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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 (Amendment No.     )

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CLOUD PEAK ENERGY INC.
505 South Gillette Avenue
Gillette, Wyoming 82716

March 27, 2017

Dear Fellow Stockholder:

It is our pleasure to invite you to attend Cloud Peak Energy Inc.’s 2017 Annual Meeting of Stockholders (the “2017 Annual Meeting”). The 2017 Annual Meeting will be held on Wednesday, May 10, 2017 at 9:00 a.m. Mountain Time, at the Gillette College Technical Center, 3251 South 4-J Road, Gillette, Wyoming 82718.

In connection with the 2017 Annual Meeting, the attached Notice of Annual Meeting and Proxy Statement describe the business items we plan to address at the meeting. We also will present a brief report on our business and respond to your questions at the meeting.

In accordance with the Securities and Exchange Commission’s “notice and access” model, we are providing our Notice of Annual Meeting, Proxy Statement and annual report on Form 10-K for the year ended December 31, 2016 to you online with paper copies available, free of charge, upon request. On or about March 27, 2017, we began mailing a Notice of Internet Availability of Proxy Materials detailing how to access the proxy materials electronically and how to submit your proxy via the Internet. The Notice of Internet Availability of Proxy Materials also provides instructions on how to request and obtain paper copies of the proxy materials and proxy card or voting instruction form, as applicable. We believe this process provides our stockholders with a convenient way to access the proxy materials and submit their proxies online, while allowing us to reduce our environmental impact as well as the costs of printing and distribution.

Your vote is very important so we encourage you to review the information contained in the proxy materials and submit your proxy, regardless of the number of shares you own. It is important that beneficial owners instruct their brokers on how they want to vote their shares. Please note that you will need the control number provided on your Notice of Internet Availability of Proxy Materials in order to submit your proxy online.

We look forward to seeing you on May 10th.

Sincerely,

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CLOUD PEAK ENERGY INC.
505 South Gillette Avenue, Gillette, Wyoming 82716

March 27, 2017

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE 2017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 10, 2017

This Notice of Annual Meeting, the Proxy Statement and our annual report on Form 10-K for the year ended December 31, 2016 (the “Form 10-K”) (which we are distributing in lieu of a separate annual report to stockholders), are available on our website at www.cloudpeakenergy.com , in the “SEC Filings” subsection of the “Investor Relations” section. Additionally, you may access the Notice of Annual Meeting, the Proxy Statement and the Form 10-K at www.proxyvote.com .

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CLOUD PEAK ENERGY INC.

505 South Gillette Avenue
Gillette, Wyoming 82716

PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2017

This Proxy Statement is being furnished to you in connection with the solicitation of proxies by the Board of Directors of Cloud Peak Energy Inc. (the “Board”) for use at Cloud Peak Energy Inc.’s 2017 Annual Meeting of Stockholders (the “2017 Annual Meeting”). In this Proxy Statement, references to “Cloud Peak Energy,” the “company,” “we,” “us,” “our” and similar expressions refer to Cloud Peak Energy Inc., unless the context of a particular reference provides otherwise. Although we refer to our website and other websites in this Proxy Statement, the information contained on our website or other websites is not a part of this Proxy Statement.

GENERAL INFORMATION

2017 Annual Meeting Date and Location

Our 2017 Annual Meeting will be held on Wednesday, May 10, 2017, at 9:00 a.m. Mountain Time, at the Gillette College Technical Center, 3251 South 4-J Road, Gillette, Wyoming 82718, or at such other time and place to which the meeting may be adjourned or postponed. References in this Proxy Statement to the 2017 Annual Meeting also refer to any adjournments, postponements or changes in time or location of the meeting, to the extent applicable.

Delivery of Proxy Materials

Mailing Date and Delivery of Proxy Materials

On or about March 27, 2017, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) to our stockholders containing instructions on how to access the proxy materials and submit your proxy online. We have made these proxy materials available to you over the Internet or, upon your request, have delivered paper copies of these materials to you by mail, in connection with the solicitation of proxies by the Board for the 2017 Annual Meeting.

Stockholders Sharing an Address

Registered Stockholders —Each registered stockholder (meaning you own shares in your own name on the books of our transfer agent, Computershare Trust Company, N.A.) will receive one Notice of Availability, regardless of whether you have the same address as another registered stockholder.

Street Name Stockholders —If your shares are held in “street name” (that is, in the name of a bank, broker or other holder of record), applicable rules permit brokerage firms and our company, under certain circumstances, to send one Notice of Availability to multiple stockholders who share the same address. This practice is known as “householding.” Householding saves printing and postage costs by reducing duplicate mailings. If you hold your shares through a broker, you may have consented to reducing the number of copies of materials delivered to your address. In the event that you wish to revoke a “householding” consent you previously provided to a broker, you must contact that broker to revoke your consent. If your household is receiving multiple copies of the Notice of Availability and you wish to request delivery of a single copy, you should contact your broker directly.

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Voting

Stockholders Entitled to Vote

The record date for determining the common stockholders entitled to notice of and to vote at the 2017 Annual Meeting was the close of business on March 17, 2017, at which time we had issued and outstanding 75,056,435 shares of common stock, which were held by 76 holders of record. Please refer to “Security Ownership of Management and Principal Stockholders” for information about common stock beneficially owned by our directors, executive officers and principal stockholders as of the date indicated in such section. Stockholders of record are entitled to one vote for each share of common stock owned as of the record date. The officer of the company who is in charge of the stock ledger of Cloud Peak Energy will prepare, at least ten days prior to the 2017 Annual Meeting, a complete list of the stockholders entitled to vote at the meeting. Such list will be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten days prior to the meeting during ordinary business hours at our principal executive offices located at 505 South Gillette Avenue, Gillette, Wyoming 82716. The list will also be available at the 2017 Annual Meeting for inspection by any stockholder who is present.

Voting of Proxies by Management Proxy Holders

The Board has appointed Mr. Bryan Pechersky, our Executive Vice President, General Counsel and Corporate Secretary, and Mr. Heath Hill, our Executive Vice President and Chief Financial Officer, as the management proxy holders for the 2017 Annual Meeting. If you submit a proxy for your shares, your shares will be voted by the management proxy holders in accordance with your properly submitted instructions. For stockholders who submit a proxy without indicating how to vote their shares, the proxy will be voted as the Board recommends, which is:

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As of the date of this Proxy Statement, the Board is not aware of any other business or nominee to be presented or voted upon at the 2017 Annual Meeting. Should any other matter requiring a vote of stockholders properly arise, the proxies confer upon the management proxy holders discretionary authority to vote the proxies in accordance with their best judgment in the interest of the company.

Quorum; Required Votes; Majority Voting Standard for Directors

Quorum — The holders of a majority of the voting power of the issued and outstanding stock of the company entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at the 2017 Annual Meeting. Each vote represented at the meeting in person or by proxy will be counted toward a quorum. Abstentions and “broker non-votes” are counted as present at the 2017 Annual Meeting for purposes of determining whether a quorum is present. If a quorum is not present, the meeting may be adjourned or postponed from time to time until a quorum is obtained.

Broker Non-Votes — Under the rules of the New York Stock Exchange (“NYSE”), brokers holding shares of record for a customer have the discretionary authority to vote on certain proposals if the brokers do not receive timely instructions from the customer regarding how the customer wants the shares to be voted. However, there are also certain proposals for which brokers do not have discretionary authority to vote if they do not receive timely instructions from the customer. When a broker does not have discretion to vote on a particular matter and the customer has not given timely instructions on how the broker should vote, a “broker non-vote” results. The impact of broker non-votes on the proposals to be voted on at the 2017 Annual Meeting is set forth in the table below. It is important that beneficial owners instruct their brokers on how they want to vote their shares.

Majority Voting Standard for Directors — We have adopted a majority voting standard with respect to the election of directors to the Board. In accordance with our Bylaws, in order for a nominee to be elected as a director, a director nominee must receive more votes cast for than against his or her election. This policy does not apply, and directors must be elected by a plurality of the votes cast, if we have received a stockholder nominee for director or notice of an intention to nominate a competing candidate, including through the proxy access process provided by our Bylaws, and such stockholder nomination has not been withdrawn by the tenth day before we mail our Notice of Availability to stockholders. The Board shall nominate for election as director only a candidate who agrees to tender, promptly following the annual meeting at which he or she is to be elected, an irrevocable resignation that will become effective upon (i) the failure to receive the required vote at the annual meeting at which the director faces election, and (ii) Board acceptance of such resignation based on any factors deemed relevant by the Board. Our nominees for director at the 2017 Annual Meeting have each signed such a resignation letter. The foregoing summary is qualified by the terms of our majority voting standard, which are included in our Bylaws.

Vote Required — The table below sets forth the required vote for approval of each proposal to be voted on at the 2017 Annual Meeting.

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A representative of Broadridge Financial Services, Inc. will tabulate the votes and act as inspector of elections.

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Street Name Stockholders —If your shares are held in street name, you will receive instructions from your bank, broker or other holder of record that you must follow in order for your shares to be voted. Internet and/or telephone voting will be offered to street name stockholders. You may also vote in person at the 2017 Annual Meeting if you obtain a legal proxy from your bank, broker or other holder of record. Please consult the voting instruction form or other information sent to you by your bank, broker or other holder of record to determine how to obtain a legal proxy in order to vote in person at the 2017 Annual Meeting.

If you are a street name stockholder and you submit a voting instruction form, you may change your vote by submitting new voting instructions to your bank, broker or other holder of record in accordance with the procedures of such bank, broker or other holder of record.

Annual Meeting Admission

If you wish to attend the 2017 Annual Meeting in person, you must present a form of personal identification. If you are a beneficial owner of Cloud Peak Energy common stock that is held of record by a bank, broker or other holder of record, you will also need to provide proof of ownership as of the record date to be admitted to the meeting. A recent brokerage statement or a letter from your bank or broker are examples of proof of ownership. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the meeting.

Solicitation Expenses

We will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of the Notice of Availability and related proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, e-mail, facsimile or other means, without additional compensation. We have also retained MacKenzie Partners Inc. for proxy solicitation and related services in connection with our 2017 Annual Meeting. Under our agreement with MacKenzie Partners, MacKenzie Partners will receive a fee of $12,500 and we will also reimburse MacKenzie Partners for reasonable and customary out-of-

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pocket expenses incurred in performing such services. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares of common stock held by such persons, and we may reimburse these brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith.

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annual meeting, retired from our Board immediately following the 2016 annual meeting and is therefore not included in the table below.  Please see “Director Retirement Policy; 2016 Chairman Transition” below for additional information.

*                  As of the 2017 Annual Meeting date.

Below are summaries of the background, business experience, attributes, qualifications and skills of the current directors of the company and director nominees.

Patrick Condon has served as a director since March 2012. He also serves on the board of directors of Entergy Corporation (“Entergy”), an energy company based in Louisiana, and on the board of Urban Gateways, a Chicago-based 501(c)(3) organization whose mission is to educate and inspire young people by delivering high-quality, accessible arts experiences that advance their personal and academic growth. From May 2012 until its December 2015 sale to The Kroger Co., Mr. Condon also served as an independent director and chair of the audit committee of Roundy’s, Inc., a leading Midwest grocery company located in Milwaukee, Wisconsin. Mr. Condon joined Deloitte & Touche LLP as a partner in 2002, where he provided various consulting and attest services to clients and held a number of regional and national leadership positions until his retirement in 2011. Prior to joining Deloitte & Touche LLP, Mr. Condon was a partner at Arthur Andersen LLP where he provided similar services to clients and held similar leadership positions. Mr. Condon earned a Bachelor of Science in business administration degree in accounting from John Carroll University and is a certified public accountant.

Qualifications of Mr. Condon : Mr. Condon has over forty years’ experience in accounting and finance focused on auditing, leadership and strategy. His qualifications as a financial expert provide an essential skill set to the Board and the Audit Committee.

Jeane Hull has served as a director since July 2016.  Ms. Hull retired from Peabody Energy Corporation (“Peabody”) in August 2015, where she served as Peabody’s Executive Vice President and Chief Technical Officer with responsibility for global strategy and governance for health, safety and environment, supply chain, engineering, applied technologies and asset management functions. Ms. Hull joined Peabody in 2007 as the Senior Vice President of Engineering and Technical Services and managed the global delivery of engineering, environmental, geology and design and construction services. She also served as Peabody’s Group Executive, Powder River Basin from 2008 to 2011 and assumed additional responsibility for Southwest Operations in 2010.  Ms. Hull also serves on the board of directors of Interfor Corporation, a Toronto Stock Exchange listed lumber company with operations in Canada and the United States, since May 2014, and as a member of its audit committee and chair of its environmental and safety committee. A registered professional engineer, Ms. Hull holds a Bachelor of Science degree in civil engineering from South Dakota School of Mines and Technology and an M.B.A. from Nova University in Florida.

Qualifications of Ms. Hull : Ms. Hull has over thirty years’ experience in leadership and operations roles in the mining industry. Her experience brings important expertise to the Board and its committees.

William Owens has served as a director since January 2010. Mr. Owens served as Governor of Colorado from 1999 to 2007 and as Colorado State Treasurer from 1995 to 1999. Since January 2016, Mr. Owens has served as a Senior Director with the law firm Greenberg Traurig. Mr. Owens has served on the board of directors, compensation and corporate governance committees of Bill Barrett Corporation since 2010; and on the board of directors, compensation and corporate governance committees of Federal Signal Corporation, an industrial products company, since 2011. In addition, Mr. Owens has served as a member of the supervisory board of Credit Bank of Moscow, a medium-sized privately owned bank operating in Moscow, Russia and the Moscow region, since 2012, as chairman of its supervisory board since 2013, and as a member of its compensation, corporate governance and nominations committee and of its strategy and capital markets committee since 2013. Mr. Owens also served on the board of

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directors and audit committee of Key Energy Services, an oilfield services company, from 2007 to 2016; and on the board of directors and audit committee of Vision Logistics, a private transportation company, from 2008 to 2013. Mr. Owens earned a Bachelor of Science degree from Stephen F. Austin State University and a Master’s degree in public affairs from the University of Texas.

Qualifications of Mr. Owens : Mr. Owens’ experience in managing in both the public and private sectors makes him well suited to provide advice to the Board, including regarding the political environment that has increasingly impacted our industry in recent years. He also has extensive experience in both the energy and natural resources sectors. Mr. Owens’ breadth of public and private experience, including service on other public and private boards, brings valuable expertise to the Board and its committees.

William T. Fox III has served as Chairman of our Board since May 2016 and has been a director since October 2009. Mr. Fox was with Citigroup Inc., a global financial services company, and its predecessors for 36 years engaged in corporate lending, and served as a senior credit officer from 1978 until his retirement in 2003. From 1989 until his retirement in 2003, Mr. Fox served as Managing Director, Global Industry Head, Global Energy and Mining of Citigroup. Prior to that, Mr. Fox was Citigroup’s Managing Director, North American Energy and Vice President, Petroleum Department. Mr. Fox served on the board of directors of Rowan Companies, Inc., a provider of international and domestic contract drilling services, from 2001 to 2016, where he served as the chairman of its audit committee, a member of its nominating and corporate governance committee and a member of its executive committee. Mr. Fox holds a Bachelor of Arts degree in economics from Trinity College.

Qualifications of Mr. Fo x: Mr. Fox has over thirty years’ experience in commercial banking with a focus in lending to energy companies. In addition, his financial qualifications and experience provide essential skill sets to the Board and its committees.

Robert Skaggs has served as a director since July 2015. Mr. Skaggs previously served as chairman of the board and chief executive officer of Columbia Pipeline Group, Inc. (“CPG”), a natural gas pipeline and underground storage system company, until it was acquired by TransCanada Corporation in July 2016.  Prior to CPG’s separation in July 2015 from NiSource Inc. (“NiSource”), a Fortune 500 energy holding company engaged in natural gas and electric generation, transmission, storage and distribution, Mr. Skaggs served as chief executive officer of NiSource since 2005 and as its president since 2004. Mr. Skaggs earned a Bachelor of Arts degree in economics from Davidson College, a Juris Doctorate from West Virginia University and a Master’s degree in business administration from Tulane University.

Qualifications of Mr. Skaggs : Through his background as a senior executive of large energy industry companies, Mr. Skaggs has extensive experience in developing regulatory strategies, as well as leading regulated commercial activities, and in federal governmental relations in the natural gas, electric and coal-fired generation industries, which brings important expertise and skill to the Board and its committees.

Colin Marshall has served as our President and Chief Executive Officer and a director since July 2008. Previously, he served as the president and chief executive officer of Rio Tinto Energy America Inc. (“RTEA”), an indirect subsidiary of Rio Tinto plc and the former parent company of Cloud Peak Energy Resources LLC (“CPE Resources”), the company’s wholly-owned subsidiary, from June 2006 until November 2009. In this Proxy Statement, references to “Rio Tinto” refer to Rio Tinto plc and Rio Tinto Limited and their subsidiaries, collectively. Rio Tinto plc is the ultimate parent company of RTEA. From March 2004 to May 2006, Mr. Marshall served as General Manager of Rio Tinto’s Pilbara Iron’s west Pilbara iron ore operations in Tom Price, West Australia, from June 2001 to March 2004, he served as General Manager of RTEA’s Cordero Rojo mine in Wyoming, and from August 2000 to June 2001, he served as Operations Manager of RTEA’s Cordero Rojo mine. Mr. Marshall worked for Rio Tinto plc in London as an analyst in the Business Evaluation Department from 1992 to 1996. From 1996 to 2000, he was Finance Director of the Rio Tinto Pacific Coal business unit based in Brisbane, Australia. Mr. Marshall holds a Bachelor of Engineering degree and a Master’s degree in mechanical engineering from Brunel University and a Master of Business Administration from the London Business School.

Qualifications of Mr. Marshall : In his position as President and Chief Executive Officer, making him the senior most executive of the company, Mr. Marshall provides the Board with a key perspective into the operations of the business, including the operations and marketing challenges it faces. Mr. Marshall has over twenty years’ financial and operational experience in the mining industry.

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Steven Nance has served as a director since January 2010. Mr. Nance has been the president and managing member of Steele Creek Energy, LLC, a company dealing primarily in oil and gas investments, since 2010. Mr. Nance was appointed to the board of directors of Newfield Exploration Company, an exploration and production company, in June 2013 and currently serves as lead director in addition to serving on its operations and reserves committee and chairing its nominating and governance committee. Mr. Nance served on the board of directors of The Williams Companies, Inc. from 2012 to 2016, where he served on its compensation committee and chaired its special safety committee. Mr. Nance served as president and sole director of Steele Creek Investment Company, the predecessor entity which held Mr. Nance’s oil and gas ownership, from 1997 to November 2013 providing, from time to time, consulting services on matters such as oil and gas investments, succession planning, coaching and leadership development. From 2000 until 2007, Mr. Nance served as the president of Peoples Energy Production Company, an oil and gas exploration and production company. Mr. Nance holds a Bachelor of Science degree in petroleum engineering from Texas Tech University and is a registered professional engineer (inactive status).

Qualifications of Mr. Nance : Mr. Nance has over thirty years’ experience in the oil and gas industry and has significant experience in senior executive positions, as well as merger and acquisition activities in these industries. Mr. Nance has experience in risk management and, along with his perspective as a former executive, brings a wealth of broad corporate knowledge to the Board and its committees.

Board Recommendation on Proposal

The Board unanimously recommends a vote FOR the election of each of the Class II director nominees named above. The management proxy holders will vote all properly submitted proxies FOR election unless properly instructed otherwise.

EXECUTIVE OFFICERS

This section provides information regarding the background, business experience, attributes, qualifications and skills of our current executive officers, other than Mr. Marshall, our President and Chief Executive Officer, who also serves as a director of the company. Refer to the table and disclosure above under “Proposal I—Election of Directors” for biographical and related information regarding Mr. Marshall.

*                  As of the 2017 Annual Meeting date.

Heath Hill has served as our Executive Vice President and Chief Financial Officer since March 2015 and prior to that he served as our Vice President and Chief Accounting Officer since September 2010. Previously, Mr. Hill served in various capacities with PricewaterhouseCoopers LLP, our independent auditors, from September 1998 to September 2010, including Senior Manager from September 2006 to September 2010, and Manager from September 2003 to September 2006. While with PricewaterhouseCoopers LLP, Mr. Hill’s responsibilities included assurance services primarily related to SEC registrants, including annual audits of financial statements and internal controls, public debt offerings and IPO transactions. From June 2003 to June 2005 he held a position with PricewaterhouseCoopers in Germany serving U.S. registrants throughout Europe. Mr. Hill never worked on any engagements or projects for Cloud Peak Energy Inc. or its predecessor, Rio Tinto, while he was with PricewaterhouseCoopers LLP. Mr. Hill earned his Bachelor’s degree in accounting from the University of Northern Colorado and is an active certified public accountant.

Gary Rivenes has served as our Executive Vice President and Chief Operating Officer since October 2009. Previously, he served as Vice President, Operations, of RTEA from December 2008 until November 2009, and as Acting Vice President, Operations, of RTEA from January 2008 to November 2008. From September 2007 to December 2007, Mr. Rivenes served as General Manager for RTEA’s Jacobs Ranch mine, from October 2006 to

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September 2007, he served as General Manager for RTEA’s Antelope mine and from November 2003 to September 2006, he served as Manager, Mine Operations for RTEA’s Antelope mine. Prior to that, he worked for RTEA in a variety of operational and technical positions for RTEA’s Antelope, Colowyo and Jacobs Ranch mines since 1992. Mr. Rivenes holds a Bachelor of Science in mining engineering from Montana College of Mineral Science & Technology.

Bryan Pechersky has served as our Executive Vice President since January 2015, our General Counsel since January 2010 and our Corporate Secretary since March 2013. Prior to his promotion to Executive Vice President, he served as Senior Vice President beginning in 2010. Mr. Pechersky oversees our legal department and, since June 2016, our government affairs department. Previously, Mr. Pechersky was Senior Vice President, General Counsel and Secretary for Harte-Hanks, Inc., a worldwide, direct and targeted marketing company from March 2007 to January 2010. Prior to that, he also served as Senior Vice President, Secretary and Senior Corporate Counsel for Blockbuster Inc., a global movie and game entertainment retailer from October 2005 to March 2007, and was Deputy General Counsel and Secretary for Unocal Corporation, an international energy company acquired by Chevron Corporation in 2005, from March 2004 until October 2005. While in these capacities, Mr. Pechersky’s responsibilities included advising on various legal, regulatory and compliance matters, transactions and other responsibilities that are common for a general counsel and corporate secretary. Mr. Pechersky was in private practice for approximately seven years with the international law firm Vinson & Elkins L.L.P. before joining Unocal Corporation. Mr. Pechersky also served as a Law Clerk to the Hon. Loretta A. Preska of the U.S. District Court for the Southern District of New York in 1995 and 1996. Mr. Pechersky earned his Bachelor’s degree and Juris Doctorate from the University of Texas at Austin.

Bruce Jones has served as our Senior Vice President, Technical Services since July 2013, with responsibilities in strategic and long-term mine planning, geological services, land management and environmental affairs. Prior to his appointment as Senior Vice President, Mr. Jones was General Manager of our Spring Creek Mine from March 2007 to July 2013. Before joining the Spring Creek Mine, Mr. Jones was the Operations Manager for Kennecott Utah Copper at the Bingham Canyon Mine in Bingham Canyon, Utah. Mr. Jones began his career as a mining engineer for Inspiration Coal, Inc. in 1982 and has worked in several sectors of the mining industry. During his career, Mr. Jones has held engineering and operations management positions at gold, copper and coal mining operations. Mr. Jones holds a Bachelor of Science degree in mining engineering from the University of Wisconsin-Platteville and a Master of Business Administration from the University of Utah. Mr. Jones is a registered professional engineer in Kentucky and Utah.

Cary Martin has served as our Senior Vice President, Human Resources since October 2009. Previously, he served as Vice President / Corporate Officer of Human Resources for OGE Energy Corp., an electric utility and natural gas processing holding company from September 2006 until March 2008, and as a Segment Vice President for several different divisions of SPX Corporation, an international multi-industry manufacturing and services company from December 1999 until May 2006. In these capacities, Mr. Martin’s responsibilities included oversight of employee and labor relations, workforce planning, employee development, compensation administration, policies and procedures and other responsibilities that are common for a human resources executive. From 1982 until 1999, Mr. Martin served in various management and officer positions for industries ranging from medical facilities to cable manufacturers. Mr. Martin received his Bachelor’s degree in business administration from the University of Missouri and his Master’s degree in management science from St. Louis University.

Todd Myers has served as our Senior Vice President, Marketing and Business Development since June 2016.   Prior to that appointment, he served as our Senior Vice President, Business Development beginning in July 2010.  Previously, he served as President of Westmoreland Coal Sales Company and in other senior leadership positions with Westmoreland Coal in marketing and business development during two periods dating to 1989. In his various capacities with Westmoreland Coal, Mr. Myers’s responsibilities included developing and implementing corporate merger and acquisition strategies, divesting coal related assets, negotiating complex transactions and other responsibilities generally attributable to the management of coal businesses. Mr. Myers also spent five years with RDI Consulting, a leading consulting firm in the coal and energy industries, where he led the environmental consulting practice. In 1987, Mr. Myers served as a staff assistant in the U.S. House of Representatives. Mr. Myers earned his Bachelor of Arts in political science from Pennsylvania State University in University Park, Pennsylvania, and his Masters in International Management from the Thunderbird Graduate School of Global Management in Glendale, Arizona.

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Kendall Carbone has served as our Vice President and Chief Accounting Officer since March 2015 and previously as our Assistant Chief Accounting Officer since January 2015. Prior to joining Cloud Peak Energy, Ms. Carbone served as Vice President, Controller and Chief Accounting Officer for both Cool Planet Energy Systems, Inc. from 2013 to 2014 and QEP Resources, Inc. from 2010 to 2013. Ms. Carbone has extensive experience in the energy industry including bio-fuel, natural gas and oil refining as well as previous experience in mining. Ms. Carbone is a certified public accountant and holds a Master’s degree in accounting from New York University and a Bachelor’s degree in economics from Dartmouth College.

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CORPORATE GOVERNANCE

We believe strong corporate governance helps to ensure our company is managed for the long-term benefit of our stockholders. We believe effective corporate governance should include constructive conversations with our stockholders, and we maintain a robust investor relations program. In 2016, we engaged in extensive investor outreach efforts specifically focused on executive compensation matters, as described in greater detail below under “Executive Compensation—Compensation Discussion and Analysis — Stockholder Outreach and Response to 2016 Say on Pay Vote.”

As part of our commitment to corporate governance leadership and our compliance with the listing standards of the NYSE and SEC regulations, we have adopted various charters, policies and procedures. You can access and print, free of charge, the charters of our Audit Committee, Compensation Committee, Governance Committee, and Health, Safety, Environment and Communities Committee (“HSEC Committee”), as well as our Corporate Governance Guidelines, Code of Conduct, Code of Ethics for Principal Executive and Senior Financial Officers, Clawback Policy, Insider Trading Policy and certain other policies and procedures from our website at www.cloudpeakenergy.com in the “Corporate Governance” subsection of the “Investor Relations” section. Additionally, stockholders can request copies of any of these documents, free of charge, by submitting a written request to Cloud Peak Energy Inc., Attn: General Counsel, 505 South Gillette Avenue, Gillette, Wyoming 82716.

The Board reviews these materials annually and updates them based on changes in Delaware corporate law, the rules and listing standards of the NYSE and SEC regulations, as well as best practices suggested by recognized governance authorities. The Board also takes into account feedback received from our investor outreach efforts. From time to time, we expect these materials will be modified in response to changing regulatory requirements, evolving practices, feedback from our stockholders and other stakeholders and otherwise as circumstances warrant. We encourage you to check our website periodically for the most recent versions of our governance materials.

Board Leadership Structure; Separate Chairman and CEO Positions

Cloud Peak Energy’s Chairman of the Board and Chief Executive Officer (“CEO”) positions are separate. Our Board is composed of a majority of independent directors, and the Chairman of the Board is an independent director. The only member of our Board who is not considered independent is Mr. Marshall, our President and CEO. In addition, our Audit Committee, Compensation Committee and Governance Committee, each as described below, are composed of entirely independent directors, including the chairman of each committee. The Board believes that the HSEC Committee is best served by including Mr. Marshall as a member and has appointed an independent director as the chairman of that committee.

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary as circumstances warrant. We believe the number of independent directors that make up our Board, along with the oversight provided by our independent Chairman of the Board, benefits both the company and our stockholders. The Board and independent directors consider the Board’s leadership structure on a regular basis.

Board’s Role in Risk Oversight

Generally speaking, the Board executes oversight responsibility for risk management directly and through its committees, as follows:

·                   The Audit Committee has primary responsibility for overseeing and discussing with management the process for identifying and classifying the company’s principal risks and identifying appropriate steps to monitor and manage such exposures. The company’s internal auditor, who reports directly to the Audit Committee and administratively to our Executive Vice President and Chief Financial Officer, performs risk assessments and conducts audits of high risk areas accordingly. The Audit Committee’s meeting agendas are planned to include discussions of significant individual risk areas throughout the year. In addition, the Audit Committee has certain oversight responsibilities with respect to our overall legal compliance program.  Our internal compliance committee is a cross-functional employee committee that oversees our

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corporate ethics and compliance programs and is appointed by, and reports directly to, our Audit Committee. The compliance committee consists of our CEO, Chief Operating Officer, General Counsel, Senior Vice President, Human Resources and Director of Internal Audit.

·                   The Board’s other committees (Compensation Committee, Governance Committee, and HSEC Committee) oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive compensation and compensation generally.

·                   The Board is kept abreast of its committees’ risk oversight and other activities via reports of the committee chairmen to the full Board. These reports are presented at regular Board meetings and include discussions of committee agenda topics, including matters involving risk oversight. In addition, Board members frequently attend all committee meetings regardless of membership on that committee, and the full Board is provided with all Board and standing committee meeting materials. For additional information about the activities and responsibilities of the Board’s committees and the scope of the Board’s delegation to its committees, refer to the respective committees’ charters, which are available on our website at www.cloudpeakenergy.com in the “Corporate Governance” subsection of the “Investor Relations” section.

·                   The Board’s meetings are also planned to consider specific risk topics, including risks associated with our strategic plan, our capital structure and our significant business activities, and an overall risk review presented by management. In addition, the Board receives detailed regular reports from members of our executive management team, which include discussions of the risks and exposures involved in their respective areas of responsibility. These reports are provided in connection with regular Board meetings and are discussed, as necessary, at Board meetings. Further, the Board’s fulfillment of its oversight responsibility for risk management includes being informed between regular meetings of significant developments, including those that could affect our risk profile or other aspects of our business.

Diversity of Board Members

We do not maintain a separate policy regarding the diversity of our Board members. However, the charter of the Governance Committee provides that in recommending potential nominees to the Board, the Committee will take diversity into account with the intent of creating a Board that consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. Consistent with its charter, the Governance Committee and ultimately the Board seek nominees with distinct professional backgrounds, experience and perspectives so that the Board as a whole has the appropriate mix of skills, perspectives, personal and professional experiences and backgrounds necessary to fulfill the needs of the company with respect to the current issues it faces. When evaluating recommendations for potential nominees, the Governance Committee considers the contribution of existing directors, as well as the qualifications of new nominees.

Board of Directors and Board Committees

Our business is managed under the direction of our Board. The Board appoints the CEO, approves and monitors the fundamental financial and business strategies of our company, and provides a source of advice and counsel to management. The Board also oversees CEO succession planning and is responsible for ensuring that succession planning for other members of senior management is ongoing. In addition, the Board’s responsibilities include reviewing and approving major corporate actions, working with management to identify the principal risks of the company’s businesses and overseeing the implementation of appropriate risk management systems, as well as evaluating, through the Compensation Committee and the independent directors, the compensation of the CEO and other executive officers.

The Board meets on a regularly scheduled basis to review significant developments affecting our company, to act on matters requiring approval by the Board and to otherwise fulfill its responsibilities. It also holds special meetings when an important matter requires action or review by the Board between regularly scheduled meetings. The Board has the following separately designated standing committees:

·                   Audit Committee,

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·                   Compensation Committee,

·                   Governance Committee, and

·                   HSEC Committee.

The following table provides membership and meeting information for the Board and each of the Board’s standing committees during 2016 and also describes changes to the Board and its committees as of the date of this Proxy Statement:

(1)          The Board has determined whether the director is independent as described below under “Independence of Directors.”

(2)          The Board has determined that each of Messrs. Condon and Skaggs is an audit committee financial expert as described below under “Audit Committee Financial Experts and Financial Literacy.”

(3)          Mr. Bailey served as Chairman of the Board through the date of the 2016 annual meeting and, immediately following the 2016 annual meeting, he retired from the Board pursuant to our director retirement policy.  Mr. Fox became Chairman of the Board immediately following the 2016 annual meeting upon Mr. Bailey’s retirement from the Board.

(4)          Ms. Hull was elected to the Board effective July 6, 2016, and was appointed as a member of the Audit Committee, Compensation Committee and HSEC Committee.

(5)          During 2016, each director participated in (a) all of the Board meetings that were held and (b) at least 75 percent of the total number of all meetings of each committee of which the director was a member that were held, in each case, during the period that the director served on the Board or the applicable committee.

A brief description of the principal functions of each of the Board’s four standing committees follows. Each committee also has certain oversight responsibilities for risk management as described above. The Board retains the right to exercise the powers of any committee to the extent consistent with applicable rules and regulations, and may do so from time to time. For additional information, please refer to the Audit Committee Charter, the Compensation Committee Charter, the Governance Committee Charter, and the HSEC Committee Charter, which are available on our website at www.cloudpeakenergy.com in the “Corporate Governance” subsection of the “Investor Relations” section.

Audit Committee

The primary function of the Audit Committee is to assist the Board in fulfilling its responsibility to our stockholders, the investment community and governmental agencies that regulate our activities in its oversight of:

·                   The integrity of our financial statements, financial reports and other financial information filed with the SEC;

·                   The integrity and adequacy of our auditing, accounting and financial reporting processes and systems of internal control over financial reporting;

·                   Our compliance with legal and regulatory requirements, including internal controls designed for that purpose;

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·                   The independence, qualifications and performance of our independent registered public accounting firm; and

·                   The performance of our internal audit function.

The Audit Committee provides an avenue of free, open and clear communication among the auditors, the internal audit function, management, the Audit Committee and the Board. The Audit Committee is also responsible for preparing the Audit Committee Report that SEC rules require be included in our annual proxy statement. The Audit Committee meets regularly in executive session with the Chief Financial Officer (“CFO”), internal auditor, General Counsel and external auditors, and as a committee. These executive sessions may include other non-employee directors.

Compensation Committee

General

The Compensation Committee determines and oversees the execution of the company’s compensation philosophy and oversees the administration of the company’s executive compensation program. The primary functions of the Compensation Committee are to:

·                   Review, evaluate and approve, or recommend to the Board or other independent directors of the Board, our agreements, plans, policies and programs to compensate our executive officers and directors;

·                   Oversee our plans, policies and programs to compensate our non-executive employees;

·                   Review and discuss with our management the Compensation Discussion and Analysis included in our annual proxy statement, and determine whether to recommend to the Board that the Compensation Discussion and Analysis be included in our annual proxy statement, in accordance with applicable rules and regulations;

·                   Produce the Compensation Committee Report as required by Item 407(e)(5) of Regulation S-K for inclusion in our annual proxy statement; and

·                   Otherwise discharge the Board’s responsibilities relating to compensation of our executive officers and directors.

The Compensation Committee may, in its discretion and as appropriate, delegate duties and responsibilities to a member or to a subcommittee of the Compensation Committee. However, no subcommittee may be delegated any power or authority required by any law, regulation or listing standard to be exercised by the Compensation Committee as a whole. No subcommittees were formed or met in 2016.

The Compensation Committee meets in executive session as it deems appropriate to review and consider executive compensation matters without the presence of our executive officers. These executive sessions may include other independent directors and the Compensation Committee’s independent compensation consultant.

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Compensation Committee regarding executive compensation matters generally and the performance of the executive officers reporting to him. Mr. Marshall provided input on the company targets, and, for the executive officers reporting to him, the personal performance measurements related to our Annual Incentive Plan for 2016, base salary levels and other compensation matters. Mr. Marshall did not provide recommendations with respect to his own compensation amounts.

Compensation Consultants —As in prior years, the Compensation Committee retained Aon Hewitt to assist with the evaluation of and determinations for our executive compensation program and other executive and director compensation matters for 2016. Under the terms of the engagement, Aon Hewitt reports directly to the Compensation Committee. Although Aon Hewitt also works in cooperation with management as required to gather information necessary to carry out its obligations to the Compensation Committee, Aon Hewitt does not have a separate engagement with our management; however, management has periodically engaged Radford, an Aon Hewitt affiliate, to provide equity valuation and other similar services from time to time for an immaterial service fee.

In connection with its engagement of Aon Hewitt and based on the information presented to it, the Compensation Committee assessed the independence of Aon Hewitt pursuant to applicable SEC and NYSE rules and concluded that Aon Hewitt’s work for the Compensation Committee, and the immaterial services provided by Radford as described above, did not raise any conflict of interest for 2016. Please see “Executive Compensation—Compensation Discussion and Analysis” for additional information regarding the scope of Aon Hewitt’s engagement for 2016 and other matters related to our executive compensation program for 2016.

Nominating and Corporate Governance Committee

The primary functions of the Governance Committee are to:

·                   Advise the Board and make recommendations regarding appropriate corporate governance practices and assist the Board in implementing those practices;

·                   Assist the Board by identifying individuals qualified to become members of the Board, consistent with the criteria approved by the Board, and recommending director nominees to the Board for election at the annual meetings of stockholders or for appointment to fill vacancies on the Board;

·                   Advise the Board about the appropriate composition of the Board and its committees;

·                   Lead the Board in the annual performance evaluation of the Board, its committees and of management; and

·                   Direct all matters relating to the succession of our CEO.

Health, Safety, Environment and Communities Committee

The primary functions of the HSEC Committee are to oversee:

·                   Our compliance with safety, health, environmental and sustainability-related laws and other regulatory requirements applicable to our business;

·                   Our initiatives to enhance sustainable business practices and our reputation as a responsible corporate citizen, including the promulgation and enforcement of policies, procedures and practices that promote the protection of the safety and health of our employees, contractors, customers, the public and the environment;

·                   The plans, programs and processes established by us to evaluate and manage safety, health, environmental and sustainability risks to our business, operations, products and reputation generally; and

·                   Our response to significant safety, health, environmental and sustainability-related public policy, legislative, regulatory, political and social issues, trends or incidents that may affect our business operations, financial performance or public image or the industry in which we operate.

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Director Nomination Process; Proxy Access

The Governance Committee identifies and recommends to the Board the candidates for nomination as directors. Stockholders may propose nominees for consideration by our Governance Committee by submitting names and supporting information to Cloud Peak Energy Inc., Attn: Corporate Secretary, 505 South Gillette Avenue, Gillette, Wyoming, 82716 in accordance with our Bylaws and applicable law. The Board approves the final choice of candidates for nomination and recommendation for election to our stockholders. In addition, our Bylaws provide that eligible stockholders who comply with the requirements of the proxy access provision set forth in our Bylaws may include their own nominee or nominees for director in our proxy statement.  Specifically, the company’s proxy access provision provides that a stockholder, or an unlimited group of stockholders, who has, or have:

·                   maintained continuous qualifying ownership of at least 3% of Cloud Peak Energy’s outstanding common stock, for at least 3 years, and

·                   complied with the other requirements set forth in the Bylaws,

may submit, for inclusion in Cloud Peak Energy’s proxy materials for an annual meeting of stockholders, a number of director nominees that together with all eligible stockholder nominees shall not exceed 25% of the total number of directors in office (rounded down to the nearest whole number).

The Governance Committee selects nominees for the Board, including any nominees proposed for consideration by our stockholders, in accordance with the procedures and criteria set forth in the Corporate Governance Guidelines and the Governance Committee’s charter. The Board seeks a diverse group of candidates who possess the background, skills and expertise necessary to make a significant contribution to the Board and the company. In reviewing director candidates, the Governance Committee reviews each candidate’s qualifications for membership on the Board and takes into account the qualities required to add value to the company and to the functioning of the Board and its committees such as independence, financial expertise, diversity, experience with businesses and other organizations of comparable size, the interplay of the candidate’s experience with the experience of other Board members, the candidate’s personal and professional integrity and business judgment, the candidate’s willingness to commit the required time to serve as a Board member, the extent to which the candidate would be a desirable addition to the Board and its committees and any other factors it deems appropriate (including with respect to continuing directors, the director’s past Board and committee meeting attendance and performance and length of Board service), as well as the expected qualities of Board members set forth in our Corporate Governance Guidelines and any applicable legal, regulatory and listing requirements.

As provided by our Corporate Governance Guidelines, a Board member is expected to demonstrate high ethical standards and integrity in his or her personal and professional dealings, act honestly and in good faith with a view to the best interest of the company, devote sufficient time to the affairs of the company and exercise care, diligence and skill in fulfilling his or her responsibilities, both as a Board member and as a member of any of its standing committees. A Board member is also expected to provide independent judgment on a broad range of issues, understand and challenge the key business plans of the company, be willing to work in a team and be open to opinions of others, and raise the appropriate difficult questions and issues to facilitate active and effective participation in the deliberation of the Board and of each committee on which he or she serves. Further, each of the Board members should make all reasonable efforts to attend all Board and committee meetings, review the materials provided by management in advance of the Board and committee meetings, and inform the Chairman of the Board before accepting membership on any other board of directors or audit committees. A Board member should also inform the Chairman of the Board of any change in the director’s interests that could affect the director’s relationship to the company.

The Governance Committee and the Board may take into account the nature of and time involved in a director’s service on other boards in evaluating the suitability of individual directors and making its recommendations to the Board or the company’s stockholders, as applicable.

Ms. Hull, who was appointed to the Board in July 2016, was initially referred to the Governance Committee and the Board for consideration by our CEO.  Ms. Hull was considered along with another potential candidate.  In accordance with our director nomination process described above, Ms. Hull was ultimately recommended by our Governance Committee and nominated by the Board following a thorough review and evaluation by the Governance

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Committee and the Board of Ms. Hull’s executive and industry experience, skill set and independence and the determination that she would provide a valuable additional perspective to the Board and its committees.

Director Retirement Policy; 2016 Chairman Transition

Our Corporate Governance Guidelines state that a director who has attained the age of 72 prior to the annual meeting of stockholders in any year shall retire from office at such annual meeting unless the Board, in its discretion, approves an exception.

Mr. Keith Bailey, who turned 72 on April 5, 2014 and who served as Chairman of the Board during 2016 through the date of the 2016 annual meeting, retired from the Board immediately following the 2016 annual meeting. The Board previously approved an exception to our director retirement policy to provide for Mr. Bailey to continue serving the remainder of his then-current term as a Class I director, which expired at the 2016 annual meeting.  Mr. Bailey did not stand for reelection at the 2016 annual meeting. The Board reduced the size of the Board by one effective upon Mr. Bailey’s retirement and, as of that time, our Board was comprised of six members until the Board increased the size of the Board by one immediately prior to the appointment of Ms. Hull in July 2016.

The Board appointed independent director Mr. Fox, who is currently 71, to become Chairman of the Board effective upon Mr. Bailey’s retirement.  In connection with the nomination of Mr. Fox as a Class II director to serve a new term of three years commencing at the 2017 Annual Meeting, the Board considered the fact that Mr. Fox would turn 72 years old prior to the expiration of this new term at the annual meeting of stockholders in 2020.  Given Mr. Fox’s significant, continuing contributions to the Board and a desire to provide longer-term consistency in the role of Chairman of the Board, the Board approved an exception to our director retirement policy to provide for Mr. Fox to continue to serve on the Board for the full duration of the new term, assuming his re-election to the Board at the 2017 Annual Meeting.

Independence of Directors

Pursuant to our Corporate Governance Guidelines and the rules of the NYSE, our Board is comprised of a majority of directors who satisfy the criteria for “independent directors.”

Annual questionnaires are used to gather input to assist the Governance Committee and the Board in their determinations of the independence of the non-employee directors. Based on the foregoing and on such other due consideration and diligence as it deemed appropriate, the Governance Committee presented its findings to the Board on the independence of (1) former director Keith Bailey, (2) Patrick Condon, (3) William T. Fox III, (4) William Owens, (5) Steven Nance, (6) Robert Skaggs, and (7) in connection with her appointment to the Board in July 2016, Jeane Hull, in each case, in accordance with the applicable federal securities laws, the SEC rules promulgated thereunder, and the applicable rules of the NYSE and our Guidelines on the Independence of the Directors (which may be found in Annex A to our Corporate Governance Guidelines).

The Board concluded that, other than in their capacity as directors, none of the non-employee directors had a material relationship with Cloud Peak Energy, either directly or as a partner, stockholder or officer of an organization that has a relationship with Cloud Peak Energy. In making its determination in connection with the appointment of Ms. Hull, the Board considered that Ms. Hull retired from her position as an officer of Peabody in August 2015 and that Cloud Peak Energy has in the past sold coal to, or purchased coal from, Peabody in the ordinary course of business.  Due to the amounts involved in those ordinary course transactions, the fact that Ms. Hull’s employment with Peabody terminated prior to her appointment to the Board and the fact that Ms. Hull did not participate in those transactions, the Board determined that Ms. Hull did not have a material relationship with Cloud Peak Energy that would impair Ms. Hull’s independence to serve on our Board or the Board’s committees.  The Board undertook a similar analysis with respect to Mr. Condon, who also serves as a non-employee director of Entergy.  In the ordinary course of business, we sell our coal to numerous domestic utility customers, including Entergy or its affiliates.  Our Board considered that potential relationship and deemed it not to be material or to otherwise impair Mr. Condon’s independence to serve on our Board or the Board’s committees because Mr. Condon’s role for Entergy is solely as a non-employee member of its board of directors and he does not participate in those ordinary course transactions.

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The Board further determined that (1) each director serving on the Audit Committee, Compensation Committee and Governance Committee is otherwise independent under applicable NYSE listing standards and our Guidelines on the Independence of the Directors for purposes of serving on the Board, Audit Committee, Compensation Committee and Governance Committee, as applicable, (2) each such non-employee director satisfies the additional audit committee independence standards under Rule 10A-3 of the Exchange Act and the additional independence requirements applicable specifically to compensation committee members under the NYSE’s listing standards, and (3) each director serving on the Compensation Committee qualifies as an “outside director” under Section 162(m) of the Internal Revenue Code and a “non-employee director” under Rule 16b-3 of the Exchange Act.

Executive Sessions of Independent Directors

Our Corporate Governance Guidelines provide that every regular meeting of the Board will include one or more executive sessions at which no employee directors or other members of senior management are present in order to promote free and open discussion and communication among the non-employee directors. At least one executive session per year includes only independent directors. Currently, all of our non-employee directors are also considered to be independent directors. As a result, our independent directors hold an executive session at each quarterly Board meeting. The Chairman of the Board, who is an independent director, presides over all executive sessions of the Board. If, in the future, our Chairman of the Board were to be a person who is an executive of the company, in accordance with our Corporate Governance Guidelines, our Board would appoint a lead director from among the non-employee directors to preside over the executive sessions of the Board.

Board and Committee Evaluations

Each year, the Board and its committees perform a rigorous self-evaluation. The Governance Committee oversees this process. The evaluations solicit input from directors regarding the performance and effectiveness of the Board and its committees and provide an opportunity for directors to identify areas where improvements could be made. Individual director responses are submitted to our Corporate Secretary, who then compiles aggregated, anonymous results of the evaluations for review and discussion by the Board and its committees. The Board believes this process is effective to evaluate the Board and its committees and identify opportunities for continuous improvement.

Audit Committee Financial Experts and Financial Literacy

The Board has determined that Messrs. Condon and Skaggs and Ms. Hull, the current members of the Audit Committee, are each financially literate as interpreted by the Board in its business judgment based on applicable NYSE rules, and that Messrs. Condon and Skaggs each further qualify as an audit committee financial expert, as such term is defined in applicable SEC rules, and have accounting or related financial management experience, as defined by applicable NYSE rules and interpreted by the Board in its business judgment.

Communications with Non-Employee Directors and Other Board Communications

The Board provides a process, pursuant to its Policy Regarding Communications from Stockholders, to enhance the ability of stockholders and other interested parties to communicate directly with the non-employee directors as a group, the entire Board, Board committees or individual directors.

Stockholders and other interested parties may communicate by writing to: Cloud Peak Energy Inc., 505 South Gillette Avenue, Gillette, Wyoming 82716, Attn: Corporate Secretary; or via the Internet at www.cloudpeakenergy.com by clicking on “Contact the Board” in the “Corporate Governance” subsection of the “Investor Relations” section. Stockholders may submit their communications to the Board or individual directors on a confidential or anonymous basis by sending the communication in a sealed envelope marked “Confidential—To be opened only by the Corporate Secretary of the Company.” The Corporate Secretary will compile all communications submitted using the process described herein and forward such communications to such director or group of directors as he deems necessary or appropriate. The Corporate Secretary is not required to forward certain communications if it is determined that the communication is (1) unrelated to the duties and responsibilities of the Board, (2) unduly hostile, threatening or illegal, or (3) obscene or otherwise deemed to be inappropriate.

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Stockholder communications that relate to accounting, internal accounting controls or auditing matters will be processed in accordance with our Accounting Complaints Policy. Concerns about accounting or auditing matters may be forwarded on a confidential or anonymous basis to the Audit Committee by writing to: Cloud Peak Energy Inc., 505 South Gillette Avenue, Gillette, Wyoming 82716, Attn: General Counsel, as well as through the Ethics Hotline at (866) 528-0054.

Director Attendance at Annual Meetings

The Corporate Governance Guidelines provide that directors are expected to attend our annual meeting of stockholders. All of our directors at the time of the 2016 annual meeting of stockholders attended that meeting.

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*                  Less than 1%.

(1)          Address for beneficial owners shown in the table is: c/o Cloud Peak Energy Inc., 505 South Gillette Avenue, Gillette, Wyoming 82716.

(2)          Includes 800 shares held in a joint account with Ms. Hull’s spouse.

(3)          Includes the following: (a) common stock underlying restricted stock units (referred to herein as “RSUs” or “restricted stock units”), including RSUs that may vest within 60 days of February 28, 2017, (b) common stock underlying performance share units (referred to herein as “PSUs” or “performance share units”) that may vest within 60 days of February 28, 2017, reported at 51% of the target number of PSUs subject to each award, and (c) shares issuable upon the exercise of outstanding stock options that are exercisable within 60 days of February 28, 2017, as follows:

**           As of February 28, 2017, all exercisable stock options had an exercise price greater than the market price of the underlying stock.

(4)          The number of RSUs reported above does not include the following restricted stock unit awards granted in January 2017 because non-employee directors are not expected to have a right to acquire the full number of underlying shares within 60 days: (a) 16,015 restricted stock units to Mr. Condon, (b) 20,463 restricted stock units to Mr. Fox, (c) 16,015 restricted stock units to Ms. Hull, (d) 16,015 restricted stock units to Mr. Nance, (e) 16,015 restricted stock units to Mr. Owens, and (f) 16,015 restricted stock units to Mr. Skaggs. Pursuant to the terms of those awards, the number of RSUs awarded will become payable on a pro rata basis if the non-employee director leaves the Board prior to the one-year anniversary of the grant date.

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EXECUTIVE COMPENSATION

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Executive Compensation Program Overview

Our executive compensation program is designed to attract and retain highly competent, motivated executives and reward them for superior performance, consistent with creating long-term stockholder value. It consists of a mix of three primary components, described below, which we believe appropriately rewards our executive officers for their overall contribution to company performance, recognizes the impact of ongoing depressed coal industry conditions on our performance and on our executive compensation program and aligns our executives’ interests with those of our stockholders with the ultimate objective of increasing long-term stockholder value.

Based on this philosophy we set targeted pay levels that approximate the median of our Compensation Peer Group (defined below). The pay ultimately realized is dependent primarily upon (1) our financial and safety performance, (2) individual executive performance and (3) our absolute and relative stock price performance.

The three primary components of our executive compensation program are:

2016 Company Performance Highlights

As described in our year-end 2016 earnings announcement, our company and industry again faced a challenging external environment and continued to be negatively impacted by reduced sales volumes and revenues, weak coal demand and pricing, competition with low priced natural gas and subsidized wind and solar energy in the U.S., and anti-coal regulatory and political initiatives. Despite the external environment, we performed well in managing

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through these challenging industry conditions and completed a number of important transactions that we believe significantly improved our financial flexibility and positioned our company for future growth opportunities.  Highlights of our 2016 results and significant transactions are described below:

·                   Strong Adjusted EBITDA Performance — In depressed industry conditions that reduced our shipments from 75.1 million tons in 2015 to 58.5 million tons in 2016, we earned Adjusted EBITDA of $98.6 million.  A portion of the 2016 Adjusted EBITDA reflected our ability to preserve economic value through contract buyouts from customers who cancelled previously committed tons.

·                   Positive Net Income in 2016 Compared to Net Loss in 2015 — In 2016, we earned net income of $21.8 million, compared to a net loss in 2015 of $(204.9) million.

·                   Improved Cost Per Ton and Effectively Managed Variable Shipment Rates — We improved our average cost per ton sold in 2016 compared to 2015, despite significantly reduced shipments and a lower realized price per ton in 2016. A primary driver behind our improved cost per ton was our implementation of greater flexibility into our workforce planning to better align labor costs to variable shipment rates in our industry.

·                   Strong Year-End Liquidity — We ended 2016 with total available liquidity of approximately $440 million, including cash and cash equivalents of approximately $84 million.

·                   296% Absolute TSR Performance — Our strong stock performance in 2016 led to an absolute TSR (calculated using the same methodology as for our performance share units) of 296%.

·                   Achieved 0.25 AIFR, Resulting in a Company Record and Industry Leading Safety Performance — During 2016, we had a Mine Safety and Health Administration (“MSHA”) All Injury Frequency Rate (“AIFR”) of 0.25, a decrease from the full-year 2015 AIFR rate of 0.91 and the lowest in our company’s history.

·                   Amended Bank Facility to Enhance Flexibility — We amended our Credit Agreement to modify the financial covenants and increase the second-lien issuance capacity to enhance our liquidity and enable the completed bond exchange offers in 2016.

·                   Completed Bond Exchange Offers, Reduced Leverage and Significantly Reduced Previous 2019 Bond Maturities — We exchanged over 75% of our 2019 and 2024 unsecured bonds into newly issued second lien 2021 notes, which reduced our outstanding bond liability by $91 million. The exchange offers also eliminated a significant portion of our previous 2019 bond maturities by taking advantage of then-prevailing discounted trading prices for our 2019 bonds and exchanging a substantial portion of our previous 2019 bonds into 2021 bonds. In early 2017, we completed an equity offering to raise proceeds to redeem the remaining 2019 bonds.

·                   Eliminated Self-Bonding for Reclamation — Total reclamation bonding exposure was reduced by $167 million or 28% during 2016, reflecting our successful reclamation and updated state requirements.  Approval from the Wyoming Department of Environmental Quality was received in January 2017 of our application to reduce our Antelope Mine’s required bond amount by an additional $25 million, which allows for the final $10 million of self-bonding to be removed.  Our reclamation bonding requirements are now all covered by third-party surety providers.

·                   Resumed Export Sales in Fourth Quarter — Taking advantage of higher international coal prices in late 2016, we resumed export sales and shipped 0.4 million tons during the fourth quarter of 2016.  As of February 15, 2017, we had committed export sales of 1.9 million tons for the first half of 2017.

·                   Significantly Reduced Take-or-Pay Exposure In Our Logistics Business — We replaced our throughput and transportation agreements with our port and rail logistics providers in late 2016 and early 2017 to enhance our flexibility and substantially reduce our potential future take-or-pay

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obligations that we would have owed if we failed to meet minimum shipment obligations under those agreements.  As of February 15, 2017, the outstanding undiscounted commitments under the amendments were reduced by $488 million that could have been owed through 2024, to approximately $51 million through the current two year term (2017 and 2018) of these agreements.

The following table highlights our 2016 financial performance and shipments:

(1)          Net loss for 2015 was impacted by the $111.8 million non-cash valuation allowance adjustment on our deferred tax assets based upon then-forecasted taxable earnings and a $58.2 million non-cash asset impairment recorded due to lower forecasted earnings as a result of the weak international coal prices at that time.

(2)          Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” in our Form 10-K filed on February 16, 2017 for additional information regarding and a reconciliation of Adjusted EBITDA.

2016 Executive Compensation Highlights

·                   Continued High Percentage of At-Risk, Performance Based Compensation — As shown in the chart below, targeted direct compensation for our CEO was 80% at-risk, performance-based, while targeted direct compensation for our other named executive officers was 70% at-risk, performance-based.

·                   No 2016 Target Compensation Increases (Other Than Limited Salary Adjustment for New CFO) — Taking into account depressed industry conditions and outlook in early 2016, our historical executive compensation adjustments and the company’s compensation philosophy and goals, the Compensation Committee decided not to increase 2016 base salaries, target bonus opportunity, target LTIP opportunity or other compensation amounts for our executives, other than a market increase to Mr. Hill’s base salary from $350,000 to $375,000 to more appropriately reflect his earlier promotion to Chief Financial Officer. As a result, the Compensation Committee did not engage Aon Hewitt to update the Compensation Peer Group for 2016.

·                   Established Rigorous Adjusted EBITDA Bonus Target That Reflected Depressed Industry Conditions and Expectations of Reduced Sales Volumes and Revenues — In establishing Adjusted EBITDA targets for 2016, as in prior years, the Compensation Committee reviewed a sensitivity analysis to the key business drivers of Adjusted EBITDA. This sensitivity analysis sought to identify opportunities and risks for each of the key business drivers to establish rigorous threshold, target, and maximum Adjusted

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EBITDA levels. Key business drivers encompassed sales volumes, coal prices and operating costs, including diesel fuel, labor and explosives costs, logistics revenues and transportation costs. The Adjusted EBITDA goal for 2016 was lower than 2015 and reflected the expected continued challenging environment for coal demand and pricing for 2016 and corresponded to our budgeted Adjusted EBITDA in our 2016 annual operating plan, as well as our expectation that no export shipments would occur in 2016. The established 2016 Adjusted EBITDA target was rigorous taking into account these ongoing depressed industry conditions and expected reduced sales volumes and revenues.

·                   Strong Financial Performance in Depressed Industry Conditions Resulted in Slightly Above Target Achievement Against Adjusted EBITDA Component (60%) of Bonus Plan — Despite difficult industry conditions, we achieved a 2016 Adjusted EBITDA slightly above the target goal, resulting in a 104% payout on this bonus component.

·                   Record Safety Performance Resulted in Increased Year-Over-Year Bonuses Due to Maximum 200% Achievement Against Safety Component (20%) of Bonus Plan, Compared to 0% Safety Payout for 2015 — During 2016, our AIFR under our cash bonus plan was 0.25, resulting in a maximum payout to our executives for that component of our 2016 cash bonus plan. The AIFR component of the 2015 bonus awards resulted in 0% payouts for 2015. Consequently our record safety performance in 2016 significantly contributed to the 2016 bonus awards exceeding 2015 amounts.

·                   Compensation Committee Evaluated Individual Executives for Personal Performance Component (20%) of Bonus Plan — As in prior years, the Compensation Committee evaluated the performance of each individual executive officer for purposes of making executive compensation determinations, including the personal performance component of the annual cash bonus plan.  The personal performance component is evaluated against the responsibilities of each executive’s position, achievement of annual departmental goals, feedback from peers and other co-workers, assessments of our independent directors, annual performance ratings and the executive’s contributions, individually and as part of the executive team, to achieving the significant company accomplishments during the year, which are highlighted above. In 2016, the executive team was responsible for successfully achieving a significant restructuring of our balance sheet and future contractual commitments and adjusting our business and cost structure to depressed industry conditions, weak pricing and increased variability in shipment rates.

·                   Retained 60% Weighting of Performance Share Units in Long-Term Incentive Program — The Compensation Committee decided to retain the same long term incentive target award values for 2016 and the same percentage split between time-vested restricted stock units (40%) and performance-vested performance share units (60%) used in 2015.

·                   Equity Award Program Structured to Help Offset Dilution — The Compensation Committee decided to grant the 2016 restricted stock units and performance share units with the flexibility to settle those awards upon vesting in shares of common stock, cash or a combination of common stock and cash, similar to the 2015 awards.  The Compensation Committee granted the 2016 performance share units with the expectation that they would be settled in cash upon any vesting in 2019 and did not award any stock options in 2016 to help offset dilution to our stockholders.

·                   2014-2016 PSUs Vested At Only 51% of Target — With respect to the 2014-2016 performance share units that vested in March 2017, they vested at 51% of target, reflecting the impact of continued challenging conditions in the U.S. coal industry and our negative absolute TSR performance over that three-year performance period.

·                   Strong Relative and Absolute TSR Performance in 2016 — From the end of 2015 to the end of 2016, our TSR (calculated using the same methodology as for our performance share units) relative to our Performance Peer Group was number two of seventeen (or the 94th percentile). Our absolute TSR in 2016 (calculated on the same basis) was 296%. Our strong 2016 TSR performance impacts the three-year performance period for performance unit awards granted in 2016 and in certain prior years, in addition to the overall impact that our stock price has on the value associated with other historical equity awards.

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·                   Reduced Executive Team Size Following Retirement of Former Executive — Mr. Orchard, our former Senior Vice President, Marketing and Government Affairs, retired from the company effective June 3, 2016.  In connection with his retirement, Mr. Orchard’s responsibilities were reallocated to other members of the management team.  We did not replace his position. Mr. Myers assumed responsibility for the company’s marketing functions, and Mr. Pechersky assumed responsibility for the company’s government affairs functions.

·                   Compensation Committee Conducted Extensive Investor Outreach on Executive Compensation — As discussed below under “—Stockholder Outreach and Response to 2016 Say on Pay Vote,” in response to the low majority Say on Pay approval with respect to our 2015 compensation program, the Compensation Committee undertook a comprehensive investor outreach initiative in the summer and fall of 2016 led by the Chair of our Compensation Committee, reaching out to investors representing approximately 60% of our outstanding shares.  The purpose of the outreach was to better understand stockholder perspectives with respect to our executive pay practices and evaluate any concerns and feedback.

CEO Pay Alignment with Compensation Peer Group

We believe our CEO’s compensation is well-aligned with our Compensation Peer Group, as demonstrated by the following:

·                   Our CEO’s 2016 direct compensation (salary, plus realized 2016 bonus, plus targeted 2016 long-term incentive awards) was less than the median of the direct compensation for our Compensation Peer Group CEOs (based on available 2015 proxy data); and

·                   Although our 2014-2016 relative TSR compared to our Compensation Peer Group was at the 50th percentile, our CEO’s 2014-2016 direct compensation (as described above for each year) was at the 33rd percentile of the direct compensation for our Compensation Peer Group CEOs (based on available 2013-2015 proxy data).

Due to other Compensation Peer Group companies who filed for bankruptcy and/or did not file proxy statements for certain years as a result of bankruptcy filings, the Compensation Peer Group identified under the heading “ 2015/2016 Compensation Peer Group ” below was modified as follows for purposes of these CEO pay alignment comparisons: (1) Alpha Natural Resources, Inc. and Walter Energy, Inc. were excluded due to bankruptcy in 2015; (2) Arch Coal Inc. and Peabody Energy Corporation were deemed to have TSR of negative 100%, as each company went into bankruptcy during the 2016 year; and (3) only companies that filed a definitive proxy statement in 2016 (with respect to 2015 year compensation) were included for comparison purposes.

Compensation Risk Mitigating Program Design and Governance Policies

In addition to our three primary components of executive compensation, our executive compensation program includes other features that we believe are consistent with strong governance practices, including:

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What We Do Not Do:

Comparison of Historical Granted and Realized/Realizable Total Pay

We believe our compensation program creates a strong direct link between our pay and our performance. The table below shows the significant impact of our rigorous performance target setting in our incentive programs and our stock price performance on the substantially reduced realized or estimated year-end 2016 realizable pay of our executives over time.  Even in years when target financial performance levels are set lower than prior year performance to reflect the challenging external environment for the coal industry, the table below demonstrates the rigor of our targets and alignment of our executive pay and our performance. Refer to the Cumulative LTIP Awards 2009-2016 table below for additional information regarding the longer-term significant reductions to the equity award values in our executive compensation program. 

In  2016,  we had a strong absolute and relative TSR performance as discussed above, resulting in an increase in the estimated year-end 2016 equity value under our 2016 executive compensation program.  In particular, the estimated value of 2016 PSUs assumes a 200% vesting based on our strong 296% absolute 2016 TSR performance. The actual value of any vested 2016 PSUs in 2019 will be based on our TSR performance for the full three-year performance period.

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*                  As a result of the transition between NEOs throughout the applicable years, the “Other NEOs” includes our former Chief Financial Officer, Michael Barrett, for years prior to and including 2014, and includes Heath Hill as Chief Financial Officer for 2015 and 2016.  The chart also includes our former Senior Vice President, Marketing and Government Affairs, Mr. James Orchard, for years prior to and including 2015, with Mr. Myers only being included with respect to the 2016 year.

(1)          Realizable values include (a) base salary, (b) actual bonus payouts and (c) estimated long-term incentive value as of year-end 2016 as reported below under “—Long-Term Equity Incentive Plan and Realized/Realizable Values.” 2016 PSUs reflect an assumed 200% vesting based on our strong 296% absolute TSR performance for 2016 .

(2)          Granted values include (a) base salary, (b) target bonus amount and (c) the grant date fair value of awards under FASB ASC Topic 718, which is how equity awards are reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table.

Base Salaries and Periodic Historical Adjustments

Base salaries are generally reviewed annually based upon market data provided from time to time by Aon Hewitt, the Compensation Committee’s independent compensation consultant. In years where Aon Hewitt is engaged to perform detailed reviews of our compensation program, the Compensation Committee will also review compensation for comparable positions of our Compensation Peer Group. In addition, the Compensation Committee assesses individual performance, experience, responsibilities and time in position. The chart below shows the annual adjustments, if any, to base salaries from 2013 through 2016 for our CEO and other current named executive officers.

Reflecting the challenging environment and our focus on costs, the Committee made no merit increases for the named executive officers for 2016. With respect to Mr. Hill, the chart below reflects his promotion from Vice President and Chief Accounting Officer to Executive Vice President and Chief Financial Officer in March 2015, as well as his market increase for 2016  to adjust his below market salary in his first year as Chief Financial Officer in 2015. Other than Mr. Hill, no named executive officer received a salary increase for 2016.

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Annual Cash Incentive Plan, Rigor of Target-Setting and Historical Payouts

Our Annual Incentive Plan (“AIP”), approved at the 2013 annual meeting of stockholders, is an annual cash incentive plan designed to reward executives for the achievement of certain annual company performance targets that are approved by the Compensation Committee. Under the AIP, each executive has the potential to earn an annual cash incentive based upon a percentage of the executive’s base salary.  If performance targets are exceeded, maximum payouts of up to two times target are possible and if performance falls below threshold levels, no payouts are made.

As in prior years, the 2016 AIP performance targets consisted of three components. The Compensation Committee believes the established performance targets are rigorous and reflect the ongoing challenging external environment for the coal industry, weak demand and pricing and reduced sales volume and revenues.  See the section titled “ Annual Incentive Compensation and Process for Setting Rigorous Performance Objectives ” below for a full discussion of our AIP goal setting process.

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For 2016 the Adjusted EBITDA component was awarded at 104% of target and the safety performance component resulted in a maximum 200% payment.  The personal performance components of the AIP were made at levels ranging between 175% and 180% of target, depending on the assessment of each individual’s performance during the year. As a result, the aggregate AIP payouts for our named executive officers for 2016 ranged between 138% and 141% of target.

As shown in the charts below, our AIP payouts have reflected the different performance levels for Adjusted EBITDA, safety and personal performance over time. We believe our compensation program is appropriately aligned with our performance. Our achievement of the maximum 200% safety payout in 2016 reflects our strong safety performance last year and was a significant contributing factor to the total 2016 AIP payments exceeding 2015 AIP payments.

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*                  As a result of the transition between NEOs throughout the applicable years, the “Other NEOs” includes our former Chief Financial Officer, Michael Barrett, for years prior to and including 2014, and includes Heath Hill as Chief Financial Officer for 2015 and 2016.  The chart also includes our former Senior Vice President, Marketing and Government Affairs, Mr. James Orchard, for years prior to and including 2015, with Mr. Myers’ AIP bonus only being included with respect to the 2016 year.

(1) Reflects 0% payout on safety component.

(2) Reflects 200% payout on safety component.

Long-Term Equity Incentive Plan and Realized/Realizable Values

The LTIP is an equity-based plan designed to align the long-term interests of our executive officers with those of our stockholders. Each executive is awarded an annual target award value under the LTIP based upon a multiple of the executive’s base salary. In 2015, the Compensation Committee eliminated the stock option component of the annual award (which comprised 25% of the total equity award value in prior years) in light of ongoing depressed equity values in our industry and the dilutive impact of options, and re-directed the targeted long-term equity value between the following two components, which was continued for 2016 grants:

The long term value of the awards is a function of our stock price performance over time: if our stock price increases, the value of awards made under the LTIP increases and our executives benefit; if our stock price decreases, the value of awards made under the LTIP decreases and our executives do not achieve some or any of the potential value of the awards.

The following tables provide a comparison of the 2013 through 2016, and cumulative 2009-2016, target equity award values at grant date versus actual values or estimated values at year-end 2016 for our CEO and other named executive officers. Grant date targeted value reflects the grant date fair value for the applicable year as determined under FASB ASC Topic 718, which is how equity awards are reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table. The estimated year-end 2016 value is calculated as of December 30, 2016 (as December 31, 2016 was not a trading day) based on our closing stock price of $5.61.

We believe the tables below highlight the strong pay for performance alignment of our compensation program as shown by the substantially reduced realized or estimated year-end 2016 realizable value of historical equity awards compared to grant date target values, other than for 2016 when we had a strong TSR performance that positively impacted the potential realizable value of 2016 awards.

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LTIP Awards — Grant Date Targeted Value vs Realized (Realizable) Value

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*                  As a result of the transition between NEOs throughout the applicable years, the “Other NEOs” within the tables above includes our former Chief Financial Officer, Michael Barrett, for years prior to and including 2014, and includes Heath Hill as Chief Financial Officer for 2015 and 2016.  The chart also includes our former Senior Vice President, Marketing and Government Affairs, Mr. James Orchard, for years prior to and including 2015, with Mr. Myers only being included with respect to the 2016 year.

(1)          All 2013 LTIP awards were subject to a three-year vesting schedule, in addition to satisfaction of TSR performance criteria over the three-year period for our PSUs. 2013 award values at year-end 2016 were calculated as follows: (1) PSUs reflect the actual 43% vesting of those awards; (2) NQ were valued at $0 because the exercise price was in excess of the closing stock price at year-end 2016; and (3) RSUs were valued based on the number of vested RSUs multiplied by our closing stock price of $5.61 on December 30, 2016.

(2)          All 2014 LTIP awards are subject to a three-year vesting schedule, in addition to satisfaction of TSR performance criteria over the three-year period for our PSUs. 2014 award values at year-end 2016 were calculated as follows: (1) PSUs reflect the actual 51% vesting of those awards; (2) NQ were valued at $0 because the exercise price was in excess of the closing stock price at year-end 2016; and (3) RSUs were valued based on the number of RSUs that vested in March 2017 multiplied by our closing stock price of $5.61 on December 30, 2016.

(3)          All 2015 LTIP awards are subject to a three-year vesting schedule, in addition to satisfaction of TSR performance criteria over the three-year period for our PSUs. 2015 award values at year-end 2016 were calculated as follows: (1) PSUs reflect the estimated 100% vesting of those awards based on TSR performance through year-end 2016 with a cap at target vesting for a negative absolute TSR; and (2) RSUs were valued based on the number of unvested RSUs multiplied by our closing stock price of $5.61 on December 30, 2016.

(4)          All 2016 LTIP awards are subject to a three-year vesting schedule, in addition to satisfaction of TSR performance criteria over the three-year period for our PSUs. 2016 award values at year-end 2016 were calculated as follows: (1) PSUs reflect the assumed 200% vesting of those awards based on our strong 296% absolute TSR for 2016 ; and (2) RSUs were valued based on the number of unvested RSUs multiplied by our closing stock price of $5.61 on December 30, 2016.

(5)          The Cumulative LTIP Awards 2009-2016 table reflects all LTIP awards granted to our named executive officers since the adoption of our LTIP in 2009.  Grant date target values and year-end 2016 estimated values were calculated by using the same methodology as described within the footnotes above for target award values as of the grant dates of an award and 2016 estimated year-end values.

Executive Compensation Philosophy and Objectives

Our executive compensation program is designed to reward our executive officers for their overall contribution to company performance, including the achievement of specific annual, long-term and strategic goals. The executive

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compensation program also seeks to align executive officers’ interest with those of our stockholders by rewarding performance that meets or exceeds established goals, with the ultimate objective of increasing long-term stockholder value. Specifically, the program is designed to:

·                                           Retain and attract a highly competent, motivated team of employees appropriately aligned with the long-term interest of our stockholders;

·                                           Encompass safety and environmental stewardship as core elements of our compensation program;

·                                           Encourage behavior that will enhance both current year performance and long-term growth of stockholder value;

·                                           Target total compensation to be in a range around the 50th percentile of our peer group with the opportunity for enhanced compensation for superior company and individual performance;

·                                           Provide as part of our total compensation base salary, the opportunity for a cash incentive and the opportunity for equity, linked to the long-term growth in TSR;

·                                           Achieve minimum performance thresholds prior to any incentive compensation being earned;

·                                           Provide market competitive programs of health, welfare and retirement benefits to all employees on an equivalent basis; and

·                                           Make equity ownership and retention guidelines for executives and directors a key component to ensure alignment with long-term stockholder interests.

The Compensation Committee reviews the compensation philosophy annually to review whether the goals and objectives are being met, and what, if any, changes may be needed to the philosophy.  In recent years, the Compensation Committee’s review has taken into account the impact of ongoing depressed coal industry conditions on our company’s performance and on our executive compensation program.

Stockholder Outreach and Response to 2016 Say on Pay Vote

Annual Say on Pay Vote

As recommended by our Board in 2011, a majority of stockholders in 2011 expressed their preference for an advisory vote on executive compensation every year, and we have implemented that recommendation.  At our 2017 annual meeting, we are again asking our stockholders to communicate their preference on the frequency of these advisory votes on executive compensation and are recommending continued annual advisory votes (see Proposal IV —   Frequency of Future Advisory Votes to Approve the Compensation of Named Executive Officers).

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2016 Vote — Low Majority Stockholder Say on Pay Approval for 2015 Compensation; Investor Outreach

In 2016, the advisory vote on compensation received a significantly lower approval of approximately 53% with respect to our 2015 executive compensation program as disclosed in our proxy statement for the 2016 annual meeting.  As a result of this decline in support for Say on Pay in 2016, the Compensation Committee undertook a comprehensive investor outreach initiative in the summer and fall of 2016 led by the Chair of our Compensation Committee, reaching out to investors representing approximately 60% of our outstanding shares.  The purpose of the outreach was to better understand stockholder perspectives with respect to our executive pay practices and evaluate any concerns and feedback.

This section provides an overview of (1) our outreach process and participants, (2) the significant stockholder base included in our outreach program, (3) feedback received from stockholders and (4) the response of our Compensation Committee and other independent directors to the feedback.

Although the topics and specifics of each investor conversation varied, we believe the table below summarizes the most relevant matters and our responses.  The responses described below reflect actions of the Compensation Committee and the company in early 2016 that addressed certain issues ultimately raised by some investors in our Say on Pay outreach, as well as other actions taken later in 2016 and early 2017 following the 2016 Say on Pay vote and investor outreach. In addition to the compensation determinations made to date, the Compensation Committee will continue to consider investor feedback and the outcome of future Say on Pay votes and future investor outreach when making compensation decisions for our executive officers.  The impact of these future determinations will be reflected in future proxy statements.

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In addition to evaluating the feedback from our Say on Pay outreach process and the results of each year’s advisory vote on executive compensation, the Compensation Committee also considers many other factors in evaluating our executive compensation programs as discussed in this CD&A, including the Compensation Committee’s assessment of the interaction of our compensation programs with our corporate business objectives, evaluations of our programs by the Compensation Committee’s independent compensation consultant, and in years where we conduct extensive Compensation Peer Group reviews, data relating to pay practices of our Compensation Peer Group.

Setting Executive Compensation for 2016; Compensation Peer Group

The Compensation Committee historically has engaged Aon Hewitt, its independent compensation consultant, to conduct a review of the company’s executive officer compensation program in order to assist the Compensation Committee in determining whether any elements or amounts of the existing compensation program should be modified. With respect to 2016, however, the Compensation Committee ultimately determined that executive officer base salaries, target annual cash bonus opportunities (as a percentage of base salary) and target equity award values (as a percentage of base salary), as well as the overall structure and components of the executive compensation program, would remain the same in 2016 as in 2015, other than the limited market-based increase in our Chief Financial Officer’s base salary. Therefore Aon Hewitt’s engagement for 2016 included the following, at the Compensation Committee’s request:

·                                           Assist the Compensation Committee in staying abreast of industry, governance and regulatory developments impacting executive and director compensation;

·                                           Participate in Compensation Committee meetings as requested and provide the views of Aon Hewitt with regard to various agenda items considered by the Compensation Committee throughout 2016;

·                                           Assist the Compensation Committee in reviewing and updating the company’s Performance Peer Group, which is used for purposes of TSR comparisons and vesting requirements in the company’s performance share unit awards;

·                                           Assist with the Compensation Committee’s periodic compensation program risk assessment;

·                                           Assist with the company’s compensation disclosures in its annual proxy statement; and

·                                           Assist with the Compensation Committee’s Say on Pay investor outreach.

The Compensation Peer Group is used for the purpose of establishing the comparison targets for and review of the company’s executive compensation program. As discussed below, we have a separate Performance Peer Group for purposes of the TSR performance metrics used in our performance share units. Our Compensation Peer Group is designed to focus on coal industry peers and competitors for executive talent. Our Performance Peer Group is a broader group that reflects the equity performance of coal producers and also includes oil and gas companies because of the impact natural gas prices have on demand and pricing for domestic coal supplies.

Because the 2016 executive compensation program remained the same as in 2015, there were no formal updates to the Compensation Peer Group companies that the company previously utilized in 2015. For reference, below are the Compensation Peer Group companies identified in the 2015 year:

*                  Alpha Natural Resources, Inc. and Walter Energy, Inc. filed for bankruptcy in 2015.  Arch Coal Inc. and Peabody Energy Corporation filed for bankruptcy during 2016.

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