SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Westmoreland Coal Company
(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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) or Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
5) Total fee paid:
________________________________________________________________________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
WESTMORELAND COAL COMPANY
14TH FLOOR -- HOLLY SUGAR BUILDING
2 NORTH CASCADE AVENUE
COLORADO SPRINGS, COLORADO 80903
NOTICE OF SPECIAL MEETING OF HOLDERS OF DEPOSITARY SHARES
TO THE SHAREHOLDERS:
A special meeting of holders of Depositary Shares (representing interests
in Series A Convertible Exchangeable Preferred Stock) of Westmoreland Coal
Company will be held at the offices of the Company, 14th Floor -- Holly Sugar
Building, 2 North Cascade Avenue, Colorado Springs, Colorado 80903, on
Wednesday, September 11, 1996 at 10:00 a.m. Mountain Daylight Time, to:
1. Elect two directors by a vote of the holders of Depositary Shares;
and
2. Transact such other business as may properly come before the
meeting or any adjournment thereof.
Each Depositary Share represents one-quarter share of Series A Convertible
Exchangeable Preferred Stock, par value $1.00 per share. Only shareholders of
record of Depositary Shares at the close of business on July 15, 1996 will be
entitled to notice of and to vote at the meeting. The proxy statement which
follows contains more detailed information as to the actions proposed to be
taken.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE IF
YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON.
Theodore E. Worcester
Corporate Secretary
August 8, 1996
<PAGE>
WESTMORELAND COAL COMPANY
14TH FLOOR--HOLLY SUGAR BUILDING
2 NORTH CASCADE AVENUE
COLORADO SPRINGS, COLORADO 80903
August 8, 1996
PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Westmoreland Coal Company (the 'Company') for use at the special meeting of
holders of Depositary Shares to be held on September 11, 1996 (the 'Special
Meeting'). The proxy may be revoked by a shareholder at any time before its
exercise by written notice to the Secretary of the Company, by executing and
delivering a proxy with a later date or by voting in person at the meeting. The
expense of this solicitation will be paid by the Company. Some officers and
regular employees may solicit proxies personally and by telephone. This proxy
statement and the enclosed proxy were first sent to shareholders of the Company
on or about August 8, 1996.
Shareholders of record of Depositary Shares at the close of business on
July 15, 1996 (the 'record date') will be entitled to vote at the meeting. On
the record date, the Company had outstanding 2,300,000 Depositary Shares, each
of which represents one quarter of a share of Series A Convertible Exchangeable
Preferred Stock, par value $1.00 per share (the 'Preferred Stock'). Each
outstanding Depositary Share will entitle the holder to one vote on all business
of the meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding Depositary Shares will constitute a quorum. Directors are elected by
the affirmative vote of a plurality of the votes of the shares present in person
or by proxy at the meeting. In all other matters, the affirmative vote of a
majority of the shares present in person or by proxy at the meeting is required
for approval.
A shareholder may, with respect to the election of directors (i) vote for
the election of all named director nominees, (ii) withhold authority to vote for
all named director nominees or (iii) withhold authority to vote for either named
director nominee by so indicating in the appropriate space on the proxy. In the
absence of a specific direction from the shareholder, proxies will be voted for
the election of both named director nominees.
1
<PAGE>
ELECTION OF DIRECTORS
The purpose of the meeting is to elect two directors by a vote of the
holders of the Depositary Shares. Each Depositary Share represents one-quarter
share of Preferred Stock, the terms of which entitle the holders to elect two
directors if the Company is in arrears on six or more Preferred Stock dividends.
The Company was in arrears on six dividends as of April 1, 1996 and seven
dividends as of July 1, 1996, and the Board of Directors accordingly has
nominated two persons for election as directors. The holders of the Company's
Common Stock are not entitled to vote for these nominees.
The two persons named in the following table have been designated as
nominees for election to the Board of Directors for a term ending on the date of
the next annual meeting of shareholders. Both of these nominees were brought to
the Company's attention as candidates by holders of Depositary Shares and are
believed to have the support of holders of a substantial portion of the
Depositary Shares, including the largest such holder, Riverside Capital
Advisers, Inc. (on behalf of its clients). Mr. Sight was appointed by the Board
in 1995 to ensure the Board's attentiveness to the concerns of the holders of
Depositary Shares after the Company had suspended payment of Preferred Stock
dividends, but before six dividends had been missed. He was then reelected by
the shareholders of the Company in June, 1996. At the time of his original
appointment to the Board in July 1995, he agreed to resign from his current
position when an election is held to elect directors by a vote of the holders of
the Depositary Shares. The persons named in the proxy, who shall be appointed by
shareholders as their agents to vote their shares of stock, intend to vote for
the election of these nominees. Each nominee has consented to being named and to
serve if elected. If any should decline or be unable to serve, the persons named
in the proxy will vote for the election of such substitute nominee as shall have
been designated by the Board of Directors. The Company has no reason to believe
that any nominee will decline or be unable to serve.
<TABLE>
<CAPTION>
DIRECTOR OF
BUSINESS EXPERIENCE DURING PAST THE COMPANY COMMITTEE
NAME FIVE YEARS AND OTHER DIRECTORSHIPS AGE SINCE MEMBERSHIPS (1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert E. Killen (2) Chairman of the Board and Chief 55 -- --
Executive Officer of The Killen
Group, Inc. (since April 1996) and
Chairman of the Board of Berwyn
Financial Services (since October
1991). President of The Killen
Group, Inc. (from September 1982 to
April 1996).
James W. Sight (3) Director of United Recycling 40 July 1995 Audit; Corporate
Industries (since January 1995) Governance;
Director of U.S. Home Corp. (since Independent
June 1993) Directors
Private Investor
</TABLE>
2
<PAGE>
(1) See 'Information About the Board and Committees' below.
(2) Mr. Killen beneficially owns 2,000 Depositary Shares as a personal
investment and is deemed to beneficially own 71,506 Depositary Shares and
958,058 shares of Common Stock purchased by the Killen Group, Inc. on
behalf of its clients.
(3) Mr. Sight beneficially owns 120,000 shares of the Company's Common Stock as
a personal investment.
SHARE OWNERSHIP
Except as set forth in the following table, no person or entity known to
the Company beneficially owned more than 5% of the Company's voting securities
as of December 31, 1995. The information in the table was obtained from filings
made with the Securities and Exchange Commission as of December 31, 1995, except
with respect to The Killen Group, Inc. for which information was provided
directly to the Company by Mr. Killen.
<TABLE>
<CAPTION>
NUMBER OF SHARES AND NATURE OF BENEFICIAL OWNERSHIP (1)
---------------------------------------------------------------------
NAME AND ADDRESS OF COMMON PERCENTAGE OF DEPOSITARY PERCENTAGE OF
BENEFICIAL OWNER STOCK COMMON STOCK SHARES DEPOSITARY SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Penn Virginia Equities Corporation 1,754,411(2) 25.2%
1105 North Market Street
Suite 1300
P.O. Box 8985
Wilmington, DE 19899
Riverside Capital Advisers, Inc. 685,500(3) 29.8%
2320 Northeast 9th Street
Suite 300
Fort Lauderdale, FL 33304
The Killen Group, Inc. 922,558(4) 13.3%
1189 Lancaster Avenue
Berwyn, PA 19312
Alvin Hoffman 187,700(5) 8.2%
c/o Makefield Securities Corp.
6699 NW 2nd Ave. Unit 416
Boca Raton, FL 33487
</TABLE>
3
<PAGE>
(1) Except as indicated below, the Company is informed that the respective
beneficial owners have sole voting power and sole investment power with
respect to the shares shown opposite their names.
(2) Penn Virginia Equities Corporation is a wholly owned subsidiary of Penn
Virginia Corporation ('Penn Virginia'). Lennox K. Black, who was a director
of the Company until May 10, 1996, is Chairman of the Board and was also
Chief Executive Officer of Penn Virginia through May 7, 1996. (See
'Transactions with Other Companies' below.)
(3) Riverside Capital Advisers, Inc. reported that at December 31, 1995, it was
deemed to own 685,500 depositary shares as a result of its having sole
voting power and sole dispositive power over such shares held in thirteen
customer accounts for which it provides investment advice.
(4) The Killen Group, Inc., a registered investment advisor, is deemed to
beneficially own 71,506 Depositary Shares and 958,058 shares of Common
Stock purchased on behalf of its clients. In addition, Robert E. Killen,
the President and sole shareholder of The Killen Group, Inc. and one of the
two director nominees to be voted upon at the Special Meeting, beneficially
owns 2,000 Depositary Shares as a personal investment.
(5) Mr. Hoffman, a registered representative associated with Makefield
Securities Corp., reported on Schedules 13D dated May 4, 1995 and July 15,
1995 filed with the Securities and Exchange Commission, that he was deemed
to beneficially own 187,700 Depositary Shares, consisting of 57,600 shares
that he holds as a personal investment and 130,100 shares that he holds on
behalf of clients in discretionary accounts.
4
<PAGE>
The following table sets forth information as of July 15, 1996 concerning
stock ownership of individual directors and named executive officers, and of the
executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES AND NATURE OF BENEFICIAL OWNERSHIP (1)
NAME OF DIRECTORS, --------------------------------------------------------
NAMED EXECUTIVE OFFICERS PERCENTAGE OF DEPOSITARY
AND PERSONS AS A GROUP COMMON STOCK COMMON STOCK (2) SHARES (2)
- ------------------------------------------------------ ---------------- ----------------------- -------------
<S> <C> <C> <C>
Pemberton Hutchinson 3,100(6) -- 3,200
William R. Klaus 7,837(6)(8) -- --
Thomas W. Ostrander 2,181 -- --
Christopher K. Seglem 82,243(3)(5) 1.2% 239(4)
James W. Sight 120,000 1.7% --
Edwin E. Tuttle 18,773(6) -- --
Ronald W. Stucki 26,172(3)(5) -- 200(4)
Robert J. Jaeger -- -- --
Theodore E. Worcester 28,310(3)(5) -- --
R. Page Henley 36,600(3)(5)(7) -- --
Directors and Executive Officers
of the Company as a Group 325,216(3)(5)(6)(7)(8) 4.75% 3,639
</TABLE>
(1) This information is based on information furnished to the Company by
individual directors and executive officers. Except as indicated below, the
Company is informed that the respective beneficial owners have sole voting
power and sole dispositive power with respect to the shares opposite their
names.
(2) Percentages represent the percentage owned of the Company's Common Stock.
Percentages of less than 1% are not reflected. No individual or group
presented in the table held as much as 1% of the Company's Depositary
Shares.
(3) Includes shares held by Mellon Bank as Trustee of the Westmoreland Coal
Company and Affiliated Companies Employees' Savings/Retirement Plan vested
as follows: Mr. Seglem-5,046, Mr. Stucki-172, Mr. Henley-5,544 and Mr.
Worcester-2,310; shares vested in the directors and executive officers as a
group totaled 13,072.
(4) Represents shares held by Mellon Bank as Trustee of the Westmoreland Coal
Company and Affiliated Companies Employees' Savings/Retirement Plan. Shares
vested in the directors and executive officers as a group totaled 439.
(5) Includes shares which may be purchased under the 1982 and 1985 Westmoreland
Incentive Stock Option and Stock Appreciation Rights Plans as follows: Mr.
Seglem-77,197, Mr. Stucki-26,000, Mr. Henley-26,046 and Mr.
Worcester-26,000; shares which may be purchased under these Plans for the
group as a whole totaled 155,243.
(6) Includes shares which may be purchased under the 1991 Non-Qualified Stock
Option Plan for Non-Employee directors as follows: Messrs. Klaus and
Tuttle-6,000 each; Mr. Hutchinson-1,500; in total, 13,500.
(7) Includes 5,000 shares of restricted Common Stock granted to Mr. Henley
under the Westmoreland Coal Company 1995 Long-Term Incentive Stock Plan.
(8) Includes 1,837 shares held by Mr. Klaus under the Westmoreland Directors'
Deferred Compensation Plan, which may not be voted.
5
<PAGE>
BOARD OF DIRECTORS
The five persons named in the following table, together with Mr. Sight who
is named in the table under the caption 'Election of Directors' above, are now
directors of the Company. All of these directors were elected by the
shareholders at the annual meeting of shareholders in June 1996.
As in the coming year two of the current directors will be of the
retirement age set in the Board's earlier policy statement, the Board has begun
a search for their replacements. It is the intention to add two or three new
members to the Board, as they are identified, in the coming year (resulting in a
temporary increase in the total number of directors), in order to allow for an
appropriate transition period, and so that the Company can have the benefit of
contributions from the new directors with respect to its planning and
implementation for the future.
<TABLE>
<S> <C> <C> <C> <C>
DIRECTOR OF
BUSINESS EXPERIENCE DURING PAST THE COMPANY COMMITTEE
NAME FIVE YEARS AND OTHER DIRECTORSHIPS AGE SINCE MEMBERSHIPS (1)
- ----------------------------------------------------------------------------------------------------------------------------
Pemberton Hutchinson (2) Chairman of the Board of the Company 65 1977 Executive; Compensation
(January 1992 through June 1996); and Benefits
Chief Executive Officer (January 1989
through June 1993); President of the
Company (June 1981 through June 1992)
Director of Mellon Bank Corporation,
Teleflex, Incorporated and The Pep
Boys
William R. Klaus Partner, Pepper, Hamilton & Scheetz, 70(3) 1973 Audit; Executive;
attorneys Compensation and
Benefits; Independent
Directors
Christopher K. Seglem (2) Chairman of the Board of the Company 49 1992 Executive
(since June 1996); Chief Executive
Officer of the Company (since June
1993) and President of the Company
(since June 1992); Chief Operating
Officer of the Company (June 1992
through June 1993); Executive Vice
President of the Company (December
1990 through June 1992)
Edwin E. Tuttle Director of CoreStates Bank, N.A. and 69 1978 Audit; Compensation and
General Accident Insurance Company of Benefits; Executive;
America Independent Directors
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
DIRECTOR OF
BUSINESS EXPERIENCE DURING PAST THE COMPANY COMMITTEE
NAME FIVE YEARS AND OTHER DIRECTORSHIPS AGE SINCE MEMBERSHIPS (1)
- ----------------------------------------------------------------------------------------------------------------------------
Thomas W. Ostrander Managing Director, Salomon Brothers 46 1995 Audit; Corporate
Inc, investment banking firm (since Governance; Independent
1989) Directors (4)
Works with a variety of domestic and
international corporations providing
services in the area of capital
formation, corporate strategy, mergers
and acquisitions and other corporate
and financial strategy matters.
</TABLE>
- ------------------
(1) See 'Information About the Board and Committees' below.
(2) Although reported in the Company's 1994 Annual Report and Form 10-K, the
Securities and Exchange Commission's proxy rules also require a description
of any bankruptcy petition filed during the past five years with respect to
a corporation of which a director nominee was an executive officer at or
within two years before the time of filing, giving rise to this footnote:
The Company filed a 'pre-packaged' plan of reorganization under the Federal
bankruptcy laws on November 8, 1994 to facilitate the sale of the assets of
its subsidiary, Criterion Coal Company, a portion of the proceeds of the
sale of which were to be used to repay maturing long-term debt. The
Company's plan of reorganization was confirmed on December 16, 1994. Mr.
Hutchinson was an executive officer of the Company within two years before
the time of the filing. Mr. Seglem held the executive offices indicated at
and within two years before the time of the filing, and upon the Company's
emergence from bankruptcy on December 22, 1994.
(3) In light of the retirement of three members of the Board of Directors as of
the date of the Annual Meeting of Shareholders in 1996, the Board determined
that, in order to preserve continuity on the Board, and in order to provide
an orderly transition for new directors, it was in the best interests of the
Company to waive its previously adopted policy with respect to retirement of
directors in the case of Mr. Klaus and ask Mr. Klaus to stand for reelection
at its 1996 annual meeting of shareholders despite the fact that he had
attained age 70. Mr. Klaus agreed to do so and was so elected. The Board and
Mr. Klaus will consider this subject annually hereafter.
(4) Mr. Sight and Mr. Ostrander were appointed to the Committee of Independent
Directors in February, 1996.
7
<PAGE>
INFORMATION ABOUT THE BOARD AND COMMITTEES
The Board of Directors held 11 meetings during 1995. Each director attended
more than 75% of the aggregate of the total number of meetings of the Board of
Directors and of the total number of meetings held by all committees on which he
served during the time he was in office.
The Audit Committee of the Board of Directors, currently composed of
Messrs. Tuttle (Chairman), Klaus, Ostrander and Sight, met three times during
1995. This Committee, which reports to the Board of Directors, reviews the
adequacy of the Company's internal accounting controls and oversees the
implementation of management recommendations. It also reviews with the Company's
independent auditors the audit plan for the Company, the internal accounting
controls, financial statements and management letter. It also recommends to the
Board the selection of independent auditors for the Company.
The Compensation and Benefits Committee of the Board of Directors, composed
of Messrs. Klaus (Chairman), Hutchinson and Tuttle, met five times during 1995.
This Committee reviews the Company's and its subsidiaries' employee benefit
programs and management compensation and it reports its recommendations to the
Board of Directors.
The Executive Committee of the Board of Directors, currently composed of
Messrs. Hutchinson (Chairman), Tuttle, Klaus, and Seglem, did not meet during
1995.
The Committee of Independent Directors, currently composed of Messrs.
Ostrander (Chairman), Tuttle, Klaus and Sight, met twice during 1995. This
Committee is composed of directors who are not and have never been officers or
employees of the Company or of Penn Virginia Corporation (see 'Transactions with
Other Companies' below). It reviews matters involving transactions or issues
between the Company and Penn Virginia Corporation, to determine that the terms
and conditions of settlement are fair and reasonable to the Company and no less
favorable than if negotiated with an unaffiliated company.
The Board of Directors does not have a standing nominating committee.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information for 1995, 1994, and 1993 as to
the person who held the position of Chief Executive Officer during 1995 and the
other five most highly compensated executive officers at the end of 1995, whose
total salary and bonus for 1995 exceeded $100,000.
SUMMARY COMPENSATION TABLE (3)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ --------------------------
OTHER RESTRICTED STOCK ALL
ANNUAL STOCK OPTIONS OTHER
NAME AND COMPEN- AWARD(S) (#COMMON COMPEN-
PRINCIPAL POSITIONS YEAR SALARY BONUS (1) SATION ($) SHARES) SATION (2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Christopher K. Seglem, 1995 $290,004(4) $162,402 $ 0 75,000 $99,973
Chief Executive Officer and 1994 290,004(4) 203,003 0 16,000 12,295
President 1993 270,504 175,621 0 52,000 12,792
Ronald W. Stucki, 1995 180,011(4) 86,405 0 20,000 38,293
Senior Vice President- 1994 180,011(4) 108,006 0 13,000 3,859
Operations 1993 162,124 93,438 1,532 12,000 3,712
Theodore E. Worcester, 1995 156,208(4) 74,980 0 20,000 40,476
Senior Vice President of Law 1994 156,208(4) 93,725 0 13,000 3,784
and Administration and General 1993 143,568 81,083 0 12,000 3,385
Counsel
Matthew S. Sakurada, 1995 161,164 77,322 0 0 3,750
President of Westmoreland 1994 150,762 93,725 0 13,000 3,633
Energy, Inc. (5) 1993 116,065 44,800 0 0 2,649
R. Page Henley, 1995 156,169 74,961 0 12,731(6) 0 5,195
President, Westmoreland 1994 156,169 31,234 0 3,500 3,769
Coal Sales Company, Inc. 1993 156,169 0 0 0 16,636
Robert J. Jaeger, 1995 84,175 38,016 0 20,000 4,206
Senior Vice President of 1994 -N/A- -N/A- -N/A- -N/A- -N/A-
Finance, Treasurer and 1993 -N/A- -N/A- -N/A- -N/A- -N/A-
Controller (7)
</TABLE>
(1) The amounts presented in the bonus column for 1995 represent total bonuses
earned for 1995 based on accomplishment of strategic objectives. Of the
total amount for each individual, 50 percent was paid in the first quarter
of 1996. Payment of the remaining 50 percent will be deferred until the
earliest to occur of (a) such year in which the Company has a positive cash
flow from operations or (b) upon sale, merger or liquidation of the Company,
provided that the individual is employed by the Company at the time the 50
percent would be paid, or if not employed, such employment was terminated by
reason other than voluntary resignation (which would include a decision to
not accept relocation of employment), or other than for discharge due to
gross or willful misconduct.
(2) All Other Compensation for the named executive officers in 1995 consisted of
directors' fees, Company contributions to the 401(k) salary savings plan
(the 'Plan') for the four Plan quarters ending November 30,
9
<PAGE>
1995, one month's salary for relocation, moving expenses and reimbursement
for temporary living costs as follows- Mr. Seglem received directors' fees
of $7,150. Amounts contributed to the Plan during 1995 on behalf of the
named executives included: Mr. Seglem-$3,750, Mr. Stucki-$3,750, Mr.
Worcester-$3,750, Mr. Henley-$3,750, Mr. Sakurada-$3,750 and Mr.
Jaeger-$519. The one month's salary paid to relocating employees is a
company policy and included amounts for the following named executives: Mr.
Seglem-$24,167, Mr. Stucki-$15,001 and Mr. Worcester-$13,017. Amounts paid
for moving and related expenditures on behalf of the named executives
included: Mr. Seglem-$64,906, Mr. Stucki-$19,542, Mr. Worcester-$23,709 and
Mr. Henley-$1,445. Also, Mr. Jaeger was reimbursed $3,687 principally for
temporary living costs.
(3) The Company has an Executive Severance Policy, amended with the consent of
the participants, which covers certain of the executive officers named
above, and provides that in the event of termination of such person's
employment with the Company or its subsidiaries for reasons set forth in the
Policy, or from a change-in-control of the Company, as defined in the
Policy, such executive officer will be entitled to a severance award. This
award shall include an amount equal to twice the executive officer's annual
average cash compensation, defined as the greater of the annualized base
salary at the time of severance plus the amount of bonus awarded (including
amount deferred) in that year or the annual average of the executive
officer's most recent five calendar years of base salary and bonus awarded
(including amount deferred), including the year of termination. The
severance award will be paid in approximately equal monthly installments
over a period of 24 months following the date of termination, unless the
executive officer elects to receive the present value of his total
severance, including the present value of executive benefits, in a lump sum
cash distribution at the time of termination.
(4) Salary increases were not granted to Messrs. Seglem, Stucki, Worcester or
Henley in 1994 or 1995. The larger amounts reflected for Messrs. Seglem,
Stucki and Worcester for 1994 as compared to 1993 are due to their increases
in 1993 being in effect for only part of 1993, but for all of 1994.
(5) Mr. Sakurada resigned his position effective March 1, 1996 and was not
employed by the Company or any of its subsidiaries, except in a limited
consulting capacity, after that date.
(6) Mr. Henley was granted 5,000 shares of restricted stock under the
Westmoreland Coal Company 1995 Long-Term Incentive Stock Plan. These shares
are valued in the table at the closing price of the Company's Common Stock
on the date of grant (12/5/95). These shares will cease to be restricted if
Mr. Henley remains an employee of the Company until January 1, 1997. Neither
the grant of the restricted stock nor his vesting in the stock will require
any consideration to be paid by Mr. Henley.
(7) Mr. Jaeger was hired April 17, 1995.
10
<PAGE>
The following table represents information regarding options to purchase
common shares granted to the named executive officers in 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------------- --------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE OR
NAME UNDERLYING TO EMPLOYEES IN BASE PRICE
OPTIONS FISCAL YEAR PER SHARE EXPIRATION GRANT DATE PRESENT VALUE*
GRANTED DATE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Christopher K. Seglem 75,000 28.6% $ 2.625 12/5/2003 $ 117,750
Ronald W. Stucki 20,000 7.6% $ 2.625 12/5/2003 $ 31,400
Theodore E. Worcester 20,000 7.6% $ 2.625 12/5/2003 $ 31,400
Robert J. Jaeger 20,000 7.6% $ 2.625 12/5/2003 $ 31,400
</TABLE>
* This calculation was made using the Black--Scholes option pricing model. The
model assumes: (a) an option term of 10 years, which represents the length of
time between the grant date of options under the Company's 1995 incentive
stock option plans and the expiration date of the options; (b) an interest
rate that represents the zero-coupon Government Bond yield available on the
grant date and maturing at the end of the option term; (c) stock volatility
based on monthly closing market prices for December 1992 through December
1995; and (d) a dividend yield which represents the quarterly dividends paid
divided by the quarterly closing market prices, annualized for the 12
quarters from December 1992 through December 1995.
The following table presents information regarding the number of
unexercised options to purchase common shares and the number of unexercised
stock appreciation rights at December 31, 1995:
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
NAME UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1995 DECEMBER 31, 1995
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Christopher K. Seglem 77,197 117,000 -0- -0-
Ronald W. Stucki 26,000 39,000 -0- -0-
Theodore E. Worcester 26,000 39,000 -0- -0-
Matthew S. Sakurada 3,371 26,000 -0- -0-
R. Page Henley 26,046 3,500 -0- -0-
Robert J. Jaeger -0- 20,000 -0- -0-
</TABLE>
No member of the named executive officer group exercised any options during
1995, or held any unexercised SARs as of December 31, 1995.
11
<PAGE>
RETIREMENT PLAN
The Company sponsors a Retirement Plan (the 'Plan') for eligible employees
of the Company and its subsidiaries to which employees make no contributions.
All employees whose terms and conditions of employment are not subject to
collective bargaining and who work 1,000 or more hours per year are eligible for
participation in the Plan. Eligible employees become fully vested after five
years of service, or in any event, upon attaining age 65.
In general, the Plan provides for payment of annual retirement benefits to
eligible employees equal to 1.2% of any employee's average annual salaried
compensation (over the sixty most highly compensated consecutive months of
employment) plus .5% of such average annual compensation in excess of the
employee's pay used to determine Social Security retirement benefits ('covered
compensation') for each year of service to a maximum of 30 years. The plan also
provides for disability benefits and for reduced benefits upon retirement prior
to the normal retirement age of 65.
No amounts are included in the salary compensation column of the Summary
Compensation Table above in respect of Plan contributions by the Company and its
subsidiaries because the Plan is a qualified defined benefit plan. Based on the
most recent actuarial valuation, dated December 1, 1994, no contribution is
required or permitted to this Plan for 1995, due to the full funding limitations
imposed under the Employee Retirement Income Security Act of 1974, as amended
('ERISA'). The basis upon which benefits are computed is a straight-life
annuity; payments are available in other forms on an actuarially reduced basis
equivalent to a straight-life annuity. Benefit amounts set forth in the table
below are not subject to any deduction for Social Security benefits or other
offset amounts.
The following table shows estimated annual retirement benefits, which are
representative of an employee currently age 65 whose salary remained unchanged
during his or her last five years of employment and whose benefit will be paid
for the life of the employee:
<TABLE>
<CAPTION>
ANNUAL BENEFIT FOR YEARS OF
COMPENSATION SERVICE CREDITED
- ------------------------------------------------------------------------------
10 20 30 OR MORE
--------- --------- -----------
<S> <C> <C> <C>
$25,000 $ 3,000 $ 6,000 $ 9,000
50,000 7,204 14,408 21,612
100,000 15,704 31,408 47,112
150,000 24,204 48,408 72,612
200,000 32,704 65,408 98,112
250,000 41,204 82,408 123,612
300,000 49,704 99,408 149,112
</TABLE>
Years of service credited under the Plan as of December 31, 1995 for the
following individuals are: Mr. Seglem-15 years, Mr. Stucki-15 years, Mr.
Worcester-5 years, Mr. Henley-12 years and Mr. Jaeger-0 years.
The current compensation covered by the Plan for any named executive
officer in the Summary Compensation Table is that amount reported in the Salary
column, subject to limitations imposed by the Internal Revenue Code.
The annual benefit presented in the above table reflects the inclusion of a
Supplemental Executive Retirement Plan (the 'SERP'), established by the Company,
effective January 1, 1992, which currently covers all the executive officers
named above. Senior management and certain other key individuals shall be
eligible to participate in the SERP.
12
<PAGE>
To become vested in the SERP, a participant must attain age 55 and
generally complete 10 years of service. The SERP is a non-qualified plan which
supplements the Retirement Plan by not being limited by the Internal Revenue
Code requirements on annual compensation that may be considered in determining a
participant's annual benefit and the amount of annual benefit payable to the
participant. Bonus amounts are included in a participant's compensation under
the SERP, although excluded under the Retirement Plan. Benefits are payable out
of the Company's general assets, and shall commence and be payable at the same
time and in the same form as the Retirement Plan.
COMPENSATION OF DIRECTORS
Throughout 1995 the attendance fee for the Chairman of the Board of
Directors was $1,300, for each committee chairman was $750 and for each director
attending a Board or committee meeting was $650. The attendance fees paid to Mr.
Seglem are included in the All Other Compensation column of the Summary
Compensation Table.
Throughout 1995, the annual retainer fee to each outside director was
$15,000, of which $9,000 was paid in cash, and the $6,000 remaining could be
used to purchase stock of the Company, or at the director's election could also
be paid in cash.
Mr. Hutchinson retired as an employee of the Company as of December 31,
1993. For the period January 1, 1994 to the Annual Meeting of Shareholders in
1996, he agreed to provide consulting services to the Board of Directors at its
request, for which he received $1,250 per month. Mr. Hutchinson is also
receiving benefit payments from the Company's SERP (see discussion under
Retirement Plan, above).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Mr. Klaus, together with former directors Brenton S. Halsey and Lennox K.
Black, served on the Compensation and Benefits Committee during 1995. Mr. Black
is Chairman of the Board and was also Chief Executive Officer of Penn Virginia
Corporation through May 7, 1996. See discussion under 'Transactions with Other
Companies,' following. There were no other compensation committee interlocks or
insider participation in compensation decisions affecting executive officers.
No member of this Committee was an officer or employee of the Company. No
executive officer of the Company served either as a member of the compensation
committee or as a director of a company, one of whose executive officers served
on the Company's Compensation and Benefits Committee, or as a member of the
compensation committee of a company, one of whose executive officers served as a
director of the Company.
TRANSACTIONS WITH OTHER COMPANIES
The Company leases coal reserves and land on which the Company has built
coal preparation plants and other structures from Penn Virginia Resources
Corporation ('PVRC'), a wholly owned subsidiary of Penn Virginia Corporation, of
which Mr. Black (who served on the Company's Board until May 10, 1996) is
Chairman of the Board and was also Chief Executive Officer through May 7, 1996.
During 1995 the Company paid royalties under these leases in the amount of
$5,325,000. The Company believes that at the time the leases of coal reserves
and land were entered into with PVRC, and when certain of their terms were
renegotiated, pursuant to the provisions thereof, the leases were on terms fair
and reasonable to the Company and no less favorable to the Company than if the
leases were from unaffiliated companies.
13
<PAGE>
In January 1995, the Company released its rights in certain coal reserves
in West Virginia to an indirect subsidiary of Penn Virginia Corporation (and
assignee of PVRC) in exchange for $3 million of cash and a guarantee by Penn
Virginia Corporation of certain environmental reclamation and remediation
obligations of an unaffiliated third party to whom the Company, in a concurrent
transaction, had sold operating assets of its Hampton, West Virginia, Division.
In that transaction and another concurrent transaction with an unaffiliated
party, the Company received a net additional $4.05 million of cash and
assumption by those parties of environmental reclamation and remediation
obligations. In May 1996, the Company relinquished certain coal reserves to Penn
Virginia Corporation for which it received a cash payment of $10.7 million and
an 18-month option to purchase Penn Virginia's 16% ownership interest in
Westmoreland Resources, Inc. for $3.0 million. The Company also received
assignable access rights from Penn Virginia to the Company's Stone Mountain
reserves, a tract of underground reserves owned in fee by the Company. In
concurrent transactions, unaffiliated parties assumed certain of the Company's
environmental reclamation and remediation obligations in exchange for coal
reserves. Both the January 1995 and May 1996 transactions were on terms
considered fair and reasonable to the Company and no less favorable than if
negotiated with an unaffiliated company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, all statements of beneficial ownership required
to be filed with the Securities and Exchange Commission in fiscal 1995 were
timely filed, except a Form 4 was late in filing to report the disposal of 2,000
shares of Common Stock by the wife of E.B. Leisenring, Jr., a former director of
the Company.
SHAREHOLDER PROPOSALS
Any proposal submitted by shareholders for inclusion in the Company's proxy
statement and proxy for the 1997 annual meeting of shareholders of the Company
must be received by the Company at its principal executive offices no later than
December 27, 1996 and must comply in all other respects with applicable rules
and regulations of the Securities and Exchange Commission relating to such
inclusion.
OTHER BUSINESS
The Board of Directors has no present intention of bringing any other
business before the meeting and has not been informed of any other matters that
are to be presented to the meeting. If any other matters properly come before
the meeting, however, the persons named in the enclosed proxy will vote in
accordance with their best judgment.
By order of the Board of Directors.
Theodore E. Worcester
Corporate Secretary
14
<PAGE>
WESTMORELAND COAL COMPANY
Proxy Solicited on Behalf of the Board of Directors
Special Meeting of Holders of Depositary Shares - September 11, 1996
The undersigned hereby constitutes and appoints Christopher K. Seglem, Theodore
E. Worcester, and Paul W. Durham and each of them, as true and lawful agents and
proxies with power of substitution, to represent the undersigned and to vote all
depositary shares of stock held by the undersigned at the Special Meeting of
Holders of Depositary Shares to be held at the offices of Westmoreland Coal
Company, 2 North Cascade Ave., 14th Floor, Colorado Springs, CO on Wednesday,
September 11, 1996 at 10:00 A.M. (Mountain Daylight Time), and at any
adjournments thereof, on all matters coming before said meeting as noted on the
reverse side of this card.
Election of Directors, Nominees:
Robert E. Killen and James W. Sight
This card also serves to instruct Mellon Bank, N.A., Trustee of the Westmoreland
Coal Company and Affiliated Companies Employees Savings/Retirement Plan how to
vote shares held by the Trustee for any stockholders or employees participating
in the Plan. The Trustee has been authorized in its discretion to exercise
voting rights for shares held in the Plan if no written instructions are
received. Written voting instructions must be received by the Trustee by
September 5, 1996. Voting instructions received by the Trustee will be kept
confidential.
See Reverse Side
- --------------------------------------------------------------------------------
(FORM OF REVERSE OF PROXY)
Please mark your
X votes as in this
example
---------------------
This proxy, when properly executed, will be voted in the manner directed herein.
If no directions are given, this proxy will be voted FOR the election of
directors.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------- ---------------------- --------------------
The Board of Directors recommends a vote FOR Special
- -------------------------------------------------------------------
FOR WITHHELD Action
1. Election of
Directors
(see reverse)
For, except vote withheld from the following nominee: Will Attend
Special Meeting
- ------------------------------------------------------------------- --------------------
RECEIPT OF THE NOTICE OF
SPECIAL MEETING AND PROXY
STATEMENT DATED, AUGUST ___, 1996 ARE
HEREBY ACKNOWLEDGED.
</TABLE>
SIGNATURE(S) DATE , 1996 NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney executor, administrator,
trustee, guardian or corporate officer, please give full title as such.
