Arch Coal, Inc. Personnel and Compensation Committee Charter

Purpose

The Personnel and Compensation Committee is appointed by the Board to discharge the Board’s responsibilities relating to compensation and the development/succession of the Company’s executives. The Committee has overall responsibility for approving and evaluating the Company’s employee compensation plans, policies and programs.

The Committee shall prepare, or cause to be prepared, the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.

Committee Membership

The Personnel and Compensation Committee shall consist of no fewer than three members. The members of the Committee shall meet the independence requirements of the New York Stock Exchange.

The members of the Committee shall be appointed by the Board on the recommendation of the Nominating & Governance Committee. Committee members may be replaced by the Board.

Committee Authority and Responsibilities

1. The Personnel and Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of the CEO or other senior executive compensation and shall have the sole authority to approve the consultant’s fees and other retention terms. The Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors.

2. The Committee shall annually review, approve and make recommendations to the Board with respect to incentive compensation plans and equity based plans.

3. The Committee shall annually review, approve and recommend to the Board corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the Board the CEO’s compensation levels based on this evaluation. In determining the long-term incentive component of CEO compensation, the Committee will consider the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the CEO in past years.

4. The Committee shall annually review, approve and recommend to the Board, for the CEO and the senior executives of the Company, (a) the annual base salary level, (b) the annual incentive opportunity level, (c) the long-term incentive opportunity level, (d) employment agreements, severance arrangements, and change in control agreements/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits.

5. The Committee shall review plans for executive development and succession.

6. The Committee may delegate authority to the Chair of the Committee and/or a subcommittee of the Committee when appropriate. Any action taken pursuant to the delegation set forth in the preceding sentence shall be reviewed and ratified at the next meeting of the full Committee.

7. The Committee shall make regular reports to the Board.

8. The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Committee shall annually review its own performance.

9. The Committee shall review and discuss with management the disclosures made under the heading “Compensation Discussion and Analysis” and recommend to the Board whether those disclosures should be included in the Company’s Form 10-K or proxy statement, as applicable.