EXHIBIT 10.48
September 24, 2003
PERSONAL AND CONFIDENTIAL
Xxxxxxx X. Xxxxxxx
000 Xxxxxx Xxxx Xxxx
Xx. Xxxxx, XX 00000
Dear Xxxx:
As you know, effective as of October 1, 2003, you will cease to report directly
to the Chief Executive Officer of Peabody Energy Corporation (the "Company") and
will instead report to the Company's Chief Operating Officer. This letter
agreement will confirm that the Company desires to demonstrate its high regard
for you and has decided that it is appropriate to give you the additional
incentives described below (i) to induce you to continue to serve the Company in
your current position and (ii) to encourage your highest cooperation and
goodwill as the change in your reporting relationships described above occurs.
1. Effective September 1, 2003, notwithstanding anything to the contrary
in the Employment Agreement dated May 19, 1998, as amended as of May
10, 2001, between you and the Company (the "Employment Agreement"), the
Company will pay you an annual Base Salary (as that term is defined in
the Employment Agreement) of $500,000 payable in accordance with the
ordinary payroll practices of the Company. Your Base Salary otherwise
continues to be governed by the terms and conditions of the Employment
Agreement.
2. In addition to any compensation to which you may be entitled under the
Employment Agreement, you will be entitled to receive, as of September
1, 2005, an additional bonus described below (the "Retention Bonus") if
you remain in the Company's employ through August 31, 2005, and meet
applicable performance goals, as determined by the CEO (as that term is
defined in the Employment Agreement), during such period. The Retention
Bonus will be equal to the lesser of:
(i) The sum of (a) your then current annual Base Salary and (b)
the product of your then current annual Base Salary multiplied
by the greater of the percentage rates applicable to your
annual incentives for the 2003 and 2004 fiscal years, based on
actual performances for each such fiscal year; and
(ii) $1,200,000 minus the sum of:
(a) the total amount of Base Salary increase paid to you
under this letter agreement for the period beginning
on September 1, 2003, and ending on August 31, 2005;
(b) the total amount of the incremental annual incentive
payments actually received by you with respect to the
2003 and 2004 fiscal years, as a result of the Base
Salary increase under this letter agreement; and
(c) $50,000 (which corresponds to the total amount of
additional long-term incentive payments to be made to
you for the period beginning on September 1, 2003,
and ending on August 31, 2005, as a result of the
Base Salary increase under this letter agreement).
3. Notwithstanding anything to the contrary in Paragraph 2 above, if your
employment with the Company is terminated before September 1, 2005,
either by you for Good Reason (as that term is defined in the
Employment Agreement, but excluding the change in your reporting
relationships described above) or by the Company without Cause (as that
term is defined in the Employment Agreement), you will be entitled to
receive the Retention Bonus hereunder as of the date of such
termination; provided that such Retention Bonus will be equal to
$1,200,000 minus the sum of:
(i) the total amount of Base Salary increase paid to you under
this letter agreement for the period beginning on September 1,
2003, and ending on the date of termination of your employment
with the Company;
(ii) the total amount of the incremental annual incentive payments
actually received by you with respect to such portion of the
2003 and 2004 fiscal years as will end on the date of
termination of your employment with the Company, as a result
of the Base Salary increase under this letter agreement; and
(iii) $25,000 if your employment with the Company is terminated on
or after January 1, 2004, but before January 1, 2005; or
$50,000 if your employment with the Company is terminated on
or after January 1, 2005.
4. Notwithstanding anything to the contrary in Paragraph 2 above, if your
employment with the Company is terminated before September 1, 2005, as
a result of your death or Disability (as that term is defined in the
Employment Agreement), you (or your beneficiary) will be entitled to
receive, as of the date of such termination, an amount equal to the
Retention Bonus, as calculated under Paragraph 3 above, multiplied by a
fraction the numerator of which is the number
2
of calendar days that will have elapsed during the period beginning
September 1, 2003, and ending on the date of termination of your
employment with the Company, and the denominator of which is 731.
5. If your employment with the Company ends at any time before September
1, 2005, for any reason other than the reasons set forth in Paragraphs
3 and 4 above (including, but not limited to, a termination of your
employment with the Company by you without Good Reason (as that term is
defined above) or by the Company for Cause (as that term is defined in
the Employment Agreement)), or if you fail to meet applicable
performance goals, as determined by the CEO during such period, you
will not be entitled to the Retention Bonus hereunder.
6. If the conditions set forth in Paragraph 2, 3 or 4 above are met, the
Retention Bonus (or the prorated amount described in Paragraph 4) will
be paid by the Company as soon as administratively feasible after the
date on which such conditions are met. Any amount payable hereunder
will be subject to customary withholding taxes and such other
employment taxes as are required under federal law or the law of any
state or other governmental body to be collected with respect to
compensation paid by an employer to an employee.
7. Other than as explicitly set forth herein, your employment with the
Company otherwise continues to be governed by the terms and conditions
of the Employment Agreement.
Please confirm your agreement with the foregoing by signing and dating the
enclosed duplicate copy of this letter agreement and returning that copy to me
by Friday, September 26, 2003.
Very truly yours,
PEABODY ENERGY
By: /s/ Irl X. Xxxxxxxxxx
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Its: Chairman and Chief Executive Officer
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AGREED AND ACCEPTED:
/s/ XXXXXXX X. XXXXXXX
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Signature
Xxxxxxx X. Xxxxxxx
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Print Name
September 26, 2003
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Date
3
