1. 2007 Report
Corporate & Social
ReSponSibility

2. Summary | Economic | Employee | Environmental | Public | Appendix
Our Mission:
Peabody’s mission
is to be a leading
worldwide producer
and supplier of
sustainable energy
solutions, which
power economic
prosperity and result
in a better quality
of life.
Our Values Our Results
On the Cover
Employees at Peabody’s
Our culture is driven by strong corporate governance We operated the safest U.S. large surface mine, and the past
Farmersburg Mine in Indiana were n n
honored by the U.S. Department of and a continuous focus on safety, stewardship, three years have been the safest in our 125-year history
Labor this past year for operating sustainability and best-in-class performance We earned half of the U.S. Department of the Interior’s awards
n
the safest large mine in America.
for reclamation excellence and good neighbor practices
Safety is core to our mission, and our employees
n
Inside
commit to a vision of an incident-free workplace We earned global recognition for sustainable practices on
n
Peabody’s Caballo Mine in
Arizona’s Black Mesa
Wyoming won the U.S. Interior We believe that greater use of clean coal drives
n
Bronze Good Neighbor Award for We joined China’s centerpiece GreenGen near-zero emissions
energy security, economic growth and environmental n
an innovative partnership with
initiative as the only non-Chinese company
solutions
area ranchers to reclaim land
We set records for sales volume, revenues and EBITDA and
that is twice as productive for n
We are the global leader advancing clean coal
n
grazing. delivered 64% total shareholder return
initiatives to achieve near-zero emissions
We ranked first among peers in Fortune’s Most Admired listing,
n
We believe clean, affordable electricity improves
n
with the number-one score in every category, including social
quality of life and longevity
responsibility
2 Peab od y Ener gy

3. Summary | Economic | Employee | Environmental | Public | Appendix
Key Stakeholder Communications and Focus Areas
Environmental Employee Public
Corporate &
• Letter from the Chairman and CEO 4
Responsibility Responsibility Responsibility
Economic
Responsibility
• Sustainability Awards 6
Annual
✓
Report
• Economic and Corporate Responsibility 8
Environmental
✓ ✓
Regulatory
• Employee Responsibility 16
Filings and
Public Notices
• Environmental Responsibility 27
SEC
✓
Filings
• Public Responsibility 32
✓ ✓ ✓ ✓
Website
• Appendix 40
✓ ✓ ✓ ✓
Employee
Publications
Corporate &
✓ ✓ ✓ ✓
Social
Responsibility
Report
Management believes that a suite of external communications vehicles including
the annual report, Securities and Exchange Commission (SEC) filings, website,
employee publications and Corporate & Social Responsibility Report represent a
full portrayal of the company’s commitments and progress to stakeholders.
This report is intended to provide information regarding responsibilities that, by
design, are not as thoroughly discussed in other communication vehicles.
In compiling this report, Peabody reviewed Global Reporting Initiative guidelines
for sustainability and incorporated appropriate reporting data.
The use of the words “Peabody,” “the company,” and “our” relate to Peabody, our
subsidiaries and our majority-owned affiliates.
Celebrating 125 Years 3

4. Summary | Economic | Employee | Environmental | Public | Appendix
Dear Stakeholder:
Peabody celebrates our 125th anniversary this year, an extraordinary milestone
Peabody is the Largest Private-Sector Coal Company
and a tribute to our 7,000 employees worldwide who transform our vision for
corporate and social responsibility into actions and results. 250
Peabody is the world’s largest Shenhua
Energy
private-sector coal company. 200
We are a Fortune 500 company
Sales (Tons in Millions)
Rio Tinto
and a member of the S&P 500
150
Index. We rank first in our sector
Arch BHP
among Fortune’s “Most Admired
Companies” listing, with the Anglo-American
100
China Coal Energy
number-one position in all Xstrata
Foundation
Consol
categories, including social Alpha Natural
50
Massey
Resources
responsibility. Yanzhou
Patriot
International Coal
I am pleased that the past 0
three years have been our 1 2 3 4 5 6 7 8 9 10
safest, that we continue to earn Reserves (Tons in Billions)
the industry’s highest honors for Source: Most recent company reports and websites, SEC filings and Peabody analysis. Values are on a short-ton basis.
Peabody sales and reserves based on 2007 data.
environmental excellence and
good neighbor practices, and
that we are strengthening Peabody is the world’s largest private-sector coal company, with world record
sales of 238 million tons and a 9.3 billion-ton reserve base. The energy value of
communities around the world,
our reserves exceeds the oil or gas reserves in the Continental United States.
injecting $3.2 billion in direct
Peabody Energy Chairman and Chief
benefits into economies in 2007.
Executive Officer Gregory H. Boyce
Our 125th anniversary comes
Peabody was founded in 1883. Coal is the rock that built America and the
at a time when the world energy landscape is dramatically changing, global
modern world, and coal will continue to build fast-growing population centers
markets are strong, and we face enormous energy needs. As we settle into the
and improve quality of life for billions of people around the world.
21st century, coal’s contribution to society is even more valuable than when
4 Peab od y Ener gy

5. Summary | Economic | Employee | Environmental | Public | Appendix
We have an enormous opportunity to create sustainable energy solutions to solve our energy and environmental
challenges, ease supply issues and improve health and longevity for people around the world.
In the next quarter century, global energy use is expected to increase by nearly Peabody’s vision is to achieve near-zero emissions from coal, and we are the
50 percent, and world electricity generation will nearly double. At a time when global leader advancing signature clean coal projects in the United States,
competing fuels are increasingly strained and coming from unstable regions, China and Australia. Greater use of clean coal is important for solving the
greater use of coal can advance the goals of clean energy solutions that world’s energy needs and advancing climate solutions.
build energy security, strengthen economies and solve our environmental
As a nation, we must commit to significant funding increases to commercialize
challenges. I believe it is our responsibility to advance all of these three “Es”
carbon capture and storage technologies for clean electricity and Btu Conversion
at all times.
projects. The magnitude of this challenge is enormous, but within reach as our
We need all forms of energy to meet these most powerful solution for an energy-short world.
heavy demands, though coal is the only
You will read more about Peabody’s positions, priorities and successes in this
sustainable fuel that can keep pace. Oil and
2007 report, which builds on five years of benchmarking by our management
natural gas supplies are increasingly strained.
and board of directors.
The U.S. petroleum industry predicts that
Once again, I want to recognize our global team of employees for their hard
the global supply of oil and natural gas from
work delivering best-in-class performance. I also thank our board for its wisdom
conventional sources will not meet the
and guidance. I am privileged to lead such a dedicated team that continues
significant projected growth demand over
creating sustainable energy solutions for health, wealth and prosperity through
the next 25 years. Coal has been the fastest-
robust use of clean coal.
growing fuel for each of the past five years,
and coal use is expected to grow nearly
75 percent over the next quarter century.
In 2008, Peabody was named first among Mining and Crude Oil industries in
Gregory H. Boyce
Fortune Magazine’s “Most Admired Companies” ranking of U.S. companies.
Chairman and Chief Executive Officer
Peabody ranked first in the sector and held the number-one score in every
category, including social responsibility.
Celebrating 125 Years 5

6. Summary | Economic | Employee | Environmental | Public | Appendix
peabody leads the industry in Reclamation excellence,
Year after year, Peabody scientists, engineers and reclamation specialists develop
innovative programs that apply the principles of sustainable development to
mining and reclamation. These industry-leading programs brought home five of
10 prestigious awards for community and environmental stewardship from the
U.S. Department of the Interior in 2007.
SuStainability
Somerville Central Mine in Indiana partners with area land- Caballo Mine in Wyoming collaborates with local Employees at the former Gibraltar Mine in
owners to revitalize productive farming and pastureland and ranchers to double the productivity of area range for Kentucky reclaim mined land to highly
support local recreational, civic and educational institutions. grazing and assists with conservation projects. productive forest, pastureland and wildlife
habitat.
Gibraltar Mine
Caballo Mine
Excellence in Reclamation Award
Bronze Good Neighbor Award
U.S. Department of the Interior
U.S. Department of the Interior
Miller Creek Mine
Caballo Mine
Excellence in Reclamation Award
Wyoming Department of
Indiana Department of Natural Resources
Environmental Quality
“Good Neighbor” Award
Ken Rogers
Reclamation Innovation Award
Caballo Mine
Indiana Society of Mining and Reclamation
Wyoming Engineering Society
Project of the Year Award
6 Peab od y Ener gy

7. Summary | Economic | Employee | Environmental | Public | Appendix
earning top Honors for environmental Stewardship
Twentymile Mine in Colorado is home to The former Seneca Mine in Colorado has developed reclamation Miller Creek Mine in Indiana reclaims highly
large populations of Columbian sharp- practices that restore native vegetation that is hardy enough to endure productive farmland and wildlife habitat for the
tailed grouse, who use the land for mating northwest Colorado’s harsh winters. community.
and breeding.
Vern Pfannenstiel Seneca Coal Company
Somerville Central Mine
Reclamationist of the Year Excellence in Reclamation Award
Excellence in Reclamation Award
American Society of Mining and Colorado Division of Reclamation, Mining
U.S. Department of the Interior
Reclamation and Safety; Colorado Mining Association
Somerville Central Mine
Somerville Central Mine Twentymile Mine and Seneca Mine
Excellence in Reclamation Award
Silver Good Neighbor Award Excellence in Reclamation Award
Indiana Department of Natural Resources
U.S. Department of the Interior U.S. Department of the Interior
awaRdS
2007

8. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
concepts of corporate and social responsibility were defined, Peabody
Peabody’s Global Operations Contribute Billions established its own tenets for best practice. Peabody’s 7,000 worldwide
in Economic Benefits employees seek to operate under a mission statement to provide clean energy
solutions that contribute to economic prosperity and a better quality of life
Southwestern U.S.
$260 million
for families and communities around the world.
Colorado
$157 million
Peabody believes that greater use of clean coal is the answer to improving
energy security, fueling the world’s strongest economies and ensuring
continuous emissions improvement: what we call the “3Es.” The company also
believes that greater use of coal must be guided by the ultimate vision of near-
Midwestern U.S.
zero emissions. Technology is the key to satisfying growing energy demand
$733 million
while addressing climate concerns. More on this topic is included in the Public
Responsibility section of this report.
Peabody is the world’s largest coal company in reserves and sales, fueling
Powder River Basin
approximately 10 percent of all U.S. electricity and 2 percent of the world’s
$1.0 billion
Australia power.
$1.0 billion
More coal is being used around the world, and Peabody is uniquely positioned
to fuel this long-term global growth. Peabody is reshaping its global operations
and business portfolio to serve the fastest-growing markets. This includes
increasing operations in Australia, tripling our trading activities and focusing on
growing Pacific Rim markets from China and Mongolia to Mozambique.
One of Peabody’s primary corporate responsibilities is to provide strong share-
holder returns. The company delivered an 840 percent total shareholder return
Peabody’s global operations injected nearly $3.2 billion in direct economic
over the past five years. In 2007, Peabody achieved record financial results in
benefits in communities where we do business in 2007, with each dollar typically
contributing a four-fold benefit. sales volume, revenues and EBITDA.
The company continues organic growth, with three major mines completed
Peabody is the world’s largest coal company in in Australia this past year and a new greenfield mine in New Mexico under
reserves and sales, fueling approximately 10 percent development that will begin operation in the second half of 2008. And Peabody
is pursuing clean generation and Btu Conversion opportunities that convert
of all U.S. electricity and 2 percent of the world’s power.
coal’s energy into other fuels.
In 2007, Peabody completed the spin-off of certain operations in West Virginia
Peabody has 125 years of leadership in corporate and social responsibility.
and Kentucky, focusing its efforts on expanding globally and building on
Some would call that a great run. We believe it’s a great start for our next
leading U.S. positions in the Powder River Basin, Colorado and the Midwest.
125 years of world-class practices in sustainability. Decades before the
8 Peab od y Ener gy

9. Summary | Economic | Employee | Environmental | Public | Appendix
Economic and Corporate Responsibility
All told, Peabody operations infused nearly $3.2 billion in direct economic
Peabody Serves the Highest-Growth Markets benefits into communities through wages, taxes, royalty payments, capital
investments, vendor contracts and charitable contributions in 2007.
In 2007, Peabody received recognition for performance in safety, stewardship
and investor activities. Peabody earned eight major awards for safety, operated
the safest large surface mine and the most productive mine in the United
States. Nearly two dozen awards were earned for sustainable practices in
the past two years.
Peabody has ranked among Fortune’s Most
Admired Companies for six successive
years. And BTU was named to the Forbes
Platinum List of America’s Best Big
Companies and ranked among the top
10 companies in CFO Magazine’s “value
creators” S&P 500 ranking.
This section highlights:
• he “3E’s”: Energy Security, Economic
T
Growth and Environmental Solutions
Peabody Headquarters
• Corporate Governance and Ethics
Peabody Offices
COALTRADE Offices
• Code of Business Conduct and Ethics
Position Sales Reserves
• inancial Disclosure and Sarbanes-Oxley
F
Wyoming PRB #1 140 3,341 2007 sales volumes and reserves in millions
Compliance
of short tons. Reserves are 2007 proven and
Midwest #1 31 3,691 probable. Sales and reserves adjusted for
Colorado #1 8 207 October 2007 spin-off of Patriot Coal and 2007
• Corporate Compliance and Training
Southwest #2 14 990 Peabody reserve acquisitions. Venezuela sales
volume for Paso Diablo Mine, of which Peabody
Programs
Australia #5 21 1,073 owns a 25.5% interest.
Venezuela #1 7 182
Short tons in millions
Peabody is the world’s largest coal company based on our world record sales
of 238 million tons and 9.3 billion-ton reserve base. We have a growing global
presence and 31 operations in the United States and Australia.
Celebrating 125 Years 9

10. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
Energy, Economic and Environmental Solutions Against this backdrop, Peabody is creating sustainable energy solutions for the
world’s most pressing energy and environmental challenges, while improving
health and wealth around the world.
Energy Solutions
According to the U.S. Energy Information Administration’s 2008 Energy Outlook,
Global energy needs are soaring as emerging nations around the world drive
coal will remain the primary fuel for U.S. electricity, growing to 55 percent by
enormous economic development and improvements in quality of life. China,
2030 as other energy forms face supply and cost constraints. Global competi-
India and the United States are leading this growth, representing nearly
tion for natural gas supplies is pushing global liquefied natural prices above
90 percent of long-term coal demand over the next two decades.
$10 per million Btu. The delivered cost for natural gas in the United States was
Coal represents 40 percent of world electricity – nearly double the share of its
nearest competitors – at a fraction of the cost of other fuels. Coal has been
Low-Cost Electricity Correlates with States that Use Coal
the fastest-growing fuel for each of the past five years, and global coal use is
expected to increase nearly 75 percent over the next 25 years, according to the
Retail Cost per kWh & Percent of Coal Generation
International Energy Agency.
6.4¢
In the next quarter century, the world’s population is expected to grow 8%
13.3¢
7.5¢ 6.4¢
25 percent to more than 8 billion people. World Gross Domestic Product (GDP), 2%
64% 94%
7.0¢ 7.4¢
the primary driver of energy demand, will more than double. Global energy 8% 60%
5.1¢ 15.3¢
6.8¢ 8.4¢
1%
consumption will increase by more than half, and world electricity generation 15%
47%
5.3¢ 63% 8.6¢
95% 59%
will nearly double, based on forecasts by the International Energy Agency’s 9.1¢
6.8¢
6.2¢ 55%
10.0¢ 77% 7.9¢
60%
World Energy Outlook. China and India are experiencing industrialization, 22% 8.6¢ 6.5¢ 86%
6.4¢
5.3¢
48% 94%
85% 7.7¢
12.8¢
urbanization and the digital revolution all at once, setting the pace for global 98% 7.1¢
6.9¢
68% 6.5¢ 5.8¢
1% 45%
73% 82% 93%
energy markets with sustained annual double-digit economic growth. 7.8¢
7.1¢ 61%
8.5¢ 7.3¢ 64%
7.4¢ 7.2¢
6.9¢
37% 47%
In the past 20 years, more than 1 billion people have gained access to electricity 77% 40%
47%
7.5¢ 7.8¢
8.8¢ 54% 62%
in developing nations. Clean energy is one of life’s necessities, fundamental to 35%
10.3¢
human activities, economic and social development and longevity. Reducing 8.4¢
36% 25%
13.1¢
9%
energy poverty remains one of our most pervasive global issues. 10.3¢
30%
MA 15.2¢ 25%
“Energy leads people out of poverty, increases life 21.3¢
CT 16.2¢ 11%
13%
expectancy, reduces infant mortality and facilitates NH 14.0¢ 17%
RI 13.2¢ 0% <9.0¢
education… It provides a window to the wider world,” ¢ = average retail price per kilowatt hour for CY 2007 NJ 13.4¢ 16% >9.0¢
% = percent of total generation from coal for CY 2007 VT 12.0¢ 0% Hydro
says the World Coal Institute. MD 11.4¢ 59%
Source: Energy Information Administration, March 2007. DE 11.3¢ 66%
Today nearly one-third of the world’s population – more than 1.6 billion people
around the world – lack access to affordable electricity. About 2.4 billion people The 10 states that use the highest percentage of natural gas for electricity
rely on primitive biomass for electricity and 1 billion people live on less than generation have electricity prices that are 120 percent greater than the states that
$1 per day, according to the World Energy Institute. use the most coal. Coal creates an advantage for citizens who are increasingly
concerned about high energy costs.
10 Peab od y Ener gy

11. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
four times the price for coal in 2007. Higher natural gas prices have cost trade deficit. The SSEB study also calls for production of ultra-clean liquid
America nearly $500 billion more than expected since the beginning of the transportation fuels, including 5.6 million barrels a day of coal-to-liquids fueled
decade. Nuclear is valuable, though hampered by safety and disposal concerns. by about 1 billion tons of U.S. coal per year. The net result:
• A renewed U.S. industrial boom, with direct new energy sector investments
Economic Growth of up to $200 billion by 2030;
Access to affordable energy is vital to economic prosperity. It frees up a • More than 1.4 million new jobs created over two decades;
family’s disposable income and allows them to make positive lifestyle choices.
• A projected reduction of the U.S. trade deficit by $600 billion by 2030; and
Consider that the 10 states that use the highest percentage of coal-fueled
• A conservation and efficiency savings equivalent to 19 million barrels per
electricity enjoy electricity costs that average 40 percent lower than states
day of current oil usage.
relying on other fuels.
Affordable energy also drives business growth. Over the past 10 years, the
states with the lowest business energy costs grew 25 percent faster and
U.N. Human Development Index Improves with Greater
created 60 percent more new jobs than the states with higher energy costs.
Electricity Use
The United States has more coal than any nation, with 27 percent of the
world’s reserves. Numerous studies support the thesis for greater use of coal 1.0
Sweden
to improve energy security, drive down costs and build the economy. In the United Finland
Italy
Canada
0.9 States
Argentina
next decade, coal use is expected to add more than $1 trillion to U.S. economic
Qatar
UAE
output, along with up to 9 million jobs, according to a study by Pennsylvania 0.8 Malaysia
Brazil
State University researchers. China
0.7 Indonesia
South Africa
Several major studies call for greater use of coal for industrial growth and Morocco
0.6 India
economic development. The National Coal Council’s “Coal: America’s Energy
Bangladesh
Future” calls for more than doubling U.S. coal production annually for clean 0.5
Zimbabwe
electricity, natural gas, transportation fuels, hydrogen and ethanol.
0.4 Zambia
Mozambique
The study, conducted at the request of U.S. Energy Secretary Samuel Bodman, Ethiopia
0.3
calls for investing a present value of $350 billion to create a new energy infra-
structure that would drive down energy costs 33 percent, create 1.4 million 0.2
0 5,000 10,000 15,000 20,000
jobs and create $3 trillion in net-present-value economic benefits by 2025.
Electricity Use
The Southern States Energy Board (SSEB), a consortium of governors and
state legislators from 16 southern states and two territories, conducted the Source: International Energy Agency, World Energy Outlook 2005
“American Energy Security” study, which concludes that greater use of coal
will create a renewed industrial boom, create millions of jobs and reduce the There is a strong correlation between global electrification and improvement in
the United Nations Human Development Index. Economies of nations that have
access to low-cost electricity also enjoy improved health and longevity.
Celebrating 125 Years 11

12. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
The Electric Power Research Institute reports that the cumulative benefit for
improving coal technology and reducing exposure to high-priced natural gas-
fired generation within the electricity sector from 2007 to 2050 could reach
$1.3 trillion in 2000 dollars. Notably, the scenarios used natural gas price
assumptions well below those represented by recent prices and the futures
market through 2010.
Coal also helps drive improved lifestyles, which is demonstrated by the strong
correlation between global electrification with improvement in the United
Nations Human Development Index.
A 2007 study by a respected Johns Hopkins University epidemiologist, “The
Health Benefits of Low-Cost Energy,” finds that improving human life expec-
tancy is driven by access to affordable energy. It states that removing coal from
the energy equation could cause 150,000 deaths each year. A report prepared
by a Duke professor draws similar conclusions, showing the benefits of low-
cost electricity, leveraged by coal’s continually improving environmental profile.
Environmental Solutions
Peabody believes that a world that enjoys improved quality of life and growing
economies can do more to achieve the parallel and important goal of a cleaner
Peabody continues expanding globally, completing three major new mines in
environment. Coal has a strong and improving environmental track record Australia and expanding global coal trading offices in the United States, the
thanks to tens of billions of dollars of investments in technologies that have United Kingdom, Australia and China. The Millennium Mine in Queensland is
ramping up to produce 3 million tons of metallurgical coal annually.
enabled significant emissions reductions.
Peabody’s vision is to achieve near-zero emissions from coal, and the company
Corporate Governance and Ethics
is advancing voluntary initiatives to commercialize clean coal technologies and
address concerns about climate.
Good corporate governance is the foundation for Peabody Energy’s actions
Chief initiatives include Peabody’s participation in GreenGen in China, the at every level, and the board of directors has adopted a robust corporate
COAL21 Fund in Australia and FutureGen and Vision 21 in the United States, governance program it believes is in the best interests of the company and
projects that seek to demonstrate near-zero emissions from coal while its shareholders.
capturing and storing carbon. More about these projects and Peabody’s
position on climate is included in the Public Responsibility section of
this report.
12 Peab od y Ener gy

13. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
Corporate Governance Principles
The company’s Mission Statement reflects Peabody’s global leadership in
providing energy solutions and is a reflection of managers’ commitment to use
The board of directors operates under a set of governance principles covering
the principles for decision-making.
such issues as the roles and responsibilities of the board and management,
Peabody’s board of directors regularly reviews corporate governance policies board composition and director qualifications, director election procedures,
and procedures to ensure continued compliance with best practices, applicable meeting procedures, committee functions, director orientation and continuing
laws and Securities and Exchange Commission (SEC) requirements. education, and management evaluation and succession.
The board has carefully considered the company’s director election process Some of the key corporate governance practices adopted by the company
and, in July 2007, amended the company’s bylaws to provide for majority include the following:
voting in uncontested director elections.
• At least a majority of the company’s directors must meet the criteria
In addition, the board has recommended to the shareholders that they approve for independence established by the New York Stock Exchange. The
an amendment to the company’s articles of incorporation to eliminate the independence of each director is reviewed at least annually and at other
company’s classified board structure in favor of the annual election of times when a change in circumstances could potentially impact the
directors. This amendment was approved at Peabody’s 2008 Annual independence of one or more of the directors.
Meeting of Shareholders.
• The company’s bylaws provide for majority voting in uncontested director
Peabody will continue its strong focus on best practices to ensure effective elections.
corporate governance for the benefit of the company’s shareholders.
• The Audit, Compensation and Nominating and Corporate Governance
Committees of the board are comprised entirely of independent directors.
Board of Directors
• Non-management directors meet at least quarterly in executive session
Peabody is governed by a board of directors consisting of 12 members elected without management.
by shareholders. Eleven members of the board are independent under New
• The board and its committees conduct annual performance reviews to
York Stock Exchange rules. The board of directors appoints and oversees the
evaluate whether they are functioning effectively and to determine what
Chief Executive Officer and other officers who are charged with the conduct
actions, if any, could improve their performance.
of the company’s business. Directors have full and free access to officers and
• Each director participates in a director orientation program shortly after
employees of the company and its affiliates.
his or her election, and is encouraged to periodically attend, at company
expense, appropriate continuing education programs.
Board Committees
• The board and each committee have the authority to hire independent legal,
The board has appointed four standing committees from among its members
financial and other advisors without consulting or obtaining the advance
to assist it in carrying out its obligations. These committees include an Audit
approval of any officer.
Committee, Compensation Committee, Executive Committee and Nominating
• Each member of the Audit Committee has been deemed an “audit
and Corporate Governance Committee. Each standing committee has adopted
committee financial expert” for purposes of the SEC’s rules relating to
a formal charter that describes in detail its purpose, organizational structure
audit committees.
and responsibilities.
Celebrating 125 Years 13

14. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
Communications
• The Audit Committee must pre-approve all audit and non-audit services
performed by the company’s independent registered public accounting firm
Our shareholders, customers, employees and the public can communicate
to ensure that such services do not impair that firm’s independence.
directly with the board by submitting their written comments to the Chairman,
• Directors may not serve on more than four other public company boards.
Peabody Energy, 701 Market Street, St. Louis, MO 63101. These written
• Directors are required to submit their resignation to the board for consider- communications are forwarded to each board member and reviewed by the
ation following a job change. full board, as appropriate.
• Directors may not stand for election or be appointed to fill vacant or newly
If a concern arises about ethical conduct, it should be sent directly to Peabody’s
created board positions after reaching age 75. Chief Legal Officer, who will promptly forward a copy of the communication
• The company has adopted and disclosed stock ownership guidelines for to the Chairman of the Audit Committee, and if appropriate, the Chairman and
officers and directors. Chief Executive Officer, for immediate action to address the matter.
The company also has established compliance procedures for the Code of
Code of Business Conduct and Ethics
Business Conduct and Ethics. Employees who have concerns about busi-
Employees and directors must adhere to a rigorous Code of Business Conduct ness practices are asked to raise their concerns to their supervisor or human
and Ethics, which is designed to avoid conflicts of interest, achieve compliance resources representative or may use a third-party hotline called “Tell Peabody.”
with laws and protect company assets.
Tell Peabody allows for confidential and anonymous communication of
The Code of Business Conduct and Ethics defines ethical standards to help all potential concerns, which are reported to the company’s corporate compli-
employees establish and maintain our reputation as a world-class company. ance officer, who determines the appropriate action, including investigation.
Report summaries are distributed to senior management weekly and routinely
Employees are regularly reminded of their
discussed with the Nominating and Corporate Governance Committee.
obligation to act in a responsible, ethical and
constructive manner through workplace
Transparency
communications and training sessions. All
salaried employees are required to take online Peabody ensures that key corporate compliance and governance information
training at least annually and to provide written and documents are accessible to shareholders and other stakeholders. The
certification of compliance with the Code of company’s Corporate Governance Guidelines, board committee charters, Code
Business Conduct and Ethics. of Business Conduct and Ethics and other information about our governance
practices are available online at PeabodyEnergy.com.
Any exceptions or qualifications are investi-
gated and reported to the board of directors. Our annual proxy statement also includes detailed governance information
Any modification in or waiver of the Code regarding director candidates and board independence, board meetings and
for executive officers or directors must be attendance, director compensation and the director nominating process.
approved in advance by the board of direc-
tors and promptly disclosed as required by
law or stock exchange regulations.
14 Peab od y Ener gy

15. Summary | Economic | Employee | Environmental | Public | Appendix
economic and Corporate Responsibility
Corporate Governance Ratings and the company’s registered independent public accountants. The results
of the sub-certification process and the ongoing assessments of disclosure
The board reviews the company’s corporate governance practices at least controls are reviewed among senior management and discussed in detail with
annually to ensure that they continue to reflect best practices and promote the Audit Committee.
the best interests of shareholders. During this process, the board solicits input
Further quality assurance related to the company’s public reporting of financial
from leading governance advisors who are independent of management. The
information is provided by the Disclosure Committee. The company maintains
board also considers views expressed by third parties, including independent
a multi-discipline Disclosure Committee, which reviews financial statements
governance ratings agencies.
and certain SEC filings, and advises the CEO and CFO regarding potential
The company’s governance practices are rated by several independent disclosure items. All earnings releases, quarterly reports and annual reports
organizations, including RiskMetrics (formerly Institutional Shareholder are reviewed with and approved by the Audit Committee prior to filing.
Services), Moody’s, Glass Lewis and Governance Metrics International. While
individual ratings can vary widely, Peabody’s practices are generally rated Corporate Compliance and Training Programs
better than average when compared to other companies in its industry group
To ensure legal and ethical compliance, the company conducts regular
and in line with the average of S&P 500 companies.
training sessions at appropriate levels on a variety of topics, including safety,
Financial Disclosure and Sarbanes-Oxley Compliance environmental laws, antitrust laws, securities and insider trading laws, equal
employment opportunity matters, discrimination and sexual harassment.
Peabody is committed to providing clear, complete, timely and accurate Peabody also maintains robust corporate compliance policies and approval
financial information for external reporting purposes. The primary goal of the processes that are updated regularly and communicated throughout the
financial reporting process is to provide stakeholders with financial information organization.
that is useful in making informed business and economic decisions. These
objectives are consistent with the Sarbanes-Oxley Act of 2002, which also
requires the company to maintain all necessary systems, policies and proce-
dures and documentation of financial controls to ensure its periodic financial
reports are complete and accurate.
Peabody believes the company’s written charters and governance guidelines,
Code of Business Conduct and Ethics, robust internal policies and procedures
and documentation of controls over financial reporting establish the proper
“tone at the top” that facilitates compliance with Sarbanes-Oxley requirements.
Under Sarbanes-Oxley, the company’s Chief Executive Officer (CEO) and Chief
Financial Officer (CFO) are required to certify the completeness and accuracy
of financial statements included in public filings, and to periodically assess the
effectiveness of the company’s financial controls over financial reporting. To
support the CEO and CFO certification responsibility, the company maintains a Hundreds of safety observations are conducted daily across Peabody operations
thorough sub-certification process and robust system of internal and disclosure to recognize best practices and correct unsafe acts. These safety contacts are
controls that are regularly tested and monitored by management, Internal Audit entered into a hand-held PDA and tracked through a mine management safety
system.
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16. Summary | Economic | Employee | Environmental | Public | Appendix
employee Responsibility
The past three years have been the safest in Peabody’s North Antelope Rochelle Mine – the world’s largest coal mine – was
also the most productive in 2007, based on the most recent industry data. North
Peabody’s 125-year history, and once again we Antelope Rochelle earned dual honors from the governor and state as the safest
operated the nation’s safest large surface mine. mine in Wyoming this past year.
Creating an accident-free workplace through best practices in safety is central Throughout the organization, we seek to elevate performance excellence,
to Peabody Energy’s mission and a major component of our position on embracing four key pillars of leadership: inspiration, innovation, collaboration
employee responsibility. Our vision for safety is to achieve zero incidents and execution. We believe effective leadership must inspire employees to
of any kind. This means operating free of injuries, occupational illnesses, perform at their highest level… innovate through new technologies, new
property damage and near misses. We continue to accelerate our emphasis markets and new approaches… and collaborate to build and develop teams
on communications, training and prevention, and the past three years have that enable Peabody to seize opportunities. These elements drive execution
been the safest in our 125-year history. and ensure strong results.
We believe that our responsibility to employees also includes providing an By building on these leadership qualities, Peabody believes we can help
empowered, collaborative work environment. We reward performance in employees achieve their highest potential, build employee satisfaction and
safety, continuous improvement, innovation and creativity, and provide create a high-performing organization. Employees also are encouraged to seek
opportunities for personal growth and career advancement. broader assignments to advance career goals and participate in continued
development, education and training.
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17. Summary | Economic | Employee | Environmental | Public | Appendix
employee Responsibility
This section highlights: All Peabody meetings start with a safety contact, and hundreds of safety
observations are conducted daily across the company to monitor behavioral
• Peabody’s Safety Results
work practices and immediately correct unsafe acts. These observations
• Emergency Preparedness are tracked and shared through a computer-based safety
management system.
• Best-In-Class Training Centers
Peabody also has expanded its recruiting to attract graduates
• Employee Demographics
from the nation’s top universities offering occupational
• Next Generation Workforce
health and safety degrees to provide a fresh perspective on
• Diversity Initiatives best practices and create a path for succession planning.
• Employee Relations and Benefits
Peabody’s Safety Results
“Peabody’s safety vision is to operate
safe workplaces that are incident free.”
Management continues accelerating efforts to improve safety, focusing on
strengthened communications, reinforcing safe behavior and eliminating
The following governing principles for safety and health
hazards. Specialized training in incident investigation and root cause analysis
apply to everyone at a Peabody workplace:
is being conducted for all U.S. mine managers and supervisors this year, with
a heightened focus placed on assessing and alleviating risk. • The safety and health of our most important asset,
The prestigious
our employees, is a core value that is integrated
For instance, a new awareness program empowers employees to “SLAM” U.S. Department of Labor’s
into all areas of our business;
hazards using a simple premise: “Stop, Look, Assess, Manage.” SLAM means Sentinels of Safety Award
considering all the safety controls available and mitigating potential risk before has been presented to
• All workplace incidents can be eliminated,
Peabody operations three
performing a job. Every U.S. employee will receive SLAM procedure training including injuries, occupational illnesses, property
of the past four years.
this year. damage and near misses;
• Management has the overall accountability for
Actions that build on our successes and continually improve performance are
employee safety and health;
guided by the Executive Safety Committee, Central Safety and Health Team and
Mine Safety and Health Teams. These teams collaborate with employees at • Each employee is responsible for their own safety and health, as well as
each operation to refine best practices, create standard processes and provide promoting the safety of their co-workers;
technical transfer for best-in-class performance at every level.
• Each employee must be empowered with the skills and authority to
perform their job in a safe manner;
Excellence in safety also is driven through individual accountability. Every
Peabody employee commits to our safety vision and governing principles, and • All employees must comply with established safety rules and regulations;
managers, front-line supervisors and employees are held responsible for their
• Open, honest and effective safety communication is essential;
own safety and the safety of each other.
• All safety and health efforts must be sustainable and will be continuously
reviewed and improved; and
• The workplace is anywhere a Peabody employee is on the job.
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18. Summary | Economic | Employee | Environmental | Public | Appendix
employee Responsibility
Safety Improvements largest in the world – was also honored as the safest mine in Wyoming,
recognized by both the governor and the state mine inspector.
Peabody’s U.S. employees achieved a 2.59 safety rate per 200,000 hours
All told, employees earned nearly 20 awards for emergency preparedness and
worked in 2007, reflecting a 29 percent improvement in the past three years.
best practices in safety in 2007, including four U.S. Labor Sentinels of Safety
The Farmersburg Mine in Indiana set the pace, earning Sentinels of Safety certificates for low incident rates.
honors by the U.S. Department of Labor as the safest large surface mine in
Peabody’s Australia operations improved their lost-time accident rate by more
America. Peabody operations have earned this honor three of the past four
than half, which includes the contribution of new mines that became part of
years.
Peabody through the Excel acquisition.
Employees at the Viking Mine completed the year with zero reportable
Peabody is standardizing its Australian safety tracking system this year to
incidents, and employees at the Lee Ranch Mine achieved dual state honors
create a consistent reporting mechanism for its U.S. and Australian operations
as the safest mine in New Mexico. The North Antelope Rochelle Mine – the
based on the Mine Safety and Health Administration (MSHA) standard.
Emergency Preparedness
U.S. Safety Performance Peabody Versus Other Industries
In June 2006, President Bush signed into law the Mine Improvement and
U.S. Accidents Per 200,000 Worker Hours New Emergency Response Act (MINER Act) creating 13 major provisions for
emergency preparedness and technology research. The legislation called for
additional compliance-related training, new reporting standards and more
4.64 stringent PSI standards for mine seals. It also called for developing two-way
underground communication systems, safe chambers and caches of self-
Agriculture/Forestry/Fishing/Hunting
contained self-rescuers.
Transportation & Warehousing
Even before the MINER Act was created, Peabody operations already were
Education & Health Services
complying with several of the new mandates as a matter of practice. For
2.59
instance, the act calls for developing mine emergency response plans, which
Leisure & Hospitality
are completed annually at Peabody operations.
Manufacturing
Peabody 2007
Construction
Coal Mining
Each of our underground U.S. mines have approved emergency plans that
Wholesale
include the location of safety chambers. To comply with the act, safety
Utilities
Retail
chambers designed to provide oxygen, food and water for up to 32 workers
for 96 hours have been ordered, and deliveries are expected to begin as early
as this spring. Thousands of self-contained self-rescue units also are being
Source: 2007 data from Peabody and the U.S. Department of Labor; 2006 data from Occupational Safety &
delivered to build underground caches.
Health Administration
Beyond providing safety tools, the MINER Act has a number of practical
Peabody’s safety results are significantly better than the coal industry average and requirements, such as ensuring that operations are supported by local mine
the average in other major industries, including transportation, manufacturing,
rescue teams. Four hours of monthly drilling is mandatory, and mine rescue
agricultural and construction. We maintain an intense focus to continually improve.
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19. Summary | Economic | Employee | Environmental | Public | Appendix
employee Responsibility
These teams continually hone their emergency response capabilities, through
sophisticated annual mine emergency rescue drills (MERDs) involving
multiple regulatory agencies and local emergency responders. Drilling is
frequent throughout all regions. In 2007, employees earned eight awards for
major national and regional mine emergency competitions.
Peabody installed redundant communication systems at its underground
mines this past year and evaluated several two-way communication systems,
which included testing at the Twentymile Mine in Colorado. The system awaits
approval from MSHA.
Best-in-Class Training Centers
Recognizing the need to attract and retain the industry’s best talent, Peabody
has developed a premier training regime through high-tech training centers
in the Midwest and West. These centers offer virtual technology, advanced
curriculum and hands-on skills applications.
The safety and management team at Farmersburg Mine in Indiana celebrates
best-in-class performance as America’s safest large surface mine. Continuous
improvement in safety toward a vision of zero incidents is a core value.
response teams must be located within one hour of the mines they serve.
Approximately 10 percent of Peabody’s sales come from underground operations.
Peabody has encouraged mine rescue training and drilling for decades to main-
tain the highest level of preparedness, with teams typically training at twice the
required level. The company has emergency response and mine rescue teams
at every U.S. location, with resources significantly enhanced this past year.
Ten mine rescue and Surface Mine Emergency Teams (SMET) were established
Peabody is training its Next Generation Workforce through facilities in Wyoming
in the Midwest in 2007, which include new rescue teams at the Air Quality and and Indiana. More than 2,600 employees received training at the Western facility
Gateway mines, and two teams at Vermilion Grove. Every U.S. Peabody mine located at the Rawhide Mine in 2007. The new miner program uses virtual
technology for basic safety and skills training.
has a mine rescue or SMET team.
Celebrating 125 Years 19