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                                                                   Exhibit 10.29

                           PEABODY ENERGY CORPORATION

                             Equity Incentive Plan
                           for Non-Employee Directors


     1.  Purpose and Nature of Plan.  The purpose of this Equity Incentive Plan
for Non-Employee Directors of Peabody Energy Corporation (the "Plan") is to
increase the ownership interest in Peabody Energy Corporation (the "Company") of
non-employee directors whose services are considered essential to the Company's
continued success and to provide a further incentive to serve as a director of
the Company.

     2.  Definitions.  The following terms as used in this Plan shall have the
meanings ascribed to them below:

          (a) Board shall mean the Board of  Directors of  Peabody Energy
     Corporation.

          (b) Change in Control means any one of the following:

               (i) any Person (other than a Person holding securities
          representing 10% or more of the combined voting power of the Company's
          outstanding securities as of the Effective Date, the Company, any
          trustee or other fiduciary holding securities under an employee
          benefit plan of the Company, or any company owned, directly or
          indirectly, by the shareholders of the Company in substantially the
          same proportions as their ownership of stock of the Company), becomes
          the Beneficial Owner, directly or indirectly, of securities of the
          Company, representing 50% or more of the combined voting power of the
          Company's then-outstanding securities;

               (ii) during any period of twenty-four consecutive months (not
          including any period prior to the effective date), individuals who at
          the beginning of such period constitute the Board, and any new
          director (other than (A) a director nominated by a Person who has
          entered into an agreement with the Company to effect a transaction
          described in clause 2(b)(i), (iii) or (iv) or (B) a director nominated
          by any Person (including the Company) who publicly announces an
          intention to take or to consider taking actions (including, but not
          limited to, an actual or threatened proxy contest) which if
          consummated would constitute a Change in Control) whose election by
          the Board or nomination for election by the Company's shareholders was
          approved by a vote of at least three-fourths ( 3/4) of the directors
          then still in office who either were directors at the beginning of the
          period or whose election or nomination for election was previously so
          approved, cease for any reason to constitute at least a majority
          thereof;

               (iii)  the consummation of any merger, consolidation, plan of
          arrangement, reorganization or similar transaction or series of
          transactions in
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                                                     Peabody Engergy Corporation
                                Equity Incentive Plan for Non-Employee Directors

================================================================================

          which the Company is involved, other than such a transaction or series
          of transactions which would result in the shareholders of the Company
          immediately prior thereto continuing to own (either by remaining
          outstanding or by being converted into voting securities of the
          surviving entity) more than 50% of the combined voting power of the
          securities of the Company or such surviving entity (or the parent, if
          any) outstanding immediately after such transaction(s) in
          substantially the same proportions as their ownership immediately
          prior to such transaction(s); or

               (iv) the shareholders of the Company approve a plan of complete
          liquidation of the Company or the sale or disposition by the Company
          of all or substantially all of the Company's assets, other than a
          liquidation of the Company into a wholly owned subsidiary.

     As used in herein, "Person" (including a "group"), has the meaning as such
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term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (or any successor section thereto).

          (c) Eligible Director shall have the meaning set forth in Section 4.

          (d) Fair Market Value of a share of Stock shall mean the fair market
     value of one share of Stock as of a particular day, which shall be the
     closing price per share of Stock on the New York Stock Exchange on that
     day, or, if such day is not a trading day, the last preceding trading day.

          (e) Restricted Stock is Stock issued under the terms of this Plan
     subject to the terms and conditions prescribed in Section 6.  A holder of
     Restricted Stock shall be entitled to all dividends paid with respect to
     Restricted Stock during the period of restriction and shall not be required
     to return any such dividends to the Company in the event of the forfeiture
     of the Restricted Stock.  A holder of Restricted Stock shall be entitled to
     vote the Restricted Stock during the period of restriction.  The Board
     shall determine whether Restricted Stock is to be delivered to the Eligible
     Director with an appropriate legend imprinted on the certificate, or if the
     shares are to be issued in the name of a nominee or deposited in escrow
     pending removal of the restrictions.

          (f) Stock shall mean common stock, $0.01 par value, of the Company.

     3.  Administration.  The Plan shall be administered by the full Board.
Subject to the provisions of the Plan, the Board shall be authorized to
interpret the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan.  The determination of the Board in
the administration of the Plan shall be conclusive and binding upon all persons
including, without limitation, the Company, its stockholders and Eligible
Directors granted options and other benefits under the Plan.  The Secretary of
the Company shall be authorized to implement the Plan in

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                                                     Peabody Engergy Corporation
                                Equity Incentive Plan for Non-Employee Directors

================================================================================

accordance with its terms and to take such actions of a ministerial nature as
shall be necessary to effectuate the intent and purposes of the Plan. The
validity, construction, and effect of the Plan shall be determined in accordance
with the laws of the State of Delaware.

     4.  Participation in the Plan.  A director of the Company who is not an
employee of the Company or any affiliate of the Company on the date an award is
granted (an "Eligible Director") shall be eligible to participate in the Plan.

     5.  Shares Subject to the Plan.  Subject to adjustment as provided in
Section 8, an aggregate of 200,000 shares Stock shall be available for issuance
under the Plan.  The shares of Stock issued under the Plan may be made available
from authorized but unissued shares or shares reacquired by the Company,
including shares purchased in the open market or in private transactions.
Shares of Restricted Stock may again become available for the grant under the
Plan if such Restricted Stock is forfeited.  If any option granted under the
Plan shall expire or terminate for any reason without having been exercised in
full and without compensation therefor, the shares subject to, but not delivered
under, such option may again become available for the grant of other options
under the Plan.

     6.  Restricted Stock.  Each Eligible Director elected or appointed as a
director of the Company after April 1, 2001 will be granted shares of Restricted
Stock when such Eligible Director is first elected or appointed as a director of
the Company.  Such Restricted Stock shall be subject to the following terms and
conditions:

     (a) Vesting.  Such grant of Restricted Stock shall become vested on the
     third anniversary of the date of grant; provided that all shares of
     Restricted Stock shall become vested immediately upon a Change in Control.

          (b) Forfeiture for Voluntary Termination or Termination for Cause.  In
     the event an Eligible Director voluntarily terminates his or her service
     with the Board without the consent of the Board, other than on account of
     permanent disability, or is involuntarily terminated for cause, before the
     third anniversary of the date of grant of such Restricted Stock, the
     Eligible Director shall forfeit his or her shares of Restricted Stock that
     are not vested on the date of such a termination of  service on the Board,
     and such forfeited Restricted Stock shall be returned to the Company.

          (c) Involuntary Termination, Disability or Death.  In the event of the
     involuntary termination of service of an Eligible Director without cause,
     voluntary termination of an Eligible Director's service with the consent of
     the Board, or the death or permanent disability of an Eligible Director,
     all outstanding shares of Restricted Stock of such holder shall become
     fully vested immediately.

          (d) Delivery of Vested Stock.  An Eligible Director shall have the
     right to delivery of a certificate representing shares of Restricted Stock
     only after such shares have become vested as provided in this Section.

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                                                     Peabody Engergy Corporation
                                Equity Incentive Plan for Non-Employee Directors

================================================================================

     7.  Stock Options.  Each Eligible Director shall be awarded an option to
purchase shares of Stock as of  each annual meeting of the Board.  In addition,
an Eligible Director first elected or appointed as a director on a date other
than the annual meeting of the Board shall be awarded an option to purchase
shares of Stock when such Eligible Director is first elected or appointed as a
director of the Company.  All options granted under the Plan shall be non-
statutory options not intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended.  Each option granted under this Plan shall be
evidenced by a written agreement in such form as the Board shall from time to
time approve, which agreements shall comply with and be subject to the following
terms and conditions:

     (a) Purchase Price.  The purchase price per share of Stock for which each
     option is exercisable shall be the fair market value per share of Stock on
     the date the option is granted.

     (b) Exercisability of Options.  Each option granted under the Plan
     generally shall become exercisable in three equal annual installments,
     commencing on the first anniversary of the date of grant and annually
     thereafter on subsequent anniversaries of the date of grant, as follows:

     (i)  One-third of the shares to which each option relates (rounded down to
          the nearest whole share) may be purchased commencing on the first
          anniversary of the date of grant;

     (ii)  An additional one-third of the shares to which each option relates
           (rounded down to the nearest whole share), on a cumulative basis, may
           be purchased commencing on the second anniversary of the date of
           grant; and

     (iii)  The balance of the shares to which each option relates, on a
          cumulative basis, may be purchased commencing on the third anniversary
          of the date of grant.

     Notwithstanding the above, all options shall be exercisable immediately
     upon a Change in Control.

     (c) Term of Options.  Each option granted under the Plan shall expire ten
     years from the date of the grant, and shall be subject to earlier
     termination as hereinafter provided.

          (d) Voluntary Termination or Termination for Cause. In the event an
     Eligible Director voluntarily terminates his or her service with the Board
     without the consent of the Board before the third anniversary of the date
     of grant of such option, or is involuntarily terminated for cause, the
     Eligible Director shall forfeit his or her options that are not exercisable
     on the date of such a termination of service on the Board.  Such a

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                                                     Peabody Engergy Corporation
                                Equity Incentive Plan for Non-Employee Directors

================================================================================

     former director may exercise options granted under this Plan that are
     exercisable on the date of such a termination of service on the Board no
     later than ninety days after such a termination of service.

     (e) Involuntary Termination, Disability or Death.   In the event of the
     involuntary termination of service of an Eligible Director without cause,
     voluntary termination of an Eligible Director's service with the consent of
     the Board, or the permanent disability of an Eligible Director, each of the
     then outstanding options of such holder will continue to become exercisable
     in accordance with paragraph (c) above and the holder may exercise the
     exercisable installments at any time within five years after such
     termination of service but in no event after the expiration date of the
     term of the option.  In the event of the death of the holder of any option
     while serving on the Board, each of the then outstanding options of such
     holder shall immediately become exercisable in full and may be exercised by
     the holder's legal representative at any time within a period of five years
     after death, but in no event after the expiration date of the term of the
     option.  However, if the holder dies within five years following
     termination of service on the Board, such option shall be exercisable for
     two years after the holder's death or five years after termination of
     service, whichever is longer, or until the expiration date of the term of
     the option, if earlier.

     (f) Payment.  Options may be exercised only upon payment to the Company in
     full of the purchase price of the shares to be delivered.  Such payment
     shall be made in cash, in Stock beneficially owned by the holder for at
     least six months before the date of exercise ("Mature Stock") or in a
     combination of cash and Mature Stock.  The sum of the cash and the fair
     market value of such Mature Stock shall be at least equal to the aggregate
     price of the shares to be delivered.

     8.  Adjustment Upon Changes in Stock.  If there shall be any change in the
Stock subject to the Plan by reason of merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, exchange of stock or other change
in the corporate structure, appropriate adjustments shall be made to the
aggregate number and kind of shares of Stock or other securities subject to the
Plan, Restricted Stock awards and outstanding option grants, to the purchase
price of outstanding options, and to other terms of the Plan or awards, as the
Board determines to reflect such changes.

     9.  Nontransferability.  An Eligible Director may not sell, transfer,
pledge or otherwise dispose of or encumber his or her Restricted Stock (other
than by will or by the laws of descent and distribution) until after such
Restricted Stock becomes vested.  Each option and all rights thereunder shall be
non-assignable and non-transferable other than by will or the laws of descent
and distribution and shall be exercisable during the holder's lifetime only by
the holder or the holder's guardian or legal representative; provided, however,
options granted under the Plan may be transferred, without consideration, to a
Permitted Transferee (as defined below).  In the event of the death of a
participant, exercise or payment shall be made only:

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                                                     Peabody Engergy Corporation
                                Equity Incentive Plan for Non-Employee Directors

================================================================================

(a)  By or to the Permitted Transferee, executor or administrator of the estate
     of the deceased participant or the person or persons to whom the deceased
     participant's rights under the benefit shall pass by will or the laws of
     descent and distribution; and

(b)  To the extent that the deceased participant or the Permitted Transferee, as
     the case may be, was entitled thereto at the date of his death.

For purposes of this Section, "Permitted Transferee" shall include (i) one or
more members of the participant's family, (ii) one or more trusts for the
benefit of the participant and/or one or more members of the participant's
family, or (iii) one or more partnerships (general or limited), corporations,
limited liability companies or other entities in which the aggregate interests
of the participant and members of the participant's family exceed 80% of all
interests.  For this purpose, the participant's family shall include only the
participant's spouse, children and grandchildren.

  10.  Beneficiary.  An Eligible Director may designate one or more persons
(concurrently, contingently or successively) to whom Restricted Stock will be
distributed and by whom stock options will be exercisable if the Eligible
Director dies before receiving complete payment of such amounts.  Any such
designation must be made on a form acceptable to the Company for this purpose,
will be effective on the date received by the Company and may be revoked by the
Eligible Director by a subsequent written designation delivered to the Company
while the Eligible Director is alive.  If the Eligible Director fails to
designate a beneficiary or if no designated beneficiary survives the Eligible
Director, then any such benefit shall be transferred to the Eligible Director's
estate.

  11.  Limitation of Rights.

          (a) No Right to Continue as a Director.  Neither the Plan, nor the
     granting of Restricted Stock or an option, nor any other action taken
     pursuant to the Plan, shall constitute or be evidence of any agreement or
     understanding, express or implied, that the Eligible Director has a right
     to continue as a director for any period of time, or at any particular rate
     of compensation.

          (b) No Stockholders' Rights for Options.  Except with respect to
     adjustments upon changes in the Stock as set forth in this Plan, an
     Eligible Director shall have no rights as a stockholder with respect to the
     shares covered by options granted hereunder until the date of the issuance
     of a stock certificate therefor.

  12.  Effective Date and Duration of Plan.  The Plan shall become effective
immediately following approval by the stockholders of the Company.  The period
during which grants of Restricted Stock and options shall be made under the Plan
shall terminate on the day following the tenth anniversary of the meeting or
action by written consent of stockholders at which the Plan was approved (unless
the Plan is extended or terminated at an earlier date by stockholders) but such
termination shall not affect the terms of any then outstanding shares of
Restricted Stock or options.

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                                                     Peabody Engergy Corporation
                                Equity Incentive Plan for Non-Employee Directors

================================================================================

  13.  Amendment, Suspension or Termination of the Plan.  The Board may suspend
or terminate the Plan or revise or amend it in any respect whatsoever; provided,
however, that to the extent necessary to comply with or get an exemption from
any provision of the Code, including regulations thereunder, or of the
Securities Exchange Act of 1934, as amended, approval of the stockholders will
be required for any revision or amendment that shall change the selection or
eligibility of Eligible Directors to receive Restricted Stock or options under
the Plan, the number of shares of Stock subject to any such options or
Restricted Stock or the purchase price thereunder, or materially increase the
benefits accruing to Eligible Directors under the Plan.

  14.  Notice.  Any written notice to the Company required by any of the
provisions of this Plan shall be addressed to the Secretary of the Company and
shall become effective when it is received.

  15.  Use of Proceeds.  Proceeds from the sale of Stock pursuant to options
granted under the Plan shall constitute general funds of the Company.

  The undersigned hereby certifies that this Peabody Energy Corporation Equity
Incentive Plan for Non-Employee Directors was adopted by the Board of Directors
of the Company on ______________________, 2001.



                                  By:  ____________________________________

                                  Title:    _______________________________

                                  Date:  __________________________________

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