<PAGE> 1
SCHEDULE 14A
(RULE 14A)
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:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ASHLAND COAL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ASHLAND COAL, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
<PAGE> 2
LOGO
ASHLAND COAL, INC.
P.O. Box 6300 Huntington, WV 25771-6300 (304) 526-3333
March 22, 1996
Dear Stockholder:
The Board of Directors of Ashland Coal and I cordially invite you to attend
the Annual Meeting of Stockholders to be held in Huntington, West Virginia, on
Friday, April 26, 1996 at 10:30 a.m.
The formal business to be conducted is the election of Directors, approval
of a Restated Certificate of Incorporation, and ratification of Ernst & Young
LLP as independent auditors of the company. After completion of the formal
business, I will review Ashland Coal's 1995 results of operations and the
outlook for the future. Officers and directors will be available to answer any
questions you may have about the company.
We hope you can attend the meeting in person. If you plan to attend in
person, please mark the attendance block shown on the proxy card.
WHETHER OR NOT YOU PLAN TO ATTEND, I URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE POSTAGE-PAID ENVELOPE WHICH IS
PROVIDED SO THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE BOARD NOMINEES, FOR APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION,
AND FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR 1996.
I hope you will review the enclosed Annual Report. I look forward to seeing
you in Huntington.
Sincerely,
/s/ WILLIAM C. PAYNE
--------------------
WILLIAM C. PAYNE
Chairman of the Board,
President and Chief
Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
ASHLAND COAL, INC.
TO BE HELD APRIL 26, 1996
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Ashland
Coal, Inc., a Delaware corporation ("Ashland Coal"), will be held on Friday,
April 26, 1996, at 10:30 A.M., local time, at the Ashland Coal Headquarters
Building, 2205 Fifth Street Road, Huntington, West Virginia, and at any
adjournment thereof, to take action upon the following proposals as well as such
other business as may properly come before the Annual Meeting or any adjournment
thereof: (1) to elect ten directors to the Board of Directors, three of whom
shall be elected by holders of outstanding shares of Preferred Stock and seven
of whom shall be elected by holders of outstanding shares of Common Stock; (2)
to approve the Restated Certificate of Incorporation (copy attached as Exhibit
A); and (3) to ratify the appointment of Ernst & Young LLP as independent
auditors for 1996.
The Board of Directors has fixed the close of business on March 13, 1996,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof.
In order that your stock may be represented at the Annual Meeting, please
date and sign the enclosed proxy card and return it in the accompanying
envelope. If you attend the Annual Meeting and give written notice to Ashland
Coal's Secretary prior to the voting of your proxy, you may vote in person even
though you have previously sent in your proxy card.
By Order of the Board of Directors,
ROY F. LAYMAN
Administrative Vice President
and Secretary
Huntington, West Virginia
March 22, 1996
<PAGE> 4
ASHLAND COAL, INC.
2205 FIFTH STREET ROAD
HUNTINGTON, WEST VIRGINIA 25701
(304) 526-3333
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Ashland Coal, Inc. ("Ashland Coal") of proxies to be
voted at the Annual Meeting of Stockholders to be held on Friday, April 26,
1996, at 10:30 A.M., local time, at the Ashland Coal Headquarters Building, 2205
Fifth Street Road, Huntington, West Virginia, and at any adjournment thereof,
for the purposes set forth in the accompanying Notice. This Proxy Statement and
the accompanying form of proxy will be mailed to stockholders commencing on or
about March 22, 1996. Ashland Coal's mailing address is P. O. Box 6300,
Huntington, West Virginia 25771. An annual report including financial statements
for the year ended December 31, 1995, is enclosed with this Proxy Statement.
Only the holders of record of Ashland Coal's Common Stock, par value $.01
("Common Stock"), convertible Class B Preferred Stock, par value $100 ("Class B
Preferred Stock"), and convertible Class C Preferred Stock, par value $100
("Class C Preferred Stock") (Class C Preferred Stock, together with the Class B
Preferred Stock, the "Preferred Stock") at the close of business on March 13,
1996, will be entitled to vote at the Annual Meeting. At that date there were
13,562,858 shares of Common Stock, 150 shares of Class B Preferred Stock and 100
shares of Class C Preferred Stock issued and outstanding.
With respect to the election of directors, the holders of the outstanding
shares of Preferred Stock, voting together as a class, have the right to elect
one director for every 63 shares of Class B or Class C Preferred Stock held by
them. The maximum number of directors to be elected by the holders of Preferred
Stock is three. Holders of Preferred Stock are entitled to one vote for each
share of Preferred Stock in the election of directors. The remaining seven
directors are elected by the holders of the outstanding shares of Common Stock,
voting as a single class, without the vote of the holders of Preferred Stock.
The holders of outstanding shares of Common Stock are entitled to one vote for
each share held by them on the record date with respect to the election of
directors.
Cumulative voting applies in the election of the three directors to be
elected by the holders of outstanding shares of Preferred Stock and the seven
directors to be elected by holders of outstanding shares of Common Stock.
Cumulative voting means that a stockholder may multiply the number of votes to
which such stockholder is entitled by virtue of his share ownership by the
number of directors to be elected by such stockholder and cast this total number
of votes for any one nominee, or may distribute the total number of votes, in
any proportion, among as many nominees as the stockholder desires, up to the
number of directors to be elected.
Cumulative voting does not apply with respect to the ratification of the
appointment of auditors, approval of the amendment and restatement of Ashland
Coal's Restated Certificate of Incorporation, or any other matter that may
properly come before the meeting (other than the election of directors), and in
such cases the holders of outstanding shares of Common Stock and Preferred Stock
shall vote together as one class and each holder of shares of Class B and Class
C Preferred Stock shall be entitled to the number of votes that such holder
would have if such holder had converted its Preferred Stock into Common Stock
immediately prior to the record date (see SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT). The holders of outstanding shares of Common
Stock are entitled to one vote for each share held by them on the record date
with respect to the ratification of auditors and any other such matters that may
properly come before the meeting.
<PAGE> 5
The holders of a majority of the outstanding shares of stock, determined as
if each holder of shares of Preferred Stock had converted said Preferred Stock
into Common Stock immediately prior to the record date for such meeting, present
in person or by proxy, shall constitute a quorum. Abstentions and broker
non-votes count in the determination of a quorum.
ITEM 1. ELECTION OF DIRECTORS
(PROPOSAL 1 ON FORM OF PROXY CARD)
Under the Amended By-Laws of Ashland Coal, until otherwise fixed by the
Board of Directors, the number of directors constituting the whole Board shall
be ten. The Board has not determined otherwise. Each director holds office until
his successor is elected and qualified. All directors are seeking reelection at
the 1996 Annual Meeting. These directors are Messrs. J. A. "Fred" Brothers,
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, Juan Antonio Ferrando,
Robert L. Hintz, Thomas Marshall, William C. Payne, J. Marvin Quin and Robert E.
Yancey, Jr. All of the nominees have consented to serve if elected and all of
them were elected directors at last year's Annual Meeting of Stockholders. Mr.
Michael G. Ziesler, a member of the Board of Directors since 1992, and Mr.
Werner Externbrink, a member of the Board since 1993, both resigned from the
Board and the Committees on which they served on February 8, 1995, in connection
with the sale by Saarbergwerke AG of its 150 shares of Class B Preferred Stock
to Ashland Inc. Mr. Brothers was elected in February 1995 by the holders of the
Preferred Stock to fill one of the vacancies created by the resignations of
Messrs. Ziesler and Externbrink, and Mr. Quin, who previously served as a
Director elected by the holders of shares of Common Stock, was elected in April
at the 1995 Annual Meeting of Stockholders to fill the other vacancy, and at
which time Mr. Marshall was elected a Director by the holders of shares of
Common Stock.
With respect to the directors to be elected by the holders of outstanding
shares of Preferred Stock, the three persons receiving the greatest number of
votes cast by holders of outstanding shares of Preferred Stock, present or
represented at the Annual Meeting, shall be elected as directors. With respect
to the directors to be elected by the holders of outstanding shares of Common
Stock, the seven persons receiving the greatest number of votes cast by the
holders of the outstanding shares of Common Stock, present or represented at the
Annual Meeting, shall be elected as directors. Holders of Preferred Stock and
holders of Common Stock voting at the Annual Meeting may not vote for more than
the respective number of nominees listed in the Proxy Statement to be elected by
the holders of outstanding shares of Preferred Stock and Common Stock,
respectively. Abstentions and broker non-votes are not counted as votes cast
either for or against a nominee for election as a director.
It is the intention of the persons named in the enclosed form of proxy
(Messrs. Paul W. Chellgren and William C. Payne), unless otherwise instructed in
any form of proxy, to vote FOR the election of the three nominees described
herein to be elected by holders of outstanding shares of Preferred Stock and FOR
the seven nominees to be elected by holders of outstanding shares of Common
Stock. Such proxy holders also may vote such shares cumulatively for less than
the entire number of nominees if any situation arises which, in the opinion of
the proxy holders, makes such action necessary or desirable. Ashland Coal has no
reason to believe that any of the nominees will not be available for election as
directors. Ashland Coal is soliciting and the proxy holders are being granted
discretionary authority to cumulate and to vote the shares of stock as they
determine. If stockholders do not wish to confer authority to cumulate their
votes to Messrs. Chellgren and Payne as provided in the proxy, stockholders may
exercise their right to cumulate votes in the election of directors by attending
the meeting and voting in person.
2
<PAGE> 6
NOMINEES FOR DIRECTOR
The following information is provided regarding each nominee for election
as a director by holders of outstanding shares of Preferred Stock:
- - --------------------------------------------------------------------------------
J. A. "FRED" BROTHERS, Senior Vice President and Group
Operating Officer of Ashland Inc. since 1988. A Director of
Ashland Coal since February, 1995. Director, Society
National Bank, Children's Hospital (Columbus, Ohio) , The
Geon Company (a manufacturer and marketer of vinyl
plastics), and Ohio Dominican College. Age 55.
- - --------------------------------------------------------------------------------
JUAN ANTONIO FERRANDO, Director of Carboex International,
Ltd.; Senior Vice President, Business Development, Sociedad
Espanola de Carbon Exterior, S.A. (a coal supply firm
controlled by a Spanish state-owned corporation, and the
owner of Carboex) since 1986; during the past five years,
has served in a variety of managerial positions in
Desarrollo de Operaciones Mineras, S.A. (a coal mining
company with operations in Spain and other countries); a
Director of Ashland Coal since 1988. Director, Granitos
Espanoles, S.A. (a Spanish company which produces and sells
granite). Age 54.
- - --------------------------------------------------------------------------------
J. MARVIN QUIN, Senior Vice President and Chief Financial
Officer of Ashland Inc. since January 1992; Administrative
Vice President and Treasurer of Ashland Inc. from 1987 to
1992; a Director of Ashland Coal since 1992. Director,
Kentucky Electric Steel, Inc. Age 48.
- - --------------------------------------------------------------------------------
3
<PAGE> 7
The following information is provided regarding each nominee for election
as a director by holders of outstanding shares of Common Stock:
- - --------------------------------------------------------------------------------
ROBERT A. CHARPIE, Chairman of Ampersand Ventures, Inc. (a
venture capital company); retired in September 1988 as
Chairman of the Board of Cabot Corporation; a Director of
Ashland Coal since 1988. Director, Champion International
Corporation, and Federated Department Stores, Inc. Age 70.
- - --------------------------------------------------------------------------------
PAUL W. CHELLGREN, President and Chief Operating Officer of
Ashland Inc. since 1992; Senior Vice President and Chief
Financial Officer of Ashland Inc. from 1988 to 1992;
Chairman of the Board of Ashland Coal from 1982 to 1992; a
Director of Ashland Coal since 1981. Director, Ashland Inc.
and PNC Bank Corp. Age 53.
- - --------------------------------------------------------------------------------
THOMAS L. FEAZELL, Senior Vice President, General Counsel
and Secretary of Ashland Inc. since 1992; Administrative
Vice President and General Counsel of Ashland Inc. from
1988 to 1992; a Director of Ashland Coal since 1981.
Director, National City Bank of Ashland, Kentucky. Age 59.
- - --------------------------------------------------------------------------------
ROBERT L. HINTZ, Chairman of the Board of R. L. Hintz &
Associates (a management consulting firm) since 1989;
retired in 1988 as Executive Vice President of CSX
Corporation. A Director of Ashland Coal since 1993.
Director, Reynolds Metals Corporation, Scott &
Stringfellow, Inc. and Chesapeake Corporation. Age 65.
- - --------------------------------------------------------------------------------
4
<PAGE> 8
- - --------------------------------------------------------------------------------
THOMAS MARSHALL, retired in 1995 as Chairman of the Board
of Aristech Chemical Corporation, a position he held from
1986; Chief Executive Officer of Aristech Chemical
Corporation from 1986 to 1994; a Director of Ashland Coal
since April 1995. Director, PNC Bank Corp. and Allegheny
Ludlum Corporation. Age 67.
- - --------------------------------------------------------------------------------
WILLIAM C. PAYNE, Chairman of the Board of Ashland Coal
since 1992; President and Chief Executive Officer and a
Director of Ashland Coal since 1987. Age 63.
- - --------------------------------------------------------------------------------
ROBERT E. YANCEY, JR., Senior Vice President and Group
Operating Officer of Ashland Inc. and President of Ashland
Petroleum Company, a division of Ashland Inc. since 1986; a
Director of Ashland Coal since 1987. Age 50.
- - --------------------------------------------------------------------------------
Except as otherwise indicated, the nominees have held the principal
occupations described above during the past five years. Ashland Inc. owns
approximately 55 per cent of the outstanding shares of Common Stock of Ashland
Coal, assuming conversion of the Preferred Stock to Common Stock (see SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT).
<PAGE> 9
INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
During the year ended December 31, 1995, seven meetings of the Board of
Directors were held. The standing committees of the Board of Directors are the
Audit Committee, Executive Committee, Finance Committee, Key Employee Stock
Administration Committee, Nominating Committee and Personnel and Compensation
Committee. In addition, a Technical Committee, which includes persons who are
not Directors, acts in an advisory capacity to the Board. The Audit Committee
met three times, the Personnel and Compensation Committee met four times, the
Key Employee Stock Administration Committee met one time, the Finance Committee
met four times, and the Nominating Committee met once. The Executive Committee,
and the Technical Committee did not meet during 1995. Each nominee attended more
than 75 percent of the total meetings of the Board and the Committees on which
he served. Overall attendance at Board and Committee meetings during 1995 was
about 91 percent.
The Audit Committee is composed of Mr. Hintz (Chairman), and Messrs.
Charpie and Ferrando. Its duties include recommending Ashland Coal's independent
auditors, reviewing the scope and results of external and internal audits,
reviewing internal accounting controls, reviewing significant changes in
accounting principles, approving in advance all substantial services which are
not audit-related to be provided by the independent auditors, obtaining reports
on legal compliance and reviewing audit fees and services provided by
independent auditors.
The Executive Committee is composed of Mr. Payne (Chairman), and Messrs.
Chellgren and Ferrando. The Executive Committee, to the extent permitted by law
and Ashland Coal's Amended By-laws and Restated Certificate of Incorporation, as
amended, has and may exercise such powers and authority as the Board of
Directors shall from time to time determine.
The Finance Committee is composed of Mr. Charpie (Chairman), and Messrs.
Brothers, Chellgren, Ferrando, Payne, and Quin. The duties of this Committee
include, in addition to such responsibilities as may be delegated to it from
time to time by the Board of Directors, the review of Ashland Coal's current
fiscal policies, financing and capital structure, and current and contemplated
financial requirements, as well as evaluation of, and recommendations
respecting, significant financial matters. The recommendations of the Finance
Committee are subject to the review and approval of the Board of Directors.
The Key Employee Stock Administration Committee is composed of Mr. Charpie
(Chairman), and Messrs. Hintz and Marshall. The duties of this Committee include
the responsibility for approving awards and participation under Ashland Coal's
1988 and 1995 Stock Incentive Plans.
The Nominating Committee is composed of Mr. Chellgren (Chairman), and
Messrs. Charpie and Ferrando. The duties of this Committee include the
responsibility of recommending nominees for election to the Board of Directors.
The Personnel and Compensation Committee is composed of Mr. Feazell
(Chairman), and Messrs.Charpie, Marshall and Yancey. The duties of this
Committee include the approval of salaries of all principal officers and
employees of Ashland Coal and its subsidiaries above specified dollar levels and
all awards and participation under Ashland Coal's incentive plans, except for
awards and participation under Ashland Coal's 1995 Stock Incentive Plan (which
is administered by the Key Employee Stock Administration Committee). The
Personnel and Compensation Committee also makes recommendations with respect to
compensation policies, position evaluations, transfers, promotions, and
terminations of senior executives. In addition, it administers various Ashland
Coal employee compensation plans and various benefit plans, such as retirement
and saving plans, including contribution levels, determination of investment
guidelines, and selection of investment managers and the review of their
performances.
The Technical Committee is composed of individuals who are not Directors,
and presently consists of Mr. Michael F. Moran, Vice President of Ashland Coal,
and Mr. Jose Fernandez Olano, Technical Director of Sociedad Espanola de Carbon
Exterior, S.A. The Technical Committee serves in an advisory capacity to the
Board on significant projects, investments, acquisitions and other matters
requiring action by the Board. This Committee cannot exercise any of the powers
of the Board of Directors.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of February 29, 1996,
unless otherwise noted, concerning ownership of Ashland Coal's outstanding
Preferred Stock, Common Stock into which Preferred Stock may be converted
(hereinafter referred to as "Equivalents") and outstanding Common Stock. Except
for the Equivalents and the Common Stock which may be acquired by means of
dividend reinvestments under the Ashland Coal Dividend Reinvestment and Stock
Purchase Plan in respect of dividends declared to holders of record on a record
date after February 29, 1996, the listed persons have no other right to acquire
beneficial ownership of Common Stock of Ashland Coal exercisable within 60 days
after February 29, 1996. Common Stock and Equivalents Beneficially Owned and
Percentage of Common Stock and Equivalents are calculated assuming full
conversion of the Class B and the Class C Preferred Stock at the current
conversion rate. On February 8, 1995, Ashland Inc. (formerly Ashland Oil, Inc.)
("Ashland") purchased from Saarbergwerke AG, all of the issued and outstanding
shares of Class B Preferred Stock for about $110 million. As a result, Ashland
now owns Common Stock and Equivalents representing about 55 percent of the
voting power of Ashland Coal, and has the power to elect a majority of the Board
of Directors. If the Equivalents are excluded from the computation of Percentage
of Common Stock and Equivalents, Ashland owns approximately 54 per cent of the
Common Stock. Each stockholder has sole voting and dispositive power with
respect to the stock listed next to its or his name unless otherwise noted.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK APPROXIMATE
PREFERRED STOCK AND EQUIVALENTS PERCENTAGE OF
BENEFICIALLY BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED OWNED AND EQUIVALENTS
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------
Ashland Inc.1 150 (Class B) 10,026,500 2 55%
P. O. Box 391
Ashland, Kentucky 41114
Carboex International, Ltd.3 100 (Class C) 1,834,600 4 10%
Bolan House
P. O. Box N-3010
Nassau, Bahamas
J. A. Brothers1 0 3,100 *
Robert A. Charpie 0 10,000 *
Paul W. Chellgren1 0 5,3285 *
Thomas L. Feazell1 0 618 *
Juan Antonio Ferrando.3 0 0 0%
Robert L. Hintz 0 1,000 *
Thomas Marshall 0 2,500 *
William C. Payne 0 87,2506 *
J. Marvin Quin1 0 500 *
Robert E. Yancey, Jr.1 0 1,000 *
Kenneth G. Woodring 0 45,5597 *
C. Henry Besten, Jr. 0 33,5648 *
Marc R. Solochek 0 26,7279 *
Roy F. Layman 0 31,44310 *
All Executive Officers and Directors as a 0 248,49911 1%
group (14 persons)
- - -----------------------------------------------------------------------------------------------------
</TABLE>
1 Messrs. Brothers, Chellgren, Feazell, Quin and Yancey, directors of
Ashland Coal, are executive officers of Ashland, and to the extent they
may be deemed to be control persons of Ashland, they may be deemed to be
beneficial owners of shares owned by Ashland. Each of Messrs. Brothers,
Chellgren, Feazell, Quin and Yancey disclaims beneficial ownership of
such stock.
7
<PAGE> 11
2 The Class B Preferred Stock is currently convertible at the rate of
18,346 shares of Common Stock for each share of Class B Preferred Stock.
Ashland is the only holder of Ashland Coal's Class B Preferred Stock.
3 Mr. Ferrando, a director of Ashland Coal, is a director of Carboex
International, Ltd., and to the extent he may be deemed to be a control
person of Carboex, he may be deemed to be a beneficial owner of shares
owned by Carboex. Mr. Ferrando disclaims beneficial ownership of such
shares.
4 The Common Stock equivalent of 100 shares of Class C Preferred Stock
currently convertible at the rate of 18,346 shares of Common Stock for
each share of Class C Preferred Stock. Carboex International, Ltd. is
the only holder of Ashland Coal's Class C Preferred Stock.
5 Includes 1,048 shares owned by members of Mr. Chellgren's family for
which he disclaims beneficial ownership.
6 Includes 72,750 shares held subject to currently exercisable stock
options.
7 Includes 40,960 shares held subject to currently exercisable stock
options.
8 Includes 4,581 shares, as of December 31, 1995, held by Mr. Besten under
Ashland Coal's Employee Thrift Plan, which provides participants with
voting and investment power with respect to such shares, and 27,750
shares held subject to currently exercisable stock options.
9 Includes 3,209 shares, as of December 31, 1995, held by Mr. Solochek
under Ashland Coal's Employee Thrift Plan, which provides participants
with voting and investment power with respect to such shares, and 23,500
shares held subject to currently exercisable stock options.
10 Includes 26 shares owned by members of Mr. Layman's family for which
Mr. Layman disclaims beneficial ownership, 865 shares, as of December
31, 1995, held by Mr. Layman under Ashland Coal's Employee Thrift Plan,
which provides participants with voting and investment power with
respect to such shares, and 30,500 shares held subject to currently
exercisable stock options.
11 Includes 1,074 shares owned by family members of persons in the group
for which such persons disclaim beneficial ownership, 8,655 shares, as
of December 31, 1995, held by Executive Officers under Ashland Coal's
Employee Thrift Plan, which provides participants with voting and
investment power with respect to such shares, and 195,460 shares held
subject to currently exercisable stock options.
* Represents less than 1 percent of the total number of shares of Common
Stock and Equivalents outstanding.
RESTATED SHAREHOLDERS AGREEMENT
Ashland and Carboex (together, the "Principal Shareholders") and Ashland
Coal are parties to a Restated Shareholders Agreement, as amended ("Shareholders
Agreement") imposing certain restrictions on the disposition of Ashland Coal
capital stock held by them. The Shareholders Agreement also binds transferees of
the Principal Shareholders and applies to all shares of capital stock of Ashland
Coal, including any shares of Common Stock into which the Preferred Stock may be
converted. The Shareholders Agreement also restricts Ashland Coal's business to
coal mining, processing and marketing and related business activities.
Under the Shareholders Agreement, the Principal Shareholders may dispose of
their shares without consent of the other Principal Shareholder in an
underwritten public offering; with certain limits, in resales exempt from
registration under the Securities Act of 1933 (the "Act") under Rule 144
thereof; or to buyers who with their affiliates would own fewer than 500,000
common shares after the disposition.
REGISTRATION RIGHTS AGREEMENT
Ashland Coal and the Principal Shareholders are parties to a Registration
Rights Agreement, effective on July 1, 1994, pursuant to which Ashland Coal
granted to each of the Principal Shareholders "demand" and "piggyback-on-demand"
registration rights requiring Ashland Coal to register common stock held by the
8
<PAGE> 12
Principal Shareholders under the Act for sale to the public, as well as certain
"incidental" registration rights entitling the Principal Shareholders to
register common stock (subject to limitations on the number registered) in
offerings by Ashland Coal or other holders of registration rights.
9
<PAGE> 13
PERSONNEL AND COMPENSATION COMMITTEE
AND
KEY EMPLOYEE STOCK ADMINISTRATION COMMITTEE
REPORT ON
EXECUTIVE COMPENSATION FOR 1995
GENERAL
The Personnel and Compensation Committee ("P&C Committee") is composed
entirely of outside directors and has the responsibility, among others, for
approving Ashland Coal's executive compensation program, except for the grant of
stock options. The Key Employee Stock Administration Committee ("KESA
Committee"), which is also composed entirely of outside directors, was
responsible for approving grants of stock options under Ashland Coal's 1988
Stock Incentive Plan for Key Employees, and is responsible for approving grants
under the 1995 Stock Incentive Plan approved by the Stockholders at Ashland
Coal's 1995 Annual Meeting. The members of these committees are free from
interlocking or other relationships that could create a conflict of interest.
The compensation of Ashland Coal's executives is reviewed and approved
annually. In 1995, Ashland Coal again retained an executive compensation
consultant to advise the P&C Committee on the executive compensation program and
the KESA Committee on stock awards to key executives.
COMPENSATION PRINCIPLES
The fundamental objectives of Ashland Coal's compensation program are to
attract, retain and motivate key executives to enhance long-term profitability
and stockholder value. The compensation program:
- provides for a base level of compensation that is competitive with other
similarly sized publicly-traded mining companies, particularly those in
the coal mining industry, and compensates key executives based on their
level of responsibility;
- links executives' compensation to the operating and financial performance
of Ashland Coal by making significant elements of their compensation
sensitive to the performance of the company; and
- rewards the executives for short and long-term enhancement of shareholder
value.
Presently the executive compensation program consists of four principal
components:
- annual salary
- annual incentive compensation
- medium-term incentive compensation
- stock options
ANNUAL SALARY
Annual salaries for executive officers other than the President and Chief
Executive Officer ("CEO") are determined by the P & C Committee's independent
consideration of the executive's performance of his duties (as reported by the
CEO), responsibilities and experience; the historical compensation levels of
Ashland Coal; and a consultant's report of the median range of the salaries for
similarly situated executives as determined from surveys of salaries for
executives in the mining and coal industries and other industrial companies,
including anticipated estimated salary increases given or to be given in such
industries in the current year (such factors being collectively referred to as
"Salary Factors"). Annual salaries are not based on specific measures of
corporate performance, but, notwithstanding the Salary Factors, annual salaries
could be frozen, reduced, or increased by a smaller increment than otherwise
would be the case, in the P & C Committee's sole discretion, as a result of poor
corporate performance. Individual performance of an executive is not measured by
specific quantitative criteria, but is qualitatively assessed. The CEO's
compensation, including his annual salary, is discussed later in this report.
10
<PAGE> 14
The determination of annual salaries begins with the CEO's evaluation of
each executive officer's performance of his duties for the preceding year and a
comparison of his salary with salaries of similarly situated executives as
reported in compensation surveys conducted by entities not associated with
Ashland Coal and a compensation report by its compensation consultant. The
compensation consultant's report for use in setting 1996 salaries showed that
overall Ashland Coal executive salaries continue to be slightly lower than the
survey average, but within the range of competitive compensation. The companies
included in these compensation surveys are selected by such unrelated entities,
and the total number of companies surveyed is larger than the peer group of
issuers selected by Ashland Coal for comparison in the Cumulative Total Return
graph included later in this Proxy Statement. The CEO then makes recommendations
in February to the P&C Committee which may approve his recommendations or set
salaries at a level different than the CEO's recommendations.
The P&C Committee reviews the CEO's recommendations with the CEO including
the CEO's justification and support for them. The P&C Committee does not give a
specified weight to the individual Salary Factors. The individual performance of
any executive is measured by the extent to which the individual discharges his
or her duties. With respect to 1995 salary recommendations, the P&C Committee
did not follow all of Mr. Payne's recommendations. The salaries of the Ashland
Coal executives as determined by the P&C Committee are generally tied to the
median level of salaries indicated by the surveys as reported by the
compensation consultant to the Committee.
With respect to salaries for 1996, Mr. Payne recommended to the P&C
Committee that salaries for almost all of the executive officers, including
those individuals listed in the Summary Compensation Table ("Summary Table") set
forth later in this Proxy Statement, be frozen at the 1995 level, with which
recommendation the P&C Committee concurred.
ANNUAL INCENTIVE COMPENSATION
This component of the executive compensation program provides short-term
incentives under the Incentive Compensation Program for Key Employees
("Incentive Compensation Program"). The executives named in the Summary Table,
together with twenty-four other key employees of Ashland Coal designated by the
P&C Committee, are provided an opportunity to earn incentive cash compensation
based on individual and company performance. In determining the annual incentive
compensation award to any individual, a minimum company performance level must
be met, and assuming it is met, an individual's level of responsibilities,
company performance and individual performance are considered in determining the
amount of the award. There are presently six levels in the Incentive
Compensation Program. The P&C Committee determines at the beginning of each year
the level within the Incentive Compensation Program at which each participant is
placed based on the participant's potential to affect profitability. All other
performance factors being equal, the maximum achievable incentive award
increases based on increasing levels of potential to affect profitability. In
addition, in respect of the performance factors, company performance is given
twice the weight of individual performance. In the cases of Messrs. Payne and
Woodring (as well as two other persons not named in the Summary Table), the
environmental and health and safety performances of the operating subsidiaries
also are taken into account in making incentive compensation awards.
Each February the P&C Committee sets a minimum company performance standard
(hurdle) that must be met before any incentive compensation may be awarded. For
1995, company performance was measured against a profit before tax hurdle and
performance exceeded the hurdle by about 26 percent, and awards were paid in
March of 1996. The determination of individual performance for purposes of
incentive compensation awards is based upon the CEO's evaluation of the extent
to which an individual successfully discharges his or her duties. There are no
specific quantitative criteria by which individual performance is measured for
purposes of incentive compensation, but such performance is qualitatively
assessed. The P&C Committee may reject the CEO's recommendations on individual
performances if it does not concur, and the P&C Committee's decision is final.
A participant's payout at his participation level is a function of the
weighted combined company and individual performance score (expressed as a
percentage) and the participant's salary. The Incentive Compensation Program
provides that total payments are not to exceed 6 percent of net income of
Ashland
11
<PAGE> 15
Coal, excluding nonoperating items. The P&C Committee may adjust, at its
discretion, the minimum company performance standard and payments under this
Program. No such adjustments have been made during the last three years.
With respect to total annual cash compensation paid to Messrs. Payne,
Woodring, Besten, Solochek, and Layman for 1995, approximately 35 percent, 27
percent, 28 percent, 25 percent and 21 percent, respectively, was
performance-sensitive under the Incentive Compensation Program. For the
three-year period covered by the Summary Table, the portion of total annual cash
compensation which was performance sensitive under the Incentive Compensation
Program was 28 percent, 23 percent, 25 percent, 23 percent and 19 percent,
respectively, for the named executives.
PERFORMANCE UNIT PLAN
This component of the executive compensation program seeks to reward
executives for successful medium-term strategic planning and operating
performance by Ashland Coal. Only company performance is taken into account in
determining payments under Ashland Coal's Performance Unit Plan ("Performance
Plan"). Under the Performance Plan, executives designated by the P&C Committee
(currently 16 persons in addition to the named individuals) are awarded
performance units contingent upon the level of Ashland Coal's future
performance.
The number of performance units awarded to a participant is based on that
individual's level of responsibility. Performance units awarded are based on the
participant's base salary on the date of the award. The original amount of any
award may not exceed 400 percent of the employee's then base salary.
Historically, performance units have been awarded every two years and each award
covers a four-year performance cycle.
Performance measures and the time period over which performance is to be
measured are determined by the P&C Committee. Performance measures may include,
but shall not be limited to, return on net assets employed, cumulative earnings
per share, and return on equity ("ROE"). The 1993-1996 cycle uses ROE as the
performance measure and the 1995-1998 cycle uses profit before tax as the
performance measure. Below a "hurdle", there is no payment, and at or above a
"target", 100 percent of the award is earned. Payouts are earned for company
performance between the hurdle and target, depending on the level of
performance.
The amount paid out upon meeting the performance measures cannot exceed the
original amount of such award, and the total amount of payments under the
Performance Plan for each award period shall not exceed 2 percent of
stockholders' equity of Ashland Coal as shown in its Annual Report to
Stockholders at the end of the fiscal year next preceding the commencement of
such award period. Payments with respect to performance units may be made in one
or more installments and may be made wholly in cash, wholly in shares of Ashland
Coal Common Stock or partly in cash and partly in such shares, at the discretion
of the P&C Committee and as permitted by applicable securities laws. Although
the Performance Plan permits payment in shares of Ashland Coal Common Stock, no
Common Stock has been authorized by Ashland Coal's Board of Directors for
issuance under the Performance Plan. Under the Performance Plan, the P&C
Committee can adjust, at its discretion, the performance measures set and
payments made for any cycle. There have been no such adjustments made during the
last three years.
Although the Performance Plan permits awards of up to 400 percent of a
participant's salary, the maximum award to any individual has not exceeded 160
percent. In 1995, payments were made with respect to the 1991-1994 Performance
Plan cycle because the ROE hurdle was achieved. Payments under the plan cycle
for 1993-1996 approved in 1993, if earned, will be made in 1997, and payments
under the 1995-1998 plan cycle approved in 1995 will be made, if earned, in
1999.
When payments under the Performance Plan for the 1991-1994 cycle are
prorated among the years covered by that cycle, approximately 31 percent, 26
percent, 27 percent, 25 percent and 21 percent of the total cash compensation
paid to Messrs. Payne, Woodring, Besten, Solochek and Layman, respectively, for
the years shown in the Summary Table was sensitive to company performance.
12
<PAGE> 16
STOCK INCENTIVE PLAN
Stock options tie the interests of key employees of Ashland Coal to the
interests of its stockholders by providing value to an employee if the stock
price appreciates. This element of the compensation program provides longer-term
incentives. All salaried employees of Ashland Coal and its subsidiaries
(including the executives named in the Summary Table) are eligible to
participate in Ashland Coal's 1995 Stock Incentive Plan (the "1995 Plan"). The
KESA Committee, in its discretion, determines the salaried employees who are
granted awards under the 1995 Plan.
At its February 1995 meeting, the KESA Committee awarded under Ashland
Coal's 1988 Stock Incentive Plan for Key Employees (the "1988 Plan") options to
27 people in addition to those persons named in the Summary Table. The options
so granted were not based on past company performance. With the award of those
options, shares available for grant of awards under the 1988 Plan were
exhausted. In December 1994, the KESA Committee and the Board approved the 1995
Plan and recommend its approval by Ashland Coal's Stockholders, and at the 1995
Annual Meeting of Stockholders, the Stockholders approved the 1995 Plan.
The KESA Committee administers awards under the 1995 Plan. Under the 1995
Plan, awards may be granted only to individuals who are employees of Ashland
Coal or its subsidiaries. A director of Ashland Coal who is also an employee of
Ashland Coal or its subsidiaries may be granted awards under the 1995 Plan.
Directors who are not also employees may not receive awards under the 1995 Plan.
The KESA Committee has the exclusive authority to select the persons to be
granted awards under the 1995 Plan, to determine the type, size and terms of the
awards, to determine the time when awards will be granted, and to prescribe the
form of any agreement embodying awards. The 1995 Plan limits the number of
options that may be granted in any calendar year to any individual employee to
options to purchase no more than 100,000 shares of Common Stock. The KESA
Committee shall be authorized to interpret the 1995 Plan and to establish, amend
and rescind any rules and regulations relating to it.
Awards under the 1995 Plan may be made in the form of incentive or
nonqualified stock options, stock appreciation rights, restricted stock, merit
grants of shares, performance shares, or "phantom" stock, all as provided for in
the 1995 Plan. The ultimate value of an award depends on the value of the
underlying stock of Ashland Coal, thus aligning the interests of the
stockholders and the executives. Although the size of an award to an individual
is entirely at the discretion of the KESA Committee, the award is generally
based on the participation level to which a person is assigned. This level is
determined by the person's potential to affect profitability, as well as options
previously granted to that person. These factors were considered in making
option awards in 1995 under the 1988 Plan and will be considered in making
awards under the 1995 Plan. The KESA Committee also reserves the right to make
awards that deviate from the level-based awards depending on an executive's
individual performance.
CEO COMPENSATION
As with the other executives, the Salary Factors are the only factors
routinely considered by the P&C Committee in setting the annual salary of the
CEO, but notwithstanding the Salary Factors, the CEO's annual salary could be
frozen, reduced, or increased by a smaller increment than otherwise would be the
case, in the Committee's sole discretion, as a result of poor corporate
performance. The CEO's individual performance in discharging his duties as CEO
is assessed by the P&C Committee in determining his annual salary and incentive
compensation awards. As is the case with the other executives, no specific
objective or other criteria are used by the P&C Committee in assessing the
individual performance of the CEO. In determining the CEO's incentive
compensation, company performance is given twice the weight of individual
performance, as for any other executive, but the CEO's incentive compensation is
further subject to adjustment upward or downward in the Committee's sole
discretion (and without specific weighting factors) depending upon the
environmental and safety performance of the operating subsidiaries. Awards of
performance units under the Performance Plan are higher for the CEO than for
other executives because the CEO bears the highest degree of responsibility
among Ashland Coal's executives for both strategic planning and overall
operating performance. The number of options awarded under the Stock Incentive
Plan to the CEO is higher than for any other executive because of the potential
effect of his performance upon profitability and the award is also affected by
the total number of options outstanding or previously granted to the CEO.
13
<PAGE> 17
This Report is submitted by the Personnel and Compensation Committee with
respect to all matters set forth in the Report, except for those matters related
to stock options, and by the Key Employee Stock Administration Committee only
with respect to stock options.
<TABLE>
<CAPTION>
PERSONNEL AND KEY EMPLOYEE STOCK
COMPENSATION COMMITTEE ADMINISTRATION COMMITTEE
---------------------- ------------------------
<S> <C>
Thomas L. Feazell (Chairman) Robert A. Charpie (Chairman)
Robert A. Charpie Robert L. Hintz
Thomas Marshall Thomas Marshall
Robert E. Yancey, Jr.
</TABLE>
14
<PAGE> 18
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------- -------------------- -------
RESTRICTED
OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS1 COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION3
POSITION YEAR ($) ($) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------
William C. Payne 1995 309,423 163,397 -0- -0- 15,000 -0- 6,300
Chairman 1994 294,423 110,000 -0- -0- 15,000 90,176 2 12,366
President & CEO 1993 279,481 75,000 -0- -0- 15,000 -0- 11,738
Kenneth G. Woodring 1995 237,019 86,763 -0- -0- 7,500 -0- 6,290
Senior Vice President 1994 224,423 64,128 -0- -0- 7,500 56,783 2 9,426
1993 209,654 52,927 -0- -0- 6,500 -0- 8,805
C. Henry Besten, Jr. 1995 174,615 69,180 -0- -0- 5,000 -0- 6,333
Senior Vice President 1994 164,500 54,177 -0- -0- 5,000 43,961 2 6,909
1993 151,758 38,309 -0- -0- 5,000 -0- 6,374
Marc R. Solochek 1995 174,615 58,680 -0- -0- 5,000 -0- 5,831
Senior Vice President 1994 164,500 49,227 -0- -0- 5,000 34,661 2 4,606
& CFO 1993 151,758 34,919 -0- -0- 4,000 -0- 4,249
Roy F. Layman 1995 157,211 42,914 -0- -0- 4,000 -0- 6,300
Admin. Vice President 1994 149,615 34,807 -0- -0- 4,000 30,998 2 6,284
& Secretary 1993 139,654 27,495 -0- -0- 4,000 -0- 5,865
</TABLE>
1 These amounts represent the amount of money earned under the Ashland Coal,
Inc. Incentive Compensation Program for Key Employees with respect to the
subject year and paid in the immediately succeeding year.
2 This amount represents the amount paid in 1995 for the four years of the
1991-1994 plan cycle under the Ashland Coal, Inc. Performance Unit Plan.
3 These amounts represent contributions by Ashland Coal to the named executive's
account under the Ashland Coal, Inc. Employee Thrift Plan. For information
concerning supplemental retirement benefits payable to Mr. Payne following
retirement, see EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE
IN CONTROL ARRANGEMENTS.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK
PRICE APPRECIATION
FOR
INDIVIDUAL GRANTS OPTION TERM
- - ----------------------------------------------------------------------------------- --------------------
% OF
TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)1 YEAR ($/SH) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------
William C. Payne 15,000 15.7 26.125 3/21/2005 248,842 632,007
Kenneth G. Woodring 7,500 7.8 26.125 3/21/2005 124,421 316,003
C. Henry Besten, Jr. 5,000 5.2 26.125 3/21/2005 82,947 210,669
Marc R. Solochek 5,000 5.2 26.125 3/21/2005 82,947 210,669
Roy F. Layman 4,000 4.2 26.125 3/21/2005 66,358 168,535
</TABLE>
1 The options are not exercisable at all during the first year following the
date of the grant, are exercisable with respect to 50 percent of the
underlying shares after the first anniversary date of the grant and until the
second anniversary, and are exercisable between the second and third
anniversaries of the grant with respect to an additional 25 percent of the
underlying shares. After the third anniversary of the date of the grant, the
options are exercisable with respect to 100 percent of the underlying shares.
15
<PAGE> 19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
-----------------------------------------------
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END(#) AT FY-END($)
ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------
William C. Payne 7,000 126,875 72,750 26,250 121,000 -0-
Kenneth G. Woodring 2,665 43,972 40,960 12,875 115,184 -0-
C. Henry Besten, Jr. -0- -0- 27,750 8,750 30,000 -0-
Marc R. Solochek -0- -0- 23,500 8,500 30,000 -0-
Roy F. Layman -0- -0- 30,500 7,000 106,875 -0-
</TABLE>
LONG TERM INCENTIVE PLANS
AWARDS IN LAST FISCAL YEAR
--------------------------
<TABLE>
<CAPTION>
NUMBER OF ESTIMATED FUTURE
SHARES, PERFORMANCE PAYOUTS UNDER NON-STOCK
UNITS OR OR OTHER PRICE-BASED PLANS
OTHER PERIOD UNTIL ------------------------------------
RIGHTS MATURATION THRESHOLD2 TARGET2 MAXIMUM2
NAME (#) OR PAYOUT1 ($) ($) ($)
<S> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------
William C. Payne 472,000 4 Years -- -- 472,000
Kenneth G. Woodring 292,500 4 Years -- -- 292,500
C. Henry Besten, Jr. 214,500 4 Years -- -- 214,500
Marc R. Solochek 214,500 4 Years -- -- 214,500
Roy F. Layman 150,000 4 Years -- -- 150,000
</TABLE>
1 Each award covers a four year performance cycle. Payment is made at the end of
the four year performance cycle if performance objectives are made over the
four year period. The performance objective for the 1995-1998 performance
cycle is a minimum four year average profit before tax.
2 Payouts of award begin upon exceeding a threshold performance level. At or
below the threshold, there is no payout. Above the threshold, the amount of
payout can range from an amount just in excess of 0 to the maximum payout of
100% of the award, in all cases depending on the performance level achieved.
16
<PAGE> 20
ASHLAND COAL PERFORMANCE GRAPH
------------------------------
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ASHLAND COAL PEER COMPANIES S&P 500
- - ------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 154.16 113.72 130.47
12/31/92 112.75 94.46 140.41
12/31/93 136.16 95.55 154.56
12/31/94 130.08 105.01 156.60
12/31/95 99.09 109.12 215.45
</TABLE>
Peer Companies include: Addington Resources, Inc., Cyprus Amax Minerals
Co., Nerco, Inc. (through 6/2/93), Pittson Minerals Group, Westmoreland Coal
Co., and Zeigler Coal Co. (beginning 9/30/94).
PENSION PLAN
The Ashland Coal, Inc. Pension Plan ("Pension Plan") covers certain
full-time salaried and hourly employees, including the executives named in the
Summary Table set forth above. To the extent benefits under the qualified
Pension Plan would exceed the limits established by Section 415 of the Internal
Revenue Code of 1986, as amended ("Code"), they would be payable under Ashland
Coal's Nonqualified Excess Benefit Pension Plan. Similarly, to the extent
benefits payable under the qualified Pension Plan are limited by Section
401(a)(17) of the Code, such benefits will be provided to certain employees
under Ashland Coal's Benefits Restoration Plan. The following table shows the
estimated annual benefits payable to eligible employees under the qualified
Pension Plan, the Nonqualified Excess Benefit Plan, and the Benefits Restoration
Plan using the benefit formula for salaried employees and assuming continued
employment until the normal date of retirement at age 65.
17
<PAGE> 21
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- - -----------------------------------------------------------------------------
YEARS OF SERVICE
-----------------------------------------------------------
REMUNERATION 15 20 25 30 35
- - -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $21,826 $ 29,101 $ 36,377 $ 43,652 $ 50,927
$125,000 $27,451 $ 36,601 $ 45,752 $ 54,902 $ 64,052
$150,000 $33,076 $ 44,101 $ 55,127 $ 66,152 $ 77,177
$175,000 $38,701 $ 51,601 $ 64,502 $ 77,402 $ 90,302
$200,000 $44,326 $ 59,101 $ 73,877 $ 88,652 $103,427
$225,000 $49,951 $ 66,601 $ 83,252 $ 99,902 $116,552
$250,000 $55,576 $ 74,101 $ 92,627 $111,152 $129,677
$275,000 $61,201 $ 81,601 $102,002 $122,402 $142,802
$300,000 $66,826 $ 89,101 $111,377 $133,652 $155,927
$325,000 $72,451 $ 96,601 $120,752 $144,902 $169,052
$350,000 $78,076 $104,101 $130,127 $156,152 $182,177
$375,000 $83,701 $111,601 $139,502 $167,402 $195,302
</TABLE>
Remuneration is computed only on annual salary shown in the Summary Table
and excludes all other amounts shown in that Table. The benefits set forth in
the table above assumes the remuneration set forth is the remuneration during
the highest consecutive 36-month period of the final 120-month period prior to
retirement. For the purposes of computing the Annual Retirement Benefit payable
under the Pension Plan, no more than the annual compensation limit established
by the Code may be taken into account. This limit is currently $150,000.
As of December 31, 1995, Messrs. Payne, Woodring, Besten, Solochek and
Layman had credited service in the Pension Plan of 18 years, 17 years and 7
months, 22 years and 9 months, 19 years and 4 months, and 24 years and 5 months,
respectively.
The amounts in the foregoing table are shown on a straight life basis and
are not subject to any reductions for Social Security or other benefits received
by the participant. The amounts include the pre-January 1987 portion of the
benefit vested and annuitized upon termination and re-establishment of the
Pension Plan in January 1987. Under the Pension Plan, officers are entitled to
benefits on the same basis as other salaried employees. For a complete
discussion of the supplemental annual benefits payable upon retirement to
William C. Payne under his supplemental retirement benefits agreement, see
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS below.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACT
In October 1990, Ashland Coal entered into a supplemental retirement
benefits agreement with Mr. Payne ("Agreement"). Under the Agreement, if Mr.
Payne's employment is terminated by Ashland Coal without cause, he resigns for
any reason following a change in control, or he retires with or without the
consent of the Board of Directors of Ashland Coal, then he would receive on an
annual basis a supplemental benefit equal to 50 percent of his average base
compensation plus average incentive compensation paid or accrued under Ashland
Coal's Incentive Compensation Plan during the highest 36 months of the final
60-month period of his employment. Benefits payable under the Agreement are
reduced by any benefits payable to Mr. Payne under Ashland Coal's Pension Plan,
any other qualified defined benefit pension plan maintained by Ashland Coal, the
Nonqualified Excess Benefit Pension Plan, and the Benefit Restoration Plan. As a
consequence of this Agreement, Mr. Payne's benefits under the Pension Plan, the
Nonqualified Excess Benefit Pension Plan, and the Benefit Restoration Plan will
be supplemented by approximately $139,200 per year, assuming (1) he retires at
age 65, (2) that half of the sum of (A) his average base compensation paid
during the highest 36
18
<PAGE> 22
months of the final 60-month period of his employment and (B) his average
incentive compensation paid during the highest 36 months of the final 60 month
period of his employment is $231,200, and (3) that his regular benefit under the
Pension Plan, the Nonqualified Excess Benefit Pension Plan and the Benefit
Restoration Plan, upon retirement at age 65 would be $92,000. Benefits under the
Agreement are not prorated on years of service, and are not payable if Mr.
Payne's employment is terminated by Ashland Coal for cause.
SALARY CONTINUATION PLAN
Ashland Coal has adopted a Salary Continuation Plan pursuant to which each
regular, full-time salaried employee (including the executives named in the
Summary Table, but excluding hourly employees, employees covered by collective
bargaining agreements, employees of entities in which Ashland Coal has a 50
percent or less ownership interest and certain international employees of
Ashland Coal and its subsidiaries) is entitled to receive a certain lump sum
payment and other benefits in the event of a "change in control" of Ashland Coal
(as defined in this plan) and termination of a participant's employment without
cause within two years following such a change in control. Benefits under the
Salary Continuation Plan are determined according to the following schedule:
<TABLE>
<CAPTION>
LENGTH OF SERVICE PAYMENT
- - ------------------- -------------------------
<S> <C>
Up to 5 full years 3 months' compensation
6-10 full years 6 months' compensation
11-15 full years 1 year's compensation
16-20 full years 1 1/2 years' compensation
20+ years 2 years' compensation
</TABLE>
As of December 31, 1995, Messrs. Payne, Woodring, Besten, Solochek, and
Layman had service under the Salary Continuation Plan of 19, 18, 23, 20 and 25
years, respectively.
COMPENSATION OF DIRECTORS
Nonemployee directors of Ashland Coal during 1995 received an annual
retainer of $18,000 and a $1,000 fee for each Board and Committee meeting
attended and expenses incurred in attending all such meetings. Effective January
1, 1996, these amounts were increased to $19,000 and $1,100, respectively. A
director who serves as a chairman of a committee is entitled to receive an
additional $2,500 fee per year for each chairmanship held by such director. In
addition, directors receive accidental death and dismemberment insurance
coverage of $100,000. Messrs. Brothers, Chellgren, Feazell, Quin and Yancey have
waived the payment of their fees and retainers, which waiver may be withdrawn at
any time. Under the Deferred Compensation Plan for Directors' Fees, a director
who is separately compensated for his services on the Board or a committee of
the Board may defer all or part of his director's retainer, meeting fees and any
per diem compensation for special assignments. A director may elect to earn
interest on deferred amounts based on either the prime rate (as quoted by
Citibank, N.A. as its prime commercial lending rate on the last day of each
calendar quarter) or based on a hypothetical investment in Ashland Coal Common
Stock. Deferred amounts, plus earnings, are payable in cash to the director, his
estate, or beneficiary over such period of time as might be designated by the
director, in no event to extend beyond the twentieth anniversary of the
termination of his services as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of either the P&C Committee or the KESA Committee are
officers or employees of Ashland Coal or any of its subsidiaries or former
officers or employees of Ashland Coal or any of its subsidiaries. Messrs. Robert
A. Charpie, Robert E. Yancey and Thomas L. Feazell served on the P&C Committee
for all of 1995. Mr. Marshall served on the P&C Committee following his
appointment to that Committee in April 1995. Messrs. Robert L. Hintz and Robert
A. Charpie served on the KESA Committee for all of 1995. Mr. Marshall served on
the KESA Committee following his appointment to that Committee in April, 1995.
Mr. Michael Ziesler served on the P&C and KESA Committees until his resignation
in February
19
<PAGE> 23
1995. Mr. Ziesler is an employee of Saarbergwerke AG, the holder of Ashland
Coal's Class B Preferred Stock until February 1995. Messrs. Feazell and Yancey
are employees of Ashland (see CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS for
further information about the relationship of Ashland Coal with Ashland and its
former relationship with Saarbergwerke).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ashland Coal receives certain services from and provides certain services
to Ashland for which fees are charged between the companies. During 1995,
Ashland Coal paid Ashland $428,000, and Ashland paid Ashland Coal $5,000 for
these services.
Ashland Coal also has purchased fuel, oil and other products from Ashland
at current market prices using standard purchase orders. Such purchases amounted
to $5,996,000 in 1995.
By Coal Sales Agency Agreement dated December 12, 1991, as amended on
January 26, 1993 and as of January 1, 1995 ("Agency Agreement"), the Company
appointed Saarbergwerke and Carboex (collectively, "Sales Agent"), as its
exclusive agent for the purpose of selling high volatile coking coal and PCI
product from reserves controlled by Ashland Coal's subsidiaries for use in the
steel making process to customers within an area comprised of Europe, several
neighboring Mediterranean countries and the former Soviet Union. Ashland Coal
agreed to make available for sale pursuant to the Agency Agreement a minimum of
250,000 tons of high volatile coking coal per year. Pursuant to the Agency
Agreement, the Sales Agent has certain options to request PCI product in
substitution for high volatile coking coal. The Agency Agreement is for a term
through December 31, 2000, if certain sales volumes are achieved during the
two-year period of calendar 1996 and 1997. During 1995, Ashland Coal paid
Carboex $125,000 for its services as agent under the terms of the Agency
Agreement.
Management believes charges between Ashland Coal and Ashland Inc. for
services rendered or provided were reasonable, and that the other transactions
described above were concluded on terms equivalent to those prevailing among
unaffiliated parties.
Ernst & Young LLP, whose appointment as independent auditor for Ashland
Coal is sought to be ratified under Item III, is also the independent auditor
for Ashland Inc., and Ernst & Young S.A., a Spanish affiliate of Ernst & Young
LLP, is the independent auditor for Carboex.
ITEM II. AMENDMENT AND RESTATEMENT OF
RESTATED CERTIFICATE OF INCORPORATION
(ITEM 2 ON THE FORM OF PROXY CARD)
The Board of Directors of Ashland Coal has approved the form of Restated
Certificate of Incorporation in the form of Exhibit A to this Proxy Statement,
and has directed that the proposed Restated Certificate of Incorporation be
submitted to the Stockholders for approval at the 1996 Annual Meeting.
SECOND RESTATED CERTIFICATE OF INCORPORATION
Since filing its Restated Certificate of Incorporation (the "Restated
Certificate") with the Secretary of State of Delaware in June 1982, Ashland Coal
has amended the Restated Certificate four times. Ashland Coal proposes to
further amend the Restated Certificate and to restate the Restated Certificate
to reflect all these amendments. The principal proposed amendments are
summarized below. This summary is qualified in its entirety by reference to the
full text of the Restated Certificate of Incorporation (the "Second
Restatement") attached as Exhibit A to this Proxy Statement.
Serial Preferred Stock
The authorized capital stock of Ashland Coal will be changed to provide for
the authorization of 20,000,000 shares of serial preferred stock, par value $.01
which may be issued from time to time in such series as may be determined by the
Board of Directors of Ashland Coal. The Board of Directors is given the
20
<PAGE> 24
authority to fix the designation, number, voting powers, preferences, and
relative, participating, optional and other special rights of any series of
serial preferred stock, and the qualifications, limitations and restrictions
thereof. Without limiting the generality of the foregoing, the Board of
Directors shall have the power to determine the number of shares in each series;
the rights of each series with respect to dividends (including the extent of any
preference or relation, if any, to any other class or classes of stock),
provided however, dividends on any such shares of serial preferred stock shall
not be preferred to dividends payable to holders of shares of Class B and Class
C Preferred Stock as currently provided for in the Restated Certificate; the
conversion rights, if any, of any series; whether any series shall be subject to
redemption and the times and terms and conditions thereof; the liquidation and
dissolution rights of any series, provided however, that any such rights shall
not be preferred to such rights of holders of Class B and Class C Preferred
Stock; the terms of any sinking fund, or redemption, repurchase or purchase
account with respect to any series; and the voting rights and powers of any
series, provided however, holders of shares of serial preferred stock (1) will
not be entitled to more than the lesser of (x) one vote per $100 of liquidation
value or (y) one vote per share, when voting as a class with the holders of
shares of other capital stock, and (2) will not be entitled to vote on any
matter separately as a class, except to the extent required by law or as
specified with respect to each series with respect to (x) any amendment or
alteration of the provisions of the Second Restatement that would adversely
affect the powers, preferences, or special rights of the applicable series of
serial preferred stock or (y) the failure of Ashland Coal to pay dividends on
any series of serial preferred stock in full for any six quarterly dividend
payment periods, whether or not consecutive, in which event the number of
directors may be increased by two and the holders of outstanding shares of
serial preferred stock then similarly entitled shall be entitled to elect the
two additional directors until full accumulated dividends on all such shares of
serial preferred stock shall have been paid.
Management of Ashland Coal and the Board by a vote of nine for and one
against, believe that amending the Restated Certificate to permit the Board to
authorize the issuance of serial preferred stock will provide flexibility for
possible future financings, as well as other corporate purposes such as to make
acquisitions. If the Second Restatement is approved, the Board will be able to
specify the precise characteristics of the serial preferred stock to be issued,
depending on current market conditions and the nature of the specific
transactions. Ashland Coal is not currently contemplating the issuance of serial
preferred stock for financing or acquisition purposes.
Although voting rights of the proposed serial preferred stock are limited
as described above, and Ashland owns more than 50%, on a converted basis, of the
issued and outstanding stock of Ashland Coal thus making an unsolicited takeover
attempt of Ashland Coal by a third party unlikely, the issuance of serial
preferred stock could be used to discourage attempts to acquire control of
Ashland Coal and to increase the Board's ability to continue in office. Neither
the Board nor management is considering the use of serial preferred stock for
such purposes, and they are not aware of any present effort to accumulate
Ashland Coal's securities for the purpose of gaining control of Ashland Coal.
The Board and management of Ashland Coal represent that they will not issue,
without prior stockholder approval, serial preferred stock (i) for any defensive
or anti-takeover purpose, (ii) implement any stockholders' rights plan, or (iii)
with features intended to make any attempted acquisition of Ashland Coal more
difficult or costly. No serial preferred stock will be issued to any individual
or group for the purpose of creating a block of voting power to support
management on a controversial issue.
Management of Ashland Coal, and the Board by a vote of nine for and one
against, believe that the authorization of serial preferred stock is in the best
interests of stockholders and Ashland Coal since voting rights of the serial
preferred stock cannot be disproportionate and the availability of the serial
preferred stock could permit Ashland Coal to take advantage of lower cost
financing alternatives depending on market conditions.
Other Changes
Some provisions of the Restated Certificate which were adopted at the time
of Ashland Coal's initial public offering and the first issuance of common stock
on August 18, 1988 and which are no longer relevant have been deleted. The use
of "First Issuance date" as a phrase to define August 18, 1988, has been deleted
and the actual date has been inserted. Conforming changes because of deletions
or other changes have also been made.
21
<PAGE> 25
Although Ashland Coal continually evaluates acquisition prospects and is
currently doing so, there is no present intention to issue the serial preferred
stock in connection with an acquisition or otherwise. Other than the changes
discussed above with respect to changing Ashland Coal's Restated Certificate,
Ashland Coal is not aware of any proposed transaction the approval of which is
subject to stockholder vote.
The affirmative vote of at least 85% of the shares of the capital stock of
Ashland Coal voting as one class on this matter, so long as such affirmative
vote is a majority of the shares outstanding and entitled to vote, is necessary
to approve the Restated Certificate. Abstentions and broker non-votes will not
be counted as votes either for or against the adoption of the Restated
Certificate.
At the meeting of the Board at which the Second Restatement was considered,
all the members of the Board voting thereon, with the exception of the member of
the Board elected by the holder of the Class C Preferred Stock, Carboex, voted
to approve the form of the Second Restatement attached hereto as Exhibit A. The
director elected by Carboex objected on the grounds that he believes the
issuance of voting or convertible preferred stock could have the effect of
diluting the voting rights of Carboex and all the other stockholders. The
director elected by Carboex did not object to the other proposed changes to the
Restated Certificate of Incorporation. Carboex, which owns about 10% of the
issued and outstanding stock of the Corporation on a converted basis, has
indicated its intention to vote its shares against the proposal described in
this Item II.
IN ORDER TO PROVIDE THE FINANCING FLEXIBILITY DESCRIBED ABOVE AND TO HAVE
SERIAL PREFERRED STOCK AVAILABLE FOR POSSIBLE FUTURE ACQUISITIONS, AND FOR THE
OTHER REASONS STATED HEREIN, THE BOARD OF DIRECTORS, BY A VOTE OF NINE FOR AND
ONE AGAINST, RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL DESCRIBED IN
THIS ITEM II.
ITEM III. RATIFICATION OF AUDITORS
(PROPOSAL 3 ON FORM OF PROXY CARD)
The Audit Committee of the Board of Directors recommended and, subject to
stockholder ratification, the Board has appointed Ernst & Young LLP to audit the
accounts of Ashland Coal and its subsidiaries for the year ending December 31,
1996. Ernst & Young LLP has audited the accounts of Ashland Coal and its
subsidiaries for at least the last five years. Ernst & Young LLP is also the
independent auditor for Ashland and Ernst & Young S.A., a Spanish affiliate of
Ernst & Young LLP, is the independent auditor for Carboex. Submission of the
appointment to the stockholders for their ratification is not required. However,
the Board will reconsider the appointment if it is not ratified by the
stockholders. The holders of outstanding shares of Preferred Stock and Common
Stock will vote together as one class with respect to this Proposal 3.
The following resolution concerning the appointment of independent auditors
will be offered at the meeting:
"RESOLVED, that the appointment of Ernst & Young LLP by the Board of
Directors of the Corporation to audit the accounts of the Corporation and
its subsidiaries for the year ending December 31, 1996, is hereby
ratified."
Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have the opportunity to make a statement and to respond to appropriate
questions.
22
<PAGE> 26
MISCELLANEOUS
The expenses of solicitation of proxies for the Annual Meeting, including
the cost of preparing and mailing this Proxy Statement and the accompanying
material, will be paid by Ashland Coal. Such expenses may also include the
charges and expenses of banks, brokerage houses and other custodians, nominees
or fiduciaries for forwarding proxies and proxy material to beneficial owners of
shares. Solicitation may be made by mail, telephone, telegraph and personal
interview, and by regularly engaged officers and employees of Ashland Coal, who
will not be additionally compensated therefor. Ashland Coal has engaged Morrow &
Co., Inc. to assist it in the distribution of proxies in connection with the
1996 annual meeting. The anticipated cost for the services of Morrow & Co., Inc.
is $5,500, which will be paid by Ashland Coal.
The Board of Directors knows of no other matters to be voted upon at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of proxy to vote on
such matters in accordance with their judgment.
Any stockholder who executes a form of proxy may revoke it by giving
written notice to the Secretary of Ashland Coal, or by giving to the Secretary
of the meeting a duly executed form of proxy bearing a date later than the form
of proxy being revoked, at any time before such proxy is voted. Attendance at
the meeting shall not have the effect of revoking a proxy unless the stockholder
so attending shall, in writing, so notify the Secretary of the meeting prior to
the voting of the proxy.
A form of proxy which is properly signed, dated and not revoked will be
voted in accordance with the instructions contained therein. IF NO INSTRUCTIONS
ARE GIVEN, THE PERSONS NAMED IN THE FORM OF PROXY SOLICITED BY THE BOARD OF
DIRECTORS INTEND TO VOTE FOR THE NOMINEES NAMED THEREIN FOR ELECTION AS
DIRECTORS; FOR APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED
CERTIFICATE OF INCORPORATION; AND FOR THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 1996.
Any stockholder may strike out the names of the proxies designated by the
Board of Directors on the form of proxy card and may write in and substitute the
name of any other person as proxy and may deliver the revised form of proxy card
to such other person whom the stockholder may wish to designate as proxy for the
purpose of representing such stockholder at the meeting.
Stockholder Proposals: Proposals which are the proper subject for inclusion
in the Proxy Statement and for consideration at the 1997 Annual Meeting of
Stockholders must be received by Ashland Coal no later than November 21, 1996,
in order to be included in Ashland Coal's Proxy Statement and form of proxy
card.
Please fill in, sign and date the enclosed form of proxy and return it in
the accompanying addressed envelope which requires no further postage if mailed
in the United States. If you attend the Annual Meeting and wish to vote your
shares in person, you may do so if you notify the Secretary of the meeting in
writing prior to the voting of the proxy. Your cooperation in giving this matter
your prompt attention will be appreciated.
ROY F. LAYMAN
Administrative Vice President
and Secretary
Huntington, West Virginia
March 22, 1996
23
<PAGE> 27
RESTATED CERTIFICATE OF INCORPORATION
OF
ASHLAND COAL, INC.
PURSUANT TO SECTIONS 242 AND 245 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The name of the corporation is Ashland Coal, Inc. (the "Corporation"). The
Corporation was incorporated under that name by the filing of its original
Certificate of Incorporation with the Secretary of State of the State of
Delaware on June 6, 1975. This Restated Certificate of Incorporation, which
restates, integrates and further amends the Restated Certificate of
Incorporation of the Corporation as heretofore amended, was duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
FIRST: The name of the Corporation is Ashland Coal, Inc.
SECOND: The registered office of the Corporation in the State of Delaware
is located at 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: 1. AUTHORIZED CAPITAL STOCK--The aggregate number of shares of
capital stock that the Corporation is authorized to issue is 64,001,000 shares,
as follows:
(a) 44,000,000 shares of which shall be Common Stock (the "Common
Stock"), par value $.01 per share;
(b) 1,000 shares of which shall be Preferred Stock, par value $100 per
share, which shall be divided into three classes (collectively, the
"Preferred Stock"), the designation and number of shares of each class of
Preferred Stock of which is as follows:
<TABLE>
<CAPTION>
NUMBER
CLASS OF SHARES
----- ---------
<S> <C>
Class A Preferred Stock........................................... 500
Class B Preferred Stock........................................... 250
Class C Preferred Stock........................................... 250
</TABLE>
(c) 20,000,000 shares of which shall be serial preferred stock, par
value $.01 per share (the "Serial Preferred Stock"). The Board of Directors
is authorized, at any time or from time to time, to issue Serial Preferred
Stock and (i) to divide the shares of Serial Preferred Stock into one or
more series; (ii) to determine the designation for any such series by
number, letter, or title that shall distinguish such series from any other
series of Serial Preferred Stock; (iii) to determine the number of shares
in any such series (including a determination that such series shall
consist of a single share); and (iv) to determine with respect to the
shares of any series of Serial Preferred Stock:
(A) whether the holders thereof shall be entitled to cumulative,
noncumulative, or partially cumulative dividends and, with respect to
shares entitled to dividends, the dividend rate or rates, including
without limitation the methods and procedures for determining such rate
or rates, and any other terms and conditions relating to such dividends;
provided however, that dividends on any such shares shall not be
preferred to dividends payable pursuant to paragraph 2(b) of this
Article FOURTH to holders of shares of Class B and Class C Preferred
Stock;
(B) whether, and if so to what extent and upon what terms and
conditions, the holders thereof shall be entitled to rights upon the
voluntary or involuntary liquidation, dissolution or winding up of, or
upon any distribution of the assets of the Corporation; provided
however, that any such rights shall not be preferred to such rights of
holders of shares of Class B and Class C Preferred Stock;
Exhibit A-1
<PAGE> 28
(C) whether, and if so upon what terms and conditions, shares of
Serial Preferred Stock shall be convertible into, or exchangeable for,
other securities or property;
(D) whether, and if so upon what terms and conditions, shares of
Serial Preferred Stock shall be redeemable;
(E) whether shares of Serial Preferred Stock shall be subject to
any sinking fund provided for the purchase or redemption of such shares
and, if so, the terms of such fund;
(F) whether the holders thereof shall be entitled to voting rights
and, if so, the terms and conditions for the exercise thereof, provided
that the holders of shares of Serial Preferred Stock (1) will not be
entitled to more than the lesser of (x) one vote per $100 of liquidation
value or (y) one vote per share, when voting as a class with the holders
of shares of other capital stock, and (2) will not be entitled to vote
on any matter separately as a class, except to the extent required by
law or as specified with respect to each series with respect to (x) any
amendment or alteration of the provisions of this Certificate of
Incorporation that would adversely affect the powers, preferences, or
special rights of the applicable series of Serial Preferred Stock or (y)
the failure of the Corporation to pay dividends on any series of Serial
Preferred Stock in full for any six quarterly dividend payment periods,
whether or not consecutive, in which event the number of directors may
be increased by two and the holders of outstanding shares of Serial
Preferred Stock then similarly entitled shall be entitled to elect the
two additional directors until full accumulated dividends on all such
shares of Serial Preferred Stock shall have been paid; and
(G) whether the holders thereof shall be entitled to other powers,
preferences or rights and, if so, the qualifications, limitations, or
restrictions of such powers, preferences or rights.
2. PREFERRED STOCK
(a) CONVERSION
(i) Each holder of Class B Preferred Stock and each holder of Class
C Preferred Stock shall be entitled to convert each share of Class B
Preferred Stock and Class C Preferred Stock, as the case may be, held by
such holder into shares of Common Stock according to the following
schedule:
(A) During the period beginning on August 18, 1993 until August
18, 1998, each share of such Class B and Class C Preferred Stock
shall be convertible into 18,346 shares of Common Stock;
(B) During the period beginning on August 18, 1998 until August
18, 2003, each share of such Class B and Class C Preferred Stock
shall be convertible into 19,596 shares of Common Stock; and
(C) From and after August 18, 2003, each share of such Class B
and Class C Preferred Stock shall be convertible into 20,846 shares
of Common Stock.
(ii) Shares of such Preferred Stock shall be convertible at the
option of the holder thereof at any time upon surrender to any transfer
agent for the Common Stock or the Treasurer or Secretary of the
Corporation of the certificate or certificates evidencing the shares so
to be converted into fully paid and nonassessable shares of Common Stock
of the Corporation. Conversion shall be deemed to have been effected on
the date when such surrender is made by delivery of such certificate or
certificates to any transfer agent for the Common Stock or the Treasurer
or Secretary of the Corporation. The Corporation shall at all times
reserve and keep available, free from pre-emptive rights, for the
purpose of effecting the conversion of the Preferred Stock, such number
of its duly authorized shares of Common Stock as shall be sufficient to
effect the conversion of all outstanding shares of the Preferred Stock.
(iii) The number of shares of Common Stock and the number of shares
of other classes of the Corporation, if any, into which each share of
the Preferred Stock is convertible shall be subject to adjustment from
time to time as follows:
Exhibit A-2
<PAGE> 29
(A) In case the Corporation shall (1) set a record date for the
holders of Common Stock for the purpose of entitling them to receive
a dividend declared payable in shares of Common Stock, or in
securities convertible into Common Stock, (2) split or subdivide its
outstanding shares of Common Stock, (3) combine its outstanding
shares of Common Stock into a smaller number of shares, or (4) issue
by reclassification, or change in the outstanding shares, of the
Common Stock any shares of the Corporation, the holder of each share
of Preferred Stock shall thereafter be entitled to receive upon
payment of such dividend, or such split, subdivision, combination,
reclassification, change or issuance, as the case may be, the number
of shares of the Corporation which the holder would have owned or
have been entitled to receive after the happening of any of the
events described above had such share of the Preferred Stock been
converted immediately prior to the happening of such event, such
adjustment to become effective immediately after the opening of
business on the day following such record date or the day upon which
such dividend, split, subdivision, combination, reclassification,
change or issuance becomes effective.
(B) In case of any consolidation or merger of the Corporation
with or into another corporation, or in case of any sale or
conveyance to another corporation of all or substantially all the
assets of the Corporation, the holder of each share of Preferred
Stock then outstanding shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other
securities, cash and/or property receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of
Common Stock into which such share might have been converted
immediately prior to such consolidation, merger, sale or conveyance,
and shall have no other conversion rights under these provisions;
provided, however, that effective provision shall be made, in the
Articles or Certificate of Incorporation of the resulting or
surviving corporation or otherwise, so that the provisions set forth
herein for the protection of the conversion rights of the shares of
the Preferred Stock shall thereafter be applicable, as nearly as
reasonably may be, to any such other shares of stock and other
securities and cash and/or property, if any, deliverable upon
conversion of the shares of the Preferred Stock remaining outstanding
or other convertible preferred stock received by the holders in place
thereof; and provided, further, that any such resulting or surviving
corporation shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or
property as the holders of the shares of the Preferred Stock
remaining outstanding, or other convertible preferred stock received
by the holders in place thereof, shall be entitled to receive, if
any, pursuant to the provisions hereof, and to make provisions for
the protection of the conversion rights as above provided.
(C) In the case the Corporation shall issue to the holders of
its Common Stock rights or warrants to subscribe for or purchase
shares of its Common Stock at a price less than the Current Market
Price (as defined below in this subsection) of the Corporation's
Common Stock at the record date fixed for the determination of the
holders of Common Stock entitled to such rights or warrants, the
conversion rate shall be increased, effective at the opening of
business on the next full business day after such record date, to an
amount determined by multiplying such conversion rate by a fraction
the numerator of which is the number of shares of Common Stock of the
Corporation outstanding immediately prior to such record date plus
the number of additional shares of its Common Stock offered for
subscription or purchase and the denominator of which is said number
of shares outstanding immediately prior to such record date plus the
number of shares of Common Stock of the Corporation which the
aggregate subscription or purchase price of the total number of
shares so offered would purchase at the Current Market Price of the
Corporation's Common Stock at such record date. As used in this
subparagraph the term "Current Market Price" at such record date
shall mean the average of the daily last reported sale prices per
share of the Corporation's Common Stock on any exchange or market
where the Common Stock trades during the most recent twenty (20)
consecutive full business days before such record date, provided that
if there was no reported sale on any such day or days there shall be
substituted the average of the closing bid and asked quotations on
that exchange or market on that day.
Exhibit A-3
<PAGE> 30
(D) In the case the Corporation shall distribute to the holders
of its Common Stock any evidences of its indebtedness, any other
security not convertible into Common Stock other than Common Stock,
or any rights or warrants to subscribe for any security other than
its Common Stock, or any other assets (excluding dividends and
distributions in cash to the extent permitted by law), the conversion
rate shall be increased, effective at the opening of business on the
next full business day after the record date fixed for the
determination of the holders of Common Stock entitled to such
distribution, to an amount determined by multiplying such conversion
rate by a fraction the numerator of which is the Current Market Price
(as defined in subsection (C) above) of one (1) share of the
Corporation's Common Stock at such record date and the denominator of
which is such Current Market Price less the fair market value (as
determined by the Board of Directors, whose determination, in the
absence of fraud, shall be conclusive) of such evidences of
indebtedness, security, rights, warrants or other assets (excluding
dividends and distributed which is applicable to one (1) share of
Common Stock).
(E) The Corporation shall not be required to issue any fraction
of a share upon conversion of any share or shares of Preferred Stock.
If more than one share of Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares
of Common Stock issuable upon conversion thereof shall be computed on
the basis of the total number of shares of Preferred Stock so
surrendered. If any fractional interest in share of Common Stock
would be deliverable upon conversion, the Corporation shall make an
adjustment therefor in cash unless its Board of Directors shall have
determined to adjust fractional interests by issuance of scrip
certificates or in some other equitable manner. Adjustment in cash
shall be made on the basis of the current market value of one share
of Common Stock, which shall be taken to be the last reported sale
price of the Corporation's Common Stock on any exchange or market
where the Common Stock trades on the last business day before the
conversion date or, if there was no reported sale on that day, the
average of the closing bid and asked quotations on any exchange or
market where the Common Stock trades on that day.
(F) Whenever any adjustment is required in the shares into which
any share of the Preferred Stock is convertible, the Corporation
shall forthwith prepare a notice describing in reasonable detail the
adjustment and the method of calculation used and cause a copy of
such notice to be mailed to the holders of record of the shares of
the Preferred Stock.
(b) DIVIDENDS
(i) Each share of Preferred Stock shall be entitled to receive
dividends at such times and in such amounts as shall be equal to the
dividends payable on the number of shares of Common Stock into which
each such share of Preferred Stock is convertible as provided in Section
2(a)(i) of this Article FOURTH immediately prior to the applicable
record date for such Common Stock dividend.
(ii) In addition to being entitled to receive dividends as provided
in Section 2(b)(i) of this Article FOURTH, the Class B and Class C
Preferred Stock shall receive the following cumulative dividends in
preference to the Common Stock:
(A) from August 18, 1993 until August 18, 1998 - $2,800 per
share per annum, payable on or about August 18 of each of 1994, 1995,
1996, 1997 and 1998;
(B) from August 18, 1998 until August 18, 2003 - $1,400 per
share per annum, payable on or about August 18 of each of 1999, 2000,
2001, 2002, 2003;
(C) from and after August 18, 2003 - $0.
(iii) No interest shall be paid on accumulated and unpaid
dividends.
(c) LIQUIDATION
The shares of Preferred Stock shall be preferred over the shares of
Common Stock of the Corporation in the event of any liquidation,
dissolution or winding up of the Corporation, whether
Exhibit A-4
<PAGE> 31
voluntary or involuntary, so that the holders of the Preferred Stock shall
be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or
earnings, before any distribution is made to holders of shares of Common
Stock, an amount equal to the par value per share of Preferred Stock and,
thereafter, the holders of Preferred Stock shall participate in any
remaining distribution to holders of shares of Common Stock as if the
Preferred Stock had been converted into Common Stock on the applicable date
at the then applicable conversion rate. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares
of Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid, then such assets, or the proceeds thereof, shall be
distributed among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable
thereon were payable in full.
(d) ELECTION OF DIRECTORS
The holders of the outstanding shares of Class B and Class C Preferred
Stock, voting together as a class, shall have the right to elect one
Director of the Corporation for every 63 shares of Class B or Class C
Preferred Stock held by such holders and the successors to said Directors,
each of which Directors shall hold office until the earlier of his or her
death, resignation, removal at any time, with or without cause, by the vote
of the holders of such class or classes, as the case may be, which have
elected such Director, or the election of his or her successor; provided,
however, that the maximum number of Directors to be elected by the holders
of Class B and Class C Preferred Stock shall be three. The Directors to be
elected by the holders of the Class B and Class C Preferred Stock shall be
elected and removed by cumulative voting in accordance with Sections 214
and 141(k) of the General Corporation Law of Delaware.
3. COMMON STOCK
(a) The holders of Common Stock shall be entitled to one vote for each
share of Common Stock held by them on all matters properly presented to the
shareholders, except as otherwise provided by this Restated Certificate of
Incorporation or the General Corporation Law of Delaware.
(b) The Board of Directors of the Corporation may declare and pay dividends
on the Common Stock out of funds of the Corporation legally available for the
payment thereof.
(c) The holders of the outstanding shares of Common Stock, voting as a
single class and without the vote of the holders of the Preferred Stock, shall
have the right to elect and remove that number of Directors of the Corporation
and the successors to said Directors as shall equal the number of Directors
fixed by resolution of the Board of Directors adopted pursuant to the By-laws,
less that number of Directors which the holders of the Preferred Stock shall be
entitled to elect, by cumulative voting in accordance with Sections 214 and
141(k) of the General Corporation Law of Delaware.
4. PREEMPTIVE RIGHTS. No holder of shares of any class or series of stock
of the Corporation shall have any preemptive rights to subscribe to stock,
obligations, warrants, subscription rights or other securities of the
Corporation of any class or series, whether now or hereafter authorized.
5. VOTING. Except as otherwise provided in this Restated Certificate of
Incorporation or as otherwise required by law, all shares of all classes of
capital stock shall vote on all matters as one class and there shall be no
separate class vote with respect to any matters. On all matters properly
presented to holders of Preferred Stock and Common Stock voting as one class,
each holder of shares of Preferred Stock shall be entitled to the number of
votes that such holder would have if such holder had converted said Preferred
Stock into Common Stock immediately prior to the applicable record date.
FIFTH: The number of Directors of the Corporation shall be fixed in the
manner set forth in the By-laws.
SIXTH: The Corporation shall not amend, alter or repeal this Restated
Certificate of Incorporation as it relates to the election and removal of any
Directors to be elected by the holders of the Class B and Class C Preferred
Stock by cumulative voting except upon the approval of the holders of a majority
of the outstanding shares of the Class B and Class C Preferred Stock voting as
separate classes. The Corporation shall not
Exhibit A-5
<PAGE> 32
otherwise amend, alter or repeal this Restated Certificate of Incorporation, or
its By-laws, enter into any merger or consolidation, sell, lease or transfer all
or substantially all of its property and assets, or dissolve and wind up its
affairs, except upon the approval of at least 85% of the outstanding shares of
capital stock of the Corporation voting thereon and voting as one class as
provided in Section 5 of Article FOURTH.
SEVENTH: To the fullest extent that the General Corporation Law of the
State of Delaware as it exists on the date hereof or as it may hereafter be
amended permits the limitation or elimination of the liability of directors, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
EIGHTH: Unless and except to the extent that the By-laws of the Corporation
shall so require, the election of Directors of the Corporation need not be by
written ballot.
Exhibit A-6
<PAGE> 33
<TABLE>
<S> <C>
ASHLAND COAL, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R FOR THE ANNUAL MEETING ON APRIL 26, 1996
O The person(s) whose signature(s) appear(s) on the opposite side hereof hereby constitute(s) and
X appoint(s) Paul W. Chellgren and William C. Payne, and each of them, his or her (their) true and
Y lawful attorney and proxy with full power of substitution in each, to represent such person(s)
at the Annual Meeting of Stockholders of Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road, Huntington, West Virginia, at 10:30 a.m. on
Friday, April 26, 1996, and at any adjournments thereof, and to vote, with all powers such
person(s) would possess if present at such meeting (including with respect to the election of
directors, the power to cumulate votes and distribute such votes among the nominees), all shares
of Common Stock credited to such person'(s) account(s) as of the record date for the Annual
Meeting, on the matters set forth on the opposite side hereof and all other matters properly
coming before the meeting or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders: ------------------------------------
------------------------------------
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, ------------------------------------
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. (If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 34
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- - ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- - ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
- - ----------------------------------------------------------------------------
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
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.
</TABLE>
<PAGE> 35
<TABLE>
<S> <C>
ASHLAND COAL, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R FOR THE ANNUAL MEETING ON APRIL 26, 1996
O The person(s) whose signature(s) appear(s) on the
X opposite side hereof hereby constitute(s) and
Y appoint(s) Paul W. Chellgren and William C. Payne, and
each of them, its true and lawful attorney and proxy
with full power of substitution in each, to represent
such person(s) at the Annual Meeting of Stockholders of
Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road,
Huntington, West Virginia, at 10:30 a.m. on Friday,
April 26, 1996, and at any adjournments thereof, and to
vote, with all powers such person(s) would possess if
present at such meeting (including, with respect to the
election of directors, the power to cumulate votes and
distribute such votes among the nominees), all shares
of Preferred Stock credited to such person'(s)
account(s) as of the record date for the Annual
Meeting, on the matters set forth on the opposite side
hereof and on all other matters properly coming before
the meeting or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Preferred Stockholders: ------------------------------------
------------------------------------
J. A. "Fred" Brothers, Juan Antonio Ferrando, J. Marvin ------------------------------------
Quin. ------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 36
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- - ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- - ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
- - ----------------------------------------------------------------------------------------------------------
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
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.
- - --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 37
<TABLE>
<S> <C>
ASHLAND COAL, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R FOR THE ANNUAL MEETING ON APRIL 26, 1996
O The person whose signature appears on the opposite side
X hereof, as a participant in the Coal-Mac. Inc. Savings
Y and Retirement Plan ("Plan"), hereby instructs Chase
Manhattan Bank, N.A., Trustee, to constitute and
appoint Paul W. Chellgren and William C. Payne, and
each of them, the lawful attorney and proxy of said
Trustee with full power of substitution in each, to
represent the interests of such person in the Common
Stock of Ashland Coal, Inc. held under the terms of the
Plan at the Annual Meeting of Stockholders of Ashland
Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road,
Huntington, West Virginia, at 10:30 a.m. on Friday,
April 26, 1996, and at any adjournments thereof, and to
vote, with all powers such person(s) would possess if
present at such meeting (including, with respect
to the election of directors, the power to cumulate
votes and distribute such votes among the nominees),
and in accordance with the choices made on the
opposite side hereof, all shares of Common Stock
credited to such person's account under the Plan as of
the record date for the Annual Meeting, on the matters
set forth on the opposite side hereof and on all other
matters properly coming before the meeting or any
adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders: ------------------------------------
------------------------------------
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, ------------------------------------
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. (If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 38
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- - ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- - ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
- - -----------------------------------------------------------------------------------
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
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.
</TABLE>
<PAGE> 39
<TABLE>
<S> <C> ASHLAND COAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON APRIL 26, 1996
P The person whose signature appears on the opposite side hereof, as a participant
R in the Ashland Coal Inc. Employee Thrift Plan ("Plan"), hereby instructs Chase Manhattan
O Bank, N.A., Trustee, to constitute and appoint Paul W. Chellgren and William C. Payne,
X and each of them, the lawful attorney and proxy of said Trustee with full power of substitution in each, to
Y represent the interests of such person in the Common Stock of Ashland Coal, Inc. held under the terms of the
Plan at the Annual Meeting of Stockholders of Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road, Huntington, West Virginia, at 10:30 a.m. on Friday, April 26,
1996, and at any adjournments thereof, and to vote, with all powers such person(s) would possess if present at
such meeting (including, with respect to the election of directors, the power to cumulate votes and distribute
such votes among the nominees), and in accordance with the choices made on the opposite side hereof, all shares
of Common Stock credited to such person's account under the Plan as of the record date for the Annual Meeting,
on the matters set forth on the opposite side hereof and on all other matters properly coming before the meeting
or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders: ------------------------------------
------------------------------------
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, ------------------------------------
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. (If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 40
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- - -------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- - -------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
- - ----------------------------------------------------------------------------------
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
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.
</TABLE>
