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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 [•], 2016

Dear Fellow Stockholder:

It is our pleasure to invite you to attend Cloud Peak Energy Inc.’s 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”). The 2016 Annual Meeting will be held on Wednesday, May 11, 2016 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 2016 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, 2015 to you online with paper copies available, free of charge, upon request. On or about March [•], 2016, 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 11th.

Sincerely,

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CLOUD PEAK ENERGY INC.

505 South Gillette Avenue, Gillette, Wyoming 82716

March [•], 2016

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 11, 2016

As a stockholder of Cloud Peak Energy Inc., a Delaware corporation, you are hereby given notice of, and invited to attend in person or by proxy, Cloud Peak Energy Inc.’s 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”). The 2016 Annual Meeting will be held at the Gillette College Technical Center, 3251 South 4-J Road, Gillette, Wyoming 82718, on Wednesday, May 11, 2016, at 9:00 a.m. Mountain Time, for the following purposes:

1.              To elect two Class I members of the Board of Directors of Cloud Peak Energy Inc. (the “Board”) named in the Proxy Statement, each for a term of three years;

2.              To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2016 fiscal year;

3.              To approve, on an advisory basis, the compensation of the company’s named executive officers, as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K promulgated by the Securities and Exchange Commission (the “SEC”);

4.              To approve the First Amendment to the Cloud Peak Energy Inc. 2009 Long Term Incentive Plan (as amended and restated effective March [•], 2016) (the “Restated 2009 LTIP”) to increase the number of shares authorized for issuance thereunder;

5.              To re-approve the material terms of the Restated 2009 LTIP, as amended by the First Amendment, in accordance with the stockholder approval requirements of Section 162(m) of the Internal Revenue Code;

6.              To approve an amendment to the Amended and Restated Certificate of Incorporation of Cloud Peak Energy Inc. (the “Certificate of Incorporation”) to eliminate the classification of the Board over a three-year period; and

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

The Board has fixed the close of business on March 18, 2016 as the record date for the determination of stockholders entitled to notice of and to vote at the 2016 Annual Meeting and any adjournment or postponement thereof.

Pursuant to rules adopted by the SEC, we are providing access to our proxy materials primarily via the Internet, rather than mailing paper copies of these materials to each stockholder. On or about March [•], 2016, we began mailing a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access the proxy materials, submit your proxy, and request paper copies of the proxy materials. We believe this process expedites stockholders’ receipt of the proxy materials, lowers the cost of our 2016 Annual Meeting through lower printing and distribution costs, and reduces the environmental impact associated with printing a large volume of proxy materials. Your vote is important. We urge you to review the Proxy Statement carefully and to submit your proxy or voting instructions as soon as possible so that your shares will be represented at the meeting.

Thank you for your continued interest and support.

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE 2016 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2016

This Notice of Annual Meeting, the Proxy Statement and our annual report on Form 10-K for the year ended December 31, 2015 (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 11, 2016

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 2016 Annual Meeting of Stockholders (the “2016 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

2016 Annual Meeting Date and Location

Our 2016 Annual Meeting will be held on Wednesday, May 11, 2016, 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 2016 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 [•], 2016, 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 2016 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 2016 Annual Meeting was the close of business on March 18, 2016, at which time we had issued and outstanding [•] shares of common stock, which were held by [•] 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 2016 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 2016 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 2016 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:

·                  Proposal I (Election of Directors)—FOR the election of each of the persons named under “Proposal I—Election of Directors” as nominees for election as Class I directors;

·                  Proposal II (Ratification of the Appointment of Independent Auditors)—FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm (independent auditors) for fiscal year 2016;

·                  Proposal III (Advisory Vote to Approve the Compensation of Named Executive Officers)—FOR the approval, on an advisory basis, of the compensation of the company’s named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K promulgated by the SEC;

·                  Proposal IV (Approval of Share Increase Amendment to Restated 2009 LTIP)—FOR the approval of the First Amendment to the Cloud Peak Energy Inc. 2009 Long Term Incentive Plan (as amended and restated effective March [•], 2016) (the “Restated 2009 LTIP”) to increase the number of shares authorized for issuance thereunder;

·                  Proposal V (Re-Approval of the Section 162(m) Material Terms of the Restated 2009 LTIP)—FOR the re-approval of the material terms of the Restated 2009 LTIP, as amended by the First Amendment, in accordance with the stockholder approval requirements of Section 162(m) of the Internal Revenue Code; and

·                  Proposal VI (Board Declassification Amendment to Certificate of Incorporation)—FOR the approval of an amendment to the Cloud Peak Energy Inc. Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to eliminate Board classification over a three-year period.

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 2016 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.

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Quorum; Required Votes; Majority Voting Policy 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 2016 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 2016 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 2016 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 Policy for Directors — We have adopted a majority voting policy 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 2016 Annual Meeting have each signed such a resignation letter. The foregoing summary is qualified by the terms of our majority voting policy, which are included in our Bylaws.

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

Voting Procedures

Registered Stockholders—If you are a registered stockholder, you may vote your shares or submit a proxy to have your shares voted by one of the following methods:

·                  By Internet. You may submit a proxy electronically via the Internet at www.proxyvote.com. Please have your Notice of Availability, which includes your personal control number, in hand when you log onto the

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website. Internet voting facilities will close and no longer be available on the date and time specified on the proxy card or Notice of Availability.

·                  By Telephone. If you request paper copies of the proxy materials by mail, you may submit a proxy by telephone using the toll-free number listed on the proxy card. Please have your proxy card in hand when you call. Telephone voting facilities will close and no longer be available on the date and time specified on the proxy card.

·                  By Mail. If you request paper copies of the proxy materials by mail, you may submit a proxy by signing, dating and returning your proxy card in the pre-addressed envelope provided.

·                  In Person. You may vote in person at the 2016 Annual Meeting by completing a ballot; however, attending the meeting without completing a ballot will not count as a vote. Directions to the meeting are provided at the back of this Proxy Statement.

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 2016 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 2016 Annual Meeting.

Revoking Your Proxy

If you are a registered stockholder, you may revoke your proxy or change your vote at any time before the shares are voted at the 2016 Annual Meeting by:

·                  Timely delivering a valid, later-dated executed proxy card;

·                  Timely submitting a proxy with new voting instructions using the Internet or telephone voting system;

·                  Voting in person at the meeting by completing a ballot (attending the meeting without completing a ballot will not revoke any previously submitted proxy); or

·                  Filing a written notice of revocation received by the General Counsel of Cloud Peak Energy Inc. at 505 South Gillette Avenue, Gillette, Wyoming 82716, by 5:00 p.m. Mountain Time, on Tuesday, May 10, 2016.

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 2016 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 2016 Annual Meeting. Under our agreement with MacKenzie Partners, MacKenzie Partners will receive a fee of up to $15,000 and we will reimburse MacKenzie Partners for reasonable and customary out-of-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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Copies of the Annual Report

Upon written request, we will provide any stockholder, without charge, a copy of our annual report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”), but without exhibits. Stockholders should direct requests to Cloud Peak Energy Inc., Attn: General Counsel, 505 South Gillette Avenue, Gillette, Wyoming 82716. The Form 10-K and the exhibits filed with it are available on our website, www.cloudpeakenergy.com in the “SEC Filings” subsection of the “Investor Relations” section. The Form 10-K does not constitute a part of the proxy solicitation materials.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and related rules of the Securities and Exchange Commission (the “SEC”) require our directors and Section 16 officers, and persons who own more than 10% of a registered class of our equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file. We assist our directors and Section 16 officers in making their Section 16(a) filings pursuant to powers of attorney granted by our directors and Section 16 officers on the basis of information obtained from them and our records.

Except for one Section 16 officer who filed a Form 4 during 2015 one day past the applicable filing deadline, no director, Section 16 officer, beneficial owner of more than 10% of the outstanding common stock of the company, or any other person subject to Section 16 of the Exchange Act, failed to file on a timely basis during 2015.  This is based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to Cloud Peak Energy during and with respect to 2015, including those reports that we have filed on behalf of our directors and Section 16 officers pursuant to powers of attorney.

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PROPOSAL I

ELECTION OF DIRECTORS

Election of Class I Directors; Recommended Board Declassification

As of the date of mailing of the Notice of Availability, we have seven members on our Board. Pursuant to our Certificate of Incorporation and our Bylaws, as currently in effect, our Board is divided into three classes, each of which serves for a three-year term. One class of directors is elected each year at the annual meeting of stockholders. The current terms of our three classes of directors are:

The Board has approved an amendment to the Certificate of Incorporation to eliminate the classification of the Board over a three-year period and provide for the annual election of all directors beginning at the 2019 annual meeting of stockholders, which amendment stockholders are being asked to approve at the 2016 Annual Meeting. Please see “Proposal VI—Board Declassification Amendment to Certificate of Incorporation” for more information.

The Class I directors elected at the 2016 Annual Meeting will serve for a term of three years, which expires at the annual meeting of stockholders in 2019 or when their successors are duly elected and qualified.  The nominees for Class I directors are (1) Patrick Condon and (2) William Owens, each of whom is a current member of our Board and was recommended for election by our Nominating and Corporate Governance Committee (“Governance Committee”). Each of the nominees has indicated his willingness to serve as a member of the Board if elected. If, however, a nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute as the Board may recommend, or the Board may reduce the number of directors to eliminate the vacancy, and if any director is unable to serve his or her full term, the Board may by resolution reduce the number of directors or by a majority vote of the directors then in office may designate a substitute to serve until the annual meeting of stockholders in 2019.

Although Keith Bailey is a Class I director, 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. Bailey turned 72 on April 5, 2014.  The Board previously approved an exception to our director retirement policy to provide for Mr. Bailey to continue serving the remainder of his current term as a Class I director, which term expires at the 2016 Annual Meeting.  As a result, Mr. Bailey is not standing for re-election at the 2016 Annual Meeting and will retire from the Board immediately following the 2016 Annual Meeting.  Please see “Director Retirement Policy; Chairman Transition” below for additional information. The Board will reduce the size of the Board by one effective upon Mr. Bailey’s retirement and, as of that time, our Board will be comprised of six members.  In addition, the Board has appointed current independent director William T. Fox III to become Chairman of the Board effective upon Mr. Bailey’s retirement.

The following table sets forth, as of the 2016 Annual Meeting date, certain information about our current directors and nominees.  Immediately following the 2016 Annual Meeting, Mr. Bailey will retire from the Board, the Board will be reduced to six members and Mr. Fox will become Chairman of the Board, as discussed above.

*                 As of the 2016 Annual Meeting date.

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

Keith Bailey has served as Chairman of our Board since September 2009. From 1994 until his retirement from full time employment in 2002, Mr. Bailey served as chief executive officer and chairman of the board of directors of The Williams Companies, Inc., an energy and communications company. Mr. Bailey also served as The Williams Companies, Inc.’s president from 1992 to 2001 and chief financial officer from 1986 to 1992. From 2005 to 2013, Mr. Bailey served on the board of directors of Integrys Energy Group, Inc., a natural gas and electric utility company, as the chairman of its finance committee and on its audit committee. Mr. Bailey served on the board of directors of APCO Oil & Gas International, Inc. from 1988 through January 2015, as chair of its nominating committee and on its audit committee. Mr. Bailey has served on the board of directors of Aegis Insurance Services Ltd., an insurance company, since 2002 and currently serves on its investment committee. Mr. Bailey served on the board of directors of MarkWest Energy Partners, L.P., a natural gas gathering and processing company, from 2005 until June 2014. Mr. Bailey holds a Bachelor of Science degree in mechanical engineering from the Missouri School of Mines and Metallurgy.

Qualifications of Mr. Bailey: Mr. Bailey has over fifty years’ executive experience in the energy business, particularly with respect to oil and gas and coal, and over twenty-eight years’ experience as a public company director. Mr. Bailey offers extensive senior leadership and energy industry expertise to our Board, as well as significant corporate governance experience with his years in leadership and board positions with other public companies, public and private universities and both local and national boards of major national charities.

Patrick Condon has served as a director since March 2012.  He also serves on the board of directors of Entergy Corporation, 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.

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 and audit committee of Key Energy Services, an oilfield services company, since 2007; 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 universal privately owned bank operating in Moscow 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 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.

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William T. Fox III has served as 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 has served on the board of directors of Rowan Companies, Inc., a provider of international and domestic contract drilling services, since 2001 and currently serves 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. Fox: Mr. Fox has over thirty years’ experience in commercial banking with a focus in lending to energy companies. In addition, his qualifications as a financial expert and experience as an audit committee chairman on another board provide essential skill sets to the Board and the Audit Committee.

Robert Skaggs has served as a director since July 2015. Mr. Skaggs is chairman of the board and chief executive officer of Columbia Pipeline Group, Inc. (“CPG”), a natural gas pipeline and underground storage system company. 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: 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 to the Audit Committee, Compensation Committee and Governance Committee.

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.

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 The Williams Companies, Inc. in January 2012 and currently serves on its compensation committee and chairs its special safety committee. 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 compensation and operations and reserves committees and chairing its nominating and governance 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

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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.

Board Recommendation on Proposal

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

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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 2016 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 public accountants, 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 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. 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, Chief Judge 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, Austin, Texas.

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

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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, Business Development since July 2010. Previously, he served as President of Westmoreland Coal Sales Company. Prior to that, Mr. Myers served 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 energy industry, where he led the energy and environment 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 a Master of International Management from the Thunderbird Graduate School of Global Management in Glendale, Arizona.

James Orchard has served as our Senior Vice President, Marketing and Government Affairs since October 2009. Previously, he served as Vice President, Marketing and Sustainable Development for RTEA from March 2008 until November 2009. From January 2005 to March 2008, Mr. Orchard was Director of Customer Service for RTEA. Prior to that he worked for Rio Tinto’s Aluminum division in Australia and New Zealand for over 17 years, where he held a number of technical, operating, process improvement and marketing positions, including as manager of Metal Products from January 2001 to January 2005. Mr. Orchard graduated from the University of New South Wales with a Bachelor of Science and a PhD in industrial chemistry.

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 2015, we engaged in an extensive investor outreach effort specifically focused on corporate governance matters, as described in greater detail below.

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, concerns of 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.

As discussed above, 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. Bailey, who served as Chairman of the Board during 2015 and to date in 2016, turned 72 on April 5, 2014.  The Board previously approved an exception to our director retirement policy to provide for Mr. Bailey to continue serving the remainder of his current term as a Class I director, which term expires at the 2016 Annual Meeting.  As a result, Mr. Bailey is not standing for re-election at the 2016 Annual Meeting and will retire from our Board effective immediately following the 2016 Annual Meeting.  The Board has appointed current independent director Mr. Fox to become Chairman of the Board effective upon Mr. Bailey’s retirement.

Board’s Role in Risk Oversight

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

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·                  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 control such exposures. The company’s internal auditor, who reports directly to the Audit Committee and administratively to our Executive Vice President, General Counsel and Corporate Secretary, 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.

·                  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 committee meetings regardless of membership on that committee, and the full Board is provided with Board and all 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

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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: (1) Audit Committee, (2) Compensation Committee, (3) Governance Committee, and (4) HSEC Committee.

The following table provides membership and meeting information for the Board and each of the Board’s standing committees during 2015 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, Fox and Skaggs is an audit committee financial expert as described below under “Audit Committee Financial Experts and Financial Literacy.”

(3)         As discussed above, immediately following the 2016 Annual Meeting, Mr. Bailey will retire from the Board pursuant to our director retirement policy, the Board will be reduced to six members and Mr. Fox will become Chairman of the Board.

(4)         Mr. Fox was appointed to the Governance Committee, effective January 8, 2015.  He was removed from the Governance Committee in July 2015, in connection with Mr. Skaggs’ appointment to the Board and the Governance Committee.

(5)         Mr. Nance was appointed to the Compensation Committee, effective January 8, 2015.  He was removed from the Audit Committee in July 2015, in connection with Mr. Skaggs’ appointment to the Board and the Audit Committee.

(6)         Mr. Skaggs was elected to the Board effective July 7, 2015, and was appointed as a member of the Audit Committee, Compensation Committee and Governance Committee.

(7)         During 2015, 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;

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

·                  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 2015.

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.

Other Participants in the Executive Compensation Process

In addition to the members of the Compensation Committee and members of the Board who may also be in attendance at the Compensation Committee’s meetings, our CEO, Senior Vice President, Human Resources and the Compensation Committee’s independent compensation consultant, Aon Hewitt, also participated in and contributed to our executive compensation process during 2015. Ultimately, the Compensation Committee exercises its independent business judgment with respect to recommendations and opinions of these other participants and the Compensation Committee (or our independent directors as a group) makes final determinations about our executive officer compensation.

CEO—During its meetings throughout 2015, the Compensation Committee invited input from our CEO on executive compensation for 2015. In particular, Mr. Marshall provided the perspective of management to the 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 2015, base salary

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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. 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.

In connection with its engagement of Aon Hewitt, 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 did not raise any conflict of interest for 2015.  Please see “Executive Compensation—Compensation Discussion and Analysis” for additional information regarding the scope of Aon Hewitt’s engagement for 2015 and other matters related to our executive compensation program for 2015.

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.

Stockholder Outreach and Stockholder Rights

As discussed above, we maintain a robust investor relations program and, in 2015, engaged in an extensive investor outreach effort specifically focused on corporate governance matters.  Following this outreach effort, our Board took a number of actions as part of the company’s ongoing commitment to corporate governance leadership and to further a strong alignment of interests between Cloud Peak Energy’s stockholders and the Board.

Board Declassification

Subject to stockholder approval at the 2016 Annual Meeting, the Board has approved an amendment to our Certificate of Incorporation that will eliminate over a three-year period the Board’s classified structure. As a result of the proposed amendment, the Board’s declassification would be phased-in over a three-year period beginning

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with the 2017 annual meeting of stockholders. From and after the election of directors at the 2019 annual meeting of stockholders, all directors will stand for election at each annual meeting of stockholders for one year terms. Please see “Proposal VI—Board Declassification Amendment to Certificate of Incorporation” for additional information.

Proxy Access

On October 20, 2015, the Board approved and adopted amendments to our Bylaws to implement 3%/3-year proxy access, which became effective immediately and was first available to stockholders beginning with the 2016 Annual Meeting. The new proxy access provision allows eligible stockholders who comply with the requirements set forth in the Bylaws to include their own nominee or nominees for director in the company’s proxy statement along with the candidates nominated by the Board.

The Board’s decision to adopt proxy access followed extensive individual discussions with our largest stockholders. As previously disclosed in prior public filings with the SEC, at the company’s annual stockholders’ meeting in May 2015, the stockholders approved a non-binding stockholder proposal requesting an amendment to the Bylaws to implement proxy access and did not approve the Board’s alternative recommended amendment to the Bylaws to implement proxy access. As part of the Board’s efforts to be responsive to the 2015 annual meeting voting outcome on proxy access, the company held numerous one-on-one discussions with its largest stockholders. These discussions focused on proxy access structures that would be appropriate for the company and took into consideration, among other factors, evolving proxy access developments at other U.S. public companies, the voting results from the company’s 2015 annual meeting, our overall corporate governance program and the risk of abuse of the proxy access process by short-term or special interest investors who may not represent the best interests of all of our stockholders. Stockholders expressed a variety of opinions and preferences with respect to the need for proxy access, desirable features of a proxy access structure and managing the risks of abuse from short-term and special interest holders.

Following the foregoing investor outreach and taking into account the input received from stockholders and the proxy access voting results at the 2015 annual meeting, the Board modified its previously recommended proxy access provision and adopted a proxy access provision that provides that (1) a stockholder or a group of no more than 20 stockholders, (2) who has, or have, maintained continuous qualifying ownership of at least 3% of Cloud Peak Energy’s outstanding common stock, (3) for at least 3 years, (4) and has, or have, complied with the other requirements set forth in the Bylaws, (5) 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 the lesser of 20% of the Board and the total number of directors to be elected at the annual meeting.  As compared to the Board’s previously recommended proxy access provision, the adopted proxy access provision provides that shares on loan can be considered “owned” shares under certain circumstances, removes the one-year post-meeting holding requirement, removes the disqualification provision for nominees in a future meeting who fail to receive a certain percentage of the vote in a prior meeting, and clarifies that multiple funds under common management count as one stockholder for purposes of the group aggregation limit.

Director Nomination Process

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, beginning with the 2016 Annual Meeting and as described above under “Stockholder Outreach and Stockholder Rights,” 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.

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

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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.

Mr. Skaggs, who was appointed to the Board in July 2015, was referred by one of our current independent directors for consideration by the Governance Committee and the Board, and he was ultimately appointed to the Board following multiple candidate interviews and in accordance with our director nomination process described above.

Director Retirement Policy; Chairman Transition

As discussed above, 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. Bailey, who served as Chairman of the Board during 2015 and to date in 2016, turned 72 on April 5, 2014.  The Board previously approved an exception to our director retirement policy to provide for Mr. Bailey to continue serving the remainder of his current term as a Class I director, which term expires at the 2016 Annual Meeting.  As a result, Mr. Bailey is not standing for re-election at the 2016 Annual Meeting and will retire from our Board effective immediately following the 2016 Annual Meeting.  The Board has appointed current independent director Mr. Fox to become Chairman of the Board effective upon Mr. Bailey’s retirement.

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) Keith Bailey, (2) Patrick Condon, (3) William T. Fox III, (4) William Owens, (5) Steven Nance, and (6) in connection with his appointment to the Board in July 2015, Robert Skaggs, 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).

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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. 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

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, Fox and Skaggs, 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, Fox 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

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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.

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 2015 annual meeting of stockholders attended that meeting.

Certain Relationships and Related Party Transactions

Pursuant to our Related Party Transactions Policy, our Audit Committee reviews and approves or ratifies transactions in excess of $100,000 of value in which we participate and in which a director, nominee for director, executive officer of the company or any immediate family member thereof, or beneficial holder of more than 5% of any class of our voting securities has or will have a direct or indirect material interest. After appropriate review (which includes consideration of the financial terms of the transaction), the Audit Committee is to approve only those related party transactions that are consistent with our Related Party Transactions Policy and on terms, taken as a whole, which the Audit Committee believes are no less favorable to us than could be obtained in an arms-length transaction with an unrelated third party, unless the Audit Committee determines that the transactions are not inconsistent with the best interests of the company.

Policies on Business Conduct and Ethics

We have established a corporate compliance program as part of our commitment to responsible business practices in all of the communities in which we operate. The Board has adopted a Code of Conduct that applies to all of our directors, officers and employees, which, although not intended to cover every situation or circumstance that may arise, is designed to (1) provide basic principles and guidelines to assist directors, officers and employees in complying with the legal and ethical requirements governing the company’s business conduct and (2) cover a wide range of business practices and procedures. In addition, we have adopted a Code of Ethics for Principal Executive and Senior Financial Officers mandating a commitment to financial integrity and to full and accurate financial disclosure in compliance with applicable accounting policies, laws and regulations. These two policies form the foundation of a compliance program that includes policies and procedures covering a variety of specific areas of professional conduct, including compliance with laws, conflicts of interest, confidentiality, public corporate disclosures, insider trading, anti-bribery, trade practices, protection and proper use of company assets, intellectual property, financial accounting, employment practices, health, safety and environment, and political contributions and payments.

Both our Code of Conduct and our Code of Ethics for Principal Executive and Senior Financial Officers are available on our website at www.cloudpeakenergy.com in the “Corporate Governance” subsection of the “Investor Relations” section. In accordance with NYSE and SEC rules, we will disclose any future amendments to or waivers from our Code of Ethics for our Principal Executive and Senior Financial Officers as well as any waivers from our Code of Conduct for directors and executive officers by posting such information on our website within the time period required by applicable SEC and NYSE rules.

Indemnification of Officers and Directors

Our Bylaws require us to indemnify our officers and directors to the fullest extent permitted by the Delaware General Corporation Law. Our Bylaws also state that Cloud Peak Energy has the power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise (including, without limitation, with respect to an employee benefit plan), against any liability asserted against the person and incurred by

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the person or on the person’s behalf in any such capacity, or arising out of the person’s status as such, whether or not the company would have the power to indemnify the person against such liability under our Bylaws or the Delaware General Corporation Law; provided, however, that such insurance is available on acceptable terms, as determined by a majority of the Board.

Management Certifications

In accordance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and SEC rules thereunder, our CEO and CFO have signed certifications under Sarbanes-Oxley Act Section 302, which have been filed as exhibits to the Form 10-K. In addition, our CEO submitted our most recent certification to the NYSE under Section 303A.12(a) of the NYSE listing standards on May 28, 2015.

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SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the number of shares of common stock beneficially owned by each person known by Cloud Peak Energy to beneficially own more than 5% of the outstanding shares of our common stock. Except as otherwise noted, (A) the persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them, and (B) ownership is as of the dates noted below. As of February 29, 2016, there were 61,647,254 shares of our common stock outstanding.

(1)         This information is based on a Schedule 13G/A filed with the SEC on January 26, 2016, by BlackRock, Inc., in which it reported sole voting power as to 5,486,882 shares and sole dispositive power as to all shares.

(2)         This information is based on a Schedule 13G filed with the SEC on February 12, 2016, by Dimensional Fund Advisors LP (“Dimensional”), in which it reported sole voting power as to 3,839,194 shares and sole dispositive power as to all shares. Dimensional furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional or its subsidiaries may possess voting and/or investment power over the securities that are owned by the Funds, and may be deemed to be the beneficial owner of the shares held by the Funds. However, all securities are owned by the Funds. Dimensional disclaims beneficial ownership of such securities.

(3)         This information is based on a Schedule 13G filed with the SEC on February 9, 2016, by Boston Partners, in which it reported sole voting power as to 3,197,657 shares and sole dispositive power as to all shares.

(4)         This information is based on a Schedule 13G/A filed with the SEC on February 11, 2016, by The Vanguard Group, Inc., in which it reported sole voting power as to 72,642 shares, sole dispositive power as to 3,478,294 shares and shared dispositive power as to 72,642 shares.

(5)         This information is based on a Schedule 13G filed with the SEC on February 3, 2016, by Kopernik Global Investors, LLC, in which it reported sole voting power as to 2,380,787 shares and sole dispositive power as to all shares.

(6)         This information is based on a Schedule 13G filed with the SEC on February 4, 2016, by Franklin Resources, Inc., in which it reported sole voting power and sole dispositive power held by Franklin Advisory Services, LLC, an indirect wholly-owned investment management subsidiary, as to all shares. The securities are beneficially owned by one or more open or closed-end investment companies or other managed accounts that are investment management clients of investment managers that are direct and indirect subsidiaries of Franklin Resources, Inc., including Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin Advisory Services, LLC, each of which may be deemed to be the beneficial owners of the securities reported. The address of Franklin Advisory Services, LLC is One Parker Plaza, Ninth Floor, Fort Lee, NJ 07024.

The following table sets forth information with respect to the number of shares of our common stock beneficially owned by (1) our “named executive officers,” which, for purposes of this Proxy Statement, refers to the

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six current and former executive officers included in the Summary Compensation Table below in this Proxy Statement, (2) each current Cloud Peak Energy director and each nominee for director, and (3) all current Cloud Peak Energy directors and executive officers as a group. Except as otherwise noted, (a) the persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them, and (b) ownership is as of February 29, 2016.

*                 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 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 29, 2016, (b) common stock underlying performance share units (referred to herein as “PSUs” or “performance share units”) that may vest within 60 days of February 29, 2016, reported at 43% 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 29, 2016, as follows:

**          As of February 29, 2016, all exercisable stock options had an exercise price greater than the market price of the underlying stock.

(3)         Mr. Barrett resigned from the company effective March 16, 2015 and, as a result, forfeited all of his unvested equity awards and all of his vested, unexercised stock options expired 30 days following his resignation.

(4)         The number of RSUs reported above does not include the following restricted stock unit awards granted in January 2016: (a) 58,081 restricted stock units to Mr. Bailey, (b) 45,455 restricted stock units to Mr. Condon, (c) 45,455 restricted stock units to Mr. Fox, (d) 45,455 restricted stock units to Mr. Nance, (e) 45,455 restricted stock units to Mr. Owens, and (f) 45,455 restricted stock units to Mr. Skaggs.  Pursuant to the terms of those awards, the number of RSUs awarded will vest and 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.

(5)         In accordance with our director retirement policy, immediately following the 2016 Annual Meeting, Mr. Bailey will retire from the Board.  As a result, the 58,081 restricted stock units granted to him in January 2016 will vest on a pro rata basis on May 11, 2016 pursuant to the terms of those awards, and all vested and outstanding RSUs held by him will be paid in shares of our common stock within 30 days following his retirement.

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EXECUTIVE COMPENSATION

Compensation Committee Report

The material in this Report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in such filing.

The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and contained in this Proxy Statement. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee

William T. Fox III, Chair

Steven Nance

William Owens

Robert Skaggs

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) provides a discussion of the compensation philosophy and objectives that underlie our executive compensation program and how we evaluated and set our executives’ compensation for 2015. This CD&A is intended to provide qualitative information concerning how 2015 compensation was earned and awarded to our named executive officers. Further, it identifies the most significant factors relevant to our 2015 executive compensation decisions and gives context to the data presented in the compensation tables included below in this Proxy Statement. Lastly, this CD&A describes any significant changes to our executive compensation program that have been implemented prior to filing this Proxy Statement for 2016. The term “executive officers” means our senior executives who are all listed above under the heading “Executive Officers” and also includes Mr. Marshall (who is listed further above under the heading “Proposal I—Election of Directors” and is also an executive officer). The term “named executive officers” means the six current and former executive officers identified in the table below, each of whom were considered “executive officers” as of December 31, 2015 (other than Mr. Barrett).

(*)         Mr. Barrett resigned from the company effective March 16, 2015, at which time Mr. Hill was promoted to Executive Vice President and Chief Financial Officer. Previously, Mr. Hill served as our Vice President and Chief Accounting Officer.

Executive Summary

This CD&A executive summary describes key features of our executive compensation program, summarizes the 2015 cash and equity incentive compensation received by our  named executive officers  and highlights the strong alignment of our executives’ compensation with  our financial, operating and stockholder returns.  Please read the complete CD&A and remaining compensation sections in this Proxy Statement for further details regarding the matters summarized below.

The key features of our executive compensation program are:

·                  A Compensation Peer Group (defined below) focused on U.S. coal industry peers and competitors for executive talent;

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·                  Base salaries determined in large part through an in-depth comparative analysis of comparable positions at our Compensation Peer Group companies  and targeted to be approximately at the 50th percentile of our Compensation Peer Group;

·                  An annual cash incentive plan with the payment amount based on (1) actual Adjusted EBITDA (defined below) versus a target Adjusted EBITDA approved by the Compensation Committee and which aligns with the Adjusted EBITDA included in our annual budget (60% weighting); (2) annual safety performance that requires improvement relative to a rolling three-year average (20% weighting); and (3) an assessment by the Compensation Committee and other independent directors of individual executive  performance (20% weighting); and

·                  A long term incentive plan consisting of (1) 40% of the targeted grant date value in restricted stock units and (2) 60% in performance share units that require performance based on our three-year total stockholder return (“TSR”) compared to our Performance Peer Group (defined below), with any vesting capped at target if our absolute TSR is negative over the three-year performance period.

Executive compensation highlights for 2015 include:

·                  Targeted direct compensation for our CEO was 80% performance-based, while targeted direct compensation for our other named executive officers was 70% performance-based.

·                  In light of our five-year tenure as a public company, the Compensation Committee conducted an in-depth review of our executive compensation program to determine whether the program as designed continued to meet the needs of our company, our employees, our stockholders and other stakeholders.   The Compensation Committee reaffirmed many elements of our executive compensation program and determined to modify other elements, including the following:

·                  Our CEO’s 2015 salary was increased approximately 3.3% compared to 2014. The other named executive officers’ 2015 salaries were increased on average approximately 3% compared to 2014, excluding Mr. Hill’s salary increase in connection with his promotion. The last salary adjustments were in 2013.

·                  The Compensation Committee eliminated stock options and re-directed that targeted long-term equity value towards a combination of restricted stock units (40%) and performance share units (60%), resulting in the long-term incentive program being further performance-based.

·                  We did not achieve our Adjusted EBITDA target or safety target for our annual incentive plan. As a result, our CEO’s 2015 bonus was 87% of his targeted bonus and approximately 30% lower than his 2014 bonus, and his total cash compensation for 2015 (salary plus realized 2015 bonus) was 93.5% of his targeted cash compensation and approximately 16% less than his realized 2014 cash compensation.

·                  As a result of our negative absolute TSR and relative performance against our Performance Peer Group, payouts realized under our 2012-2014 performance share units, which vested in early 2015, were made at 48% of target.

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

·                  Our CEO’s 2015 direct compensation (salary, plus realized 2015 bonus, plus targeted 2015 long-term incentive awards) was less than the median of the direct compensation for our Compensation Peer Group CEOs (based on available 2014 proxy data); and

·                  Although our 2013-2015 relative TSR compared to our Compensation Peer Group was at the 57th percentile, our CEO’s 2013-2015 direct compensation (as described above) was  at the 38th percentile of the direct compensation for our Compensation Peer Group CEOs (based on available 2012-2014 proxy data).

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The following key factors impacted the Compensation Committee’s 2015 executive compensation decisions:

·                  Despite very difficult industry conditions, we were able to achieve 87% of our Adjusted EBITDA target in our cash bonus plan.

·                  Although we did not achieve our challenging safety target, we continued our track record as one of the safest companies in our industry.

·                  In a depressed market we improved our cash margin per ton and cost per ton despite reduced shipments and lower realized coal prices.

·                  We maintained a strong financial position with available liquidity of approximately $620 million including cash and cash equivalents of approximately $89 million at year-end 2015.

·                  We achieved a 98% say on pay approval by our stockholders in 2015.

We believe our total compensation for 2015 appropriately reflects our performance for the year and the performance of our executive team.

This executive summary is organized as follows:

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, which we believe appropriately reward our executive officers for their overall contribution to company performance, while also aligning their interests with those of our stockholders with the ultimate objective of increasing long-term stockholder value:

·                  A competitive base salary;

·                  The potential for an annual cash incentive depending on company Adjusted EBITDA, and safety performance and on individual performance; and

·                  An equity-based long-term incentive program that is tied to the performance of our share price, including relative and absolute TSR over a three-year period, and requires executives to maintain substantial ownership in accordance with our stock ownership guidelines.

Based on this philosophy we set targeted pay levels that approximate the median of our coal industry peers. The pay ultimately realized is dependent primarily upon our financial and safety performance, individual performance and our absolute and relative stock price performance.

For our CEO and other named executive officers, the three primary components of our executive compensation program represent the following percentages of their 2015 total targeted direct compensation:

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* “Other NEOs” in the chart above includes amounts for our Chief Financial Officer Heath Hill at his 2015 CFO compensation levels. It does not reflect 2015 compensation for our former Chief Financial Officer Michael Barrett.

Compensation Risk Mitigating Program Design and Governance Policies

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

·                  A substantial percentage of performance-based compensation;

·                  Annual say on pay stockholder vote regarding our executive compensation program;

·                  Annual compensation program risk assessment;

·                  Engagement by the Compensation Committee of an independent compensation consultant;

·                  Regular review of executive tally sheets by the Compensation Committee;

·                  Executive stock ownership guidelines and holding requirements;

·                  Clawback Policy (defined below) for incentive compensation;

·                  Insider Trading Policy that prohibits, among other things, hedging and pledging transactions relating to our stock;

·                  Double-trigger, rather than single-trigger, change in control vesting acceleration provisions for awards under our Cloud Peak Energy Inc. 2009 Long Term Incentive Plan (as amended and restated effective March [•], 2016) (the “Restated 2009 LTIP” or “LTIP”);

·                  Low change-in-control multiple of 2X target cash compensation for our CEO and 1X target cash compensation for other executives;

·                  No tax gross-ups upon a change in control;

·                  No payment of dividends on unvested performance shares;

·                  No repricing of stock options without stockholder approval; and

·                  No perquisites.

These components and other features of our overall executive compensation program are discussed in more detail below in this Proxy Statement.

2015 Company Performance Highlights

As described in our year-end 2015 earnings announcement, our company and industry again faced a challenging external environment, oversupplies of coal domestically and internationally and weak coal pricing. Global economic conditions remained sluggish, abundant low priced natural gas in the U.S. continued to compete with coal as a source of electricity generation, U.S. federal regulatory actions continued to negatively impact coal-fueled electricity generation, and low international coal prices were exacerbated by the strong U.S. dollar benefiting non-U.S. coal producers. As noted more fully below, these challenging industry conditions negatively impacted our financial and stock performance and payouts from our annual and long-term incentive plans. Despite the external environment, our mines effectively reduced costs and controlled capital expenditures and we delivered Adjusted EBITDA (defined below) of approximately $124 million and finished the year with a strong cash position. We ended 2015

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with available liquidity of approximately $620 million, including cash and cash equivalents of approximately $89 million.

In addition, we accomplished a number of important achievements in 2015 to help manage through current industry conditions and position our company for future growth opportunities:

·                  Improved our cash margin per ton and cost per ton in 2015 compared to 2014, despite reduced shipments and a lower realized price per ton in 2015;

·                  To help address depressed seaborne coal prices, we entered amended agreements with our port and rail providers for our export sales to eliminate volume obligations for the period 2016 through 2018 in exchange for a series of payments, which are in lieu of the previous take-or-pay commitments during this three-year period; and

·                  Reached an agreement with a landowner near our Cordero Rojo Mine in Wyoming, which provides Cordero Rojo with access to substantial additional coal and enhances flexibility for the future development of the mine.

The following table highlights our 2015 financial performance and shipments:

(1)         Non-GAAP financial measure; please refer to Part II, Item 6 “Selected Financial Data,” Footnote 3 in our Form 10-K filed on February 18, 2016 for additional information regarding and a reconciliation of Adjusted EBITDA.

(2)         Net loss for 2015 was impacted by the $111.8 million non-cash valuation allowance adjustment on our deferred tax assets based upon current 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.

During 2015, our All Injury Frequency Rate (“AIFR”) under our cash bonus plan was 0.68, resulting in no payout to our executives for that component of our 2015 cash bonus plan.

From the end of 2014 to the end of 2015, our TSR (calculated using the same methodology as for our performance share units) relative to our Performance Peer Group (defined below) was at the 43rd percentile. Our absolute TSR in 2015 (calculated on the same basis) was negative 71%. This performance reflects the continued challenging external environment facing our industry. Our TSR in 2015 impacts the three-year performance period for performance unit awards granted in 2015 and in certain prior years, in addition to the overall impact that our stock price has on the value associated with restricted stock, restricted stock units and stock option awards.

As discussed more fully below, we believe our compensation program is appropriately aligned with our performance as evidenced by our below-target annual incentive payments and realized pay for our executives compared to targeted cash bonus and equity values.

Current Base Salaries and Periodic Historical Adjustments

Base salaries are generally reviewed annually based upon a detailed review of the compensation for comparable positions of our Compensation Peer Group (defined below) and other market data provided from time to time by Aon Hewitt, the Compensation Committee’s  independent compensation consultant. 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 current challenging environment and our focus on costs, the Committee made no merit increases for the named executive officers for 2016. The chart below also reflects that Mr. Hill was promoted

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from Vice President and Chief Accounting Officer to Executive Vice President and Chief Financial Officer in March 2015. Mr. Hill received a market adjustment in 2016 to reflect his below market salary in his first year as CFO in 2015. Other than Mr. Hill, no named executive officer has received a salary increase for 2016.

2013-2016 NEO Base Salaries

Annual Cash Incentive Plan 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. As in prior years, the 2015 AIP performance targets consisted of three components:

·                  Adjusted EBITDA (weighted 60%);

·                  Safety (weighted 20%); and

·                  Personal performance (weighted 20%).

If performance targets were exceeded, maximum payouts of up to two times target were possible and if performance fell below threshold levels, no payouts are made.

For 2015 the Adjusted EBITDA component was awarded at 87% of target and the safety performance component resulted in no payment. The personal performance components of the AIP were made at levels ranging between 125% and 180%, depending on the assessment of each individual’s performance during the year. As a result, the AIP payouts for our current named executive officers for 2015 ranged between 78% and 89% of target.

Our goal setting for Adjusted EBITDA corresponds to our annual operating plan which reflects our expectations for the year based on our operating environment. Our safety performance target reflects a 20% improvement over the three year rolling safety achievement average.  See page 37 for a full discussion of our AIP goal setting process. We believe these goals are challenging but achievable. 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 as evidenced by our actual annual incentive plan payouts in recent years compared to targeted amounts.

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* The “Other NEOs” includes our former Chief Financial Officer, Michael Barrett, for years prior to and including 2014, and includes Heath Hill for 2015.  Mr. Hill became our Chief Financial Officer in March 2015.

AIP Results as % of Target

Long-Term Equity Incentive Plan and Realized/Realizable Values

The Restated 2009 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 award value under the Restated 2009 LTIP based upon a multiple of the executive’s base salary. For 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:

·                  Restricted stock units (40%); and

·                  Performance share units (60%).

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 Restated 2009 LTIP increases and our executives benefit; if our stock price decreases, the value of awards made under the Restated 2009 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 2012 through 2015 target equity award values at grant date versus actual values or estimated values at year-end 2015 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 year-end 2015 value is calculated as of December 31, 2015 based on our closing stock price of

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$2.08. We believe that the tables below highlight the strong pay for performance nature of our compensation program, with the current substantially reduced value of our executives’ long-term incentive awards reflecting our absolute and relative stock price performance.

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

*                 The “Other NEOs” includes our former Chief Financial Officer, Michael Barrett, for years prior to and including 2014, and includes Heath Hill for 2015.  Mr. Hill became our Chief Financial Officer in March 2015.

(1)         All 2012 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.  2012 award values at year-end 2015 were calculated as follows: (1) PSUs reflect the actual 48% vesting of those awards; (2) nonqualified stock options (“NQs”) were valued at $0 because the exercise price was in excess of the closing stock price at year-end 2015; and (3) restricted stock awards (“RSAs”) were valued based on the number of RSAs that vested in March 2015 multiplied by our closing stock price of $2.08 on December 31, 2015.

(2)         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 2015 were calculated as follows: (1) PSUs reflect the actual 43% vesting of those awards based on TSR performance through year-end 2015; (2) NQ were valued at $0 because the exercise price was in excess of the closing stock price at year-end 2015; and (3) RSUs were valued based on the number of unvested RSUs multiplied by our closing stock price of $2.08 on December 31, 2015.

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(3)         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 2015 were calculated as follows: (1) PSUs reflect the estimated 45% vesting of those awards based on TSR performance through year-end 2015; (2) NQ were valued at $0 because the exercise price was in excess of the closing stock price at year-end 2015; and (3) RSUs were valued based on the number of unvested RSUs multiplied by our closing stock price of $2.08 on December 31, 2015.

(4)         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 2015 were calculated as follows: (1) PSUs reflect the estimated 100% vesting of those awards based on TSR performance through year-end 2015 and the 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 $2.08 on December 31, 2015.

Comparison of Historical Granted and Realized/Realizable Total Pay

We believe that our compensation program creates a strong link between our pay and our performance.  The table below shows the overall impact of our incentive programs and our stock price performance on the substantially reduced realized pay of our executives.

(1)         The “Other NEOs” includes our former Chief Financial Officer, Michael Barrett, for years prior to and including 2014, and includes Heath Hill for 2015.  Mr. Hill became our Chief Financial Officer in March 2015.

(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.

(3)         Realized values include (a) base salary, (b) actual bonus payouts and (c) estimated long-term incentive value as of year-end 2015 as reported above under “—Long-Term Equity Incentive Plan and Realized/Realizable Values.”

Additional details of our executive compensation program are included in the following sections of our CD&A. Please read them to develop a full understanding of our program. We firmly believe our executive compensation program is in the best interest of our stockholders, is performance-based, and is aligned with the goal of creating long-term stockholder value.

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 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:

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·                  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, as appropriate, 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.

Annual Say on Pay Stockholder Vote

As recommended by our Board in 2011, a majority of stockholders in 2011 expressed their preference for an advisory vote on executive compensation occurring every year, and we have implemented that recommendation. The following table shows the results of our annual say on pay vote in 2015 and going back to 2011:

The Compensation Committee evaluates the results of each year’s advisory vote on executive compensation and the support expressed by stockholders, and 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 review of data relating to pay practices of our Compensation Peer Group.

For 2015, the Compensation Committee did not make any changes to our compensation programs as a result of the “say on pay” vote, given the strong support stockholders expressed for our executive compensation programs.

Setting Executive Compensation for 2015

The Compensation Committee historically has engaged Aon Hewitt, its independent compensation consultant,  to conduct a review of Cloud Peak Energy’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.

In light of Cloud Peak Energy’s approximately five-year tenure as a public company, the Compensation Committee conducted a historical review of the overall executive compensation program in anticipation of making its 2015 executive compensation determinations. The Compensation Committee’s review was intended to ensure continuing alignment of the program with the increasingly challenging and volatile industry conditions for U.S. coal producers, including the compensation philosophy objective of retaining and attracting a highly competent, motivated team of employees appropriately aligned with the long-term interests of the company’s stockholders. Specifically, the primary purposes of the review were to evaluate whether (1) the executive compensation philosophy remained appropriate, as set forth in the company’s annual proxy statement, (2) the overall executive

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compensation program and its various components have functioned as intended over time, in accordance with the compensation philosophy and taking into account the changed industry conditions for U.S. coal producers since the company’s 2009 initial public offering, and (3) there are any compensation program components that should be considered for modification.

The Compensation Committee reviewed and discussed various matters, including industry trends in executive compensation, the company’s compensation philosophy and our goal of aligning the executive compensation program with industry conditions to achieve the objectives of the compensation philosophy, the current Compensation Peer Group and whether any potential changes to the peer group were necessary, and the primary elements of the company’s executive compensation program, including base salary, annual cash bonus opportunity and equity awards. The Compensation Committee also reviewed the current long-term incentive plan structure, including historical equity settlements relative to target values and expectations at the time of those previous grants, equity vesting schedules, whether stock options remained an appropriate equity compensation tool, and the impact of the absolute TSR vesting requirements for performance share units which reduces vested shares regardless of relative TSR performance compared to the Performance Peer Group.

As part of this executive compensation program review, the Compensation Committee engaged Aon Hewitt to provide a comprehensive market data review for each executive officer position from our Compensation Peer Group and secondary source data from the mining industry and general industry. In addition, Aon Hewitt’s engagement for 2015 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 2015;

·                  Assist the Compensation Committee in reviewing and updating the company’s Compensation Peer Group and 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 the Compensation Committee in evaluating the intended motivational and alignment purposes of its long-term equity compensation award components and the specific vesting and other terms of its equity awards;

·                  In connection with the company’s Chief Financial Officer transition that was effective in March 2015, provide peer company data to assist the Compensation Committee in its compensation determinations for the promotion of Mr. Heath Hill from Vice President and Chief Accounting Officer to Executive Vice President and Chief Financial Officer;

·                  In connection with the promotion of Mr. Bryan Pechersky from Senior Vice President, General Counsel and Corporate Secretary to Executive Vice President, General Counsel and Corporate Secretary, provide peer company data to assist the Compensation Committee in its related compensation determinations; and

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

The Compensation Peer Group for 2015 remained the same as the Compensation Peer Group utilized in 2014, except that the Compensation Committee removed James River Coal and Patriot Coal as a result of their previous bankruptcy filings.  The Compensation Peer Group is used for the purpose of establishing the comparison targets for and annual 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. For reference, below are the Compensation Peer Group companies:

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*                 This was the previous name of Westmoreland Resource Partners, LP.

Key Elements of Our 2015 Executive Compensation Program

The following table highlights the key elements of our 2015 executive compensation program and the primary purpose of each element. Each element set forth in the table below is discussed in further detail in this CD&A.

Base Salary

Base salaries are generally reviewed annually based upon a detailed review of the compensation for comparable positions of our Compensation Peer Group and other market data provided from time to time by the Compensation Committee’s independent compensation consultant. In addition, the Compensation Committee assesses individual performance, experience, responsibilities and time in position.

For 2015, the Compensation Committee engaged Aon Hewitt to provide market data for each executive officer position from our Compensation Peer Group and secondary source data from the mining industry and general industry, and the Compensation Committee considered the individual performance, experience, responsibilities and time in position of the CEO and each other senior executive officer, our company performance, and the fact that the

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last adjustments to base salaries were made in 2013. After this review, the Compensation Committee decided to adjust individual executive officer base salaries to better reflect updated market data since the 2013 adjustments, individual executive performance and responsibilities and the promotion of certain executives. Below are the 2015 annual base salaries for our current named executive officers:

(*)         Mr. Hill was promoted from Vice President and Chief Accounting Officer to Executive Vice President and Chief Financial Officer in March 2015.

Annual Incentive Compensation and Process for Setting Performance Objectives

Our AIP is our cash incentive plan, which has a one-year performance period. Awards under the plan are paid based on actual performance against pre-established company targets that are approved in advance by the Compensation Committee and also include a discretionary personal performance component. In accordance with the plan, annual incentive compensation is determined after the completion of each fiscal year.

As in prior years, the target bonus percentage amounts (“target”) under the AIP for 2015 awards were based on a multiple of each executive’s base salary for 2015. Target bonuses are generally reviewed annually based upon a detailed review of the compensation for comparable positions of our Compensation Peer Group and other market data provided from time to time by Aon Hewitt. For 2015, no changes were made to executive officer target bonus percentage amounts, except to recognize the promotion of Mr. Hill to the Executive Vice President level. Due to his resignation, Mr. Barrett did not receive an AIP award for 2015.

The following table provides the 2015 target multiple, as well as potential payments which could have been made upon the achievement of a threshold, target or maximum level of performance for each of our current named executive officers.

(*)         Mr. Hill’s potential bonus values were prorated using three months of his base salary related to his previous position as our Chief Accounting Officer and nine months at his 2015 Executive Vice President and Chief Financial Officer compensation level.

The measurement objectives for the plan were established at the beginning of 2015 by the Compensation Committee. There are three components that determined 2015 awards under the AIP: (1) Adjusted EBITDA (weighted 60%), (2) safety (weighted 20%) and (3) personal performance (weighted 20%).

Although personal performance is discretionary at the sole determination of the Compensation Committee, with respect to the senior executive officers other than himself, our CEO provided his recommendations for these amounts to the Compensation Committee for its consideration. 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 to significant accomplishments during the year. For 2015, those accomplishments included those noted above under “2015 Company Performance Highlights.” As a result of this evaluation by the Compensation Committee and other independent directors, and taking into account the recommendations of our

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CEO for the other executive officers, our named executive officers received amounts ranging from 125% to 180% of their targeted amounts for their personal performance components.

The threshold, target and maximum for the Adjusted EBITDA and safety components, including actual results achieved for each component for 2015, are shown in the following table:

(1)         Refer to Part II, Item 6 “Selected Financial Data,” Footnote 3 in our Form 10-K filed on February 18, 2016 for additional information regarding and a reconciliation of Adjusted EBITDA.

(2)         See below for a discussion of the differences between our AIFR calculation for the AIP compared to the Mine Safety and Health Administration (MSHA) methodology.

In setting the performance objectives for 2015, the Compensation Committee considered a variety of factors, including (i) the continued importance of safety in the company’s culture and the desire to continuously improve the company’s safety record, (ii) setting financial performance targets at a level which reflected our outlook for the business and would appropriately incentivize and compensate executive officers, and (iii) the importance of holding each executive accountable for his individual contribution to our success.

In establishing Adjusted EBITDA targets for 2015, 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 the threshold, target, and maximum Adjusted EBITDA targets. Key business drivers included sales volumes, coal prices and operating costs, including diesel fuel, labor and explosives costs, logistics revenues and transportation costs. The Adjusted EBITDA goal for 2015 was lower than 2014 and reflected the expected challenging environment for coal demand and pricing for 2015 and corresponds to our budgeted Adjusted EBITDA in our annual operating plan.

The table below reflects the Adjusted EBITDA goals we have set in recent years, along with the actual Adjusted EBITDA result for each applicable year. The Compensation Committee believes the target performance goal for each year was challenging but achievable. As shown in the table below, the goal setting process has produced performance targets that have resulted in below-target payouts on the Adjusted EBITDA goal in three of the last four years.

Taking into account the recommendation of management, the Compensation Committee again used a rolling three-year average of our AIFR to establish the safety threshold. Target and maximum levels were established by reducing the threshold number by 20% and 40%, respectively. In general, we calculate our AIFR using the same methodology used to report monthly to MSHA, which is calculated by multiplying the number of reportable injuries times 200,000, divided by the total number of hours of employee exposure. The number we report to MSHA is required to include only the employees at our three mines and does not include contractors, visitors or employees at our non-mine sites. However, the safety number we use for our AIP is based on all our employees and includes contractors and all other visitors to all our sites to better reflect our core values and commitment to the safety of everyone involved in our business. As such, our number for purposes of our AIP target is usually different than the MSHA number we report publicly.

As a result of these differences between our AIFR calculation and the MSHA calculation, for 2015, we calculated an AIFR of 0.68, compared to a 0.91 reported by MSHA.

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The following table provides a quantitative supplemental breakdown of the three components that make up the named executive officers’ actual 2015 award under our AIP. Both the dollar amount of the award and the award as a percentage of each named executive officer’s base salary are displayed for each component.