Our mission is to create superior value for shareholders as the leading global supplier

of coal, which enables economic prosperity

and a better quality of life.

Our Values

Peabody Plaza

701 Market Street

St. Louis, Missouri 63101

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 9, 2019

Peabody Energy Corporation (the “company”) will hold its 2019 Annual Meeting of Stockholders (the “2019 Annual Meeting”) at the Sheraton Clayton Plaza Hotel, 7730 Bonhomme Avenue, Clayton, Missouri 63105 on Thursday, May 9, 2019, at 9:00 a.m., Central time, to:

The foregoing items of business are more fully described in the proxy statement accompanying this notice. The board of directors has fixed the close of business on March 18, 2019 as the record date for determining stockholders of the company entitled to receive notice of and vote at the 2019 Annual Meeting and any adjournment or postponement thereof.

WHETHER OR NOT YOU EXPECT TO ATTEND THE 2019 ANNUAL MEETING, WE URGE YOU TO VOTE YOUR SHARES VIA THE TOLL-FREE TELEPHONE NUMBER OR OVER THE INTERNET, AS PROVIDED IN THE ENCLOSED MATERIALS. IF YOU REQUESTED A PROXY CARD BY MAIL, YOU MAY SIGN, DATE AND MAIL THE PROXY CARD IN THE ENVELOPE PROVIDED.

By Order of the Board of Directors,

A. Verona Dorch

Executive Vice President, Chief Legal Officer, Government Affairs and Corporate Secretary

March 27, 2019

Dear Fellow Stockholder:

It is my pleasure to invite you to attend the 2019 Annual Meeting of Stockholders on Thursday, May 9 in St. Louis.

We believe that 2018 marked a year of substantial achievements even in the face of notable challenges. Your company earned $645.7 million in income from continuing operations, net of income taxes, on Adjusted EBITDA¹ of $1.38 billion and revenue of $5.58 billion, while generating Free Cash Flow² of $1.36 billion. The company also completed an attractive acquisition of the Shoal Creek hard-coking coal mine in Alabama and reduced liabilities by more than $550 million. Peabody initiated a quarterly dividend and increased the per-share payout as the year progressed, even as we expanded the share buyback program and completed $1.1 billion of share repurchases over 18 months. Most recently, we have announced an approximately $200 million supplemental dividend, or $1.85 per share, recognizing our strong cash flow generating capability.

Some headwinds persisted in 2018, including macro concerns around global GDP growth and trade wars that led to equity declines across the resource sector in general and coal specifically. These issues were exacerbated by a fire in September at the company’s North Goonyella Mine, which resulted in second-half provisions and ongoing costs, and the company is now executing its plan to resume operations. For the full year, shares of BTU lost 22% from a total shareholder return perspective, whereas a representative group of U.S. coal equities declined an average of 24%. Sixteen of 23 global coal equities and master limited partnerships lost value during 2018. These challenges in 2018 detracted from BTU’s total shareholder return of 40% as measured from the company’s relisting in April 2017 through December 2018.

A fundamental tenet at Peabody is that how we behave is just as important as what we accomplish. In 2018, Peabody continued to emphasize its environmental, social and governance (“ESG”) practices and conducted outreach with shareholders on our ESG approach. The company was recognized with a number of national and international ESG, safety, land restoration and employment practices awards. I invite you to further explore the company’s ESG practices and what we colloquially call “Coal Done Right” in our Corporate and Social Responsibility Report.

As chairman of Peabody, I believe that good governance is a journey rather than a destination. I use such times as the proxy to evaluate both how far we’ve come and where we are heading. Since our last annual meeting, the board has continued to provide oversight on good governance, strategy and risk management. In 2018, we have advanced a new compensation program that is consistent with best practices and aligns management with stockholders. We are also pleased to have added Andrea Bertone, former President of Duke Energy International, to our board. Ms. Bertone increases the skills, experience and diversity of a board already high in quality and international in scope.

As we enter 2019, we do so as a company that remains committed to delivering results and generating value across an increasingly seaborne-oriented company. Our financial approach continues to be focused on generating cash, maintaining financial strength, investing wisely and returning cash to shareholders. We believe that this focus, matched by a commitment to best practices in ESG, provides the best opportunity for real value creation over time.

Thank you for your time and ongoing support of Peabody.

Bob Malone

Chair of the Board

¹ Adjusted EBITDA is not a recognized term under GAAP. This measure is defined and reconciled to the nearest GAAP measure in Appendix B.

² Free Cash Flow is not a recognized term under GAAP. This measure is defined and reconciled to the nearest GAAP measure in Appendix B.

TABLE OF CONTENTS

PROXY SUMMARY

This summary highlights certain information contained in the Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding the company’s 2018 performance, please review the company’s Annual Report on Form 10-K for the year ended December 31, 2018. This Proxy Statement and related materials were first made available on the internet or mailed to stockholders on or about March 27, 2019.

ROADMAP OF VOTING MATTERS

Stockholders are being asked to vote on the following matters at the 2019 Annual Meeting:

GOVERNANCE HIGHLIGHTS

We are committed to good corporate governance, which we believe promotes the long-term interests of stockholders. The Corporate Governance section beginning on page 24 describes our governance framework, which includes the following highlights:

Approach to Environmental, Social, and Governance Components

Peabody’s ESG approach is essential to how we drive long-term success and create value for our stockholders.

Environmental: Peabody believes in responsible coal mining, including a commitment to reducing greenhouse gas intensity, conserving water, advancing recycling and waste management programs, and applying contemporaneous land reclamation to lessen surface disturbance across global operations. In addition, Peabody continues to support responsible coal use by advocating and collaborating for global development and deployment of advanced coal technologies.

Social: Peabody recognizes that our company is only as strong as our people. As such, we are committed to integrating safety into all aspects of the business and enriching our culture through robust training, development, and inclusion and diversity initiatives. We also strive to be a strong corporate citizen though targeted charitable giving, employee volunteerism and community engagement.

Governance: Peabody is focused on good corporate governance and transparency. Our Board has oversight of our risk management activities that extend to all levels of the organization and works to ensure that our practices and policies promote the best interest of the enterprise.

Additional information regarding our ESG approach and progress can be found within our annual corporate and social responsibility report available at www.peabodyenergy.com/Sustainability/Corporate-Social-Responsibility-Report.

DIRECTOR NOMINEES

EXECUTIVE COMPENSATION HIGHLIGHTS

Peabody’s 2018 executive compensation program was the first full-year executive pay program since the company successfully emerged from Chapter 11 of Title 11 of the U.S. Code (“Chapter 11”) reorganization in April 2017. The program included fundamental changes that evidence our pay-for-performance approach to executive compensation. This approach aligns with the company’s current business strategy and is designed to motivate and reward our leaders for long-term performance and enhanced company value. Our 2018 compensation program design and pay levels were significantly different from those of 2017. The 2017 design and pay levels were driven by programs specific to the period the company was in Chapter 11 through Emergence. In addition, in response to last year’s Say-on-Pay vote, we engaged with and listened to our investors. We believe that our 2018 executive compensation program supported the company’s strategic objectives and was aligned with stockholder interests and the feedback provided by our owners during that engagement process.

The 2018 executive compensation program for our named executive officers (“Named Executive Officers” or “NEOs”) is summarized in the following table:

¹ The performance metrics applicable to NEO awards are explained below under “Compensation Discussion and Analysis.”

² Free Cash Flow—STIP is not a recognized term under GAAP. This measure is defined and reconciled to the nearest GAAP measure in Appendix B.

³ Adjusted EBITDA—STIP is not a recognized term under GAAP. This measure is defined and reconciled to the nearest GAAP measure in Appendix B.

BOARD RESPONSIVENESS TO STOCKHOLDERS – HOW WE ENGAGED IN RESPONSE TO SAY-ON-PAY VOTE

Stockholder Outreach

Peabody engaged in open and constructive dialogue with its stockholders throughout 2018 and into 2019. During this time, Peabody reached out to 24 institutional stockholders, representing about 87% of total shares outstanding as of March 18, 2019, to solicit feedback on the company’s compensation programs and other governance matters.

Meetings with Board Members and Senior Management

Members of management directly engaged with 9 institutional stockholders, representing about 66% of our total shares outstanding, to articulate our compensation philosophy and solicit feedback on our compensation programs. Our Compensation Committee Chair participated in 8 of these meetings, representing 58% of our total shares outstanding.

Matters Discussed

In addition to Say-on-Pay matters, members of the Peabody team discussed the company’s strategy and value proposition; fundamental drivers of the long-term success of the business; the company’s holistic approach to ESG matters; board composition and operations; and sustainability.

Outcomes

After considering input from stockholders received through an extensive engagement effort, we believe that the 2018 compensation program is properly aligned with stockholder feedback and addresses the concerns raised regarding the outsized equity awards and the desire for greater linkage between pay and performance with the 2017 program. Changes to 2018 compensation relative to 2017 included aligning the STIP more closely with the achievement of strategic priorities, and both reducing the value of LTIP awards granted and making the majority of the LTIP awards performance-based rather than time-based (60% PSUs and 40% RSUs). In addition to extensive stockholder engagement, we sought the advice of the Compensation Committee’s independent consultant and other external advisors.

The Compensation Committee believes that the 2018 executive compensation program and pay levels are aligned with the views expressed by our stockholders and are consistent with our overall compensation objectives. As shown in the chart below, the 2018 Summary Compensation Table values for our CEO and the other NEOs (on average) reflect a significant reduction from 2017.

SUMMARY OF CERTAIN EXECUTIVE COMPENSATION PRACTICES

The table below highlights our current executive compensation practices, including practices we have implemented because we believe they drive performance, and the practices we have not implemented because we do not believe they would serve our stockholders’ long-term interests.

QUESTIONS AND ANSWERS

Please see the Questions and Answers section in Appendix A beginning on page 72 for important information about the Proxy Statement, the 2019 Annual Meeting, the proposals and voting. Additional questions may be directed to the Corporate Secretary at Peabody Energy Corporation, Peabody Plaza, 701 Market Street, St. Louis, Missouri 63101 or by calling (314) 342-3400.

PROPOSAL 1 – ELECTION OF DIRECTORS

The Board has nominated Andrea E. Bertone, Nicholas J. Chirekos, Stephen E. Gorman, Glenn L. Kellow, Joe W. Laymon, Teresa S. Madden, Bob Malone, Kenneth W. Moore, Michael W. Sutherlin and Shaun A. Usmar for election as directors, each to serve for a term of one year or until his or her successor is duly elected and qualified. Each nominee is currently serving as a director and has consented to serve for the new term. Should any of them become unavailable for election, your proxy authorizes us to vote for such other person, if any, as the Board may recommend.

Overview of Director Election Process

Pursuant to the Amended and Restated Bylaws (“bylaws”), the Board shall consist of at least three members and no more than 15, and may be fixed from time to time by a resolution adopted by the Board or by the stockholders. At present, the Board has ten members. Directors need not be stockholders but are subject to certain share ownership requirements as described below.

Each director to be elected by stockholders shall be elected by the vote of a majority of the stockholders, except that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of votes. There is no cumulative voting in the election of directors. Directors may be removed, with or without cause, by a majority vote of our voting stock.

All directors will be in one class and serve for a term ending at the annual meeting following the annual meeting at which the director was elected. Our current class of directors is subject to reelection at our 2019 Annual Meeting.

The Board recommends that you vote “FOR” the director nominees named below.

Director Selection and Evaluation Process

Current Board

Our current Board consists of our President and CEO, Glenn L. Kellow, and nine independent directors: Bob Malone (Chair), Andrea E. Bertone, Nicholas J. Chirekos, Stephen E. Gorman, Joe W. Laymon, Teresa S. Madden, Kenneth W. Moore, Michael W. Sutherlin and Shaun A. Usmar. All of our current Board members other than Ms. Bertone (who was appointed to the Board on February 21, 2019) were elected to serve for a one-year term at our 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”) and were initially appointed on April 3, 2017 when the company successfully emerged from Chapter 11 reorganization (the “Emergence”).

Overview of Director Nominating Process

The Board believes one of its primary goals is to advise management on strategy and to monitor our performance. The Board also believes the best way to accomplish this goal is by choosing directors who possess a diversity of experience, knowledge and skills that are particularly relevant and helpful to us. As such, current Board members and director nominees possess a wide array of skills and experience in the coal industry, related energy industries and other important areas, including engineering, finance and accounting, operations, environmental affairs, international affairs, governmental affairs and administration, public policy, corporate governance, board service and executive management. When evaluating potential members, the Board seeks to enlist the services of candidates who possess high ethical standards and a combination of skills and experience which the Board determines are the most appropriate to meet its objectives. The Board believes all candidates should be committed to creating value over the long term and to serving our best interests and the best interests of our stockholders.

The Nominating and Corporate Governance Committee is responsible for identifying, evaluating and recommending qualified candidates for election to the Board. The Nominating and Corporate Governance Committee will consider director candidates submitted by stockholders in accordance with the process outlined below.

Any stockholder wishing to submit a candidate for consideration should send the following information to the Corporate Secretary, Peabody Energy Corporation, Peabody Plaza, 701 Market Street, St. Louis, Missouri 63101:

Stockholders may submit potential director candidates at any time in accordance with these procedures. The Nominating and Corporate Governance Committee will consider such candidates if a vacancy arises or if the Board decides to expand its membership, and at such other times as the Nominating and Corporate Governance Committee deems necessary or appropriate. We recently modified our bylaws to implement “proxy access,” a means for stockholders to include stockholder-nominated director candidates in our proxy materials for annual meetings of stockholders. Separate procedures apply if a stockholder wishes to nominate a director candidate at the 2020 Annual Meeting. Those procedures are described below under the heading “Process for Stockholder Proposals and Director Nominations.”

Under its charter, the Nominating and Corporate Governance Committee must review with the Board, at least annually, the requisite qualifications, independence, skills and characteristics of Board candidates, members and the Board as a whole. While the selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, the Nominating and Corporate Governance Committee believes candidates should generally meet the criteria listed below under the heading “Director Qualifications.” The Nominating and Corporate Governance Committee will consider candidates submitted by a variety of sources, including stockholder nominees, when filling vacancies and/or expanding the Board and will evaluate each potential candidate’s educational background, employment history, outside commitments and other relevant factors to determine whether he/she is potentially qualified to serve on the Board. Qualified stockholder nominees will be evaluated on the same basis as those submitted by Board members or other sources.

The Nominating and Corporate Governance Committee believes that its process for selecting directors will consistently produce highly qualified, independent Board members. However, the Committee may choose, from time to time, to use additional resources (including independent third-party search firms) after determining that such resources could enhance a particular director search.

Director Qualifications

Under its charter, the Nominating and Corporate Governance Committee reviews with the Board, at least annually, the requisite qualifications, independence, skills and characteristics of Board candidates, members, and the Board. While the selection of qualified directors is a complex and subjective process that requires

consideration of many intangible factors, the Nominating and Corporate Governance Committee believes that candidates should generally meet the following criteria:

The Board believes that all of our current directors meet these criteria. In addition, as outlined below, each director brings a strong and unique background and set of skills to the Board, giving the Board competence and experience in a wide variety of areas, including mining and related industries, end-user segments (energy/steel), mergers and acquisitions (“M&A”), finance and accounting, human capital and organizational health, restructuring, global operations, health, safety and environmental affairs, international, governmental affairs and administration, public policy, corporate governance, legal and regulatory, board service and executive management. We believe the Board as a whole and each of our directors individually possess the necessary qualifications and skills to effectively advise management on strategy, monitor our performance and serve our best interests and the best interests of our stockholders.

The following table shows our directors’ specific skills and knowledge that the Nominating and Corporate Governance Committee and Board relied upon when determining whether to nominate the individual for election. A particular nominee may possess other valuable skills, knowledge, or experience even though they are not indicated below.

Diversity

Peabody is an equal opportunity employer and, in addition, one of our core values is to offer an inclusive workplace. Our policies and practices support diversity of thought, perspective, sexual orientation, gender, gender identity and expression, race, ethnicity, culture and professional experience, among others. While the Board does not have a formal policy of considering diversity when evaluating director candidates, the Board does believe that its members should reflect diversity in professional experience, cultural experience, gender and ethnic background. These factors, together with the director qualifications criteria noted above, are considered by the Nominating and Corporate Governance Committee in assessing potential new directors.

Board Evaluations

The Board conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. Pursuant to its charter, the Nominating and Corporate Governance Committee is responsible for developing and administering an annual review process to evaluate the performance of the Board. This annual review process includes the annual solicitation of comments from all directors, after which the Nominating and Corporate Governance Committee reports to the Board with an assessment of the Board’s performance, which is discussed by the full Board. The Board has confirmed that each committee and the Board as a whole is functioning effectively.

Board Training and Development

From time to time, the Board members attend ongoing training and development sessions. For instance, in 2018 our directors participated in an in-boardroom training event provided by the National Association of Corporate Directors.

Director Involvement in Stockholder Engagement

Peabody management and Board members engaged in open and constructive dialogue with our stockholders throughout 2018 and into 2019. The Board and the Compensation Committee value these discussions and will continue to engage with stockholders to continue to solicit feedback about our executive compensation programs and other matters.

Feedback provided by our stockholders related to executive compensation and other governance matters was shared with the Compensation Committee and the full Board. After considering this input from stockholders, which is described in detail below under “Compensation Discussion and Analysis,” the Board determined the already established 2018 compensation program that was designed by the Compensation Committee and in place by early 2018 was properly aligned with stockholder feedback. The Compensation Committee believes that the 2018 executive compensation program and pay levels are aligned with the views expressed by our stockholders (who generally supported the 2018 executive compensation program structure) and are consistent with our overall compensation objectives.

ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS

Committee Overview

Committee Role and Responsibilities

The specific roles and responsibilities of the Board’s Audit, Compensation, Nominating and Corporate Governance, Executive and Health, Safety, Security and Environmental Committees are delineated in written charters adopted by the Board for each committee. Each member of the Audit, Compensation, Nominating and Corporate Governance and Health, Safety, Security and Environmental Committees is independent in accordance with our Corporate Governance Guidelines, which applies the independence standards (the “Independence Standards”) included in the New York Stock Exchange (“NYSE”) Listed Company Manual and the Exchange Act (as defined herein). Our Corporate Governance Guidelines and the charters of each of the Board’s committees are available on the Corporate Governance page under the Investors section of our website at: www.peabodyenergy.com. As provided in their charters, each committee is authorized to engage or consult from time to time, as appropriate, at our expense, with outside independent legal counsel or other experts or advisors it deems necessary, appropriate or advisable to discharge its duties.

Director Attendance

The Board met 13 times in fiscal year 2018. During fiscal year 2018, each incumbent director attended 75% or more of the aggregate number of meetings of the Board and the committees on which he or she served, and their average attendance was approximately 98%.

In accordance with our Corporate Governance Guidelines, the non-management directors meet in executive session at least quarterly. During fiscal 2018, our non-management directors met in executive session six times. Our Chair, Mr. Malone, chaired these executive sessions.

Under Board policy, each director is expected to attend our annual meetings of stockholders in person, subject to occasional excused absences due to illness or unavoidable conflicts. All of our then-current directors attended the 2018 Annual Meeting, and all of our director nominees are expected to attend the 2019 Annual Meeting.

Board’s Role in Risk Oversight

The Board oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to enhance long-term organizational performance and stockholder value. A fundamental part of risk management is not only understanding the risks we face, how those risks may evolve over time, and what steps management is taking to manage and mitigate those risks, but also understanding what level of risk tolerance is appropriate for us. Management is responsible for the day-to-day management of the risks we face, while the Board, as a whole and through its committees, is responsible for the oversight of risk management.

In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board regularly reviews information regarding marketing, operations, safety performance, trading, finance and business development as well as the risks associated with each. In addition, the Board holds strategic planning sessions with management to discuss our strategies, key challenges, and risks and opportunities. The full Board receives reports on our enterprise risk management initiatives on at least an annual basis.

While the Board is ultimately responsible for risk oversight, Board committees also have been allocated responsibility for specific aspects of risk oversight. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls, risk assessment and risk management. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the risks arising from our compensation policies and programs. The Health, Safety, Security and Environmental Committee assists the Board in fulfilling its oversight responsibilities with respect to the risks associated with our health, safety, security and environmental objectives, policies and performance. The Nominating and Corporate Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the risks associated with board organization, membership and structure, ethics and compliance, political contributions and lobbying expenditures, succession planning for our directors and executive officers, and corporate governance.

Board Independence

In accordance with our Corporate Governance Guidelines, a majority of our Board must be independent as defined by the NYSE listing standards and the Exchange Act. As required by the NYSE listing standards, the Board evaluates the independence of its members at least annually, and at other appropriate times when a change in circumstances could potentially impact the independence or effectiveness of one or more directors (such as in connection with a change in employment status or other significant status changes). This process is administered by the Nominating and Corporate Governance Committee, which consists entirely of directors who are independent under applicable NYSE rules. After carefully considering all relevant relationships, the Nominating and Corporate Governance Committee submits its recommendations regarding independence to the full Board, which then makes a determination with respect to each director.

On February 21, 2019, the Board determined that all the current members except for Mr. Kellow are independent. In making independence determinations, the Nominating and Corporate Governance Committee and the Board consider all relevant facts and circumstances, including (1) the nature of any relationships with us, (2) the significance of the relationship to us, the other organization and the individual director, (3) whether or not the relationship is solely a business relationship in the ordinary course of our and the other organization’s businesses and does not afford the director any special benefits, and (4) any commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships. For purposes of this determination, the Board generally

deems any relationships that have expired for more than three years to be immaterial. The Board also considered the relationships described below in “Review of Related Person Transactions.” The Audit Committee, Compensation Committee, Health, Safety, Security and Environmental Committee and Nominating and Corporate Governance Committee are each comprised of independent directors.

Board Leadership Structure

Our bylaws and Corporate Governance Guidelines permit the roles of Chair and CEO to be filled by different individuals. Effective May 1, 2017, the Board elected Mr. Malone to the role of non-executive Chair of the Board of the company after its Emergence.

Our Board leadership structure provides for strong oversight by independent directors. The Board is currently comprised of Mr. Kellow and nine independent directors. All Board committees are chaired by and composed entirely of independent directors, except for the Executive Committee, of which Mr. Kellow is a member.

As Chair, Mr. Malone’s duties are to:

Corporate Governance

Good corporate governance is a priority at Peabody. Our key governance practices are outlined in our Corporate Governance Guidelines, committee charters, and Code of Business Conduct and Ethics. These documents can be found on our website (www.peabodyenergy.com) by clicking on “Investor Info” and then “Corporate Governance.” Information on our website is not considered part of this Proxy Statement.

The Nominating and Corporate Governance Committee is responsible for reviewing the Corporate Governance Guidelines from time to time and reporting and making recommendations to the Board concerning corporate governance matters. Each year, the Nominating and Corporate Governance Committee, with the assistance of outside experts, reviews our corporate governance practices, not only to ensure that they comply with applicable laws and NYSE listing requirements, but also to ensure that they continue to reflect what the Nominating and Corporate Governance Committee believes are best practices and promote our best interests and the best interests of our stockholders.

Director Service on Other Public Company Boards

As stated above, when reviewing qualifications, independence, skills and characteristics of Board candidates and nominees, the Nominating and Corporate Governance Committee examines whether such candidates or nominees have any material outside commitments (e.g., memberships on other boards and committees, charitable foundations, etc.) which might adversely affect their performance as a director on the Board. Current directors are required to advise the Chair of the Board and the Chair of the Nominating and Corporate Governance Committee prior to accepting an invitation to serve on another public company board.

It is the current view of the Board that no director should serve on more than four public company boards, including the Board. Except in extraordinary circumstances, and only after the Board has determined that such simultaneous service would not impair the ability of the director to serve effectively on the company’s Audit Committee, no member of the company’s Audit Committee shall serve simultaneously on the audit committee of more than two other public companies. For purposes of this guideline and as provided under NYSE rules, (i) service on the boards of multiple funds within a single fund complex shall be deemed as service on one public company board, and (ii) service on multiple audit committees within a single fund complex shall be deemed as service on one public company audit committee.

Majority Voting and Mandatory Director Resignation Policy

Our bylaws provide for majority voting in the election of directors. In the case of uncontested elections, in order to be elected, the number of shares voted in favor of a nominee must exceed 50% of the number of votes cast with respect to that nominee’s election at any meeting of stockholders for the election of directors at which a quorum is present. Votes cast include votes against or votes to withhold authority with respect to that nominee’s election, but exclude abstentions and broker non-votes.

If a nominee is an incumbent director and does not receive a majority of the votes cast with respect to the nominee’s election, such director is expected to promptly tender his or her resignation to the Chair of the Board following certification of the stockholder vote. The Nominating and Corporate Governance Committee will promptly consider the resignation submitted by such director and will recommend to the Board whether to accept or reject the tendered resignation. In considering whether to accept or reject the tendered resignation, the Nominating and Corporate Governance Committee will consider all factors deemed relevant by its members. The Board will act on the Nominating and Corporate Governance Committee’s recommendation no later than 90 days following the date of the stockholders’ meeting where the election occurred. In considering the Nominating and Corporate Governance Committee’s recommendation, the Board will consider the factors considered by the Nominating and Corporate Governance Committee and such additional information and factors the Board deems to be relevant. Any director who tenders his or her resignation under our Corporate

Governance Guidelines will not participate in the Nominating and Corporate Governance Committee recommendation or Board consideration regarding whether to accept the tendered resignation.

In the case of contested elections, directors will be elected by a plurality of the votes of the shares present in person or by proxy and voting for nominees in the election of directors at any meeting of stockholders for the election of directors at which a quorum is present. For these purposes, a contested election is any election of directors in which the number of candidates for election as directors exceeds the number of directors to be elected.

Code of Business Conduct and Ethics

We have adopted a code of ethics, the “Code of Business Conduct and Ethics” which can be found on our website (www.peabodyenergy.com) by clicking on “Investor Info” and then “Corporate Governance.” The Code of Business Conduct and Ethics applies to all our directors, officers and salaried employees.

Succession Planning

Pursuant to the Corporate Governance Guidelines, our CEO provides the Board with an annual report on succession planning and related development recommendations. The report includes a short-term succession plan which delineates temporary delegation of authority in the event that the CEO or any other executive officer is unable to perform his or her duties.

Director Compensation

The 2018 compensation of non-employee directors consisted of cash compensation (annual Board and committee retainers) and equity compensation. Each of these components is described in more detail below. Any director who was also our employee received no additional compensation for serving as a director. In setting director compensation, the Compensation Committee received input from F.W. Cook, its independent compensation consultant. In addition, our 2017 Incentive Plan places a limit of $600,000 total on cash and equity compensation that may be awarded to each non-employee director in any calendar year.

In July 2018, F.W. Cook conducted a competitive market review of our non-employee director compensation program. For purposes of this review, data was collected from the same peer group we utilized for executive compensation decisions (as described below under “Compensation Discussion and Analysis”). Based on this review, F.W. Cook presented to the Compensation Committee an analysis of and recommendations for our director compensation program. Because the review indicated that the company’s per-director compensation is comparable to the peer group median, no changes were made to the non-employee director compensation program or stock ownership requirements for 2018.

However, the company made the following changes effective for 2019 non-employee director compensation to align with peer group practices and better align the interests of our non-employee directors with those of our stockholders: (1) provided for dividend equivalents on annual deferred stock unit grants to non-employee directors, and (2) increased the Audit Committee Chair cash retainer from $20,000 to $25,000.

The Board consists of ten directors, including our CEO and nine independent directors. Our Board adopted the following compensation structure for our non-employee directors for 2018:

The equity award for our non-employee directors was comprised of deferred stock units (“DSUs”). The number of DSUs granted to each non-employee director was determined by dividing $130,000 by the closing price per share of the company’s Common Stock on the grant date (and rounding down to the nearest whole DSU). DSUs generally vest monthly over 12 months. However, the underlying shares are generally not distributed until the earlier of (1) three years after the grant date and (2) the director’s separation from service, if this election is made.

Other Elements of Board Compensation

In addition to the compensation described above, we paid travel and accommodation expenses of our non-employee directors to attend meetings and other integral corporate functions. Non-employee directors did not receive meeting attendance fees. Non-employee directors could be accompanied by a spouse/partner when traveling on company business on our aircraft or charter aircraft. Non-employee directors also had the opportunity to participate in our charitable contribution matching gifts program at the same level and based on the same guidelines applicable to our full-time employees.

The following table sets forth compensation for each director (other than Mr. Kellow) who served on the Board in 2018:

Non-Employee Director Share Ownership Requirements

Under our share ownership requirements for directors, each non-employee director is required to acquire and retain Common Stock having a value equal to at least five times his or her annual cash retainer within five years of board appointment.

If at any time a non-employee director does not meet his or her ownership requirement, the director must retain (1) any Common Stock owned by the director (whether owned directly or indirectly) and (2) any net shares received as the result of the exercise, vesting or payment of any equity award until the ownership requirement is met, in each case unless otherwise approved in writing by the Compensation Committee. For this purpose, “net shares” means the shares of Common Stock that remain after shares are sold or withheld, as the case may be, to (1) pay the exercise price for a stock option award or (2) satisfy any tax obligations, including withholding taxes, arising in connection with the exercise, vesting or payment of an equity award.

Compliance with these requirements is evaluated as of December 31 of each year. The value of an individual’s share ownership as of such date is determined by multiplying the number of shares of our Common Stock or other eligible equity interests held by the individual by the closing price of our stock as of the business day immediately preceding the date of determination. Currently, each non-employee director is in compliance with these requirements and is on-track to meet the share ownership guidelines within the allowable timeframe.

For purposes of determining stock ownership levels, only the following forms of equity interests are included:

COMPENSATION DISCUSSION AND ANALYSIS

Dear Fellow Stockholder:

As members of the Compensation Committee of the Board of Directors of Peabody, we believe that most executive compensation should be contingent on performance against robust metrics that reflect the interests of our stockholders and the company’s long-term business strategy. We also believe that executive compensation should be market competitive to attract and retain high-quality talent and earned compensation should be reasonable compared to actual company performance.

At the 2018 Annual Meeting, our Say-on-Pay vote received 58% support. The Compensation Committee takes this feedback very seriously. We heard concerns about the magnitude of the 2017 compensation and a desire to see a greater linkage between pay and performance.

Following last year’s vote, the Compensation Committee made a concerted effort to increase engagement with our stockholders regarding our executive compensation program. I have personally had the opportunity to speak with stockholders holding 58% of our shares outstanding.

After listening to input from stockholders, the Compensation Committee believes the 2018 compensation program aligns with stockholder feedback and addressed the concerns with the 2017 compensation program. The 2018 program also incorporates advice from the Compensation Committee’s independent consultant and other external advisors. The following changes were incorporated into the design:

During September 2018, our North Goonyella Mine in Australia experienced a fire in a portion of the mine, which impacted our financial results.

As described in more detail in the “Compensation Discussion and Analysis,” the following pay actions demonstrate our pay-for-performance philosophy:

On behalf of the Compensation Committee, I would like to thank you for your support and feedback. We are committed to the continued evaluation of our executive compensation programs to ensure they are aligned with the interests of our stockholders. Thank you for your investment in Peabody. I can assure you that the Board, this Committee and management is working hard every day to deliver on the trust you have put in us.

Sincerely,

Joe Laymon

Compensation Committee Chair

Overview

Peabody’s 2018 executive compensation program was the first full-year executive pay program since the company successfully emerged from Chapter 11 reorganization in April 2017. The program included fundamental changes that evidence our pay-for-performance approach to executive compensation. This approach aligns with the company’s current business strategy and is designed to motivate and reward our leaders for long-term performance and enhanced company value. Our 2018 compensation program design and pay levels were significantly different from those of 2017. The 2017 pay levels were driven by programs specific to the period the company was in Chapter 11 through Emergence. In addition, in response to last year’s Say-on-Pay vote, we engaged with and listened to our investors. We believe that our 2018 executive compensation program supported the company’s strategic objectives and was aligned with stockholder interests and the feedback provided by our owners during that engagement process. Our North Goonyella Mine in Australia experienced a fire in a portion of the mine during September 2018. As a result of this event, and as described below under the subheading “Short-Term Incentive Program,” discretionary downward adjustments were made to the results for the 2018 STIP payments for NEOs and other members of the executive leadership team.

2018 Named Executive Officers

This Compensation Discussion and Analysis (the “CD&A”) explains the elements of the compensation of the company’s NEOs and describes the objectives and principles underlying the company’s executive compensation program and decisions made in fiscal year 2018. For fiscal year 2018, our NEOs were:

Business Highlights for 2018

Peabody concluded 2018 with strong company-wide Adjusted EBITDA margins¹ of approximately 25% for the full year, successful completion of what we believe to be a highly accretive acquisition, robust cash flows and share buybacks that have now surpassed $1 billion. Against the backdrop of favorable seaborne conditions, Peabody began 2019 with a healthy balance sheet, expectations of continued strong operating cash flows and an ongoing commitment to returning cash to stockholders. In particular,

¹ Adjusted EBITDA margin is not a recognized term under GAAP. This measure is defined and reconciled to the nearest GAAP measure in Appendix B.

Response to Last Year’s Say-on-Pay Vote

At the 2018 Annual Meeting of Stockholders, we conducted a Say-on-Pay vote in which we received approximately 58% support. We take these voting results seriously, so following last year’s vote, we made a concerted effort to increase engagement with our stockholders regarding our executive compensation program.

Peabody engaged in open and constructive dialogue with its stockholders throughout 2018 and into 2019. The Board and the Compensation Committee value these discussions and will continue to engage with stockholders to continue to receive feedback about our executive compensation programs.

Analysis of Executive Compensation Since Emergence from Bankruptcy; Response to Stockholders

In evaluating the company’s executive compensation program for 2018 and the changes made in 2018, it is important to understand the historical context in which the program has developed. The company emerged from Chapter 11 bankruptcy protection on April 3, 2017 with a new board of directors that formed a new

Compensation Committee and, as it related to the CEO, the Special Committee. As part of the company’s plan to emerge from bankruptcy, the company established the terms of the 2017 executive compensation program. The 2017 program was part of the company’s Plan of Reorganization, which received 93% approval from the creditors, who would become the company’s stockholders upon Emergence. The 2017 program reflected the priorities and aligned with the interests of the new stockholders in 2017, and included an RSU grant to all active employees.

The Emergence awards reflected the following:

The 2017 executive compensation program was largely comprised of one-time programs specific to the period the company was in Chapter 11; the program aligned with the interests of the stockholders and with the goals and interests of the company at that time. The Compensation Committee recognized that stockholder interests and the company’s business plans and priorities changed from 2017 to 2018. Therefore, the 2018 executive compensation program is grounded in a pay for performance approach, aligns with current business realities and is designed to motivate and reward our leaders for long-term performance and enhanced company value.

Feedback provided by our stockholders related to executive compensation and other governance matters was shared with the Compensation Committee and full Board. After considering this input from stockholders, we believe that the 2018 compensation program is properly aligned with stockholder feedback and addresses previously raised concerns. In addition to extensive stockholder engagement, we sought the advice of the Compensation Committee’s independent consultant and other external advisors. The following table details what the Board heard throughout the course of these conversations and how the 2018 compensation program addressed each concern and reflected changes aligned with stockholder feedback and concerns:

The Compensation Committee believes that the 2018 executive compensation program and pay levels are aligned with the views expressed by our stockholders and are consistent with our overall compensation objectives. As shown in the chart below, the 2018 Summary Compensation Table values for our CEO and the other NEOs (on average) reflect a significant reduction from 2017.

We will continue to engage with and solicit feedback on compensation and design practices from our stockholders, who (based on feedback in our outreach discussions) generally supported the 2018 executive compensation program structure.

2018 Executive Compensation Program Structure

Our 2018 executive compensation program reflected a combination of salary, annual cash incentives under our STIP and LTIP equity awards.

The graphs below display the 2018 target total direct compensation mix for our CEO and our other NEOs, as well as the portion that was performance-based. As shown in the graphs below, about 59% of the CEO’s target total direct compensation and, on average, about 54% of the target total direct compensation for the other NEOs was performance-based.

Process for Determining 2018 NEO Compensation

Our executive compensation philosophy is comprised of the following core principles:

Summarized below are roles and responsibilities of the parties that participated in the development of the company’s 2018 executive compensation program:

Committees

The Compensation Committee and, as it relates to the CEO, the independent members of the Board (the “Special Committee” and together with the Compensation Committee, the “Committees”), had responsibility for overseeing our executive compensation framework. The Committees, working with the Committees’ independent compensation advisor (discussed further below), other advisors and senior management, sought to align pay with performance and create incentives that reward operational excellence, safety and financial management and that ultimately are designed to create stockholder value.

The Committees’ responsibilities included:

In making compensation decisions for 2018, the Committees took a fresh look at the total compensation opportunity for each of our NEOs and modified base salaries and determined incentive targets, taking into consideration:

The Committees did not use a predetermined formula to make overall decisions but generally considered all of the above factors.

Management

For 2018, in relation to compensation, the role of the CEO was to review the performance of the other NEOs and make recommendations on base salary, STIP and LTIP opportunities for the other NEOs.

Independent Compensation Consultants

The Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that

person’s independence from management and is directly responsible for the appointment, compensation arrangements and oversight of the work of any such person. Under this authority, for 2018 the Compensation Committee engaged an independent compensation consultant, F.W. Cook, after assessing its independence. F.W. Cook does not provide any other services to us and its work in support of the Compensation Committee did not raise any conflicts of interest or independence concerns. F.W. Cook in general provided the Committees with competitive market information, assistance on evaluation of the peer group composition, input to incentive program design, and information on compensation trends. The Board conducts an annual review of the performance of F.W. Cook.

Competitive Market Information

Talent for senior-level management positions and key roles in the organization can be acquired across a broad spectrum of companies. As such, we utilized competitive market compensation information for 2018:

This competitive market information comes from both compensation surveys and from a group of companies of similar size and/or complexity as us (the “Compensation Peer Group”), described in more detail in the section below. The survey data provided a significant sample size, included information for management positions below senior executives, and included other industries from which we might recruit for executive positions. The primary survey source was the Willis Towers Watson Executive Database. We did not select the constituent companies comprising this survey group, and the component companies’ identities were not a material factor in the applicable compensation analysis.

As stated above, while the Compensation Committee examined competitive market information from this survey and the Compensation Peer Group, competitive market information was not the sole factor in its decision-making process.

Compensation Peer Group

In July 2017, the Compensation Committee approved a revised Compensation Peer Group. In determining the composition of the Compensation Peer Group, our Compensation Committee considered companies that were:

Based on review and discussions with F.W. Cook, no changes were made to the Compensation Peer Group for 2018. The Compensation Peer Group for 2018 was comprised of the following companies:

2018 Compensation Peer Group (18)				Alignment with Peer Median (2)
AK Steel Holding Corporation		Freeport-McMoRan Inc.
Antero Resources Corporation		The Mosaic Company
Arch Coal, Inc.		Newmont Mining Corporation
Barrick Gold Corporation		Noble Energy, Inc.
Chesapeake Energy Corporation		Packaging Corporation of America
Cleveland-Cliffs Inc.		Southwestern Energy Company
CONSOL Energy Inc.(1)		SunCoke Energy, Inc.
CVR Energy, Inc.		Teck Resources Limited
Domtar Corporation		United States Steel Corporation

⁽¹⁾ In November 2017, CONSOL Energy Inc. spun off “CONSOL Mining Corp,” which has retained the name CONSOL Energy, Inc. (and remains in the peer group, as it produces and exports coal).

⁽²⁾ Data is reflected as of the most recently reported four quarters at January 1, 2019 from S&P’s Capital IQ; includes adjustments that may differ from GAAP reporting made by Capital IQ.

2018 NEO Compensation Determinations and Outcomes

The following discussion provides details of our executive compensation program determinations and outcomes for each of our NEOs during 2018.

Base Salaries

In general, we pay base salaries to the NEOs to provide them with a level of fixed income for their service to the company.

The Committees approved an increase to the base salary rate of each NEO effective April 1, 2018, as detailed in the following table. These changes generally represented merit increases, but also included market-based adjustments for Glenn Kellow and Amy Schwetz.

Short-Term Incentive Program

The STIP is designed to reward company performance while encouraging management to continue to improve upon our excellent safety record. For 2018, the STIP was modified to better align with our strategic priorities as a fully independent public company and reflect input from stockholders. In particular, the Committees approved the following changes from the 2017 STIP program:

The table below provides the definitions for and the purposes of the 2018 STIP performance metrics, which applied to the executive officers and certain other participants in the 2018 STIP:

Similar to many U.S.-based publicly traded companies, the 2018 STIP initially had a funding mechanism that was designed and intended to comply with the “qualified performance-based compensation” exemption requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Generally, awards structured this way were anticipated to potentially be deductible by us for U.S. federal income tax purposes. More particularly, under the 2018 STIP, awards were initially designed so that a threshold goal of $100 million of Adjusted EBITDA—STIP was required to be met for fiscal 2018 in order to fund 2018 STIP awards at maximum payout levels, and the Committees retained negative discretion to reduce final award payouts. However, due to the unavailability of the “qualified performance-based compensation” exemption under Section 162(m) of the Code following tax reform legislation adopted in late 2017 (as further described below), in January 2018 the Committees determined that 2018 STIP awards would not be “qualified performance-based awards” for purposes of Section 162(m) of the Code (although they are still performance-based awards for compensation purposes). Accordingly, the Committees determined that the threshold Adjusted EBITDA—STIP funding mechanism would not be applicable and determined that the performance goals described below would serve as the only performance measures for the 2018 STIP awards. In any event, the 2018 STIP awards were also designed so that no 2018 STIP award could exceed $5,000,000.

Summarized in the table below are: the weights for each 2018 STIP performance metric; threshold, target and maximum performance expectations; actual results; and the achievement percentage for each performance metric, including the discretionary downward adjustments to the formulaic results:

In 2018, our NEOs earned STIP awards equal to 169% of target, based on our performance against Free Cash Flow-STIP per Share, Adjusted EBITDA—STIP and Safety metrics. However, following a fire at the North Goonyella Mine in Australia, the CEO recommended, and both the Compensation Committee and the Special Committee approved, a reduction in the formulaic results, decreasing STIP payments by 24%. This 24% reduction was derived as follows:

Finally, for the CEO, who has direct line operating responsibility for North Goonyella operations, the CEO recommended, and the Special Committee approved, a further discretionary reduction of 50%, resulting in a 62% reduction in the overall 2018 STIP payment for the CEO as shown in the table below:

⁽¹⁾ Reflects increases from the following 2017 target percentages based on the analysis previously described above: 110% for Mr. Kellow; 80% for Ms. Schwetz; and 80% for each of Mr. Meintjes and Mr. Williamson.

Long-Term Incentive Program

The LTIP for the NEOs for fiscal year 2018 consisted of PSUs and RSUs. Target aggregate LTIP award values were established for the NEOs as shown in the following table. Approximately 60% of each NEO’s target award was granted as PSUs, and approximately 40% was granted as RSUs.

PSUs were granted to the NEOs for a performance period beginning on January 1, 2018 and ending December 31, 2020. The LTIP includes PSUs to provide strong linkage to company performance based on the metrics described below.

The table below provides definitions for and the purposes of the performance metrics applicable to the 2018 PSU awards:

Summarized in the table below are the weights for each performance metric and threshold, target and maximum performance expectations.