ARCH Arch Resources Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.      )​

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Filed by a Party other than the Registrant ☐

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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Arch Resources, Inc.

(Name of Registrant as Specified In Its Charter)​

   

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

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Dear fellow stockholder:

You are cordially invited to attend our Annual Meeting of stockholders on Friday, May 13, 2022 at 10:00 a.m. Central Time. The Annual Meeting will be held by remote communication only, in a virtual meeting format. You can attend the virtual Annual Meeting at the meeting time at www.virtualshareholdermeeting.com/ARCH2022.

In connection with the Annual Meeting, we have enclosed a notice of the meeting, a Proxy Statement and a proxy card. We have also enclosed a copy of our annual report for 2021, which contains detailed information about us and our operating and financial performance.

By hosting the Annual Meeting online, the Company is able to communicate more effectively with its stockholders, enable increased attendance and participation from locations around the world, reduce costs and increase overall safety for all participants, in light of the ongoing COVID-19 pandemic. This approach also aligns with the Company’s broader sustainability goals. The virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting. If you plan to attend the Annual Meeting online, you will need the 16-digit control number found on your proxy card, voting instruction form or notice of internet availability of proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Central Time. Online check-in will begin at 9:45 a.m. Central Time, and you should allow ample time for the online check-in procedures.

Whether or not you plan to attend, I encourage you to vote your shares prior to the meeting. You may vote by telephone or via the Internet, or complete, sign and return the enclosed proxy card. The prompt execution of your proxy will be greatly appreciated.

Thank you for your continued support of Arch Resources, and we hope you will virtually attend the Annual Meeting.

Sincerely,

/s/ PAUL A. LANG

PAUL A. LANG
Chief Executive Officer

ARCH RESOURCES, INC.

1 CityPlace Drive, Suite 300 St. Louis, Missouri 63141 t: (314) 994-2700

 

 

One CityPlace Drive, Suite 300
St. Louis, Missouri 63141

March 30, 2022​

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

When and Where Is the 2022 Annual Meeting of Stockholders Being Held?

The 2022 annual meeting of stockholders (the “Annual Meeting”) of Arch Resources, Inc., a Delaware corporation (“Arch” or the “Company”), will be held on Friday, May 13, 2022 at 10:00 a.m., Central Time. The Annual Meeting will be held by remote communication only, in a virtual meeting format. You can attend the virtual Annual Meeting at the meeting time at www.virtualshareholdermeeting.com/ARCH2022.

Who May Vote at the Annual Meeting?

Stockholders of the Company on March 24, 2022, the record date for the Annual Meeting, are entitled to receive notice of and to vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting. On the record date, the Company had 15,477,075 shares of Common Stock outstanding, consisting of 15,476,818 shares of Class A Common Stock and 257 shares of Class B Common Stock outstanding.

How Do I Gain Admission to the Annual Meeting?

You can access the virtual Annual Meeting at the meeting time at www.virtualshareholdermeeting.com/ARCH2022. If you plan to attend the Annual Meeting online, you will need the 16-digit control number found on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials (the “Notice”). The Annual Meeting will begin promptly at 10:00 a.m. Central Time. Online check-in will begin at 9:45 a.m. Central Time, and you should allow ample time for the online check-in procedures.

What Items Will Be Voted on at the Annual Meeting?

Stockholders will vote on the following items at the Annual Meeting:

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The election of eight director nominees to the Board of Directors (the “Board”) of the Company (Proposal 1);

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An advisory resolution to approve the Company’s named executive officer compensation (Proposal 2); and

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The ratification of the appointment of Ernst & Young LLP, independent registered public accounting firm, as the Company’s independent auditors for the year ending December 31, 2022 (Proposal 3).

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“FOR” the ratification of the appointment of Ernst & Young LLP, independent registered public accounting firm, as the Company’s independent auditors for the year ending December 31, 2022 (Proposal 3).

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How Do I Vote?

If you are a registered stockholder, you may vote your shares in advance using any of the following voting alternatives:

By Internet — You can vote over the Internet at www.proxyvote.com by following the instructions provided (you will need the Control Number from the Notice or proxy card you receive).

 

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By Phone — You can vote by phone by calling the toll-free number indicated on your proxy card or voting instruction card (you will need the Control Number from the Notice or proxy card you receive).

By Mail — If you received your proxy materials by mail, you can vote by signing, dating and returning the accompanying proxy card.

Alternatively, you may attend the virtual Annual Meeting and vote your shares during the meeting. When your proxy is properly submitted, your shares will be voted as you indicate. If you do not indicate your voting preference, the appointed proxies (Paul A. Lang and Rosemary L. Klein) will vote your shares FOR each of the director nominees to the Board under Proposal No. 1, FOR Proposal No. 2 and FOR Proposal No. 3. If your shares are owned in joint names, all joint owners must vote by the same method, and if joint owners vote by mail, all of the joint owners must sign the proxy card. The deadline for voting by telephone or via the Internet in advance of the Annual Meeting, is 11:59 p.m., Eastern time, on the day before the Annual Meeting.

If you are a beneficial owner of shares held in street name, follow the instructions provided by your nominee to vote your shares in advance of the Annual Meeting. In most instances, you will be able to vote by the same methods as indicated above. Alternatively, you may attend the virtual Annual Meeting and vote your shares during the meeting.

May I Change My Vote?

You may revoke your proxy and change your vote at any time before the voting deadline for the Annual Meeting. After your initial vote, you may vote again on a later date any time prior to the Annual Meeting via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the voting deadline for the Annual Meeting will be counted), by signing and returning a new proxy card or voting instruction form with a later date, or by attending the Annual Meeting and voting during the meeting. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request in writing that your prior proxy be revoked.

How Many Votes Do I Have?

You have one vote for each share of the Company’s Class A Common Stock and one vote for each share of the Company’s Class B Common Stock that you owned at the close of business on the record date. These shares include:

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Shares registered directly in your name with the Company’s transfer agent, for which you are considered the “stockholder of record”; and

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Shares held for you as the beneficial owner through a broker, bank, or other nominee in “street name.”

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Is My Vote Confidential?

Yes. Voting tabulations are confidential except in extremely limited circumstances. Such limited circumstances include contested solicitation of proxies when disclosure is required by law to defend a claim against the Company or to assert a claim by the Company and when a stockholder’s written comments appear in a proxy or other voting material.

What Are Broker Non-Votes and How Are They Counted?

A broker non-vote occurs when a broker, bank, or other nominee holding shares on behalf of a beneficial owner is prohibited from exercising discretionary voting authority for a beneficial owner who has not provided voting instructions. Brokers, banks, and other nominees may vote without instruction only on “routine” proposals. On “non-routine” proposals, nominees cannot vote without instructions from the beneficial owner, resulting in so-called

 

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“broker non-votes.” Proposal No. 3, the ratification of Ernst & Young, LLP as the Company’s independent registered public accounting firm, is the only routine proposal on the ballot for the Annual Meeting. All other proposals are non-routine. If you hold your shares with a broker, bank, or other nominee, they will not be voted on non-routine proposals unless you give voting instructions to such nominee. Broker non-votes are counted as present and entitled to vote for purposes of determining a quorum at the meeting, but are not counted for purposes of determining the number of shares present and entitled to vote on non-routine matters.

What Is the Voting Requirement to Approve Each of the Proposals?

For Proposal No. 1, the eight nominees receiving the greatest number of affirmative votes of the shares entitled to be voted for them will be elected as directors to serve for one-year terms and until their respective successors are duly elected and qualified. Abstentions are not counted for the purpose of the election of directors, and neither abstentions nor broker non-votes will have any effect on the voting results.

Approval of Proposals No. 2 and No. 3 requires the affirmative vote of a majority of the shares voting thereon at the Annual Meeting. The vote on Proposal No. 2, the approval of the Company’s named executive officer compensation, is a non-binding advisory vote only. Abstentions and broker non-votes are not treated as votes cast. Accordingly, neither abstentions nor broker non-votes, if applicable, will affect the outcome of the voting on Proposals No. 2 or No. 3. Since Proposal No. 3 is a “routine” proposal, we do not expect any broker non-votes to occur with respect to this proposal.

If a submitted proxy does not specify how to vote, the shares represented by that proxy will be considered to be voted FOR each of the eight nominees recommended by the Board in Proposal No. 1, and FOR each of Proposals No. 2 and No. 3. Unless a stockholder provides instructions to withhold discretionary voting authority, the appointed proxies may use their discretion to vote on any other matters properly brought before the meeting. As of the date of this Proxy Statement, the Company knows of no matter that will be presented for consideration at the Annual Meeting other than those matters discussed in this Proxy Statement.

What “Quorum” Is Required for the Annual Meeting?

In order to have a valid stockholder vote, a quorum must exist at the Annual Meeting. For the Company, the holders of a majority of the outstanding shares of common stock, present in person (virtually) or by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting. For these purposes, shares that are present or represented by proxy at the Annual Meeting will be counted toward a quorum, regardless of whether the holder of the shares or proxy fails to vote on a particular matter. Abstentions and broker non-votes are counted as present for the purposes of establishing a quorum.

What Is Householding?

As permitted by the Securities and Exchange Commission (“SEC”), the Company may deliver only one copy of this Proxy Statement, its 2021 annual report to stockholders or the Notice, as applicable, to stockholders residing at the same address, unless the stockholders have notified the Company of their desire to receive multiple copies of these documents. This is known as householding.

The Company will promptly deliver, upon request, a separate copy of the Proxy Statement, annual report or Notice, as applicable, to any stockholder residing at an address to which only one copy was mailed. Requests for separate copies for the current year or future years, or to receive a single copy in the future for stockholders sharing an address, should be directed to the Secretary, Arch Resources, Inc., One CityPlace Drive., Suite 300, St. Louis, Missouri 63141, or by telephone at (314) 994-2700.

 

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Where Can I Find the Voting Results?

The Company intends to announce preliminary voting results at the Annual Meeting. The Company will publish the final results in a Current Report on Form 8-K, which the Company expects to file within four business days after the Annual Meeting is held. You can obtain a copy of the Current Report on Form 8-K by logging on to the Company’s website at archrsc.com or through the EDGAR system at sec.gov. Information on the Company’s website does not constitute part of this Proxy Statement.

 

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CORPORATE GOVERNANCE PRACTICES

Overview

We are dedicated to creating long-term value for our stockholders, while maintaining our commitment to ESG matters and being a responsible corporate citizen. We are committed to conducting business with integrity and an unrelenting passion for providing the best value to our customers.

Our Commitment to Environmental, Social and Governance Responsibility

We believe that our long-term success depends upon achieving excellence in mine safety and environmental stewardship; conducting business in the most ethical and transparent manner; investing in our people and the communities in which we operate; and demonstrating the highest principles of corporate governance. We are proud of our long-standing history of outstanding performance in these areas, and our commitment to continuous improvement in ESG is unwavering. Please visit our website at www.archrsc.com for information regarding the Company’s pivot towards steel and metallurgical markets and our philosophy and approach to key ESG-related topics, as well as data reflecting our industry-leading safety and environmental performance. The information contained in our website is not incorporated by reference into this Proxy Statement or any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We also discuss key highlights of our ESG approach below.

Our Approach to Safety and Environmental Stewardship

Safety is deeply engrained in our culture. Across the organization, employees engage in a proactive, behavior-based approach to safety. This cultural-based approach, which is employee led, began decades ago and it is now a part of who we are. Year-after-year, we have consistently led our large, integrated peers in safety performance, as measured by lost-time incident rate. For 2021, our lost-time incident rate across all of our operations was 1.01 per 200,000 employee-hours worked, which is more than two times better than the industry average and again leads U.S. diversified producers. While we are proud of our track record, we are sharply focused on further improvement. We have made zero safety incidents at every operation every year our single, highest priority.

We are relentless in our efforts to be good stewards of the environment. We strive for perfection in our approach to water, air and land. As with safety, we continue to set the standard for the industry with our environmental performance. In 2021, we achieved perfect compliance with respect to air and water emissions across all of our operations, after near-perfect records in each of the previous four years. In every operating region, we take our reclamation efforts seriously and are often recognized for excellence by state and federal agencies.

We believe that our performance in the areas of safety and environmental stewardship in particular — and ESG more generally — is integral to our operational and financial performance and to enhancing long-term stockholder value. Given this integral connection, we have historically tied a significant portion of our executive officers’ incentive compensation to Company performance on safety and environmental compliance.

Our Approach to Climate

We recognize the importance of reducing greenhouse gas emissions on a systematic and sustained basis, and have taken steps to reduce our carbon footprint. Our pivot towards steel markets — and towards higher quality but lower volume metallurgical products — has driven significant reductions in our emissions profile as well. Since 2013, we have reduced greenhouse gas emissions across our operating portfolio by approximately 56 percent, and expect to achieve further reductions in future periods, as we systematically wind down our legacy thermal mining operations.

 

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Our metallurgical products are essential to the primary production of steel as a reducing agent for iron ore. While the production process is carbon-intensive, steel is a highly recyclable resource supported by a well-developed logistics chain and recycling infrastructure. We expect primary steel to play an essential role in the ongoing rebound in the global economy, the development of critical infrastructure and the construction of a new, lower-carbon economy supported by mass transit systems, wind turbines and electric vehicles. While we believe steel producers will ultimately need to de-carbonize the steel-making processes entirely, consistent with a net-zero carbon future, we expect metallurgical coal to continue to play a critical role in steel production for the next two decades or more. In 2021, we directed more than 95 percent of our capital spending to our metallurgical segment.

As we have expanded our metallurgical portfolio, we have correspondingly reduced our thermal coal asset base via asset sales, final mine reclamation and the continuous streamlining and rightsizing of our thermal portfolio. Over the past decade, we have reduced our thermal coal output by well over 50 percent and expect to drive forward with further reductions. We are also exploring strategic alternatives for our remaining thermal assets, while accelerating final reclamation activities at our thermal coal operations in the Powder River Basin of Wyoming. At the same time, we are continuing to focus on optimizing cash flows from our remaining thermal assets, which we believe are well-positioned to generate significantly more cash than needed to fund our asset retirement obligations for those operations. In addition, we have created a thermal mine reclamation fund to cover those obligations. We view our focused approach as the most orderly and responsible process for our stockholders and other stakeholders, including the employees at our thermal operations, the communities in which those employees live and work, and the electricity consumers who rely on this low-cost fuel source to help maintain affordable and stable electricity.

Our Approach to People — Human Capital Management

We directly employ approximately 3,300 employees, almost all of whom are located in the United States. Our responsible and respectful corporate culture has allowed us to attract and retain an experienced, talented and high-performing workforce. Our five-year average voluntary retention rate is over 89 percent, and approximately 40 percent of the Company’s workforce has at least 10 years of Company service.

We recognize the importance of furthering education and development of our employees through the various stages of their careers. To that end, we offer free access to a multitude of courses that are designed for personal and career development through an online education platform. We also invest significantly in the development of our next generation of leaders. Over the five years preceding the pandemic, we conducted multi-day leadership workshops designed to educate high-potential employees about our corporate strategy, financial position, asset base and corporate culture, as well as to enhance leadership skills, and we plan to resume these workshops as soon as it is safe to do so. We regularly hold workshops with both internal and external matter experts to discuss best practices related to safety, environmental compliance and operating procedures.

We are committed to building and maintaining a diverse and inclusive workforce. Advancing diversity in all forms is our focus, and we strive to ensure a culture of inclusion in which all employees feel respected and safe. To reinforce our commitment, we established Arch C.A.R.E.S, a Company-wide program designed to promote and encourage a safe and respectful work environment. The fundamentals of the program are: (C) Courage to stand up for oneself and others; (A) positive and encouraging Attitude; (R) Respect for others; (E) Excellence in what employees do and say; and (S) Safety. The program endeavors to further engrain mutual respect as a core value in our corporate culture.

Our Board plays a critical role in the oversight of talent and culture at Arch, routinely engaging with senior leadership on topics such as succession planning and talent development. The Personnel and Compensation Committee of our Board oversees compensation and bonus pools which are determined, in part, by delivering against

 

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organizational objectives, including safety and environmental performance. Our Board is also committed to ensuring a culture of inclusion and diversity at every level of the organization.

Our Approach to Community

Beyond the broad economic benefits that our operations provide, we make it a priority to enrich our local communities in other ways. We encourage our employees to take an active role in community organizations and projects and to cultivate strong relationships with neighbors. We give back to the community through charitable giving and volunteerism. We reach out to our neighbors through special programs, such as community advisory panels at select operations, and by devoting time to nonprofit organizations, including local schools.

Our Approach to Governance

We are committed to demonstrating the highest principles of corporate governance. We believe that strong, effective corporate governance policies and practices are the foundation of a well-functioning board and are vital to preserving the trust of our stakeholders, including our customers, suppliers, employees and stockholders, as well as regulators and the general public.

Our Board has adopted Corporate Governance Guidelines that set forth a framework within which the Board, assisted by its committees, directs the affairs of the Company. These guidelines address, among other items, the composition and functions of the Board, director independence, compensation of directors, and director qualification standards. The Company’s Code of Business Conduct is applicable to all employees of the Company, including our principal executive officer, principal financial officer and principal accounting officer, as well as all directors of the Company.

Our Board regularly reviews these governance policies and modifies them as warranted based upon Delaware law, the rules and listing standards of the New York Stock Exchange and SEC regulations, as well as best practices recommended by recognized governance authorities. The Corporate Governance Guidelines and the Code of Business Conduct are available on the Company’s website under the “Investor Center” section at archrsc.com and in print to any stockholder who requests them from the Company’s Secretary. Amendments to or waivers from (to the extent applicable to one of the Company’s directors or executive officers) the Code of Business Conduct are posted to the same location on the Company’s website. Information on the Company’s website does not constitute part of this Proxy Statement.

Enhancements to ESG Governance Framework

Our Board has ultimate responsibility for oversight of the Company’s ESG strategy and attendant risks. Each of the Board’s standing committees assists the Board in fulfilling this important role.

In 2021, our Board took steps to enhance its ESG governance framework to gain efficiencies and re-emphasize the Board’s commitment to continuous improvement in ESG. The Board designated ESG oversight responsibility to its standing corporate governance and nominating committee. To ensure the appropriate emphasis on ESG and set the right “tone at the top” of the organization, the Board renamed the committee the Environmental, Social, Governance and Nominating Committee, also referred to as the ESG and Nominating Committee. The Committee’s charter was revised to expressly reflect its responsibility for oversight of ESG strategy, risk and opportunities. The ESG and Nominating Committee reports to the full Board on a regular basis with updates on ESG.

The ESG and Nominating Committee receives regular reports from management’s ESG task force. This task force consists of approximately 30 key members of management — from operations as well as functional areas — and

 

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is led by the Company’s Senior Vice President — Strategy and Senior Vice President and Chief Operating Officer. Management has structured the task force and related ESG protocols to mimic what was utilized for the Company’s behavior-based safety program. Like safety, we believe the key to our continuing success in ESG is incorporating ESG into our culture — not only within our operations but within every function of the Company. The task force meets on a quarterly basis to discuss, evaluate and report on ESG matters pertaining to operations and each functional area. The task force leaders then provide the Committee with an update on the task force meetings, initiatives and progress. The ESG and Nominating Committee, in its oversight role, and management will continue to implement governance-related protocols as may be needed to ensure information flow and accountability to advance the Company’s ESG strategy and goals.

The Audit Committee and Personnel and Compensation Committee also assist our Board in fulfilling its oversight responsibility for ESG. For discussion of the Personnel and Compensation Committee’s role in overseeing human capital management, please see Our Commitment to Environmental, Social and Governance Responsibility — Our Approach to People — Human Capital Management. For discussion of the Audit Committee’s role in overseeing management’s enterprise risk assessment processes, please see the section below entitled, Oversight of Risk Management.

Oversight of Risk Management

Our Board is responsible for oversight of the Company’s risk management processes. To assist our Board in fulfilling its risk oversight responsibilities, the Audit Committee receives periodic reports on management’s enterprise risk management process and assessment of current and future risks, including assessment and management of the Company’s asset retirement obligations and ESG and cybersecurity related risks.

To increase the Board’s effectiveness, each of the standing committees of the Board is actively involved in risk oversight. The committees’ involvement allows for a deeper review of specific risks. Each committee reports on its activities to the full Board. Set forth below are the key areas of committee oversight:

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The Audit Committee oversees financial risk, including internal controls. The Committee also focuses on cybersecurity risk, with management regularly reporting to the Audit Committee on the Company’s risk and mitigation efforts.

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The Personnel and Compensation Committee oversees risks related to compensation and engages an independent compensation consultant to assess risks pertaining to the Company’s executive compensation programs.

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The ESG and Nominating Committee oversees risks associated with ESG matters and corporate governance processes.

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ESG risks, such as those related to safety, environmental performance, climate change and human capital management, are a top priority for our Board. These risks, and the Company’s ability to mitigate them, are evaluated and factored into the Company’s strategy and business plan. As such, our Board is actively engaged in overseeing these risks, as well as opportunities related to ESG matters. Our Board is well-versed in how these risks may impact the Company and is regularly updated by the committees and management on the Company performance related to ESG matters and mitigation of associated risks.

Management Succession Planning

Our Board recognizes the importance of succession planning for the Chief Executive Officer (“CEO”) and other members of the executive leadership team. The Board, in consultation with the Personnel and Compensation Committee,

 

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evaluates talent development of the CEO and other executive team members to ensure the Company has the right people in place to execute the Company’s long-term strategic plans and appropriate succession for key individuals.

Our Board also recognizes the importance of a thoughtful Board refreshment process. For information on this topic, please see the section entitled “Board Refreshment and Diversity” below.

Stockholder Engagement Program

We regularly reach out to stockholders to get feedback on matters such as executive compensation, corporate governance, ESG responsibility and other current and emerging issues and will continue this practice going forward. Stockholders have access to the Board and senior leadership as part of this outreach program. During 2021, we reached out to our largest stockholders, representing more than 75% of our outstanding shares of common stock. We subsequently met with the holders of approximately 19% of our outstanding common stock to discuss our corporate governance program, executive compensation practices and ESG-related matters, including safety, environmental stewardship, and human capital management. The stockholders with whom we spoke were generally supportive of our corporate governance program, executive compensation practices and commitment to ESG.

Director Independence

Our Board’s objective is to have a substantial number of directors who are independent. The Corporate Governance Guidelines incorporate the criteria established by the New York Stock Exchange to assist the Board in determining whether a director is independent. Our Board has determined, in its judgment, that all but two directors, John W. Eaves and Paul A. Lang, meet the New York Stock Exchange standards for independence.

All members of the Board’s Audit, ESG and Nominating and Personnel and Compensation Committees must be independent directors in accordance with the Corporate Governance Guidelines. Members of the Audit Committee must also satisfy a separate SEC independence requirement, which provides that they may not accept, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or any of the Company’s subsidiaries other than their directors’ compensation. Our Board has determined, in its judgment, that all members of the Board’s Audit, ESG and Nominating and Personnel and Compensation Committees are independent directors under the New York Stock Exchange standards for independence.

Leadership Structure

Our Board has no fixed policy with respect to the separation of the offices of Chairman and Chief Executive Officer. Instead, the Board retains discretion to make this determination on a case-by-case basis from time to time as it deems to be in the best interest of the Company and the Company’s stockholders. The Company’s current structure is that Mr. Eaves serves as Executive Chairman of the Board, Mr. Chapman is the Lead Independent Director, and Mr. Lang serves as Chief Executive Officer of the Company.

The Company’s independent directors meet regularly in executive session without management present. The Corporate Governance Guidelines provide that in the event the Chairman of the Board is the Chief Executive Officer or is not an independent director, then the independent directors of the Board shall elect a Lead Independent Director to lead executive session meetings of the independent directors. Accordingly, under our current structure, Mr. Chapman, as Lead Independent Director, presides over these executive sessions.

Service on Other Public Company Boards

Each director on our Board must be willing to make the commitment of time and effort to make a constructive contribution to the Board and fulfill their fiduciary duties. The Corporate Governance Guidelines provide that a

 

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director may not serve on the boards of more than four public companies (including the Board) and any director who also serves as an executive officer of a public company should not serve on the boards of more than two public companies (including the Board), in each case except for reasonable transition periods relating to changes in board service. Accordingly, our Chief Executive Officer does not currently serve on the board of directors of any other public company, and none of our current directors serves on more than four public company boards, including Arch.

Director Qualifications

The Company’s Corporate Governance Guidelines provide that our Board and the ESG and Nominating Committee will consider candidates for the Board who possess the following principal qualities: strength of character; an inquiring and independent mind; practical wisdom; and mature judgment. In addition to these qualities, the selection criteria for nomination include recognized achievement, an ability to contribute to some aspect of the Company’s business, and the willingness to make the commitment of time and effort required of a director.

As described in more detail below, our Board believes that each of the Company’s directors meets such criteria and has attributes and experience that make them well qualified to serve. In order to find the most valuable talent available to meet these criteria, the Board generally considers candidates diverse in geographic origin, gender, ethnic background, and professional experience (private, public, and non-profit). The Company’s goal is to include members with the skills and characteristics that, taken together, will assure a strong Board.

The ESG and Nominating Committee has identified nine areas of expertise that are particularly relevant to service on the Board and has identified the directors whose key areas of expertise qualify them for each of the listed categories. The categories identified by the ESG and Nominating Committee are:

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CEO/Senior Management — Experience working as a chief executive officer, chief financial officer, chief accounting officer, managing director or other senior officer of a major public or private company or non-profit entity.

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Industry — Extensive knowledge and experience in the energy, natural resources, metals and mining industries, either as a senior executive of a company in such industries, as a senior executive of a customer serving such industries or through legal or regulatory experience on industry-related matters.

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ESG — A thorough understanding of safety, environmental responsibilities and other ESG matters pertaining to the Company.

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Finance and Accounting — Senior executive-level experience or membership on a board audit committee with an extensive understanding of finance and accounting matters such as capital markets, corporate finance, M&A, financial accounting and reporting, treasury and related cash management functions, auditing, Sarbanes-Oxley compliance and internal controls.

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Governance/Board — Prior or current experience as a board member of a major organization (private, public or non-profit).

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Government Relations — Experience in or a strong understanding of the workings of government and public policy on a local, state and national level.

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Human Capital Management — Senior executive-level or board compensation committee experience with an extensive understanding of  (i) executive-level and incentive based compensation plans; (ii) practices for attracting, developing and retaining talent; and (iii) approaches for promoting Company values and cultural initiatives.

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Marketing — Senior executive-level experience in marketing combined with a strong working knowledge of the Company’s domestic and international markets, customers and strategy.

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Strategic Planning and Risk Management — Senior executive-level or board experience in strategic planning and risk assessment for a major public, private or non-profit entity, including a strong understanding of enterprise risk management processes related to financial, operational, market, ESG, regulatory, cybersecurity and information security and other risks relevant to the Company.

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Board Refreshment and Diversity

Our Board and its ESG and Nominating Committee make diversity in gender, ethnicity/race, age, and career experience a priority when considering director candidates. The recruitment process reflects a deliberate search for specific skills, background and experiences, as needed. In 2021, the Board and ESG and Nominating Committee engaged a third-party search firm to help identify and recruit highly qualified women and individuals from ethnically diverse groups to include in the pool of potential director candidates as part of its board refreshment process. This year-long search process resulted in the election of Molly P. Zhang (aka Peifang Zhang) to the Board on January 3, 2022.

The Board has nominated eight director nominees to stand for election at the Annual Meeting. The slate of director nominees includes two women, one of whom is ethnically diverse.

Director Biographies

The following eight directors have been nominated to stand for election at the Annual Meeting, with each serving a one-year term expiring at the 2023 annual meeting of stockholders: Patrick J. Bartels, Jr., James N. Chapman, John W. Eaves, Holly Keller Koeppel, Patrick A. Kriegshauser, Paul A. Lang, Richard A. Navarre and Molly P. Zhang.

Set forth below is a list of the Company’s directors who have been nominated for election at the Annual Meeting, along with certain biographical information, including their ages as of April 1, 2022, and their occupations during the last five or more years. A discussion of each director’s expertise and qualifications is also provided.

 

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12

 

 

13

 

 

14

 

 

15

 

 

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Core Qualifications of Board in its Entirety

In our director nomination process, we look for candidates whose qualifications and expertise cover many, if not all, of the core skillsets believed to be most important. The core qualifications and areas of expertise of our slate of director nominees standing for election at the Annual Meeting include:

 

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Board Meetings and Committees

Under the Company’s Corporate Governance Guidelines, each director is expected to spend the time needed and meet as frequently as necessary to properly perform their duties and responsibilities, including attending the annual stockholders’ meeting, Board meetings and meetings of the committees on which they serve. Our directors rarely, if ever, miss a Board or committee meeting and consistently attend the annual stockholders meeting each year. During 2021, our Board met 6 times, and each director attended 100% of all of the meetings of the Board and the committees of the Board on which such director served. All of our directors also attended the Company’s 2021 annual meeting of stockholders. The number of meetings held by the Board and its committees during 2021 are reflected below, together with the current composition of the Board and its committees:

C — Chair; M — Member; LD — Lead Independent Director

(1)

Each of the members of the Audit Committee is an audit committee financial expert as defined in SEC regulations.

​

 

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ESG and Nominating Committee

The ESG and Nominating Committee is responsible for, among other things, the following items:

•

identifying qualified individuals to stand for election to the Board at the annual stockholders’ meeting and recommending candidates for membership on the Board’s committees;

​

•

developing and recommending the Corporate Governance Guidelines to the Board;

​

•

overseeing the Company’s efforts with regard to ESG matters, including strategies, risks and opportunities; and

​

•

reviewing the effectiveness of Board governance, including overseeing an annual assessment of the performance of the Board.

​

Our Board has determined, in its judgment, that the ESG and Nominating Committee is composed entirely of independent directors as defined in the New York Stock Exchange listing standards. The ESG and Nominating Committee operates under a written committee charter approved by the Board, a copy of which is published under the “Investor Center” section of the Company’s website at archrsc.com.

Personnel and Compensation Committee

The Personnel and Compensation Committee is responsible for, among other things, the following items:

•

overseeing the Company’s executive incentive compensation and equity-based plans;

​

•

overseeing the Company’s non-employee director compensation program; and

​

•

monitoring the Company’s succession planning and management development practices.

​

Our Board has determined, in its judgment, that the Personnel and Compensation Committee is composed entirely of independent directors as defined in the New York Stock Exchange listing standards. In making its determination, the Board considered, among other things, the factors applicable to members of the Personnel and Compensation Committee pursuant to New York Stock Exchange listing standards and Rule 10C-1 of the Exchange Act. The Personnel and Compensation Committee operates under a written committee charter approved by the Board, a copy of which is published under the “Investor Center” section of the Company’s website at archrsc.com. The report of the Personnel and Compensation Committee can be found under “Personnel and Compensation Committee Report” in this Proxy Statement.

Audit Committee

The Audit Committee is responsible for, among other items, the following items:

•

overseeing the integrity of the Company’s financial statements, internal accounting, and effectiveness of financial controls, disclosure controls and financial reporting processes;

​

•

determining and evaluating the qualifications, independence and performance of the Company’s independent registered public accounting firm; and

​

•

overseeing the performance of the Company’s internal audit function.

​

The Audit Committee is directly responsible for the appointment, compensation and oversight of the work of the Company’s independent registered public accounting firm. Our Board has determined, in its judgment, that the Audit Committee is composed entirely of independent directors in compliance with the New York Stock Exchange

 

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listing standards and Rule 10A-3 of the Exchange Act. The Audit Committee operates under a written committee charter approved by the Board, a copy of which is published under the “Investor Center” section of the Company’s website at archrsc.com.

Our Board has determined, in its judgment, that each of the three members of the Audit Committee is “financially literate” and is an “audit committee financial expert” as defined in SEC regulations. Under the Audit Committee’s charter, no member of the committee may serve on more than two other public company audit committees unless the Board determines that such simultaneous service will not impair the ability of the member to serve effectively on the committee. None of the members of the Audit Committee currently serve on the audit committees of more than two other public companies. The report of the Audit Committee can be found under “Audit Committee Report” in this Proxy Statement.

Board and Committee Self-Assessments

Our Board conducts annual self-evaluations to determine whether it and its committees are functioning effectively and whether its governing documents continue to remain appropriate. Each committee also annually reviews its own performance and assesses the adequacy of its charter, and reports the results and any recommendations to the Board.

Director Retirement/Resignation Policies

The Corporate Governance Guidelines require any nominee for director in an uncontested election who receives a greater number of votes “withheld” from their election than votes “for” such election, to offer their resignation to the Board. In the event a resignation is tendered, the ESG and Nominating Committee and the Board will evaluate the best interests of the Company and its stockholders and make a determination on the action to be taken with respect to such offered resignation, which may include (i) accepting the resignation, (ii) maintaining the director but addressing the underlying cause of the withheld votes, (iii) resolving that the director will not be re-nominated in the future for election, or (iv) rejecting the resignation. Following a determination by the Board, the Company will disclose the Board’s decision in a filing with the SEC, a press release, or another broadly disseminated means of communication. The Corporate Governance Guidelines require the Board to nominate for election or re-election only those candidates who agree in advance in writing to tender a resignation letter in accordance with these terms. Each nominee for election at the Annual Meeting has agreed to follow this policy as set forth in the Corporate Governance Guidelines.

The Corporate Governance Guidelines also provide that outside directors offer to tender their resignation for consideration by the Board at the annual meeting following such director’s 72nd birthday.

Vacancies on the Board may be filled by a majority of the remaining directors. A director elected to fill a vacancy, or a new directorship created by an increase in the size of the Board, serves until the next annual meeting of stockholders, until their successor shall be elected and qualified, or until their earlier death, resignation or removal, except as otherwise required by law.

Conflicts of Interest

The Company’s Code of Business Conduct reflects the Company’s policy that all of the Company’s employees, including the Company’s named executive officers, and directors must avoid any activity that creates, or may create, a conflict of interest that might interfere with the proper performance of their duties or that might be hostile, adverse or competitive with the Company’s business. In addition, each of the Company’s directors and executive officers is encouraged to notify the Board when confronted with any situation that may be perceived as a conflict of interest, even if the person does not believe that the situation would violate the Company’s Code of Business Conduct or Corporate

 

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Governance Guidelines. The Board will then determine, after consultation with counsel, whether a conflict of interest exists. Directors who have a material personal interest in a particular issue are not allowed to vote on any matters with respect to that issue.

 

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ELECTION OF DIRECTORS
(PROPOSAL NO. 1)

Upon the recommendation of the ESG and Nominating Committee, the Board has nominated Patrick J. Bartels, Jr., James N. Chapman, John W. Eaves, Holly Keller Koeppel, Patrick A. Kriegshauser, Paul A. Lang, Richard A. Navarre and Molly P. Zhang (aka Peifang Zhang) for election as directors, each to serve for a term that will expire at the Company’s 2023 annual meeting of stockholders, until a successor is elected and qualified or until their earlier death, resignation or removal.

To the knowledge of the Board, no nominee will be unwilling or unable to serve as a director. All nominees have consented to be named in this Proxy Statement and to serve if elected. If, however, a nominee is unavailable for election, your proxy authorizes the Company to vote for a replacement nominee if the Board names one. As an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting.

Recommendation of the Board

The Board recommends a vote “FOR” each nominee.

 

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RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL NO. 3)

Ernst & Young LLP was the Company’s independent registered public accounting firm for 2021. The Audit Committee has appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for 2022. The Audit Committee and the Board are requesting that stockholders ratify this appointment. In the event the stockholders do not ratify the selection of Ernst & Young LLP, the Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the fiscal year if the Audit Committee believes such a change would be in the Company’s best interests and the best interests of the Company’s stockholders. Representatives of Ernst & Young LLP are expected to be available at the Annual Meeting to make a statement if they desire to do so and to be available to respond to appropriate questions.

(1)

Audit fees include fees for professional services rendered by Ernst & Young LLP for the audit of our annual consolidated financial statements and reports on internal control over financial reporting, and the review procedures on the consolidated financial statements included in our Quarterly Reports on Form 10-Q, as well as the statutory audits of our international subsidiaries and other services related to SEC filings.

​

The Audit Committee has adopted an audit and non-audit services pre-approval policy that requires the Audit Committee to pre-approve services to be provided by the Company’s independent registered public accounting firm. The Audit Committee considers whether services to be provided by the independent registered public accounting firm are prohibited by the SEC’s rules on auditor independence and whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service. The Audit Committee is mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve such services. The Audit Committee has delegated to the Chairman of the Audit Committee pre-approval authority between committee meetings, and the Chairman then reports any pre-approval decisions to the committee at the next regularly scheduled committee meeting.

Recommendation of the Board

The Board recommends a vote “FOR” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022.

 

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Drove continued progress in our clearly defined strategy of harvesting value and generating cash from our legacy thermal assets.

•

Generated $175.7 million in segment-level Adjusted EBITDA from our legacy thermal segment in 2021, while investing just $5.9 million in capital.

​

•

Since our Chapter 11 emergence, thermal segment-level Adjusted EBITDA is nearly nine times higher than the capital investment in the segment.

​

Built a significant book of future contracts for our legacy thermal segment for 2022 and beyond, capitalizing on a period of strong market demand and pricing to lock in significant future cash flows.

•

Moved quickly and strategically to secure more than 100 million tons of future commitments for our Powder River Basin and Colorado thermal mines during a period of high natural gas prices and a tightness in U.S. thermal markets.

​

•

Locked in volumes and pricing through these efforts which should deliver strong thermal cash flows in 2022, and provide a solid and profitable base of business in future years as well.

​

Took significant steps to further strengthen the balance sheet.

•

Entered into late-year agreements to repurchase — at a small discount — nearly $75 million of our outstanding term loan.

​

•

Amended our accounts receivable securitization facility to enhance the borrowing base, resulting in an increase in liquidity of approximately $40 million.

​

Made significant strides in our ongoing strategic pivot towards steel and metallurgical markets.

•

Sold our 49.5 percent equity interest in Knight Hawk Coal Company for $38 million, in keeping with our ongoing efforts to intensify our focus on steel and metallurgical markets.

​

•

Initiated an accelerated final reclamation and closure plan for our Coal Creek mine in the Powder River Basin, and reduced our total asset retirement obligation for our Powder River Basin operations by $40.6 million or more than 20 percent, during 2021.

​

•

Secured an agreement with the Company’s surety providers on an innovative framework to build funding for the long-term final mine reclamation costs of its thermal assets, and made an initial deposit of  $20 million into this new thermal reclamation fund or “sinking fund”.

​

Demonstrated continuing industry-leading performance on core ESG metrics.

•

Achieved a lost-time incident rate of 1.01 per 200,000 employee-hours worked across all of our operations, which was more than two times better than the industry average.

​

•

Set the industry standard among large, integrated producers for environmental compliance yet again, with zero SMCRA violations across all of our operations for the first time ever — improving upon our recent track record of just one violation Company-wide in each of the previous four years.

​

•

Recorded zero water quality exceedances against 134,000 parameters measured across 600 measuring points Company-wide, for a 100 percent compliance rate — a record performance after registering just one exceedance the previous year against 168,000 measurements, for a 99.999 percent compliance rate.

​

 

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2021 Key Compensation Decisions and Actions

Over 99% of the votes cast at our 2021 annual meeting of stockholders voted to approve our executive compensation programs and policies in the “say-on-pay” vote. Although we view this as an endorsement of our executive compensation program, we continued to engage in additional stockholder outreach efforts during the year. Our stockholders indicated their general support of our compensation program during such outreach. Our Personnel and Compensation Committee takes stockholder feedback, as well as the results of the “say-on-pay” vote, into account when establishing or modifying our compensation program.

Our key compensation decisions and actions relating to our NEOs’ compensation for 2021 include the following:

•

No Design Modifications to Our Annual or Long-Term Incentive Plans. After conducting its annual review and analysis and considering stockholder feedback and the “say-on-pay” voting results as described above, our Personnel and Compensation Committee maintained the design structure of our annual and long-term compensation programs without any modifications from the prior year’s design.

​

•

Annual Incentive Compensation Plan (“ICP”).

​

Our 2021 budget and strategic financial objectives, as well as our commitment to safety and environmental stewardship, were considered when establishing the following metrics for our 2021 ICP design: Adjusted EBITDA (50%), Free Cash Flow (20%), safety incident rate (15%) and environmental compliance (15%). These metrics were consistent with the design metrics utilized in our 2020 ICP.

We have historically included ESG metrics in our ICP. Safety and environmental stewardship are core values of the Company, and we believe are also key to delivering excellence in our operational and financial performance. As reflected in the executive summary above, we are consistently an industry leader in safety and environmental performance year-after-year. As part of its annual review, the Personnel and Compensation Committee closely considers the Company’s strategy and goals relating to climate change and other environmental priorities in setting the environmental performance metrics to include in the annual ICP.

•

Long-Term Incentive Plan.

​

The 2021 LTIP awards to our NEOs were weighted equally between time-and performance-based restricted stock units. The time-based restricted stock units vest over three years. The performance-based restricted stock units vest based on the Company’s performance against return on invested capital targets and relative total shareholder return over a three-year performance period.

•

Company Achievement and Retention Equity Awards. In 2021, our Board approved an equity award grant to certain senior officers and other key members of management, including our NEOs. The grant was awarded for the following two purposes: (i) in recognition of significant Company achievements — in particular the successful multi-year development and 2021 start-up of our world-class Leer South mine, effectively on time and on budget despite the ongoing pandemic, supply chain issues and labor shortages impacting the industry, as well as the creation of a novel sinking fund to address the Company’s thermal reclamation obligations — and (ii) as a retention incentive in light of the increasing difficulty to retain and recruit talent into our industry. The awards granted were time-based RSUs, with the achievement award component vesting ratably over two years and the retention award component vesting ratably on the second, third and fourth anniversaries of the grant date.

​

•

Elimination of Executive Perquisites. We eliminated the last remaining executive perquisites for NEOs, which had consisted of reimbursement for such items as tax and financial planning.

​

 

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Overview

Our compensation programs are designed to attract, motivate and retain highly talented executives, while keeping them focused on promoting our strategic objectives. We believe these compensation programs encourage sustained long-term profitability by making a significant portion of each named executive officer’s total direct compensation variable and dependent on our achievement of safety, environmental and financial performance. Thus, most of our executives’ total compensation is performance-based and not guaranteed.

The type and amount of compensation for each NEO is determined after considering a variety of factors, including the executive’s position and level of responsibility within our organization, comparative market data and other external market-based factors. The Personnel and Compensation Committee (the “P&C Committee” or “Committee”), uses this information when establishing compensation in order to achieve a comprehensive package that emphasizes pay-for-performance and is competitive in the marketplace. For 2021, the pay mix at target for the CEO and other NEOs is displayed below.

(1)

Average of the NEOs, excluding the CEO.

​

 

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The components of the NEO compensation program for 2021 were as follows:

Our Compensation Process

The Personnel and Compensation Committee, with advice and analysis from its independent compensation consulting firm, considers current compensation levels, benchmarking and other data of peer companies, individual and Company performance, long-term career goals, future leadership potential and succession planning, among other factors, in determining appropriate target compensation levels for our NEOs. The Committee does not use a formula to weight these factors, but instead uses these factors to provide context within which to assess the significance of comparative market data and to differentiate the level of target compensation among our NEOs. During 2021, a significant aspect of this process involved evaluating individual pay levels for our NEOs in connection with Company performance and achievements to ensure each NEO’s total compensation package was appropriately aligned with market practice and reflective of the NEO’s responsibilities and internal pay equity.

After the end of the performance period to which a particular incentive award relates, the Committee reviews our performance relative to the applicable performance targets and recommends payouts based on that performance. The Committee generally retains the ability to recommend payouts that are above or below actual performance levels for the applicable performance period. For purposes of determining the amount of a payout to recommend, the Committee may also consider infrequent or non-recurring items that are not reflective of ongoing operations, the

 

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effects of major corporate transactions or other items that the Committee determines, in its judgment, significantly distort the comparability of our actual performance against the performance targets.

Annually, the Committee reviews the design of our named executive officer compensation program, including whether the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. In doing so, the Committee assesses whether compensation programs used in prior years have successfully achieved our compensation objectives. The Committee also considers the extent to which our compensation program is designed to achieve our long-term financial and operating goals. The Committee has retained the independent compensation consultant referenced below under “Role of Compensation Consultants” to help analyze certain comparative market data. Certain members of management participate in this process by assembling and summarizing data used by the Committee. The Committee and its independent compensation consultant reviewed our compensation policies and practices, and the Committee has determined that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. In 2021, the Company prepared “tally sheets” that summarize the past and present values of each component of each NEO’s total compensation. This tool is available to assist Committee members in the evaluation and approval of changes to compensation.

Role of Compensation Consultants

During 2021, the Committee continued to retain Lyons, Benenson & Company Inc. (“LB”) as an independent compensation consultant to advise on executive compensation matters. LB assisted the Committee in determining the compensation peer group, which is described in more detail below. LB also advised the Committee on competitive compensation practices, mix of compensation elements and comparative market data, which the Committee considered in addressing and determining the appropriate levels of compensation for each NEO relative to the marketplace.

The Committee has reviewed the independence of its independent compensation consultant and has determined that no conflicts of interest exist. The Committee has sole authority to retain or replace the independent compensation consultant. The Committee regularly reviews the performance and independence of its independent compensation consultant, as well as fees paid. A representative of the independent compensation consultant attends Committee meetings, as requested, to serve as a resource on compensation matters. In order to encourage independent review and discussion of compensation matters, the Committee has the authority to, and does from time to time, meet with such representative in executive session.

Role of Management

Annually, the Committee reviews the performance of our Chief Executive Officer and makes recommendations to the Board regarding his compensation. In doing so, the Committee uses information provided by the independent compensation consultant and certain historical financial and operating performance data provided by management. Our Chief Executive Officer reviews the performance of the other NEOs with the Committee and makes recommendations on their base salary, annual cash incentive and long-term incentive opportunities. The Company’s human resources department provides support for this process.

Compensation Peer Group

In 2021, the Committee, in consultation with LB, conducted a full review of peer group companies to address the Company’s strategic pivot to focus primarily on metallurgical and steel markets, the Company’s Adjusted EBITDA, revenue and employee size shifts in recent years, and the acquisitions and bankruptcy filings that have occurred within the peer group. Although the Committee seeks to maintain as much consistency as possible in the peer group year-over-year, multiple changes to the peer group were implemented in 2021, based primarily upon the criteria noted

 

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above. AK Steel Holding Corporation, Commercial Metals Company, Martin Marietta Materials, Inc., and Vulcan Materials Company were removed from the peer group due to misalignment in scope. Allegheny Technologies, Inc., Carpenter Technology Corp., Schnitzer Steel Industries, Inc. and Summit Materials, Inc. were added to the peer group. The updated 2021 peer group (listed below) consists of 16 companies and has median revenues of approximately $1.5 billion and median market capitalization of approximately $1.86 billion. The Committee recognizes that certain companies in this group generally are larger than the Company under the market capitalization measure; nevertheless, the Committee views this peer group as appropriate in light of the importance it ascribes to providing competitive compensation opportunities that are sufficient to attract and retain the talented executives needed to lead the Company.

When evaluating benchmark data for these peer companies, the median market data is applied to each individual pay component in addition to a total compensation analysis. General industry compensation data is also reviewed by the Committee to provide an additional reference point but is not used to benchmark the amount of total compensation or any specific element of compensation for the NEOs. This data is based on a broad spectrum of public companies (excluding financial services and retail companies) that had median revenues similar to the Company.

The Committee assesses the appropriateness of the peer groups used to benchmark our compensation programs on an annual basis and adds or subtracts members of the peer groups as appropriate.

Human Capital Management

Our people and culture are critical to our long-term success. Our talented workforce is our greatest asset, and we are committed to their training and development. Ensuring an environment of inclusion, diversity and respect is a top priority. Succession planning is a key focus of our Board. Please see the following sections for further discussion of our approach to human capital management: “Our Approach to People — Human Capital Management,” and “Management Succession Planning.”

Evaluation of Stockholder “Say-on-Pay” Vote Results

This year, we are again providing stockholders with the right to cast a non-binding advisory vote to approve the compensation of our NEOs (see “Proposal No. 2 — Advisory Vote to Approve Named Executive Officer Compensation”). Approximately 99% of the votes cast at our 2021 annual meeting of stockholders voted to approve our executive compensation programs and policies. Although we view this as an endorsement of our executive compensation program, during 2021, we continued to engage in additional stockholder outreach efforts as discussed in the “Stockholder Engagement Program” section above. The Committee takes stockholder feedback, as well as the results of the “say-on-pay” vote, into account when establishing or modifying our compensation programs.

Elements of Our Compensation Program

The Committee believes that our named executive officers, together with our other executives who have an ability to influence the achievement of our financial and operating objectives, should have a higher percentage of total

 

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compensation that is variable and, therefore, subject to greater risk. This provides closer alignment between those executives’ total compensation with the short-and long-term interests of stockholders and other stakeholders.

In order to achieve the compensation objectives established by the Committee, the Company uses the following compensation elements:

•

Base salary;

​

•

Short-term incentive opportunities (the Annual Incentive Compensation Plan); and

​

•

Long-term incentive opportunities (the Long-Term Incentive Plan).

​

In general, as the position and amount of responsibility for an executive increase, a greater percentage of that executive’s total compensation will be variable. Executives with the highest level and amount of responsibility generally have the lowest percentage of their total compensation fixed as base salary and the highest percentage of their total compensation dependent upon our performance, as reflected in short-or long-term incentive awards.

The following table shows the allocation of total target compensation for each NEO for each of the last three years:

(1)

For purposes of determining total compensation, we have included base salary, target annual cash incentives and the value of target long-term incentive awards.

​

Base Salary

We provide each named executive officer with an annual base salary. Base salaries for our named executive officers depend on each executive’s experience and scope of responsibilities, as well as the median market data for comparable job positions at companies within our peer group. We increase base salary primarily in response to notable achievements or for additions in scope of responsibilities. In addition, we may increase base salary to remain competitive in the marketplace.

During 2021, as part of its annual review of executive compensation, the Committee approved adjustments to the annual base salaries of our NEOs, other than Mr. Eaves. The committee determined that the adjusted base compensation was appropriate and aligned with the base compensation of comparable positions at our peer group companies. The table below lists the annual base salary amounts for our NEOs in 2020 and 2021.

 

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Annual Incentive Compensation Plan

Overview

The Committee designed the Annual Incentive Compensation Plan to focus our organization on meeting and exceeding certain annual financial and operating objectives by rewarding those key employees with the greatest ability to influence our results.

For 2021, the Committee maintained Adjusted EBITDA and Free Cash Flow as the financial performance measures for the plan. Adjusted EBITDA constitutes 50% of the total target award, and Free Cash Flow represents 20% of the total target award. Consistent with prior years, the Committee chose safety and environmental metrics as the operating performance measures for the plan, each of which constitute 15% of the total target award. The safety and environmental measures continue to be part of the 2021 plan because these goals reflect our core values. As part of its annual review, the Committee closely considers the Company’s strategy and goals relating to climate change and other environmental priorities in setting the environmental performance metrics to include in the plan.

Early each year, the Committee determines the compensation plan design for the annual cash incentives based on performance from the prior year and the current year budget and targets, as well as other factors. The Committee recommends the annual plan design, as well as the performance targets, to the Board for approval. Annual cash awards contain various incentive levels based on the participant’s accountability and impact on our performance, with target opportunities established as a percentage of base salary based on the median market data. During the executive market review conducted in 2021, the annual incentive target for Mr. Giljum was adjusted mid-year to align with competitive market data for his position. None of our other NEOs received an adjustment to their target annual cash incentive award opportunity during 2021.

The following table shows the target opportunities available to the NEOs as a percentage of their base salaries and the actual payouts as a percentage of their base salaries for each of the last three years:

(1)

The percentages shown for Messrs. Lang, Giljum, and Drexler and Ms. Klein are based on a blended base salary rate, which takes into account the annual base salary for each NEO in effect during 2021 before and after the salary and target adjustments in July 2021. No adjustments were made for Mr. Eaves during 2021.

​

 

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The following table shows the performance measures used in the 2021 Annual Incentive Compensation Plan for our NEOs, together with the percentage of the total annual cash incentive grant that such component comprises. Each of the components for the NEOs is described in greater detail below:

We believe that these performance measures align our compensation packages with both stockholder and employee interests by targeting specific performance goals and operational standards. By identifying meaningful performance measures, and by assigning greater weight to certain measures, we are able to more closely align compensation to the achievement of those business objectives over which particular employees have the greatest impact.

If the target level of performance is achieved with respect to a particular performance measure, the applicable payout percentage for that performance measure will equal 100%. Achievement at the threshold performance level results in an applicable payout percentage that varies based on the performance measure, as shown in the table below. If the maximum level of performance is achieved with respect to a particular performance measure, the payout percentage for that measure will equal 200% of target performance. We interpolate payouts under the annual cash incentive awards for performance levels that fall between the threshold, target and maximum performance levels. There is no payout for performance that does not meet the threshold level criteria and there is no payout in excess of the maximum performance level.

(1)

In the event of a work-related fatality at any of our mine locations, there is no payout for the safety incident rate component.

​

Adjusted EBITDA

“Adjusted EBITDA” is determined based on our earnings before interest, taxes, depreciation and amortization, on a consolidated basis in accordance with generally accepted accounting principles, and excludes items such as acquisition-related expenses and amortization of acquired sales contracts. Refer to Annex A for a reconciliation to the most directly comparable GAAP measure. The Committee utilized the budget approved by the Board for 2021 during the annual review process, which included Adjusted EBITDA, and set the “target” level for this performance measure at 100% of budget. The threshold payout value for 2021 was set at 70% of the Adjusted EBITDA budget and the maximum payout value was set at 130% of the Adjusted EBITDA budget. We consider these goals to be difficult to attain and appropriately reflective of our position in the inherently volatile commodities market. The following table shows the threshold, target and maximum levels for the 2021 Annual Incentive Compensation Plan:

 

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Free Cash Flow

“Free Cash Flow” is defined as cash flow from operating activities minus royalty payments and capital expenditures used for maintaining the asset base. Capital spending, if any, applied to new mine development is not deducted from the Free Cash Flow calculation. The Committee utilized the budget approved by the Board during the annual review process, and set the “target” level for this performance measure at 100% of budget. The threshold payout value was set at 70% of the Free Cash Flow budget and the maximum payout value was set at 130% of the budget. We consider these goals to be difficult to attain and appropriately reflective of our position in the inherently volatile commodities market. The following table shows the threshold, target and maximum levels for the 2021 Annual Incentive Compensation Plan:

Safety Incident Rate

Safety is an important emphasis for the Company and, the Board believes, each of the Company’s stakeholders. Strong safety performance leads to improved employee performance and lower costs associated with regulatory citations, insurance and litigation matters, which in turn lead to improved operating performance. Because of these factors, the Committee uses Safety Incident Rate as a component of the annual incentive compensation plan. “Safety Incident Rate” is determined based on the Company’s historical performance and is the number of reportable injuries per 200,000 man hours. The “target” goal for 2021 was set at the Company’s three-year average, while the threshold and maximum goals were set at 10% higher than the Company’s three-year average and 10% improvement over the Company’s three-year average, respectively. In addition, there is no payout for this performance measure if there is a work-related fatality during the fiscal year. The following table shows the threshold, target and maximum levels for the 2021 Annual Incentive Compensation Plan:

Environmental Compliance

Like safety, environmental compliance is an important goal for the Company. Improved environmental compliance can improve the areas in which our employees live and operate, and can reduce long-term costs and expenses associated with fines, remediation issues and litigation matters. The Committee has established an environmental compliance component based on Notices of Violation, or NOVs, received by the Company and its subsidiaries. Due to the Company’s outstanding industry-leading environmental compliance performance, the Committee has established fixed performance levels at threshold, target and maximum that recognize these ongoing achievements. The Committee believes that continuing to use these performance levels for 2021 serves as an acknowledgement that management has set the standard for environmental compliance, while motivating continued performance by management in this regard. The following table shows the threshold, target and maximum levels for the 2021 Annual Incentive Compensation Plan:

 

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(1)

No payout was earned for the Safety Incident Rate performance measure due to two fatalities at our mines.

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While we are proud to consistently lead our large, integrated peers in safety performance year-after-year, the two fatalities that occurred at our mines during 2021 are stark reminders of just how important our continuing focus on safety is. Safety is a core value of Arch, and our Board and executive leadership team remain committed to the safety of our workforce. We believe in the proactive, behavior-based approach that we utilize to engrain safety into our culture, and our executive leadership team, along with other members of management, have and will continue to assess our prior performance and take appropriate actions to ensure that each member of our dedicated workforce makes it home safely each and every day.

Based on the actual performance as set forth above, the cumulative amounts listed below were earned under the 2021 Annual Incentive Compensation Plan for the Company’s 2021 performance.

(1)

An annual incentive target increase from 80% to 85% was approved for Mr. Giljum by our Board of Directors in July 2021 and is weighted accordingly.

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(2)

The amounts shown for Messrs. Lang, Giljum, and Drexler and Ms. Klein are based on blended base salary and annual target bonus rates, which take into account the annual base salary and target bonus percentages for each NEO in effect before and after the compensation adjustments in July 2021.

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Long-Term Incentive Plan

Overview

The Committee designed our long-term incentive plan to promote decision-making that creates long-term value for our stockholders and other stakeholders. The Committee believes that an effective LTIP should also create strong retention incentives for those key employees who are most likely to influence our long-term performance.

Our long-term incentive plan is comprised entirely of restricted stock units, for which awards are divided equally between time-and performance-based awards. Long-term incentive awards contain various incentive levels based on the participant’s accountability and potential influence on our performance, with target opportunities established as a percentage of base salary based on the median market data.

 

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2021 Annual Grants

For 2021, the Company maintained its two equally-weighted performance measures, return on invested capital (“ROIC”) and relative total shareholder return (“TSR”), for its performance-based restricted stock unit awards.

The following table sets forth the LTIP award targets and number of restricted stock units (“RSUs”) granted to each NEO in 2021.

(1)

The number of RSU awards granted to each NEO were determined based upon the 20-day VWAP of a share of our common stock preceding the grant date of February 25, 2021

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(2)

The grant value for Ms. Klein is inclusive of the stub period value from the date she assumed her current role as Senior Vice President — Law, General Counsel and Corporate Secretary on October 13, 2020 to the grant date of the awards.

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The time-based RSU awards vest in three equal installments on the first three anniversaries of the grant date. The performance-based RSU awards vest on December 31, 2023 and will be settled on or before March 15, 2024. The performance-based RSU award is earned based on a three-year performance period from January 1, 2021 to December 31, 2023 for two equally weighted performance measures: ROIC and TSR relative to the Company’s compensation peer group.

For the ROIC measure, 50% of the performance-based RSUs will be eligible to vest based on the average ROIC for calendar years 2021 through 2023. “ROIC” is determined based on the quotient obtained by dividing net operating profit after tax by average invested capital. Invested capital includes the sum of current maturities of debt, long-term debt and total stockholders’ equity per the consolidated balance sheets.

For the relative TSR measure, 50% of the performance-based RSUs will be eligible to vest based on the Company’s TSR relative to the Company’s peer group over the three-year performance period. The TSR calculation will be based on a “point-to-point” approach using the 30 calendar-day average of the closing price per share of the Company or a member of the peer group, as applicable, at the beginning and end of the performance period. In the event that our TSR is negative, the payout will be capped at target, regardless of peer group performance. If a peer company declares bankruptcy or is delisted during the performance period, the calculation for that company will be considered -100%. In the instance of a merger or acquisition of a peer company during the performance period, the company would be removed from the peer group. The peer group for the 2021 LTIP awards consists of the companies being utilized for our peer group at the time of the grant and are listed below:

 

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If the target level of performance is achieved with respect to a performance measure, the applicable payout percentage for that performance measure will equal 100%. Achievement at the threshold performance level will result in a payout at 50% of target performance and achievement at the maximum performance level will result in a payout at 200% of target performance. We interpolate payouts for performance levels that fall between the stated performance levels. There is no payout for performance that does not meet the threshold level and there is no payout in excess of the maximum performance level. The following table shows the performance levels for the 2021 LTIP:

2021 Performance Achievement and Retention Equity Awards

On October 13, 2021, our Board, based upon the recommendation of the Committee in consultation with LB, granted equity awards to certain senior officers and other key members of management, including our NEOs. The grant was awarded for the following two purposes: (i) in recognition of significant Company achievements-including the successful multi-year development and 2021 start-up of our world-class Leer South mine effectively on time and on budget despite the ongoing pandemic, supply chain issues and labor shortages impacting the industry, as well as the creation of a novel sinking fund to address the Company’s thermal reclamation obligations-and (ii) as a retention incentive in light of the increasing difficulty to retain and recruit talent into our industry. The awards granted were time-based RSUs, with the performance recognition award component vesting ratably over two years and the retention award component vesting ratably on the second, third and fourth anniversaries of the grant date.

The following table sets forth the number of time-based RSUs granted to each NEO under the 2021 special grants.

 

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Achievement and Payment on 2018 Annual LTIP Awards

Each of our NEOs, other than Mr. Giljum and Ms. Klein, received an equity award of restricted stock units under the 2018 annual LTIP for executive officers. The award was divided equally between time-based and performance-based restricted stock units. On October 25, 2021, which was the third anniversary of the grant date of the awards, the time-based restricted stock unit award vested in full and was delivered in shares of Company common stock.

The performance-based restricted stock unit award also vested on the third anniversary of the grant date and was earned based on the VWAP of a share of Company common stock during any 45-day trading period during the three-year performance period, as follows:

Based on the highest VWAP achieved during the October 2018 — October 2021 performance period of  $93.38, no payout was earned by any NEOs for this award.

Other Benefits

Elimination of Executive Perquisites — During 2021, our Board eliminated the last remaining executive perquisites for NEOs, which had consisted of reimbursement for such items as tax and financial planning.

Participation in Benefit Plans and Other Compensation Arrangements — Each of our NEOs is eligible to participate in the same health and welfare plans as our other eligible employees. These plans include medical and dental insurance, life, travel and accidental death and dismemberment insurance, short-and long-term disability coverage, participation for eligible employees in our qualified defined benefit pension plan (which was frozen at the end of 2014), and a 401(k) plan. We no longer sponsor a supplemental retirement plan or non-qualified deferred compensation plan.

Change in Control Agreements — To provide our NEOs with some financial security in the event their employment with our organization is terminated without cause or under certain circumstances following a change in control, we provide the executives with change in control agreements that provide for cash payments and certain other severance benefits upon a qualifying termination. As a condition to receiving payments under the change in control agreements, the NEO is required to execute a waiver of claims against us and abide by certain non-disclosure, non-competition and non-solicitation requirements. We believe that the change in control agreements provide a meaningful mechanism by which to retain those individuals who are most capable of affecting our future performance. For more information about the change in control agreements with our NEOs, see “Potential Payments upon Termination of Employment or Change in Control” below.

Stock Ownership Guidelines

Our Board has adopted stock ownership guidelines which are intended to promote meaningful stock ownership by our NEOs. The Personnel and Compensation Committee of our Board reviews the guidelines on a regular basis and makes recommendations to our Board on adjustments, if any, to required threshold levels and considers best practices as part of that review process. Our current stock ownership guidelines specify a number of shares of our common stock, including unvested RSUs, that our NEOs must accumulate within the later of five years of the

 

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implementation of the guidelines or their first receiving an equity grant in such position. All of our NEOs either satisfy the required threshold or are within the five-year period. The specific stock ownership guidelines are determined based on a multiple of base salary, as follows:

Anti-Hedging and Anti-Pledging Policy

Each of our directors and employees, including our NEOs, is subject to the terms of our securities trading policies. Those policies prohibit entering into hedging transactions involving our stock, including trading in or writing “puts” and “calls” or engaging in “prepaid variable forward contracts,” “equity swaps,” “collars,” “exchange funds,” “short sales,” “margining” or any financial instruments or other action designed to hedge or offset or speculate on any change in the value of the Company’s stock. Those policies also prohibit NEOs and directors from pledging any Company securities.

Impact of Section 162(m) on Compensation

Section 162(m) of the Code places a limit of  $1,000,000 per person on the amount of compensation that a public company may deduct in any year with respect to certain current or former executive officers. The Committee believes that stockholder interests are best served by not restricting the Committee’s flexibility in structuring compensation plans, even though such plans may result in non-deductible compensation expenses. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.

 

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(1)

Amounts shown represent the value of a retention payment previously awarded as part of the Company’s succession plan. The applicable performance condition was satisfied and the final retention payment was made in 2021.

​

(2)

Amounts shown represent the aggregate grant date fair value of all stock awards made to each NEO during the year indicated. We have determined the grant date fair value in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The determination of the grant date fair value is subject to certain estimates and assumptions described in Note 19, Stock-Based Compensation and Other Incentive Plans, to our consolidated financial statements for the year ended December 31, 2021, included in our Annual Report on Form 10-K for the year ended December 31, 2021. The actual value, if any, that the NEOs will realize from the stock awards is a function of a value of the underlying shares if and when the awards vest and, for performance-based awards, the level of attainment of the applicable performance goal.

​

Amounts for the performance-based RSU awards were calculated based on the probable outcome of the performance condition as of the grant date, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For these amounts, see the “Grant Date Fair Value of Stock and Option Awards” column of the “Grants of Plan Based Awards for the Year Ended December 31, 2021” table below. The following are the values of the performance-based awards as of the grant date assuming attainment of the maximum level of performance: Mr. Eaves — $900,366; Mr. Lang — $2,550,340; Mr. Giljum — $938,056; Mr. Drexler — $1,490,839; Ms. Klein — $1,285,639.

(3)

Amounts shown represent the changes in the actuarial present value of the accumulated benefits for our NEOs under our defined benefit pension plans, computed in accordance with FASB ASC Topic 715. The present value of accumulated benefits is subject to certain actuarial assumptions described in Note 21, Employee Benefit Plans, to our consolidated financial statements for the year ended December 31, 2021 and under the heading “Employee Benefit Plans” in the section entitled “Critical Accounting Policies” included in the Form 10-K.

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(4)

Amounts shown for 2021 reflect the following:

​

•

For Mr. Eaves: matching contributions to 401(k) plan ($17,400).

​

•

For Mr. Lang: matching contributions to 401(k) plan ($15,796).

​

•

For Mr. Giljum: matching contributions to 401(k) plan ($17,400).

​

•

For Mr. Drexler: matching contributions to 401(k) plan ($17,400), as well as financial planning, tax preparation services, and club dues which were below $25,000 in the aggregate and pre-dated the elimination of such perquisites as indicated below.

​

•

For Ms. Klein: matching contributions to 401(k) plan ($15,581).

​

Our Board eliminated perquisites for all NEOs in July 2021. The Company match of contributions to the 401(k) plan is not a perquisite but rather is a feature in our 401(k) plan available to all eligible employees.

 

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