PROXY STATEMENT
OF WESTMORELAND COAL
Securities and Exchange Commission
Washington D.C. 20549
SCHEDULE 14a INFORMATION
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__________________________________________________________________
Westmoreland Coal Company
__________________________________________________________________
(Name of Registrant as Specified in Its Charter)
Westmoreland Committee To Enhance Share Value
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if other than the Registrant)
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The following is added text of a Web Site at
freedomforshareholders.com.
Westmoreland Committee to Enhance Share Value
Post Office Box 4004
Merrifield, VA 22116
http://www.freedomforshareholders.com
May 10, 1999
Dear Fellow Westmoreland Shareholder:
You have a rare opportunity to be part of the shareholder
movement that removes the current management of Westmoreland
Coal Company, which we believe is out of touch with shareholders'
anger and interests.
Vote with us for change by casting your BLUE proxy card before
May 12.
Time is running short: If you haven't already done so, call your
broker to vote your BLUE card(s) or fax them to DF King & Co.,
Inc. at (212) 809-0692. Call (800) 628-8538 if you need
assistance voting your shares.
WE ASK THAT YOU CONSIDER THE FOLLOWING WHEN VOTING YOUR SHARES
Less than a month out from bankruptcy, Westmoreland's current
Board of Directors approved a round of bonuses for salaried
management and employees totaling $2.6 million in cash and,
according to the amended annual report of Form 10-K filed with
the SEC on March 23, 1999, granted 95,000 shares of restricted
stock and 95,000 stock options. In a later amended Form
10-K filed on March 29, 1999, those amounts were changed to
40,000 shares of restricted stock and 65,000 stock options,
granted to employees and one officer. We do not know the reason
for this change. Of the $2.6 million in cash awards, the
Company's President, Chairman of the Board and Chief Executive
Officer, Christopher K. Seglem, was paid a cash bonus of
$667,000 - 200 percent of his annual salary - bringing his annual
cash compensation to more than $1 million. The other three most
highly paid executive officers received an aggregate of $700,000
in cash bonuses. The Equity Committee's counsel agreed to the
payment of $1.3 million in bonuses to senior management.
NEVERTHELESS, DO YOU REALLY THINK THESE BONUSES WERE JUSTIFIED?
Of the 186,016 shares of common stock that Mr. Seglem beneficially
owns in Westmoreland, 183,000 are options to buy additional
shares. The remaining 3,016 common shares (and 24 depository
shares) that are in his tax-advantaged 401k plan represent the
sum total of Mr. Seglem's investment in Westmoreland. The five
nominees chosen by management to represent the Common
Shareholders, including Mr. Seglem, actually own 32,568 shares
of Common Stock and 3,224 Depositary Shares. Ironically, The two
persons nominated by management to represent the Depositary
Shareholders own 1,051,054 shares of Common Stock and 45,372
Depositary Shares. Three of our nominees who are not members
of the Committee and were asked to serve as nominees for their
special qualifications, each owns only a nominal amount of
recently acquired shares. Our remaining nominees, who are also
the members of the Committee, own a little more than 1,300,000
Common Shares and approximately 40,000 Depositary Shares.
Inasmuch as we are not represented on the Board, we find it
surprising and disturbing that, if it were not for
the Common Stock ownership of Messrs. Killen and Sight -
management's Depositary Share nominees - we own vastly more
stock than management's nominees.
Management's two-year tactical bankruptcy incurred $10 million
in expenses, and plunged the value of our shares to record lows.
When it was all said and done, we believe management gained
little towards its original objective of reducing Company
obligations to the UMWA Funds. In fact, when the smoke
cleared, the Company (according to its summary of the Master
Agreement in Note 1 to its financial statements):
Agreed to pay in full all arrearages, with interest, under
the Coal Act
Agreed to pay what we consider a staggering $4 million
UMWA expense reimbursement
Agreed to a contingent promissory note to pay the Funds up to
an additional $12M
Agreed to reinstate its Individual Employer Plan for 1992
Plan retirees
Agreed to pay its future obligations to the Funds as and
when due
Agreed to resolve the UMWA 1974 Pension Trust claim for
$13.8 by submission to arbitration, as provided by law
Agree to secure its obligation to provide retiree health
benefits under the 1992 Plan by posting a $20.8 million
bond, as required by the Coal Act
Agree to secure its obligations to the Funds with a $12
million Contingent Promissory Note (decreasing to $6
million in 2002) plus other security
Agreed not to challenge the Coal Act in court or through
legislation
Agreed to make payments for retiree health benefits as if
it continued to be obligated under the 1993 UMWA Wage
Agreement for five years, and indefinitely after that period
unless it can get a ruling from a court of competent
jurisdiction that it is not obligated to make further
payments.
Yes, your the Equity Committee, of which three of our nominees
were members, reluctantly signed off on the Master Agreement.
However, this was only after they were advised by counsel that the
Company and the Funds were in agreement and would probably be
successful in having their plan for dismissal approved without the
Equity Committee's participation. At this point, the Equity
Committee insisted upon, and got, a commitment from the Funds to
pay $125,000 toward this proxy contest and the commitment of the
Company (i) not to change its corporate governance documents until
after the conclusion of this Special Meeting and, (ii) to make the
recently concluded tender offer for the Depositary Shares.
However, at all times the three members of the Equity Committee
who are nominees in this contest felt that management accomplished
little in its negotiations with the Funds and with its handling of
the bankruptcy case.
To enable real change, we believe that the current Board of
Directors must be replaced. Of the five incumbents on the Board
of Directors representing common stock shareholders, three have
reigned at Westmoreland for more than 20 years.
Vote for our slate of new Directors by signing, dating, and
returning a BLUE proxy card.
Please consider our plans for the Company:
a.. Sale of all IPPs. The Committee proposes selling
Westmoreland's remaining IPPs as soon as practicable, consistent
with obtaining fair market value for the assets. We believe that
the current, but probably temporary, market environment of under-
capacity in the electricity sector has escalated IPP market
valuations to the point that very favorable selling prices can be
obtained and assuming that necessary approvals of the UMWA Funds
can be obtained. We have also retained the expert advice of
Bodington & Company -- a management and financial consulting firm
serving the electric power industry to develop a strategy for
obtaining maximum revenues possible for Westmoreland's remaining
IPP assets. The federal Coal Act in effect makes any purchaser of
an IPP liable for any existing claims the affected Funds might
have against the Company which are related to that property. This
liability to the purchaser may be waived by the affected Funds.
Since it is unlikely that a prospective purchaser will purchase
an IPP without this waiver, any sale of the IPPs will require
the approval of the affected UMWA Funds and the Committee has no
assurance that the approval will be granted. The Committee
believes that the Funds support a corporate strategy of the sale
of the IPPs, assuming that the terms and conditions for such sale
are favorable, but their express consent has not been obtained.
a.. Expansion of Surface Mining Operations. The Committee
proposes substantially increasing production and marketing of
Westmoreland's coal assets in the Powder River Basin near Hardin,
Montana and attempting to negotiate lower rail transportation
rates.
a.. Closing Executive Headquarters. The Committee would reduce
overhead costs by reducing the number of Westmoreland's salaried
executives in Colorado Springs, relinquishing the headquarters
space, and managing the company through its subsidiaries. There
are no Westmoreland operations in or near Colorado Springs,
Colorado.
We invite you to read on our web site a history of management's
performance in bankruptcy.
Vote BLUE to elect our Directors to implement our plan FOR
increasing share value!
Fellow shareholders -- you may never have this opportunity again.
We are championing the cause of increasing the value of your
shares. Vote now for change in Westmoreland management. Move them
out and let us move on. Enough is Enough!
Members
Westmoreland Committee to Enhance Share Value
The election is May 12.
It is urgent that you call your broker to vote your BLUE
proxy card(s) or fax your card(s) to our proxy solicitor DF King
& Co, Inc. at (212) 809-0692. Call toll-free 800-628-8538 if you
need assistance in voting your shares.
We urge you NOT to sign any white proxy cards sent to
you by Westmoreland management. If your have already done so,
you may cancel that vote by signing, dating, and returning
you BLUE proxy card(s). Only your latest dated proxy counts.
Remember each account you own must be voted separately.
Join us. Regardless of how many shares you own, your
vote is important to us. We need your vote.
