassified.

Bylaws

Our bylaws include the same supermajority provisions that are currently included in our Certificate of Incorporation. If the amendment to the Certificate of Incorporation is approved, our bylaws will be amended and restated to, among other things, eliminate the same supermajority provisions from the bylaws at the same time.

 

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PROPOSAL NO. 5—APPROVAL OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTE REQUIREMENTS AFTER OUR BOARD IS DECLASSIFIED

 

Vote Required

The affirmative vote of the holders of at least three quarters (75%) of the voting power of all of the outstanding shares of capital stock of CEIX entitled to vote thereon, voting together as a single class is required to approve this Proposal No. 5. Abstention from or failure to vote, either by proxy or in person, will have the same effect as a vote against the approval of this Proposal No. 5. This Proposal No. 5 is considered a “non-routine” matter, and accordingly, brokerage firms are prohibited from voting in their discretion on behalf of their clients if such clients have not furnished voting instructions. Therefore, broker “non-votes” will have the same effect as a vote against this Proposal. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, the proxies will be voted FOR this Proposal No. 5.

Not Conditioned on Other Proposals

This Proposal No. 5 is separate from, and is not conditioned on, the approval of any other proposal at the Annual Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDMENTS TO THE CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTE REQUIREMENTS AFTER OUR BOARD IS DECLASSIFIED.

 

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EXECUTIVE OFFICERS 

 

 

 

CEIX’s executive officers are listed below. Each officer is appointed by the Board and holds office for the term set forth in the officer’s written employment agreement or until the officer’s successor has been elected and qualified, or until such officer’s earlier death, resignation or removal.

 

  Name

    Age    

  Executive  

Since

Position

James A. Brock

63

2017

President and Chief Executive Officer

Miteshkumar B. Thakkar

41

2020

Interim Chief Financial Officer

James J. McCaffrey

63

2017

Chief Commercial Officer

John M. Rothka

42

2017

Chief Accounting Officer

Kurt R. Salvatori

50

2017

Chief Administrative Officer

Martha A. Wiegand

49

2017

General Counsel and Secretary

The biographical information for Mr. Brock is provided under the caption “Proposal No. 1Election of Class III Directors – Continuing Class I Directors with Terms Expiring at the 2021 Annual Meeting of Stockholders” on page 14.

 

 

LOGO

  

 

Miteshkumar B. Thakkar

 

Mr. Thakkar has served as our Interim Chief Financial Officer since January 1, 2020. Mr. Thakkar has also served as Director of Finance and Investor Relations of CEIX and CONSOL Coal Resources LP since November 2017 and as Director of Finance and Investor Relations of CONSOL Coal Resources LP since May 2015. He previously served in various roles in the equity research department of FBR Capital Markets Corporation (now part of B. Riley FBR, Inc.) from May 2007 through May 2015 where he provided equity research coverage for companies in the metals and mining sector starting as an intern and moving up to VP, Research Analyst from July 2011 to May 2015. Prior to his work at FBR, he served in various roles at Reliance Engineering Associates Pvt. Ltd. from September 2002 through June 2006 where he managed project planning and controls for various petrochemical and telecom-related projects. Mr. Thakkar holds a Bachelors of Engineering (Mechanical) degree from the Maharaja Sayajirao University of Baroda and a Masters in Business Administration degree from Texas A&M University.

 

 

LOGO

  

 

James J. McCaffrey

 

Mr. McCaffrey has served as our Chief Commercial Officer since November 1, 2019. Prior to this appointment he served as our Senior Vice President—Coal Marketing since July 10, 2017 and acts as our functioning chief commercial officer. Mr. McCaffrey also has served as Senior Vice President—Sales of CONSOL Pennsylvania Coal Company, a wholly-owned subsidiary of CEIX, since June 2016. From January 2013 to June 2016, Mr. McCaffrey served as Senior Vice President—Energy Marketing for CONSOL Pennsylvania Coal Company, and from April 2003 to January 2013, he served as Senior Vice President of Coal Sales, Vice President of Materials & Supply Chain Management, Senior Vice President—CNX Land Resources, Vice President of Supply Chain and Vice President of Marketing Services in the coal operations group of CNX. Mr. McCaffrey, a certified mine foreman in Pennsylvania, started his career as a coal miner with CNX in 1976, and joined CNX’s management team as Vice President and General Manager of Consolidation Coal Mining Operations in March 2002. Additionally, Mr. McCaffrey serves on the Board of Directors of the Washington Health System Foundation and is a member of the Board of Visitors of the University of Pittsburgh Swanson School of Engineering.

 

 

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EXECUTIVE OFFICERS

 

 

LOGO

  

 

John M. Rothka

 

Mr. Rothka has served as our Chief Accounting Officer since November 22, 2017. Mr. Rothka also serves as the Chief Accounting Officer of the general partner of CONSOL Coal Resources LP, a position he has held since August 2, 2017. Prior to his appointment as the Chief Accounting Officer of the general partner of CONSOL Coal Resources LP and beginning in July 2015, Mr. Rothka served as the Controller of the general partner. Mr. Rothka joined the Accounting Department of CNX in September 2005, where he served in positions of increasing responsibility, and was promoted to Senior Manager in February 2012, a position he served in until July 2015. Prior to joining CNX, Mr. Rothka began his professional career at the accounting firm of Aronson LLC, where he served from September 1999 to November 2002, before joining Deloitte from November 2002 to September 2005, where he held several positions of increasing responsibility in the audit and assurance groups. Mr. Rothka is a certified public accountant.

 

 

LOGO

  

 

Kurt R. Salvatori

 

Mr. Salvatori has served as our Chief Administrative Officer since July 10, 2017. Mr. Salvatori has also served as Vice President- Administration of CONSOL Pennsylvania Coal Company since January 1, 2017. Previously, Mr. Salvatori served as Vice President Shared Services for CNX from July 2016 to December 2017, and prior to that as Vice President Human Resources for CNX from September 2011 to June 2016. Mr. Salvatori joined CNX in April 1992 and held numerous positions at CNX and CNX Gas Corporation, including Director of Human Resources from April 2006 to September 2011, Manager of Human Resources from January 2005 to April 2006, and Supervisor of Retirement and Investment Plans from April 2002 to January 2005. Active in non-profit organizations, Mr. Salvatori served as a trustee of the Washington County Community Foundation from 2010 through June 2019 and as a trustee of the Monongahela Health System since 2014. Mr. Salvatori has also served as chairman of the CONSOL Energy Political Action Committee (PAC) since 2017. In 2019, Mr. Salvatori became a trustee of the newly founded CONSOL Cares Foundation.

 

 

LOGO

  

 

Martha A. Wiegand

 

Ms. Wiegand has served as our General Counsel and Secretary since July 10, 2017. Ms. Wiegand has also served as General Counsel and Secretary of the general partner of CONSOL Coal Resources LP since March 16, 2015, and as a member of the Board of Directors of the general partner since January 2, 2020. Ms. Wiegand joined the legal department of CNX in December 2008 as Senior Counsel and was promoted to Associate General Counsel of CNX effective in 2012, where she was responsible for a variety of legal matters, including coal and natural gas marketing and transportation, labor and employment, financing arrangements and certain corporate transactions. Prior to joining CNX, Ms. Wiegand worked for approximately 10 years for several large Pittsburgh-based law firms, where she handled financing and corporate transactions for clients in the banking and energy industries, among others. She is licensed to practice law in Pennsylvania and New Jersey and is a member of the American Bar Association, the Pennsylvania Bar Association and the Energy & Mineral Law Foundation. Ms. Wiegand has also served on the American Coalition for Clean Coal Electricity (ACCCE) Strategy & Policy Committee since 2018 and on the Board of Trustees of the Energy & Mineral Law Foundation since 2019. She also served on the Committee of Unsecured Creditors in the Westmoreland Coal Company bankruptcy.

 

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EXECUTIVE COMPENSATION INFORMATION

 

 

 

 

Compensation Discussion and Analysis –

  Table of Contents

 

                      
   
   

Our Named Executive Officers (NEOs)

  

 

33

 

   
   
   

Executive Summary

  

 

33

 

   
   
   

Say-on–Pay Vote

  

 

35

 

   
   
   

CEIX Executive Compensation Policies and
Practices

  

 

35

 

   
   
   

CEIX Executive Compensation Philosophy

  

 

36

 

   
   
   

2019 Compensation Overview

  

 

36

 

   
   
   

 

Elements of Total 2019 Compensation Program

  

 

 

 

36

 

 

   
   

 

Pay Mix

  

 

 

 

37

 

 

   
   

 

Our Compensation Committee and Management Roles

  

 

 

 

37

 

 

   
   

 

CEIX Compensation Consultant

  

 

 

 

37

 

 

   
   
   

2019 Compensation Actions and Programs in Effect

  

 

38

 

   
   
   

Increase in 2019 Base Salaries, 2019 STIC and LTIC Targets

 

  

 

 

 

38

 

 

   
   

 

2019 Peer Group

  

 

 

 

38

 

 

   
   

 

2019 Short-Term Incentive Compensation (STIC)

  

 

 

 

38

 

 

   
   

 

2019 Performance Highlights of Our NEOs

  

 

 

 

40

 

 

   
   

 

2019 Long-Term Incentive Compensation (LTIC)

  

 

 

 

40

 

 

   
   

 

2019 to 2021 Payout for 2019 Tranche

  

 

 

 

41

 

 

   
   

 

2018 to 2020 for 2019 Tranche

  

 

 

 

42

 

 

   
   

Our Former Parent Long-Term Incentive Compensation Programs

 

  

 

 

 

42

 

 

   
   

 

Former Parent 2016 to 2020 LTIC Payout

  

 

 

 

42

 

 

   
   

 

Change in Control and CEO Employment Agreements

  

 

 

 

43

 

 

   
   

 

Retirement Benefit Plans

  

 

 

 

43

 

 

   
   
   

Governance Policies

  

 

44

 

   
   
   

 

Clawback Policy

     44      
   

Stock Ownership Guidelines/Holding Requirements for NEOs

 

  

 

 

 

44

 

 

   
   

 

No Hedging/Pledging Policy

  

 

 

 

45

 

 

   
   

 

Equity Grant Practices Policy

  

 

 

 

45

 

 

   
   

 

Perquisites

  

 

 

 

45

 

 

   
   

 

Tax, Accounting and Regulatory Considerations

  

 

 

 

45

 

 

   
 

 

 

 

Compensation Risk Assessment

  

 

 

 

45

 

 

   

 

 

 

 

 

 

Named Executive Officers

 

 

LOGO

 

 

 

James A. Brock

 

President and

Chief Executive Officer

 

LOGO

 

 

 

James J. McCaffrey

 

Chief Commercial Officer

 

 

LOGO

 

 

 

Martha A. Wiegand

 

General Counsel and Secretary

 

LOGO

 

Kurt R. Salvatori

 

 

Chief Administrative Officer

 

 

 

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EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

Compensation Discussion and Analysis

As one of the major producers of high-Btu bituminous thermal and crossover metallurgical coal in the United States, we operate with a pay for performance philosophy in a challenging, highly competitive and rapidly evolving environment. This Compensation Discussion and Analysis (“CD&A”) discusses the compensation decisions made for the fiscal year 2019 with respect to our named executive officers (“NEOs”), who are listed below.

Our Named Executive Officers (NEOs)

 

Name

 

Title

 

  James A. Brock

 

President and Chief Executive Officer

 

  James J. McCaffrey

 

Chief Commercial Officer

 

  Martha A. Wiegand

 

General Counsel and Secretary

 

  Kurt R. Salvatori

 

Chief Administrative Officer

 

  David M. Khani*

 

Former Executive Vice President, Chief Financial Officer and Treasurer

 

*   Mr. Khani resigned from CEIX effective as of December 31, 2019 and is no longer with our company. While he is required to appear in the summary compensation table, and other tables, he was not eligible for payments under many of the CEIX plans and programs resulting in payouts with respect to the 2019 or 2020 fiscal year.

 

Executive Summary

 

HOW DID WE
PERFORM?
  

 

  

 

—   Strengthened CEIX balance sheet by making net payments toward debt of nearly $184 million in 2019

 

     

—   Repurchased $32.7 million of CEIX Stock resulting in capital return to CEIX Stockholders

 

     

—   Completed debt refinancing and extended maturities which reduced CEIX projected interest expense by approximately $4.2 million per year

 

     

—   Met the threshold performance level for 2018 LTIC and exceeded the target performance level for 2016 LTIC with respect to pre-established performance metrics associated with our 2016 and 2018 performance-based long-term incentive programs**

 

     

—   Failed to meet the pre-established performance-metrics of our 2019 annual incentive plan for operating margin and free cash flow targets**

 

     

—   Achieved 2019 adjusted EBITDA* and coal sales volume consistent with publicly announced guidance ranges despite commodity price volatility

 

 

q

 

     

WHAT DID WE

CHANGE FOR

2019?

  

 

  

 

—   Authorized discretionary annual incentive payouts at below target levels to each of our NEOs based on adjusted corporate goals due to economic circumstances and market conditions beyond the control of our executives

 

     

—   Adjusted base salaries for four of our NEOs to reflect results of competitive compensation peer group data, general industry and internal pay equity of our NEOs

 

     

—   Adjusted annual and long-term incentive targets for certain NEOs to reflect results of competitive compensation peer group data, general industry and internal pay equity of our NEOs

 

 

 

**

This CD&A, which relates to 2019 compensation determinations, contains references to one or more financial measures (indicated by *) that have not been calculated in accordance with GAAP. Through this document references to free cash flow are in accordance with our Compensation Program, which defines free cash flow as net cash provided by operating activities plus monetization of non-EBITDA producing assets less organic capital expenditures and distributions to non-controlling interests. See reconciliation of these disclosed non-GAAP financial measures including average cash margin per ton sold, average operating margin per ton sold, and free cash flow to the most directly comparable GAAP financial measures in Appendix A to this Proxy Statement.

 

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EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

WHAT DID WE

CHANGE FOR

2019?

  

 

  

 

—   Implemented performance-based annual and long-term variable incentive compensation with goals tied to the achievement of operating margin and free cash flow annual targets, as well as relative total stockholder return and free cash flow long-term targets for our NEOs

 

     

—   Reviewed and approved adjustments in our peer group

 

 

q

 

     

HOW DO WE

DETERMINE PAY?

  

 

  

 

—   Design competitive pay programs to reward executives for positive company pre-established financial and operational goals, mitigate material risks and align with stockholder interests’ equity-based long-term incentive awards

 

     

—   Establish pay levels commensurate with performance and the need to retain high-quality talent, as well as to preserve internal equity among new NEOs

 

     

—   Consider many factors, including the advice of our Compensation Committee’s independent compensation consultant, internal pay equity among executives and the alignment of total pay opportunity and pay outcomes with performance and external competitive market data relating to our peer group and general industry

 

 

q

 

     

HOW DID WE PAY

OUR NEOS?

  

 

  

 

—   Base salaries reflected each NEO’s role, responsibility, experience and market conditions

 

     

—   Discretionary payout under our 2019 STIC due to unprecedented economic conditions beyond the control of our NEOs to reward for strong corporate performance, and to retain our key executives

 

  

 

  

—   Vesting under two of our long-term programs aligned with performance of our stock as compared to our peers

 

     

—   Long-term equity incentives granted at target levels delivered through a mix of performance-based restricted stock units (“PSUs”) (60%) and time-based restricted stock units (“RSUs”) (40%)

 

     

—   No off-cycle equity awards or material perquisites for any of our NEOs

 

 

q

 

     

HOW DO WE

ADDRESS

RISK AND

GOVERNANCE?

  

 

  

 

—   Provide an appropriate balance of short and long-term compensation with payouts based on the company’s achievement of pre-established financial and operational goals, including a focus on sustainability, environmental compliance and safety

 

     

—   Follow practices that promote good governance and serve the interests of our stockholders, with threshold and maximum payout caps for annual cash incentives and long-term performance awards, and policies on clawbacks, anti-pledging, anti-hedging, insider trading, stock ownership and equity grant practices

 

     

—   Solicit “say-on-pay” stockholder vote annually at stockholder meeting

 

     

—   Conducts an annual risk assessment of our compensation policies and practices through our Compensation Committee, with the assistance of an independent compensation consultant

 

     

—   Review our compensation program and practices with an independent compensation consultant that reports directly to our Compensation Committee

 

 

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EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

 

q

 

     

WHY YOU

SHOULD

APPROVE THE

SAY-ON-PAY

PROPOSAL

  

 

  

 

—   Fiscal 2019 performance continued to support long-term stockholder value

 

     

—   Fiscal 2019 annual and long-term incentive payouts for our NEOs aligned with company performance

 

     

—   Our pay program is aligned with stockholder interests, emphasizing achievement of strategic objectives both annually and over the long term

 

     

—   Our pay practices are tied to robust risk management and corporate governance principles

 

Say-on-Pay Vote

We took into consideration the results of the say-on-pay voting by our stockholders last year when reviewing our current policies and practices related to compensation of our NEOs. Of the 22,089,381 million votes cast by our stockholders, over 99% were in favor of our 2018 executive compensation program. While we believe we have a fair and effective compensation program, we are gratified to receive the vote of confidence from our stockholders. We therefore determined not to make any significant changes to our current compensation program. We commit to staying up-to-date on recommended best practices where practicable. Finally, our Compensation Committee and senior management will also continue to consider stockholder input, including the advisory say-on-pay vote, as we evaluate the future design of our executive compensation programs and the specific compensation decisions for each of our NEOs.

CEIX Executive Compensation Policies and Practices

Our commitment to strong corporate governance practices extends to the compensation plans, principles, programs and policies established by our Compensation Committee and our Board, which include the following governance practices and policies:

 

 

  WHAT WE DO

 

  

 

WHAT WE DON’T DO

 

 

    Pay for Performance

 

     Meaningful Stock Ownership/Holding
 Requirements

 

    Anti-Hedging Policy

 

     Assess Compensation Risk

 

  

 

LOGO   No Excessive Perquisites

 

LOGO   No Income Tax Gross Ups

 

LOGO   No Backdating of Stock Options

 

LOGO   No Repricing of Stock Options

       (without stockholder approval)

     Equity Grant Practices Policy

 

  

 

LOGO   No Discounting of Stock Options

     Clawback Provisions in All Incentive Awards

 

  

     Double Trigger Cash Change in Control Provisions

 

  

     Independent Compensation Consultant

  

 

  LOGO  – 2020 Proxy Statement       35


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

CEIX Executive Compensation Philosophy

Our compensation philosophy is designed to attract and retain key talent necessary for us to compete, promote a pay-for-performance culture, incentivize our NEOs to achieve desired financial and operating results, and create a balanced compensation program that aligns risk-taking with the sustainability and long-term financial health of our company.

Our philosophy is founded on the following six guiding principles:

 

   

Compensation targets and the mix of pay based on market practices.

 

   

Actual compensation should align with results against performance objectives.

 

   

Incentives should promote above-median pay when performance exceeds company and peer expectations and below-median pay when performance lags behind these indicators.

 

   

Compensation should be aligned with the long-term interest of our stockholders.

 

   

Compensation practices and policies should not encourage unreasonable risk-taking.

 

   

Compensation programs should align with our corporate values.

Our compensation philosophy also reflects our commitment to enhancing management retention and leadership stability in a highly competitive market by subjecting a significant portion of total compensation to multi-year vesting or performance conditions described on pages 40-43, relating to our long-term compensation programs.

2019 Compensation Overview

Elements of Total 2019 Compensation Program. In 2019, our NEOs were compensated through the following elements of compensation.

 

   
  Compensation Element   Form of Compensation   Purpose
   

Base Salary

 

Cash

 

Provides fixed compensation element necessary to attract and retain key executives

   

2019 Short-Term Incentive Compensation (“STIC”)

 

Cash

 

Motivates NEOs to work towards achievement of key operational and financial goals, including a focus on sustainability, environmental compliance, safety, profitability and balance sheet strength

   

2019 Long-Term Incentive Compensation (“LTIC”)

 

Equity: Performance-based restricted stock units that vest ratably over 3 years based on pre-established performance goals

 

Equity: Service-based restricted stock units that vest ratably over 3-year period

 

Performance goals tied to relative total stockholder return and free cash flow promote investor alignment through ownership consistent with peer group practices

   

Change in Control and Non CIC Severance Agreements

 

Cash severance including post-termination benefits

 

Attracts and retains NEOs, provides competitive benefits and ensures NEOs remain focused to act in best interest of company if faced with significant strategic event

   

Retirement Benefits

 

Active qualified 401(k) savings plan with company matching and discretionary contributions

 

Broad-based plan that provides income security through employee and company contributions for all participants including NEOs

         

 

36       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

Pay Mix. The charts below illustrate the target total direct compensation opportunity for 2019 for Mr. Brock and the average of our other NEOs; 63.20% of CEO’s total direct compensation is equity based and 85.3% is performance-based.

 

CEO

 

14.7% Base; 22.1% STIC; 63.2% LTIC

 

  

Other NEOs

 

24.9% Base; 14.7% STIC; 60.4% LTIC

 

 

LOGO

 

 

  

 

LOGO

 

 

Our Compensation Committee and Management Roles. Our Compensation Committee requests that the CEO be present at committee meetings, where compensation and corporate performance are discussed and evaluated. The CEO is encouraged to provide insight, suggestions or recommendations regarding executive compensation if present during these meetings or at other times. However, only independent committee members are allowed to vote on decisions made regarding executive compensation. In making its determinations with respect to executive compensation, the committee is supported by CEIX’s Chief Administrative Officer, its General Counsel and Mercer, the committee’s independent compensation consultant. While the committee meets with the CEO to discuss his own compensation package, ultimately, decisions regarding the CEO’s compensation are made by the committee in executive session without the CEO or any other executive officer present, solely based upon the committee’s deliberations. Decisions regarding other NEOs who report directly to the CEO are also made by the committee (or Board, in the case of equity grants, absent a delegation to the committee or CEO) after considering recommendations from the CEO, Mercer and the Chief Administrative Officer.

CEIX Compensation Consultant. Our Compensation Committee retained Mercer as an independent compensation consultant directly, although in carrying out its assignments, Mercer also interacts with CEIX management when necessary and appropriate. Specifically, the Chief Administrative Officer, responsible for Human Resources matters, including executive compensation, interacts with the consultant to provide compensation data, best practices data, and executive compensation trends. In addition, Mercer may, in its discretion, seek input and feedback from executives regarding its consulting work product prior to the presentation to the Compensation Committee to align with CEIX’s business strategy, to determine that additional data may need to be gathered, or to identify other issues, if any, prior to the presentation to the Compensation Committee. Annually, the Compensation Committee reviews with management the independence of any compensation consultant it retains. In February 2020, the Compensation Committee conducted an independence review of Mercer by analyzing the factors mandated by the listing standards of the New York Stock Exchange and concluded that there were no conflicts of interest arising from Mercer’s work.

 

  LOGO  – 2020 Proxy Statement       37


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

2019 Compensation Actions and Programs in Effect

Increase in 2019 Base Salaries, 2019 STIC and LTIC Targets. In early 2019, our Compensation Committee approved increases in the base salaries for four (4) of our named executive officers to reflect their increased roles and responsibilities and to ensure that our executives are compensated competitively in line with CEIX’s Peer Group and general industry. The Compensation Committee also approved certain adjustments in the STIC and LTIC compensation targets for our NEOs to ensure that their short-term and long-term compensation opportunities are in line with the CEIX Peer Group and general industry. The base salaries and targets, expressed as a percentage of each NEO’s base salary, are included in the table below reflecting adjustments from 2018 to 2019.

 

           

Name of Executive

2018

Base Salary

2019

Base Salary

2018

STIC

2019

STIC

2018

LTIC

2019

LTIC

         

Mr. Brock

 

$650,000

 

$810,000

 

110

%    

 

150

%    

 

350

%    

 

430

%  

         

Mr. McCaffrey

 

$389,500

 

$400,000

 

50

%

 

50

%

 

128

%

 

150

%

         

Ms. Wiegand

 

$300,000

 

$350,000

 

50

%

 

60

%

 

42

%

 

114

%

         

Mr. Salvatori

 

$270,000

 

$300,000

 

50

%

 

50

%

 

46

%

 

83

%

2019 Peer Group. The Compensation Committee selected the following 11 companies (the “Peer Group”) based on the recommendation of Mercer, which includes companies in the coal and energy industry similar in revenue size to CEIX and with industry and business characteristics comparable to CEIX in terms of revenue and market cap and with whom we compete for talent. The Compensation Committee’s 2019 review focused on additions and removals necessary in light of the continued industry pressures on the coal and mining industry. Based on that review, Westmoreland Coal Company and Foresight Energy LP were removed due to insufficient capitalization and Cloud Peak Energy was similarly removed as it was acquired and taken private and no longer a relevant competitor. Three additional companies were added to the group, Warrior Met Coal, Inc., Contura Energy, Inc. and SunCoke Energy, Inc., which were considered to be more appropriate peers from a financial comparability standpoint in terms of industry scope. The Compensation Committee does not target a particular percentile within the Peer Group in setting an NEO’s compensation, but uses the Peer Group compensation data as one of several reference points in determining the form and amount of compensation. The Compensation Committee also uses general industry competitive market data to evaluate our NEO total compensation packages.

 

Alliance Resources Partners, L.P.    Louisiana-Pacific Corporation
Arch Coal, Inc.    Natural Resources Partners L.P.
Cleveland-Cliffs Inc.    Peabody Energy Corporation
Compass Minerals International, Inc.    SunCoke Energy, Inc.
Contura Energy, Inc.    Warrior Met Coal, Inc.
Hallador Energy Company   

2019 Short-Term Incentive Compensation (STIC) (Original Design). In January 2019, our Compensation Committee approved 2019 annual incentive awards for the performance period beginning January 1, 2019 through December 31, 2019, the payment of which were contingent on the company’s successful achievement of performance goals related to operating margin and free cash flow, equally weighted, but subject to modification influenced by each NEO’s contribution towards achieving environmental and safety initiatives and other value added priorities, as determined by our President and CEO, and approved by our Compensation Committee. At the time these performance goals were established, our Compensation Committee believed they would encourage our NEOs to stay focused on operational execution and balance sheet strength.

After thorough deliberation and consideration, including discussions with the Committee’s independent compensation consultant (prior to the end of 2019 and again in February of 2020) the Committee decided to adjust the corporate performance goals under the 2019 STIC. The Committee recognized that the operating margin and free cash flow performance goals, while sound when initially established, had been set at an aggressive level under starkly different economic circumstances in early 2019 as compared to the end of 2019. As a result, the Committee did not want to unfairly punish or reward executives for economic factors that were out of their control.

 

38       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

The Committee expressed concern that management would not be rewarded appropriately for achieving strong operational performance in the face of extreme fluctuations in coal prices well beyond the control of 2019 STIC participants. In reaching its decision, the Committee adjusted the weightings associated with corporate performance and individual performance by decreasing the weighting on corporate performance from ninety percent (90%) to seventy-five percent (75%) and by increasing the weighting on individual performance from ten percent (10%) to twenty-five percent (25%).

Original 2019 STIC Performance Goals equally weighted at 45% each and 10% allocated to individual NEO performance appear below:

 

   

Performance Goals

Operating Margin Free Cash Flow
   

Threshold (50%)

  $15.59 Per Ton             $  88 million          
   

Target (100%)

  $16.69 Per Ton     $120 million  
   

Maximum (200%)

  $18.27 Per Ton     $166 million  

In February 2020, the Compensation Committee evaluated the original performance goals with 0% as the unadjusted payout percentage as CEIX did not achieve threshold performance levels for either operating margin or free cash flow.

Adjusted 2019 STIC Performance Goals: The Committee used discretion reserved to it under the 2019 STIC terms to evaluate the CEIX’s 2019 performance based on the following positive corporate results (modified by each NEO’s individual performance):

 

   

Strengthened the company’s balance sheet by making net payments toward debt of nearly $184 million in 2019

 

   

Repurchased $32.7 million of CEIX common stock resulting in capital return to CEIX shareholders

 

   

Achieved adjusted EBITDA* guidance of $406 million*, which was considered above the mid-point of guidance range anticipated

 

   

Maintained a strong sales portfolio during 2019 and also built a substantial sales book for 2020

 

   

Relative 2019 performance of CEIX against its Peer Group in terms of revenue growth, adjusted EBITDA* achieved, market cap and enterprise value

 

*

See reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure in Appendix A to this Proxy Statement.

Based on the discretionary authority reserved under the 2019 STIC terms, the Committee approved payouts to our named executive officers in the amounts displayed below, which represent on average a percentage payout slightly below target performance for each executive. As compared to the payout percentage achieved under the unadjusted 2019 STIC terms, the Committee increased the total payout percentage from zero percent (0%) to just below target performance reflecting company performance, and further influenced by each executive’s contribution towards achieving environmental and safety initiatives and other value-added priorities, as determined by our President and CEO, and approved by our Compensation Committee.

The 2019 STIC award payout formula under the original and the adjusted formula appears below:

 

Annual

Base Salary

               X  

Target

Opportunity

Percentage

(% of Base Salary)

  X          

(+/-

Up to 200%

Modifiers)

    =           2019 STIC Adjusted
Award
Payout

 

NEO

2019 Target
Opportunity

Percentages

(% of Base
Salary)

2019 Target
Payout
Opportunity

 

2019 STIC
Payout
Formulaic
Score

(% of
Opportunity)

 

2019 STIC
Payout

Adjusted
Score

(% of
Opportunity)

2019
Actual
Adjusted
Payout

Mr. Brock

 

150

%      

 

$1,215,000

        

 

%      

 

98.7

%      

 

$1,199,813

      

Mr. McCaffrey

 

50

%

 

$   200,000

 

%

 

98.7

%

 

$   195,000

Ms. Wiegand

 

60

%

 

$   210,000

 

%

 

93.7

%

 

$   196,875

Mr. Salvatori

 

50

%

 

$   150,000

 

%

 

82.5

%

 

$   123,750

 

  LOGO  – 2020 Proxy Statement       39


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

To illustrate CEIX’s pay for performance culture, the 2019 payout percentage is significantly below the historical payout percentages displayed below under the 2018 and 2017 annual incentive plans, demonstrating that our Committee approves higher payouts to recognize superior performance and reduced payouts when performance falls short.

 

       

NEO

2018 STIC
Payout
Score (% of
Opportunity)
2018
Actual
Payout
2017 STIC
Payout
Score (% of
Opportunity
2017
Actual
Payout

Mr. Brock

 

200

%        

 

$1,430,000

      

 

197.7

%       

 

$540,042

     

Mr. McCaffrey

 

200

%

 

$   389,500

 

197.7

%

 

$385,021

Ms. Wiegand

 

200

%

 

$   300,000

 

197.7

%

 

$139,379

Mr. Salvatori

 

197.5

%

 

$   266,625

 

197.7

%

 

$166,760

2019 Performance Highlights of Our NEOs

 

   

James A. Brock. As our Chief Executive Officer, Mr. Brock continued to lead CEIX in its second full year as a standalone company, and continued his role as Chief Executive Officer of the general partner of CCR. The Pennsylvania Mining Complex produced 27.3 million tons in 2019, which is its second highest production year in its history. Despite a challenged commodity market, the PAMC ran at approximately 96% capacity utilization during 2019, highlighting the sustained desirability of our product. Additionally, the CONSOL Marine Terminal achieved record terminal revenue of $67.4 million. On the strategic front, Mr. Brock spearheaded the company’s growth and diversification efforts by launching the Itmann Metallurgical Coal Project and foray into coal-to-products space.

 

   

James J. McCaffrey. As our Chief Commercial Officer, Mr. McCaffrey holds a critical role as the leader of the marketing team for our coal business, which has delivered a relatively stable pricing and volume performance over the past 2 years even while the thermal coal industry continued to shrink domestically and internationally. Furthermore, the CONSOL Marine Terminal reported a record revenue year in 2019, primarily driven by the take-or-pay contract Mr. McCaffrey was able to secure. Mr. McCaffrey’s team built CEIX’s coal sales portfolio for 2020 through 2021, resulting in our company being greater than 95% contracted for 2020 and 43% contracted for 2021, assuming an annual coal sales volume at the midpoint of our 2020 coal sales volume guidance range.

 

   

Martha A. Wiegand. As the General Counsel and Secretary of CEIX and the general partner of CCR, Ms. Wiegand has played a critical role in leading both internal and external teams of lawyers in her role of advising both boards on various corporate governance and other board-level issues, serves as the top legal advisor for the Pennsylvania Mining Complex and oversees the companies’ land, legal, cybersecurity, health, safety and environmental, and internal audit functions. During the year Ms. Wiegand was also appointed to the board of the general partner of CCR.

 

   

Kurt R. Salvatori. As our Chief Administrative Officer, Mr. Salvatori oversees the company’s human resource, government affairs, information technology and public relations functions. During 2019, these functions went “live” with the company’s new enterprise resource planning system, launched CONSOL’s new charitable giving vehicle, the CONSOL Cares Foundation, and continued the overall management of the company’s long-term liability portfolio.

2019 Long-Term Incentive Compensation (LTIC). In February of 2019, our Compensation Committee designed the long-term program for our NEOs to include grants of PSUs and RSUs. The RSUs and PSUs both vest ratably over a three-year period, although vesting of the PSUs is subject to the company’s satisfactory achievement of pre-established performance goals as follows:

 

   

Form of 2019 LTIC

  Weight      Performance Goal and Vesting Period
   

Performance-Based Restricted Stock Units (PSUs)

  60%     

Performance Goals

- 50% Relative TSR of XME Metals & Mining Index

- 50% Free Cash Flow

Ratable vesting over three-year performance period

   

Service-Based Restricted Stock Units (RSUs)

  40%      Ratable vesting over three-year service period
          

 

40       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

Our Compensation Committee believes the PSUs and RSUs align the interests of our executives with those of our stockholders because (1) the vesting of the RSUs increases executive stock ownership and supports executive retention, and (2) the vesting of the PSUs is tied to the achievement of pre-established goals related to our stock price and the sustained financial and operational stability of our company over the long-term. While most companies tie target relative TSR to peer group median performance, we have imposed a higher performance bar for target vesting. As described below, CEIX is required to perform above the median (60th percentile) to earn target award values. Our Compensation Committee also designs the targets for our future performance goals to be attainable but reasonably difficult to meet such that future performance must generally exceed current fiscal year performance.

The target accounting values for the 2019 PSU and RSU grants for our NEOs appear below. These values are computed in the same manner as the stock awards in the Summary Compensation Table that appears on page 46 as explained by footnote 3 to the table.

 

   

Named Executive Officer

  

 

    PSU Target    

Grant ($)

  

 

    RSU Target    

Grant ($)

   

Mr. Brock

    

$

2,380,687

    

$

1,393,200

   

Mr. McCaffrey

    

$

410,099

    

$

240,000

   

Ms. Wiegand

    

$

273,371

    

$

160,000

   

Mr. Salvatori

    

$

170,876

    

$

100,000

                       

The vesting of the NEOs’ PSUs will be calculated annually based on the following pre-established equally weighted goals, with the aggregate payout capped at 200% of target performance.

 

(1)

The TSR relative to the XME Metals and Mining ETF (measured at the end of each year) during the 3-year performance period using the 10-day average closing price ending December 31 for the applicable tranche; and

 

(2)

Free Cash Flow means net cash provided by operating activities plus monetization of non-EBITDA producing assets less organic capital expenditure and distributions to non-controlling interests.

The PSU target performance goals for the 2019 tranche performance period under the 2019-2021 LTIC appear below:

 

       

2019

Weight 50% Target 100% Target 200% Target

Relative TSR

 

50%

 

 

25th Percentile    

 

 

60th Percentile    

 

 

75th Percentile    

 

Free Cash Flow

 

50%

 

 

$88 million    

 

 

$120 million    

 

 

$166 million    

 

2019 to 2021 LTIC Payout for 2019 Tranche. CEIX company performance against pre-established goals for the 2019 year failed to meet the threshold performance levels related to free cash flow, which was $65 million for the 2019 year and below the threshold performance level of $88 million, and Relative TSR performance was at the 4th percentile, also below the threshold performance level, the 25th percentile. Accordingly, the Committee authorized no vesting or payout with respect to the 2019 year under the 2019 to 2021 LTIC.

2018 to 2020 LTIC Payout. In January of 2018, Messrs. Brock, McCaffrey and Salvatori and Ms. Wiegand were granted PSUs that vest ratably over a three-year period (January 1, 2018 through December 31, 2020), based on Relative TSR and Free Cash Flow as follows:

 

       

2019

Weight 50% Target 100% Target 200% Target

Relative TSR

 

50%

 

 

25th Percentile    

 

 

60th Percentile    

 

 

75th Percentile    

 

Free Cash Flow

 

50%

 

 

$26 million    

 

 

$67 million    

 

 

$98 million    

 

 

  LOGO  – 2020 Proxy Statement       41


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

2018 to 2020 LTIC Payout for 2019 Tranche. The vesting of the 2018-2020 PSUs is calculated annually based on the following pre-established equally weighted performance goals, with the maximum payout capped at 200% of target performance:

 

       

Performance Metric

Performance
Results

 

Target
Units Earned
(%)

Weighting
(%)

 

Total Units
Earned
(%)

Relative TSR

  7th Percentile

 

       

 

50%

     

 

     

Free Cash Flow*

$65 million

 

196%

 

 

50%

 

 

98%

 

In February 2019, the Compensation Committee evaluated the company’s achievement against the above-described performance goals under the 2018 - 2020, and determined that our NEOs earned the following payouts with respect to the 2019 PSU tranche:

 

     

Named Executive Officer

2019 PSU
Tranche
(at target)
Target
Payout
(%)

 

Payout
Amounts
(# of
shares)

Mr. Brock

 

14,361

        

 

49

%    

 

7,038

        

Mr. McCaffrey

 

3,155

 

49

%

 

1,547

Ms. Wiegand

 

788

 

49

%

 

387

Mr. Salvatori

 

788

 

49

%

 

387

Our Former Parent Long-Term Incentive Compensation Programs. The awards and payouts described below include awards granted under our former parent’s equity plan and assumed by CEIX under our Omnibus Performance Incentive Plan (the “Omnibus Plan”). These awards included PSUs that are eligible for vesting with respect to the company’s performance during the 2019 Year.

Former Parent 2016 to 2020 LTIC Payout. In January 2016, Messrs. Brock, McCaffrey and Salvatori were granted PSUs by our former parent that vest, if earned, ratably over a five-year period (January 1, 2016 through December 31, 2020) based on Absolute Stock Price and Relative TSR as compared to the S&P 500. The performance goals established for the 2016 through 2020 performance period for 2019 are as follows:

 

 

LOGO

The vesting of these awards is calculated annually based on the pre-established equally weighted performance goals described above, with the aggregate payout capped at 200% of target performance. Our performance for the 2019 tranche is shown below:

 

       

Performance Metric

       Performance    
Results
   Target
    Units Earned    
(%)
       Weighting    
(%)
  

 

    Total Units    
Earned

(%)

Relative TSR

  

40th Percentile

  

  71%

  

50%

  

  35.50%

Absolute Stock Price Per Share

  

$14.69

  

200%

  

50%

  

100.00%

                     

 

42       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

Relative TSR for the 2019 tranche was measured by comparing CEIX’s common stock price 10-day average closing stock price per share ending on December 31, 2019, against the companies in the S&P 500 as of the same date using a 10-day average closing stock price per share ending on December 31, 2016. The Absolute Stock Price metric for the 2019 tranche was measured by comparing the 2019 target grant date stock price (“GDSP”) of $8.47 per share against CEIX’s 10-day average closing stock price per share ending December 31, 2019 of $14.69 per share.

In February 2019, the Compensation Committee evaluated the company’s achievement against the above-described performance goals, and determined that our NEOs (other than Ms. Wiegand who was not a participant in the 2016 LTIC) earned the following payouts with respect to the 2019 PSU tranche:

 

     

Named Executive Officer

   2019 PSU
Tranche
    (at target)    
   Target
Payout
      (%)      
  

 

Payout
Amounts
(# of
    shares)    

Mr. Brock

    

 

9,960

    

 

135.5%

 

    

 

13,496

 

Mr. McCaffrey

    

 

2,490

    

 

135.5%

 

    

 

3,374

 

Mr. Salvatori

    

 

747

    

 

135.5%

 

    

 

1,012

 

                                  

Change in Control and CEO Employment Agreements. In connection with a review of the plans and programs that we assumed from our former parent in connection with the separation, our Compensation Committee recommended, and the Board approved, new severance and double trigger cash severance CIC agreements covering each of our NEOs (other than the CEO), as well as an employment agreement for our CEO and President, all of which became effective on February 15, 2018.

These agreements (including the employment agreement for our CEO) provide for non-CIC severance exclusively upon a termination of employment absent “cause.” In the case of a CIC scenario, each NEO is only entitled to cash severance if, following, or in connection with, a CIC, the NEO’s employment is terminated by CEIX absent “cause” or if the NEO resigns due to constructive termination within a specified period. The purpose of these agreements is to ensure that CEIX (a) offers a compensation package that is competitive with that offered by other companies with whom we compete for talent, (b) retains and relies upon the undivided focus of our senior executives immediately prior to, during and following a CIC, and (c) diminishes the inevitable distraction of our NEOs by virtue of personal uncertainties and risks created by the potential job loss following a CIC.

In addition to the double trigger severance CIC provisions, all of the agreements (including the CEO’s employment agreement) include post termination restrictive covenants relating to confidentiality, non-competition and non-solicitation and also require each NEO to sign an appropriate release of claims. These agreements do not include any gross up feature arising from the excise tax payable on an excess parachute payment.

The CEO’s employment agreement also provides for a three-year initial term of employment automatically renewed for additional one-year periods unless either party provides advance written notice within sixty days of the end of the term.

Retirement Benefit Plans. We maintain several retirement plans, the purpose of which is to attract and retain employees and to ensure an overall competitive compensation and benefits offering for all of our employees, including our NEOs. The maintenance of these plans also reflects commitments made at the time of our separation from our former parent that required us to assume certain plan liabilities as a result of the separation.

 

   

Qualified Defined Contribution Plan. We maintain a qualified Investment Plan which operates as a 401(k) savings plan for eligible employees of CEIX and its affiliates, including our NEOs. Plan participants may make before-tax and/or after-tax contributions of 1% to 75% of eligible compensation to the plan via payroll deductions. Plan participants who have attained age 50 before the end of the plan year are eligible to make catch-up contributions. A participant may also separately designate from 1% to 75% (not to exceed $10,000) of any incentive compensation payment as a before-tax and/or after-tax contribution. The company matches 100% of a participant’s contribution up to 6% of eligible compensation. The plan also permits certain discretionary contributions ranging from 1% to 6%.

 

  LOGO  – 2020 Proxy Statement       43


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Discussion and Analysis

 

   

Qualified Defined Benefit Plan. We also maintain an Employee Retirement Plan, a qualified defined benefit plan under Section 401(a) of the Code, which was initially frozen in 2014 for certain plan participants and then subsequently frozen to all remaining plan participants as of December 31, 2015. None of our named executive officers accrue any future benefit under this plan.

 

   

Non-Qualified Retirement Restoration Plan (the “Restoration Plan”). This plan is an unfunded deferred compensation plan maintained for the benefit of employees whose eligible compensation under the Pension Plan (defined below) exceeded limits imposed by the federal income tax laws. This plan has been frozen since December 31, 2006. None of our named executive officers accrue any future benefit under this plan.

 

   

Non-Qualified Supplemental Retirement Plan (“SERP”). This plan includes certain obligations for participants under a company predecessor plan. The plan was frozen effective as of December 31, 2011, and none of our named executive officers accrue any future benefit under this plan.

 

   

Non-Qualified Defined Contribution Restoration Plan (the “New Restoration Plan”). This plan also includes obligations for certain participants arising from a predecessor company plan. However, this plan is not frozen and covers our current employees, including our NEOs. Eligibility for benefits under this plan is determined each calendar year, and participants whose eligible plan compensation exceeds the compensation limits imposed by section 401(a)(17) of the Code (up to $280,000 for 2019) are eligible for New Restoration Plan benefits. The amount of each participant’s benefit under this plan is equal to 9% times his or her eligible plan compensation, less 6% times the lesser of his or her annual base salary as of December 31 or the compensation limit imposed by the Code for such year ($280,000 for 2019). These benefits are described in the compensation tables following this CD&A beginning on page 46.

Governance Policies

Clawback Policy. We maintain a clawback policy in our Omnibus Plan that permits our Compensation Committee to recover any award (whether cash or equity based), which is subject to recovery under any law, government regulation, and stock exchange listing requirement or company policy. In addition, any awards made under our Omnibus Plan are subject to recoupment in the event an award recipient violates any restrictive covenant in his or her award agreement relating to confidentiality, non-competition or non-solicitation. During 2019, all CEIX incentive awards (whether cash or equity based) were made under the terms of the Omnibus Plan and thus subject to recovery under our policy.

Stock Ownership Guidelines/Holding Requirements for NEOs. We adopted stock ownership guidelines applicable to each of our NEOs, which require that they own a minimum number of shares of CEIX stock, based upon a multiple of base salary. The guidelines provide each NEO with a five-year period from January 25, 2018 to achieve the applicable ownership level. The ownership requirements applicable to the NEOs are as follows:

 

 

Named Executive Officer

Ownership
    Requirement    

(As Multiple
of Base
Salary)

President and Chief Executive Officer

5x

Executive Vice President, Chief Financial Officer and Treasurer

2x

Chief Commercial Officer

2x

General Counsel and Secretary

2x

Chief Administrative Officer

2x

Our stock ownership guidelines were adopted to align our NEOs’ (as well as our non-employee directors’) interests with those of our stockholders. Unless an NEO has satisfied his or her guideline level, he or she must retain an amount equal to 50% of the net shares received (after tax withholding) upon the exercise or vesting of any equity award under the Omnibus Plan. Shares counted towards the guideline include: shares owned outright by the executive officer or his or her immediate family members residing in the same household; shares held in trust for the benefit of the executive officer or his or her immediate family members residing in the same household; vested shares of restricted stock; and vested deferred stock units, restricted stock units or performance share units that may only be settled in shares.

 

44       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Compensation Committee Report

 

No Hedging/Pledging Policy. Our Corporate Governance Guidelines prohibit any executive officer (including an NEO) from entering into speculative transactions in CEIX securities, and similarly prohibit an executive officer from purchasing or selling puts, calls, options or other derivative securities based on CEIX securities. The policy also prohibits hedging or monetization transactions, such as forward sale contracts, in which the holder continues to own the underlying CEIX security without all the risks or rewards of ownership. In addition, directors and officers of CEIX are prohibited from holding CEIX securities in a margin account or otherwise pledging CEIX securities as collateral for a loan.

Equity Grant Practices Policy. We maintain a written policy for granting equity awards, which describes the Compensation Committee’s practices relating to equity grants to executives and the timing of such grants in relation to material and non-public information and which specifically prohibits the backdating of stock options. The policy also describes the Compensation Committee’s delegation of authority to the Chair and Chief Executive Officer to award equity to non-executive employees. We do not have a practice or policy of timing our grants in relation to the announcement of material non-public information. In accordance with the policy, all stock option grants must have an exercise price equal to the closing price of CEIX common stock on the date of grant.

Perquisites. We provide limited perquisites that we believe are reasonable, competitive and consistent with our compensation program, which are described more fully in the footnotes to the Summary Compensation Table that appears on pages 46-47.

Tax, Accounting and Regulatory Considerations. Our Compensation Committee believes that stockholder interests are best served if their discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. However, our Compensation Committee does not anticipate a shift away from variable or performance-based compensation payable to our executive officers in the future, nor do we anticipate applying less rigor in the process by which we establish performance goals or evaluate performance against such pre-established goals, with respect to compensation paid to our NEOs. In addition, accounting considerations are one of many factors that our Compensation Committee considers in determining compensation mix and amount.

Compensation Risk Assessment. Annually, our Compensation Committee reviews the compensation programs and practices of CEIX. The CEIX pay philosophy provides for an effective balance in cash and equity mix, short and long-term performance periods, and financial and non-financial performance goals, and affords the Compensation Committee discretion to adjust payouts under the company’s compensation plans. Further, CEIX policies to mitigate compensation-related risk include stock ownership guidelines, vesting periods on equity, insider trading prohibitions, a clawback policy, caps on the amount of compensation that may be earned and independent Compensation Committee oversight. In February 2019, the Compensation Committee determined that our plans and programs do not encourage unnecessary risk-taking and do not pose a material adverse effect on the company. The review was conducted by CEIX management with the assistance of the Compensation Committee’s independent compensation consultant, Mercer.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section above with CEIX’s management and, based upon such review and discussion, the Compensation Committee has recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into CEIX’s Annual Report on Form 10-K for the year ended December 31, 2019. The Compensation Committee’s charter is available on our website at www.consolenergy.com.

Members of the Compensation Committee:

Joseph P. Platt, Chair

John T. Mills

William P. Powell

The foregoing Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing of CEIX under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that CEIX specifically incorporates the Report by reference therein.

 

  LOGO  – 2020 Proxy Statement       45


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Summary Compensation Table

 

Summary Compensation Table

The following table discloses the compensation for our NEOs, which include Mr. Brock, the principal executive officer of CEIX, Mr. Khani, the former principal financial officer of CEIX, and the other three most highly compensated executives of CEIX serving at fiscal year-end 2019: Mr. McCaffrey, Chief Commercial Officer; Ms. Wiegand, General Counsel and Secretary; and Mr. Salvatori, Chief Administrative Officer.

 

Name and

Principal Position

                 (a)

 

Year

(b)

 

Salary(1)

(c)

 

Bonus(2)

(d)

 

Stock

Awards(3)

(e)

 

Option

Awards

(f)

 

Non-Equity

Incentive

Compensation

(g)

 

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings(4)

(h)

 

All Other

Compensation(5)

(i)

 

SEC

Total

(j)

 

James A. Brock

President and

Chief Executive Officer

   

 

 

 

2019

 

   

 

$

 

803,231

 

   

 

$

 

1,199,813

 

   

 

$

 

3,773,887

 

   

 

 

 

 

   

 

 

 

 

   

 

$

 

733,841

 

   

 

$

 

39,600

 

   

 

$

 

6,550,372 

 

   

 

2018

   

$

641,163

   

 

   

$

2,438,915

   

 

   

$

1,430,000

   

 

   

$

46,000

   

$

4,556,078 

   

 

2017

   

$

419,855

   

 

   

$

2,138,000

   

 

   

$

540,042

   

$

417,165

   

$

891,572

   

$

4,406,634 

 

James J. McCaffrey

Chief Commercial Officer

   

 

2019

   

$

399,520

   

$

195,000

   

$

650,099

   

 

   

 

   

$

713,779

   

$

47,128

   

$

2,005,526 

   

 

2018

   

$

389,500

   

 

   

$

536,000

   

 

   

$

389,500

   

 

   

$

63,472

   

$

1,378,472 

   

 

2017

   

$

389,123

   

$

125,000

   

$

450,000

   

 

   

$

385,021

   

$

428,415

   

$

49,456

   

$

1,827,015 

 

Martha A. Wiegand

General Counsel and

Secretary

   

 

2019

   

$

347,855

   

$

196,875

   

$

433,371

   

 

   

 

   

$

42,756

   

$

31,143

   

$

1,052,000 

   

 

2018

   

$

297,500

   

 

   

$

133,980

   

 

   

$

300,000

   

$

18,866

   

$

47,788

   

$

798,134 

   

 

2017

   

$

234,231

   

$

200,000

   

$

300,000

   

 

   

$

139,379

   

$

21,814

   

$

104,312

   

$

999,736 

 

Kurt R. Salvatori

Chief Administrative Officer

   

 

2019

   

$

298,731

   

$

123,750

   

$

270,876

   

 

   

 

   

$

278,960

   

$

29,800

   

$

1,002,117 

   

 

2018

   

$

268,885

   

 

   

$

133,980

   

 

   

$

266,625

   

 

   

$

47,096

   

$

716,586 

     

 

2017

   

$

240,224

   

$

100,000

   

$

200,000

   

 

   

$

166,760

   

$

174,051

   

$

30,998

   

$

912,033 

 

David M. Khani(6)

Former Executive Vice President,

Chief Financial Officer

and Treasurer

   

 

2019

   

$

530,566

   

 

   

$

2,167,009

   

 

   

 

   

 

   

$

36,873

   

$

2,734,448 

   

 

2018

   

$

530,068

   

 

   

$

2,770,188

   

 

   

$

739,078

   

$

52,599

   

$

52,814

   

$

4,144,747 

   

 

2017

   

$

530,068

   

$

150,000

   

$

3,197,692

   

 

   

$

612,915

   

$

99,402

   

$

29,200

   

$

4,619,277 

 

(1)

The amounts in this column represent base salaries before compensation reduction under any CEIX or affiliated company qualified retirement and/or 401(k) savings plan in effect during 2019. In addition, these salary amounts are not annualized but represent the amounts actually earned and paid to each NEO during 2019; as a result, the base salary numbers above vary slightly from the base salary amounts shown in the chart on page 38 in the “Compensation Discussion and Analysis,” which describes how the 2019 STIC, as adjusted, and LTIC amounts are computed.

 

(2)

The values in this column for 2019 reflect discretionary payouts under the 2019 STIC based on adjusted goals as discussed beginning on page 38 of the Compensation Discussion and Analysis, which describes our Compensation Committee’s decision-making process. The values in this column for 2017 represent discretionary cash awards to all of the NEOs, except Mr. Brock, in recognition of their significant contributions to the completion of the separation.

 

(3)

The values set forth in this column represent the aggregate grant date fair value of the service-based and performance-based restricted stock unit awards made in 2019 computed in accordance with FASB ASC Topic 718. The assumptions used in determining the grant date fair value of the stock awards are set forth in Notes 1 and 17 to our consolidated financial statements, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. For grants of restricted stock units, the fair value per share is equal to the closing price of CEIX’s common stock on the NYSE on the date of grant for awards made by CEIX. With respect to the 2019 grant of PSUs, the value is reported assuming the target level of performance is achieved. The value of the 2019 PSU awards to our NEOs, assuming the maximum level of performance is achieved, are as follows: $4,761,373 (Brock); $ -0- (Khani); $820,199 (McCaffrey); $546,741: (Wiegand); and $341,752 (Salvatori).

 

(4)

Amounts in this column reflect the actuarial increase in the present value of each NEO’s benefit under the CEIX’s Employee Retirement Plan, Retirement Restoration Plan, Supplemental Retirement Plan and New Restoration Plan between December 31, 2018 and December 31, 2019. These amounts were determined using the interest rate and mortality assumptions set forth in our consolidated financial statements, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. These amounts represent accounting values and were not realized by our NEOs during 2019. A zero is shown for Mr. Khani as his resignation from CEIX made him ineligible for benefits under the CONSOL Energy Supplemental Retirement Plan and the CONSOL Energy New Restoration Plan resulting in a decrease in the present value of his overall retirement benefit under CEIX’s retirement plans.

 

46       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Grants of Plan-Based Awards – 2019

 

(5)

The amounts shown in this column for 2019 are derived as follows:

 

Category

   BROCK      McCAFFREY      WIEGAND      SALVATORI      KHANI  

401(k) Plan Contributions(a)

    

$

16,800

      

$

16,800

      

$

16,800

      

$

16,800

      

$

16,800  

Vehicle Allowance or Company Car

    

$

13,000

      

$

13,000

      

$

13,000

      

$

13,000

      

$

13,000  

Executive Health Physical

    

$

3,549

      

 

      

$

1,343

      

 

      

$

1,733  

Business and Country Club Dues

    

$

5,000

      

$

17,328

      

 

      

 

      

$

5,340  

Spousal Travel

    

$

1,251

      

 

      

 

      

 

      

 

—  

 

  (a)

Annual employer contribution to the 401(k) plan.

 

(6)

Mr. Khani, resigned from CEIX effective as of December 31, 2019 and is no longer with our company. Due to his resignation, Mr. Khani was not eligible for payments under many of the CEIX plans and programs resulting in payouts during or with respect to the 2019 fiscal year.

Grants of Plan-Based Awards – 2019

The following table sets forth each grant made to an NEO in the 2019 fiscal year under plans established by CEIX.

 

       

 

Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(STIC Awards)(1)

        

 

Estimated Future Payouts
Under Equity Incentive

Plan Awards
(PSUs)(2)

   

 

All

Other

Stock

Awards:

Number of

Shares

of Stock

or Units

(#)(3)

   

 

All

Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)

   

Exercise

or Base

Price of

Option

Awards

($/Sh)

   

 

Grant

Date

Fair

Value of

Stock

and

Option

Awards

(Target)(4)

 
  Name  

Grant

Date

 

Threshold

($)

   

Target

($)

   

Maximum

($)

       

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

 

James A. Brock

 

Annual STIC

 

$

607,500

 

 

$

1,215,000

 

 

$

2,430,000

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

   

2/07/2019

 

 

 

 

 

 

 

 

 

     

 

15,214

 

 

 

30,428

 

 

 

60,856

 

 

 

40,570

 

 

 

 

 

 

 

 

$

3,773,887  

 

James J. McCaffrey

 

Annual STIC

 

$

100,000

 

 

$

200,000

 

 

$

400,000

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

   

2/07/2019

 

 

 

 

 

 

 

 

 

     

 

2,621

 

 

 

5,241

 

 

 

10,482

 

 

 

6,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

650,099  

 

Martha A. Wiegand

 

Annual STIC

 

$

105,000

 

 

$

210,000

 

 

$

420,000

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

   

2/07/2019

 

 

 

 

 

 

 

 

 

     

 

1,747

 

 

 

3,494

 

 

 

6,988

 

 

 

4,659

 

 

 

 

 

 

 

 

$

433,371  

 

Kurt R. Salvatori

 

Annual STIC

 

$

75,000

 

 

$

150,000

 

 

$

300,000

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

   

2/07/2019

 

 

 

 

 

 

 

 

 

     

 

1,092

 

 

 

2,184

 

 

 

4,368

 

 

 

2,912

 

 

 

 

 

 

 

 

$

270,876  

 

David M. Khani

 

Annual STIC

 

$

185,698

 

 

$

371,396

 

 

$

742,792

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

   

2/07/2019

 

 

 

 

 

 

 

 

 

     

 

8,736

 

 

 

17,472

 

 

 

34,944

 

 

 

23,296

 

 

 

 

 

 

 

 

$

2,167,009  

 

 

(1)

These awards were made pursuant to the 2019 STIC, which is described in the “Compensation Discussion and Analysis” beginning on page 32.

 

(2)

This column reports the number of PSUs that may be earned by each NEO. The numbers above reflect the threshold (50%), the target (100%) and the maximum (200%) performance levels.

 

(3)

This column reports the number of CEIX RSUs granted to all of our NEOs during 2019.

 

(4)

The values set forth in this column reflect awards of PSUs (at target) for each of our NEOs and are based on the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. The values set forth in this table may not correspond to the actual values that ultimately will be realized by the NEOs upon vesting and settlement. Due to Mr. Khani’s resignation from the company effective as of December 31, 2019, his unvested 2019 equity awards and STIC were forfeited.

 

  LOGO  – 2020 Proxy Statement       47


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Understanding Our Summary Compensation and Grants of Plan-Based Awards Tables

 

Understanding our Summary Compensation and Grants of Plan-Based Awards Tables

In addition to base salaries, our executive officers receive a mix of at-risk compensation, both short- and long-term, for their services. Pursuant to various plans which were adopted by our former parent or CCR (and assumed by CEIX in connection with the separation), our NEOs are eligible to receive annual cash incentive awards based on the achievement of certain performance targets. With respect to long-term awards, each of our NEOs also is eligible to receive equity awards, which vary depending upon the year in which granted and include RSUs, PSUs (as well as historical grants made by our former parent and CCR) in the form of stock options and or phantom units. The RSUs and PSUs and the plans under which they are awarded are discussed below, and in greater detail in the “Compensation Discussion and Analysis” on pages 40-41.

STIC

To be eligible to receive an annual award under the STIC, an NEO must generally be an active, full-time employee on December 31 of the year for which the award was granted. For more information on the STIC, see the discussion beginning on page 38 in the “Compensation Discussion and Analysis” section.

RSUs

RSUs granted by our former parent were converted into CEIX awards under our Omnibus Plan. Our Compensation Committee determines the number of RSUs to be granted to each executive participant, the duration of such awards, the conditions under which the RSUs may be forfeited to CEIX, and the other terms and conditions of such awards. RSUs are structured to comply with Section 409A of the Code. Accordingly, distributions will be made only upon a permissible distribution event, including upon separation from service. See page 56 for a full description of the RSU award terms and conditions including the effect of termination under different scenarios on such awards.

PSUs

PSU awards were also granted and represent a contingent right to receive shares of CEIX common stock to the extent such units are earned and become payable pursuant to the terms of the plan and related award documents. For more information on the PSU awards, see the discussion beginning on page 40 in the “Compensation Discussion and Analysis” section. See page 57 for a full description of the PSU award terms and conditions including the effect of termination under different scenarios on such awards.

 

48       LOGO  – 2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION INFORMATION | Outstanding Equity Awards at Fiscal Year-End for CEIX – 2019

 

Outstanding Equity Awards at Fiscal Year-End for CEIX – 2019

The following table sets forth unvested RSU and PSU awards that have been awarded to our NEOs by our former parent and CEIX and were outstanding as of December 31, 2019.

 

   

 

Option Awards

     

 

Stock Awards

Name

    (a)

 

Number of
Securities
Underlying
Unexercised

Options (#)
(Exercisable)
(b)

  Number of
Securities
Underlying
Unexercised
Options (#)
(Unexercisable)
(c)
 

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

Options

(d)

 

Option
Exercise
Price

(e)

 

Option
Expiration
Date

(f)

 

  

 

Number of
Shares or
Units of
Stock
That
Have Not
Vested

(#)

(g)

 

Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)

(h)(1)

 

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)

(i)

 

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
    Have Not    

Vested
($)

(j)(1)

James A. Brock

   

 

   

 

   

 

   

 

   

 

       

 

68,104

(2)

 
   

$

988,189

   

 

64,897

(5)

 
   

$

941,655

   

 

   

 

   

 

   

 

   

 

       

 

13,496

(3)

 
   

$

195,827

   

 

   

 

     

 

   

 

   

 

   

 

   

 

             

 

7,038

(4)

 
   

$

102,121

   

 

   

 

James J. McCaffrey

   

 

   

 

   

 

   

 

   

 

       

 

13,433

(2)

 
   

$

194,913

   

 

12,642

(5)

 
   

$

183,435

   

 

   

 

   

 

   

 

   

 

       

 

3,374

(3)

 
   

$

48,957

   

 

   

 

     

 

   

 

   

 

   

 

   

 

             

 

1,547

(4)

 
   

$

22,447

   

 

   

 

Martha A. Wiegand

   

 

   

 

   

 

   

 

   

 

       

 

7,948

(2)

 
   

$

115,325

   

 

5,451

(6)

 
   

$

79,094

     

 

   

 

   

 

   

 

   

 

             

 

387

(4)

 
   

$

5,615

   

 

   

 

Kurt R. Salvatori

   

 

   

 

   

 

   

 

   

 

       

 

5,084

(2)

 
   

$

73,769

   

 

4,453

(5)

 
   

$

64,613

   

 

   

 

   

 

   

 

   

 

       

 

1,012

(3)

 
   

$

14,684

   

 

   

 

     

 

   

 

   

 

   

 

   

 

             

 

387

(4)

 
   

$

5,615

   

 

   

 

David M. Khani(7)