<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by 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
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CONSOL ENERGY INC.
- --------------------------------------------------------------------------------
(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)(1) 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: ______________________________________________________
4) Date Filed: ________________________________________________________
<PAGE>
CONSOL ENERGY INC.
300 Delaware Avenue
Suite 567
Wilmington, DE 19801-1622
Telephone (302) 427-5861
Annual Meeting November 17, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting for CONSOL Energy
Inc. on Wednesday, November 17, 1999, at 10:30 a.m. at the Hotel du Pont, 1007
Market Street, Wilmington, Delaware.
The enclosed Notice of Annual Meeting and Proxy Statement describe the various
matters to be acted upon during the meeting. In addition, management will review
results and discuss the steps taken to ensure strong performance in the future.
There also will be an opportunity for you to express your views on subjects
related to CONSOL Energy's operations.
You may vote your shares by telephone, proxy card, or Internet at
www.proxyvote.com. The proxy card describes your voting options in more detail.
If you need special assistance because of a disability, please contact the
Company's investor relations office.
We appreciate your commitment to CONSOL Energy Inc. and hope you will be able to
join us at this Annual Meeting.
Sincerely,
/s/ John Whitmire
John Whitmire
Chairman of the Board
<PAGE>
CONSOL ENERGY INC.
300 Delaware Avenue
Suite 567
Wilmington, DE 19801-1622
Telephone (302) 427-5861
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1999
Notice is hereby given that the annual meeting of stockholders of CONSOL
Energy Inc. will be held on November 17, 1999, at 10:30 a.m., Eastern Standard
Time, at the Hotel du Pont, 1007 Market Street, Wilmington, Delaware for the
following purposes:
1. To elect directors to hold office in accordance with the Bylaws of
CONSOL Energy Inc.;
2. To ratify the selection of Ernst & Young LLP as independent public
accountants for the fiscal year ending June 30, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournments.
The Board of Directors has fixed the close of business on October 12, 1999,
as the record date for determining the stockholders entitled to notice of and to
vote at the meeting.
If you do not expect to attend the annual meeting in person, please
complete, date and sign the enclosed proxy card and return it in the enclosed
envelope, which requires no additional postage if mailed in the United States.
Prompt response is helpful and your cooperation will be appreciated. If you
desire, you may vote by telephone or by the internet at www.proxyvote.com.
D. L. Fassio
Vice President and Secretary
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED
PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. A RETURN
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. IF YOU RECEIVE MORE THAN ONE PROXY
CARD, PLEASE BE SURE TO COMPLETE AND RETURN EACH PROXY CARD.
<PAGE>
CONSOL ENERGY INC.
_______________
PROXY STATEMENT
_______________
October 13, 1999
The enclosed proxy is being solicited by the Board of Directors of CONSOL
Energy Inc. (CONSOL Energy) to be voted at the Annual Meeting of Stockholders to
be held November 17, 1999, at 10:30 a.m. local time at the Hotel du Pont, 1007
Market Street, Wilmington, Delaware.
The persons named as proxies on the accompanying proxy card have informed
CONSOL Energy of their intention, if no contrary instructions are given, to vote
the shares represented by such proxies in favor of the election as directors of
CONSOL Energy of those persons named as management's nominees; in favor of the
selection of Ernst & Young LLP as independent certified public accountants of
CONSOL Energy for the 2000 fiscal year; and in accordance with their best
judgment on any other matters which may come before the meeting. The Board of
Directors does not know of any business to be brought before the Annual Meeting
other than as indicated in the notice.
The record date with respect to this solicitation is October 12, 1999. All
holders of record of CONSOL Energy Inc. Common Stock as of the close of business
on October 12, 1999 are entitled to vote at the meeting. As of September 30,
1999 the Company had 80,159,858 shares of Common Stock outstanding. Each share
of stock is entitled to one vote. A favorable vote of a majority of the shares
of Common Stock voted in person or by proxy at the meeting is required for the
approval of each of the proposals described in this Proxy Statement, assuming
that a quorum is present. Abstentions and broker non-votes are not counted in
the calculation of the vote, although they will be considered present for quorum
purposes.
A proxy may be revoked by the stockholder at any time prior to its being
voted. If a proxy is properly executed and is not revoked by the stockholder,
the shares it represents will be voted at the meeting in accordance with the
instructions from the stockholder. If the proxy card is signed and returned
without specifying choices, the shares will be voted in accordance with the
recommendations of the Board of Directors. In lieu of returning signed proxy
cards, holders of record can properly execute proxies by calling a specially
designated telephone number as described on the enclosed proxy card.
The proxy also serves as the voting instruction for the trustees who hold
shares of record for participants in the CONSOL Inc.
-1-
<PAGE>
Investment Plan for Salaried Employees. If proxies representing shares in the
employee savings plan are not received by mail or telephone, those shares will
be voted at the discretion of the trustee.
CONSOL Energy's Annual Report to Stockholders, containing financial
statements reflecting the financial position and results of the operations for
the fiscal year ending June 30, 1999, and this Proxy Statement are to be
distributed beginning October 15, 1999.
CONSOL Energy will provide to any stockholder, without charge and upon the
written request of the stockholder, a copy of CONSOL Energy's Annual Report on
Form 10-K as filed with the United States Securities and Exchange Commission for
CONSOL Energy's most recent fiscal year. Any such request should be directed to
CONSOL Energy Inc., Investor Relations Department, 1800 Washington Road,
Pittsburgh, PA 15241.
GENERAL INFORMATION
Nominations for Election of Directors by Executive Committee. The Executive
Committee is composed of directors of CONSOL Energy and it recommends to the
Board of Directors nominees for election as directors at the Annual Meeting.
Members of the Executive Committee are J. L. Whitmire, J. B. Harvey, B. Bonekamp
and D. Henning.
Proxy Committee. The Proxy Committee is composed of directors and/or officers
of CONSOL Energy who vote as instructed the shares of CONSOL Energy Common Stock
for which they receive proxies. Current members of the Proxy Committee are
J. B. Harvey and D. L. Fassio.
Proxy Solicitation. All costs relating to the solicitation of proxies will be
borne by CONSOL Energy. Corporate Investor Communications, Inc., has been
retained by CONSOL Energy to aid in the solicitation of proxies, at an estimated
cost of $4,000 plus reimbursement of out-of-pocket expenses. Proxies may also
be solicited by officers, directors and employees personally, by mail, or by
telephone, facsimile transmission or other electronic means. On request, CONSOL
Energy will pay brokers and other persons holding shares of stock in their names
or in those of their nominees for their reasonable expenses in sending
soliciting material to, and seeking instructions from, their principals.
Secrecy in Voting. As a matter of policy, proxies, ballots and voting
tabulations that identify individual stockholders are held confidential by
CONSOL Energy. Such documents are available for examination only by the
inspectors of election and certain employees associated with tabulation of the
vote. The identity of the vote of any stockholder is not disclosed except as
may be necessary to meet legal requirements.
-2-
<PAGE>
Beneficial Ownership of Securities
Principal Stockholders. As of September 30, 1999, RWE A.G. beneficially owned
an aggregate of 57,997,357 shares of CONSOL Energy's Common Stock, or 72% of
such shares outstanding at that time.
Section 16(a) Beneficial Ownership Reporting Compliance. CONSOL Energy's
directors and executive officers are required under the Securities Exchange Act
of 1934 to file reports of ownership and changes in ownership of CONSOL Energy
Inc. Common Stock with the Securities and Exchange Commission and the New York
Stock Exchange. During 1999, all such reports due were filed on a timely basis.
The following table sets forth at June 30, 1999 information with respect to
beneficial ownership by (i) beneficial owners of more than five percent of
CONSOL Energy's Common Stock known by the Company, based upon information filed
with the Securities and Exchange Commission, (ii) each director, (iii) each
nominee for director, (iv) each executive officer named in the Summary
Compensation table set forth below and (v) all directors and executive officers
of the Company as a group. The shares identified as beneficially owned by RWE
A.G. are shares held of record by Rheinbraun A.G. and Rheinbraun U.S. GmbH,
direct and indirect wholly owned subsidiaries of RWE A.G. RWE A.G. is a
publicly held company in Germany. The address of the directors and executive
officers of CONSOL Energy is c/o CONSOL Inc. 1800 Washington Road, Pittsburgh,
PA 15241.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
- ---------------- -------------------- --------
Beneficial Ownership/1/
--------------------
<S> <C> <C>
RWE A.G................... 57,997,357 72%
Opernplatz 1
45128 Essen, Germany
J. Brett Harvey........... 2,600 _______
Ronald E. Smith........... _____ _______
Ronald J. FlorJancic...... 390 _______
John L. Whitmire.......... 200 _______
B.R. Brown................ _____ _______
Dr. Dieter Henning........ _____ _______
Berthold Bonekamp......... _____ _______
</TABLE>
- ------
/1/Except as otherwise indicated, the named person has the sole voting and
investment powers with respect to the shares of the Company Common Stock set
forth opposite such person's name.
-3-
<PAGE>
<TABLE>
<S> <C> <C>
Bernd Breloer............. _____ _______
Dr. Rolf Zimmermann....... _____ _______
M. F. Nemser............... 1,100 _______
All Directors and Executive
Officers as a group./2/.. 4,290 _______
</TABLE>
PROPOSALS FOR CONSIDERATION AT ANNUAL MEETING
---------------------------------------------
PROPOSAL #1 -- NOMINATIONS FOR ELECTION OF DIRECTORS
The nominees for election as directors are identified as follows. All
nominees are now members of the Board of Directors. If any nominee should for
any reason become unable to serve, the shares represented by all valid proxies
will be voted for the election of such other person as the Board of Directors
may designate following recommendation by the Executive Committee, or the Board
may reduce the number of directors to eliminate the vacancy.
The following material contains information concerning the nominees, including
their recent employment, positions with CONSOL Energy, other directorships, and
age as of the date of the 1999 Annual Meeting.
John L. Whitmire, Chairman of the Board of Directors, CONSOL Energy Inc. and
CONSOL Inc., age 58, has served as Chairman of the Board of Directors, CONSOL
Energy Inc. and CONSOL Inc. since March 3, 1999, and Mr. Whitmire will act as
one of CONSOL Energy Inc.'s independent directors. Prior to his election, Mr.
Whitmire has been the Chairman of the Board and Chief Executive Officer of Union
Texas Petroleum Holdings, Inc., a position that he held from January 1996 until
September 1998 when Union Texas Petroleum was acquired by ARCO. Before joining
Union Texas Petroleum, Mr. Whitmire served for more than 30 years in various
executive capacities with Phillips Petroleum Company, including as Executive
Vice President--Exploration and Production and as a Director from January 1994
to January 1996. Mr. Whitmire is a Director of the National Audubon Society,
Thermon Industries and Global Marine, Inc. Mr. Whitmire received a bachelor of
science degree in Mechanical Engineering from New Mexico State University.
- ------
/2/ Does not include shares of the Company's Common Stock subject to stock
options which will become exercisable 25% per year, beginning in May 2000, as
follows: Mr. Bonekamp, Mr. Breloer, Mr. Brown, and Mr. Henning 4,000 shares
each; Mr. Smith 44,000 shares; Mr. Nemser 44,000 shares; Mr. Zimmermann 50,000
shares; Mr. Harvey 120,000 shares; Mr. FlorJancic 60,000 shares; Mr. Whitmire is
entitled to receive options with a fair market value of $25,000 and shares of
Common Stock through March 2, 2000 with a fair market value of $225,000.
-4-
<PAGE>
J. Brett Harvey, Director and President and Chief Executive Officer, CONSOL
Energy Inc. and CONSOL Inc., age 49, has been President and Chief Executive
Officer and a Director of CONSOL Energy Inc. and CONSOL Inc. since January 1998.
Prior to joining CONSOL Energy Inc., Mr. Harvey served as the President and
Chief Executive Officer of PacifiCorp Energy Inc., a subsidiary of PacifiCorp.
Between 1993 and 1995 Mr. Harvey was President and Chief Executive Officer of
both Interwest Mining Company and PacifiCorp Fuels. Mr. Harvey is a member of
the Board of Directors of the National Mining Association, the National Coal
Council, and the Utah Mining Association. He received a bachelor's degree in
Mining Engineering from the University of Utah. He is a former Director of the
Wasatch Crest Mutual Insurance Company and has served on the Construction Board
of the College of Eastern Utah.
Philip W. Baxter, Director, CONSOL Energy Inc. and CONSOL Inc., age 51, was
elected to the Board of CONSOL Energy Inc. on August 1, 1999, and to the Board
of CONSOL Inc. on August 12, 1999, and Mr. Baxter will act as one of CONSOL
Energy Inc.'s independent directors. Mr. Baxter is a former chief financial
officer of the Tulsa-based energy conglomerate Mapco Inc., which merged with The
Williams Company in March 1998. Prior to his career at Mapco, he held a number
of financial positions with Williams Energy Company, a subsidiary of The
Williams Company. Currently, Mr. Baxter volunteers as the executive business
administrator of a Tulsa Methodist church and is a director for BuyItNow.com, an
Internet retailer. He is also a director and the board's treasurer for Gilcrese
Museum and a board member of The Nature Conservancy. He received a bachelor's
degree in Business Administration from the University of Oklahoma in 1970 where
he majored in finance and economics.
Berthold Bonekamp, Director, CONSOL Energy Inc. and CONSOL Inc., age 49, has
served on the Board of CONSOL Energy Inc. and CONSOL Inc. since July 1998 where
he serves as a representative of Rheinbraun A.G. He started at the Accounting
Department of Rheinbraun A.G. in 1981. He held a variety of positions in the
Rheinbraun Accounting Department and was promoted to Vice President and Division
Head-Corporate Development, Organization and Information Processing in 1994.
From 1995 to 1998 he served as Chairman of the Executive Board and Chief
Executive Officer of RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne,
the trading and logistic services branch of the Rheinbraun group. In 1998 he
became a member of the Executive Board of Rheinbraun A.G., where he serves as
Executive Vice President-International Operations. Mr. Bonekamp holds a
Mechanical Engineering degree from the Muenster College of Applied Science and
holds a master's degree in Business Administration (Diplom-Kaufmann) from
Muenster University in Germany.
Bernd Jobst Breloer, Director, CONSOL Energy Inc. and CONSOL Inc., age 56, has
served on the Board of CONSOL Energy Inc. and CONSOL Inc. since September 1998,
where he serves as a representative of Rheinbraun A.G. Mr. Breloer has held
various executive
-5-
<PAGE>
positions in the RWE A.G. group's nuclear division. From 1988 to 1992 he served
as Chairman of the Executive Board and as Chief Executive Officer of Nukem GmbH,
the group's nuclear fuel cycle services entity. In 1993, he joined Rheinbraun
A.G., where he became a member of the Executive Board with responsibility for
the Finance and Accounting Division. Mr. Breloer holds a master's degree in
Business Administration (Diplom-Kaufmann) from Muenster University in Germany.
B. R. Brown,/3/ age 67, has served as Director, CONSOL Energy Inc. and CONSOL
Inc., since January 1992 and was Chairman of the Board of Directors of CONSOL
Energy Inc. and CONSOL Inc. from January 1992 until February 1999. From January
1992 to January 1996, he served as CONSOL Energy Inc.'s and CONSOL Inc.'s
President and Chief Executive Officer and served in the Executive Office of
Chairman of the Board from January 1996 until February 1999. Mr. Brown serves
as a Director of Remington Arms Co., Inc. He also has served as a Director and
Chairman of the Bituminous Coal Operators Association Negotiating Committee, is
a past Chairman of the National Mining Association, a Director and former
Chairman of the Coal Industry Advisory Board of the International Energy Agency
and a Trustee of The Nature Conservancy. Mr. Brown holds honorary doctorates
from several colleges, including Bluefield State College, Robert Morris College,
Waynesburg College and Wheeling College. He is a graduate of the University of
Arkansas.
Dr. Rolf Zimmermann, Executive Vice President of CONSOL Energy Inc. and CONSOL
Inc. and Director, CONSOL Energy Inc. and CONSOL Inc., age 55, has been
Executive Vice President of CONSOL Inc. since January 1999 and of CONSOL Energy
Inc. since February 1999. He has been on the Board of CONSOL Energy Inc. and of
CONSOL Inc. since November 1993, where he served as representative of Rheinbraun
A.G. In 1973, he served in the Corporate Planning Department of the oil
refinery subsidiary of Rheinbraun A.G. He became Vice President and head of
supply in 1985. He joined Rheinbraun A.G. in 1989 and was head of the Corporate
Structure and Internal Audit Department until 1990. From 1990 to 1991, he was a
member of the management board of a consulting firm established to prepare for
the privatization of the East German lignite industry. In 1992, he became
Senior Vice President of Rheinbraun A.G. and head of the Business Development,
Corporate Structure and Information Processing Division. Mr. Zimmermann
received a master's degree (Diplom-Volkswirt) in Economics from Bonn University
and holds a doctor's degree (Dr. rer.pol.) in Economics from Cologne University
in Germany.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" THE ABOVE NAMED NOMINEES
- ------
/3/ Mr. Brown's Consulting Arrangement expires January 31, 2000, at which time
he has indicated he will resign his directorship.
-6-
<PAGE>
BOARD OF DIRECTORS
Initial Public Offering. CONSOL Energy became a publicly traded company through
the issuance of an Initial Public Offering (IPO) on April 29, 1999. As a result
of the IPO, CONSOL Energy established an Executive Committee, Proxy Committee,
Compensation Committee and Audit Committee to perform designated functions for
and at the request of the Board of Directors of CONSOL Energy. During 1998, all
members of the Board of Directors attended the annual meeting of the Board. The
Board of Directors has not held a meeting of the entire Board since the filing
of the IPO.
Compensation. Members of the Board who are employees of CONSOL Energy or any of
its subsidiaries are not compensated for service on the Board or on committees.
Members of the Board, other than Mr. Whitmire, who are not employees of CONSOL
Energy or any of its subsidiaries receive an annual Board membership fee of
$30,000; an attendance fee of $2,000 for each meeting of the Board of Directors;
an attendance fee of $1,000 for each meeting of any committee of the Board of
Directors and, if a chairman of a committee, an attendance fee of $2,000; and
initial stock options of 4,000 shares and an annual grant of stock options of
2,000 shares.
Plans for Directors. Under the terms of the Equity Incentive Plan, any director
may defer all or part of the payment of Board and committee fees in the form of
cash or stock units until a specified year, until ceasing to be a CONSOL Energy
director or until death. Annual stock grants may also be deferred but only as
stock units. Interest equivalents accrue on payments deferred in the form of
cash and dividend equivalents accrue on payments deferred in the form of stock
units.
Audit Committee. The Audit Committee, which consists of two directors, employs
independent accountants, subject to stockholder ratification, to audit the
financial statements of CONSOL Energy and its subsidiaries and perform other
assigned duties. Further, the Committee provides general oversight with respect
to the accounting principles employed in financial reporting and the adequacy of
CONSOL Energy's internal controls. No member of the Audit Committee may be an
officer or employee of CONSOL Energy or any of its subsidiaries. Current
members of the Audit Committee are P. W. Baxter and J. L. Whitmire.
Compensation Committee. The Compensation Committee, which consists of two
directors, is responsible for establishing an executive compensation policy
consistent with corporate objectives and stockholder interests. Members of the
Compensation Committee are J. L. Whitmire and P. W. Baxter. The Committee has
responsibility for recommending to the Board levels of compensation for employee
directors, including salaries as well as variable compensation, and stock
options. No member of the Committee may be an officer or employee of CONSOL
Energy or any of its subsidiaries.
-7-
<PAGE>
Compensation Committee Report.
The Compensation Committee of the Board of Directors is responsible for
administering the Equity Incentive Plan and reviewing and making decisions with
respect to the other compensation of executive officers and key executives of
CONSOL Energy Inc. and its subsidiaries. The Compensation Committee was
appointed in August 1999 in connection with and shortly after the Initial Public
Offering of CONSOL Energy Inc. was completed, with Messrs. Whitmire and Baxter
as members. Prior to the completion of the Initial Public Offering,
compensation for CONSOL Energy Inc.'s and its subsidiaries' executive officers
was set by the Executive Committee and Board of Directors of CONSOL Energy Inc.
Therefore, CONSOL Energy Inc. Compensation Committee does not have a report for
1999.
The Compensation Committee is in the process of establishing compensation
policies for CONSOL Energy Inc. and its subsidiaries for Fiscal Year 1999-2000
consistent with corporate objectives and stockholder interests. Beginning in
fiscal year 1999-2000, the Compensation Committee will approve and/or recommend
to the Board of Directors compensation, as well as stock options, performance
awards and other stock-based awards for employee directors and other senior
management. The Compensation Committee will also review CONSOL Energy Inc. and
its subsidiaries executive compensation policies, plans and practices, as well
as planning policies.
CONSOL Energy Inc.'s current short term executive compensation program
consists of salary and variable compensation. Salaries for executive officers
were established based on a comparison to peer group companies, with salary
increases based on individual contribution.
The Compensation Committee is in the process of establishing CONSOL Energy
Inc.'s executive compensation programs and practices. The Compensation
Committee expects that CONSOL Energy Inc.'s compensation policies will be based
on its performance and further expects that performance factors will include (1)
total performance, including stockholder return, earnings and cash flow; and
(ii) personal performance and leadership. CONSOL Energy Inc.'s compensation
policies will be designed to align executives' interests with those of
stockholders.
EXECUTIVE COMPENSATION AND STOCK OPTION INFORMATION
The Officers.
The names and ages of the principal executive officers of CONSOL Energy and
its subsidiaries are set forth below, together with the positions held by each
person in the Company.
-8-
<PAGE>
<TABLE>
<CAPTION>
Served as an
Name and Age Position Officer Since
- ------------------------- -------------------------- -------------
<S> <C> <C>
J. B. Harvey, 49 President and 1998
Chief Executive
Officer
Dr. R. Zimmermann, 55 Executive Vice 1993
President
M. F. Nemser, 49 Vice President and 1992
Treasurer
W. J. Lyons, 50 Vice President and 1995
Controller
D. L. Fassio, 52 Vice President and 1994
Secretary
R. E. Smith, 50 Executive Vice President - 1992
Engineering Services,
Environmental Affairs &
Exploration - CONSOL Inc.
R. J. FlorJancic, 49 Executive Vice President - 1995
Marketing - CONSOL Inc.
</TABLE>
For the past five years, each of the above officers held the office shown,
except as follows:
Mr. Harvey has been President, Chief Executive Officer and a Director of
CONSOL Energy since January 1998. Prior to his current employment, he served
as the President and Chief Executive Officer of PacifiCorp Energy Inc., a
subsidiary of PacifiCorp. Between 1993 and 1995 Mr. Harvey was President and
Chief Executive Officer of both Interwest Mining Company and PacifiCorp Fuels.
Dr. R. Zimmermann has been Executive Vice President of CONSOL Inc. since
January 1999 and of CONSOL Energy Inc. since February 1999. He has been on
the Board of CONSOL Energy Inc. and of CONSOL Inc. since November 1993, where
he served as a representative of Rheinbraun A.G.
W. J. Lyons has been Vice President and Controller of CONSOL Energy Inc.
since January 1, 1995 and of CONSOL Inc. since January 1, 1995. Prior to
January 1, 1995, Mr. Lyons held the position of Assistant Controller for
CONSOL Inc. since January 1992 and as Manager of Accounting of Consolidation
Coal Company since October 1985.
D. L. Fassio has been Secretary of CONSOL Energy and Vice President,
General Counsel and Secretary of CONSOL Inc. since March 1994. He has been
Vice President of CONSOL Energy since
-9-
<PAGE>
November 1998. He joined Consolidation Coal Company in March 1981 as
Attorney.
R. J. FlorJancic has been Executive Vice President-Marketing of CONSOL
Inc. since May 1995. He was Vice President-Supply and Distribution from
January 1992 to December 1993 and Vice President-Sales from December 1993 to
May 1995.
Executive Compensation. The following table discloses the compensation awarded
to or earned by Mr. Harvey and the other four most highly compensated executive
officers of CONSOL Energy or its subsidiaries at June 30, 1999 whose annual
salary plus other forms of compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation ($) Compensation
Restricted #
Name Other Annual Stock Securities LTIP All Other
Principal Position Year Salary Bonus Compensation Award (#) Underlying Payments Compensation
- -------------------- ---- --------- --------- ------------ -------- Options/ -------- ------------
SARs
-----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Brett Harvey 1999 207,000 500,097 125,178 - 120,000 - 10,800
President and 1998 - 149,050 128,227 - - 26,800
Chief Executive 1997 - - - - - -
Officer 1996 - - - - - -
Ronald J. 1999 114,875 355,000 - - 60,000 280,000 4,800
FlorJancic 1998 207,900 195,000 - - 186,150 11,591
Executive Vice 1997 193,650 185,000 - - 75,000 9,600
President 1996 - - - - - -
Ronald E. Smith 1999 108,600 145,000 - - 44,000 196,000 4,800
Executive Vice 1998 211,150 132,000 - - 161,330 14,568
President 1997 205,650 120,000 - - 202,500 9,600
1996 - - - - - -
C. W. McDonald/4/ 1999 144,900 190,000 - - 61,000 238,000 4,800
Executive Vice 1998 283,200 175,000 - - 223,380 16,796
President 1997 277,650 160,000 - - 300,000 9,600
1996 272,250 135,000 - - 112,500 9,000
Michael F. Nemser 1999 92,460 253,000 - - 44,000 140,000 4,800
Senior Vice 1998 169,500 120,000 - - 99,280 9,600
President and 1997 164,250 112,000 - - 45,000 9,600
Chief Financial 1996 - - - - - 9,000
Officer
B. R. Brown 1999 - - - - - - -
1998 - 3,418,711 - - - 558,000
1997 - 425,000 - - - 558,000
1996 - 6,657,635 - - - -
W. G. Karis 1999 - - - - - - -
1998 - - - - - - -
1997 1,041,227 220,000 - - - 255,000 12,084
1996 300,000 424,289 - - - 225,000 18,074
</TABLE>
- ------
/4/Elected to retire effective September 1, 1999 and information provided is for
eight months.
-10-
<PAGE>
Long-Term Incentive Plan. Certain officers of CONSOL Energy and its
subsidiaries participate in a Long-Term Incentive Plan (LTIP) which is
administered by the Vice President-Human Resources of CONSOL Inc. at the
direction of the Chairman of the Board of Directors of CONSOL Energy Inc. The
Board of Directors may adjust award targets to reflect certain extraordinary
events, including strategic restructuring and new investments for capital
expansion. The Board of Directors has the discretion to terminate, suspend,
withdraw or modify the LTIP in whole or in part.
Awards under the LTIP are based on CONSOL Energy's results of operations.
Performance targets are tied to operating earnings and cash flow measures.
Awards are granted in units, each of which has a nominal value of $100. The
awards have a three-year term and are payable in the year after the term. The
target for the first year is the profit objective of CONSOL Energy for that
year. Years two and three are based upon targets stated in CONSOL Energy's
long-term business plan in place prior to the beginning of the award cycle.
Awards may vary from 0% to 150% of the nominal value of the unit depending upon
the targeted results of operations for CONSOL Energy. For example, if the
results of operations average 100% of the target for the relevant period, each
unit would have a value of $100. If the results of operations average less than
80% of the target for the relevant period, each unit would have a value of $0.
If the results of operations average 150% or more of the target for the relevant
period, each unit would have a value of $150. A recipient may elect to receive
payment when an award is earned or may defer the payment of such award. Deferred
awards accrue compounded interest at an annual rate equal to Moody's AAA 10-year
municipal bond rate.
The following table provides certain information with respect to awards
granted to Mr. Harvey and the other four most highly compensated executive
officers during the six months ending June 30, 1999.
Long-Term Incentive Plan Table
(1998-2000 Cycle)
<TABLE>
<CAPTION>
Number Period Until Threshold Target Maximum
Name of Units Payout (Years) $ $ $
------------ -------------- ------ -------- --------
<S> <C> <C> <C> <C> <C>
J. Brett Harvey 4,000 1/2001 0/Unit 100/Unit 150/Unit
Ronald J. FlorJancic 2,000 1/2001 0/Unit 100/Unit 150/Unit
C. Wesley McDonald/5/ 1,700 1/2001 0/Unit 100/Unit 150/Unit
Ronald E. Smith 1,400 1/2001 0/Unit 100/Unit 150/Unit
Michael F. Nemser 1,000 1/2001 0/Unit 100/Unit 150/Unit
</TABLE>
- ------
/5/Elected to retire effective September 1, 1999.
-11-
<PAGE>
Stock Option Grants.
The Board of Directors of CONSOL Energy have granted to certain employees
nonqualified stock options to acquire an aggregate of 784,000 shares of common
stock at an exercise price equal to the Initial Public Offering price. The
following table sets forth the number of shares subject to stock options that
were awarded to the five most highly compensated executive officers as of June
30, 1999:
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual Alternative
Rates of Stock Price to (f) and (g):
Appreciation Grant Date
Individual Grants for Option Term Value
______________________________________________________________________ ________________________ ________
(a) (b) (c) (d) (e) (f) (g) (h)
Number of % of
Securities Total
Under- Options/
lying SARs
Options/ Granted to Exercise Grant
SARs Employees or Base Date
Granted in Fiscal Price Expiration Present
Name (#) Year ($/Sh) Date 5% (%) 10% (%) Value $
__________ _________ _________ _______ _________ ________ ________ ______
<S> <C> <C> <C> <C> <C> <C> <C>
J. Brett Harvey 120,000 15 $16 2009 1,207,200 3,060,000 N/A
Ronald J. FlorJancic 60,000 7.6 $16 2009 603,600 1,530,000 N/A
Ronald E. Smith 44,000 5.6 $16 2009 442,640 1,122,000 N/A
C. W. McDonald/6/ 60,000 7.6 $16 2009 603,600 1,530,000 N/A
Michael F. Nemser 44,000 5.6 $16 2009 442,640 1,122,000 N/A
</TABLE>
The stock options granted to these executive officers will terminate ten years
after the date on which they were granted. The stock options will vest 25% per
year, beginning one year after the grant date. The vesting of the options will
accelerate in the event of death, disability or retirement and may accelerate
upon a change of control of CONSOL Energy. The stock options will terminate
upon the occurrence of the following events:
. immediately, if the employee is terminated for cause or his employment has
been terminated for any other reason and he breaches a covenant not to
compete with CONSOL Energy;
. within three months if the employee is terminated without cause or does so
voluntarily; or
. within three years upon the death of the option holder.
- ------
/6/Elected to retire effective September 1, 1999.
-12-
<PAGE>
The stock options will not terminate earlier than provided upon their grant if
the employee retires or is disabled.
Employment Agreements.
Employment Agreement With Mr. Harvey. J. Brett Harvey entered into an
employment agreement with CONSOL Energy Inc. and CONSOL Inc. on December 11,
1997. Under the terms of this contract, Mr. Harvey assumed his current
positions as the President and Chief Executive Officer of both companies on
January 1, 1998. The employment agreement terminates on December 31, 2002
unless it is terminated earlier. Mr. Harvey's employment will terminate if:
. he becomes disabled and would be eligible to receive disability benefits
under CONSOL Inc.'s employee retirement plan,
. if either party terminates the agreement or
. for cause as determined by the Board of Directors of CONSOL Energy at any
time.
If the agreement is terminated other than by CONSOL Energy for cause or if Mr.
Harvey resigns, Mr. Harvey will receive severance payments in an amount equal
to any incentive compensation received in the preceding 12 months and his then
current base salary. These amounts would be paid to Mr. Harvey until the end of
the term of the employment agreement. In the event of termination for cause,
Mr. Harvey's compensation and benefits terminate at the end of the month in
which the notice of termination is given.
Mr. Harvey receives a yearly base salary of $414,000. He is entitled to
participate in all incentive compensation programs for senior management of
CONSOL Inc., including short-term and long-term incentive pay programs. He also
is eligible for all employee benefit plans and policies applicable to CONSOL
Inc. employees. For employee retirement plans purposes, Mr. Harvey will receive
11 years of additional service credit representing his years of employment at
PacifiCorp, deducting from any such benefits amounts payable to him pursuant to
any retirement or similar plans of PacifiCorp.
Mr. Harvey's employment agreement contains certain confidentiality and non-
competition obligations. Mr. Harvey must keep CONSOL Energy's non-public
information confidential during the term of the employment agreement and for a
period of 12 months after his termination. Mr. Harvey has agreed not to compete
with the business of CONSOL Energy for so long as he receives severance benefits
under the terms of the employment agreement.
Consulting Arrangement With Mr. Brown. Mr. Brown entered into an agreement with
CONSOL Inc. which provides that Mr. Brown will serve as a general consultant
until January 31, 2000. Mr. Brown will receive a base consulting fee of
$360,000 per year. If Mr. Brown
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<PAGE>
works more than six days in any month, CONSOL Inc. will pay him a consulting fee
of $5,000 for each additional day. Mr. Brown also is entitled to reimbursement
of out-of-pocket expenses which he reasonably incurs in connection with the
performance of his services under this agreement. Mr. Brown also is entitled to
benefits available to retirees of CONSOL Inc.
The consulting agreement binds Mr. Brown to certain confidentiality and non-
competition obligations. Mr. Brown must keep the non-public information of
CONSOL Inc. confidential at all times. During the term of the consulting
agreement and for one year after it terminates, Mr. Brown has agreed not to
compete with the business of CONSOL Inc.
Agreement with John L. Whitmire. CONSOL Energy Inc. entered into an agreement
with Mr. Whitmire on February 22, 1999 pursuant to which he was engaged as the
non-executive Chairman of the Board of both CONSOL Energy Inc. and CONSOL Inc.,
subject to election by each corporation's stockholders. Under the terms of the
agreement, Mr. Whitmire will receive cash compensation of $100,000, shares of
common stock having a fair market value of $225,000 and stock options having a
fair market value of $25,000 each year. Mr. Whitmire was elected to serve as
the Chairman of the Board by the stockholders of CONSOL Energy Inc. and CONSOL
Inc. on March 3, 1999.
Retirement Benefits.
Retirement benefits for CONSOL Energy Inc. and its subsidiaries' employees
under the Pension and Retirement Plan are based on an employee's years of
service and average monthly pay during the employee's three highest-paid years.
"Average monthly pay" for this purpose includes regular compensation and 100% of
annual variable compensation payments, but excludes other bonuses and
compensation in excess of limits imposed by the Internal Revenue Code. The
Internal Revenue Code limits the amount of annual benefits which may be payable
from the pension trust. Retirement benefits provided under the pension plan in
excess of these limitations are paid from the Company's general revenues under
separate, nonfunded pension restoration plans.
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<PAGE>
Pension Plan Table
<TABLE>
<CAPTION>
- -------------------------------------------------
Rumuneration Years of Service
- -------------------------------------------------
15 20 25 30
- -------------------------------------------------
<S> <C> <C> <C> <C>
$90,000 $17,894 $23,857 $29,821 $35,785
$145,000 $31,092 $41,457 $51,821 $62,185
$200,000 $44,294 $59,057 $73,821 $88,585
$255,000 $57,492 $76,657 $95,821 $114,985
$310,000 $70,692 $94,257 $117,821 $141,385
$365,000 $83,892 $111,857 $139,821 $167,785
$420,000 $97,092 $129,457 $161,821 $194,185
$530,000 $123,492 $164,657 $246,618 $287,721
$640,000 $149,892 $197,857 $299,418 $349,321
$750,000 $176,292 $235,057 $352,218 $410,921
</TABLE>
The above table illustrates the straight life annuity amounts payable under
the Pension and Retirement Plan and pension restoration plans to CONSOL Energy
and its subsidiaries' employees retiring at age 65 in 1999. Amounts shown above
are subject to deduction for Social Security payments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Purchase of Shares from Du Pont Energy/7/. Indemnification Under Purchase
Agreement. Until the completion of CONSOL Energy's Initial Public Offering in
May 1999, DuPont Energy owned more than 5% of CONSOL Energy's Common Stock.
Previously, in November 1998, CONSOL Energy purchased 51,139,156 shares of
common stock from Du Pont Energy for a purchase price of $500 million. The
purchase of shares from Du Pont Energy was completed under an agreement entered
into in September 1998 among Du Pont, Du Pont Energy, Rheinbraun and CONSOL
Energy. Du Pont agreed to indemnify Rheinbraun and CONSOL Energy in respect of
any losses incurred by Rheinbraun as a result of the purchase of shares from Du
Pont Energy, and 47% of any and all losses incurred by CONSOL Energy arising or
related to the period prior to the closing date of the purchase of shares from
Du Pont Energy with respect to the following:
- ------
/7/On August 4, 1999, Du Pont Energy Company transferred all of its equity
interests in CONSOL Energy Inc. to Du Pont Delaware, Inc.
-15-
<PAGE>
. environmental matters, which include the failure to obtain any permits or
to comply with laws governing the generation, handling, storage,
transportation, disposal or remediation of hazardous material only to the
extent these losses exceed $50 million;
. litigation, only to the extent the losses exceed $40 million;
. taxes; and
. properties of Conoco or its mineral divisions.
Except for indemnification as to the mineral divisions of Conoco, Du Pont is
only obligated to indemnify CONSOL Energy and Rheinbraun at such time that all
losses exceed $20 million, calculated on a pre-tax basis. At that time, Du
Pont's indemnification will include the first $20 million of losses. Du Pont is
obligated to indemnify CONSOL Energy and Rheinbraun for liabilities arising out
of the mineral division of Conoco on a dollar-for-dollar basis. In no event will
Du Pont's indemnification obligations in the aggregate exceed $500 million.
The agreement provides that Du Pont will have two demand registration rights
at Du Pont's expense prior to December 31, 2001.
Registration Rights.
In connection with the purchase of shares from Du Pont Energy, Du Pont and Du
Pont Energy agreed not to dispose of any of the remaining shares of Common Stock
held by Du Pont Energy during the 180 days after the closing date of the
purchase of shares from Du Pont Energy. This includes securities issued in
exchange for, in lieu of or as a dividend on such shares of Common Stock. After
the 180 days, Du Pont Energy will have the right to dispose of the shares:
. pursuant to registration rights previously granted to Du Pont Energy under
the shareholders agreement, or
. in a private sale or sales conforming to the Securities Act of 1933.
Du Pont Energy may not, and Du Pont will cause Du Pont Energy not to, effect
any public sale of shares during the seven days prior to and the 90 days after
any underwritten registered financing by CONSOL Energy has become effective or
such longer period, not to exceed 180 days, as the underwriter may require
consistent with customary practice.
CONSOL Energy and Rheinbraun A. G. and Rheinbraun U. S. GmbH have entered into
a registration rights agreement that provides that, upon the request of
Rheinbraun A. G. or Rheinbraun U. S. GmbH, CONSOL Energy will use its best
efforts to effect the registration
-16-
<PAGE>
under applicable federal and state securities laws of any of the shares of
common stock or any other securities issued with respect to such common stock.
Rheinbraun also will have the right to include these securities in other
registrations of securities initiated by CONSOL Energy on its own behalf or on
behalf of its other stockholders. CONSOL Energy generally will be required to
pay all out-of-pocket costs and expenses in connection with each such
registration. The registration rights will be assignable by Rheinbraun. The
agreement contains customary terms and provisions with respect to registration
procedures and indemnification and contribution.
STOCK PERFORMANCE GRAPH
The following performance graph compares the cumulative stockholders return on
CONSOL Energy Common Stock to the cumulative total return of the New York Stock
Exchange Market Value Index and the Industry 4-digit SIC Code Index of 1221.
The graph assumes the value of the investment in the CONSOL Energy Common Stock
and each index was $100 at April 30, 1999 and that all dividends were reinvested
through fiscal year ending June 30, 1999.
<TABLE>
<CAPTION>
Company/Market/Index 4/30/1999 5/28/1999 6/30/1999
- ------------------------ --------- --------- ---------
<S> <C> <C> <C>
CONSOL Energy Inc. 100.00 94.74 84.21
Bituminous Coal, 100.00 104.41 100.31
Surface Mine
NYSE Market Index 100.00 98.07 102.21
</TABLE>
-17-
<PAGE>
PROPOSAL #2 -- RATIFICATION OF INDEPENDENT ACCOUNTANTS
Article III, Section 5 of the Bylaws provides that it shall be the duty of the
Audit Committee to employ, subject to stockholder ratification at each annual
meeting, independent accountants to audit the books of account, accounting
procedures and financial statements of CONSOL Energy and its subsidiaries for
the year and to perform such other duties as prescribed from time to time by the
Audit Committee.
Subject to ratification by the stockholders at the Annual Meeting, the Board
of Directors has appointed Ernst & Young LLP to serve as the independent
certified public accountants for CONSOL Energy for its 2000 fiscal year end.
Ernst & Young LLP has served as independent accountants of CONSOL Energy since
1992. It is believed that its knowledge of CONSOL Energy's business gained
through this service is most valuable. Partners and employees of the firm who
work on CONSOL Energy's account are periodically changed, thus giving CONSOL
Energy the benefit of new thinking and approaches in the audit area.
During 1999 Ernst & Young audited CONSOL Energy's annual consolidated
financial statements and those of its subsidiaries, reviewed financial
information in filings with the Securities and Exchange Commission and other
regulatory agencies, audited employee benefit plans and provided various other
services.
The affirmative vote of the majority of the votes cast by the holders of
CONSOL Energy Common Stock on this proposal shall constitute ratification of the
appointment of Ernst & Young LLP. If the stockholders by the affirmative vote of
a majority of the CONSOL Energy Common Stock represented at the Annual Meeting
do not ratify the appointment of Ernst & Young LLP, the selection of independent
certified public accountants will be reconsidered by the Board of Directors.
Representatives of Ernst & Young are expected to be present at the meeting and
will have an opportunity to address the meeting and respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE FOLLOWING
RESOLUTION:
RESOLVED that the action of the Audit Committee in employing Ernst & Young as
independent accountants for the fiscal year July 1, 1999 through June 30, 2000
to perform the functions assigned to them in accordance with the Bylaws of
CONSOL Energy Inc. is hereby ratified.
-18-
<PAGE>
PROXY STATEMENT PROPOSALS
Each year the Board of Directors will submit to the stockholders at the annual
meeting its nominations for election of directors. In making such
recommendations, the Executive Committee will consider nominations submitted by
stockholders. Any such nominations must be made by stockholders of record and
received by the Secretary of CONSOL Energy by June 12, 2000. Nominations must
be accompanied by a statement of the nominee indicating willingness to serve if
elected and disclosing principal occupations or employments held over the past
five years. In addition, the Bylaws require that the selection of independent
accountants by the Audit Committee of the Board of Directors be submitted for
stockholder ratification at each annual meeting. Other proposals may be
submitted by the Board of Directors or stockholders for inclusion in the proxy
statement for action at the annual meeting. Any proposal submitted by a
stockholder for inclusion in the 2000 Annual Meeting Proxy Statement must be
received by CONSOL Energy no later than June 12, 2000.
OTHER MATTERS
The Board of Directors knows of no other proposals that may properly be
presented for consideration at the meeting but, if other matters do properly
come before the meeting, the persons named in the proxy will vote your shares
according to their best judgment.
-19-
<PAGE>
PROXY
CONSOL ENERGY INC.
Annual Meeting November 17, 1999
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints J.B. Harvey and D.L. Fassio, and each
of them, proxies with power of substitution to vote on behalf of the
undersigned all shares which the undersigned may be entitled to vote at the
Annual Meeting of Shareholders of COLSOL Energy Inc. on November 17, 1999 and
any adjournments thereof, with all powers that the undersigned would possess
if personally present, with respect to the matters referred to on this proxy.
A majority of the proxies or substitutes present at the meeting may exercise
all power granted hereby.
Nominees for Election as Directors.
J. Brett Harvey, Dr. Rolf Zimmerman, John L. Whitmire, B.R. Brown, Berthold
Bonekamp, Bernd Jobst Breloer, Philip W. Baxter.
COMMENTS OR CHANGE OF ADDRESS
_________________________________________
_________________________________________
_________________________________________
_________________________________________
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
DETACH PROXY CARD HERE
<PAGE>
Please mark your 4593
X vote as in this
example.
The proxies will vote the shares represented by this proxy as specified by
you, but if no specification is made, the proxies will vote the shares for the
election of directors and for approval of all proposals.
The Board of Directors Recommends a vote FOR proposals 1 and 2.
1. Election of Directors (see reverse) FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s)
__________________________________________
2. Ratification of Independent Accountants FOR AGAINST ABSTAIN
Ernst & Young LLP [ ] [ ] [ ]
SIGNATURE(S)__________________________________________ DATE____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
Change of
Address/Comments on [ ]
Reverse Side
FOLD AND DETACH HERE
ANNUAL MEETING OF SHAREHOLDERS
OF
CONSOL ENERGY(TM)
NOVEMBER 17, 1999
