1000 CONSOL Energy Drive, Suite 100

Canonsburg, Pennsylvania 15317

Telephone (724) 485-3300

Annual Meeting of Stockholders – May 9, 2018

Dear Fellow Stockholder:

On behalf of the entire Board of Directors of CONSOL Energy Inc. (CEIX), we invite you to attend CEIX’s first Annual Meeting of Stockholders. The Annual Meeting will be held on May 9, 2018, at 8:00 a.m., Eastern Time, at the Hyatt Regency Pittsburgh International Airport, Earhart Room, 1111 Airport Boulevard, Pittsburgh, Pennsylvania 15231.

You will be asked to vote on several items at the Annual Meeting, including the election of our Class I directors, ratification of the appointment of our independent registered public accounting firm, approval of our 2017 executive compensation program (the “say-on-pay vote”), and approval of the frequency with which we should conduct a say-on-pay vote. Detailed information about the director nominees, including their specific experience and qualifications, begins on page 23 of the proxy statement. Information about our independent registered public accounting firm begins on page 69 of the proxy statement. Our Compensation Discussion and Analysis, which explains our 2017 compensation decisions, begins on page 31 of the proxy statement. A summary of why we are seeking stockholder input on say-on-pay vote frequency is on page 72 of the proxy statement. We encourage you to read the proxy statement carefully for more information.

We achieved several operational, business and strategic milestones in 2017. We delivered new records for production and export sales from our Pennsylvania Mining Complex and a new record for throughput volume at our CONSOL Marine Terminal. We also succeeded in locking in ~32 million tons of sales commitments for 2018 and beyond, providing a solid foundation for achieving our objectives. On the strategic front, CEIX launched as an independent publicly traded pure play coal company on November 28, 2017. Although we are a brand new public company, our legacy of safety and compliance, and high productivity, go back 150+ years when the energy industry in the U.S. was in a nascent stage. Over this past year, we have put together a strong management team that is motivated to build upon this legacy and lead the industry in product margins and profitability. The timing of our launch is very exciting for several reasons: (a) the U.S. coal industry is recovering from a multi-year downturn, (b) our market strategy and low-cost assets are well positioned for further margin expansion as we capitalize on rising coal prices through innovative contracting strategies in the domestic market, and (c) with approximately 30% of our coal going into the export market and our ownership of CONSOL Marine Terminal, we have an opportunity to benefit from growing global demand.

Looking forward, our strategic priorities are very clear. We are focused on: (a) generating free cash flow, which will be used to reduce debt, de-risk our balance sheet and increase equity value, (b) returning capital to stockholders through dividends and buybacks as and when our debt covenants permit, (c) improving stockholder returns by being rate of return-driven in our capital allocation process, (d) identifying avenues to bring forward the value of our vast portfolio (approximately 1.6 billion tons) of undeveloped reserves, and (e) embracing technology and other productivity-enhancing techniques to safely and compliantly increase our product margins. Our goal is to deliver strong and consistent financial performance for our stockholders through the commodity cycles through return-focused capital allocation and operating a well-capitalized portfolio of assets safely and compliantly.

 

We are making our proxy materials for the Annual Meeting available to you via the Internet. We hope that this offers you convenience while allowing us to reduce the number of copies that we print.

Your vote is important to us. We hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting as promptly as possible through the Internet, by telephone or by completing and mailing a proxy card (following the process as further described in the proxy statement). Detailed instructions on “How to Vote” begin on page 8.

If you plan to attend the Annual Meeting in person, please bring a valid government-issued photo identification. If your shares are held in the name of a bank, broker or other nominee, please also bring with you a letter (and a legal proxy if you wish to vote your shares) from your bank, broker or nominee confirming your ownership as of the record date.

Thank you for your investment in CEIX, and we hope you will be able to join us at this year’s Annual Meeting.

Sincerely,

 

William P. Powell Chairman of the Board		James A. Brock President & CEO

 

 

 

 

Notice of Annual Meeting of Stockholders

 

WHEN: May 9, 2018 at 8:00 a.m. (EST)   WHERE: Hyatt Regency Pittsburgh International Airport Earhart Room                 1111 Airport Boulevard Pittsburgh, Pennsylvania 15231					ITEMS OF BUSINESS:
					1.			To elect two Class I directors for a three-year term;
					2.			To ratify the appointment of Ernst & Young LLP as CEIX’s independent registered public accounting firm for the fiscal year ending December 31, 2018;
					3.			To approve, on an advisory basis, the compensation paid to our named executive officers in 2017, as reported in this Proxy Statement;
					4.			To approve, on an advisory basis, the frequency of future advisory votes on executive compensation; and
					5.			To transact such other business as may properly come before the meeting and at any adjournments or postponements of the meeting.

RECORD DATE: By resolution of the Board of Directors, we have fixed the close of business on March 12, 2018 as the record date for determining the stockholders of CEIX entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof.

INFORMATION ABOUT THE MEETING: We are delivering our proxy materials to stockholders via the Internet. On March 28, 2018, we mailed a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to holders of record as of the record date, and posted our proxy materials on the website referenced in the Internet Notice. The Internet Notice explains how to access the proxy materials and our 2017 Annual Report, free of charge, through the website described in the Internet Notice. The Internet Notice and website also provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by e-mail for this meeting and on an ongoing basis. You may vote in person or through any of the acceptable means described in the Proxy Statement. Instructions on how to vote begin on page 8.

March 28, 2018

Martha A. Wiegand

General Counsel and Secretary

 

 

TABLE OF CONTENTS

 

 

		– 2018 Proxy Statement

 

2018 ANNUAL MEETING OF STOCKHOLDERS

 

Date and Time:		May 9, 2018 8:00 a.m. (EST)
Place:		Hyatt Regency Pittsburgh International Airport Earhart Room                 1111 Airport Boulevard Pittsburgh, Pennsylvania 15231
Record Date:		March 12, 2018

WE BECAME AN INDEPENDENT, PUBLICLY TRADED COAL COMPANY ON NOVEMBER 28, 2017

 

 

On November 28, 2017, we separated from our former parent company, CNX Resources Corporation (NYSE: CNX) (we sometimes refer to the combined company prior to the separation as “ParentCo”), and became an independent, publicly traded coal company through ParentCo’s pro rata distribution of all of our common stock to ParentCo’s stockholders.

In anticipation of the separation, we were originally formed as CONSOL Mining Corporation in Delaware on June 21, 2017, as a subsidiary of ParentCo, to hold all of ParentCo’s coal business, including its interest in the Pennsylvania Mining Complex (“PAMC”) operations, and certain related coal assets, including ParentCo’s ownership interest in CNX Coal Resources LP (now known as CONSOL Coal Resources LP) (“CCR”), which owns a 25% undivided interest stake in Pennsylvania Mining Complex, the CONSOL Marine Terminal and undeveloped coal reserves (Greenfield Reserves) located in the Northern Appalachian, Central Appalachian and Illinois basins and certain related coal assets and liabilities (the “coal business”).

The separation was completed on November 28, 2017. Following the separation:

 

•

ParentCo changed its name from CONSOL Energy Inc. to CNX Resources Corporation (NYSE: CNX) and continues as an independently traded oil and natural gas exploration and production company.

 

•

We changed our name to CONSOL Energy Inc. and now independently own and operate the coal business with our common shares listed for trading on the New York Stock Exchange under the ticker “CEIX”.

 

•

CNX Coal Resources LP changed its name to CONSOL Coal Resources LP and its ticker to NYSE: CCR. In addition, the general partner of CCR changed its name to CONSOL Coal Resources GP LLC.

The separation is described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2017. In addition, our Annual Report on Form 10-K describes our company and the assets and liabilities that comprise the coal business that we now own after completion of the separation. The 2018 Annual Meeting is our first Annual Meeting following the separation.

PROXY SUMMARY

 

 

PROPOSALS REQUIRING YOUR VOTE

 

 

Stockholders are being asked to vote on the following proposals at the Annual Meeting. Your vote is very important to us. Please cast your vote immediately on all of the proposals to ensure that your shares are represented.

 

Item		Proposal		Board Recommendation		Page
1		Election of Class I Directors		FOR EACH NOMINEE		22
		The election of two Class I director nominees, each to be elected for a three-year term ending in 2021.
2		Ratification of Appointment of Ernst & Young LLP		FOR		70
		The Audit Committee appointed Ernst & Young LLP as CEIX’s independent registered public accounting firm for fiscal year 2018. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s appointment of the independent registered public accounting firm.
3		Advisory Approval of 2017 Named Executive Officers’ Compensation		FOR		71
		CEIX’s executive compensation programs are designed to create a direct linkage between stockholder interests and management with incentives specifically tailored to the achievement of financial, operational and stock performance goals.
4		Advisory Approval of the Frequency of Future Advisory Votes on Executive Compensation		FOR EVERY YEAR		72
		In accordance with rules of the Securities and Exchange Commission (the “SEC”), CEIX is required to provide its stockholders with the opportunity to cast an advisory vote to determine the frequency of future advisory stockholder votes on compensation paid to our named executive officers.

 

CURRENT BOARD OF DIRECTORS

 

 

The following table provides summary information about our current Board of Directors as of March 12, 2018. Both of our Class I directors, whose terms expire at the Annual Meeting, are nominees for election at the Annual Meeting, each for a three-year term ending in 2021.

 

Name

Age

Director Since

Occupation

Class/ Term Expiring

Independent

Current Committee   Memberships

William P. Powell†

62

2017

Managing Partner of 535 Partners LLC

Class III 2020

Yes

•  AC •  NCG •  HSE

James A. Brock

61

2017

President and Chief Executive Officer of CEIX

Class I 2018

No

•  HSE

Alvin R. Carpenter

76

2017

Former Vice Chairman of CSX Corporation

Class I 2018

Yes

•  CC •  HSE††

John T. Mills

70

2017

Former Chief Financial Officer of Marathon Oil Corporation

Class III 2020

Yes

•  AC†† •  CC •  HSE

Joseph P. Platt

70

2017

General Partner of Thorn Partners LP

Class II 2019

Yes

•  CC†† •  NCG •  HSE

Edwin S. Roberson

73

2017

Former Chief Executive Officer of Christ Community Health Services

Class II     2019

Yes

•  AC •  NCG†† •  HSE

 

 

 

2		– 2018 Proxy Statement

PROXY SUMMARY

 

 

BUSINESS/STRATEGIC 2017 HIGHLIGHTS

 

 

 

•

The Right Team. Established a senior executive team and Board of Directors that is experienced and can navigate and capitalize on the future opportunities in the mining space.

 

•

Strong Execution.

 

•

Remained committed to achieving best-in-class safety and compliance results and completed 2017 without any life-altering accidents.

 

•

Achieved a safety incident rate 30% lower than the Mine Safety and Health Administration (MSHA) national average, and a Significant & Substantial (S&S) Citation Rate 33% lower than the MSHA national average.

 

•

Successfully spun out our business as a publicly traded company which included issuing $300 million in senior notes and entering into (i) an $800 million credit facility, (ii) a revolving credit facility as lender with CCR for an aggregate principal amount of up to $275 million, and (iii) a $100 million securitization facility.

 

•

Finished fiscal year 2017 with approximately $154 million in cash on hand.

 

•

As of February 2018, we were greater than 95% contracted for 2018, 70% contracted for 2019 and 24% contracted for 2020, assuming an annual production rate of ~27 million tons going forward.

 

•

Coal average revenue per ton sold increased by 5.1% to $45.52 per ton and coal average cash margins per ton sold increased by 8.4% to $16.50 per ton as a result of strong cost controls and rising coal price realizations.*

 

•

Record Output.

 

•

Produced a record level at 26.1 million tons, the highest level in the Pennsylvania Mining Complex history.

 

•

Exported a record level of 14.3 million tons at our 100% owned CONSOL Marine Terminal.

 

•

Bottom Line. Generated net cash provided by operations of $248.1 million and $191.3 million of free cash flow.**

 

*	See reconciliation of average cash margins per ton sold (non-GAAP) to average revenue per ton sold (GAAP) in Appendix A to this Proxy Statement.

 

**	See reconciliation of free cash flow (non-GAAP) to net cash provided by operations (GAAP) in Appendix A to this Proxy Statement.

POST-SEPARATION COMPENSATION HIGHLIGHTS

 

 

 

New   Compensation   Philosophy		Our Compensation Committee adopted a philosophy to attract and retain key talent necessary for us to compete, and to incentivize senior executives with a pay-for-performance culture that aligns risk-taking with the sustainability and long-term financial health of our company.
LTIC   Performance-based   Restricted   Stock Unit   Awards		Our Compensation Committee and Board reviewed three performance-based long-term equity awards and approved vesting with respect to two of the three programs where performance met or exceeded target performance goals.
Spin Cash   and Restricted   Stock Unit   Awards		Our Compensation Committee and Board authorized payment of cash spin awards and service-based equity awards in recognition of the extraordinary efforts displayed by senior management and other employees in critical roles who participated in completing the successful separation of CEIX from CNX.

 

		– 2018 Proxy Statement		3

PROXY SUMMARY

 

 

Change in   Control and   Severance   Agreements		Our Compensation Committee and Board approved severance and double trigger cash severance change in control (“CIC”) agreements providing for CIC and non-CIC severance in the event of involuntary termination of employment absent “cause.”
Independent   Compensation   Consultant		Our Compensation Committee selected an independent expert compensation consultant that reports directly to the Compensation Committee.
Governance   Practices		Our Compensation Committee and Board adopted several good governance practices, including policies on anti-hedging, recoupment, stock ownership/holding and equity grant practices.

CORPORATE GOVERNANCE HIGHLIGHTS

 

 

Our Board and management are committed to strong corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability and helps build public trust in our new public company. This Proxy Statement describes our governance framework, which includes the following highlights:

 

•

Independent Directors. A majority of our directors must be independent. Currently, all of our directors other than our President and Chief Executive Officer, are independent, and our Audit, Nominating and Corporate Governance, and Compensation Committees consist exclusively of independent directors.

 

•

Majority Voting Requirement. Our Amended and Restated Bylaws (the “bylaws”) require that any nominee for election to the Board who does not receive a majority of the votes cast in favor of that director’s election to the Board in an uncontested election must tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation on the tendered resignation, and the Board then will accept or reject the offer of resignation within 90 days.

 

•

Five-Year Phase-Out of Classified Board. Our organizational documents include a five-year plan to phase-out our classified Board structure. This means that by 2023, all of our directors will be subject to annual re-election to the Board.

 

•

Independent Chairman; Lead Director. Currently, our Chairman of the Board is independent of management. In addition, in the event that our Chief Executive Officer would also serve as the Chairman, our corporate governance guidelines require a Lead Director position with specific responsibilities to ensure independent oversight of management.

 

•

Regular Meetings of Independent Directors. Our independent directors regularly meet in executive sessions with no members of management present.

 

•

Robust Strategy, Risk and Safety Oversight by Board and Committees. Our Board and committees have implemented a robust framework to actively oversee the strategy and risks relating to the operation and management of an independent, publicly traded coal company. In addition, our Board has a strong commitment to the safety of our workers and the environments in which we operate and has formed a separate Board level committee to oversee that value of CEIX.

 

•

Stock Ownership and Retention Guidelines. As further described on page 18, our Board has adopted stock ownership and retention guidelines that apply to the Board and our executive officers.

 

•

Proactive Stockholder Outreach. Our management team spent a significant amount of time meeting and speaking to our stockholder base before and after the separation date. We have initiated an integrated effort to interact and receive feedback from the proxy teams at our stockholder base to incorporate best governance, compensation, and oversight practices.

 

•

Sustainability. We provide transparency into our operations through the regular publishing of corporate responsibility reports. Through our former parent CNX, our operations have been covered in an annual Corporate Responsibility Report every year since 2012, and our first stand-alone Corporate Responsibility Report will be published in Summer 2018.

 

4		– 2018 Proxy Statement

PROXY SUMMARY

 

 

•

Strong Commitment to Robust Corporate Governance Practices. As a new public company, our Board is carefully working through and considering additional corporate governance practices to ensure that we have a strong corporate governance platform tailored to our company.

LEARN MORE ABOUT OUR COMPANY

 

 

You can learn more about our company by visiting our website, www.consolenergy.com.

 

		– 2018 Proxy Statement		5

 

INFORMATION ABOUT THE ANNUAL MEETING OF STOCKHOLDERS

CONSOL Energy Inc.

1000 CONSOL Energy Drive, Suite 100

Canonsburg, Pennsylvania 15317

Telephone (724) 485-3300

GENERAL: Proxies are being solicited by the Board to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 9, 2018, at 8:00 a.m., Eastern Time, at the Hyatt Regency Pittsburgh International Airport, Earhart Room, 1111 Airport Boulevard, Pittsburgh, Pennsylvania 15231.

The specific proposals to be considered and voted upon at the Annual Meeting are summarized in the Notice of Annual Meeting of Stockholders. Each proposal is described in more detail in this Proxy Statement.

PROXY MATERIALS AND INFORMATION ABOUT THE MEETING: We mailed to all stockholders of record entitled to vote at the Annual Meeting the Internet Notice on or about March 28, 2018.

We are taking advantage of an SEC rule that allows companies to furnish their proxy materials via the Internet rather than in paper form. This rule allows a company to send some or all of its stockholders the Internet Notice regarding Internet availability of proxy materials. The Internet Notice contains instructions on how to access the proxy materials over the Internet or how to request a paper copy of proxy materials.

An electronic copy of this Proxy Statement, the 2017 Annual Report and the Notice of Annual Meeting of Stockholders are available at www.edocumentview.com/CEIX.

Copies of our 2017 Annual Report furnished to our stockholders do not contain copies of exhibits to our Annual Report on Form 10-K for the year ended December 31, 2017. You can obtain copies of these exhibits electronically at the website of the SEC at www.sec.gov or by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The exhibits are also available as part of the Form 10-K for the year ended December 31, 2017 which is available on CEIX’s corporate website at www.consolenergy.com. Stockholders may also obtain copies of our Annual Report on Form 10-K for the year ended December 31, 2017, or the exhibits thereto, without charge by contacting our Investor Relations department at CONSOL Energy Inc., Investor Relations department, 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317, Telephone (724) 485-3300.

RECORD DATE AND QUORUM: The record date with respect to this solicitation is March 12, 2018. All holders of record of CEIX common stock as of the close of business on the record date are entitled to vote at the Annual Meeting and any adjournment or postponement thereof. As of the record date, CEIX had 28,068,321 shares of common stock outstanding. Each share of common stock is entitled to one vote. Stockholders do not have cumulative voting rights. In order to hold the Annual Meeting, a quorum representing the holders of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting must be present in person or represented by proxy.

 

6		– 2018 Proxy Statement

INFORMATION ABOUT THE ANNUAL MEETING

 

 

PROPOSALS, BOARD RECOMMENDATION AND VOTE REQUIRED: Stockholders are being asked to vote on the following proposals at the Annual Meeting. The table below also outlines the Board’s recommendation on how to vote for each proposal and the vote required with respect to each proposal.

 

Item		Proposal				Board Recommendation		Vote Required
1		Election of Class I Directors Election of two Class I director nominees, each for a three-year term ending in 2021.				FOR EACH NOMINEE		Plurality of the votes cast.   Under this plurality vote standard, the director nominees who receive the highest number of “for” votes cast are elected as directors. Under our bylaws, if a director nominee does not receive a majority of the votes casts in favor of his or her election, then the director must tender his or her resignation to the Board.
2		Ratification of Appointment of Ernst & Young LLP The Audit Committee appointed Ernst & Young LLP as CEIX’s independent registered public accounting firm for fiscal year 2018. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s appointment of the independent registered public accounting firm.				FOR		Affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the matter.
3		Advisory Approval of 2017 Named Executive Officers’ Compensation CEIX’s executive compensation programs are designed to create a direct linkage between stockholder interests and management with incentives specifically tailored to the achievement of financial, operational and stock performance goals.				FOR		Affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the matter.
4		Advisory Approval of the Frequency of Future Advisory Votes on Executive Compensation In accordance with rules of the SEC, CEIX is required to provide its stockholders with the opportunity to cast an advisory vote to determine the frequency of future advisory stockholder votes on compensation paid to our named executive officers.				FOR EVERY YEAR		The frequency (one, two or three years) receiving the most votes will be deemed the preference of the stockholders.

PROXIES AND VOTING: A proxy is your legal designation of another person to vote the CEIX common shares that you owned as of the record date. The person that you designate to vote your shares is called a “proxy” and when you designate someone to vote your shares in written document, that document is also called a “proxy” or “proxy card”. The Board has appointed several officers of the company to serve as proxies on the proxy card.

The proxies named by the Board intend, if no contrary instructions are given, to vote the shares represented by such proxies as follows:

 

•

in favor of the election of those persons nominated as set forth in this Proxy Statement to serve as Class I directors of CEIX (Proposal No. 1);

 

•

in favor of the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of CEIX for the fiscal year ending December 31, 2018 (Proposal No. 2);

 

•

in favor of, on an advisory basis, the compensation paid to our named executive officers in 2017 (Proposal No. 3);

 

		– 2018 Proxy Statement		7

INFORMATION ABOUT THE ANNUAL MEETING

 

 

•

in favor of, on an advisory basis, every one year as the frequency of future advisory votes on executive compensation (Proposal No. 4); and

 

•

in accordance with their judgment on any other matters which may properly come before the Annual Meeting.

The Board does not know of any other business to be brought before the Annual Meeting other than as indicated in the Notice of Annual Meeting of Stockholders.

HOW TO VOTE: There are three ways for stockholders of record to vote by proxy:

 

•

VIA THE INTERNET: Stockholders who have received the Internet Notice by mail may submit proxies over the Internet by following the instructions on the Internet Notice. Stockholders who received a paper copy of a voting instruction form by mail from their bank, broker or other nominee may submit proxies over the Internet by following the instructions on the voting instruction form provided by their bank, broker or other nominee.

 

•

VIA TELEPHONE: Registered stockholders of record may submit proxies by telephone by calling 1-800-652-8683 and following the instructions. Stockholders must have the 15-digit control number that appears on their Internet Notice when voting. Stockholders who have received a voting instruction form by mail or e-mail from their bank, broker or other nominee may vote by phone by calling the number specified on the voting instruction form provided by their bank, broker or other nominee. Those stockholders should check the voting instruction form for telephone voting availability.

 

•

VIA MAIL: Stockholders who have received a paper copy of a proxy card or voting instruction form by mail may submit proxies by completing, signing and dating their proxy card or voting instruction form and mailing it in the accompanying pre-addressed envelope.

Stockholders of record may also vote in person at the Annual Meeting.

BENEFICIAL OWNERSHIP AND BROKER NON-VOTES: If you hold shares beneficially in street name, then you must provide your voting instructions to your bank, broker or other nominee. If you do not provide your bank, broker or other nominee with voting instructions, your shares may be treated as “broker non-votes.”

Generally, broker non-votes occur on a matter when a bank, broker or other nominee is not permitted to vote on that matter without instructions from the beneficial owner and such instructions are not given. Banks, brokers or other nominees that have not received voting instructions from their clients cannot vote on their clients’ behalf on “non-routine” proposals, such as Proposal Nos. 1, 3, and 4, although they may vote their clients’ shares on “routine matters,” such as Proposal No. 2. In tabulating the voting result for any particular proposal, votes that are withheld or shares that constitute broker non-votes are not considered entitled to vote on that proposal and have no effect on the outcome. Abstentions have the same effect as votes against the matter, except in the case of Proposal Nos. 1 and 4, where abstentions would not have an effect on the outcome. Proxies received but marked as abstentions and broker non-votes will be counted for quorum purposes.

REVOCATION OF PROXY: If you are the stockholder of record of shares of our common stock as of the close of business on the record date, you can revoke your proxy at any time before its exercise by:

 

•

sending a written notice to CEIX at 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317, attention: Secretary, bearing a date later than the date of the proxy, that is received prior to the Annual Meeting, stating that you revoke your proxy;

 

•

submitting your voting instructions again by telephone or over the Internet;

 

•

signing another valid proxy card bearing a later date than the proxy initially received and mailing it so that it is received by CEIX prior to the Annual Meeting; or

 

•

attending the Annual Meeting and voting in person.

If you hold your shares through a bank, broker or other nominee, you must follow the instructions found on your voting instruction form, or contact your bank, broker or other nominee, in order to revoke your previously delivered

 

8		– 2018 Proxy Statement

INFORMATION ABOUT THE ANNUAL MEETING

 

 

proxy. If a proxy is properly executed and is not revoked by the stockholder, the shares it represents will be voted at the Annual Meeting in accordance with the instructions provided by the stockholder. If a proxy card is signed and returned without specifying choices, the shares will be voted in accordance with the recommendations of the Board. Attendance at the Annual Meeting without a request to revoke a proxy will not by itself revoke a previously executed and delivered proxy.

ATTENDING THE MEETING IN PERSON: Subject to space availability, all stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting in person. Because seating is limited, admission to the meeting will be on a first come, first served basis.

Registration will begin at 7:30 a.m. Eastern Time. Stockholders who attend may be asked to present valid picture identification, such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. Please also note that if you hold your shares in “street name” (that is, through a bank, broker or other nominee), a copy of a brokerage statement reflecting your stock ownership as of the record date must be provided during check-in at the registration desk at the Annual Meeting.

If you require directions to the Annual Meeting, please contact CEIX’s Investor Relations department at (724) 485-3300.

PROXY SOLICITATION: All costs relating to the solicitation of proxies will be borne by CEIX. Georgeson LLC has been retained by CEIX to aid in the solicitation of proxies at an estimated cost of $9,000, plus reimbursement of out-of-pocket expenses. Proxies may also be solicited by officers, directors and employees personally, by mail, or by telephone, facsimile transmission or other electronic means. None of these directors, officers or employees will receive any additional or special compensation for soliciting proxies. Upon request, CEIX will reimburse banks, brokers and other nominees for their reasonable expenses in sending proxy materials to their customers who are beneficial owners of CEIX’s common stock.

SECRECY IN VOTING: As a matter of policy, proxies, ballots and voting tabulations that identify individual stockholders are held confidentially by CEIX. Such documents are available for examination only by the inspectors of election and certain employees who assist in the tabulation of votes. The vote of any individual stockholder will not be disclosed except as may be necessary to meet applicable legal requirements.

 

		– 2018 Proxy Statement		9

Board of Directors and Its Committees

Board of Directors

The business and affairs of CEIX are managed under the direction of our Board. Our Board currently consists of six directors, who are divided into three classes with staggered terms. Under our Amended and Restated Certificate of Incorporation, Class I directors to be elected at the Annual Meeting will serve three-year terms expiring in 2021 and Class II directors to be elected at the 2019 annual meeting of stockholders will serve three-year terms expiring in 2022. Beginning with the 2020 annual meeting of stockholders, all directors to be elected at each annual meeting will be elected to serve one-year terms, such that by 2023, all directors will be subject to re-election annually, and the Board will no longer be classified.

We do not have a formal policy regarding directors’ attendance at our annual meetings of stockholders; however, all directors are encouraged to attend. All of CEIX’s directors are expected to attend the Annual Meeting.

Board Leadership Structure

Our Board currently is structured with separate Chairman and Chief Executive Officer positions. Our Corporate Governance Guidelines provide that the Board will determine whether to have a joint Chairman and Chief Executive Officer or separate these offices as part of the succession planning process when it elects a Chief Executive Officer or at other appropriate times. The Board believes that, following our recent separation from CNX, the most effective leadership structure for our company at this time is to have Mr. Powell serve as independent Chairman and Mr. Brock to serve as Chief Executive Officer. The Board believes these separate positions can facilitate Mr. Brock’s focus on the operation of our company and implementation of our strategy and business plans at this critical time, while ensuring effective oversight and focus by the Board on accountability of management, oversight and corporate governance matters impacting a newly public company.

The Board believes there is no single best leadership structure that is the most effective in all circumstances and may decide to combine the positions of Chairman and Chief Executive Officer in the future, if it deems appropriate and in the best interests of our company and stockholders. In such case, our Corporate Governance Guidelines provide that, upon the recommendation of the Nominating and Corporate Governance Committee, the Board will designate an independent member to serve as Lead Director, with duties and responsibilities including acting as liaison between the Chairman and the independent directors, presiding at meetings in the absence of the Chairman, including executive sessions, reviewing and approving with the Chairman meeting schedules and agendas and information necessary for each meeting, having authority to direct the Chief Executive Officer or Corporate Secretary to call a special meeting of the independent directors, and consulting directly with major stockholders as appropriate.

Determination of Director Independence

The New York Stock Exchange (NYSE) listing standards require a majority of our directors and each member of our Audit, Compensation and Nominating and Corporate Governance Committees to be independent. In January 2018, our Board evaluated the relevant relationships between each director or director nominee (and his immediate family members and affiliates) and CEIX, and affirmatively determined that each of our directors, other than Mr. Brock (who is the President and Chief Executive Officer of CEIX), had no material relationship with CEIX and is “independent” under the corporate governance rules of the NYSE codified in Section 303A of the NYSE Listed Company Manual. The Board also determined that each member of the Audit Committee meets the independence standards required for audit committee members under the NYSE listing standards and the SEC rules, and considered the additional factors under the NYSE rules relating to members of the Compensation Committee before determining that each of them is independent.

 

10		– 2018 Proxy Statement

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Board of Directors and Its Committees

 

Membership and Meetings of the Board of Directors and its Committees

In 2017, each of the incumbent directors attended all of:

 

•

the meetings held by our Board (during the period for which he or she was a director); and

 

•

the meetings held by all Board committees on which he or she served (during the period for which he or she served).

Committee membership as of March 28, 2018 and the number of meetings held during 2017 are shown in the following table:

 

Board of Directors

Audit Committee

Compensation Committee

Nominating and Corporate Governance Committee

Health, Safety and Environmental   Committee

William P. Powell

Chairman

✓

✓

✓

James A. Brock

✓

✓

Alvin R. Carpenter

✓

✓

Chair

John T. Mills

✓

Chair

✓

✓

Joseph P. Platt

✓

Chair

✓

✓

Edwin S. Roberson

✓

✓

Chair

✓

No. of 2017 Meetings

2

2

1

1

1

During 2017, the non-management directors held two executive sessions of the Board. Mr. Powell, our Chairman who is an independent director, presided over these executive sessions.

 

		– 2018 Proxy Statement		11

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Board of Directors and Its Committees

 

Board’s Role in Risk Management

 

		THE BOARD
•  Assesses major risks facing CEIX and reviews options for risk mitigation with the assistance of the various committees; and   •  Monitors risks that have been delegated to a particular committee through reports provided by the respective committee chairpersons at each regularly-scheduled Board meeting.

 

 

		MANAGEMENT
•  Responsible for the management and assessment of risk at CEIX and its subsidiaries;   •  Identifies, communicates and discusses the risks affecting CEIX, its subsidiaries and our business through regular presentations to the Board and appropriate committees (as determined by the subject matter of the particular risk); and   •  In 2017, performed a comprehensive risk analysis of the material risks that could affect CEIX and communicated those results to the full Board.

 

12		– 2018 Proxy Statement

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Board of Directors and Its Committees

 

Committees of the Board of Directors

Our Board has four standing committees: Audit, Compensation, Nominating and Corporate Governance, and Health, Safety and Environmental. Our committees regularly make recommendations and report on their activities to the entire Board. All members of each of the Audit, Compensation and Nominating and Corporate Governance Committees are independent under the current listing standards of the NYSE and other applicable regulatory requirements, as described above under “Determination of Director Independence”. Our Board, considering the recommendations of our Nominating and Corporate Governance Committee, will review committee membership at least annually. The responsibilities of each of the four committees are summarized below.

 

Audit Committee     Three Independent Director   Members		•  Assists our Board in its oversight of, among other things, the integrity of CEIX’s financial statements, CEIX’s compliance with legal and regulatory requirements, CEIX’s risk management policies and practices, and CEIX’s information technology security and risks;   •  Oversees the appointment, compensation, and retention of CEIX’s independent auditor, and oversees the work done by CEIX’s independent auditor and any other registered public accounting firm hired to perform audit-related functions;   •  Reviews and discusses with CEIX’s management and its independent auditor annual and quarterly financial statements, including those disclosures that appear under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in CEIX’s Form 10-Ks and Form 10-Qs;   •  Provides general oversight over the accounting principles employed in CEIX’s financial reporting and the effectiveness of CEIX’s internal controls over financial reporting;   •  Prepares any required Audit Committee Report; and   •  Oversees CEIX’s internal audit function.

Our Board has determined that all members of the Audit Committee are financially literate within the meaning of SEC rules and under the current listing standards of the NYSE. Our Board has also determined that each of the members of the Audit Committee qualify as an “audit committee financial expert.” A copy of the Audit Committee’s report for the 2017 fiscal year is included in this Proxy Statement.

 

Compensation Committee     Three Independent Director   Members		•  Establishes and reviews CEIX’s compensation philosophies, policies, plans and programs, consistent with CEIX’s objectives and stockholder interests, for our non-employee directors and executive officers;   •  Reviews executive officer compensation against peer group benchmark data and sets compensation levels for executive officers;   •  Reviews the performance of our executive officers and awards incentive compensation;   •  Reviews and discusses with management the Compensation Discussion and Analysis required to be included in our proxy statement;   •  Oversees CEIX’s policies on structuring compensation programs for executive officers;   •  Reviews and monitors our management development and succession plans and activities;   •  Engages and oversees the outside compensation consultant;   •  Reviews and oversees the risk assessment related to CEIX’s compensation programs; and   •  Prepares the Compensation Committee Report.

 

		– 2018 Proxy Statement		13

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Board of Directors and Its Committees

 

Our Compensation Committee’s charter generally permits it to delegate its authority, duties and responsibilities or functions to one or more members of the Compensation Committee or to CEIX’s officers, except where otherwise prohibited by law or applicable listing standards. The terms of our Omnibus Performance Incentive Plan (the “Omnibus Plan”) also permit our Compensation Committee to delegate any power and authority granted to it by the Board under the Omnibus Plan to our officers.

Our Compensation Committee periodically reviews the compensation paid to our non-employee directors and the principles upon which their compensation is determined. The Compensation Committee also periodically reports to the Board on how our non-employee director compensation practices compare with those of other similarly situated public corporations and, if the Compensation Committee deems it appropriate, recommends changes to our director compensation practices to our Board for approval.

For additional information regarding the Compensation Committee’s processes and procedures for reviewing and determining executive officer compensation, see “Compensation Discussion and Analysis” beginning on page 31.

 

Nominating and Corporate   Governance Committee     Three Independent Director   Members		•  Identifies qualified individuals for nomination, election or appointment to the Board;   •  Ensures appropriate Board and committee composition, and recommends appropriate Board structure and operations;   •  Oversees and assesses CEIX’s corporate governance system, including the responsibilities of Board members and committees, and related policies and procedures;   •  Oversees annual evaluation of the Board, committees and management;   •  Recommends each director nominee to our Board for nomination for election at the annual meetings, taking into account candidates whose names are submitted by stockholders; and   •  Annually reviews CEIX’s Corporate Governance Guidelines.

Director Nomination Process. The Nominating and Governance Committee will consider director candidates recommended by stockholders, although a formal policy has not been adopted with respect to consideration of such candidates because stockholder recommendations may be informally submitted and considered by the Nominating and Governance Committee under its charter. Director candidates recommended by stockholders will be evaluated by the Nominating and Governance Committee using the same criteria as candidates identified by the Board or the Nominating and Governance Committee for consideration. Stockholders wishing to submit names of candidates for election as directors should submit the names of candidates to the Secretary, CONSOL Energy Inc., 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317. See “Additional Matters” on page 80 for more information on making director nominations. The Nominating and Corporate Governance Committee expects to annually review and assess the Board’s membership needs, with the assistance of a consultant when appropriate. The Nominating and Corporate Governance Committee anticipates that it will consider some of the historical factors considered by ParentCo’s nominating and corporate governance committee, including seeking to maintain a Board that is comprised of individuals who are competent in the following areas:

 

•

general industry knowledge;

 

•

accounting and finance;

 

•

ability to make sound business decisions;

 

•

management;

 

•

leadership;

 

•

knowledge of international markets;

 

14		– 2018 Proxy Statement

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Board of Directors and Its Committees

 

•

business strategy;

 

•

crisis management;

 

•

corporate governance;

 

•

prior board experience; and

 

•

risk management.

The Nominating and Corporate Governance Committee seeks to identify director candidates with leadership experience in positions with a high degree of responsibility. Director nominees are expected to be selected based upon contributions that they can make to CEIX.

The Board does not maintain a separate policy regarding the diversity of its members. However, the Nominating and Corporate Governance Committee, and ultimately the Board, generally seeks director nominees with diverse personal and professional backgrounds, experience and perspectives that, when combined, provide a diverse portfolio of experience and knowledge that will well serve CEIX’s governance and strategic needs. As a newly independent publicly traded company spun out from ParentCo as of November 28, 2017, our Board is in the process of undertaking an assessment of our various Board members’ skills, experiences and backgrounds and comparing the same against our company’s goals, plans and needs on a future-looking basis, and looks forward to embracing one or more diverse new members to our Board as a result thereof.

Board Assessment and Future Candidates. Set forth below is a summary of the process the Nominating and Corporate Governance Committee and Board intend to use in reviewing Board needs and future candidates.

 

 

 

Health, Safety and   Environment Committee     Five Independent Director   Members		•  Oversees CEIX’s monitoring and enforcement of its policies to protect the health and safety of employees, contractors, customers, the public and the environment;   •  Reviews CEIX’s strategy, including objectives and policies, relative to the protection of the safety and health of employees, contractors, customers and the public and the environment;   •  Reviews material compliance issues or pending or threatened proceedings regarding health, safety or environmental matters, and management’s response to the same;   •  Reviews any significant health, safety and environmental public policy and legislative, political and social issues and trends; and   •  Reviews CEIX’s policies and procedures relative to potential employee strikes and/or terrorist activity and the protection of CEIX’s assets against damage, destruction and/or theft.

 

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has served as an officer or employee of CEIX at any time. During the last completed fiscal year, no CEIX executive officer served as a member of the compensation committee or on the board of directors of any company at which a member of CEIX’s Compensation Committee or Board of Directors served as an executive officer.

 

		– 2018 Proxy Statement		15

November 2017 Our Former ParentCo splits the existing board and selects our members N&CG Committee1 assesses composition, skills and experience of existing Board, current and future needs & considers diversity Our directors, management and stockholders identify potential candidates and refer them to us Indepth review of qualifications matched to needs, consider diversity Review independence and potential conflicts, in person meetings recommend selected candidates for board appointment 1 with consultant, as appropriate REPEAT PROCESS    ANNUALLY

 

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Director Compensation Table – 2017

 

Corporate Governance Web Page and Available Documents

We maintain a corporate governance page on our website at www.consolenergy.com. The following documents are currently included on the corporate governance page of our website:

 

•

Corporate Governance Guidelines;

 

•

Code of Business Conduct and Ethics;

 

•

Related Person Transaction Policy and Procedures; and

 

•

Charters of the Audit, Nominating and Corporate Governance, Compensation, and Health, Safety and Environmental Committees.

We also will provide a printed copy of any of these documents free of charge upon request to stockholders who contact our Investor Relations department in writing at CONSOL Energy Inc., 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317. These documents address important principles and corporate governance processes.

Communication with the Board of Directors

Stockholders and other interested persons who wish to communicate with the Board may do so by writing to the Board at Secretary, CONSOL Energy Inc., 1000 CONSOL Energy Drive, Suite 100, Canonsburg, Pennsylvania 15317, or by sending an e-mail to directors@consolenergy.com. The Secretary will relay all such communications to the Board in their entirety or to individual directors (as appropriate) at the next regularly scheduled Board meeting (or earlier as necessary) except for spam, junk mail, mass mailings, solicitations, résumés, job inquiries or other matters unrelated to CEIX. Communications that are intended specifically for the independent directors should be marked “Confidential” and sent to the street address noted above, to the attention of the Independent Directors in care of the Chairman of the Board. Information concerning how to communicate with the Board is also included on CEIX’s website at www.consolenergy.com.

Director Compensation Table – 2017

The following table sets forth the compensation elements of our non-employee directors for the entire 2017 fiscal year, a significant portion of which was paid pre-separation and some of which was paid post-separation (prorated based on actual service periods with either CNX or CEIX):

 

Name(1)		Fees Earned or Paid in Cash(2)					Stock Awards(3)					Option Awards(4)					All Other Compensation					Total
Alvin R. Carpenter				$127,500					$250,000					—					—					$377,500
John T. Mills				$150,000					$250,000					—					—					$400,000
Joseph P. Platt				$133,333					$250,000					—					—					$383,333
William P. Powell				$136,458					$300,000					—					—					$436,458
Edwin S. Roberson				$128,333					$250,000					—					—					$378,333

 

(1)

While Mr. Brock, our President and Chief Executive Officer, is a member of our Board, his name does not appear in this table and his compensation is reported in the Summary Compensation Table and other sections of the Proxy Statement. In 2017, he did not receive any additional compensation in connection with his service on our Board.

 

(2)

Mr. Carpenter serves as the Chairman of our Health, Safety and Environmental Committee and is a member of our Compensation Committee; Mr. Mills serves as the Chairman of our Audit Committee and is a member of our Compensation Committee and Health, Safety and Environmental Committee; Mr. Platt is the Chairman of our Compensation Committee and also a member of our Nominating and Governance Committee and Health, Safety and Environmental Committee; Mr. Roberson is the Chairman of our Nominating and Corporate Governance Committee and also a member of the Audit Committee and Health, Safety and Environmental Committee; and Mr. Powell is the Chairman of our Board and also a member of the Audit Committee, Nominating and Corporate Governance Committee and Health, Safety and Environmental Committee.

 

16		– 2018 Proxy Statement

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Understanding Our Director Compensation Table

 

(3)

This includes the value of pre-separation awards made by CNX in the form of restricted stock units (“RSUs”) valued at $150,000 covering 9,561 shares of CNX common stock, which awards were converted into 6,874 CEIX common stock awards as required by the terms of the Employee Matters Agreement entered into by CNX and CEIX as part of the separation (“EMA”) in connection with the separation. These awards vest on the first anniversary of the award date, May 9, 2018. These amounts represent the aggregate grant date fair value of stock units granted in 2017 to non-employee directors computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The grant date fair value is computed based upon the closing price per share of CNX stock on the date of grant. A discussion of the relevant assumptions made in the valuation of these stock awards is provided in Note 16 to our consolidated financial statements, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. This column also includes the $100,000 value of each of the separation RSU awards made to Messrs. Carpenter, Mills, Platt and Roberson in recognition of their service to CEIX post-separation covering 3,353 shares, which vest on the first anniversary of the award date, December 12, 2018. Mr. Powell received $150,000 in recognition of his service covering 5,030 shares.

 

(4)

Mr. Carpenter elected to defer 100% of his cash retainer and 100% of his Board fees for the 2017-2018 Board year into non-qualified stock options, an offering permitted under the CNX Non-Qualified Directors Deferred Fee Plan, receiving a non-qualified stock option covering 22,392 shares of CNX common stock. Pursuant to the terms of the separation, stock option awards to our non-employee directors were retained by CNX as outstanding awards of CNX.

Understanding Our Director Compensation Table

Compensation for our non-employee Board of Directors during 2017 was established by our former parent, CNX, prior to the separation and consisted of a mix of cash and equity-based compensation. In accordance with the non-employee director compensation program established, the Chairman and committee chairs of our Board of Directors were also entitled to receive additional payments for their services in that capacity as follows:

 

Element of Compensation		Dollar Value of Board Compensation
Chairman Retainer		$200,000
Board Retainer		$120,000
Committee Chair Retainer (other than Audit & Comp)		$  10,000
Audit Committee Chair		$  30,000
Compensation Committee Chair		$  20,000
Audit Committee Member		$    7,500

Pre-Separation Annual Stock Award

On May 9, 2017, each of our non-employee directors, while serving as a director of CNX, received an annual stock grant valued at $150,000 covering 9,561 shares of CNX common stock in the form of RSUs that vest on the first anniversary of the grant date. With respect to this annual stock grant, each of our directors was eligible to elect deferred stock units (“DSUs”) in lieu of RSUs, the receipt of which would be deferred until the director’s separation from service with CNX (or CEIX, as a result of the separation) or another payment date specified by the director.

Pursuant to the terms of the separation, these awards were converted into 6,874 CEIX RSUs, adjusted in a manner to preserve their intrinsic value measured immediately before and after the separation. Otherwise, the original terms and conditions of these awards remain in place and provide that in the event of death or disability or upon the completion of a change in control, all shares subject to such award will vest automatically and be delivered to the director immediately, or as soon as administratively practical thereafter (but in no event later than the 15th day of the third month following that date). If a director’s service is terminated for cause or he or she ceases to provide services to the company for any reason other than death, disability or in connection with a change in control, such director’s award will be cancelled with respect to any unvested shares, and the number of RSUs will be reduced accordingly. The director will then cease to have any rights or entitlements to receive any shares of common stock under those cancelled units.

CNX Deferral Program

Under the terms of the CNX Non-Qualified Directors Deferred Fee Plan, each of our non-employee directors was eligible to defer payment of all or any portion of his or her annual cash Board Retainer fee. Participation in this plan

 

		– 2018 Proxy Statement		17

BOARD OF DIRECTORS AND COMPENSATION INFORMATION

Understanding Our Director Compensation Table

 

was at the election of the particular director. Amounts deferred under this plan are generally invested in hypothetical investment accounts designated by the director from a list of hypothetical alternatives selected by CNX. Earnings are credited to the accounts on quarterly basis, and the account is payable to the director participant in cash as soon as administratively practicably after the earlier of (i) the director’s termination of service as a director, or (ii) the date selected by such director, which date must be at least two years after the end of the year for which the fees are deferred. The plan is an unfunded and unsecured liability of CNX and any benefits paid to our directors will be paid from CNX’s general assets.

In addition, in 2017, in lieu of all or any portion of their annual retainer, non-employee directors had the option to elect to receive non-qualified stock options. Subject to the provisions of the related non-qualified stock option agreements and the plan, options granted to our non-employee directors generally vest on the one-year anniversary of the Board-determined grant date and expire on the tenth anniversary of such grant date.

In 2017, Mr. Powell deferred receipt of his annual stock award until termination of his service with the Board. Also in 2017, Mr. Roberson elected to (i) defer a portion of his Board retainer into the CNX Non-Qualified Directors Deferred Fee Plan, and (ii) receive DSUs in lieu of his annual stock award deliverable four years from the grant date.

Post-Separation Special Spin Award

In December of 2017, our non-employee directors were also awarded by CEIX a post-separation equity award in the form of service-based RSUs to compensate them for their services related to completing the separation. This award was approved by our Board of Directors and supported by prevalence data provided by our Compensation Committee’s independent expert compensation consultant, Mercer, who reports directly to such committee.

Stock Ownership Guidelines

Our Board has adopted stock ownership guidelines to align the interest of our non-employee directors with those of our stockholders. The guidelines provide that our non-employee directors hold CEIX common stock with a value equal to five times their annual Board cash retainer on or before the fifth anniversary of becoming a Board member.

 

18		– 2018 Proxy Statement

The following tables set forth information with respect to the beneficial ownership of CEIX’s common stock, as of March 12, 2018, by:

 

•

beneficial owners of more than 5% of CEIX’s common stock based upon information filed with the SEC; and

 

•

each director and each nominee for director, each named executive officer and all directors and executive officers of CEIX as a group.

The table also presents the ownership of common units of CCR held by each director and each nominee for director, each named executive officer and all directors and executive officers of CEIX as a group, as of March 12, 2018.

Amounts shown below include options that are currently exercisable or that may become exercisable within 60 days of March 12, 2018 (i.e., May 11, 2018) and the shares underlying DSUs and RSUs that may be settled for common stock on or before May 11, 2018. Unless otherwise indicated, the named person has the sole voting and dispositive power with respect to the shares of CEIX common stock (or CCR common units, as applicable) set forth opposite such person’s name.

 

Name and Address of Beneficial Owner		Amount and Nature of  Beneficial Ownership					Percent of Class (1)
Southeastern Asset Management, Inc.(2) 6410 Poplar Ave., Suite 900 Memphis, TN 38119		6,066,147					21.61%
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055		2,801,486					9.98%
Greenlight Capital, Inc.(4) 140 East 45th Street, 24th Floor New York, NY 10017		2,225,663					7.93%
The Vanguard Group (5) 100 Vanguard Blvd. Malvern, PA 19355		2,037,448					7.26%
State Street Corporation(6) One Lincoln Street Boston, MA 02111		1,972,462					7.03%
Dimensional Fund Advisors LP(7) 6300 Bee Cave Road Austin, TX 78746		1,458,036					5.19%
azValor Asset Management, SGIIC, SA(8) Paseo de la Castellana 110 28046, Spain		1,428,338					5.09%

 

		– 2018 Proxy Statement		19

BENEFICIAL OWNERSHIP OF SECURITIES

 

 

Name		CONSOL  Energy Inc.  Shares  Beneficially  Owned					Percent   of  Class(1)					CONSOL Coal  Resources LP  Common Units  Beneficially  Owned					Percent of  Class(1)
James A. Brock		32,763					*					76,551					*
Alvin R. Carpenter(9)		18,574					*					27,483					*
David M. Khani		59,536					*					13,000					*
James J. McCaffrey		7,292					*					8,706					*
John T. Mills(9), (10)		32,398					*					25,000					*
Joseph P. Platt(9)		6,874					*					—					—
William P. Powell(9), (11)		28,787					*					—					—
Edwin S. Roberson(9)		7,484					*					6,500					*
Kurt Salvatori		3,484					*					3,619					*
Martha A. Wiegand		758					*					10,609					*
All current directors and current executive officers as a group (total of 11)		197,973					*					172,688					*

 

*	Indicates less than 1% ownership.

 

(1)	As of March 12, 2018, there were 28,068,321 shares of CEIX common stock outstanding and 15,906,728 common units of CCR outstanding.

 

(2)

Southeastern Asset Management, Inc. (“Southeastern”) has sole voting power with respect to 2,718,911 shares, shared voting power with respect to 3,024,249 shares, no voting power with respect to 322,987 shares, sole dispositive power with respect to 3,041,898 shares and shared dispositive power with respect to 3,024,249 shares. Longleaf Partners Fund has shared voting and dispositive power with respect to 1,425,317 shares. Longleaf Partners Small-Cap Fund has shared voting and dispositive power with respect to 1,523,676 shares. O. Mason Hawkins, Chairman of the Board and CEO of Southeastern, does not have any voting or dispositive power with respect to the listed shares. Southeastern is a registered investment adviser. All of the shares reported are owned legally by Southeastern’s investment advisory clients. This information is based solely on the reporting persons’ most recent Schedule 13G/A filed with the SEC on February 13, 2018, as updated for shares outstanding as of March 12, 2018.

 

(3)

BlackRock, Inc. has sole voting power with respect to 2,716,219 shares and sole dispositive power with respect to 2,801,486 shares. This information is based solely on the reporting person’s most recent Schedule 13G/A filed with the SEC on January 23, 2018, as updated for shares outstanding as of March 12, 2018.

 

(4)

Greenlight Capital, Inc. has shared voting and dispositive power over 1,186,096 shares, DME Advisors, LP has shared voting and dispositive power over 419,344 shares, DME Capital Management, LP has shared voting and dispositive power over 612,236 shares, DME Advisors GP, LLC has shared voting and dispositive power over 1,031,580 shares, and David Einhorn has shared voting and dispositive power over 2,225,663 shares. This information is based solely on the reporting persons’ most recent Schedule 13G/A filed with the SEC on February 14, 2018, as updated for shares outstanding as of March 12, 2018.

 

(5)

The Vanguard Group, Inc. has sole voting power with respect to 14,190 shares, shared voting power with respect to 3,134 shares, sole dispositive power with respect to 2,021,802 shares and shared dispositive power with respect to 15,646 shares. This information is based solely on the reporting person’s most recent Schedule 13G filed with the SEC on February 8, 2018, as updated for shares outstanding as of March 12, 2018.

 

(6)

State Street Corporation has shared voting power and dispositive power with respect to 1,972,462 shares and SSgA Funds Management, Inc. has shared voting and dispositive power with respect to 1,625,523 shares. This information is based solely on the reporting persons’ most recent Schedule 13G filed with the SEC on February 14, 2018, as updated for shares outstanding as of March 12, 2018.

 

(7)

Dimensional Fund Advisors LP has sole voting power with respect to 1,411,769 shares and sole dispositive power with respect to 1,458,036 shares. Dimensional Fund Advisors LP, a registered investment advisor, furnishes investment advice to four registered investment companies and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (collectively, the “Dimensional Funds”). All listed shares are owned by the Dimensional Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries may possess voting and/or investment power over the CEIX shares that are owned by the Dimensional Funds, and may be deemed to be the beneficial owner of the CEIX shares held by the Dimensional Funds. This information is based solely on the reporting person’s most recent Schedule 13G filed with the SEC on February 9, 2018, as updated for shares outstanding as of March 12, 2018.

 

(8)	azValor Asset Management, SGIIC, SA has sole voting power and dispositive power with respect to 1,428,338 shares. This information is based solely on the reporting person’s most recent Schedule 13G filed with the SEC on January 10, 2018, as updated for shares outstanding as of March 12, 2018.

 

(9)	For CEIX, includes 6,874 unvested RSUs that vest within 60 days of March 12, 2018.

 

20		– 2018 Proxy Statement

BENEFICIAL OWNERSHIP OF SECURITIES

Section 16(a) Beneficial Ownership Reporting Compliance

 

(10)	For CEIX, includes 18,320 vested RSUs for which Mr. Mills has elected to defer delivery.

 

(11)	For CEIX, includes 20,622 vested RSUs for which Mr. Powell has elected to defer delivery.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires CEIX’s directors, executive officers and persons who beneficially own more than 10% of CEIX’s common stock to file with the SEC and deliver to CEIX initial reports of ownership and reports of changes in ownership of such registered equity securities. To our knowledge, based solely upon a review of Section 16 filings with the SEC, written representations that no other reports were required, and on CEIX’s records, we believe that during 2017, CEIX’s executive officers, directors and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements.

 

		– 2018 Proxy Statement		21

The Nominating and Corporate Governance Committee has recommended, and the Board has nominated, our current Class I directors, James A. Brock and Alvin R. Carpenter, whose terms expire at the Annual Meeting, for re-election by the stockholders as Class I directors at the Annual Meeting. Upon election, each such director will serve until the 2021 annual meeting of stockholders or until his successor is elected and qualified, or his earlier death, resignation or removal.

To be elected, each nominee must receive a plurality of the votes cast (i.e., the director nominees who receive the highest number of “for” votes cast, up to the maximum number of directors to be elected, are elected as directors). If any nominee should for any reason become unable to serve, all shares represented by valid proxies will be voted for the election of such other person as the Board may designate, as recommended by the Nominating and Corporate Governance Committee. Alternatively, the Board may reduce the number of directors to eliminate the vacancy.

Our bylaws provide that if an incumbent director receives a greater number of votes “withheld” from his or her election than votes “for” such director nominee’s election, the director must tender his or her resignation promptly to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose its decision and the underlying rationale in a press release, a filing with the SEC or other broadly disseminated means of communication within 90 days from the date of the certification of the election results.

The following biographies include information concerning the nominees for director and the continuing directors, including their recent employment, positions with CEIX, other directorships, board committee memberships and ages as of March 12, 2018.

 

22		– 2018 Proxy Statement

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Biographies of Class I Director Nominees

 

Biographies of Class I Director Nominees

JAMES A. BROCK

 

 

 

		PRESIDENT & CHIEF EXECUTIVE OFFICER OF CEIX   Director Since: 2017   Age: 61		Class I Director Term expires 2018   CEIX Committees: •  Health, Safety and Environmental

BACKGROUND:

James A. Brock has served as our Chief Executive Officer since June 21, 2017, and as our President since December 4, 2017, and he has been a member of our Board since November 28, 2017. He currently serves as a member of our Board’s Health, Safety and Environmental Committee. Mr. Brock previously served as the Chief Operating Officer-Coal of CNX from December 10, 2010 until November 28, 2017, when CEIX separated from CNX. Mr. Brock also currently serves as Chief Executive Officer and Chairman of the board of directors of the general partner of CONSOL Coal Resources LP, a position he has held since March 16, 2015. Previously, he served as Senior Vice President-Northern Appalachia-West Virginia Operations of CNX from 2007 to 2010, and as Vice President-Operations of CNX from 2006 to 2007. Mr. Brock began his career with CNX in 1979 at the Matthews Mine and since then has served at various locations in many positions including Section Foreman, Mine Longwall Coordinator, General Mine Foreman and Superintendent.

QUALIFICATIONS:

With a career in coal spanning five decades, we believe Mr. Brock’s extensive knowledge of our industry and our operations gained during his years of service with CNX, and now CEIX, provides our Board with valuable experience.

 

		– 2018 Proxy Statement		23

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Biographies of Class I Director Nominees

 

ALVIN R. CARPENTER

 

 

 

		FORMER VICE CHAIRMAN – CSX CORPORATION   Director Since: 2017   Age: 76		Class I Director Term expires 2018   CEIX Committees: •  Compensation •  Health, Safety and Environmental (Chair)

BACKGROUND:

Alvin R. Carpenter joined the Board on November 28, 2017. He currently serves as a member of our Board’s Compensation Committee and Health, Safety and Environmental Committee, which he chairs. Mr. Carpenter previously served as a member of the board of directors of CNX, from June 2013 until November 28, 2017, when CEIX separated from CNX. He retired from CSX Corporation (CSX), a railroad company, in February 2001, where he had served as Vice Chairman from July 1999 until his retirement. From 1962 until February 2001, he held various positions with CSX, including President and Chief Executive Officer of CSX Transportation, Inc. from 1992 to 1999 and Executive Vice President-Sales and Marketing of CSX Transportation, Inc. from 1989 to 1992. Mr. Carpenter served as a director of Stein Mart, Inc., a retail company, from 1996 to 2015, where he served as chairman of its compensation committee and as a member of the corporate governance committee. Mr. Carpenter also served as a director of Regency Centers Corporation, an owner and developer of dominant, grocery-anchored retail centers, from 1993 until 2016, where he served as a member of its audit, compensation and nominating and corporate governance committees. He served as a director of Lender Processing Services, Inc. from 2009 until it was sold to Fidelity National Financial, Inc. in January 2014, where he had served as its lead director, as chairman of the corporate governance and nominating committee and as a member of the compensation committee. Additionally, he previously served on the boards of directors of PSS World Medical, Inc., Barnett Bank, Inc., Nations Bank, American Heritage Life Insurance Company, Blue Cross & Blue Shield of Florida, One Valley Bancorp of West Virginia and Florida Rock Industries, Inc. In Florida, he also chaired Governor Jeb Bush’s Commission on Workers’ Compensation Reform and served on Governor Bush’s Advisory Council on Base Realignment and Closure.

QUALIFICATIONS:

Mr. Carpenter brings over 50 years of business experience to our Board, including 40 years of experience in the railroad industry where he has served in a wide variety of operating, planning and sales and marketing positions. In addition to the business expertise he developed while employed in the railroad industry, Mr. Carpenter has developed significant expertise in the areas of corporate governance, compensation and audit matters through his service on various public company boards and board committees.

 

24		– 2018 Proxy Statement

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Biographies of Continuing Directors

 

Biographies of Continuing Directors

Continuing Class II Directors with Terms Expiring at the 2019 Annual Meeting of Stockholders

JOSEPH P. PLATT

 

 

 

		GENERAL PARTNER – THORN PARTNERS, LP   Director Since: 2017   Age: 70		Class II Director Term expires 2019   CEIX Committees: •  Compensation (Chair) •  Nominating and Corporate Governance •  Health, Safety and Environmental

BACKGROUND:

Joseph P. Platt joined the Board on November 28, 2017. He currently serves as a member of our Board’s Compensation Committee, which he chairs, Nominating and Corporate Governance Committee and Health, Safety and Environmental Committee. Mr. Platt previously served as a member of the board of directors of CNX from May 2016 until November 28, 2017, when CEIX separated from CNX. He is the general partner at Thorn Partners, LP, a family limited partnership, a position he has held since 1998. Mr. Platt’s career at Johnson and Higgins, a global insurance broker and employee benefits consultant (J&H), spanned 27 years until 1997, when J&H was sold to Marsh & McLennan Companies. At the time of the sale, Mr. Platt was an owner, director and executive vice president of J&H. Mr. Platt has served on the board of directors of Greenlight Capital Re, Ltd., a property and casualty reinsurer, since 2004 and has been its lead independent director since 2007, and also serves as an independent director of BlackRock’s Open End & Liquidity Funds and on the boards of various other nonpublic companies and not-for-profit institutions.

QUALIFICATIONS:

Mr. Platt brings significant financial, compensation and risk management expertise to our Board.

 

		– 2018 Proxy Statement		25

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Biographies of Continuing Directors

 

EDWIN S. ROBERSON

 

 

 

		FORMER CHIEF EXECUTIVE OFFICER – CHRIST COMMUNITY HEALTH SERVICES   Director Since: 2017   Age: 73		Class II Director Term expires 2019   CEIX Committees: •  Audit •  Nominating and Corporate Governance (Chair) •  Health, Safety and Environmental

BACKGROUND:

Edwin S. Roberson joined the Board on November 28, 2017. He currently serves as a member of our Board’s Audit Committee, Nominating and Corporate Governance Committee, which he chairs, and Health, Safety and Environmental Committee. Mr. Roberson previously served as a member of the board of directors of CNX from May 2016 until November 28, 2017, when CEIX separated from CNX. From 2014 until his retirement on December 31, 2017, Mr. Roberson served as Chief Executive Officer of Christ Community Health Services, a health system of eight clinics providing high quality healthcare to the underserved in the Memphis, Tennessee community. Prior to that, Mr. Roberson served as Chief Executive Officer of various cancer research and biotech firms, and as President of Beacon Consulting, LLC, a business consulting firm, from 2006 to 2011. From 1991 to 2006, he worked at Conwood LLC, the nation’s second-largest manufacturer of smokeless tobacco products and a major seller and distributor of tobacco products manufactured by third parties, where he served in several roles, including Chief Financial Officer and, ultimately, President. After serving in the Army from 1969 to 1971, where he was awarded two Bronze Stars in Vietnam, Mr. Roberson, a CPA, began his professional career at KPMG, an international accounting and consulting firm, where he was a tax partner until 1991. Mr. Roberson also served on the board of directors of Paragon National Bank, where he was chairman of the audit committee. Mr. Roberson serves on the board of directors of Infocare, Inc. (US). Additionally, he also serves on the board of directors of several private companies.

QUALIFICATIONS:

Mr. Roberson brings to the Board significant leadership skills and financial, accounting and strategy expertise. Further, Mr. Roberson is a certified public accountant.

 

26		– 2018 Proxy Statement

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Biographies of Continuing Directors

 

Continuing Class III Directors with Terms Expiring at the 2020 Annual Meeting of Stockholders

JOHN T. MILLS

 

 

 

		FORMER CHIEF FINANCIAL OFFICER – MARATHON OIL CORPORATION   Director Since: 2017   Age: 70		Class III Director Term expires 2020   CEIX Committees: •  Audit (Chair) •  Compensation •  Health, Safety and Environmental

BACKGROUND:

John T. Mills joined the Board on November 14, 2017. He currently serves as a member of our Board’s Audit Committee, which he chairs, Compensation Committee and Health, Safety and Environmental Committee. Mr. Mills previously served as a member of the board of directors of CNX from March 2006 until November 28, 2017, when CEIX separated from CNX. From December 2007 until August 2015, he served on the board of directors of Cal Dive International Inc., a marine contractor providing manned diving, derrick, pipelay and pipe burial services to the offshore oil and natural gas industry, where he served as lead independent director, and as a member of the audit, compensation, and corporate governance and nominating committees. From January 2008 through June 2010, Mr. Mills was a member of the board of directors and audit, conflicts and risk management committees of Regency GP, LLC, the general partner of Regency GP, LP, the general partner of Regency Energy Partners LP, a natural gas gathering, processing and transportation master limited partnership. Mr. Mills joined the board of directors of Horizon Offshore, Inc., a marine construction company, in June 2002 and served as the chairman of the board of directors from September 2004 until December 2007, when Horizon Offshore, Inc. was acquired by Cal Dive International, Inc. Mr. Mills was the Chief Financial Officer of Marathon Oil Corporation, an integrated energy company, from January 2002 until his retirement in December 2003. In 2011, Mr. Mills attended the Harvard Business School program “Making Corporate Boards More Effective.”

QUALIFICATIONS:

As a licensed attorney with over 40 years of business experience, including 16 years as an officer of Marathon Oil Corporation and U.S. Steel Corporation, Mr. Mills brings significant knowledge and experience to our Board. In particular, Mr. Mills brings an in-depth understanding of the evaluation of organic growth capital projects and acquisition and disposition opportunities, and the importance of maintaining a competitive capital structure and liquidity. In addition, having previously served as Senior Vice President, Finance and Administration, and later Chief Financial Officer of Marathon Oil Corporation, Mr. Mills has developed a wealth of financial knowledge with respect to the oversight of (i) the preparation of consolidated financial statements, (ii) internal audit functions, and (iii) public accountants, skills which are critical to our company and particularly our Audit Committee.

 

		– 2018 Proxy Statement		27

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Biographies of Continuing Directors

 

WILLIAM P. POWELL

 

 

 

		MANAGING PARTNER – 535 PARTNERS LLC   Director Since: 2017   Age: 62		Class III Director Term expires 2020   CEIX Committees: •  Audit •  Nominating and Corporate Governance •  Health, Safety and Environmental

BACKGROUND:

William P. Powell joined the Board on November 28, 2017 and has served as Chairman of our Board since that time. He currently serves as a member of our Board’s Audit Committee, Nominating and Corporate Governance Committee and Health, Safety and Environmental Committee. Mr. Powell previously served as a member of the board of directors of CNX from January 2004 until November 28, 2017, when CEIX separated from CNX. Mr. Powell also previously was a director of Cytec Industries, a global specialty chemicals and materials company, from 1993 until its merger with Solvay SA in December 2015, where he served as lead independent director, as chair of the governance committee and as a member of the audit committee. From May 2001 until May 2007, Mr. Powell was a Managing Director of William Street Advisors, a New York City-based merchant banking boutique. Mr. Powell resigned from William Street Advisors to establish a family office, 535 Partners LLC, where he has served as Managing Partner since May 2007. Prior to his time at William Street Advisors, he served as a Managing Director of UBS Warburg LLC and its predecessor Dillon, Read & Co. Inc. since 1991.

QUALIFICATIONS:

With an MBA degree and over 30 years of financial, management and investment experience, Mr. Powell brings a wealth of knowledge to our Board. Having served on multiple public company boards for over 20 years, Mr. Powell also has significant expertise in corporate governance matters.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE ABOVE-NAMED CLASS I DIRECTOR NOMINEES FOR THE BOARD OF DIRECTORS.

 

28		– 2018 Proxy Statement

CEIX’s executive officers are listed below. Each officer is appointed by the Board and holds office for the term set forth in the officer’s written employment agreement or until the officer’s successor has been elected and qualified, or until such officer’s earlier death, resignation or removal.

 

Name		Age					Executive   Since					Position
James A. Brock		61					2017					President and Chief Executive Officer
David M. Khani		54					2017					Executive Vice President, Chief Financial Officer and Treasurer
James J. McCaffrey		61					2017					Senior Vice President – Coal Marketing
John Rothka		40					2017					Chief Accounting Officer
Kurt Salvatori		48					2017					Chief Administrative Officer
Martha A. Wiegand		47					2017					General Counsel and Secretary

The biographical information for Mr. Brock is provided under Proposal No. 1 – Election of Directors.

 

		David M. Khani   Mr. Khani has served as our Executive Vice President and Chief Financial Officer since August 2, 2017, and has served as our Treasurer since December 11, 2017. Mr. Khani previously served as the Executive Vice President and Chief Financial Officer at CNX from March 1, 2013 to August 2, 2017. Mr. Khani joined CNX in 2011 as Vice President of Finance, where he played a key role in the growth of CNX’s exploration and production business, and was integrally involved in the separation of CEIX from CNX. Prior to joining CNX, Mr. Khani was with FBR Capital Markets & Co., an investment banking and advisory firm, and held the following positions: Director of Research from February 2007 through October 2010, and then Co-Director of Research from November 2010 through August 2011. Mr. Khani also serves as Chief Financial Officer and as a director of the general partner of CONSOL Coal Resources LP and served in those same capacities with CONE Midstream Partners LP until January 3, 2018.
		James J. McCaffrey   Mr. McCaffrey has served as our Senior Vice President- Coal Marketing since July 10, 2017 and acts as our functioning chief commercial officer. Mr. McCaffrey also has served as Senior Vice President- Sales of CONSOL Pennsylvania Coal Company, a wholly-owned subsidiary of CEIX, since June 2016. From January 2013 to June 2016, Mr. McCaffrey served as Senior Vice President- Energy Marketing for CONSOL Pennsylvania Coal Company, and from April 2003 to January 2013, he served as Senior Vice President of Coal Sales, Vice President of Materials & Supply Chain Management, Senior Vice President- CNX Land Resources, Vice President of Supply Chain and Vice President of Marketing Services in the coal operations group of CNX. Mr. McCaffrey started his career as a coal miner with CNX in 1976, and joined CNX’s management team as Vice President and General Manager of Consolidation Coal Mining Operations in March 2002.

 

		– 2018 Proxy Statement		29

EXECUTIVE OFFICERS

 

		John Rothka   Mr. Rothka has served as our Chief Accounting Officer since November 22, 2017. Mr. Rothka also serves as the Chief Accounting Officer of the general partner of CONSOL Coal Resources LP, a position he has held since August 2, 2017. Prior to his appointment as the Chief Accounting Officer of the general partner of CONSOL Coal Resources LP and beginning in July 2015, Mr. Rothka served as the Controller of the general partner. Mr. Rothka joined the Accounting Department of CNX in September 2005, where he served in positions of increasing responsibility, and was promoted to Senior Manager in February 2012, a position he served in until July 2015. Prior to joining CNX, Mr. Rothka began his professional career at the accounting firm of Aronson LLC, where he served from September 1999 to November 2002, before joining Deloitte & Touche from November 2002 to September 2005, where he held several positions of increasing responsibility in the audit and assurance groups.
		Kurt Salvatori   Mr. Salvatori has served as our Chief Administrative Officer since July 10, 2017. Mr. Salvatori has also served as Vice President- Administration of CONSOL Pennsylvania Coal Company since January 1, 2017. Previously, Mr. Salvatori served as Vice President Shared Services for CNX from 2016 to January 2017, and prior to that as Vice President Human Resources for CNX from September 2011 to June 2016. Mr. Salvatori joined CNX in April 1992 and held numerous positions at CNX and CNX Gas Corporation, including Director of Human Resources from April 2006 to September 2011, Manager of Human Resources from January 2005 to April 2006, and Supervisor of Retirement and Investment Plans from April 2002 to January 2005.
		Martha A. Wiegand   Ms. Wiegand has served as our General Counsel and Secretary since July 10, 2017. Ms. Wiegand has also served as General Counsel and Secretary of the general partner of CONSOL Coal Resources LP since March 16, 2015. Ms. Wiegand joined the legal department of CNX in December 2008 as Senior Counsel and was promoted to Associate General Counsel of CNX effective in 2012, where she was responsible for a variety of legal matters, including coal and natural gas marketing and transportation, labor and employment, financing arrangements and certain corporate transactions. Prior to joining CNX, Ms. Wiegand worked for approximately 10 years for several large Pittsburgh-based law firms, where she handled financing and corporate transactions for clients in the banking and energy industries, among others. She is licensed to practice law in Pennsylvania and New Jersey and is a member of the American Bar Association, the Pennsylvania Bar Association and the Energy & Mineral Law Foundation.

 

30		– 2018 Proxy Statement

Compensation Discussion and Analysis

 

		– 2018 Proxy Statement		31

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

Compensation Discussion and Analysis

We Became an Independent, Publicly Traded Company on November 27, 2017

CONSOL Energy Inc. (“CEIX”) became an independent, publicly traded company on November 28, 2017 when its former parent (now called CNX Resources Corporation or “CNX”) completed the legal and structural separation of its coal and gas businesses through a tax free spin-off of CEIX to CNX’s stockholders. The separation was effected by the pro rata distribution by CNX of all of CEIX’s outstanding common stock to CNX stockholders.

This Compensation Discussion and Analysis (“CD&A”) discusses the compensation decisions made for the fiscal year 2017 with respect to the named executive officers listed below (“NEOs”) by CNX prior to the November 28, 2017 separation and by CEIX’s newly-formed compensation committee after we became an independent, publicly traded company on November 28, 2017 (the “Compensation Committee”). To provide a full understanding of how our NEOs were compensated for 2017 and will be compensated in 2018, this CD&A specifically addresses the following:

 

•

Historical compensation philosophy, programs and practices of CNX: Prior to the separation, decisions regarding NEO compensation were made primarily by CNX’s Compensation Committee (“CNX Committee”), by CNX management or by the board of directors of the General Partner in implementing the executive compensation programs of CNX and CONSOL Coal Resources LP (NYSE: CCR). CCR is a publicly traded master limited partnership that CNX sponsored prior to the separation and which was included in our coal business as part of the separation.

 

•

Impact of Terms of the Employee Matters Agreement on NEO Compensation: In addition, as addressed in further detail throughout the CD&A, our initial compensation programs following the separation were prescribed to a great extent by the terms of the Employee Matters Agreement entered into by CNX and CEIX as part of the separation (“EMA”). The EMA provided for the conversion and adjustment of outstanding equity and incentive awards granted by CNX to its senior executives who joined CEIX in connection with the separation, and also required us to establish, maintain or assume certain retirement and executive severance arrangements with terms substantially similar to those provided by CNX, which at least through the end of 2017, have remained largely consistent with those programs in place at CNX.

 

•

Decisions by Our New Compensation Committee Following the Separation: This CD&A also addresses compensation actions and decisions made by our new Compensation Committee in late 2017 and early 2018 following the separation.

Our Named Executive Officers (“NEOs”)

This CD&A discusses the compensation of our NEOs who served in the positions listed below during 2017:

 

Name		Title
James A. Brock		President and Chief Executive Officer
David M. Khani		Executive Vice President, Chief Financial Officer and Treasurer
James J. McCaffrey		Senior Vice President, Coal Marketing
Martha A. Wiegand		General Counsel and Secretary
Kurt Salvatori		Chief Administrative Officer

 

32		– 2018 Proxy Statement

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

Highlights of Post-Separation CEIX Compensation Committee Actions (December 2017 and January 2018)

Our Compensation Committee first met in December 2017 following the completion of the separation, and met again in January 2018. At those meetings, the new committee considered and approved the framework summarized in the table below for CEIX’s new compensation program and worked to complete the 2017 compensation program that was first established by the CNX Committee in early 2017 and which we assumed as part of the separation. Our Compensation Committee considered these actions in the context of our company’s strong operational and financial performance during 2017 illustrated by the:

 

•

successful separation of our company from CNX;

 

•

annual coal production of 26.1 million tons;

 

•

record annual throughput of 14.3 million tons through the CONSOL Marine Terminal;

 

•

growth of 6% in annual sales compared to 2016;

 

•

growth of 5% of average revenue per ton compared to 2016; and

 

•

strong growth portfolio built by the company for future export opportunities in 2018 to 2020.

Details relating to the actions summarized below are included in the sections of the CD&A referenced in the table below.

 

Action		Description				Page/Section     in CD&A for Further Description
Adopt New Compensation Philosophy		Our Compensation Committee adopted a philosophy that recognizes the highly competitive and regulated environment in which we operate and the objective of which is to: (i) attract and retain key talent necessary for us to compete; (ii) incentivize our NEOs with a pay-for-performance culture; and (iii) align risk-taking with the sustainability and long-term financial health of our company.				35
2017 Short Term Incentive Program (“STIC”) Payout		Our Compensation Committee and Board (upon the recommendation of the Compensation Committee) authorized 2017 annual cash awards under the 2017 STIC and assumed by CEIX under its Omnibus Plan under the terms of the EMA based on the attainment of pre-established performance goals initially related to Coverage Ratio and a percentage of the Pennsylvania Mining Complex Dropdowns, adjusted to reflect the impact of the separation.				38-39
2015, 2016 and 2017 Long-Term Incentive Equity Program (“LTIC”) PSU Awards		Our Compensation Committee and Board (upon the recommendation of the Compensation Committee) reviewed the performance related to the vesting of three (3) separate long-term performance-based restricted stock unit awards (“PSUs”) (all of which were initially approved by CNX and assumed by CEIX under the Omnibus Plan) based on pre-established performance goals. In light of the goals having been met as to the 2015 LTIC and 2016 LTIC, the Compensation Committee and Board approved vesting for these programs. The Compensation Committee and Board did not approve any vesting with respect to the 2017 LTIC program because the performance metrics were not met.				40-44

 

		– 2018 Proxy Statement		33

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

Action		Description						Page/Section in CD&A for Further Description
Spin-related Cash and RSU Awards		Our Compensation Committee and Board (upon the recommendation of the Compensation Committee) authorized the payment of cash awards and service-based RSU awards in recognition of the extraordinary efforts displayed by our NEOs in completing the successful separation of CEIX from CNX. Our CEO declined to accept any cash award for his efforts in completing the separation.						42
2018 Compensation Adjustments		Our Compensation Committee and Board (upon the recommendation of the Compensation Committee) approved adjustments to three of the NEO 2018 base salaries and also adjusted the annual and long-term incentive targets for certain NEOs based on a review of compensation data using a selected “peer group” of companies, as well as against general industry standards.						46
2018 Peer Group		Our Compensation Committee and Board (upon the recommendation of the Compensation Committee) selected a peer group of companies based on the recommendation of its compensation consultant against which to evaluate the competitive nature of our NEO compensation amounts, programs, plans and policies.						46-47
Change in Control and Severance Agreements		Our Compensation Committee and Board approved severance and double trigger change in control agreements entitling each NEO to severance benefits upon a qualifying termination of employment absent cause in a change in control scenario and in a non-change in control scenario. These agreements became effective on February 15, 2018.						47
President and CEO Employment Agreement		Our Compensation Committee and Board approved an employment agreement for our President and CEO, enumerating certain entitlements relating to his position and describing his responsibilities, as well as including his right to severance benefits upon a qualifying termination of employment absent cause whether or not related to a change in control (including CIC and non-CIC benefits). This agreement became effective on February 15, 2018.						47

Say-on-Pay Vote

We will have our first say-on-pay vote (and also our first say-when-on-pay vote) at the Annual Meeting (see Proposal No. 3). Our Board has recommended that we hold annual say-on-pay votes.

Our Compensation Committee and senior management will consider stockholder input, including the advisory say-on-pay vote, as we evaluate the future design of our executive compensation programs and the specific compensation decisions for each of our NEOs.

 

34		– 2018 Proxy Statement

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

CEIX Executive Compensation Policies and Practices

Our commitment to strong corporate governance practices extends to the compensation plans, principles, programs and policies established by our Compensation Committee and our Board, which include the following governance practices and policies:

 

WHAT WE DO		WHAT WE DON’T DO
✓  Pay for Performance      ✓  Meaningful Stock Ownership/Holding Requirements      ✓  Anti-hedging Policy     ✓  Assess Compensation Risk		No excessive Perquisites     No Income Tax Gross Ups     No backdating of Stock Options     No repricing of Stock Options        (without stockholder approval)
✓  Equity Grant Policies		No discounting of Stock Options
✓  Claw Back Provisions in Equity Awards
✓  Double Trigger Cash Change in Control Provisions
✓  Independent Compensation Consultant

CEIX Executive Compensation Philosophy and Pay Elements

One of the first steps that our Compensation Committee took after the separation was to adopt a compensation philosophy in December 2017. Our compensation philosophy is designed to attract and retain key talent necessary for us to compete, promote a pay-for-performance culture, incentivize our NEOs to achieve desired financial and operating results, and create a balanced compensation program that aligns risk-taking with the sustainability and long-term financial health of our company.

Our philosophy is founded on the following six guiding principles:

 

•

Compensation targets and the mix of pay based on market practices.

 

•

Actual compensation should align with results against performance objectives.

 

•

Incentives should promote above-median pay when performance exceeds company and peer expectations and below-median pay when performance lags behind these indicators.

 

•

Compensation should be aligned with the long-term interest of our stockholders.

 

•

Compensation practices and policies should not encourage unreasonable risk-taking.

 

•

Compensation programs should align with our corporate values.

Our compensation philosophy also reflects our commitment to enhancing management retention and leadership stability in a highly competitive market by subjecting a significant portion of total compensation to multi-year vesting or performance conditions described on pages 40-44, relating to our long-term compensation programs.

 

		– 2018 Proxy Statement		35

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

2017 Compensation

Overview of Elements of Total 2017 Compensation Program. In 2017, our NEOs were compensated through the following elements of compensation.

 

Compensation Element

Form of Compensation

Purpose

Who Approved?

Base Salary

Cash

Provides fixed compensation element necessary to attract and retain key executives

CNX Committee and CNX management

2017 STIC

Cash

Motivates NEOs to work towards achievement of key annual financial, operational and strategic objectives, including a focus on sustainability, environmental compliance, safety, profitability and balance sheet strength

CNX Committee and CNX management

2017 LTIC   •  2017 CNX LTIC (Khani only)   •  CCR Phantom Units (all NEOS other than Khani)

PSUs: Performance-based restricted stock units that vest ratably over 5 years based on pre-established performance metrics for Mr. Khani   RSUs: RSUs that vest over 3-year period for Mr. Khani   CCR Phantom Units: Service based units that vest ratably over three years and settled in CCR units for Messrs. Brock, McCaffrey, Salvatori and Ms. Wiegand

The combination of performance factors tied to absolute stock price and relative total stockholder return (“TSR”) promote investor alignment through ownership consistent with peer group practices   RSUs and CCR Phantom Units encourage retention of our NEOs   CCR Phantom Units designed to focus on executives who devoted 100% of their time and efforts on the management and operation of the Pennsylvania Mining Complex

CNX Committee, board of directors of General Partner and CNX management

2017 Spin Awards

Cash (for NEOs other than CEO)   RSUs – RSUs that vest ratably over 3-year period

To recognize extraordinary efforts in completing the separation in a manner that aligned with investor interests   To encourage retention of critical leaders for successful launch of new public company

CEIX Compensation Committee

Change in Control or Retention Agreements

Pre-Separation Change in Control Agreements (Mr. Brock, Mr. Salvatori and Ms. Wiegand)   Retention Agreement (Mr. McCaffrey)

To attract and retain NEOs by providing competitive benefits and to ensure NEOs remain focused and act in the best interest of the company when faced with significant strategic event

Pre-Separation Agreements approved by CNX Committee and board of directors of General Partner

 

36		– 2018 Proxy Statement

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

Pay Mix. The charts below illustrate the target total direct compensation opportunity for 2017 for Mr. Brock and the average of our other NEOs.

 

CEO   20.2% Base; 13.1% STIC; 66.7% LTIC		Other NEOs   27.6% Base; 14.2% STIC; 58.2% LTIC

CNX Compensation Consultant. In setting 2017 compensation, the CNX Committee used Willis Towers Watson, an independent expert compensation consultant reporting directly to the CNX Committee, to assist on executive compensation matters for its NEOs, which included Messrs. Brock and Khani.

CNX Committee and CNX Management Approved 2017 Base Salaries, STIC and LTIC. Decisions regarding our NEO’s 2017 compensation were made in the first quarter of 2017 before the CNX board of directors had definitively determined to effect the separation. The determination of which executives would become part of CEIX’s team following the separation was made after 2017 compensation decisions had already been made.

In establishing the 2017 compensation program, the CNX Committee and CNX management considered the nature and scope of our NEOs’ responsibilities and prior performance of CNX as well as individual contributions to CNX’s prior financial results. In addition, when considering 2017 compensation for Mr. Brock and Mr. Khani, the CNX Committee considered an outside compensation consultant report on survey and reported data for compensation paid to executives with similar responsibilities at similarly-situated companies and, in particular, whether the total compensation opportunity for Mr. Brock and Mr. Khani was competitive with the total compensation opportunities offered to similarly-situated executives by CNX’s peers. CNX’s 2017 peers used in making this determination reflected a mix of natural gas and coal companies.

2017 CNX Peer Group. During 2017, the CNX Committee also used a peer group comprised of thirteen companies reflecting CNX’s unique mix of both natural gas and coal companies, against which the committee measured the overall competitive nature of CNX’s compensation programs. In addition to this peer group, the CNX Committee also considered general industry competitive data to evaluate its compensation programs.

2017 Base Salaries. Base salaries are intended to provide a level of compensation sufficient to attract and retain an effective management team when considered in combination with the STIC and LTIC awards and other elements of CNX’s 2017 executive compensation program.

 

Named Executive Officers		Base Salary for 2017
Mr. Brock				$420,250
Mr. Khani				$530,566
Mr. McCaffrey				$389,500
Ms. Wiegand				$235,000
Mr. Salvatori				$241,000

 

		– 2018 Proxy Statement		37

CEO 20.2% Base; 13.1% STIC; 66.7% LTIC Other NEOs 27.6% Base; 14.2% STIC; 58.2% LTIC LTIC, 66.7% Base, 20.2% STIC, 13.1% LTIC, 58.2% Base, 27.6% STIC, 14.2%

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

The Compensation Committee increased base salaries in 2018 as part of its overall evaluation and setting of 2018 compensation. See “2018 Actions by Compensation Committee” below.

2017 STIC and Impact of the Separation. CNX developed a 2017 STIC program that was designed to reward and retain executives who devoted substantially all of their time and efforts toward the management and operation of the Pennsylvania Mining Complex, which included Mr. Brock, Mr. McCaffrey, Mr. Salvatori and Ms. Wiegand.

Mr. Khani was treated differently for 2017 because he served as the Chief Financial Officer of CNX until August 2, 2017 and then began serving as the Chief Financial Officer of the General Partner on August 2, 2017. At the time that Mr. Khani changed his role on August 2, 2017, CNX and the board of directors of the General Partner agreed that Mr. Khani’s 2017 STIC payments would be based on eight months of performance by CNX under its 2017 STIC and for four months of performance under the 2017 STIC designed to reward executives who focused solely on the Pennsylvania Mining Complex.

The CNX 2017 STIC in which Mr. Khani participated for the first eight months was based on the goal of generating free cash flow as follows: Operating Cash Flow – Capital Expenditures + Asset Sales + Net Investments in CNX Midstream = Cash Flow. The free cash flow performance factor had a score ranging from 0% to 200% with a score of 100% indicating target performance. Actual performance against this performance goal for the full year was 148% of target performance.

Originally, the 2017 STIC applied to the January 1, 2017 – December 31, 2017 performance period. The program was structured to align management’s interests with the key performance goals of (1) Coverage Ratio* and (2) the percentage of Pennsylvania Mining Complex Dropdowns*, adjusted by safety (+/- 15%) and environmental performance (+/- 10%) modifiers under the 2017 STIC. CNX and the board of directors of the General Partner believed these metrics, when established, were appropriate and effective measures for our NEOs with respect to short-term performance. When setting the threshold levels of performance, CNX and the board of directors of the General Partner believed the levels to be achievable goals. At the time the target performance levels were determined, CNX and the board of directors of the General Partner also believed the goals to be aggressive, but obtainable. The maximum level of performance, based on 200% of target performance, was believed to be realizable, but only with exceptional performance.

The performance factors had a potential score ranging from 0% – 200%, with a target score of 100%. If the threshold, or minimum, score of 50% had not been achieved, a score of zero would be assigned, with no payout.

The 2017 STIC award payout formula appears below:

 

Annual Base Salary

X

Target Opportunity Percentage (% of Base Salary)

X

(Coverage Ratio* & PAMC Dropdown* Performance Factor +/- Modifiers) (Up to 200%)

=

STIC Award Payout

The performance goals are equally weighed at 50%.

 

Performance Goals		Coverage Ratio   (50%)					% of PAMC   Dropdown (50)%
Threshold (50%)		1.00					15%
Target (100%)		1.15					20%
Maximum (200%)		1.30					30%

Under the terms of the EMA, CEIX assumed responsibility for payment of all 2017 STIC payments to our NEOs. The EMA specifically provided that for Mr. Khani, 2017 STIC performance would be measured based on relevant performance metrics of CNX for the first eight months of 2017 and based on the relevant performance metrics of

 

38		– 2018 Proxy Statement

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

CCR for the last four months of 2017. The other NEOs participated in the 2017 STIC (the CCR STIC) for the full 2017 year so no proration was necessary.

In January 2018, the Compensation Committee evaluated and determined achievement with the performance goals and the resulting amounts of payments for our NEOs under the 2017 STIC. As a result of the separation, the Compensation Committee substituted the impact of the completion of the separation for the percentage of the Pennsylvania Mining Complex Dropdowns in calculating the 2017 STIC. This was done in recognition that our former parent, CNX, included the Dropdown performance measure as a goal to accomplish the separation. Given that the separation transaction was successfully accomplished the Dropdown goal was deemed by the committee to have been successfully achieved.

The percentage payout for the 2017 STIC, as well as the achievement of the performance goals (as adjusted in light of the Compensation Committee determinations) against actual performance appear in the table below.

 

Performance Goal1		Actual Results					Weighted Score
Coverage Ratio*		1.30					100%
Separation*		100%					100%

 

			Initial Score without Modifier:				200	%
			Safety:				-1.15	%
			Environmental				0.00	%
			Final Score with Modifiers:				197.70	%

The following table shows the details of the payments made to our NEOs under the 2017 STIC, based on their target payout (as a percentage of base salary) multiplied by the payout percentage of 197.70% (except for Mr. Khani whose blended payout percentage was 165.03%).

 

NEO		Target Opportunity   Percentages   (% of Base Salary)(1)					Target Payout Opportunity					STIC Payout     Score     (% of     Opportunity)					Actual Payout
Mr. Brock		65%							$273,163			197.70%							$540,042
Mr. Khani		70%							$371,396			165.03%							$612,915
Mr. McCaffrey		50%							$194,250			197.70%							$385,021
Ms. Wiegand		30%							$  70,500			197.70%							$139,379
Mr. Salvatori		35%							$  84,350			197.70%							$166,760

2017 Performance Highlights of for our NEOs.

 

•

James A. Brock. Mr. Brock successfully led CEIX (formerly known as CONSOL Mining Corporation) in its separation from CNX and CEIX’s achievement of record performance in 2017, and continued his role as Chief Executive Officer of the General Partner. He also led the Pennsylvania Mining Complex to have a record 2017 year. In particular, CEIX achieved record annual coal production of 26.1 million tons, record annual throughput of 14.3 million tons through the CONSOL Marine Terminal, growth of 6% in annual sales compared to 2016 and growth of 5% of average revenue per ton compared to 2016.

 

•

David M. Khani. As the Chief Financial Officer, Mr. Khani has played and continues to play a critical role in supporting Mr. Brock’s leadership of our new company’s business, and in light of his significant experience

 

1

*This CD&A, which relates to 2017 compensation determinations, contains references to one or more financial measures (indicated by *) utilized by the CNX Committee and the Compensation Committee that have not been calculated in accordance with GAAP. A reconciliation of disclosed non-GAAP financial measures used by CNX and CEIX and in the 2017 compensation determinations to the most directly comparable GAAP financial measures is provided in Appendix A to this Proxy Statement.

 

		– 2018 Proxy Statement		39

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

relating to the coal industry, he also serves as the Chief Financial Officer of the General Partner. During 2017, Mr. Khani led our company’s financial team in securing approximately $1.6 billion of multi levels of complex financing for CEIX and CCR in connection with the separation in volatile financial markets for coal producers.

 

•

James J. McCaffrey. Mr. McCaffrey holds a critical role as the leader of the marketing team for our coal business, which had a second consecutive year of sales volume growth, an increase of 6% from 2016 and 14% from 2015. Mr. McCaffrey’s team built CEIX’s coal sales portfolio for 2018 through 2020, resulting in our company being greater than 95% contracted for 2018, 70% contracted for 2019, and 24% contracted for 2020, assuming an annual production rate of approximately 27 million tons.

 

•

Martha A. Wiegand. As the General Counsel and Secretary of CEIX and the General Partner of CCR, Ms. Wiegand has played a critical role in leading both internal and external teams of lawyers and other advisors in completing the separation on behalf of CEIX and in negotiating and completing approximately $1 billion of multi levels of financing for CEIX and CCR as part of the separation. In her roles, Ms. Wiegand advises both boards on various corporate governance and other board-level issues, serves as the top legal advisor for the Pennsylvania Mining Complex and oversees the companies’ land, legal, health, safety and environmental, and internal audit functions.

 

•

Kurt Salvatori. As the Chief Administrative Officer of CEIX and the General Partner of CCR, Mr. Salvatori led a team for CNX and CCR (prior to the separation) and for CEIX and CCR (after the separation) to manage all employee-related issues for the companies, including various human resources, executive compensation, health and welfare and retirement issues. In addition, Mr. Salvatori also leads a team to support the Compensation Committee in designing and implementing CEIX’s executive compensation programs following the separation.

2017 CNX LTIC. CNX designed its 2017 LTIC program in January 2017. Only Mr. Khani, who was then an NEO of CNX, received an award under the 2017 CNX LTIC. Under the 2017 CNX LTIC, Mr. Khani received his entire 2017 LTIC opportunity in the form of PSUs and RSUs with 55% of his target LTIC in the form of PSUs and 45% delivered in the form of service-based RSUs. Awards granted to Mr. Khani under CNX’s Equity Incentive Plan, as amended and restated (the CNX LTIC), were assumed, converted and issued under the Omnibus Plan pursuant to the terms of the EMA. The number of shares subject to each such award were adjusted in a manner intended to preserve the aggregate intrinsic value of the original CNX awards as measured immediately before and immediately after the separation. Such adjusted awards otherwise continue to have the same terms and conditions that applied to the original CNX awards immediately prior to the separation.

 

•

2017 – 2021 PSU Award to Mr. Khani. The vesting of the 2017 PSU award is calculated annually based on the following pre-established equally weighted goals, with the aggregate payout capped at 200% of target:

 

•

TSR relative to the S&P 500 (measured at the end of each year during the 5-year performance period using the 10-day average closing stock price ending December 31 for the applicable tranche); and

 

•

Absolute Stock Price appreciation (measured at the end of each year during the 5-year performance period using the 10-day closing stock price per share ending on January 31, 2017 of $16.11 (the “GDSP”) as the starting point).

 

40		– 2018 Proxy Statement

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

The CNX Committee believed that TSR and Absolute Stock Price were appropriate and effective measures to drive the long-term performance of CNX. When setting the threshold levels of performance described in the table below, the CNX Committee believed the levels to be achievable goals. At the time the target performance levels were determined, the CNX Committee believed the goals to be aggressive, but obtainable. The maximum levels of performance for the goals, based on 200% of target performance, were also believed to be realizable, but only with exceptional performance. In evaluating any payout, straight line interpolation between performance levels for evaluation of both TSR and Absolute Stock Price is used.

 

 

In the event that a tranche fails to pay out at the end of any annual tranche period with respect to the Absolute Stock Price measure (a “Missed Year”), the unvested PSUs attributable to the Missed Year may still become fully vested (but at not higher than the target level of achievement), if the company achieves target performance (or greater) as determined after the end of a future tranche.

The opportunity to recoup any missed payouts can occur for any prior tranche, but only up to target performance for that prior period. In addition, the PSU terms and conditions include a potential for accelerated vesting in the event the Absolute Stock Price goal is exceeded; if the closing price of CEIX common stock equals or exceeds outstanding performance for one or more future years within the performance period, all unvested PSUs associated with those specific years will vest.

 

•

2017 PSU and RSU Awards to Mr. Khani. In January of 2017, the CNX Committee approved the grant of service-based RSUs that vest ratably over a period of three years, on the first, second and third anniversaries of the grant date. The CNX Committee and board approved a target award for Mr. Khani under the CNX 2017-2021 PSU program covering 60,314 converted shares and representing $1,421,227 value, as well as an RSU award covering 49,349 converted shares and representing $1,162,850 value.

2017 Phantom Awards from CCR. In January 2017, the General Partner and CNX approved the grant of CCR Phantom Units to Messrs. Brock, McCaffrey and Salvatori and Ms. Wiegand (to be settled in CCR units) under the terms of the CCR 2015 Long-Term Incentive Plan (the “CCR Plan”), which units were initially scheduled to vest ratably over a three-year period beginning on the first, second and third anniversaries of the grant date. Each of these executives received their entire 2017 long-term compensation in the form of CCR Phantom Units (in lieu of any CNX PSUs or RSUs) because they were devoting 100% of their time and effort to the management and operation of the Pennsylvania Mining Complex.

The value of these awards on the grant date is shown below:

 

NEO		Phantom Unit Value
Mr. Brock			$	1,388,000
Mr. McCaffrey			$	250,000
Ms. Wiegand			$	100,000
Mr. Salvatori			$	100,000

 

		– 2018 Proxy Statement		41

PSU Performance Measures TSR relative to the s&p 500 (50%) performance outstanding target threshold below threshold performance level 75th percentile 60th percentile 25th percentile <25th percentile multiplier 200% 100% 50% 0% Absolute Stock Price (50%) (1)(2) Year/tranche(2) 1st Year threshold (50% Payout) target (100% payout) outstanding (200% payout) performance level gdsp* gdsp* gdsp* +7.0% +10.0% +13.0%

EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

 

Under the Change in Control Agreements in place during 2017 for Messrs. Brock and Salvatori and Ms. Wiegand, the CCR Phantom Units vested effective as of the separation on November 28, 2017. Similarly, under the terms of Mr. McCaffrey’s Retention Agreement in place during 2017, the above referenced Phantom Units vested on December 31, 2017. These agreements are described in detail below.

2017 Spin/Separation Awards. In December 2017, our Compensation Committee and Board (upon the recommendation of the Compensation Committee) authorized special spin-off recognition awards in the form of cash and service-based RSUs, which vest ratably over a period of three years on the first, second and third anniversaries of the grant date. The awards were made to our NEOs to recognize the extraordinary efforts they made in completing the separation and to ensure their retention post-separation to continue CEIX’s success as an independent, publicly traded coal company. It is for this reason that the CEO and President received only an RSU award and no cash. The value of the cash awards, and the RSUs (in cash as well as share values as of the grant date) are shown below:

 

NEO		RSU ($ Value)					RSU (shares)					Cash Award
Mr. Brock				$750,000					25,150					0
Mr. Khani				$200,000					6,706					$150,000
Mr. McCaffrey				$200,000					6,706					$125,000
Ms. Wiegand				$200,000					6,706					$200,000
Mr. Salvatori				$100,000					3,353					$100,000

2017 Payouts under CNX PSU Awards Covering Prior Year CNX LTIC Plans Assumed by CEIX as Part of the Separation. The following awards were originally granted under the CNX Equity Plan, and were assumed, converted and issued under the Omnibus Plan pursuant to the terms of the EMA. The number of shares subject to each such award were adjusted in a manner intended to preserve the aggregate intrinsic value of the original CNX award as measured immediately before and immediately after the separation. Such awards otherwise continue to have the same terms and conditions that applied to the original CNX awards immediately prior to the separation. The award values shown in the tables below reflect adjusted values.

 

•

CNX Three-Year LTIC; 2015 – 2017. In January of 2015, our NEOs (other than Ms. Wiegand) were granted PSUs that vest, if earned, over a three-year period (January 1, 2015 through December 31, 2017) initially based on two metrics: return on capital employed (“ROCE”) and Relative TSR as compared to the S&P 500. In January 2018, our Compensation Committee determined the actual payout of the 2015 – 2017 PSU awards by following the formula with the two metrics of Relative TSR and ROCE being equally weighted.

 

PSU PERFORMANCE MEASURES
		Relative TSR (50%)				ROCE 50%
Performance		vs S&P 500   (2015-2017)		Payout Prior to     Weighting		Average		Payout (prior to   overall weighting)
< Threshold		<25th percentile		0%		<3.0%		0%
Threshold		25th percentile		50%		3.0%		50%
Target		50th percentile		100%		5.2%		100%
Outstanding		75th percentile		200%		8.0%		200%

 

42		– 2018 Proxy Statement