Exhibit 10.28





EXHIBIT 10.28




ALPHA NATURAL RESOURCES, INC.

2008 ANNUAL INCENTIVE BONUS PLAN




Effective as of May 14, 2008 and Amended on November 18, 2009




1. Purpose of the Plan




The purpose of the Alpha Natural Resources, Inc. 2008 Annual Incentive Bonus Plan (the “Plan”)
is to advance the interests of the Company and its shareholders by providing incentives to key
employees with significant responsibility for achieving performance goals critical to the success
and growth of the Company. The Plan is designed to: (i) promote the attainment of the Company’s
significant business objectives; (ii) encourage and reward management teamwork across the entire
Company; and (iii) assist in the attraction and retention of employees vital to the Company’s
long-term success.



2. Definitions





For the purpose of the Plan, the following definitions shall apply:




(a) “Alpha” means Alpha Natural Resources, Inc. (or any successor thereto).




(b) “Board” means the Board of Directors of Alpha.




(c) “Cause” means “Employer Cause” as set forth in any employment agreement between the
Participant and the Company or, in the absence of such an agreement, “Cause” as defined by
the Company’s plans applicable to the Participant or employment policies in effect at the
time of the Participant’s Separation from Service and/or a violation of the Company’s Code
of Business Ethics.




(d) “Change of Control” means (A) any merger, consolidation or business combination in
which the stockholders of Alpha immediately prior to the merger, consolidation or business
combination do not own at least a majority of the outstanding equity interests of the
surviving parent entity, (B) the sale of all or substantially all of the Company’s assets
in a single transaction or a series of related transactions, (C) the acquisition of
beneficial ownership or control of (including, without limitation, power to vote) a
majority of the outstanding common stock of Alpha by any person or entity (including a
“group” as defined by or under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), (D) the stockholders of Alpha approve any plan for the dissolution or liquidation
of Alpha, or (E) a contested election of directors, as a result of which or in connection with which the persons who were directors of Alpha before such election or
their nominees cease to constitute a majority of the Board.


 


 









 






(e) “Code” means the Internal Revenue Code of 1986, as amended, including any successor law
thereto.




(f) “Committee” means the Compensation Committee of the Board, or such other committee as
is appointed or designated by the Board to administer the Plan, in each case which shall be
comprised solely of two or more “outside directors” (as defined under Section 162(m) of the
Code and the regulations promulgated thereunder).




(g) “Company” means Alpha and any subsidiary entity or affiliate thereof, including
subsidiaries or affiliates which become such after adoption of the Plan.




(h) “Forfeit,” “Forfeiture,” “Forfeited” means the loss by a Participant of any and all
rights to an award granted under the Plan, including the loss to any payment of
compensation by the Company under the Plan or any award granted thereunder.




(i) “Participant” means any person: (1) who satisfies the eligibility requirements set
forth in Paragraph 4; (2) to whom an award has been made by the Committee; and (3) whose
award remains outstanding under the Plan.




(j) “Performance Goal” means, in relation to any Performance Period, the level of
performance that must be achieved with respect to a Performance Measure.




(k) “Performance Measures” means any one or more of the following performance criteria,
either individually, alternatively or in any combination, and subject to such modifications
or variations as specified by the Committee, applied to either the Company as a whole or to
a business unit or subsidiary entity thereof, either individually, alternatively or in any
combination, and measured over a period of time including any portion of a year, annually
or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison group, in
each case as specified by the Committee: cash flow; cash flow from operations; earnings
(including, but not limited to, earnings before interest, taxes, depreciation, and
amortization or some variation thereof); earnings per share, diluted or basic; earnings per
share from continuing operations; net asset turnover; inventory turnover; capital
expenditures; debt; debt reduction; working capital; return on investment; return on sales;
net or gross sales; market share; economic value added; cost of capital; change in assets;
expense reduction levels; productivity; delivery performance; safety record and/or
performance; stock price; return on equity; total or relative increases to stockholder
return; return on invested capital; return on assets or net assets; revenue; income or net
income; operating income or



 


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net operating income; operating profit or net operating profit; gross margin, operating
margin or profit margin; and completion of acquisitions, business expansion, product
diversification, new or expanded market penetration and other non-financial operating and
management performance objectives.




To the extent consistent with Section 162(m) of the Code and the regulations
promulgated thereunder, the Committee may determine that certain adjustments shall apply,
in whole or in part, in such manner as specified by the Committee, to exclude the effect of
any of the following events that occur during a Performance Period: the impairment of
tangible or intangible assets; litigation or claim judgments or settlements; changes in tax
law, accounting principles or other such laws or provisions affecting reported results;
business combinations, reorganizations and/or restructuring programs, including but not
limited to reductions in force and early retirement incentives; currency fluctuations; and
any extraordinary, unusual, infrequent or non-recurring items, including, but not limited
to, such items described in management’s discussion and analysis of financial condition and
results of operations or the financial statements and/or notes thereto appearing in the
Company’s annual report for the applicable period.




(l) “Performance Period” means, in relation to any award, the calendar year or other fiscal
period within a calendar year of less than 12 months for which a Participant’s performance
is being calculated, with each such period constituting a separate Performance Period.




(m) “Section 409A” shall mean Section 409A of the Code, the regulations and other binding
guidance promulgated thereunder.




(n) “Separation from Service” or “Separates from Service” shall mean the Participant’s
death, retirement or other termination of employment or service with the employer
(including all persons treated as a single employer under Sections 414(b) and 414(c)). For
purposes hereof, the determination of controlled group members shall be made pursuant to
the provisions of Sections 414(b) and 414(c); provided that the language “at least 50
percent” shall be used instead of “at least 80 percent” in each place that it appears in
Section 1563(a)(1), (2) and (3) and Treas. Reg. Section 1.414(c)-2; provided, further,
where legitimate business reasons exist (within the meaning of Treas. Reg. Section
1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80
percent” in each place it appears. Whether a Participant has experienced a Separation from
Service will be determined based on all of the facts and circumstances in accordance with
the guidance issued under Section 409A and, to the extent not inconsistent therewith, the
terms of the Plan.




(o) “Retirement” shall mean (1) the date a Participant reaches the age of 62 with ten (10)
Years of Service, (2) the date the Participant reaches the age of 65 or (3) a combination
of age and Years of Service which equals 80 (for example, a Participant who reaches the age
of 50 with thirty (30) Years of Service.


 


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(p) “Total and Permanent Disability” means: (1) if the Participant is insured under a
long-term disability insurance policy or plan which is paid for by the Company, the
Participant is totally disabled under the terms of that policy or plan; or (2) if no such
policy or plan exists, the Participant shall be considered to be totally disabled as
determined by the Committee.




(q) “Years of Service” shall mean the aggregate annual periods of continuous employment or
other service with the Company measured from the Participant’s date of hire (or re-hire)
and ending on the date the Participant Separates from Service, including employment or
other service with any predecessors to the Company, and such other entities as approved by
the Committee (or its delegatee(s)). An absence or leave approved by the Company, to the
extent permitted by applicable provisions of the Code, shall not be considered an
interruption of employment or performance of services for any purpose under this Plan.



3. Administration of the Plan




(a) The management of the Plan shall be vested in the Committee; provided, however, that all
acts and authority of the Committee pursuant to this Plan shall be subject to the provisions of the
Committee’s Charter, as amended from time to time, and such other authority as may be delegated to
the Committee by the Board. The Committee may, with respect to Participants whom the Committee
determines are not likely to be subject to Section 162(m) of the Code, delegate such of its powers
and authority under the Plan to the Company’s officers as it deems necessary or appropriate. In the
event of such delegation, all references to the Committee in this Plan shall be deemed references
to such officers as it relates to those aspects of the Plan that have been delegated.



(b) Subject to the terms of the Plan, the Committee shall, among other things, have full
authority and discretion to determine eligibility for participation in the Plan, make awards under
the Plan, establish the terms and conditions of such awards (including the Performance Goal(s) and
Performance Measure(s) to be utilized) and determine whether the Performance Goals applicable to
any Performance Measures for any awards have been achieved. The Committee’s determinations under
the Plan need not be uniform among all Participants, or classes or categories of Participants, and
may be applied to such Participants, or classes or categories of Participants, as the Committee, in
its sole and absolute discretion, considers necessary, appropriate or desirable. The Committee is
authorized to interpret the Plan, to adopt administrative rules, regulations, and guidelines for
the Plan, and may correct any defect, supply any omission or reconcile any inconsistency or
conflict in the Plan or in any award. All determinations by the Committee shall be final,
conclusive and binding on the Company, the Participant and any and all interested parties.


 


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(c) Subject to the provisions of the Plan, the Committee will have the authority and
discretion to determine the extent to which awards under the Plan will be
structured to conform to the requirements applicable to performance-based compensation as
described in Section 162(m) of the Code, and to take such action, establish such procedures, and
impose such restrictions at the time such awards are granted as the Committee determines to be
necessary or appropriate to conform to such requirements. Notwithstanding any provision of the Plan
to the contrary, if an award under this Plan is intended to qualify as performance-based
compensation under Section 162(m) of the Code and the regulations issued thereunder and a provision
of this Plan would prevent such award from so qualifying, such provision shall be administered,
interpreted and construed to carry out such intention (or disregarded to the extent such provision
cannot be so administered, interpreted or construed).



(d) The benefits provided under the Plan are intended to be excepted from coverage under
Section 409A and the regulations promulgated thereunder and shall be construed accordingly.
Notwithstanding any provision of the Plan to the contrary, if any benefit provided under this Plan
is subject to the provisions of Section 409A and the regulations issued thereunder (and not
excepted therefrom), the provisions of the Plan shall be administered, interpreted and construed in
a manner necessary to comply with Section 409A and the regulations issued thereunder (or
disregarded to the extent such provision cannot be so administered, interpreted, or construed.)



4. Participation in the Plan




Officers and key employees of the Company shall be eligible to participate in the Plan. No
employee shall have the right to participate in the Plan, and participation in the Plan in any one
Performance Period does not entitle an individual to participate in future Performance Periods.



5. Incentive Compensation Awards




(a) The Committee may, in its discretion, from time to time make awards to persons eligible
for participation in the Plan pursuant to which the Participant will earn cash compensation. The
amount of a Participant’s award may be based on a percentage of such Participant’s salary or such
other methods as may be established by the Committee. Each award shall be communicated to the
Participant, and shall specify, among other things, the terms and conditions of the award and the
Performance Goals to be achieved. The maximum amount that may be awarded and paid under the Plan to
a Participant for any calendar year shall not exceed USD $10,000,000.



(b) With respect to awards that are intended to be performance-based compensation under
Section 162(m) of the Code, each award shall be conditioned upon the Company’s achievement of one
or more Performance Goal(s) with respect to the Performance Measure(s) established by the
Committee. No later than ninety (90) days after the beginning of the applicable Performance Period,
the Committee shall establish in writing the Performance Goals, Performance Measures and the
method(s) for computing the amount of compensation which will be payable under the Plan to each
Participant if the Performance Goals established by the Committee are attained; provided


 


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however, that for a Performance Period of less than one year, the Committee shall take any
such actions prior to the lapse of 25% of the Performance Period. In addition to establishing
minimum Performance Goals below which no compensation shall be payable pursuant to an award, the
Committee, in its discretion, may create a performance schedule under which an amount less than or
more than the target award may be paid so long as the Performance Goals have been achieved.



(c) The Committee, in its sole discretion, may also establish such additional restrictions or
conditions that must be satisfied as a condition precedent to the payment of all or a portion of
any awards. Such additional restrictions or conditions need not be performance-based and may
include, among other things, the receipt by a Participant of a specified annual performance rating,
the continued employment by the Participant and/or the achievement of specified performance goals
by the Company, business unit or Participant. Furthermore and notwithstanding any provision of this
Plan to the contrary, the Committee, in its sole discretion, may reduce the amount of any award to
a Participant if it concludes that such reduction is necessary or appropriate based upon: (i) an
evaluation of such Participant’s performance; (ii) comparisons with compensation received by other
similarly situated individuals working within the Company’s industry; (iii) the Company’s financial
results and conditions; or (iv) such other factors or conditions that the Committee deems relevant.
Notwithstanding any provision of this Plan to the contrary, the Committee shall not use its
discretionary authority to increase any award that is intended to be performance-based compensation
under Section 162(m) of the Code.



6. Payment of Individual Incentive Awards




(a) After the end of the Performance Period, the Committee shall certify in writing the extent
to which the applicable Performance Goals and any other material terms have been achieved. Subject
to the provisions of the Plan, earned Awards shall be paid in the first calendar year immediately
following the end of the Performance Period on or before March 15th of such calendar year (“Payment
Date”). For purposes of this provision, and for so long as the Code permits, the minutes of the
Committee meeting in which the certification is made may be treated as written certification.



(b) Unless otherwise determined by the Committee or as otherwise provided in a Company plan
applicable to Participant or any agreement between the Participant and the Company, Participants
who have a Separation from Service prior to the Payment Date of an award for any reason other than
as provided below, shall Forfeit any and all rights to payment under such award(s) then outstanding
under the terms of the Plan and shall not be entitled to any cash payment for the applicable
period. If a Participant Separates from Service prior to the Payment Date of an award (i) by
reason of death, Retirement or Total and Permanent Disability, the Participant’s award shall be
prorated to reflect the period of service during the Performance Period prior to his/her death,
Retirement or Total and Permanent Disability; (ii) on account of an involuntary Separation from
Service by the Company other than for Cause (A) within the 90-day period immediately preceding a
Change of Control, or (B) on or within the one (1) year



 


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period following a Change of Control, the award will be deemed earned at a target award level;
or (iii) on account of an involuntary Separation from Service by the Company other than for Cause
(and other than an involuntary Separation from Service by the Company in connection with a Change
of Control as described in clause (ii)), the Participant’s award shall be prorated to reflect the
period of service during the Performance Period prior to his/her Separation from Service. Except
as otherwise provided herein, any payments under the Plan shall be paid either to the Participant
or, as appropriate, the Participant’s estate, subject to the Committee’s certification that the
applicable Performance Goals and other material terms have been met. For purposes of this
subsection 6(b), the prorated portion of an award shall be based on the ratio of the number of
complete months the Participant is employed or serves during the Performance Period to the total
number of months in the Performance Period. Any payment to which a Participant becomes entitled to
receive pursuant to the Change of Control provisions of this subsection 6(b) will be paid to the
Participant contemporaneous with the consummation of the Change of Control or, if later, on or
before the sixtieth (60th) day following the Participant’s Separation from Service (but, in each
case, within the short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4)).



(c) The Committee shall determine whether, to what extent, and under what additional
circumstances amounts payable with respect to an award under the Plan shall be deferred either
automatically, at the election of the Participant, or by the Committee. All deferrals under the
Alpha Natural Resources, Inc. and Subsidiaries Deferred Compensation Plan, the Foundation Coal
Deferred Compensation Plan, or such other plan of the Company as may be designated by the Committee
shall be made in accordance with terms and procedures of such plan.



7. Clawback/ Recoupment




(a) For awards paid under this Plan after March 1, 2010, the Committee may, to the extent
permitted by governing law, require reimbursement of any cash compensation paid to a Participant
under the Plan if the Participant is an employee of pay grade 22 or higher at the beginning of the
Performance Period where: (i) the payment was predicated upon the achievement of certain financial
results that were subsequently the subject of a restatement of the Company’s financial statements
filed with the Securities and Exchange Commission, which restatement occurs no more than three
years from the date of such payment, where the Committee reasonably determines that any employee
engaged in intentional misconduct that caused or partially caused the need for the restatement, and
a lower payment would have been made to Participants based upon the restated financial results;
provided, however, that the Committee reserves the discretion to determine that a Participant shall
not be subject to this provision; or (ii) the Participant engaged in ethical misconduct in
violation of the Company’s Code of Business Ethics, which the Committee reasonably determines
caused material business or reputational harm to the Company.


 


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(b) If the Committee reasonably determines that a payment of cash compensation made to a
Participant under the Plan should be reimbursed under subsections (a)(i) or (a)(ii), then the
following shall apply: (i) in the event reimbursement is required under subsection (a)(i), the Participant shall be required to
reimburse the Company in an amount equal to the dollar value of the cash compensation received by
the Participant in excess of what the Participant would have received on such date had the payment
been based upon such restated financial results; or (ii) in the event reimbursement is required
under subsection (a)(ii), the Participant shall be required to reimburse the Company in an amount
the Committee reasonably determines to be appropriate, which could equal up to the full amount of
the cash compensation paid to the Participant under the Plan during such three-year period.
Notwithstanding the foregoing, the Company shall not be required to make any additional payment in
the event that the restated financial results would have resulted in a greater payment to the
Participant.



(c) In the event the Participant is obligated to reimburse the Company for any cash
compensation received under the Plan pursuant to subsections (b)(i) or (b)(ii), the Company may, at
its sole election: (i) require the Participant to pay the amount in a lump sum within 30 days of
such determination; (ii) deduct the amount from any other compensation owed to the Participant (as
a condition to receiving additional awards under the Plan), and the Participant by accepting
participation in the Plan agrees to permit the deduction provided for by this subparagraph); or
(iii) a combination of subsections (c)(i) and (c)(ii).



(d) By participating in the Plan, the Participant agrees that timely payment to the Company as
set forth in this Section 7 is reasonable and necessary, and that timely payment to the Company as
set forth in this Section 7 is not a penalty, and it does not preclude the Company from seeking all
other remedies that may be available to the Company. The Participant further acknowledges and
agrees that a Participant’s award(s) shall be cancelled and Forfeited without payment by the
Company if the Committee reasonably determines that a Participant has engaged in the conduct
specified under subsections (a)(i) and (a)(ii).



8. Amendment or Termination of the Plan




While the Company intends that the Plan shall continue in force from year to year, the Company
reserves the right to amend, modify or terminate the Plan, at any time; provided, however, that no
such modification, amendment or termination shall, without the consent of the Participant,
materially adversely affect the rights of such Participant to any payment that has been determined
by the Committee to be due and owing to the Participant under the Plan but not yet paid. Any and
all actions permitted under this Section 8 may be authorized and performed by the Committee in its
sole and absolute discretion.



Notwithstanding the foregoing or any provision of the Plan to the contrary, the Committee may
at any time (without the consent of the Participant) modify, amend or terminate any or all of the
provisions of this Plan to the extent necessary to conform the provisions of the Plan with Section
409A or Section 162(m) of the Code, the regulations promulgated thereunder or an exception thereto
regardless of whether such modification, amendment, or termination of the Plan shall adversely
affect the rights of a Participant under the Plan. Notwithstanding any provision of the Plan to the
contrary, in no event



 


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shall the Committee or Board (or any member thereof), or the Company (or its employees, officers,
directors or affiliates) have any liability to any Participant (or any other person) due to the
failure of the Plan to satisfy the requirements of Section 409A or any other applicable law.



9. Rights Not Transferable




A Participant’s rights under the Plan may not be assigned, pledged, or otherwise transferred
except, in the event of a Participant’s death, to the Participant’s designated beneficiary, or in
the absence of such a designation, by will or by the laws of descent and distribution.



10. Funding/Payment




The Plan is not funded and all awards payable hereunder shall be paid from the general assets
of the Company. No provision contained in this Plan and no action taken pursuant to the provisions
of this Plan shall create a trust of any kind or require the Company to maintain or set aside any
specific funds to pay benefits hereunder. To the extent a Participant acquires a right to receive
payments from the Company under the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company. If any earned award is not paid by the Payment Date due
to administrative impracticality, such earned award will be paid, without earnings, as soon as
administratively practicable thereafter.



11. Withholdings




The Company shall have the right to withhold from any awards payable under the Plan or other
wages payable to a Participant such amounts sufficient to satisfy federal, state and local tax
withholding obligations arising from or in connection with the Participant’s participation in the
Plan and such other deductions as may be authorized by the Participant or as required by applicable
law.



12. No Employment or Service Rights




Nothing contained in the Plan shall confer upon any Participant any right with respect to
continued employment or service with the Company (or any of its affiliates) nor shall the Plan
interfere in any way with the right of the Company (or any of its affiliates) to at any time
reassign the Participant to a different job, change the compensation of the Participant or
terminate the Participant’s employment or service for any reason.


 


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13. Other Compensation Plans




Nothing contained in this Plan shall prevent the Corporation from adopting other or additional
compensation arrangements for employees of the Corporation, including arrangements that are not
intended to comply with Section 162(m) of the Code.



14. Governing Law




The Plan shall be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to its conflict of law provisions.



15. Effective Date




The Plan shall become effective immediately upon the approval and adoption thereof by the
Board; provided, however, that no award intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code shall be payable prior to approval of the Plan’s
material terms by the Company’s stockholders.




 


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