exv10w2



 






Exhibit 10.2




[PEABODY ENERGY CORPORATION LETTERHEAD]




March 1, 2005




PERSONAL AND CONFIDENTIAL




Irl F. Engelhardt

901 Kent Road

St. Louis, MO 63124



Dear Irl:




This letter agreement (the “Letter Agreement”) will summarize the basic terms which Peabody Energy
Corporation (the “Company”) believes would be appropriate to govern a continued employment
relationship between you and the Company until such time as you would relinquish your duties and
responsibilities as the Company’s Chief Executive Officer and continue as the Company’s Chairman of
the Board with expanded responsibilities as set forth in the attached Amended and Restated
Employment Agreement (as further described in this Letter Agreement) and thereafter.




As you know, the Company has elected its new President and Chief Executive Officer, to become
effective January 1, 2006 (the “Effective Date”). The Company believes that a gradual transfer of
your duties and responsibilities as the Company’s Chief Executive Officer to your successor over
several calendar months is an essential step to ensure a smooth transition in connection with your
succession. Therefore, the Company would greatly appreciate it if, throughout the balance of this
calendar year 2005, you would agree to acquaint your successor with the duties and responsibilities
associated with the Chief Executive Officer position with the Company and perform such transition
duties as shall be approved by the Company’s Board of Directors (the “Board”) to ensure a seamless
transfer of your duties and responsibilities as the Company’s Chief Executive Officer to your
successor.




As a result, until the end of calendar year 2005, you would continue to be employed by the Company
as its Chief Executive Officer and Chairman of the Board under the terms and conditions of the
Employment Agreement made as of May 19, 1998, between you and the Company, as previously amended
(the “Existing Employment Agreement”). The gradual transfer of duties and responsibilities between
you and your successor and any Board-approved organizational modifications relating thereto, as
described in this Letter Agreement, would be deemed not to constitute Good Reason for purposes of
the Existing Employment Agreement or any other relevant agreement between you and the Company.




In order to secure your continued services as a senior executive officer of the Company and as
Chairman of the Board on and after the Effective Date, the Company agrees to





 









 








Irl F. Engelhardt

March 1,2005

Page 2



enter into an Amended and Restated Employment Agreement for a two-year term beginning on the
Effective Date and ending on December 31, 2007, with possible renewal periods, if mutually agreed
upon, in the form attached hereto as Exhibit A and incorporated herein by reference.




Please confirm your agreement with the foregoing (including, but not limited to, the terms and
conditions of the Amended and Restated Employment Agreement attached hereto as Exhibit A and
incorporated herein by reference) by signing and dating the enclosed duplicate copy of this Letter
Agreement and returning that copy to me, or contact me with any questions or comments you may have.
If you terminate your employment with the Company at any time before the Effective Date after
having executed this Letter Agreement, the Amended and Restated Employment Agreement attached
hereto as Exhibit A would not be applicable.




	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	PEABODY ENERGY CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/
ROBERT B KARN
	

	 	Its:
	 	Chairman
of Compensation Committee






AGREED AND ACCEPTED:




	 	 
	/s/
IRL F. ENGELHARDT
	Signature

	 

	2/28/05
	Date