Alpha Metallurgical Resources Inc

The MIP is currently authorized for the issuance of awards of up to 1,201,202 shares of common stock, and as of December 31, 2023, there were 90,970 shares of common stock available for grant under the MIP. The LTIP is currently authorized for the issuance of awards of up to 1,500,000 shares of common stock, and as of December 31, 2023, there were 819,305 shares of common stock available for grant under the LTIP. Pursuant to the Merger Agreement, the Company assumed the ANR Inc. 2017 Equity Incentive Plan (the “ANR EIP”), which had underlying ANR shares that were converted to 89,766 Contura Energy, Inc. shares. The ANR EIP isnot authorized for additional issuance of awards of shares of common stock, and as of December 31, 2023, there wereno shares of common stock available for grant under the ANR EIP.

As of December 31, 2023, the Company hadthree types of stock-based awards outstanding: time-based restricted stock units, performance-based restricted stock units, and performance-based cash awards. Upon vesting and settlement or exercise of the stock-based awards outstanding, the Company issues authorized and unissued shares of the Company’s common stock to the recipient. Stock-based compensation expense totaled $20,856, $9,841, and $7,468 for the years ended December 31, 2023, 2022, and 2021, respectively. For the years ended December 31, 2023, 2022, and 2021, approximately 95%,92%, and 89%, respectively, of stock-based compensation expense was reported as selling, general and administrative expenses, and the remainder was recorded as cost of coal sales.

The Company is authorized to repurchase common shares from employees (upon the election by the employee) to satisfy the employees’ statutory tax withholdings upon the vesting of stock grants. Shares that are repurchased to satisfy the employees’ statutory tax withholdings are recorded in treasury stock at cost. During the year ended December 31, 2023, the Company repurchased 81,287 shares of its common stock issued pursuant to awards under the MIP and LTIP for a total purchase amount of $17,333, or $213.23 average price paid per share. During the year ended December 31, 2022, the Company repurchased 94,460 shares of its common stock issued pursuant to awards under the MIP and LTIP for a total purchase amount of $7,867, or $83.28 average price paid per share. During the year ended December 31, 2021, the Company repurchased 50,363 shares of its common stock issued pursuant to awards under the MIP and LTIP for a total purchase amount of $785, or $15.60 average price paid per share.

On November 8, 2023, the Company modified the terms of certain outstanding stock-based compensation awards previously granted to Mr. Stetson, the executive chair of the Board. Pursuant to the terms of the modification, upon the completion of his service as executive chair as of the end of the day on December 31, 2023, and his appointment by the Board as non-executive chair of the Board effective as of January 1, 2024, the pro-rata vesting of his outstanding incentive awards was to be calculated as if his separation date were instead December 31, 2024. The modification resulted in total incremental compensation cost of $6,717 for the year ended December 31, 2023 and impacted the time-based restricted stock units and performance-based restricted stock units granted to him under the LTIP during the years ended December 31, 2023 and 2022. Awards held by other employees were not affected by the modification. As all modified awards are fully vested, there is no remaining compensation cost to be recognized as of December 31, 2023.

2023 Awards Granted

During the year ended December 31, 2023, the Company granted certain key employees and non-employee directors 35,018 time-based restricted stock units under the LTIP with a weighted average grant date fair value of $165.43 based on the Company’s closing stock price at the trading day before the date of the grant. Awards granted to key employees on January 25, 2023 will vest ratably over athree-year period from the date of the grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date. Per the terms of the transition agreement between Mr. Stetson and the Company, dated November 18, 2022, relating to his service as the Company’s executive chair of the Board, and then as its non-executive chair, awards granted to Mr. Stetson were to vest pro-rata as of December 31, 2023, the last day of his service as the Company’s executive chair, reflecting his service through that date. The transition agreement was later amended as discussed above. Restricted stock units were also granted to a non-employee director on February 2, 2023, which vested on May 2, 2023, and to multiple non-employee directors on May 3, 2023, which will vest on the first to occur of (i) May 2, 2024, (ii) the director’s separation of service due to the director’s death or physical or mental incapacity to perform his or her usual duties, (iii) the director’s service as a member of the Board is terminated, for any reason other than removal for cause, as of a date that is more than six months after the date of grant, and (iv) a change in control.

Additionally, during the year ended December 31, 2023, the Company granted certain key employees 49,701 performance-based restricted stock units under the LTIP, which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder return goals and annually determined operational goals over athree year period. These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. Per the terms of the transition agreement between Mr. Stetson and the Company, dated November 18, 2022, relating to his service as the Company’s executive chair of the Board, and then as its non-executive chair, the awards granted to Mr. Stetson were to vest pro-rata as of December 31, 2023, the last day of his service as the Company’s executive chair, reflecting his service through that date. The transition agreement was later amended as discussed above. The performance-based restricted stock units have the potential to be earned from 0% to 200% of the targeted performance level, depending on actual results. Upon vesting and settlement of these awards, the Company will issue authorized and previously unissued shares of the Company’s common stock to the recipient. The 29,816 operational performance-based restricted stock units were valued based on the Company’s closing stock price on the trading day before the date of the grant and had a weighted average grant date fair value of $171.07. For the awards with operational performance conditions, the Company reassesses at each reporting date whether achievement of each of the performance conditions was probable and adjusts the accrual of stock-based compensation expense as needed. Of the 19,885 relative total shareholder return performance-based restricted stock units,2,093 were valued based on the Company’s closing stock price on the trading day before the date of the grant and had a weighted average grant date fair value of $171.07, and 17,792 were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value of $267.18 based on a Monte Carlo simulation. The Monte Carlo simulation incorporated the assumptions as presented in the following table:

(1)The start price for the Company represented the average closing stock price over thetwenty trading days ending on December 31, 2022, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2)The valuation date stock price represented the closing value on the grant date.

(4)The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

2022 Awards Granted

During the year ended December 31, 2022, the Company granted certain key employees and non-employee directors 95,111 time-based restricted stock units under the MIP and LTIP with a weighted average grant date fair value of $96.60 based on the Company’s closing stock price at the trading day before the date of the grant. Awards granted to key employees on January 25, 2022 will vest ratably over athree-year period from the date of the grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date. Restricted stock units were also granted to non-employee directors on May 3, 2022, which vested on May 2, 2023. An award granted to Mr. Stetson, the Chief Executive Officer (“CEO”), on November 18, 2022, in advance of his transition to executive chair of the Board on January 1, 2023, vested over the course of 2023 in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date.

Additionally, during the year ended December 31, 2022, the Company granted certain key employees 60,857 performance-based restricted stock units under the LTIP, which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder return goals and annually determined operational goals over athree year period. These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. These performance-based restricted stock units have the potential to be earned from 0% to 200% of the targeted performance level, depending on actual results. Upon vesting and settlement of these awards, the Company will issue authorized and previously unissued shares of the Company’s common stock to the recipient. The 36,515 operational performance-based restricted stock units were valued based on the Company’s closing stock price on the trading day before the date of the grant and had a weighted average grant date fair value of $60.37. For the awards with operational performance conditions, the Company reassesses at each reporting date whether achievement of each of the performance conditions was probable and adjusts the accrual of stock-based compensation expense as needed. The 24,342 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value of $97.33 based on a Monte Carlo simulation. The Monte Carlo simulation incorporated the assumptions as presented in the following table:

(1)The start price for the Company represented the average closing stock price over thetwenty trading days ending on December 31, 2021, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2)The valuation date stock price represented the closing price on the grant date.

(4)The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

Additionally, during the year ended December 31, 2022, the Company granted certain key employees performance-based cash incentive awards under the LTIP with a target award amount of $1,105. The cash to be awarded is based on the achievement of pre-established relative total shareholder return goals over athree-year period. These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. These awards have the potential to be distributed from 0% to 200% of the targeted performance level, depending on actual results. Upon vesting of these awards, the Company issues cash to the recipient. These awards are classified as a liability, and the Company reassesses at each reporting date the fair value of the award and adjusts the accruals of stock-based compensation expense as appropriate based on a Monte Carlo simulation. As of December 31, 2023 and 2022, the liability for these awards totaled $1,233 and $374, respectively. The performance-based cash incentive awards were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value as a percent of target dollar value of 61.97% based on a Monte Carlo simulation. The Monte Carlo simulation incorporates the assumptions as presented in the following table:

(1) The start price for the Company represented the average closing stock price over thetwenty trading days ending on December 31, 2021, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The valuation date stock price represented the closing price on the grant date.

(3) The expected volatility assumption was based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represented the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

2021 Awards Granted

During the year ended December 31, 2021, the Company granted certain key employees and non-employee directors 223,496 time-based restricted stock units under the MIP and LTIP with a weighted average grant date fair value of $12.03 based on the Company’s closing stock price at the trading day before the date of the grant. Awards granted to key employees will vest ratably over athree-year period from the date of the grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date. Restricted stock units were also granted to non-employee directors on February 10, 2021, which vested on April 30, 2021, and on May 1, 2021, which vested on April 30, 2022.

Additionally, during the year ended December 31, 2021, the Company granted certain key employees 167,587 performance-based restricted stock units under the LTIP, which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder return goals and annually determined operational goals over athree year period. These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. These performance-based restricted stock units have the potential to be earned from 0% to 200% of the targeted performance level, depending on actual results. Upon vesting and settlement of these awards, the Company will issue authorized and previously unissued shares of the Company’s common stock to the recipient. The 100,552 operational performance-based restricted stock units were valued based on the Company’s closing stock price on the trading day before the date of the grant and had a weighted average grant date fair value of $12.00. For the awards with operational performance conditions, the Company reassesses at each reporting date whether achievement of each of the performance conditions was probable and adjusts the accrual of stock-based compensation expense as needed. The 67,035 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value of $16.18 based on a Monte Carlo simulation. The Monte Carlo simulation incorporated the assumptions as presented in the following table:

(1)The start price for the Company represented the average closing stock price over thetwenty trading days ending on December 31, 2020, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2)The valuation date stock price represented the closing price on the grant date.

(4)The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

Additionally, during the year ended December 31, 2021, the Company granted certain key employees performance-based cash incentive awards under the LTIP with a target award amount of $927. The cash to be awarded is based on the achievement of pre-established relative total shareholder return goals over athree-year period. These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria. These awards have the potential to be distributed from 0% to 200% of the targeted performance level, depending on actual results. Upon vesting of these awards, the Company issues cash to the recipient. These awards are classified as a liability, and the Company reassesses at each reporting date the fair value of the award and adjusts the accruals of stock-based compensation expense as appropriate based on a Monte Carlo simulation. As of December 31, 2023 and 2022, the liability for these awards totaled $1,609 and $812, respectively. The performance-based cash incentive awards were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value as a percent of target dollar value of 51.73% based on a Monte Carlo simulation. The Monte Carlo simulation incorporates the assumptions as presented in the following table:

(1) The start price for the Company represented the average closing stock price over thetwenty trading days ending on December 31, 2020, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The valuation date stock price represented the closing price on the grant date.

(3) The expected volatility assumption was based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S. Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represented the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

Restricted Stock Units

Time-Based Restricted Stock Units

Time-based restricted stock unit activity for the year ended December 31, 2023 is summarized in the following table:

(1) Includes 6,753 shares with deferred settlement pursuant to the award agreements.

As of December 31, 2023, there was $2,011 of unrecognized compensation cost related to non-vested time-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.45 years. The total fair value of shares vested, including awards with deferred settlements, during the years ended December 31, 2023, 2022, and 2021, was $35,204, $20,275, and $5,544, respectively.

Performance-Based Restricted Stock Units

Relative performance-based restricted stock unit activity for the year ended December 31, 2023 based on target achievement of the performance criteria is summarized in the following table:

As of December 31, 2023, there was $3,809 of unrecognized compensation cost related to non-vested relative performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.92 years. The total fair value of shares vested during the year ended December 31, 2023 was $3,559.

Operational performance-based restricted stock unit activity for the year ended December 31, 2023 based on target achievement of the performance criteria is summarized in the following table:

As of December 31, 2023, there was $1,446 of unrecognized compensation cost related to non-vested operational performance-based restricted stock units, based on the probability of achievement as of December 31, 2023, which is expected to be recognized as expense over a weighted-average period of 1.70 years.The total fair value of shares vested during the year ended December 31, 2023 was $5,339.

Stock Options

30-Day Volume-Weighted Average Price (“VWAP”) Stock Options

30-day VWAP stock option activity for the year ended December 31, 2023 is summarized in the following table:

(1) The aggregate intrinsic value of outstanding and exercisable options is calculated as the difference between the exercise price and the Company’s stock price at each reporting period end. The aggregate intrinsic value of exercised options is calculated as the difference between the exercise price and the Company’s stock price on the exercise date.

As of December 31, 2023, there wasno unrecognized compensation cost related to the 30-day VWAP stock options.

Performance-Based Cash Incentive Awards

Performance-based cash incentive award activity for the year ended December 31, 2023 based on target achievement of the performance criteria is summarized in the following table:

As of December 31, 2023, there was $728 of unrecognized compensation cost related to non-vested performance-based cash incentive awards, based on the probability of achievement as of December 31, 2023, which is expected to be recognized as expense over a weighted-average period of 1.01 years.