Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þo Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
 
Westmoreland Coal Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 (1) Title of each class of securities to which transaction applies:
    
 (2) Aggregate number of securities to which transaction applies:
    
 (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
    
 (4) Proposed maximum aggregate value of transaction:
    
 (5) Total fee paid:
    

o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 (1) Amount Previously Paid:
    
 (2) Form, Schedule or Registration Statement No.:
    
 (3) Filing Party:
    
 (4) Date Filed:

Table of Contents

Westmoreland Values
Our Vision, Mission, and Values reflect who we are
and what we stand for as a company.
Our Vision

To deliver the premium value in the coal industry.

Our Mission

Westmoreland Coal Company is dedicated to diligently applying our mining expertise to attain economic advantages.

•
   Leverage unique operations
•
   Maximize transportation advantages
•
   Identify and develop niche reserves
•
   Cultivate unique partnerships
•
   Sustain efficiency and standardization

  
Our Values

Our decisions and practices are guided by the values below. They are the core to who we are and how we behave as a company.

To excel at the pillars of coal mining by:
•
   Uncompromised safety
•
   Environmental stewardship
•
   State-of-the-art mining techniques

To exceed partner expectations by:
•
   Fair and collaborative approach
•
   Community and tribal partnerships
•
   Delivery of shareholder value
•
   Agile and responsive interactions
•
   Commitment focused - we do what we say

To maintain a foundation of integrity by:
•
   Honest, transparent, and respectful communication
•
   Highest legal and ethical standards
•
   Pride in our work and our company
•
   Dedication to diversity - respect and honor all
��
2014: A Year of Growth for Westmoreland Coal Company

Westmoreland Coal Company had a whole new look by the end of 2014. We closed the acquisition of six surface mines in Canada, along with interests in activated carbon facilities and a char plant. We moved quickly to integrate the new mines into the Westmoreland family by combining our procurement, human resource and legal teams. We successfully aligned the accounting and financial reporting of our U.S. and Canadian mines to streamline cross-border information exchange. After a successful public offering of Westmoreland common stock, we continued to grow with our acquisition of the general partner of Oxford Resource Partners, LP, which marked our entry into the master limited partnership space. To finish off the year, we also acquired Buckingham Coal Company to increase our presence in northern Appalachia and, on a small scale, return to our historic roots of underground mining. By the end of 2014, we had increased our workforce from 1,370 employees to 3,440. We increased our total proven or probable coal reserves by approximately 750 million tons and approximately doubled annual production on a proforma basis.

Table of Contents

WESTMORELAND COAL COMPANY
9540 S. Maroon Circle, Suite 200
Englewood, Colorado 80112

Westmoreland Logo

March 28, 2012April [ ], 2016


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Westmoreland Stockholders:

We invite you to join us for the 2015 Annual Meeting of Stockholders of Westmoreland Coal Company, which will once again be held as a virtual meeting. You will be able to attend the 2015 Annual Meeting, vote, and submit your questions during the meeting via live webcast by visitingwww.virtualshareholdermeeting.com/WLB2015. Be sure to have your 12-Digit Control Number to enter the meeting. The Annual Meeting of Stockholders of Westmoreland Coal Company will be held at The Crowne Plaza Hotel located at 27 North 27th Street, Billings, Montana 59101via the Internet on Tuesday, May 22, 201219, 2015 at 8:30 a.m. Mountain Daylight Time, for the following purposes:

1.The election of sixeight directors to the Board of Directors to serve for a one-year term;

2.Advisory approval of Westmoreland Coal Company’sCompany's executive compensation;

3.To approve the amendments to the Amended and Restated 2007 Equity Incentive Plan for Employees and Non-Employee Directors;

4.3.The ratification of the appointment of Ernst & Young LLP as principal independent auditor for fiscal year 2012;2015;
4.Vote on the ratification of certain amendments to Westmoreland Coal Company's Certificate of Incorporation;

5.Vote on a shareholder proposal, if properly presented at the Annual Meeting of Stockholders; and

5.
6.To transact such other business as may properly come before the meeting or any postponement or adjournment thereof.

Only stockholders of record at the close of business on March 26, 2012April 14, 2015 will be entitled to notice of and to vote at the meeting and any postponement or adjournment thereof.

YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible. You may vote by proxy over the Internet or by telephone, or, if you received paper copies of the proxy materials, you can also vote by mail by following the instructions on the proxy card or voting instruction card. Voting over the Internet, by telephone or by written proxy or voting instruction card will ensure your representation at the annual meeting regardless of whether you attend in person.attend.

This proxy statement, the annual report to stockholders and the proxy voter card are being mailed on or about April 9, 201224, 2015.

By Order of the Board of Directors,
By Order of the Board of Directors,
Jennifer S. Grafton
SVP, Chief Administrative Officer and Secretary




Table of Contents

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 19, 2015.

This notice, the accompanying proxy statement and Westmoreland Coal Company's annual report to stockholders for the fiscal year ended December 31, 2014 are available at www.proxyvote.com.


Table of Contents

PROXY SUMMARY
We provide below highlights of certain information in this proxy statement. As it is only a summary, please review the complete proxy statement and 2014 annual report before you vote.

2014 Westmoreland Performance Highlights

After years of hard work, Westmoreland was in a position to take advantage of unique market opportunities resulting in 2014 being a year of growth. The following are key highlights from fiscal year 2014:

After signing the purchase agreement in late 2013, we completed the acquisition of six active surface coal mines in Canada that diversified us into a favorable mining jurisdiction and additional business lines, such as activated carbon and char, as well as the creation of our first true export market capacity. To accomplish all this, we successfully set up a bridge loan to facilitate the raise of $425 million in senior add-on bonds, which also allowed for the prepayment of debt previously held by our subsidiary Westmoreland Mining LLC;
We amended our existing revolving credit facility with The PrivateBank and Trust Company to add Bank of the West as a lender and to increase the maximum available borrowing capacity to $50 million, which may be increased to $100 million and can be used for borrowings and letters of credit, which was further amended in connection with our December refinancing;
Our new Canadian corporate office took to the Westmoreland way and, in the midst of a relocation of our entire office in Edmonton, we accomplished a consolidation of all Canadian accounting and finance, and a cross border integration of our procurement, human resources and legal teams;
Our labor specialists and local mine teams successfully negotiated union contract extensions at our Coal Valley and Poplar River mines in Canada and our Beulah mine in the United States;
We completed a public offering of Westmoreland common stock that raised approximately $60 million for general corporate purposes and increased our overall financial flexibility in order to pursue organic and acquisition growth strategies;
We monetized our port capacity agreement with Westshore Terminals in British Columbia in favor of a new supply chain collaboration with Ridley Terminals in British Columbia and CN Railroad that supports our export coal mine;
We entered into long term extensions on coal supply agreements with Saskatchewan Power Corporation at our Estevan Mine in Saskatchewan, Canada, and with FMC Corporation and Tata Chemicals North America Inc. at our Kemmerer Mine in Wyoming;
We agreed to invest with our partner Cabot Corporation in our activated carbon plant in Estevan, Saskatchewan, to approximately double the operation's capacity by 2017;
At the end of the year, we entered the MLP space through an acquisition of Oxford Resources GP, LLC, the general partner of Oxford Resource Partners, LP, and as a result of several related transactions we now own approximately 79% of Oxford Resource Partners, LP, which has been renamed Westmoreland Resource Partners, LP ("WMLP" and such series of transactions the "WMLP Transactions");
At the same time as our entry into the MLP space, we refinanced and restructured our debt, previously consisting of 10.75% senior secured notes, and now split between a term loan and 8.75% senior secured notes. At the same time, we restructured $175 million in existing debt at the WMLP level. Our revolving credit agreement was also renegotiated to fit our new structure, as described above;
In December, we announced the redemption of our Series A preferred stock that closed early in 2015 ending our dividend obligation with respect to that equity; and
At the very end of the year, we completed the acquisition of Buckingham Coal Company, LLC, an underground mine, which ultimately closed on January 1, 2015.

See page 42 for information about reconciliation of non-GAAP financial measures.





Table of Contents


Corporate Governance Highlights

At Westmoreland Coal Company, good governance remains a critical component of our corporate culture. Several of our key governance strengths and actions are noted in the table below.
BOARD AND OTHER GOVERNANCE INFORMATION2014*
Size of Board8
Number of Independent Directors7
Diverse Board (as to Gender, Experience and Skills)Yes
Annual Election of All DirectorsYes
Majority Voting for DirectorsYes
Separate Chairman & CEOYes
Independent Directors Meet Without Management PresentYes
Annual Board Self-Evaluation Conducted by Independent Third-PartyYes
Annual Equity Grant to Non-Employee DirectorsYes
Board Orientation ProgramYes
Code of Business Conduct and Ethics for DirectorsYes
Corporate Governance Guidelines for DirectorsYes
Annual Advisory Approval of Executive CompensationYes
Policy Prohibiting Use of Corporate Funds for Political ExpendituresYes
_____________________
* As of April 16, 2015 

Meeting Agenda Items

Item 1-Election of Directors - Our board recommends a vote FOR the election of the director candidates nominated by the board.

You are being asked to elect eight directors. Each of our current directors is standing for reelection to hold office until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. All directors attended greater than 86% of the meetings of the board and board committees on which they served in 2014, with six directors attending 100%.

SUMMARY INFORMATION ABOUT OUR DIRECTOR NOMINEES
   AGE  
DIRECTOR
SINCE
 OCCUPATION AS OF 3/24/14 INDEPENDENT
Keith E. Alessi 60 2007 Chief Executive Officer, Westmoreland Coal Company  
Terry J. Bachynski 57 2014 Natural Resource Consultant in Canada X
Gail E. Hamilton 65 2011 Retired IT Executive X
Michael G. Hutchinson 59 2012 Retired Audit Partner, Deloitte & Touche X
Richard M. Klingaman 79 2006 Retired Energy Industry Consultant X
Craig R. Mackus 63 2013 Retired Equipment Manufacturer CFO X
Jan B. Packwood 71 2011 Retired Public Utility CEO X
Robert C. Scharp 68 2011 Retired Coal Industry Executive X

Item 2-Advisory Approval of Our Executive Compensation - Our board recommends a vote FOR this proposal.

                   By OrderWe are asking stockholders to approve on an advisory basis the compensation of our named executive officers, who are discussed in more detail in the BoardCompensation Discussion and Analysis, which starts on page 16. We hold this advisory vote on an annual basis.



Table of Directors,Contents


SUMMARY INFORMATION ON OUR EXECUTIVE COMPENSATION PROGRAM

Our executive compensation program is designed to reward our leadership team for delivering results and building long-term value. We believe our program's performance measures align the interests of our stockholders and senior executives by tying pay outcomes to our short- and long-term performance. Several important features of our executive compensation program are:

üNo employment agreements for executive officers; all executive officers are at-will employees, subject to certain rights to which they are entitled in the event that they are terminated in connection with a change of control of our business;
üNo gross-ups;
üNo company aircraft or company-provided vehicles, other than vehicles used at mine operation sites;
üNo SERPS, defined benefit plans or other executive-only retirement plans;
üOur long-term incentive awards included performance-vested restricted stock units whose value is based on achievement of three-year targets; and
üWe require our executive officers to have significant ownership of company stock.

Westmoreland also has a strong history of setting executive compensation at levels that shareholders approve of:
Say on Pay Vote
Annual Stock Holder MeetingApproval Percentage
201498.73%
201398.49%
201297.02%
201199.20%

For more information on our compensation programs, total compensation in 2014 and our compensation philosophy, see our Compensation Discussion and Analysis that starts on page 16.

                   /s/ Jennifer S. GraftonItem 3-Ratification of Appointment of Ernst & Young LLP for 2015 - Our board recommends a vote FOR this proposal.

                   Jennifer S. GraftonErnst & Young LLP has been our independent registered public accounting firm since 2009. The fees paid to Ernst & Young LLP are detailed on page 37. One or more representatives of Ernst & Young LLP will be present at the meeting, will be given the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

                   General Counsel and SecretaryItem 4-Approval of certain amendments to Westmoreland Coal Company's Certificate of Incorporation - Our board recommends a vote FOR this proposal.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 22, 2012.
This notice, the accompanying proxy statement and Westmoreland Coal Company’s annual report to stockholders for the fiscal year
ended December 31, 2011 are available at www.proxyvote.com.
We are asking stockholders to approve certain amendments to our Certificate of Incorporation, which are discussed in more detail in our changes to Certificate of Incorporation section on page 38.

Item 5-Vote on a shareholder proposal, if properly presented at the Annual Meeting of Stockholders - Our board recommends a vote AGAINST this proposal.

We are asking stockholders to vote against the proxy access shareholder proposal submitted by the Comptroller of the City of New York, Scott M. Stringer, on behalf of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, the New York City Police Pension Fund and the New York City Board of Education Retirement System, which is discussed in more detail in the shareholder proposal and our corresponding statement of opposition section beginning on page 39.



PROXY STATEMENT

PROXY STATEMENT

Table of Contents

 Page
General Information about the 2012the 2015 Annual Meeting of Stockholders
1
  
Questions and Answers about the 20122015 Annual Meeting of Stockholders
1
  
Directors and Executive Officers
4
5
  
Corporate Governance
6
7
  
Director CompensationCommittees of the Board of Directors
11
9
  
Beneficial Ownership of SecuritiesDirector Compensation
12
13
  
Beneficial Ownership of Securities
14
Section 16(a) Beneficial Ownership Reporting Compliance
14
15
  
Equity Compensation Plan Information
14
16
  
Compensation Discussion and Analysis
15
17
  
Executive Compensation for 20112014
26
30
  
Certain Transactions
32
36
  
Overview of Proposals
32
36
  
Additional Information
43
Miscellaneous
40
44
Appendix A
A-1






WESTMORELAND COAL COMPANY
9540 S. Maroon Circle, Suite 200
Englewood, Colorado 80112

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held May 22, 201219, 2015


GENERAL INFORMATION ABOUT THE 20122015 ANNUAL MEETING OF STOCKHOLDERS

This proxy statement is being furnished by the Board of Directors (the “Board”) of Westmoreland Coal Company (the “Company”) to holders of our common stock and depositary shares in connection with the solicitation by the Board of Directors of proxies to be voted at the Annual Meeting of Stockholders of Westmoreland Coal Company to(the “Annual Meeting”). The Annual Meeting will be held at The Crowne Plaza Hotel located at 27 North 27th Street, Billings, Montana 59101via the Internet on Tuesday, May 22, 201219, 2015 at 8:30 a.m. Mountain Daylight Time, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the “Annual Meeting”) and this proxy statement.

This proxy statement and the enclosed proxy voter card relating to the Annual Meeting of Stockholders are first being mailed to stockholders on or about April 9, 2012.24, 2015. As of March 26, 2012,April 2, 2015, the record date, members of the Company’s senior managementCompany's officers and directors are the record and beneficial owners of a total of 316,444612,104 shares (approximately 2.3%3.41%) of the Company’sCompany's outstanding common stock and have no ownership in the Company’s outstanding depositary shares.stock. It is management’smanagement's intention to vote all of its shares in the manner recommended by the Board for each matter to be considered by the stockholders.

QUESTIONS AND ANSWERS ABOUT THE 20122015 ANNUAL MEETING OF STOCKHOLDERS

What is a Virtual Annual Meeting?

A virtual annual meeting of stockholders is an official annual meeting held over the Internet that offers the ability to verify attendance and provides an interactive element that allows for real-time voting in a secure environment. The virtual meeting also enables two-way engagement, allowing stockholders to ask questions of corporate officers and directors. The virtual meeting provides Westmoreland a low-cost way for stockholders to attend and interact with management, and has the potential to increase participation and reduce costs associated with meeting facilities and travel.

Westmoreland will be hosting the 2015 Annual Meeting live via the Internet. A summary of the information you need to attend the meeting online is provided below:

Any stockholder can attend the 2015 Annual Meeting live via the Internet atwww.virtualshareholdermeeting.com/WLB2015;
Webcast starts at 8:30 a.m. Mountain Time;
Stockholders may vote and submit questions while attending the Annual Meeting on the Internet;
Please have your 12-Digit Control Number to enter the Annual Meeting;
Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted atwww.virtualshareholdermeeting.com/WLB2015; and
Webcast replay of the Annual Meeting will be available until May 19, 2016.

Who can vote at the meeting?

Only common stockholders who owned our common stock or depositary shares, each of which represents one quarter of a share of Series A Convertible Exchangeable Preferred Stock, $1.00 par value (“depositary shares”),were owners of record at the close of business on March 26, 2012April 14, 2015 are entitled to vote. Each holder of common stock is entitled to one vote per share. Each holder of depositary shares is entitled to one vote per share. There were 13,899,965[l] shares of common stock and 639,840 depositary shares outstanding on March 26, 2012.
April 14, 2015.

What constitutes a quorum for the meeting?

The holders of a majority of the aggregate voting power of the common stock and depositary shares outstanding on the record date, present in person or by proxy at the Annual Meeting, shall constitute a quorum to conduct business at the Annual Meeting. Abstentions and “broker non-votes” (shares held by a broker or nominee that does not have discretionary authority to vote on a particular matter and has not received voting instructions from its client) are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting.

1
Table of Contents


How do I vote?

Via the Internet at www.proxyvote.com;
●
Via the Internet at www.proxyvote.com; 
By phone for registered and beneficial owners at 1-800-690-6903; or 
●
By phone at 1-800-690-6903; or 
By completing and mailing in a paper proxy card.
●
By completing and mailing in a paper proxy card.

If your shares are registered directly in your name with Computershare Trust Company, our transfer agent, you are considered a stockholder of record with respect to those shares and the proxy card and voting instructions have been sent directly to you by Broadridge Financial Solutions, Inc.you. If, like most stockholders, you hold your shares in “street name” through a stockbroker, bank or other nominee rather than directly in your own name, you may not vote your shares in person at the Annual Meeting without obtaining authorization from your stockbroker, bank or other nominee, and younominee. You need to submit voting instructions to your stockbroker, bank or other nominee in order to cast your vote.  Generally, you will receive instructions from your stockbroker, bank or other nominee that you must follow in order to have your shares voted.

We encourage you to register your vote via the Internet. If you attend the virtual Annual Meeting, you may also submit your vote in person over the Internet and any votes that you previously submitted –- whether via the Internet, by phone or by mail –- will be superseded by the vote that you cast at the Annual Meeting. Whether your proxy is submitted by the Internet, by phone or by mail, if it is properly completed and submitted and if you do not revoke it prior to the Annual Meeting, your shares will be voted at the Annual Meeting as specified by you or, if you do not specify a choice as to a particular matter, in the manner set forth in this proxy statement.

If you have additional questions, need assistance in submitting your proxy or voting your shares of our Common Stock, or need additional copies of the Proxy Statement or the enclosed proxy card, please contact Alliance Advisors LLC.

Alliance Advisors LLC
200 Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003
855-325-6676
Banks and Brokers Call: (973) 873-7700


Can I change my vote after I return my proxy card?

Yes. Even after you have submitted your proxy card, you may change your vote at any time before the proxy is exercised by either filing with our Secretary a written notice of revocation or a duly executed proxy card bearing a later date or by voting in person at the Annual Meeting. The powers of the proxy holders will be suspended if you attend the Annual Meeting in person and so request. However, attendance at the virtual Annual Meeting will not, by itself, revoke a previously granted proxy. If you want to change or revoke your proxy and you hold your shares in “street name,” contact your broker or the nominee that holds your shares. Any written notice of revocation sent to us must include the stockholder’sstockholder's name and must be received prior to the Annual Meeting to be effective.

What vote is required to approve each item?

Our directors areUnder our bylaws, which were amended and restated in February 2015, we have a majority vote standard for election of directors. In an uncontested election, each director will be elected by a vote of the majority of the votes cast, meaning the number of shares cast “for” a director exceeds the number of votes cast “against” that director. In a contested election, the directors will be elected by a plurality vote, which means that, withof the votes cast, meaning the directors receiving the largest number of “for” votes will be elected to the open positions. With respect to Proposal 1, regardless of whether the nominees who receive the largest numbermajority of “FOR” votes cast or plurality standard applies, broker non-votes, abstentions and withheld votes will have no effect because such votes are not treated as being cast.

In an uncontested election, a nominee who does not receive a majority vote will not be elected. Neither broker non-votes nor abstentionsAn incumbent director who is not elected because he or she does not receive a majority vote will have any effectcontinue to serve as a holdover director until the earliest of: (a) 90 days after the date on which the election inspector determines the voting results as to that director, (b) the date on which the Board appoints an individual to fill the office held by that director, or (c) the date of directors.  that director's resignation.

Approval of Proposals 2, 34 and 45, requires the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at the Annual Meeting. BrokerWith respect to Proposals 2, 4 and 5, broker non-votes will have no effect, with respectbut abstentions from other shares entitled to any non-routine matter for which a broker does not have authority to vote.  Abstentionsvote will have the same effect as a vote against the proposals, other than Proposal 1.such proposals.

2
Table of Contents


Which ballot measures are considered “routine” or “non-routine”?

The ratification of the appointment of Ernst & Young LLP as the Company’sCompany's independent registered public accounting firm for 20122015 (Proposal 4)3) is a matter considered routine under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore broker non-votes are not expected in connection with Proposal 4.3.

The election of directors (Proposal 1), the advisory approval of the Company’sCompany's executive compensation (Proposal 2), and the approval of thecertain amendments to Westmoreland Coal Company's Certificate of Incorporation (Proposal 4) and the Company’s Amended and Restated 2007 Equity Incentive Plan for Employees and Non-Employee Directorsshareholder proposal (Proposal 3)5) are matters considered non-routine under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposals 1, 2, 4 and 3.5.

How are you handling solicitation of votes?

The accompanying proxy is solicited on behalf of our Board and the cost of solicitation is borne by us. In addition to solicitations by mail, our directors, officers, and employees may solicit proxies by telephone, e-mail and personal interview, but will receive no additional compensation for doing so. We have also retained Alliance Advisors LLC for proxy solicitation and related services in connection with our 2015 Annual Meeting of Stockholders. Under our agreement with Alliance, Alliance will receive a fee of $11,000 and we will reimburse them for reasonable and customary out-of-pocket expenses incurred in performing such services. We will also request brokerage houses, custodians, nominees, and fiduciaries to forward copies of the proxy material to those persons for whom they hold shares and request instructions for voting the proxies. We will reimburse those brokerage houses and other persons for their reasonable expenses for such services.

Do I have any rights of appraisal?

Under Delaware law, stockholders are not entitled to dissenters’dissenters' rights on any proposal referred to herein.

Where can I find the voting results of the Annual Meeting?

We will announce preliminary general voting results at the Annual Meeting and publish final detailed voting results on a Form 8-K that we will file with the SEC within four business days after the Annual Meeting.

How do I submit a stockholder proposal for the 20132016 Annual Meeting?

Any proposal that a stockholder wishes to be considered for inclusion in our proxy statement and proxy card for the 20132016 Annual Meeting of Stockholders (the “2013“2016 Annual Meeting”) must be submitted to the Company's Secretary at our offices, 9540 S. Maroon Circle, Suite 200, Englewood, Colorado 80112, no later than November 28, 2012.December 19, 2015. In addition, such proposals must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934.

2
If a stockholder wishes to present a proposal before the 20132016 Annual Meeting, without having the proposal included in our proxy statement and proxy card, such stockholder must give written notice to the Secretary at the address noted above. The Secretary must receive such notice no earlier than January 22, 201320, 2016 and no later than February 21, 2013,19, 2016, and the stockholder must comply with the provisions of Sections 2.5 or 2.6, as applicable, of our bylaws. Only proposals included in the proxy statement or that comply with our advance notice bylaw requirements will be considered properly brought before the Annual Meeting.

Does the Company offer an opportunity to receive future proxy materials electronically?

Yes. If you are a stockholder of record or a member of the 401(k) plan, you may, if you wish, receive future proxy statements and annual reports online rather than receiving proxy materials in paper form. If you elect this feature, you will receive an e-mail message notifying you when the materials are available, along with a web address for viewing the materials and instructions for voting by telephone or on the Internet. If you have more than one account, you may receive separate e-mail notifications for each account. You may sign up for electronic delivery in two ways:at any time by visiting

●
If you vote online, you may sign up for electronic delivery at that time; or

●
You may sign up at any time by visiting http://enroll.icsdelivery.com/wlb.

http://enroll.icsdelivery.com/wlb.  If you received this proxy statement electronically, you do not need to do anything to continue receiving proxy materials electronically in the future. If you hold your shares in a brokerage account, you may also have the opportunity to receive proxy materials electronically. Please follow the instructions of your broker.

How can I get electronic access to the proxy materials and the annual report?

This proxy statement and our 2011 Annual Report2014 annual report are available at www.proxyvote.com; referencesee your ballot materials for access information.


3
Table of Contents

Will I receive a separate proxy statement if I share the same address and last name as another stockholder?

No. If you are the beneficial owner, but not the record holder, of shares of our stock, your broker, bank or other nominee may only deliver one copy of this proxy statement and our Annual Reportannual report to multiple stockholders who share an address, unless that nominee has received contrary instructions from one or more of the stockholders. We will deliver promptly, upon written or oral request, a separate copy of this proxy statement and our Annual Reportannual report to a stockholder at a shared address to which a single copy of the documents was delivered. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.

4
3

DIRECTORS AND EXECUTIVE OFFICERS

NameAgeDirector/ Executive Officer SincePositionAgeDirector/ Executive Officer SincePosition
Keith E. Alessi572007Director; Chief Executive Officer602007Director; Chief Executive Officer
Michael R. D’Appolonia632008
Director – Independent
Terry J. Bachynski572014
Director - Independent
Gail E. Hamilton622011
Director – Independent
652011
Director - Independent
Michael G. Hutchinson592012
Director - Independent
Richard M. Klingaman762006
Director – Independent; Chairman of the Board
792006
Director - Independent; Chairman of the Board
Craig R. Mackus632013
Director - Independent
Jan B. Packwood682011
Director – Independent
712011
Director - Independent; Vice Chairman of the Board
Robert C. Scharp652011
Director – Independent
682011
Director - Independent
Kevin A. Paprzycki442008Chief Financial Officer
Jennifer S. Grafton362011General Counsel and Secretary392011Senior Vice President, Chief Administrative Officer and Corporate Secretary
Douglas P. Kathol592010Executive Vice President
Robert P. King592012President and Chief Operating Officer
John A. Schadan492014President Canada Operations
Joseph E. Micheletti462011Senior Vice President – Coal Operations492011Executive Vice President
Kevin A. Paprzycki412008Chief Financial Officer and Treasurer

(1)Mr. Paprzycki also acted as Treasurer throughout 2014 before relinquishing the role on February 20, 2015.
(2)Ms. Grafton acted as General Counsel and Secretary during 2014, before being promoted to Senior Vice President, Chief Administrative Officer and Secretary on November 20, 2014.
(3)Mr. Schadan was Senior Vice President, Canada Operations, before being promoted to Executive Vice President on August 1, 2014, and then President - Canada Operations on March 13, 2015.
(4)Mr. Micheletti was Senior Vice President, Coal Operations, before being promoted to Executive Vice President on August 1, 2014.
Director Information

The Board has fixed the number of directors following the Annual Meeting at six.eight. All our directors bring to our Board a wealth of leadership experience derived from their service as executives of corporations.and respected professionals. Certain individual qualifications and skills of our directors that contribute to the Board’sBoard's effectiveness as a whole are described in the following paragraphs.

Keith E. Alessi has served in various capacities at Westmoreland since 2007 and currently serves as a Director and our Chief Executive Officer.  Since he began working for us in 2007, he has assumed various roles including Executive Chairman, President and other various interim roles. Prior to Westmoreland, Mr. Alessi was an adjunct lecturer at the University of Michigan Ross School of Business at the University of Michigan from 2001 to 2010 and was an Adjunct Professor at The Washington and Lee University Law School from 1999 to 2007. He previously served as Chief Executive Officer, Chief Operating Officer or Chief Financial Officer of a number of public and private companies from 1982 to 2000. Mr. Alessi currently serves as a member of the board of directors of Town Sports International Holdings, Inc. and MWI Veterinary Supply, Inc.

Mr. Alessi has over 30 years of turnaround management experience gained in a senior executive capacity. This has given him unique insights into the hurdles, challenges and opportunities facing Westmoreland and provides him the necessary leadership experience to lead the Company.integration of the globally-diversified mining assets as its Chief Executive Officer.

Terry J. BachynskiMichael R. D’Appolonia most recently has over 30 years’ experience in the energy business, having served asin several executive management and board positions with various private and public companies, including Suncor Energy Inc., Gulf Canada Resources Limited, CS Resources Limited, EPCOR Utilities Inc. and Syncrude Canada. Since 2001, Mr. Bachynski has been President and Chief Executive OfficerCEO of Kinetic Systems, Inc., a global provider of processJDEL Associates Ltd. which provides regulatory, environmental, stakeholder, aboriginal and mechanical solutions to the electronics, solar and biopharmaceutical industries. From 1986 to 2006, Mr. D’Appolonia was an executive and Principal of Nightingale & Associates, LLC, and its predecessor company Nightingale & Associates, Inc., a global managementgovernment affairs consulting firm providing financial and operational restructuring services to mid-marketindustry for the development and operation of major resource development projects, primarily in Western Canada. Mr. Bachynski sits on the boards of several private companies including Universe Machines Corporation, Unified Alloys Ltd. and Millennium EMS Solutions Ltd. Mr. Bachynski has an LL.B. from the University of Western Ontario and resides in the US and overseas. From January 2002 through June 2006, Mr. D’Appolonia served as Nightingale’s President.  Mr. D’Appolonia is a member of the board of directors of Exide Technologies, Inc.  In addition, he was a member of the board of directors of The Washington Group International, Inc. from 2001 to 2007.Edmonton, Alberta, Canada.

Mr. D’Appolonia’sBachynski has performed a wide range of roles in his extensive career in the energy sector. Mr. Bachynski provides the Board with a unique insight into challenges and opportunities specific to natural resource development in Canada. His experience as a Chief Executive Officer of a large global organization, along with his public company board experience, bringswill bring an active voice for our recently acquired Canadian Operations to our Board the perspective of a leader facing a similar set of current external economic, social and governance issues.Board.

Gail E. Hamilton most recently served as Executive Vice President of Symantec Corporation, an infrastructure software and services provider, retiring in 2005. Previously, she served as the General Manager of the Communications Division of Compaq

5
Table of Contents

Computer Corporation and as the General Manager of the Telecom Platform Division for Hewlett-Packard Company. She is currently a director of Arrow Electronics Inc., OpenText Corp., and Ixia. In the last five years, Ms. Hamilton has also served as a director of Washington Group International and Surgient, Inc.

Ms. Hamilton is a former senior executive with business and operational experience at a public technology company, whose strategic planning and business development experience are invaluable in guiding the development and progression of our information technology infrastructure and programs. In addition, Ms. Hamilton’sHamilton's extensive public and private board experience will bring further professionalism and insight to the board room.

Michael G. Hutchinson recently retired from Deloitte & Touche. His Deloitte career spanned nearly 35 years, leading their Denver Energy and Natural Resources Practice for the last fifteen years while at the same time managing the Audit and Enterprise Risk Management practice of the Denver office. Mr. Hutchinson currently serves as a member of the board of directors of One Gas, Inc. and as its audit committee chairman.
4
As the former lead audit partner at a top four auditing firm, Mr. Hutchinson brings to the Board his substantial expertise in accounting and finance matters, which he gained during his 35 years of experience in public accounting. Mr. Hutchinson is well qualified to serve as a director based on his experience with accounting principles, financial controls and evaluating financial statements of public companies in the energy sector, particularly from an auditor's perspective.

Richard M. Klingaman has been a consultant to the natural resources and energy industries since May 1992. Prior to consulting, Mr. Klingaman was a senior executive with Penn Virginia Corporation, a natural resources company specializing in coal, oil, natural gas, timber, lime and limestone.

Mr. Klingaman’sKlingaman's extensive experience in the mining and energy industries, including as Senior Vice President of a large natural resources company, provides him with an intimate knowledge of our operations and our industry.

Craig R. Mackus became Chief Financial Officer of Bucyrus International, Inc. in June 2004 after serving as Vice President-Finance from October 2002 through June 2004 and as Controller from February 1988 through May 2006. Mr. Mackus retired from Bucyrus International, Inc. in 2011 upon its merger with Caterpillar. He also served as Bucyrus's secretary from May 1996 through his retirement in 2011.

As a senior manager of an international manufacturing company provided equipment to the mining industry, Mr. Mackus brings significant financial, governance and operational mining experience to the Board.  As the CFO during a major merger transaction between Bucyrus International Inc. and Caterpillar, Mr. Mackus provides the Board with his first-hand experience in significant M&A activity.

Jan B. Packwood was the President and Chief Executive Officer of IDACORP, Inc. (NYSE: IDA), a holding company whose main subsidiary, Idaho Power Company, is an electric utility engaged in the generation, transmission, distribution, sale and purchase of electric energy,  from 1999 to 2006.  Prior to such time, Mr. Packwood served in various executive-level capacities of Idaho Power Company beginning in the 1980s.   He currently serves as a director of IDACORP, Inc. and of various IDACORP, Inc. subsidiaries, including Idaho Power Company, IDACORP Financial Services, Inc. and Ida-West Energy Company.

As the former President and Chief Executive Officer of an electric utility involved in the mining and use of coal in the Pacific Northwest, Mr. Packwood brings to the Board a vast knowledge of our and our main customers’customers' business, including an understanding of the risks faced by our own power plant and the power plants we supply.  This expertise will be invaluable in directing the future of our power plant operations, as well as providing insight into potential growth and expansion activities in our mining segment.

Robert C. Scharpwas previously the Chief Executive Officer of Shell Coal Pty Ltd from 1997 to 2000 and then Chief Executive Officer of Anglo Coal Australia from 2000 to 2001. He served as the Chairman of the Shell Canada Energy Mining Advisory Council from 2005 to 2010. He had a 22 year career with Kerr McGee Corporation including serving as President - Kerr McGee Coal Corporation and Senior Vice President - Oil and Gas Production. Mr. Scharp was a director of Bucyrus International from 2005 to 2011 and was a director of Foundation Coal Holdings from 2005 to 2009. Mr. Scharp is also a retired Army National Guard colonel.

Mr. Scharp brings a wealth of coal mining industry experience to the Board, including invaluable chief executive operational oversight of coal mine operations. Mr. Scharp’sScharp's vast industry experience will assist the Board in driving future operational mining excellence and evaluating potential growth and expansion opportunities.


6
Table of Contents

Executive Officer Information

Keith E. Alessi, ourwho joined Westmoreland in 2007 and serves as Chief Executive Officer, is discussed above under “Director Information.”

Jennifer S. Grafton joined Westmoreland as Associate General Counsel in December 2008 and was named General Counsel and Secretary in February 2011.  Prior to Westmoreland, Ms. Grafton worked in the corporate group of various Denver-based and national law firms focusing her practice on securities and corporate governance.  She is a member of the Colorado bar.

Douglas P. Kathol joined Westmoreland in 2003 as Vice President – Development, adding additional responsibility as Treasurer in 2008.  In 2010, Mr. Kathol was named Executive Vice President.  Prior to Westmoreland, Mr. Kathol spent almost twenty years in various positions, including Senior Vice President of Norwest Corporation, a consulting firm providing expertise to the energy, mining, and natural resources industries.

Robert P. King joined Westmoreland in March 2012 as President and Chief Operating Officer. From 2006 through 2012, Mr. King held various executive leadership roles at Consol Energy, Inc., including Executive Vice President – Business Advancement and Support Services from 2009 through March 2012. Mr. King has over 30 years experience in the coal industry, both underground and surface mines.

Joseph E. Micheletti joined Westmoreland in 2001 and has held a series of positions with Westmoreland since such time, including President and General Manager of our Jewett Mine.  In June 2011, Mr. Micheletti was named Senior Vice President – Coal Operations.  Mr. Micheletti has worked in the production, maintenance, processing, and engineering disciplines of the mining industry for 24 years and sits as a Director of the Rocky Mountain Coal Mining Institute.

Kevin A. Paprzycki joined Westmoreland as Controller and Principal Accounting Officer in June 2006 and was named Chief Financial Officer in April 2008. In June 2010, he was also named Treasurer.Treasurer, a role that he relinquished in 2015. Prior to Westmoreland, Mr. Paprzycki was Corporate Controller at Applied Films Corporation from 2005 to 2006. Mr. Paprzycki became a certified public accountant in 1994 and a certified financial manager and certified management accountant in 2004.

Jennifer S. Grafton joined Westmoreland as Associate General Counsel in December 2008 and was named General Counsel and Secretary in February 2011. She was recently promoted to Senior Vice President, Chief Administrative Officer and Secretary in which she oversees a variety of functions including legal, human resources and risk management. Prior to Westmoreland, Ms. Grafton worked in the corporate group of various Denver-based and national law firms focusing her practice on securities and corporate governance. She is a member of the Colorado bar.
5

Joseph E. Micheletti joined Westmoreland in 1998 and has held key leadership positions at several Westmoreland mining projects, including President and General Manager of our Jewett Mine, and was promoted to Executive Vice President on August 1, 2014. Mr. Micheletti is responsible for Westmoreland Coal Company’s U.S. mining projects, overseeing the safe, cost effective, and environmentally responsible operation of the company’s mining activities. He holds a Bachelor of Science degree in Mineral Processing Engineering from Montana College of Mineral Science and Technology. Mr. Micheletti has worked in the production, maintenance, processing, and engineering disciplines of the mining industry for 24 years and sits as a Director of the Rocky Mountain Coal Mining Institute.

John A. Schadanjoined Westmoreland in April 2014 as Senior Vice President before being promoted to Executive Vice President, and was recently promoted again to President - Canada Operations on March 13, 2015. Mr. Schadan’s career has encompassed both the western Canadian coal business as well as engineering and construction for a major international firm, and spans a variety of disciplines including mine engineering, environmental and regulatory approvals, business development, marketing, commercial contract negotiations, establishing joint venture partnerships, operations and general management. Prior to joining Westmoreland, Mr. Schadan worked for Sherritt’s coal division as VP Operations from March 2013, and prior to that was employed at SNC Lavalin beginning in 1999. Mr. Schadan is a registered Professional Engineer in the Province of Alberta and holds a mining engineering degree from Queen’s University. He currently sits as a Director for both the Alberta Chamber of Resources and Safe Saskatchewan.

CORPORATE GOVERNANCE

We are committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders and maintaining our integrity in the marketplace. The Code of Conduct Handbook for directors, officers and employees, in conjunction with the Certificate of Incorporation, Bylaws, Board committee charters and Corporate Governance Guidelines, form the framework for the governance of Westmoreland. All of these documents are available on our website at www.westmoreland.com. On an annual basis, all directors, officers and employees sign an acknowledgementacknowledgment that they have received and reviewed the guidelines provided in the Code of Conduct Handbook. We will post on thisour website any amendments to the Code of Conduct Handbook or waivers of the Code of Conduct Handbook for directors and executive officers. You can request a copy of any of these documents by writing to the Corporate Secretary, Westmoreland Coal Company, 9540 S. Maroon Circle, Suite 200, Englewood, Colorado 80112.

Board Structure and Risk Oversight

The Board separatedof Directors does not have a policy regarding the positionsseparation of the roles of Chief Executive Officer ("CEO") and Chairman of the Board as the Board believes it is in the best interests of Westmoreland to make that determination based on the position and direction of Westmoreland, and the membership of the Board. Currently, the roles of Chairman of the Board and Chief Executive Officer in May 2009 and elected Richard M. Klingaman, an independent director, as our Chairman, and Keith E. Alessi as our Chief Executive Officer. Separating these positions allowsCEO are split so that our CEO tocan focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. The Board recognizesOn March 21, 2014, Mr. Alessi was asked to resume his service as CEO to facilitate an efficient transition of the time, effort, and energy thatSherritt business into Westmoreland. Accordingly, Mr. Klingaman was elevated to the CEO is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman particularly as the Board’s oversight responsibilities continue to grow.  The Board believes this leadership structure has enhanced the Board’s oversight of risk and independence from our management, the ability of the Board position where he chaired all regular and independent executive sessions of the Board and, with input from the CEO, set the agenda for Board meetings. We believe this structure promotes a unified approach to carry outcorporate strategy development and allows for a bridge between management and the Board, helping each to pursue its roles and responsibilities on behalfcommon purpose more efficiently.


7
Table of our stockholders, and our overall corporate governance.Contents

Risk Oversight by the Board of Directors

Risk is inherent with every business, and how well a business manages risk can ultimately influence its success. We face a number of risks, including economic risks, operational risks, environmental and regulatory risks, and others, such as the impact of competition, weather conditions and pressures from competing fuel sources. Management is responsible for the day-to-day managementsupervision of risks that we face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The Board believes that establishing the right “tone at the top” and full and open communication between management and the Board are essential for effective risk management and oversight. Our Chairman talks regularlyhas regular communications with our CEO to discuss strategy and the risks we face. The executive management team attends the quarterly board meetings and is available to address any questions or concerns raised by the Board on risk management-relatedmanagement related matters. Each quarter, the Board receives presentations from senior management on strategic matters involving our operations and is provided extensive materials that highlight the various factors that could lead to risk in our organization. The Board holds a strategic planning session with the management team on an annual basis to discuss strategies, key challenges, and risks and opportunities for us. Further, the Board is empowered to hire its own advisors without management approval to assist it in fulfilling its duties.

While the Board is ultimately responsible for our risk oversight, our committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. The Compensation and Benefits Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Corporate Governance Committee is tasked with overseeingthe oversight of succession planning for our directors and executive officers. On an annual basis, pursuant to such committee’scommittee's charters, the committees assess risk and have specific conversations with senior management regarding the risks faced.

CommitteesDirector Independence

NASDAQ Marketplace Rules require that a majority of the Board be independent. No director qualifies as independent unless the Board determines that the director has no direct or indirect relationship with the Company that would interfere with the exercise of Directorsindependent judgment in carrying out the responsibilities of a director. In assessing the independence of its members, the Board examined the commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships of each member. The Board's inquiry extended to both direct and indirect relationships with the Company. Based upon both detailed written submissions by nominees and discussions regarding the facts and circumstances pertaining to each nominee, considered in the context of applicable NASDAQ Marketplace Rules, the Board has determined that all of the nominees for election, other than Mr. Alessi, are independent. The independent directors meet during most Board meetings in separate executive session led by our Chairman and without management present.

AsEach member of the dateAudit Committee must, in addition to the independence requirements of this proxy statement,the NASDAQ Marketplace Rules, meet the heightened independence standards required for audit committee members under the NASDAQ Marketplace Rules listing standards, Section 10A of the Securities Exchange Act of 1934, and Rule 10A-3 thereunder. The Board determined that Messrs. Hutchinson, Bachynski, Mackus and Packwood, the 2014 Audit Committee members, each met such heightened independence standards. Beginning in July 2013, each member of the Compensation and Benefits Committee was required to also meet heightened independence standards under the NASDAQ Marketplace Rules listing standards. The Board determined that Ms. Hamilton and Messrs. Hutchinson, Scharp and Mackus, the 2014 Compensation and Benefits Committee members, met such heightened independence standards.

Communicating with the Board

Stockholders who wish to write directly to the Board on any topic should address communications to the Board of Directors in care of the Chairman of the Board, Westmoreland Coal Company Board of Directors, 9540 S. Maroon Circle, Suite 200 Englewood, Colorado 80112. Our Chairman of the Board will report on stockholder communications to the Board and provide copies or specific summaries to directors on matters deemed to be of appropriate importance. In general, communications from stockholders relating to corporate governance will be forwarded to the Board unless they are frivolous, obscene, repeat the same information contained in earlier communications, or fail to identify the author.


8

COMMITTEES OF THE BOARD OF DIRECTORS

Throughout 2014, our Board has sevenconsisted of eight directors and the following four committees: (1) Audit; (2) Compensation and Benefits; (3) Nominating and Corporate Governance; and (4) Executive. From time-to-time, the Board will form a Pricing Committee to address specific transactions such as debt or equity issuances. The Board has set the number of directors following the Annual Meeting at six.  The current committee membership, the number of meetings during 2011 and the function of each of the committees are described below.  Each of the committees operates under a written charter adopted by the Board. All of the committee charters are available on our website at www.westmoreland.com. On February 20, 2015, the Board created a Health, Safety and Environment committee, which has begun drafting a charter and setting goals for the year. During 2011,2014, the Board held nine meetings plus a two-day strategic planning session.eleven meetings. Each director serving during 2011of our current directors attended 100%at least 86% of the aggregate of all Board and applicable
committee meetings held during the period that he or she served as a director. Directors are expected to attend the Annual Meeting of Stockholders.director, with six directors attending 100%. All directors attended the last Annual Meeting of Stockholders and all are expected to attend this year's Annual Meeting of Stockholders. The 2014 committee membership, number of meetings held during 2014 and function of each of the committees are described in the table below.
Name of Director Audit 
Compensation
and
Benefits
 
Nominating
and
Corporate Governance
 Executive
Non-Employee Directors:        
Terry J. Bachynski Member   Member  
Gail E. Hamilton   Member Member  
Michael G. Hutchinson Chair Member    
Richard M. Klingaman       Chair
Craig R. Mackus Member Member    
Jan B. Packwood Member   Chair Member
Robert C. Scharp   Chair Member Member
Employee Director:        
Keith E. Alessi       Member
Number of Meetings in 2014 4 5 4 3

Name of Director Audit 
Compensation
and
Benefits
 
Nominating
and
Corporate Governance
 Executive 
Non-Employee Directors:                                                                                                                         
Thomas J. Coffey Chair Member     
Michael R. D’Appolonia   Chair Member Member 
Gail E. Hamilton Member Member     
Richard M. Klingaman       Member 
Jan B. Packwood Member   Chair   
Robert C. Scharp Member   Member   
Employee Director:         
Keith E. Alessi       Chair 
Number of Meetings in 2011 5 4 3 2 
Audit Committee

The Audit Committee provides oversight of the quality and integrity of our accounting, auditing and financial reporting practices and is responsible for retaining and terminating our independent accounts. The committee exercises its oversight obligations through regular meetings with management, the Director of Internal Audit and our independent registered public accounting firm, Ernst & Young LLP. The Audit Committee is also responsible for oversight of risks relating to accounting matters, financial reporting and regulatory compliance. To satisfy these oversight responsibilities, the committee separately meets with our Chief Financial Officer, the Director of Internal Audit, Ernst & Young LLP and management. The committee also receives periodic reports regarding issues such as the status and findings of audits being conducted by the internal and independent auditors, the status of material litigation, accounting changes that could affect our financial statements and proposed audit adjustments. The Board has determined that Michael D’Appolonia, Jan Packwood and Bob Scharp qualifyG. Hutchinson qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.

Audit Committee Report

Under its charter, the Audit Committee assists the Board of Directors in fulfilling the Board’sBoard's responsibility for oversight of Westmoreland’sWestmoreland's financial reporting process and practices, and its internal control over financial reporting. Management is primarily responsible for our financial statements, the reporting process and assurance for the adequacy of the internal control over financial reporting. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of Westmoreland’sWestmoreland's financial statements and internal control over financial reporting, and for expressing an opinion on the conformity of our audited financial statements to generally accepted accounting principles used in the United States and the adequacy of our internal control over financial reporting.

The Audit Committee has reviewed and discussed with Ernst & Young LLP Westmoreland’sWestmoreland's audited consolidated financial statements and internal control over financial reporting. The Audit Committee has discussed with Ernst & Young LLP, during the 20112014 fiscal year, the matters required to be discussed by Statement on Auditing Standards No. 61,16, as amended (Communication with Audit Committees) as adopted by the Public Company Accounting Oversight Board. The Audit Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding such firm’sfirm's communications with the Audit Committee concerning independence, and has discussed with the independent accountants their independence.

9
Table of Contents


The Audit Committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls and the overall quality of our financial reporting. The Audit Committee also has reviewed and discussed the audited financial statements with management.

7
Based on the reviews and discussions described above, the Audit Committee recommended to the Board that the audited financial statements and assessment of internal controls over financial reporting be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.2014. The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2012.2015.

ThomasMichael G. Hutchinson, Chairman
Terry J. Coffey, Chairman
Gail E. HamiltonBachynski
Jan B. Packwood
Robert C. ScharpCraig R. Mackus

Compensation and Benefits Committee

The Compensation and Benefits Committee is responsible for assuring that the Board, our Chief Executive Officer, other executive officers, and our key management are compensated appropriately and in a manner consistent with our approved compensation strategy, internal equity considerations, competitive practice, and any relevant laws or regulations. In addition, the committee reviews our compensation programs to ensure that our programs are not promoting imprudent risk-taking. In accordance with its charter, the committee may retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, form and delegate authority to subcommittees and delegate authority to one or more designated members of the committee. To assist it in satisfying its oversight responsibilities, the committee chose in February 2011approved the continued engagement of Pay Governance to continueserve as its relationship with Buck Consulting, which began in February 2010, and meets regularly with management to understand the financial, human resources and stockholder implications of compensation decisions being made.consultant for fiscal year 2015.

Compensation and Benefits Committee Risk Assessment

On an annual basis, the committee reviews and discusses the structure of our compensation program to assess whether any aspect of the program could potentially be expected to provide an incentive to our executive officers or other employees to take any unnecessary or inappropriate risks that could threaten our operating results, financial condition or impact long-term stockholder value. To assist the committee in theirits annual review it engaged Pay Governance in February 2012, the committee engaged Buck ConsultingJanuary 2014 to conduct a risk assessment of our incentive-based compensation plans (including the annual and long-term incentive programs) and our compensation practices.

Based on the findings of Buck Consulting,Pay Governance, our internal controls, policies and risk-mitigating components in our incentive arrangements, as well as the committee’scommittee's formal review and discussion, the committee believes our compensation programs represent an appropriate balance of short-term and long-term compensation and do not encourage executive officers or other employees to take on unnecessary or excessive risks that are reasonably likely to have a material adverse effect on us.

Our incentive compensation is designed to reward bonus-eligible employees for committing to and achieving goals that are intended to be challenging yet provide them a reasonable opportunity to reach the threshold amount, while requiring meaningful growth to reach the target level and substantial growth to reach the maximum level. The amount of growth required to reach the maximum level of compensation is developed within the context of the normal business planning cycle and, while difficult to achieve, is not viewed to be at such an aggressive level that it would induce bonus-eligible employees to take inappropriate risks that could threaten our financial or operating stability. In addition, theThe annual bonus program contains a cap on the maximum financial payout to employees as a whole.

Our executive compensation program includes the following features to help minimize risk.

Compensation Mix. We allocate compensation between fixed and contingent components, and between annual cash incentives and long-term time-based equity incentives, based in part on an employee’semployee's position and level of responsibility within the organization. We believe our mix of compensation elements helps to ensure that executives and other employees who are eligible for incentive compensation do not focus on achieving short-term results at the expense of the long-term growth and sustainability of the Company. None of our employees receives compensation that is primarily derived fromreceive commissions.

Base salary is the only assured portion of compensation that we provide to our executives and other employees. Consequently, our incentive compensation arrangements are intended to reward performance.


10

The annual incentive plan establishes cash-based award opportunities that are payable if, and only to the extent that, pre-established corporate financial, operational safety and individual performance objectives are achieved, subject to theachieved. The committee has discretion of the committee to exclude certain events outside our direct control and to reward exemplary performance.

8
The equity-basedlong-term component of the executive compensation program consists of grants of time-vested and performance-based restricted stock units.units or cash awards. The use of both time-based and performance-based restricted stock unitsawards for fiscal 20122015 balances our desire to drive long-term stock price growth with the retention pressures we face from our direct peers, as well as from emerging and evolving competitors.

Stock Ownership Guidelines. We have established stock ownership guidelines to ensure that our executives’executives' interests are aligned with those of stockholders. These guidelines also help ensure that the decisions our executives implement to achieve our financial and strategic objectives are focused on our long-term growth and health. We believe that this policy effectively mitigates the possibility that our executives would make business decisions to influence stock price increases in the short-term that cannot be sustained over the long-term or would liquidate their equity holdings to capture short-term fluctuations in our stock price.

Board Approval of Transactions. Management must obtain approval from the Board for significant transactions (i.e., mergers, acquisitions, dividends, etc.) that could impact the achievement of previously approved financial performance targets used in the executive compensation program, and the Compensation and Benefit Committee retains the discretion to ignore the impact of certain factors over which management has no control (such as accounting changes or force majeure events) for purposes of determining whether pre-established performance targets have been met.

Compensation and Benefits Committee Interlocks and Insider Participation

During 2011,2014, each of Messrs. CoffeyHutchinson, Mackus and D’AppoloniaScharp, and Ms. Hamilton served on our Compensation and Benefits Committee. None of these directors was a current or former officer or employee of the Company, and none had any related party transaction involving the Company that is disclosable under Item 404 of Regulation S-K. During 2011,2014, none of our executive officers served on the board of directors of any entity that had one or more executive officers serving on our Board.

Communicating with the Board

Stockholders who wish to write directly to the Board on any topic should address communications to the Board of Directors in care of the Chairman of the Board, Westmoreland Coal Company Board of Directors, 9540 S. Maroon Circle, Suite 200 Englewood, Colorado 80112. Our Chairman of the Board will report on stockholder communications to the Board and provide copies or specific summaries to directors on matters deemed to be of appropriate importance. In general, communications from stockholders relating to corporate governance will be forwarded to the Board unless they are frivolous, obscene, repeat the same information contained in earlier communications, or fail to identify the author.


8

COMMITTEES OF THE BOARD OF DIRECTORS

Throughout 2014, our Board consisted of eight directors and the following four committees: (1) Audit; (2) Compensation and Benefits; (3) Nominating and Corporate Governance; and (4) Executive. Each of the committees operates under a written charter adopted by the Board. All of the committee charters are available on our website at www.westmoreland.com. On February 20, 2015, the Board created a Health, Safety and Environment committee, which has begun drafting a charter and setting goals for the year. During 2014, the Board held eleven meetings. Each of our current directors attended at least 86% of the aggregate of all Board and applicable committee meetings held during the period that he or she served as a director, with six directors attending 100%. All directors attended the last Annual Meeting of Stockholders and all are expected to attend this year's Annual Meeting of Stockholders. The 2014 committee membership, number of meetings held during 2014 and function of each of the committees are described in the table below.
Name of Director Audit 
Compensation
and
Benefits
 
Nominating
and
Corporate Governance
 Executive
Non-Employee Directors:        
Terry J. Bachynski Member   Member  
Gail E. Hamilton   Member Member  
Michael G. Hutchinson Chair Member    
Richard M. Klingaman       Chair
Craig R. Mackus Member Member    
Jan B. Packwood Member   Chair Member
Robert C. Scharp   Chair Member Member
Employee Director:        
Keith E. Alessi       Member
Number of Meetings in 2014 4 5 4 3

Audit Committee

The Audit Committee provides oversight of the quality and integrity of our accounting, auditing and financial reporting practices and is responsible for retaining and terminating our independent accounts. The committee exercises its oversight obligations through regular meetings with management, the Director of Internal Audit and our independent registered public accounting firm, Ernst & Young LLP. The Audit Committee is also responsible for oversight of risks relating to accounting matters, financial reporting and regulatory compliance. To satisfy these oversight responsibilities, the committee separately meets with our Chief Financial Officer, the Director of Internal Audit, Ernst & Young LLP and management. The committee also receives periodic reports regarding issues such as the status and findings of audits being conducted by the internal and independent auditors, the status of material litigation, accounting changes that could affect our financial statements and proposed audit adjustments. The Board has determined that Michael G. Hutchinson qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.

Audit Committee Report

Under its charter, the Audit Committee assists the Board of Directors in fulfilling the Board's responsibility for oversight of Westmoreland's financial reporting process and practices, and its internal control over financial reporting. Management is primarily responsible for our financial statements, the reporting process and assurance for the adequacy of the internal control over financial reporting. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of Westmoreland's financial statements and internal control over financial reporting, and for expressing an opinion on the conformity of our audited financial statements to generally accepted accounting principles used in the United States and the adequacy of our internal control over financial reporting.

The Audit Committee has reviewed and discussed with Ernst & Young LLP Westmoreland's audited consolidated financial statements and internal control over financial reporting. The Audit Committee has discussed with Ernst & Young LLP, during the 2014 fiscal year, the matters required to be discussed by Statement on Auditing Standards No. 16, as amended (Communication with Audit Committees) as adopted by the Public Company Accounting Oversight Board. The Audit Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding such firm's communications with the Audit Committee concerning independence, and has discussed with the independent accountants their independence.

9


The Audit Committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls and the overall quality of our financial reporting. The Audit Committee also has reviewed and discussed the audited financial statements with management.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board that the audited financial statements and assessment of internal controls over financial reporting be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2015.

Michael G. Hutchinson, Chairman
Terry J. Bachynski
Jan B. Packwood
Craig R. Mackus

Compensation and Benefits Committee Report

The Compensation and Benefits Committee has reviewedis responsible for assuring that the Board, our Chief Executive Officer, other executive officers, and discussedour key management are compensated appropriately and in a manner consistent with our approved compensation strategy, internal equity considerations, competitive practice, and any relevant laws or regulations. In addition, the committee reviews our compensation programs to ensure that our programs are not promoting imprudent risk-taking. In accordance with its charter, the committee may retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, form and delegate authority to subcommittees and delegate authority to one or more designated members of the committee. To assist it in satisfying its oversight responsibilities, the committee approved the continued engagement of Pay Governance to serve as its compensation consultant for fiscal year 2015.

Compensation Discussion and Analysis required by Item 402(b)Benefits Committee Risk Assessment

On an annual basis, the committee reviews the structure of Regulation S-K with management. our compensation program to assess whether any aspect of the program could provide an incentive to our executive officers or other employees to take any unnecessary or inappropriate risks that could threaten our operating results, financial condition or impact long-term stockholder value. To assist the committee in its annual review it engaged Pay Governance in January 2014 to conduct a risk assessment of our incentive-based compensation plans (including the annual and long-term incentive programs) and our compensation practices.

Based on thisthe findings of Pay Governance, our internal controls, policies and risk-mitigating components in our incentive arrangements, as well as the committee's formal review and discussion, the committee believes our compensation programs represent an appropriate balance of short-term and long-term compensation and do not encourage executive officers or other employees to take on unnecessary or excessive risks that are reasonably likely to have a material adverse effect on us.

Our incentive compensation is designed to reward bonus-eligible employees for committing to and achieving goals that are intended to be challenging yet provide them a reasonable opportunity to reach the threshold amount, while requiring meaningful growth to reach the target level and substantial growth to reach the maximum level. The amount of growth required to reach the maximum level of compensation is developed within the context of the normal business planning cycle and, while difficult to achieve, is not viewed to be at such an aggressive level that it would induce bonus-eligible employees to take inappropriate risks that could threaten our financial or operating stability. The annual bonus program contains a cap on the maximum financial payout to employees as a whole.

Our executive compensation program includes the following features to help minimize risk.

Compensation Mix. We allocate compensation between fixed and contingent components, and between annual cash incentives and long-term time-based incentives, based in part on an employee's position and level of responsibility within the organization. We believe our mix of compensation elements helps to ensure that executives and other employees who are eligible for incentive compensation do not focus on achieving short-term results at the expense of the long-term growth and sustainability of the Company. None of our employees receive commissions.

Base salary is the only assured portion of compensation that we provide to our executives and other employees. Consequently, our incentive compensation arrangements are intended to reward performance.


10

The annual incentive plan establishes cash-based award opportunities that are payable if, and only to the extent that, pre-established corporate financial, operational safety and individual performance objectives are achieved. The committee has discretion to exclude certain events outside our direct control and to reward exemplary performance.

The long-term component of the executive compensation program consists of grants of time-vested and performance-based restricted stock units or cash awards. The use of both time-based and performance-based awards for fiscal 2015 balances our desire to drive long-term growth with the retention pressures we face from our direct peers, as well as from emerging and evolving competitors.

Stock Ownership Guidelines. We have established stock ownership guidelines to ensure that our executives' interests are aligned with those of stockholders. These guidelines also help ensure that the decisions our executives implement to achieve our financial and strategic objectives are focused on our long-term growth and health. We believe that this policy effectively mitigates the possibility that our executives would make business decisions to influence stock price increases in the short-term that cannot be sustained over the long-term or would liquidate their equity holdings to capture short-term fluctuations in our stock price.

Board Approval of Transactions. Management must obtain approval from the Board for significant transactions (i.e., mergers, acquisitions, dividends, etc.) that could impact the achievement of previously approved financial performance targets used in the executive compensation program, and the Compensation and Benefit Committee retains the discretion to ignore the impact of certain factors over which management has no control (such as accounting changes or force majeure events) for purposes of determining whether pre-established performance targets have been met.

Compensation and Benefits Committee recommended to the Board that the Compensation DiscussionInterlocks and Analysis, provided below, be included in this proxy statement.

Michael R. D’Appolonia, Chairman
Thomas J. Coffey
Gail E. Hamilton

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee identifies and recommends individuals qualified to be nominated as members of the Board and considers director candidates brought to the Board by stockholders. The committee also provides oversight on corporate governance matters and provides for the evaluation of Board, committee, and individual director performance, as well as provides oversight on succession planning.

The committee regularly assesses the mix of skills and industry experience currently represented on the Board, whether any vacancies on the Board are expected due to retirement or otherwise, the skills represented by retiring directors, and additional skills highlighted during the Board self-assessment process that could improve the overall quality and ability of the Board to carry out its functions. In the event vacancies are anticipated, or arise, the Nominating and Corporate Governance Committee considers various potential candidates for director and employs the same process for evaluating all candidates, including those submitted by stockholders. The committee is responsible for ensuring all director nominees undergo a thorough background check prior to nomination or appointment as a director and to review any adverse findings prior to such nomination or appointment.  Candidates may come to the attention of the committee through current Board members, professional search firms, stockholders or other persons.  In late 2010, we utilized the services of the National Association of Corporate Directors to help identify potential director candidates for election to the Board.

The committee initially evaluates a candidate based on publicly available information and any additional information supplied by the party recommending the candidate. If the candidate appears to satisfy the selection criteria and the committee’s initial evaluation is favorable, the candidate is contacted by the chairman of the committee for an interview to determine the mutual levels of interest in pursuing the candidacy. The committee is tasked with considering whether the candidate is (i) independent pursuant to the
requirements of The NASDAQ Stock Market, (ii) accomplished in his or her field and has a reputation, both personal and professional, that is consistent with our ideals and integrity, (iii) able to read and understand basic financial statements, (iv) knowledgeable as to us and the issues affecting our business, (v) committed to enhancing stockholder value, (vi) able to understand fully the legal responsibilities of a director and the governance processes of a public company, (vii) able to develop a good working relationship with other Board members and senior management and (viii) able to suggest business opportunities to us.  If these discussions and considerations are favorable, the committee makes a final recommendation to the Board to nominate the candidate for election.

In considering whether to recommend any particular candidate, including incumbent directors, for inclusion in the Board’s slate of recommended director nominees, the Nominating and Corporate Governance Committee takes into consideration a number of criteria which include:  professional work experience; skills; expertise; diversity; personal and professional integrity; character; temperament; business judgment; time availability in light of other commitments; dedication; conflicts of interest; and public company experience. The committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee.  The committee focuses on issues of diversity, such as diversity of education, professional experience and differences in viewpoints and skills. The committee does not have a formal policy with respect to diversity; however, the Board and the committee believe that it is essential that the Board members represent diverse viewpoints and strives to ensure that the slate of nominees represents a wide breadth of diverse backgrounds and skill sets to adequately represent the needs of the stockholders. With respect to the nomination of continuing directors for re-election, the individual’s contributions to the Board are also considered. We believe that the backgrounds and qualifications of our directors, considered as a group, provide a composite mix of skills, experience, and knowledge that will assure that the Board can continue to fulfill its responsibilities.

The Board’s retirement policy mandates that directors elected to the Board at our annual meeting retire from the Board at the first annual meeting of stockholders following the director’s 75th birthday.  The Board grandfathered all directors then serving as a director at the time the policy was adopted in November 2010, making the new retirement policy only applicable to current and future directors who will turn 75 after May 2010.

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made, to the Nominating and Corporate Governance Committee, c/o  Secretary, Westmoreland Coal Company, 9540 South Maroon Circle, Suite 200, Englewood, Colorado 80112. Assuming that appropriate biographical and background material has been provided on a timely basis, the committee will evaluate stockholder-recommended candidates by following the same process, and applying the same criteria, as it follows for candidates submitted by others. If the Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy statement for the next annual meeting.

Stockholders also have the right to nominate director candidates directly, without any action or recommendation on the part of the committee or the Board, by following the procedures set forth in Section 2.6, “Advance Notice of Nominees,” in our bylaws. Among other things, a stockholder wishing to nominate a director candidate must give notice to us within the specified time period that includes the information about the stockholder and the proposed nominee required by the bylaws. Any stockholder wishing to nominate a candidate for election to the Board pursuant to the bylaw provision must strictly comply with the procedures specified in Section 2.6 of the bylaws. Candidates nominated by stockholders in accordance with these procedures could be presented by the nominating stockholder from the floor of the annual meeting, but would not be included in our proxy statement for the next annual meeting, unless the Board made its own determination to include such candidate.

Other CommitteesInsider Participation

During 2011, the Board had two other committees in addition to the committees set forth above: the Executive Committee and the Pricing Committee.  Pursuant to its charter adopted by the Board in February 2012, the Executive Committee is authorized to act on behalf2014, each of the Board during periods between Board meetings. During 2011, the Executive Committee held two meetings. The Pricing Committee acts in the event of offerings of the Company’s securities with respect to matters such as determining the price and terms at which such securities shall be sold to underwriters and the public. During 2011, the Pricing Committee held no meetings, but acted by unanimous written consent on several occasions with respect to the contribution of shares to our pension plans and with respect to the issuance of debt in February 2011.

Director Independence

NASDAQ Marketplace Rules require that a majority of the Board be independent. No director qualifies as independent unless the Board determines that the director has no direct or indirect relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In assessing the independence of its members, the Board examined the commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships of each member. The Board's inquiry extended to both direct and indirect relationships with the Company. Based upon both detailed written submissions by its members and discussions regarding the facts and circumstances pertaining to each member, considered in the context of applicable NASDAQ Marketplace Rules, the Board has determined that all of the directors nominated for election, other than Mr. Alessi, are independent.  The independent directors meet during most Board meetings in separate executive session without management present. The Chairman of the Board, who is an independent director, presides over these meetings.  Each member of the Audit Committee must, in addition to the independence requirements of the NASDAQ Marketplace Rules, meet the heightened independence standards required for audit committee members under the NASDAQ Marketplace Rules listing standards, Section 10A of the Securities Exchange Act of 1934, and Rule 10A-3 thereunder.  The Board determined that Messrs. Coffey, PackwoodHutchinson, Mackus and Scharp, and Ms. Hamilton served on our Compensation and Benefits Committee. None of these directors was a current or former officer or employee of the 2011 Audit Committee members, each met such heightened independence standards.Company, and none had any related party transaction involving the Company that is disclosable under Item 404 of Regulation S-K. During 2014, none of our executive officers served on the board of directors of any entity that had one or more executive officers serving on our Board.

Communicating with the Board

Stockholders who wish to write directly to the Board on any topic should address communications to the Board of Directors in care of the Chairman of the Board, Westmoreland Coal Company Board of Directors, 9540 S. Maroon Circle, Suite 200 Englewood, Colorado 80112. Our Chairman of the Board will report on stockholder communications to the Board and provide copies or specific summaries to directors on matters deemed to be of appropriate importance. In general, communications from stockholders relating to corporate governance will be forwarded to the Board unless they are frivolous, obscene, repeat the same information contained in earlier communications, or failsfail to identify the author.


8

COMMITTEES OF THE BOARD OF DIRECTORS
DIRECTOR COMPENSATION
Throughout 2014, our Board consisted of eight directors and the following four committees: (1) Audit; (2) Compensation and Benefits; (3) Nominating and Corporate Governance; and (4) Executive. Each of the committees operates under a written charter adopted by the Board. All of the committee charters are available on our website at www.westmoreland.com. On February 20, 2015, the Board created a Health, Safety and Environment committee, which has begun drafting a charter and setting goals for the year. During 2014, the Board held eleven meetings. Each of our current directors attended at least 86% of the aggregate of all Board and applicable committee meetings held during the period that he or she served as a director, with six directors attending 100%. All directors attended the last Annual Meeting of Stockholders and all are expected to attend this year's Annual Meeting of Stockholders. The 2014 committee membership, number of meetings held during 2014 and function of each of the committees are described in the table below.
Name of Director Audit 
Compensation
and
Benefits
 
Nominating
and
Corporate Governance
 Executive
Non-Employee Directors:        
Terry J. Bachynski Member   Member  
Gail E. Hamilton   Member Member  
Michael G. Hutchinson Chair Member    
Richard M. Klingaman       Chair
Craig R. Mackus Member Member    
Jan B. Packwood Member   Chair Member
Robert C. Scharp   Chair Member Member
Employee Director:        
Keith E. Alessi       Member
Number of Meetings in 2014 4 5 4 3

Audit Committee

The elementsAudit Committee provides oversight of the quality and integrity of our 2012 director compensation are reflectedaccounting, auditing and financial reporting practices and is responsible for retaining and terminating our independent accounts. The committee exercises its oversight obligations through regular meetings with management, the Director of Internal Audit and our independent registered public accounting firm, Ernst & Young LLP. The Audit Committee is also responsible for oversight of risks relating to accounting matters, financial reporting and regulatory compliance. To satisfy these oversight responsibilities, the committee separately meets with our Chief Financial Officer, the Director of Internal Audit, Ernst & Young LLP and management. The committee also receives periodic reports regarding issues such as the status and findings of audits being conducted by the internal and independent auditors, the status of material litigation, accounting changes that could affect our financial statements and proposed audit adjustments. The Board has determined that Michael G. Hutchinson qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.

Audit Committee Report

Under its charter, the Audit Committee assists the Board of Directors in fulfilling the Board's responsibility for oversight of Westmoreland's financial reporting process and practices, and its internal control over financial reporting. Management is primarily responsible for our financial statements, the reporting process and assurance for the adequacy of the internal control over financial reporting. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of Westmoreland's financial statements and internal control over financial reporting, and for expressing an opinion on the conformity of our audited financial statements to generally accepted accounting principles used in the table below.United States and the adequacy of our internal control over financial reporting.

The Audit Committee has reviewed and discussed with Ernst & Young LLP Westmoreland's audited consolidated financial statements and internal control over financial reporting. The Audit Committee has discussed with Ernst & Young LLP, during the 2014 fiscal year, the matters required to be discussed by Statement on Auditing Standards No. 16, as amended (Communication with Audit Committees) as adopted by the Public Company Accounting Oversight Board. The Audit Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding such firm's communications with the Audit Committee concerning independence, and has discussed with the independent accountants their independence.

9


The Audit Committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls and the overall quality of our financial reporting. The Audit Committee also has reviewed and discussed the audited financial statements with management.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board that the audited financial statements and assessment of internal controls over financial reporting be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2015.

Michael G. Hutchinson, Chairman
Terry J. Bachynski
Jan B. Packwood
Craig R. Mackus

Compensation and Benefits Committee

The Compensation and Benefits Committee is responsible for assuring that the Board, our Chief Executive Officer, other executive officers, and our key management are compensated appropriately and in a manner consistent with our approved compensation strategy, internal equity considerations, competitive practice, and any relevant laws or regulations. In addition, the committee reviews our compensation programs to ensure that our programs are not promoting imprudent risk-taking. In accordance with its charter, the committee may retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, form and delegate authority to subcommittees and delegate authority to one or more designated members of the committee. To assist it in satisfying its oversight responsibilities, the committee approved the continued engagement of Pay Governance to serve as its compensation consultant for fiscal year 2015.

Compensation and Benefits Committee Risk Assessment

On an annual basis, the committee reviews the structure of our compensation program to assess whether any aspect of the program could provide an incentive to our executive officers or other employees to take any unnecessary or inappropriate risks that could threaten our operating results, financial condition or impact long-term stockholder value. To assist the committee in its annual review it engaged Pay Governance in January 2014 to conduct a risk assessment of our incentive-based compensation plans (including the annual and long-term incentive programs) and our compensation practices.

Based on the findings of Pay Governance, our internal controls, policies and risk-mitigating components in our incentive arrangements, as well as the committee's formal review and discussion, the committee believes our compensation programs represent an appropriate balance of short-term and long-term compensation and do not encourage executive officers or other employees to take on unnecessary or excessive risks that are reasonably likely to have a material adverse effect on us.

Our incentive compensation is designed to reward bonus-eligible employees for committing to and achieving goals that are intended to be challenging yet provide them a reasonable opportunity to reach the threshold amount, while requiring meaningful growth to reach the target level and substantial growth to reach the maximum level. The amount of growth required to reach the maximum level of compensation is developed within the context of the normal business planning cycle and, while difficult to achieve, is not viewed to be at such an aggressive level that it would induce bonus-eligible employees to take inappropriate risks that could threaten our financial or operating stability. The annual bonus program contains a cap on the maximum financial payout to employees as a whole.

Our executive compensation program includes the following features to help minimize risk.

Compensation Mix. We allocate compensation between fixed and contingent components, and between annual cash incentives and long-term time-based incentives, based in part on an employee's position and level of responsibility within the organization. We believe our mix of compensation elements helps to ensure that executives and other employees who are eligible for incentive compensation do not focus on achieving short-term results at the expense of the long-term growth and sustainability of the Company. None of our employees receive commissions.

Base salary is the only assured portion of compensation that we provide to our executives and other employees. Consequently, our incentive compensation arrangements are intended to reward performance.


10

The annual incentive plan establishes cash-based award opportunities that are payable if, and only to the extent that, pre-established corporate financial, operational safety and individual performance objectives are achieved. The committee has discretion to exclude certain events outside our direct control and to reward exemplary performance.

The long-term component of the executive compensation program consists of grants of time-vested and performance-based restricted stock units or cash awards. The use of both time-based and performance-based awards for fiscal 2015 balances our desire to drive long-term growth with the retention pressures we face from our direct peers, as well as from emerging and evolving competitors.

Stock Ownership Guidelines. We have established stock ownership guidelines to ensure that our executives' interests are aligned with those of stockholders. These guidelines also help ensure that the decisions our executives implement to achieve our financial and strategic objectives are focused on our long-term growth and health. We believe that this policy effectively mitigates the possibility that our executives would make business decisions to influence stock price increases in the short-term that cannot be sustained over the long-term or would liquidate their equity holdings to capture short-term fluctuations in our stock price.

Board Approval of Transactions. Management must obtain approval from the Board for significant transactions (i.e., mergers, acquisitions, dividends, etc.) that could impact the achievement of previously approved financial performance targets used in the executive compensation program, and the Compensation and Benefit Committee retains the discretion to ignore the impact of certain factors over which management has no control (such as accounting changes or force majeure events) for purposes of determining whether pre-established performance targets have been met.

Compensation and Benefits Committee Interlocks and Insider Participation

During 2014, each of Messrs. Hutchinson, Mackus and Scharp, and Ms. Hamilton served on our Compensation and Benefits Committee. None of these directors was a current or former officer or employee of the Company, and none had any related party transaction involving the Company that is disclosable under Item 404 of Regulation S-K. During 2014, none of our executive officers served on the board of directors of any entity that had one or more executive officers serving on our Board.

Compensation and Benefits Committee Report

The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on this review and discussion, the Compensation and Benefits Committee recommended to the Board that the Compensation Discussion and Analysis, provided herein, be included in this proxy statement and incorporated by reference into Westmoreland's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Robert C. Scharp, Chairman
Gail E. Hamilton
Michael G. Hutchinson
Craig R. Mackus

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee identifies and recommends individuals qualified to be nominated as members of the Board and considers director candidates brought to the Board by stockholders. The committee oversees succession planning. It also provides oversight on corporate governance matters and conducts the evaluation of the Board, committees, and individual director performance.

The committee regularly assesses the mix of skills and industry experience currently represented on the Board, whether any vacancies on the Board are expected due to retirement or otherwise, the skills represented by retiring directors, and additional skills highlighted during the Board self-assessment process that could improve the overall quality and ability of the Board to carry out its functions. In the event vacancies are anticipated or arise, the Nominating and Corporate Governance Committee considers various potential candidates for director and employs the same process for evaluating all candidates, including those submitted by stockholders. The committee is responsible for ensuring all director nominees undergo a thorough background check prior to nomination or appointment as a director and to review any adverse findings prior to such nomination or appointment. Candidates may come to the attention of the committee through current Board members, professional search firms, stockholders or other persons.


11

The committee initially evaluates a candidate based on publicly available information and any additional information supplied by the party recommending the candidate. If the candidate appears to satisfy the selection criteria and the committee's initial evaluation is favorable, the candidate is contacted by the chairman of the committee for an interview to determine the mutual levels of interest in pursuing the candidacy. The committee is tasked with considering whether the candidate is (i) independent pursuant to the requirements of The NASDAQ Stock Market, (ii) accomplished in his or her field and has a reputation, both personal and professional, that is consistent with our ideals and integrity, (iii) able to read and understand basic financial statements, (iv) knowledgeable as to us and the issues affecting our business, (v) committed to enhancing stockholder value, (vi) able to understand fully the legal responsibilities of a director and the governance processes of a public company, (vii) able to develop a good working relationship with other Board members and senior management and (viii) able to suggest business opportunities to us. If these discussions and considerations are favorable, the committee makes a final recommendation to the Board to nominate the candidate for election.

In considering whether to recommend any particular candidate, including incumbent directors, for inclusion in the Board's slate of recommended director nominees, the Nominating and Corporate Governance Committee takes into consideration a number of criteria, including: professional work experience; skills; expertise; diversity; personal and professional integrity; character; temperament; business judgment; time availability in light of other commitments; dedication; conflicts of interest; and public company experience. The committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. The committee focuses on issues of diversity, such as diversity of education, professional experience and differences in viewpoints and skills. The committee does not have a formal policy with respect to diversity; however, the Board and the committee believe that it is importantessential that the Board members represent diverse viewpoints and strive to ensure that the slate of nominees represents a wide breadth of diverse backgrounds and skill sets to adequately represent the needs of the stockholders. With respect to the nomination of continuing directors for re-election, the individual's contributions to the Board are also considered. We believe that the backgrounds and qualifications of our directors, considered as a group, provide a composite mix of skills, experience, and knowledge that will assure that the Board can continue to fulfill its responsibilities.

The Board's retirement policy mandates that directors elected to the Board at our annual meeting retire from the Board at the first annual meeting of stockholders following the director's 75th birthday. The Board grandfathered all directors then serving as a director at the time the policy was adopted in November 2010, making the new retirement policy only applicable to current and future directors who will turn 75 after May 2010.

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made, to the Nominating and Corporate Governance Committee, c/o  Corporate Secretary, Westmoreland Coal Company, 9540 South Maroon Circle, Suite 200, Englewood, Colorado 80112. Assuming that appropriate biographical and background material has been provided on a timely basis, the committee will evaluate stockholder-recommended candidates by following the same process, and applying the same criteria, as it follows for candidates submitted by others. If the Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy statement for the next annual meeting.

Stockholders also have the right to nominate director candidates directly, without any action or recommendation on the part of the committee or the Board, by following the procedures set forth in Section 2.6, “Advance Notice of Nominees,” in our bylaws. Among other things, a stockholder wishing to nominate a director candidate must give notice to us within the specified time period that includes the information about the stockholder and the proposed nominee required by the bylaws. Any stockholder wishing to nominate a candidate for election to the Board pursuant to the bylaw provision must strictly comply with the procedures specified in Section 2.6 of the bylaws.

Jan B. Packwood, Chairman
Gail E. Hamilton
Robert C. Scharp
Terry J. Bachynski

Executive Committee

During 2014, the Board had an Executive Committee. Pursuant to its charter reviewed and adopted on an annual basis, the Executive Committee is authorized to act on behalf of the Board during periods between Board meetings. During 2014, the Executive Committee held three meetings.


12

DIRECTOR COMPENSATION

The Board's goal in designing director compensation is to provide a competitive package that will enable it to attract and retain outstandinghighly skilled individuals with relevant experience and that reflects the time and talent required to serve on the Board. Compensation for our non-employee directors is reviewed by the Compensation and targetBenefits Committee with the assistance of Pay Governance. The table below reflects the total director compensation at the median of our peer group. for 2014.

2014 Non-Employee Director Compensation
Name(1)
Fees Earned Or
Paid In Cash($)
Grant Date
Fair Value
of Stock
Awards($)(2)
Total
Compensation ($)
Keith E. Alessi———
Terry J. Bachynski33,92569,558103,483
Gail E. Hamilton84,62490,021174,645
Michael G. Hutchinson100,20690,021190,227
Richard M. Klingaman124,73390,021214,754
Craig R. Mackus88,22190,021178,242
Jan B. Packwood103,30390,021193,324
Robert C. Scharp104,14490,021194,165
____________________
(1)Mr. Alessi did not receive any additional compensation for his services as a director.
(2)An equivalent of $90,000 of restricted stock units were awarded to each non-employee director elected to the Board in May 2014. The restricted stock units vest on May 20, 2015. Mr. Bachynski was elected to the Board on August 8, 2014, and received both a prorated equity award at that time and a prorated cash retainer at the end of the third quarter.

Approved 2015 Non-Employee Director Compensation Structure

In February 2012,2015, the Compensation and Benefits Committee recommended, and the Board approved, the below compensation structure for fiscal year 2012.2015. All non-employee directors receive the “Annual Cash Retainer” in addition to any other retainers they may be entitled for service as the ChairmanChair of a committee or for serving as the Chaira member of a committee.

Type of Compensation Amount
Annual Cash Retainer $35,00055,000
Annual Stock Award Retainer (restricted stock units with one-year vest)
 
$70,000 valued at fair market
value on date of grant
90,000 stock equivalent
Annual Retainer for Chairman of the Board Premium $35,00055,000
Annual Retainer for Committee Chair:  
Audit Committee $7,00015,000
Compensation and Benefits Committee $5,00015,000
Nominating and Corporate Governance Committee $3,0008,000
Annual Retainer for Serving on the a Committee:
Audit C&B or N&CG CommitteesCommittee$10,000
Compensation and Benefits Committee$7,500
Nominating and Corporate Governance Committee $5,000 per committee
Attendance at Board or Committee Meeting (in-person)
 $1,500 per meeting
Attendance at Board or Committee Meeting (telephonic)
 $1,000 per meeting

2011 Non-Employee Director Compensation
          
Name(1)
 
Fees Earned Or
Paid In Cash($)
  
Grant Date
Fair Value
of Stock
Awards($)(2)
  
Total
Compensation ($)
 
Thomas J. Coffey                                                         75,500   50,009   125,509 
Michael R. D’Appolonia                                                         73,500   50,009   123,509 
Gail E. Hamilton                                                         61,375   50,009   111,384 
Richard M. Klingaman                                                         85,000   50,009   135,009 
Jan B. Packwood                                                         65,067   50,009   115,076 
Robert C. Scharp                                                         63,375   50,009   113,384 
Former Directors(3)            
William M. Stern                                                         5,667   —   5,667 
Frank T. Vicino, Jr.                                                         4,889   —   4,889 
__________
(1)Mr. Alessi, who is our Chief Executive Officer, does not receive any additional compensation for his services as a director.
(2)
2,940 restricted stock units were awarded to each non-employee director elected to the Board in May 2011.  The restricted stock units vest on May 24, 2012.  The grant date fair value of these awards was $17.01 per share.
(3)Messrs. Stern and Vicino were serving as our preferred directors in early 2011.  Upon the repayment of the outstanding preferred dividends in early February 2011, the preferred director positions were eliminated.

Non-Employee Director Stock Ownership Guidelines

In March 2011,February 2014, the Board adopted stock ownership guidelines for non-employee directors under which the directors are expected to own a threshold amount of Westmoreland equity equal inequity. Each non-employee director is now required to hold Westmoreland common stock with an aggregate value toof at least three times thehis or her annual cash retainer, withretainer. The directors have a five-year timetablewindow to comply.comply with these new guidelines.


2011 Outstanding Equity Awards at Fiscal Year-End for Directors
13

Option Awards 
Name 
Securities
Underlying
Unexercised
Options (#)
Exercisable
  
Securities
Underlying
Unexercised
Options (#)
Unexercisable
  
Option
Exercise
Price ($)
  
Option
Expiration
Date
 
Thomas J. Coffey                                              5,000   0   15.31   5/24/12 
  1,762   0   25.14   6/23/16 
Richard M. Klingaman                                              3,733   0   23.99   2/2716 
BENEFICIAL OWNERSHIP OF SECURITIES

The following table sets forth information, as of March 1, 2012,April 2, 2015 (the "Table Date"), concerning beneficial ownership by: holders of more than 5% of any class of our voting securities; directors; each of the named executive officers listed in the Summary Compensation Table; and all directors and executive officers as a group. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted. The number of shares beneficially owned by each entity or individual is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the entity or individual has sole or shared voting power or investment power and also any shares that the entity or individual has the right to acquire within 60 days of March 1, 2012the Table Date through the exercise of any stock options, the conversion of depositary shares at a conversion ratio of 1.708 shares of common stock for each depositary share, the vesting of restricted stock or upon the exercise or conversion of other rights. Unless otherwise indicated, each person has sole voting and investment power with respect to the shares set forth in the table. The percentage calculations set forth in the table are based on 13,879,45817,769,746 shares of common stock outstanding and 639,840 depositary shares outstanding on March 1, 2012the Table Date.

12
Name of Beneficial OwnerCommon Stock
% of
Common
5% or Greater Equity Holders  
Jeffrey L. Gendell(1)
1,087,3776.12%
Charles L. Frischer(2)
997,5215.61%
BlackRock Inc.(3)
965,4125.43%
Officers and Directors
Terry J. Bachynski(4)
1,573*
Gail E. Hamilton(5)
22,136*
Michael G. Hutchinson(5)
14,269*
Richard M. Klingaman(5)
32,479*
Craig R. Mackus(5)
10,244*
Jan B. Packwood(5)
22,136*
Robert C. Scharp(5)
22,136*
Keith E. Alessi(6)
361,4042.02%
Robert P. King(7)
46,066*
Kevin A. Paprzycki(8)
33,507*
Jennifer S. Grafton(9)
17,759*
Joseph E. Micheletti(10)
27,641*
John A. Schadan754*
Directors and Executive Officers as a Group (13 persons)612,1043.41%
____________________
Table of Contents
Name of Beneficial Owner
 Common Stock  
% of
Common
  
Depositary
Shares
  
% of
Depositary
Shares
 
 
5% or Greater Equity Holders            
Jeffrey L. Gendell (1)  3,071,144   22.12%  3,700   * 
Frank Vicino, Jr. (2)  188,574   1.34%  108,730   16.99%
Stephen D. Rosenbaum (3)  131,404   *   60,000   9.38%
T. Rowe Price (4)  774,320   5.58%  —   — 
Officers and Directors 
Thomas J. Coffey (5)  41,696   *   —   — 
Michael R. D’Appolonia  9,448   *   —   — 
Gail E. Hamilton  0   *   —   — 
Richard M. Klingaman  10,343   *   —   — 
Jan B. Packwood  0   *   —   — 
Robert C. Scharp  0   *   —   — 
Keith E. Alessi (6)  153,895   1.10%  —   — 
Kevin A. Paprzycki (7)  17,953   *   —   — 
Douglas P. Kathol (8)  42,067   *         
Joseph E. Micheletti (9)  8,232   *   —   — 
Morris W. Kegley (10)  17,255   *   —   — 
John V. O’Laughlin (11)  42,884   *   —   — 
Directors and Executive Officers as a Group (11 persons)  287,984   2.05%  —   — 
_________
* Percentages of less than 1% are indicated by an asterisk
(1)The total for Mr. Gendell includes shares of common stock, as well as shares of common stock issuable upon conversion of depositary shares. According to a Schedule 13D/A filed January 6, 2012,December 10, 2014, Mr. Gendell owns 549,000 shares of common stock of which he has sole voting and dispositive power. In addition, Tontine Capital Partners, L.P. and other limited partnerships and limited liability companies that are affiliates of Tontine Capital Partners, L.P. own 2,515,826 shares of common stock and 3,700 depositary shares that are convertible into 6,318538,377 shares of common stock. Mr. Gendell is either a managing member of, or a managing member of the general partner of, these limited partnerships and limited liability companies and has shared voting and dispositive power over these shares. All of the foregoing shares may be deemed to be beneficially owned by Mr. Gendell. Mr. Gendell disclaims beneficial ownership of these shares for purposes of Section 16(a) under the Exchange Act, or otherwise, except as to shares directly owned by Mr. Gendell or representing Mr. Gendell’s pro rata interest in, and interest in the profits of, these limited partnerships and limited liability companies. The address for Mr. Gendell is 55 Railroad Avenue,1 Sound Shore Drive, Greenwich, CT 06830.
(2)
According to a Schedule 13D/A13D filed on February 19, 2010,March 4, 2015, Mr. Frank Vicino Jr. beneficiallyFrischer directly, or through his IRA, owns 108,730 depositary985,211 shares of commons stock of which he has sole voting and dispositive power. Mr. Frischer is also the sole dispositive power for 86,750 shares, and shared voting and dispositive power over 21,980 shares. The common stock total for Mr. Vicino includes 185,673 common shares issuable upon conversiongeneral partner of depositary shares. The address for Mr. Vicino is 3312 NE 40th Street, Fort Lauderdale, Fl 33308.
3)The total for Mr. Rosenbaum includesthe Libby Frischer Family Partnership, a New York partnership (the "Partnership"), which owns 12,130 shares of common stock as well aswith sole voting and dispositive power. Mr. Frischer does not disclaim beneficial ownership of the shares of common stock issuable upon conversion of depositary shares. The depositary shares are convertible into 102,459 shares of common stock. Theowned by the Partnership. Mr. Frischer's address for Mr. Rosenbaum is 817 N. Calvert Street, Baltimore, MD 21202.4404 52nd Avenue NE, Seattle, Washington 98105.


14

(4)
(3)According to a Schedule 13G/A filed on February 13, 2012, these securities are owned by various individual2, 2015, BlackRock Inc., a parent holding company of certain institutional investment managers registered under the Exchange Act and institutional investors, which T. Rowe Price Associates, Inc. (Price Associates) serves as an investment advisercertain other entities, beneficially owns 965,412 shares with sole dispositive power, and has sole voting power to direct investments and/or sole power to vote the securities. For purposes934,763 of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.those shares. The principal business address of T. Rowe PriceBlackRock Inc. is 10040 East Pratt St., Baltimore, Maryland 21202.52nd street, New York, New York 10022.
(4)Includes 1,574 shares of restricted stock issued under our 2007 Employee and Non-Employee Director Compensation Plan ("2007 Plan") that will vest on May 20, 2015.
(5)Includes 5,000 common3,244 shares of restricted stock issued under our 2007 Plan that may be purchased upon exercise of options under the 2000 Non Employee Director Stock Incentive Plan.will vest on May 20, 2015.
(6)Includes 5,959771 shares of common stock held by Prudential Retirement, as trustee of the Westmoreland’s 401(k) plan, 30,556 shares of common stock that may be purchased upon the exercise of options under our 2002 LTIP Plan and 60,000 shares of common stock that may be purchase upon the exercise of options under our 2007 Plan and 10,027 shares of restricted stock issued under our 2007 Plan that will vest on April 1, 2012.Plan.

(7)Includes 4,4192,307 shares of common stock held by Prudential Retirement, as trustee of theWestmoreland’s 401(k) plan. All amounts reported for Mr. King are as of August 1, 2014, when he ceased to serve as President - U.S. Operations for Westmoreland.
(8)Includes 7,565 shares of common stock held by Prudential Retirement, as trustee of Westmoreland’s 401(k) plan, and 7,000 shares of common stock that may be purchased upon exercise of options under our 2007 Plan and 1,911 shares of restricted stock issued under our 2007 Plan that will vest on April 1, 2012.Plan.
(8)(9)Includes 5,2155,898 shares of common stock held by Prudential Retirement, as trustee of the Westmoreland’s 401(k) plan, 7,500 shares of common stock that may be purchased upon exercise of options under our 2002 Plan, 7,000 shares of common stock which may be purchased upon exercise of options under our 2007 Plan and 2,500 shares of restricted stock issued under our 2007 Plan that will vest on April 1, 2012.  In addition, beneficial ownership includes 13,878 shares of common stock owned by Mr. Kathol's wife.  Mr. Kathol expressly disclaims beneficial ownership of these securities, and this disclosure shall not be an admission that the reporting person is the beneficial owner of such securities for purposes of Section 16 or for any other purpose.plan.
(9)(10)Includes 9533,832 shares of common stock held by Prudential Retirement, as trustee of the Westmoreland’s 401(k) plan, 5,000 shares of common stock that may be purchased upon exercise of options under our 2007 Plan and 670 shares of restricted stock issued under our 2007 Plan that will vest on April 1, 2012.
(10)Includes 4,671 shares of common stock held by Prudential Retirement, as trustee of the Westmoreland’s 401(k) plan, 7,000 shares of common stock that may be purchased upon exercise of options under our 2007 Plan and 1,500 shares of restricted stock issued under our 2007 Plan that will vest on April 1, 2012.
(11)Includes 6,828 shares of common stock held by Prudential Retirement, as trustee of the Westmoreland’s 401(k) plan, 12,000 shares of common stock that may be purchased upon exercise of options under our 2002 Plan, 15,000 shares of common stock which may be purchased upon exercise of options under our 2007 Plan and 1,508 shares of restricted stock issued under our 2007 Plan that will vest on April 1, 2012.Plan.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and The NASDAQ Stock Market. To the knowledge of management, based solely on its review of such reports, no person who at any time during the fiscal year ended December 31, 2011,2014, was a director, executive officer, or beneficial owner of more than ten percent of any class of equity securities of the Company failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year.


15

EQUITY COMPENSATION PLAN INFORMATION

At December 31, 2011,2014, we had stock options and stock appreciation rights (“SARs”) outstanding from two stockholder-approved stock plans and one plan for non-employee directors that was not approved by stockholders. The 2000 Nonemployee Directors’Directors' Stock Incentive Plan is the only plan not approved by stockholders and provided for the grant of stock options to non-employee directors at the time they were first elected to the Board and at the time of each subsequent re-election to the Board. In October 2009, the Board terminated the 2000 Nonemployee Directors’Directors' Stock Incentive Plan and several other stock-holder approved plans. The termination of these plans does not impair the rights of any participant under any award granted pursuant to the plans. All new equity issuances, whether to directors or officers, are made out of our stockholder-approved 2007 plan. We intend to make future equity issuances out of the 2014 Equity Incentive Plan, which was approved by shareholders at our 2014 annual meeting.

Plan Category 
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options
(a)
  
Weighted Average
Exercise Price
of Outstanding
Options
(b)
  
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column (a))
(c)
 
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options
(a)
Weighted Average
Exercise Price
of Outstanding Options
(b)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column (a))
(c)
Equity plans approved by security holders  199,606(1) $20.98   80,566(3)
115,206(1)
$22.35465,415
Equity plans not approved by security holders  30,000(2) $15.31   0 
12,543(2)
$24.79—
Total  229,606  $20.24   80,566 127,749$22.59465,415
______________________________
(1)Excludes SARs to acquire 100,100 shares of common stock with exercise prices above $12.75, theThe closing price of a share of our common stock as reported on The NASDAQ Stock Market on December 30, 2011. At31, 2014, was $33.21. On December 31, 2011, 100,1002013, there were 4,400 SARs were outstanding with base prices between $19.37 and $29.48.
(2)Excludes110,806 stock options outstanding from equity plans approved by security holders. Included are SARs to acquire 16,0672,500 shares of common stock with an exercise prices above $12.75, the closing price of a share$29.48 and 1,900 shares of our common stock as reported on The NASDAQ Stock market on December 30, 2011. At December 31, 2011, 16,067with an exercise price of $24.41. Also, included are 80,250 stock options with an exercise price of $21.40 and 30,556 stock options with an exercise price of $24.12.
(2)Includes SARs were outstandingto acquire 8,810 shares of common stock with base prices between $23.985an exercise price of $25.14 and $25.14.SARs to acquire 3,733 shares of common stock at $23.99.
(3)
Number of securities remaining available for future issuance is also as of December 31, 2014, and reflects the reservation of 302,033613,480 shares for issuance to certain employees and directors upon the completion of certain time-based and performance-based vesting restrictions related to restricted stock units issued on JulyMay 22, 2012, June 1, 2009, July 1, 2010, and2012, April 1, 2011.
2013, May 21, 2013, June 2, 2014 and May 20, 2014.


COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis provides stockholders with a detailed description of the material elements of our compensation program for our named executive officers for 2014. It discusses the policies and objectives that make up our compensation program, the compensation decisions made in 2014 and the rationale behind those decisions. This discussion is supplemented by compensation tables and accompanying narratives that follow.

For 2014, pursuant to SEC requirements, Westmoreland Coal Company's named executive officers were:
Named Executive OfficerOfficer Title
Mr. Keith AlessiChief Executive Officer*
Mr. Kevin PaprzyckiChief Financial Officer
Mr. John SchadanExecutive Vice President
Mr. Joseph MichelettiExecutive Vice President
Ms. Jennifer GraftonSenior Vice President, Chief Administrative Officer and Corporate Secretary
Mr. Robert KingFormer Chief Executive Officer*
* Mr. Alessi was appointed to the Chief Executive Officer role on March 21, 2014, as part of a corporate realignment after the Canadian Acquisition. Mr. Alessi relinquished the title of Executive Chairman of the Board at that time. On March 21, 2014, Mr. King was reassigned to the role of President - U.S. Operations, and later resigned from Westmoreland effective August 1, 2014.

The Compensation Discussion and Analysis is divided into the following sections:

Executive Summary;
Components of the Executive Compensation Program for 2014;
Compensation Program and Governance;
Role of the Compensation Consultant and the CEO in the Compensation Program;
Components of Executive Compensation in fiscal year 2014;
Named Executive Officer Compensation in fiscal year 2014;
Realized Pay vs. Reported Total Compensation; and
Review of Performance-Based Compensation Components.

Executive Summary

Years of hard work and unique market opportunities led to 2014 being a year of growth at Westmoreland Coal Company (referred to as the "Company" or "Westmoreland"). We began the year on the heels of an announcement that we would acquire the coal business of Sherritt International (the "Canadian Acquisition"), Canada's largest thermal coal producer, with interests in activated carbon and char facilities, as well as export port capacity. We ended the year announcing our entry into the MLP space when we acquired Oxford Resources GP, LLC (now called Westmoreland Resources GP, LLC), and a significant interest in Oxford Resource Partners, LP (now called Westmoreland Resource Partners, LP). We surpassed the billion ton barrier and now own or control approximately 1.23 billion tons of proven and probable coal reserves.

Throughout its history, including over recent years, Westmoreland Coal Company has experiencedAt a time when much of the coal industry remained stagnant, Westmoreland's acquisitive year greatly altered major changes, requiring redefinition of our business model.  Originally focused on underground mining in the Appalachian Basin, we have since divested ourselves of all eastern mining properties and assets, moved our headquarters to Colorado and purchased six surface coal mining operations.  Since 2001, we have focused on niche coal markets where we can take advantage of long-term coal contracts and rail transportation advantages.  To understand our company and the way infinancial measures against which we compensatepreviously judged our executives, it is important to understandperformance. Much of this growth was driven by the business environment we have operated in overaddition of the past several years, the challenges that we have faced,Canadian mines and the progress we have made towards returning the company to profitability.  This understanding will provide insight into our past compensation practices and the steps we are taking to align the pay of our executives with creating long-term stockholder value.

Historical Business Environment

Our business has a high proportion of revenues, and therefore cash flows, set or limited by long-term supply contracts with a small number of customers. While these contracts provide certain long term visibility and stability, their exclusivity and terms significantly restrictsubsequently our ability to react financially if there iscapitalize on new found intra-company efficiencies across borders. Westmoreland finished 2014 with revenues of $1.116 billion, an event which negatively impactsadjusted EBITDA of $175.5 million and operating cash flows of $50.0 million. Westmoreland's stock was a leader in the energy sector all year long. We have calculated our customers’ abilitytotal shareholder return to buy coal.  We also have ongoing responsibilitybe approximately 72% for substantial post-retirement health care liabilities associated with our discontinued Appalachian Basin underground mining operations.   We had been challenged during recent history with generating sufficient cash at our operating subsidiaries to fund both2014. Additionally, Westmoreland received two corporate family rating credit upgrades in the increasing costsfourth quarter.

Westmoreland's year of corporate overhead and these post-retirement liabilities.  In 2007,growth was highlighted by the following accomplishments from 2014:
After signing the purchase agreement in late 2013, we hired Mr. Keith E. Alessi as Chief Executive Officer (“CEO”) at a difficult time in our history.  Since 2007, Mr. Alessi has led efforts which have successfully standardized our operations, reduced corporate overhead and post retirement costs, stabilized cash flow, provided meaningful liquidity to our balance sheet and set a new, focused strategic vision. This new vision led tocompleted the acquisition of six active surface coal mines in Canada that diversified us into a favorable mining jurisdiction and additional business lines, such as activated carbon and char, as well as the Kemmerer mine in January of 2012.

Fiscal 2011 – The Year in Review

Fiscal year 2011 was a year in which we improved liquidity, successfully weathered several external challenges that impacted our customers, relocated our corporate offices and ultimately announced a major acquisition. Our business model relies primarily upon long term, cost plus contracts, with a small number of large customers. During 2011, the Pacific Northwest experienced unprecedented amounts of snow that led to a prolonged hydroelectric power season. This negatively impacted our largest customer well into the summer period.  In addition, flooding associated with the high snow pack disrupted rail transportation and mining production, which resulted in a further reduction in coal sales across our northern tier mining operations. Lastly, an explosion and fire at onecreation of our major customers in November resulted in further lossfirst true export market capacity. To accomplish all this, we successfully set up a bridge loan to facilitate the raise of revenue. Despite these large interruptions in our operations in 2011, we ended the year within 10% of our record adjusted EBITDA from fiscal year 2010 due to timely reaction and stringent cost management.
In February, we issued $150$425 million in senior securedadd-on bonds, which also allowed for the prepayment of debt previously held by our subsidiary Westmoreland Mining LLC;
We amended our existing revolving credit facility with The PrivateBank and Trust Company to add Bank of the West as a lender and to increase the maximum available borrowing capacity to $50 million, which may be increased to $100

17

million and can be used for borrowings and letters of credit, which was further amended in connection with our December refinancing;
Our new Canadian corporate office took to the Westmoreland way and, in the midst of a relocation of our entire office in Edmonton, we accomplished a consolidation of all Canadian accounting and finance, and a cross border integration of our procurement, human resources and legal teams;
Our labor specialists and local mine teams successfully negotiated union contract extensions at our Coal Valley and Poplar River mines in Canada and our Beulah mine in the United States;
We completed a public offering of Westmoreland common stock that raised approximately $60 million for general corporate purposes and increased our overall financial flexibility in order to refinancepursue organic and acquisition growth strategies;
We monetized our port capacity agreement with Westshore Terminals in British Columbia in favor of a new supply chain collaboration with Ridley Terminals in British Columbia and CN Railroad that supports our export coal mine;
We entered into long term extensions on coal supply agreements with Saskatchewan Power Corporation at our Estevan Mine in Saskatchewan, Canada, and with FMC Corporation and Tata Chemicals North America Inc. at our Kemmerer Mine in Wyoming;
We agreed to invest with our partner Cabot Corporation in our activated carbon plant in Estevan, Saskatchewan, to approximately double the operation's capacity by 2017;
At the end of the year, we entered the MLP space through an acquisition of Oxford Resources GP, LLC, the general partner of Oxford Resource Partners, LP, and as a result of several related transactions we now own approximately 79% of Oxford Resource Partners, LP, which has been renamed Westmoreland Resource Partners, LP ("WMLP" and such series of transactions the "WMLP Transactions");
At the same time as our entry into the MLP space, we refinanced and restructured our debt, previously consisting of 10.75% senior secured notes, and now split between a term loan and 8.75% senior secured notes. At the same time, we restructured $175 million in existing debt andat the WMLP level. Our revolving credit agreement was also renegotiated to provide ourselves additional liquidity. This, combined with favorable financial results from 2010, led to the elimination of a going-concern audit opinion infit our financial statements. new structure, as described above;
In December, we bolsteredannounced the redemption of our reserves throughSeries A preferred stock that closed early in 2015 ending our dividend obligation with respect to that equity; and
At the very end of the year, we completed the acquisition of 158 million tonsBuckingham Coal Company, LLC, an underground mine, which ultimately closed on January 1, 2015.

Based on Westmoreland management's significant accomplishments in transforming the Company in 2014, our Compensation and Benefits Committee (the “Committee”) and Board approved the annual incentive compensation earned by our named executive officers for 2014 to pay out above targeted levels. The above-target payout for the named executive officers reflects the Committee's and Board's recognition of coal at our Absaloka mine.  This acquisition wastheir exceptional performance and accomplishments this year. The value of long-term incentive compensation awards granted in 2014 remained static as a percentage of base salary, with any increase merely reflecting an increase in base salary. In 2014, base salaries were increased by amounts we believe are in line with our strategic objective of increasing coal reservespeer group and extending mine lives at allreflect the individual officers’ heightened responsibilities, however they remained below the median of our operations.peer group.

In November 2011, the management team successfully relocated the corporate offices from Colorado Springs to south Denver. This move not only cut overhead costs through a reduction in office rent, lowered travel expensesFactors Creating Alignment between Pay and decreased consulting costs, but broadened the available pool of talent from which to draw new employees and executives and brought us geographically closer toPerformance

Our pay programs support our key business partners. By designingobjectives and are aligned with the success of our stockholders.  If our market capitalization declines, the value of our executives’ vested equity and the equity to be vested declines accordingly. As an office from scratch,executive’s level of responsibility within our organization increases, so does the percentage of total compensation that we were ablelink to buildperformance through our annual incentive program (“AIP”) and our long-term incentive program (“LTIP”). The chart below shows base salary, AIP and LTIP compensation, as a new environment that reflects the core valuespercentage of the company, with all offices identical in size, including thetotal compensation opportunity (using target awards for fiscal 2014) for our Chief Executive Officer and other named executive officers’ offices, and no executive has a corner office.  The new office atmosphere supports our overall compensation philosophy of limited perquisites and encourages a team environment.officers. 

Finally, we moved to diversify and grow the business through the execution of a Purchase and Sale Agreement with Chevron Mining Inc. for the purchase of the Kemmerer mine in Kemmerer, Wyoming.  Both of these activities demonstrated the management team’s keen attention to fulfilling the strategic plan and growth model set out by the Board of Directors in early 2011.  We announced  this transaction in December 2011 and was successfully closed in January 2012.

18
15

Westmoreland’s executive compensation program is designed to maintain an appropriate alignment between corporate performance and compensation. The following compensation features protect us from inappropriate risk-taking:

A substantial portion of each executive's total compensation is tied to performance, varying from 72 percent for the Chief Executive Officer to approximately 51 percent for the other named executive officers; 
The performance-based incentive compensation program rewards executives for achieving, or exceeding, predetermined goals for nationally reported safety metrics, growth of free cash flow and individual objectives; 
Stock ownership guidelines are designed to align the financial interests of executives with those of our stockholders; 
Our compensation programs are overseen by a Compensation and Benefits Committee of experienced and independent directors, who are assisted by an independent compensation consultant; 
We conduct an annual risk review to identify and limit any material adverse effects of our compensation policies and practices;
We have no supplemental executive retirement plans;
No tax gross-up provisions in any compensation plans;
No employment agreements with any employees, other than certain rights to which they are entitled if they are terminated in connection with a change of control; and
No excessive perquisites such as company aircraft or car leases, other than for vehicles used at mine operation sites.

We believe our executive compensation programs, as more fully described in this Compensation Discussion and Analysis and accompanying tables contained in this Proxy Statement, are structured in the best manner possible to grow our business profitably, while also supporting our culture and traditions that have guided us for over 160 years.

Significant Compensation Actions

In 2014 the Committee made the following decisions and took the following actions with respect to our executive compensation program:

In connection with the Canadian Acquisition, we brought on a new suite of executives in our Canadian corporate office;
Adjusted the performance metrics used in the annual incentive program to associate the metrics used for a particular executive with the operational segment or segments (U.S. only vs. Canada only vs. Global) that he or she controls, which we refer to as the Adjusted AIP Metric; and 
Thoroughly reviewed and set the compensation package for Mr. Alessi who returned to the position of Chief Executive Officer in March of 2014. Mr. Alessi's compensation package was 72% performance-based to ensure alignment with overall Westmoreland performance.

Components of the Executive Compensation Program for 2014

Throughout this Compensation Discussion and Analysis, all individuals who served as principal executive officer or principal financial officer during fiscal year 2014, as well as the other individuals included in the “Summary Compensation Table” on page 31 of this Proxy Statement pursuant to Securities and Exchange Commission ("SEC") requirements, are referred to as the named executive officers. They were (i) Keith E. Alessi, our Chief Executive Officer, (ii) Kevin A. Paprzycki, our Chief Financial Officer and Treasurer, (iii) John A. Schadan, Executive Vice President, (iv) Joseph E. Micheletti, Executive Vice President, (v) Jennifer S. Grafton, Senior Vice President, Chief Administrative Officer and Corporate Secretary, and (vi) Mr. Robert P. King, former Chief Executive Officer during fiscal year 2014. Our executive compensation program consists of three

19

main elements: base salary, long-term incentive awards and annual incentive awards. Executives are also eligible for post-employment benefits.

Element of Executive Officer
Compensation
DescriptionPurpose
Base Salary
Ongoing cash compensation based on the executive officer’s role. Salary levels are evaluated annually and are based on each executive’s role and responsibility, market data, applicable experience, unique skills, past performance, and future potential with us.
Individual increases to base salary are not guaranteed for our named executive officers and are provided only at the Committee’s discretion after a review of an individual’s performance and relevant market data.
●    Provide a degree of financial certainty and stability.

●     Retention and attraction of executive talent.

●     Recognize competitive market conditions and reward individual performance through periodic increases.
Annual Incentive AwardThe annual incentive plan is intended to provide compensation for performance based on the achievement of strategic goals and objectives. The incentive pay is based on financial, safety and personal performance. If the thresholds for the financial and safety components are not met, then no payout is made for that particular component. 
●     Motivate executive officers to achieve key annual goals and position Westmoreland for long-term success.

●     Flexibility to reward executives for individual performance and overall Company performance in the year.
Long-Term AwardsLong-term incentive awards are designed to align the interests of our executives with those of our stockholders. Awards are granted annually under our equity incentive plan. The performance-based awards vest upon the achievement of a preset three-year cumulative free cash flow measure. The number of shares issued is based on a percentage of the executive’s base salary divided by the stock price on the date of grant.
●     Provide an incentive for executive officers to achieve long-term, sustainable success for Westmoreland and to create stockholder value.

●     Attract, motivate, reward and retain executive talent.
Post-Employment BenefitsWe have a severance policy that provides, under certain circumstances, executives with 12 months of base pay, in addition to 9 months of outplacement assistance and 12 months of health benefits at the same cost share as active employees. Payment is triggered upon: involuntary termination that is not for cause; the sale of a facility or division; or a position being relocated by at least fifty miles. Otherwise, we do not guarantee or provide any other compensation or benefits to our executives upon their departure.
●     Provide a degree of financial certainty and stability.

●     Retention and attraction of executive talent.

●     Recognize competitive market conditions


Compensation Program and Governance

General Compensation Practices and Philosophy

Our compensation philosophy aligns executive compensation with performance metrics that enhance stockholder value. Our compensation programs are guided by several key principles:
Based on
Align executives’ interests with long-term stockholder interests through equity awards;
Link pay to performance by making a holistic reviewsubstantial portion of total executive compensation variable or “at risk” over the short- and overhaul of thelong-term; and
Provide a compensation program in 2010, our philosophy for totalthat emphasizes direct compensation packages for fiscal year 2012 is consistent with fiscal year 2011, but significantly different than in prior periods. Our prior approach was reflectiveas opposed to perquisites and other benefits.

20


Westmoreland now bases its total compensation strategy on a moderate growth model.  Asmodel, which emphasizes a moderate growth company,balance of fixed and variable compensation. Westmoreland seeks to maintain salaries at or near peer group medians, shiftsprovide a portion of short-term incentive to long-term incentivebased on financial, safety and increases thepersonal goals and provides a significant percentage of pay in the form of long-term incentives asequity. Subject to certain rights to which they are entitled if they are terminated in connection with a percentagechange of total compensation.  Our named executivecontrol, our officers remainare at-will employees and do not have employment agreements, including the CEO.agreements. See "Potential Payments upon Termination or Change-in-Control" section beginning on page 33.

The Westmoreland benefits philosophy is to provide executive officers with protection and security through health and welfare, retirement, disability insurance and life insurance programs. During fiscal year 2011,2014, the CEO and other executive officers were eligible to receivemanagement team received the same benefits that are generally available to other Westmoreland employees. In addition to the company-wide benefits, the Board elected to provide executiveWestmoreland additionally provides physical examinations to executive officers starting in fiscal year 2012, forexecutives, which we cover the costs that are not otherwise covered under each executive officer’s chosen health plan. We believe that the executive physical is a prudent measure to help ensure the health of our executives. The executive physical benefit is a benefit generally provided by our peer group companies and is available at a reasonable cost to Westmoreland.

Our compensation programdisability benefit is intendedcapped at a certain dollar threshold. This precludes the management team from receiving the same 60% disability pay replacement as the general employee population. As such, Westmoreland provides additional long-term disability insurance to retain and reward our executives and is guided by several key principles:
the management team to match the same benefit as non-executives.

●
Design a program that aligns with long-term stockholder interests through the use of equity awards;
●
Target compensation is at median of peer group, with the long-term goal of bringing lower compensated executives to target levels as they continue to gain experience;
●
Link pay to performance by making a substantial portion of total executive compensation variable or “at risk” over the long-term; and
●
Provide a compensation program that emphasizes direct compensation as opposed to perquisites and other benefits.
Stock Ownership Guidelines, Hedging Policy and Clawback PoliciesPolicy

In order to betterTo align the interests of our executive management team with the intereststhat of our stockholders and to promote our commitment to sound corporate governance, the Compensation and Benefits Committee approvedmanagement team is subject to stock ownership guidelines in 2011.guidelines. The executive management team is expected to be in compliance with these guidelines within five years of becoming subject to the policy. As of the end of 2014, all named executive officers except for Mr. Schadan (who joined the Company in April 2014) have met the stock ownership guideline. The ownership requirement for our executive officers is calculated as a multiple of base salary as follows:
Executive LevelMultiple of Base Salary
Chief Executive Officer3.0x
CEONamed Executive Officers3.0x
COO2.0x
CFO, EVP and SVP1.5x
Other executive officers1.0x1.5x

We believe that stock hedging by the executive management team works counter to the objectives of our executive compensation strategy and disturbs the relationship between our executive compensation packages and shareholder interests. In February 2013, the Board of Directors adopted a provision within our Insider Trading Policy that prohibits hedging of Westmoreland stock by any employee or non-employee director.

At this time, the Committee has not adopted a clawback policy for the executive management team. While in full support of such a policy in concept, the Compensation and Benefits Committee is waiting for more formal guidance from the Securities and Exchange Commission in response to the recent Dodd Frank legislationSEC before adoption and implementation of a formal policy.

Compensation Methodology

Peer Comparisons and Survey Data

OurThe Committee considers comparative data of executives’ compensation within our peer group is based on criteria that representgroup. This process studies trends and comparative practices in executive compensation generally, as well as the characteristics that define the markets in which we competespecific levels and mix of total compensation for talent, rather than simply the markets in which we compete for business.benchmarking purposes. In creating our peer group, we noted that there are very few comparably-sized publicly-traded coal companies to align ourselves with for comparative purposes.companies. In addition, a third of our executive team comes from segments other than mining. With theseThe companies in our peer group have at least one of the following characteristics:

Are focused on comparable industry (energy-related), specifically, coal, mining and other factorsoil and gas-related companies;
Have a comparable size in mind,relation to revenue and employees; or
Are publicly-traded Colorado headquartered companies with whom we identified two characteristics that we believe would havecompete for top public company talent.

Our Committee reviews the greatest influence on how we perform, as well as oncomposition and appropriateness of our peer group annually. Following a review in early 2014, the leadership talent that we needCommittee adjusted our peer group companies to drive outstandingensure continued comparability to Westmoreland after the Canadian Acquisition. The Committee is assisted in this decision by our compensation consultant, Pay Governance, whose role is more thoroughly discussed below. The fiscal year 2014 peer group is made up of the following companies:


21
16

Access Midstream PartnersAlliance Holdings
Arch CoalAtwood Oceanics
Cal Dive InternationalCloud Peak Energy
CONSOL EnergyDril-Quip
Genesee & WyomingHEICO
Bill BarrettForest Oil
Parker DrillingPioneer Energy Services
InnospecMolycorp
Stillwater Mining
performance.  First, we are capital-intensive
Federal Income Tax and second, we maintain long-term contracts as partOther Consequences

Under Section 162(m) of the business relationshipInternal Revenue Code, we may not be able to deduct certain forms of compensation in excess of $1,000,000 paid per year to our named executive officers who are employed by us at year-end. The Committee believes that it is established with customers.  Based on such characteristics,generally in our best interest to satisfy the requirements for deductibility under Internal Revenue Code Section 162(m). Accordingly, the Committee has taken appropriate actions, to the extent it believes feasible, to preserve the deductibility of long-term performance awards. However, notwithstanding this general policy, the Committee also believes that there may be circumstances when our interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible under Internal Revenue Code Section 162(m). Accordingly, we identifiedreserve the below peer groupauthority to award non-deductible compensation in appropriate circumstances. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation intended by us to satisfy the requirements for 2011 with the assistancedeductibility under Section 162(m) does in fact do so.

Role of the compensation consultant engaged byCompensation Consultant and the CEO in the Compensation and Benefits Committee.  The companies included in the peer group differ from those listed in the indices used to prepare our stock price performance graph, which can be found in our 2011 Annual Report to Stockholders. We believe that the peer group listed below, when used in conjunction with third-party compensation survey information, enables us to provide an accurate assessment of market practices for the compensation of our executive management team.Program

Name 
FY 2010 Net Income
in Millions ($)
  
FY 2010 Revenues
in Millions ($)
 
Atwood Oceanics  272   645 
Calgon Carbon Corp.  35   482 
Drew Industries Inc.  28   573 
Dril-Quip Inc.  102   566 
Forward Air Corp.  32   484 
Genessee & Wyoming Inc.  79   630 
Gulf Island Fabrication Inc.  13   248 
Hecla Mining Co.  49   419 
Heico Corp.  55   617 
Hornbeck Offshore Services Inc.  36   421 
Horsehead Holding Corp.  25   382 
James River Coal Co.  78   701 
Pioneer Drilling Co.  -33   487 
Stillwater Mining Co.  50   556 
Superior Well Services Inc.  -80   399 
Union Drilling Inc.  -16   193 
Unit Corp.  146   872 
  
Westmoreland Coal Company  0   506 

In 2011, we used Economic Research Institute and CompAnalyst market data as additional comparison points. Total market data was compared with individual pay for each position, and “compra-ratios” were determined. Compra-ratios are an individual’s current salary divided by the reference point of the market data. For example, if an individual’s salary is $125,000 and the mid-point of the market data for that position was $100,000, the compra-ratio for that individual would be 125%, meaning such person is earning 25% more than the average of the market.
Internal Pay EquityCompensation Consultant

The Committee considers internal pay equity when makinghas the authority to retain outside counsel, consultants and other advisers, to assist it in evaluating compensation decisionsor in otherwise discharging its duties and responsibilities. The Committee engaged Pay Governance (the “Consultant”) for advice regarding the structuring of executive management team. However,compensation for fiscal year 2014 and recently reengaged the Consultant for fiscal year 2015. The Consultant assists the Committee in determining appropriate peers for purposes of comparing market compensation and provides other related services. The Committee has authorized the Consultant to interact with management on its behalf.
The Consultant has not provided any services for Westmoreland other than the services it provided to the Committee. The Committee has concluded, under the guidance of SEC rules and relevant NASDAQ listing standards, that the Consultant’s work does not use a fixed ratio or formula when comparing compensation among executive officers. Our CEO is compensated at a higher level than other executive officers due to his significantly greater levelraise any conflict of experience, accountability and responsibility.  Mr. Alessi’s total cash compensation was 3.5 times greater than the average of our four other named executive officers in 2011. We feel that Mr. Alessi’s cash compensation for 2011 as compared to the other named executive officers is appropriate based on his significant role in leading the team to meet the Board’s strategic objectives for 2011.  Our next highest paid named executive officer makes 1.45 times our lowest paid named executive officer.  We believe such internal pay equity highlights the reasonableness of the dispersion of pay to our named executive officers.interest.

Compensation Administration and the Role of Management in Determining Executive Compensation

Determinations regarding 2014 executive officer compensation were made at the February 2014 Committee meeting. The Compensationfollowing table summarizes the roles of the Committee, Consultant and Benefits Committee establishes overall compensation strategy to ensure that our executives are rewarded appropriately and thatChief Executive Officer in executive compensation supports our business strategy and objectives. At the beginning of the calendar year, each executive sets personal performance goals, which are approved by the CEO for the executive team and by the Compensation and Benefits Committee for the CEO, targeted to positively influence stockholder value.  At the end of the calendar year, performance is evaluated by the CEO, for the other named executive officers, and by the Board, for the CEO, against the established goals and individual accomplishments during the year.  The Compensation and Benefits Committee reviews and approves the compensation, including base salaries, annual incentives, long-term incentives, and other benefits, of our named executive officers. The Compensation and Benefits Committee also reviews and approves the compensation for other key executives who are not identified in this report.  The annual incentive bonuses are paid out during the first quarter of the calendar year while increases to basedecision making.


22
17

salaries occur at the beginning of the second quarter.  Long-term equity incentives, which are based on management tiers, were awarded on April 1, 2011.

While the Compensation and Benefits Committee has the responsibility to monitor and approve all compensation for our named executive officers, management also plays an important role in determining executive compensation. At the Compensation and Benefits Committee’s request, management recommends appropriate company-wide and mine and power financial and non-financial performance goals. After review and discussion, the Compensation and Benefits Committee adopts performance goals for the coming year.  Management works with the Compensation and Benefits Committee to establish the agenda and prepare information for each Compensation and Benefits Committee meeting. In addition, the CEO assists the Compensation and Benefits Committee by providing his evaluation of the performance of the executive officers who report directly to him, and recommending compensation levels for such officers. The Compensation and Benefits Committee also has a process for soliciting from the CEO an assessment of his own performance, which in conjunction with each director’s independent analysis of the CEO’s performance, is used to assist the Compensation and Benefits Committee and the Board in their evaluation of the CEO’s performance.  The CEO is not present during the Compensation and Benefits Committee and Board review and assessment of the CEO’s performance evaluation.

Role of Compensation Consultants

The Compensation and Benefits Committee originally retained Buck Consulting in February 2010 to serve as the Compensation and Benefits Committee’s compensation consultant to assist the Compensation and Benefits Committee in thoroughly reviewing our executive compensation program for future periods.  Buck Consulting continued to provide guidance to the Compensation and Benefits Committee in 2011 and early 2012 in determining the total compensation packages for executive management.
Responsible PartyRoles and Responsibilities
Compensation and Benefits Committee
of the Board of Directors

The Committee is currently
comprised of four
Independent Directors
and reports to the Board.
●     Retains independent counsel, consultants and other advisers to assist it in evaluating compensation or in otherwise discharging its responsibilities.
●     Works with the CEO to set performance goals at the beginning of each year targeted to positively influence stockholder value and evaluates CEO performance in relation to those goals and overall performance of the Company.
●     Determines and approves compensation for our executive officers.
●     Reviews and approves overall compensation strategy and all programs in which our executive officers participate, including equity, bonus (including all performance-based goals), retirement and other benefit plans.
●     Reviews compensation philosophy, metrics and amounts, and the results of stockholder say-on-pay votes, before establishing executive compensation.
●     Considers comparable metrics in our peer group.
Consultant to the Compensation
Committee
Pay Governance, as an independent
consultant retained directly by the
Committee, provides consulting advice on matters of governance and executive compensation
●     Provides advice and opinion on the appropriateness and competitiveness of our compensation programs relative to market practice.
●     Performs all functions at the direction of the Committee.
●     Attends Committee meetings.
●     Provides advice regarding compensation decision-making governance.
●     Provides market data, as requested.
●     Consults on various compensation matters and recommends compensation program designs and practices.
●     With the cooperation of management, works to conduct an assessment of the risks arising from our compensation programs.
●     Confers with the CEO and CAO on compensation levels, incentives and goals.
Chief Executive Officer
With the support of other members
of the management team
●     Works with the other executive officers to set personal performance goals at the beginning of each year targeted to positively influence stockholder value.
●     Reviews performance of the other executive officers against the set goals and makes recommendations to the Committee with respect to their compensation.
●     Confers with the Committee concerning design and development of compensation and benefit plans for Westmoreland employees.
●     Recommends appropriate company-wide and mine and power financial and non-financial performance goals for the annual incentive program.

Components of the Executive Compensation Program for 2011in Fiscal Year 2014

Throughout this Compensation DiscussionIn February of 2014, the Committee set executive base salaries, annual incentive plan and Analysis,long-term incentive plan goals for fiscal year 2014, except for Mr. Alessi whose compensation was set at the individuals who servedtime he returned to his role as Chief Executive Officer in March of 2014. Mr. Schadan's base salary, annual incentive plan and Chief Financial Officer during fiscal year 2011, as well aslong-term incentive plan goals were set in May of 2014 upon his joining Westmoreland following the other individuals includedCanadian Acquisition. Mr. Paprzycki, Ms. Grafton and Mr. Micheletti received salary increases in April of 2014 to reflect the “Summary Compensation Table” on page 27 of this proxy statement, are referred to as the “named executive officers.” They are (i) Keith Alessi, our President and Chief Executive Officer, (ii) Kevin Paprzycki, our Chief Financial Officer and Treasurer, (iii) Doug Kathol, our Executive Vice President, (iv) Joseph Micheletti, our Senior Vice President – Coal Operations, (v) Mike Kegley, our General Counsel – Mining and Operations, and (vi) John O’Laughlin, our former Senior Vice President – Coal Operations. Effective as of February 21, 2011, John O’Laughlin accepted a new position with us as Vice President – Strategic Sourcing and Asset Management. This new role is not an executive officer position.
Our executive compensation program consists of three main elements:individual officers’ heightened responsibilities.

Base Salaries
2014 Base Salaries for Named Executive Officers
NamePositionBase Salary
Keith E. Alessi(1)
Chief Executive Officer$750,000
Kevin A. PaprzyckiChief Financial Officer and Treasurer$330,000
Jennifer S. Grafton
Senior Vice President, Chief Administrative Officer and Corporate Secretary(4)
$300,000
Joseph E. MichelettiExecutive Vice President$289,300
John A. Schadan(3)
President - Canada Operations$243,713
Robert P. King(2)
Former President and Chief Executive Officer$515,000

23

(1)Mr. Alessi became Executive Chairman of Westmoreland in an employee capacity on January 17, 2014, and returned to the role of Chief Executive Officer on March 21, 2014.
(2)Mr. King acted as President and Chief Executive Officer of the Company until March 21, 2014. He later resigned on August 1, 2014.
(3)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and as such his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only. His Canadian dollar cash salary amount was $282,500 for 2014.
(4)Ms. Grafton acted as General Counsel and Secretary for the bulk of fiscal year 2014. In mid-November, she was promoted to SVP and Chief Administrative Officer and retained the Secretary role. All of Ms. Grafton's compensation for 2014 was determined based on the General Counsel role.

Annual Incentive Compensation
GOALPERCENT OF TOTAL
Financial
Goal: Annual budgeted free cash flow of Westmoreland, for 2014 this number was based on the Adjusted AIP Metric.
●     50% payout upon meeting 80% of goal (threshold)
●     100% payout upon meeting 100% of goal (target)
●     200% payout upon meeting 120% of goal (maximum)
●     40% for all executives
Safety
Goal: 10% lower than Annual National Mine Safety and Health Administration (MSHA) average for reportable incident rate for surface mines in the coal industry
●     50% payout upon meeting 100% of goal (threshold)
●     100% payout upon meeting 125% of goal (target)
●     200% payout upon meeting 150% of goal (maximum)

●     20% for all executives
IndividualThe percentage payout is evaluated on achievement of certain individual goals established between the executive and the CEO (or, in the case of the CEO, between him and the Board) and is based on the executive’s overall performance. An executive may receive greater than 100% payout for the individual goal based on exemplary performance, as approved by the Committee, or in the case of the CEO, by the Board. The Board has great flexibility in exercising discretion relating to the individual AIP component and has the ability to reward executives based on the results of the year, notwithstanding that a particular executive did not meet the specific goal laid out at the beginning of the year.

●     40% for all executives

2014 Target vs. Actual AIP Bonus Paid
 
Name
% of
Annual Base
Salary
Target Total
Cash Incentive
Bonus
% of
Target
Individual
Bonus
Approved
% of Target
Financial
Bonus
Approved(1)
% of Target
Safety Bonus
Approved(2)
Total Cash
Bonus
Keith E. Alessi100%$750,000100%80%75%
$2,500,000(4)(6)
Kevin A. Paprzycki35%$115,500200%80%75%
$330,000(4)
Jennifer S. Grafton35%$105,000200%80%75%
$300,000(4)
Joseph E. Micheletti35%$101,255125%—%75%
$103,369(4)
John A. Schadan(3)
35%$85,299100%200%—%
$94,315(4)
Robert P. King(5)
100%$515,000—%—%75%$45,063

24

(1)In 2014, the Adjusted AIP Metric for consolidated global Westmoreland resulted in a financial metric payout of 80% of the target, for consolidated U.S. only at 0% of the target and for consolidated Canada only at 200% of the target.
(2)In 2014, the average national reportable incident rate was 1.72, which is a calculation based on total hours worked and reportable incidents. In 2014, the average reportable incident rate for Westmoreland as a whole was 1.29, 25.0% below the national average. This safety performance resulted in 75% payout. Additionally, Mr. Schadan's annual incentive bonus did not include a safety bonus payout as the Canadian mines on a consolidated basis did not meet the safety threshold.
(3)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only.
(4)The calculated Annual Incentive Plan bonus for Mr. Alessi was $652,532; for Mr. Paprzycki it was $100,490; for Ms. Grafton it was $91,355; for Mr. Micheletti it was $65,816 and for Mr. Schadan it was $59,325, or $51,180 after conversion to U.S. dollars using the above conversion. The Committee determined, and the Board approved, that the exceptional accomplishments of these named executives officers throughout the year were deserving of discretionary adjustments to the annual incentive program outcomes. The Committee decided, and the Board approved, the annual incentive bonus payments shown, which more accurately reflect each executives significant efforts and accomplishments during a year of unprecedented growth for Westmoreland.
(5)The consolidated U.S. performance was below the threshold target, thus Mr. King received no financial payout. As Mr. King departed the Company mid-year, the Board determined in its discretion that no individual performance payout was appropriate.
(6)Mr. Alessi's bonus was paid out $1 million in cash and $1.5 million in Westmoreland common stock.

Long-Term Incentive Compensation
GOAL2014 COMPONENTSPERCENT OF TOTAL
Performance-Based Shares
Goal: Three year cumulative free cash flow of Westmoreland
●     50% payout upon meeting 80% of goal (threshold)
●     100% payout upon meeting 100% of goal (target)
●     150% payout upon meeting 120% of goal (maximum)
●     50% for all executives
Time Based SharesShares will vest in equal annual installments over a three-year period based on completion of the service requirement.
●     50% for all executives

Long-Term Incentive Awards for Named Executive Officers for 2014
 
Name
Percentage of
Base SalaryFederal Income Tax and Other Consequences

In determining base salaries, each executive’s role and responsibility, applicable experience, unique skills, past performance, future potential with us, and peer group data are considered.  In addition,Under Section 162(m) of the Compensation and Benefits Committee considers compra-ratios, which are salary data for similar positionsInternal Revenue Code, we may not be able to deduct certain forms of compensation in the same pay grade, allowing the Compensation and Benefits Committeeexcess of $1,000,000 paid per year to evaluate internal equity. A matrix, which is utilized for all employees and includes our named executive officers allowswho are employed by us at year-end. The Committee believes that it is generally in our best interest to satisfy the requirements for deductibility under Internal Revenue Code Section 162(m). Accordingly, the Committee has taken appropriate actions, to the extent it believes feasible, to preserve the deductibility of long-term performance awards. However, notwithstanding this general policy, the Committee also believes that there may be circumstances when our interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible under Internal Revenue Code Section 162(m). Accordingly, we reserve the authority to award non-deductible compensation in appropriate circumstances. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation intended by us to satisfy the requirements for deductibility under Section 162(m) does in fact do so.

Role of the Compensation Consultant and Benefitsthe CEO in the Compensation Program

Compensation Consultant

The Committee has the authority to approve recommended base pay increases outretain outside counsel, consultants and other advisers, to assist it in evaluating compensation or in otherwise discharging its duties and responsibilities. The Committee engaged Pay Governance (the “Consultant”) for advice regarding the structuring of executive compensation for fiscal year 2014 and recently reengaged the Consultant for fiscal year 2015. The Consultant assists the Committee in determining appropriate peers for purposes of comparing market compensation and provides other related services. The Committee has authorized the Consultant to interact with management on its behalf.
The Consultant has not provided any services for Westmoreland other than the services it provided to the Committee. The Committee has concluded, under the guidance of SEC rules and relevant NASDAQ listing standards, that the Consultant’s work does not raise any conflict of interest.

Determining Executive Compensation

Determinations regarding 2014 executive officer compensation were made at the February 2014 Committee meeting. The following table summarizes the roles of the available merit pool,Committee, Consultant and Chief Executive Officer in executive compensation decision making.


22

Responsible PartyRoles and Responsibilities
Compensation and Benefits Committee
of the Board of Directors

The Committee is currently
comprised of four
Independent Directors
and reports to the Board.
●     Retains independent counsel, consultants and other advisers to assist it in evaluating compensation or in otherwise discharging its responsibilities.
●     Works with the CEO to set performance goals at the beginning of each year targeted to positively influence stockholder value and evaluates CEO performance in relation to those goals and overall performance of the Company.
●     Determines and approves compensation for our executive officers.
●     Reviews and approves overall compensation strategy and all programs in which our executive officers participate, including equity, bonus (including all performance-based goals), retirement and other benefit plans.
●     Reviews compensation philosophy, metrics and amounts, and the results of stockholder say-on-pay votes, before establishing executive compensation.
●     Considers comparable metrics in our peer group.
Consultant to the Compensation
Committee
Pay Governance, as an independent
consultant retained directly by the
Committee, provides consulting advice on matters of governance and executive compensation
●     Provides advice and opinion on the appropriateness and competitiveness of our compensation programs relative to market practice.
●     Performs all functions at the direction of the Committee.
●     Attends Committee meetings.
●     Provides advice regarding compensation decision-making governance.
●     Provides market data, as requested.
●     Consults on various compensation matters and recommends compensation program designs and practices.
●     With the cooperation of management, works to conduct an assessment of the risks arising from our compensation programs.
●     Confers with the CEO and CAO on compensation levels, incentives and goals.
Chief Executive Officer
With the support of other members
of the management team
●     Works with the other executive officers to set personal performance goals at the beginning of each year targeted to positively influence stockholder value.
●     Reviews performance of the other executive officers against the set goals and makes recommendations to the Committee with respect to their compensation.
●     Confers with the Committee concerning design and development of compensation and benefit plans for Westmoreland employees.
●     Recommends appropriate company-wide and mine and power financial and non-financial performance goals for the annual incentive program.

Components of Executive Compensation in Fiscal Year 2014

In February of 2014, the Committee set executive base salaries, annual incentive plan and long-term incentive plan goals for fiscal year 2014, except for Mr. Alessi whose compensation was set at 3.0% for 2012.  For example, an outstanding performing executive who has a low compra-ratio, suchthe time he returned to his role as 75%, would be eligible for a 4.5% merit increase, while, conversely, a lower performing executive with a high compra-ratio, such as 125%, would generally not be eligible for a merit increase.  The Compensation and Benefits Committee has the discretion to grant salary adjustments above the percentage recommended by the matrix to take into account external peer group data. Individual increases toChief Executive Officer in March of 2014. Mr. Schadan's base salary, are not guaranteed for our named executive officersannual incentive plan and are provided only atlong-term incentive plan goals were set in May of 2014 upon his joining Westmoreland following the discretionCanadian Acquisition. Mr. Paprzycki, Ms. Grafton and Mr. Micheletti received salary increases in April of 2014 to reflect the Compensation and Benefits Committee after a review of an individual’s performance and relevant market data.individual officers’ heightened responsibilities.

Base Salaries
18

2011
2014 Base Salaries for Named Executive Officers
   
NamePositionBase Salary
Keith E. Alessi(1)
CEO and PresidentChief Executive Officer$600,000
Douglas P. KatholExecutive Vice President$280,500750,000
Kevin A. PaprzyckiChief Financial Officer and Treasurer$330,000
Jennifer S. Grafton
Senior Vice President, Chief Administrative Officer and Corporate Secretary(4)
$245,000300,000
Joseph E. Micheletti(1)MichelettiSeniorExecutive Vice President – Coal$289,300
John A. Schadan(3)
President - Canada Operations$145,583/ $225,000243,713
Morris W. Kegley
Robert P. King(2)
General Counsel – MiningFormer President and OperationsChief Executive Officer$224,298515,000

23

John V. O’Laughlin(2)Senior Vice President – Coal Operations$225,508
__________
(1)Mr. Micheletti’s base salary was set at $145,583 through MayAlessi became Executive Chairman of 2011Westmoreland in hisan employee capacity on January 17, 2014, and returned to the role as General Manager of the Jewett mine. In May of 2011, Mr. Micheletti’s base salary was increased to $225,000 to reflect his promotion to Senior Vice President – Coal Operations.Chief Executive Officer on March 21, 2014.
(2)
John O’Laughlin servedMr. King acted as our Senior Vice President – Coal Operations through Februaryand Chief Executive Officer of the Company until March 21, 2011. Effective2014. He later resigned on August 1, 2014.
(3)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and as such his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of February 21, 2011, Mr. O’Laughlin accepted a new position with us$.8627 U.S. dollars per Canadian dollar, for comparability purposes only. His Canadian dollar cash salary amount was $282,500 for 2014.
(4)Ms. Grafton acted as Vice President – Strategic SourcingGeneral Counsel and Asset Management.Secretary for the bulk of fiscal year 2014. In mid-November, she was promoted to SVP and Chief Administrative Officer and retained the Secretary role. All of Ms. Grafton's compensation for 2014 was determined based on the General Counsel role.

Annual Incentive Compensation

The annual incentive plan is intended to provide variable compensation awarded for performance based on the achievement of strategic goals and objectives.  The incentive pay is based on financial performance and personal performance, while executives with direct mining operational responsibility also have a safety component.  If the thresholds for the financial and safety components are not met, then no payout is made for that particular component. The annual incentive plan goals for fiscal year 2011 were set by the Compensation and Benefits Committee in February 2011 and encompassed the following:
GOAL
COMPONENTS
GOAL PERCENT OF TOTAL
Financial
Goal: Depending on the executive, annualAnnual budgeted operating income and free cash flow of Westmoreland, Coal Company and/or maximizing contract incentives of certain minesfor 2014 this number was based on the Adjusted AIP Metric.
●●    50% payout upon meeting 80% of goal (threshold)
●●    100% payout upon meeting 100% of goal (target)
●●    200% payout upon meeting 120% of goal (maximum)
●●    40% for mine operational executives
●    60% for corporate officeall executives
Safety
Goal: 10% lower than Annual National Mine Safety and Health Administration (MSHA) average for reportable incident rate for surface mines in the coal industry
●●    50% payout upon meeting 100% of goal (threshold)
●●    100% payout upon meeting 125% of goal (target)
●●    200% payout upon meeting 150% of goal (maximum)
●    30% for mine operational executives
●●    Not applicable     20% for corporateall executives
IndividualThe percentage payout is evaluated on achievement of certain individual goals established between the executive and the CEO (or, in the case of the CEO, between him and the Board) and will beis based on the executive’s overall performance. An executive may receive greater than 100% payout for the individual goal based on exemplary performance, as approved by the Compensation and Benefits Committee, or in the case of the CEO, by the Board. The Board has great flexibility in exercising discretion relating to the individual AIP component and has the ability to reward executives based on the results of the year, notwithstanding that a particular executive did not meet the specific goal laid out at the beginning of the year. For example, for 2011 AIP payout, the Board took into account exemplary work on the Kemmerer transaction that was not part of the individual goals that were set in early 2011.
●    30% for mine operational executives
●●    40% for corporate officeall executives

2014 Target vs. Actual AIP Bonus Paid
 
Name
% of
Annual Base
Salary
Target Total
Cash Incentive
Bonus
% of
Target
Individual
Bonus
Approved
% of Target
Financial
Bonus
Approved(1)
% of Target
Safety Bonus
Approved(2)
Total Cash
Bonus
Keith E. Alessi100%$750,000100%80%75%
$2,500,000(4)(6)
Kevin A. Paprzycki35%$115,500200%80%75%
$330,000(4)
Jennifer S. Grafton35%$105,000200%80%75%
$300,000(4)
Joseph E. Micheletti35%$101,255125%—%75%
$103,369(4)
John A. Schadan(3)
35%$85,299100%200%—%
$94,315(4)
Robert P. King(5)
100%$515,000—%—%75%$45,063

19
24

Target vs. Actual Annual Incentive Bonuses
Paid for 2011 Performance for Named Executive Officers
 
  
Name 
Percentage of
Base Salary
Earned in 2011
  
Target Total
Cash Incentive
Bonus
  
Percentage of
Target Individual
Bonus Approved
  
Percentage
of Target
Financial Bonus Approved(2)
  
Percentage
of Target
Safety Bonus Approved(3)
  Total Cash Bonus 
Keith E. Alessi
  100% $588,460   134%  100% NA  $668,460 
Douglas Kathol  40% $109,577   214%  100% NA  $159,577 
Kevin A. Paprzycki  35% $83,202   250%  100% NA  $133,202 
Joseph E. Micheletti(1)  30%/ 35% $63,578   362%  116%  94%/ 189%  $128,546 
Morris W. Kegley  30% $65,448   151%  113% NA  $81,425 
John V. O’Laughlin(4)  30% $66,351   85%  113% NA  $64,524 
__________
(1)In May2014, the Adjusted AIP Metric for consolidated global Westmoreland resulted in a financial metric payout of 2011, Mr. Micheletti was promoted to Senior Vice President – Coal Operations.  As such, his percentage80% of AIP payout was increased from 30% to 35%.the target, for consolidated U.S. only at 0% of the target and for consolidated Canada only at 200% of the target.
(2)
In 2011, the annual budgeted operating income goal and free cash flow goal for Westmoreland Coal Company was $27.510 million and $20.487 million, respectively. The 2011 actual operating income and free cash flow was $16.067 million and $26.789, respectively.  The weighted actual performance for corporate financial was 100% of goal, resulting in 100% financial payout. The mine level financial goal was based on maximizing contract incentives.  The consolidated performance of the mines for Mr. Kegley equated to a 123% payout and the consolidated performance of the mines for Mr. Micheletti was 124% payout. Messrs. Alessi, Kathol, Paprzycki and Micheletti had the entirety of their financial goal based on the corporate operating income and free cash flow measures. However, Mr. Kegley’s financial portion of the AIP was based 30% on corporate financial and 40% on certain mines maximizing contract incentives.
(3)In 2011,2014, the average national reportable incident rate was 1.95,1.72, which is a calculation based on total hours worked and reportable incidents. In 2010,2014, the average reportable incident rate for TexasWestmoreland as a whole was 1.521.29, 25.0% below the national average. This safety performance resulted in 75% payout. Additionally, Mr. Schadan's annual incentive bonus did not include a safety bonus payout as the Canadian mines on a consolidated basis did not meet the safety threshold.
(3)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for the mines Mr. Micheletti oversaw as Senior Vice President – Coal Operations was 1.03.comparability purposes only.
(4)The calculated Annual Incentive Plan bonus for Mr. O’Laughlin’s Target Total Cash Incentive Bonus is based on both actual earningsAlessi was $652,532; for Mr. Paprzycki it was $100,490; for Ms. Grafton it was $91,355; for Mr. Micheletti it was $65,816 and earnings through our short-term disability program.for Mr. Schadan it was $59,325, or $51,180 after conversion to U.S. dollars using the above conversion. The Committee determined, and the Board approved, that the exceptional accomplishments of these named executives officers throughout the year were deserving of discretionary adjustments to the annual incentive program outcomes. The Committee decided, and the Board approved, the annual incentive bonus payments shown, which more accurately reflect each executives significant efforts and accomplishments during a year of unprecedented growth for Westmoreland.
(5)The consolidated U.S. performance was below the threshold target, thus Mr. King received no financial payout. As Mr. King departed the Company mid-year, the Board determined in its discretion that no individual performance payout was appropriate.
(6)Mr. Alessi's bonus was paid out $1 million in cash and $1.5 million in Westmoreland common stock.

Long-Term Incentive Compensation

Long-term incentive awards are designed to align the interests of our executives with those of our stockholders.  On April 1, 2011, we issued time-based restricted stock units with a three-year vest and performance-based restricted stock units with a three-year cliff vest on April 1, 2011. The performance-based restricted stock units vest upon the achievement of a preset three-year cumulative free cash flow measure. The number of shares issued was based on a percentage of the executive’s base salary divided by the stock price on the date of grant.

Long-Term Incentive Awards for Named Executive Officers for 2011
 
  
Name 
Percentage of
Base Salary
  
Number of
Time-Based RSUs
  
Number of
Performance-Based
RSUs
  
Grant Date
Fair Value of RSUs
 
Keith E. Alessi  150%  30,081   30,080  $900,009 
Douglas P. Kathol  80%  7,500   7,500  $224,400 
Kevin A. Paprzycki  70%  5,733   5,732  $171,516 
Joseph E. Micheletti  40%(1)  2,010   2,010  $60,139 
Morris W. Kegley  60%  4,500   4,498  $134,610 
John V. O’Laughlin  60%  4,524   4,522  $135,328 
__________
(1)
Mr. Micheletti’s long-term incentive award was
GOAL2014 COMPONENTSPERCENT OF TOTAL
Performance-Based Shares
Goal: Three year cumulative free cash flow of Westmoreland
●     50% payout upon meeting 80% of goal (threshold)
●     100% payout upon meeting 100% of goal (target)
●     150% payout upon meeting 120% of goal (maximum)
●     50% for all executives
Time Based SharesShares will vest in equal annual installments over a three-year period based on his role as mine managercompletion of the Jewett mine.  In 2012, his long-term incentive award will be based on this current position as Senior Vice President – Coal Operations and will represent 70% of his base salary.service requirement.
●     50% for all executives

Post-Employment Benefits

We have a severance policy that provides, under certain circumstances, our executives with twelve months of base pay, in addition to nine months of outplacement assistance and 12 months of health benefits at the same cost share as active employees.  Payment under the severance policy is triggered upon the following events: involuntary termination that is not for cause, such as a layoff; the sale of a facility or division, such as the sale of a specific mine; or a position being relocated by at least fifty miles. Except for this severance policy, we do not guarantee or provide any other cash compensation or benefits to our executives upon their departure from Westmoreland. For full walk-away amounts for each of our named executive officers upon the happening of certain events, such as involuntary termination without cause or change-in-control, see “EXECUTIVE COMPENSATION FOR 2011-Potential Payments upon Termination or Change-in-Control” below.

Long-Term Incentive Awards for Named Executive Officers for 2014
 
Name
Percentage of
Federal Income Tax and Other Consequences

Under Section 162(m) of the Internal Revenue Code, we may not be able to deduct certain forms of compensation in excess of $1,000,000 paid per year to our named executive officers who are employed by us at year-end. The Compensation and Benefits Committee believes that it is generally in our best interest to satisfy the requirements for deductibility under Internal Revenue Code Section 162(m). Accordingly, the Compensation and Benefits Committee has taken appropriate actions, to the extent it believes feasible, to preserve the deductibility of annual incentive and long-term performance awards. However, notwithstanding this general policy, the Compensation and Benefits Committee also believes that there may be circumstances when our interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible under Internal Revenue Code Section 162(m). Accordingly, we reserve the authority to award non-deductible compensation in appropriate circumstances. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation intended by us to satisfy the requirements for deductibility under Section 162(m) does in fact do so.

2012Role of the Compensation Consultant and the CEO in the Compensation Program

As illustratedCompensation Consultant

The Committee has the authority to retain outside counsel, consultants and other advisers, to assist it in evaluating compensation or in otherwise discharging its duties and responsibilities. The Committee engaged Pay Governance (the “Consultant”) for advice regarding the graph below, we believestructuring of executive compensation for fiscal year 2014 and recently reengaged the Consultant for fiscal year 2015. The Consultant assists the Committee in determining appropriate peers for purposes of comparing market compensation and provides other related services. The Committee has authorized the Consultant to interact with management on its behalf.
The Consultant has not provided any services for Westmoreland other than the services it provided to the Committee. The Committee has concluded, under the guidance of SEC rules and relevant NASDAQ listing standards, that performancethe Consultant’s work does not raise any conflict of interest.

Determining Executive Compensation

Determinations regarding 2014 executive officer compensation were made at the February 2014 Committee meeting. The following table summarizes the roles of the Committee, Consultant and equity-basedChief Executive Officer in executive compensation should increase as a percentage of total direct compensation as salary grade levels and responsibility increases.  As such, for 2012, the CEO and the COO have the highest percentage of total compensation at risk through both the annual and long-term incentive opportunities.decision making.

Pie Charts

22
21

Responsible PartyRoles and Responsibilities
Compensation and Benefits Committee
of the Board of Directors

The Committee is currently
comprised of four
Independent Directors
and reports to the Board.
●     Retains independent counsel, consultants and other advisers to assist it in evaluating compensation or in otherwise discharging its responsibilities.
●     Works with the CEO to set performance goals at the beginning of each year targeted to positively influence stockholder value and evaluates CEO performance in relation to those goals and overall performance of the Company.
●     Determines and approves compensation for our executive officers.
●     Reviews and approves overall compensation strategy and all programs in which our executive officers participate, including equity, bonus (including all performance-based goals), retirement and other benefit plans.
●     Reviews compensation philosophy, metrics and amounts, and the results of stockholder say-on-pay votes, before establishing executive compensation.
●     Considers comparable metrics in our peer group.
Consultant to the Compensation
Committee
Pay Governance, as an independent
consultant retained directly by the
Committee, provides consulting advice on matters of governance and executive compensation
●     Provides advice and opinion on the appropriateness and competitiveness of our compensation programs relative to market practice.
●     Performs all functions at the direction of the Committee.
●     Attends Committee meetings.
●     Provides advice regarding compensation decision-making governance.
●     Provides market data, as requested.
●     Consults on various compensation matters and recommends compensation program designs and practices.
●     With the cooperation of management, works to conduct an assessment of the risks arising from our compensation programs.
●     Confers with the CEO and CAO on compensation levels, incentives and goals.
Chief Executive Officer
With the support of other members
of the management team
●     Works with the other executive officers to set personal performance goals at the beginning of each year targeted to positively influence stockholder value.
●     Reviews performance of the other executive officers against the set goals and makes recommendations to the Committee with respect to their compensation.
●     Confers with the Committee concerning design and development of compensation and benefit plans for Westmoreland employees.
●     Recommends appropriate company-wide and mine and power financial and non-financial performance goals for the annual incentive program.

As approved by theComponents of Executive Compensation and Benefits Committee and, for the CEO, by the Board, the following table illustrates the total targeted compensation packages for the projected named executive officers for 2012.in Fiscal Year 2014

Name Position Base Salary  Targeted AIP  
Targeted
LTIP
  
Targeted
Total
Compensation
 
Keith E. Alessi CEO $700,000   100%  150% $2,450,000 
Robert P. King President and COO $425,000   100%  100% $1,275,00 
Douglas P. Kathol Executive Vice President $287,513   40%  80% $632,528 
Kevin A. Paprzycki CFO and Treasurer $260,000   35%  70% $533,000 
Joseph E. Micheletti SVP – Coal Operations $231,750   35%  70% $475,088 

SummaryIn February of Named2014, the Committee set executive base salaries, annual incentive plan and long-term incentive plan goals for fiscal year 2014, except for Mr. Alessi whose compensation was set at the time he returned to his role as Chief Executive Officer Compensation for 2011

Keith E. Alessi:  Presidentin March of 2014. Mr. Schadan's base salary, annual incentive plan and Chief Executive Officer

Total Cash Received
for 2011
 2011 Base Salary Bonus for 2011 
# of RSUs / Grant Date Fair
Value of 2011 RSUs
$1,256,920 $600,000 $668,460 60,161 RSUs/ $900,009
long-term incentive plan goals were set in May of 2014 upon his joining Westmoreland following the Canadian Acquisition. Mr. Paprzycki, Ms. Grafton and Mr. Micheletti received salary increases in April of 2014 to reflect the individual officers’ heightened responsibilities.

Base SalarySalaries

For 2012, the Board increased Mr. Alessi’s base salary to $700,000, which puts this component
2014 Base Salaries for Named Executive Officers
NamePositionBase Salary
Keith E. Alessi(1)
Chief Executive Officer$750,000
Kevin A. PaprzyckiChief Financial Officer and Treasurer$330,000
Jennifer S. Grafton
Senior Vice President, Chief Administrative Officer and Corporate Secretary(4)
$300,000
Joseph E. MichelettiExecutive Vice President$289,300
John A. Schadan(3)
President - Canada Operations$243,713
Robert P. King(2)
Former President and Chief Executive Officer$515,000

23

(1)Mr. Alessi became Executive Chairman of Westmoreland in an employee capacity on January 17, 2014, and returned to the role of Chief Executive Officer on March 21, 2014.
(2)Mr. King acted as President and Chief Executive Officer of the Company until March 21, 2014. He later resigned on August 1, 2014.
(3)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and as such his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only. His Canadian dollar cash salary amount was $282,500 for 2014.
(4)Ms. Grafton acted as General Counsel and Secretary for the bulk of fiscal year 2014. In mid-November, she was promoted to SVP and Chief Administrative Officer and retained the Secretary role. All of Ms. Grafton's compensation for 2014 was determined based on the General Counsel role.

Annual Incentive Compensation
GOALPERCENT OF TOTAL
Financial
Goal: Annual budgeted free cash flow of Westmoreland, for 2014 this number was based on the Adjusted AIP Metric.
●     50% payout upon meeting 80% of goal (threshold)
●     100% payout upon meeting 100% of goal (target)
●     200% payout upon meeting 120% of goal (maximum)
●     40% for all executives
Safety
Goal: 10% lower than Annual National Mine Safety and Health Administration (MSHA) average for reportable incident rate for surface mines in the coal industry
●     50% payout upon meeting 100% of goal (threshold)
●     100% payout upon meeting 125% of goal (target)
●     200% payout upon meeting 150% of goal (maximum)

●     20% for all executives
IndividualThe percentage payout is evaluated on achievement of certain individual goals established between the executive and the CEO (or, in the case of the CEO, between him and the Board) and is based on the executive’s overall performance. An executive may receive greater than 100% payout for the individual goal based on exemplary performance, as approved by the Committee, or in the case of the CEO, by the Board. The Board has great flexibility in exercising discretion relating to the individual AIP component and has the ability to reward executives based on the results of the year, notwithstanding that a particular executive did not meet the specific goal laid out at the beginning of the year.

●     40% for all executives

2014 Target vs. Actual AIP Bonus Paid
 
Name
% of
Annual Base
Salary
Target Total
Cash Incentive
Bonus
% of
Target
Individual
Bonus
Approved
% of Target
Financial
Bonus
Approved(1)
% of Target
Safety Bonus
Approved(2)
Total Cash
Bonus
Keith E. Alessi100%$750,000100%80%75%
$2,500,000(4)(6)
Kevin A. Paprzycki35%$115,500200%80%75%
$330,000(4)
Jennifer S. Grafton35%$105,000200%80%75%
$300,000(4)
Joseph E. Micheletti35%$101,255125%—%75%
$103,369(4)
John A. Schadan(3)
35%$85,299100%200%—%
$94,315(4)
Robert P. King(5)
100%$515,000—%—%75%$45,063

24

(1)In 2014, the Adjusted AIP Metric for consolidated global Westmoreland resulted in a financial metric payout of 80% of the target, for consolidated U.S. only at 0% of the target and for consolidated Canada only at 200% of the target.
(2)In 2014, the average national reportable incident rate was 1.72, which is a calculation based on total hours worked and reportable incidents. In 2014, the average reportable incident rate for Westmoreland as a whole was 1.29, 25.0% below the national average. This safety performance resulted in 75% payout. Additionally, Mr. Schadan's annual incentive bonus did not include a safety bonus payout as the Canadian mines on a consolidated basis did not meet the safety threshold.
(3)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only.
(4)The calculated Annual Incentive Plan bonus for Mr. Alessi was $652,532; for Mr. Paprzycki it was $100,490; for Ms. Grafton it was $91,355; for Mr. Micheletti it was $65,816 and for Mr. Schadan it was $59,325, or $51,180 after conversion to U.S. dollars using the above conversion. The Committee determined, and the Board approved, that the exceptional accomplishments of these named executives officers throughout the year were deserving of discretionary adjustments to the annual incentive program outcomes. The Committee decided, and the Board approved, the annual incentive bonus payments shown, which more accurately reflect each executives significant efforts and accomplishments during a year of unprecedented growth for Westmoreland.
(5)The consolidated U.S. performance was below the threshold target, thus Mr. King received no financial payout. As Mr. King departed the Company mid-year, the Board determined in its discretion that no individual performance payout was appropriate.
(6)Mr. Alessi's bonus was paid out $1 million in cash and $1.5 million in Westmoreland common stock.

Long-Term Incentive Compensation
GOAL2014 COMPONENTSPERCENT OF TOTAL
Performance-Based Shares
Goal: Three year cumulative free cash flow of Westmoreland
●     50% payout upon meeting 80% of goal (threshold)
●     100% payout upon meeting 100% of goal (target)
●     150% payout upon meeting 120% of goal (maximum)
●     50% for all executives
Time Based SharesShares will vest in equal annual installments over a three-year period based on completion of the service requirement.
●     50% for all executives

Long-Term Incentive Awards for Named Executive Officers for 2014
 
Name
Percentage of
Base Salary
Cash or Cash Value of
Time-Based RSUs(1) 
Cash or Cash Value of
Performance-Based
RSUs(1)
Total Cash
Value of RSUs
Keith E. Alessi150%$562,539$562,508$1,125,047
Kevin A. Paprzycki70%$115,535$115,504$231,038
Jennifer S. Grafton70%$105,015$105,015$210,029
Joseph E. Micheletti70%$101,323$101,262$202,585
John A. Schadan70%$98,924$98,893$197,818
Robert P. King125%$321,965$321,903$643,868
_____________________
(1)Mr. Alessi was awarded long-term incentive awards in stock totaling 18,288 time-based RSUs and 18,287 performance-based RSUs. Mr. Paprzycki was awarded long-term incentive awards in stock totaling 3,756 time-based RSUs and 3,755 performance-based RSUs. Ms. Grafton was awarded long-term incentive awards in stock totaling 3,414 time-based RSUs and 3,414 performance-based RSUs. Mr. Micheletti was awarded long-term incentive awards in stock totaling 3,294 time-based RSUs and 3,292 performance-based RSUs. Mr. Schadan was awarded long-term incentive awards in stock totaling 3,216 time-based RSUs and 3,215 performance-based RSUs. Mr. King was awarded long-term incentive awards in stock totaling 10,467 time-based RSUs and 10,465 performance-based RSUs, however he forfeited these grants at the time of his resignation from Westmoreland. The named executive officer's awards had grant date fair values as shown on the chart, based on an a June 2, 2014, stock price of $30.76.

Transaction Success Bonuses

On June 12, 2014, the Board of Directors of Westmoreland, at the recommendation of the Committee, awarded one-time success bonuses to certain named executive officers for exemplary work in bringing the acquisition of Westmoreland’s new Canadian assets to a successful closing. The compensation was issued in the form of Westmoreland’s common stock under

25

the Amended and Restated 2007 Equity Incentive Plan based on the closing price of the stock on June 12, 2014. The values of the one-time success bonuses for named executive officers were as follows:
Named Executive OfficerValue of One-Time Success Bonus
Keith Alessi$250,000
Kevin Paprzycki$75,000
Jennifer Grafton$75,000

Named Executive Officer Compensation in Fiscal Year 2014

Westmoreland’s named executive officer compensation is broken down into several components. The named executive officers are generally compensated at the same percentage of targeted bonus for meeting team goals set by the Committee, however, certain individuals bonuses are tied to the performance of specific segments of the Company. Where individuals are compensated differently or the reasoning is different, we provide more information.

Annual Incentive Compensation: Financial and Safety Components

Financial Component: The financial component was based on budgeted operating income andWestmoreland's free cash flow atmetric. In 2014, the addition of the Canadian mines required that certain individual's cash flow metric accounted for only U.S. or Canada free cash flow, while others involved a consolidated corporate level. The weighted actual performance for these corporate financial goals was 100%, resulting in 100% financial payout.

Individual Component: The Compensation and Benefits Committee recommended and the Board approved a 134% individual performance payout formetric. Mr. Alessi, for his performance in 2011.  The non-employee directors of the Board reviewedMr. Paprzycki and provided feedback on Mr. Alessi’s strategic effectiveness, business management, talent management and personal effectiveness.  Mr. Alessi was provided above average ratings in all categories by the directors. The Board made particular note of his major accomplishments in 2011, including exemplary leadership of the $150.0 million note issuance, successful reserve acquisition, relocation of the corporate office, successful Kemmerer bid and management of the extended hydro electric power season, subsequent floods and customer plant outage.

Safety Component:  Not applicable.

Long-Term Incentive Compensation

For fiscal year 2011, Mr. Alessi was awarded long-term equity at a targeted 150% of base salary, which is at a substantially higher tier than the other named executive officers.  The Board felt such grant was warranted due to Mr. Alessi’s direct responsibility for overseeing the entire organization, as well as direct responsibility for our company’s profits and losses.  The Board and Mr. Alessi felt strongly that his compensation should be directly tied to that of the stockholders and our overallMs. Grafton each received their financial results.

Douglas Kathol:  Executive Vice President

Total Cash Received
for 2011
 2011 Base Salary Bonus for 2011 
# of RSUs / Grant Date Fair
Value of 2011 RSUs
$433,519 $280,500 $159,577 15,000 RSUs/ $224,400
Base Salary

For 2012, the Compensation and Benefits Committee increased Mr. Kathol’s base salary to $287,513 effective April 1, 2012, which puts this component of their annual incentive compensation near the 25% of the peer group.

Annual Incentive Compensation

Financial Component: Thebased on a consolidated global metric that came in at 80%. Mr. Micheletti's financial component was based on budgeted operating income andthe U.S. mines operations free cash flow metric and paid out at 0%. Mr. Schadan's financial component was based on the consolidated corporate level. The weighted actual performance for these corporate financial goals was 100%, resulting in 100% financial payout.Canadian operations free cash flow metric and paid out at 200%.

Safety Component: The safety component was based on achieving 10% lower than Annual National MSHA average for reportable incident rate for surface mines in the coal industry. The average reportable incident rate for the Westmoreland’s mines was 1.29, which is 25.0% below the national average of 1.72, resulting in a 75% safety payout for named executive officers, with the exception of Mr. Schadan. Mr. Schadan did not receive annual incentive compensation attributable to his safety target goal as our Canadian mines' metric did not meet the threshold set.

Keith E. Alessi, Chief Executive Officer

Total Salary and
Bonus Cash
Received for 2014
2014 Base SalaryBonus for 2014
# of RSUs / Grant Date Fair
Value of 2014 RSUs
3,500,000$750,000$2,500,00036,575 RSUs/ $1,125,047

Base Salary and Annual Incentive Compensation: Individual Component:  Management

Mr. Alessi returned to the role of Chief Executive Officer on March 21, 2014, and at the same time relinquished his title of Executive Chairman of the Board. The Committee determined Mr. Alessi’s base salary with the assistance of the Consultant, utilizing peer group and market survey data.

The Committee proposed, and the CommitteeBoard of Directors approved, a 214%discretionary individual performance payout of $2,500,000 for Mr. Kathol dueAlessi, paid $1,000,000 in cash and the remainder in common stock under Westmoreland's Amended and Restated 2007 Equity Incentive Plan. On March 21, 2014, Mr. Alessi returned to the role of Chief Executive Officer of Westmoreland. Mr. Alessi was not only the driving force behind the Canadian Acquisition, but upon returning to the CEO role, he oversaw its successful integration with the domestic Westmoreland team. His efforts to close two acquisitions over the last year have seen Westmoreland's revenue move from $674.7 million in meeting our strategic goal2013 to $1.116 billion in 2014, a number that does not include the first four months of growth through acquisition.production in 2014 by the Canadian assets before Westmoreland owned them. Likewise, under Mr. Kathol played a key roleAlessi's leadership, Westmoreland's adjusted EBITDA increased from $116.3 million to $175.5 million and operating cash flow increased from $20.0 million to $50.0 million over the past year. See page 43 for information about reconciliation of non-GAAP financial measures. The Company's financial results, which Mr. Alessi drove, were also reflected in our successful bidtotal shareholder return that we have calculated to be approximately 73% for the Kemmerer Mine. In addition, Mr. Kathol helped grow the business through the acquisition of additional reserves and the execution of new coal sales contracts.fiscal year 2014.


Safety Component:  Not applicable.
26

Long-Term Incentive Compensation

For fiscal year 2011, the Compensation and Benefits Committee awarded Mr. Kathol 15,000 restricted stock units representing 80%Table of his base salary, which is the second largest equity grant on the executive team.  The Compensation and Benefits Committee felt this award appropriate given Mr. Kathol’s direct operational responsibilities and to incentivize Mr. Kathol to make decisions that will create and sustain stockholder value.Contents

Relocation

Mr. Kathol was offered a relocation package when the corporate office relocated from Colorado Springs to South Denver due to the distance from his house to the new office location.  The Company paid $59,943 in 2011 primarily towards final moving expenses, transportation of household goods, temporary living expenses, and a miscellaneous allowance of one-month’s salary.

Kevin A. Paprzycki:Paprzycki, Chief Financial Officer and Treasurer

Total Cash Received
for 2011
 2011 Base Salary Bonus for 2011 
# of RSUs / Grant Date Fair
Value of 2011 RSUs
$370,922 $245,000 $133,202 11,465 RSUs/ $171,516
Total Salary and
Bonus Cash
Received for 2014
2014 Base SalaryBonus for 2014
# of RSUs / Grant Date Fair
Value of 2014 RSUs
$726,923$330,000$330,0007,511 RSUs/$231,038

Base Salary and Annual Incentive Compensation: Individual Component

The Compensation and Benefits Committee approvedincreased Mr. Paprzycki’s new base salary for 2012 in line with peer group data, bringing his base salary to $260,000 effective as of April 1, 2012.  This increase in base salary brings this component of compensation to near 25% of peer group data.

Annual Incentive Compensation

Financial Component: The financial component was based on budgeted operating income and free cash flow at the consolidated corporate level. The weighted actual performance for these corporate financial goals was 100%, resulting in 100% financial payout.

Individual Component: Management proposed and the Compensation and Benefits Committee approved a 250% individual performance payout for Mr. Paprzycki. Mr. Paprzycki made significant strides in enhancing the Treasury function and implemented new financial reporting systems to greatly simplify and expedite forecast measures. The Compensation and Benefits Committee also recognized Mr. Paprzycki in providing critical modeling and financial data for the successful Kemmerer Mine bid.

Safety Component:  Not applicable.

Long-Term Incentive Compensation

For fiscal year 2011, the Compensation and Benefits Committee awarded Mr. Paprzycki 11,465 restricted stock units, which reflected the target percentage award from his set tier.

Joseph E. Micheletti: Senior Vice President – Coal Operations
Total Cash Received
for 2011
 2011 Base Salary Bonus for 2011 
# of RSUs / Grant Date Fair
Value of 2011 RSUs
$320,282 $145,583/$225,000(1) $128,546 4,020 RSUs/ $60,139
__________
(1)Mr. Micheletti’s base salary was set at $145,583 through May of 2011 while in his role as President and General Manager of the Jewett Mine. In May of 2011, Mr. Micheletti’s base salary was increased to $225,000 to reflect his promotion to Senior Vice President – Coal Operations.

Base Salary

For 2012, the Compensation and Benefits Committee increased Mr. Micheletti’s base salary to $231,750$330,000 effective April 1, 2012,2014, which puts this component of compensation below the 25%25th percentile of peer group data. The Committee determined Mr. Paprzycki’s base salary with the assistance of the Consultant, utilizing peer group but commensurate with his limited time in this new role.and market survey data.

The Chief Executive Officer proposed, and the Committee approved, a discretionary individual performance payout of $330,000 for Mr. Paprzycki. In 2014, Mr. Paprzycki guided Westmoreland through a senior secured note debt raise of $425 million, followed by a combined senior secured note and term loan debt refinance of $700 million. He led his team's integration of U.S. and Canadian financial reporting along with financial planning and analysis. Mr. Paprzycki continued to lead the investor relations function of the Westmoreland. Mr. Paprzycki also played pivotal roles in the negotiations and completion of both the Canadian Acquisition and WMLP transactions, each of which included extensive due diligence and financial modeling.

Jennifer S. Grafton, Senior Vice President, Chief Administrative Officer and Secretary

Total Salary and
Bonus Cash
Received for 2014
2014 Base SalaryBonus for 2014
# of RSUs / Grant Date Fair
Value of 2014 RSUs
$656,154$300,000$300,0006,828 RSUs/$210,029

Base Salary and Annual Incentive Compensation: Individual Component

The Committee increased Ms. Grafton’s base salary to $300,000 effective April 1, 2014, which puts this component of compensation below the 25th percentile of peer group data. The Committee determined Mr. Grafton’s base salary with the assistance of the Consultant, utilizing peer group and market survey data.

The Chief Executive Officer proposed, and the Committee approved, a discretionary individual performance payout of $300,000 for Ms. Grafton. In 2014, Ms. Grafton steered us through the legal matters arising out of acquisition activity for both the Canadian Acquisition and the WMLP transactions, each on a demanding timeline. In November of 2014, Ms. Grafton was named Senior Vice President and Chief Administrative Officer, adding the role of global head of Human Resources in addition to her leadership for Westmoreland in the areas of legal, business development, insurance and risk. Ms. Grafton continued her role as Secretary and oversaw corporate compliance with charters, policies, and regulations.

Joseph E. Micheletti, Executive Vice President
Total Salary and
Bonus Cash
Received for 2014
2014 Base SalaryBonus for 2014
# of RSUs / Grant Date Fair
Value of 2014 RSUs
$385,588$289,300$103,3696,586 RSUs/$202,585

Base Salary and Annual Incentive Compensation: Individual Component

The Committee increased Mr. Micheletti’s base salary to $289,300 effective April 1, 2014, which puts this component of compensation at the 25th percentile of peer group data.

The Chief Executive Officer proposed, and the Committee approved, a discretionary individual performance payout of $103,369 for Mr. Micheletti. In 2014, Mr. Micheletti was also instrumental in conducting operational due diligence and evaluating the mine properties in connection with both the Canadian Acquisition and the WMLP transactions. Mr. Micheletti oversaw a growing U.S. operational base and negotiated two long term major coal supply agreements to be supplied out of our mine in Kemmerer, Wyoming. Mr. Micheletti's emphasis on safety at Westmoreland mines has once again shown in our results with a reportable incident rate at 25% below national average across all U.S. mines.

27


John A. Schadan, President - Canada Operations
Total Salary and
Bonus Cash
Received for 2014
2014 Base SalaryBonus for 2014
# of RSUs / Grant Date Fair
Value of 2014 RSUs
$335,575$243,713$94,315 6,431 RSUs/$197,818

Base Salary and Annual Incentive Compensation: Individual Component

Soon after joining Westmoreland, Mr. Schadan was promoted to Executive Vice President and was recently promoted to President - Canada Operations on March 13, 2015. In May of 2014, the Committee determined his salary to be $282,500 in Canadian dollars. Mr. Schadan works out of our corporate office in Edmonton, Alberta, and as such his salary and cash bonuses were all paid in Canadian dollars, and his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only.

The Chief Executive Officer proposed, and the Committee approved, a discretionary individual performance payout of $109,325 in Canadian dollars, or $94,315 in U.S. dollars using the above conversion, for Mr. Schadan. Mr. Schadan led Westmoreland's Canadian team seamlessly through what was a lengthy, but successful integration with the U.S. operations. Mr. Schadan consistently exceeded expectations by delivering above budgeted results at the Canadian operations. He quickly adapted to the Westmoreland culture, which was reflected in his ability to dramatically cut capital expenditures while maintaining a consistent production pace at his mines. Additionally, Mr. Schadan led his team in optimizing the size and output at our export mine operation, which we call Coal Valley, during a time in which the thermal coal export market is strained.

Realized Pay vs. Reported Total Compensation

Financial Component:  Mr. Micheletti’sThe SEC’s calculation of total compensation includes several items that are driven by accounting and actuarial assumptions, which are not necessarily reflective of compensation actually realized by the named executives in 2014. To supplement the SEC-required disclosure, we have included an additional table that shows compensation actually realized by each of the named executives in 2014. Set forth below we have provided a table showing for each named executive: (1) 2014 compensation actually realized by the named executive, as reported on each named executive’s W-2 form (Realized Compensation Total), and (2) 2014 compensation as determined under SEC rules (Summary Compensation Total). We believe this information provides a helpful view of compensation actually received by our named executive officers in 2014, and is useful to our stockholders in assessing the alignment between executive pay and our performance. The amounts reported in this table differ from the amounts reported as total compensation in the 2014 Summary Compensation Table and are not a substitute for those amounts.

Name and Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Non-Equity
Incentive Plan
Compen-sation
($)
Change in
Pension
Value
Earnings
($)
All Other
Compen-
sation
($)
Summary
Compen-
sation
Total
($)
Realized
Compen-
sation
Total
($)
Keith E. Alessi Chief Executive Officer2014750,000
250,000(1)
1,125,047
2,500,000(3)
8,66117,2354,650,9433,461,858
Kevin A. Paprzycki
CFO and Treasurer
2014321,923
75,000(1)
231,038330,00015,46817,448990,8771,000,055
Jennifer S. Grafton SVP, CAO and Secretary2014281,154
75,000(1)
210,029300,00074417,374884,301603,908
Joseph E. Micheletti
Executive Vice President
2014282,219—202,585103,36960,64517,435666,253641,201
John A. Schadan(2) President - Canada Operations
2014160,678
34,508(2)
197,81894,315—
21,294(2)
508,613344,239
Robert P. King
Former President and CEO
2014312,885—
643,868(4)
45,063—16,7371,018,5531,689,787
_____________________

28

(1)As detailed above, Mr. Alessi, Mr. Paprzycki and Ms. Grafton received one time transaction success bonuses after the closing of the Canadian Acquisition issued in the form of Westmoreland’s common stock under the Amended and Restated 2007 Equity Incentive Plan.
(2)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and as such his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only. Mr. Schadan received a retention bonus of $40,000 in Canadian dollars, $34,508 in U.S. dollars, after the Canadian Acquisition and $2,333, or $2,013 after U.S. conversion, as part of a legacy automobile reimbursement program. Mr. Schadan is a participant in an active Registered Retirement Savings Plan in Canada for which the Company contributed 12% of his salary base on his behalf; that amount was $22,350, or $19,281 after U.S. conversion, in 2014. His pay figures reflect beginning his position with Westmoreland on May 1, 2014.
(3)Mr. Alessi's was paid out $1 million in cash and $1.5 million in Westmoreland common stock under the Amended and Restated 2007 Equity Incentive Plan.
(4)Mr. King forfeited his equity grant for 2014 upon his resignation on August 1, 2014.


Reconciliation of Realized Compensation Column to Summary Compensation Table

The amounts reported in the Realized Compensation Column reflect income for 2014 shown as reported on the named executives’ W-2 forms. These amounts differ from the amounts reported as total compensation in the 2014 Summary Compensation Table required under SEC rules and are not a substitute for the amounts reported in the 2014 Summary Compensation Table. For 2014, realized compensation represents: (1) total compensation, as determined under applicable SEC rules, minus (2) the aggregate grant date fair value of equity awards (as reflected in the Stock Awards and Option Awards columns), minus (3) the year-over-year change in pension value (as reflected in the Change in Pension Value column), plus (4) the value realized in 2014 from the vesting of RSUs before payment of any applicable withholding taxes. In addition, realized compensation reflects any bonus actually paid in the year shown, whereas total compensation under SEC rules reflects any bonus earned for the year shown. For more information on total compensation as calculated under the SEC rules, see the narrative and notes accompanying the 2014 Summary Compensation Table set forth on page 29.


Review of Performance-Based Compensation Components

The Board is keenly focused on tying executive compensation to our performance. On an annual basis, the management team has a significant portion of its compensation aligned with key financial metrics and performance indicators. These metrics are approved by the Committee in February of each year. In 2014, the Committee elected to tie the financial component of the management team’s short-term AIP bonus to the free cash flow metric. After the Canadian Acquisition, certain of our named executive officer's financial components were tied to just U.S. mines, U.S. consolidated or Canadian consolidated free cash flow, while others' financial component was based partially on his time as President and General Managera consolidated global Westmoreland metric.

Beginning in 2011, the Committee began issuing 50% of the Jewett Minelong-term incentive component of compensation in the form of performance-based awards. These awards cliff vest over three years and partially on his time as Senior Vice President – Coal Operations.  The portionpay out if the threshold goal has been met. If the team exceeds the target goal by 20% or more, the awards pay out at 150%. Each year since 2011, the Committee set a three-year cumulative free cash flow goal for the performance-based LTIP awards. We achieved 91% of his financial component tied to his role as President and General Manager was basedthe 2012 three-year cumulative free cash flow goal, which resulted in a 73% payout on the Jewett mine maximizing contract incentivesperformance-based shares. As of December 31, 2014, we were 64% towards achieving the 2013 three-year LTIP award goal and was paid out at 100%. The portion of his financial component tied to his role as Senior Vice President – Coal Operations was based on34% towards achieving the weighting of the five mine’s performance relative to maximizing contract incentives and/or operating income and was paid out at 124%.2014 three-year LTIP award goal.

Individual Component:  Management proposed and the Compensation and Benefits Committee approved a 362% individual performance payout for Mr. Micheletti. The Committee recognized Mr. Micheletti’s key role in the assisting the team in putting together a successful bid for the Kemmerer Mine. Additionally, Mr. Micheletti successfully assisted mine-level management in maximizing contract incentives and in replacing bonding collateral at the Jewett Mine.

Safety Component:  Mr. Micheletti’s safety component was based partially on his time as President and General Manager of the Jewett Mine and partially on his time as Senior Vice President – Coal Operations.  The portion of his safety component tied to his role as President and General Manager was based on the Jewett mine’s reportable incident rate relative to the national average for surface mines and paid out at 94%.  With direct operational responsibility for all of our mines as Senior Vice President – Coal Operations, Mr. Micheletti’s safety component payout in such role was based upon an average of reportable incident rates at all mine locations. In 2011, the average national reportable incident rate was 1.95, which is a calculation based on total hours worked and reportable incidents.  In 2011, the average reportable incident rate for the mines Mr. Micheletti oversaw was 1.03, which is significantly less than the national average. This phenomenal safety record correlated into a 189% safety component payout.

Long-Term Incentive Compensation

For fiscal year 2011, Mr. Micheletti was awarded 4,020 restricted stock units, which is a higher tier award than other vice presidents.  The Compensation and Benefits Committee felt such higher tier level was warranted due to Mr. Micheletti’s direct responsibility for overseeing more employees than any other named executive officer, direct responsibility for a large portion of our company’s profits and losses, and his direct operational responsibility for all mining operations.

Relocation

Mr. Micheletti was offered a relocation package as part of his promotion to Senior Vice President – Coal Operations to cover his move from Texas to Montana.  The Company paid $27,122 in 2011 primarily towards a home finding trip (up to a maximum of six days), temporary living expenses, and a miscellaneous allowance of one-month’s salary.  Mr. Micheletti will incur additional expenses in 2012 to include his final moving expenses, transportation of household goods, and home purchase closing costs.


Morris W. Kegley:  General Counsel – Mining and OperationsEXECUTIVE COMPENSATION FOR 2014

Total Cash Received
for 2011
 2011 Base Salary Bonus for 2011 
# of RSUs / Grant Date Fair
Value of 2011 RSUs
$299,585 $224,298 $81,425 8,998 RSUs/ $134,610

Change in Role

On February 29, 2012, the Board determined that the roles and responsibilities of Mr. Kegley no longer require that he be considered an executive officer of the Company for reporting purposes under the rules and regulations of the Securities and Exchange Commission.

Annual Incentive Compensation

Financial Component: The financial component for Mr. Kegley was based 30% on budgeted operating income and free cash flow at the consolidated corporate level and 40% on the four major mines maximizing contract incentives and/or operating income. The weighted actual performance for the corporate financial goals was 100%, resulting in 100% financial payout for that portion, while the mine-level goal paid out at 123%.

Individual Component: Management proposed and the Compensation and Benefits Committee approved a 151% individual performance payout for Mr. Kegley.  Mr. Kegley provided invaluable assistance in the review of land and coal supply agreements in anticipation of the Kemmerer Mine bid. Additionally, Mr. Kegley played an integral role in the acquisition of new reserves at our Absaloka Mine.

Safety Component:  Not applicable.

Long-Term Incentive Compensation

For fiscal year 2011, the Committee awarded Mr. Kegley 8,998 restricted stock units based on his placement in the 60% long-term incentive tier, as discussed above.

John V. O’Laughlin: Former Senior Vice President – Coal Operations

Total Cash Received
for 2011
 2011 Base Salary Bonus for 2011 
# of RSUs / Grant Date Fair
Value of 2011 RSUs
$285,695 $225,508 $64,524 9,046 RSUs/ $135,328

Change in Role

On February 21, 2011, Mr. O’Laughlin accepted a new position with us as Vice President – Strategic Sourcing and Asset Management.  The Board determined that the roles and responsibilities of Mr. O’Laughlin in this new position no longer require that he be considered an executive officer of the Company for reporting purposes under the rules and regulations of the Securities and Exchange Commission.

Annual Incentive Compensation

Financial Component: The financial component for Mr. O’Laughlin was based 30% on budgeted operating income and free cash flow at the consolidated corporate level and 40% on the four major mines maximizing contract incentives and/or operating income. The weighted actual performance for the corporate financial goals was 100%, resulting in 100% financial payout for that portion, while the mine-level goal paid out at 123%.

Individual Component: Management proposed and the Compensation and Benefits Committee approved a 85% individual performance payout for Mr. O’Laughlin.

Long-Term Incentive Compensation

For fiscal year 2011, the Committee awarded Mr. O’Laughlin 9,046 restricted stock units based on his placement in the 60% long-term incentive tier, as discussed above.

EXECUTIVE COMPENSATION FOR 2011

Summary Compensation Table

The following tables set forth information regarding the fiscal 20112014 compensation for our Chief Executive Officer, Chief Financial Officer, our other three most highly compensated executive officers who were serving as executive officers at the end of fiscal 2011, and one additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer at the end of fiscal 20112014 (collectively, our “named executive officers”). Columns required by SEC rules are omitted where there is no amount to report. The table also sets forth information regarding the fiscal 20092012 and/or fiscal 20102013 compensation for those individuals who were also named executive officers in fiscal 20092012 and/or fiscal 2010.

2013.
Name and Principal
Position
 Year 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($)(1)
 
Non-Equity
Incentive
Plan
Compensation
($)(2)
 
Change in
Pension
Value
Earnings
($)
 
All Other
Compenation
($)(3)(5)
 
Total
($)
Keith E. Alessi(6)
CEO and President
 2011 588,460 — 900,009 668,460 8,027 16,572 2,181,528
 2010 492,305 — 884,775 482,239 4,004 16,572 1,879,895
 2009 588,461 350,000 245,100 370,731 20,044 16,643 1,590,979
Kevin A. Paprzycki
CFO and Treasurer
 2011 237,720 — 171,516 133,202 14,478 16,369 573,285
 2010 213,948 — 72,309 101,994 5,907 16,202 410,360
 2009 213,077 — 45,752 38,354 3,599 12,467 313,249
Douglas P. Kathol
Executive Vice President
 2011 273,942 — 224,400 159,577 31,893 76,515 766,327
 2010 248,392 — 119,996 134,806 16,409 16,444 536,047
Joseph E. Micheletti
SVP – Coal Operations
 2011 191,736 — 60,139 128,546 57,061 53,194 483,826
Morris W. Kegley
General Counsel
 2011 218,160 — 134,610 81,425 23,535 16,231 473,961
 2010 196,752 — 53,283 93,779 13,398 16,199 373,411
 2009 213,463 — 45,752 76,847 38,224 12,472 386,758
Former Named Executive Officers                
John V. O’Laughlin(4)
VP – Coal Operations
 2011 221,171 — 135,238 64,524 54,827 16,283 492,043
 2010 224,239 — 79,900 66,465 28,987 16,274 415,865
 2009 225,222 — 68,628 80,535 (5,611) 12,552 381,326
 
Name and Principal
Position
Year
Salary
($)
Bonus
($)(6)
Stock
Awards
($)(1)(5)
Non-Equity
Incentive
Plan
Compen-
sation
($)(2)
Change in
Pension
Value
Earnings
($)
All Other
Compen-
ation
($)(3)
Total
($)
 
Keith E. Alessi(4)
CEO
2014750,000250,0001,125,0472,500,0008,66117,2354,650,943
 2013201,923———(3,546)15,798214,175
 2012673,077—1,050,0101,141,4234,51716,8482,885,875
 
Kevin A. Paprzycki
CFO and Treasurer
2014321,92375,000231,038330,00015,46817,448990,877
 2013289,231—210,000122,541(10,349)17,129628,552
 2012255,962—182,018111,9988,95716,774575,709
 Jennifer S. Grafton General Counsel and Secretary2014281,15475,000210,029300,00077417,374884,331
 2013221,923—161,00093,948(546)16,818493,143
 
Joseph E. Micheletti
Executive Vice President
2014282,219—202,585103,36960,64517,435666,253
 2013254,278—184,10086,965(36,803)17,039505,579
 2012229,095—161,432103,65634,15925,400553,742
 
John A. Schadan - President Canada Operations(7)
2014160,67834,508197,81894,315—21,294508,613
 
 
Former Named Executive Officer
        
 
Robert P. King(4)
President and CEO
2014312,885—643,86845,063—16,7371,018,553
 2013478,365—625,017550,368—17,1481,670,898
 2012318,75050,000730,771392,302—88,7601,580,583
_______________________________
(1)Amounts in these columns represent the aggregate grant date fair value of the equity awarded calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 –- Share-Based Payment. These columns were prepared assuming none of the awards will be forfeited.  Additional information is set forth in the “Grants of Plan-Based Awards” table below. Details regarding the 2011, 20102014, 2013 and 20092012 stock awards that are outstanding as of December 31, 20112014 may be found in the ��2011“2014 Outstanding Equity Awards At Fiscal Year-End” table below. A more detailed discussion of the assumptions used in the valuation of stock awards made in fiscal year 20112014 may be found in the Notes to the Financial Statements in the Company’sCompany's Form 10-K for the year ended December 31, 2011.2014.
(2)Represents the cash bonus awarded under our Annual Incentive Plan, a discretionary performance-based award made in the first quarter of each fiscal year for performance in the prior fiscal year. Mr. Alessi's 2014 award, however, was settled $1,500,000 in stock and $1,000,000 in cash.
(3)“All Other Compensation” for 20112014 includes reimbursements and payments for our contributions to the Westmoreland’sWestmoreland's 401(k) plan and life insurance premiums. We contributed $14,700$15,600 in matching contributions to the 401(k) plan on behalf of each named executive officer. Our 401(k) match program provided for a match of total cash compensation earned in 20112014 up to a maximum allowable cash compensation of $245,000$260,000 equaling 6% of total cash compensation. We paid life insurance premiums of $1,872, $1,669, $1,872, $1,346, $1,531$1,634, $1,848, $1,834, $1,137 and $1,583$1,774 during 20112014 for Messrs. Alessi, Paprzycki, Kathol, Micheletti, Kegley,King and O’LaughlinMs. Grafton, respectively.
(4)Mr. O’Laughlin served as our SVP – Coal Operations through the end of February 2011.
(5)“All Other Compensation” for 2011 also includes $59,943Alessi and $27,122 for Messrs. Kathol and Micheletti, respectively, for relocation of their home.  Mr. Kathol was eligible for relocation under our Relocation Policy upon the move of the office from Colorado Springs to Englewood, Colorado.  Upon Mr. Micheletti accepting the position of Senior Vice President – Coal Operations, he was eligible for relocation under the Relocation Policy for his move from Texas to Montana.
(6)Mr. Alessi doesKing did not receive any additional compensation for histheir services while employee directors. Mr. Alessi spent most of 2013 as Chairman of the Board.
(5)Due to a director.shortage of available stock in our equity plan, Messrs. Paprzycki, Micheletti and Ms. Grafton were awarded cash awards in lieu of stock for long-term incentive purposes in 2013.


30
26

(6)In 2014, Mr. Alessi, Mr. Paprzycki and Ms. Grafton received transaction bonuses for the successful close of Westmoreland's Canadian Acquisition paid in stock. Mr. Schadan received a retention bonus in 2014.
(7)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and as such his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only. Mr. Schadan received a retention bonus of $40,000 in Canadian dollars, $34,508 in U.S. dollars, after the Canadian Acquisition and $2,333, or $2,013 after U.S. conversion, as part of a legacy automobile reimbursement program. Mr. Schadan is a participant in an active Registered Retirement Savings Plan in Canada for which the Company contributed 12% of his salary base on his behalf; that amount was $22,350, or $19,281 after U.S. conversion, in 2014. His pay figures reflect beginning his position with Westmoreland on May 1, 2014.

Components of Total Compensation

We believe in compensating our executive officers with a mix of both base salary and at riskat-risk compensation made up of cash and equity. For a thorough discussion of our compensation components and the percentage of at riskat-risk compensation, see “Components of the Executive Compensation Program for 20112014” in the Compensation Discussion and Analysis section above.on page 22.

Non-Equity Incentive Plan Compensation

Non-equity incentive plan compensationamounts are annual cash incentives under our Annual Incentive Plan (“AIP”). The AIP is funded based on various components, which are unique to each named executive officer, and may include our annual budgeted operating income performance,EBITDA, annual budgeted free cash flow, maximizing contract incentives at specific mines, MSHA average for reportable incident rate for surface mines in the coal industry, and individual performance goals, all of which are discussed above in “Compensation Discussion and Analysis.”

Equity Awards

Values for stock grants in the summary compensation table and numbers included in the grants of plan-based awards table relate to restricted stock and restricted stock units granted to the named executive officers under our stockholder-approved 2007 plan.and 2014 plans. The plan is administered by the Compensation and Benefits Committee, which has retained the exclusive authority to make awards under the plan. The committeeCommittee approves all long-term incentive grants to named executive officers other than the CEO, whose grants are approved by the Board. The committeeCommittee also approves the overall grant pool for all other participants.

The primary purpose of the long-term incentive plan is to link compensation with the long-term interests of stockholders. Time-basedFor the 2014 stock award granted to Named Executive Officers, the time-based restricted stock units representing 50% of the total award were granted to the named executives officers on April 1, 2011June 2, 2014, and vest over three years beginning 12 months from the grant date, with 33% of the shares becoming vested and available for release at that time, and an additional 33% vesting and becoming available for releaseeach year on each successive anniversary of the grant date.April 1st. Full vesting occurs on the third anniversary of the grant date. Performance-basedApril 1, 2016. The performance-based restricted stock units representing the other 50% of the total award were also granted on April 1, 2011June 2, 2014 and will cliff vest on April 1, 20142017, upon achievement of a three-year cumulative free cash flow amountgoal that was set by the Compensation and Benefits Committee in early 2011.2014. Beginning in 2015, Westmoreland will tie the achievement of three year performance-based equity awards to a relative total shareholder return calculation. Awards not yet released are forfeited upon separation.

20112014 Grants of Plan-Based Awards

      
Estimated Future Payouts Under
Equity Incentive Plan Awards(1)
       
Name Grant Date 
Approval Date
by Committee/
Board
 
Threshold
(#)
  
Target
(#)
  
Maximum
(#)
  
All Other
Stock
Awards(#)(1)
  
Grant Date
Fair Value
of Stock
Awards($)(1)
 
Keith E. Alessi
 4/01/2011 3/09/2011  15,040   30,080   45,120   30,081   900,009 
Kevin A. Paprzycki
 4/01/2011 2/08/2011  2,866   5,732   8,598   5,733   171,516 
Douglas P. Kathol
 4/01/2011 2/08/2011  3,750   7,500   11,250   7,500   224,400 
Joseph Micheletti
 4/01/2011 2/08/2011  1,005   2,010   3,015   2,010   60,139 
Morris W. Kegley
 4/01/2011 2/08/2011  2,249   4,498   6,747   4,500   134,610 
John V. O’Laughlin
 4/01/2011 2/08/2011  2,261   4,522   6,783   4,524   135,238 
__________
   
Estimated Future Payouts Under
Performance- Based Equity Incentive
Plan Awards(1)
  
NameGrant Date
Approval Date
by Board
Threshold
(#)
Target
(#)
Maximum
(#)
All Other
Stock
Awards(#)(1)
Grant Date
Fair Value
of Stock
Awards($)(1)
Keith E. Alessi6/2/20147/22/20149,14418,28727,43118,288$1,125,047
Kevin A. Paprzycki6/2/20147/22/20141,8783,7555,6333,756$231,038
Jennifer S. Grafton6/2/20147/22/20141,7073,4145,1213,414$210,029
Joseph Micheletti6/2/20147/22/20141,6463,2924,9383,294$202,585
John A. Schadan6/2/20147/22/20141,6083,2154,8233,216$197,818
Robert P. King(2)
6/2/20147/22/20145,23310,46515,69810,467$643,868
_____________________

31

(1)The 20112014 LTIP award granted byto the Compensation and Benefits Committee on February 8, 2011 to all named executive officers except Mr. Alessi, whose granton June 2, 2014, was approvedultimately finalized by the Board of Directors on March 9, 2011, andJuly 22, 2014, consisted of time-based restricted stock units with a three-year vest and performance-based restricted stock units with a three-year cliff vest issued out of the 2007 plan with a grant date of April 1, 2011.2014 shareholder approved equity plan. The grant date fair value on April 1, 2011June 2, 2014, was $14.96$30.76 per share.
(2)Mr. King forfeited his grants at the time of his resignation from Westmoreland on August 1, 2104.

27
20112014 Outstanding Equity Awards at Fiscal Year-End
 Option AwardsStock Awards
Name
Securities
Underlying
Unexercised
Options(#)
Exercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Units that
have
not
vested
(#)(1)
Market
value of units
that have not
vested as of
12/31/14($)(2)
Unearned
units that
have
not vested
(#)(3)
Market value
of unearned
units
that have not
vested as of
12/31/14($)(2)
Keith E. Alessi30,55624.125/2/2017    
 60,00021.407/1/2018    
    23,973796,143  
    18,288607,344  
     
71,9182,388,397
      18,287607,311
Kevin A. Paprzycki2,50029.486/5/2016    
 1,90024.417/1/2016    
 7,00021.407/1/2018    
    4,156138,021  
    
$70,000(4)
$70,000(4)
  
    3,756124,737  
      12,466413,996
      
$105,000(4)
$105,000(4)
      3,755124,704
Jennifer S. Grafton   2,74090,995  
    
$53,667(4)
$53,667(4)
  
    3,414113,379  
      8,219272,953
      
$80,500(4)
$80,500(4)
      3,414113,379
Joseph E. Micheletti5,00021.407/1/2018    
    3,686122,412  
    
$61,367(4)
$61,367(4)
  
    3,294109,394  
      11,056367,170
      
$92,050(4)
$92,050(4)
      3,292109,327
John A. Schadan   3,216106,803
  
      3,215106,770
Former Executive       
Robert P. King(5)
   10,467347,609  
    18,244605,883  
    9,704322,270  
      10,465347,543
      27,364908,758
      29,110966,743

  Option Awards Stock Awards 
Name 
Securities
Underlying
Unexercised
Options(#)
Exercisable
  
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Units that
have
not
vested
(#)(1)
  
Market
value of units
that have not
vested as of
12/30/11($)(2)
  
Unearned
units that
have
not vested
(#)(3)
  
Market value
of unearned
units
that have not
vested as of
12/30/11($)(2)
 
Keith E. Alessi  30,556   24.12 5/02/17            
   60,000   21.40 7/01/18            
            10,000   127,500       
            39,850   508,088       
            30,081   383,533       
                    30,080   383,520 
Kevin A. Paprzycki  2,500   29.48 6/05/16                
   1,900   24.41 7/01/16                
   7,000   21.40 7/01/18                
            1,867   23,804         
            5,944   75,786         
            5,733   73,096         
                    5,732   73,083 
Douglas P. Kathol
  7,500   16.17 8/18/13                
   6,700   19.37 7/01/14                
   6,700   20.98 7/01/15                
   4,300   24.41 7/01/16                
   7,000   21.40 7/01/18                
            1,867   23,804         
            9,864   125,766         
            7,500   95,625         
                    7,500   95,625 
Joseph E. Micheletti
  5,000   21.40 7/01/18                
            1,067   13,604         
            2,504   31,926         
            2,010   25,628         
                    2,010   25,628 
Morris W. Kegley
  1,900   24.41 7/01/16                
   7,000   21.40 7/01/18                
            1,867   23,804         
            4,380   55,845         
            4,500   57,375         
                    4,498   57,350 
John V. O’Laughlin
  4,700   12.86 6/24/12                
   3,650   18.08 6/30/13                
   3,650   17.80 12/31/13                
   9,800   19.37 7/01/14                
   14,600   20.98 7/01/15                
   9,900   24.41 7/01/16                
   15,000   21.40 7/01/18                
            2,800   35,700         
            6,568   83,742         
            4,524   57,681         
                    4,522   57,656 
_____________________
__________

32
28

(1)Awards in this column consist of restricted stock units with a grant dates of JulyJune 1, for both 2009 and 2010 and2012, April 1, 2011.2013 and June 2, 2014. Awards of restricted stock units vest in thirds over a three-year period beginning on the first anniversary of the date of grant.grant, except that the grants on June 1, 2012, and June 2, 2014, also vest on April 1st. To the extent vested in the last year, these units are reflected in the “Stock Vested in 2011”2014” table below.
(2)The market value of the awards of restricted stock units that have not yet vested was determined by multiplying the closing price of a share of common stock on December 30, 201131, 2014 ($12.75)33.21) by the number of shares.
(3)Awards in this column consist of performance-based restricted stock units with a grant date of June 1, 2012, April 1, 2011.2013 and June 2, 2014. These awards pay out at Threshold, Targetthreshold, target and Maximummaximum performance goals, depending on the achievement of a free cash flow metric designated by the Compensation and Benefits Committee in 2011. Upon2012, 2013 and 2014. Contingent on achievement of the performance goal on April 1, 2014,2015, April 1, 2016, and April 1, 2017, these awards cliff vest. If threshold performance is not achieved, all awards will forfeit.
(4)In 2013, due to a shortage of shares in the 2007 shareholder-approved equity plan, all long-term incentive plan award recipients, except for Mr. King, were awarded cash awards in lieu of stock. The 2013 long term incentive plan cash awards will function similarly to the equity awards. Time-based awards vest in thirds over a three-year period beginning on the first anniversary of the grant. Performance-based awards pay out at threshold, target and maximum performance goals, depending on the achievement of a free cash flow metric designated by the Compensation and Benefits Committee in 2013. Contingent on achievement of the performance goal on April 1, 2016, the recipients' awards cliff vest. If threshold performance is not achieved, all awards will forfeit.
(5)Mr. King forfeited his 2014 time-based and performance-based equity grants at the time of his resignation from Westmoreland on August 1, 2014.

Stock Vested in 20112014

Name 
Shares Acquired
on Vesting(#)
  
Stock Value Realized
on Vesting($)(1)
 
Keith E. Alessi                                             10,000   179,800 
   19,925   358,251 
Kevin A. Paprzycki                                             1,867   33,567 
   2,972   53,437 
Douglas P. Kathol                                             1,867   33,567 
   4,932   88,677 
Joseph E. Micheletti                                             1,067   19,185 
   1,252   22,511 
Morris W. Kegley                                             1,867   33,567 
   2,190   39,376 
John V. O’Laughlin                                             2,800   50,344 
   3,284   59,046 
__________
Name
Shares Acquired
on Vesting(#)
Stock Value Realized
on Vesting($)(1)
Keith E. Alessi86,1202,678,576
Kevin A. Paprzycki14,655459,874
Jennifer S. Grafton8,255259,042
Joseph E. Micheletti7,371231,302
John A. Schadan——
   
Former Executive(2)
  
Robert P. King18,826590,760
_____________________
(1)The market value of the awards was determined by multiplying the closing price of a share of common stock on JulyApril 1, 20112014 ($17.98)31.38) by the number of shares.shares that vested on April 1, 2014. Mr. Alessi also had shares vest from a director grant on May 21, 2014, which was calculated by multiplying the closing price of a share of common stock on May 21, 2014 ($27.97) by the number of shares that vested on May 21, 2014.
(2)Mr. King ceased his position of President - U.S. Operations on August 1, 2014.

20112014 Pension Benefits
Name Plan Name 
Number of Years
Credited Service
(#)
  
Present Value of Accumulated Benefit as of
December 31, 2011
($)(1)
  
Payments During Last
Fiscal Year
($)
 
Keith E. Alessi
 Westmoreland Retirement Plan (WCC)  2.08   35,850   — 
Kevin A. Paprzycki
 Westmoreland Retirement Plan (WCC)  3.0   41,627   — 
Douglas P. Kathol
 Westmoreland Retirement Plan (WCC)  5.81   154,017   — 
Joseph E. Micheletti
 Westmoreland Retirement Plan (WECO)  10.0   183,891   — 
Morris W. Kegley
 Westmoreland Retirement Plan (WCC)  3.67   148,150   — 
John V. O’Laughlin
 Westmoreland Retirement Plan (BSS)  9.0   248,063   — 
__________
NamePlan Name
Number of
Years Credited
Service
(#)
Present Value of
Accumulated
Benefit as of
December 31, 2014
($)(1)
Payments During
Last
Fiscal Year
($)
Keith E. AlessiWestmoreland Retirement Plan (WCC)2.0845,482—
Kevin A. PaprzyckiWestmoreland Retirement Plan (WCC)3.055,703—
Joseph E. MichelettiWestmoreland Retirement Plan (WECO)10.0241,892—
Jennifer S. GraftonWestmoreland Retirement Plan (WCC)0.52,445—
_____________________
(1)Pension economic assumptions are consistent with our SFAS 87 financial reporting for fiscal year 2011.2014. Demographic assumptions are also consistent with our pension financial reporting, with the exception that per SEC guidance, pre-retirement decrements are not used. A discount rate of 4.25%3.90% was used for 2011.2014.

Effective July 1, 2009, the Board froze all structures of our pension plan for non-union employees, including our named executive officers, resulting in no future benefits accruing under these plans. Prior to July 2009, each of the named executive officers except Mr. King and Mr. Schadan who each began employment with us after 2009, participated in one of the same defined benefit pension plan

33

structures offered to other non-union employees. Eligible employees become fully vested after five years of vested service. The Company’sCompany's pension plan structure provides for normal retirement at 65. Early retirement benefits are available at age 55 with 10 years of service, however at reduced benefits.  Mr. O’Laughlin is the only named executive eligible to retire as of December 31, 2011. The executive may choose optional forms of benefit, all reduced to be actuarially equivalent to the single life annuity benefit. The optional forms available are 50%, 66 2/3% and 100% joint and survivor options, a 10-year certain and life option, and a single life annuity.

20112014 Pension Benefits Upon Retirement, Termination, Disability or Death

Messrs. Paprzycki, Kathol, Micheletti, KegleyAlessi and O’LaughlinMs. Grafton are vested in the pension plan and entitled to an annual lifetime benefit payable upon voluntary or involuntary termination or death (paid for the life of the spouse). Mr. O’Laughlin is vested in the pension plan and entitled to an annual lifetime benefit payable upon retirement, voluntary or involuntary termination, disability or death (paid for the life of the spouse).  Mr. Alessi is not vested in the pension plan. Benefits shown assume that the event entitling the individual to benefits occurred on December 31, 2011.2014.

The benefits for Mr. Alessi are first payable on November 1, 2019. Mr. Alessi is not currently eligible for early retirement benefits.
29
NameType of TerminationPlan
Benefit
Amount
Form of Payment
Time or Period of
Payment
Keith E. AlessiTerminationPension Plan$326
Monthly AnnuityLife
 DeathPension Plan$249
Monthly AnnuityLife of Spouse


Table of Contents
Mr. Paprzycki is vested in the pension plan and is entitled to an annual lifetime benefit payable upon retirement, voluntary or involuntary termination, disability or death (paid for the life of the spouse). The benefits for Mr. Paprzycki are first payable on September 1, 2035. Mr. Paprzycki currently is not currently eligible for early retirement benefits.

NameType of Termination
Plan
Benefit
Amount
Form of Payment
Time or Period of
Payment
Kevin A. PaprzyckiTerminationPension Plan$732
Monthly AnnuityLife
 DeathPension Plan$559
Monthly AnnuityLife of Spouse

Mr. Kathol is vested in the pension plan and is entitled to an annual lifetime benefit payable upon retirement, voluntary or involuntary termination, disability or death (paid for the life of the spouse). The benefits for Mr. Kathol are first payable on December 1, 2017. Mr. Kathol currently is not eligible for early retirement benefits.

Name Type of Termination Plan 
Benefit
Amount
 Form of Payment 
Time or Period of
Payment
Douglas P. Kathol
 Termination Pension Plan $1,291 Monthly Annuity Life
  Death Pension Plan $985 Monthly Annuity Life of Spouse

Mr. Micheletti is vested in the pension plan and is entitled to an annual lifetime benefit payable upon retirement, voluntary or involuntary termination, disability or death (paid for the life of the spouse). The benefits for Mr. Micheletti are first payable on August 1, 2015.

Name Type of Termination Plan 
Benefit
Amount
 Form of Payment 
Time or Period of
Payment
Joseph E. Micheletti
 Termination Pension Plan $840 Monthly Annuity Life
  Death Pension Plan $319 Monthly Annuity Life of Spouse

Mr. Kegley is vested in the pension plan and is entitled to an annual lifetime The death benefit payable upon retirement, voluntary or involuntary termination, disability or death (paid for the life of the spouse). to his spouse is payable immediately.
NameType of TerminationPlan
Benefit
Amount
Form of Payment
Time or Period of
Payment
Joseph E. MichelettiTerminationPension Plan$840
Monthly AnnuityLife
 DeathPension Plan$389
Monthly AnnuityLife of Spouse
The benefits for Mr. KegleyMs. Grafton are first payable on JulyApril 1, 2012. Mr. Kegley currently2041. Ms. Grafton is not currently eligible for early retirement benefits.

Name Type of Termination Plan 
Benefit
Amount
 Form of Payment 
Time or Period of
Payment
Morris W. Kegley
 Termination Pension Plan $993 Monthly Annuity Life
  Death Pension Plan $758 Monthly Annuity Life of Spouse

Mr. O’Laughlin is vested in the pension plan and is entitled to an annual lifetime benefit payable upon retirement, voluntary or involuntary termination, disability or death (paid for the life of the spouse).

Name Type of Termination Plan 
Benefit
Amount
 Form of Payment 
Time or Period of
Payment
John V. O’Laughlin
 Retirement/Termination Pension Plan $2,139 Monthly Annuity Life
 Disability Pension Plan $2,139 Monthly Annuity Life
 Death Pension Plan $974 Monthly Annuity Life of Spouse
NameType of TerminationPlan
Benefit
Amount
Form of Payment
Time or Period of
Payment
Jennifer S. GraftonTerminationPension Plan$37
Monthly AnnuityLife
DeathPension Plan$31
Monthly AnnuityLife of Spouse

Potential Payments upon Termination or Change-in-Control

Our named executive officers are not entitled to any additional payments or benefits relating to termination of employment other than the retirement benefits described in the preceding compensation tables and participation in a severance policy that is generally available to all our employees. Our severance policy covers virtually all our employees, although the amount of the severance benefit depends upon employee tier and years of service with us. The highest tier, which includes our named executive officers, provides for severance compensation equal to 12 months of monthly base pay, 9 months of outplacement assistance and 12 months of health benefit continuation. Severance benefits are payable under the policy only in the following circumstances: involuntary termination that is not for cause; termination due to sale of a facility, division or business segment; or relocation of more than 50 miles that the employee declines. Our executives do not have employment contracts or any benefits triggered by a change-in-control, unless the change-in-control results in an involuntary termination of the executive without cause. In addition, our Annual Incentive Policy provides that program participants are only entitled to payment of incentive payouts if they are employed on the date
of payment, which typically occurs in MarchApril of the following year.year, although this requirement is deemed fulfilled upon death or disability. All incentive payouts are forfeited should a named executive officer leave our employment for any reason, unless otherwise expressly agreed to by the Compensation and Benefits Committee.


34

The following table represents full walk-away amounts for each of our named executive officers upon the occurrence of certain events, assuming in each case that the event in question occurred as of December 31, 2011.2014. The following tables do not include amounts payable upon termination for pension benefits, as those benefits are described above in the “2011“2014 Pension Benefits” tables.

NameType of Compensation
Termination for Cause/
Voluntary Termination
Involuntary
Not for Cause(3)
Termination upon
Change-in-Control(5)
Retirement
Death or
Disability(4)
Keith E. AlessiSalary and/or AIP payout$—$750,000$2,250,000$—$—
 
Vested Equity(1)(2)
$—$—$5,385,550$—$4,980,687
 Outplacement services and health benefits$—$17,734$—$—$—
 TOTAL$—$767,734$7,635,550$—$4,980,687
Name Type of Compensation 
Termination for Cause/
Voluntary Termination
  
Involuntary
Not for Cause
  
Termination upon
Change-in-Control
  Retirement  Death(3) Type of Compensation
Termination for Cause/
Voluntary Termination
Involuntary
Not for Cause(3)
Termination upon
Change-in-Control(5)
Retirement
Death or
Disability(4)
Keith Alessi 
Salary
 $0  $600,000  $0  $0  $0 
Kevin PaprzyckiSalary and/or AIP payout$—$330,000$775,500$—
 Vested Equity(1)(2) $0  $0  $1,019,120  $0  $1,115,438 
Vested Equity(1)(2)
$—$1,085,172$—$967,047
 Outplacement services and health benefits $0  $23,622  $0  $0  $0 Outplacement services and health benefits$—$23,054$—
 TOTAL $0  $623,622  $1,019,120  $0  $1,115,438 TOTAL$—$353,054$1,860,672$—$967,047
NameType of Compensation
Termination for Cause/
Voluntary Termination
Involuntary
Not for Cause(3)
Termination upon
Change-in-Control(5)
Retirement
Death or
Disability(4)
Jennifer GraftonSalary and/or AIP payout$—$300,000$705,000$—$—
 
Vested Equity(1)(2)
$—$—$724,873$—$622,454
 Outplacement services and health benefits$—$24,080$—$—$—
 TOTAL$—$324,080$1,429,873$—$622,454
NameType of Compensation
Termination for Cause/
Voluntary Termination
Involuntary
Not for Cause(3)
Termination upon
Change-in-Control(5)
Retirement
Death or
Disability(4)
Joe MichelettiSalary and/or AIP payout$—$289,300$679,855$—$—
 
Vested Equity(1)(2)
$—$—$920,770$—$817,191
 Outplacement services and health benefits$—$23,234$—$—$—
 TOTAL$—$312,534$1,600,625$—$817,191

Name Type of Compensation 
Termination for Cause/
Voluntary Termination
  
Involuntary
Not for Cause
  
Termination upon
Change-in-Control
  Retirement  Death(3) 
Kevin Paprzycki 
Salary
 $0  $245,000  $0  $0  $0 
  
Vested Equity(1)(2)
 $0  $0  $172,686  $0  $191,040 
  Outplacement services and health benefits $0  $15,122  $0  $0  $0 
  TOTAL $0  $260,122  $172,686  $0  $191,040 
NameType of Compensation
Termination for Cause/
Voluntary Termination
Involuntary
Not for Cause(3)
Termination upon
Change-in-Control(5)
Retirement
Death or
Disability(4)
John A. Schadan(6)
Salary and/or AIP payout$—$243,713$572,725$—$—
 
Vested Equity(1)(2)
$—$—$213,574$—$142,404
 Outplacement services and health benefits$—$7,500$—$—$—
 TOTAL$—$251,213$786,299$—$142,404

Name Type of Compensation 
Termination for Cause/
Voluntary Termination
  
Involuntary
Not for Cause
  
Termination upon
Change-in-Control
  Retirement  Death(3) 
 Douglas Kathol 
Salary
 $0  $280,500  $0  $0  $0 
  
Vested Equity(1)(2)
 $0  $0  $245,195  $0  $269,211 
  Outplacement services and health benefits $0  $5,445  $0  $0  $0 
  TOTAL $0  $285,945  $245,195  $0  $269,211 

Name Type of Compensation 
Termination for Cause/
Voluntary Termination
  
Involuntary
Not for Cause
  
Termination upon
Change-in-Control
  Retirement  Death(3) 
Joseph Micheletti 
Salary
 $0  $225,000  $0  $0  $0 
  
Vested Equity(1)(2)
 $0  $0  $71,158  $0  $77,594 
  Outplacement services and health benefits $0  $14,433  $0  $0  $0 
  TOTAL $0  $239,433  $71,158  $0  $77,594 

Name Type of Compensation 
Termination for Cause/
Voluntary Termination
  
Involuntary
Not for Cause
  
Termination upon
Change-in-Control
  Retirement  Death(3) 
Morris Kegley 
Salary
 $0  $224,298  $0  $0  $0 
  
Vested Equity(1)(2)
 $0  $0  $137,024  $0  $151,427 
  Outplacement services and health benefits $0  $10,227  $0  $0  $0 
  TOTAL $0  $234,525  $137,024  $0  $151,427 

Name Type of Compensation 
Termination for Cause/
Voluntary Termination
  
Involuntary
Not for Cause
  
Termination upon
Change-in-Control
  Retirement  Death(3) 
John O'Laughlin 
Salary
 $0  $225,508  $0  $0  $0 
  
Vested Equity(1)(2)
 $0  $0  $177,123  $0  $191,603 
  Outplacement services and health benefits $0  $9,027  $0  $0  $0 
  TOTAL $0  $234,535  $177,123  $0  $191,603 
________
(1)Various unvested options and SARs held by our named executive officers automatically vest upon a change-in-control. However, all outstanding options held by our named executive officers have an exercise price greater than $12.75, the closing price of our stock on December 30, 2011. There is noThe intrinsic value in anyof the accelerated options or vested stock options because options with anSARs were determined by multiplying the number of securities held by the difference between the security's exercise price greater than $12.75 have zero intrinsic value.and $33.21, the closing stock price on December 31, 2014. The value of vested equity was determined by multiplying the number of vested shares times $12.75,$33.21, the closing stock price on December 30, 201131, 2014.
(2)We recently awarded time-based long-term equity awards to the named executive officers in the form of restricted stock units with grant dates of JulyJune 1, 2009, July 1, 2010,2012, and June 2, 2014, as well as a long-term cash award grant on April 1, 2011,2013, each vesting in thirds annually on an annual basis.April 1st. Pursuant to the time-based restricted stock unit award agreements, theall units automatically vest immediately prior to a change-in-control, death, disability or qualified retirement of the recipient. No named executive officer met the qualifications for a “qualified retirement” as of December 31, 2011.2014.
(3)Involuntary, or "not for cause," termination results in the named executive officer receiving one-year's base salary, one-year's health benefits (of which the former employee must still pay the portion that the employee would normally pay to receive health benefits), and nine months of outplacement services valued at $7,500.
(4)The performance-based restricted stock units vest pro rata uponand performance-based cash awards are earned on a pro-rata basis based on the date of death ofor disability. For valuation purposes, we assume the triggering event (death) occurred on December 31, 20112014, resulting in the vesting ofrecipient earning a thirdfull share of the recipient's 2012 performance-based award, two-thirds of the recipient's 2013 performance-based award and one-third of the recipient's 2014 performance based award. The recipient's earned pro-rata share will not vest until the normal vesting date for the award, occurring on April 1st of the third anniversary of the grant date, and the final determination of the amount of the award contingent on the final performance determination of the performance metric. Here, the pro-rata shares are assumed to have paid out based on a 100% achievement of the performance metric. The payments of the performance-based awards, however, are still completely contingent on the performance metric being met over the applicable three-year period, and payouts can range from 0% for failure to meet the threshold of the performance metric to 150% for meeting the maximum of the performance metric.


35
31

CERTAIN TRANSACTIONS
(5)Upon termination after a change in control, as defined under the the named executive officers' individual change in control agreements, named executive officers are entitled to two times base pay and payment of their target annual incentive plan payout, as well as an immediate vesting of all equity not yet vested.
(6)Mr. Schadan is located in Westmoreland's corporate office in Edmonton, Alberta, and as such his cash compensation figures have been converted to U.S. dollar amounts throughout this Proxy Statement using the conversion rate on December 31, 2014, of $.8627 U.S. dollars per Canadian dollar, for comparability purposes only.

CERTAIN TRANSACTIONS

Policies and Procedures for Related Person Transactions

Our Board has adopted written policies and procedures for the review of any transaction, arrangement, or relationship in which Westmoreland Coalthe Company is a participant the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), each of whom we refer to as a related person, has a direct or indirect material interest.

If a related person proposes to enter into a related person transaction, the related person must report the proposed related person transaction to our general counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our Audit Committee. Whenever practicable, the reporting, review, and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the Audit Committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the Chairman of the Audit Committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the Audit Committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually. As appropriate for the circumstances, the Audit Committee will review and consider:

●
the related person’s interest in the related person transaction;

●
the approximate dollar value of the amount involved in the related person transaction;

●
whether the terms of the transaction are no less favorable to us than could have been reached with an unrelated third party; and

●
the purpose of, and the potential benefits to us of, the transaction.

The Board has determined that certain transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of the policy, such as compensation to an executive officer if the compensation has been approved, or recommended to the Board for approval by the Compensation and Benefits Committee or an arrangement that is specifically contemplated by provisions of our certificate of incorporation or bylaws, such as the exculpation, indemnification, and directors’directors' and officers’officers' insurance arrangements contemplated by the certificate of incorporation and bylaws.

Certain RelationshipsBased on a review of the questionnaires that our directors, director nominees and Related Transactionsexecutive officers completed and a review of our internal records on any related person that was identified in such questionnaires, we have determined that there are no related party transactions in excess of $120,000, since the beginning of 2014 or currently proposed, involving the Company.

Tontine Note Transaction

On March 4, 2008, we completed the sale of $15 million of senior secured convertible notes to Tontine Partners, L.P. and Tontine Capital Partners, L.P. pursuant to a Senior Secured Convertible Note Purchase Agreement dated as of March 4, 2008 among us, the Tontine partnerships, and Tontine Capital Associates, L.P., as collateral agent.  The senior notes bore interest at a rate of 9% (which increased to 10% per annum in July 2010), payable in cash or in kind at our option, and were payable in full on March 4, 2013.  In 2010, we paid the Tontine entities $1,236,438 of in kind interest and $462,363 in cash.  On February 4, 2011, at the closing of a note transaction, Tontine Partners L.P. and Tontine Capital Partners, L.P. each converted $15,962,541 in principal amount of the senior secured convertible notes into common stock of Westmoreland at a conversion price of $8.50 per share. This conversion, coupled with the cash payment made on the closing date of the note transaction, resulted in full satisfaction of these senior secured convertible notes.  Mr. Jeffrey Gendell, who is either a managing member of, or a managing member of the general partner of, the Tontine partnerships is deemed to beneficially own greater than 20% of our outstanding common stock.

Diane Kathol Severance Payout

Doug Kathol, our Executive Vice President and a named executive officer, is married to Diane Kathol who served as our Vice President – Mining and Power during all of fiscal year 2010. Ms. Kathol retired from Westmoreland on December 31, 2010. During 2011, Ms. Kathol received a severance payout of $166,525, paid throughout the year in the normal payroll cycles.

OVERVIEW OF PROPOSALS

This proxy statement contains four proposals requiring stockholder action. Proposal No. 1 requests the election of sixeight directors to the Board, Proposal No. 2 requests advisory approval of the Company’sCompany's executive compensation, Proposal No. 3 requests the approval of amendments to the Amended and Restated 2007 Equity Incentive Plan, and Proposal No. 4 requests the ratification of the
appointment of Ernst & Young LLP as the Company’sCompany's independent registered public accounting firm for 2012.2015, Proposal No. 4 requests the approval of certain amendments to Westmoreland Coal Company's Certificate of Incorporation and Proposal No. 5, if properly presented at the Annual Meeting of Stockholders, is a vote on a shareholder proposal regarding proxy access. Each of the proposals is discussed in more detail below.

Proposal 1 –- Election of Directors

The Board has nominated directors Alessi, D’Appolonia,Bachynski, Hamilton, Hutchinson, Klingaman, Packwood, Mackus and Scharp to be elected to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified.  On March 12, 2012, Mr. Coffey notified us that he will retire from the Board effective at the Annual Meeting after 12 years of dedicated service.  As such, the Board decreased the size of the Board to six directors effective as of the Annual Meeting.  While Tontine Capital Partners, L.P. and Tontine Partners, L.P. have the right to designate two individuals for election to our Board as directors pursuant to the Secured Convertible Note Purchase Agreement dated March 4, 2008, they have not so designated any directors at this time.

At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the six nominees named in this Proxy Statement. Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, for the election of the Board’s six nominees.

Vote Required

The six nominees receiving the highest number of affirmative votes of the shares entitled to be voted for them, up to the six directors toEach director will be elected by thosea vote of the majority of the votes cast, meaning the number of shares will becast “for” a director exceeds the number of votes cast “against” that director. Each director elected as directors towill serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified.

Recommendation of the Board

The Board of Directors recommends you vote “FOR” the election of directors Alessi, D’Appolonia,Bachynski, Hamilton, Hutchinson, Klingaman, Packwood, Mackus and Scharp.


36

Proposal 2 - Advisory Approval of the Company’sCompany's Executive Compensation

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders to vote to approve, on an advisory or nonbinding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’sSEC's rules. As background to compensation paid to our named executive officers in 2011 are2014, please refer to the following business highlights:

●
During 2011, the Pacific Northwest experienced unprecedented amounts of snow that led to a prolonged hydroelectric power season. This negatively impacted our largest customer well into the summer period.  In addition, flooding associated with the high snow pack disrupted rail transportation and mining production, which resulted in a further reduction in coal sales across our northern tier mining operations. Lastly, an explosion and fire at one of our major customers in November resulted in further loss of revenue. Despite these large interruptions in our operations in 2011, we ended the year within 10% of our record adjusted EBITDA from fiscal year 2010 due to timely reaction and stringent cost management;
●
To mitigate the effect of future events like those that occurred in 2011, among other reasons, we entered into an agreement for the acquisition of the Kemmerer Mine, which will diversify the business and diminish the impact of uncontrollable events; and
●
Under management’s leadership, the Company improved liquidity through the $150.0 million debt issuance in February 2011, expanded our reserve base through a major acquisition at our Absaloka Mine and relocated the corporate office to the Denver area resulting in lowered costs and a platform for future growth.

"Proxy Summary - 2014 Westmoreland Performance Highlights" section at the beginning on this proxy statement. In addition, compensation and governance practices implemented in recent years include the following:

●
The CEO nor any other executive officer has an employment contract;
Neither the CEO nor any other executive officer has an employment contract, subject to certain rights to which they are entitled if they are terminated in connection with a change in control;
●
We have eliminated all tax gross-ups, executive supplemental retirement policies, frozenWe have eliminated all tax gross-ups and executive supplemental retirement policies, froze pension plans and terminated retiree health care;
●
The Compensation and Benefits Committee engaged Buck Consulting,The Compensation and Benefits Committee engaged Pay Governance, an independent compensation consultant to advise them, who does no other work for us;
●
Approximately 70% of both the CEO’s and the President and COO’sApproximately 72% of the CEO's total compensation package is at-risk compensation;
●
We have minimal executive perquisites;
The named executive officers receive annual long-term equity awards in the form of restricted stock units with half of the shares vesting at the end of a three-year period upon the attainment of a three-year performance metrics. Restricted stock units represent a significantly larger percentage of each officer's total compensation opportunity as compared to short term annual incentive opportunities. We believe this alignment ensures that a significant portion of our officer's compensation is tied to long-term stock price performance; and
The Board implemented stock ownership guidelines at three times salary for the CEO and between two and one times salary for other members of the management team.
●
The named executive officers receive annual long-term equity awards in the form of restricted stock units with half of the shares vesting at the end of a three-year period upon the attainment of a three-year free cash flow goal.  Restricted stock units represent a significantly larger percentage of each officer’s total compensation opportunity as compared to short term annual incentive opportunities.  We believe this alignment ensures that a significant portion of our officer’s compensation is tied to long-term stock price performance;
●
The Board implemented officer stock ownership guidelines at three times salary for the CEO and between two and one times salary for other members of the management team; and
●
The Board approved stock ownership guidelines for directors of three times their annual cash retainer fee.

Compensation Philosophy and Approach

Westmoreland’sAs described in greater detail in the Compensation Discussion and Analysis above, Westmoreland's compensation philosophy for its named executive officers is designed to achieve several key objectives, including: focusing decision-making and behavior on goals that are consistent with the overall business strategy; creating a pay-for-performance culture, and allowing us to attract and retain employees with the skills critical to our long-term success. To achieve these objectives, Westmoreland uses a mix of base pay and incentive opportunities (short and long-term), while concentrating a majority of the executives’executives' reward opportunities in at-risk incentive pay. The design of the compensation program is intended to support our overall business objectives and to increase long-term stockholder value. In 2011,2014, greater than 50% of target total compensation for each named executive officer was at-risk based on our performance and the named executive officer.

We considered the most recent stockholder advisory vote on executive compensation required by the proxy rules in reassessing these compensation policies and our compensation decisions and, based on the 99.2%98.73% favorable vote cast in 2011,2014, believe stockholders support our approach and actions. The Compensation and Benefits Committee made no material changes to 20122014 compensation packages given the overwhelming stockholder support. We intend to continue to seek stockholder guidance on executive compensation through an annual say-on-pay vote. To the extent there is any significant vote against our named executive officers' compensation as disclosed in this Proxy Statement, we will consider our stockholders' concerns and the Compensation and Benefits Committee will evaluate whether any actions are necessary to address the concerns. Our recent history of stockholder approval on executive compensation has been strong:
Say on Pay Vote
Annual Stock Holder MeetingApproval Percentage
201498.73%
201398.49%
201297.02%
201199.20%

We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’officers' compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” Proposal 2 approving, on an advisory basis, the compensation of the named executive officers, as disclosed in this proxy statement.

37


The say-on-pay vote is advisory, and therefore not binding on us, the Compensation and Benefits Committee or our Board of Directors.us. Our Board of Directors and our Compensation and Benefits Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation, as disclosed in this proxy statement, we will consider our stockholders’stockholders' concerns and the Compensation and Benefits Committee will evaluate whether any actions are necessary to address those concerns. The Board has adopted a policy providing for annual say-on-pay advisory votes. Unless the Board modifies this policy, the next say-on-pay advisory vote will be held at our 20132016 Annual Meeting.

Vote Required

Approval of Proposal 2 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.

Recommendation of the Board

The Board of Directors recommends a vote FOR Proposal 2.

Proposal 3 – Amendments to the Amended and Restated 2007 Equity Incentive Plan for Employees and Non-Employee Directors

Reason for the Proposed Amendments

The Board of Directors approved the 2007 Equity Incentive Plan for Employees and Non-Employee Directors (the “2007 Plan”) on March 9, 2007, and established the number of shares to be reserved for issuance under this plan at 700,000. On August 16, 2007, the Company’s stockholders approved the 2007 Plan.  Currently, the 2007 Plan has only 55,655 shares available for issuance to
employees and directors.  After the issuance of approximately 35,000 shares to the director at the Annual Meeting, we will have 20,655 shares available for issuance. On February 29, 2012, the Board approved the Amended and Restated 2007 Equity Incentive Plan for Employees and Non-Employee Directors (the “Amended 2007 Plan”), which increases the share reserve by 700,000 shares. After giving effect to grants previously made under the 2007 Plan, the aggregate number of shares that would be available for issuance under the Amended 2007 Plan, assuming stockholder approval of the amendment to add an additional 700,000 shares for issuance thereunder, would be approximately 720,655 shares as of the date of this proxy statement. This number does not include the effect of forfeitures, if any, of outstanding awards. The Board believes that this amendment is in our best interests and our stockholders and is consistent with the compensation philosophy described in this proxy statement.

Summary of Proposed Amendments

In addition to the increased share reserve, the Board is also asking stockholders to approve additional amendments to the 2007 Plan, which include the following:

●
Update Section 4(a) to prohibit broad recycling of shares;

●
Update Section 4(a) to provide more detail on the treatment of shares that are repurchased by us to cover tax obligations;

●
Reorder the document to put all potential award sections together (Options, SARs, Restricted Stock, RSUs, etc.) and move the director award section to after these sections for better flow;

●
Broaden the current language in Section 3 to allow the Board and the Compensation and Benefits Committee to delegate administrative authority under the plan to executives;

●
Update the Option and SAR sections to prohibit both repricing and cash buyouts without express stockholder approval;

●
Amend the director award section to fix the dollar value of the award at $70,000;

●
Permit amendment of awards to comply with Section 954 of the Dodd Frank Act (the “clawback” requirements) without participant consent;

●
Update the Restricted Stock Unit section to provide for a minimum vesting period of 3 years; and

●
Update the 2007 Plan to provide for double trigger vesting in the event of Change of Control.

Amended and Restated 2007 Plan Summary

The following is a brief summary description of the Amended 2007 Plan, which is qualified in its entirety by reference to the provisions of the Amended 2007 Plan itself, which is attached as Appendix A to this Proxy Statement.

●
Types of Awards

The Amended 2007 Plan provides for the grant of incentive stock options intended to qualify under Internal Revenue Code Section 422, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards as described below (collectively, “Awards”).

●
Incentive Stock Options and Non-statutory Stock Options.

Optionees receive the right to purchase a specified number of shares of common stock at a specified option price and subject to such other terms and conditions as are specified in connection with the option grant.  Options may not be granted at an exercise price less than 100% of the fair market value of the common stock on the date of grant or for a term in excess of ten years.  The Amended 2007 Plan permits the following forms of payment of the exercise price of options: (i) payment by cash, check or in connection with a “cashless exercise” through a broker, (ii) subject to certain conditions, surrender to the Company of shares of common stock, (iii) by means of a “net exercise” procedure; (iv) any other lawful means, or (v) any combination of these forms of payment.

Unless approved by the Company’s stockholders, (i) no outstanding option may be amended to provide an exercise price less than the then-current exercise price of such option, and (ii) no option may be issued under the 2007 Plan in substitution for any outstanding option to purchase shares of common stock if the exercise price of such option is less than the then-current exercise price of the cancelled option.

●
Stock Appreciation Rights.

A stock appreciation right, or SAR, is an award entitling the holder, upon exercise, to receive an amount in common stock or cash or a combination thereof determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of common stock.  SARs may be granted independently or in tandem with an option.  SARs may not be granted at a base price less than 100% of the fair market value of the common stock on the date of grant.

●
Restricted Stock Awards.

Restricted stock awards entitle recipients to acquire shares of common stock, subject to the right of the Company to repurchase all or part of such shares from the recipient in the event that the conditions specified in the applicable Award are not satisfied prior to the end of the applicable restriction period established for such Award.

●
Restricted Stock Unit Awards.

Restricted stock unit awards entitle the recipient to receive shares of common stock to be delivered at the time such shares vest pursuant to the terms and conditions established by the Board of Directors.

●
Other Stock-Based Awards.

Under the Amended 2007 Plan, the Board of Directors has the right to grant other Awards based upon the common stock having such terms and conditions as the Board of Directors may determine, including the grant of shares based upon certain conditions, the grant of Awards that are valued in whole or in part by reference to, or otherwise based on, shares of common stock, and the grant of Awards entitling recipients to receive shares of common stock to be delivered in the future.

●
Performance Conditions.

The Compensation and Benefits Committee may determine, at the time of grant, that a restricted stock award, restricted stock unit award or other stock-based award granted to an employee will vest solely upon the achievement of specified performance criteria designed to qualify for deduction under Section 162(m) of the Code.  The performance criteria for each such Award will be based on one or more of the following measures: (a) earnings before interest, taxes, depreciation and/or amortization, (b) earnings before operating income or profit, (c) operating efficiencies, (d) return on equity, assets, capital, capital employed, or investment, (e) after tax operating income, (f) net income, (g) earnings or book value per share, (h) cash flow(s), (i) total sales or revenues or sales or revenues per employee, (j) production, (k) stock price or total stockholder return, (l) dividends, (m) strategic business objectives consisting of one or more objectives based on meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures, or (n) except in the case of individuals who are “covered employees” under Section 162(m) of the Code, any other performance criteria established by the Compensation and Benefits Committee.  These performance measures may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated.  Such performance goals may be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs.  Such performance goals (i) may vary by employee and may be different for different Awards; (ii) may be particular to a employee or the department, branch, line of business, subsidiary, division or other unit in which the employee works and may cover such period as may be specified by the Compensation and Benefits Committee; and (iii) will be set by the Compensation and Benefits Committee within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m) of the Code.

●
Director Awards.

The Amended 2007 Plan provides for the automatic grant of Awards to members of the Board of Directors who are not employees of the Company (“Non-Employee Directors”).  On the commencement of service on the Board, each Non-Employee Director will receive an Award with a value determined in a manner deemed appropriate by the Board, in an amount determined in the
Board’s discretion.  In addition, on the date of each annual meeting of stockholders, each Non-Employee Director who is both serving as a director immediately before and immediately after such meeting will receive an Award with a value determined in a manner deemed appropriate by the Board, which may include Black-Scholes modeling, equal to $70,000 (rounded up to the nearest whole share).  The Board retains the specific authority from time to time to increase or decrease the dollar values of Awards granted to Non-Employee Directors under the Amended 2007 Plan.  Awards automatically granted to Non-Employee Directors will (i) have an exercise or base price equal to 100% of the fair market value of the common stock on the date of grant, (ii) vest according to the schedule specified in the Award, (iii) expire at the time specified in the Award, which in the case of Options will be the earlier of 10 years from the date of grant or three months following cessation of service on the Board, and (iv) contain such other terms and conditions as the Board determines.  If a Non-Employee Director’s service terminates for any reason other than a Reorganization Event or Change in Control Event, then all of such Non-Employee Director’s Awards will automatically vest and become fully exercisable on the date such individual ceases to be a director, provided that the individual has served as a director for three years or more.  If the individual has served as a director for less than three years, all of the Non-Employee Director’s Awards will expire on the date such individual ceases to be a director.  Notwithstanding the foregoing vesting provisions, (i) a Non-Employee Director’s Awards may vest automatically upon the occurrence of a Reorganization Event or Change in Control Event as described below, and (ii) the Board may provide for accelerated vesting in the case of the death or disability of a director.

●
Transferability of Awards

Except as the Board of Directors may otherwise determine or provide in an Award, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an incentive stock option, pursuant to a qualified domestic relations order, and during the life of the grantee, will be exercisable only by the grantee.

●
Eligibility to Receive Awards

Employees, officers, and directors of the Company and its subsidiaries and of other business ventures in which the Company has a controlling interest are eligible to be granted Awards under the Amended 2007 Plan.  Under present law, however, incentive stock options may only be granted to employees of the Company and its subsidiaries.

●
Plan Benefits

All of the Company’s employees, officers and directors are eligible to receive Awards under the Amended 2007 Plan.

Key Corporate Governance Practices in the Stock Plan

The Amended 2007 Plan includes a number of provisions that we believe promote good corporate governance practices and reinforce the alignment between our equity compensation arrangements and the interests of our stockholders, including:
●
Administration.  The Amended 2007 Plan is administered by the Compensation and Benefits Committee of the Board, which is comprised entirely of non-employee directors.
●
Minimum Vesting Requirements.  All equity awards, except for awards of stock options and/or stock appreciation rights and the automatic, non-discretionary awards to our non-employee directors, made under the Amended 2007 Plan are required to meet minimum three year vesting requirements, subject to certain limited exceptions.
●
Shares Returning from Past Awards and Other Limitations.  If the Amended 2007 Plan is approved, shares used to pay the exercise price of an award or withholding taxes in connection with an award, and unissued shares resulting from the settlement of stock appreciation rights in shares, will not become available for future issuance under the Amended 2007 Plan. Shares tendered in payment of an option for a cashless, net or similar exercise, shares withheld for taxes, and shares attributable to cash-settled awards shall not be again available for the grant of awards under the Amended 2007 Plan.
●
Limited Transferability.  Awards generally may not be transferred, except by will or the laws of descent and distribution, unless approved by the Compensation and Benefits Committee.
●
No Evergreen Provision.  There is no “evergreen” feature pursuant to which the shares authorized for issuance under the Amended 2007 Plan can be increased automatically without stockholder approval.
●
No Discounted Options or SARs.  Stock options and stock appreciation rights may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date, except as permitted under the Internal Revenue Code.
●
No Repricing Without Stockholder Approval.  We cannot, without stockholder approval, reprice awards, such as stock options or stock appreciation rights, by reducing the exercise price of such awards, or exchange such awards for cash, other awards or new stock options or new stock appreciation rights that have a reduced exercise price.
Key Information

If stockholders approve the Amended 2007 Plan, the total number of shares available for issuance will be approximately 720,655.  If stockholders do not approve the Amended 2007 Plan, we will not have an adequate number of shares available for future equity awards and may not be able to effectively recruit new employees, motivate current employees or operate our equity compensation program.

We manage our use of equity incentive awards carefully and maintained a reasonable “burn rate,” which we define as the number of shares subject to equity awards issued in a fiscal year, with double weighting put on full value restricted stock awards, as a percentage of our weighted average shares outstanding. Westmoreland’s three-year average burn rate of 2.67% is lower than the 4.02% burn rate used by Institutional Shareholders Services (ISS) to assess companies like ours in the energy industry.  The ISS burn rate calculation is similar but not identical to our burn rate calculation.
The following table shows the number of outstanding and available shares, by plan, before and after stockholder approval (assuming a total of 720,655 shares are available for issuance after approval, which reflects the 30,000 share issuance to the non-employee directors) and the total overhang as of the record date:

   Issued Awards   Available Shares   Total 
Before Stockholder Approval               
Stock Plan   433,783     50,655     484,438  
Other Plans   194,307     0     194,307  
                
Total   628,045     50,655     678,745  
Total Overhang (%)             4.9%
    
After Stockholder Approval               
Amended and Restated 2007 Plan   433,783     750,655     1,184,438  
Other Plans   194,307     0     194,307  
                
Total   628,045     750,655     1,378,745  
Total Overhang (%)             10%

Federal Income Tax Consequences

The following tax discussion is a general summary as of the date of this proxy statement of the U.S. federal income tax consequences to the Company and the participants in the Amended 2007 Plan.  The discussion is intended solely for general information of stockholders considering how to vote with respect to this proposal and not as tax guidance to participants in the Amended 2007 Plan.  The discussion does not address state, local or foreign income tax rules or other U.S. tax provisions, such as estate or gift taxes.  Different tax rules may apply to specific participants and transactions under the 2007 Plan, particularly in jurisdictions outside the United States.  In addition, the federal income tax laws and regulations frequently have been revised and may be changed again at any time.  Therefore, each recipient is urged to consult a tax advisor before exercising any award or before disposing of any shares acquired under the 2007 Plan both with respect to federal income tax consequences as well as any foreign, state or local tax consequences.

The grant of an option or restricted stock unit will create no tax consequences for the participant or the Company.  A participant will have no taxable income upon exercise of an incentive stock option, except that the alternative minimum tax may apply.  Upon exercise of an option other than an incentive stock option, a participant generally must recognize ordinary income equal to the fair market value of the shares acquired minus the exercise price.  Upon a disposition of shares acquired by exercise of an
incentive stock option before the end of the applicable incentive stock option holding periods, the participant generally must recognize ordinary income equal to the lesser of (1) the fair market value of the shares at the date of exercise minus the exercise price or (2) the amount realized upon the disposition of the incentive stock option shares minus the exercise price.  Otherwise, a participant’s disposition of shares acquired upon the exercise of an option (including an incentive stock option for which the incentive stock option holding periods are met) generally will result in only capital gain or loss.  Other awards under the 2007 Plan (including restricted stock units, both time-based and performance-based) generally will result in ordinary income to the participant at the later of the time of delivery of cash, shares, or other awards, or the time that either the risk of forfeiture or restriction on transferability lapses on previously delivered cash, shares, or other awards.  Except as discussed below, the Company generally will be entitled to a tax deduction equal to the amount recognized as ordinary income by the participant in connection with an option, restricted stock unit award, or other awards, but will be entitled to no tax deduction relating to amounts that represent a capital gain to a participant.  Thus, the Company will not be entitled to any tax deduction with respect to an incentive stock option if the participant holds the shares for the incentive stock option holding periods.

Section 162(m) generally allows the Company to obtain tax deductions without limit for performance-based compensation.  The Company intends that options and performance-based restricted stock unit awards granted under the 2007 Plan will continue to qualify as performance-based compensation not subject to Section 162(m)’s $1 million deductibility cap.  A number of requirements must be met in order for particular compensation to so qualify, however, so there can be no assurance that such compensation under the 2007 Plan will be fully deductible under all circumstances.  In addition, other awards under the 2007 Plan may not qualify as performance-based compensation under Section 162(m), and therefore compensation paid to executive officers in connection with such awards may not be deductible.

Vote Required

Approval of Proposal 4 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.  If stockholders approve the Amended 2007 Plan, it will replace the existing 2007 Plan.

Recommendation of the Board

The Board of Directors recommends a vote FOR Proposal 4.

Proposal 4 –- Ratification of Principal Independent Auditor

The Audit Committee has appointed Ernst & Young LLP as the Company’sCompany's independent registered public accounting firm and as auditors of our consolidated financial statements for fiscal year 2012. In January 2009, E&Y began serving as our independent registered public accounting firm. Prior to that, KPMG LLP served as our independent registered public accounting firm.2015.

Auditor’sAuditor's Fees

The following table summarizes the fees of Ernst & Young LLP for fiscal years 20102013 and 2011.2014. For 2011,2014, audit fees include an estimate of amounts not yet billed.

Fee Category(1) 2011  2010 
Audit Fees(2)
 $855,000  $911,000 
Audit Related Fees (3) $77,000  $0 
Total Fees
 $932,000  $911,000 
__________
Fee Category(1)
2014 2013
Audit Fees(2)
$2,688,590
 $916,390
Audit Related Fees(3)
$—
 $69,000
All Other Fees$3,000
 $—
Total Fees(4)
$2,691,590
 $985,390
_____________________
(1)We did not pay any “Tax Fees” or “All Other Fees” to Ernst & Young in fiscal years 20102013 or 2011.2014, with the exception of $3,000 in “All other Fees” in fiscal year 2014 for a subscription to a Canadian library resource.
(2)Audit fees consist of fees for the audit of our financial statements, including fees related to the audit of our internal controls over financial reporting, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings.
(3)Audit Related Fees in 2013 consist of fees we paid to Ernst & Young as part ofin connection with the high-yield note financing in February 2011.Canadian Acquisition, including a diagnostic that converted Sherritt's IFRS numbers to GAAP, and expenses related to an impairment assessment for our ROVA facility.

Pre-Approval Policy and Procedures

The Audit Committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our registered public accounting firm. This policy generally provides that we will not engage our registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the Audit Committee or the engagement is entered into pursuant to one of the pre-approval procedures. From time-to-time, the Audit Committee may pre-
approvepre-approve specified types of services that are expected to be provided to us by our registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to approve any audit or non-audit services to be provided to us by our registered public accounting firm.firm between meetings up to a certain threshold. Any approval of services by the Chairman of the Audit Committee pursuant to this delegated authority is reported on at the next meeting of the Audit Committee. All fees paid to Ernst & Young in 20102013 and 20112014 were pre-approved by the Audit Committee.

At the Annual Meeting, the stockholders are being asked to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2012.2015. In the event of a negative vote on such ratification, the Audit Committee

38

will reconsider its selection.selection but is not obligated to appoint a different independent registered public accounting firm. Even if this appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in our best interest. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting andin order to respond to questions.questions and may make a statement if they desire to do so.

Vote Required

Approval of Proposal 3 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.

Recommendation of the Board

The Board of Directors recommends you vote FOR Proposal 3.

Proposal 4 - Approval of Certain Amendments to the Westmoreland Coal Company Certificate of Incorporation

Westmoreland is asking shareholders to approve certain proposed amendments to the Westmoreland’s Restated Certificate of Incorporation (the “Certificate”). Following is a brief supporting statement and a summary of the proposed Certificate amendments. The complete text of the proposed Certificate amendments are contained in Exhibit A. The summary is qualified in its entirety by reference to the full text of the proposed amendments.

Summary

On February 20, 2015, Westmoreland's Board, upon recommendation by the Nominating and Corporate Governance Committee, resolved that certain amendments to Westmoreland's Certificate be presented to Westmoreland shareholders for approval at the next annual meeting. The primary purpose of the amendments is to remove irrelevant provisions and clarify and update the Certificate If the amendments are approved they will, among other things, update the Certificate to:
Update the statement of purpose of the corporation to better conform with requirements of the General Corporate Law of the State of Delaware ("DGCL"). DGCL only requires a statement that the corporation will engage in any lawful act or activity, providing the corporation more flexibility;
Reduce the par value of the shares of capital stock of the Westmoreland from $2.50 to $0.01. The impact of such a reduction is not material from a Delaware law perspective as the reduction merely reduces the minimum consideration payable upon the issuance of stock, reduces the filing fees for documents affecting the stock of the Company filed with the Secretary of State of the State of Delaware and increases (by a nominal amount) the funds available under Delaware law for dividends and stock repurchases;
Remove references to Series B Preferred Stock, which was authorized in connection with the Westmoreland’s stockholder rights plan that expired on February 7, 2013;
Remove references to Series A Convertible Exchangeable Preferred Stock, which was previously eliminated from the Current Charter pursuant to a Certificate of Elimination filed with the Secretary of State of State of Delaware. All Series A Convertible Exchangeable Preferred Stock was recently redeemed and no shares remain outstanding;
Allow for all holders of stock in Westmoreland to vote on a proposed increase or decrease to the number of authorized shares of Common Stock irrespective of Section 242(b)(2).  Section 242(b)(2) of the DGCL requires that, unless otherwise provided in the Certificate, holders of the outstanding shares of a class of capital stock are entitled to vote as a class on any proposed amendment to the Certificate that would increase or decrease the aggregate number of authorized shares of such class.  The amendments would eliminate the separate class vote on any increase or decrease in the authorized number of shares of a class of capital stock.  If the proposed amendments are approved, any further amendment to the Certificate which would increase or decrease the authorized number of shares of Preferred Stock or Common Stock would need to be approved by the holders of a majority of the outstanding shares of the Company’s capital stock entitled to vote, but no separate class votes would be required;
Restrict holders of Common Stock from voting on matters that relate solely to the terms of one or more series of Preferred Stock.  Pursuant to Section 212 of the DGCL, the Certificate may eliminate the right of the holders of Common Stock to vote on any amendment to the Certificate that solely relates to the terms of a series of Preferred Stock, if the holders of that series of Preferred Stock are entitled to vote on the amendment.  If the proposed amendments are approved, any further amendment to the Certificate which only relates to a series of Preferred Stock

39

would need to be approved only by the holders of a majority of the outstanding shares of that series of Preferred Stock; and
make other minor changes to update, provide clarification and modernize the Certificate.
Effectiveness of Proposed Amendment.

If shareholders approve the proposed amendments to the Certificate, the amendments will become effective upon the filing with the Delaware Department of State, Division of Corporations. Westmoreland would make that filing promptly after the Annual Meeting. If the proposed amendments are not approved, no amendments will be made to the Certificate.

Vote Required

Approval of Proposal 4 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.

Recommendation of the Board

The Board of Directors recommends you vote “FOR” the ratification of the proposed amendments to Westmoreland Coal Company's Certificate of Incorporation.


Proposal 4.5 - Shareholder Proposal Regarding Proxy Access

Proposal 5 below has been submitted for inclusion in our Proxy Statement by a stockholder proponent. The proponent has informed us that it or its representatives will appear at our 2015 Annual Meeting to present its proposal. The proposal and supporting statement below are presented in this Proxy Statement as received from the proponent in accordance with the rules of the SEC, and we and our Board disclaim any responsibility for their content. Any references in the proposal or the supporting statement to “we,” “our” or similar words are references to the proponent of the proposal and not to our company, our other stockholders or our Board.
We have also included a statement in opposition of our Board with respect to the proposal, recommending a vote against the stockholder proposal. The Board does not necessarily disagree with all stockholder proposals submitted to the company. When it agrees with a proposal and believes it is in the best interests of Westmoreland Coal Company and its stockholders, a proposal often can be implemented without a stockholder vote. The stockholder proposal that appears in this Proxy Statement is one with which the Board disagrees and believes it should oppose in fulfilling the Board’s obligations to represent and safeguard the best interests of our stockholders as a whole.

STOCKHOLDER PROPOSAL REGARDING PROXY ACCESS

We have been advised by the Comptroller of the City of New York, Scott M. Stringer, that the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, the New York City Police Pension Fund and the New York City Board of Education Retirement System (collectively, the “Systems”), Municipal Building, One Centre Street, Room 629, New York, New York 10007-2341, intend to present the following proposal for consideration at our 2015 Annual Meeting. This proposal will be voted on if it is properly presented at our 2015 Annual Meeting. According to documentation submitted by the Systems to us, the Systems most recently collectively owned approximately 26,513 shares of our common stock as of the dates specified in their documentation, or less than 0.2% of our outstanding common stock as of April 14, 2015, which is the record date for our 2015 Annual Meeting.

The Systems’ Proposal Language and Their Supporting Statement

RESOLVED: Shareholders of Westmoreland Coal Company (the “Company”) ask the board of directors (the “Board”) to adopt, and present for shareholder approval, a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.
The number of shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator must:

40

a) have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three years before submitting the nomination;
b) give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules about (i) the nominee, including consent to being named in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and
c) certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (c) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control at the Company.
The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding the one-quarter limit.
SUPPORTING STATEMENT
We believe proxy access is a fundamental shareholder right that will make directors more accountable and contribute to increased shareholder value. The CFA Institute’s 2014 assessment of pertinent academic studies and the use of proxy access in other markets similarly concluded that proxy access:
Would “benefit both the markets and corporate boardrooms, with little cost or disruption.”
Has the potential to raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)
The proposed bylaw terms enjoy strong investor support — votes for similar shareholder proposals averaged 55% from 2012 through September 2014 — and similar bylaws have been adopted by companies of various sizes across industries, including Chesapeake Energy, Hewlett-Packard, Western Union and Verizon.
We urge shareholders to vote FOR this proposal.

WESTMORELAND COAL COMPANY'S STATEMENT IN OPPOSITION

MISCELLANEOUSWestmoreland Coal Company’s Board of Directors (the “Board”) has carefully considered this shareholder proposal and recommends that shareholders vote AGAINST this proposal for the reasons set forth below.

Westmoreland Coal Company has a proven track record of being proactive on corporate governance issues and highly responsive to our shareholders’ concerns. Our Board ardently believes in the benefit of giving long-term dedicated shareholders a strong voice at Westmoreland and that proxy access, if properly structured, could enhance shareholder participation in director elections. At the same time, for the reasons stated below, we are against being forced into the one-size-fits-all approach taken by the New York City Comptroller, on behalf of several New York City Pensions Funds' and Systems', in its recent “Boardroom Accountability Project” (the “Project”). The Systems' proposal submitted the exact same proxy access shareholder proposal to 75 companies, which would permit any combination of shareholders beneficially owning 3% of the shares of that company for three years to nominate candidates representing up to 25% of the Board of Directors.  The Systems' proposal fails to reflect the economic differences of the 75 companies presented with proxy access proposals. For example, the 3% beneficial ownership threshold suggested for Westmoreland, with a market capitalization on March 6, 2015 of approximately $460 million, was also submitted to Exxon Mobil Corporation, whose market capitalization on that date was nearly $360 billion. Identical shareholder rights at these companies would require a shareholder (or group) to hold approximately $10.8 billion in Exxon Mobil Corporation stock for three years compared to the drastically lower threshold for Westmoreland of approximately $13.8 million in stock. Westmoreland will continue to be proactive in the corporate governance arena and proxy access is an issue widely discussed by the Board. However, with our shareholders’ long-term interests in mind, the Board must recommend that shareholders vote against this proposal.

Aside from the Board’s concerns with the proposal’s technical flaws outlined above, the Board believes that the proposal advances a solution for a problem that does not exist at Westmoreland and does so at the risk of considerable harm to Westmoreland and its shareholders. The proposal claims that it will make directors more accountable and contribute to shareholder value, but ignores our Board’s track record of creating shareholder value, ignores the effective voice shareholders already have at Westmoreland, undercuts the critical role of the independent Nominating and Corporate Governance Committee (the “N&CG

41

Committee”), and introduces a potentially expensive and destabilizing dynamic into the Board election process if it is not tailored appropriately. Further, the proposal was brought forth as part of the Project in which Westmoreland was selected, along with 33 other “carbon-intensive coal, oil and gas, and utility companies,” based on the Systems' priority issue of climate change and not because of any inadequacy by Westmoreland related to corporate governance, executive compensation or performance.

Westmoreland has outperformed the entire coal industry and energy sector over the last several years.
As mentioned above, the proposal is entirely unrelated to any perceived performance deficiencies; in fact, the proposal ignores Westmoreland’s outstanding performance. We closed the year in 2009 with a stock price of $8.91 on December 31. Five years later, on December 31, 2014, our stock closed at $33.21, representing a 273% increase. Our Board and management’s performance and accomplishments have helped drive Westmoreland’s strong total shareholder returns (“TSR”). Westmoreland’s TSR has outperformed that of the Dow Jones U.S. Coal Index and the entire S&P 500 Index for the past five years as shown in the chart below:

Our strong performance highlights that the proposal does not seek to address any performance deficiencies at Westmoreland. Materials published by the Project, which identify 75 publicly-held companies that received proxy access proposals and the reasons those publicly-held companies were selected, indicate that Westmoreland was targeted because of “Fossil Fuel.” “Fossil Fuel” is not a compelling rationale to adopt proxy access, and the Board does not believe that a “Fossil Fuel” inspired proxy contest would be in the best interests of our shareholders. In particular, the Board is concerned that the rationale for this submission illustrates the potential misuse of proxy access by single purpose, special interest groups (or other shareholders) focused on personal, political or other issues that are incompatible with the best interests of Westmoreland and its shareholders.
The proposal advances a solution for a corporate governance problem that does not exist at Westmoreland.
Shareholders evaluating the proposal should consider it in the context of our overall corporate governance practices. The Board believes that its implementation of numerous corporate governance and executive compensation measures demonstrates its responsiveness and accountability to our shareholders. For example:
Our directors are elected annually and can be voted against any given year;
Due to our robust director independence standards, all of our directors are independent, other than our CEO;
Our directors are elected by a majority vote standard in uncontested elections;
We have an independent Chairman of the Board;
We have an annual advisory vote on executive compensation; and
Our shareholders are able to:
◦Communicate with any director, any Board committee or the full Board (as discussed above under “Communicating with the Board” on page 8). At its regular meetings, our N&CG Committee reviews correspondence from shareholders relating to the business of the Board;

42

◦Propose director nominees to the N&CG Committee, which, in turn, evaluates and considers such nominees at its regular meetings in the same manner as it would any nominee recommended by a Board member, management, search firm or other source (as discussed above under “Nominating and Corporate Governance Committee Report” beginning on page 11); and
◦Submit proposals for consideration at an Annual Meeting and for inclusion in Westmoreland’s proxy statement for that meeting.

The proposal would bypass our independent Nominating & Corporate Governance Committee’s process for identifying and recommending director nominees who would best serve our shareholders’ long-term interests.
An effective board of directors is composed of individuals with a diverse and complementary blend of experiences, skills and perspectives. Our N&CG Committee and our Board are best situated to assess the particular qualifications of potential director nominees and determine whether they will contribute to an effective and well-rounded Board that operates openly and collaboratively and represents the best interests of all shareholders. The N&CG Committee, which is comprised entirely of independent, non-employee directors, has a process for identifying and recommending director candidates for election by our shareholders, which are described in our Corporate Governance Guidelines of the Board and discussed above under Nominating and Corporate Governance report on page beginning on page 11. The N&CG Committee’s process is thoughtfully designed to identify and nominate director candidates who possess a combination of skills, professional experience, independence and diversity of backgrounds necessary to oversee our business and who can contribute to the overall effectiveness of our Board and its committees. Additionally, as part of the Board’s self-assessment, the N&CG Committee oversees the evaluation of the qualifications and performance of each incumbent Director prior to the Board nominating an incumbent Director for an additional term.
Shareholders already have a voice in this process through their ability to nominate potential directors for consideration by the N&CG Committee. The proposal, however, would enable any holder or group of holders of as little as 3% of our outstanding shares to bypass the N&CG Committee’s process by placing directly into nomination candidates who may fail to meet the independence or other qualifications established by the Committee, fail to contribute to the desired mix of perspectives, or fail to represent the interests of shareholders as a whole. In contrast, our N&CG Committee has a fiduciary duty to act in good faith for the best interests of Westmoreland and all of our shareholders.
*    *    *    *
The Board believes that the current measures Westmoreland employs for the nomination and election of directors have led to a Board that is responsive to shareholder input and that promotes a strategy of long-term value creation. A proxy access bylaw that has not been thoroughly tested, and shaped to fit Westmoreland’s size and board structure, could significantly disrupt annual elections for many years, cause disruptions to management, create a fragmented board and discourage highly qualified director candidates from serving. If Westmoreland plays out as a test case for how proxy access bylaws should be fitted to the economic realities of a company, it could be a long time before there is an opportunity to create the precise proxy access bylaw that fits Westmoreland. In the meantime, disruption of the Board’s functioning could adversely affect the pursuit of our long-term strategy and put shareholder value at risk. For the foregoing reasons, we believe that this proposal is unnecessary, creates risk of considerable harm to Westmoreland, and is not in the best interests of our shareholders.

Vote Required

Approval of Proposal 5 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.

Recommendation of the Board

For the foregoing reasons, the Board of Directors recommends you vote “AGAINST” the shareholder proposal regarding proxy access.

ADDITIONAL INFORMATION
Explanation of Non-GAAP Financial Measures

The Company's fiscal 2014 Form 10-K includes a reconciliation of adjusted EBITDA to net loss on a GAAP basis and a discussion of why we believe these non-GAAP financial measures are useful to investors. A copy of our fiscal 2014 Form 10-K is being provided with our proxy statement to our stockholders. As discussed in the Compensation Discussion and Analysis, one of the performance targets for the Company's AIP and LTIP awards is free cash flow. Free cash flow is defined as adjusted

43

EBITDA modified for book to cash differences in pension, postretirement medical, reclamation liabilities and deferred revenue, less expenditures for capital investments, reserve acquisition and bonding requirements. 

MISCELLANEOUS
Upon the written request of any person who on the record date was a record owner ofour stock, or who represents in good faith that he or she was on such date abeneficial owner of such stock entitled to vote at the Annual Meeting, wewill send such person, without charge, a copy of our Annual Report onForm 10-K for 2011,2014, as filed with the Securities and Exchange Commission.Requests for this report should be directed to Corporate Secretary, Westmoreland Coal Company, 9540 S. Maroon Circle, Suite 200, Englewood, Colorado 80112.

The Board has no present intention of bringing any other business before the Annual Meeting and has not been informed of any other matters that are to be presented to the Annual meeting. If any other matters properly come before the Annual Meeting, however, the persons named in the enclosed proxy will vote in accordance with their best judgment.

March 28, 2012
April [ ], 2016


40

Appendix A

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
WESTMORELAND COAL COMPANY
WESTMORELAND COAL COMPANY, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
1.    The present name of the corporation is Westmoreland Coal Company, and the name under which the corporation was originally incorporated is Stonega Coke and Coal Company. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was May 4, 1910.
2.    This Restated Certificate of Incorporation, whichonly restates and integrates and alsodoes not further amend the provisions of the Certificate of Incorporation of this corporation as heretofore amended or supplemented and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation.
3.    The text of the Certificate of Incorporation as amended or supplemented heretofore is hereby amended, integrated and restated without further amendments or changes to read in its entirety as followsas herein set forth in full:
FIRST: The name of the corporation is Westmoreland Coal Company.
SECOND: The addresslocation of the corporation’s registeredits principal office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the city of Wilmington, County of New Castle. The name of its registeredtheAagent therein and in charge thereof is The Corporation Trust Company.
THIRD: The purposes of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delawareare to mine, produce, process, manufacture, buy, sell, own, lease, deal in and dispose of coal, oil, gas, and all types of minerals and their products; and in addition to produce, process, manufacture, buy, sell, own, lease, deal in and dispose of all kinds of property and to engage in all kinds of enterprises.
FOURTH: The aggregate number of shares of all classes of stock which the corporation has authority to issue is 35,000,000, of which (a) 5,000,000 shall be Preferred Stock of the par value of $0.01 per share, issuable in series, and (b) 30,000,000 shall be Common Stock,of the par value of $2.50.01 per share.
The designations and the powers, preferences and rights of such classes of stock, and the qualifications, limitations and restrictions thereof, which are fixed by this Certificate of Incorporation, and the authority of the Board of Directors of the corporation (“Board of Directors”) to fix by resolution or resolutions providing for the issue of any series of the Preferred Stock and the designations, powers, preferences and rights of any such series, and the qualifications, limitations and restrictions thereof, which are not fixed by the Certificate of Incorporation, are as follows:
PREFERRED STOCK

A-1

1.    Issue in Series. The Preferred Stock may be issued from time to time in one or more series. Each series shall have the terms stated herein and in the resolution of the Board of Directors providing for their issue. All shares of any one series of Preferred Stock shall be identical.
2.    Creation of Series. The Board of Directors shall have authority by resolution to divideprovide, out of unissued shares ofthe Preferred Stock,intofor one or more series of Preferred Stock and to determine and fix with respect to each series, at any time prior to the issuance of any shares of such series, the number of shares constituting such series and the designations, powers preferences and rights of the shares of each such series, and the qualifications, limitations and restrictions thereof, which may vary as to shares of different series, subject to limitations provided by law and herein. All series of Preferred Stock may have voting rights on such terms as the Board of Directors shall determine, as shall be permitted by applicable law. The authority of the Board of Directors with respect to each such series shall include, but not be limited to, the determination or fixing of the following:
(a)    The designation of the series and the number of shares which shall constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors;
(b)    The dividend rate and time of payment of dividends on the shares of the series, whether dividends shall be cumulative, and, if so, from what date or dates, and whether and to what extent the shares of the series shall have participation rights;
(c)    The redemption rights and price or prices, if any, at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the corporation;
(d)    Whether or not the shares of the series shall be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares, and, if so entitled, the annual amount of such fund and the terms and provisions relative to the operation thereof;
(e)    Whether or not the shares of the series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock, or any other security, of the corporation or any other entity, and if so convertible or exchangeable, the specification of such other class or series or such other security, the conversion price or prices, or the rates of exchange, and any adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;
(f)    The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation;
(g)    Whether or not the shares of the series shall be entitled to the benefit of limitations restricting the payment of dividends on, or the making of other distributions in respect of stock of any class or series ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior class or series, and the terms of any such restrictions;
(h)    The terms, as applicable, of the voting rights, if any, in addition to the voting rights provided by law, of any series issued on or after the effective date of this amendmentof the holders of shares of the series; and
(i)    Any other relative rights, powers, preferences, qualifications, restrictions and limitations of that series.

A-2

3.    Subject to the rights of the holders of any series of Preferred Stock pursuant to the terms of this Certificate of Incorporation or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board of Directors, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

COMMON STOCK
4.    Dividends. Subject to applicable law and the preferential rights of any outstanding shares of Preferred Stock,Hholders of Common Stock shall be entitled to receive such dividends if, as and whenmay be declared by the Board of Directors except that the corporation will not declare, pay or set apart for payment any dividend on shares of Common Stock (other than dividends payable in Common Stock), or directly or indirectly make any distribution on, redeem, purchase or otherwise acquire any such shares, if at the time of such action the corporation is in default with respect to any dividend payable on or any sinking fund or purchase fund requirement relative to shares of Preferred Stock.
5.    Distribution of Assets. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the corporation, holders of Common Stock shall be entitled to receive pro rata all of the remaining assets of the corporation available for distribution to its stockholders subject to the preferential rights of any outstanding shares of Preferred Stockafter all amounts to which the holders of Preferred Stock are entitled have been paid or set aside in cash for payment.
6.    Notwithstanding the foregoing, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) or pursuant to the General Corporation Law of the State of Delaware.
7.    Subject to the rights of the holders of any series of Preferred Stock pursuant to the terms of this Certificate of Incorporation or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board of Directors, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.
GENERAL
5.    Voting Rights. Except as otherwise required by law, the holders of Common Stock and the holders of each series of Preferred Stock shall exclusively possess voting power in the election of directors and for all other purposes.
DESIGNATIONS OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
Section 1.    Designation and Amount. The shares of such series shall be designated as “Series B Junior Participating Preferred Stock” (the “Series B Preferred Stock”) and the number of shares constituting

A-3

the Series B Preferred Stock shall be 300,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series B Preferred Stock.
Section 2.    Dividends and Distributions.
(A)     Subject to the rights of the holders of any shares of Series A Convertible Exchangeable Preferred Stock of the Corporation or of any other series of Preferred Stock (or any similar stock) ranking prior and superior to the Series B Preferred Stock with respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the holders of shares of common stock, par value $2.50 per share of the Corporation (the “Common Stock”), and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series B Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the shares of Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B)    The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the shares of Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the shares of Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C)    Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends of such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B Preferred Stock in an amount less than the total amount of such dividends at

A-4

the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B Preferred Stock shall have the following voting rights:
(A)    Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the shares of Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B)    Except as otherwise provided herein, in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C)    Except as set forth herein, or as otherwise provided by law, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of shares of Common Stock as set forth herein) for taking any corporate action.
Section 4.    Certain Restrictions.
(A)    Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series B Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(i)    declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock;
(ii)    declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii)    redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock, provided that the Corporation may at any time redeem, purchase or

A-5

otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or
(iv)    redeem or purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, or any shares of stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(B)    The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5.    Reacquired Shares. Any shares of Series B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.
Section 6.    Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the shares of Common Stock payable in shares of shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
Section 7.    Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series B Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each

A-6

share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the shares of Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
I
Section 8.    No Redemption. The shares of Series B Preferred Stock shall not be redeemable.
Section 9.    Rank. The Series B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock including without limitation the Corporation’s Series A Convertible Exchangeable Preferred Stock.
Section 10.    Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock, voting together as a single class.
FIFTH:    This corporation is to have perpetual existence.
SIXTH:    The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whateverthe fullest extent permitted by law.
SEVENTH:    In addition to the powers conferred by statute, the board of directors is expressly authorized to (a) make, alter, amend and repeal the bylaws and (b) have one or more offices outside of Delaware and keep the books and records of the corporation in any of such offices, except as prohibited by law.
The stockholders shall have no preemptive right to subscribe to any stock of the corporation.
EIGHTH:    No director of the corporation shall be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this article Eighth shall be prospective only, and shall not affect, to the detriment of any director, any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification.4.    This Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance with Section 245 of the General Corporation Law of the State of Delaware.
NINTH:    Unless and except to the extent that the bylaws of the corporation shall so require, the election of directors of the corporation need not be by written ballot.
8.    This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware.

A-7

IN WITNESS WHEREOF, said Westmoreland Coal Company has caused this Amended and Restated Ccertificate of Incorporation to be signed by Theodore E. Worcester, its Senior Vice President,executed by its duly authorized officer on this 21st ___ day of February_____, 19952015.

WESTMORELAND COAL COMPANY

By    
Theodore E. Worcester
Name:
Title:


Westmoreland Coal Company
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
WESTMORELAND COAL COMPANY
9540 SOUTH MAROON CIR.
SUITE 200
ENGLEWOOD, CO 80112
ATTN: JENNIFER S. GRAFTON
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to create an electronic voting
instruction form.
WESTMORELAND COAL COMPANY
9540 SOUTH MAROON CIR., SUITE 200
ENGLEWOOD, CO 80112
ATTN: JENNIFER S. GRAFTON
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would likeDuring The Meeting - Go to reducewww.virtualshareholdermeeting.com/WLB2015
You may attend the costs incurredMeeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by our company in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, pleasearrow available and follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.instructions.
 
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you call and then follow the instructions.
 VOTE BY MAIL
 
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN  THIS  PORTION ONLY

THIS  PROXY  CARD  IS  VALID  ONLY  WHEN  SIGNED  AND  DATED.
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
WESTMORELAND COAL COMPANY
For
All
Withhold
All
For All
Except
To withhold authority to vote for any individual
individual  nominee(s), mark “For"For All
Except” Except" and write the
number(s) of the
nominee(s) on the line below.
 
 
The Board of Directors recommends you vote
FOR
the following:
m m m   


1. Election of Directorsooo 
Nominees:      
 
1.  Election of Directors
     Nominees
01) Keith E. Alessi		05) Richard M. Klingaman 
      
 01  Keith E. Alessi
02  Michael R. D'Appolonia
0302) Gail E. Hamilton04  Richard M. Klingaman05  Jan B. Packwood06) Craig R. Mackus 
 06  Robert C. Scharp    
03) Michael G. Hutchinson07) Jan B. Packwood
04) Terry J. Bachynski08) Robert C. Scharp      
 The Board of Directors recommends you vote FOR proposals 2, 3 and 4.ForAgainstAbstain
2) Advisory approval of Westmoreland Coal Company's executive compensation.ooo


3) Ratification of the appointment of Ernst & Young LLP as principal independent auditor for fiscal year 2015.ooo
4) Approval certain amendments to Westmoreland Coal Company's Certificate of Incorporation.ooo
The Board of Directors recommends you vote AGAINST proposal 5.  For
Against5) If properly presented at the meeting, vote on shareholder proposal regarding proxy access.Abstainooo
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
 
         
2. Advisory approval of Westmoreland Coal Company's executive compensation.mmm 
 
3.  To approve the amendments to the Amended and Restated 2007 Equity Incentive Plan for Employees and Non-Employee Directors.mmm
4.  Ratification of the appointment of Ernst & Young LLP as principal independent auditor for fiscal year 2012.mmm
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership name by authorized officer.
     
       
 Signature [PLEASE SIGN WITHIN BOX]
Date
 Signature (Joint Owners)Date 

A-8













Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Combined Document is available at www.proxyvote.com.








Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Combined Document is/are available at www.proxyvote.com .
WESTMORELAND COAL COMPANY
Annual Meeting of Stockholders
May 22, 201219, 2015 8:30 AM
This proxy is solicited by the Board of Directors
The undersigned hereby constitutes and appoints Jennifer S.S. Grafton as true and lawful agent and proxy with power of substitution, to represent the undersigned and to vote all shares of Common Stock held by the undersigned at the Annual Meeting of Stockholders to be held via live webcast at The Crowne Plaza Hotel located at 27 North 27th Street, Billings, Montana 59101,www.virtualshareholdermeeting.com/WLB2015 on Tuesday, May 22, 2012,19, 2015, at 8:30 a.m. (mountain daylight time), and at any adjournments thereof, on all matters coming before said meeting as noted on the reverse side of thisthe card.
 
This proxy, when properly executed, will be voted in the manner directed herein. If no directions are given, this proxy will be voted in accordance with the Board of Directors' recommendations. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY AND PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.THEREOF.
 
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors' recommendations. The proxies cannot vote yourthe shares unless youthey sign and return this card.
 
Continued and to be signed on reverse side

Appendix A

WESTMORELAND COAL COMPANY
AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN FOR EMPLOYEES
AND NON-EMPLOYEE DIRECTORS
1.  Purpose
The purpose of this 2007 Equity Incentive Plan for Employees and Non-Employee Directors (the “Plan”) of Westmoreland Coal Company, a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders.
2.  Eligibility
All of the Company’s employees, officers and directors are eligible to be granted options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards (each, an “Award”) under the Plan.  Each person who receives an Award under the Plan is deemed a “Participant”.
Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”); provided, however, that the term “Company” shall be limited to include only entities that are eligible issuers of service recipient stock (as defined in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E)), or the applicable successor regulations for Awards that would otherwise be subject to Section 409A, unless the Board of Directors determines otherwise.
3.  Administration and Delegation
(a)  Administration by Board of Directors.  The Plan will be administered by the Board.  The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable.  The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan.  The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.
(b)  Appointment of Committees.  To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”), or any officer of the Company.  All references in the Plan to the “Board” shall mean the Board or any such Committee or officer to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officer.
4.  Stock Available for Awards
(a)  Number of Shares.
(1)  Subject to adjustment under Section 10, Awards may be made under the Plan for up to 1,400,000 shares of common stock, $2.50 par value per share, of the Company (the “Common Stock”).
(2)  If any Award expires; is terminated, surrendered or canceled without having been fully exercised; is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right); or otherwise results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan.  Further, shares of Common Stock otherwise held by a Participant and tendered to the Company by the Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan.  However, in the case of Incentive Stock Options (as hereinafter defined), the foregoing provisions shall be subject to any limitations under the Code.
(3)  Shares tendered in payment of an option for a cashless, net or similar exercise, shares withheld for taxes, and shares attributable to cash-settled Awards shall not be again available for the grant of Awards under the Plan.
(4)  Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.
(b)  Section 162(m) Per-Participant Limit.  The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 200,000 per calendar year.  For purposes of the foregoing limit, the combination of an Option in tandem with a SAR (as each is hereafter defined) shall be treated as a single Award.  The per-Participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).
(c)  Substitute Awards.  In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof.  Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.  Substitute Awards shall not count against the overall share limit set forth in
- 2 -
Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.
5.  Stock Options
(a)  General.  The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.  An Option that is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option.”
(b)  Incentive Stock Options.  An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of the Company, any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code.  The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board, including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.
(c)  Exercise Price; Fair Market Value.
(1)  The Board shall establish the exercise price of each Option and specify such exercise price in the applicable option agreement.  The exercise price shall be not less than 100% of the Fair Market Value (as defined below) of a share of Common Stock on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value of a share of Common Stock on such future date.
(2)  The “Fair Market Value” of a share of Common Stock for purposes of the Plan shall be determined as follows:
(A)  if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) in the principal U.S. market for the Common Stock on the date of grant; or
(B)  if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or
(C)  if the Common Stock is not publicly traded, the Board will determine the Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under
- 3 -
Section 409A of the Code, except as the Board or Committee may expressly determine otherwise; or
(D)  for any date that is not a trading day, the Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the closing bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly.
The Board may substitute a particular time of day or other measure of “closing sale price” or “closing bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Section 409A of the Code.  The Board has sole discretion to determine the Fair Market Value for purposes of this Plan, and all Awards are conditioned on the Participants’ agreement that the Board’s determination is conclusive and binding even though others might make a different determination.
(d)  Duration of Options.  Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement, provided, however, that no Option will be granted for a term in excess of 10 years.
(e)  Exercise of Option.  Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised.  Shares of Common Stock subject to the Option will be delivered by the Company following exercise either as soon as practicable or, subject to such conditions as the Board shall specify, on a deferred basis (with the Company’s obligation to be evidenced by an instrument providing for future delivery of the deferred shares at the time or times specified by the Board).
(f)  Payment Upon Exercise.  Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:
(1)  in cash or by check, payable to the order of the Company;
(2)  except as may otherwise be provided in the applicable option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;
(3)  to the extent provided for in the applicable option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if
- 4 -
any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;
(4)  to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (A) the number of shares of Common Stock underlying the Option so exercised reduced by (B) the number of shares of Common Stock equal to the aggregate exercise price of the Option divided by the Fair Market Value on the date of exercise;
(5)  to the extent provided for in the applicable Incentive Stock Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive the number of shares of Common Stock underlying the Option so exercised reduced by the number of shares of Common Stock equal to the aggregate exercise price of the Option divided by the Fair Market Value on the date of exercise; provided, however, that such provision shall only be operative in an Incentive Stock Option agreement to the extent that the inclusion of the provision will not cause the Option to fail to qualify as an Incentive Stock Option under the applicable Code rules;
(6)  payment of such other lawful consideration as the Board may determine; or
(7)  by any combination of the above permitted forms of payment.
6.  
Stock Appreciation Rights.
(a)  General.  The Board may grant Awards consisting of a stock appreciation right (“SAR”) entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined in whole or in part by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock.  The date as of which such appreciation or other measure is determined shall be the exercise date.
(b)  Grants.  SARs may be granted in tandem with, or independently of, Options granted under the Plan.
(c)  Grant or Base Price.  The grant or base price or exercise price of an SAR shall not be less than 100% of the Fair Market Value per share of Common Stock on the date of grant of the SAR; provided that if the Board approves the grant of an SAR with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value of a share of Common Stock on such future date.
(d)  Term.  The term of an SAR shall not be more than 10 years from the date of grant.
(e)  Exercise.  SARs may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with any other documents required by the Board.
- 5 -
7.  
Restricted Stock.
(a)  General.  The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award.
(b)  Terms and Conditions.
(1)  General. The Board shall determine the terms and conditions of an Award of Restricted Stock, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.
(2)  Dividends.  Participants holding shares of Restricted Stock will be entitled to all ordinary cash and other dividends paid with respect to such shares, unless otherwise provided by the Board.  Each dividend payment will be made no later than the end of the calendar year in which the dividends are paid to shareholders of that class of stock or, if later, the 15th day of the third month following the date the dividends are paid to shareholders of that class of stock.
8.  
Restricted Stock Units.
(a)  General.  The Board may grant Awards entitling the recipient to receive shares of Common Stock to be delivered at the time such shares of Common Stock vest (“Restricted Stock Units”).
(b)  Terms and Conditions.
(1)  In General.  The Board shall determine the terms and conditions of a Restricted Stock Unit Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.
(2)  Settlement.  Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market Value of one share of Common Stock, as provided in the applicable Award agreement.  The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred in a manner consistent with Section 409A, on a mandatory basis or at the election of the Participant.
(3)  Voting Rights.  A Participant shall have no voting rights with respect to any Restricted Stock Units.
(4)  Dividend Equivalents.  To the extent provided by the Board, in its sole discretion, a grant of Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of
- 6 -
outstanding shares of Common Stock (“Dividend Equivalents”).  Dividend Equivalents may be paid currently or credited to an account for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, as determined by the Board in its sole discretion, subject in each case to such terms and conditions as the Board shall establish, in each case to be set forth in the applicable Award agreement.
9.  
Other Stock-Based Awards.
Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future.  Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled.  Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine.  Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.
10.  
Director Awards.
(a)  Initial Grant.  Upon the commencement of service on the Board by any individual who is not then an employee of the Company or any subsidiary of the Company, the Company may elect to grant to such person an Award with a value determined in a manner deemed appropriate by the Board, with such award being made in the Board’s sole discretion.
(b)  Annual Grant.  On the date of each annual meeting of stockholders of the Company, the Company shall grant to each member of the Board of Directors of the Company who is serving as a director of the Company immediately following such annual meeting and who is not then an employee of the Company or any of its subsidiaries, an Award with a value equal to $70,000 (rounded up to the nearest whole share) based on the Fair Market Value of the Company’s common stock.
(c)  Grant or Base Price.  The grant or base price or exercise price of an Award granted under this Section 6 shall not be less than 100% of the Fair Market Value per share of Common Stock on the date of grant of the Award.
(d)  Terms of Director Awards.
(1)  If a Participant’s service as a director terminates for any reason other than a Reorganization Event or a Change in Control Event, and if the Participant has served as a director for three years or more, then such Participant’s Awards shall vest and become fully exercisable on the date such Participant ceases to be a director.  If a Participant’s service as a director terminates for any reason other than a Reorganization Event or a Change in Control Event, and such Participant has served as a director for less than three years, then all of the Participant’s unvested Awards shall expire on the date such Participant ceases to be a director; provided, however, that the Board may in its sole discretion provide for the vesting of any
- 7 -
unvested Award if the Participant’s service as a director terminates by reason of death or disability.
(2)  Awards granted under this Section 10 shall expire at the time specified in the relevant Award, which in the case of Options shall be the earlier of 10 years from the date of grant or three months following cessation of Board service.
(e)  Board Discretion.  This Plan is not intended to limit the Board’s ability to revise the incentive compensation payable to the directors, and the Board retains the specific authority to from time to time increase or decrease the dollar values specified in paragraph (b) and to amend the terms of director Awards as otherwise permitted by this Plan.
11.  
Adjustments for Changes in Common Stock and Certain Other Events.
(a)  Changes in Capitalization.  In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the sub-limit set forth in Section 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share- and per-share provisions and the grant or base price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding Award of Restricted Stock or RSUs, (vi) the share- and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, and (vii) the terms and conditions of each Award issuable under Section 6, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.
(b)  Reorganization Events.
(1)  Definition.  A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction or (c) any liquidation or dissolution of the Company.
(2)  Consequences of a Reorganization Event on Awards Other than Restricted Stock.  In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted
- 8 -
Stock on such terms as the Board determines: (i) provide that Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that the Participant’s unexercised Options or other unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Options or other Awards (to the extent the exercise price does not exceed the Acquisition Price) over (B) the aggregate exercise price of all such outstanding Options or other Awards and any applicable tax withholdings, in exchange for the termination of such Options or other Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing.  In taking any of the actions permitted under this paragraph (2), the Board shall not be obligated by the Plan to treat all Awards, or all Awards of the same type, identically.
For purposes of clause (i) above, an Option shall be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.
(3)  Consequences of a Reorganization Event on Restricted Stock.  Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company under each outstanding share of Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Restricted Stock.  Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Award of Restricted Stock or any other agreement between a Participant and the Company, all restrictions and
- 9 -
conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.
(c)  Change in Control Events.
(1)  Definition.  A “Change in Control Event” shall mean:
(A)   (I) except as provided in clause (A)(II) below, the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 20% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control Event: (i) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iii) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (C) of this definition; and provided, further, that if any person beneficially owns 20% or more of the Outstanding Company Common Stock or the Outstanding Company Voting Securities, but notwithstanding such ownership, a Change in Control Event has not occurred because the Person’s acquisition of all or a portion of such Person’s shares is or was an acquisition described in clause (i) of the preceding proviso, then the acquisition by that Person of any additional shares of Common Stock other than pursuant to a stock split, stock dividend, or other similar event shall constitute a Change in Control Event; or (II) notwithstanding the foregoing clause (A)(I), the acquisition of 20% or more of the Outstanding Company Common Stock or the Outstanding Company Voting Securities shall not be a Change of Control Event if the Person acquiring such interest in the Company’s outstanding securities does not thereby become an “Acquiring Person” under the terms of the Rights Agreement (defined below) in effect on the date of the shareholder approval of this Plan; provided, however, that if such Person would become an “Acquiring Person” under the terms of the Rights Agreement upon the acquisition of a specified percentage of the Outstanding Company Common Stock or the Outstanding Company Voting Securities greater than 20% (the “Modified Ownership Threshold”), then it shall be a Change of Control Event under this Plan if such Person acquires a beneficial interest in the Outstanding Company
- 10 -
Common Stock or the Outstanding Company Voting Securities at or above the Modified Ownership Threshold, thereby making such Person an “Acquiring Person” under the terms of the Rights Agreement.  The “Rights Agreement” referred to in this clause (A)(II) means the Amended and Restated Rights Agreement, dated as of February 7, 2003, between the Company and Computershare Trust Company, N.A. (formerly known as EquiServe Trust Company, N.A.), as rights agent, as amended by the First Amendment to the Amended and Restated Rights Agreement, dated as of May 2, 2007.
(B)   such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated pursuant to the terms of the Standby Purchase Agreement, dated as of May 2, 2007 between the Company and Tontine Capital Partners, L.P. or (z) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or
(C)   the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 20% or more of the then-outstanding shares of common
- 11 -
stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or
(D)   the liquidation or dissolution of the Company.
(2)  Effect on Awards.  Unless specifically provided to the contrary in the instrument evidencing any Award or any other agreement between a Participant and the Company, upon a Change of Control Event, unvested Awards will automatically become vested or exercisable, and all restrictions and conditions on Restricted Stock shall automatically be deemed terminated or satisfied: (a) if the Participant is an employee and is Terminated within 12 months following such Change of Control; or (b) if the Participant is a director and is removed from the Board within 12 months of the Change of Control, or, if a regular meeting of shareholders occurs within 12 months of the Change of Control, such director is not nominated for re-election at such meeting after he or she expresses a desire to be so nominated.  For purposes of the foregoing, “Terminated” means involuntary dismissal or a material change in the employee’s level of total compensation or a material change in his or her level of responsibility which, in either such case, causes the employee to voluntarily terminate his or her employment.
12.  General Provisions Applicable to Awards
(a)  Transferability of Awards.  Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a domestic relations order acceptable to the Company its sole discretion, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award.  References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.
(b)  Documentation.  Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine.  Such written instrument may be in the form of an agreement signed by the Company and the Participant or a written confirming memorandum to the Participant from the Company.  Each Award may contain terms and conditions in addition to those set forth in the Plan.
- 12 -
(c)  Board Discretion.  Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award.  The terms of each Award need not be identical, and the Board need not treat Participants uniformly.
(d)  Termination of Status.  The Board shall determine the effect on an Award of the disability, death, termination of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.
(e)  Withholding.  The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will recognize ownership of Common Stock under an Award.  The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages.  If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations.  Payment of withholding obligations is due before the Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company so requires, at the same time as is payment of the exercise price unless the Company determines otherwise.  If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income).  Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.
(f)  Amendment of Award.  Subject to Section 5(g), the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 10 hereof.  Notwithstanding the foregoing, the Board may amend an Award to comply with Section 954 of the Dodd Frank Act (the “clawback” requirements) without Participant consent.
(g)  Conditions on Delivery of Stock.  The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company
- 13 -
such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.
(h)  Acceleration.  The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.
(i)  Limitation on Repricing; Buyout.  Unless such action is approved by the Company’s stockholders: (i) no outstanding Option granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option (other than adjustments pursuant to Section 10); (2) the Board may not cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option; and (3) the Board may not conduct any cash buyouts of Awards except to the extent the Award may, by its terms, be settled in cash.
(j)  Performance Awards.
(1)  Grants.  Restricted Stock, RSUs and Other Stock-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 11(i) (“Performance Awards”), subject to the limit in Section 4(b) on shares covered by such grants.
(2)  Committee.  Grants of Performance Awards to any Covered Employee intended to qualify as “performance-based compensation” under Section 162(m) (“Performance- Based Compensation”) shall be made only by a Committee (or subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m).  In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be deemed to be references to such Committee or subcommittee.  “Covered Employee” shall mean any person who is a “covered employee” under Section 162(m)(3) of the Code.
(3)  Performance Measures.  For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following:
(A)  earnings before interest, taxes, depreciation and/or amortization,
(B)  earnings before operating income or profit,
(C)  operating efficiencies,
(D)  return on equity, assets, capital, capital employed, or investment,
(E)  after tax operating income,
- 14 -
(F)  net income,
(G)  earnings or book value per share,
(H)  cash flow(s),
(I)   total sales or revenues or sales or revenues per employee,
(J)   production (separate work units or SWUs),
(K)  stock price or total stockholder return,
(L)  dividends,
(M)  strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures, or
(N)  except in the case of a Covered Employee, any other performance criteria established by the Committee, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated.
Such performance measures may be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs.  Such performance measures: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary, division, operating unit, or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (iii) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m).  Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.
(4)  Adjustments.  Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.
(5)  Other.  The Committee shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.
- 15 -
13.  
Vesting.  Unless otherwise provided in an Award agreement, Awards shall be 100% vested: (a) for directors, after one year of service, and (b) for employees, ratably over three years of service.
14.  Miscellaneous
(a)  No Right To Employment or Other Status.  No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.
(b)  No Rights As Stockholder.  Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.
(c)  Effective Date and Term of Plan.  This amended and restated version of the Plan shall become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”).  No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.
(d)  Amendment of Plan.  The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until such amendment shall have been approved by the Company’s stockholders if required by Section 162(m) (including the vote required under Section 162(m)); (ii) no amendment that would require stockholder approval under the rules of American Stock Exchange (“AMEX”) may be made effective unless and until such amendment shall have been approved by the Company’s stockholders; and (iii) if the AMEX amends its corporate governance rules so that such rules no longer require stockholder approval of “material amendments” to equity compensation plans, then, from and after the effective date of such amendment to the AMEX rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or 10), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless stockholder approval is obtained.  In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval.  Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment does not materially and adversely affect the rights of Participants under the Plan.  No Award shall be made that is conditioned upon stockholder approval of any amendment to the Plan.
- 16 -
(e)  Compliance with Code Section 409A.  No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code.  The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for any action taken by the Board.  To the extent any Award constitutes deferred compensation subject to 409A that is payable to a specified employee on separation from service, payment of the Award will be delayed for six months after the date of separation from service.
(f)  Governing Law.  The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

- 17 -