<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 Rule 14a-11(c) or Rule 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):
[X] No fee required
[_] Fee computed on 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:
-------------------------------------------------------------------------
[_] 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:
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(4) Date Filed:
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<PAGE>
WESTMORELAND COAL COMPANY
2 North Cascade Avenue, 14th Floor [LOGO]
Colorado Springs, Colorado 80903
April 14, 1999
Dear Stockholder:
It is our pleasure to invite you to attend the Special Meeting of
Stockholders of Westmoreland Coal Company to be held on Wednesday, May 12,
1999, at 8:00 a.m., local time, at the Antlers Adam's Mark Hotel, 4 South
Cascade Avenue, Colorado Springs, Colorado 80903.
At the Special Meeting, we will ask the holders of Common Stock to consider
and vote upon the election of five directors to the Board of Directors. In
addition, we will ask the holders of Depositary Shares (each representing one-
quarter of a share of our Series A Convertible Exchangeable Preferred Stock)
to consider and vote upon the election of two additional directors to the
Board of Directors.
The formal Notice of Special Meeting, the Proxy Statement and our WHITE
proxy card follow. Your vote is important, regardless of the size of your
holdings. Whether or not you plan to attend the Special Meeting and vote in
person, please take a moment and complete, sign and date our enclosed WHITE
proxy card and return it in the enclosed postage-paid envelope. Instructions
for voting are contained on the WHITE proxy card. Voting in advance of the
Special Meeting will not limit your right to vote in person should you wish to
attend the Special Meeting.
In connection with the Special Meeting, a few dissident stockholders
calling themselves "The Westmoreland Committee to Enhance Share Value" may be
attempting to solicit your proxy in an effort to elect their designees to your
Board of Directors. We urge you to reject their solicitation and not sign any
of their blue proxy cards.
Thank you for your support, and we look forward to seeing you at the
Special Meeting.
Sincerely,
/S/ Christopher K. Seglem
Christopher K. Seglem
Chairman of the Board, President and
Chief Executive Officer
IMPORTANT
Your vote is important. Please take a moment to sign, date and promptly
mail your WHITE proxy card in the postage-paid envelope provided. If your
shares are registered in the name of a broker, only your broker can execute
a proxy and vote your shares and only after receiving your specific
instructions. Please contact the person responsible for your account and
direct him or her to execute a proxy on your behalf today. IF YOU HAVE
RECEIVED A BLUE PROXY CARD FROM THE DISSIDENT STOCKHOLDERS, YOUR BOARD OF
DIRECTORS URGES YOU NOT TO SIGN OR RETURN ANY BLUE PROXY CARD SENT TO YOU.
If you have any questions or need further assistance in voting, please
contact the firm assisting us in the solicitation of proxies:
MORROW & CO., INC.
Call toll free at (800) 662-5200.
<PAGE>
LOGO
WESTMORELAND COAL COMPANY
2 North Cascade Avenue, 14th Floor
Colorado Springs, Colorado 80903
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Our Stockholders:
A Special Meeting of Stockholders of Westmoreland Coal Company, a Delaware
corporation (the "Company"), will be held at the Antlers Adam's Mark Hotel, 4
South Cascade Avenue, Colorado Springs, Colorado 80903, on Wednesday, May 12,
1999 at 8:00 a.m. local time, and at any or all adjournments or postponements
thereof. The Special Meeting is being held in lieu of an annual meeting of the
Company's stockholders in 1999.
At the Special Meeting, the Company will ask the stockholders to vote on
two proposals:
1. The election by the holders of Common Stock of five directors to the
Board of Directors to serve for a one-year term; and
2. The election by the holders of Depositary Shares of the Company (each
representing one-quarter of a share of the Company's Series A
Convertible Exchangeable Preferred Stock) of two additional directors to
the Board of Directors to serve for a one-year term.
The record date for the holders of Common Stock is March 23, 1999, and only
those holders of record of Common Stock on such record date will be entitled
to notice of and to vote at the Special Meeting. On March 10, 1999, pursuant
to an agreement under which the Company successfully emerged from bankruptcy
in January 1999 (the "Master Agreement"), the Company commenced a tender offer
to purchase up to 1,052,631 Depositary Shares at a price of $19.00 per
Depositary Share, subject to certain terms and conditions. The tender offer
was scheduled to expire on April 6, 1999, but was extended by one day due to
technical difficulties at The Depository Trust Company which had prevented
some holders of Depositary Shares from tendering. On April 7, 1999, the
Company accepted for payment and thereby purchased 1,052,631 Depositary Shares
for $19,999,989 in full payment of those shares. Because 1,683,903 Depositary
Shares were tendered and not withdrawn, a proration factor was applied and
approximately 62.5% of the Depositary Shares tendered by each holder was
purchased. Pursuant to the terms of the Master Agreement, the extension of the
tender offer by one day required the Company to change the scheduled date of
the Special Meeting (May 11, 1999) by one day to May 12, 1999. The Company has
established the close of business on April 12, 1999 as the record date for
those holders of record of the Depositary Shares entitled to notice of and to
vote at the Special Meeting.
In addition, at the Special Meeting, the stockholders may transact such
other business as may properly come before the meeting or at any adjournment
or postponement thereof. The Proxy Statement which follows contains more
detailed information as to the actions proposed to be taken.
This Notice of Special Meeting of the Stockholders is first being mailed to
stockholders on or about April 14, 1999.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. IF YOU HAVE RECEIVED A BLUE PROXY CARD FROM A DISSIDENT
GROUP OF STOCKHOLDERS, WE URGE YOU NOT TO SIGN OR RETURN ANY BLUE PROXY CARD
SENT TO YOU.
/s/ Charles H. Finkenstadt, Jr.
Charles H. Finkenstadt, Jr.
Corporate Secretary
April 14, 1999
<PAGE>
WESTMORELAND COAL COMPANY
2 North Cascade Avenue, 14th Floor
Colorado Springs, Colorado 80903
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
April 14, 1999
General Information
The enclosed proxy is solicited on behalf of the Board of Directors of
Westmoreland Coal Company, a Delaware corporation (the "Company"), for use at
a special meeting of stockholders in lieu of an annual meeting scheduled to be
held on May 12, 1999, and at any and all adjournments or postponements thereof
(the "Special Meeting"). The proxy may be revoked by a stockholder at any time
before its exercise by written notice to the Corporate Secretary of the
Company, by executing and delivering a proxy with a later date or by voting in
person at the Special Meeting. A stockholder's attendance at the Special
Meeting will not by itself revoke any previously executed proxy by such
stockholder. If your shares are held by a broker, you must contact your broker
to revoke your proxy.
Holders of Common Stock of record at the close of business on March 23,
1999, will be entitled to notice of and to vote at the Special Meeting. On
March 10, 1999, pursuant to an agreement under which the Company successfully
emerged from bankruptcy in January 1999 (the "Master Agreement"), the Company
commenced a tender offer (the "Tender Offer") to purchase up to 1,052,631
Depositary Shares (each representing one-quarter of a share of the Company's
Series A Convertible Exchangeable Preferred Stock) at a price of $19.00 per
Depositary Share, subject to certain terms and conditions. The Tender Offer
was scheduled to expire on April 6, 1999, but was extended by one day due to
technical difficulties at The Depository Trust Company which had prevented
some holders of Depositary Shares from tendering. On April 7, 1999, the
Company accepted for payment and thereby purchased 1,052,631 Depositary Shares
for $19,999,989 in full payment of those shares. Because 1,683,903 Depositary
Shares were tendered and not withdrawn, a proration factor was applied and
approximately 62.5% of the Depositary Shares tendered by each holder was
purchased. Pursuant to the terms of the Master Agreement, the extension of the
Tender Offer by one day required the Company to change the scheduled date of
the Special Meeting (May 11, 1999) by one day to May 12, 1999. The Company has
established the close of business on April 12, 1999 as the record date for
those holders of record of the Depositary Shares entitled to notice of and to
vote at the Special Meeting. The Company selected April 12, 1999 as the record
date for the Depositary Shares so that only holders of those Depositary Shares
not purchased by the Company in the Tender Offer would be able to vote at the
Special Meeting. On March 23, 1999, the record date for the holders of Common
Stock, the Company had outstanding 7,059,663 shares of Common Stock. On April
12, 1999, the record date for the holders of Depositary Shares, the Company
had outstanding 1,247,369 Depositary Shares.
The Common Stock and the Depositary Shares constitute all of the Company's
voting securities. Each outstanding share of Common Stock and each outstanding
Depositary Share will entitle the holder to one vote for each nominee as
director; provided, however, that of the seven nominees for the Board of
Directors of the Company, five of such nominees (the "Common Stockholder
Nominees") will be elected solely by the holders of Common Stock ("Proposal
1") and two of such nominees (the "Depositary Stockholder Nominees") will be
elected solely by the holders of Depositary Shares ("Proposal 2").
ACCORDINGLY, ONLY HOLDERS OF COMMON STOCK WILL BE ENTITLED TO VOTE ON PROPOSAL
1, AND ONLY HOLDERS OF DEPOSITARY SHARES WILL BE ENTITLED TO VOTE ON PROPOSAL
2.
This Proxy Statement and attached WHITE proxy card are being first mailed
to stockholders on or about April 14, 1999.
1
<PAGE>
Separate WHITE proxy cards are being sent to holders of Common Stock and to
the holders of Depositary Shares. If you only hold shares of Common Stock, you
will only be sent the WHITE proxy card for holders of Common Stock. If you
only hold Depositary Shares, you will only be sent the WHITE proxy card for
holders of Depositary Shares. If you own both Common Stock and Depositary
Shares, you will be sent both WHITE proxy cards and you should complete both
WHITE proxy cards if you wish to use such proxies to vote your respective
interests in the Common Stock and Depositary Shares.
A stockholder may, with respect to the election of directors for which such
stockholder is entitled to vote: (i) vote for the election of all named
director nominees, (ii) withhold authority to vote for all named director
nominees or (iii) vote for the election of all named director nominees other
than any nominee(s) with respect to whom the stockholder withholds authority
to vote by so indicating in the appropriate space on the WHITE proxy card.
Duly executed and unrevoked WHITE proxies received by the Company prior to the
Special Meeting will be voted in accordance with the stockholders'
specifications marked thereon. In the absence of a specific direction from the
stockholder, the WHITE proxies will be voted for the election of all named
director nominees.
A quorum is necessary to hold a valid meeting of stockholders. If
stockholders entitled to cast at least a majority of the shares entitled to
vote at the Special Meeting are present in person or by proxy, a quorum will
exist for purposes of electing the nominees for the Board of Directors. Shares
owned by the Company are not voted and do not count for quorum purposes. In
order to assure the presence of a quorum at the Special Meeting, please vote
your shares by completing, signing and dating the enclosed WHITE proxy card
and returning it promptly in the enclosed postage-paid envelope, even if you
plan to attend the Special Meeting in person. Abstentions are counted as
present, and broker non-votes may be counted as present, to establish a
quorum.
If a quorum is present at the Special Meeting, the Company's bylaws provide
that directors shall be elected by the affirmative votes of a plurality of the
votes of the shares present in person or by proxy at the Special Meeting. As a
result, withholding authority to vote for a director nominee and broker non-
votes with respect to the election of directors will not affect the outcome of
the election of directors.
IF YOU HAVE RECEIVED A BLUE PROXY CARD FROM A DISSIDENT GROUP OF
STOCKHOLDERS, YOUR BOARD OF DIRECTORS URGES YOU NOT TO SIGN OR RETURN ANY BLUE
PROXY CARD SENT TO YOU.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR
HER TO VOTE "FOR" YOUR BOARD'S NOMINEES ON OUR WHITE PROXY CARD.
2
<PAGE>
PROPOSAL 1
COMMON STOCKHOLDER NOMINEES FOR ELECTION AS DIRECTORS
The five persons named in the following table, all of whom are now
directors of the Company, have been designated as the Common Stockholder
Nominees for election to the Board of Directors for a one-year term. All of
these directors were elected by the stockholders of the Company at the 1996
annual meeting of stockholders. As a result of the Company's bankruptcy
proceedings during 1997 and 1998, no annual meetings of stockholders have been
held since the 1996 annual meeting. The persons named in the WHITE proxy card
intend to vote for the election of these Common Stockholder Nominees. Each
Common Stockholder Nominee has consented to being named and to serve if
elected. If any Common Stockholder Nominee 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 Common Stockholder Nominee will
decline or be unable to serve. In addition, two Depositary Stockholder
Nominees have been nominated by the Company and will be submitted to a vote of
the holders of the Depositary Shares. See "Proposal 2 -- Depositary
Stockholder Nominees for Election as Directors" below. The holders of the
Company's Depositary Shares are not entitled to vote on this Proposal 1.
THE BOARD OF DIRECTORS URGES HOLDERS OF COMMON STOCK TO VOTE
"FOR" THE COMMON STOCKHOLDER NOMINEES
<TABLE>
<CAPTION>
Business Experience Director
During Past of the
Five Years and Other Company Committee
Name Directorships Age Since Memberships(/1/)
---- ------------------------ --- -------- ---------------------
<C> <S> <C> <C> <C>
Pemberton Hutchinson Chairman of the Board of 68 1977 Executive (Chairman);
the Company (January Compensation
1992 through June 1996); and Benefits
Chief Executive Officer
(January 1989 through
June 1993); and
President of the Company
(June 1981 through June
1992). Director of
Mellon Bank Corporation
and Teleflex
Incorporated.
William R. Klaus Chairman Emeritus, 73 1973 Executive;
Pepper Hamilton LLP, Compensation
attorneys, and former and Benefits
Chairman of Commercial (Chairman);
Practice Department and Audit;
Merger and Acquisition Independent
Practice Group (retired Directors
1996); Director, The
Fidelity Bank (May 1973
through April 1992);
Director, Pennsylvania
Warehousing & Safe
Deposit Company, Inc.
(since February 1968);
Director, Acer
Engineering &
Consultants, Inc. (a
subsidiary of Hyder plc,
a U.K. company) (since
January 1990).
Thomas W. Ostrander Managing Director, 48 1995 Audit;
Salomon Smith Barney Independent
Inc., investment banking Directors
firm (and predecessor (Chairman);
firms) (since 1989). Corporate
Governance
(Chairman)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Business Experience Director
During Past of the
Five Years and Other Company Committee
Name Directorships Age Since Memberships(/1/)
---- ------------------------ --- -------- -----------------
<C> <S> <C> <C> <C>
Christopher K. Seglem Chairman of the Board of 52 1992 Executive
Directors (since June
1996) and Chief
Executive Officer of the
Company (since June
1993); President of the
Company (since June
1992); Chief Operating
Officer of the Company
(June 1992 through June
1993); and Executive
Vice President of the
Company (December 1990
through June 1992).
Edwin E. Tuttle Director of General 71 1978 Executive;
Accident Insurance Compensation
Company of America (from and Benefits;
1980 through April Audit (Chairman);
1998); Director of Independent
CoreStates Bank, N.A. Directors
(December 1976 through
April 1996); and retired
Vice-Chairman of Elf
Atochem of North
America, Inc. (a
diversified chemical
company).
</TABLE>
- --------
(1) See "Information About the Board and Committees" below.
In connection with the implementation of the Company's business
restructuring plan announced in 1993, the Company filed a "pre-packaged" plan
of reorganization under Chapter 11 of the United States Bankruptcy Code
("Chapter 11") on November 8, 1994 (the "1994 Bankruptcy Filing") to
facilitate the sale of the assets of a 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 and the Company emerged from bankruptcy on December 22, 1994. The
Company filed a second voluntary petition for reorganization under Chapter 11
on December 23, 1996 (the "1996 Bankruptcy Filing" and together with the 1994
Bankruptcy Filing, the "Bankruptcy Filings"). The Company successfully emerged
from bankruptcy on January 4, 1999 pursuant to the terms of a consensual
dismissal. Mr. Hutchinson was a Director and an executive officer of the
Company at and within two years before the time of the 1994 Bankruptcy Filing
and a Director at and within two years before the time of the 1996 Bankruptcy
Filing. Mr. Seglem was a Director and held the executive offices indicated at
and within two years before each of the Bankruptcy Filings. In addition,
Messrs. Klaus and Tuttle were Directors of the Company at and within two years
before each of the Bankruptcy Filings, and each of the executive officers
named under "Executive Officers" below, except Mr. Jaeger, was an executive
officer of the Company at and within two years before each of the Bankruptcy
Filings. Mr. Jaeger was an executive officer and Mr. Ostrander was a Director
of the Company at and within two years before the 1996 Bankruptcy Filing.
4
<PAGE>
PROPOSAL 2
DEPOSITARY STOCKHOLDER NOMINEES FOR ELECTION AS DIRECTORS
The holders of the Depositary Shares will be entitled to elect two
additional directors at the Special Meeting. Each Depositary Share represents
one-quarter of a share of the Company's Series A Convertible Exchangeable
Preferred Stock, the terms of which entitle the holders thereof to elect two
directors if the Company is in arrears on six or more Preferred Stock
dividends. The Company was in arrears on eighteen quarterly dividends as of
April 1, 1999, and the Board of Directors accordingly has nominated two
persons for election as directors pursuant to these provisions.
The two persons named in the following table have been designated as the
Depositary Stockholder Nominees for election to the Board of Directors for a
one-year term. Both of these nominees were brought to the Company's attention
as candidates by holders of Depositary Shares and were elected to the Board of
Directors in September 1996, at a special meeting of the holders of Depositary
Shares. They were believed to have the support of the then largest holder of
Depositary Shares and were elected with the support of approximately 97% of
the Depositary Shares present or represented at the meeting. Mr. James W.
Sight was originally appointed by the Board of Directors in 1995 to ensure the
Board of Directors' 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 to the Board
of Directors by the holders of the Depositary Shares in June 1996, as one of
the two directors permitted to be elected by such holders. The persons named
in the WHITE proxy card intend to vote for the election of the two Depositary
Stockholder Nominees named below. Each Depositary Stockholder Nominee has
consented to being named and to serve if elected. If any Depositary
Stockholder Nominee 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 Depositary Stockholder Nominee will decline or be unable to
serve. The holders of the Company's Common Stock are not entitled to vote on
this Proposal 2.
THE BOARD OF DIRECTORS URGES HOLDERS OF DEPOSITORY SHARES TO VOTE
"FOR" THE DEPOSITARY STOCKHOLDER NOMINEES
<TABLE>
<CAPTION>
Director
of the
Business Experience During Past Company Committee
Name Five Years and Other Directorships Age Since Memberships(/1/)
---- ---------------------------------- --- -------- ----------------
<C> <S> <C> <C> <C>
Robert E. Killen(/2/) Chairman of the Board and 58 1996 --
Chief Executive Officer of
The Killen Group, Inc.
(since April 1996);
Chairman of the Board of
Berwyn Financial Services
(since October 1991); and
President of The Killen
Group, Inc. (from
September 1982 to April
1996).
James W. Sight(/2/) Director of United 43 1995 Audit;
Recycling Industries Independent
(since January 1995); Directors;
Director of U.S. Home Corporate
Corp. (since June 1993); Governance
and private investor.
</TABLE>
- --------
(1) See "Information About the Board and Committees" below.
(2) Messrs. Killen and Sight were directors at the time of the 1996
Bankruptcy Filing.
5
<PAGE>
Information About the Board and Committees
The Board of Directors held 13 meetings during 1998. 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 functions of the Audit Committee of the Board of Directors were carried
out by the Board as a whole during 1998 and the Audit Committee, composed of
Messrs. Tuttle (Chairman), Klaus, Ostrander and Sight, did not meet separately
during the year. 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, the financial statements and management letter.
In addition, it recommends to the Board of Directors 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 once during 1998. 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, composed of Messrs.
Hutchinson (Chairman), Klaus, Seglem and Tuttle, did not meet during 1998. To
the extent permitted by law, this Committee is authorized to exercise the
power of the Board of Directors with respect to the management of the business
and affairs of the Company.
The Committee of Independent Directors, composed of Messrs. Ostrander
(Chairman), Klaus, Sight and Tuttle, did not meet during 1998. This Committee
is composed of directors who are not and have never been officers or employees
of the Company or of Penn Virginia Corporation, which was a significant
stockholder of the Company and leased certain coal properties to the Company
until 1996. It is authorized to review matters involving transactions or
issues between the Company and Penn Virginia Corporation and to determine
whether the terms and conditions of such transactions are fair and reasonable
to the Company and no less favorable than if negotiated with an unaffiliated
company.
The Corporate Governance Committee, composed of Messrs. Ostrander
(Chairman) and Sight, did not meet during 1998. This Committee is authorized
to review issues related to corporate governance and structure and to make
recommendations to the Board of Directors.
The Board of Directors does not have a standing nominating committee.
Solicitation by Dissident Group
On March 9, 1999, Frank E. Williams, Jr., R. Bentley Offutt, Guy O. Dove
III, Wynnefield Partners Small Cap Value L.P. I, Wynnefield Partners Small Cap
Value L.P., and Wynnefield Small Cap Value Offshore Fund Ltd. (collectively,
the "Dissident Group") filed a Schedule 13D (the "Schedule 13D Filing") under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the
Schedule 13D Filing, the Dissident Group stated, among other things, that they
"[sought] to remove the present Board of Directors and to replace some or all
[sic] that Board with nominees to be chosen by the [Dissident] Group" and that
the Dissident Group "plans to solicit proxies to further that end" and intends
"the redirection of the . . . [Company's] business activities." On March 16,
1999, Mr. Williams issued a press release which stated that the Dissident
Group was calling itself "The Westmoreland Committee to Enhance Share Value"
and that it "intends to nominate a slate of directors and to solicit proxies
toward its objective of replacing some of Westmoreland Coal's current board."
On April 5, 1999, the Dissident Group filed preliminary proxy materials with
the Securities and Exchange Commission relating to the Special Meeting (the
"Dissident Group Proxy Statement"). In the Dissident Group Proxy Statement,
the Dissident Group proposed two director nominees to be voted on by the
holders of Depositary Shares and five nominees for the director positions
represented by the Common Stockholder Nominees.
6
<PAGE>
In the Dissident Group's preliminary proxy materials, the Dissident Group
indicated that it believed that holders of Depositary Shares are entitled to
vote on both the election of the five director positions represented by the
Common Stockholder Nominees as well as the election of the two directors to be
elected by the holders of the Depositary Shares. In the Company's view, the
Dissident Group's position in the preliminary materials is false and contrary
to the Company's charter. Section 4(e) of the Certificate of Designation for
the Preferred Stock (which is a part of the Company's charter) provides that
as long as the nonpayment of Preferred Stock dividends continues, "holders of
shares of the Series A Preferred Stock shall not, as such stockholders, be
entitled to vote on the election or removal of directors other than Preferred
Stock Directors . . . " (emphasis added). In the Company's 1996 Annual Meeting
(the last annual meeting the Company has held), at which time there were no
Preferred Stock directors in office and no such director was being elected,
holders of Depositary Shares voted together with the holders of Common Stock
in the general election of directors. Later that year, as required by the
Company's charter as a result of the Company's failure to pay six quarterly
dividends on the Preferred Stock as of April 1, 1996, the Company held a
special meeting of holders of Depositary Shares to elect the two additional
Preferred Stock directors. At this year's Special Meeting, where for the first
time the two Preferred Stock directors as well as the other five directors
must be elected, it is the Company's view that its charter does not permit
holders of the Depositary Shares to vote on the election of directors other
than the two Preferred Stock directors.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE PROPOSALS OF THE DISSIDENT
GROUP AND URGES STOCKHOLDERS TO REJECT THE PROXY SOLICITATION OF THE DISSIDENT
GROUP AND NOT TO SIGN OR RETURN ANY BLUE PROXY CARDS SENT BY THE DISSIDENT
GROUP.
BENEFICIAL OWNERSHIP OF SECURITIES
As of March 31, 1999, to the Company's knowledge, the following persons
were the beneficial owners of 5% or more of the Company's voting securities:
<TABLE>
<CAPTION>
Number of Shares and Nature of
Beneficial Ownership(/1/)
----------------------------------------------------
Percentage Percentage of
Name and Address of Common of Common Depositary Depositary
Beneficial Owner(/1/) Stock Stock Shares Shares
- --------------------- ------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
The Killen Group, Inc.... 786,054(/2/) 11.1% 45,372(/3/) 2.0%
1189 Lancaster Avenue
Berwyn, PA 19312
Wynnefield Partners...... 659,628(/4/) 9.3% 46,400(/5/) 2.0%
Small Cap Value LP
One Penn Plaza, Suite
4720
New York, NY 10119
Jeffrey L. Gendell....... 408,300 5.8% -- --
200 Park Avenue
Suite 3900
New York, NY 10166
Ryback Management Corp... -- -- 347,284(/6/) 15.1%
7711 Carondelet Ave.
Suite 700
P.O. Box 16900
St. Louis, Missouri 63105
</TABLE>
- --------
(1) Based solely on information contained in Schedule 13Ds and 13Gs filed by
the beneficial owners with the Securities and Exchange Commission or
information furnished to the Company. Except as indicated below, the
respective beneficial owners have reported that they have sole voting
power and sole dispositive power with respect to the securities set forth
opposite their names. For ease of analysis, the Common Stock information
in the table and the related footnotes do not include the number of
shares of Common Stock into which the Depositary Shares may be converted.
A holder of Depositary Shares may convert such
7
<PAGE>
Depositary Shares into shares of Common Stock at any time at a conversion
ratio of 1.708 shares of Common Stock for each Depositary Share.
Consequently, a holder of Depositary Shares is deemed to beneficially own
all of the shares of Common Stock into which such holder's Depositary Shares
may be converted, although Depositary Shares are not entitled to vote for
the election of directors to be elected by holders of the Common Stock
unless such Depositary Shares are actually converted prior to the record
date for holders of Common Stock for the Special Meeting.
As described above under "Solicitation by Dissident Group," the Dissident
Group filed a Schedule 13D on March 9, 1999. In the Schedule 13D Filing, Mr.
Williams reported that he has beneficial ownership and sole voting power and
sole dispositive power with respect to 211,000 shares of Common Stock
(representing approximately 3.0% of the Common Stock) and 38,000 Depositary
Shares (representing approximately 1.7% of the Depositary Shares). Mr.
Offutt reported that he has beneficial ownership of 199,400 shares of Common
Stock (representing approximately 2.8% of the Common Stock). Mr. Offutt has
sole voting and dispositive power with respect to 50,000 shares and shared
voting power and dispositive power with respect to 149,400 shares, which
shares are held by his wife. Mr. Dove reported that he has beneficial
ownership of 198,000 shares of Common Stock (representing approximately 2.8%
of the Common Stock) and 30,000 Depositary Shares (representing
approximately 1.3% of the Depositary Shares). Mr. Dove has sole voting and
dispositive power with respect to 198,000 shares of Common Stock and 20,000
Depositary Shares and shared voting power with respect to 10,000 Depositary
Shares, which shares are owned by his adult children. The beneficial
ownership of Wynnefield Partners Small Cap Value L.P. I, a Delaware limited
partnership ("Wynnefield LP I"), Wynnefield Partners Small Cap Value L.P., a
Delaware limited partnership ("Wynnefield LP"), and Wynnefield Small Cap
Value Offshore Fund, a Cayman Islands partnership ("Offshore Fund"), is
described in Notes (4) and (5). The members of the Dissident Group are
deemed to have beneficial ownership of approximately 18.1% of the Common
Stock and approximately 5.0% of the Depositary Shares.
(2) Includes 12,184 shares of Common Stock owned by Mr. Killen as a personal
investment, 723,870 shares of Common Stock owned by The Killen Group, Inc.
("The Killen Group") of which Mr. Killen is the Chairman, Chief Executive
Officer and sole stockholder and 50,000 shares of Common Stock held by a
limited partnership of which Mr. Killen and his spouse are the general
partners. Of the 723,870 shares of Common Stock, The Killen Group reports
that it has sole voting power with respect to 547,350 shares.
(3) Includes 2,000 Depositary Shares owned by Mr. Killen as a personal
investment, and 43,372 Depositary Shares owned by The Killen Group, of
which Mr. Killen is the Chairman, Chief Executive Officer and sole
stockholder. Of the 43,372 Depositary Shares owned by The Killen Group, it
has sole voting power with respect to 21,021 Depositary Shares held by
Berwyn Income Fund and dispositive power with respect to 22,351 Depositary
Shares held in various client accounts.
(4) Includes 210,947 shares of Common Stock held by Wynnefield LP I, 317,253
shares of Common Stock held by Wynnefield LP and 131,428 shares of Common
Stock held by Offshore Fund. See also Notes (1) and (5).
(5) Includes 20,400 Depositary Shares held by Wynnefield LP I, 17,000
Depositary Shares held by Wynnefield LP and 9,000 Depositary Shares held
by Offshore Fund. Collectively, these Depositary Shares are convertible
into 79,251 shares of Common Stock, which shares of Common Stock, together
with the 659,628 shares of Common Stock reported in Note (4), would
represent 10.4% of the total shares of Common Stock outstanding. See also
Notes (1) and (4).
(6) Ryback Management Corporation reported in the Schedule 13G filed by it on
February 10, 1999, that it holds 347,284 Depositary Shares in a fiduciary
capacity for its clients, including Depositary Shares held by two separate
series of the Lindner Investment Series Trust, an affiliated registered
investment company. Lindner Bulmark Fund reports that it has sole voting
power with respect to 119,300 Depositary Shares, which Depositary Shares,
assuming conversion into shares of Common Stock, would represent 203,764
shares of Common Stock, or 2.8% of the total number of shares of Common
Stock outstanding. The Lindner Growth Fund reports that it has sole
dispositive power with respect to 227,984 Depositary Shares, which
Depositary Shares, assuming conversion, would represent 389,397 shares of
Common Stock, or 5.2% of the total number of shares of Common Stock
outstanding.
8
<PAGE>
The following table sets forth information as of March 23, 1999 concerning
beneficial ownership of each director and executive officer of the Company and
of the directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Number of Shares and Nature of
Beneficial Ownership(/1/)
---------------------------------------------
Percentage Percentage of
Common of Common Depositary Depositary
Name Stock Stock Shares Shares
- ---- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Pemberton Hutchinson(/2/)........ 4,600 * 3,200 *
Robert E. Killen(/3/) (/4/)...... 786,054 11.1% 45,372 2.0%
William R. Klaus(/5/)............ 9,214 * -- --
Thomas W. Ostrander.............. 7,323 * -- --
Christopher K. Seglem(/6/)....... 186,016 2.6% 24 *
James W. Sight................... 265,000 3.7% -- --
Edwin E. Tuttle(/7/)............. 25,415 * -- --
R. Page Henley, Jr.(/8/)......... 56,824 * -- --
Robert J. Jaeger(/9/)............ 20,000 * -- --
Theodore E. Worcester(/10/)...... 72,475 1.0% -- --
Directors and Executive Officers
of the Company
as a Group (10 persons) ........ 1,432,921 19.4% 48,596 2.1%
</TABLE>
- --------
(1) This information is based on information known to the Company or
furnished to the Company by 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
all of the shares set forth opposite their names. Percentages of less
than 1% are indicated by an asterisk. For ease of analysis, the Common
Stock information in the table and the related footnotes do not include
the number of shares of Common Stock into which the Depositary Shares may
be converted. A holder of Depositary Shares may convert such Depositary
Shares into shares of Common Stock at any time at a conversion ratio of
1.708 shares of Common Stock for each Depositary Share. Consequently, a
holder of Depositary Shares is deemed to beneficially own all of the
shares of Common Stock into which such holder's Depositary Shares may be
converted, although Depositary Shares are not entitled to vote for the
election of directors to be elected by holders of the Common Stock unless
such Depositary Shares are actually converted prior to the record date
for holders of Common Stock for the Special Meeting.
(2) Includes 3,000 shares of Common Stock which may be purchased under the
1991 Non-Qualified Stock Option Plan for Non-Employee Directors (the
"1991 Plan").
(3) Includes 723,870 shares of Common Stock held by The Killen Group Inc., of
which Mr. Killen is the Chairman, Chief Executive Officer and sole
stockholder, 50,000 shares held by a limited partnership of which Mr.
Killen and his spouse are the general partners, and 12,184 shares held by
Mr. Killen as a personal investment.
(4) Includes 2,000 Depositary Shares held by Mr. Killen as a personal
investment and 43,372 Depositary Shares owned by The Killen Group, of
which Mr. Killen is the Chairman, Chief Executive Officer and sole
stockholder. Of the 43,372 Depositary Shares owned by The Killen Group,
it has sole voting power with respect to 21,021 Depositary Shares held by
Berwyn Income Fund and dispositive power with respect to 22,351
Depositary Shares held in various client accounts.
(5) Includes 7,500 shares of Common Stock which may be purchased under the
1991 Plan.
(6) The Westmoreland Coal Company and Affiliated Companies Employees'
Savings/Retirement Plan (the "401(k) Plan") provides investment
alternatives which include a Common Stock Fund and a Depositary Share
Fund). The amount in the table for Mr. Seglem includes 3,016 shares of
Common Stock and 24
9
<PAGE>
Depositary Shares held by the Mellon Bank, as trustee of the 401(k) Plan.
Includes 183,000 shares of Common Stock which may be purchased under the
1985 Westmoreland Incentive Stock Option and Stock Appreciation Rights Plan
(the "1985 Plan") and the 1995 Long Term Incentive Stock Plan (the "1995
Plan").
(7) Includes 7,500 shares of Common Stock which may be purchased under the
1991 Plan.
(8) Includes 3,314 shares of Common Stock held by the Mellon Bank, as trustee
of the 401(k) Plan. Includes 28,500 shares of Common Stock which may be
purchased under the 1985 Plan and the 1995 Plan.
(9) Includes 20,000 shares of Common Stock which may be purchased under the
1995 Plan.
(10) Includes 7,475 shares of Common Stock held by the Mellon Bank, as
trustee of the 401(k) Plan. Includes 65,000 shares of Common Stock which
may be purchased under the 1985 Plan and the 1995 Plan.
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the executive
officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Christopher K. 52 Chairman of the Board, President and
Seglem(/1/) Chief Executive Officer
R. Page Henley, 64 Senior Vice President--Acquisitions and
Jr.(/2/) Development, and Government Affairs;
President, Westmoreland Coal Sales Company
Robert J. 50 Senior Vice President of Finance and Treasurer
Jaeger(/3/)
Theodore E. 58 Senior Vice President of Law and Administration, General
Worcester(/4/) Counsel and Assistant Secretary
</TABLE>
- --------
(1) Mr. Seglem was elected President and Chief Operating Officer of the
Company in June 1992, and a Director of the Company in December 1992. In
June 1993, he was elected Chief Executive Officer, at which time he
relinquished the position of Chief Operating Officer. In June 1996, he
was elected Chairman of the Board. He is a member of the bar of
Pennsylvania.
(2) Mr. Henley was elected Senior Vice President--Government Affairs in June
1992. In 1993, Mr. Henley was elected Vice President, General Counsel and
Secretary of Westmoreland Energy, Inc. ("WEI"), a subsidiary of the
Company. In 1994, Mr. Henley was elected Senior Vice President--
Development of the Company. In 1995, Mr. Henley was elected President of
Westmoreland Coal Sales Company and relinquished his positions with WEI.
In 1997, Mr. Henley's duties were expanded to include acquisitions, and
his title was revised accordingly. He is a member of the bars of West
Virginia and Virginia.
(3) Mr. Jaeger held various financial positions at Penn Virginia Corporation
from 1976 and was Vice President and Chief Financial Officer when he left
in March 1995. He joined WEI in April 1995 as Vice President-- Finance.
He was elected Vice President--Finance, Treasurer and Controller of the
Company in September 1995. He was elected Senior Vice President--Finance,
Treasurer and Controller in February 1996 and relinquished the position
of Controller in January 1998. Mr. Jaeger is a certified public
accountant.
(4) Mr. Worcester was elected Vice President and General Counsel in 1990. He
was elected Senior Vice President in June 1992 while retaining his
position of General Counsel of the Company. In 1995, he was elected
Senior Vice President of Law and Administration and in 1996, Corporate
Secretary, in addition to his General Counsel position. He is a member of
the bar of Colorado. Mr. Worcester relinquished the title of Corporate
Secretary as of January 1999.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation and certain other
components of compensation for 1998, 1997 and 1996 for the Chief Executive
Officer and other three most highly compensated executive officers of the
Company whose salary and bonus exceeded $100,000 for 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
-------------------------------- ---------------------
Year Restricted Shares
Name and Principal ended Other Annual Stock Underlying All Other
Positions Dec. 31 Salary Bonus(/1/) Compensation Awards Options Compensation(/2/)
- ------------------ ------- -------- ---------- ------------ ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Christopher K. Seglem 1998 $334,802 $ -- $ -- -- -- $25,445
Chairman of the Board, 1997 $334,802 $ -- $ -- -- -- $21,655
President and Chief 1996 $334,802 $ -- $22,000 -- -- $13,200
Executive Officer
R. Page Henley, Jr. 1998 $178,446 $ -- $ -- -- -- $10,235
Senior Vice President-- 1997 $175,000 $ -- $ -- -- -- $39,834
Acquisitions and 1996 $175,000 $ -- $ -- -- -- $ 3,750
Development and,
Government Affairs,
President, Westmoreland
Coal Sales Company
Robert J. Jaeger 1998 $177,112 $ -- $ -- -- -- $ 5,342
Senior Vice President 1997 $161,805 $ -- $ -- -- -- $ 5,011
of 1996 $156,000 $ -- $ 1,393 -- -- $83,864
Finance and Treasurer
Theodore E. Worcester 1998 $183,181 $ -- $ -- -- -- $ 9,663
Senior Vice President 1997 $179,644 $ -- $ -- -- -- $11,356
of 1996 $179,644 $ -- $ 4,839 -- -- $ 3,750
Law and Administration,
General Counsel and
Assistant Secretary
</TABLE>
- --------
(1) In connection with the Company's successful emergence from bankruptcy, in
which all creditors' and stockholders' interests were fully preserved,
and in conformity with the Master Agreement with the Official Committee
of Equity Security Holders and the UMWA Health and Retirement Funds,
bonuses in the approximate amount of $1.3 million were paid to executive
officers of the Company. Of such amount, Messrs. Seglem, Henley, Jaeger
and Worcester received $667,000, $100,000, $300,000 and $300,000,
respectively.
(2) All Other Compensation for the named executive officers in 1998 consisted
of directors' fees, Company contributions to the 401(k) Plan, and
insurance premiums and financial planning fees paid by the Company. Mr.
Seglem received directors' fees of $16,250 in 1998. The Company
contributed $4,000 to the 401(k) Plan during 1998 on behalf of each of
Messrs. Seglem, Henley, Jaeger and Worcester. In 1998 the Company paid
life insurance premiums of $4,747, $6,235, $782 and $4,063 for Messrs.
Seglem, Henley, Jaeger and Worcester, respectively, and paid financial
planning fees of $448, $560 and $1,600 for Messrs, Seglem, Jaeger and
Worcester, respectively. All Other Compensation for some earlier years
includes reimbursement for relocation expenses.
11
<PAGE>
Pension Plan
The Company sponsors a Pension 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.
The Plan was adopted effective December 1, 1997 as a qualified replacement
plan for a previous plan (the "Previous Plan"), which was terminated effective
November 30, 1996 (the "Previous Plan Termination Date"). 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 0.5% 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, less the benefit, if any, provided to the
participants under the Previous Plan. The Plan also provides for disability
benefits and for reduced benefits upon retirement prior to the normal
retirement age of 65. For the purpose of benefit calculation under the Plan,
credited service under the Previous Plan is included with credited service
under the Plan and a benefit amount is calculated using the above formula. The
amount of the accrued benefit under the Previous Plan, calculated as of the
Previous Plan Termination Date, is then subtracted to arrive at the benefit
amount payable under the Plan.
No amounts are included in the Salary 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. No
contribution is required or permitted to this Plan for 1998, 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, except as noted below for the amount of the
accrued benefit under the Previous Plan.
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>
Years of Service
------------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 29,540 $ 39,387 $ 49,234 $ 59,081 $ 59,081
150,000 35,915 47,887 59,859 71,831 71,831
175,000 42,290 56,387 70,484 84,581 84,581
200,000 48,665 64,887 81,109 97,331 97,331
225,000 55,040 73,387 91,734 110,081 110,081
250,000 61,415 81,887 102,359 122,831 122,831
300,000 74,165 98,887 123,609 148,331 148,331
350,000 86,915 115,887 144,859 173,831 173,831
400,000 99,665 132,887 166,109 199,331 199,331
450,000 112,415 149,887 187,359 224,831 224,831
500,000 125,165 166,887 208,609 250,331 250,331
</TABLE>
The amounts shown in the above table would be reduced by the amount of
accrued benefit under the Previous Plan. The amount of reduction from the
annual benefit for the following individuals are: Mr. Seglem--$38,162; Mr.
Henley--$25,335; Mr. Worcester--$9,197; and Mr. Jaeger--$2,694.
Two years and one month of service has been credited under the Plan
subsequent to the Previous Plan Termination Date for each of Messrs. Seglem,
Worcester, Henley and Jaeger. Years of credited service under
12
<PAGE>
the Previous Plan as of the Previous Plan Termination Date for the following
individuals and the amounts received by them from the Previous Plan in
December 1997 in connection with the plan termination were: Mr. Seglem--16
years, three months, $174,424; Mr. Worcester--five years, 11 months; $71,993,
Mr. Henley--12 years, 10 months, $261,589; and Mr. Jaeger--one year, seven
months, $10,603.
The current compensation covered by the Plan for any executive officer in
the Summary Compensation Table is that amount reported in the Salary column,
subject to limitations imposed by the Internal Revenue Code of 1986, as
amended (the "Code").
The Code limits the amount of compensation that may be taken into account
for the purpose of determining the retirement benefit payable under retirement
plans (such as the Plan) that are qualified under ERISA. So that the Company
may provide retirement income to its senior executives and other key
individuals that is commensurate as a percentage of preretirement income with
that paid to other Company employees, the Company established a nonqualified
Supplemental Executive Retirement Plan (the "SERP"), effective January 1,
1992, which currently covers all the executive officers listed in the Summary
Compensation Table. The annual benefit presented in the above table includes
the portion of retirement benefits payable through the SERP.
To become vested in the SERP, a participant must attain age 55 and
generally complete 10 years of service. Bonus amounts are included in a
participant's compensation under the SERP, although excluded under the 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 Plan.
Severance Arrangements
The Company has an Executive Severance Policy (the "Policy") which covers
each of the executive officers named above, and provides that an executive
officer will be entitled to a severance award in the event of certain
terminations of such person's employment with the Company or its subsidiaries.
For purposes of the Policy, a termination is deemed to have occurred and
severance will be granted at any and all times for the following reasons: (i)
discharge for unacceptable job performance (other than that resulting from
gross or willful misconduct, which is defined as an act or acts constituting
larceny, fraud, gross negligence, crime or crimes, moral turpitude in the
course of employment, or willful and material misrepresentation to the
Company's directors or officers); (ii) discharge due to recognition of a
mistake in the recruiting process, as determined by management; (iii) a
significant reduction, or increase without adequate compensation, in the
nature or scope of such executive's authority or duties; (iv) a relocation of
such executive from Colorado Springs, Colorado to any location, or a reduction
in such executive's base compensation, a material reduction of the value of
the aggregate of employee benefits as described in the Policy, or cessation of
eligibility for incentive bonus payments; or (v) in the event of a change in
control of the Company, as defined in the Policy. This award will 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 amounts 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 (such as life and health insurance, stock options, and financial
planning and outplacement services), in a lump sum cash distribution at the
time of termination.
A change in control of the Company is defined in the Policy as: (i) a
transaction, acquisition, merger, other event or series of events ("events")
which results in any individual, person, entity or group acting in concert
("person") having beneficial ownership of 20% or more of the Company's common
stock or voting preferred stock or any combination thereof, that will give
that person ownership or control of 20% or more of the combined voting power
of all stock generally entitled to vote for the election of directors; or
where such person prior to a transaction, acquisition, merger, other event or
series of events holds a 20% or more voting power, as defined therein, an
event which increases that person's interest by 5% or more; unless a majority
of those members of
13
<PAGE>
the Board of Directors who were in office prior to the occurrence of the event
determines at the next regularly scheduled Board meeting that the event was
not hostile or adverse; or (ii) a change in the membership of the Board of
Directors when, in less than two years, the directors prior to the change
cease to constitute a majority, unless the new directors were designated as
nominees or were elected to fill a vacancy on the Board by two-thirds of the
incumbent directors at the time; or (iii) a consolidation or merger as a
result of which the Company is not the surviving or continuing corporation or
where the Company's stock is converted into cash, securities or other
property; or any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company; or an adoption of any plan or
proposal for the liquidation or dissolution of the Company.
Compensation of Directors
In 1998, the attendance fee for the Chairman of the Board of Directors and
for each committee chairman attending a Board or committee meeting was $1,250.
The attendance fee for all other directors and committee members was $1,000
per meeting. The attendance fees paid to Mr. Seglem are included in the "All
Other Compensation" column of the Summary Compensation Table. In addition,
under the 1991 Plan, each non-employee director of the Company should receive
on September 1 of each year options to purchase 1,500 shares of Common Stock.
Likewise, under the 1996 Directors' Stock Option Plan, each director should
receive, as an initial grant, options to purchase 20,000 shares of Common
Stock, and options to purchase 10,000 shares of Common Stock annually
thereafter. In 1998, the annual retainer fee to each outside director was
$15,000, $9,000 of which was paid in cash, and the remaining $6,000 of which
directors could elect to receive in cash or in Common Stock of the Company.
Mr. Hutchinson retired as an employee of the Company as of December 31,
1993. Mr. Hutchinson is entitled to receive benefit payments from the
Company's SERP of $3,708 a month. These payments were not made while the
Company was subject to bankruptcy court jurisdiction. A catch-up payment,
including interest at the rate of 5.45% per annum, of $93,986 was made to Mr.
Hutchinson after the dismissal of the 1996 Bankruptcy Filing in January 1999.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Messrs. Klaus (Chairman), Tuttle and Hutchinson served on the Compensation
and Benefits Committee during 1998.
No member of this Committee was an officer or employee of the Company
during 1998. One member of this Committee, Mr. Hutchinson, was formerly an
officer 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.
Compensation and Benefits Committee Report on Executive Compensation
The Compensation and Benefits Committee is responsible for setting the
salaries and incentive compensation of the Company's executive officers. The
Committee's objective is to attract, retain and motivate highly qualified
executive officers and to reinforce their incentive to perform at the highest
level, increase the Company's long-term profitability and increase stockholder
value. The Committee is composed solely of directors who are not employees of
the Company.
The Committee met in February 1996, the Board of Directors, acting in place
of the Committee, met in April 1997 and June 1998, and the Committee met in
December 1998 to review compensation.
The Committee has not increased the salary of Christopher K. Seglem, the
Company's Chairman of the Board, President and Chief Executive Officer, since
January 1996, when he received a 15.5% increase. Prior to that, his last
salary increase had been in June 1993.
14
<PAGE>
With regard to Mr. Seglem's salary, the Committee considered quantitative
and qualitative factors which indicated that an increase would be justified.
Quantitative factors considered included (i) the Company's overall financial
performance, (ii) the status of the Company's bankruptcy case, which, at the
time of the Committee's meeting in December 1998 appeared likely to have a
highly successful outcome, (iii) the strong performance of the Company's
independent power and coal operations in 1997, projections regarding their
performance in 1998 and the realization or surpassing of those projections,
(iv) the significant improvement in the Company's financial condition through
the continued implementation of its strategic business plan, including the
achievement of increased cash flow through identifying, funding and
emphasizing the Company's strongest operations, including the acquisition of
an additional 20% ownership of Westmoreland Resources, Inc., and divesting or
discontinuing underperforming assets and lines of business, (v) as part of the
foregoing effort, the near completion of the sale of the Company's remaining
Virginia Division assets and termination of its Eastern coal operations, and
(vi) the realization of net proceeds in excess of $30 million from the
restructuring of the Company's Rensselaer and Ft. Drum independent power
projects in June 1998, the commencement of negotiations for the sale of the
Company's remaining interest in the Rensselaer project (which resulted in net
proceeds in excess of $33 million in 1999) and the status of those
negotiations in December 1998 when the Committee met to review compensation.
In June 1998, when the Board of Directors considered salary levels
effective July 1,1998, the Company had recently filed a plan of reorganization
with the bankruptcy court, in April 1998, and that plan of reorganization and
the financial information contained therein were the basis for the Committee's
initial determination of July 1, 1998 salary levels. In December 1998, when
the Committee met to review compensation options for 1999 and following
emergence from bankruptcy, the Company--under the leadership of the Chairman,
President and Chief Executive Officer--had negotiated and was in the process
of finalizing a settlement agreement that preserved the Company as an ongoing
enterprise and 100% of the stockholders' ownership interests in the Company.
The qualitative factors considered by the Committee included uncontrollable
factors affecting the Company's performance, the Chief Executive Officer's
vision for, knowledge of and experience with the Company's business
operations, his leadership qualities affecting the Company's relationships
with stockholders, consultants, advisors, customers, suppliers, employees,
collective bargaining organizations and the communities within which the
Company has operations, his overall management abilities, initiatives and
strategic planning for the future and his extraordinary efforts put forth by
means of diligence, hard work and exceptionally long hours. These strengths
and qualities were particularly valuable to the Company as it faced challenges
during the Chapter 11 proceeding from parties who sought to liquidate the
Company on the one hand or deprive its stockholders of their equity ownership
in the Company on the other.
Comparative factors considered were compensation paid to chief executive
officers of comparably sized companies, and particularly of those of companies
in the energy industries. A further analysis of salaries at companies in
workout situations similar to an analysis presented to the Committee in early
1996 was not deemed necessary at the current time.
The Committee's determination that Mr. Seglem deserved a salary increase
was based not only on the quantitative, qualitative and comparative factors
described above but also on the Committee's good faith business judgment of
his performance as it related to results in 1998, the actions he had taken to
preserve and enhance stockholder value and the long-term positioning of the
Company. The Committee did not apply a specific formula or attach specific
weights to the foregoing factors, but in general the Committee attached more
significance to the Company's overall financial performance, the progress in
the Chapter 11 case and the importance of Mr. Seglem to this outcome.
Notwithstanding the apparent justification for an increase in Mr. Seglem's
salary, the Committee elected to continue the freeze of his salary which had
been in place since 1996. Mr. Seglem's salary has been frozen during this
period in light of the Company's need to conserve its capital resources during
the bankruptcy, as a gesture of good faith to the Company's creditors and
stockholders and as an expression of confidence in the future success of the
Company.
15
<PAGE>
With respect to the other executive officers, the Committee considered the
quantitative and comparative factors mentioned above and Mr. Seglem's strong
recommendation regarding these officers and the fact that the corporate
headquarters performs the same functions as it did prior to the Company's
restructuring plan begun in 1993 with a substantial reduction in personnel.
The Committee supported Mr. Seglem's recommendation that, in light of Mr.
Jaeger's significant responsibilities and increasing tenure with the Company
during this challenging period, it was appropriate to bring his salary into
line with the salaries of other senior executive officers. For these reasons,
the salaries for the other executive officers were increased as follows: by
12.1% for Mr. Henley, 15% for Mr. Worcester and 15.6% for Mr. Jaeger effective
January 1, 1996; by 7.5% for Mr. Jaeger effective July 1, 1997; and by 4% for
Messrs. Henley and Worcester and 11.4% for Mr. Jaeger effective July 1, 1998.
Prior to January 1, 1996, these officers had last received salary increases
effective July 1, 1992 for Mr. Henley, August 9, 1993 for Mr. Worcester and
September 7, 1995 for Mr. Jaeger.
Prior to the Chapter 11 cases, and as part of the Company's restructuring
plan commenced in 1993, the Company had instituted a bonus incentive program
designed to compensate the Company's executive officers for the Company's
strategic performance and financial results and to place a substantial portion
of their total compensation package "at risk" by deferring this portion until
the accomplishment of certain signal events related to restoration of the
Company's financial health. The deferred portions of bonuses for 1994 and 1995
became payable during the Chapter 11 cases but, due to restrictions imposed by
bankruptcy law, were not paid until after the cases were dismissed in January
1999. During the bankruptcy, the Committee did not award bonuses, and hence no
bonuses for 1996, 1997 or 1998 were paid. The Committee believes that this
decision was appropriate in light of the sacrifices the Company's other
constituents, such as creditors and stockholders, could have been called upon
to make in connection with the Chapter 11 cases. At its meeting in December
1998, the Committee declined to make any salary adjustments or award bonuses
until after the Company had successfully emerged from bankruptcy under
consensual terms of dismissal. Bonuses were paid to the Company's executive
officers following the consensual dismissal of the bankruptcy. See footnote 1
to the "Summary Compensation Table" above.
In addition, the Committee believes that stock options and restricted stock
awards are an important feature of executive compensation. Stock option awards
made to executive officers are designed to align the interests of management
more closely with those of the stockholders of the Company by increasing stock
ownership by management. Accordingly, options and restricted stock had been
awarded executive officers for 1995 and previous years, but for the reasons
given above, no stock options or shares of restricted stock have been awarded
as of the date hereof to executive officers during or with respect to 1996,
1997 or 1998.
William R. Klaus, Chairman
Pemberton Hutchinson
Edwin E. Tuttle
16
<PAGE>
Performance Graph
The following Performance Graph compares the cumulative total stockholder
return on the Company's Common Stock for the five-year period December 31, 1993
through December 31, 1998 with the cumulative total return over the same period
of the AMEX Market Index and the Dow Jones Coal Index, which is comprised of
the following companies: Arch Coal Inc., China Energy Resources, Pittston
Minerals Group, Penn Virginia Corporation and Yanzhou Coal Mining. These
comparisons assume an initial investment of $100 and reinvestment of dividends.
The Common Stock and Depositary Shares traded on the New York Stock Exchange
until December 23, 1996, when trading was halted in connection with the 1996
Bankruptcy Filing. Public trading for the Common Stock and Depositary Shares
resumed in February 1997 on the Over the Counter Bulletin Board. After the
Company emerged from bankruptcy in January 1999, it applied to list the Common
Stock and the Depositary Shares on the American Stock Exchange. On March 30,
1999, the listing application was approved.
COMPARISON OF CUMULATIVE TOTAL RETURN
Among Westmoreland Coal Company, AMEX
Market Index and Dow Jones Coal Index
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 12/23/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Westmoreland Coal
Company................. $100 $128.57 $ 50.00 $ 19.05 $ 27.38 $ 72.62
AMEX Market Index........ 100 88.33 113.86 120.15 144.57 142.61
Dow Jones Coal Index..... 100 97.81 74.96 96.58 100.98 61.45
</TABLE>
17
<PAGE>
CERTAIN TRANSACTIONS
Westmoreland Resources, Inc. ("WRI"), an 80% owned subsidiary, has a coal
mining contract with Morrison Knudsen Company, Inc. ("MK"), one of its
stockholders, pursuant to which MK mines the coal and delivers it to WRI. The
contract term extends for the life of the economically recoverable coal
reserves on the land presently leased from the Crow Tribe. Mining costs are
incurred by WRI under the contract and were $22,654,000, $24,295,000, and
$16,552,000 in 1998, 1997 and 1996, respectively.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP, independent public
accountants, as the independent auditors of the Company for the fiscal year
ending December 31, 1999. The Company expects that a representative of that
firm will be present at the Special Meeting and will have the opportunity to
make a statement and to respond to appropriate questions from the
stockholders.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy materials
for the 2000 Annual Meeting of Stockholders pursuant to Rule 14a-8 under the
Exchange Act, a stockholder proposal must be received by the Corporate
Secretary no later than December 16, 1999. If a stockholder proposal submitted
outside of Rule 14a-8 under the Exchange Act intended to be brought before the
2000 Annual Meeting is received by the Corporate Secretary after February 29,
2000, which is 45 days from the anniversary of the date of the mailing of this
Proxy Statement, such proposal shall be considered untimely and the proxy
cards used for such 2000 Annual Meeting may confer to the persons named in
such proxy cards discretionary authority to vote in the best judgment of such
persons on any such matter. All proposals should be addressed to Westmoreland
Coal Company, 2 North Cascade Avenue, 14th Floor, Colorado Springs, Colorado
80903, Attention: Corporate Secretary.
SOLICITATION OF PROXIES
The Company will bear the entire cost of soliciting its proxies for the
Special Meeting. Proxies may be solicited in person or by mail, telephone,
facsimile and other means, and may be solicited personally by directors,
officers or employees of the Company who will not receive special compensation
for such services. The Company will reimburse brokers, dealers, banks and
trustees, or their nominees, for reasonable expenses incurred by them in
forwarding proxy material to beneficial owners of shares of Common Stock and
beneficial owners of Depositary Shares. The Company has retained Morrow & Co.,
Inc. ("Morrow") for solicitation services in connection with the solicitation.
Morrow will receive a fee estimated at $75,000, together with reimbursement
for its reasonable out-of-pocket expenses. The Company has agreed to indemnify
Morrow against certain liabilities and expenses. It is anticipated that Morrow
will employ approximately 25 persons to solicit stockholders for the Special
Meeting. Costs incidental to the solicitation of proxies include expenditures
for printing, postage, legal, accounting, public relations, soliciting,
advertising and related expenses and are expected to be approximately
$200,000, in addition to the fees of Morrow described above (excluding the
amount normally expended by the Company for the solicitation of proxies at its
stockholder meetings). Total costs incurred to date for, in furtherance of, or
in connection with these solicitations of proxies are approximately $115,000.
Certain information about the directors, executive officers and certain
employees of the Company and its subsidiaries who may also solicit proxies is
set forth in the attached Schedule I. Schedule II sets forth certain
information relating to shares of Common Stock and Depositary Shares owned by
such parties and certain transactions between any of them and the Company and
its subsidiaries.
Included in this mailing is a copy of the Company's 1998 Annual Report to
Stockholders, which includes the Company's 1998 Annual Report on Form 10-K/A.
Additional copies of the Company's 1998 Annual Report on Form 10-K/A may be
obtained without charge upon written request to Westmoreland Coal Company, 2
North Cascade Avenue, 14th Floor, Colorado Springs, Colorado 80903.
18
<PAGE>
OTHER BUSINESS
Stockholders are invited to submit nominees for the Board of Directors and
proposals for consideration at the Special Meeting. The Board of Directors has
no present intention of bringing any other business before the Special
Meeting. Other than the effort by the Dissident Group to remove the present
Board of Directors and to replace some or all of such directors with nominees
chosen by the Dissident Group as indicated in its Dissident Group Proxy
Statement, the Board of Directors has not been informed of any other proposals
or matters that are to be presented at the Special Meeting. If any other
proposals or matters properly come before the Special Meeting, however, the
persons named in the enclosed WHITE proxy card will vote, at their discretion
in accordance with their best judgment as to the best interests of the Company
and its stockholders, all the shares of Common Stock and Depositary Shares
represented by duly executed WHITE proxy cards.
By order of the Board of Directors.
/s/ Charles H. Finkenstadt, Jr.
Charles H. Finkenstadt, Jr.
Corporate Secretary
19
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN EMPLOYEES OF THE COMPANY AND ITS SUBSIDIARIES
The following table sets forth the name and the present occupation or
employment (except with respect to the directors and executive officers, whose
principal occupation is set forth in the Proxy Statement), and the name,
principal business and address of any corporation or other organization in
which such employment is carried on, of (1) the directors and executive
officers of the Company, (2) certain directors of the Company's subsidiaries
and (3) certain employees of the Company and its subsidiaries who may assist
in soliciting proxies from stockholders of the Company. Unless otherwise
indicated below, the principal business address of each such person is 2 North
Cascade Avenue, 14th Floor, Colorado Springs, Colorado 80903 and such person
is an employee of the Company. Directors are indicated by an asterisk.
Directors and Executive Officers of the Company
<TABLE>
<CAPTION>
Name and Principal
Business Address
- ------------------
<S> <C>
R. Page Henley, Jr.
Pemberton Hutchinson*
Robert J. Jaeger
Robert E. Killen*
The Killen Group, Inc.
1189 Lancaster Avenue
Berwyn, PA 19312
William R. Klaus*
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Thomas W. Ostrander*
Salomon Smith Barney Inc.
Seven World Trade Center--32nd Floor
New York, NY 10048
Christopher K. Seglem*
James W. Sight*
8500 College Blvd.
Overland Park, KS 66210
Edwin E. Tuttle*
<CAPTION>
Theodore E. Worcester
</TABLE>
I-1
<PAGE>
Certain Directors of Subsidiaries of the Company
<TABLE>
<CAPTION>
Name and Principal Present Office or Other Principal
Business Address Occupation or Employment
- ------------------ ---------------------------------
<S> <C>
Clyde Joseph Presley....................... Member of the Board of Directors,
Westmoreland Resources, Inc. Westmoreland Resources, Inc.
Box 449
Hardin, MT 59034
Ronald W. Stucki........................... Member of the Board of Directors,
Westmoreland Resources, Inc. Westmoreland Resources, Inc.
Box 449
Hardin, MT 59034
Certain Employees of the Company and
Its Subsidiaries Who May Also Solicit Proxies
Name and Principal Present Office or Other Principal
Business Address Occupation or Employment
- ------------------ ---------------------------------
Gregory M. Daniels ........................ Vice President Human Resources and
President, Virginia Division, of the
Company
Edward J. Demeter.......................... Vice President--Distribution,
Westmoreland Coal Sales Company Westmoreland Coal Sales Company
725 Wright Drive
Maple Glen, PA 19002
Paul W. Durham............................. Assistant General Counsel and Assistant
Secretary of the Company
Charles H. Finkenstadt, Jr................. Corporate Secretary of the Company
Diane S. Jones............................. Manager, Business Development & Corporate
Relations of the Company
W. Michael Lepchitz........................ President & General Counsel,
Westmoreland Energy, Inc. Westmoreland Energy, Inc.
Citizens Commonwealth Building
300 Preston Avenue, 5th Floor
Charlottesville, VA 22902
Larry W. Mikkola........................... Controller of the Company and Controller
and Vice
President of Westmoreland Resources, Inc.
David W. Simpson........................... President,
Westmoreland Resources, Inc. Westmoreland Resources, Inc.
Box 449
Hardin, MT 59034
Gregory S. Woods........................... Executive Vice President,
Westmoreland Energy, Inc. Westmoreland Energy, Inc.
Citizens Commonwealth Building
300 Preston Avenue, 5th Floor
Charlottesville, VA 22902
</TABLE>
I-2
<PAGE>
SCHEDULE II
SHARES HELD BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN EMPLOYEES
OF THE COMPANY AND ITS SUBSIDIARIES AND CERTAIN TRANSACTIONS
BETWEEN ANY OF THEM AND THE COMPANY AND ITS SUBSIDIARIES
Ownership of Shares
The shares of Common Stock and Depositary Shares held by directors and
executive officers of the Company are set forth in the Proxy Statement. The
following officers and employees of the Company and its subsidiaries and the
following directors of the Company's subsidiaries own the following shares of
Common Stock or Depositary Shares as of March 23, 1999:
<TABLE>
<CAPTION>
Name of Shares of Common Stock Depositary Shares
Beneficial Owner Beneficially Owned Beneficially Owned
- -------------------- ---------------------- ------------------
<S> <C> <C>
Gregory M. Daniels.................... 31,933(/1/) 32(/2/)
Edward J. Demeter..................... 7,235(/3/) 13(/2/)
Paul W. Durham........................ -- --
Charles H. Finkenstadt, Jr............ -- --
Diane S. Jones........................ 5 2(/2/)
W. Michael Lepchitz................... 41,790(/4/) 7(/2/)
Larry W. Mikkola...................... 5,255(/5/) --
Clyde Joseph Presley.................. -- --
David W. Simpson...................... 3,000(/6/) --
Ronald W. Stucki...................... -- --
Gregory S. Woods...................... 47,598(/7/) --
</TABLE>
- --------
(1) Includes 25,000 shares which may be purchased under the 1985 Plan and the
1995 Plan and 5,703 shares held by the Mellon Bank, as trustee of the
401(k) Plan.
(2) Includes Depositary Shares contained in the individual's 401(k) Plan
accounts.
(3) Includes 5,000 shares which may be purchased under the 1995 Plan and 1,235
shares held by the Mellon Bank, as trustee of the 401(k) Plan.
(4) Includes 15,000 shares which may be purchased under the 1995 Plan and 290
shares held by the Mellon Bank, as trustee of the 401(k) Plan.
(5) Includes 5,000 shares which may be purchased under the 1995 Plan and 255
shares held by the Mellon Bank, as trustee of the 401(k) Plan.
(6) Includes 3,000 shares held by the Mellon Bank, as trustee of the 401(k)
Plan.
(7) Includes 20,000 shares which may be purchased under the 1995 Plan and
11,088 shares held by the Mellon Bank, as trustee of the 401(k) Plan.
II-1
<PAGE>
Purchases and Sales of Securities
The following table sets forth information concerning all purchases and
sales of securities of the Company by directors, executive officers and
certain employees since March 23, 1997:
<TABLE>
<CAPTION>
Number of Number of
Date of Nature of Shares of Depositary
Name Transaction Transaction Common Stock Shares
- ---- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Directors:
Robert E. Killen................ 11/04/97 Purchase 2,000 --
03/12/99 (1) 10,184
William R. Klaus................ 03/12/99 (1) 1,714 --
Thomas W. Ostrander............. 03/12/99 (1) 5,142 --
James W. Sight.................. 02/03/98 Sale 8,500 --
02/04/98 Sale 10,000
02/05/98 Sale 6,500
02/06/98 Sale 7,500
02/06/98 Sale 2,500
02/10/98 Sale 2,500
03/24/98 Sale 15,000
03/25/98 Sale 15,000
04/03/98 Sale 11,000
04/09/98 Sale 7,500
04/16/98 Sale 11,500
04/29/98 Sale 10,000
Edwin E. Tuttle................. 03/12/99 (1) 5,142 --
Executive Officers:
R. Page Henley, Jr.............. 01/26/99 (2) 20,000 --
Theodore E. Worcester........... (3) (3) (3) --
Subsidiary Directors:
Ronald W. Stucki................ 12/5/97 Sale 94 93
Certain Employees:
Gregory M. Daniels(/4/)......... 01/26/99 (2) 1,000 --
Edward J. Demeter............... 01/26/99 (2) 1,000 --
W. Michael Lepchitz............. 01/26/99 (2) 11,500 --
03/22/99 (5) 15,000
Gregory S. Woods(/6/)........... 01/26/99 (2) 6,500 --
03/22/99 (5) 10,000
</TABLE>
- --------
(1) Restricted shares issued in lieu of cash payments for a portion of the
director's annual retainer fee.
(2) Restricted shares granted under the 1995 Plan.
(3) Mr. Worcester is a participant in the Company's 401(k) Plan, which
provides investment alternatives including the Company's Common Stock
Fund. From March 1997 to March 1999, Mr. Worcester has made monthly
contributions to purchase Common Stock in connection with his 401(k) Plan
account. These
II-2
<PAGE>
monthly contributions ranged from $200 to $489. At December 31, 1997,
December 31, 1998 and March 23, 1999, he had 4,295 shares, 6,664 shares and
7,475 shares of Common Stock, respectively, in such 401(k) Plan account.
(4) Mr. Daniels is a participant in the Company's 401(k) Plan, which provides
investment alternatives including a Common Stock Fund and Depositary Share
Fund. From March 1997 to March 1999, Mr. Daniels has made contributions to
his 401(k) Plan account and investment decisions in connection with such
401(k) Plan account, which contributions and investment decisions have
included frequent acquisitions and dispositions of interests in the Common
Stock Fund and Depositary Share Fund. At December 31, 1997, December 31,
1998 and March 23, 1999, he had 4,136 shares, 5,049 shares and 5,703
shares of Common Stock, respectively, in such 401(k) Plan account.
(5) Shares purchased upon exercise of options under the 1995 Plan.
(6) Mr. Woods is a participant in the Company's 401(k) Plan, which provides
investment alternatives including a Common Stock Fund and Depositary Share
Fund. From March 1997 to March 1999, Mr. Woods has made contributions to
his 401(k) Plan account and investment decisions in connection with such
401(k) Plan account, which contributions and investment decisions have
included frequent acquisitions and dispositions of interests in the Common
Stock Fund and Depositary Share Fund. At December 31, 1997, December 31,
1998 and March 23, 1999, he had 10,083 shares, 13,136 shares and 11,088
shares of Common Stock, respectively in such 401(k) Plan account.
Other Transactions and Relationships
Christopher K. Seglem, Theodore E. Worcester, and Paul W. Durham have
agreed to serve as the proxies on the Company's WHITE Special Meeting proxy
cards.
Except as disclosed in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company and its subsidiaries named in
Schedule I owns any securities of the Company or any subsidiary of the
Company, beneficially or of record, has purchased or sold any of such
securities within the past two years or is or was within the past year a party
to any contract, arrangement or understanding with any person with respect to
any such securities. Except as disclosed in this Schedule or in the Proxy
Statement, to the knowledge of the Company, its directors and executive
officers or the employees of the Company and its subsidiaries named in
Schedule I, none of their associates beneficially owns, directly or
indirectly, any securities of the Company. The Company owns, directly or
indirectly, all of the common stock of its subsidiaries Westmoreland Coal
Sales Company, Westmoreland Energy, Inc., Westmoreland Terminal Company,
Kentucky Criterion Coal Company, Pine Branch Mining Co., WEI-Fort Lupton,
Inc., WEI Rensselaer, Inc., WEI Roanoke Valley, Inc., Westmoreland-Altavista,
Inc., Westmoreland-Corona, Inc., Westmoreland-Fort Drum, Inc., Westmoreland
Franklin, Inc., Westmoreland-Hopewell, Inc., Westmoreland Technical Service,
Inc., Cleancoal Terminal Co., Criterion Coal Co., Deane Processing Co. and
Eastern Coal and Coke Co. The Company also owns 80% of the common stock of
Westmoreland Resources, Inc.
Other than as disclosed in this Schedule and in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company and its subsidiaries named in
Schedule I has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon at the Special Meeting.
II-3
<PAGE>
The Company entered into a Master Agreement dated as of January 4, 1999
(the "Master Agreement") among the Company, certain of its subsidiaries, the
United Mine Workers of America, the UMWA 1992 Benefit Plan, the UMWA Combined
Fund, the UMWA 1974 Pension Trust, and the Official Committee of Equity
Security Holders, which facilitated the termination of the Company's
bankruptcy case. The Master Agreement provides, among other things, that a
meeting of the Company's stockholders for matters including the election of
directors be held no later than March 31, 1999, unless the Company commenced a
tender offer for Depositary Shares that provides for accepting and paying for
shares no later than April 6, 1999. The Tender Offer commenced by the Company
on March 10, 1999 provided for acceptance and payment for shares no later than
April, 6, 1999, but was extended by one day to April 7, 1999 due to technical
difficulties at The Depository Trust Company. Accordingly, the Master
Agreement permits the Company to hold its meeting of stockholders no later
than the first business day that is at least 35 days after the Company has
accepted and paid for shares purchased in the Tender Offer. The Company also
agreed to invite stockholders to submit nominees for the Board of Directors
and proposals for consideration at the meeting. Under the Master Agreement,
the Company agreed that, until the stockholder meeting is concluded, the
Company's Board of Directors will not: (a) amend its stockholder rights plan,
(b) undertake any extraordinary purchases, mergers, acquisitions,
recapitalizations, or restructurings (other than asset dispositions or
transactions to preserve the value of existing assets), or (c) borrow money
outside of the ordinary course of business or pledge material assets to secure
debt (other than any bonding requirements under applicable law, including
workers' compensation laws or environmental laws, or any requirement under the
Master Agreement and exhibits thereto). The Company also agreed that its Board
of Directors will not take any action that could interfere with the exercise
of stockholder rights at the meeting, including, but not limited to, amending
its bylaws: (a) to create or implement a staggered board, (b) to require that
removal of directors be for cause only, (c) to impose additional time periods
or qualification requirements to make the nomination of Board members more
difficult, or (d) increase the number of directors on the Board. Other than as
disclosed in this Schedule and in the Proxy Statement, to the knowledge of the
Company, none of the Company, any of its directors, executive officers or the
employees of the Company and its subsidiaries named in Schedule I is, or has
been within the past year, a party to any contract, arrangement or
understanding with any person with respect to any securities of the Company,
including, but not limited to, joint ventures, loan or option arrangements,
puts or calls, guarantees against loss or guarantees of profit, division of
losses or profits, or the giving or withholding of proxies.
Other than as set forth in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company and it subsidiaries named in Schedule
I, or any of their associates, has had or will have a direct or indirect
material interest in any transaction or series of similar transactions since
the beginning of the Company's last fiscal year or any currently proposed
transactions, or series of similar transactions, to which the Company or any
of its subsidiaries was or is to be a party in which the amount involved
exceeds $60,000.
Other than as set forth in this Schedule and in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company and its subsidiaries named in
Schedule I, or any of their associates, has any arrangements or understandings
with any person with respect to any future employment by the Company or its
affiliates or with respect to any future transactions to which the Company or
any of its affiliates or with respect to any future transactions to which the
Company or any of its affiliates will or may be a party.
II-4
<PAGE>
IMPORTANT
Your proxy is important. No matter how many shares of Common Stock or
Depositary Shares you own, please give the Company your proxy "FOR" the
election of your Board's nominees for director by signing, dating and
returning the Company's WHITE proxy card today in the postage prepaid envelope
provided.
DO NOT RETURN ANY BLUE PROXY CARDS THAT YOU MAY HAVE RECEIVED
FROM A DISSIDENT GROUP OF STOCKHOLDERS.
If you have already submitted a proxy to the Dissident Group for the
Special Meeting, you may revoke that proxy and vote "FOR" the election of your
Board's nominees by signing, dating and returning the Company's WHITE proxy
card, which must be dated after any proxy you may have submitted to the
Dissident Group. Only your latest dated proxy for the Special Meeting will
count at the Special Meeting.
If any of your shares of Common Stock or Depositary Shares are held in the
name of a brokerage firm, bank, bank nominee or other institution, only it can
vote such shares and only upon receipt of your specific instructions.
Accordingly, please contact the person responsible for your account and
instruct that person to execute the Company's WHITE proxy card as soon as
possible.
If you have any questions or require any additional information or
assistance, please contact our proxy solicitor:
MORROW & CO., INC.
Call Toll Free (800) 662-5200.
<PAGE>
- --------------------------------------------------------------------------------
P R O X Y
Common
[LOGO OF WESTMORELAND COAL]
WESTMORELAND COAL COMPANY
PROXY FOR SHARES OF COMMON STOCK ONLY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WESTMORELAND COAL COMPANY
FOR THE SPECIAL MEETING OF THE STOCKHOLDERS
ON MAY 12, 1999
The undersigned hereby appoints Christopher K. Seglem, Theodore E. Worcester
and Paul W. Durham and each of them acting in the absence of the others, with
full power of substitution, attorneys and proxies for and in the name and place
of the undersigned, to represent and vote the number of shares of Common Stock
that the undersigned would be entitled to vote if then personally present at
the Special Meeting of the Stockholders of Westmoreland Coal Company, or at any
adjournment or postponement thereof.
THIS PROXY GRANTS DISCRETIONARY AUTHORITY (1) TO VOTE FOR A SUBSTITUTE NOMINEE
OF THE BOARD OF DIRECTORS IF ANY NOMINEE FOR DIRECTOR IS UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AS A DIRECTOR (UNLESS AUTHORITY TO VOTE FOR ALL NOMI-
NEES OR FOR THE PARTICULAR NOMINEE WHO HAS CEASED TO BE A CANDIDATE IS WITH-
HELD) AND (2) TO VOTE IN ACCORDANCE WITH THE BEST JUDGMENT OF THE NAMED PROXIES
ON OTHER PROPOSALS OR MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES.
This card also serves to instruct Mellon Bank, N.A., Trustee of the Westmore-
land Coal Company and Affiliated Companies Employees Savings/Retirement Plan
(the "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 May 7, 1999. Voting instructions received by the Trustee will be
kept confidential.
Election of Directors by the holders of
Common Stock, Nominees:
Pemberton Hutchinson, William R. Klaus,
Thomas W. Ostrander, Christopher K.
Seglem and Edwin E. Tuttle
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-------------
SEE REVERSE
SIDE
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKHOLDERS ONLY
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" THE NOMINEES.
[LOGO OF WESTMORELAND COAL]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
1. Election of Nominees as Directors by the Holders of Common Stock
(see reverse)
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
________________________________________________________________________________
(Signature)
________________________________________________________________________________
(Signature, if jointly held)
Title: _________________________________________________________________________
Dated: ___________________________________________________________________, 1999
NOTE: Please date this proxy card and sign it exactly as your name or names
appear. All joint owners of shares should sign. State full title when
signing as executor, administrator, trustee, guardian, etc. Please return
the signed proxy card in the enclosed postage prepaid envelope.
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<PAGE>
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P R O X Y
Depositary
[LOGO OF WESTMORELAND COAL]
WESTMORELAND COAL COMPANY
PROXY FOR DEPOSITARY SHARES ONLY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WESTMORELAND COAL COMPANY
FOR THE SPECIAL MEETING OF THE STOCKHOLDERS
ON MAY 12, 1999
The undersigned hereby appoints Christopher K. Seglem, Theodore E. Worcester
and Paul W. Durham and each of them acting in the absence of the others, with
full power of substitution, attorneys and proxies for and in the name and place
of the undersigned, to represent and vote the number of Depositary Shares that
the undersigned would be entitled to vote if then personally present at the
Special Meeting of the Stockholders of Westmoreland Coal Company, or at any ad-
journment or postponement thereof.
THIS PROXY GRANTS DISCRETIONARY AUTHORITY (1) TO VOTE FOR A SUBSTITUTE NOMINEE
OF THE BOARD OF DIRECTORS IF ANY NOMINEE FOR DIRECTOR IS UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AS A DIRECTOR (UNLESS AUTHORITY TO VOTE FOR ALL NOMI-
NEES OR FOR THE PARTICULAR NOMINEE WHO HAS CEASED TO BE A CANDIDATE IS WITH-
HELD) AND (2) TO VOTE IN ACCORDANCE WITH THE BEST JUDGMENT OF THE NAMED PROXIES
ON OTHER PROPOSALS OR MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES.
This card also serves to instruct Mellon Bank, N.A., Trustee of the Westmore-
land Coal Company and Affiliated Companies Employees Savings/Retirement Plan
(the "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 May 7, 1999. Voting instructions received by the Trustee will be
kept confidential. In addition, this proxy shall constitute instructions to the
Depositary of the Depositary Shares to vote the Preferred Stock.
Election of Directors by the holders of
Depositary Shares, Nominees:
Robert E. Killen and James W. Sight
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-------------
SEE REVERSE
SIDE
-------------
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- --------------------------------------------------------------------------------
DEPOSITARY SHAREHOLDERS ONLY
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" THE NOMINEES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
[LOGO OF WESTMORELAND COAL]
2. Election of Nominees as Directors by the Holders of Depositary Shares
(see reverse)
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee:
- --------------------------------------------------------------------------------
________________________________________________________________________________
(Signature)
________________________________________________________________________________
(Signature, if jointly held)
Title: _________________________________________________________________________
Dated: ___________________________________________________________________, 1999
NOTE: Please date this proxy card and sign it exactly as your name or names
appear. All joint owners of shares should sign. State full title when
signing as executor, administrator, trustee, guardian, etc. Please return
the signed proxy card in the enclosed postage prepaid envelope.
- --------------------------------------------------------------------------------
