EXHIBIT 10.14

         
 
  Number: GP- 04

  Page 1 of 5 (WESTMORELAND COAL COMPANY LOGO) [d66453d6645300.gif]   Revision
Date: December 31, 2008 WESTMORELAND COAL COMPANY   Supersedes Policy Dated
7/26/04 and GP-04 dated 5/21/07 Manual of Policies:   Approved Issuing Officer:
COMPENSATION
Title:
SEVERANCE POLICY  
Original signed as Policy # GPC-001 on file in Corporate Office   Name: D.L.
Lobb       Title: CEO & President    
 
       
 
       

1.   POLICY STATEMENT       It is the policy of the Westmoreland Coal Company,
(“the Company”, or “Westmoreland”) to pay severance benefits under certain
specific circumstances, as defined by this policy, to certain non-union
employees who are involuntarily terminated for reasons other than cause and
under certain conditions described herein. The purpose of severance is to aid
employees for hardships incurred upon loss of employment. This policy applies to
non-union employees of Westmoreland Coal Company and all of its direct and
indirect subsidiaries (each such entity, an “Employer” for its employees, and
each such employee, an “Employee” or “you”).   2.   FUTURE OF THE POLICY      
Although the Company currently expects to continue the provisions of this policy
at its sole discretion, the Company reserves the right to change or amend at any
time, any and all terms and conditions of this policy, or to terminate this
policy in its entirety, upon six (6) months notice to employees covered under
this policy. Furthermore, the Company reserves the right to interpret and
construe the provisions of this Policy, including the determination of the
eligibility for and amount of benefits under the Policy, to the fullest extent
permissible by law.   3.   ELIGIBILITY       You are an “Eligible Employee” if:

  o   You are an active full-time employee of the Employer, scheduled to work at
least 40 hours per week, AND     o   Your employment terminates due to:

  1.   Involuntary termination that is not for Cause, including but not limited
to, permanent layoff, permanent reduction in force, or termination of employment
due to lack of work or job elimination; or     2.   The sale of a facility or
division or segment of business unless, following such sale, you are
subsequently employed by the purchaser of the facility or division or segment of
business; or     3.   A position being relocated in which the distance between
the relocated place of employment and your residence is at least fifty
(50) miles greater than the distance between your former place of employment and
your residence, and you do not continue employment at the relocated place of
employment. AND

  o   You have a position on the date your employment terminates that is listed
in the Position or Classification section of the attached Addendum; AND     o  
Within 30 days following your termination with Employer you do not receive an
offer of Similar Employment from the Employer or any of its affiliates or
subsidiaries, or (i) your employment is terminated by the Employer as a result
of or in relation to a sale of the Employer or any of its assets, business
unit(s), or divisions(s), subsidiaries or affiliates or the contracting out or
outsourcing of any function within the Employer, and (ii) you do not receive an
offer of Similar Employment from the purchasing, contracting, or outsourcing
party or a successor thereto. “Similar Employment” means a position with pay and
Working Conditions that are reasonably comparable to that of your last position
with the Company. For purposes of the Policy, “Working Conditions” do not
include employee benefits. An Employee is not eligible for severance benefits
hereunder, if that an Employee does not accept the Similar Employment; AND

 

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Title:
  No.   Date Issued:   Supersedes   Page 2 of 5
SEVERANCE POLICY
  GP — 04   12/31/08   Policy IV-19    
 
          Dated 10/1/94    
 
          and GP-04 dated    
 
          5/21/07    

  o   You sign, return to the Company and do not revoke the Release Agreement
(“Release Agreement”) within the time frames specified in that document or a
letter accompanying same in a form satisfactory to the Company.

4.   INELIGIBILITY       The following are NOT Eligible Employees:

  o   Employees who are covered by a collective bargaining agreement that does
not provide for participation in this Policy.     o   Seasonal, Part-time and/or
Temporary workers (as reflected in the Employer’s payroll system) and
independent contractors.     o   Employees whose employment is terminated due to
the employee’s resignation, death, or disability (as defined in the Company’s
applicable long-term disability Policy).     o   Employees whose employment is
terminated for Cause, as defined herein.

  o   For Cause: Gross or willful misconduct that is injurious to the Company,
or its direct or indirect subsidiaries or affiliates, which includes but is not
limited to an act or acts constituting embezzlement, misappropriation of funds
or property of such entities, larceny, fraud, gross negligence, crime or crimes
resulting in a felony conviction, moral turpitude or behavior that brings the
Employee into public disrepute, contempt, scandal or ridicule or that reflects
unfavorably upon the reputation or high moral or ethical standards of the
Company (or the Employer) or violation of Company (or Employer) policy including
but not limited to the policies set forth on Code of Business Conduct and
Fitness for Duty; willful misrepresentation to the Company’s or an Employer’s
directors, officers, managers, supervisors, employees or third parties; or
failure to meet the duties of care and loyalty to the Company or the Employer.
For purposes of this paragraph, failure to act on the participant’s part shall
be considered “willful” if done by the participant without a reasonable belief
that the omission was in the best interest of the Company or the Employer.

  o   Any Employee who refuses to sign, revokes or subsequently breaches the
Release Agreement.     o   Any Employee who is in material violation of company
policy or in material breach of statutory or common law duties that the Employee
owes to the Employer.     o   Any Employee who is not otherwise an Eligible
Employee, as provided above.

5.   DETERMINATION AND PAYMENT OF SEVERANCE PAYMENTS       If you are an
Eligible Employee, you may be eligible to receive severance benefits that
consist of three parts:

  o   Severance Compensation     o   Medical, Vision, and Dental Benefit
Continuation     o   Outplacement Assistance

  5.1.   Severance Compensation: Severance compensation will be calculated based
upon your Position or Classification on the date your employment terminates and
completed Years of Service as set forth in the attached Addendum.         For
purposes of calculating severance compensation, base pay means your “weekly base
pay” in effect for the payroll period during which employment with your Employer
is terminated. Overtime, bonuses, commissions, incentive pay and any taxable or
nontaxable fringe benefit or payment will be excluded. “Weekly base pay” means
40 hours multiplied by your base hourly rate only for hourly Employees, and your
annual base salary divided by 52 for exempt Employees. Your “monthly base pay”
is computed by multiplying your “weekly base pay” by 52 and then dividing that
number by 12. “Year of Service” means each completed full year of continuous
service with the Company or any other Employer from your date of hire. Partial
Years of Service will not be included in calculating your severance
compensation.

 

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Title:
  No.   Date Issued:   Supersedes   Page 3 of 5
SEVERANCE POLICY
  GP — 04   12/31/08   Policy IV-19    
 
          Dated 10/1/94    
 
          and GP-04 dated    
 
          5/21/07    

      In addition, your severance benefit under the Severance Policy will be
reduced (but not below zero) by all amounts of severance pay or similar pay to
which you may be entitled to under any other Company Severance Policy, benefits
mandated by state or federal law, payment in lieu of WARN notification or any
individual written employment agreement or other written agreement relating to
payment upon separation from employment or change of control of the Company.    
    Severance payments will be paid in equal installments on the normal payroll
schedule or in a lump-sum payment as determined solely by the Employer (except
that for payments to a CEO/President of an Employer, the determination shall be
made by the Employer’s board of directors, excluding the CEO/President if a
board member) and shall be net of any tax, medical or other required
withholdings. Severance payments shall commence upon the Employee’s “separation
of service” within the meaning of Section 409A(a)(2)(A)(i) of the Internal
Revenue Code of 1986, as amended (“Code”) from the Employer; provided, however,
any payments that would otherwise be made in the case of a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code, within six
(6) months after such Employee’s separation from service (but only with respect
to payments that would otherwise be subject to additional tax under Code
Section 409A), shall be delayed until the date of such Employee’s separation
from service or, if applicable, expiration of the six (6) month period (or, if
earlier, the date of death of the Employee).         No severance payments will
be made later than two years after the separation from service or without the
return of an executed and non-revoked Release Agreement.     5.2.   Medical,
Dental, and/or Vision Benefit Continuation: If you have medical, dental, and/or
vision coverage provided by or through the Employer upon your termination of
employment, these coverages will terminate at the end of the month following the
date your employment terminates. You and your dependents have the right to
continue your benefits under COBRA. If you choose to continue your benefits
under COBRA, the Employer will share in the cost of the established COBRA rate
through the period specified in the attached Addendum based on your Position or
Classification on the date your employment terminates. You will be responsible
to share the cost of the COBRA rate by paying an equivalent of the established
employee premium rate through your specific severance period. The Employer
reserves the right to pay you a lump-sum value of the established COBRA rate
equal to the length of your specified severance period in lieu of paying the
Employer share of cost, in which case you will then be required to pay the full
COBRA rate for any continued coverage, and the lump sum payment to you will be
taxable income to you. At the end of your specified severance period, you will
be responsible for the entire COBRA rate (both employee and Employer portions)
through the remaining COBRA period.         Additionally, the benefit
continuation benefit applies only to medical, dental, and vision benefits under
Employer-sponsored Plans. It is not provided for the cost of any flexible
spending account coverage (which in certain circumstances is also subject to
COBRA) or other benefits (for example life insurance or long term disability
benefits.) Except for the limited continuation of health coverage discussed
here, other employee benefit plans and arrangements of the Employer stop when
your employment terminates in accordance with the standard rules of such Plans
and arrangements.     5.3.   Outplacement Assistance. You will be able to obtain
outplacement assistance services from an outplacement firm selected by the
Employer for a specified period of time, as indicated in the Addendum, based on
your Position or Classification on the date your employment terminates. You must
begin such outplacement assistance within three (3) months of your employment
termination to receive this benefit.

6.   CONDITIONS TO PAYMENT OF BENEFITS       As a condition of your entitlement
to severance benefits under the Severance Policy, you must agree in writing to
release the Company and others associated with the Company from any and all
legal claims, except those preserved by public policy, associated with your
employment by the Employer by signing and not revoking the Release Agreement.  
    Your severance benefits will be paid in equal installments or in a lump-sum
payment, solely determined by the Company, after the expiration of any
applicable waiting periods set forth in the Release Agreement and starting
within two (2) pay periods of said waiting period and never to exceed two
(2) years (unless payment is delayed as provided in Section 5.1 herein). Your
severance benefits will be subject to all applicable tax

 

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Title:
  No.   Date Issued:   Supersedes   Page 4 of 5
SEVERANCE POLICY
  GP — 04   12/31/08   Policy IV-19    
 
          Dated 10/1/94    
 
          and GP-04 dated    
 
          5/21/07    

    and other withholdings. No deductions will be made as contributions to the
Westmoreland Coal Company Savings and Retirement 401(k) Policy. As provided
above, you will not be paid severance benefits if you are in material violation
of applicable Company policies or you are in violation of any other legal or
contractual obligation you may owe the Employer, including without limitation
the Release Agreement. To the extent that an Eligible Employee is or has been
covered by any other Company or Employer severance Policy(ies) or
arrangement(s), this Severance Policy expressly supersedes and replaces any and
all such Policy(ies) or arrangement(s) (other than an individual written
employment agreement or other written agreement relating to payment upon
separation from employment, including change of control agreements) the terms of
which will supersede this Policy to the extent such terms are inconsistent
herewith.       If you become re-employed with the Company or another Employer
in any category of employment prior to your completion of the severance
compensation period, your severance benefits under the Severance Policy
resulting from the termination will cease, and if you received a lump sum, you
will be required to reimburse the Company for the remaining pro-rated amount of
severance in accordance with your identified severance period as referenced in
the attached Addendum. You again will be subject to the terms of this Policy.  
    If a court of competent jurisdiction, including without limitation a United
States Bankruptcy Court, limits the amount or ability of the Company to pay
benefits hereunder, neither the Company, its subsidiaries, affiliates, or
successors and their respective employees, officers, directors, shareholders,
and agents will have any liability therefore. Likewise, regardless of whether
benefits described hereunder are in certain jurisdictions deemed to be wages or
compensation, no employee, officer, director, shareholder, or agent of the
Company or its subsidiaries, affiliates or successors assumes any liability for
the payment of benefits hereunder.

7.   SURVIVABILITY OF PAYMENTS       The commitments under this Policy shall
survive, to the extent permissible by law, upon the bankruptcy, insolvency,
liquidation or dissolution of the Company.

 

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Title:
  No.   Date Issued:   Supersedes   Page 5 of 5
SEVERANCE POLICY
  GP — 04   12/31/08   Policy IV-19    
 
          Dated 10/1/94    
 
          and GP-04 dated    
 
          5/21/07    

ADDENDUM
WESTMORELAND COAL COMPANY SEVERANCE POLICY FOR NON-UNION EMPLOYEES
DECEMBER 31, 2008

                              Outplacement   Health Benefit Level   Position or
Classification*   Severance Compensation   Assistance   Cost Share
 
               
1
 
o CEO/President

o Chief Financial Officer

o General Counsel
o Vice Presidents of a Functional Area
o Controller
o Such other positions not listed above that participate in the Annual Incentive
Plan at levels 1 and 2 (40% — 100%)
  Twelve (12) months of monthly base pay as defined in this document   9 month
program   12 months
 
               
2
 
o Directors of a Functional Area
o Assistant General Counsel
o Such other positions not listed above which participate in the Annual
Incentive Plan at Level 3 (30%)
  Nine (9) months of monthly base pay; plus one week of base pay for each year
of service, not to exceed a maximum of 12 months of monthly base pay as defined
in this document.   6 month program   9 months
 
               
3
 
o Senior Managers of a Functional Area
o Such other positions not listed above which participate in the Annual
Incentive Plan at Level 4 (20%)
  Six (6) months of monthly base pay; plus one week of base pay for each year of
service, not to exceed a maximum of 12 months of monthly base pay as defined in
this document.   3 month program   6 months
 
               
4
 
o Other Management Personnel or key contributors
o Such other positions not list above which participate in the Annual Incentive
Plan at Level 5 (15%)
  One (1) month of monthly base pay as defined in this document plus one (1)
week of weekly base pay as defined in this document for each year of service not
to exceed 26 weeks   2 week program   Equal to Severance Compensation
 
               
5
  Other Exempt Salaried Personnel who are Individual Contributors   One
(1) month of monthly base pay as defined in this document + 1 week of weekly
base pay as defined in this document for each year of service not to exceed
26 weeks   2 day program   Equal to Severance Compensation
 
               
6
  Non-Exempt or Hourly Personnel   One (1) week of weekly base pay as defined in
this document per Year of Service — 2 week minimum not to exceed 26 weeks  
2 day program   1 month