2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 474 Compared to the new Compensation Peer Group, the Company falls between the 45 th and 50 th percentile in both revenue and total assets, as shown in the table below. Company Revenue ($ in millions) (1) Total Assets ($ in millions) (2) Median 5,876 8,540 Peabody Energy Corporation 5,579 8,181 Peabody Energy Corporation Percentile Rank 45% 49% Data Source: S&P’s Capital IQ; includes adjustments that may differ from GAAP reporting made by Capital IQ to all companies (1) Reflected as of the most recently reported four quarters at December 31, 2017. (2) Reflected as of the most recently reported quarter at December 31, 2017. Executive Compensation Policies and Practices Benefits NEOs are eligible to participate in benefit plans generally available to the broader employee group. Excess Retirement Plan Previously, our NEOs generally participated in our nonqualified excess defined contribution retirement plan (“Excess Retirement Plan”). The Excess Retirement Plan was designed to allow a select group of highly compensated management employees to make contributions in excess of certain limits imposed by the Internal Revenue Code that apply to our tax-qualified 401(k) plan, and to receive matching contributions on such employee contributions. The Excess Retirement Plan was suspended effective December 31, 2015 and participants, including our NEOs, were no longer able to contribute to the plan and we did not make any contributions on behalf of the NEOs for 2016 or 2017. Under the Plan confirmed by the Bankruptcy Court, the liabilities relating to our current employees under the Excess Retirement Plan were transferred to a new nonqualified supplemental employee retirement account plan. Beginning January 1, 2018, our NEOs are eligible to make contributions to the new supplemental employee retirement account. Perquisites We provide perquisites that the Committees believe are necessary to enable the NEOs to perform their responsibilities safely and efficiently. We believe the benefit we receive from providing these perquisites significantly outweighs the cost of providing them. The limited perquisites utilized by our NEOs in 2017 are explained in the footnotes to the All Other Compensation table on page 49. Share Ownership Requirements We have share ownership requirements for our NEOs, which are designed to align their long-term financial interests with those of our stockholders. The NEO share ownership requirements are as follows: Role Value of Common Stock to be Owned CEO 5 times base salary Other NEOs 3 times base salary If at any time an NEO does not meet his or her ownership requirement, he or she must retain 100% of net shares received as the result of the exercise, vesting or payment of any equity award until the ownership requirement is met. As of the date of this filing, all NEOs comply with these ownership requirements. Peabody | Notice of 2018 Annual Meeting of Stockholders and Proxy Statement 41 • To evaluate share utilization by reviewing overhang levels and annual run rates; • To evaluate the form and mix of equity awarded to NEOs; • To evaluate share ownership guidelines; • To assess the competitiveness of total direct compensation awarded to NEOs; • To validate whether our executive compensation program is aligned with our performance; and • As an input in designing compensation plans, benefits and perquisite programs. The survey data provides a significant sample size, includes information for management positions below senior executives, and includes other industries from which we might recruit for executive positions. The primary survey source was Willis Towers Watson Executive Database. As stated above, while the Compensation Committee examines executive compensation data from surveys and the Compensation Peer Group, competitive compensation information is not the sole factor in its decision- making process. Compensation Peer Group In July 2017, the Compensation Committee requested its independent compensation consultant evaluate the appropriateness of the Compensation Peer Group for our company post-Emergence. In selecting the new Compensation Peer Group, our Compensation Committee considered companies that are: • Direct business competitors; • Labor market competitors; • In a similar industry (for example, coal and consumable fuels, mining and metals, energy and other companies subject to similar economic opportunities and challenges); and • At a similar scale (with revenue and enterprise value generally within 1/3-times to 3-times the size of our company). The following table illustrates the changes to the peer group based on this analysis: Peers Removed (10) Peers Added (9) 2017 Compensation Peer Group (18) Air Products & Chemicals, Inc. + Antero Resources Corporation = AK Steel Corporation Allegheny Technologies, Inc. Chesapeake Energy Corporation Antero Resources Corporation Alpha Natural Resources, Inc. CVR Energy, Inc. Arch Coal, Inc. Eastman Chemical Company The Mosaic Company Barrick Gold Corporation Ecolab, Inc. Noble Energy, Inc. Chesapeake Energy Corporation Joy Global, Inc. Packaging Corpor tion of America Cleveland-Cliffs Inc. 16 Kinross Gold Corporation Southwestern Energy Company CONSOL Energy Inc. Praxair, Inc. SunCoke Energy, Inc. CVR Energy, Inc. Rockwell Automation, Inc. United States Steel Corporation Domtar Corporation SPX Corporation Freeport-McMoRan Inc. The Mosaic Company Newmont Mining Corporation Noble Energy, Inc. Packaging Corporation of America Southwestern Energy Company SunCoke Energy, Inc. Teck Resources Limit United States Steel Corporation 16 Formerly Cliffs Natural Resources Inc. Peabody | Notice of 2018 Annual Meeting of Stockholders and Proxy Statement 40 PEABODY ENERGY CORPORATION