EXECUTIVE COMPENSATION INFORMATION

Compensation Discussion and Analysis

Introduction

Our Compensation Committee has continued its commitment to an executive compensation program that is aligned with our business goals and culture and serves the long-term interests of our shareholders. We believe that attracting and retaining superior talent, supported by a compensation program that is highly performance-based, is important to delivering long-term shareholder returns.

This Compensation Discussion and Analysis (“CD&A”) section of the Proxy Statement is designed to provide our shareholders with an explanation of CNX’s executive compensation philosophy and objectives, our 2019 executive compensation program, and the compensation paid by CNX to the following named executive officers (“named executives”):

After the Separation, the Board and management reviewed CNX’s executive team and their respective roles and responsibilities. With the reduced size of the Corporation, it was determined that those positions which were “executive officer” positions within the meaning of the applicable Exchange Act rule would be similarly reduced and, as such, the Corporation had no more than four individuals serving in such roles with CNX at the end of fiscal year 2019 (Messrs. DeIuliis, Rush, Griffith and Akinkugbe). Accordingly, this CD&A focuses solely on these four named executives, except as otherwise stated.

This CD&A contains references to one or more financial measures that have not been calculated in accordance with generally accepted accounting principles (“GAAP”). A reconciliation of each disclosed non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in Appendix A to this Proxy Statement.

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Our executive compensation program is designed to attract, motivate, and retain key executives who will promote both the short- and long-term growth of CNX and create sustained shareholder value. To this end, we take a pay-for-performance approach to our executive compensation program that ties the majority of the compensation payable to our named executives to stock price and operational performance, and promotes equity ownership among the named executives to greater align their interests with those of our shareholders. Outlined below are some of the significant best practices we have implemented in our executive compensation program.

2019 Say-On-Pay Results

At our 2019 Annual Meeting of Shareholders, our shareholders approved the compensation of our named executives with a substantial majority of shareholders (93%) voting in favor. We were pleased with this result and we consider this vote to be a strong endorsement of the changes that we made to our 2019 executive compensation program in response to our extensive shareholder outreach.

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Changes to 2019 Compensation Programs

The below chart details the steps that we took to further align our 2019 executive compensation program with shareholder interests following extensive shareholder outreach:

2019 Executive Compensation Highlights

Some of the executive compensation highlights from 2019 are as follows:

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We consistently place a substantial portion of our named executives’ compensation at-risk, a majority of which is dependent upon the performance of our stock price. As demonstrated in the following charts for both the CEO and the other named executives, the vast majority of 2019 compensation was in the form of short-term and long-term incentive-based compensation.

The above charts demonstrate a strong alignment between the named executives’ compensation and the long-term interests of our shareholders. In short, our named executives’ compensation is highly correlated with stock price performance – if value is not delivered to our shareholders, as measured by stock price, then the named executives’ compensation will be adversely affected.

Compensation Philosophy and Objectives

CNX’s compensation philosophy is to provide a total compensation package—that is, base salary, short-term (annual) incentive compensation, long-term (equity-based) compensation (generally, in the form of RSUs and PSUs), retirement compensation (401(k) contributions), and benefits (such as health insurance, vacation, etc.) that will attract and retain employees with the education, experience, values (Responsibility, Ownership and Excellence), initiative and drive necessary to execute CNX’s business plan and achieve CNX’s long-term strategic goals, including, without limitation, continued focus on optimizing NAV per share (and incorporating related metrics into our compensation programs to keep our key decisions centered on attainment of this goal).

Each named executive’s total compensation opportunity has been generally targeted within a reasonable range around the median of similarly-situated executives at peer group companies after consideration of the items described in the next paragraph. For 2019, the Compensation Committee determined not to retain a compensation consultant in line with CNX’s overall cost-cutting initiatives, and the Compensation Committee also determined that it did not need to incur additional costs to benchmark executive compensation since it had been benchmarked the prior year. As a further extension of these initiatives, the Compensation Committee, in consultation with the CEO, reduced the 2019 target total direct compensation of named executives in the aggregate, including the CEO’s compensation, for a savings of $2.3 million relative to the target total direct compensation of our named executives in 2018. With respect to actual compensation at year-end (salary and STIC paid for the year, together with LTIC grants held at year-end using FASB ASC Topic 718 valuation), CNX reduced compensation to named executives by approximately $4.5 million (2019 named executives as compared to 2018 named executives).

Key factors affecting the Compensation Committee’s 2019 executive compensation determinations include: (i) the nature and scope of an executive’s responsibilities; (ii) an executive’s performance (including contribution to CNX’s financial results); (iii) the overall financial performance of the Corporation; and (iv) reducing target compensation of the named executives in the aggregate.

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Results of 2019 Shareholder Vote on Named Executive Compensation

CNX engages in discussions with our major shareholders on various topics, including the compensation of our named executives, as we value the input of our shareholders. The insight that we have gained over the years through these discussions is helpful to the Compensation Committee as it considers and adopts compensation policies relating to our named executives.

At our 2019 Annual Meeting of Shareholders, a significant majority (93%) of the shares voted approved our 2018 executive compensation program. We were pleased with this outcome following our efforts to engage in shareholder discussions throughout 2018 and responded to shareholder comments in designing our 2019 executive compensation program. The 2019 vote result indicated to the Compensation Committee that no significant changes needed to be made to the executive compensation program going forward. However, we continue to strive to structure our executive compensation programs to better align the interests of our named executives and shareholders, and will in the future continue to make changes to our executive compensation programs designed to further enhance the objectives of such programs and respond to shareholder feedback.

Process for Evaluating Compensation

Generally, in the first quarter of each year, the Compensation Committee meets to establish the base salaries, incentive opportunities, and related performance goals of CNX’s incentive compensation programs, including the STIC and LTIC. To establish compensation for a particular named executive (other than our CEO), CNX’s Human Resources personnel make initial assessments that are submitted to our CEO for review. This assessment considers relevant industry salary practices, the complexity and level of responsibility associated with the particular named executive’s position, the position’s overall importance to CNX in relation to other executive positions, and the competitiveness of the named executive’s total compensation. Our CEO may make appropriate changes to this qualitative assessment based on his determination of such named executive’s past performance. The Compensation Committee then reviews: (i) our CEO’s compensation recommendations for each named executive (other than himself) and (ii) our CEO’s evaluation of each named executive’s performance and internal value. After considering the factors described above, and in consultation with the CEO, the Compensation Committee approved the named executives’ 2019 compensation packages.

To establish compensation for our CEO, the Compensation Committee reviews: (i) the CEO’s self-evaluation of his annual performance and (ii) the Board’s evaluation of his annual performance. After considering these factors, the Compensation Committee reviews and approves, and recommends that the Board approves, the compensation of our CEO. Our CEO does not participate in, and is not present for, any approvals relating to his compensation.

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Elements of Executive Compensation Program

In 2019, we continued to compensate our named executives through the following:

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2019 STIC

The STIC program is designed to deliver annual cash awards when CNX and our named executives are successful in meeting or exceeding established performance targets and to pay less, or nothing at all, when CNX and/or our employees fall short of these targets. The STIC program provides incentive compensation (measured at target) that is comparable to compensation provided by companies with which CNX competes for executive talent. The description of the 2019 STIC program established by the Compensation Committee applied to all of the named executives for the January 1, 2019 – December 31, 2019 performance period.

The Compensation Committee determined to base the 2019 STIC applicable to the January 1, 2019 – December 31, 2019 performance period on the achievement of (i) Adjusted EBITDAX per share and (ii) pre-established individual performance goals for our executive officers.

Part One: Adjusted EBITDAX/Share Goal:

EBITDAX per share was calculated as described in Appendix A and had a score ranging from 0 – 200%, with a score of 100% indicating target performance and a higher score (up to a maximum of 200%) indicating above-target performance as follows:

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If the threshold, or minimum, score of 70% had not been achieved, a score of zero would have been assigned, with no payout. If the Adjusted EBITDAX per share performance level equaled or exceeded the threshold, the EBITDAX Score was assigned with total payout potentially modified by the individual performance factor described below. The target Adjusted EBITDAX per share performance factor was derived from the annual Board-approved profit objective for CNX for 2019.

The “EBITDAX Score” was applied to the following formula:

The Adjusted EBITDAX per share was achieved at $5.19/share (Adjusted EBITDAX of $967.9M⁽¹⁾) resulting in the achievement of the goal at 190%.

Part Two: Individual Performance Goals:

In January 2020, the Compensation Committee approved each named executive’s achievement of the individual strategic performance goals for 2019. The goals (both quantitative and qualitative) were weighted equally. The named executives’ performance relative to the below goals was capped at 20% percent of the total STIC payout (which together with the Adjusted EBITDAX/share payout, can never exceed 250% of target payout). The individual strategic performance goals (and related performance results) were as follows:

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Based on the results of the 2019 STIC as shown above, the ultimate payouts to our named executives for 2019 performance were as follows:

LTIC

Our LTIC program is designed to create a strong incentive for our named executives to achieve the longer-term performance objectives in CNX’s strategic plan and to align management’s interests with those of our shareholders. The Compensation Committee determined that each named executive would receive his entire 2019 long-term incentive opportunity in the form of PSUs and RSUs, with 55% of each named executive’s target long-term incentive opportunity in the form of PSUs, and 45% in the form of time-based RSUs, except in the case of Messrs. Rush and Griffith who also received a portion of their long-term incentive opportunity in the form of phantom units in CNXM as more fully described below. The Compensation Committee believes that our PSU awards align the interests of our employees with those of our shareholders because the vesting of such awards is tied to the achievement of pre-approved, long-term performance goals related to our stock price.

A. 2019 PSU Grants and 2019 Tranche Metrics and Performance

In January 2016, 2017, 2018 and 2019, the Compensation Committee granted PSUs that vest, if earned, ratably over a five-year period. The performance periods for the 2016 PSU Program, 2017 PSU Program, 2018 PSU Program and 2019 PSU Program (collectively, the “Programs”) are for the calendar years: 2016 through 2020; 2017 through 2021; 2018 through 2022; and 2019 through 2023, respectively. This five-year vesting period encourages retention among our named executives.

The vesting of the 2019 tranches of the named executives’ PSU awards was calculated based on the following pre-established, equally-weighted goals, with the aggregate payout capped at 200% of target:

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In the event that a tranche fails to pay out at the end of any annual tranche period with respect to the absolute stock price measure (a “Missed Year”), the unvested PSUs attributable to the Missed Year may still become fully vested, capped at the target level, if the Corporation achieves target performance (or greater) as determined after the end of the performance period of a future tranche. The opportunity to recoup any missed payouts can occur for any prior tranche, but only up to target performance level for that prior period. This is, in fact, a long-term feature of the program that continues to incentivize employees to take actions that result in stock price appreciation in future years and not disincentivize participants in the event one component is not achieved in one year.

Additionally, for the 2017, 2018 and 2019 PSU Programs only, if the closing market price of CNX common stock equals or exceeds 200% for one or more future years, all unvested PSUs associated with those specific years will pay out at 200% immediately (“Special Vesting”). The Compensation Committee believes that this Special Vesting feature will help to enhance the retention of CNX stock by our named executives. This furthers the Board’s objective of aligning shareholder and management interests to increase our stock price. If the Corporation achieves its goals for its shareholders sooner than expected, then management is appropriately compensated. This award term was not included in the CEO’s 2019 PSU award.

The Missed Year and Special Vesting provisions described above only apply to 50% of the PSU Awards (i.e., only the absolute stock price goal). In total, our Board believes that these features help the PSU program achieve an overall balanced approach by continuing to incentivize employees to operate CNX in a manner that will achieve long-term stock price appreciation in alignment with shareholders’ interests.

The target awards for the 2019 PSU Program are as follows:⁽¹⁾

In January 2020, the Compensation Committee determined the payouts for each of the PSU Programs based on CNX’s relative TSR and absolute stock price performance during 2019. This determination was based on strict adherence to the formula described above.

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As a result of the achievement of the above performance factors, the executive officers earned the following payout amounts under the 2019 tranches of the PSU Programs:

B. 2019 RSU Grants

In order to provide competitive compensation, retain key executive talent, and align management’s interests with shareholders, in January 2019, time-based, three-year ratable vesting RSU awards were granted in the following amounts to all of the named executives, subject to continued employment with CNX:⁽¹⁾

C. 2019 Phantom Unit Grants

In light of their responsibilities with CNXM, the Compensation Committee and the board of directors of the general partner of CNXM agreed that it would be appropriate for a portion of Messrs. Rush’s and Griffith’s 2019 LTIC be in the form of phantom units granted under the CNXM 2014 Long-Term Incentive Plan (the “CNXM Plan”). The phantom unit awards will generally vest ratably over a three-year period from the grant date, subject to their continued employment with CNX. The aggregate target dollar values of their respective 2019 phantom unit awards were as follows: $340,000 for Mr. Rush and $312,500 for Mr. Griffith.

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Retirement Benefit Plans

During 2019, CNX maintained retirement benefit plans, which were intended to attract and retain key talent. CNX continues to move toward a single qualified defined contribution plan to deliver retirement benefits to its employees, as in 2018 it froze a nonqualified supplemental defined contribution plan in which employees participated. This action left only one supplemental (not frozen) plan in place, which is the CNX Supplemental Retirement Plan (the “SERP”) in which only two active employees participate. As part of the spin-off of the coal business, CONSOL Energy Inc. assumed the CONSOL Energy Inc. Employee Retirement Plan (qualified plan) (the “Pension Plan”), and in connection therewith, the Compensation Committee determined to eliminate all offsets to Mr. DeIuliis’ SERP in recognition of him foregoing (i) a bonus for the spin-off and (ii) a $1 million in equity grants for 2019.

Change in Control Agreements

We have CIC Agreements with each of our named executives who are currently employed by us. The CIC Agreements provide for a “double trigger” requirement, in that each named executive will receive cash severance benefits only if such named executive’s employment is terminated or constructively terminated after, or in connection with, a change in control (as defined in the respective CIC Agreements) and such named executive enters into a general release of claims reasonably satisfactory to us. Under these circumstances, the currently employed named executives would be entitled to receive a lump sum cash severance payment equal to a multiple of base pay, plus a multiple of incentive pay (as defined in each named executive’s respective CIC Agreement) as follows:

Additionally, benefits would be continued for 18 to 30 months (as set forth in the applicable CIC Agreement) and equity grants would accelerate and vest in connection with a change in control alone. Mr. DeIuliis’ CIC agreement was entered prior to 2009 and includes a tax gross-up provision in the event of a change in control consistent with market practice at that time (the CIC Agreements of Messrs. Rush, Griffith, and Akinkugbe, which were entered into more recently, do not contain change in control tax gross-ups). If it is determined that any payment or distribution would constitute an “excess parachute payment,” we will pay a gross-up payment to Mr. DeIuliis, subject to certain limitations, such that the net amount retained by him after deduction of any excise tax imposed under Section 4999, and any tax imposed upon the gross-up payment, will be equal to the excise tax on such payments or distributions.  See “Understanding Our Change in Control and Employment Termination Tables and Information.”

Equity Vesting Event (Pre-2019 Grants)

Consistent with prior disclosures in CNX’s 2019 Form 10-Qs and the 2019 Annual Report, Southeastern Asset Management, Inc. and its affiliates acquired beneficial ownership of more than 25% of CNX’s outstanding common stock in the open market (the “Transaction”) on May 31, 2019. This Transaction constituted a “change in control” under the CIC Agreements, resulting in the vesting of pre-2019 equity grants for nine employees with CIC Agreements, including two named executives: Mr. DeIuliis—192,952 RSUs and 520,024 PSUs; and Mr. Rush—69,700 RSUs and 38,853 PSUs. Without this Transaction, approximately 40% of Mr. DeIuliis’ and Mr. Rush’s equity grants would have vested in their ordinary course by January 2020.⁽¹⁾ The PSUs, which account for the majority of these vested equity grants, continue to be subject to the attainment of the applicable performance goals, and therefore, there is no guaranty of payment. Messrs. DeIuliis and Rush agreed in advance of the Transaction that any equity awards granted to them in 2019 would not vest as a result of this Transaction. The CIC Agreements and equity award agreements contain confidentiality obligations and non-competition and non-solicitation covenants. No tax gross-ups were paid in connection with the Transaction and the other named executives employed with CNX at the time of the Transaction did not have CIC Agreements with the Corporation.

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Former SVP Agreement

In May 2019, Andrea Passman departed from her position of Senior Vice President of Engineering and Operations. In connection with her departure, the Corporation entered into a severance agreement with Ms. Passman pursuant to which Ms. Passman received a severance payment of $350,000, her annual base salary as of her departure date. In addition, Ms. Passman agreed to a waiver and release of any claims against the Corporation and to non-competition and non-disclosure covenants in favor of the Corporation. All unvested equity awards held by Ms. Passman on the date of her departure were cancelled, including the 58,897 PSUs (at target) and 48,188 RSUs granted in 2019, and she was not entitled to any 2019 STIC payout (which had a target opportunity of $175,000 or 50% of her base salary).

Clawback Policy

The Compensation Committee and Board approved the adoption of an executive compensation clawback policy, which provides that the Compensation Committee may seek to recover performance-based cash and equity incentive compensation awarded in 2014 and thereafter that was paid to an executive officer in the three years prior to a restatement as a result of CNX’s material non-compliance with the financial reporting requirements of the securities laws if (i) such officer is responsible for such restatement and (ii) the amount paid to the officer would have been lower had it been calculated based on such restated financial statements.

Stock Ownership Guidelines for Executives

The stock ownership guidelines provide that all employees designated as officers for purposes of the policy should own shares of CNX stock, the value of which is a multiple of base salary. The guidelines provide each officer with a five-year period from their appointment as an officer to achieve the applicable ownership level. Shares issuable upon the exercise of stock options or settlement of PSUs held by an individual are not counted for purposes of determining whether an individual has satisfied the ownership guideline requirement, which is as follows for the currently employed named executives.

Our stock ownership guidelines were implemented by the Compensation Committee to further align our named executives’ interests with those of our shareholders and to comply with what we believe are best practices. CNX reviews named executives’ compliance with the stock ownership guidelines annually.

No Hedging/Pledging Policy

Our Insider Trading Policy prohibits directors, officers (including named executives who are currently employed with CNX) and employees from engaging in any of the following activities with respect to securities of CNX (except as otherwise may be approved in writing by the General Counsel): (i) purchases of CNX stock on margin; (ii) short sales; (iii) buying or selling options (other than the grant and exercise of compensatory stock options by CNX to directors, officers and employees), including buying or selling puts or calls or other hedging transactions with CNX securities (including, without limitation, to purchase financial instruments (such as prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of registrant equity securities); or (iv) pledging CNX stock (provided, however, that brokerage account agreements may grant security interests in securities held at the broker to secure payment and performance obligations of the brokerage account holder in the ordinary course). As a result of Mr. Thorndike’s contractual arrangement with a third party who acquired shares in a margin account (and as disclosed in the Beneficial Ownership of Securities table), Mr. Thorndike may be deemed to own 50,000 shares that were acquired on margin. Mr. Thorndike has indicated he will continue to use commercially reasonable efforts to pay down the margin. By March 30, 2020,

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Mr. Thorndike intends to reduce the number of shares that are deemed to be held on margin to 17,500. Also as disclosed in the Beneficial Ownership of Securities table, Mr. Lanigan may be deemed to own 30,600 CNX shares held by a family limited partnership, of which Mr. Lanigan is a general partner, and 657,950 CNX shares and 36,200 CNXM common units held by limited liability companies, of which Mr. Lanigan is part owner of the managing member, which shares currently are held in a marginable account, but are on non-margin status.

Stock Retention Requirements

The Compensation Committee has implemented stock retention requirements applicable to our named executives who are currently employed with CNX and certain of our other employees for regular annual cycle PSU and RSU awards in which 50% of vested shares (after tax) must be held until the earlier of: (i) 10 years from the Board determined grant date or (ii) the participant reaching age 62.

Perquisites

We provide our named executives who are currently employed with CNX and other senior officers with perquisites that we believe are reasonable, competitive and consistent with CNX’s compensation program. Our principal perquisite programs currently include such benefits as club memberships, de minimis personal usage of company purchased event tickets, and a vehicle allowance. These programs are more fully described in the footnotes to the SCT. We do not provide tax gross-ups on CNX-provided perquisite programs for our named executives.