Peabody seeks OK of leadership team incentive plans, board pay changes

By Caroline Salls

Pittsburgh, Aug. 4 – Peabody Energy Corp. requested court approval of incentive plans for its executive leadership team (ELT) and changes to the compensation program for the independent directors on its board, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The ELT includes Peabody’s president and chief executive officer; president – Australia; president – Americas; executive vice president and chief financial officer; executive vice president and chief legal officer, government affairs and corporate secretary; and group executive marketing and trading.

The company said the ELT is not eligible to participate in its non-insider incentive plans or key employee retention plan.

Currently, Peabody’s directors are slated to receive $240,000 in compensation for 2016 plus applicable retainers, consisting of a $110,000 annual cash retainer, $65,000 in deferred cash and $65,000 in deferred stock units that vest monthly.

The company’s motion seeks to reduce this total compensation to a single $175,000 annual cash retainer, plus applicable chairman or committee chairperson retainers, during the pendency of the Chapter 11 cases and discontinue the deferred cash and deferred stock units.

According to the 8-K, the incentive plans are designed to incentivize the ELT to achieve rigorous performance goals that will enhance the value of the Peabody debtors’ estates for all stakeholders. The company said it is possible that ELT members may receive no payment at all under these incentive plans.

Each ELT member’s target direct compensation is expected to decrease compared to his or her pre-bankruptcy target compensation level, even if the incentive plans are approved and target performance is achieved. The decrease for the team as a whole would be 26%.

Each member of the ELT would still be eligible to earn a target award equal to 80% of annual base salary, or 110% of annual base salary in the case of the president and CEO, under the incentive plan.

Earned awards would be determined based on the company’s performance, first for calendar year 2016, and then for calendar year 2017.

Each member of the ELT would have a target award opportunity under a key employee incentive plan equal to a percentage of annual base salary, including 175% for the president and CEO, 125% for the Australia and Americas presidents, executive vice president and chief legal officer, 150% for the executive vice president and CFO and 100% for the group executive marketing and trading.

Peabody, a St. Louis-based coal producer, filed for bankruptcy on April 13 in the U.S. Bankruptcy Court for the Eastern District of Missouri. The Chapter 11 case number is 16-42529.

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