Exhibit 10.85

 

CONSOL ENERGY INC.

SUMMARY OF AMENDED AND RESTATED SHORT-TERM INCENTIVE COMPENSATION PLAN

 

The following is a summary of the Amended and Restated Short-Term Incentive
Compensation Plan (the “Plan”) of CONSOL Energy Inc. (the “Company”). The Plan,
as amended and restated, was approved by the Company’s Board of Directors (the
“Board”) on October 19, 2005.

 

Purpose. The Plan provides for incentive-based, competitive cash compensation
opportunities to certain employee groups of the Company and its subsidiaries and
business units. The Plan’s purpose is to provide an effective management tool
and employee reward opportunity based on achievement of Company, business unit,
and individual employee objectives.

 

Who Is Eligible. Based on recommendations made in the first quarter of each
year, the Compensation Committee of the Board (the “Compensation Committee”)
determines those management and employee groups from the individual business
units and operations who will be eligible for an award, if any, as a result of
performance in the previous Plan quarter and year.

 

Quarterly Awards. To be eligible for a quarterly award, the Plan participant
must be an active, full-time, non-union represented employee on the last day of
a Plan quarter, have worked for at least one month of that same quarter, be an
active employee on the date the quarterly award is distributed, and belong to
one of the following employee groups: (i) salaried employees below the level of
Superintendent at union represented and non-union represented mine sites;
(ii) non-union represented employees at mine sites; and (iii) coal operations
support employees at Baltimore Terminal, Alicia Dock, River Division and Cargo
Dockers. Notwithstanding the foregoing, if a participant’s employment ends due
to an “early,” “normal,” or “incapacity” retirement (all as defined in the
Company’s retirement plan), the participant must have retired after the last day
of the calendar quarter to be eligible for that quarter’s award.

 

Annual Awards. To be eligible for an annual award, the Plan participant must be
an active, full-time, non-union represented employee on December 31 of a Plan
year, have worked for at least 3 months of that same year, be an active employee
on the date the annual award is distributed, and belong to one of the following
employee groups: (i) Company corporate employees; (ii) Fairmont Supply Company
employees; (iii) coal operations support employees; (iv) coal operations
employees at the Superintendent level and above; and (v) Schedule 1 employees.
Notwithstanding the foregoing, if a participant’s employment ends due to an
“early,” “normal,” or “incapacity” retirement, the participant must have retired
on or after December 31 of the Plan year to be eligible for that year’s award.

 

Net Income Performance Threshold. Each year, the Compensation Committee sets a
minimum net income threshold for the Company. In years when the Company’s
minimum net income threshold is not achieved, the Plan does not pay an annual
award (though quarterly awards throughout the year may be paid to those employee
groups eligible for quarterly awards).

 

Award Determination Process. The amount of an award depends on the extent to
which the individual, the business unit and the Company achieve established
objectives for the applicable Plan quarter or year. An individual’s incentive
compensation opportunity percentage primarily determines the amount of the
award. Objectives, as set forth below, are established and approved for each
Plan quarter and year and are assigned an overall performance rating and
weighted according to various factors. The objectives include: (i) combined
corporate performance (e.g. one or more recommended corporate profit objectives
approved by the Compensation Committee); (ii) business unit performance; and
(iii) individual performance. At the end of each Plan quarter and year, the
Compensation Committee determines combined corporate and business unit
performance and the Plan participant’s manager determines individual
performance.

 

The incentive compensation opportunity percentage is job-grade specific and
expressed as a percentage of base salary. The Compensation Committee
establishes, approves and recommends changes to these percentages by examining
job responsibilities for each grade level and benchmarking the opportunity to
market-competitive data. Adjustments may be made to awards in order to achieve
internal pay equity.

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At the end of each Plan quarter and year, performance in relation to each
objective is evaluated. The Compensation Committee determines a single Company
and business unit performance rating. The manager and individual will discuss
the individual’s performance rating to assign to such individual’s performance.
The ratings and individual incentive compensation opportunity percentage are
then used in specific plan formulas (set forth below) to determine the amount of
a quarterly or annual award under the Plan.

 

Payment Schedule and Formula. Once a Plan quarter or year ends, as the case may
be, and the Compensation Committee has approved an award under the Plan, it will
be paid as soon as administratively feasible. The payments will be determined in
accordance with the applicable formula set forth below:

 

Quarterly Award Formula.

 

Base
salary/wage
as of last day
of quarter   X   Incentive
compensation
opportunity %   X   1/4
(quarterly)   X   Company
performance
factor   X   Business unit
performance
factor   =   Quarterly
incentive
award
payment

 

Annual Award Formula.

 

Base salary/wage as of

December 31

  X  

Incentive compensation

opportunity %

  X  

Annual incentive

compensation award factor

  =  

Annual award

payment

 

Settlement of Awards. Awards are paid in cash.

 

Taxation of Award. An award will be treated as ordinary income in the year in
which it was paid. The amount needed to satisfy federal, state and/or local
withholding tax requirements (including FICA) will be withheld from a
participant’s award before making a payment to the participant.

 

Plan Administration. The Plan is administered by the Compensation Committee. The
President and CEO of the Company, with the assistance of the Vice President of
Human Resources and staff, perform administrative functions, including
recommendations to the Compensation Committee. The Compensation Committee
considers and approves any awards.

 

The powers of the Compensation Committee include authority to interpret the
Plan, and, subject to Plan provisions, determine eligible participants, terms of
any awards, minimum thresholds, target amounts and profit objectives, and the
extent to which the Company and Plan participants have met or exceeded
thresholds, target amounts and profit objectives. The Compensation Committee has
the power, in its sole and complete discretion, to determine the amount of or
eliminate any award under the Plan.

 

The Compensation Committee may delegate to appropriate officers of the Company
and/or its related companies who are participating employees in the Plan certain
tasks related to its powers and duties under the Plan.

 

Amendment or Termination. The Plan can be amended or terminated at any time by
the Compensation Committee, subject to approval by the Company’s Board, provided
that no amendment or termination effects the rights of eligible participants to
receive awards earned but unpaid as of the date of an amendment or termination.

 

No Assignments. Prior to receipt, no award is assignable, in whole or in part,
either voluntarily or by operation of law.

 

Reserves. Any account or reserves that the Company establishes to record amounts
credited for the Plan are solely for accounting purposes.

 

No Rights to Awards or Continued Employment. No person has a right or claim to
be granted an award from the Plan, and no employee who is an eligible Plan
participant will have the right to continued employment with the Company or any
of its subsidiaries or business units.

 

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