PROXY SUMMARYCORPORATE GOVERNANCE
CORPORATE GOVERNANCE | | The Corporation is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability, and helps build public trust in the Corporation. Our governance highlights include: | | | | –
Annual election of directors –
10 of our 11 director nominees are independent, including the Chairman of the Board –
Independent Audit, Compensation & Organization, and Corporate Governance & Sustainability committees –
Regular executive sessions of independent directors –
Robust risk oversight by full Board and committees –
Annual Board and committee self-evaluations –
Executive compensation driven by pay-for-performance philosophy –
Active Board refreshment approach to ensure Board composition aligns with corporate strategy | | | –
Proxy access right in line with market standards –
Stock ownership and holding guidelines for directors and executives –
A robust Code of Ethical Business Conduct that is based on the Corporation’s S.T.E.E.L. Principles –
Annual stockholder engagement –
Best in class compliance commitment –
Regular review of Chief Executive Officer (“CEO”) and senior management succession planning –
Ability of our Board and its committees, at their sole discretion, to hire independent advisors, including counsel, at the Corporation’s expense | |
| | OUR COMMITMENT TO STOCKHOLDER ENGAGEMENT | | | | In 2020, we contacted stockholders representing approximately 40% of our outstanding shares and held meetings with eight investors holding approximately 20% of our shares. Our stockholders provided constructive feedback and were generally supportive of our current governance, sustainability and compensation practices. | | | | Topics covered in our engagement meetings: | | | | –
Response to COVID-19 to ensure health and safety of employees, prioritize cash and liquidity and accelerate execution of our Best of Both strategy –
Sustainability program focused on driving the company towards its future as a sustainable solutions provider –
Executive Compensation program that aligns pay for performance and incents behaviors to deliver long-term stockholder value | | | –
Human Capital Management, including initiatives to enhance inclusion and diversity and ensure employees feel psychologically and physically safe –
Board Composition and Effectiveness to oversee risk and grounded in good governance | |
2017 HIGHLIGHTS AND ACCOMPLISHMENTS (PAGE 23)
Earning the Right to Grow and Driving Sustainable Profitable Growth
We are focused on execution of a two-phased stockholder value creation strategy: (1) earn the right to grow, and (2) drive and sustain profitable growth. Earning the right to grow means delivering consistent, reliable EBITDA across the business cycle by achieving operational excellence through a focused effort by our talented workforce to deliver superior results in four business-critical areas: safety, quality, delivery, and cost. Driving and sustaining profitable growth means earning economic profit across the business cycle and above-average returns for long-term stockholders, which is enabled through stable, reliable facilities that produce innovative product and service solutions for discerning steel customers. Underlying both phases is our unwavering commitment to strengthen our balance sheet, with emphasis on cash flow, liquidity, and financial flexibility. We are on a mission to become an industry leader by striving to create a sustainable competitive advantage with a customer-centric focus on: delivering high-quality, on time value-added products; collaborating with customers to develop innovative solutions that address their most challenging needs, including new advanced high-strength steels to meet fuel efficiency and safety requirements for automotive customers and new premium connections for demanding applications of our energy customers in oil and gas drilling; generating economic profit through active participation in relevant markets; and creating and maintaining a competitive cost structure centered around operational flexibility.
Our successful navigation through the industry downturn in 2015 and 2016 better positioned us to benefit from improved industry conditions in 2017, although we continued to face challenges driven by uncertain geopolitical factors. We delivered significant improvement in our Tubular segment, and had continued success from our European operations. We recognized the need to accelerate our plans to revitalize our assets in our North American Flat-Rolled operations through a strategic investment program.
4UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT
PROXY SUMMARYOUR 2020 PERFORMANCE HIGHLIGHTS
OUR 2020 PERFORMANCE HIGHLIGHTS The continuedintense focus of our executive team and employees on our long-term strategic goals despite market and pandemic-related challenges was evidenced by many achievements in 2020. We made significant progress transforming our business by investing in the Best of improvingBoth advanced technology, enhancing our sustainability program to support our environmental stewardship goals and those of our customers, optimizing our balance sheet enhancing operating efficiency and reliability, and seeking robust enforcementto support execution of our trade laws, ledstrategy, and ensuring we have a talented and diverse workforce to a successful yearlead and helped move us another step closer to achieving sustainable profitability. We made good progress in 2017, and strive for greater achievement in the year ahead.
execute our business plans.| | Comprehensive and Effective Response to COVID-19 Pandemic | | | –
Implemented robust crisis response, including stringent COVID-19 protocols to ensure safety of employees and continuity of operations –
Idled blast furnaces safely and temporarily, while remaining flexible to support customers in the recovery –
Expedited production and delivery to support customers’ production of medical supplies –
Donated goods, time and services to support communities in time of crisis and change | | | | Record Setting Safety Performance | | | –
All-time best days away from work (DAFW) safety performance at 0.07, which is 8 times better than the industry average reported by the U.S. Bureau of Labor Statistics –
Best contractor DAFW safety performance since 2009 (when measurement began) | | | | Executing Against our Strategic Priorities | | | –
Accelerated acquisition of Big River Steel, the cornerstone of our Best of Both strategy –
Completed construction of electric arc furnace at our Tubular facility –
Monetized excess iron ore assets to deliver $100 million of cash in 2020 with an option for incremental $500 million in future –
Positive operating cash flow of $138 million in 2020 and strong year-end liquidity of approximately $3.2 billion, including approximately $2.0 billion of cash, to support the execution of our strategy | | | | Delivering Long-Term Value to our Stockholders | | | –
Achieved 48% total shareholder return –
Achieved record low 24-day cash conversion cycle time, demonstrating intense focus on cash efficiency –
Reduced 2020 capital spending to enable future execution of Best of Both investments –
Generated approximately $160 million in cash proceeds through the sale of non-core real estate assets. | | | | Demonstrating our Commitment to Environmental Stewardship | | | –
Released enhanced and updated Sustainability Report, with materiality assessment and commitment to setting KPIs for top six material topics –
Trialed 11 U. S. Steel grades of steel at Big River Steel, with its low carbon emissions intensity production process, in furtherance of our commitment to support our sustainability goals and those of our customers | | | | Investing in our People and our Community | | | –
Awarded a perfect “100” score by the Human Rights Campaign® Corporate Equality Index for the second straight year –
Sponsored two fellows for the CEO Action for Diversity & Inclusion™ –
Doubled participation in our employee resource groups –
Leveraged technology to enhance engagement with our employees | |
![[MISSING IMAGE: tm212306d1-pc_perform1pn.gif]](https://files.docoh.com/DEF 14A/0001104659-21-035691/tm212306d1-pc_perform1pn.gif) 2017 Highlights and AccomplishmentsUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT5
•Implemented comprehensive safety program enhancements for employees and contractors, to help achieve ourPROXY SUMMARYEXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION The goal of our executive compensation program is to attract, reward and retain leaders who create long-term value for our stockholders by delivering on objectives that support the Corporation’s long-term strategy. Appropriately motivating and incentivizing our leadership team to ensure continuity through the strategic transformation is a safe return home every day
•Out-performedtop priority of the Bureau of Labor Statisticscompensation program. To meet this objective and AISI industry safety benchmarks in both OSHA Recordable Days and Days Away From Work
•Finished 2017to align our executives’ interests with adjusted EBITDA of $1.087 billion, more than double 2016 adjusted EBITDA; and with positive operating cash flow of $802 million
•Strong year-end liquidity of $3.350 billion, highest since 2001, including $1.553 billion of cash on hand, which supports our goal of maintaining a healthy balance sheet
•Reduced total debt by over $300 million, contributing to net debt reduction by 50% over the last three years and achieving lowest net debt since 2007
•Successfully completed a $750 million debt offering, providing for future financial flexibility•Continued improvement in working capital by achieving cash conversion cycle time at industry leading performance, a 50% reduction over the last four years
•Made a $75 million voluntary contribution to our defined benefit pension plan, strengthening our pension plan as partthose of our liability management strategy, and adding to the over $400 million improvement in the funded statusstockholders, a significant portion of our pensionnamed executive officers' (“NEO”) compensation is variable and other post-employment benefit plans from 2016“at risk”, and total target compensation is aligned at a level competitive with the median of our peer group.
2020 CEO Compensation Decisions and Results –
Majority of CEO target compensation is variable and “at risk,” being performance- and/or stock-based –
2020 target compensation mix consistent with prior year’s target compensation mix; total target direct compensation aligned with peer group median –
Below target annual incentive and long-term incentive payouts correlate with performance against rigorous goals –
Volunteered for temporary reduction to 2017
•Improved customer experience by reducing quality claims by 9%base salary in 2017, and implemented delivery improvement projects to achieve the highest service level in past four years
•Conducted first-ever company-wide employee inclusion survey
•Continue to lead the steel industry's efforts to strengthen and enforce trade laws against unfairly traded imports  FY 2020 AVERAGE NEO TOTAL TARGET DIRECT COMPENSATION United States Steel Corporation | 2018 Proxy Statement |iv
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6UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT
KEY EXECUTIVE COMPENSATION PROGRAM PRACTICES (PAGE 27)PROXY SUMMARYOUR RESPONSE TO COVID-19 PANDEMIC
Compensation Governance Practices The Compensation & Organization Committee (the "Committee"“Compensation Committee”), which consists solely of independent directors, has implemented the following best practices with respect to executive compensation: ✓Considers the results of the most recent say-on-pay advisory vote by stockholders and has implemented proactive communications with stockholders to gain input and feedback when making executive compensation decisions
✓Undertakes a goal setting process that is used to arrive at rigorous short-term and long-term performance goals under our incentive plans that are aligned to key corporate strategic and financial goals
✓Engages in and leads a robust CEO performance evaluation process
✓Engages and consults with its own independent compensation consultant
✓Has established formal selection criteria for the executive compensation and relative TSR peer groups and annually reviews peer group composition
✓Annually reviews tally sheets analyzing executive compensation levels and structures, including amounts payable in various termination scenarios
✓Annually reviews the risks associated with our compensation programs and has implemented various risk mitigating practices and policies, such as:
•Targeting the majority of our executives' compensation in long-term performance based awards using multiple equity and cash vehicles
•Implementing rigorous executive stock ownership and holding requirements
•Utilizing multiple performance measures that focus on company-wide metrics and placing a cap on potential incentive payments
✓Our Change in Control Severance Plan establishes a "double trigger," requiring participants to be terminated without "cause," or voluntarily "for good reason" following a change in control prior to receipt of any payment of severance benefits
✓Maintains a "clawback" policy that applies to executive officers and provides for the recoupment of incentive awards under certain conditions in the event the Corporation's financial statements are restated
✓Maintains Anti-Hedging and Pledging Policies that prohibit all employees and directors from engaging in any transaction that is designed to hedge or offset any decrease in our stock price and prohibits executive officers and directors from pledging our stock as collateral for a loan or holding shares in a margin account
✓Prohibits payment of tax gross-ups to any executives for any payments relating to a change in control
Asset revitalization and Innovation
In 2017 we announced a $2 billion strategic initiative to revitalize the assets in our North American Flat-Rolled segment. The program is focused on improving company critical assets to deliver 15-20% EBITDA returns over three to four years, through a consistent focus on improving safety, quality, delivery and cost. The Corporation views this program as essential to improving predictability and our ability to compete effectively in the industry. As we revitalize our assets, we expect to increase profitability, productivity, operational consistency, and reduce volatility.
In addition to investing in improvements of our leaders and current assets, we're also focused on the future by investing in our global workforce and the innovation that will create tomorrow's steel solutions today. We've continued our
aggressive efforts around the development of the next generation of advanced high-strength steels (AHSS) for the automotive industry to solve its most pressing challenges. Years of work on AHSS technology culminated with the announcement in September 2017 of the commencement of construction of a new continuous galvanizing line at our PRO-TEC Coating Company joint venture that will feature proprietary technology developed in part by our company. We also launched a new proprietary semi-premium tubular connection – USS-EAGLE SFHTM and sold our first orders of USS-LIBERTY LDTM connections to meet the needs of our customers in the oil and gas industry and to position U. S. Steel as a stronger company by 2020.
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| | | | | WHAT WE DO | | | | –
Consider results of “say on pay” votes when making compensation decisions | | | | –
Regularly engage with our stockholders about our executive compensation program | | | | –
Align pay and performance | | | | –
Cap annual and long-term incentive awards, including when TSR is negative | | | | –
Utilize an independent compensation consultant | | | | –
Require significant stock ownership of executive officers | | | | –
Utilize a market-based approach (competitive within our peer group) for determining NEO target pay levels | | | | –
Require a “double trigger” for change in control severance | | | | –
Provide for clawback of incentive awards if our financial statements are restated | | | | –
Annually review risks associated with our compensation programs | |
| | | | | PROXY SUMMARYWHAT WE DON’T DO
| | | | –
No excise tax gross ups for change in control payments –
No guarantee minimum payout of annual or long-term performance awards –
No repricing of options –
No hedging transactions, short sales or pledging of our common stock by our directors or executive officers –
No dividends or dividend equivalents on unearned RSUs or performance shares | |
Human Capital Management and our "Pivot to the People"
Success in achieving our long-term goal of top quartile performance in safety, quality, delivery and cost is fully dependent on the leadership, engagement and commitment of our employees. Over the next several years as we focus on improving our physical assets through significant asset revitalization investments, we must concurrently focus
significant investments in our employees to ensure they have the skills and capabilities necessary to deliver our strategic business objectives. The goal of our human resources strategy is to ensure our human resources initiatives fully support our business objectives in a sustainable fashion throughout the business cycles we face.
Corporate Social Responsibility
Over 100 years ago, we adopted the Gary Principles. The Gary Principles were among the first Codes of Conduct adopted by a publicly traded company and continue to guide us today.
U. S. Steel knows that to be a good corporate citizen is not only the right thing to do, but also is essential to our success. We are more than a global leader in the steel industry; we are your friends, neighbors and community partners. Our employees live and work in the same communities as you. We breathe the same air, drink the same water and share the same hopes and dreams for our families.
Every employee who works in one of our facilities has the right to return home safely at the end of every day. We are working to eliminate all injuries and incidents at all of our locations because it is the right thing to do, but also because it improves productivity, quality, reliability and financial performance. By making safety and health a
personal responsibility, our employees are making a daily commitment to follow safe work practices, look out for the safety of co-workers and ensure safe working conditions for everyone. We continue to enhance our safety practices for both employees and contractors, as we pursue our zero safety incident goal.
Ensuring the safety of the environment in which we work is equally important. We recognize that the earth is a shared and finite resource that we all must safeguard for generations to come. It is our commitment to sustainability that drives our operations to adopt management systems and best practices that foster continuous improvement in our processes, preserve vital resources and ensure the future of the industry. We have enhanced our disclosure of actions and results in this area on our website (www.ussteel.com/posts/environmental-stewardship), and plan to release a sustainability report more fully describing our efforts in 2018.
OUR RESPONSE TO COVID-19 PANDEMIC | | The spread of the novel coronavirus designated as COVID-19 (“COVID-19”) pandemic across the globe significantly impacted global markets and nearly every industry, U. S. Steel included. We quickly recognized the uncertainty and potential severity the pandemic would cause and implemented our crisis response plan. Overseen by our Board of Directors, and led by our executive team, we implemented a comprehensive and adaptive response to the pandemic focused on protecting lives and livelihoods, preserving cash and liquidity, remaining nimble to execute our strategy and supporting our customers and communities, all in line with our foundational S.T.E.E.L. Principles. Some of the measures we implemented and continue to practice include: | | | | –
Issuing weekly communication, including preventive tips, and a dedicated website for employees and their families –
Providing employees with protective equipment, masks, and sanitizing and cleaning supplies and enhanced cleaning frequency –
Limiting outside visitors to our facilities, restricting access for non-essential vendors, suppliers and contractors | | | –
Actively managing physical distancing while at work, including no meetings or gatherings of greater than 10 individuals –
Working from home for employees in our administrative offices and headquarters –
Intensifying our focus on preserving cash and proactively raising approx. $1.7 billion of incremental capital to support our balance sheet | |
"We must never forget that our rights and interests are and should be subservient to the public welfare, that the rights and interests of the individual must always give way to those of the public." – Gary PrinciplesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT7
U. S. Steel Leads Fight Against Imports for the Domestic Industry and National Security
In 2017, U. S. Steel continued to lead the industry in efforts to address dumped and subsidized imports, as well as imports that threaten national security.
In April 2017, the U.S. Department of Commerce (DOC) initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to determine the effects of steel imports on U.S. national security. U. S. Steel testified at the DOC public hearing and is actively advocating for a meaningful remedy to prevent further harm to the domestic steel industry that is critical to U.S. infrastructure, energy independence, national and economic security.
To address unfair import competition, U. S. Steel focused on maintaining and defending a total of approximately 100 antidumping (AD) and countervailing duty (CVD) orders on flat-rolled and tubular steel products on 26 countries through fierce advocacy before the DOC, the U.S. International Trade Commission (ITC), the Administration, Congress, U.S. Courts, the World Trade Organization, and in the public arena.
In addition to defending the 2016 AD/CVD orders on hot-rolled, cold-rolled, and corrosion-resistant steel, U. S. Steel has led efforts to maintain AD/CVD orders on tubular steel products.
In December 2017, in response to circumvention petitions filed by U. S. Steel and other domestic steel producers in September 2016, the DOC preliminarily found that imports of cold-rolled and corrosion-resistant steel made from Chinese substrate are covered by the AD/CVD orders on such imports from China, and imposed significant cash deposit requirements on U.S. imports of cold-rolled steel from Vietnam made from Chinese hot-rolled steel and U.S. imports of corrosion-resistant steel from Vietnam made from Chinese hot- or cold-rolled steel.
In 2018, U. S. Steel will continue to aggressively and strategically use U.S. trade laws to address unfair import competition.
United States Steel Corporation | 2018 Proxy Statement |vi
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PROXY STATEMENT TABLE OF CONTENTS
Proposal 1:
Election of Directors vii |United States Steel Corporation | 2018 Proxy Statement
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| | Stockholders are being asked to elect 11 direct nominees for a one-year term. | | | | | | | | | |
| | Board Recommendation: | | | | | | | Proposal 1: ElectionThe Board of Directors recommends a
vote “FOR’’ the election of each nominee.
| | | | | | | | |
PROPOSAL 1: ELECTION OF DIRECTORS
|
At the 2018 Annual Meeting, ten directorseleven director nominees are up for election for a one-year term. Each nominee will be elected towill serve until our next annual meeting of stockholders.stockholders and until his or her successor is duly elected and qualified. All of the nominees are presently members of the Board of Directors. Ms. Atkinson was elected to the Board of Directors in July 2020 by the Board to fill a vacancy. The Board is recommending that all teneleven nominees be elected. John G. DrosdickMessrs. Dinges and Girsky decided not to stand for re-election, and their terms will expire as of our Annual Meeting. Ms. Diaz Dennis will not stand for re-election, and in accordance with our director retirement age policy, will retire from the Board as of the expiration of his term at the 2018our Annual Meeting in accordance with our Director Retirement Policy, described on page 13. Additionally Mr. Stevens and Ms. McNeal decided not to stand for re-election. Meeting. Except in the case of contested elections, each director nominee is elected if a majority of the votes are cast for that director'sdirector’s election. The term "a“a majority of the votes cast"cast” means that the number of votes cast "for"“for” a director'sdirector’s election exceeds the number of votes cast "against"“against” the director'sdirector’s election, with abstentions and broker non-votes not counted as votes cast either "for"“for” or "against"“against” the director'sdirector’s election. A "contested election"“contested election” is one in which the number of nominees exceeds the number of directors to be elected at the meeting. –
If a nominee who is currently serving as a director is not re-elected, Delaware law provides thatthen the director would continue to serve on the Board until the director'sdirector’s successor is duly elected and qualified or until the director'sdirector’s earlier resignation or removal. Under our by-laws, in order for any incumbent director to become a nominee for election by the stockholders as a director, that director must tender an irrevocable offer to resign from the Board of Directors, contingent upon acceptance of such offer of resignation by the Board of Directors, if –
If the director fails to receive a majority of the votes cast in an election that is not a contested election. election, then that director must tender an irrevocable offer to resign from the Board, contingent upon acceptance of such offer of resignation by the Board of Director. –
If an incumbent director fails to receive a majority of the votes cast in an election that is not a contested election, then the Corporate Governance & Public PolicySustainability Committee, or such otheranother independent committee designated by the Board of Directors, must make a recommendation to the Board of Directors as to whether to accept or reject the offer of resignation of the incumbent director, or to take other action. The Board of Directors must act on the offer of resignation, taking into account the committee'scommittee’s recommendation, within 90 days following certification of the election results. Each of theThe Corporate Governance & Public PolicySustainability Committee, in making its recommendation, and the Board, of Directors, in making its decision, may consider such factors and other information as it may consider appropriate and relevant to the circumstances. DIRECTOR RETIREMENT POLICY Our Corporate Governance Principles require any non-employee director to retire at the first annual meeting of stockholders after he or she reaches the age of 74. However, the Board may grant exceptions to this policy on a case-by-case basis. Each employee director must retire from the Board when he or she ceases to be an executive officer of the Corporation. However, the CEO may remain on the Board after retirement as an employee, at the Board’s request, through the last day of the month in which he or she turns 70. All directors who undergo a significant change in their business or professional careers must volunteer to resign from the Board. Ms. Patricia Diaz Dennis, a current director, will retire from our Board at the Annual Meeting under this policy. | 8 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
PROPOSAL 1: ELECTION OF DIRECTORSDIRECTOR INDEPENDENCE
DIRECTOR INDEPENDENCE A brief statement aboutdescription of the background and qualifications of each nominee is provided on the following pages.pages 12-17. No directornominee has a familial relationship to any other director, nominee for director or executive officer. The independence of Board membersdirectors and nominees and other information related to the Board of Directors is described under the heading, "Corporate Governance – Independence"“Corporate Governance—Director Independence” in this proxy statement. Mr. Sperling is the only nominee who has not been previously elected to the Board by our stockholders. His nomination was recommended by the Chairman of the Board after consultation with certain stakeholders.If any nominee for whom you have voted becomes unable to serve, your proxy may be voted for another person designated by the Board. | | |  | | The Board recommends a vote "FOR" the election of each nominee. |
SelectionOur Corporate Governance Principles limit the number of Director Nomineesother public company boards our directors may serve on to five, and for currently serving public company CEOs, to three. Our Board of Directors waived this limit for Stephen Girsky, who serves as Chief Executive Officer of VectoIQ Acquisition Corp. II, a special purpose acquisition company (SPAC) listed on NASDAQ, as of January 2021. In making this determination, our Board considered many factors, including the significant differences in a SPAC CEO and a public operating company CEO. The SPAC has no employees and no assets other than invested cash. It does not require the same day-to-day management as a traditional public company operating company does. Additionally, the SPAC position inherently is time-limited, and once an investment partner is selected, Mr. Girsky does not intend to serve as CEO of the surviving public company. Mr. Girsky decided not to stand for re-election and his term will expire as of the Annual Meeting.
SELECTION OF DIRECTOR NOMINEES The Corporate Governance & Public PolicySustainability Committee is responsible for identifying nominees for election to the Board. The Corporate Governance & Public PolicySustainability Committee may consider nominees suggested by several sources, including outside search firms, incumbent Board members and stockholders. As provided in its charter, the Corporate Governance & Public PolicySustainability Committee seeks candidates with experience and abilities relevant to serving as a director of the Corporation and who will represent the best interests of stockholders as a whole, and not any specific interest group or constituency. The Corporate Governance & Public Policy Committee,committee, with input from the Chairman of the Board and other directors, evaluates the qualifications of each director candidate in accordance with the criteria described in the director qualification standards section of our Corporate Governance Principles. In evaluating the qualifications of director | | Director Qualifications Criteria | | | | In evaluating the qualifications of director nominees, the Corporate Governance & Sustainability Committee considers factors including, but not limited to, the following: | | | | Independence. Directors should neither have, nor appear to have, a conflict of interest that would impair the director’s ability to represent the interests of all the Corporation’s stakeholders and to fulfill the responsibilities of a director. Commitment. Directors should be able to contribute the time necessary to be actively involved in the Board and its decision making and should be able and willing to prepare for and attend Board and committee meetings. Diversity. Though the Board does not have a formal policy regarding the consideration of diversity in identifying nominees for director, directors should be selected so that the Board represents diverse experience at various policy making and executive levels in business, government, education and in industries that are relevant to the Corporation’s business operations. The Board considers the term “diversity” to include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to Board heterogeneity. | | | Experience. Directors should be or have been in leadership positions in their field of endeavor and have a record of excellence in that field. Integrity. Directors should have a reputation of integrity and be of the highest ethical character. Judgment. Directors should have the ability to exercise sound business judgment on a large number of matters. Knowledge. Directors should have a firm understanding of business strategy, corporate governance, board operations and other relevant business matters. Skills. Directors should be selected so that the Board has an appropriate mix of skills in critical core areas, including, but not limited to: accounting, compensation, finance, government relations, legal, management, risk oversight and strategic planning. | |
nominees, the Corporate Governance & Public Policy Committee considers factors including, but not limited to, the following:
Independence. Directors should neither have, nor appear to have, a conflict of interest that would impair the director's ability to represent the interests of all the Corporation's stakeholders and to fulfill the responsibilities of a director.
Commitment. Directors should be able to contribute the time necessary to be actively involved in the Board and its decision making and should be able and willing to prepare for and attend Board and committee meetings.
Diversity. Though the Board does not have a formal policy regarding the consideration of diversity in identifying nominees for director, directors should be selected so that the Board represents diverse experience at various policy making and executive levels in business, government, education and in industries that are relevant to the Corporation's business operations. The Board considers the
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Proposal 1: Election of DirectorsUNITED STATES STEEL CORPORATION
2021 PROXY STATEMENT | 9 |
PROPOSAL 1: ELECTION OF DIRECTORSSELECTION OF DIRECTOR NOMINEESterm "diversity" to include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to board heterogeneity.
Experience. Directors should be or have been in leadership positions in their field of endeavor and have a record of excellence in that field.
Integrity. Directors should have a reputation of integrity and be of the highest ethical character.
Judgment. Directors should have the ability to exercise sound business judgment on a large number of matters.
Knowledge. Directors should have a firm understanding of business strategy, corporate governance and board operations and other relevant business matters.
Skills. Directors should be selected so that the Board has an appropriate mix of skills in critical core areas, including, but not limited to: accounting, compensation, finance,
government relations, legal, management, risk oversight and strategic planning.
These director qualification standards are evaluated by the Corporate Governance & Public PolicySustainability Committee each time a new candidate is considered for Board membership. The Corporate Governance & Public PolicySustainability Committee and the Board may take into account such other factors they consider to be relevant to the success of a publicly traded company operating in the steel industry. As part of the annual nomination process, the Corporate Governance & Public Policy Committee reviews the qualifications of each director nominee, including currently serving Board members, and reports its findings to the Board. On February 27, 2018,23, 2021, the Corporate Governance & Public PolicySustainability Committee determined that each Board memberdirector nominee satisfied the director qualification standards and advised the Board that each of the director nominees listed under "Proposal“Proposal 1: Election of Directors"Directors” was qualified to serve on the Board. Stockholder Recommendations for Director Nominees Stockholder Recommendations
|
The Corporate Governance & Public PolicySustainability Committee will consider director nominees recommended by stockholders. Notice of sucha recommendation shouldmust be sent in writing to the Chair of the Corporate Governance & Public PolicySustainability Committee, c/o the Corporate Secretary of United States Steel Corporation, 600 Grant Street, Suite 1500,1884, Pittsburgh, PA 15219. The recommendation must include: (i) –
the candidate'scandidate’s name, address, occupation and share ownership; (ii) –
any other biographical information that will enable the Corporate Governance & Public PolicySustainability Committee to evaluate the candidate in light of the criteria described above; and (iii) –
information concerning any relationship between the candidate and the stockholder making the recommendation. The recommendation must also identify the writer as a stockholder of the CorporationU. S. Steel and provide sufficient detail for the Corporate Governance & Public PolicySustainability Committee to consider the recommended individual'sindividual’s qualifications. The Corporate Governance & Public Policy Committee will evaluate the qualifications of candidates recommended by stockholders using the same criteria as used for other BoardBoard-nominated candidates. Under the collective bargaining agreement with the United Steelworkers (the "USW"“USW”), the USW has the ability to recommend up to two individuals to be considered for Board membership. The agreement recognizes that every director has a fiduciary duty to the Corporation and all of its stockholders, and that each individual recommended by the USW must meet the criteria described above. 10 | Director NomineesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
For purposes
PROPOSAL 1: ELECTION OF DIRECTORSDIRECTOR NOMINEE SKILL MATRIX
DIRECTOR NOMINEE SKILL MATRIX We consider current Board skills, background, experience, tenure and anticipated retirements to identify gaps that may need to be filled through the Board refreshment process. The following chart summarizes the core competencies that the Board considers valuable to effective oversight of the Corporation and illustrates how the current Board members individually and collectively represent these key competencies. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill, or experience rather, the indicator represents that the item is a core competency that the director brings to the Board. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 11 |
PROPOSAL 1: ELECTION OF DIRECTORS2021 Director Nominees
2021 Director Nominees For the upcoming annual meeting,Annual Meeting, the Board, based on the recommendation of the Corporate Governance & Public PolicySustainability Committee, has recommendedis recommending the election of each nominee as a director. Each nominee has informed the Board that he or she is willing to serve as a director. If any nominee should decline or become unable or unavailable to serve as a director for any reason, your proxy authorizes the persons named in the proxy to vote for a replacement nominee, if the Board names one, as such persons determine in their best judgment. one. It is the intention of the proxyholders to vote proxies for the election of the nominees named in this proxy statement unless such authority is withheld. The following is a
A brief description ofbiography about the age, principal occupation, positionbackground and business experience, including other public company directorships, for at least the past five years, and major affiliationsqualifications of each of the nominees. Each nominee's biographical information includes a description of the director's experience, qualifications, attributes and skills that qualify him or her to servedirector nominee is provided on the Board.following pages. 2 |United States Steel Corporation | 2018 Proxy Statement
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| | | | | Proposal 1: Election of Directors
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United States Steel Corporation | 2018 Proxy Statement |3
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Proposal 1: Election of Directors
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The Board of Directors recommends a vote
"FOR"“FOR” the election of each of the following 20182021 Director Nominees for a one-year term:term. | |
| | Skills & Experience –
Top Level Enterprise/Corporate Leadership –
High Level Financial –
Technology Transformation –
Risk Management | | | | | | Tracy A. Atkinson | | | | | | | Age: 56 Director Since: 2020 | | | Committees –
Audit –
Compensation & Organization | | | | | | Other Public Company Boards –
Raytheon Technologies Corporation (formerly Raytheon Company) –
Affiliated Managers Group Inc. | | | | | | | | | | | | | | Experience Ms. Atkinson served as Executive Vice President of State Street Corporation from 2008 — March 2020 and as its Chief Administration Officer from May 2019 — March 2020. Prior to that role, Ms. Atkinson served as State Street Corporation’s Chief Compliance Officer from 2017 to May 2019, and its Treasurer from 2016 to 2017. From 2009 to 2010, Ms. Atkinson served as Executive Vice President and Chief Compliance Officer of State Street Corporation, and she served as Executive Vice President and State Street Global Advisors’ Chief Compliance Officer from 2008 to 2009. Prior to joining State Street Corporation in 2008, Ms. Atkinson served in various leadership positions at MFS Investment Management from 2004 to 2008 and as a Partner at PricewaterhouseCoopers from 1999 to 2004, after having joined the firm in 1988. Ms. Atkinson received a bachelor’s degree in accounting from the University of Massachusetts and is a certified public accountant. | | | | | | | Qualifications –
Expertise in public company accounting, risk management, disclosure, financial system management | | | –
Corporate governance and audit expertise gained through service on boards of other large corporations | |
| 12 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
David B. Burritt earned a bachelor's degree in accounting from Bradley University and received a master's degree in business administration from the University of Illinois in Champaign. Mr. Burritt joined the Corporation in September 2013 to serve as executive vice president and chief financial officer with responsibility for all aspects of the Corporation's strategic and financial matters. In January 2015, he added executive leadership of U. S. Steel's North American Flat-Rolled commercial entities and corporate support services to his responsibilities. In February 2017, he was elected president and chief operating officer with executive responsibility for all aspects of the Corporation's day-to-day business in the United States and Central Europe, and was named President & Chief Executive Officer in May 2017. Prior to joining U. S. Steel, Mr. Burritt, served as chief financial officer at Caterpillar Inc., retiring from that position in 2010. During more than 32 years with Caterpillar, Mr. Burritt helped lead several important transformations and employee development initiatives at the company, including his role as business measurements manager to support Caterpillar's reorganization into accountable business units, his role as corporate champion for the company-wide 6 Sigma deployment, and his leadership role that helped Caterpillar effectively navigate the financial crisis and related recovery.
Particular experience, attributes or skills that qualify candidate for Board membership: As the Chief Executive Officer, Mr. Burritt is responsible for all of the business and corporate affairs of U. S. Steel. His understanding of complex financial and operational issues is crucial to the Corporation's strategic planning and operational success. As the only employee-director on the Board, Mr. Burritt is able to provide the Board with an "insider's view" of what is happening in all facets of the Corporation. He shares not only his vision for the Corporation, but also his hands-on experience as a result of his daily management of the Corporation and constant communication with employees at all levels. His insider's perspective provides the Board with invaluable information necessary to direct the business and affairs of the Corporation.
Patricia Diaz Dennis graduated from the University of California Los Angeles and received her law degree from the Loyola Law School of Loyola Marymount University. Ms. Dennis has held three Senate-confirmed federal government appointments. Former President Ronald Reagan named her to the National Labor Relations Board in 1983 and appointed her as a commissioner of the Federal Communications Commission three years later. After becoming partner and head of the communications section of Jones, Day, Reavis & Pogue, Ms. Dennis returned to public service in 1992 when former President George H. W. Bush appointed her Assistant Secretary of State for Human Rights and Humanitarian Affairs. Ms. Dennis served in a variety of executive positions with SBC Communications, Inc., which later became AT&T, including General Counsel and Secretary of SBC West from May 2002 until August 2004 and Senior Vice President and Assistant General Counsel of AT&T from 2004 to 2008. Ms. Dennis currently serves on the board of Entravision Communication Corporation, and previously served on the board of Massachusetts Mutual Life Insurance Company. She also is a trustee of the NHP Foundation and a member of the Advisory Board for LBJ Family Wealth Advisors.
Particular experience, attributes or skills that qualify candidate for Board membership: Ms. Dennis' legal expertise and federal government public service contribute to her skills in the areas of risk management, compliance, internal controls, and legislative and administrative issues. Additionally, her National Labor Relations Board experience brings significant union relations insight and expertise to the Board. These factors, along with her long record of demonstrated executive leadership and integrity, provide valued insight and perspective to Board deliberations and in the oversight of the Corporation's operations. Ms. Dennis' experience on the board of directors of a large insurance firm also demonstrates her knowledge of complex financial and operational issues. Ms. Dennis' appointments to three federal government positions provide her with unique insight with respect to regulatory and public policy matters, both of which strengthen the Board's collective knowledge, capabilities and experience.
4 |PROPOSAL 1: ELECTION OF DIRECTORS United States Steel Corporation 2021 Director Nominees| 2018 Proxy Statement
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| | Skills & Experience –
Top Level Enterprise/Corporate Leadership –
High Level Financial –
Human Capital Talent Development and Labor –
Customer Centricity and Innovation –
Technology Transformation –
International Markets –
Steel/Related Industry –
Environmental and Sustainability –
Risk Management | | | | | | David B. Burritt | | | | | | | Age: 65 Director Since: 2017 | | | Committees –
Executive | | | | | | Other Public Company Boards –
Lockheed Martin Corporation | | | | | | | | | | | | | | Experience Mr. Burritt has served as president and chief executive officer of United States Steel Corporation since May 2017. At that time, Mr. Burritt was also named to the Corporation’s Board of Directors. He had been elected president and chief operating officer in February 2017 with executive responsibility for all aspects of the Corporation’s day-to-day business in the United States and Central Europe. Mr. Burritt joined U. S. Steel in September 2013 to serve as executive vice president and chief financial officer with responsibility for all aspects of the Corporation’s strategic and financial matters. In January 2015, he added executive leadership of U. S. Steel’s North American Flat-rolled commercial entities and corporate support services. Prior to joining U. S. Steel, Mr. Burritt, served as chief financial officer at Caterpillar Inc. Mr. Burritt is a member of The Business Council and the National Safety Council. He also serves on the Executive Committee of the worldsteel Board of Directors. Mr. Burritt holds a bachelors degree in Accounting from Bradley University and a master’s degree in business administration from the University of Illinois in Champaign. | | | | | | | Qualifications –
Insider’s view of U. S. Steel as a result of his daily management of the Corporation and regular communication with employees, customers and stockholders –
Over four decades of experience in the understanding of complex strategic, financial and operational matters | | | –
Expertise in public company accounting, risk management, disclosure, financial system management, manufacturing and commercial operations and business transformation | |
| | Skills & Experience –
Top Level Enterprise/Corporate Leadership –
High Level Financial –
Human Capital Talent Development and Labor –
Customer Centricity and Innovation –
Technology Transformation –
International Markets –
Steel/Related Industry –
Environmental and Sustainability –
Risk Management | | | | | | John J. Engel | | | | | | | Age: 59 Director Since: 2011 | | | Committees –
Compensation & Organization –
Corporate Governance & Sustainability
(incoming Chair) | | | | | | Other Public Company Boards –
WESCO International, Inc. | | | | | | | | | | | | | | Experience Mr. Engel has served as Chairman, President and Chief Executive Officer of WESCO International, Inc. since 2011. Previously, at WESCO International, Inc., Mr. Engel served as President and Chief Executive Officer from 2009 to 2011, and Senior Vice President and Chief Operating Officer from 2004 to 2009. Before joining WESCO in 2004, Mr. Engel served as Senior Vice President and General Manager of Gateway, Inc.; Executive Vice President and Senior Vice President of Perkin Elmer, Inc.; and Vice President and General Manager of Allied Signal, Inc. Mr. Engel also held various engineering, manufacturing and general management positions at General Electric Company. Mr. Engel is a member of the Business Roundtable and the Business Council and is a member of the board of directors of the National Association of Manufacturers. Mr. Engel holds a Bachelor of Science degree in mechanical engineering from Villanova University. He received his Master of Business Administration from the University of Rochester. | | | | | | | Qualifications –
Executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise –
Extensive experience in global manufacturing and logistics, operational issues, human capital management, and business leadership | | | –
Knowledge of financial system management, public company accounting, disclosure requirements and financial markets. | |
Proposal 1: ElectionUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 13 |
PROPOSAL 1: ELECTION OF DIRECTORS2021 Director Nominees
| | Skills & Experience: –
Top Level Enterprise/Corporate Leadership –
High Level Financial –
Human Capital Talent Development and Labor –
Steel/Related Industry –
International Markets –
Environmental and Sustainability –
Risk Management | | | | | | John V. Faraci | | | | | | | Age: 71 Director Since: 2019 | | | Committees –
Audit –
Compensation & Organization
(incoming Chair) | | | | | | Other Public Company Boards –
Conoco Phillips Company –
PPG Industries, Inc. –
Carrier Corp. | | | | | | | | | | | | | | Experience Mr. Faraci has served as the Executive Chairman of DirectorsCarrier since 2020. He served as Chairman and Chief Executive Officer of International Paper from 2003 to 2014. During his 40-year career at International Paper, Mr. Faraci served in a series of financial, planning and management positions, including President and Chief Executive Officer and Chief Financial Officer. He is a trustee of the American Enterprise Institute, and a member of the Council on Foreign Relations. Mr. Faraci graduated from Denison University with a degree in history and economics. He received his Master of Business Administration from the University of Michigan’s Ross School of Business. | | | | | | | Qualifications –
Executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise –
Expertise in public company accounting, risk management, disclosure, financial system management | | | –
Corporate governance and audit expertise gained through service on boards of other large corporations | |
| | Skills & Experience –
Top Level Enterprise/ Corporate Leadership –
High Level Financial –
Human Capital Talent Development and Labor –
Technology Transformation –
Steel/Related Industry –
International Markets –
Environmental and Sustainability –
Risk Management | | | | | | Murry S. Gerber | | | | | | | Age: 68 Director Since: 2011 | | | Committees –
Audit (Chair) | | | | | | Other Public Company Boards –
BlackRock, Inc. –
Halliburton Company | | | | | | | | | | | | | | Experience Mr. Gerber served as Executive Chairman of EQT Corporation, an integrated energy production company, from 2010 until May 2011, as its Chairman from 2000 to 2010, as its President from 1998 to 2007 and as its Chief Executive Officer from 1998 to 2000. Prior to joining EQT Corporation, Mr. Gerber served as the CEO of Coral Energy (now Shell Trading North America) from 1995 to 1998. He is a member of the board of trustees of the Pittsburgh Cultural Trust. Mr. Gerber holds a bachelor’s degree in geology from Augustana College and a master’s degree in geology from the University of Illinois. | | | | | | | Qualifications –
Deep knowledge of the energy industry, an important supplier to and customer of the Corporation –
Executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise | | | –
Corporate governance and audit expertise derived from service on boards of other multinational corporations | |
| 14 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
PROPOSAL 1: ELECTION OF DIRECTORS2021 Director Nominees
| | Skills & Experience –
Top Level Enterprise/ Corporate Leadership –
Human Capital Talent Development and Labor –
Technology Transformation –
Environmental and Sustainability –
Risk Management | | | | | | Jeh C. Johnson | | | | | | | Age: 63 Director Since: 2020 | | | Committees –
Audit –
Corporate Governance & Sustainability | | | | | | Other Public Company Boards –
Lockheed Martin Corporation –
PG&E Corporation (2017-2018) | | | | | | | | | | | | | | Experience Secretary Johnson has been a partner at the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP since January 2017. Previously, Secretary Johnson served as U.S. Secretary of Homeland Security from December 2013 to January 2017; as General Counsel of the U.S. Department of Defense from 2009 to 2012; as General Counsel of the U.S. Department of the Air Force from 1998 to 2001; and as an Assistant U.S. Attorney in the Southern District of New York from 1989 to 1991. Prior to and between his periods of public service, he was in private practice at Paul, Weiss, Rifkind, Wharton & Garrison LLP. Secretary Johnson graduated from Morehouse College, and received his law degree from Columbia Law School. | | | | | | | Qualifications –
Extensive experience in legal and government roles contribute skills in the areas of risk management, cybersecurity oversight and public policy –
Executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise | | | –
Corporate governance and experience regarding organizational management gained through service on boards of other multinational corporations | |
| | Skills & Experience –
Customer Centricity and Innovation –
Technology Transformation –
International Markets –
Steel/Related Industry –
Environmental and Sustainability | | | | | | Paul A. Mascarenas | | | | | | | Age: 59 Director Since: 2016 | | | Committees –
Audit –
Corporate Governance & Sustainability | | | | | | Other Public Company Boards –
ON Semiconductor Corp. –
The Shyft Group –
Borg Warner Inc. | | | | | | | | | | | | | | Experience Mr. Mascarenas served as President and Chairman of the Executive Board of FISITA (Fédération Internationale des Sociétés d’Ingénieurs des Techniques de l’Automobile) from 2014 to 2016. Previously, Mr. Mascarenas worked for 32 years at Ford Motor Company, holding various development and engineering positions, and most recently serving as Chief Technical Officer and Vice President, leading Ford’s worldwide research organization. Mr. Mascarenas is a fellow of the Institution of Mechanical Engineers, and a fellow of the Society of Automotive Engineers. He served as general chairperson for the 2010 SAE World Congress and Convergence and has served on the FISITA board since 2012. Mr. Mascarenas is a Venture Partner with Fontinalis Partners. In 2015, he was awarded an Order of the British Empire (OBE) by Her Majesty, Queen Elizabeth II, for his services to the automotive industry. Mr. Mascarenas received a degree in mechanical engineering from University of London, King’s College in England and in June 2013, received an honorary doctorate degree from Chongqing University in China. | | | | | | | Qualifications –
Extensive experience in product development, program management and business leadership, as well as experience working in an international forum –
Insight and expertise related to the automotive industry | | | –
Knowledge of complex financial and operational issues | |
2018 Director Nominees – continuedUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 15 |
Dan O. Dinges graduated from The University of Texas with a Bachelor of Business Administration degree in Petroleum Land Management. Mr. Dinges began his career with Mobil Oil Corporation in 1978. From 1981 to 2001, Mr. Dinges worked in a variety of management positions with Samedan Oil Corporation, a subsidiary of Noble Affiliates, Inc. (now Noble Energy Inc.). In September 2001, Mr. Dinges joined Cabot Oil & Gas Corporation as its President and Chief Operating Officer, and assumed his current position as Chairman, President and Chief Executive Officer in May 2002. Mr. Dinges serves on the board of directors of the American Petroleum Institute, Spitzer Industries, Inc., the American Exploration & Production Council, the Foundation for Energy Education, Houston Methodist Hospital Research Institute, Boy Scouts of America, and Palmer Drug Abuse Program. Mr. Dinges previously served on the board of directors of Lone Star Technologies, Inc. Mr. Dinges is also a member of the All-American Wildcatters Association and serves on the executive committee of the Kay Bailey Hutchinson Center for Energy, Law and Business at The University of Texas at Austin.
Particular experience, attributes or skills that qualify candidate for Board membership: Mr. Dinges has substantive experience in managing and overseeing strategic and operational matters as a result of his service as Chairman, President and Chief Executive Officer of Cabot Oil & Gas Corporation. Mr. Dinges also possesses knowledge of and insight into the steel industry through his prior service as a director of Lone Star Technologies, Inc. In addition, he provides the Board with an insightful perspective regarding the energy industry which is an important supplier to, and customer of, the Corporation. Mr. Dinges' experience as Chairman, President and Chief Executive Officer of Cabot Oil & Gas Corporation demonstrates his leadership capability and general business acumen.
John J. Engel graduated from Villanova University in 1984 with a Bachelor of Science degree in mechanical engineering. He received his Master of Business Administration from the University of Rochester in 1991. Mr. Engel has served as Chairman, President and Chief Executive Officer of WESCO International, Inc. since 2011. Previously, at WESCO International, Inc., Mr. Engel served as President and Chief Executive Officer from 2009 to 2011, and Senior Vice President and Chief Operating Officer from 2004 to 2009. Before joining WESCO in 2004, Mr. Engel served as Senior Vice President and General Manager of Gateway, Inc.; Executive Vice President and Senior Vice President of Perkin Elmer, Inc.; and Vice President and General Manager of Allied Signal, Inc. Mr. Engel also held various engineering, manufacturing and general management positions at General Electric Company. Mr. Engel is a member of the Business Roundtable and the Business Council, and is a member of the board of directors of the National Association of Manufacturers.
Particular experience, attributes or skills that qualify candidate for Board membership: As a result of his service as Chairman, President and Chief Executive Officer of WESCO International, Inc. and working in a diverse range of industries, Mr. Engel has skills and valuable experience managing the significant operational and financial issues that the Corporation is likely to face. Further, Mr. Engel's demonstrated business acumen, strategic planning and risk oversight experience makes him a valued member of our Board.
United States Steel Corporation | 2018 Proxy Statement |PROPOSAL 1: ELECTION OF DIRECTORS 52021 Director Nominees
Table of Contents
| Skills & Experience Proposal 1: Election–
Top Level Enterprise/Corporate Leadership –
High Level Financial –
Human Capital Talent Development and Labor –
International Markets –
Environmental and Sustainability –
Risk Management | | | | | | Michael H. McGarry | | | | | | | Age: 63 Director Since: 2019 | | | Committees –
Audit –
Compensation & Organization | | | | | | Other Public Company Boards –
PPG Industries, Inc. –
Axiall Corporation (2013-2016) | | | | | | | | | | | | | | Experience Mr. McGarry is the Chairman and Chief Executive Officer of PPG Industries, Inc. From 1981 to 2004, Mr. McGarry progressed through a variety of management positions at PPG, including Market Development Manager, silica products; Operations Manager, silicas; Business Manager, TESLIN® sheet; Product Manager in the derivatives, chlorine, liquid and dry caustic soda businesses; and General Manager, fine chemicals. He was appointed Vice President, chlor-alkali and derivatives in 2004; then Vice President, coatings, Europe, and managing director, PPG Europe in 2006; and Senior Vice President of the Commodity Chemicals reporting segment in 2008. In 2012, he was elected Executive Vice President and then Chief Operating Officer in 2014. Mr. McGarry became President and Chief Operating Officer in March 2015 and joined PPG’s Board of Directors in July 2015. He became President and Chief Executive Officer on September 1, 2015 and Chairman and Chief Executive Officer on September 1, 2016. Mr. McGarry graduated from the University of Texas at Austin with a Bachelor of Science degree in mechanical engineering and completed the Advanced Management Program at Harvard Business School. | | | | | | | Qualifications –
Executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise –
Expertise in public company accounting, risk management, disclosure, financial system management | | | –
Extensive experience in global manufacturing and logistics, operational issues, and business leadership | |
| | Skills & Experience –
Human Capital Talent Development and Labor –
International Markets –
Environmental and Sustainability –
Risk Management | | | | | | Eugene B. Sperling | | | | | | | Age: 62 Director Since: 2017 | | | Committees –
Audit –
Corporate Governance & Sustainability | | | | | | Other Public Company Boards –
None | | | | | | | | | | | | | | Experience Mr. Sperling currently heads Sperling Economic Strategies, which has advised various companies, start-ups, philanthropies and foundations and is author of the recent book, Economic Dignity (Penguin Press, 2020). Mr. Sperling served as Director of the National Economic Council (NEC) and Assistant to the President for Economic Policy in the White House under President Clinton from 1997 to 2001 and under President Obama from 2011 to 2014. Mr. Sperling was co-chair of the first White House Manufacturing Council and helped launch the Select USA initiative. Mr. Sperling also served as counselor to Treasury Secretary Timothy Geithner at the U.S. Department of the Treasury and as a member of the President’s Auto Task Force. He was the founder and director, from 2002 to 2008, of the Center for Universal Education, at Brookings Institution, which specializes in education for girls and boys in developing and conflict-impacted nations. Mr. Sperling graduated from the University of Minnesota and Yale Law School and attended Wharton Business School at the University of Pennsylvania. | | | | | | | Qualifications –
Experience in public policy, economic policy, government affairs, and governance | | | –
Knowledge and insight regarding the economy, market and risk analysis, manufacturing and innovation, the automotive industry, and labor relations | |
| 16 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
PROPOSAL 1: ELECTION OF DIRECTORS2021 Director Nominees
| | Skills & Experience –
Top Level Enterprise/Corporate Leadership –
High Level Financial –
Human Capital Talent Development and Labor –
Customer Centricity and Innovation –
Steel/Related Industry –
Environmental and Sustainability –
Risk Management | | | | | | David S. Sutherland (Chairman of the Board) | | | | | | | Age: 71 Director Since: 2008 | | | Committees –
Executive | | | | | | Other Public Company Boards –
GATX Corporation –
Imperial Oil, Ltd. | | | | | | | | | | | | | | Experience Mr. Sutherland serves as the Corporation’s Independent Chairman. He retired as President and Chief Executive Officer of the former IPSCO, Inc., a leading North American steel producer, in July 2007 after spending 30 years with the company and more than five years as President and Chief Executive Officer. Mr. Sutherland is a former chairman of the American Iron and Steel Institute and served as a member of the boards of directors of the Steel Manufacturers Association, the International Iron and Steel Institute, the Canadian Steel Producers Association and the National Association of Manufacturers. Mr. Sutherland earned a Bachelor of Commerce degree from the University of Saskatchewan and a Master of Business Administration from the University of Pittsburgh’s Katz Graduate School of Business. | | | | | | | Qualifications –
Broad and deep knowledge of the steel industry –
Executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise | | | –
Corporate governance and audit expertise derived from service on boards of other multinational corporations | |
| | Skills & Experience –
Top Level Enterprise/Corporate Leadership –
Human Capital Talent Development and Labor –
Customer Centricity and Innovation –
Technology Transformation –
Environmental and Sustainability –
Risk Management | | | | | | Patricia A. Tracey | | | | | | | Age: 70 Director Since: 2007 | | | Committees –
Audit –
Corporate Governance & Sustainability | | | | | | Other Public Company Boards –
None | | | | | | | | | | | | | | Experience Vice Admiral Tracey retired as Vice President, Homeland Security and Defense Services for HP Enterprise Services in October 2016. She worked with Hewlett Packard Co. in increasingly responsible roles until her retirement, and previously was a Client Industry Executive for business development and performance improvement with Electronic Data System Corporation, which was acquired by Hewlett Packard Co. in August 2008. From 1970 to 2004, Vice Admiral Tracey served in increasingly responsible operational and staff positions with the United States Navy, including Chief of Naval Education and Training from 1996 to 1998, Deputy Assistant Secretary of Defense (Military Personnel Policy) from 1998 to 2001, and Director, Navy Headquarters Staff from 2001 to 2004. Vice Admiral Tracey served as a consultant on decision governance processes to the United States Navy from 2004 to 2005 and to the Department of Defense from 2005 to 2006. She currently advises business owners pursuing opportunities with the U.S. Government. She also serves on the board of trustees of Norwich University and the Board of Directors of Armed Forces Benefits Association. Vice Admiral Tracey holds a Bachelor of Arts degree in Mathematics from the College of New Rochelle and a Master of Science in Operations Research and Systems Analysis from the Naval Postgraduate School. | | | | | | | Qualifications –
Senior executive leadership experience over a 34-year career in the U.S. military –
Deep experience in government affairs, planning and executing large scale organization and workforce transformation strategies, occupational safety and environmental compliance, and governance | | | –
Insight regarding information technology and cybersecurity gained from overseeing implementation of advanced solutions for Department of Defense and Homeland Security agencies | |
2018 Director Nominees – continuedUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 17 |
Murry S. GerberC received a Bachelor's degree in geology from Augustana College and a Master's degree in geology from the University of Illinois. From 1979 to 1998, Mr. Gerber served in a series of technical and management positions with Shell Oil Company, including Chief Executive Officer of Coral Energy, L.P. (now Shell Trading North America) from 1995 to 1998. Mr. Gerber served as Chief Executive Officer and President of EQT Corporation from June 1998 through February 2007; Chairman and Chief Executive Officer from May 2000 through April 2010; and Executive Chairman from April 2010 until May 2011. Mr. Gerber is also a member of the boards of directors of BlackRock, Inc. and Halliburton Company.
Particular experience, attributes or skills that qualify candidate for Board membership:OR Mr. Gerber has valuable experience in overseeing various managerial, financial and operational issues that face a publicly held company as a result of his service as Chairman and Chief Executive Officer of EQT Corporation. Mr. Gerber also provides the Board with knowledge and insight regarding the energy industry, an important supplier to, and customer of, the Corporation. Mr. Gerber's experience on the boards of directors of publicly held companies demonstrates his knowledge of complex strategic financial and operations matters.
Stephen J. GirskyP received a Bachelor of Science degree in mathematics from the University of California at Los Angeles and a Master of Business Administration from the Harvard Business School. Mr. Girsky is Managing Partner of VectoIQ, an independent advisory firm based in New York, where he applied more than 30 years of experience working with senior corporate and board executives, labor leaders, OEM leaders, suppliers and dealers, and national and local policy makers. Mr. Girsky served in a number of capacities at General Motors from November 2009 until July 2014, including GM Vice Chairman, having responsibility for global corporate strategy, new business development, global product planning and program management, global connected consumer/OnStar, and GM Ventures LLC, Global Research & Development and Global Purchasing and Supply Chain. Mr. Girsky served as Chairman of the Adam Opel AG Supervisory Board and was President of GM Europe for a period of time. Mr. Girsky is a director at Brookfield Business Partners, Drive.ai, and Valens Semiconductor Ltd. He served on the General Motors Board of Directors following its emergence from bankruptcy in June 2009 until June 2016. He also served as the lead director of Dana Holdings Corp. from 2008 to 2009. Mr. Girsky has also served as president of Centerbridge Industrial Partners, an affiliate of Centerbridge Partners, LP, and a multibillion dollar investment fund. Prior to Centerbridge, he was a special advisor to the CEO and CFO of General Motors Corporation from August 2005 to June 2006.ORATE
In total, Mr. Girsky has more than 25 years of automotive experience, including serving as managing director at Morgan Stanley and as senior analyst of the Morgan Stanley Global Automotive and Auto Parts Research Team. Prior to joining Morgan Stanley, he was managing director of PaineWebber's Automotive Group and worked as an analyst on the overseas financial staff of GM.
Particular experience, attributes or skills that qualify candidate for Board membership:G Mr. Girsky's career at GM provided him with extensive experience in global corporate strategy, product development, program management, research and development and business leadership. Mr. Girsky also brings to the Board expertise related to the automotive industry, finance, market and risk analysis, and labor relations which add valuable insight and perspective to Board deliberations and in the oversight of the Corporation's operations. Mr. Girsky's service on the board of directors of a Fortune 100 company also demonstrates his knowledge of complex financial and operational issues, all of which strengthen the Board's collective knowledge, capabilities and experience.OVERNANCE
6 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Proposal 1: Election of Directors |
2018 Director Nominees – continued |
Paul A. Mascarenas received a degree in mechanical engineering from University of London, King's College in England and in June 2013, received an honorary doctorate degree from Chongqing University in China. Mr. Mascarenas served as President and Chairman of the Executive Board of FISITA (Fédération Internationale des Sociétés d'Ingénieurs des Techniques de l'Automobile) from 2014 to 2016. Previously, Mr. Mascarenas worked for 32 years at Ford Motor Company, holding various development and engineering positions, and most recently serving as Chief Technical Officer and Vice President, leading Ford's worldwide research organization, overseeing the development and implementation of the company's technology strategy and plans. Mr. Mascarenas is a fellow of the Institution of Mechanical Engineers, and a fellow of the Society of Automotive Engineers. He served as general chairperson for the 2010 SAE World Congress and Convergence and has served on the FISITA board since 2012. Mr. Mascarenas also currently serves on the board of directors at ON Semiconductor, and is a Special Venture Partner with Fontinalis Partners. In 2015, he was awarded an Order of the British Empire (OBE) by Her Majesty, Queen Elizabeth II, for his services to the automotive industry.
Particular experience, attributes or skills that qualify candidate for Board membership: Mr. Mascarenas' long career at Ford provided him with extensive experience in product development, program management and business leadership, as well as experience working in an international forum. Mr. Mascarenas also brings to the Board insight and expertise related to the automotive industry. This experience, along with Mr. Mascarenas' record of demonstrated executive leadership, enables him to provide valued insight and perspective to Board deliberations and in the oversight of the Corporation's operations. Mr. Mascarenas' service on the board of directors of a Fortune 1000 semiconductors supplier company also demonstrates his knowledge of complex financial and operational issues, all of which strengthen the Board's collective knowledge, capabilities and experience.
Eugene B. Sperling graduated from the University of Minnesota and Yale Law School and attended Wharton Business School at the University of Pennsylvania. He currently heads Sperling Economic Strategies, which advises financial companies, start-ups, Fortune 500 companies and philanthropies, and is a contributing editor for The Atlantic.
Mr. Sperling served as Director of the National Economic Council (NEC) and Assistant to the President for Economic Policy in the White House under President Clinton from 1997 to 2001 and under President Obama from 2011 to 2014, the first individual to hold both positions under two presidents. As NEC Director, he coordinated economic policy development among the economic cabinet members. While serving in this role, he was influential in fiscal negotiations, passage of the payroll and low-income tax cuts, the Small Business Jobs Act and formation of the American Jobs Act. He spearheaded the Manufacturing Innovation Hubs initiative and the renewal of the Advanced Manufacturing Partnership. Mr. Sperling was co-chair of the first White House Manufacturing Council and helped launch the Select USA initiative.
Mr. Sperling also served as counselor to Treasury Secretary Timothy Geithner at the U.S. Department of the Treasury and as a member of the President's Auto Task Force. He was the founder and director, from 2002 to 2008, of the Center for Universal Education, which specializes in education for girls and boys in developing and conflict-impacted nations. Mr. Sperling currently serves on the board of directors of Ripple Labs.
Particular experience, attributes or skills that qualify candidate for Board membership: Stemming from his vast experience in government, Mr. Sperling brings to the Board valuable experience in public policy, economic policy, governmental affairs, and governance. He also provides the Board with knowledge and insight regarding market and risk analysis, manufacturing and innovation, the automotive industry, and labor relations, which add valuable insight and perspective to Board deliberations.
United States Steel Corporation | 2018 Proxy Statement |7
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Proposal 1: Election of Directors
|
2018 Director Nominees – continued |
David S. Sutherland earned a Bachelor of Commerce degree from the University of Saskatchewan and a Master of Business Administration from the University of Pittsburgh's Katz Graduate School of Business. Mr. Sutherland retired as President and Chief Executive Officer of the former IPSCO, Inc., a leading North American steel producer, in July 2007 after spending 30 years with the company and more than five as President and Chief Executive Officer. Mr. Sutherland became the independent Chairman of the Board of U. S. Steel on January 1, 2014. Mr. Sutherland is a director of GATX Corporation and Imperial Oil, Ltd. Mr. Sutherland is a former chairman of the American Iron and Steel Institute and served as a member of the boards of directors of IPSCO, Inc., the Steel Manufacturers Association, the International Iron and Steel Institute, the Canadian Steel Producers Association and the National Association of Manufacturers.
Particular experience, attributes or skills that qualify candidate for Board membership: By virtue of his diverse background and experience, Mr. Sutherland has an extraordinarily broad and deep knowledge of the steel industry. As a former Chief Executive Officer, Mr. Sutherland understands the issues facing executive management of a major corporation. His prior experiences enable him to provide the Board with valuable insights on a broad range of business, social and governance issues that are relevant to large corporations.
Vice Admiral Tracey holds a Bachelor of Arts degree in Mathematics from the College of New Rochelle and a Master of Science in Operations Research and Systems Analysis from the Naval Postgraduate School. From 1970 to 2004, Vice Admiral Tracey served in increasingly responsible operational and staff positions with the United States Navy, including Chief of Naval Education and Training from 1996 to 1998, Deputy Assistant Secretary of Defense (Military Personnel Policy) from 1998 to 2001, and Director, Navy Headquarters Staff from 2001 to 2004. Vice Admiral Tracey served as a consultant on decision governance processes to the United States Navy from 2004 to 2005 and to the Department of Defense from 2005 to 2006. She took a position as a Client Industry Executive for business development and performance improvement with Electronic Data System Corporation in 2006. Hewlett Packard Co. acquired Electronic Data Systems Corporation in August 2008. Vice Admiral Tracey left her position as Vice President, Homeland Security and Defense Services with HP Enterprise Services in October 2016. She also serves on the board of trustees of Norwich University and the Board of Armed Forces Benefits Association. She currently consults with US Public Sector, a division of DXC Technology.
Particular experience, attributes or skills that qualify candidate for Board membership: As a result of her military service, Vice Admiral Tracey has valuable experience in governmental affairs, human resources, organizational and workforce development, occupational safety and environment compliance, and governance. She also provides the Board with knowledge and insight regarding information technology and information security and also brings experience in planning large-scale transformation, and in executing multi-year turnarounds.
8 |United States Steel Corporation | 2018 Proxy Statement
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Corporate governance is a continuing focus at U. S. Steel, embraced by the Board of Directors, management, and all employees. The Corporation hasWe have a long and rich tradition relating to corporate governance and public company disclosure, including being one of the first publicly traded companies in United States history to hold an annual meeting of stockholders and to publish an annual report. In this section, we describe some of our key governance policies and practices.
OUR GOVERNANCE PRACTICESFRAMEWORK | | U. S. Steel is committed to maintaining the highest standards of corporate governance and ethical conduct, which we believe are essential for sustained success and long-term stockholder value. In light of this goal, the Board oversees, counsels and directs management in the long-term interests of the Corporation, its stockholders and its customers. Our governance framework gives our highly-experienced directors the structure necessary to provide oversight, advice and counsel to U. S. Steel. The Board’s responsibilities include, but are not limited to: | | | | –
overseeing the management of our business and the assessment of our business risks; –
overseeing the processes for maintaining the integrity of our financial statements and other public disclosures, and compliance with laws and ethical principles; –
reviewing and approving our major financial objectives and strategic and operating plans; | | | –
overseeing our human capital management and succession planning for the CEO and other key executives; and –
establishing an effective governance structure, including appropriate board composition and planning for board succession. | |
U. S. Steel is committed to maintaining the highest standards of corporate governance and ethical conduct, which we believe are essential for sustained success and long-term stockholder value. In light of this goal, the Board oversees, counsels and directs management in the long-term interests of the Corporation, its stockholders and its customers. Our governance framework gives our highly-experienced directors the structure necessary to provide oversight, advice and counsel to U. S. Steel. The Board's responsibilities include, but are not limited to:
•overseeing the management of our business and the assessment of our business risks;
•overseeing the processes for maintaining our integrity with regard to our financial statements and other public disclosures, and compliance with laws and ethical principles;
•reviewing and approving our major financial objectives and strategic and operating plans;
•overseeing our talent management and succession planning for the CEO and other key executives; and
•establishing an effective governance structure, including appropriate board composition and planning for board succession.
The Board discharges its responsibilities through regularly scheduled meetings as well as through telephonic meetings, actions by written consent and other communications with management as appropriate. U. S. Steel expects directors to attend all meetings of the Board and the Board committees upon which they serve, and all annual meetings of the Corporation'sCorporation’s stockholders. –
During the fiscal year ended December 31, 2017,2020, the Board held 10eight meetings and numerous interim conference calls. –
All of the directors attended in excess of 75% of the meetings of the Board and the committees on which they served. –
All but one of the then-serving directors attended the 20172020 Annual Meeting of Stockholders. The Board has long adhered to governance principles designed to assure excellence in the execution of its duties. The Board regularly reviews the Corporation'sCorporation’s governance policies and practices, which are responsive to stockholder feedback. These principles are outlined in our Corporate Governance Principles, which, in conjunction with our certificate of incorporation, by-laws, Board committee charters and related policies, form the framework for the effective governance of the Corporation. The full text of the Corporate Governance Principles, by-laws, the charters for each of the Board committees, and the Corporation's Code of Ethical Business Conduct are available on the Corporation's website, www.ussteel.com. These materials are also available in print to any person, without charge, upon written request to:
Corporate Secretary
United States Steel Corporation
600 Grant Street, Suite 1500
Pittsburgh, PA 15219
United States Steel Corporation | 2018 Proxy Statement |9
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18 | Corporate GovernanceUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Corporate Governance At A Glance
CORPORATE GOVERNANCEOUR GOVERNANCE FRAMEWORK
| | CORPORATE GOVERNANCE MATERIALS | | | | | | | | | | The following materials are available on our website, www.ussteel.com –
Corporate Governance Principles | –
By-laws –
Board Committee Charters –
Code of Ethical Business Conduct | | | These materials are also available in print to any person, without charge, upon written request to: Corporate Secretary
United States Steel Corporation
600 Grant Street, Suite 1884
Pittsburgh, PA 15219 | |
Corporate Governance at A Glance | | Leadership Structure | | | | | Leadership Structure–
| | | | •
Our Chairman is independent. He interacts closely with our Chief Executive OfficerCEO The independent Board members elect our Chairman annually. Among other duties, our Chairman leads executive sessions of the independent directors to discuss certain matters without management present
| | | | | Board Composition | | | | | | | | | Board Composition–
| | | | •
Currently, the Board has fixed the number of directors at 13*
•
The boardBoard regularly assesses its performance through annual Board and committee self-evaluations –
The Corporate Governance & Sustainability Committee periodically updates the board skills analysis to ensure the Board composition is aligned with the strategic needs of the Corporation
| | | | | Board Independence | | | | | | | | | Board Independence–
| | | | •
12
10 out of 1311 of our directorsnominees are independent*independent Our CEO is the only management director
| | | | | Board Committees | | | | | | | | | Board Committees–
| | | | •
We have four Board committees – Executive, Audit, Corporate Governance & Public Policy,Sustainability, and Compensation & Organization With the exception of the Executive Committee (our Chairman Committee Chairs and CEO serve on this committee), all other committees are composed entirely of independent directors
| | | | | Management Succession Planning | | | | | | | | | Management–
Succession Planning
|
| | | •
The Board actively monitors our succession planning and peopletalent development and receives regular updates on employee engagement, inclusion and diversity, and retention matters –•
At least twice per year, the
The Board regularly reviews senior management succession and development plans
| | | | | | | | | | | | | Director Stock Ownership | | | | Our directors are required to receive at leastmore than half of their annual retainer in shares of our common stock – and must hold these shares during their entire tenure on the Board | | | | | Risk Oversight | | | | | | | | | Risk Oversight–
| | | | •
Our full Board is responsible for risk oversight, and has designated committees to have particular oversight of certain key risks.risks Our Board oversees management as management fulfills its responsibilities for the assessment and mitigation of risks and for taking appropriate risks
| | | | | Accountability to Stockholders | | | | | | | | | Accountability to–
Stockholders
|
| | | •
We use majority voting in uncontested director elections We have annual election of directors We implemented a "3-3-20" proxy access by-law provision in line with market standards, which enables certain of our stockholders to nominate directors and have their eligible nominees included in the proxy statement with our nominees We actively reach out to our stockholders through our engagement program Stockholders can contact our Board, our Chairman or management by regular mail
| | | | or email | | | | | | | | |
*Following the 2018 Annual Meeting, the Board will have 10 members, 9 of which are independent.
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 19 |
CORPORATE GOVERNANCEBOARD LEADERSHIP STRUCTURE BOARD LEADERSHIP STRUCTURE The Board regularly considers the appropriate leadership structure for the Corporation. It has concluded that the Corporation and its stockholders are best served by the Board retaining discretion to determine whether the same individual should serve as both Chief Executive Officer and Chairman of the Board, or whether the Chairman of the Board should be an independent director. The Board believes that it is important to retain the flexibility to make this determination at any given point in time based on what it believes will provide the best leadership structure for the Corporation, taking into account the needs of the Corporation at that time. Due to the high level of transition in the Corporation's executive leadership and the dynamic business environment in 2013 and 2014, the Board chose to implement a non-executive, independent Chairman role in January 2014 to allow the Chief Executive Officer to strategically focus on the associated business challenges. David S. Sutherland currently serves as the independent Chairman of the Board. If the Chairman of the Board is not independent, then the independent directors annuallywill elect from among themselves a Lead Director. The Chairman (or Lead Director) is elected annually by the Board. If the Chairman of the Board is independent, then the Chairman'sChairman’s duties also include the duties of the Lead Director. The duties of the Lead Director are as follows: •chair executive sessions of the non-employee directors;
•serve as a liaison between the Chief Executive Officer and the independent directors;
•approve Board meeting agendas and, in consultation with the Chief Executive Officer and the independent directors, approve Board meeting schedules to ensure there is sufficient time for discussion of all agenda items;
•approve the type of information to be provided to directors for Board meetings;
•be available for consultation and direct communication with the Corporation's stockholders;
•call meetings of the independent directors when necessary and appropriate; and
•perform other duties as the Board may from time to time designate.
| | Lead Director Duties: | | | | –
chair executive sessions of the non-employee directors; –
serve as a liaison between the CEO and the independent directors; –
approve Board meeting agendas and, in consultation with the CEO and the independent directors, approve Board meeting schedules to ensure there is sufficient time for discussion of all agenda items; | | | –
approve the type of information to be provided to directors for Board meetings; –
be available for consultation and direct communication with the Corporation’s stockholders; –
call meetings of the independent directors when necessary and appropriate; and –
perform other duties as the Board may from time to time designate. | |
10 |United States Steel Corporation | 2018 Proxy Statement
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| 20 | Corporate GovernanceUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
CORPORATE GOVERNANCEBOARD'SBOARD’S ROLE IN RISK OVERSIGHT
Pursuant to its charter, the Audit Committee
BOARD’S ROLE IN RISK OVERSIGHT The Board of Directors is responsible for reviewing and discussing the Corporation's policies with respect to the assessmentoversight of risks and risk management, including the following:•the guidelines and policies that govern the process by which the assessment and management of the Corporation's exposure to risk are handled by senior management; and
•the Corporation's major risk exposures and the steps management has taken to monitor and control such exposures.
The Corporation's Internal Audit group provides regular reports to the Audit Committee on the results of various internal audit projects and provides recommendations for the enhancement of operational functions in order to reduce certain risks. Although the Audit Committee has primary responsibility for overseeing risk management, each of our other Board committees also considers the risks within their specific areas of responsibility. For example, the charter of the Compensation & Organization Committee gives it responsibility for assessing whether the Corporation's compensation and organization policies and practices for executives and non-executives are reasonably likely to create a risk that could have a material adverse effect on the Corporation. Pursuant to its charter, the Corporate Governance & Public Policy Committee considers the risks
associated with legislative, regulatory and public policy issues affecting the Corporation's businesses and operations. Each committee regularly reports to the full Board on its respective activities, including, when appropriate, those activities related to risk assessment and risk management oversight.
impacting U. S. Steel. The Board, as a whole, also considers risk assessment and risk management. For example, theThe Board annually reviews the Corporation'sCorporation’s strategic plan which includes a review of risks related to: safety, environmental, operating and competitive matters; political, and regulatory issues; employee and labor issues; and financial results and projections. Management regularly provides updates toAlthough the Board related to legal and compliance risks and cyber-security matters. The Chief Risk Officer is responsibleAudit Committee has primary responsibility for the Corporation's financial and businessoverseeing risk management, includingeach of our other Board committees also considers the assessment, analysis and monitoringrisks within its specific areas of business risk and opportunities and the identification of strategies for managing risk. The Chief Risk Officer provides regularresponsibility. Each committee regularly reports to the Audit Committeefull Board on its respective activities, including, when appropriate, those activities related to risk assessment and Board of Directors on these matters.
The Corporation believes that its leadership structure, as described above, supports the Board's role in risk management oversight.
![[MISSING IMAGE: tm212306d1-tb_auditpn.gif]](https://files.docoh.com/DEF 14A/0001104659-21-035691/tm212306d1-tb_auditpn.gif) | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 21 |
CORPORATE GOVERNANCEBOARD OVERSIGHT OF STRATEGY BOARD OVERSIGHT OF STRATEGY A primary responsibility of our Board is oversight of our business strategy. At each regular Board meeting throughout the year, our Board reviews our strategy, operating plans, and overall financial performance, and progress on each, and provides significant guidance and feedback. In addition, at least one multi-day meeting each year is dedicated to focus on our long-term strategic planning. The Board also devotes significant time to reviewing our capital allocation strategy aligned with the Best of Both strategy. Annually, our Board reviews and approves our capital authorization and spending budgets, which are designed to strategically deploy capital intended to facilitate investments required to achieve operational excellence, drive business growth andgrow profitability, generate strong returns. Ourreturns and improve sustainability performance. The primary goal of our capital allocation strategy is aligned to supportcreate long-term stockholder value driven by three priorities for cash: –
investing in new, lower capital intensity technologies and innovation to achieve our strategic priorities, with a focus on preserving a strongBest of Both strategy; –
reinvesting in our current assets to advance operational excellence to deliver high-quality products and service to our customers; and –
maintaining our balance sheet a strong liquidity profile and financial flexibility. priorities that are supportive of the Corporation’s strategic objectives. To oversee management'smanagement’s performance in executing our strategy, the Board receives regular updates and actively engages in dialogue with our executive management team. Members of our Board also periodically visit our facilities to monitor the execution of our strategy in our business units,operating segments, and to assess areas for improvement or potential risk. BOARD OVERSIGHT OF SUCCESSION PLANNING Our Board and management consider succession planning and professional development to be an integral part of the Corporation'sCorporation’s long-term strategy. The Compensation & Organization Committee is responsibleBoard and management have a robust, well-developed succession planning process that not only develops internal leadership candidates, but also considers external leadership candidates for monitoring our managementtop executive roles. Our Board discusses succession and development plans and receives regular updates on employee engagement, diversity and retention matters, which are reported to the full Board. At least twice annually, ourplanning at each of its quarterly meetings. Our full Board reviews senior management succession and development plans with our CEO. Our CEO then presents to the independent directors his evaluations and recommendation of future candidates for the CEO position and other senior leadership roles and potential succession timing for those positions, including under emergency circumstances. The Board also reviews and discusses development plans for individuals identified as high-potential candidates for senior leadership positions. The Board and the Compensation Committee are responsible for monitoring our management succession and leadership development plans. Our Corporate Governance Principles require all executive officers to retire at age 65. The Compensation Committee may, in its discretion, waive that requirement, and did waive it for Mr. Burritt and Ms. Breves.BOARD OVERSIGHT OF CULTURE AND HUMAN CAPITAL MANAGEMENT Moving up the talent curve is a critical success factor to achieving our corporate strategy. Because we believe U. S. Steel will only be able to successfully execute on its strategic priorities with the full engagement of a talented workforce, the Board and its committees oversee human capital management. The Board receives periodic reports on the results of employee engagement or inclusion surveys, the collective bargaining process and relationship between management and the United Steelworkers, relevant workforce metrics, including related to inclusion and diversity, talent development, and pay equity analysis and hiring practices. The Board also believes that visits to facilities enable it to judge the Corporation’s culture first-hand. While safety concerns have limited visitation to our facilities, as part of our onboarding process, each new director elected in 2020 visited our Mon Valley Works facility. These experiences enable the Board to judge whether the Corporation is adopting business practices that create the engaged and stable workforce needed to achieve its long-term strategy. | 22 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
CORPORATE GOVERNANCEBOARD AND COMMITTEE EVALUATION PROCESS BOARD AND COMMITTEE EVALUATION PROCESS Each year, the Board conducts annual self-evaluations to determine whether it and its committees are functioning effectively and whether its governing documents continue to remain appropriate. In 2018, the Board enhanced its typical evaluation process by engaging in a robust review of the effectiveness of the Board, conducted by an independent advisor. Each standing committee, other than the Executive Committee, annually reviews its own performance and reports the results and any recommendations to the Board. The process is designed and overseen by the Corporate Governance & Sustainability Committee. Annual Board and Committee Self-Evaluations STEP 1 Questionnaire | | | STEP 2 Board Assessment | | | STEP 3 Individual Interviews | | | STEP 4 Evaluation Results | | | Step 5 Follow up Actions | | | Directors respond to a wide range of questions related to topics including operations, composition of the Board, responsibilities, governing documents and resources. | | | The Board evaluation includes an assessment of whether the Board has the appropriate mix of skills, experience and other characteristics, and is made up of a sufficiently diverse group of people. | | | The Chairman of the Board conducts individual interviews with each director to discuss Board, committee and director performance and effectiveness. | | | Results of the evaluations are discussed by the full Board. | | | Feedback from this evaluation process is used to make any necessary changes to Board practices, composition, size and other matters. | |
BOARD REFRESHMENT Our Board maintains a robust process in which the members focus on identifying, consideringto identify, consider and evaluatingevaluate potential board candidates. Our Corporate Governance & Public PolicySustainability Committee leads this process by considering prospective candidates at its meetings. In identifying appropriate candidates through a thoughtful evaluation, supported by its outside consultants, the committee is focused on aligning the skills, experience and characteristics of our Board with the strategic development of the company. U. S. Steel. A primary goal is to ensure sufficient Board diversity so that its membership consists of individuals with a variety of backgrounds, skills, experience and attributes. Among other things, the members aim to strike a balance between the knowledge that comes from longer-term service on the Board with the fresh insights that can come from United States Steel Corporation | 2018 Proxy Statement |11
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adding new members to the Board. The Board has been undergoing a deliberate refreshment effort over the past several years to add important skills, experience and diversity, to oversee our corporate strategy. In the last four years, five highly qualified independent directors have joined our Board. The following shows our board refreshment process: Identification of Candidates
The Corporate Governance & Public Policy Committee reviews candidates identified by an independent search firm or recommended by our directors, officers or stockholders, taking into consideration the qualifications and requirements outlined in our Corporate Governance Principles, as well as the skills and experience already represented on the Board.
Assessment and Interviews
The committee seeks input from other Board members and senior management to evaluate nominees for director and
interviews appropriate candidates to confirm their qualifications, interest and availability for Board service.
Nomination and Election
Upon a recommendation from the Corporate Governance & Public Policy Committee, the Board determines whether to elect a director candidate and optimal committee placement.
Onboarding
We conduct a comprehensive onboarding process for new directors, including site visits, to provide an understanding of our business, opportunities and challenges.
![[MISSING IMAGE: tm212306d1-tb_refreshpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-21-035691/tm212306d1-tb_refreshpn.jpg) BOARD SELF-ASSESSMENTS
Each year, the Board conducts annual self-evaluations to determine whether it and its committees are functioning effectively and whether its governing documents continue to remain appropriate. Our Board's self-evaluation is facilitated by a wide range of questions related to topics including operations, composition of the board, responsibilities, governing documents and resources. The Board evaluation also includes an assessment of whether the Board (i) has the appropriate mix of skills, experience and other
characteristics, including those described earlier, and (ii) is made up of a sufficiently diverse group of people. The process is designed and overseen by the Corporate Governance & Public Policy Committee, and the results of the evaluations are discussed by the full Board.
Each standing committee, other than the Executive Committee, annually reviews its own performance and reports the results and any recommendations to the Board.
INDEPENDENCE
The following non-employee directors are independent within the definitions of independence of both the New York Stock Exchange (NYSE) listing standards and the U.S. Securities and Exchange Commission (SEC) standards for Audit Committee members: Patricia Diaz Dennis, Dan O. Dinges, John G. Drosdick, John J. Engel, Murry S. Gerber, Stephen J. Girsky, Paul A. Mascarenas, Glenda G. McNeal, Eugene B. Sperling, Robert J. Stevens, David S. Sutherland and Patricia A. Tracey. The Corporation has incorporated the NYSE and SEC independence standards into its own categorical standards for independence. The Board has affirmatively determined that none of the directors or nominees for director, other than Mr. Burritt, has a material relationship with the Corporation. The Board made such determination based on all relevant facts and circumstances.
In making its determination of director independence, the Board of Directors considered the fact that U. S. Steel purchased certain goods and services from WESCO International, Inc. (WESCO) in 2017. Mr. Engel is the Chairman, President and Chief Executive Officer of WESCO. The Board determined that Mr. Engel did not have a direct or indirect material interest in these transactions and that the transactions were undertaken in the ordinary course of business. In addition, the value of materials purchased by U. S. Steel in 2017 was less than 2% of WESCO's annual gross revenues. As a result, the Board concluded that these transactions would not affect Mr. Engel's independence.
Additionally, the Board considered the fact that U. S. Steel indirectly sold products to Cabot Oil & Gas Corporation ("Cabot") in 2017. Mr. Dinges is the Chairman, President and Chief Executive Officer of Cabot. The Board determined that Mr. Dinges did not have a direct or indirect material interest in these transactions and that the transactions were undertaken in the ordinary course of business, and that the products sold by U. S. Steel were less than 2% of Cabot's annual gross revenues. Accordingly, the Board concluded that these transactions would not affect Mr. Dinges' independence.
The Board affirmatively determined that each member of the Audit Committee: (i) did not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Corporation or any of its subsidiaries, (ii) was not an affiliated person of the Corporation or any of its subsidiaries, and therefore (iii) satisfied the NYSE's enhanced independence standards for audit committee members.
The Board also determined that: (i) no member of the Compensation & Organization Committee has a relationship to the Corporation which is material to that director's ability to be independent from management in connection with the duties of a compensation committee member, and (ii) each member of the Compensation & Organization Committee therefore satisfies the independence requirements of NYSE listing standards.
12 |United States Steel Corporation | 2018 Proxy Statement
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Corporate GovernanceUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 23 |
DIRECTOR RETIREMENT POLICY
Our Corporate Governance Principles require any non-employee director to retire at the first annual meeting of stockholders after he or she reaches the age of 74. However, the Board may grant exceptions to this policy on a case-by-case basis.
Each employee director must retire from the Board when he or she ceases to be an executive officer of the Corporation, except that the Chief Executive Officer may remain on the Board after retirement as an employee, at the Board's request, through the last day of the month in which he or she turns 70.
Our Corporate Governance Principles also provide that directors who undergo a significant change in their business or professional careers shall volunteer to resign from the Board.
At the 2018 Annual Meeting of Stockholders, Mr. Drosdick's term will expire and he will retire from the Board pursuant to the mandatory director retirement policy.
CORPORATE GOVERNANCEBOARD COMMITTEES Under our by-laws and the general corporation law of the State of Delaware, U. S. Steel'sSteel’s state of incorporation, the business and affairs of U. S. Steel are managed under the direction of the Board of Directors. The non-employee directors hold regularly scheduledhold executive sessions without management. The directors spend considerable time preparing for Board and committee meetings.The Board has three principalstanding committees, each of which is comprised exclusively of independent directors: (i) the Audit Committee; (ii) the Compensation & Organization Committee; and (iii) the Corporate Governance & Public PolicySustainability Committee.
Each of the principalstanding committees has a written charter adopted by the Board, which areis available on the Corporation's Corporation’s website (www.ussteel.com). The committee charters are regularly reviewed and updated to incorporate best practices and prevailing governance trends. The Board also has an Executive Committee that acts on, and reports to the Board on, routine or delegated matters that arise between Board meetings.
Each principalstanding committee is required to have at least three members, each of whom is considered independent. Each of the principalstanding committee charters require the committee to perform a self-evaluation and review its charter annually. Each committee may in its sole discretion, retain or obtain the advice of outside advisers,advisors, including any consultant, independent legal counsel or other adviser,advisor, at the Corporation'sCorporation’s expense to assist the committee in fulfilling its duties and responsibilities. The table below shows the current committee memberships of our directors:
THE TABLE BELOW SHOWS THE CURRENT COMMITTEE MEMBERSHIPS OF OUR DIRECTORS: | | Director | | | Audit
Committee | | | Compensation &
Organization
Committee | | | Corporate
Governance &
Sustainability
Committee | | | Executive
Committee | | | | Tracy A. Atkinson | | | ■ | | | ■ | | | | | | | | | | David B. Burritt | | | | | | | | | | | | ■ | | | | Patricia Diaz Dennis | | | | | | ■ | | | ■ | | | | | | | Dan O. Dinges | | | | | | ■ | | | | | | | | | | John J. Engel | | | | | | ■ | | | ■ | | | | | | | John V. Faraci | | | ■ | | | ■ | | | | | | | | | | Murry S. Gerber | | | ■ | | | | | | | | | | | | | Stephen J. Girsky | | | | | | | | | ■ | | | | | | | Jeh C. Johnson | | | ■ | | | | | | ■ | | | | | | | Paul A. Mascarenas | | | ■ | | | | | | ■ | | | | | | | Michael H. McGarry | | | ■ | | | ■ | | | | | | | | | | Eugene B. Sperling | | | ■ | | | | | | ■ | | | | | | | David S. Sutherland (Chairman of Board) | | | | | | | | | | | | ■ | | | | Patricia A. Tracey | | | ■ | | | | | | ■ | | | | | | | TOTAL MEETINGS HELD IN 2020: | | | 5 | | | 6 | | | 5 | | | | | | |
■ Member ■ Chair | | | | | | | | | | | | | | | | | | | Director
| | Audit
Committee
| | Compensation &
Organization
Committee
| | Corporate
Governance
& Public Policy
Committee
| | Executive
Committee
|
|---|
| | | | | | | | | | David B. Burritt | | | | | | | | X | | | | | | | | | | | Patricia Diaz Dennis | | | | X | | X | | | | | | | | | | | | | Dan O. Dinges | | | | C | | | | X | | | | | | | | | | | John G. Drosdick | | | | X | | | | | | | | | | | | | | | John J. Engel | | C | | | | | | X | | | | | | | | | | | Murry S. Gerber | | X | | X | | | | | | | | | | | | | | | Stephen J. Girsky | | X | | | | X | | | | | | | | | | | | | Paul A. Mascarenas | | X | | | | X | | | | | | | | | | | | | Glenda G. McNeal | | X | | | | X | | | | | | | | | | | | | Eugene B. Sperling | | X | | | | X | | | | | | | | | | | | | David S. Sutherland* | | | | | | | | X | | | | | | | | | | | Robert J. Stevens | | | | X | | X | | | | | | | | | | | | | Patricia A. Tracey | | | | X | | C | | X | | | | | | | | | | | TOTAL MEETINGS HELD: | | 5 | | 6 | | 5 | | | | | | | | | | | | |
C = Committee Chair.
*Chairman of the Board.
United States Steel Corporation | 2018 Proxy Statement |13
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| | Chair:
Murry S. Gerber* Members: Tracy A. Atkinson*
Michael H. McGarry*
John V. Faraci*
Eugene B. Sperling
Jeh C. Johnson
Patricia A. Tracey
Paul A. Mascarenas All members are “financially literate.” *These four directors meet the SEC’s definition of an “audit committee financial expert.” No member of the Audit Committee serves on the audit committees of more than two other publicly traded companies. | | | | | | AUDIT | | | | | | | Duties and Responsibilities –
Review and discuss with management and the independent registered public accounting firm matters related to the annual audited financial statements, quarterly financial statements, earnings press releases and the accounting principles and policies applied; –
Review and discuss with management and the independent registered public accounting firm matters related to the Corporation’s internal controls over financial reporting; –
Review the responsibilities, staffing and performance of the Corporation’s internal audit function; –
Review issues regarding the Corporation’s compliance with legal or regulatory requirements and corporate policies dealing with business conduct; –
Be responsible for the appointment (subject to stockholder ratification), compensation, retention, and oversight of the Corporation’s independent registered public accounting firm. The committee has the sole authority to approve all audit engagement fees and terms as well as all non-audit engagements with the firm; and –
Discuss policies regarding risk assessment and risk management, including overseeing cybersecurity risk. | |
24 | Corporate GovernanceUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
CORPORATE GOVERNANCEBOARD COMMITTEES
| Audit Chair:
Dan O. Dinges*
Members: Tracy A. Atkinson
John V. Faraci
Patricia Diaz Dennis
Michael H. McGarry
John J. Engel Committee agendas are established in consultation with management, the Compensation Committee chair and the independent compensation consultant, Pay Governance. The Compensation Committee meets in executive session without management for a portion of each regular meeting *
Following Mr. Dinges’ retirement at the Annual Meeting, Mr. Faraci will serve as Chair of this committee. | | | | | | COMPENSATION & ORGANIZATION | | | | | | | Duties and Responsibilities –
Determine and approve ,with the Board, the CEO’s compensation based on the evaluation of the CEO’s performance; –
Determine and approve, with input from the CEO, the compensation of the Corporation’s executive officers; –
Review the Corporation’s executive management succession plans annually with the Board; –
Assess whether the Corporation’s compensation policies and practices are reasonably likely to create a risk that could have a material adverse effect on the Corporation; –
Assess the independence of the Corporation’s executive compensation consultant; and –
Consider the most recent stockholder advisory vote on executive compensation. The Compensation Committee retains Pay Governance, LLC as its independent executive compensation consultant. A representative of Pay Governance attended all meetings of the Compensation Committee in 2020. | |
Pursuant to its charter, the Audit Committee's duties and responsibilities include:
•reviewing and discussing with management and the independent registered public accounting firm matters related to the annual audited financial statements, quarterly financial statements, earnings press releases and the accounting principles and policies applied;
•reviewing and discussing with management and the independent registered public accounting firm matters related to the Corporation's internal controls over financial reporting;
•reviewing the responsibilities, staffing and performance of the Corporation's internal audit function;
•reviewing issues that arise with respect to the Corporation's compliance with legal or regulatory requirements and corporate policies dealing with business conduct;
•being directly responsible for the appointment (subject to stockholder ratification), compensation, retention, and oversight of the work of the Corporation's independent registered public accounting firm, while possessing the sole authority to approve all audit engagement fees and terms as well as all non-audit engagements with such firm; and
•discussing policies with respect to risk assessment and risk management.
The Audit Committee annually requests PriceWaterhouseCoopers LLP (PwC) to prepare a self-assessment utilizing the Center for Audit Quality, External Auditor Assessment Tool. This best practice assists the Audit Committee in its oversight role and annual evaluation of PwC to assess the quality of the audit and to recommend the retention of PwC. Based on this assessment, we believe the quality of PwC's services, communication and interaction with the Audit Committee is of a high standard.
The charter also requires the Audit Committee to be comprised of at least three directors, each of whom is financially literate, and at least one of whom must have accounting or related financial management expertise. Under the charter, no director who serves on the audit committees of more than two other public companies may serve on the Audit Committee, unless the Board determines that such simultaneous service will not impair the ability of such director to effectively serve on the Audit Committee. No member of the Audit Committee serves on the audit committees of more than two other publicly traded companies. The Board has determined that John J. Engel, the Committee's chairman, Murry S. Gerber and Stephen J. Girsky meet the SEC's definition of audit committee financial expert.
| | Chair:
Stephen J. Girsky* Members: Patricia Diaz Dennis
Paul A. Mascarenas
John J. Engel
Eugene B. Sperling
Jeh C. Johnson
Patricia A. Tracey The Committee has the sole authority to retain and terminate any search firm used to identify director candidates, including sole authority to approve the search firm’s fees and other retention terms. *
Following Mr. Girsky’s retirement at the Annual Meeting, Mr. Engel will serve as Chair of this committee. | | | | | | CORPORATE GOVERNANCE & SUSTAINABILITY | | | | | | | Duties and Responsibilities –
Identify, evaluate and recommend nominees for director; –
Make recommendations to the Board concerning the appropriate size and composition of the Board and its committees; –
Make recommendations to the Board concerning the compensation of non-employee directors; –
Recommend to the Board a set of corporate governance principles applicable to the Corporation, reviewing these principles annually and recommending appropriate changes to the Board; –
Review and discuss risk matters relating to legislative, regulatory and public policy issues affecting the Corporation’s businesses and operations; –
Review public policy issues likely to be of interest to various stakeholders of the Corporation, including employee health and safety, environmental, energy and trade matters; –
Review and approve codes of conduct applicable to the Corporation’s employees and directors; and –
Review the Corporation’s environmental stewardship and sustainability performance, and its practices for consistency with the values of good corporate citizenship. | |
Compensation & Organization Committee
|
Pursuant to its charter, the Compensation & Organization Committee's duties and responsibilities include:
•determining and approving, with the Board, the CEO's compensation level based on the evaluation of the CEO's performance;
•approving the compensation of the "executive officers" of the Corporation as defined under Section 16 of the Securities Exchange Act of 1934;
•reviewing the Corporation's executive management succession plans annually with the Board;
•administering the plans and programs under which short-term and long-term incentives are awarded to executive officers and approving such awards;
•assessing whether the Corporation's compensation and organization policies and practices are reasonably likely to create a risk that could have a material adverse effect on the Corporation;
•considering the most recent stockholder advisory vote on executive compensation in connection with determining executive compensation policies and decisions;
•reviewing with management and recommending to the Board the Compensation Discussion and Analysis (CD&A) section of the proxy statement and producing the committee report for inclusion in the proxy statement; and
•adopting and amending certain employee benefit plans and designating participants therein.
The Compensation & Organization Committee has retained Pay Governance, LLC as its consultant to assist it in evaluating executive compensation. The consultant reports directly to the Compensation & Organization Committee. The Compensation & Organization Committee retains sole authority to hire the consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement. A representative of the consultant attended all in-person meetings of the Compensation & Organization Committee in 2017.
The consultant provides various executive compensation services to the Compensation & Organization Committee, which generally include advising the Compensation & Organization Committee on the principal aspects of our executive compensation program and changing industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relationship to their performance.
During 2017, the consultant performed the following specific services:
•provided presentations on executive compensation trends, and best practices and recent developments;
14 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 25 |
CORPORATE GOVERNANCEU. S. STEEL’s SUSTAINABILITY FRAMEWORK
U. S. STEEL’s SUSTAINABILITY FRAMEWORK U. S. Steel is an integrated steel producer of high-quality, value added steel products that serve as the building blocks of a sustainable future. With differentiated products and a goal of low impact manufacturing, we are doing our part to realize a low carbon economy. U. S. Steel is empowering its people to innovate new solutions that manufacture products with a low carbon footprint, all the while decreasing the impact on human health and the environment. Outside of the organization, U. S. Steel is engaging the community and working with local leaders to develop a better neighborhood for the communities where we operate. Our Board oversees our sustainability program primarily through the Corporate Governance & Sustainability Committee. The Corporate Governance & Sustainability Committee reviews sustainability as a standing agenda item at each quarterly meeting, including reports and discussions on sustainability strategic priorities, implementation of the greenhouse gas (GHG) emissions intensity reduction target, and the use of reporting and disclosure frameworks. It also makes recommendations to the Board and monitors compliance with the Corporation programs and practices regarding government relations and political contributions, corporate philanthropy and stockholder engagement. | 26 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
CORPORATE GOVERNANCEU. S. STEEL’s SUSTAINABILITY FRAMEWORK
•prepared competitiveEmployee Health & Safety
At U. S. Steel, we have a long-standing commitment to the safety and health of the men and women who work in our facilities. Every employee deserves to return home safely at the end of every day, and we are working to eliminate all injuries and incidents. In addition, the psychological safety of all employees is important to us. We have combined physical safety and psychological safety into the construct of 360° safety. Ensuring a safe workplace also improves productivity, quality, reliability and financial performance. By making safety and health a personal responsibility, our employees are making a daily commitment to follow safe work practices, look out for the safety of co-workers and ensure safe working conditions for everyone. A “Safety First” mindset is as essential to our success as the tools and technologies we rely on to do business. This past year, we relied on our strong safety culture to ensure the health and safety of our employees during the COVID-19 pandemic. Our objective is to attain a sustainable zero harm culture supported by leadership and owned by an engaged and highly skilled workforce, empowered with the capabilities and resources needed to assess, reduce, and eliminate workplace risks and hazards. In support of these objectives, we have developed an enhanced Safety Management System, initiated new safety communication methods and enhanced contractor safety processes. One of our most important safety protocols is our fatality prevention audit program. These proactive assessments by positionof the processes and protocols we have in place, and adherence to them, to avoid fatalities and severe injuries are conducted annually at the enterprise level and more frequently at each of our facilities. We assess our safety performance through a variety of lagging and leading indicators, including OSHA DAFW. This measurement allows us to evaluate the frequency of injuries sustained at our facilities requiring an employee to stay at home for each element of compensation and for compensationmore than one day. U. S. Steel has achieved record-safety performance in this measurement in the aggregate;
•reviewed draftslast several years, routinely achieving performance better than industry benchmarks.For 2020, we had a corporate DAFW rate of 0.07, which is 8x better than the U.S. Bureau of Labor Statistics' Iron and commentedSteel benchmark DAFW rate of 0.60. Protection of the Environment U. S. Steel is committed to effective environmental stewardship. We have implemented and continue to develop business practices that are environmentally effective. We believe part of being a good corporate citizen requires a dedicated focus on how our industry affects the environment. We continue to work on the CD&Apromotion of cost-effective environmental strategies through the development of appropriate air, water and related compensation tableswaste laws and regulations at the local, state, national and international levels. We are committed to reducing our emissions and are investigating, creating and implementing innovative, best practice solutions throughout our operations to improve our environmental performance and to manage and reduce energy consumption. In 2020 alone, U. S. Steel recycled 3.0 million tons of purchased and produced steel scrap. Because of steel’s physical properties, our products can be recycled at the end of their useful life without loss of quality, contributing to steel’s high recycling rate and affordability. Many of our major production facilities have Environmental Management Systems that are certified to the ISO 14001 Standard. This standard, published by the International Organization for Standardization (ISO), provides the framework for the proxy statement;
•reviewed the peer group used for compensation benchmarking purposesmeasurement and recommended changes, if appropriate; and
•attended executive sessionsimprovement of environmental impacts of the Compensationcertified facility.By using the blast furnace and coke oven gas generated in our cokemaking and steelmaking activities to power our facilities, we avoided consuming natural gas and other fuels from 2018 to 2020 to heat more than 3.4 million households each year. In 2020, we recycled approximately 3.3 million tons of blast furnace slag and 0.4 million tons of steel slag by selling it for use as aggregate and in highway construction.
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 27 |
CORPORATE GOVERNANCEU. S. STEEL’s SUSTAINABILITY FRAMEWORK
| | Reduction of Greenhouse Gas Emissions | | | | In 2019, as part of our strategy to become the Best of Both in the steel industry, U. S. Steel announced its commitment to reduce greenhouse gas ("GHG") emissions intensity across its global footprint. U. S. Steel set a goal to reduce its global greenhouse gas emissions intensity by 20% as measured by the rate of CO2 equivalents emitted per ton of finished steel shipped, by 2030 based on 2018 baseline levels. This target will apply to U. S. Steel’s global operations. These reductions are equivalent to the amount of CO2 being generated by more than 850,000 average-sized homes each year. By creating targeted carbon reduction initiatives to accelerate our transformation toward a future of sustainable steel, we create value for all stakeholders. The carbon intensity reduction target reflects our continued commitment to improvement in production efficiency and the manufacture of products that are environmentally friendly. In addition to a commitment to reduce its own greenhouse gas emissions intensity, U. S. Steel is committed to helping its customers achieve their environmental goals. Our industry-leading XG3TM advanced high-strength steel enables automakers to manufacture lighter weight vehicles that meet federal Corporate Average Fuel Economy (CAFE) standards with reduced carbon emissions. As part of our innovation efforts, we continue to look at new steelmaking technologies so that we can produce green steels and further reduce carbon emissions. | | | | |
Human Capital Management At U. S. Steel, we are focused on attracting and retaining the top talent needed to support our strategic transformation and meet our customers’ evolving needs as a sustainable steel solutions provider. The support and development of our people is foundational to achieving our Best of Both strategy. We refer to this strategic talent pillar as “Moving Up the Talent Curve.” Our focus on people extends to our current and future employees. We aim to have an engaged and diverse workforce to promote new ideas and innovation, reflect the communities where we operate, and deliver exceptional customer service. We seek to build an inclusive environment where people feel free to bring their whole selves to work. To achieve the Best of Both strategy, we must have the “Best from All.” More about our focus on people and human capital management can be found in our Sustainability Report, available on our website (www.ussteel.com). Ethics & Organization Committee.The consultant provided no servicesCompliance
Our culture is based on our S.T.E.E.L. Principles: Safety First; Trust and Respect; Environmentally Friendly Activities; Ethical Behavior; and Lawful Business Conduct. We expect our employees and members of our Board to take personal responsibility to “do what’s right,” and our Code of Ethical Business Conduct serves as the foundation for the actions of our employees and directors. To further ensure that employees understand the Corporation’s expectations and all applicable rules, we provide formal ethics and compliance training to our employees and have frequent communication with information about key compliance topics, which include messages from senior management during 2017.The Compensation & Organization Committee has assessedunderscoring the independenceimportance of doing business with integrity. Employees also receive summaries of current events that demonstrate the need to do business lawfully that include reminders of the consultant pursuantCorporation’s expectations for all employees. In addition, through our annual policy certification process, employees and directors certify their ongoing compliance with our Code of Ethical Business Conduct.
| 28 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
CORPORATE GOVERNANCEU. S. STEEL’s SUSTAINABILITY FRAMEWORK
| | Inclusion & Diversity | | | | Attracting, developing, and retaining a workforce of talented, diverse people is essential to having high-performing teams that drive results for our Corporation’s stakeholders. As part of our commitment to cultivating a culture of caring, we have inclusive benefits available for our U.S. non-represented workforce, including expanded parental leave, back-up dependent care, infertility coverage, gender reassignment coverage and healthcare continuation for the families of employees who suffered work-related or military service fatalities. In 2020, U. S. Steel earned a 100% score on the Human Rights Campaign’s annual Corporate Equality Index in recognition of our comprehensive and inclusive benefits for the second year in a row. Our Employee Resource Groups We also support several employee resource groups (ERGs) to enhance employee engagement, promote a culture of acceptance, foster diversity in the workplace, and raise awareness related to issues of identity and intersectionality. Our ERGs also provide leadership development, mentorship and networking opportunities for their members. Our ERGs involve employees throughout the organization and offer opportunities for sharing experiences, strategies and success. Collectively, our ERGs drive awareness, strengthen employee engagement, and create internal and external connections, including through charitable outreach. Our current ERGs and their areas of focus are below. | | | | |
| | To promote an inclusive environment that embraces the vision, furthers the value, and aligns with the Inclusion and Diversity strategy of U. S. Steel. We will leverage the mix of diverse thought, personal background, and professional education to enhance employee engagement and positively impact business goals. | | | To engage and empower the next generation of leaders in steel by connecting U. S. Steel employees of all generations across the company to strengthen the future of our industry. | | | To honor and support all employees, current and prospective, who are veterans of our nation’s military or remain active in the National Guard or Reserves. | | | To foster an environment that supports employees with disabilities and their caregivers in bringing 100% of themselves to work by advocating for and empowering the individual, increasing awareness and understanding of disability related issues and promoting inclusion, trust and respect throughout the organization and in our communities. | | | | To create awareness and promote a work environment that is inclusive and safe, where people feel they can reach their maximum potential and have confidence in a work environment where they will be fairly evaluated. | | | To cultivate an inclusive environment that enables women to maximize their professional success at U. S. Steel through networking, education, recruitment, leadership opportunities and community involvement. | | | Dedicated to supporting parents and caregivers throughout U. S. Steel by providing a network of fellow parents and allies, to support each other, share knowledge, and learn about various benefits U. S. Steel provides to parents and caregivers. | | |
TALENT DEVELOPMENT AND RETENTION We believe that development and retention of talent is essential to our success, and we seek to provide opportunities for continuous learning and development. All of our employees at a director-level and above have a formal professional development plan that is assessed at least annually. In addition, we proactively measure our attrition rates, and take targeted actions to ensure our highest potential and performing employees are incentivized to remain with the NYSE listing standardsCorporation. Over the past five years, our regrettable voluntary turnover rate has been at or below 5%. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 29 |
CORPORATE GOVERNANCECOMMITMENT TO STOCKHOLDER ENGAGEMENT
LABOR RELATIONS Approximately 80% of our employees in North America and SEC rulesSlovakia are covered by collective bargaining agreements. We work closely with union representatives to provide safe and concludedproductive workplaces that no conflictenable our employees to deliver high-quality products and meet the needs of interest existsour customers. Our partnership with the United Steelworkers includes not only a commitment to safety programs, but also a common approach to combating the unfairly traded imports that would preventthreaten our industry, our company, and ultimately the consultant from servingjobs of our employees. COMMITMENT TO STOCKHOLDER ENGAGEMENT The Board, as an independent consultantwell as management, prioritizes constructive communication with our stockholders to learn about their views regarding the Compensation & Organization Committee.The Compensation & Organization Committee also obtains input from the CEO with regard toCorporation and our governance and compensation for other executives.
practices. Our CEO, recommends the level of base salary increase (if any), the annual incentive award,CFO and Investor Relations team regularly communicate with our investors and the long-term incentive award value for all ofinvestment community generally regarding our business strategy and financial performance. Additionally, we have maintained ongoing dialogue with our largest stockholders regarding our corporate governance and executive officers, includingcompensation program since 2012. The feedback we receive from these discussions is carefully considered by the other named executive officers (other than himself). These recommendations are based upon his assessment of each executive officer's performance,Board, the performance of the individual's respective business or function, and employee retention considerations. The CompensationCorporate Governance & OrganizationSustainability Committee reviews the CEO's recommendations and approves any compensation changes affecting our Section 16 executive officers. Committee agendas are established in consultation among management, the Committee chair and the Compensation & Organization Committee's independent compensation consultant. The Compensation & Organization Committee meets in executive session without management for at least a portion of each regular meeting.
In 2017, the Compensation & Organization Committee considered reports and analysis that it had requested of management and its independent consultant concerning risks associated with the Corporation's compensation and organization policies and practices.
Committee.Our Engagement Process ![[MISSING IMAGE: tm212306d1-icon_engagpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-21-035691/tm212306d1-icon_engagpn.jpg) | | 2020 Stockholder Engagement | | | | In 2020, we contacted stockholders representing approximately 40% of our outstanding shares and held meetings with eight investors, representing approximately 20% of our outstanding stock. Our stockholders provided constructive feedback and were supportive of our current governance, sustainability and compensation practices. | | | | Topics covered in our engagement meetings: | | | | –
Response to COVID-19 to ensure health and safety of employees, prioritize cash and liquidity and accelerate execution of our Best of Both strategy –
Sustainability program focused on driving the Corporation towards its future as a sustainable solutions provider –
Executive Compensation program that aligns pay for performance and incents behaviors to deliver long-term stockholder value | | | –
Human Capital Management, including initiatives to enhance inclusion and diversity and ensure employees feel psychologically and physically safe –
Board Composition and Effectiveness to oversee risk and grounded in good governance | |
30 | Corporate Governance & Public Policy CommitteeUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
The Corporate Governance & Public Policy Committee serves as the Corporation's governance and nominating committee. Pursuant to its charter, the duties and responsibilities of this committee include:
•Identifying and evaluating nominees for director and selecting, or recommending thatCORPORATE GOVERNANCEDIRECTOR COMPENSATION
Actions Taken by the Board select, the director nominees for the next annual meeting of stockholders;Following Stockholder Engagement
•making recommendations toThe feedback we receive from our stockholder during our engagements is thoughtfully considered by management and the Board, concerningand has led to modifications in our sustainability, executive compensation programs and governance practices and disclosure. Some of the appropriate sizeactions we have taken that are informed by stockholder feedback and compositioninsights over the last several years include: | Topic | | | What We Heard From Our Stockholders | | | Board Actions in Response to Stockholder Feedback | | | Sustainability | | | Encouraged by our increased and enhanced sustainability disclosure and GHG reduction goal | | | –
Inaugural Sustainability report issued in 2019 with enhanced report released in 2020 –
Announced 20% GHG Emissions Intensity Reduction Goal by 2030, compared to a 2018 baseline | | | Human Capital Management | | | Comprehensive inclusive benefits provide helpful insight into U. S. Steel’s culture of inclusion | | | –
Detailed disclosure in Sustainability report on inclusion & diversity, talent management and community engagement | | | Executive Compensation | | | Continue to align executive compensation with company performance | | | –
Ongoing benchmarking of compensation practices to our peers See page 44 for more on enhancements to our executive compensation program | | | Governance | | | Positive feedback regarding transparency of governance program | | | –
Proactively adopted proxy access in 2016 –
Annual website disclosure regarding political contributions | |
COMMUNICATIONS FROM STOCKHOLDERS AND INTERESTED PARTIES Stockholders and interested parties may send communications through the Secretary of the Corporation to the: (1) Board, (2) Committee Chairs, (3) Chairman of the Board, or (4) outside directors as a group. The Secretary will collect, organize and its committees;
•making recommendationsforward to the Board concerningdirectors all communications that are appropriate for consideration by the compensationdirectors. Examples of non-employee directors;
•recommendingcommunications that would not be considered appropriate for consideration by the directors include solicitations for products or services, employment matters, and matters not relevant to stockholders generally, to the functioning of the Board, a set of corporate governance principles applicableor to the Corporation, reviewing such principles annually and recommending appropriate changes toaffairs of the Board;
•reviewing relationships with, and communications to and from, the investment community, including the Corporation's stockholders;•reviewing matters and discussing risk relating to legislative, regulatory and public policy issues affecting the Corporation's businesses and operations;
•reviewing public policy issues likely to be of interest to various stakeholdersCorporation. The Secretary of the Corporation including employee health and safety, environmental, energy and trade matters;
•reviewing and approving codes of conduct applicable to employees and principal operating units; and
•assessing and making recommendations concerning overall corporate governance to the extent specific matters are not the assigned responsibility of other board committees.
Themay be contacted at: Corporate Governance & Public Policy Committee's charter gives the committee the sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority to approve the search firm's fees and other retention terms.
Secretary, United States Steel Corporation, | 2018 Proxy Statement |15
Table of Contents
600 Grant Street, Suite 1884, Pittsburgh, PA 15219 or by email at boardofdirectors@uss.com. Director CompensationDIRECTOR COMPENSATION
|
Our Corporate Governance Principles provide that each non-employee director shall be paid compensation as the Board may determine from time to time. Directors who are employeesThe goal of U. S. Steel receive no compensation for their service on the Board.
The objective of U. S. Steel'sSteel’s director compensation programs is to enable the Corporation to attract and retain as directors individuals of substantial accomplishment with demonstrated leadership capabilities.capabilities to serve as directors . In order to align the interests of directors with the interests of stockholders, our non-employee directors participate in the Deferred Compensation Program for Non-Employee Directors and the Non-Employee Director Stock Program, each of which is described below.
Directors who are employees of U. S. Steel receive no compensation for their service on the Board. 2020 Director Compensation For 2017, non-employee directors were paid an2020, the Board maintained the annual retainer fee of $240,000. Committee Chairs$265,000 after following a robust benchmarking review process, described below. Each committee chair received an additional $20,000 and the Chairman of the Board were paidreceived an additional annual fee of $20,000 and $50,000, respectively.$100,000 retainer. No meeting fees or committee membership fees are paid.paid. In response to the challenges of the pandemic, the Board temporarily decreased their annual retainer for half the year by 20% for the maximum cash portion. Deferred Compensation Program Under our Deferred Compensation Program for Non-Employee Directors, each non-employee director is required to defer at least 50%a minimum of 55% of his or her retainer in the form of Common Stock Units and may elect to defer up to 100%. A Common Stock Unit is what is sometimes referred to as "phantom stock"“phantom stock” because initially no stock is actually issued. Instead, we keep a book entry account for each director that shows how many Common Stock Units he or she has. When a director leaves the Board, he or she receives actual shares of common stock corresponding to the number of Common Stock Units in his or her account. The ongoing value of each Common Stock Unit equals the market price of the common stock. When dividends are paid | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 31 |
CORPORATE GOVERNANCEDIRECTOR COMPENSATION
on the common stock, we credit each account with equivalent amounts in additional Common Stock Units. If U. S. Steel were to undergo a change in control resulting in the removal of a non-employee director from the Board, that director would receive a cash payment equal to the value of his or her deferred stock account. The Board and management believe that such deferral, by continually building each director’s equity interest in the Corporation, provides a meaningful continued interest in the Corporation that is tied to the stockholders’ interest because the stock issued upon a director’s departure from the Board reflects all changes in the market value of U. S. Steel common stock from the date of deferral. Non-Employee Director Stock Program Under our Non-Employee Director Stock Program, upon joining our Board, each non-employee director is eligible to receive a grant of up to 1,000 shares of common stock. In order to qualify, each director must first have purchased an equivalent number of shares in the open market during the 60 dayssix months following the first date of his or her service on the Board. Compensation Review Process The Corporate Governance & Public PolicySustainability Committee reviews and sets director compensation on an annual basis. In November 2016, the committee reviewed information and recommendations from Annually, Pay Governance, an independent compensation consultant, presents a benchmarking report on director compensation for the same comparatorpeer group of 24 companies the Compensation & Organization Committee uses for determining compensation for our executives, as well as for a larger general comparator group of 151 companies in a similar revenue range as the Corporation. After reviewing the information presented by Pay Governance, as well as other public information on the topic, the committee determined thatevaluates the plan design wasand compensation levels to ensure they are consistent with market trends but that the amountand makes recommendations of our directors' annual base retainer, which was set in 2011, was below the 25th percentile and significantly below the 50th percentile of both comparator groups. The Corporate Governance & Public Policy Committee recommended, and the Board approved, an increase in the annual director compensation retainer to $240,000 beginning in 2017, in order to align the compensation level with the median of both comparator groups. No increase was made to the additional amounts paid to the board chair or to committee chairs. In 2017, the Corporate Governance & Public Policy Committee reviewed director compensation information of the peer group and a general comparator group, and made noany appropriate changes to the director compensation fees for 2018. Mr. Sutherland's annual retainer was temporarily increased by $150,000, effective March 1, 2018, in connection with his assumption of additional duties.Board. The following table sets forthshows the compensation of non-employee directors in 2017:2020: DIRECTOR COMPENSATION | Name | | | Fees Earned
or Paid in
Cash(1)
($) | | | Stock
Awards(2)
($) | | | All Other
Compensation
($) | | | Total
($) | | | Tracy A. Atkinson | | | 45,215 | | | 55,264 | | | 0 | | | 100,479 | | | Patricia Diaz Dennis | | | 112,095 | | | 137,005 | | | 0 | | | 249,100 | | | Dan O. Dinges | | | 67,275 | | | 201,825 | | | 0 | | | 269,100 | | | John J. Engel | | | 112,095 | | | 137,005 | | | 0 | | | 249,100 | | | John V. Faraci | | | 112,095 | | | 137,005 | | | 0 | | | 249,100 | | | Murry S. Gerber | | | 121,095 | | | 148,005 | | | 0 | | | 269,100 | | | Stephen J. Girsky | | | — | | | 265,767 | | | 0 | | | 265,767 | | | Jeh C. Johnson | | | — | | | 160,767 | | | 0 | | | 160,767 | | | Paul A. Mascarenas | | | 49,820 | | | 199,280 | | | 0 | | | 249,100 | | | Michael H. McGarry | | | 112,095 | | | 137,005 | | | 0 | | | 249,100 | | | Eugene B. Sperling | | | 112,095 | | | 137,005 | | | 0 | | | 249,100 | | | David S. Sutherland | | | — | | | 349,100 | | | 0 | | | 349,100 | | | Patricia A. Tracey | | | 113,595 | | | 138,838 | | | 0 | | | 252,433 | |
(1)
The amount shown represents the cash portion of the 2020 annual retainer paid to directors. Messrs. Girsky, Johnson and Sutherland elected to receive 100% of their 2020 retainer as deferred common stock. | | | | | | | | | | | | | | | | | | | | DIRECTOR COMPENSATION | | | | | | | | | | | | | | | | | | | | | | | Name | | | Fees Earned
or Paid in
Cash
($) | | | Stock
Awards(1)(2)
($) | | | Option
Awards
($) | | | Non-Equity
Incentive Plan
Compensation
($) | | | All Other
Compensation
($) | | | Total
($) | | | | | | | | | | | | | | | | | | | | | | | Patricia Diaz Dennis | | | 120,000 | | | 120,000 | | | 0 | | | 0 | | | 0 | | | 240,000 | | | | | | | | | | | | | | | | | | | | | | | Dan O. Dinges | | | 63,333 | | | 190,000 | | | 0 | | | 0 | | | 0 | | | 253,333 | | | | | | | | | | | | | | | | | | | | | | | John G. Drosdick | | | 123,333 | | | 130,000 | | | 0 | | | 0 | | | 0 | | | 253,333 | | | | | | | | | | | | | | | | | | | | | | | John J. Engel | | | 130,000 | | | 130,000 | | | 0 | | | 0 | | | 0 | | | 260,000 | | | | | | | | | | | | | | | | | | | | | | | Murry S. Gerber | | | 120,000 | | | 120,000 | | | 0 | | | 0 | | | 0 | | | 240,000 | | | | | | | | | | | | | | | | | | | | | | | Stephen J. Girsky | | | 0 | | | 240,000 | | | 0 | | | 0 | | | 0 | | | 240,000 | | | | | | | | | | | | | | | | | | | | | | | Paul A. Mascarenas | | | 120,000 | | | 120,000 | | | 0 | | | 0 | | | 0 | | | 240,000 | | | | | | | | | | | | | | | | | | | | | | | Glenda G. McNeal | | | 120,000 | | | 120,000 | | | 0 | | | 0 | | | 0 | | | 240,000 | | | | | | | | | | | | | | | | | | | | | | | Eugene B. Sperling | | | 50,000 | | | 75,435 | | | 0 | | | 0 | | | 0 | | | 125,435 | | | | | | | | | | | | | | | | | | | | | | | Robert J. Stevens | | | 0 | | | 240,000 | | | 0 | | | 0 | | | 0 | | | 240,000 | | | | | | | | | | | | | | | | | | | | | | | David S. Sutherland | | | 43,500 | | | 246,500 | | | 0 | | | 0 | | | 0 | | | 290,000 | | | | | | | | | | | | | | | | | | | | | | | Patricia A. Tracey | | | 130,000 | | | 130,000 | | | 0 | | | 0 | | | 0 | | | 260,000 | | | | | | | | | | | | | | | | | | | | | | |
16 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Stock Ownership of Directors and Executive Officers |
(2)(1)The amount shown represents the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (ASC 718), as described in the Corporation'sCorporation’s financial statements for the year ended December 31, 20172020 included in the Corporation'sCorporation’s annual report on Form 10-K for 2017.2020. All of the 20172020 stock awards represent Common Stock Units under the Deferred Compensation Program for Non-Employee Directors, except in the case of Mr. Sperling, where $50,000 represents Common Stock Units under the Deferred Compensation Program for Non-Employee Directors and $25,435 represents shares awarded under the Non-Employee Director Stock Program.(2)The aggregate stock awards outstanding at the end of 2017 for each director listed in the table represent Common Stock Units under the Deferred Compensation Program for Non-Employee Directors and shares of stock awarded under the Non-Employee Director Stock Program.
32 | STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERSUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
The Board has adopted stock ownership and holding requirements for executive officers. These requirements are described under the caption "Stock Ownership and Holding Guidelines" in the Compensation Discussion and Analysis section of this proxy statement.
Non-employee directors are required to hold equity interests in the Corporation in the form of stock-based deferred compensation. This requirement is a part of our Corporate Governance Principles. Each non-employee director is required to defer at least 50% of his or her annual retainer as stock-based compensation under the Deferred Compensation Program for Non-Employee Directors. Amounts deferred are credited to the director's deferred stock account in the form of Common Stock Units. No amounts are paid to the director from the deferred stock account until the director leaves the Board, at which time he or she receives actual shares of common stock corresponding to the number of Common Stock Units in his
or her account. The Board and management believe that such deferral, by continually building each director's equity interest in the Corporation, provides a meaningful continued interest in the Corporation that is tied to the stockholders' interest because the stock issued upon a director's departure from the Board reflects all changes in the market value of U. S. Steel common stock from the date of deferral. Each non-employee director is in compliance with the requirement described in this paragraph.
The following table sets forth the number of shares of U. S. Steel common stock beneficially owned as of February 26, 2018* by each director and director nominee, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. No director or executive officer beneficially owned, as of the applicable date, any equity securities of U. S. Steel other than those shown.
CORPORATE GOVERNANCERELATED PERSON TRANSACTIONS POLICY
| | | | | | | | | | NameRELATED PERSON TRANSACTIONS POLICY
| | Shares
Beneficially
Owned*
| |
|---|
| | | | | Kevin P. Bradley(1)
| | | 46,933 | | | | | | | Scott D. Buckiso(1)
| | | 71,225 | | | | | | | David B. Burritt(1)
| | | 198,508 | | | | | | | Patricia Diaz Dennis(2)
| | | 26,058 | | | | | | | Dan O. Dinges(2)
| | | 53,208 | | | | | | | John G. Drosdick(2)
| | | 54,767 | | | | | | | John J. Engel(2)
| | | 42,645 | | | | | | | Suzanne R. Folsom(1)
| | | 62,600 | | | | | | | Murry S. Gerber(2)
| | | 171,969 | | | | | | | Stephen J. Girsky(2)
| | | 28,785 | | | | | | | Mario Longhi(1)
| | | 300,430 | | | | | | | Paul A. Mascarenas(2)
| | | 17,883 | | | | | | | Douglas R. Matthews(1)
| | | 214,128 | | | | | | | Glenda G. McNeal(2)
| | | 45,084 | | | | | | | David J. Rintoul(1)
| | | 56,512 | | | | | | | Pipasu H. Soni(1)
| | | 25,153 | | | | | | | Eugene B. Sperling(2)
| | | 7,422 | | | | | | | Robert J. Stevens(2)
| | | 50,429 | | | | | | | David S. Sutherland(2)
| | | 106,422 | | | | | | | Patricia A. Tracey(2)
| | | 46,803 | | | | | | | All Directors and Executive Officers as a group (25 persons)(1)(2)(3)
| | | 1,784,523 | | | | | | |
*Does not include fractional shares. Amounts shown for Mr. Longhi and Ms. Folsom are as of their termination dates, June 30, 2017 and December 29, 2017, respectively.
(1)Includes shares which may be acquired upon exercise of outstanding options which are or will become exercisable within 60 days of February 26, 2018 in the following amounts: Mr. Buckiso: 47,476; Mr. Burritt: 28,266; Mr. Matthews: 132,122; Mr. Rintoul: 16,196; Mr. Soni: 5,180; and all executive officers as a group: 282,496.
United States Steel Corporation | 2018 Proxy Statement |17
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Communications from Stockholders and Interested Parties
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(2)Includes those Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board in the following amounts: Ms. Diaz Dennis: 24,058; Mr. Dinges: 51,208; Mr. Drosdick: 52,767; Mr. Engel: 40,645; Mr. Gerber: 33,769; Mr. Girsky: 23,285; Mr. Mascarenas: 14,383; Ms. McNeal: 43,019; Mr. Sperling: 5,422; Mr. Stevens: 48,116; Mr. Sutherland: 94,334; Vice Admiral Tracey: 45,145; and all directors as a group: 476,155.
(3)The total number of shares beneficially owned by all directors and executive officers as a group constitutes approximately 1.0% of the outstanding shares of common stock of U. S. Steel.
COMMUNICATIONS FROM STOCKHOLDERS AND INTERESTED PARTIES
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Stockholders and interested parties may send communications through the Secretary of the Corporation to the: (1) Board, (2) Committee Chairs, (3) Chairman of the Board, or (4) outside directors as a group. The Secretary will collect, organize and forward to the directors all communications that are appropriate for consideration by the directors. Examples of communications that would not be considered appropriate for consideration by the directors
include solicitations for products or services, employment matters, and matters not relevant to stockholders generally, to the functioning of the Board, or to the affairs of the Corporation. The Secretary of the Corporation may be contacted at: Corporate Secretary, United States Steel Corporation, 600 Grant Street, Suite 1500, Pittsburgh, PA 15219.
POLICY WITH RESPECT TO RELATED PERSON TRANSACTIONS
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The Board of Directors of the Corporation has adopted a written policy that requires certain transactions with related persons to be approved or ratified by its Corporate Governance & Public PolicySustainability Committee. For purposes of this policy, related persons include: (i) any person who is, or at any time since the beginning of the Corporation's last fiscal year was, a director or executive officer of the Corporation or a nominee to become a director of the Corporation; (ii) any person who is the beneficial owner of more than 5% of any class of the Corporation's voting securities; and (iii) any immediate family member of any person described in (i) or (ii). | | For purposes of this policy, related persons include: | | | | –
any person who is, or at any time since the beginning of the Corporation’s last fiscal year was, a director or executive officer of the Corporation or a nominee to become a director of the Corporation; | | | –
any person who is the beneficial owner of more than 5% of any class of the Corporation’s voting securities; and –
any immediate family member of any person described above. | |
The types of transactions that are subject to this policy are transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Corporation, or any of its subsidiaries, was, is or will be a participant and in which any related person had, has or will have a direct or indirect material interest and the aggregate amount involved will or may be expected to exceed $120,000. The standards applied by the Corporate Governance & Public Policy Committee when reviewing transactions with related persons include: (a) the benefits to the Corporation of the transaction; (b) the terms and conditions of the transaction and whether such terms and conditions are comparable to the terms available to an unrelated third party or to employees generally; and (c) the potential for the transaction to affect the independence or judgment of a director or executive officer of the Corporation. | | The standards applied by the Corporate Governance & Sustainability Committee when reviewing transactions with related persons include: | | | | –
the benefits to the Corporation of the transaction; –
the terms and conditions of the transaction and whether such terms and conditions are comparable to the terms available to an unrelated third party or to employees generally; and | | | –
the potential for the transaction to affect the independence or judgment of a director or executive officer of the Corporation. | |
Under the policy, certain transactions are deemed to be automatically pre-approved and do not need to be brought to the Corporate Governance & Public PolicySustainability Committee for individual approval. The transactions that are automatically pre-approved include: (i) transactions involving compensation to directors and executive officers of the type that is required to be reported in the Corporation's proxy statement; (ii) indebtedness for ordinary business travel and expense payments; (iii) transactions with another company at which a related person's only relationship is as an employee (other than an executive officer), a director or beneficial owner of less than 10% of any class of equity securities of that company, provided that the amount involved does not exceed the greater of $1,000,000 or 2% of that company's consolidated gross annual revenues; (iv) | | The transactions that are automatically pre-approved include: | | | | –
transactions involving compensation to directors and executive officers of the type that is required to be reported in the Corporation’s proxy statement; –
indebtedness for ordinary business travel and expense payments; –
transactions with another company at which a related person’s only relationship is as an employee (other than an executive officer), a director or beneficial owner of less than 10% of any class of equity securities of that company, provided that the amount involved does not exceed the greater of $1,000,000 or 2% of that company’s consolidated gross annual revenues; –
transactions where the interest of the related person arises solely from the ownership of a class of equity securities of the Corporation, and all holders of that class of equity securities receive the same benefit on a pro rata basis; | | | –
transactions where the rates or charges involved are determined by competitive bid; –
transactions involving the rendering of services as a common or contract carrier or public utility at rates or charges fixed in conformity with law or governmental regulation; and –
transactions involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services. | |
| | There were no transactions that required approval of the Corporate Governance & Sustainability Committee under this policy during 2020. | |
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 33 |
CORPORATE GOVERNANCEDIRECTOR INDEPENDENCE
DIRECTOR INDEPENDENCE The Board affirmatively determined that all non-employee director nominees for 2021 are independent within the definitions of independence of both the New York Stock Exchange (“NYSE”) listing standards and the U.S. Securities and Exchange Commission (“SEC”) standards for Audit Committee members. U. S. Steel has incorporated the NYSE and SEC independence standards into our own categorical standards for independence. The Board has affirmatively determined that none of the directors or nominees for director, other than our CEO, Mr. Burritt, has a material relationship with the Corporation. The Board made this determination based on all relevant facts and circumstances. AUDIT COMMITTEE The Board also determined that each member of the Audit Committee: (1) did not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Corporation or any of its subsidiaries, and (2) was not an affiliated person of the Corporation and all holdersor any of its subsidiaries. Therefore each member satisfied the NYSE’s enhanced independence standards for audit committee members. COMPENSATION COMMITTEE The Board also determined that class of equity securities receive the same benefit on a pro rata basis; (v) transactions where the rates or charges involved are determined by competitive bid; (vi) transactions involving the rendering of services as a common or contract carrier or public utility at rates or charges fixed in conformity with law or governmental regulation; and (vii) transactions involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services.There were no transactions that required approvalmember of the Compensation Committee has a relationship to the Corporation that is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member. Therefore, each member of the Compensation Committee satisfied the independence requirements of NYSE listing standards.
For more information, our standards of director independence are located in our “Corporate Governance & Public Policy Committee under this policy during 2017.Principles,” available on our website at www.ussteel.com. | 34 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Proposal 2:Advisory Vote on Executive Compensation | | INFORMATION ABOUT THIS PROPOSAL Stockholders are being asked to approve, on an advisory basis, the 2020 compensation of our five named executive officers as described in the Compensation Discussion & Analysis and the Executive Compensation Tables. | |
| | | | SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEThe Board of Directors recommends a
vote “FOR” the resolution approving the compensation of our Named Executive Officers.
| | | | | | | | |
Under Section 16(a) of the Securities Exchange Act of 1934, our directors and executive officers and persons holding more than 10% of any class of our equity securities, are required to file with the SEC initial reports of their ownership of our common stock and reports of changes in such ownership. To our knowledge, based on information furnished to us during 2017, there were no late filings by any U. S. Steel directors, executive officers or other persons subject to Section 16(a) of the Securities Exchange Act of
1934 required to be disclosed in this proxy statement. In December 2017, an amendment to the applicable Form 3 was filed for each of Christine Breves and Scott Buckiso disclosing ownership of phantom shares through the Corporation's Supplemental Thrift Program. These shares were inadvertently omitted from the initial Forms 3 that were timely filed upon their designation as an "executive officer" under the federal securities laws.
18 |United States Steel Corporation | 2018 Proxy Statement
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On October 2, 2017, an Amended Shareholder Class Action Complaint was filed in Federal Court in the Western District of Pennsylvania consolidating previously-filed actions. Separately, four related shareholder derivative lawsuits were filed in State and Federal courts in Pittsburgh. The underlying consolidated class action lawsuit alleges that the Corporation, certain current and former officers, an upper level manager of the Corporation and the financial underwriters who participated in the August 2016 secondary public offering, violated federal securities laws in making false statements and/or failing to discover and disclose material information regarding the financial condition of the Corporation. The lawsuit claims that this conduct caused a
prospective class of plaintiffs to sustain damages during the period of January 27, 2016 and April 25, 2017 as a result of the prospective class purchasing the Corporation's common stock at artificially inflated prices and/or suffering losses when the price of the common stock dropped. The derivative lawsuits generally make the same allegations against the same officers and also allege that certain members of the Board of Directors failed to exercise appropriate control and oversight over the Corporation and were unjustly compensated. They seek to recover losses that were allegedly sustained. The Corporation is vigorously defending these matters.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
The following table furnishes information concerning all persons known to U. S. Steel who beneficially own five percent or more of the voting stock of U. S. Steel:
| | | | | | | | | | | | | | | | | | | | | | | | | Class
| | Name and Address of Beneficial Owner
| | Amount and Nature of
Beneficial Ownership
| | Percent
of Class
| |
|---|
| | | | | | | | | | | | | | U. S. Steel Common Stock | | The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | | | 15,079,047 | | | 8.61% | | | | | | | | | | | | | | | | U. S. Steel Common Stock | | Blackrock, Inc.(2)
55 East 52nd street
New York, NY 10055 | | | 14,848,328 | | | 8.5% | | | | | | | | | | | | | |
(1)Based on Schedule 13G filed on February 9, 2018, which indicates that The Vanguard Group had sole voting power over 93,513 shares, shared voting power over 30,804 shares, sole dispositive power over 14,969,105 shares and shared dispositive power over 109,942 shares.
(2)Based on Schedule 13G filed on January 23, 2018, which indicates that Blackrock, Inc. had sole voting power over 14,167,063 shares, shared voting power over no shares, sole dispositive power over 14,848,328 shares and shared dispositive power over no shares.
United States Steel Corporation | 2018 Proxy Statement |19
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Proposal 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
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PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
|
Pursuant to Section 14A of the Securities Exchange Act of 1934, we are seeking an advisory vote from our stockholders on the following resolution to approve the compensation of the named executive officers ("NEOs"(“NEOs”) listed in the compensation tables of this proxy statement: RESOLVED, that the stockholders of United States Steel Corporation (the "Corporation"“Corporation”) approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission in the Corporation'sCorporation’s proxy statement for the 20182021 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis, compensation tables and narrative discussions. We intend to offer this non-binding advisory vote at each of our annual meetings. Although it is not binding, we and the Board welcome our stockholders'stockholders’ views on our NEOs'NEOs’ compensation and will carefully consider the outcome of this advisory vote consistent with the best interests of all stockholders. Say-on-Pay Advisory Vote Discussion |
At the 20172020 Annual Meeting of Stockholders, approximately 92%74.8% of the votes cast were "For"“For” our advisory vote on executive compensation. We value the feedback we receive from regular engagement with our stockholders and are encouraged by the positive support we have received over the past several years for our compensation program and recognition of our responsiveness to stockholders. In 2017, we continued our long-standing engagement with our largest stockholders both during and outside
The Board of Directors recommends a vote FOR this proposal based on the proxy season. In eachefforts of the last two years, we've met with or held telephonic meetings with stockholders representing approximately 20% of our outstanding stock. In addition, some stockholders indicated they did not believe a call was necessary at the time. All of the stockholders provided positive feedback regarding recent changes to our executive compensation program and support the pay-for-performance nature of our compensation program. The Compensation & Organization Committee considered this feedback when reviewingand the incentiveBoard to design an executive compensation programs for 2018.
program that: –
Aligns the interests of U. S. Steel executives with our stockholders; –
Provides market-aligned pay opportunities that attract, reward and retain key talent needed to drive outstanding corporate performance and create long-term stockholder value; and –
Reflects the input received from stockholders on our executive compensation program through our robust engagement program. In considering this advisory vote, we encourage you to read the Compensation Discussion and Analysis, the compensation tables and other relevant information in this proxy statement for additional details on our executive compensation programs and the 20172020 compensation paid to our named executive officers.NEOs. | | | | | The Board recommends that you vote "FOR" the resolution approving the compensation of our Named Executive Officers.35 |
PROPOSAL 2: Advisory Vote on Executive CompensationCOMPENSATION & ORGANIZATION COMMITTEE REPORT
COMPENSATION & ORGANIZATION COMMITTEE REPORT |
The Compensation & Organization Committee of the Board of Directors of the Corporation has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussion, the Compensation & Organization Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Corporation'sCorporation’s Annual Report on Form 10-K for the year-ended December 31, 2017. 2020.| | | | | | Dan O. Dinges, Chairman | | | John G. DrosdickJ. Engel | | | | | | | Tracy A. Atkinson | | | John V. Faraci | | | | | | | Patricia Diaz Dennis | | Murry S. Gerber | Robert J. Stevens | Michael H. McGarry | Patricia A. Tracey |
20 |United States Steel Corporation | 2018 Proxy Statement
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| 36 | Compensation Discussion and AnalysisUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
|
Compensation
Discussion
and Analysis This Compensation Discussion and Analysis ("CD&A") contains a discussion of the material elements of compensation awarded to, earned by, or paid to the Corporation's "NamedCorporation’s “Named Executive Officers" ("NEOs"Officers” (“NEOs”), includingindividuals who served as our principal executive officer, the principal financial officer, and the next three most highly compensated executive officers of U. S. Steel in 2017, as well as individuals who served as our principal executive officer and interim principal financial officer during a portion of 2017. 2020.Named Executive Officers in 2020 | | | | U. S. Steel's Named Executive Officers in 2017* | | | | David B. Burritt | |
President & Chief Executive Officer | | | | Kevin P. Bradley | | Executive | | Christine S. Breves
Senior Vice President & Chief Financial Officer | | | | | | | Douglas R. Matthews | | James E. Bruno
Senior Vice President – Industrial, Service Center and Mining Solutions | | | | Scott D. Buckiso | | Senior Vice President –— European Solutions & President, U. S. Steel Kosice | USSK | | | David J. Rintoul | | | | Scott D. Buckiso
Senior Vice President – Tubular Business& Chief Manufacturing Officer, NAFR | | | | | | | Duane D. Holloway
Senior Vice President, General Counsel and Chief Ethics & Compliance Officer | | | |
Mario Longhi | CONTENTS | Former President & Chief Executive Officer | | | | | Suzanne R. Folsom | | Former General Counsel, Chief Compliance Officer & Senior Vice President – Government Affairs | | To assist stockholders in finding important information in the CD&A, we’re providing this highlighted page summary. | | Pipasu H. Soni | | Former Interim Chief Financial Officer; Vice President – Finance |
*As a result of the following changes, there are eight named executive officers for 2017: Mario Longhi stepped down as Chief Executive Officer on May 8, 2017. As of that date, David B. Burritt was promoted from Executive Vice President, Chief Operating Officer & Acting Chief Financial Officer to President & Chief Executive Officer. Pipasu Soni, the Corporation's Vice President – Finance, served as Interim Chief Financial Officer from May to July 2017 while a permanent search was conducted to fill the vacancy created by Mr. Burritt's promotion. Ms. Folsom resigned from her position as General Counsel, Chief Compliance Officer & Senior Vice President as of December 29, 2017. Mr. Rintoul retired from the Corporation on February 28, 2018.
| | | | | | | | Executive Summary | | | | | | | | | | | | | | | | Our executive compensation program is designed to attract, reward and retain executives who make significant contributions through operational and financial achievements aligned with the goals and philosophy of our long-term strategy. The Compensation & Organization Committee (the "Committee") is guided by five compensation principles highlighted below and discussed in more detail on page 28.•
Align Pay with Stockholder Interests
•
Pay Fair and Competitive Compensation
| | •
Link Compensation to Company Performance and Strategy
•
Retain Executives
•
Provide Equity-Focused and Tax-Efficient Rewards
These principles reflect a strong pay-for-performance culture. Furthermore, the structure of our compensation program and the pay outcomes for executives demonstrate our commitment to linking compensation to company performance and strategy.
| | |
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Earning the Right to Grow and Driving Sustainable Profitable Growth |
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Over the past few years, U. S. Steel, like the American steel industry in general, has faced difficult market conditions as a result of macroeconomic challenges, including significant reductions in the market price of steel, global overcapacity and record levels of unfairly traded imports, slow growth globally, a strong U.S. dollar, and markedly low energy prices. In the face of these challenging conditions, we initiated a process that provides the framework for a multi-year transformation to return our company to top quartile performance and sustainable profitability through the business cycle.We are on a mission to become an industry leader by striving to create a sustainable competitive advantage with a customer-centric focus on: delivering high-quality, value-added products on time every time; collaborating with our customers to develop innovative solutions that address their most challenging needs, including new advanced high-strength steels to meet fuel efficiency and safety requirements for automotive customers and new premium connections that provide strong, durable connections between pipes used by energy customers in oil and gas drilling; generating
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economic profit through active participation in relevant markets; and creating and maintaining a competitive cost structure centered around operational flexibility. As part of this process, we have aligned our company with commercial entities to drive customer intimacy in order to foster innovation and be more responsive to their needs. We focus on our strengths, how we can create the most value for our stockholders and best serve our customers, with committed and engaged executives and employees.We have launched a series of initiatives that we believe will enable us to achieve true operational excellence by improving our performance across our core business processes, including commercial, supply chain, manufacturing, procurement, innovation, and operational and functional support. Our highly talented, capable and collaborative employees are the driving force behind many of these continuous improvement projects, and their efforts are creating a culture where accountability and high performance are valued and celebrated.
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| | | | | | | | | 2020 Performance Highlights | | | | | 39 | | | | | | | | COVID-19 Response and Compensation Impact | | | | | 40 | | | | | | | | 2020 Executive Compensation Program Overview | | | | | 41 | | | | | | | | 2020 Compensation Decisions and Results | | | | | 42 | | | | | | | | Stockholder Feedback and Say-on-Pay Vote | | | | | 44 | | | | | | | | Our Compensation Philosophy | | | | | | | | | | | | | | | | | | | | | |
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United States Steel Corporation | 2018 Proxy Statement |21
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| 2020 Compensation DiscussionDecisions Align Pay and Analysis – Performance | | | | | | | 2020 NEO Performance & Compensation Summaries | | | | | | | Our Compensation Process | | | | | | | Peer Group Benchmarking | | | | | | | Elements of Compensation | | | | | | | Compensation Policies and Other Considerations | | | | | | | Executive SummaryCompensation Tables | | | | |
UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT37
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
EXECUTIVE SUMMARY EXECUTING OUR STRATEGY TO CREATE LONG-TERM STOCKHOLDER VALUE In 2018 we launched our Best of Both strategy to allbecome the best steel company by leveraging the advantages of integrated steelmaking – iron ore and product innovation – with the advantages of mini mills – process innovation and cost efficiency. Our strategy is to create long-term stockholder value by pursuing a business model that is resilient to market volatility and is profitable through the business cycle. In 2020, we executed critical components of our Best of Both strategy, none more transformational than the full acquisition of Big River Steel. We first invested in Big River Steel in 2019, with an option to purchase the remaining equity within four years. During the pandemic, we refocused our efforts isto exercise that option in 2020, when the pricing was fixed and favorable to us. During our belief thatfirst year as partners, we must operate as a principled company committedsuccessfully trialed 11 U. S. Steel grades of steel at Big River Steel, with its low carbon emissions intensity production process, validating the Best of Both thesis. In addition to a codethe Big River Steel acquisition, we also completed additional actions in 2020 moving us towards our Best of conduct that is rooted in our Gary Principles and our core values, the most important of which is safety Both future: – of our employees, our environment, and our facilities and equipment. These core beliefs have served us well for much of our history, and our commitment to them remains as strong as the products we make every day.Our success in this transformation is predicated on having the right leaders to guide the Corporation and successfully execute on our strategy, so it is critical to attract and retain the highest level of executive talent. We believe we have the right leadership team, which includes highly experienced executives from both inside and outside
Completed construction of the steel industry,continuous galvanizing line (CGL) at our PRO-TEC joint venture, which coupled with the Big River Steel facility, allows us to produce low carbon footprint, differentiated products for our customers –
Monetized iron ore assets and divested non-core assets to continuegenerate additional cash to lead the Corporationsupport our business through the operational,pandemic –
Completed construction of the electric arc furnace (EAF) at our Fairfield Works | | BEST OF BOTH STRATEGY | | | | | |
In 2020, we enhanced our footprint from 100% blast furnace operation, to one with three electric arc furnaces – lower cost and lower carbon production. This transformation in footprint and technology enables U. S. Steel to produce the steels of the future – those that are BEST for customers, BEST for consumers, and BEST for the planet. 38UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
2020 PERFORMANCE HIGHLIGHTS In spite of market and regulatory hurdles facing our business.Our executive compensation program has been structured to closely align withpandemic-related challenges, the objectives of the transformation: attract, reward and retain talented executives; focus our executives on the goals that are within their control and support our strategy; and clearly and closely align with company performance, and the long-term interests of stockholders, using measurable financial metrics. We believe both the structure of our compensation programs and the pay outcomes for executives demonstrate our strong commitment to linking compensation to company performance and strategy.
Executive Leadership Transition
In May 2017, Mario Longhi announced his retirement from the Corporation after serving as the Corporation's Chief Executive Officer since 2013. David B. Burritt, who has been with the Corporation since 2013 and served most recently as President and Chief Operating Officer, was promoted to President & Chief Executive Officer and appointed as a member of the Board of Directors. The promotion of Mr. Burritt reinforces the Board's confidence in the Corporation's leadership team and commitment to the long-term transformational strategy initiated by Mr. Longhi. The Corporation's 2017 highlights and accomplishments, described on the next page, are a testament to the
successful transition of executive leadership, and Mr. Burritt's intense focus on continuous improvement in the areas of safety, quality, delivery and cost.
In connection with his retirement, Mr. Longhi entered into a separation agreement with the Corporation, which provided for, among other things, pro rata vesting of certain 2015 and 2016 long-term incentive awards, a pro rata portion of any award under the annual incentive compensation plan, and certain retirement benefits. Under the agreement, Mr. Longhi forfeited all of his 2017 long-term incentive awards. This agreement is described in more detail on page 36.
22 |United States Steel Corporation | 2018 Proxy Statement
Compensation Discussion and Analysis – Executive Summary |
2017 Highlights and Accomplishments
Our successful navigation through the industry downturn in 2015 and 2016 better positioned us to benefit from improved industry conditions in 2017, although we continued to face challenges driven by uncertain geopolitical factors. We delivered significant improvement in our Tubular segment, and had continued success from our European operations. We recognized the need to accelerate our plans to revitalize our assets in our North American Flat-Rolled operations through a strategic investment program. The continued focus of our executive team and employees on our long-term strategic goals was evidenced by many achievements in 2020. We made significant progress transforming our business by:
–
investing in the Best of improvingBoth advanced technology; –
enhancing our sustainability program to support our environmental stewardship goals and those of our customers; –
optimizing our balance sheet enhancing operating efficiency and reliability, and seeking robust enforcementto support execution of our trade laws, again ledstrategy; and –
ensuring we have a talented and diverse workforce to lead and execute our business plans. Here is a successfulsummary of our major accomplishments during 2020: | | Comprehensive and Effective Response to COVID-19 Pandemic | | | –
Implemented robust crisis response, including stringent COVID-19 protocols to ensure safety of employees and continuity of operations –
Idled blast furnaces safely and temporarily, while remaining flexible to support customers in the recovery –
Expedited production and delivery to support customers’ production of medical supplies –
Donated goods, time and services to support communities in time of crisis and change | | | | Record Setting Safety Performance | | | –
All-time best days away from work (DAFW) safety performance at 0.07, which is 8 times better than the industry average reported by the U.S. Bureau of Labor Statistics –
Best contractor DAFW safety performance since 2009 (when measurement began) | | | | Executing Against our Strategic Priorities | | | –
Accelerated acquisition of Big River Steel, the cornerstone of our Best of Both strategy –
Completed construction of electric arc furnace at our Tubular facility –
Monetized excess iron ore assets to deliver $100 million of cash in 2020 with an option for incremental $500 million in future –
Positive operating cash flow of $138 million in 2020 and strong year-end liquidity of approximately $3.2 billion, including approximately $2.0 billion of cash, to support the execution of our strategy | | | | Delivering Long-Term Value to our Stockholders | | | –
Achieved 48% total shareholder return –
Achieved record low 24-day cash conversion cycle time, demonstrating intense focus on cash efficiency –
Reduced 2020 capital spending to enable future execution of Best of Both investments –
Generated approximately $160 million in cash proceeds through the sale of non-core real estate assets. | | | | Demonstrating our Commitment to Environmental Stewardship | | | –
Released enhanced and updated Sustainability Report, with materiality assessment and commitment to setting KPIs for top six material topics –
Trialed 11 U. S. Steel grades of steel at Big River Steel, with its low carbon emissions intensity production process, in furtherance of our commitment to support our sustainability goals and those of our customers | | | | Investing in our People and our Community | | | –
Awarded a perfect “100” score by the Human Rights Campaign® Corporate Equality Index for the second straight year –
Sponsored two fellows for the CEO Action for Diversity & Inclusion™ –
Doubled participation in our employee resource groups –
Leveraged technology to enhance engagement with our employees | |
UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT39
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
RESPONSE TO COVID-19 The global pandemic resulting from COVID-19 has had a significant impact on economies, businesses and individuals around the world. At U. S. Steel we quickly implemented our crisis response plan to respond to challenges and issues posed by the pandemic, and focused our organization around three priorities to guide our actions and decisions through the crisis. | | | | | | | | | | | | | | | | | | PROTECT LIVES AND
LIVELIHOOD Our strong safety culture provided a solid foundation upon which we implemented additional cleaning, sanitizing, and protective protocols to ensure the health and safety of our employees and the continuity of our operations. | | | | | | PRIORITIZE CASH AND
LIQUIDITY To bolster liquidity in the uncertain environment, we heightened our focus on managing the business to preserve cash, and we accessed the capital markets to raise an additional $1.7 billion of capital. We also quickly adjusted our capital spending to align with market conditions. | | | | | | REMAIN FOCUSED, BUT FLEXIBLE TO ACHIEVE OUR BEST OF BOTH
STRATEGY The uncertain and challenging environment strengthened our resolve to execute our Best of Both strategy as quickly as prudently possible. The need to support our customers, continue to innovate and move towards the future was highlighted by the pandemic, and management decisively executed this goal through disciplined, focused and intentional actions. | |
2020 Compensation-Related Impacts of the Pandemic Throughout the year, the Compensation Committee was highly focused on the impact of the pandemic to the business, and helped move us another step closerrelated compensation and benefits impacts to achieving sustainable profitability. We made good progressemployees. The Committee received regular updates from management on employee compensation, benefits and other arrangements implemented in 2017,response to the pandemic. For example, management worked closely with the USW to ensure that furloughed workers had access to full benefits, including health insurance and striveretirement benefits, and provided flexibility to employees who were unable to work or preferred alternative work arrangements due to high risk family members. | | 2020 COVID-19 Compensation-Related Actions | | | | –
As part of our cash preservation efforts, our executive officers volunteered to temporarily reduce their base salaries for half the year by 25% for our CEO and 10% for other executives, and suspended all company contributions to our 401(k) plan for salaried employees. These recommendations were endorsed by the Compensation Committee. –
In response to the challenges of the pandemic, our Board of Directors temporarily decreased their annual retainer for half the year by 20% for the maximum cash portion. –
The significant impact of the pandemic on our business resulted in a below threshold performance level for the Annual Incentive Compensation Plan EBITDA performance goal. This performance was monitored throughout the year, but given the ongoing uncertainty in the business, no goal changes were made. The Compensation Committee considered alternative methods for evaluating performance, and ways to ensure management was compensated commensurate with the performance in exceptionally challenging circumstances, while balancing the interests of all stakeholders, and awarded our NEOs (other than the CEO) a one-time award, as described on page 46. | |
40UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
2020 Executive Compensation Program Overview Our executive compensation program is designed to attract, reward and retain executives who make significant contributions through operational and financial achievements aligned with the goals and philosophy of our long-term strategy. The primary elements of our compensation program, are described below. | | Element | | | Overview and Key Performance Metrics | | | Purpose | | | | FIXED | | | | Base Salary | | | Fixed cash baseline compensation takes into account the scope and complexity of the NEO’s role, individual qualifications and experiences, and internal value to the Corporation. | | | Base salaries are set at market competitive levels to attract and retain highly qualified executives to lead and implement our strategy. | | | | VARIABLE | | | | Annual Incentive Compensation Plan (AICP) 0%-230% of target for corporate performance and individual performance adjustments | | | A financial performance measure intended to focus the organization on operating at sustainable, profitable levels Cash Conversion Cycle (25%) A financial liquidity measure intended to focus the organization on the number of days that it takes to convert resource inputs into cash flows | | | Performance-based annual cash incentive opportunities support achieving goals that are crucial to our strategic plan. | | | | (-15% to 30%) In addition to their role in achieving enterprise financial goals, NEOs are evaluated on their individual performance in four categories. | | | SAFETY •
NEOS are expected to demand strict compliance to our safety protocols, facilitate safe work practices, and ensure a psychologically safe environment for our employees . EXECUTION OF THE STRATEGY •
NEOs all contribute to the achievement of our strategic goals to create long-term stockholder value. They are expected to act with an enterprise mindset and facilitate alignment throughout the organization with our Best of Both strategy. ADVANCING CRITICAL SUCCESS FACTORS •
NEOs all work towards improving on the three areas that are critical to our long-term success: –
Moving Down the Cost Curve –
Moving up the Talent Curve –
Winning in Strategic Markets LEADERSHIP •
NEOs are expected to demonstrate value-based tone at the top and exemplify our S.T.E.E.L. Principles, ensuring engagement and development within their respective areas of responsibility. | | | | Long-Term Incentive
Program (LTIP) 0%-200% of target for corporate performance | | | Corporate Performance Metrics (60% of LTIP) Relative TSR (50%) TSR performance awards are based on relative performance, with the payout determined based on the rank of U.S. Steel’s TSR compared to the TSR of its peer group companies over the three-year performance period, as well as for each year within the performance period. Return On Capital Employed (ROCE) (50%) ROCE performance awards are based on our weighted average cost of capital, over the three-year performance period, with weighting increasing in the second and third years. Vests after three-year performance period if ROCE performance metrics are achieved.
| | | Variable long-term performance-based compensation motivates and rewards executives for achieving multi-year strategic priorities. | | | | Time-Based Restricted Stock Units (RSUs) (40%of LTIP) RSUs provide the best retention benefits among our long-term incentives, especially during times of challenging economic and industry conditions. Awarding RSUs facilitates stock ownership and executive retention, and promotes stockholder alignment. RSUs vest ratably over three years. | | | RSUs support retention of highly qualified executives to lead and implement our strategy. They align with stockholder interests as the value fluctuates with stock price performance. | |
*
Illustrations are based on 2020 CEO target compensation UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT41
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
2020 Compensation Decisions and Results The Compensation Committee set 2020 total target direct compensation in January 2020 in line with the median of those of our executive compensation peer group, as reported by the committee’s independent compensation consultant. The table below shows actual compensation earned or granted in 2020. | NEO | | | 2020 Base
Salary ($) | | | AICP
Award and
OneTime
Bonus ($) | | | LTIP Grant
Target
Award ($) | | | LTIP 2018
2020
Payout ($) | | | Total Actual
and Awarded
Compensation ($) | | | Burritt | | | 1,112,500 | | | 1,530,000 | | | 8,000,000 | | | 0 | | | 10,642,500 | | | Breves | | | 666,500 | | | 687,000 | | | 2,000,000 | | | 0 | | | 3,353,500 | | | Bruno | | | 551,000 | | | 795,130 | | | 1,300,000 | | | 0 | | | 2,646,130 | | | Buckiso | | | 551,000 | | | 445,100 | | | 1,300,000 | | | 0 | | | 2,296,100 | | | Holloway | | | 561,500 | | | 431,100 | | | 1,300,000 | | | 0 | | | 2,292,600 | |
COVID-19 Impact: Each executive officer’s base base salary was reduced for greaterpart of the year in response to and as a show of leadership during the immediate onset of the pandemic. In determining actual awards under the AICP, the Compensation Committee determined to base the awards on earned base salary, without giving effect to the temporary base salary reduction. Compensation Outcomes: Payouts Reflect Corporate Performance The Compensation Committee considers a mix of cash and equity awards over both the short-term and long-term as a critical balance in reinforcing U. S. Steel’s commitment to performance alignment. This strong pay-for-performance alignment is clearly reflected in amounts actually earned by our NEOs based on the achievement of metrics established by the Compensation Committee for the annual and long-term incentive plans. The following table illustrates how our performance has affected the payout of our annual incentives and how the performance of our common stock affects the value of the long-term incentives that would be received by our CEO based on our closing stock price of $16.77 on December 31, 2020: | | | | Annual
Incentive | | | Restricted
Stock Units(1) | | | Performance
Awards(2) | | | Year | | | % of Target Award Paid | | | Value as a % of
Grant Value | | | Award Payout as a %
of Target | | | 2020 | | | 50% | | | 190% | | | 40% | | | 2019 | | | 84% | | | 70% | | | 40% | | | 2018 | | | 187% | | | 38% | | | 0% | |
(1)
The “Restricted Stock Units” column shows the market value on December 31, 2020, of the shares underlying the restricted stock units as a percentage of the market value on the grant date. The grant date fair value of the RSUs granted in 2018 was $43.99, in 2019 was $23.92 and in 2020 was $8.83. To the extent that the market value has declined, the value of the restricted stock units reflected in the year ahead.Summary Compensation Table also declined. (2)
The following“Performance Awards” column indicates the percentage of the performance awards that would be paid out based on our TSR as compared to the TSR of the peer group companies and ROCE performance. The 2018 performance period ended on December 31, 2020, and the actual results are highlightsreflected in the table. For the 2019 and accomplishments from 2017:•- 2020 performance awards, the information in the table is determined as if the performance periods ended on December 31, 2020.
Implemented comprehensive safety program enhancements42UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
Performance and/or stock-based compensation accounted for employees and contractors, to help achieveapproximately 89% of our goal of a safe return home every day
•Out-performed the Bureau of Labor Statistics and AISI industry safety benchmarksCEO’s target compensation in both OSHA Recordable Days and Days Away From Work
•Finished 2017 with adjusted EBITDA of $1.087 billion, more than double 2016 adjusted EBITDA; and with positive operating cash flow of $802 million
•Strong year-end liquidity of $3.350 billion, highest since 2001, including $1.553 billion of cash2020. Based on hand, which supports our goal of maintaining a healthy balance sheet
•Reduced total debt by over $300 million, contributing to net debt reduction by 50%strong pay-for-performance alignment, realizable compensation for our CEO over the last three years is 83.6% of target value granted during the period as reported in the Summary Compensation Table on page 63 of this proxy statement.CEO Realizable Pay Three-Year (2018 - 2020) Aggregate CEO Compensation (in $millions) Compensation Governance Practices Our compensation program is designed to promote exceptional performance and achievingalign the interests of our lowest net debtexecutives with the interests of our stockholders while discouraging executives from excessive risk-taking. | | | | | WHAT WE DO | | | | –
Consider results of say on pay votes when making compensation decisions | | | | –
Regularly engage with our stockholders about our executive compensation program | | | | –
Align pay and performance | | | | –
Cap annual and long-term incentive awards, including when TSR is negative | | | | –
Utilize an independent compensation consultant | | | | –
Require significant stock ownership of executive officers | | | | –
Utilize a market-based approach (competitive within our peer group) for determining NEO target pay levels | | | | –
Require a “double trigger” for change in control severance | | | | –
Provide for clawback of incentive awards if our financial statements are restated | | | | –
Annually review risks associated with our compensation programs | |
| | | | | WHAT WE DON’T DO | | | | –
No excise tax gross ups for change in control payments –
No guarantee minimum payout of annual or long-term performance awards –
No repricing of options –
No hedging transactions, short sales or pledging of our common stock by our directors of executive officers –
No dividends or dividend equivalents on unearned RSUs or performance shares | |
UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT43
COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE SUMMARY
STOCKHOLDER FEEDBACK AND SAY ON PAY VOTE The Board, as well as management, prioritizes constructive communication with our investors to learn about their views of our Corporation and our governance, sustainability and compensation practices. We have maintained ongoing dialogue with our largest stockholders regarding our executive compensation program since 2007
•Successfully completed a $750 million debt offering, providing for future financial flexibility•Continued improvement in working capital2012. The feedback we receive from these discussions is carefully considered by achieving cash conversion cycle time at industry leading performance, a 50% reductionthe Board and the Compensation Committee. We believe the support of our say-on-pay proposal over the last fourfew years
•Made a $75 million voluntary contribution is evidence of the Board’s careful attention to our defined benefit pension plan, strengthening our pension plan as part of our liability management strategy, and adding to the over $400 million improvement in the funded status of our pension and other post-employment benefit plans from 2016 to 2017
•Improved customer experience by reducing quality claims 9% in 2017, and implemented delivery improvement projects to achieve the highest service level in past four years
•Conducted first-ever company-wide employee inclusion survey
•Continue to lead the steel industry's efforts to strengthen and enforce trade laws against unfairly traded imports
Asset revitalization and Innovation
In 2017 we announced a $2 billion strategic initiative to revitalize the assets in our North American Flat-Rolled segment. The program is focused on improving company critical assets to deliver 15-20% EBITDA returns over three to four years, through a consistent focus on improving safety, quality, delivery and cost. The Corporation views this program as essential to improving predictabilitystockholder feedback, and our ability to compete effectivelydecisively take action and incorporate their perspectives in our programs.
In each year from 2017-2019, we received over 94% approval of our executive compensation program. The Compensation Committee recognizes that the 74.8% support for our executive compensation in 2020 was lower than our typical votes in recent years, and we again extended invitations in 2020 to our stockholders to hear their views. 2020 Stockholder Engagement and Actions Taken In 2020, we reached out to holders of approximately 40% of our outstanding shares and meetings were held with the eight investors who accepted our invitation, representing approximately 20% of our outstanding stock. During these meetings, we heard that our stockholders are generally supportive of our executive compensation program and the link between pay and performance embedded in our executive compensation program. One recurring theme of our engagements on compensation has been the challenge of addressing external market conditions that could have a dispositive impact on the Corporation’s earnings. Over the years we have implemented several changes to our compensation practices to further align pay with performance, reduce the volatility in the industry. As we revitalizemeasures under the program to ensure executive compensation is tied to controllable actions and respond to stockholder feedback. We also heard from stockholders that the change to include annual components in the TSR calculation for our assets, we expectLTIP award raised concerns that the award was not long-term in nature. We have expanded disclosure around the rationale behind that change to increase profitability, productivityprovide stockholders with more information upon which to assess our program structure. Finally, our engagements often focus on the health and operational consistency, and reduce volatility.In addition to investing in improvementssafety of our leadersemployees and current assets, we'rehow executives are judged in these areas. We have also enhanced our disclosure in this area to provide more transparency to stockholders about how individual performance is assessed.
COMPENSATION CHANGES MADE IN RESPONSE TO STOCKHOLDER FEEDBACK | | Actions Taken | | | | | | Goal | | | | Enhanced disclosure on individual performance | | | | | | Provide more transparency around how executives’ performance is judged, including how safety factors into our executive compensation program | | | | Revised the AICP formula to enable payout of partial incentive award based on superior individual performance | | | | | | Ensure highly qualified executives are motivated even in periods of market decline, given cyclicality of the business | | | | Eliminated use of stock options to reduce volatility in payouts | | | | | | Reduce volatility in executive compensation payouts and respond to stockholders’ disfavor of options | | | | Revised TSR calculation to include components of TSR for each year in the performance period while maintaining the largest weighting on three-year TSR performance | | | | | | Provide better alignment to stockholder experience, by reducing extremes in vesting and increasing data points used in the calculation, given high volatility in stock price performance | | | | Expanded disclosure around TSR calculation | | | | | | Provide more information to stockholders on the change to calculation specific to our business needs | |
44UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSISOUR COMPENSATION PHILOSOPHY
OUR COMPENSATION PHILOSOPHY Our Compensation Program is Designed Around Four Guiding Principles: | | | | | | Strong Pay-for-Performance Approach | | | –
Majority of target compensation opportunity is performance- and/or stock-based –
Our compensation programs are focused on objective corporate performance measures and individual performance | | | | | Align Pay with Long-Term Interests of our Stockholders | | | –
Equity comprises the largest portion of an executive’s compensation, a substantial portion of which is performance-based –
Executives are subject to rigorous stock ownership and holding requirements | | | | | Support our Strategic and Financial Goals | | | –
Balance of compensation elements that focus on both short-term and long-term corporate performance and goals that align with our annual and long-term strategic objectives | | | | | Attract, Reward and Retain Executives | | | –
Our long-term incentive grants include restricted stock units that may retain some value in a period of stock market decline –
Executive compensation is targeted to be competitive with and aligned to the median of our peer group | |
Compensation Committee Decision-Making Process We have a robust and ongoing annual process to plan, review and determine executive compensation, which includes at least annual engagement with our stockholders. When evaluating the futurecompensation reported in the Summary Compensation Table against company performance, it is helpful to keep in mind the timing each of the decisions are made by investingthe Compensation Committee. | DATE | | | COMPENSATION ELEMENT | | Determined January/February 2020 | | | Base Salary and Annual/Long-Term Incentive Program Target Grant Values –
Base salaries and target grant values under the AICP and LTIP were determined in January and February 2020 and reflect corporate and individual performance in 2019 and potential to drive success in 2020. | | Determined after 2020 Year-end
Paid March 2021 | | | Annual Incentive Awards –
AICP awards reported for 2020 were determined following 2020-year end based on 2020 corporate and individual performance and paid in March 2021. | | Certified after 2020 Year-end
Payouts for 2020 awards reported in March 2021 | | | Long-Term Incentive Awards –
Performance for 2018-2020 LTIP awards was certified following 2020-year end and vested, as applicable, in February 2021. –
Interim performance criteria for 2019 and 2020 LTIP TSR performance awards certified in February 2021; awards do not vest until following the applicable three-year performance period. | |
2020 COMPENSATION DECISIONS ALIGN PAY AND PERFORMANCE In making decisions regarding 2020 compensation, the Compensation Committee underwent a robust analysis and thoughtful process. In the beginning of the year, the Compensation Committee’s independent consultant reassessed the roles and responsibilities of our executive officers. That review resulted in a change to the median total target direct compensation for executive officers as compared to the executive compensation peer group. The Compensation Committee, in order to motivate and incentivize executives, particularly during a time of strategic transition when retention of executives is of utmost importance, normalized executive total target direct compensation by adjusting target amounts for base salary, AICP opportunity and LTIP grant values. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 45 |
COMPENSATION DISCUSSION AND ANALYSIS2020 COMPENSATION DECISIONS ALIGN PAY AND PERFORMANCE
In making target compensation decisions, the Compensation Committee also took into consideration U.S. Steel’s 2019 performance, the industry market environment expected for 2020, continued development and execution of our global workforcelong-term strategy, and assumption of additional duties in connection with executive leadership changes and the innovation that will create tomorrow's steel solutions today. We've continued our aggressive efforts around the developmentresponsibilities of the next generation of advanced high-strength steels (AHSS) for the automotive industry to solve its most pressing challenges. Years of work on AHSS technology culminated with the announcement in September 2017 of the commencement of construction of a new continuous galvanizing line at our PRO-TEC Coating Company joint venture that will feature proprietary technology developed in part by our company. We also launched a new proprietary semi-premium tubular connection – EAGLE SFHTM and sold our first orders of USS-LIBERTY LDTM connections to meet the needseach of our customersNEOs. Actual AICP award decisions were made following the completion of 2020 and based on achievement of rigorous corporate EBITDA and CCC goals, as well as individual performance objectives. While Corporate EBITDA targets were not achieved, the European segment achieved above target EBITDA performance, which comprises a portion of Mr. Bruno’s award. Additionally, U. S. Steel achieved the maximum performance target for Cash Conversion Cycle. One-Time Bonus for Extraordinary Team Leadership During the Pandemic The Compensation Committee believes the AICP design is the appropriate short-term design to incentivize executives to achieve profitability and cash management that aligns with stockholders’ interests, and generally disfavors one-time cash awards. However, the Compensation Committee recognized that 2020 was not an ordinary year and determined that the usual formula did not serve as a full and adequate measurement of performance to drive stockholder value or reward performance. While EBITDA performance fell short of targeted goals that were set in January 2020 prior to the pandemic, as the year unfolded with unprecedented challenges and market disruption, the Compensation Committee determined that EBITDA did not serve as the broad measurement of annual performance or creation of stockholder value that it typically does. The severe impacts to the economy caused by the pandemic early in the year, including abrupt closure of auto facilities and the global oil and gas industrycrisis, made EBITDA targets unachievable early on. Recognizing the substantial commitment of our executives navigating the challenges, the Compensation Committee determined that payout beyond the AICP formula was warranted. However, the Compensation Committee determined not to adjust the EBITDA metric or performance goals that were negatively impacted by the pandemic. Major 2020 Achievements In recognition of that dynamic, the Compensation Committee considered the actions management took and how they performed to sustain the deep trough and perform in the recovery, including these notable achievements: –
2020 total shareholder return of 48%, outperforming the S&P 500 and the majority of our steel company peers –
Significantly exceeding pandemic-adjusted expectations for year-end cash and liquidity –
Continuity of operations through rapid and comprehensive COVID-19 crisis response, including robust health and safety measures and the speedy transition of administrative and headquarters employees to work from home, weeks faster than expected | 46 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS2020 COMPENSATION DECISIONS ALIGN PAY AND PERFORMANCE
![[MISSING IMAGE: tm212306d1-lc_compesatpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-21-035691/tm212306d1-lc_compesatpn.jpg) The Compensation Committee also recognized that successfully navigating the pandemic environment was not up to individual performance – it was largely dependent upon exceptional collaboration and execution as a team, with each leader aligned to common purpose. After taking into consideration the performance to navigate the unprecedented challenges, the Compensation Committee awarded each NEO a one-time cash award in amounts shown in the following table. The CEO forfeited approximately $290,000 in compensation through voluntary salary reduction and suspended retirement account contributions, and recommended that he be excluded from such an award. He advocated for an award recognizing the leadership of his team of senior vice presidents. In addition, in recognition of the pandemic challenges faced by employees, including loss of certain retirement compensation, and for the hard work to position U. S. Steel to prosper in the industry recovery, salaried employees were also awarded a one-time cash bonus. In determining the one-time bonus award amount, the Compensation Committee examined the amount of compensation each executive gave up as a stronger company by 2020.part of the recommended salary reduction and suspension of 401(k) contributions, as well as AICP payouts. –
The aggregate annual payment to our NEOs with AICP and the one-time bonus generally does not exceed 100% of their targeted AICP amount. The Compensation Committee considers this amount to be reasonable to recognize performance, and aligned with enterprise and stockholder interests. United States Steel Corporation | 2018 Proxy Statement |23
Compensation Discussion and Analysis – Executive SummaryUNITED STATES STEEL CORPORATION
2021 PROXY STATEMENT | 47 |
COMPENSATION DISCUSSION AND ANALYSIS2020 ANNUAL INCENTIVE PAYOUT AND ONE-TIME CASH AWARD
2020 ANNUAL INCENTIVE PAYOUT AND ONE-TIME CASH AWARD | Executive | | | Target AICP Award
as % of Base
Salary(1) | | | Target
Award(1) | | | Corporate Payout
Rate(2) | | | Actual AICP
Amount
Awarded(3) | | | One-Time
Cash Bonus | | | Total Annual
Incentive and
Bonus Payment | | | Burritt | | | 150% | | | $1,912,500 | | | 50% | | | $1,530,000 | | | 0 | | | $1,530,000 | | | Breves | | | 100% | | | $702,500 | | | 50% | | | $562,000 | | | $125,000 | | | $687,000 | | | Bruno | | | 85% | | | $493,000 | | | 121% | | | $695,130 | | | $100,000 | | | $795,130 | | | Buckiso | | | 85% | | | $493,000 | | | 50% | | | $345,100 | | | $100,000 | | | $445,100 | | | Holloway | | | 80% | | | $473,000 | | | 50% | | | $331,100 | | | $100,000 | | | $431,100 | |
(1)
“Base Salary” for purposes of determining the AICP award is the actual salary earned for 2020 without giving effect to the temporary salary reduction. The “Target Award” is the amount that would be paid to the executive assuming the Corporation achieved the AICP target performance objectives and before consideration of individual performance. (2)
The “Corporate Payout Rate” is determined by the Corporation’s actual performance measured against the 2020 performance metrics and before individual performance is considered. Differences in the payout rate among the executives are the result of variances in EBITDA weighting for the business segments. (3)
The “Actual AICP Amount Awarded” is the amount awarded by the Compensation Committee after consideration of individual performance. | 48 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS2020 NEO PERFORMANCE AND COMPENSATION SUMMARIES Maintaining Pay-for-Performance Approach through Industry Cycles2020 NEO PERFORMANCE AND COMPENSATION SUMMARIESThe Compensation Committee sets challenging operational and financial performance targets to motivate executives to achieve short- and long-term success. To link pay to performance, the Compensation Committee believes it isthat most of an executive’s compensation should be paid in the form of performance- and/or stock-based compensation with a greater emphasis on variable components for the most senior executives who have greater responsibility for the performance of the business. The Compensation Committee assesses our NEOs on their individual performance related to safety leadership and culture, executing our strategy, progressing on our critical success factors and overall leadership. Base salary and target annual and long-term award opportunities are generally aligned with our peer group median. The summaries below describe actual awards based on corporate and individual performance goals. | | | | | DAVID B. BURRITT President & Chief Executive Officer | | | | 2020 Compensation Actual Earned / Awarded | | | Responsibilities | | | | Base Salary | | | $1,112,500 | | | Mr. Burritt oversees U. S. Steel’s long-term strategic direction to deliver value for customers, employees and stockholders. He is responsible for the overall mission and culture at U. S. Steel, senior leadership development and succession planning, and engaging with key strategic customers, industry leaders, and policymakers. | | | | AICP | | | $1,530,000 | | | | LTIP | | | RSU grant | | | $3,200,000 | | | | | | | TSR-based performance awards granted | | | $2,400,000 | | | | | | | ROCE awards granted in cash | | | $2,400,000 | | | | | | | 2018-2020 equity-based performance awards | | | $0 payout | | | | One-time Bonus | | | 0 | | | | Total | | | $10,643,000
| | | | 2020 Performance Summary –
Mr. Burritt provided exceptional and steadfast leadership to the enterprise during a period of tremendous uncertainty and volatility. ��� –
Mr. Burritt set the tone for dedicated commitment to the Corporation’s S.T.E.E.L Principles, and oversaw the best safety performance ever, significantly outperforming all industry benchmarks, and strict adherence to pandemic-related health and safety guidance. –
He maintained the organization’s focus on executing its Best of Both strategy through a disciplined and structured approach that was adapted for changing market conditions. This approach culminated with the earlier than planned exercise of the Corporation’s option to acquire the remainder of Big River Steel, a significant step towards achieving U. S. Steel’s sustainability and technology transformation goals. –
Mr. Burritt also refocused the organization on customer centricity and leveraged remote technology to become more connected with customers, employees and other stakeholders. –
Mr. Burritt promoted increased employee engagement through more virtual connections, including participating in events with every employee resource group throughout the year to show the leadership’s emphasis on inclusion and diversity. | |
| | | | | | | | | | | | | | | | | | | | | | TOTAL SHAREHOLDER RETURN 48%
Outperformed the S&P 500 and the majority of our steel company peers | | | | RAISED $1.7 BILLION IN INCREMENTAL CAPITAL Ended the year with liquidity of approximately $3 billion | | | | RECORD-SETTING SAFETY PERFORMANCE Outperformed all industry benchmarks, with 0.07 Days Away from Work | | | | COMPLETED BIG RIVER STEEL ACQUISITION Executed cornerstone of our Best of Both strategy earlier than anticipated | | | | RECORD LOW 24-DAY CASH CONVERSION CYCLE TIME Demonstrated intense focus on cash efficiency | |
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 49 |
COMPENSATION DISCUSSION AND ANALYSIS2020 NEO PERFORMANCE AND COMPENSATION SUMMARIES
| | | | | CHRISTINE S. BREVES Senior Vice President & Chief Financial Officer | | | | 2020 Compensation Actual Earned / Awarded | | | Responsibilities | | | | Base Salary | | | $666,500 | | | Ms. Breves leads all aspects of the Corporation’s financial organization, including accounting, credit, tax, treasury, investor relations, pension investments, internal controls and internal audit administrative oversight. She also oversees the global information technology organization, real estate group and procurement function. | | | | AICP | | | $562,000 | | | | LTIP | | | RSU grant | | | $800,000 | | | | | | | TSR-based performance awards granted | | | $600,000 | | | | | | | ROCE awards granted in cash | | | $600,000 | | | | | | | 2018-2020 equity-based performance awards | | | $0 payout | | | | One-time Bonus | | | $125,000 | | | | Total | | | $3,353,500
| | | | 2020 Performance Summary –
Ms. Breves demonstrated superior leadership of the finance organization in 2020, leading critical capital markets activity and refinancing efforts in support of our Best of Both strategy. Through a difficult environment, she focused the organization on prioritizing cash and liquidity, and implemented a robust business resiliency planning process. –
Under her leadership, the procurement organization achieved significant cost savings for the Corporation and structured third-party long-term pellet sales to bolster the Corporation’s cash generation opportunities. –
Ms. Breves assumed leadership of the IT function in 2020, a testament to her strong leadership and ability to deliver on the Corporation’s strategic goals. | |
| | | | | JAMES E. BRUNO Senior Vice President – European Solutions & President, USSK | | | | 2020 Compensation Actual Earned / Awarded | | | Responsibilities | | | | Base Salary | | | $551,000 | | | Mr. Bruno leads all aspects of the European business, including oversight of steelmaking operations, administrative and reporting procedures, and people systems. Mr. Bruno also is responsible for engaging with key policymakers in Europe. | | | | AICP | | | $695,130 | | | | LTIP | | | RSU grant | | | $520,000 | | | | | | | TSR-based performance awards granted | | | $390,000 | | | | | | | ROCE awards granted in cash | | | $390,000 | | | | | | | 2018-2020 equity-based performance awards | | | $0 payout | | | | One-time Bonus | | | $100,000 | | | | Total | | | $2,646,130
| | | | 2020 Performance Summary –
Mr. Bruno displayed outstanding leadership of the European business. For the second year in a row, USSK achieved extraordinary Zero OSHA Days Away from Work safety performance, illustrating the strong safety consciousness. –
Under Mr. Bruno’s leadership, USSK delivered above target EBITDA performance during the pandemic environment and maintained strong quality and delivery performance to serve its customers. –
Mr. Bruno was able to quickly adapt operations to rapidly changing market environments, safely and efficiently, and made vast improvements to USSK’s labor productivity. | |
| 50 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS2020 NEO PERFORMANCE AND COMPENSATION SUMMARIES
| | | | | SCOTT D. BUCKISO Senior Vice President & Chief Manufacturing Officer NAFR | | | | 2020 Compensation Actual Earned / Awarded | | | Responsibilities | | | | Base Salary | | | $551,000 | | | Mr. Buckiso has executive responsibility for all North American Flat-Rolled production facility activities, overseeing daily steelmaking operations. He also oversees the Corporation’s iron ore mining operations, logistics services, engineering and corporate quality organizations, and Transtar, U. S. Steel’s short-line railroad subsidiary. | | | | AICP | | | $345,100 | | | | LTIP | | | RSU grant | | | $520,000 | | | | | | | TSR-based performance awards granted | | | $390,000 | | | | | | | ROCE awards granted in cash | | | $390,000 | | | | | | | 2018-2020 equity-based performance awards | | | $0 payout | | | | One-time Bonus | | | $100,000 | | | | Total | | | $2,296,100
| | | | 2020 Performance Summary –
Mr. Buckiso demonstrated strong leadership of North American operations, ensuring continuity of operations throughout the pandemic and exceptional safety performance from U. S. Steel’s essential industry workers. –
Under his leadership, significant construction projects and upgrades were completed on time and on budget to advance the Best of Both strategy. –
His focus on inventory management throughout the volatile year contributed to working capital improvements and cost reductions, and he led continued improvements in quality to key automotive customers. | |
| | | | | DUANE D. HOLLOWAY Senior Vice President, General Counsel and Chief Ethics & Compliance Officer | | | | 2020 Compensation Actual Earned / Awarded | | | Responsibilities | | | | Base Salary | | | $561,500 | | | Mr. Holloway serves as legal and business advisor to the Board of Directors, the CEO, and the senior leadership team, and has executive responsibility for all legal, regulatory, corporate governance, and ethics and compliance matters across the Corporation. | | | | AICP | | | $331,100 | | | | LTIP | | | RSU grant | | | $520,000 | | | | | | | TSR-based performance awards granted | | | $390,000 | | | | | | | ROCE awards granted in cash | | | $390,000 | | | | | | | 2018-2020 equity-based performance awards | | | $0 payout | | | | One-time Bonus | | | $100,000 | | | | Total | | | $2,292,600
| | | | 2020 Performance Summary –
Mr. Holloway delivered exceptional leadership of the Legal and Compliance functions and was integral to the execution of many Best of Both strategic initiatives in 2020. –
Mr. Holloway’s leadership of the COVID-19 crisis response team, and legal guidance on continuously changing health, safety and employment protocols was essential to protecting lives and livelihoods throughout the past year. –
His effective counsel, ethical leadership and business acumen ensure that U.S. Steel operates with proper protocols and practices to meet business requirements, mitigate risk and create value for its stakeholders. | |
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 51 |
COMPENSATION DISCUSSION AND ANALYSISOUR COMPENSATION PROCESS
OUR COMPENSATION PROCESS Role of the Compensation Committee and Independent Consultant The Compensation Committee retained Pay Governance, LLC as its independent consultant to alignassist in the evaluation of executive compensation programs and in setting executive officers’ compensation. The use of an independent consultant provides additional assurance that our executive compensation programs are reasonable and consistent with the Corporation’s objectives. The consultant reports directly to the Compensation Committee and does not perform services for management without the express approval of the Compensation Committee. There were no services performed by the consultant for management in 2020. The consultant participates in the Compensation Committee meetings, including executive sessions, and regularly advises the Compensation Committee with respect to compensation trends and best practices, plan design, and the reasonableness of individual compensation awards. For our CEO’s compensation, the Compensation Committee makes its determinations based upon its evaluation of the CEO’s performance and with input from its consultant. Each year, the Compensation Committee reviews with the Board of Directors the CEO’s goals and objectives, and the evaluation of the CEO’s performance against the prior year’s goals and objectives. The CEO does not participate in the presentations to, or discussions with, the Compensation Committee in connection with the setting of his compensation. | | 2020 Pay Governance Services | | | | During 2020, Pay Governance performed the following specific services: –
provided presentations on executive compensation trends, best practices and recent developments; –
advised on compensation program design; –
prepared competitive assessments by position for each element of compensation and for total compensation for our executives; and –
reviewed the peer groups used for benchmarking compensation and measuring performance for purposes of the relative TSR Performance Awards. | | | | The Compensation Committee has assessed the independence of the consultant pursuant to the NYSE listing standards and SEC rules and concluded that no conflict of interest exists that would prevent the consultant from serving as an independent consultant to the Compensation Committee. | |
Compensation and Risk Management The Compensation Committee’s compensation consultant annually performs a risk assessment of our executive compensation program and, based on its most recent review, the consultant has determined that our compensation program contains a variety of features that mitigate unnecessary risk taking, including the following: –
Compensation Mix: Executive officers receive a mixture of short-term and long-term incentives in addition to base salary. Long-term incentives, which are awarded in equity, make up the majority of our executives’ compensation; –
Capped Awards: Payments under our AICP are capped at 230% of target and our long-term performance awards are capped at 200% of target; –
Performance Metrics: Different metrics are used in the annual and long-term incentive programs; and –
Stock Ownership: Executive officers are required to own a significant amount of common stock determined as a multiple of their base salary. For these reasons, the Compensation Committee concluded that our 2020 compensation and organization policies and practices are not reasonably likely to create a risk that could have a material adverse effect on the Corporation. Tally Sheets The Compensation Committee uses tally sheets to evaluate the total compensation and projected payments to the NEOs under various termination scenarios. This analysis is undertaken annually to assist the Compensation Committee in determining whether the compensation package of each NEO is appropriately aligned with our compensation philosophy and the compensation practices of our peers. | 52 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSISOUR COMPENSATION PROCESS
Peer Groups The Compensation Committee also considers relevant market pay practices in its decision making process. The Compensation Committee uses the peer group data below as a frame of reference to guide executive compensation decisions. The Corporation uses two peer groups: –
Executive Compensation Peer Group. This peer group is used to benchmark and assess the competitiveness of the compensation of our NEOs. –
Performance Peer Group. This peer group, which is more industry focused, is used to evaluate the long-term performance of the Corporation for the relative TSR performance award. The performance peer group is used to evaluate our performance against a targeted group of companies in our industry that we believe we need to outperform to be successful over the long term. Executive Compensation Peer Group The executive compensation peer group is used to serve as a market reference when making compensation decisions and designing program features, and to assess the competitiveness of each element of compensation and compensation in total. We also use this peer group as a reference when analyzing pay-for-performance alignment. In setting the executive compensation peer group, the Compensation Committee considered a set of broader, industrial peers who might compete with the goalsCorporation for talent as well as companies outside of the material/industrial industry who might attract our executives that have skills transferable outside of the metals industry. The Compensation Committee aims to set executive compensation targets in line with the executive compensation peer group median. The executive compensation peer group was selected based on the following criteria: –
large companies primarily from the Materials sector or Industrials sector within the Global Industry Classification Standard (GICS) classification codes; –
companies similar in complexity — specifically, companies that have: –
revenues that range from half to double that of the Corporation; –
capital intensive businesses as indicated by lower asset turnover ratios; –
market capitalization reasonably aligned with the Corporation; and –
similar employee levels –
acceptable levels of financial and stockholder performance and a higher company stock price volatility (referred to as “beta”) to align with that of the Corporation; and –
elimination of companies with unusual compensation practices (e.g., company founders who receive little or no compensation and companies that are subsidiaries of other companies). | | The 2020 executive compensation peer group consisted of the following companies: | | | | AK Steel Holding Corporation | | | Eaton Corporation plc | | | Parker-Hannifin Corporation | | | | Alcoa Corporation | | | Freeport-McMoRan Inc. | | | PPG Industries, Inc. | | | | Allegheny Technologies Incorporated | | | Illinois Tool Works Inc. | | | Reliance Steel & Aluminum Co. | | | | Arconic Inc. | | | Ingersoll-Rand Plc | | | Steel Dynamics, Inc. | | | | Cleveland-Cliffs Inc. | | | Lear Corporation | | | Terex Corporation | | | | Commercial Metals Company | | | Masco Corporation | | | Textron Inc. | | | | Cummins Inc. | | | Navistar International Corporation | | | The Goodyear Tire & Rubber Company | | | | Eastman Chemical Company | | | Nucor Corporation | | | Weyerhaeuser Co. | | | | | | | | | | Whirlpool Corporation | |
Performance Peer Group The Compensation Committee believes the use of a performance peer group for purposes of the relative TSR performance awards is appropriate because executive compensation arrangements and practices are influenced by business complexity | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 53 |
COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
and company size, and many of our strategic turnaround initiativesindustry competitors are much smaller than U. S. Steel. The performance peer group consists of twelve domestic companies in a challenging operatingthe steel industry. Peers were selected based on criteria that included: –
specific domestic steel or steel-related industry; –
five-year stock price correlation greater than 0.50; and unpredictable economic environment. Therefore, our compensation structure balances –
stock price beta greater than 1.0. | | The 2020 performance peer group consisted of the following companies: | | | | AK Steel Holding Corporation | | | Commercial Metals Company | | | Schnitzer Steel Industries, Inc. | | | | Allegheny Technologies Inc. | | | Nucor Corporation | | | Steel Dynamics Inc. | | | | Carpenter Technology Corporation | | | Olympic Steel Inc. | | | Timken Steel Corporation | | | | Cleveland-Cliffs Inc. | | | Reliance Steel & Aluminum Co. | | | Worthington Industries, Inc. | |
AK Steel Holding Corporation was removed from the following:•a strong pay-for-performance approach that links financial performance to the incentive opportunities realized by our executives;
•measurable performance metricspeer group following its merger with Cleveland Cliffs in our incentive plans that support our strategic and financial goals;2020.
ELEMENTS OF COMPENSATION
•alignment of management interests with the long-term interests of our stockholders; and
•our need to retain executives best qualified to guide the Corporation through its transformation. The elements of compensation provided to our executives include:include base salary, short-term annual incentive compensation, long-term incentive compensation, retirement benefits, and other compensation. The distribution of compensation among the various compensation elements is based on the Committee'sCompensation Committee’s belief that to link pay to performance, most of an executive'sexecutive’s compensation should be paid in the form of performance-based variable compensation with a greater emphasis on variable components for the most senior executives who have greater responsibility for the performance of the business. Base Salary Variable, at-risk compensation accounted for 74% of our CEO's target compensation in 2017. Based on this strong pay-for-performance alignment, realizable compensation for our CEO over the last three yearsBase salary is 42% above the target value granted during the period.
*Amounts shown reflect annual target compensationdesigned to compensate for the Corporation's current President and CEO and do not reflect actual amounts paid to Mr. Burritt in 2017 because his compensation was increased in connection with his promotion in May 2017.
24 |United States Steel Corporation | 2018 Proxy Statement
Compensation Discussion and Analysis – Executive Summary |
Compensation Elements
The following table highlights the key elements of our performance-based compensation structure. Goals for each incentive component are set at the beginning of the performance period and above market performance is required for the target payout to be made under the relative TSR metric.
| | | | | Element
| | Form
| | Description and Performance Metrics
|
|---|
| | | | | Base Salary | | Fixed Cash | | Market competitive levels that take into account scope and complexity of role and individual qualifications, experiences and internal value to the Corporation | | | | | | | | | | Net sales –funding trigger (no payout under plan if not met) | | | | | | Annual Incentive | | Performance-Based Cash | | EBITDA –weighted 50% | | | | | | Compensation Plan (AICP) | | | | Cash flow –weighted 50% | | | | | | | | | | Individual performance –modifier on award amount | | | | | | | | Performance-Based Awards (60%)*
Performance-Based Equity (30%) | | Relative TSR –measured over a 3-year period; requires above market performance for target payout to be made | | | | | | Long-Term Incentive Program | | Performance-Based Cash (30%) | | ROCE –measured over a 3-year period | | | | | | (LTIP) | | Time-Based RSUs (20%)* | | Supports retention and linked to stock price performance | | | | | | | | Stock Options (20%)* | | Measured relative to appreciation in stock price |
*Percentage of award at target grant
Compensation Decisions and Outcomes Demonstrate Alignment with Performance
The Committee approved the following items based on several factors, including: the Corporation's 2016 performance; outlook for 2017 performance; continued development and execution of the long-term strategy; assumption of additional duties in connection with executive leadership changesday-to-day activities and responsibilities of each of our NEOs; among other criteria.
CEO Compensation Decisions for 2017
•Salary: In connection with his promotionposition. Base salary is set at a market competitive level to CEO,attract and retain talent. Actual salary levels take into account factors such as the Committee set the base salary of Mr. Burritt below the median for the CEO position, which is lower than that of the former CEO. Following the leadership change, the Committee determined to set a greater percentage of the CEO's target compensation as incentive-based compensation.
•Annual Incentive: Mr. Burritt's target incentive percentage under our AICP was increased to 140% of base salary in connection with his promotion to CEO (down from the 150% target of our prior CEO). Mr. Burritt did not receive an annual cash incentive award for 2017.
•Long-Term Incentive: The target value of Mr. Burritt's LTIP award increased from $2,750,000 to $6,100,000 in connection with his promotion to CEO (below the 2016 target of $8,750,000 for our prior CEO).
•Total Compensation: Mr. Burritt's target pay increased in connection with his elevation to the role of President & CEO, though it remains lower than the total target compensation of our former CEO by $4 million. The amounts shown for Mr. Burritt in the Summary Compensation Table reflect his service for a portion of the year as Executive Vice President & Chief Financial Officerexecutive’s contribution, individual qualifications and Chief Operating Officer.
The Committee believes pay decisions for 2017 demonstrate the significant link between executive compensationexperiences, and company performance, and accountability of our executives to deliverinternal value to our stockholders.
Other Compensation Decisions
Generally base salaries and target AICP and LTIP grants did not increase for our NEOs in 2017. The Committee did approve an increase in base salary, AICP target and LTIP target for Mr. Buckiso to better align his compensation with other NEOs and comparable roles across our organization and the peer group. Additionally, in February 2017, Mr. Soni was promoted to Vice President – Finance and received a corresponding increase in all compensation elements, consistent with other executives at the Vice President level.
Compensation Outcomes: Payouts Reflect Corporate Performance
The Committee considers a mix of cash and equity awards over both the short-term and long-term as a critical balance in reinforcing U. S. Steel's commitment to performance alignment. This strong pay-for-performance alignmentSteel. Base salary is clearly reflectedpaid in amounts actually earned by our NEOs based on the achievement of metrics established by the Committee for the short-term and long-term incentive plans.
The average annual incentive payout over the last three years for our named executive officers is 94% of target, and no payouts were made in 2015 based on the Corporation's financial performance. Below target performance award payouts have been made under our long-term incentive plan during this same time period, with no payouts for the 2014 performance awards, 2014-2016 or 2015-2017 ROCE performance awards and below target payout for the 2015-2017 TSR performance awards.
cash. United States Steel Corporation | 2018 Proxy Statement |25
Compensation Discussion and Analysis – Executive Summary
|
The following table illustrates how our performance has affected the payout of our short-term incentives and how the performance of our common stock affects the value of the long-term incentives that would be received by our Chief Executive Officer based on our closing stock price of $35.19 on December 29, 2017:
| | | | | | | | | | | | | | | | | | Annual Incentive(1) | | Stock Options | | | Restricted Stock(3) | | | Performance Awards(4) | | | | | | | | | | | | | | | | | | Year | | | % of Target Award Paid | | Exercise
Price | | Intrinsic
Value(2) | | | Value as a % of
Grant Value | | | Award Payout as a %
of Target | | | | | | | | | | | | | | | | | | 2017 | | | 0% | | $39.265 | | $0 | | | 90% | | | 87% | | 2016 | | | 201% | | $14.780 | | $20.41 | | | 238% | | | 200% | | 2015 | | | 0% | | $24.780 | | $10.41 | | | 142% | | | 74% | | | | | | | | | | | | | | | | | |
(1)The "Annual Incentive" column indicates the percentage of the Target Award earned under our Annual Incentive Compensation Plan. See page 30 for an explanation of Mr. Burritt's award.
(2)The "Intrinsic Value" column shows the amount (if any) by which the market value of our shares underlying an option exceeds the exercise price at December 29, 2017. If the exercise price exceeds the market price, the stock options have no intrinsic value.
(3)The "Restricted Stock" column shows the market value on December 29, 2017, of the shares underlying the restricted stock units as a percentage of the market value on the grant date. To the extent that the market value has declined, the dollar amount of the value of the restricted stock units reflected in the Summary Compensation Table will also decline.
(4)The "Performance Awards" column indicates the percentage of the performance awards that would be paid out based on our TSR as compared to the TSR of the peer group companies and ROCE. The information in the table reflects the assumption that the performance periods for the 2015, 2016 and 2017 performance awards ended on December 29, 2017.
CEO Realizable Pay
Changes to 2017 Compensation Program
No changes were made to the design of the AICP or the LTIP for 2017. The following modification was made in recognition of the experienced executive hires that have been made over recent years, in order to ensure they receive full and fair benefits under the Corporation's retirement programs.
•Vesting Upon Retirement –For LTIP awards granted in 2017 and later, the Committee revised the vesting requirements, so that awards shall be prorated upon
retirement: (i) after 30 years of service and (ii) at age 55 with 10 years of service; and fully vested upon retirement, provided the executive remains employed with the Corporation for at least six months following the grant date: (i) at age 60 with 5 years of service, and (ii) at age 65. The revision is not applicable to participants in the Supplemental Pension Program, which includes Mr. Matthews.
26 |United States Steel Corporation | 2018 Proxy Statement
Compensation Discussion and Analysis – Executive Summary |
Commitment to Stockholder Engagement on Executive Compensation
In 2017, we continued our long-standing engagement efforts with our stockholders both during and outside of the proxy season. In each of the last two years, we've met with or held telephonic meetings with stockholders representing over 20% of our outstanding stock. These discussions focused primarily on our business strategy and the alignment of our compensation program to our strategy and company performance. In addition, some stockholders indicated they did not believe a call was necessary and indicated their support for our compensation and governance practices.
The Board, as well as management, prioritizes constructive communication with our investors to learn about their views of the Corporation and our governance and compensation practices. In addition to the frequent communication our CEO and Investor Relations team has with our stockholders, we have maintained ongoing dialogue with our largest stockholders regarding our corporate governance and executive compensation program since 2012. The feedback we receive from these discussions is carefully considered by the Board and the Committee, and we believe the strong support for our say-on-pay proposal over the last few years is evidence of the careful attention we pay to the feedback
given to us by our stockholders, and our ability to decisively take action and incorporate their perspectives in our programs.
Based on our 2017 meetings, we determined that our stockholders are supportive of the strong link between pay and performance embedded in our executive compensation program. Over the years, we have implemented changes to our compensation practices to further align pay with performance and enhanced disclosure regarding the rationale behind certain compensation decisions.
Compensation Governance Practices
Our compensation program is designed to promote exceptional performance and align the interests of our executives with the interests of our stockholders while discouraging executives from excessive risk-taking. Our executive compensation is directly aligned with company performance and measurable financial metrics.
Compensation & Organization Committee Practices |
✓Considers the results of the most recent say-on-pay advisory vote by stockholders and has implemented proactive communications with stockholders to gain input and feedback when making executive compensation decisions
✓Undertakes a goal setting process that is used to arrive at rigorous short-term and long-term performance goals under our incentive plans that are aligned to key corporate strategic and financial goals
✓Engages in and leads a robust CEO performance evaluation process
✓Engages and consults with its own independent compensation consultant
✓Has established formal selection criteria for the executive compensation and relative TSR peer groups and annually reviews peer group composition
✓Annually reviews tally sheets analyzing executive compensation levels and structures, including amounts payable in various termination scenarios
✓Annually reviews the risks associated with our compensation programs and has implemented various risk mitigating practices and policies, such as:
•Targeting the majority of our executives' compensation in long-term performance based awards using multiple equity and cash vehicles
•Implementing rigorous executive stock ownership and holding requirements
•Utilizing multiple performance measures that focus on company-wide metrics and placing a cap on potential incentive payments
✓Our Change in Control Severance Plan establishes a "double trigger," requiring participants to be terminated without "cause," or voluntarily "for good reason" following a change in control prior to receipt of any payment of severance benefits
✓Maintains a "clawback" policy that applies to executive officers and provides for the recoupment of incentive awards under certain conditions in the event the Corporation's financial statements are restated
✓Maintains Anti-Hedging and Pledging Policies that prohibit all employees and directors from engaging in any transaction that is designed to hedge or offset any decrease in our stock price and prohibits executive officers and directors from pledging our stock as collateral for a loan or holding shares in a margin account
✓No payment of tax gross-ups to any executives for any payments relating to a change in control
United States Steel Corporation | 2018 Proxy Statement |27
Table of Contents
Compensation Discussion and Analysis
|
Executive Compensation in Detail
|
Compensation Principles
Our executive compensation program is designed to attract, reward and retain executives who make significant contributions through operational and financial achievement aligned with the goals and philosophy of our transformation
and the long-term interests of stockholders. The following five principles support these objectives and guide the design of our compensation program:
| | | Compensation Principle
| | Compensation Design
|
|---|
| | | Align Pay with Stockholder Interests | | •
Approximately 60% of target compensation opportunity is performance based for our CEO (average of 44% for other NEOs).
•
Equity incentives comprise a significant portion of an executive's compensation.
•
Executives are subject to rigorous stock ownership and holding requirements.
•
Performance metrics, applied to 60% of our long-term program, align with our annual and long-term strategic objectives.
| | | | Pay Fair and Competitive Compensation | | •
Executive compensation is targeted to be competitive with our peer group.
•
Our compensation programs are focused on objective corporate performance measures and individual performance.
| | | | Link Compensation to Company Performance and Strategy | | •
Balance of compensation elements that focus on both short-term and long-term performance and goals.
•
Short-term incentives are based on annual financial performance (i.e., EBITDA and cash flow), and individual performance.
•
Long-term incentives are tied to the Corporation's relative TSR and return on capital employed (ROCE).
| | | | Retain Executives | | •
Our long-term incentive grants include restricted stock units and performance awards that may retain some value in a period of stock market decline.
| | | | Provide Equity-Focused and Tax-Efficient Rewards | | •
The largest portion of an executive's compensation is in the form of long-term equity incentives, which preserves cash.
•
Our compensation programs are designed to preserve corporate tax deductions.
|
Compensation Program Elements
Short-Term Incentive Compensation
|
The purpose of our Annual Incentive Compensation Plan (AICP) is to align
Our AICP aligns our executive officers'officers’ compensation with the achievement of annual performance goals that support our business strategy. Typically, the short-termannual incentive awards are paid in cash, but the Compensation Committee retains discretion to provide the award in cash, stock, or a combination of both. The AICP is designed to focus executives primarily on efficient cash generationmanagement and profitability. It is funded each year based on the achievement of a pre-determined net sales performance goal, and once funded, actualActual amounts earned are based on the formula illustrated below, with predetermined performance goals based on the achievement of cash flowCCC and earnings before interest, taxes, depreciation and amortization (EBITDA)EBITDA performance measures. Final awards may be increased or decreased based on individual performance. The individual performance factor is based on a percentage of the executive’s target award. The Compensation Committee determined that cash flowEBITDA and EBITDACCC were the appropriate measures to drive the transformation required to achieve our goal of sustainable profitability.
2020 AICP Incentive Formula 28 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
| 54 | Compensation Discussion and AnalysisUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
| | | | | Performance MeasureAICP Performance Measures
| | How it Works
| | Rationale/Description
|
|---|
Net Sales | | Determines if plan is funded; no payouts are made if net sales goal is not achieved | | The Committee sets the funding threshold as a value of net sales to more fully align the objective with the Corporation's focus on shipping profitable tons, rather than on volume produced | | | | | | Cash Flow* | | Determines 50% of award payout | | Financial performance measure intended to focus the organization on the generation of the cash required to reduce debt and fund investments that will yield profitable returns in the future | | | | | | EBITDA** | | Determines 50% of award payout | | Financial performance measure intended to focus the organization on operating at sustainable, profitable levels | | | | | | Individual Performance | | Modifier; Committee may increase award up to 30% or reduce or eliminate based on individual performance | | Based on an assessment of the executive's individual performance, including the contribution to overall corporation results and attainment of operational and strategic goals, and the priorities of profitability, customer focus, operational excellence and building a high performing organization, as well as internal equity fairness, and the impact of significant research, development and innovation |
*Cash flow is defined as earnings before interest, taxes, depreciation, depletion, and amortization (EBITDA) for consolidated worldwide operations, plus or minus changes in current receivables, inventories, and current accounts payable and accrued expenses, less consolidated worldwide capital expenditures. EBITDA for consolidated worldwide operations means earnings (loss) before interest and income taxes as reported in the consolidated statements of operations of the Corporation, plus or minus the effect of items not allocated to segments (excluding post-retirement benefit expenses) as disclosed in the notes to the consolidated financial statements, plus depreciation, depletion and amortization as reported in the consolidated statement of cash flows of the Corporation.
**Total EBITDA shall mean earnings before interest and taxes as reported in the consolidated statement of operations of United States Steel Corporation, plus or minus the effect of items not allocated to segments (excluding postretirement benefit expenses) as disclosed in the notes to the consolidated financial statements of United States Steel Corporation, plus depreciation, depletion and amortization as reported in the consolidated statement of cash flows of United States Steel Corporation. Segment EBITDA shall mean, for the Performance Period, EBITDA for each business unit. Unless contemplated in the approved performance target, EBITDA excludes charges or credits for business dispositions, acquisitions, asset sales, asset impairments, workforce reductions, shutdowns, and amounts not allocated to business segments.
The target award under the AICP for each NEO is equal to the target percentage applied to the executive's base salary. The following table shows the actual amount awarded by the Committee after consideration of the executive's individual performance.
2017 Annual Incentive Payout
| | | | | | | | | | | | | | Executive
| | Target Award
as % of
Base Salary(1)
| | Target
Award(2)
| | Total
Payout
Rate(3)
| | Actual
Amount
Awarded(4)
| |
|---|
| | | | | | | | | | | | | | | Burritt | | | 140% | | $ | 1,189,130 | | | 91% | | $ | — | | | | | | | | | | | | | | | | | Bradley | | | 100% | | $ | 300,003 | | | 91% | | $ | 273,003 | | | | | | | | | | | | | | | | | Matthews | | | 80% | | $ | 432,800 | | | 86% | | $ | 409,429 | | | | | | | | | | | | | | | | | Buckiso | | | 60% | | $ | 247,500 | | | 101% | | $ | 324,968 | | | | | | | | | | | | | | | | | Rintoul | | | 70% | | $ | 349,300 | | | 98% | | $ | 393,661 | | | | | | | | | | | | | | | | | Longhi | | | 150% | | $ | 1,125,000 | | | 91% | | $ | 1,023,750 | | | | | | | | | | | | | | | | | Folsom | | | 80% | | $ | 560,000 | | | 91% | | $ | — | | | | | | | | | | | | | | | | | Soni(5) | | | 60% | | $ | 206,250 | | | 91% | | $ | 206,457 | | | | | | | | | | | | | | | | |
(1)"Base Salary" for purposes of determining the AICP award is the actual salary earned for 2017. Messrs. Longhi and Bradley served for a portion of the year, and the table above reflects the prorated target AICP award.
(2)The "Target Award" is the amount that would be paid to the executive assuming the Corporation achieves its target performance objectives and before consideration of individual performance. The target amount for Mr. Burritt was calculated by prorating the applicable target for his service as Chief Financial Officer (100% earned base salary) and Chief Executive Officer (140% earned based salary).
(3)The "Total Payout Rate" is determined by the Corporation's actual performance measured against the 2017 performance metrics and before individual performance is considered. Differences in the payout rate are the result of variances in EBITDA weighting for the business segments, as described on page 30.
(4)The "Actual Amount Awarded" is the amount awarded by the Committee after consideration of individual performance. In accordance with her separation agreement, Ms. Folsom was not entitled to receive an AICP award for 2017.
(5)Mr. Soni was appointed as an executive officer on February 1, 2017 and only eligible for AICP payments as of that date. He is eligible to receive payment under the Corporation's non-executive short-term incentive payment program for the portion of the year he was a non-executive.
United States Steel Corporation | 2018 Proxy Statement |29
Table of Contents
Compensation Discussion and Analysis
|
Setting Corporate Performance Goals and Determining Results The Compensation Committee sets challenging operational and financial performance targets that drive and motivate executives to achieve short- and long-term success. The Compensation Committee set the target goals for AICP purposes in the first quarter of 2020, using an approach that considers: –
prior year’s performance; –
expected 2020 financial performance and the annual operating plan; –
the impact of planned strategic activities; and –
fluctuations in global steel prices and other macroeconomic factors. In setting the 2020 goals, under the AICP for 2017,Compensation Committee recognized that 2020 financial performance would be challenged to meet or exceed 2019 performance given the trend in global steel prices, and other macroeconomic factors. For 2020, the Compensation Committee considereddetermined that a sufficient degree of stretch existed in the Corporation's performance over the past five years, the annual operating plan for 2017, industry performance, and the Corporation's business transformation efforts. In general, the maximum performance goals were set at an amount that would require the Corporation to achieve a substantial level of operational improvements through asset revitalization and at a level that would generate sufficient earnings to pay the incremental cost of the incentive payments while maintaining an equivalent amount of cash on the Corporation's balance sheet.target. The goals were considered rigorous when set. The target performance goal for both EBITDA and Cash Conversion Cycle is set in line with the Corporation’s annual operating plan, and if achieved would result in a significant stretch overpayout of 100% for that component. The Compensation Committee sets the threshold and maximum performance goals establishedat a wide range in 2016.recognition of the volatile industry in which we operate. Achievement of threshold performance results in a 50% payout, and achievement of maximum performance goals results in a 200% payout. In addition to determining individualcorporate performance targets, the Compensation Committee approved EBITDA goals
for each NEO. –
For the CEO, CFO and CFO,General Counsel, the EBITDA goal is based on the total companycorporate results, which generally measures the operational results of all business segments. –
For executives assigned to a specific segment, like Messrs. Bruno and Buckiso, the EBITDA goal is 50% based on the EBITDA goal for that segment and 50% based on total companycorporate EBITDA. EBITDA (for Mr. Matthews, this was the Flat-Rolled segment; for Mr. Rintoul, this was the Tubular segment; and for Mr. Buckiso, this was the European segment).
This segment allocation of the EBITDA goal is intended to create stronger corporate, business segment and individual accountability by tying an executive'sexecutive’s award to the performance of the segments for which he or she is directly responsible. We concluded 2017 with a total of $12.25 billion in net sales, therefore the award pool was funded for 2017 because the net sales goal of $8.5 billion was achieved.
The payout rate (prior to adjustment forresult (which does not include individual performance) was determined based on achievement of the performance measures described in the table below. This payout rate demonstrates the performance alignment design of our plan. The 2017 payout under the annual incentive compensation plan averaged 104% of target for our NEOs who received a payout, and the average payout for our NEOs over the last three years is 94% of target (in each case, including adjustments made for individual performance). 2017 AICP Corporate Performance Targets And Results
($ are in Millions)
| | | | | | | | | | | | | | | | | Performance Measure
| | Minimum
| | Target
| | Maximum
| | Actual
| | Payout Rate(1) Prior
to Adjustment for
Individual Performance
| |
|---|
| | | | | | | | | | | | | | | | | | Cash Flow | | $ | 393 | | $ | 492 | | $ | 772 | | $ | 528 | | | 110% | | | | | | | | | | | | | | | | | | | | EBITDA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Flat-Rolled | | | 724 | | | 954 | | | 1,204 | | | 732 | | | 52% | | | | | | | | | | | | | | | | | | | | Tubular | | | (116 | ) | | (46 | ) | | 4 | | | (48 | ) | | 99% | | | | | | | | | | | | | | | | | | | | Europe | | | 301 | | | 396 | | | 441 | | | 403 | | | 112% | | | | | | | | | | | | | | | | | | | | Total EBITDA | | $ | 924 | | $ | 1,319 | | $ | 1,674 | | $ | 1,087 | | | 71% | | | | | | | | | | | | | | | | | | | |
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 55 |
(1)The payout rate is 100% at target increasing to 175% of target for performance at the maximum level and decreasing to 50% of target for performance at the minimum threshold level.
COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
2020 AICP CORPORATE PERFORMANCE GOALS AND RESULTS | Performance Measure | | | Threshold | | | Target | | | Maximum | | | Actual | | | 2020 Payout
Result | | | Cash Conversion Cycle (Days) | | | 43 | | | 36 | | | 29 | | | 24 | | | 200% | | | EBITDA: ($Millions) | | | | | | | | | | | | | | | | | | Flat-Rolled | | | $0 | | | $425 | | | $1,000 | | | $(100) | | | 0% | | | Tubular | | | $(25) | | | $25 | | | $75 | | | $(140) | | | 0% | | | Europe | | | $(50) | | | $0 | | | $100 | | | $90 | | | 190% | | | Total EBITDA | | | $0 | | | $450 | | | $1,000 | | | $(162) | | | 0% | |
Setting Individual Performance Goals and Determining Results Our executive officers may earn up to an additional 30% of their target award (or have their award reduced) based on their individual performance. In determiningaddition to their role in achieving the CEO's annual incentive, the Committee considers, among other things, the CEO'senterprise financial goals, NEOs are evaluated on their individual performance in delivering results for the established value creation drivers of profitability, customer focus, operational excellence and high performing organization. The CEO's individual performance objectives are reviewed by the Committee and approved by the Board. following categories: | Performance Category | | | Purpose | | | Safety | | | Safety of our employees is our top priority and is not compromised. Executives are expected to demand strict compliance to our safety protocols and demonstrate and facilitate safe work practices. Our expanded 360 safety initiative also requires our NEOs to ensure a psychologically safe environment for our employees. | | | Strategy Execution | | | Our NEOs all contribute to the achievement of our strategic goals to create long-term stockholder value. They are expected to act with an enterprise mindset and facilitate alignment throughout the organization with our Best of Both strategy. | | | Advancing Critical Success Factors | | | Our NEOs all work towards improving on the three areas that are critical to our long-term success: –
Moving Down the Cost Curve –
Moving up the Talent Curve –
Winning in Strategic Markets | | | Leadership | | | As leaders of U. S. Steel, our NEOs are expected to demonstrate values-based tone at the top and exemplify our S.T.E.E.L. Principles. Ensuring engagement and development within their respective areas of responsibility is essential to U. S. Steel’s future success. | |
A similar evaluation is performed by the CEO with respect to all other executive officers using similar measures and objectives. The Committee sets performance goals for each annual period based on expected business results for the upcoming year, which are intended to be challenging stretch goals. The Committee uses its business judgment in reviewing each of these individual items and does not assign specific quantitative weighting to such items.The following provides a brief summarydescription of each NEO'sNEO’s individual performance and contribution to the Corporation in
individual performance result is included on pages 49-51.2017 considered by the Committee in determining each individual's performance modifier:
David BurrittLong-Term Incentive Program – Mr. Burritt was named President & Chief Executive Officer on May 8, 2017, following his promotion to President & Chief Operating Officer on February 28, 2017. Since Mr. Burritt became CEO, U. S. Steel has delivered three consecutive quarters of reliable and consistent operational and financial results. As a result of these efforts, the Corporation's stock price at the end of the year was 165% of the stock price on the date that Mr. Burritt was promoted.
Mr. Burritt's intense focus on improvements to achieve operational excellence, not only improved financial flexibility and strengthened the balance sheet to reduce risk, but also enabled the Corporation to make strategic investments for our customers in Generation 3 Advanced High Strength Steels, Premium Connections, and facilitate future growth. The rewards of these strategies began to be realized in 2017 with a return to profitability for the first time since 2014, the best net debt since 2007, and the best liquidity since 2001.
30 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Compensation Discussion and Analysis |
Upon assuming leadership of the Corporation, Mr. Burritt quickly focused on realigning and assigning a new CHRO, CFO, and SVP with responsibility for Asset Revitalization, and established a focused execution strategy for safety, quality, delivery and cost to stabilize operations and enable continuous improvement for the Corporation's long-term success. Recognizing the need to develop a high performing organization, he launched the talent development theme of "Pivot to the People," the safety initiative "Culture of Caring," and conducted the first ever comprehensive "Inclusion Survey," while making difficult choices to streamline the organization and upgrade the talent.
In keeping with the intent to improve all aspects of the business, the Board and Mr. Burritt determined that further improvement in the Corporation's culture is needed to ensure the exceptional operational and financial progress made in 2017 endures. In spite of returning to profitability with the best balance sheet in recent years, Mr. Burritt, after discussions with the Board, did not receive his annual cash incentive award for 2017, reflecting Mr. Burritt's personal responsibility for and commitment to creating a workplace climate meeting the highest standards of accountability, fairness, and respect. In 2018, Mr. Burritt will focus on continuing to drive strong operational and financial excellence while building a highly engaged workforce and high performance culture.
Kevin Bradley – Mr. Bradley joined the Corporation in July 2017, assuming responsibility for all of U. S. Steel's financial enterprise, including Financial Planning & Analysis; Accounting & External Reporting; Credit, Tax and Treasury Services; Investor Relations; and Corporate Strategy. Upon his arrival, Mr. Bradley assessed the global finance enterprise and launched the Talent to Value capability targeting best practice procedures to ensure high integrity financial reporting and to foster excellence in the financial function of the Corporation. Mr. Bradley has intensified the enterprise focus on strengthening the balance sheet. Putting the Corporation on a path to de-risk and improve the overall efficiency of its capital structure. He is working closely with his team, bringing new thinking and perspective across the organization to accelerate the transformation of U. S. Steel to a stronger and more profitable company. Mr. Bradley has meaningfully contributed to the stability and consistency of the financial performance across the Corporation. He quickly established himself as a key member of the leadership team.
Douglas Matthews – Mr. Matthews led the North American Flat-Rolled Industrial, Service Center and Mining Solutions (ISC&M) commercial entity in 2017. Through his continued successful implementation of our transformational strategy, the ISC&M team contributed to noteworthy North American Flat-Rolled EBITDA improvement in 2017. Operations led by Mr. Matthews also meaningfully improved service to our customers, including a 22% improvement in customer claims for industrial customers and significant delivery improvements for all end users. Mr. Matthews also oversaw the successful restart of Keetac mining operations and the Granite City hot strip mill. He also implemented meaningful employee engagement to achieve strong safety performance, particularly in the second half of the year. Mr. Matthews'
ability to maintain collaborative relationships with his peers, customers and union contacts benefit the Corporation in all aspects of operations. Mr. Matthews assumed interim leadership over the Tubular segment, as well, following Mr. Rintoul's retirement in February 2018.
Scott Buckiso – Mr. Buckiso led the European Solutions commercial entity, which is comprised of our Slovakian operations, supplying Automotive, Appliance, Electrical, Packaging and Construction products throughout Europe. Through his superior leadership, the European segment delivered over $400 million EBITDA in 2017, a 52% improvement from 2016. After several unfortunate contractor safety incidents, he prioritized contractor safety performance, implemented dramatic changes to the safety program (including contractor safety procedures), and saw new safety records achieved for both OSHA recordable rate and consecutives days without an OSHA recordable case for both USSK personnel and contractors. Mr. Buckiso's team also achieved production records across nearly every line, and delivered exceptional quality performance for their customers. Mr. Buckiso provided superior leadership regarding environmental sustainability, reducing CO2 emissions and increasing recycling projects and commercial activity across our European operations. Mr. Buckiso's industry knowledge and focused leadership continues to solidify the segment as a strong performer for the Corporation.
David Rintoul – Mr. Rintoul provided leadership of the Tubular segment in 2017, as the business segment began to recover from an oil & gas industry downturn and realized substantial EBITDA improvement over 2016. Under Mr. Rintoul's leadership, the Tubular group achieved a 25% improvement in OSHA recordable performance and had strong environmental performance. Mr. Rintoul also oversaw improvements in production quality and cost. He led the group's international expansion, as customers were serviced in the Middle East and South Pacific. Mr. Rintoul also further supported his customers by overseeing the development of innovative products for complex drilling. Mr. Rintoul's strong leadership, particularly during challenging times, positioned the segment for recovery and strengthened long-term partnerships in the industry. Mr. Rintoul retired from the Corporation as of February 28, 2018.
Mario Longhi – Mr. Longhi provided leadership of the Corporation's transformation efforts through ongoing implementation and application of the Carnegie Way method as the disciplined and structured approach for improving business performance. He also served as a zealous advocate for the Corporation and the industry in Washington D.C. Mr. Longhi retired in June 2017.
Pipasu Soni – Mr. Soni was promoted to Vice President – Finance in February 2017 where he was accountable for the Financial Planning & Analysis, Controllership, Treasury, Strategy and M&A functions. He served as Interim Chief Financial Officer and Principal Financial Officer for a brief time in 2017 following the promotion of Mr. Burritt to CEO and prior to Mr. Bradley's hiring. Mr. Soni worked to establish criteria for a "best in class" finance function
United States Steel Corporation | 2018 Proxy Statement |31
Table of Contents
Compensation Discussion and Analysis
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including reallocating resources, implementing processes and enhancing systems to support the long-term strategy of the Corporation. Following Mr. Bradley's hiring, Mr. Soni transitioned to the interim CFO for the ISC&M commercial entity, working closely with operations to create an
accountable culture that immediately resulted in incremental profit for the Flat-Rolled business.
Ms. Folsom was not eligible to receive an award under the 2017 AICP.
Long-Term Incentive Compensation
|
EquityPerformance awards under the long-term incentive program (LTIP) are allocated among:
•Performance-basedamong performance-based awards (60% of the LTIP award in 2017)
•Stock options (20%)
•Restricted2020) and restricted stock units (RSUs) (20%)
(40% of the LTIP award in 2020). The Compensation Committee believes that these three long-term incentive vehicles best accomplish the objectives of aligning pay with performance and retaining executives. | 56 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
On February 28, 2017,25, 2020, the Compensation Committee granted the long-term incentive awards set forthas shown in the table below. LONG-TERM INCENTIVE AWARDS GRANTED IN 2020 | Executive | | | Target Equity-Based
Performance Awards | | | Restricted Stock
Units | | | Grant Date Fair Value
of Equity Awards | | | Target Cash-Based
Performance Awards | | | Burritt | | | 292,670 | | | 362,610 | | | $5,600,045 | | | $2,400,000 | | | Breves | | | 73,170 | | | 90,650 | | | $1,400,010 | | | $600,000 | | | Bruno | | | 47,560 | | | 58,920 | | | $909,980 | | | $390,000 | | | Buckiso | | | 47,560 | | | 58,920 | | | $909,980 | | | $390,000 | | | Holloway | | | 47,560 | | | 58,920 | | | $909,980 | | | $390,000 | |
Long-Term Incentive Awards Granted in 2017 | | | | | | | | | | | | | | | | | Executive
| | Target
Equity-Based
Performance
Awards
| | Stock
Options
| | Restricted
Stock
Units
| | Grant Date
Fair Value
Of Equity
Awards
| | Target
Cash-Based
Performance
Awards
| |
|---|
| | | | | | | | | | | | | | | | | | Burritt(1) | | | 52,190 | | | 73,550 | | | 34,990 | | $ | 3,443,947 | | $ | 1,476,000 | | | | | | | | | | | | | | | | | | | | Bradley(2) | | | 13,080 | | | 15,730 | | | 7,580 | | $ | 612,624 | | $ | 262,500 | | | | | | | | | | | | | | | | | | | | Matthews | | | 6,750 | | | 12,170 | | | 5,680 | | $ | 780,240 | | $ | 334,500 | | | | | | | | | | | | | | | | | | | | Buckiso | | | 3,030 | | | 5,460 | | | 2,550 | | $ | 350,199 | | $ | 150,000 | | | | | | | | | | | | | | | | | | | | Rintoul | | | 4,940 | | | 8,900 | | | 4,150 | | $ | 570,627 | | $ | 244,500 | | | | | | | | | | | | | | | | | | | | Longhi(3) | | | 53,010 | | | 95,520 | | | 44,560 | | $ | 6,124,630 | | $ | 2,625,000 | | | | | | | | | | | | | | | | | | | | Folsom(4) | | | 8,630 | | | 15,560 | | | 17,260 | | $ | 1,597,331 | | $ | 427,500 | | | | | | | | | | | | | | | | | | | | Soni | | | 2,510 | | | 4,530 | | | 2,110 | | $ | 290,134 | | $ | 124,500 | | | | | | | | | | | | | | | | | | | |
(1)The amounts shown for Mr. Burritt include his annual grant made on February 28, 2017 as part of his compensation as Chief Financial Officer, and an additional grant made on May 31, 2017 in connection with his promotion to President & CEO.
(2)Mr. Bradley's awards were granted on August 1, 2017 shortly following his date of hire.
(3)In connection with his retirement, Mr. Longhi forfeited 100% of the long-term incentive awards granted in 2017 because he was not employed for at least six months after the date of grant.
(4)Amounts include a special grant of 10,000 RSUs made in January 2017, vesting of which was accelerated as part of her separation agreement. The grant date fair value of equity awards amount shown for Ms. Folsom includes the incremental value attributed to the acceleration of the special grant of 10,000 RSUs. Pursuant to her separation agreement, Ms. Folsom is entitled to pro rata vesting of the performance awards, stock options and RSUs granted as part of her annual LTIP award in February 2017. As a result of her separation, Ms. Folsom forfeited 7,636 options, 3,563 RSUs, 5,993 TSR-based performance awards and $296,875 of cash-based performance awards at termination of her employment.
Performance-Based Awards (60% of LTIP Award Value) Performance awards provide an incentive for executives to earn shares and cash based on our performance over a three-year performance period, with goals set at the beginning of each performance period. The performance awards do not pay dividends or carry voting privileges prior to vesting. In 2017,2020, the three-year performance period began on January 1, 2017,2020, and will end on December 31, 20192022 (the "2017“2020 Performance Period"Period”). The value of the performance awards granted underfor the 20172020 Performance Period was divided equally between relative TSR performance awards (which are equity-based) and ROCE performance awards. The TSR performance awards (which are cash-based). The three-year goals focus management on driving attractive returns onwere granted in equity, and the capital we employ and on increasing stockholder value.ROCE performance awards were granted in cash, rather than equity, in order to preserve shares in the plan. TSR Performance Awards — How We Determine Payouts For awards granted beginning in 2019, TSR performance awards are based on relative performance, with the payout determined based on the rank of the Corporation'sCorporation’s TSR compared to the TSR of peer group companies (see the “Performance Peer Group”), over the three-year performance period, (see the "Long-Term Incentive Plan Performance Peer Group" on page 38). TSR is determined based on the following formula: final price plus dividends per shareas well as for each year within the performance period, divided byperiod. Shares may be earned each year if the initial price, raised to 1/3, minus 1. The initial priceperformance criteria is met, or forfeited if the performance criteria is not met. Awards do not vest and final price used arepayout until the average closing price for the 20 business days prior to the first and last dayend of the three-year performance period, respectively. period. 32 |United States Steel Corporation | 2018 Proxy Statement
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Compensation Discussion and Analysis |
As noted in the table below, above market performance at the 60th55th percentile is required for target payout, and no payout is made for performance below the 30th percentile. percentile. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 57 |
COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
TSR Performance Award Goals | Level | | | | | | Level2020 Relative
| | 2017
Relative TSR Ranking | | | Award
| | Award Payout as a %
of Target(1)
| |
|---|
| | | | | | | | | <30th percentile | | | 0% | | | | | | | | | Threshold
| | 30th percentile | | | 50% | | | | | | <30th percentile | | | 0% | | Target
Threshold | | 60th percentile | | | 100% | | | | | | | 30th percentile | | | Maximum
50% | | 90th percentile | | | 200% | | Target | | | 55th percentile | | | 100% | | | Maximum | | | ≥80th percentile | | | 200% | |
Interpolation is used to determine actual awards between the threshold, target, and maximum levels. TSR performance is calculated over a three-year performance period as described in Appendix B of this proxy statement. In order to address any potential pay for performance disconnect should the Corporation'sCorporation’s TSR be negative over the three-year performance period (regardless of relative performance) payouts may beare capped as follows: •
–
Payout is capped at target if the Corporation'sCorporation’s TSR is 0% to -5% on a compound annual growth rate ("CAGR"(“CAGR”) basis; –
•Payout is capped at threshold50% of target if the Corporation'sCorporation’s TSR is between -5% to -10% on a CAGR basis; and –
•Payout is forfeited if the Corporation'sCorporation’s TSR is lower than -10% on a CAGR basis. The negative cap policy is effective for grants made in 2016 and later.
ROCE Performance Awards — How We Determine Payouts The payout is determined based on our weighted average cost of capital (noted as return on capital employed or "ROCE"“ROCE”), over the three-year performance period. ROCE is measured based on our consolidated worldwide EBIT, as adjusted, divided by our consolidated worldwide capital employed, as adjusted, over the three-year performance period. ���
The weighted average ROCE is a three-year performance metric calculated based on the ROCE achieved in the first, second, and third years of the performance period, weighted at 20%, 30%, and 50% respectively. –
The ROCE awards payout at 50% at the threshold level, 100% at the target level, and 200% at the maximum level. ROCE performance goals are not disclosed during an ongoing performance period due to competitive reasons. Beginning in 2015, the ROCE awards were granted in cash, rather than shares, to mitigate dilutive effects of a share grant.20152018 Performance AwardsThe performance period for the 2015 performance awards granted in 2018 ended on December 31, 2017.2020. The value of the 20152018 performance awards was equally divided between relative TSR performance awards and ROCE performance awards. While theThe 2018 ROCE performance awards were granted in equity. Both relative TSR performance met the performance goals, theand ROCE performance did not,were below the threshold goals, resulting in an overallno payout of 37% of the target2018 LTIP performance award. Each of the relative TSR and ROCE goals, results and payouts are described below. 2015
2018 TSR Performance Awards The Corporation'sCorporation’s relative annualized TSR compared to the selected peer group for the performance period was atbelow the 44th30th percentile, and resulted in a payout of 74%at 0% of the target award. The payout for our NEOs is shown below. Messrs. Bradley and Soni did not receive a payout because they 2018 TSR Performance Award Payout | | | | Shares
Granted
at Target | | | Payout Rate | | | Shares
vested as a
result of
payout | | | Fair Value of
Performance
Awards
Upon vesting | | | Burritt | | | 28,650 | | | 0% | | | 0 | | | $0 | | | Breves | | | 3,170 | | | 0% | | | 0 | | | $0 | | | Bruno | | | 3,170 | | | 0% | | | 0 | | | $0 | | | Buckiso | | | 3,170 | | | 0% | | | 0 | | | $0 | | Holloway(1) | | | 8,720 | | | 0% | | | 0 | | | $0 | |
(1)
Mr. Holloway’s awards were not employed by the Corporation when the grant was made. Mr. Buckiso did not receive a payout because he was not eligible for TSR shares when the 2015 grant was made.granted on April 30, 2018, following his April 2018 hire date. | | | | | | | | | | | | | |
| | Shares Granted
at Target
| | Shares vested as a
result of payout
| | Payout Rate
| | Delivered Value*
| |
|---|
| | | | | | | | | | | | | | | Burritt | | | 33,070 | | | 24,495 | | | 74.07% | | | $1,077,535 | | | | | | | | | | | | | | | | | Matthews | | | 13,410 | | | 9,933 | | | 74.07% | | | $436,953 | | | | | | | | | | | | | | | | | Rintoul | | | 9,800 | | | 7,259 | | | 74.07% | | | $319,232 | | | | | | | | | | | | | | | | | Longhi** | | | 105,210 | | | 60,611 | | | 74.07% | | | $2,666,278 | | | | | | | | | | | | | | | | | Folsom** | | | 17,130 | | | 12,336 | | | 74.07% | | | $542,661 | | | | | | | | | | | | | | | | |
*Delivered value is based on the fair market value of the shares on February 27, 2018 the date of vesting.
**Pursuant to their respective separation agreements, the vesting for Mr. Longhi and Ms. Folsom is pro rated based on the last date of employment.
2015 ROCE Performance Awards
The actualCorporation’s ROCE performance for the performance period was below the threshold, for payment, resulting in no payout.a payout at 0% of the target award. | 58 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
2015-2017COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
2018-2020 Return on Capital Employed (ROCE) Performance Targets and Results | | | | Performance Targets | | | Actual Results and Weighting | | | Payout Rate | | | Threshold | | | 5% | | | Year 1 (20%) | | | 20.2% | | | 4.04% | | | Target | | | 10% | | | Year 2 (30%) | | | 1.5% | | | 0.45% | | | Maximum | | | 15% | | | Year 3 (50%) | | | -10.6% | | | -5.3% | | | | | | | | | 2018-2020 Period | | | | | | -0.81% | |
| | | | Shares Granted
at Target | | | Payout Rate | | | Shares vested as a
result of payout | | | Fair Value of Performance
Awards Upon vesting | | | Burritt | | | 41,600 | | | 0% | | | 0 | | | $0 | | | Breves | | | 4,600 | | | 0% | | | 0 | | | $0 | | | Bruno | | | 4,600 | | | 0% | | | 0 | | | $0 | | | Buckiso | | | 4,600 | | | 0% | | | 0 | | | $0 | | | Holloway | | | 11,290 | | | 0% | | | 0 | | | $0 | |
In-Flight TSR Performance Awards For the TSR performance awards for the 2019-2021 performance period and the 2020-2022 performance period, the calculation of TSR is based 20% for each year within the performance period and 40% for the overall three-year period. On February 23, 2021, the Compensation Committee certified the relative TSR results for the 2020 portion of those awards. For 2020, the Corporation achieved a TSR in the 86th percentile of the performance peer group, which is maximum performance level for the year, and NEOs earned the shares illustrated in the table below. These awards vest upon completion of the three-year performance period and are subject to the executive’s continued employment. | | | | Shares Granted at Target
for 2019-2020 TSR
performance award | | | Shares earned
as a result of
2020 performance | | | Burritt | | | 82,150 | | | 32,860 | | | Breves | | | 12,840 | | | 5,136 | | | Bruno | | | 12,840 | | | 5,136 | | | Buckiso | | | 12,840 | | | 5,136 | | | Holloway | | | 12,840 | | | 5,136 | |
| | | | Shares Granted at Target
for 2020-2021 TSR
performance awards | | | Shares earned
as a result of
2020 performance | | | Burritt | | | 292,670 | | | 117,068 | | | Breves | | | 73,170 | | | 29,268 | | | Bruno | | | 47,560 | | | 19,024 | | | Buckiso | | | 47,560 | | | 19,024 | | | Holloway | | | 47,560 | | | 19,024 | |
| | | | | | | | | | | | | | | Performance Targets
| |
| |
| | Actual Results and Weighting
| | Payout Rate
| |
|---|
| | | | | | | | | | | | | | | | Threshold | | | 5% | | | | Year 1 (20%) | | | –4.9% | | | | | | | | | | | | | | | | | | | | | Target | | | 10% | | | | Year 2 (30%) | | | 0.0% | | | | | | | | | | | | | | | | | | | | | Maximum | | | 15% | | | | Year 3 (50%) | | | 10.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2015-2017 Period | | | 4.2% | | | 0% | | | | | | | | | | | | | | | | | |
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Restricted Stock Units (20%(40% of LTIP Award Value) Restricted stock units (RSUs) are awards that deliver shares of common stock and accumulated dividends upon vesting. RSUs generally vest ratably on each of the first, second and third anniversaries of the grant date, subject to the executive'sexecutive’s continued employment on each vesting date. The Compensation Committee believes that RSUs provide the best retention benefits among our long-term incentives, especially during times of challenging economic and industry conditions. Since the value of the RSUs is variable based upon our stock price, this element of executive compensation is aligned with our stockholders’ interests. They also enable our executives to build ownership in the Corporation, which addresses a key compensation objective. Additionally, because of the downside risk of owning stock, restricted stock units discourage executives from taking excessive risks that would not be in the best long-term interest of stockholders. Stock Options (20% of LTIP Award Value)
Stock options are "at-risk" awards that reward executives for an increase in the Corporation's stock price over the term of the option. The value of the options is limited to the appreciation of our stock price, if any, above the option's exercise price after the option becomes exercisable and before it expires. Stock options are:
•exercisable for a term of ten years;
•subject to ratable vesting on each of the first, second and third anniversaries of the grant date; and
•generally subject to continued employment on each vesting date.
On February 28, 2017, the Committee granted traditional stock options with an exercise price based on the fair market value on the date of grant, which was $39.265.
Other Awards
Mr. Bradley received a one-time cash award of $125,000 as part of his new-hire incentive. In January 2017, Ms. Folsom was granted 10,000 RSUs with a three-year cliff vesting schedule. As part of her separation agreement, the Committee accelerated the vesting of that award. In 2017, Mr. Soni received a cash award of $30,000, which was the second-installment of a new hire incentive.
Changes to the 2018 Compensation ProgramBenefits & Retirement Programs
•Added Cash Conversion Cycle as an AICP Metric : In recognition of the Corporation's intense focus on cash efficiency, the Committee decided to replace the AICP Cash Flow metric with Cash Conversion Cycle (CCC). This metric is measured in days. EBITDA remains the second AICP metric.
•Changed Weighting of AICP Metrics: The Committee rebalanced the weighting of the two metrics under the AICP to 70% EBITDA and 30% CCC. Previously EBITDA and Cash Flow were equally weighted.
•Elimination of Stock Options from LTIP: The Committee eliminated stock options from the types of awards granted as part of the 2018 annual long-term awards. The annual awards for 2018 are composed of 40% RSUs and 60% performance awards (30% based on TSR, and 30% based on ROCE). Stock options previously made up 20% of the long-term grant.
•Long-Term ROCE Performance Awards to be Granted in Stock: Half of the long-term performance awards are based on our ROCE metric. Since 2015 these awards have been granted in and pay out in cash. For 2018, the Committee granted these awards in equity to further align executive compensation with stockholder interests.
•Revised Long-Term TSR Goals:The Committee revised the goals for the long-term TSR metric. The Committee believes the goals remain rigorous, as they still require above-market performance to achieve target payout. The revisions better align with the Committee's objective of providing long-term compensation that is both rigorous but achievable.
| | | | |
| | 2017 GrantBenefits
| | 2018 Grant
|
|---|
| | | | | Threshold: | | 30th % | | 30th % | Target: | | 60th % | | 55th % | Maximum: | | 90th % | | 80th % | | | | | |
Fixed Compensation and Benefits
|
Base Salary
Base salary is designed to compensate for the required day-to-day activities and responsibilities of each position. Base salary is set at a market competitive level to enable the Corporation to attract and retain talent. Actual salary levels take into account such factors as the contribution of the incumbent, individual qualifications and experiences, and internal value to the Corporation. Base salary is paid in cash.
Benefits
NEOs participate in many of the benefits provided to non-represented employees generally, including vacation and holiday benefits, insurance benefits, disability benefits, and medical and prescription drug programs. We believe these benefits support our overall retention objectives. 34 |United States Steel Corporation | 2018 Proxy Statement
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Compensation Discussion and AnalysisUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 59 |
COMPENSATION DISCUSSION AND ANALYSISELEMENTS OF COMPENSATION
We provide the retirement benefits described below in order to attract and retain talented executive officers.executives. We believe our retirement programs are reasonable in light of competitive pay practices and the total compensation of our executives. The Corporation maintains the following tax-qualified retirement programs (together, the "Qualified Plans"“Qualified Plans”): •
–
United States Steel Corporation Plan for Employee Pension Benefits, Revision of 2003 (the "Pension Plan"“Pension Plan”), which is a defined benefit plan; and –
•United States Steel Corporation Savings Fund Plan for Salaried Employees (the "Savings Plan"“Savings Plan”), which is a 401(k) defined contribution plan. Participation in the Pension Plan was closed to new entrants on July 1, 2003 and benefits under the plan were frozen for all non-represented participants on December 31, 2015. Messrs. Matthews andMr. Buckiso wereis the only NEOsNEO covered by the Pension Plan and the Non Tax-Qualified Pension Plan described below. Mr. Matthews is the only NEO covered by the Supplemental Pension Program described below. Beginning in 2016, for all non-represented employees, the Corporation makes a contribution to a "Retirement Account" under the Savings Plan, which is in addition to any matching contributions made under the Savings Plan. Prior to 2016, non-represented employees who were covered by the Pension Plan were not eligible to receive Retirement Account contributions.In 2017,2020, all of the NEOs received matching contributions and Retirement Account contributions under the Savings Plan and participated in the related non-qualified plans, described below. The Corporation maintains the following non tax-qualified programs (together, the "Non-Qualified Plans"“Non-Qualified Plans”) that are designed to provide retirement benefits to executives and other high-level employees of the Corporation and its affiliates: •
–
United States Steel Corporation Non Tax-Qualified Pension Plan (the "Non“Non Tax-Qualified Pension Plan"Plan”); –
•United States Steel Corporation Executive Management Supplemental Pension Program (the "Supplemental Pension Program");
•United States Steel Corporation Supplemental Thrift Program (the "Supplemental“Supplemental Thrift Program"Program”); –
•United States Steel Corporation Non Tax-Qualified Retirement Account Program (the "Non“Non Tax-Qualified Retirement Account Program"Program”); and –
•United States Steel Corporation Supplemental Retirement Account Program (the "Supplemental“Supplemental Retirement Account Program"Program”). Benefits under the Non Tax-Qualified Pension Plan and Supplemental Pension Program were frozen on December 31, 2015 when the tax qualified Pension Plan was frozen for all non-represented participants. The purpose of the Non Tax-Qualified Pension Plan, the Supplemental Thrift Program and the Non Tax-Qualified Retirement Account Program is to provide benefitsmatching contributions and Retirement Account contributions that are not permitted to be provided under the Qualified PlansSavings Plan due to certain limits under the Internal Revenue Code. The benefit accrual formulas under these Non-Qualified Plans are approximately equal to the formulas under the respective Qualified Plans.The purpose of the Supplemental Pension Program and the Supplemental Retirement Account Program is to provide pension benefits based upon compensation paid under our short-termannual incentive compensation plans, which is excluded under the Qualified Plans.Savings Plan. We provide a retirement benefit based on incentive pay to enable our executives (who receive more of their pay in the form of incentive compensation) to receive a comparable retirement benefit. Benefits
To support our retention objectives, benefits under the Supplemental Pension Program and the Supplemental Retirement Account Program are subject to service-based and age-based restrictions. Unless the Corporation consents, benefits under the Supplemental Pension Program are not payable if the executive voluntarily terminates employment (1) prior to age 60 or before completing 15 years of service, or (2) within 36 months of the date coverage under the program commenced. Similarly, unless the Corporation consents, benefits under the Supplemental Retirement Account Program are not payable if the executive voluntarily terminates employment (1) employment: –
prior to age 55 or before completing 10 years of service (or, if earlier, attaining age 65), or (2) ; –
within 36 months of the date coverage under the program commenced. We believe that these restrictions helpcommenced; or –
for participants hired on or after January 1, 2019, prior to support our retention objectives.age 60 and completion of five years of service. For more information on our retirement programs, see thePension Benefits table andNon-Qualified Deferred Compensation table later in this proxy statement. | 60 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSISCOMPENSATION POLICIES AND OTHER CONSIDERATIONS
Perquisites and SecurityIn 2014, we examined the perquisites that historically have been offered to executives, and eliminated or reduced many of them, and none have been extended to any executive hired after November 2014.
We continue to provideprovided a limited number of reasonablemodest perquisites as a recruiting and retention tool and to ensure the health and safety of our key executives. The perquisites available to our NEOs in 2017 are described in the footnotes to the Summary Compensation Table on page 40 of this proxy statement. In general, the perquisites:•- 2020. The perquisites facilitate the ability of our executives to do their jobs without undue distractions or
delays;
•- delays and have clear business-related
purposes;
•ensure accurate personal tax reporting ofpurposes. As described in the financial intricacies of our compensation programs; and
•provide a measure of security unavailable elsewhere.
The perquisites provided maximize the safe and efficient use of our executives' time and, by facilitating the development
United States Steel Corporation | 2018 Proxy Statement |35
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of commercial and other business relationships, provide a significant benefitfootnotes to the Corporation and its stockholders.
TheSummary Compensation Table on page 64 of this proxy statement, the perquisites we provide include residential and personal security servicesinclude:
| Category | | | Rationale | | | Financial and Tax Planning Services Stipend | | | To ensure accurate tax reporting of our compensation programs and promote international assignments | | Security Services (Including Transportation)* | | | To protect employees who are the subject of a credible and specific threat on account of his or her role with the Corporation | | International Tax Gross Ups &
Reimbursements* | | | To offset increased costs that would otherwise be owed by expatriate employees assigned to our Slovakian business | | Club Memberships For Business Purposes* | | | To allow private, off-site location for involvement in the community | | | Personal Aircraft Usage | | | To allow the travel time of our CEO and other NEOs to be used productively for the Corporation and for security purposes | | Personal Use of Corporate Automobile* | | | Provided where necessary for security purposes | | | Relocation Benefits | | | To attract talent from all locations | | | Executive Physical Stipend | | | To promote the health of our executives | |
*
denotes perquisite only available to employees who arecertain NEOs In general, the subject of a credible and specific threat on account of his or her role with the Corporation. The level of security provided depends upon the nature of the threat. In 2017,2020, Messrs. Longhi, Burritt and BuckisoBruno were the only NEOs provided with security services. The Board believes that providing personal security in response to threats arising because of employmentIn general, club memberships are not provided for executives. Mr. Burritt is the named individual member, as required, for a membership held by the Corporation is business-related.Corporation. We do not provide gross-up payments to cover personal income taxes that may be attributable to any of the perquisites except for (a) relocation, (b) tax equalization, and (c) expenses and travel related to expatriate assignments. These gross-ups are also provided to non-executive employees. COMPENSATION POLICIES AND OTHER CONSIDERATIONS Stock Ownership and Holding Guidelines We have comprehensive stock ownership and holding guidelines designed to align the interests of our executive officers with those of our stockholders. As shown below, our executives are required to accumulate and retain a minimum level of ownership in the Corporation’s common stock based upon their base salary. The stock ownership guidelines require that an executive must retain 100% of the after-tax value of stock acquired upon the vesting of restricted stock units and performance awards and 100% of the after-tax value of shares issued upon the exercise of stock options until the ownership requirement is satisfied. All of the NEOs are in compliance with the terms of the policy. | Executive | | | Ownership Requirement* | | | Burritt | | | 6x base salary | | | Breves | | | 3x base salary | | | Bruno | | | 3x base salary | | | Buckiso | | | 3x base salary | | | Holloway | | | 3x base salary | |
*
Unvested restricted stock units count towards the ownership requirement. Anti-Hedging and Pledging We have a policy that prohibits all directors and employees, including the NEOs, from purchasing any financial instruments (including, but not limited to, prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in any transactions, that are designed to hedge or offset any decrease in our stock price. Our anti-pledging policy prohibits directors and executive officers, including the NEOs, from pledging our stock as collateral for a loan or holding shares in a margin account. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 61 |
COMPENSATION DISCUSSION AND ANALYSISCOMPENSATION POLICIES AND OTHER CONSIDERATIONS
Clawback Policy The Board has adopted a policy detailing procedures to recover payment of any compensation (cash or equity) if an executive engaged in any fraud or misconduct, including gross negligence, that resulted in the need for a material restatement of the Corporation’s publicly filed financial results. For any periods during which a performance-based award was paid or credited to the executive, such award will be subject to reduction, cancellation, or reimbursement to the Corporation at the Board’s discretion. This policy is stated in our Corporate Governance Principles which are available on our website www.ussteel.com. Change in Control Arrangements The Corporation's Change in Control Severance Plan (the "CIC Plan"“CIC Plan”) generally provides for the payment of severance benefits to certain eligible executives, including each of the named executive officers,NEOs, in the event their employment with the Corporation terminates involuntarily following a change in control of the Corporation.control. The CIC Plan enables our executives to evaluate corporate transactional opportunities that may be in the best interests of the Corporation'sour stockholders, while limiting concerns about the potential impact of such opportunities on their job security. Under the CIC Plan, payments require a "double“double trigger,"” meaning the named executive officerNEO is eligible for change in control severance payments and benefits in the event that he or she is terminated without cause or voluntarily for good reason in connection with a change in control. In general, upon a change in control and termination each of our NEOs are entitled to a payment equivalent to a multiple of his or her salary and .annualannual incentive awardaward. For Messrs.Mr. Burritt, and Bradley, the severance payment multiple is 2.5x, and for Ms. Breves and Messrs. Matthews, Rintoul,Bruno, Buckiso and Holloway, is 2x and for Mr. Soni is 1x. Neither Mr. Longhi nor Ms. Folsom are entitled to a change in control severance payment following termination of employment with the Corporation.2x. We do not provide gross-up payments to cover personal income taxes that may be attributable to payments under the CIC Plan. See "Potential“Potential Payments Upon Termination or Change in Control"Control” for additional information regarding the quantification of these potential payments and benefits. Employment Letter Agreements In general, the Corporation doeswe do not enter into long-term employment agreements with itsour executives but may enter into agreements for a limited period of time to attract or retain experienced professionals for high level positions. Under the terms of his offer of employment, Mr. Bradley is entitled to a severance payment of two times his annual base salary and target bonus if he is terminated without cause prior to July 27, 2019. Under the terms ofWe entered into a letter agreement with Mr. Buckiso which expires on November 20, 2018,in July 2020 providing Mr. Buckiso may become entitled to a payment of up to threewith certain pension make-whole, retention and a half timesother payments in consideration for his salary and target annual incentive award upon the occurrence of certain events.Separation Agreements
In connection with his retirement, Mr. Longhi entered into a separation agreementcontinued employment with the Corporation providingbeyond the date on which he was eligible for among other things, pro rata vesting of certain equity grants made in 2015 and 2016. Under his agreement and because Mr. Longhi was not employed for at least six months afteran immediate retirement under the 2017 annual award grant date, Mr. Longhi forfeited the entirety of his 2017 long-term incentive awards. Under the agreement, Mr. Longhi agreed to a general release of claims, and non-solicitation, non-competition and non-disparagement provisions. In connection with her resignation from the Corporation, Ms. Folsom entered into a separation agreement providing for, among other things, (i) pro-rata vesting of various outstanding annually-granted performance awards, restricted stock unit grants and stock option awards; (ii) accelerated vesting of 10,000 restricted stock units that otherwise would not be vested as of her resignation; and (iii) cash payment of $1,260,000 in 12 installments and $50,000 in lieu of outplacement services. Under the agreement, Ms. Folsom agreed to a general release of claims, and non-solicitation, non-competition and non-disparagement provisions.
Independent Consultant and Management Input
The Committee retained Pay Governance, LLC as its independent consultant to assist in the evaluation of executive compensation programs and in setting executive officers' compensation. The use of an independent consultant provides additional assurance that the Corporation's executive compensation programs are reasonable and consistent with the Corporation's objectives. The consultant reports directly to the Committee and does not perform services for management without the express approval of the Committee. There were no services performed by the consultant for management in 2017.
The consultant regularly participates in Committee meetings, including executive sessions, and advises the Committee with respect to compensation trends and best practices, plan design,Pension Plan and the reasonableness of individual compensation awards.
With respect to the CEO's compensation, the Committee makes its determinations based upon its evaluation of the CEO's performance and with input from its consultant. Each year, the Committee reviews with the Board of Directors the CEO's goals and objectives, and the evaluation of the CEO's performance with respect to the prior year's goals and objectives. The CEO does not participate in the
Non Tax-Qualified Pension Plan.36 |United States Steel Corporation | 2018 Proxy Statement
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Compensation Discussion and Analysis |
presentations to, or discussions with, the Committee in connection with the setting of his compensation.
Tally Sheets
The Committee uses tally sheets to evaluate the total compensation and projected payments to the named executive officers under various termination scenarios. This analysis is undertaken annually to assist the Committee in determining whether the compensation package of each named executive officer is appropriately aligned with our compensation philosophy and the compensation practices of our peers.
Peer Groups
The Committee also considers relevant market pay practices in its decision making process. The Committee uses the peer group data below as a frame of reference to guide executive compensation decisions. The Corporation utilizes two peer groups as described below:
•Executive Compensation Peer Group. The peer group below is used to benchmark and assess the competitiveness of the compensation of our named executive officers.
•Performance Peer Group. The performance peer group, which is more industry focused, is used to evaluate the long-term performance of our company for purposes of the relative TSR performance award. The performance peer group is being utilized to evaluate our performance against a targeted group of companies in our industry that we believe we need to outperform to be successful over the long term.
Long-Term Incentive Plan Executive Compensation Peer Group
The Executive Compensation peer group is used to serve as a market reference when making compensation decisions
and designing program features and assess the competitiveness of each element of compensation and compensation in total. We also use this peer group as a reference when analyzing pay-for-performance alignment.
The Executive Compensation Peer Group was selected based on the following criteria:
•large companies primarily from the Materials sector or Industrials sector within the Global Industry Classification Standard (GICS) classification codes
•companies similar in complexity – specifically, companies that have:
•revenues that range from half to double that of the Corporation;
•capital intensive businesses as indicated by lower asset turnover ratios;
•market capitalization reasonably aligned with the Corporation; and
•similar employee levels
•acceptable levels of financial and stockholder performance and a higher company stock price volatility (referred to as "beta") to align with that of the Corporation
•elimination of companies with unusual compensation practices (e.g., company founders who receive little or no compensation and companies that are subsidiaries of other companies)
In setting the executive compensation peer group, the Committee considered a set of broader, industrial peers who might compete with the Corporation for talent as well as companies outside of the material/industrial industry who might attract our executives that have skills transferable outside of the metals industry.
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For 2018, Alcoa Corp. was added to the executive compensation peer group.
Long-Term Incentive Plan Performance Peer Group
The Committee believes the use of a performance peer group is appropriate because executive compensation arrangements and practices are influenced by business complexity and company size, and many of our industry competitors are much smaller than U. S. Steel.
The performance peer group consists of twelve domestic companies in the steel industry. The use of a second peer group or index for evaluating TSR is a common practice among our peers. Because steel industry companies have traded differently from many of our large industrial peers since 2012, the use of a second peer group is more appropriate when evaluating relative TSR performance. Peers were selected based on criteria that included:
•specific domestic steel or steel-related industry;
•five-year stock price correlation greater than 0.50; and
•stock price beta greater than 1.0.
The 2017 Performance Peer Group consists of the following companies:
AK Steel Holding Corporation
Allegheny Technologies Inc.
Carpenter Technology Corporation
Cliffs Natural Resources Inc.
Commercial Metals Company
Nucor Corporation
Olympic Steel Inc.
Reliance Steel & Aluminum Co.
Schnitzer Steel Industries, Inc.
Steel Dynamics Inc.
TimkenSteel Corporation
Worthington Industries, Inc.
No changes were made to the Performance Peer Group for 2018.
Compensation Policies and Other Considerations
|
Stock Ownership and Holding Guidelines
We have comprehensive stock ownership and holding guidelines designed to align the interests of our executive officers with those of the Corporation's stockholders. As shown in the table below, our executives are required to accumulate and retain a minimum level of ownership in the Corporation's common stock based upon the salary midpoint for their position:
| | | Executive**
| | Ownership Requirement*
(Multiple of Salary Midpoint)
|
|---|
| | | Burritt
| | 6x | | | | Bradley
| | 3x | | | | Matthews
| | 3x | | | | Buckiso
| | 3x | | | | Soni
| | 1x | | | |
*Unvested restricted stock units count towards the ownership requirement.
**The table below does not include Messrs. Longhi and Rintoul or Ms. Folsom, who were not employed with the Corporation as of the date of filing.
Under our stock ownership guidelines, Mr. Burritt has a stock ownership requirement of 6x his salary midpoint. Messrs. Bradley, Matthews, and Buckiso each have a stock ownership requirement of 3x their salary midpoint; and Mr. Soni has an ownership requirement of 1x his salary midpoint. The stock ownership guidelines require that an executive must retain 100% of the after-tax value of stock acquired upon the vesting of restricted stock units and performance awards and 100% of the after-tax value of shares issued upon the exercise of stock options until the ownership requirement is satisfied. All of the NEOs are in compliance with the terms of the policy.
Anti-Hedging and Pledging
We have a policy that prohibits all directors and employees, including the named executive officers, from engaging in any transaction that is designed to hedge or offset any decrease
in our stock price. Our anti-pledging policy prohibits directors and executive officers, including the named executive officers, from pledging our stock as collateral for a loan or holding shares in a margin account.
Clawback Policy
The Board has adopted a policy setting forth procedures to recover payment if an executive engaged in any fraud or misconduct, including gross negligence that caused or partially caused the need for a material restatement of the Corporation's publicly filed financial results. For any periods as to which a performance-based award was paid or credited to the executive, such award shall be subject to reduction, cancellation or reimbursement to the Corporation at the Board's discretion. This policy is set forth in our Corporate Governance Principles which are available on our website www.ussteel.com.
38 |United States Steel Corporation | 2018 Proxy Statement
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Compensation Discussion and Analysis |
Compensation and Risk Management
The Committee's compensation consultant annually performs a risk assessment of our executive compensation program and, based on its most recent review, the consultant has determined that our compensation program contains a variety of features that mitigate unnecessary risk taking, including the following:
•Compensation Mix: Executive officers receive a mixture of short-term and long-term incentives in addition to base salary. Long-term incentives, which are paid mostly in equity, make up the majority of our executives' compensation;
•Capped Awards: Payments under our short-term incentive plan are capped at 227% of target and our performance awards are capped at 200% of target;
•Performance Metrics: Different metrics are used in the short-term and long-term incentive programs; and
•Stock Ownership: Executive officers are required to own a significant amount of common stock determined as a multiple of their salary midpoint.
For these reasons, the Committee concluded that our 2017 compensation and organization policies and practices are
not reasonably likely to create a risk that could have a material adverse effect on the Corporation.
Accounting and Tax Considerations In determining executive compensation, the Compensation Committee considers, among other factors, the possible tax consequences to the Corporation. Tax consequences, including but not limited to tax deductibility by the Corporation, are subject to many factors (such as changes in the tax laws and regulations or interpretations thereof) that are beyond the control of the Corporation. In addition, the Compensation Committee believes that it is important for it to retain maximum flexibility in designing compensation programs that meet its stated objectives. For these reasons, the Compensation Committee, while considering tax deductibility as one of the factors in determining compensation, does not limit compensation to those levels or types of compensation that will be deductible by the Corporation. For a detailed discussion of the accounting impacts on various elements of long-term incentive compensation, see footnote 14 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 21, 2018. United States Steel Corporation | 2018 Proxy Statement |39
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62 | Executive Compensation TablesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
EXECUTIVE COMPENSATION TABLESSUMMARY COMPENSATION TABLE
EXECUTIVE COMPENSATION TABLES |
The titles of executives used in the compensation tables of this proxy statement reflect the current titles of each executive. Summary Compensation Table The following table sets forth certain compensation information for the years 2018, 2019 and 2020 for U. S. Steel'sSteel’s Chief Executive Officer (CEO), Chief Financial Officer (CFO) and the three other most highly compensated executive officers (referred to as "Named“Named Executive Officers"Officers” or "NEOs"“NEOs”) who rendered services to U. S. Steel and its subsidiaries during 2017.2020. | Name | | | Year(1) | | | Salary(2)
($) | | | Bonus(3)
($) | | | Stock
Awards(4)(5)
($) | | | Non- Equity
Incentive
Compensation(6)
($) | | | Change in
Pension
Value &
Nonqualified
Deferred
Compensation
Earnings(7)
($) | | | All Other
Compensation(8)
($) | | | Total
($) | | David B. Burritt
President & Chief
Executive Officer | | | 2020 | | | $1,112,500 | | | — | | | $5,600,045 | | | $1,530,000 | | | — | | | $340,898 | | | $8,583,443 | | | | 2019 | | | $1,150,000 | | | — | | | $8,000,006 | | | $3,618,720 | | | — | | | $549,631 | | | $13,318,357 | | | | 2018 | | | $1,000,000 | | | — | | | $6,099,985 | | | $4,270,800 | | | — | | | $219,288 | | | $11,590,073 | | | | | Christine S. Breves
Senior Vice President &
Chief Financial Officer | | | 2020 | | | $666,500 | | | $125,000 | | | $1,400,010 | | | $562,000 | | | — | | | $90,597 | | | $2,844,107 | | | | 2019 | | | $563,889 | | | — | | | $1,250,127 | | | $605,763 | | | — | | | $149,752 | | | $2,569,531 | | | | | James E. Bruno
Senior Vice President −
European Solutions &
President USSK | | | 2020 | | | $551,000 | | | $100,000 | | | $909,980 | | | $695,130 | | | — | | | $758,243 | | | $3,014,353 | | | | 2019 | | | $556,250 | | | — | | | $1,250,127 | | | $487,500 | | | — | | | $564,697 | | | $2,858,574 | | | | | Scott D. Buckiso
Senior Vice President &
Chief Manufacturing Officer −
North American Flat-Rolled | | | 2020 | | | $551,000 | | | $100,000 | | | $909,980 | | | $345,100 | | | $802,171 | | | $124,851 | | | $2,833,102 | | | | 2019 | | | $552,500 | | | — | | | $1,250,127 | | | $618,300 | | | $243,621 | | | $354,903 | | | $3,019,451 | | | | 2018 | | | $458,750 | | | — | | | $674,921 | | | $841,203 | | | — | | | $502,588 | | | $2,477,462 | | | | | Duane D. Holloway
Senior Vice President, General
Counsel, and Chief Ethics &
Compliance Officer | | | 2020 | | | $561,500 | | | $100,000 | | | $909,980 | | | $331,100 | | | — | | | $85,295 | | | $1,987,875 | | | | 2019 | | | $572,500 | | | — | | | $1,250,127 | | | $384,720 | | | — | | | $758,258 | | | $2,965,605 | | | | 2018 | | | $390,675 | | | $250,000 | | | $1,249,888 | | | $548,507 | | | — | | | $83,725 | | | $2,522,795 | | | | |
In 2018 and 2019 the Compensation Committee granted the portion of the long-term incentive award tied to ROCE performance in equity. In 2020, the ROCE performance award was granted in cash and the payout, if any, will be disclosed in the Summary Compensation Table in the final year of the performance period. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name
| | Year(1)
| | Salary(2)
($)
| | Bonus(3)
($)
| | Stock
Awards(4)(5)
($)
| | Option
Awards(4)(6)
($)
| | Non-Equity
Incentive
Compensation(7)
($)
| | Change in
Pension
Value &
Nonqualified
Deferred
Compensation
Earnings(8)
($)
| | All Other Compensation(9)
($)
| | Total
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David B. Burritt | | | 2017 | | $ | 929,710 | | | — | | $ | 2,459,987 | | $ | 983,960 | | | — | | — | | $ | 320,543 | | $ | 4,694,200 | | | President & Chief | | | 2016 | | $ | 800,000 | | | — | | $ | 891,720 | | $ | 447,864 | | $ | 1,820,000 | | — | | $ | 116,000 | | $ | 4,075,584 | | | Executive Officer | | | 2015 | | $ | 780,250 | | | — | | $ | 1,375,213 | | $ | 549,991 | | | — | | — | | $ | 291,041 | | $ | 2,996,495 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kevin P. Bradley
Executive Vice
President & Chief
Financial Officer | | | 2017 | | $ | 300,003 | | $ | 125,000 | | $ | 437,707 | | $ | 174,918 | | $ | 273,003 | | — | | $ | 56,382 | | $ | 1,367,013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Douglas R. Matthews | | | 2017 | | $ | 541,000 | | | — | | $ | 557,285 | | $ | 222,954 | | $ | 409,429 | | $162,208 | | $ | 162,752 | | $ | 2,055,628 | | | Senior Vice President - | | | 2016 | | $ | 541,000 | | | — | | $ | 361,605 | | $ | 181,580 | | $ | 833,140 | | $225,984 | | $ | 91,565 | | $ | 2,234,874 | | | Industrial, Service Center and Mining Solutions | | | 2015 | | $ | 537,000 | | | — | | $ | 557,600 | | $ | 222,988 | | | — | | $399,272 | | $ | 45,340 | | $ | 1,762,200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Scott D. Buckiso
Senior Vice President -
European Solutions &
President USSK | | | 2017 | | $ | 412,500 | | | — | | $ | 250,171 | | $ | 100,027 | | $ | 324,968 | | $48,226 | | $ | 539,827 | | $ | 1,675,719 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David J. Rintoul
Senior Vice President -
Tubular Business | | | 2017 | | $ | 499,000 | | | — | | $ | 407,579 | | $ | 163,048 | | $ | 393,661 | | — | | $ | 145,012 | | $ | 1,608,300 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mario Longhi | | | 2017 | | $ | 750,000 | | | — | | $ | 4,374,704 | | $ | 1,749,926 | | $ | 1,023,750 | | — | | $ | 796,752 | | $ | 8,695,132 | | | Former President & | | | 2016 | | $ | 1,500,000 | | | — | | $ | 2,837,507 | | $ | 1,425,049 | | $ | 4,528,125 | | — | | $ | 632,670 | | $ | 10,923,351 | | | Chief Executive Officer | | | 2015 | | $ | 1,428,750 | | | — | | $ | 4,374,953 | | $ | 1,749,972 | | | — | | — | | $ | 1,054,990 | | $ | 8,608,665 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suzanne R. Folsom | | | 2017 | | $ | 700,000 | | | — | | $ | 1,036,022 | | $ | 285,059 | | | — | | — | | $ | 1,923,374 | | $ | 3,944,455 | | | Former General Counsel, | | | 2016 | | $ | 700,000 | | | — | | $ | 462,105 | | $ | 232,078 | | $ | 1,274,000 | | — | | $ | 124,620 | | $ | 2,792,803 | | Chief Compliance Officer
& Senior Vice President -
Government Affairs | | | 2015 | | $ | 668,750 | | | — | | $ | 712,364 | | $ | 285,036 | | | — | | — | | $ | 474,546 | | $ | 2,140,696 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pipasu H. Soni
Vice President - Finance,
Former Interim CFO | | | 2017 | | $ | 367,917 | | $ | 30,000 | | $ | 207,144 | | $ | 82,990 | | $ | 215,853 | | — | | $ | 61,193 | | $ | 965,097 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)- Amounts are not reported for
2015 and 20162018 if the executive had not previously been an NEO. Mr. Bruno and Ms. Breves were not NEOs prior to 2019. Mr. Buckiso was not an NEO in those years. Mr. Bradley2019 but he was hiredan NEO in 20172018 and Messrs. Buckiso, Rintoul and Soni were not Named Executive Officers in 2015 and 2016.2020.
(2)
(2)Salaries provided reflect the actual amount earned in each year. Salaries for 2020 reflect a temporary reduction to base salaries of 25% for the CEO and 10% for the other NEOs. Salary in 20172019 for Ms. Breves reflects partially salary as CFO, as she was promoted to CFO in November 2019. Salary in 2018 for Mr. BradleyHolloway reflects a partial year based on his hire date of July 27, 2017.April 16, 2018. (3)
(3)The 2020 bonus is in recognition of successfully navigating the COVID-19 environment. For more information on the 2020 bonus, see the "One-Time Bonus includesfor Extraordinary Leadership" section in the Compensation Discussion & Analysis above. For Mr. Holloway, the 2018 bonus represents a new hire cash hiring incentive.award. (4)
(4)Stock and option award grant date values are computed in accordance with Accounting Standard Codification Topic 718 (ASC 718), as described in footnote 1415 to the financial statements included in the Corporation'sCorporation’s Annual Report on Form 10-K for the year-ended December 31, 20172020 which was filed with the SEC on February 21, 2018.12, 2021. The Stock Awards column includes restricted stock units and performance awards that are reported at the target number of shares, and the grant date fair value of such awards includes a factor for the probable performance outcome of the TSR performance awards which are based on TSR, and excludes the effect of estimated forfeitures. The maximum payout for the performance awards is 200% of target. InFor the event that these2018 awards, would be paid atthe potential maximum payouts the maximum payments for the portion of the stock awards column that is allocated to performance awards would be in 2015: $1,673,342be: $7,319,720 for Mr. Burritt, $678,546$809,644 each for Ms. Breves and Messrs. Bruno and Buckiso, and $1,499,854 for Mr. Matthews, $495,880 for Mr. Rintoul, $5,323,626 for Mr. Longhi, and $866,778 for Ms. Folsom. Messrs. Bradley, Buckiso, and Soni did not receive the 2015 Performance Share Grant.Holloway. The potential maximum payouts in 2016for the 2019 awards would be: $879,798$9,599,976 for Mr. Burritt, $356,686and $1,500,398 for Mr. Matthews, $132,864 for Mr. Buckiso, $260,762 for Mr. Rintoul, $2,799,466 for Mr. Longhi and $455,986 for Ms. Folsom. Messrs. Bradley and Soni did not receiveeach of the 2016 Performance Share Grant.other NEOs. The potential maximum payouts in 2017for the 2020 awards would be: $2,951,826$4,800,022 for Mr. Burritt, $525,292 for Mr. Bradley, $668,520 for Mr. Matthews, $300,092 for Mr. Buckiso, $489,258 for Mr. Rintoul, $5,250,110 for Mr. Longhi, $854,716$1,200,046 for Ms. FolsomBreves, and $248,590$780,022 for Mr. Soni.each of the other NEOs. These amounts do not include the value of restricted stock units included in the stock awardsStock Awards column. (5)
(5)The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for the NEOs is $39.27$8.83 per share for our 20172020 restricted stock unit grants, $14.78$23.92 per share for our 20162019 restricted stock unit grants, and $24.78$43.99 per share for our 20152018 restricted stock unit grants. Performance award grantsFor 2020, performance awards were granted in two portions, one cash grant based on a 3-year weighted average return on capital employedROCE measure, and disclosedone equity grant based on a relative TSR measure. For 2019 and 2018, performance awards were granted in the Grants of Plan-Based Awards table,two portions, one equity grant based on a 3-year weighted average ROCE measure, and the second equity grant based on a total 40 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Executive Compensation Tables |
shareholder return (TSR)relative TSR measure. The grant date fair market value used to calculate the 2017 performance awards based on TSR is $49.52; $10.02$8.20 per share for our 2016the 2020 awards; $29.22 per share for the 2019 awards; and $63.87 per share for the 2018 awards. The grant date fair market value used to calculate the performance awards based on TSR; and $24.95ROCE is $23.92 per share for the 2019 awards and $43.99 per share for the 2018
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 63 |
EXECUTIVE COMPENSATION TABLESSUMMARY COMPENSATION TABLE
awards. For further detail, see our 2015 TSR shares.Annual Report on Form 10-K for the year-ended December 31, 2020, financial statement footnote 15. Mr. BurrittHolloway received a 2017 annual2018 new hire grant of equity in conjunction with his promotion to President and Chief Executive Officer which consisted of 20,98015,050 restricted stock units, and 35,5308,720 performance shares based on TSR.TSR, and 11,290 performance shares based on ROCE. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Burritt'sHolloway’s grant is $20.69$33.22 per share for the restricted stock units and $18.32for the performance award based on ROCE and $42.99 per share for the performance award based on TSR. Mr. Bradley received a 2017 new hire grant of equity which consisted of 7,580 restricted stock units and 13,080 performance shares based on TSR. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Bradley's grant is $23.10 per share for the restricted stock units and $20.08 per share for the performance award based on TSR. Ms. Folsom received a 2017 retention grant of equity which consisted of 10,000 restricted stock units. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Ms. Folsom's grant is $32.36 per share for the restricted stock units. For further detail, see our Annual Report on Form 10-K for the year-ended December 31, 2017, financial statement footnote 14.
(6) The grant date fair market value used to calculate compensation expense in accordance with ASC 718, is $18.32 per share for our 2017 stock option grants; $6.24 per share for our 2016 stock option grants, and $10.04 per share for our 2015 stock option grants. For further detail, see our report on Annual Report on Form 10-K for the year-ended December 31, 2017, Financial Statement footnote 14. Mr. Burritt received a 2017 annual grant of equity in conjunction with his promotion to President and Chief Executive Officer which consisted of 43,530 stock options. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Burritt's grant is $9.97 per share for the stock options. Mr. Bradley received a 2017 new hire grant of equity which consisted of 15,730 stock options. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Bradley's grant is $11.12 per share for the stock options. For further detail, see our Annual Report on Form 10-K for the year-ended December 31, 2017, financial statement footnote 14.
(7)The Non-Equity Incentive Plan Compensation benefits are short-term incentive awards and represent the aggregate amount of incentive awards earned pursuant to the Corporation'sCorporation’s Annual Incentive Compensation Plan ("AICP"(“AICP”). The amount shown for Mr. SoniFor years 2018 and 2019, this column also includes $9,396 awarded pursuant toreflects the Corporation's short-term incentive plan.payout of cash-based ROCE performance awards. (7)
(8)These amounts represent the aggregate increase in actuarial value on an accumulated benefit obligation (ABO) basis that accrued to each Named Executive Officer in 2017NEO under the Corporation'sCorporation’s retirement plans and programs, calculated using the same assumptions used for the Corporation'sCorporation’s annual financial statements except that retirement age is assumed to be the normal retirement age for the respective plans. Key assumptions, and the present value of the accumulated benefits for each executive reflecting all benefits earned as of December 31, 20172020 by the executive under each plan and letter agreement, are shown under the 20172020 Pension Benefits table. The values reported in the earnings column of the 20172020 Nonqualified Deferred Compensation table are not included here because the earnings are not above-market and are not preferential. These amounts exclude any benefits to be paid from plans of formerly affiliated companies. (8)
(9)Components of "All“All Other Compensation"Compensation” are as follows: | | | | ALL OTHER COMPENSATION IN 2020 | | | Name | | | U. S. Steel
Savings Plan
Contributions(a) | | | Non Qualified
Defined Contribution
Plan Accruals(b) | | | International Tax
Gross Ups &
Reimbursements(c) | | | Perquisites(d) | | | TOTAL | | | Burritt | | | $36,225 | | | $177,565 | | | — | | | $127,108 | | | $340,898 | | | Breves | | | $32,263 | | | $53,334 | | | — | | | $5,000 | | | $90,597 | | | Bruno | | | $28,033 | | | $36,712 | | | $683,498 | | | $10,000 | | | $758,243 | | | Buckiso | | | $28,033 | | | $47,830 | | | $38,988 | | | $10,000 | | | $124,851 | | | Holloway | | | $28,215 | | | $47,080 | | | — | | | $10,000 | | | $85,295 | |
| | | | | | | | | | | | | | | | | | | | | | | ALL OTHER COMPENSATION IN 2017 | | | | | | | | | | | | | | | | | | | | | | | Name | | | U. S. Steel
Savings
Plan
Contributions(a) | | | Non Qualified
Defined
Contribution Plan
Accruals(b) | | | International Tax
Gross Ups &
Reimbursements(c) | | | Separation
Payments(d) | | | Perquisites(e) | | | TOTAL | | | | | | | | | | | | | | | | | | | | | | | Burritt | | $ | 35,333 | | $ | 254,175 | | | — | | | — | | $ | 31,035 | | $ | 320,543 | | Bradley | | $ | 39,396 | | $ | 2,896 | | | — | | | — | | $ | 14,090 | | $ | 56,382 | | Matthews | | $ | 26,148 | | $ | 123,114 | | | — | | | — | | $ | 13,490 | | $ | 162,752 | | Buckiso | | $ | 31,750 | | $ | 64,265 | | $ | 423,885 | | | — | | $ | 19,927 | | $ | 539,827 | | Rintoul | | $ | 37,920 | | $ | 73,404 | | $ | 7,322 | | | — | | $ | 26,366 | | $ | 145,012 | | Longhi | | $ | 36,500 | | $ | 457,140 | | | — | | $ | 112,198 | | $ | 190,914 | | $ | 796,752 | | Folsom | | $ | 31,417 | | $ | 178,373 | | | — | | $ | 1,699,023 | | $ | 14,561 | | $ | 1,923,374 | | Soni | | $ | 35,192 | | $ | 26,001 | | | — | | | — | | | — | | $ | 61,193 | | | | | | | | | | | | | | | | | | | | | | |
(a)- U. S. Steel Savings Plan Contributions include: (i) employer matching contributions that were made in the form of the
Corporation'sCorporation’s common stock and (ii) other non-elective employer contributions known as Retirement Account contributions that were made to the executive'sexecutive’s 401(k) account in the U. S. Steel Savings Plan (a federal income tax-qualified defined contribution plan also known as a "401(k) plan"“401(k) plan”) during the most recently completed fiscal year.
(b)
(b)The Non Qualified Defined Contribution Plan Accruals include accruals under the following programs: The Supplemental Thrift Program, in which benefits accrue in the form of phantom shares of U. S. Steel common stock equal to the portion of the Corporation'sCorporation’s matching contributions to the U. S. Steel Savings Plan that cannot be provided due to the statutory limits on covered compensation and annual contributions. −
•The Non Tax-Qualified Retirement Account Program, which provides book accruals equal to the amount of Retirement Account contributions that cannot be provided under the U. S. Steel Savings Plan due to the statutory limits on covered compensation and annual contributions. −
•The Supplemental Retirement Account Program, which provides book accruals equal to the applicable Retirement Account contribution rate (8.5% for all NEOs) under the U. S. Steel Savings Plan multiplied by incentive compensation paid under our short-term incentive compensation programs.program. (c)
(c)Payments related to international assignments. For Mr. BuckisoBruno’s international assignment, this amount includes taxes paid on his behalf to his host country tax jurisdiction of $263,713,$198,622, housing benefits of $49,990, U. S.$51,176, U.S. tax gross-ups of $68,886,$138,758, Tax Equalization of $218,254, an international assignment premium of $29,004, goods and services differential of $7,154, personal security of $4,944, the cost of a company provided automobile of $18,128, tax preparation services in the amount of $1,615, relocation expenses of $15,711, and home leave benefits.
(d)Paymentsbenefits of $132. For Mr. Buckiso’s international assignment, this amount includes taxes paid on his behalf to Mr. Longhi include $112,198 for unused vacation. Payments to Ms. Folsom include $112,773 for unused vacation, $276,250 in incremental value relating to a changehis host country tax jurisdiction of $20,574, U.S. tax gross-ups of $17,069, and tax preparation services in the vesting termsamount of her January 31, 2017 stock award, and $1,310,000 in other payments related to her separation agreement.$1,345. (d)
(e)The amount shown for Mr. Burritt includes personal aircraft use andof $79,991, dues and initial fees for a club membership used for business purposes.purposes of $38,515, security services of $3,602, and a $5,000 stipend for financial planning services. The aggregate incremental cost of the personal use of corporate aircraft is calculated using the rate per flight hour for the type of corporate aircraft used. The rates are published twice per year by a nationally recognized and independent service. The calculated incremental costs for personal flights include the costs related to all flight hours flown in connection with the personal use. The Corporation consistently applies allocation methods for flights that are not entirely either business or personal. The amount shown for Mr. BradleyMs. Breves includes relocation expenses. Thea $5,000 stipend for financial planning services. For Messrs. Bruno, Buckiso and Holloway, the amount shown for Mr. Matthewseach includes a $5,000 stipend for financial planning services. The amount shownservices and a $5,000 stipend for Mr. Buckiso includes the cost of a company provided automobile. Amounts shown for Mr. Rintoul include a company paid executive physical. The amount shown for Mr. Longhi includes $133,429 for personal aircraft use, $38,540 for personal security, and the cost of financial planning services. The amount shown for Ms. Folsom includes the cost of financial planning services. Not included in All Other Compensation are the values of dividends paid on restricted stock awards because these amounts are considered in determining the grant date fair market value shown under the "Stock Awards" column of the Summary Compensation Table.physical benefits. 64 | Executive Compensation TablesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
EXECUTIVE COMPENSATION TABLESGRANTS OF PLAN-BASED AWARDS
Grants of Plan-Based Awards The following table summarizes the grant of non-equity incentive compensation and equity-based incentive compensation to each Named Executive Officer in 2017.2020. No options were granted in 2020. | Name | | | Plan
Name(1) | | | Grant
Date(2) | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(3) | | | | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(6) | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(7)
(#) | | | Closing
Price on
Grant
Date
($/Share) | | | Grant Date
Fair Value
of Stock
Awards(8)
($) | | | | Threshold(4)
($) | | | Target
($) | | | Maximum(5)
($) | | | | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Burritt | | | AICP | | | 1/28/2020 | | | $956,250 | | | $1,912,500 | | | $4,398,750 | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | LTIP | | | 2/25/2020 | | | $1,200,000 | | | $2,400,000 | | | $4,800,000 | | | | | | 146,335 | | | 292,670 | | | 585,340 | | | 362,610 | | | $8.50 | | | 5,600,045 | | | Breves | | | AICP | | | 1/28/2020 | | | $351,250 | | | $702,500 | | | $1,615,750 | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | LTIP | | | 2/25/2020 | | | $300,000 | | | $600,000 | | | $1,200,000 | | | | | | 36,585 | | | 73,170 | | | 146,340 | | | 90,650 | | | $8.50 | | | 1,400,010 | | | Bruno | | | AICP | | | 1/28/2020 | | | $246,500 | | | $493,000 | | | $1,133,900 | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | LTIP | | | 2/25/2020 | | | $195,000 | | | $390,000 | | | $780,000 | | | | | | 23,780 | | | 47,560 | | | 95,120 | | | 58,920 | | | $8.50 | | | 909,980 | | | Buckiso | | | AICP | | | 1/28/2020 | | | $246,500 | | | $493,000 | | | $1,133,900 | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | LTIP | | | 2/25/2020 | | | $195,000 | | | $390,000 | | | $780,000 | | | | | | 23,780 | | | 47,560 | | | 95,120 | | | 58,920 | | | $8.50 | | | 909,980 | | | Holloway | | | AICP | | | 1/28/2020 | | | $236,500 | | | $473,000 | | | $1,087,900 | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | LTIP | | | 2/25/2020 | | | $195,000 | | | $390,000 | | | $780,000 | | | | | | 23,780 | | | 47,560 | | | 95,120 | | | 58,920 | | | $8.50 | | | 909,980 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| |
| |
| |
| |
| |
| |
| |
| | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(7)
(#)
| | All Other
Option
Awards:
Number of
Securities
Underlying
Options(8)
(#)
| |
| |
| |
| |
|---|
| |
| |
| | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(3)
| | Estimated Future Payouts
Under Equity Incentive
Plan Awards(6)
| |
| |
| | Grant Date
Fair Value
of Stock
and Option
Awards(10)
($)
| |
|---|
| |
| |
| | Exercise
Price of
Option
Awards(9)
($/Share)
| | Closing
Price on
Grant
Date
($/Share)
| |
|---|
Name
| | Plan
Name(1)
| | Grant
Date(2)
| | Threshold(4)
($)
| | Target
($)
| | Maximum(5)
($)
| | Threshold
(#)
| | Target
(#)
| | Maximum
(#)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Burritt | | AICP | | | 3/27/2017 | | $ | 594,565 | | $ | 1,189,130 | | $ | 2,705,271 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 2/28/2017 | | $ | 412,500 | | $ | 825,000 | | $ | 1,072,500 | | | 8,330 | | | 16,660 | | | 33,320 | | | 14,010 | | | 30,020 | | $ | 39.265 | | $ | 38.72 | | $ | 1,925,072 | | | | LTIP | | | 5/31/2017 | | $ | 325,500 | | $ | 651,000 | | $ | 846,300 | | | 17,765 | | | 35,530 | | | 71,060 | | | 20,980 | | | 43,530 | | $ | 20.685 | | $ | 20.85 | | $ | 1,518,875 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bradley | | AICP | | | 3/27/2017 | | $ | 150,002 | | $ | 300,003 | | $ | 682,508 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 8/1/2017 | | $ | 131,250 | | $ | 262,500 | | $ | 341,250 | | | 6,540 | | | 13,080 | | | 26,160 | | | 7,580 | | | 15,730 | | $ | 23.095 | | $ | 22.72 | | $ | 612,625 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthews | | AICP | | | 3/27/2017 | | $ | 216,400 | | $ | 432,800 | | $ | 984,620 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 2/28/2017 | | $ | 167,250 | | $ | 334,500 | | $ | 434,850 | | | 3,375 | | | 6,750 | | | 13,500 | | | 5,680 | | | 12,170 | | $ | 39.265 | | $ | 38.72 | | $ | 780,239 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buckiso | | AICP | | | 3/27/2017 | | $ | 123,750 | | $ | 247,500 | | $ | 563,063 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 2/28/2017 | | $ | 75,000 | | $ | 150,000 | | $ | 195,000 | | | 1,515 | | | 3,030 | | | 6,060 | | | 2,550 | | | 5,460 | | $ | 39.265 | | $ | 38.72 | | $ | 350,198 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rintoul | | AICP | | | 3/27/2017 | | $ | 174,650 | | $ | 349,300 | | $ | 794,658 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 2/28/2017 | | $ | 122,250 | | $ | 244,500 | | $ | 317,850 | | | 2,470 | | | 4,940 | | | 9,880 | | | 4,150 | | | 8,900 | | $ | 39.265 | | $ | 38.72 | | $ | 570,627 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Longhi | | AICP | | | 3/27/2017 | | $ | 562,500 | | $ | 1,125,000 | | $ | 2,559,375 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 2/28/2017 | | $ | 1,312,500 | | $ | 2,625,000 | | $ | 3,412,500 | | | 26,505 | | | 53,010 | | | 106,020 | | | 44,560 | | | 95,520 | | $ | 39.265 | | $ | 38.72 | | $ | 6,124,630 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Folsom | | AICP | | | 3/27/2017 | | $ | 280,000 | | $ | 560,000 | | $ | 1,274,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 1/31/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,000 | | | — | | | — | | $ | 32.71 | | $ | 599,850 | | | | LTIP | | | 2/28/2017 | | $ | 213,750 | | $ | 427,500 | | $ | 555,750 | | | 4,315 | | | 8,630 | | | 17,260 | | | 7,260 | | | 15,560 | | $ | 39.265 | | $ | 38.72 | | $ | 997,481 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Soni | | AICP | | | 3/27/2017 | | $ | 103,125 | | $ | 206,250 | | $ | 469,219 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | LTIP | | | 2/28/2017 | | $ | 62,250 | | $ | 124,500 | | $ | 161,850 | | | 1,255 | | | 2,510 | | | 5,020 | | | 2,110 | | | 4,530 | | $ | 39.265 | | $ | 38.72 | | $ | 290,134 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)- AICP refers to the
Corporation'sCorporation’s Annual Incentive Compensation Plan.Plan and LTIP refers to the Long-Term Incentive Compensation ProgramCorporation’s long-term incentive program, which are both under the United States Steel Corporation 2005 Stock Incentive Plan and the United States Steel 2016 Omnibus Incentive Compensation Plan.
(2)
(2)The grant date for the AICP represents the date that the Compensation & Organization Committee (the "Committee") established the annual incentive targets for the 20172020 performance period. (3)
(3)Our NEOs received non-equity incentive awards under the AICP and LTIP in 2017.2020. For a discussion of the plans the 2017 performance targets and the 20172020 award amounts, see the Short-TermAnnual Incentive Compensation Plan and Long-Term Incentive CompensationProgram sections in the "Compensation“Compensation Discussion and Analysis" included in this proxy statement. AmountsAnalysis” above. For the AICP, threshold and target amounts shown reflect the amount that would be paid to each executive at eachbased on the Corporation’s performance level,in 2020, before consideration of individual performance. These amounts are based on earned base salary, without giving effect to the voluntary salary reduction. (4)
(4)The threshold level for the AICP award is 50% of the target award, which is based upon the lowest possible payouts for earnings before interest, taxes, depreciation, and amortization (EBITDA) (25%on EBITDA (75% of target) and cash flowconversion cycle (25% of target) for a combined threshold of 50%. In addition, individualIndividual performance is also considered and canmay decrease an award by 15% or increase an award by up to 30% orof target. The Compensation Committee retains discretion to reduce or eliminate the award. The threshold level for the LTIP grantaward, which is based on the Corporation’s three-year weighted average ROCE, is 50% of the incentive target performance for return on capital employed (ROCE) performance award described in footnote 6.award. (5)
(5)The maximum level for the AICP award is based on 175%200% of the target award multiplied bywith the maximum personal performance adjustmentadditive of 130%.30% of an NEO’s target award for individual performance. The maximum award underlevel for the LTIP ROCE performance awardsaward is 200% of the target award. (6)
(6)Performance award grants were made on February 28, 201725, 2020 to all NEOs except for Mr. Bradley, whose award was granted on August 1, 2017, shortly following his date of hire.NEOs. For 2017,2020, performance awards represent approximately 60% of the total annual grant value, with half of the performance award value granted in cash long-term incentivescash-based awards that will vest based on the Corporation'sCorporation’s three-year weighted average return on capital employed (ROCE) as the performance measure,ROCE, and the other half of the performance award value granted in equity awards that will vest based on total shareholder return (TSR). ROCE weighted average return is based on 20% weighting of year one of the performance period, 30% weighting on the second year of the performance periodCorporation’s annual and 50% weighting on the third year of the performance period. Vesting is performance-based and will occur, if at all, following the end of the three-year performance period (the "performance period") on the date the Committee meets to determine the Corporation's actual performance for the performance period. The payout is based upon the three-year weighted average ROCE for the period for the cash portion, and the rank of ourrelative TSR compared to the TSR of the companies in the peer group for the equity portion.performance. Performance awards do not pay dividends or carry voting privileges. Executives may receive grants of options and restricted stock units in additionprivileges prior to vesting. For more information the performance awards, undersee the LTIP. We have not engagedLong-Term Incentive Program section in any repricing or other material modification of any outstanding options or other equity-based award under the plan.“Compensation Discussion and Analysis” above. (7)
(7)Restricted stock unit grants were made on February 28, 2017 to all NEOs except Mr. Bradley.25, 2020. The units are time-based awards subject to ratable vesting over a three-year period with one-third of the granted sharesunits vesting on February 28, 2018;25, 2021; an additional one-third of the sharesunits vesting on February 28, 2019;25, 2022; and the remaining one-third of the sharesunits vesting on February 28, 2020,25, 2023, subject in each case to continued employment through the vesting dates. Additional RSU grants were made on May 31, 2017 to Mr. Burritt. The units are time-based awards subject to ratable vesting over a three-year period with one-third of the granted shares vesting on May 31, 2018; an additional one-third of the shares vesting on May 31, 2019; and the remaining one-third of the shares vesting on May 31, 2020, subject in each case to continued employment through the vesting dates. Restricted stock unit grants were made on August 1, 2017 to Mr. Bradley. The units are time-based awards subject to ratable vesting over a three-year period with one-third of the granted shares vesting on August 1, 2018; an additional one-third of the shares vesting on August 1, 2019; and the remaining one-third of the shares vesting on August 1, 2020, subject in each case to continued employment through the vesting dates. (8)
(8)Option grants were made on February 28, 2017 to all NEOs except Mr. Bradley. The option grants are time-based, with a ten-year term and vest over a three-year period with one-third of the granted shares vesting on February 28, 2018; an additional one-third of the shares vesting on February 28, 2019; and the remaining one-third of the shares vesting on February 28, 2020, subject in each case to continued employment on the vesting dates. Additional option grants were made on May 31, 2017 to Mr. Burritt. The option grants are time-based, with a ten-year term and vest over a three-year period with one-third of the granted shares vesting on May 31, 2018; an additional one-third of the shares vesting on May 31, 2019; and the remaining one-third of the shares vesting on May 31, 2020, subject in each case to continued employment on the vesting dates. Option grants were made on August 1, 2017 to Mr. Bradley. The option grants are time-based, with a ten-year term and vest over a three-year period with one-third of the granted shares vesting on August 1, 2018; an additional one-third of the shares vesting on August 1, 2019; and the remaining one-third of the shares vesting on August 1, 2020, subject in each case to continued employment on the vesting dates.
(9)Exercise Price of Option Awards represents the fair market value on the date of grant.
(10)This column represents the full grant date fair market value forof the equity incentive awards, stock awards and optionequity-based LTIP awards, calculated in accordance with ASC 718 based on the average of the high and low stock priceprices on the date of the grant. The restricted stock units accrue dividends at a non-preferential rate ($0.05)0.01) per share (as of the last announced dividend) thatand are paid when the underlying restricted stock units vest.are distributed. The value of these dividends is reflected in the fair market value of the restricted stock unit grant. Restricted stock units carry no voting privileges. The target number of TSR performance awards is also based on the fair market value on the date of grant and includes a factor predicting the probable outcome of the performance goal for the grant. The factor for the February 28, 201725, 2020 performance award grant was 126.0185%, the factor for the May 31, 2017 performance award grant was 88.5801%, and the factor for the August 1, 2017 performance award grant was 86.9257%92.9224% as determined by a third-party consultant using a Monte Carlo valuation model. The maximum payout for the ROCE performance awards is 200% of target. Accordingly, if maximum share payouts were achieved for such performance awards, the aggregate grant date fair value for such awards would be twice the target amount disclosed in the table related to such performance awards. The value shown for Ms. Folsom includes the incremental value attributed to the change in vesting terms of her January 2017 grant. Executive Compensation TablesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 65 |
EXECUTIVE COMPENSATION TABLESOUTSTANDING EQUITY AWARDS AT 2020 FISCAL YEAR-END
Outstanding Equity Awards at 20172020 Fiscal Year-End | Name | | | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options(1) (#)
Unexercisable | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested(2)
(#) | | | Market Value
of Shares or
Units of
Stock That
Have Not
Vested(3) ($) | | | Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(4) (#) | | | Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
shares, Units
or Other
Rights That
Have Not
Vested(3)(4) ($) | | | Burritt | | | 2/24/2015 | | | 18,260 | | | — | | | $24.780 | | | 2/24/2025 | | | | | | | | | | | | | | | | | | 5/31/2016 | | | 47,834 | | | — | | | $14.780 | | | 5/31/2026 | | | | | | | | | | | | | | | | | | 2/28/2017 | | | 30,020 | | | — | | | $39.265 | | | 2/28/2027 | | | | | | | | | | | | | | | | | | 5/31/2017 | | | 43,530 | | | — | | | $20.690 | | | 5/31/2027 | | | | | | | | | | | | | | | | | | 2/27/2018 | | | | | | | | | | | | | | | 18,490 | | | $310,077 | | | 28,650 | | | — | | | | | | 2/27/2018 | | | | | | | | | | | | | | | | | | | | | 41,600 | | | — | | | | | | 2/26/2019 | | | | | | | | | | | | | | | 89,187 | | | $1,495,666 | | | 82,150 | | | $1,033,242 | | | | | | 2/26/2019 | | | | | | | | | | | | | | | | | | | | | 100,330 | | | — | | | | | | 2/25/2020 | | | | | | | | | | | | | | | 362,610 | | | $6,080,970 | | | 292,670 | | | $9,816,152 | | | Breves | | | 5/27/2014 | | | 2,217 | | | — | | | $24.285 | | | 5/27/2024 | | | | | | | | | | | | | | | | | | 2/24/2015 | | | 8,270 | | | — | | | $24.780 | | | 2/24/2025 | | | | | | | | | | | | | | | | | | 5/31/2016 | | | 7,214 | | | — | | | $14.780 | | | 5/31/2026 | | | | | | | | | | | | | | | | | | 2/28/2017 | | | 4,530 | | | — | | | $39.265 | | | 2/28/2027 | | | | | | | | | | | | | | | | | | 2/27/2018 | | | | | | | | | | | | | | | 2,047 | | | $34,328 | | | 3,170 | | | — | | | | | | 2/27/2018 | | | | | | | | | | | | | | | | | | | | | 4,600 | | | — | | | | | | 2/26/2019 | | | | | | | | | | | | | | | 13,934 | | | $233,673 | | | 12,840 | | | $161,495 | | | | | | 2/26/2019 | | | | | | | | | | | | | | | | | | | | | 15,680 | | | — | | | | | | 2/25/2020 | | | | | | | | | | | | | | | 90,650 | | | $1,520,201 | | | 73,170 | | | $2,454,122 | | | Bruno | | | 2/24/2015 | | | 8,270 | | | — | | | $24.780 | | | 2/24/2025 | | | | | | | | | | | | | | | | | | 5/31/2016 | | | 10,820 | | | — | | | $14.780 | | | 5/31/2026 | | | | | | | | | | | | | | | | | | 2/28/2017 | | | 5,460 | | | — | | | $39.265 | | | 2/28/2027 | | | | | | | | | | | | | | | | | | 2/27/2018 | | | | | | | | | | | | | | | 2,047 | | | $34,328 | | | 3,170 | | | — | | | | | | 2/27/2018 | | | | | | | | | | | | | | | | | | | | | 4,600 | | | — | | | | | | 2/26/2019 | | | | | | | | | | | | | | | 13,934 | | | $233,673 | | | 12,840 | | | $161,495 | | | | | | 2/26/2019 | | | | | | | | | | | | | | | | | | | | | 15,680 | | | — | | | | | | 2/25/2020 | | | | | | | | | | | | | | | 58,920 | | | $988,088 | | | 47,560 | | | $1,595,162 | | | Buckiso | | | 5/31/2011 | | | 3,250 | | | — | | | $45.805 | | | 5/31/2021 | | | | | | | | | | | | | | | | | | 5/29/2012 | | | 7,410 | | | — | | | $22.305 | | | 5/29/2022 | | | | | | | | | | | | | | | | | | 5/28/2013 | | | 7,240 | | | — | | | $18.640 | | | 5/28/2023 | | | | | | | | | | | | | | | | | | 5/27/2014 | | | 8,970 | | | — | | | $24.285 | | | 5/27/2024 | | | | | | | | | | | | | | | | | | 2/24/2015 | | | 8,880 | | | — | | | $24.780 | | | 2/24/2025 | | | | | | | | | | | | | | | | | | 5/31/2016 | | | 10,820 | | | — | | | $14.780 | | | 5/31/2026 | | | | | | | | | | | | | | | | | | 2/28/2017 | | | 5,460 | | | — | | | $39.265 | | | 2/28/2027 | | | | | | | | | | | | | | | | | | 2/27/2018 | | | | | | | | | | | | | | | 2,047 | | | $34,328 | | | 3,170 | | | — | | | | | | 2/27/2018 | | | | | | | | | | | | | | | | | | | | | 4,600 | | | — | | | | | | 2/26/2019 | | | | | | | | | | | | | | | 13,934 | | | $233,673 | | | 12,840 | | | $161,495 | | | | | | 2/26/2019 | | | | | | | | | | | | | | | | | | | | | 15,680 | | | — | | | | | | 2/25/2020 | | | | | | | | | | | | | | | 58,920 | | | $988,088 | | | 47,560 | | | $1,595,162 | | | Holloway | | | 4/30/2018 | | | | | | | | | | | | | | | 5,017 | | | $84,135 | | | 8,720 | | | — | | | | | | 4/30/2018 | | | | | | | | | | | | | | | | | | | | | 11,290 | | | — | | | | | | 2/26/2019 | | | | | | | | | | | | | | | 13,934 | | | $233,673 | | | 12,840 | | | $161,495 | | | | | | 2/26/2019 | | | | | | | | | | | | | | | | | | | | | 15,680 | | | — | | | | | | 2/25/2020 | | | | | | | | | | | | | | | 58,920 | | | $988,088 | | | 47,560 | | | $1,595,162 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options(1)
(#)
Unexercisable | | | Option
Exercise
Price
($) | | | Option
Expiration
Date(2) | | | Number of
Shares or
Units of
Stock
That Have
Not
Vested(3)
(#) | | | Market Value
of Shares or
Units of
Stock That
Have Not
Vested(4) ($) | | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That
Have Not
Vested(5) (#) | | | Equity Incentive
Plan Awards: Market
or Payout Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested(4)(5) ($)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Burritt | | | 5/27/2014 | | | 16,780 | | | — | | $ | 24.285 | | | 5/27/2024 | | | — | | | — | | | — | | | — | | | | | 2/24/2015 | | | 18,260 | | | 18,260 | | $ | 24.780 | | | 2/24/2025 | | | 7,400 | | $ | 260,406 | | | 33,070 | | $ | 861,977 | | | | | 2/22/2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | 44,300 | | $ | 3,117,834 | | | | | 5/31/2016 | | | 23,916 | | | 47,834 | | $ | 14.780 | | | 5/31/2026 | | | 20,200 | | $ | 710,838 | | | — | | | — | | | | | 2/28/2017 | | | — | | | 30,020 | | $ | 39.265 | | | 2/28/2027 | | | 14,010 | | $ | 493,012 | | | 16,660 | | $ | 512,572 | | | | | 5/31/2017 | | | — | | | 43,530 | | $ | 20.690 | | | 5/31/2027 | | | 20,980 | | $ | 738,286 | | | 35,530 | | $ | 1,093,138 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bradley | | | 8/1/2017 | | | — | | | 15,730 | | $ | 23.095 | | | 8/1/2027 | | | 7,580 | | $ | 266,740 | | | 13,080 | | $ | 402,427 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthews | | | 5/27/2008 | | | 1,600 | | | — | | $ | 169.225 | | | 5/27/2018 | | | — | | | — | | | — | | | — | | | | | 5/26/2009 | | | 11,660 | | | — | | $ | 29.805 | | | 5/26/2019 | | | — | | | — | | | — | | | — | | | | | 5/25/2010 | | | 7,680 | | | — | | $ | 45.650 | | | 5/25/2020 | | | — | | | — | | | — | | | — | | | | | 5/31/2011 | | | 10,730 | | | — | | $ | 45.805 | | | 5/31/2021 | | | — | | | — | | | — | | | — | | | | | 5/29/2012 | | | 19,960 | | | — | | $ | 22.305 | | | 5/29/2022 | | | — | | | — | | | — | | | — | | | | | 5/28/2013 | | | 22,080 | | | — | | $ | 25.000 | | | 5/28/2023 | | | — | | | — | | | — | | | — | | | | | 5/27/2014 | | | 22,450 | | | — | | $ | 24.285 | | | 5/27/2024 | | | — | | | — | | | — | | | — | | | | | 2/24/2015 | | | 14,806 | | | 7,404 | | $ | 24.780 | | | 2/24/2025 | | | 3,000 | | $ | 105,570 | | | 13,410 | | $ | 349,535 | | | | | 2/22/2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | 17,960 | | $ | 1,264,025 | | | | | 5/31/2016 | | | 9,696 | | | 19,394 | | $ | 14.780 | | | 5/31/2026 | | | 8,194 | | $ | 288,347 | | | — | | | — | | | | | 2/28/2017 | | | — | | | 12,170 | | $ | 39.265 | | | 2/28/2027 | | | 5,680 | | $ | 199,879 | | | 6,750 | | $ | 207,675 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buckiso | | | 5/27/2008 | | | 450 | | | — | | $ | 169.225 | | | 5/27/2018 | | | — | | | — | | | — | | | — | | | | | 5/26/2009 | | | 3,960 | | | — | | $ | 29.805 | | | 5/26/2019 | | | — | | | — | | | — | | | — | | | | | 5/25/2010 | | | 1,890 | | | — | | $ | 45.650 | | | 5/25/2020 | | | — | | | — | | | — | | | — | | | | | 5/31/2011 | | | 3,250 | | | — | | $ | 45.805 | | | 5/31/2021 | | | — | | | — | | | — | | | — | | | | | 5/29/2012 | | | 7,410 | | | — | | $ | 22.305 | | | 5/29/2022 | | | — | | | — | | | — | | | — | | | | | 5/28/2013 | | | 7,240 | | | — | | $ | 18.640 | | | 5/28/2023 | | | — | | | — | | | — | | | — | | | | | 5/27/2014 | | | 8,970 | | | — | | $ | 24.285 | | | 5/27/2024 | | | — | | | — | | | — | | | — | | | | | 2/24/2015 | | | 5,920 | | | 2,960 | | $ | 24.780 | | | 2/24/2025 | | | 1,200 | | $ | 42,228 | | | — | | | — | | | | | 2/22/2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,690 | | $ | 470,842 | | | | | 5/31/2016 | | | 3,606 | | | 7,214 | | $ | 14.780 | | | 5/31/2026 | | | 3,047 | | $ | 107,224 | | | — | | | — | | | | | 2/28/2017 | | | — | | | 5,460 | | $ | 39.265 | | | 2/28/2027 | | | 2,550 | | $ | 89,735 | | | 3,030 | | $ | 93,223 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rintoul | | | 5/27/2008 | | | 1,400 | | | — | | $ | 169.225 | | | 5/27/2018 | | | — | | | — | | | — | | | — | | | | | 5/26/2009 | | | 7,640 | | | — | | $ | 29.805 | | | 5/26/2019 | | | — | | | — | | | — | | | — | | | | | 5/25/2010 | | | 2,880 | | | — | | $ | 45.650 | | | 5/25/2020 | | | — | | | — | | | — | | | — | | | | | 5/31/2011 | | | 8,950 | | | — | | $ | 45.805 | | | 5/31/2021 | | | — | | | — | | | — | | | — | | | | | 2/24/2015 | | | — | | | 5,414 | | $ | 24.780 | | | 2/24/2025 | | | 2,194 | | $ | 77,207 | | | 9,800 | | $ | 255,439 | | | | | 2/22/2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | 13,130 | | $ | 924,089 | | | | | 5/31/2016 | | | — | | | 14,180 | | $ | 14.780 | | | 5/31/2026 | | | 5,994 | | $ | 210,929 | | | — | | | — | | | | | 2/28/2017 | | | — | | | 8,900 | | $ | 39.265 | | | 2/28/2027 | | | 4,150 | | $ | 146,039 | | | 4,940 | | $ | 151,987 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Longhi | | | 5/27/2014 | | | 50,580 | | | — | | $ | 24.285 | | | 6/30/2020 | | | — | | | — | | | — | | | — | | | | | 2/24/2015 | | | 58,100 | | | 19,367 | | $ | 24.780 | | | 6/30/2020 | | | — | | | — | | | — | | | — | | | | | 5/31/2016 | | | 76,100 | | | 6,341 | | $ | 14.780 | | | 6/30/2020 | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Folsom | | | 1/27/2014 | | | 6,667 | | | — | | $ | 25.560 | | | 12/29/2020 | | | — | | | — | | | — | | | — | | | | | 5/27/2014 | | | 7,484 | | | — | | $ | 24.285 | | | 12/29/2020 | | | — | | | — | | | — | | | — | | | | | 2/24/2015 | | | 9,463 | | | 8,938 | | $ | 24.780 | | | 12/29/2020 | | | — | | | — | | | — | | | — | | | | | 5/31/2016 | | | 12,393 | | | 16,352 | | $ | 14.780 | | | 12/29/2020 | | | — | | | — | | | — | | | — | | | | | 2/28/2017 | | | — | | | 7,924 | | $ | 39.265 | | | 12/29/2022 | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Soni | | | 4/26/2016 | | | — | | | — | | | — | | | — | | | 12,500 | | $ | 439,875 | | | — | | | — | | | | | 5/31/2016 | | | 3,670 | | | 7,340 | | $ | 14.780 | | | 5/31/2026 | | | 3,100 | | $ | 109,089 | | | — | | | — | | | | | 2/28/2017 | | | — | | | 4,530 | | $ | 39.265 | | | 2/28/2027 | | | 2,110 | | $ | 74,251 | | | 2,510 | | $ | 77,224 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
United States Steel Corporation | 2018 Proxy Statement |43
Table of Contents
Executive Compensation Tables
|
(1)- All options vest in equal increments on the first three anniversaries of the date of grant, subject in each case to employment on the respective vesting
dates or, for the 2015 and 2016 grants, to pro rata vesting for retirement during the vesting period. For the options granted in 2017, the options fully vest upon attainment of age 60 with 5 years of service, or age 65, provided that the executive is employed for at least six months following the date of grant. Such options partially vest after 30 years of service or attainment of age 55 with 10 years of service.dates.
| 66 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
EXECUTIVE COMPENSATION TABLESOPTION EXERCISES AND STOCK VESTED IN 2020
(2) Options generally expire 10 years after the date of grant. Upon a retirement or a "termination with consent," options granted prior to 2017 expire three years after the date of termination of employment, and options granted in 2017, expire five years after the date of termination of employment.
(3)All restricted stock units vest in equal increments on the first three anniversaries of the date of grant, subject in each case to employment on the respective vesting dates or to pro rata vesting for early retirement during the vesting period; For the RSUs granted in 2017, the RSUs fully vest upon attainment of age 60 with 5 years of service, or age 65, provided that the executive is employed for at least six months following the date of grant. Such RSUs partially vest after(i.e., 30 years of service or attainment of age 55 with 10 years of service. Notwithstandingservice) or full vesting for normal retirement (i.e., the foregoing, the restricted stock unit retention grant awarded to Ms. Folsom in 2017 and the restricted stock unit new hire grant issued to Mr. Soni in 2016, are conditioned on continued employment with the Corporation and subject to three-year cliff vesting on the third anniversarylater of thesix months following date of grant. Thegrant, age 60 with five years of service, or age 65) during the vesting period. As of December 31, 2020, Mr. Burritt and Ms. Folsom's grant was accelerated pursuant to her separation agreement.Breves have met the requirements for a normal retirement and full vesting, and Mr. Buckiso has met the requirements for early retirement and pro rata vesting. (3)
(4)Value is based on $35.19$16.77 per share, which was the closing price of the Corporation’s stock on December 29, 2017.31, 2020. (4)
(5)The 2018, 2019 and 2020 performance LTIPawards were divided equally between relative TSR performance awards and ROCE performance awards and were granted in equity, except for the 2020 ROCE performance award, which was split between an equity award based ongranted in cash. For the 2018 relative TSR relative to a peer group and a long-termROCE performance cash award based on ROCE. The 2015awards, the performance period ended on December 31, 2017. Using stock prices2020, and dividends reported since the beginning of the performance period, we estimate that, through December 31, 2017, the Corporation has performed at the 44th percentile relative to a peer group which resulted in a final award of 74.07% of target for the relative TSR portion. The 2015 ROCE equity awardCorporation’s performance was below the threshold and is valued at zero aslevel required to earn a payout. As of December 31, 2017. Based on2020, the 2019 TSR performance through December 31, 2017, the 2016 TSR equity award is performing at a level that wouldis projected to earn a payout at 200%75% of plan and based ontarget, the first year of the2020 TSR performance period, the 2017 TSR equity award is performing at a level that wouldis projected to earn a payout at 87.43%200% of target. Thetarget, the 2019 ROCE cash awards for 2015, 2016 and 2017 are not shown on this table. Based on performance through December 31, 2017 these awards are indicatingaward is projected to achieve below threshold results, and the 2020 ROCE performance award, which was granted in cash and is not shown in this table, is valued at 0% of target. Mr. Burritt and Ms. Breves have met the requirements for 2015a normal retirement as described above and above target resultsare fully vested in their unearned performance awards for 20162018, 2019 and 2017.2020. Option Exercises and Stock Vested in 20172020 The following table illustrates for each Named Executive Officer,NEO, on an aggregate basis, the value realized from the exercise of stock options and from the vesting of restricted stock unit awards and performance awards in 2017.2020. | | | | Option Awards | | | | | | Stock Awards | | | Name | | | Number of
Shares
Acquired
on Exercise
(#) | | | Value
Realized on
Exercise
($) | | | | | | Number of
Shares
Acquired
on Vesting
(#) | | | Value
Realized on
Vesting(1)
($) | | | Burritt | | | — | | | — | | | | | | 74,747 | | | $616,158 | | | Breves | | | — | | | — | | | | | | 15,717 | | | $129,944 | | | Bruno | | | — | | | — | | | | | | 9,863 | | | $81,577 | | | Buckiso | | | — | | | — | | | | | | 9,863 | | | $81,577 | | | Holloway | | | — | | | — | | | | | | 11,983 | | | $98,015 | |
| | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards
| | | | | | | | | | | | | | | | | Name | | | Number of
Shares
Acquired
on Exercise
(#) | | | Value
Realized on
Exercise(1)
($) | | | Number of
Shares
Acquired
on Vesting
(#) | | | Value
Realized on
Vesting(2)
($) | | | | | | | | | | | | | | | | | Burritt | | | 204,630 | | $ | 3,275,641 | | | 75,529 | | $ | 2,629,825 | | Bradley | | | — | | | — | | | — | | | — | | Matthews | | | — | | | — | | | 33,001 | | $ | 1,154,341 | | Buckiso | | | — | | | — | | | 3,947 | | $ | 100,501 | | Rintoul | | | 32,263 | | $ | 362,569 | | | 22,396 | | $ | 775,939 | | Longhi | | | — | | | — | | | 230,594 | | $ | 8,007,682 | | Folsom | | | 24,429 | | $ | 365,150 | | | 37,905 | | $ | 1,306,726 | | Soni | | | — | | | — | | | 1,550 | | $ | 32,054 | | | | | | | | | | | | | | | | |
(1)Represents the difference between the market value on the date of exercise and the exercise price for the number of shares exercised.
(2)- Represents the market value on the vesting date of time-vested restricted stock unit awards and performance awards
whichthat had met the performance criteria. Value shown is before taxes.
The following table illustrates the actuarial present value of pension benefits accumulated by Named Executive Officers as of December 31, 2017. Messrs. Matthews and2020. Mr. Buckiso werewas the only NEOsNEO covered by the Corporation'sCorporation’s defined benefit pension plansplan, which was closed to new entrants in 2013,2003, and for which benefit accruals were frozen for all non-represented participants on December 31, 2015. | Name | | | Plan Name | | | Number
of Years
Credited
Service(1)
(#) | | | Present
Value of
Accumulated
Benefit(2)
($) | | | Buckiso | | | U. S. Steel Pension Plan | | | 25 | | | $1,420,704 | | | | | | Non Tax-Qualified Pension Plan | | | 25 | | | $160,137 | | | | | | Letter Agreement(3) | | | 25 | | | $697,879 | | | | | | Total | | | | | | $2,278,720 | |
| | | | | | | | | | Name
| | Plan Name
| | Number
of Years
Credited
Service(1)
(#)
| | Present
Value of
Accumulated
Benefit(2)
($)
| |
|---|
| | | | | | | | | | | Matthews | | U. S. Steel Pension Plan | | | 25 | | $ | 1,233,622 | | | | Non Tax-Qualified Pension Plan | | | 25 | | $ | 1,008,900 | | | | Supplemental Pension Program | | | 25 | | $ | 2,174,051 | | | | Total | | | — | | $ | 4,416,573 | | | | | | | | | | | | | Buckiso | | U. S. Steel Pension Plan | | | 25 | | $ | 1,111,560 | | | | Non Tax-Qualified Pension Plan | | | 25 | | $ | 124,588 | | | | Total | | | — | | $ | 1,236,148 | | | | | | | | | | | | |
(1)- Service shown represents credited service years (rounded) used to calculate accrued
benefits as of December 31, 2017. Credited service was frozen on December 31, 2015.benefits.
(2)
(2)Accumulated benefit at December 31, 2017. The present value of accumulated benefits is calculated using the assumptions used in the preparation of the Corporation'sCorporation’s financial statements contained in the Annual Report on Form 10-K, except that retirement age is assumed to be the normal retirement age for the respective plans. Key assumptions used for the calculations in this table and in the Summary Compensation Table include a 4.00%2.73% discount rate for the 20172020 calculations (4.00%(3.37% for 20162019 and 4.25%4.43% for 2015)2018); a lump sum rate assumption of 3.0%2.50% for 2017 (3.0%2020 (2.5% for 20162019 and 3.0% for 2015)2018) assuming the Section 417(e) minimum was not applicable; a 100% lump sum benefit election for all plans; and unreduced benefit ages, which at December 31, 2017,2015, are age 62 for the U. S. Steel Pension Plan and age 60 for the Non Tax-Qualified Pension Plan. (3)
The Corporation entered into a letter agreement with Mr. Buckiso in July 2020 providing him with certain pension make-whole provisions in consideration for his continued employment with the Corporation beyond the date on which he was eligible for an immediate retirement under the U. S. Steel Pension Plan and the SupplementalNon Tax-Qualified Pension Program.Plan. Executive Compensation TablesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 67 |
COMPENSATION DISCUSSION AND ANALYSISU. S. STEEL PENSION PLAN
U. S. Steel Pension PlanU. S. STEEL PENSION PLAN
|
The United States Steel Corporation Plan for Employee Pension Benefits, Revision of 2003 ("(“U. S. Steel Pension Plan"Plan”) provides defined benefits for substantially all non-represented, domestic employees who were hired before July 1, 2003. Messrs. Burritt, Bradley, Rintoul, Longhi, and SoniMr. Buckiso is the only NEO who were hired in 2013, 2017, 2007, 2012 and 2016 respectively, and Ms. Folsom, who was hired in 2014, are not participantsis a participant in the U. S. Steel Pension Plan and the related nonqualified plans. Mr. Matthews and Mr. Buckiso are participants under the U. S.United States Steel Corporation Non Tax-Qualified Pension Plan and the related non-qualified plans as noted under "Pension Plan Compensation" on page 55.(“Non Tax-Qualified Pension Plan”). Benefits under the U. S. Steel Pension Plan and the related non-qualified plans described belowNon Tax-Qualified Pension Plan were frozen for all non-represented participants on December 31, 2015. The U. S. Steel Pension Plan is designed to provide eligible employees with replacement income during retirement. The two primary benefits provided to non-represented employees are based on final earnings (the "Final“Final Earnings Benefit"Benefit”) and career earnings (the "Career“Career Earnings Benefit"Benefit”) formulas. Benefits may be paid as an actuarially determined lump sum in lieu of monthly pension payments. The Internal Revenue Code (the "Code"“Code”) limits the amount of pension benefits that may be paid from tax-qualified pension plans. The Final Earnings Benefit component is based on a formula using a specified percentage (dependent on years of service) of average monthly earnings whichthat is determined from the five consecutive 12-month calculation periods in which the employee'semployee’s aggregate earnings were the highest during the last ten 12-month calculation periods of continuous service prior to retirement. Incentive compensation is not considered when determining average monthly earnings. Eligibility for an unreduced Final Earnings Benefit under the U. S. Steel Pension Plan is based on attaining at least 30 years of credited service or at least age 62 with 15 years of credited service. In addition toBecause Mr. Buckiso has over 30 years of credited service and earnings while employed by the Corporation, service and earnings for certaineligibility purposes, include those accrued while workinghe is eligible for certain affiliated companies.
an unreduced Final Earnings Benefit. The annual normal retirement benefit under the Career Earnings Benefit component is equal to 1.3% of total career earnings. Incentive compensation is not considered when determining total career earnings. Career Earnings Benefits commenced prior to attaining normal retirement or age 62 with 15 years of service, but after attaining age 58, are subject to an early commencement reduction equal to one-quarter of one percent for each month the commencement of pension payments precedes the month in which the participant attains the age of 62 years. Career Earnings Benefits commenced prior to attaining age 58 are based on 1.0% of total career earnings and subject to a larger early commencement reduction. If he had retired on December 31, 2017,2020, Mr. Matthews'Buckiso’s annual Career Earnings Benefits would have been reduced by 53.33%, and if Mr. Buckiso had retired on December 31, 2017, his annual Career Earnings Benefits would have been reduced by 58.88%48.82%. Benefits accrued for each executive for the purpose of calculating both the Final Earnings and Career Earnings Benefits are limited to the executive'sexecutive’s unreduced base salary, and foreign service premium, if any, subject to the compensation limit under the Code. U. S. Steel Pension Plan Calculation Assumptions The present value“Present Value of accumulated benefit obligationsAccumulated Benefit” column of the Pension Benefits table represents the actuarial present value of benefits earned by Mr. Buckiso. The assumptions used in the executivesbenefit calculations under the U. S. Steel Pension Plan. Assumptions used in the calculationsPlan include an unreduced benefit age of 62, the election of a lump sum option and credited service, and career earnings and final average earnings as of December 31, 2015. Final average earnings isare based on the average of the monthly salaries paid in the highest five consecutive 12 month12-month period during the ten years preceding December 31, 2015. The salary amounts include base salary, excluding incentive compensation. The number of years of credited service in the 2017 Pension Benefits table shows the number of years earned and used to calculate the accrued benefits reported. NON TAX-QUALIFIED PENSION PLAN Non Tax-Qualified Pension Plan
|
The purpose of the United States Steel Corporation Non Tax-Qualified Pension Plan ("Non Tax-Qualified Pension Plan") is to compensate individuals for the loss of benefits under the U. S. Steel Pension Plan that occur due to certain limits established under the Code. The amount payable under the Non Tax-Qualified Pension Plan is equal to the difference between the benefits the executive actually receives under the U. S. Steel Pension Plan and the benefits that the executive would have received under the U. S. Steel Pension Plan except for the limitations imposed by the Code. Benefits under the Non Tax-Qualified Pension Plan were frozen on December 31, 2015. Benefits paid under the Non Tax-Qualified Pension Plan are in the form of an actuarially determined lump sum payable to the executive upon termination of employment, subject to the six-month waiting period under Section 409A of the Code for specified employees. Non Tax-Qualified Pension Plan Calculation Assumptions The present value“Present Value of accumulated benefit obligationsAccumulated Benefit” column of the Pension Benefits table represents the actuarial present value of benefits earned by Mr. Buckiso. The assumptions used in the executivesbenefit calculations under the Non Tax-Qualified Pension Plan and is based onare the same provisions asassumptions used in the calculations under the U. S. Steel Pension Plan. Assumptions used in the calculations Plan and include an unreduced benefit age of 62, the election of a lump sum option and credited service, and estimated career earnings and final average earnings as of December 31, 2015.
United States Steel Corporation | 2018 Proxy Statement |45
Table of Contents
68 | Executive Compensation TablesUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSISNON-QUALIFIED DEFERRED COMPENSATION
Supplemental Pension ProgramNON-QUALIFIED DEFERRED COMPENSATION
|
The purpose of the United States Steel Corporation Executive Management Supplemental Pension Program (the "Supplemental Pension Program") is to provide a pension benefit for executives and certain non-executives who participate in the U. S. Steel Pension Plan with respect to compensation paid under the short-term incentive compensation plans of the Corporation. Benefits under the Supplemental Pension Program were frozen on December 31, 2015.
Executives with at least 15 years of continuous service become eligible to receive a benefit under the Supplemental Pension Program at retirement or termination of employment. Benefits will not be payable under the program with respect to an executive who (a) terminates employment prior to age 60 or (b) terminates employment within 36 months of the date coverage under the Supplemental Pension Program begins, unless, in either case, the Corporation consents to
the termination; provided, however, such consent is not required for terminations because of death or involuntary termination, other than for cause. Distributions are subject to the six-month waiting period under Section 409A of the Code for specified employees.
An executive's average earnings are used to calculate the benefit under the Supplemental Pension Program and are defined as the average monthly earnings derived from the total short-term incentive (described as Non-Equity Incentive Plan Compensation in the Summary Compensation Table in this proxy statement) paid or credited to the executive under the Annual Incentive Compensation Plan with respect to the three calendar years for which short-term incentive payments were the highest out of the last ten consecutive calendar years prior to the executive's termination. Benefits are paid as an actuarially determined lump sum.
Supplemental Pension Program Calculation Assumptions
The present value of accumulated benefit obligations represents the actuarial value of benefits earned through December 31, 2015 by an executive under the Supplemental Pension Program. Assumptions used in the calculations include a normal retirement age of 60, a lump sum payment,
and credited service and average earnings as of December 31, 2015. Credited service under the Supplemental Pension Program is the same as under the U. S. Steel Pension Plan.
Non-Qualified Deferred Compensation
|
The following table provides information with respect to accruals for each NEO under the Corporation'sCorporation’s non-qualified defined contribution plans in 2017. 20172020. 2020 Year-End Aggregate Balances are as of December 31, 2017. 2020.| Executive | | | Plan Name | | | 2020 Company
Contributions/
Accruals(1) | | | 2020 Aggregate
Earnings(2) | | | 2020 Year-End
Aggregate
Balance | | | Burritt | | | Supplemental Thrift Program | | | $25,500 | | | $93,304 | | | $271,175 | | | | | | Non Tax-Qualified Retirement Account Program | | | $28,900 | | | $52,984 | | | $479,657 | | | | | | Supplemental Retirement Account Program | | | $123,165 | | | $99,099 | | | $852,886 | | | | | | Total | | | $177,565 | | | $245,387 | | | $1,603,718 | | | Breves | | | Supplemental Thrift Program | | | $7,200 | | | $25,359 | | | $84,317 | | | | | | Non Tax-Qualified Retirement Account Program | | | $10,200 | | | $15,718 | | | $148,230 | | | | | | Supplemental Retirement Account Program | | | $35,934 | | | $30,962 | | | $266,964 | | | | | | Total | | | $53,334 | | | $72,039 | | | $499,511 | | | Bruno | | | Supplemental Thrift Program | | | $5,800 | | | $27,468 | | | $89,745 | | | | | | Non Tax-Qualified Retirement Account Program | | | $8,217 | | | $19,141 | | | $159,715 | | | | | | Supplemental Retirement Account Program | | | $22,695 | | | $23,944 | | | $183,062 | | | | | | Total | | | $36,712 | | | $70,553 | | | $432,522 | | | Buckiso | | | Supplemental Thrift Program | | | $5,800 | | | $21,168 | | | $70,215 | | | | | | Non Tax-Qualified Retirement Account Program | | | $8,217 | | | $12,984 | | | $110,688 | | | | | | Supplemental Retirement Account Program | | | $33,813 | | | $50,604 | | | $391,617 | | | | | | Total | | | $47,830 | | | $84,756 | | | $572,520 | | | Holloway | | | Supplemental Thrift Program | | | $5,950 | | | $11,182 | | | $39,382 | | | | | | Non Tax-Qualified Retirement Account Program | | | $8,429 | | | $7,100 | | | $57,496 | | | | | | Supplemental Retirement Account Program | | | $32,701 | | | $17,175 | | | $103,767 | | | | | | Total | | | $47,080 | | | $35,457 | | | $200,645 | |
| | | | | | | | | | | | | Executive
| | Plan Name
| | 2017 Company
Contributions/
Accruals(1)
| | 2017 Aggregate
Earnings(2)
| | 2017 Year-End
Aggregate
Balance
| |
|---|
| | | | | | | | | | | | | | Burritt | | Supplemental Thrift Program | | $ | 43,116 | | $ | 30,079 | | $ | 253,717 | | | | Non Tax-Qualified Retirement Account Program | | $ | 56,359 | | $ | 21,258 | | $ | 215,368 | | | | Supplemental Retirement Account Program | | $ | 154,700 | | $ | 36,211 | | $ | 335,623 | | | | Total | | $ | 254,175 | | $ | 87,548 | | $ | 804,708 | | | | | | | | | | | | | | | | Bradley | | Supplemental Thrift Program | | $ | 2,896 | | $ | 14 | | $ | 2,910 | | | | Non Tax-Qualified Retirement Account Program | | $ | — | | $ | — | | $ | — | | | | Supplemental Retirement Account Program | | $ | — | | $ | — | | $ | — | | | | Total | | $ | 2,896 | | $ | 14 | | $ | 2,910 | | | | | | | | | | | | | | | | Matthews | | Supplemental Thrift Program | | $ | 21,640 | | $ | 19,413 | | $ | 192,381 | | | | Non Tax-Qualified Retirement Account Program | | $ | 30,657 | | $ | 6,480 | | $ | 64,624 | | | | Supplemental Retirement Account Program | | $ | 70,817 | | $ | 9,255 | | $ | 80,072 | | | | Total | | $ | 123,114 | | $ | 35,148 | | $ | 337,077 | | | | | | | | | | | | | | | | Buckiso | | Supplemental Thrift Program | | $ | 12,750 | | $ | 6,229 | | $ | 54,362 | | | | Non Tax-Qualified Retirement Account Program | | $ | 15,313 | | $ | 2,928 | | $ | 31,703 | | | | Supplemental Retirement Account Program | | $ | 36,202 | | $ | 27,353 | | $ | 189,020 | | | | Total | | $ | 64,265 | | $ | 36,510 | | $ | 275,085 | | | | | | | | | | | | | | | |
46 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Executive Compensation Tables |
| | | | | | | | | | | | | Executive
| | Plan Name
| | 2017 Company
Contributions/
Accruals(1)
| | 2017 Aggregate
Earnings(2)
| | 2017 Year-End
Aggregate
Balance
| |
|---|
| | | | | | | | | | | | | | Rintoul | | Supplemental Thrift Program | | $ | 14,970 | | $ | 14,800 | | $ | 173,024 | | | | Non Tax-Qualified Retirement Account Program | | $ | 19,465 | | $ | 22,619 | | $ | 200,413 | | | | Supplemental Retirement Account Program | | $ | 38,969 | | $ | 30,412 | | $ | 258,453 | | | | Total | | $ | 73,404 | | $ | 67,831 | | $ | 631,890 | | | | | | | | | | | | | | | | Longhi | | Supplemental Thrift Program | | $ | 30,000 | | $ | (145,860 | ) | $ | 326,109 | | | | Non Tax-Qualified Retirement Account Program | | $ | 42,250 | | $ | 56,507 | | $ | 480,225 | | | | Supplemental Retirement Account Program | | $ | 384,890 | | $ | 99,815 | | $ | 914,446 | | | | Total | | $ | 457,140 | | $ | 10,462 | | $ | 1,720,780 | | | | | | | | | | | | | | | | Folsom | | Supplemental Thrift Program | | $ | 30,417 | | $ | 25,469 | | $ | 194,052 | | | | Non Tax-Qualified Retirement Account Program | | $ | 39,667 | | $ | 21,106 | | $ | 166,896 | | | | Supplemental Retirement Account Program | | $ | 108,290 | | $ | 30,851 | | $ | 231,756 | | | | Total | | $ | 178,374 | | $ | 77,426 | | $ | 592,704 | | | | | | | | | | | | | | | | Soni | | Supplemental Thrift Program | | $ | 7,500 | | $ | 1,754 | | $ | 9,254 | | | | Non Tax-Qualified Retirement Account Program | | $ | 8,401 | | $ | 152 | | $ | 8,553 | | | | Supplemental Retirement Account Program | | $ | 10,100 | | $ | 1,496 | | $ | 11,596 | | | | Total | | $ | 26,001 | | $ | 3,402 | | $ | 29,403 | | | | | | | | | | | | | | | |
(1)- Accruals are included in the All Other Compensation column of the Summary Compensation
Table (seeTable. See footnote 98 to that table for more detail.) Accruals in prior years have been reported in prior years under All Other Compensation in the Summary Compensation Table.
(2)
(2)Determined by taking the balance at the end of 2017, less 2017 accruals, less the balance at the beginning of 2017,investment returns in 2020 and adding dividend equivalents. Supplemental Thrift Program The purpose of the United States Steel Corporation Supplemental Thrift Program (the "Supplemental“Supplemental Thrift Program"Program”) is to compensate individuals for the loss of matching contributions made by the Corporation under the U. S. Steel Savings Plan that cannot be provided due to the statutory limits on covered compensation (which limit was $270,000limited to $285,000 in 2017)2020) and combined Corporation and individual annual contributions (which limit was $54,000were limited to $57,000 in 2017)2020). Under the Supplemental Thrift Program, executives accrue benefits in the form of phantom shares of U. S. Steel common stock. In the aggregate, the benefit accruals under the Supplemental Thrift Program and the matching contributions under the U. S. Steel Savings Plan may equal up to 6% of the executive's eligibleexecutive’s base salary. Executive Compensation Tables
An executive receives a lump sum distribution of the benefits payable under this program upon his or her termination of employment with five or more years of continuous service, prior to attaining five years of continuous service, with the consent of the Corporation, or because of death, subject to the six-month waiting period under Section 409A of the Code for specified employees. Non Tax-Qualified Retirement Account Program The purpose of the United States Steel Corporation Non Tax-Qualified Retirement Account Program is to compensate individuals for the loss of Retirement Account contributions that cannot be providedmade by the Corporation under the U. S. Steel Savings Plan that cannot be provided due to the statutory limits on covered compensation (which was $270,000limited to $285,000 in 2017)2020) and combined Corporation and individual annual contributions (which limit was $54,000were limited to $57,000 in 2017)2020). Retirement Account contributions are non-elective employer contributions that are in addition to the matching contributions made by the Corporation under the U. S. Steel Savings Plan. All of the NEOs participate in the Non Tax-Qualified Retirement Account Program. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 69 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Under the Non Tax-Qualified Retirement Account Program, accrued benefits are recorded in a notional account and credited with earnings as if the account had been invested in the U. S. Steel Savings Plan. In the aggregate, benefit accruals under this program and the Retirement Account contributions under the U. S. Steel Savings Plan shall equal 8.5% of the executive's eligibleexecutive’s base salary. Benefits under this program are payable in a lump sum distribution following the termination of employment (a) after completing three years of continuous service, or (b) prior to completing three years of continuous service, with the consent of the Corporation; provided, however, such consent is not required for terminations because of death or involuntary termination, other than for cause. Payments are subject to the six-month waiting period under Section 409A of the Code for specified employees. Supplemental Retirement Account Program The purpose of the Supplemental Retirement Account Program is to provide Retirement Account contributions with respect to compensation paid under the short-term incentive compensation plans of the Corporation. Accrued benefits under the Supplemental Retirement Account Program are recorded in a hypothetical account and credited with United States Steel Corporation | 2018 Proxy Statement |47
Table of Contents
earnings as if the account had been invested in the U. S. Steel Savings Plan. Executives who complete at least 10 years of continuous service (or, if earlier, attain age 65) become eligible to receive a benefit under the Supplemental Retirement Account Program at retirement or termination of employment. Benefits will not be payable under the program with respect to an executive who terminates employment (a) prior to age 55 or (b) within 36 months of the date coverage under the program begins, unless the Corporation consents to the termination; provided, however, such consent is not required for terminations because of death or involuntary termination, other than for cause. Benefits are payable in the form of a lump sum distribution following termination of employment, subject to the six-month waiting period under Section 409A of the Code for specified employees. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLPotential Payments Upon Termination or Change in Control
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
|
The compensation and benefits payable to our executives upon termination vary depending upon the event triggering the termination and the executive'sexecutive’s relevant employment facts at the time of termination. For purposes of the tables and discussions included in this section, we have assumed the following termination scenarios (the column references are to the columns in the tables that follow):
Termination Scenarios Voluntary Termination (with Consent) or Retirement –(ColumnVoluntary Termination (with Consent) or Retirement — (Column A)
|
This termination scenario assumes retirement pursuant to a retirement plan. Benefits under the Supplemental Pension Program are not payable to an executive who voluntarily terminates employment prior to age 60, unless the Corporation consents to such termination. We have assumed the Corporation's consent to retire prior to age 60 under this scenario; however, the Corporation usually reserves its consent for an executive who has served the Corporation well, is not leaving for an opportunity at another company, and is not leaving prior to the development of hisplan or, her successor. With respect to long-term incentives, the Compensation & Organization Committee (the "Committee") has discretion to terminate unvested awards upon termination. While the Committee reserves the right to decide these matters on a case-by-case basis, its practice has been to prorate the vesting of the shares scheduled to vest during the current
vesting period for the time employed during the current vesting period (for example, in the case of stock options and restricted stock units, ten months worked during the twelve-month vesting period from March 2017 to February 2018 would result in a vesting of ten-twelfths of the number of shares scheduled to vest in February 2018, with no such pro rata vesting for the shares scheduled to vest after February 2018). Given our assumption under this scenario that the Committee has consented to the executive's retirement, the pro rata vesting discussed above has been applied to the calculations in the tables below with the following exception. For the 2017 long-term incentive awards, the awards are fully vested if the executive attained age 60 with 5 years of service or age 65 prior to retirement, provided the executive is employed for at least six months following the date of grant and is not eligible for retirement, a participant involuntary termination of employment with the Supplemental Pension Program.
consent of the Corporation.Voluntary Termination (Without Consent) or Involuntary Termination (for Cause) — (Column B) Voluntary Termination (Without Consent) or Involuntary Termination (for Cause) –(Column B)
|
This termination scenario assumes that the Corporation does not consent to an executive'sexecutive’s voluntary termination of his or her employment prior to age 60,retirement, or that the Corporation terminates the executive'sexecutive’s employment for cause. Under these conditions,circumstances, the Compensation Committee is not likely to exercise any discretion that it may have in favor of the executive and, accordingly, we have not assumed the exercise of any discretion in favor of executives with respect to unvested awardsexecutive. Involuntary Termination (Not for purposes of the calculations in the tables below.Cause) — (Column C) Involuntary Termination (Not for Cause) –(Column C)
|
Events that could cause the Corporation to terminate an executive'sexecutive’s employment involuntarily, not for cause, include the curtailment of certain lines of business or a facility shutdown where the executive'sexecutive’s services are no longer required due to business conditions or an organizational realignment. Prior to theUpon an involuntary termination, the executive may be eligible for benefits under our Supplemental Unemployment Benefit Program, for Non-Union Employees, which may includeincludes the payment of a percentage of base salary and qualifies the executive for basic life and health insurance. For purposes of determining the vesting of equity awards upon insurance and outplacement services.termination, we have assumed the executive's employment was terminated on December 31, 2017. Awards are prorated upon termination for purposes of the calculationsChange in the tables below with the following exception. For the 2017 long-term incentive awards, the awards are fully vested if the executive attained age 60 with 5 years of service or age 65 prior to the involuntary termination, provided the executive is employed for at least six months following the date of grantControl and is not a participant in the Supplemental Pension Program.
Termination — (Column D)48 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Potential Payments Upon Termination or Change in Control |
Change in Control and Termination –(Column D)
|
All of the NEOs are covered by the Corporation'sCorporation’s Change in Control Severance Plan (the "CIC Plan"“CIC Plan”), effective January 1, 2016, as described in the Compensation Discussion and Analysis section of the proxy statement. In addition to the severance benefits paid pursuant to the CIC Plan, all long-term incentive awards would vest upon a change in control and a termination of employment, and benefits would be paid according to the terms of each benefit plan's provisions following the termination of an executive's employment in connection with a change in control.plan. The following discussion describes the events and circumstances that would trigger payments under the CIC Plan. | 70 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Generally, payments are triggered upon the occurrence of both a Change in Control of the Corporation and termination of the executive'sexecutive’s employment by the Corporation other than for cause. Under the CIC Plan, each executive agrees to remain in the employ of the Corporation until the earlier of (i) a date three months after a Change in Control and (ii) a date six months after a Potential Change in Control (as defined below). Payments are also triggered if the executive terminates his or her employment for Good Reason (as defined below); however, in order for the Corporation to be obligated to pay the benefits under the contract, all Good Reason terminations must also involve an actual Change in Control (if the Good Reason termination occurs prior to a Change in Control, the Change in Control must be a 409A Change in Control; see definition below). Following a Change in Control, if there is a termination by the Corporation (other than for Cause or Disability) or by the executive for Good Reason, the executive is entitled to the following benefits:•
–
Accrued compensation and benefits; –
•Cash severance;Severance; –
•Supplemental Retirement Benefit; –
•Welfare Benefits; –
•Outplacement services; and –
•Supplemental Savings Plan Benefit – equal to the unvested portion of the Corporation's contributions on behalf of the executive under the tax-qualified and non tax-qualified savings plans; and
•Legal fees –— reimbursement for legal fees incurred as a result of termination of employment and incurred in contesting or disputing such termination or seeking to enforce any right or benefit under the CIC Plan or in connection with any tax audit relating to Sections 4999 (excise taxes) or 409A (deferred compensation) of the Code. A"“Good Reason"Reason” termination involves a voluntary termination following any of these events:•
–
An executive is assigned duties inconsistent with his or her position; –
•Reduction in base salary; –
•Relocation in excess of 50 miles from the executive'sexecutive’s current work location; –
Failure to continue all of the Corporation'sCorporation’s employee benefit, incentive compensation, bonus, stock option and stock award plans, programs, policies, practices or arrangements in which the executive participates or failure of the Corporation to continue the executive'sexecutive’s participation therein at amounts and levels relative to other participants; –
•Failure of the Corporation to obtain agreement from any successor to the Corporation to assume and perform the CIC Plan; or –
•Any termination that is not effected pursuant to a Notice of Termination (a Notice of Termination is to be given by the Corporation in connection with any termination for cause or disability and the executive must give a notice of termination in connection with a termination for good reason). A"“Change in Control"Control” happens under the CIC Plan if any of the following occurs:•
–
A person (defined to include individuals, corporations, partnerships, etc.) acquires 20% or more of the voting power of the Corporation; –
•A merger occurs involving the Corporation except (a) a merger with at least a majority of continuing directors or (b) a merger constituting the disposition of a division, business unit or subsidiary; –
•A change in the majority of the Board of Directors; –
•A sale of all or substantially all of the assets of the Corporation; or –
•Stockholder approval of a plan of complete liquidation. A "Potential“Potential Change in Control"Control” occurs if:•
–
The Corporation enters into an agreement that would result in a Change in Control; –
•A person acquires 15 percent or more of the voting power of the Corporation; –
•There is a public announcement by any person of intentions that, if consummated, would result in a Change in Control; or –
•The Corporation'sCorporation’s Board of Directors passes a resolution stating that a Potential Change in Control has occurred. A "“409A Change in Control"” is similar to a Change in Control, except that it meets the requirements of Section 409A of the Code. The main difference between the two definitions is that a 409A Change in Control requires a person to acquire 30% of the total voting power of the Corporation'sCorporation’s stock, while a Change in Control requires a person to acquire 20% of the total voting power of the Corporation'sCorporation’s stock. A 409A Change in Control must occur prior to any payment in the event the termination precedes the Change in Control. In other words, payments under the CIC Plan are due to the executive if: there is an involuntary termination by the Corporation (other than for cause or disability) or a voluntary termination by the executive for Good Reason; United States Steel Corporation | 2018 Proxy Statement |49
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Potential Payments Upon Termination or Change in Control
|
–•- the executive reasonably demonstrates that an Applicable Event (defined below) has occurred; and
–
•a 409A Change in Control occurs within twenty-four months following the termination. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 71 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
An"“Applicable Event"Event” (a term used for various purposes, including defining points at which compensation amounts and periods are measured) means a Change in Control, Potential Change in Control or actions of a third party who has taken steps reasonably calculated to effect a Change in Control. To the extent required by Section 409A of the Code, payments would be delayed six months following the applicable reference date. As mentioned above, a "double trigger"“double trigger” must occur prior to the Corporation incurring any liability under the CIC Plan; that is, for there to be payments under the CIC Plan, both of the following must occur: (i) a termination and (ii) a Change in Control (or, in some cases, a 409A Change in Control). Disability and Death (Columns E and F) Disability and Death(Columns E and F)
|
Employees with at least 15 years of continuous service who are covered by the U. S. Steel Pension Plan and become totally and permanently disabled prior to age 65 are eligible to retire on a permanent incapacity pension. The criteria for a disability termination under the Long-Term Incentive Compensation Program are the same as for a disability termination under Section 409A of the Code. If an employee with at least 15 years of service dies or becomes totally and permanently disabled while actively employed, benefits under the Corporation'sCorporation’s qualified and non-qualified plans are calculated as if the employee had retired on the date of his or her death. was fully vested.Potential Payments Upon Termination Tables The following tables were developed using the above termination scenarios, and an estimation of the amounts that would be payable to each NEO under the relevant scenario. A discussion of each of the types of compensation follows the tables. Amounts shown for Mr. Longhi and Ms. Folsom reflect actual amounts that they became entitled to at their termination of employment. Non-qualified retirement benefits and equity awards will be distributed six months after their termination dates. The estimated present values of the benefits provided to the NEOs under each of these termination scenarios were determined using the following assumptions:
1.
Unless otherwise noted, the tables reflect values as of December 31, 20172020 that NEOs would have been entitled to, following, or in connection with a termination of employment, with the triggering event occurring on December 31, 2017; - 2020.
2.
The stock price used for valuation purposes for the long-term incentive awards was the closing stock price on December 29, 2017,31, 2020, which was $35.19;$16.77. 3.
3.The normal life expectancy obtained from the 1971 Group Annuity Mortality Tables, or, for a permanent incapacity type of pension, life expectancy obtained from the Disabled Life Expectancy Tables (wages and salaried) based on the Corporation'sCorporation’s experience, made gender neutral on a nine to one male/female ratio; andratio. 4.
4.The December 31, 20172020 Pension Benefit Guaranty Corporation interest rate of 0.75%0.00% was used to determine 20172020 lump sum payment amounts. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Potential Payments Upon Termination
| |
|---|
| |
| | A
| | B
| | C
| | D
| | E
| | F
| |
|---|
Executive
| | Component
| | Voluntary
Termination
(with Consent)
or Retirement(1)
| |
Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause)
| | Involuntary
Termination
(Not for
Cause)(2)
| | Change in
Control and
Termination
| | Disability(3)
| | Death
| |
|---|
| | | | | | | | | | | | | | | | | | Burritt | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | — | | | $ | 300,000 | | | $ | 4,408,666 | | | — | | | — | | | | | Short-Term Incentive | | | $ | 1,082,109 | | | — | | | $ | 1,082,109 | | | — | | | $ | 1,082,109 | | | $ | 1,082,109 | | | | | Stock Options (Unvested)(4) | | | $ | 688,676 | | | — | | | $ | 688,676 | | | $ | 2,428,749 | | | $ | 2,428,749 | | | $ | 2,428,749 | | | | | Restricted Stock (Units)(4) | | | $ | 704,890 | | | — | | | $ | 704,890 | | | $ | 2,202,542 | | | $ | 2,202,542 | | | $ | 2,202,542 | | | | | Performance Stock Award(5) | | | $ | 5,037,322 | | | — | | | $ | 5,037,322 | | | $ | 9,403,783 | | | $ | 7,124,923 | | | $ | 7,124,923 | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $ | 804,708 | | | $ | 215,368 | | | $ | 804,708 | | | $ | 804,708 | | | $ | 804,708 | | | $ | 804,708 | | | | | Welfare Benefits | | | — | | | — | | | — | | | $ | 4,884 | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | $ | 579,209 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 8,317,705 | | | $ | 215,368 | | | $ | 8,617,705 | | | $ | 19,832,541 | | | $ | 13,643,031 | | | $ | 13,643,031 | | | | | | | | | | | | | | | | | | |
| 72 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
50 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | | | | | | A | | | | | | B | | | | | | C | | | | | | D | | | | | | E | | | | | | F | | | Executive | | | Component | | | Voluntary
Termination
(with Consent)
or Retirement | | | | | | Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause) | | | | | | Involuntary
Termination
(Not for
Cause)(1) | | | | | | Change in
Control and
Termination(1) | | | | | | Disability(2) | | | | | | Death | | | Burritt | | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | | | | — | | | | | | $440,000 | | | | | | $8,175,000 | | | | | | — | | | | | | — | | | | | | Short-Term Incentive | | | $1,530,000 | | | | | | — | | | | | | $1,530,000 | | | | | | — | | | | | | $1,530,000 | | | | | | $1,530,000 | | | | | | Restricted Stock Units | | | $7,886,713 | | | | | | $7,886,713 | | | | | | $7,886,713 | | | | | | $7,886,713 | | | | | | $7,886,713 | | | | | | $7,886,713 | | | | | | Performance Award(3) | | | $10,849,402 | | | | | | $10,849,402 | | | | | | $10,849,402 | | | | | | $11,270,827 | | | | | | $10,849,402 | | | | | | $10,849,402 | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $1,603,718 | | | | | | $1,603,718 | | | | | | $1,603,718 | | | | | | $1,603,718 | | | | | | $1,603,718 | | | | | | $1,603,718 | | | | | | Welfare Benefits | | | — | | | | | | — | | | | | | — | | | | | | $27,445 | | | | | | — | | | | | | — | | | | | | Supplemental Retirement Benefit | | | — | | | | | | — | | | | | | — | | | | | | $942,713 | | | | | | — | | | | | | — | | | | | | TOTAL | | | $21,869,833 | | | | | | $20,339,833 | | | | | | $22,309,833 | | | | | | $29,906,416 | | | | | | $21,869,833 | | | | | | $21,869,833 | | | Breves | | | Severance & Compensation Elements | | | | | | | | | | | | ��� | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | | | | — | | | | | | $266,000 | | | | | | $2,930,000 | | | | | | — | | | | | | — | | | | | | Short-Term Incentive | | | $687,000 | | | | | | — | | | | | | $687,000 | | | | | | — | | | | | | $687,000 | | | | | | $687,000 | | | | | | Restricted Stock Units | | | $1,788,202 | | | | | | $1,788,202 | | | | | | $1,788,202 | | | | | | $1,788,202 | | | | | | $1,788,202 | | | | | | $1,788,202 | | | | | | Performance Award(3) | | | $2,615,617 | | | | | | $2,615,617 | | | | | | $2,615,617 | | | | | | $2,392,579 | | | | | | $2,615,617 | | | | | | $2,615,617 | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $499,511 | | | | | | $232,547 | | | | | | $499,511 | | | | | | $499,511 | | | | | | $499,511 | | | | | | $499,511 | | | | | | Welfare Benefits | | | — | | | | | | — | | | | | | — | | | | | | $69,147 | | | | | | — | | | | | | — | | | | | | Supplemental Retirement Benefit | | | — | | | | | | — | | | | | | — | | | | | | $416,215 | | | | | | — | | | | | | — | | | | | | TOTAL | | | $5,590,330 | | | | | | $4,636,366 | | | | | | $5,856,330 | | | | | | $8,095,654 | | | | | | $5,590,330 | | | | | | $5,590,330 | | | Bruno | | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | | | | — | | | | | | $224,000 | | | | | | $2,196,000 | | | | | | — | | | | | | — | | | | | | Short-Term Incentive | | | $795,130 | | | | | | — | | | | | | $795,130 | | | | | | — | | | | | | $795,130 | | | | | | $795,130 | | | | | | Restricted Stock Units | | | $400,468 | | | | | | — | | | | | | $400,468 | | | | | | $1,256,089 | | | | | | $1,256,089 | | | | | | $1,256,089 | | | | | | Performance Award(3) | | | $639,389 | | | | | | — | | | | | | $639,389 | | | | | | $1,753,099 | | | | | | $959,076 | | | | | | $959,076 | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $432,522 | | | | | | $249,460 | | | | | | $432,522 | | | | | | $432,522 | | | | | | $432,522 | | | | | | $432,522 | | | | | | Welfare Benefits | | | — | | | | | | — | | | | | | — | | | | | | $68,422 | | | | | | — | | | | | | — | | | | | | Supplemental Retirement Benefit | | | — | | | | | | — | | | | | | — | | | | | | $316,770 | | | | | | — | | | | | | — | | | | | | TOTAL | | | $2,267,509 | | | | | | $249,460 | | | | | | $2,491,509 | | | | | | $6,022,902 | | | | | | $3,442,817 | | | | | | $3,442,817 | | | Buckiso | | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | | | | — | | | | | | $383,500 | | | | | | $2,196,000 | | | | | | — | | | | | | — | | | | | | Short-Term Incentive | | | $445,100 | | | | | | — | | | | | | $445,100 | | | | | | — | | | | | | $445,100 | | | | | | $445,100 | | | | | | Restricted Stock Units | | | $400,468 | | | | | | — | | | | | | $400,468 | | | | | | $1,256,089 | | | | | | $1,256,089 | | | | | | $1,256,089 | | | | | | Performance Award(3) | | | $639,389 | | | | | | — | | | | | | $639,389 | | | | | | $1,753,099 | | | | | | $959,076 | | | | | | $959,076 | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan Compensation | | | $2,669,222 | | | | | | $2,669,222 | | | | | | $3,055,229 | | | | | | $3,055,229 | | | | | | $2,427,177 | | | | | | $2,388,471 | | | | | | Non-Qualified Deferred Compensation | | | $572,520 | | | | | | $180,903 | | | | | | $572,520 | | | | | | $572,520 | | | | | | $572,520 | | | | | | $572,520 | | | | | | Welfare Benefits | | | — | | | | | | — | | | | | | — | | | | | | $69,973 | | | | | | — | | | | | | — | | | | | | Letter Agreement | | | $39,988 | | | | | | $39,988 | | | | | | $163,195 | | | | | | $163,195 | | | | | | $90,727 | | | | | | $39,988 | | | | | | Supplemental Retirement Benefit | | | — | | | | | | — | | | | | | — | | | | | | $309,691 | | | | | | — | | | | | | — | | | | | | TOTAL | | | $4,766,687 | | | | | | $2,890,113 | | | | | | $5,659,401 | | | | | | $9,375,796 | | | | | | $5,750,689 | | | | | | $5,661,244 | | | Holloway | | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | | | | — | | | | | | $169,000 | | | | | | $2,192,000 | | | | | | — | | | | | | — | | | | | | Short-Term Incentive | | | $431,100 | | | | | | — | | | | | | $431,100 | | | | | | — | | | | | | $431,100 | | | | | | $431,100 | | | | | | Restricted Stock Units | | | $427,954 | | | | | | — | | | | | | $427,954 | | | | | | $1,305,896 | | | | | | $1,305,896 | | | | | | $1,305,896 | | | | | | Performance Award(3) | | | $639,389 | | | | | | — | | | | | | $639,389 | | | | | | $1,958,363 | | | | | | $959,076 | | | | | | $959,076 | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $200,645 | | | | | | — | | | | | | $200,645 | | | | | | $200,645 | | | | | | $200,645 | | | | | | $200,645 | | | | | | Welfare Benefits | | | — | | | | | | — | | | | | | — | | | | | | $70,050 | | | | | | — | | | | | | — | | | | | | Supplemental Retirement Benefit | | | — | | | | | | — | | | | | | — | | | | | | $445,142 | | | | | | — | | | | | | — | | | | | | TOTAL | | | $1,699,088 | | | | | | — | | | | | | $1,868,088 | | | | | | $6,172,096 | | | | | | $2,896,717 | | | | | | $2,896,717 | |
Potential Payments Upon Termination or Change in ControlUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 73 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Potential Payments Upon Termination (Cont'd.)
| |
|---|
| |
| | A
| | B
| | C
| | D
| | E
| | F
| |
|---|
Executive
| | Component
| | Voluntary
Termination
(with Consent)
or Retirement(1)
| |
Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause)
| | Involuntary
Termination
(Not for
Cause)(2)
| | Change in
Control and
Termination
| | Disability(3)
| | Death
| |
|---|
| | | | | | | | | | | | | | | | | | Bradley | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | — | | | $ | 1,400,000 | | | $ | 2,500,008 | | | — | | | — | | | | | Short-Term Incentive | | | $ | 273,003 | | | — | | | $ | 273,003 | | | — | | | $ | 273,003 | | | $ | 273,003 | | | | | Stock Options (Unvested)(4) | | | $ | 26,428 | | | — | | | $ | 26,428 | | | $ | 190,254 | | | $ | 190,254 | | | $ | 190,254 | | | | | Restricted Stock (Units)(4) | | | $ | 37,055 | | | — | | | $ | 37,055 | | | $ | 266,740 | | | $ | 266,740 | | | $ | 266,740 | | | | | Performance Stock Award(5)(6) | | | $ | 309,144 | | | — | | | $ | 309,144 | | | $ | 927,433 | | | $ | 463,716 | | | $ | 463,716 | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $ | 2,910 | | | — | | | $ | 2,910 | | | $ | 2,910 | | | $ | 2,910 | | | $ | 2,910 | | | | | Welfare Benefits | | | — | | | — | | | — | | | $ | 59,421 | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | $ | 424,029 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 648,540 | | | — | | | $ | 2,048,540 | | | $ | 4,370,795 | | | $ | 1,196,623 | | | $ | 1,196,623 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthews | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | — | | | $ | 297,550 | | | $ | 2,225,427 | | | — | | | — | | | | | Short-Term Incentive | | | $ | 409,429 | | | — | | | $ | 409,429 | | | — | | | $ | 409,429 | | | $ | 409,429 | | | | | Stock Options (Unvested)(4) | | | $ | 179,720 | | | — | | | $ | 179,720 | | | $ | 472,908 | | | $ | 472,908 | | | $ | 472,908 | | | | | Restricted Stock (Units)(4) | | | $ | 227,644 | | | — | | | $ | 227,644 | | | $ | 593,796 | | | $ | 593,796 | | | $ | 593,796 | | | | | Performance Stock Award(5) | | | $ | 1,718,641 | | | — | | | $ | 1,718,641 | | | $ | 2,841,483 | | | $ | 2,403,138 | | | $ | 2,403,138 | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Pension Plan Compensation | | | $ | 6,855,416 | | | $ | 1,994,691 | | | $ | 9,607,690 | | | $ | 9,607,690 | | | $ | 7,313,755 | | | $ | 5,840,218 | | | | | Non-Qualified Deferred Compensation | | | $ | 337,077 | | | $ | 257,005 | | | $ | 337,077 | | | $ | 337,077 | | | $ | 337,077 | | | $ | 337,077 | | | | | Welfare Benefits | | | — | | | — | | | — | | | $ | 58,878 | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | $ | 288,816 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 9,727,927 | | | $ | 2,251,696 | | | $ | 12,777,751 | | | $ | 16,426,075 | | | $ | 11,530,103 | | | $ | 10,056,566 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buckiso | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | — | | | $ | 233,750 | | | $ | 693,750 | | | — | | | — | | | | | Short-Term Incentive | | | $ | 324,968 | | | — | | | $ | 324,968 | | | — | | | $ | 324,968 | | | $ | 324,968 | | | | | Stock Options (Unvested)(4) | | | $ | 68,644 | | | — | | | $ | 68,644 | | | $ | 178,052 | | | $ | 178,052 | | | $ | 178,052 | | | | | Restricted Stock (Units)(4) | | | $ | 91,424 | | | — | | | $ | 91,424 | | | $ | 239,187 | | | $ | 239,187 | | | $ | 239,187 | | | | | Performance Stock Award(5)(6) | | | $ | 532,153 | | | — | | | $ | 532,153 | | | $ | 994,821 | | | $ | 798,194 | | | $ | 798,194 | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Pension Plan Compensation | | | $ | 1,140,213 | | | $ | 1,140,213 | | | $ | 2,946,953 | | | $ | 2,946,953 | | | $ | 2,214,217 | | | $ | 1,123,611 | | | | | Non-Qualified Deferred Compensation | | | $ | 275,085 | | | $ | 86,065 | | | $ | 275,085 | | | $ | 275,085 | | | $ | 275,085 | | | $ | 275,085 | | | | | Welfare Benefits | | | — | | | — | | | — | | | $ | 63,611 | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | $ | 226,889 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 2,432,487 | | | $ | 1,226,278 | | | $ | 4,472,977 | | | $ | 5,618,348 | | | $ | 4,029,703 | | | $ | 2,939,097 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rintoul | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | — | | | $ | 212,075 | | | $ | 1,807,929 | | | — | | | — | | | | | Short-Term Incentive | | | $ | 393,661 | | | — | | | $ | 393,661 | | | — | | | $ | 393,661 | | | $ | 393,661 | | | | | Stock Options (Unvested)(4) | | | $ | 131,386 | | | — | | | $ | 131,386 | | | $ | 345,774 | | | $ | 345,774 | | | $ | 345,774 | | | | | Restricted Stock (Units)(4) | | | $ | 271,949 | | | — | | | $ | 271,949 | | | $ | 434,175 | | | $ | 434,175 | | | $ | 434,175 | | | | | Performance Stock Award(5) | | | $ | 1,683,651 | | | — | | | $ | 1,683,651 | | | $ | 2,077,279 | | | $ | 1,756,768 | | | $ | 1,756,768 | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $ | 631,890 | | | $ | 631,890 | | | $ | 631,890 | | | $ | 631,890 | | | $ | 631,890 | | | $ | 631,890 | | | | | Welfare Benefits | | | — | | | — | | | — | | | $ | 44,889 | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | $ | 223,263 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 3,112,537 | | | $ | 631,890 | | | $ | 3,324,612 | | | $ | 5,565,199 | | | $ | 3,562,268 | | | $ | 3,562,268 | | | | | | | | | | | | | | | | | | |
United States Steel Corporation | 2018 Proxy Statement |51
Table of Contents
Potential Payments Upon Termination or Change in Control
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Potential Payments Upon Termination (Cont'd.)
| |
|---|
| |
| | A
| | B
| | C
| | D
| | E
| | F
| |
|---|
Executive
| | Component
| | Voluntary
Termination
(with Consent)
or Retirement(1)
| |
Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause)
| | Involuntary
Termination
(Not for
Cause)(2)
| | Change in
Control and
Termination
| | Disability(3)
| | Death
| |
|---|
| | | | | | | | | | | | | | | | | | Longhi | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | $ | 112,198 | | | — | | | — | | | — | | | — | | | — | | | | | Short-Term Incentive | | | $ | 1,023,750 | | | — | | | — | | | — | | | — | | | — | | | | | Stock Options (Unvested)(4) | | | $ | 331,030 | | | — | | | — | | | — | | | — | | | — | | | | | Restricted Stock (Units)(4) | | | $ | 370,375 | | | — | | | — | | | — | | | — | | | — | | | | | Performance Stock Award(5) | | | $ | 7,767,155 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $ | 1,720,780 | | | — | | | — | | | — | | | — | | | — | | | | | Welfare Benefits | | | $ | 19,243 | | | — | | | — | | | — | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 11,344,531 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Folsom | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | $ | 1,422,773 | | | — | | | — | | | — | | | — | | | — | | | | | Short-Term Incentive | | | — | | | — | | | — | | | — | | | — | | | — | | | | | Stock Options (Unvested)(4) | | | $ | 426,789 | | | — | | | — | | | — | | | — | | | — | | | | | Restricted Stock (Units)(4) | | | $ | 852,407 | | | — | | | — | | | — | | | — | | | — | | | | | Performance Stock Award(5) | | | $ | 2,095,687 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $ | 592,704 | | | — | | | — | | | — | | | — | | | — | | | | | Welfare Benefits | | | $ | 31,376 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 5,421,736 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Soni | | Severance & Compensation Elements | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | — | | | — | | | $ | 75,000 | | | $ | 589,950 | | | — | | | — | | | | | Short-Term Incentive | | | $ | 215,853 | | | — | | | $ | 215,853 | | | — | | | $ | 215,853 | | | $ | 215,853 | | | | | Stock Options (Unvested)(4) | | | $ | 43,698 | | | — | | | $ | 43,698 | | | $ | 149,809 | | | $ | 149,809 | | | $ | 149,809 | | | | | Restricted Stock (Units)(4) | | | $ | 52,504 | | | — | | | $ | 492,379 | | | $ | 623,215 | | | $ | 623,215 | | | $ | 623,215 | | | | | Performance Stock Award(5)(6) | | | $ | 108,759 | | | — | | | $ | 108,759 | | | $ | 326,242 | | | $ | 163,139 | | | $ | 163,139 | | | | | | | | | | | | | | | | | | | | | | Benefits | | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Deferred Compensation | | | $ | 29,403 | | | — | | | $ | 29,403 | | | $ | 29,403 | | | $ | 29,403 | | | $ | 29,403 | | | | | Welfare Benefits | | | — | | | — | | | — | | | $ | 63,344 | | | — | | | — | | | | | Supplemental Retirement Benefit(7) | | | — | | | — | | | — | | | $ | 253,626 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | $ | 450,217 | | | — | | | $ | 965,092 | | | $ | 2,035,589 | | | $ | 1,181,419 | | | $ | 1,181,419 | | | | | | | | | | | | | | | | | | |
(1)The term "with Consent" means consent with respect to each component of pay. This termination scenario typically involves retirement pursuant to a retirement plan or, if an NEO has not yet attained the necessary age and service requirements for retirement, a voluntary termination with consent.
(2)- The value shown for cash severance benefits represents the total that would be paid under the Corporation’s Supplemental Unemployment Benefit Program over a specified
period. Cash severance amounts shownperiod and Change in Control Severance Plan, including an estimated amount of $50,000 for Mr. Longhi and Ms. Folsom also include payments for accrued and unused vacation.outplacement services.
(2)
(3)All benefit amounts would become payable on May 31, 20182021 under a permanent incapacity pension, five months following a disabling event that occurredafter becoming disabled on December 31, 2017.2020. (3)
(4)The annual restricted awards and option awards include pro rata vesting on each grant date anniversary. The retention award granted to Mr. Soni will vest 100% on the third anniversary of the date of the grant. The vesting of the restricted stock award granted in January 2017 to Ms. Folsom was accelerated upon her termination of employment.
(5)Values shown for the Performanceperformance awards are calculated as follows: The values shown for the 20152018 equity award for TSR and the cash award for ROCE are based on the actual value at the end of the Performance Periodperformance period on December 31, 2017.2020. −
•The 20152018 TSR grant finishedand ROCE grants each ended the Performance Period atperformance period below the 44th percentile of the peer group indicatingthreshold performance level, resulting in a payout of 74.07%0% of the target number of shares. The 2015 ROCE grant ended the Performance Period with below threshold results indicating that the entire award will be forfeited. −
•The values shown for the 20162019 and 20172020 TSR equity, 2019 ROCE equity and 2020 ROCE cash grants in columns A and C represent a pro-rated award based on the number of months worked during the performance period divided by the total number of months in the performance period multiplied by the expected performance through December 2017. 52 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Potential Payments Upon Termination or Change2020, except for Mr. Burritt and Ms. Breves who are fully vested in Control |
•In the event of a Change in Control, the performance period is ended on the date of the CIC and the actual performance is calculated based on the abbreviated Performance Period to determine the "Achieved Performance Award." The balance of the award if any is forfeited and the "Achieved Performance Award" remains subject to employment restrictions through the third anniversary date of the grant unless the Grantee's employment is terminated without cause after a Change in Control before the third anniversary date of the grant, in which the award will be immediately vested and released.
•In the event of disability or death, the awards are immediately vested and distributed based on the following rules:
Death or Disability prior to the end of the first year of the Performance Period – 0% vested
Death or Disability at or after the end of the first year of the Performance Period but prior to the end of the second year of the Performance Period – 50% vested
Death or Disability at or after the end of the second year of the Performance Period – 100% vested
(6)Mr. Buckiso did not receive Performance Awards in 2015. The vesting outcomes described in footnote 5 reflect his 2016 and 2017 grants ofunearned performance awards. Messrs. Bradley and Soni did not receive Performance Awards in 2015 or 2016. The vesting outcomes described in footnote 5 reflect their 2017 performance awards.
(7)For all NEOs, the Supplemental Retirement Benefit is equal to the sum of (i) the Retirement Account contributions that would have been received under the U. S. Steel Savings Plan and the Corporation's related non tax-qualified plans if his employment would have continued for an additional 36 months plus earnings, and (ii) the amount they would have received under the U. S. Steel Savings Plan and the related non tax-qualified plans if they were fully vested on December 31st.
Termination and Change-in-Control ProvisionsNo cash severance payments are made with respect to an executive'sexecutive’s termination of employment due to voluntary termination (with consent or retirement) (Column A), voluntary termination (without consent) or involuntary termination for cause (Column B), disability (Column E) or death (Column F). Under our broad-based Supplemental Unemployment Benefit Program covering most non-represented employees, monthly cash benefits are payable to executives for up to 12 months (depending on years of service) while on layoff in the event of an involuntary termination not for cause (Column C). Cash severance is one of the payments made to executives under the Change in Control Severance Plan in the event of a termination in connection with a Change in Control (Column D). Under the plan, payment would be made in a lump sum amount equal to 2.5x for Messrs.Mr. Burritt, and Bradley, 2x for Ms. Breves and Messrs. Bruno, Buckiso Matthews and Rintoul, and 1x for Mr. SoniHolloway the sum of (a) base salary and (b) the current target under the short-termannual incentive compensation program (or, if higher than the target, the average short-term incentive compensation for the prior three years). The benefits under the Supplemental Unemployment BenefitsBenefit Program and the Change in Control ProgramSeverance Plan are contingent upon the execution of an agreement which contains a general release of claims and confidentiality, non-disparagement and non-solicitation provisions. Following a voluntary termination with the Committee'sCompensation Committee’s consent or a retirement (Column A), ainvoluntary termination not for cause (Column C), disability (Column E), or death (Column F), an executive would be entitled to receive a short-term incentive award if (a) the relevant performance goals are achieved, (b) the executive is employed for at least six months during the performance period, and (c) the Compensation Committee does not exercise its discretion to reduce or eliminate the award. For purposes of the short-term incentive program, retirement means a termination of employment after having completed 30 years of service, attainment of age 60 with 5five years of service, or attainment of age 65. If an executive'sexecutive’s employment terminates voluntarily without the Committee'sCompensation Committee’s consent or involuntarily (Columns B and C)B), regardless of whether the termination is for cause or not for cause, no short-term incentive award is payable. Because the cash severance payment, discussed above, includes a multiple of the target short-term incentive, no payments are made pursuant to the short-term incentive program in the event of a Change in Control (Column D). Following a voluntary termination withUnder the Committee's consent or a retirement (Column A)terms of our long-term incentive program (“LTIP”), and subject to the Committee's discretion, (i) a prorated numberrestricted stock units are fully vested upon attainment of an executive's unvested stock options granted in 2015 and 2016 would vest based on the number of complete months worked during the vesting period and (ii) the stock options granted in 2017 would fully vest if the executive attained age 60 with 5 years of service or age 65, prior to termination, provided the executive is employed for at least six months following the date of grant (“Normal Retirement”) and is notvest on a participant in the
Supplemental Pension Program and partially vest after 30 years of service or afterpro rata basis as described below upon attainment of age 55 with 10 years of service. The remaining unvested optionsservice or 30 years of service (“Early Retirement”). If an executive is not eligible for retirement, the Compensation Committee reserves the right to decide these matters on a case-by-case basis, but its practice has been to prorate the vesting of the shares scheduled to vest during the current vesting period for the time employed during the vesting period (for example, ten months worked during the twelve-month vesting period from March 2020 to February 2021 would be forfeited. Inresult in a vesting of ten-twelfths of the eventnumber of shares scheduled to vest in February 2021). As of December 31, 2020, Mr. Burritt and Ms. Breves have met the requirements for a disability (Column E) or death (Column F), all unvested options vest immediately. All vested options grantedNormal Retirement, Mr. Buckiso has met the requirements for an Early Retirement, and Messrs. Bruno and Holloway were not eligible to retire under the current stock plan remain exercisable for three years (five years for options granted in 2017) after termination or, if less, until the original expiration date.
LTIP. United States Steel Corporation | 2018 Proxy Statement |53
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74 | Potential Payments Upon Termination or Change in ControlUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Upon a voluntary termination with consent or retirement (Column A), pro rata vesting has been applied to the restricted stock units for all NEOs, except for Mr. Burritt and Ms. Breves who have met the requirements for a Normal Retirement and are fully vested in their restricted stock units. If an executive'sexecutive’s employment terminates voluntarily without the Committee's consent or involuntarily for cause (Column B), all remaining unvested options are forfeited.For involuntary terminations that are not for cause (Column C), we have assumed that the executive terminated employment on December 31, 2017 and that a prorated number of options vested based on the number of complete months worked during the vesting year (February 2017 to February 2018 for the 2017 grant, May 2017 to May 2018 for the 2016 grant, and February 2017 to February 2018 for the 2015 grant).
Stock options include a "double-trigger" and require a termination in connection with a Change in Control (Column D) in order for the vesting to be accelerated. Unvested stock options would not be forfeited if (i) employment is terminated during a potential change in control period by the Corporation for other than cause or disability or by the executive for good reason and (ii) a 409A Change in Control occurs within twenty-four months following the commencement of the potential change in control period.
Following a voluntary termination with the Committee's consent or a retirement (Column A), and subject to the Committee's discretion, (i) a prorated number of an executive's unvested restricted stock units granted in 2015 and 2016 would vest based on the number of complete months worked during the vesting period and (ii) the restricted stock units granted in 2017 would fully vest if the executive attained age 60 with 5 years of service or age 65 prior to termination, provided the executive is employed for at least six months following the date of grant and is not a participant in the Supplemental Pension Program and partially vest after 30 years of service or after attainment of age 55 with 10 years of service. The remaining unvested restricted stock units would be forfeited. In the event of a disability (Column E) or death (Column F), all unvested restricted stock units vest immediately.
If an executive's employment terminates voluntarily without the Committee'sCompensation Committee’s consent or involuntarily for cause (Column B), all remaining unvested restricted stock units are forfeited.
For involuntary terminations that are not for cause (Column C) we have assumed that the executive terminated employment on December 31, 2017 and that a prorated number of restricted stock units vested, based onexcept for Mr. Burritt and Ms. Breves who have met the number of complete months worked during the vesting year (February 2017 to February 2018requirements for the 2017 grant, May 2017 to May 2018 for the 2016 grant, February 2017 to February 2018 for the 2015 grant). a Normal Retirement and are fully vested in their restricted stock units. Restricted stock units require a termination in connection with a Change in Control (Column D) in order for the vesting to be accelerated. Unvested restricted stock units would not be forfeited if (i) employment is terminated during a potential change in control period by the Corporation for other than cause or disability or by the executive for good reason and (ii) a 409A Change in Control occurs within twenty-four months following the commencement of the potential change in control period. In the event of disability (Column E) or death (Column F), all unvested restricted stock units vest immediately. FollowingUnder the terms of the LTIP performance awards are fully vested upon Normal Retirement and vest on a pro rata basis as described below upon Early Retirement. If an executive is not eligible for retirement, the Compensation Committee reserves the right to decide these matters on a case-by-case basis, but its practice has been to prorate the vesting of the performance awards as described above. As of December 31, 2020, Mr. Burritt and Ms. Breves have met the requirements for a Normal Retirement, Mr. Buckiso has met the requirements for an Early Retirement, and Messrs. Bruno and Holloway were not eligible to retire under the LTIP.
Upon a voluntary termination with the Committee's consent or a retirement (Column A), and provided that the relevant performance goals are achieved, (i) the prorated value ofpro rata vesting has been applied to the performance awards grantedfor all NEOs, except for Mr. Burritt and Ms. Breves who have met the requirements for a Normal Retirement and are fully vested in 2015their performance awards. If an executive’s employment terminates voluntarily without the Compensation Committee’s consent or involuntarily for cause (Column B), all remaining unvested performance awards are forfeited. For involuntary terminations that are not for cause (Column C) we have assumed that the executive terminated employment on December 31, 2020 and 2016 would vestthat a prorated number of performance awards vested based on the number of complete months worked during the relevant performance period. Performance awards require a termination in connection with a Change in Control (Column D) in order for the vesting to be accelerated. For these awards, the performance period (eachwould end upon the change in control; however, the awards would not vest until the earlier to occur of a termination within 24 months of the change in control or the normal vesting date. Unvested performance awards would not be forfeited if (i) employment is approximately three years)terminated during a potential change in control period by the Corporation for other than cause or disability or by the executive for good reason and (ii) the performance awards granteda 409A Change in 2017 would fully vest if the executive attained age 60 with 5 years of service or age 65 prior to termination, provided the executive is employed for at least sixControl occurs within twenty-four months following the datecommencement of grant and is not a participantthe potential change in the Supplemental Pension Program and partially vest after 30 years of service or after attainment of age 55 with 10 years of service. control period. For performance awards for which the performance goals are achieved, a modified proration is used in the event of adisability (Column E) or death (Column F) or disability (Column E) allowing 0% of the achieved award if such event occurs prior to the completion of the first third of the performance period, 50% of the achieved award if such event occurs on or after completion of the first third, but prior to completion of the second third, of the performance period, and 100% of the achieved award for events occurring on or after completion of the second third of the performance period. This modified proration effectively shortens the post-termination waiting period to a maximum of two years, thereby allowing an estate to potentially close within two years, since there would be no value allowed for performance awards granted within one year of a participant'sparticipant’s death. If an executive's employment terminates voluntarily without the Committee's consent or involuntarily for cause (Column B), all remaining unvested performance awards are forfeited.
For involuntary terminations that are not for cause (Column C) we have assumed that the executive terminated employment on December 31, 2017 and that a prorated number of performance awards vested based on the number of complete months worked during the relevant performance period.
Performance awards require a termination in connection with a Change in Control (Column D) in order for the vesting to be accelerated. For these awards, the performance period would end upon the change in control; however, the awards would not vest until the earlier to occur of a termination
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Potential Payments Upon Termination or Change in Control |
within 24 months of the change in control or the normal vesting date. Unvested performance awards would not be forfeited if (i) employment is terminated during a potential change in control period by the Corporation for other than
cause or disability or by the executive for good reason and (ii) a 409A Change in Control occurs within twenty-four months following the commencement of the potential change in control period.
Pension Plan Compensation
|
Pension Plan Compensation includes benefits under the following: U. S. Steel Pension Plan BenefitsMr. Buckiso is vested in his benefits under the U. S. Steel Pension Plan are payable on behalf of Messrs. Matthews and Buckisowould receive his benefits under each of the termination of employment scenarios. Refer to the "Pension Benefits"“Pension Benefits” section for a description of the U. S. Steel Pension Plan. Benefits under the U. S. Steel Pension Plan may be payable under the Non Tax-Qualified Pension Plan to the extent they are limited by the qualified plan limitations established under the Internal Revenue Code.
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 75 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
If an executive isMr. Buckiso was placed on involuntary layoff status as of December 31, 20172020 (Column C), the executivehe would be eligible to remain on layoff for a period of up to two years. Having satisfied certain age and service requirements, Messrs. Matthews andMr. Buckiso would each be eligible to commence a Rule-of-70/80 early retirement option on December 31, 2018 after being on layoff for one year.2021. The present value amounts shown for an involuntary termination not for cause (Column C) reflect enhanced benefits attributable to the additional age and continuous service accrued while on layoff, the lower early-commencement charges, and a temporary $400 monthly pension benefit that is payable until the executivehe becomes eligible for a public pension. If an executive becomes inactiveMr. Buckiso was totally and permanently disabled on December 31, 2017 due to a disability2020 (Column E), which is determined to be a permanent incapacity, the executivehe would be eligible to commence a Permanent Incapacity early retirementpermanent incapacity pension on May 31, 2018,2021, which is five months after the qualifying disability. The present value amounts shown reflect enhanced benefits attributable to the additional age and continuous service accrued during the five-month period, and the lower early-commencement charges, but not the temporary $400 monthly pension benefit that is payable until the executivehe becomes eligible for a public pension or, if earlier, governmental disability benefits.
If theMr. Buckiso’s employment of an executive iswas terminated due to his death (Column F), death benefits would become payable to thehis survivor (typically his or her spouse) or, if there is no spouse, to the executive'shis estate. The present value amounts shown are equal to the higher of (i) the actuarial equivalent of the executive'shis pension benefit (excluding the survivor and surviving spouse'sspouse’s benefits) that would have been payable if the executivehe had retired on the date of death, or (ii) the value of the survivor and surviving spouse'sspouse’s benefits as defined in the U. S. Steel Pension Plan. Non Tax-Qualified Pension Plan Benefits from the Non Tax-Qualified Pension Plan are payable on behalf of Messrs. Matthews andMr. Buckiso under each of the termination of employment scenarios. Refer to the "2017“2020 Pension Benefits –— Non Tax-Qualified Pension Plan"Plan” section for a description of the Non Tax-Qualified Pension Plan. The present value amounts shown for the various termination scenarios vary based upon the total amount payable under the U. S. Steel Pension Plan before the application of the statutory limitations established by the Internal Revenue Code. Supplemental Pension ProgramNon-Qualified Deferred Compensation
Benefits from the Supplemental Pension Program are payable on behalf of Mr. Matthews under each of the termination of employment scenarios other than a voluntary termination without consent or an involuntary termination for cause (Column B), since Mr. Matthews, the only eligible NEO, has at least 15 years of continuous service as of December 31, 2017. Mr. Buckiso is a participant in the U. S. Steel Pension Plan; however, participation in the Supplemental Pension Program was frozen in March 2011 before Mr. Buckiso became eligible for the plan.
The present value amounts shown for an involuntary termination not for cause (Column C), a change in control
and termination (Column D), and a disability (Column E) reflect benefits attributable to later commencement due to layoff because of an involuntary termination or the five-month period following the disability event.
If the employment of an executive is terminated due to death (Column F), death benefits become payable to the surviving spouse or, if there is no spouse, to the executive's estate. The present value amounts shown are equal to the actuarial equivalent of the executive's pension benefit (excluding the surviving spouse's benefits) that would have been payable with the Corporation's consent if the executive had retired on the date of death.
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Potential Payments Upon Termination or Change in Control
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Non-Qualified Deferred Compensation
|
Non-Qualified Deferred Compensation includes benefits under the following plans: Supplemental Thrift Program The conditions for a payment of benefits under the Supplemental Thrift Program include the attainment of five years of continuous service. For Messrs. Matthews, RintoulBurritt, Bruno, and Buckiso and Ms. Breves this condition has been met and therefore, this benefit is payable under all termination scenarios. Because Messrs. Burritt, Bradley and Soni haveFor Mr. Holloway, who has not yet attained five years of continuous service, this benefit is only payable upon death or if his employment is terminated with the consent of the Corporation or if the executive dies prior to retirement. For Mr. Longhi and Ms. Folsom, the Corporation consented to the payment of this benefit. Corporation.Non Tax-Qualified Retirement Account Program The conditions for a payment of benefits under the Non Tax-Qualified Retirement Account Program include the attainment of three years of continuous service. For Messrs. Burritt, Matthews, RintoulBruno, and Buckiso and Ms. Breves this condition has been met and therefore, this benefit is payable under all termination scenarios. Because Messrs. Bradley and Soni haveFor Mr. Holloway, who has not yet attained threefive years of continuous service, this benefit is only payable upon death or if theirhis employment is terminated with the consent of the Corporation or if the executive dies prior to retirement. Mr. Longhi and Ms. Folsom met the conditions for payment of this benefit.
Corporation.Supplemental Retirement Account Program The conditions for a payment of benefits under the Supplemental Retirement Account Program include the termination of employment after completing at least 10 years of continuous service or, if earlier, on or after the attainment of age 65. In addition, benefits are not payable if the participant terminates employment prior to age 55 or within 36 months of becoming a participant in the Plan. Because Mr. Rintoul meetsBurritt is the only NEO who met these conditions this benefit is payable for payment under all termination scenarios.the program as of December 31, 2020. For Messrs. Burritt, Bradley, Matthews, Buckiso and Soni, who have not yet met these conditions,the other NEOs, this benefit is only payable (i) if (a) termination ofthe executive’s employment occursis terminated prior to age 65 with the consent of the Corporation (b) employment isor involuntarily terminated other than for cause, or (c) death prior to retirement. For Mr. Longhi and Ms. Folsom,(ii) upon the Corporation consented to the payment of this benefit. executive’s death.The amount shown for a change in control and termination (Column D) represents the estimated cost of providing active employee insurance coverage to the executive for a period of 36 months or, if earlier, until the executive's 65th birthday. months.76 | Supplemental Retirement BenefitUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Supplemental Retirement Benefit The supplemental retirement benefit represents the increase in retirement benefits to an executive in the event of a termination in connection with a change in control (Column D) and is paid pursuant to the CIC Plan (see "Termination“Termination Scenarios –— Change in Control and Termination",Termination,” above). For all NEOs, the Supplemental Retirement Benefit is equal to the sum of (i) the Retirement Account contributions that would have been received under the U. S. Steel Savings Plan and the Corporation'sCorporation’s related non tax-qualified plans if their employment would have continued for an additional 36 months plus earnings, and (ii) the amount they would have received under the U. S. Steel Savings Plan and the related non tax-qualified plans if they were fully vested on December 31st. 31, 2020.Outplacement Services and Excise Tax Gross-Up Outplacement Services and Excise Tax Gross-Up
|
In the event of a termination in connection with a change in control (Column D), the CIC Plan provides for the payment of reasonable costs for outplacement services (two year maximum) for all terminations following an Applicable Event. Gross-up payments are not provided to cover excise taxes imposed under Section 4999 of the Code for an executive who receives compensation under a Change in Control termination scenario (Column D). CEO PAY RATIO56 |United States Steel Corporation | 2018 Proxy Statement
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CEO Pay Ratio
We are committed to a compensation program that is internally equitable to motivate our employees to advance the strategy of the Corporation and enhance stockholder value. The disclosure below presents the ratio of annual total compensation of our CEO to the annual total compensation of our Median Employee (defined below), excluding our CEO. Because Mr. Burritt did not serve as our CEO for the entirety of 2017, for purposes of this disclosure, the annual total compensation for the CEO was determined by annualizing the compensation of Mr. Burritt based on his compensation as of October 1, 2017. This amount differs from Mr. Burritt's "Total Compensation" reported in the Summary Compensation Table on page 40 of this proxy statement because he served as CEO for only for a portion of the year, and, consequently, actually earned a lower salary and lower compensation under the AICP and LTIP while he served as our Chief Financial Officer and Chief Operating Officer.
We calculated each employee'semployee’s annual total cash compensation to identify our Median Employee. The calculation of annual total cash compensation of each employee was determined by calculating the total cash compensation over the twelve-months ended October 1, 20172020 (the "Determination Date"“Determination Date”) . Pay to identify our Median Employee. The following pay elements that were included in determining the annual total cash compensation for each employee are:Salary,employee:
–
salary, base wages and/or overtime received (as applicable); •
–
annual incentive payment received for performance in fiscal year 20162020 (for non-represented employees); –
•cash incentive payments, based on production (for represented employees only);
•Quarterly profit sharing payments (for represented employees only); and–
other cash payments (including payments related to shift differential, holidays and vacations) (for represented employees only). Our calculation includes all full-time, part-time, temporary and seasonal employees of the Corporation and its consolidated subsidiaries employed as of October 1, 20172020 (other than the CEO). Also, included inExcluded from the data were 129 leased employees employed by third parties for whom we determined thewere unable to determine compensation. All of our thirteenseven employees located in the Czech Republic, France Germany, United Arab Emirates, Canada and Italy,Germany, representing less than 5% of our total employee population, were excluded due to administrative challenges related to collecting the necessary data for these employees. We excluded 3 3, 3, 1, 2 and 1 employees from the Czech Republic, France Germany, United Arab Emirates, Canada and Italy, respectively.4 employees from Germany. Our total U.S. employee and non-U.S. employee population (including leased employees), duringas of the twelve-month period ended October 1, 2017,Determination Date was 27,637, which is the number of employees used to determine that the excluded employees represent less than 5% of our total employee population.22,511. We applied a foreign currency exchange rate to all compensation elements paid in currencies other than U.S. dollars. We determined the Median Employee by: (i) calculating the annual total cash compensation described above for each employee; (ii) ranking the annual total cash compensation of all employees except for the CEO, from lowest to highest; and (iii) identifying the employee with the median total cash compensation (who we refer to as the "Median Employee"“Median Employee”). Once the Median Employee was determined, that employee'semployee’s annual total compensation was calculated in the same manner as the "Total Compensation"“Total Compensation” shown for our CEO in the "Summary“Summary Compensation Table."” | | | | | Median Employee 2017 Total
Compensation
$72,635 | | CEO 2017 Total Compensation
(Annualized)
$5,618,557 | |
2017 CEO Pay Ratio = 77:1 |
The annual total compensation for fiscal year 20172020 for our CEO was $5,618,557 (on an annualized basis)$8,583,443 and for the Median Employee was $72,635.$73,054. The resulting ratio of our CEO'sCEO’s annual total compensation, calculated as described above, to the annual total compensation of our Median Employee for fiscal year 20172020 is 77117 to 1. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 77 |
Prop osal 3:
Ratification of the
Appointment of
PricewaterhouseCoopers as
the Independent Registered
Public Accounting United States Steel Corporation Firm| 2018 Proxy Statement |57
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| | INFORMATION ABOUT THIS PROPOSAL Stockholders are being asked to ratify the selection of PricewaterhouseCoopers (“PwC”) as the Corporation’s independent registered public accounting firm for 2021. | |
Audit Fees
The following table shows the fees paid to PricewaterhouseCoopers LLP ("PwC") for professional services for 2017 and 2016:
| | | | | | | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | 2017 | | | 2016 | | | | | | | | | | | | Audit(1) | | $ | 5.1 | | $ | 5.1 | | | | | | | | | | | | Audit-Related(2) | | $ | 0.4 | | $ | 0.3 | | | | | | | | | | | | Tax | | $ | — | | $ | — | | | | | | | | | | | | All Other | | $ | — | | $ | — | | | | | | | | | | | | Total | | $ | 5.5 | | $ | 5.4 | | | | | | | | | | |
(1)Audit fees were for: the audit of U. S. Steel's annual financial statements; the audit of U. S. Steel's internal control over financial reporting required under the Sarbanes-Oxley Act; audits of certain subsidiaries, statutory and regulatory audits; the issuance of comfort letters, and consents; and the review of SEC regulatory filings.
(2)Audit-related fees were for employee benefit plan audits and procedures required by agreement or government agencies as well as audit and internal control review procedures associated with the implementation of new accounting standards.
Pre-Approval Policy
The Audit Committee has the sole authority to pre-approve all audit engagement fees and terms as well as all non-audit engagements with PwC. The Audit Committee has delegated to its chairman the authority to approve non-audit
engagements of less than $500,000 between Audit Committee meetings. In 2016 and 2017, all of the above services were pre-approved by the Audit Committee in accordance with this pre-approval policy.
Audit Committee Report
The Audit Committee has reviewed and discussed U. S. Steel's audited financial statements for the year ended December 31, 2017 with U. S. Steel's management. We have discussed with the independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), the matters required to be discussed by Auditing Standards No. 1301 "Communication with Audit Committees," as adopted by the Public Company Accounting Oversight Board. We also discussed with U. S. Steel's management its assessment of the effectiveness of U. S. Steel's internal control over financial reporting as of December 31, 2017, and PwC's opinion on the effectiveness of U. S. Steel's internal control over financial reporting as of December 31, 2017. We have
received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and we have discussed with PwC its independence. Based on the aforementioned review and discussions, we recommended to the Board that the audited financial statements for U. S. Steel be included in U. S. Steel's Annual Report on Form 10-K for the year ended December 31, 2017, for filing with the Securities and Exchange Commission.
| | | | John J. Engel, Chairman
Paul Mascarenas
Murry S. Gerber | | Stephen J. Girsky
Glenda G. McNeal
Eugene B. SperlingThe Board of Directors recommends a vote“FOR” the appointment of PwC as the independent registered public accounting firm. | |
58 |United States Steel Corporation | 2018 Proxy Statement
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Proposal 3: Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm |
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
Pursuant toUnder the authority provided by its charter, the Audit Committee has appointed PricewaterhouseCoopers LLP (PwC) as the independent registered public accounting firm for U. S. Steel for the current fiscal year. Although action by the stockholders in this matter is not required by law or the Corporation'sCorporation’s by-laws, the Audit Committee believes that it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in maintaining the integrity of the Corporation'sCorporation’s financial controls and reporting.
If the appointment of PwC is not ratified by the stockholders, then the Audit Committee will reconsider its appointment and review its future selection of an independent registered public accounting firm in light of that result. However, the Audit Committee may decide to maintain its appointment of PwC. Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such change would be in the best interests of the Corporation and our stockholders. PwC has served as the independent auditor (now referred to as the independent registered public accounting firm) of U. S. Steel for many years. We believe that PwC'sPwC’s knowledge of U. S. Steel'sSteel’s business and its organization gained through this period of service is quite valuable. Partners and employees of PwC assigned to the U. S. Steel engagement are periodically rotated, thus giving U. S. Steel the benefit of new thinking and approaches in the audit area. The Audit Committee annually requests PwC to prepare a self-assessment utilizingself-assessment. Additionally, for the Center forwork performed on the 2020 audit, the Audit Quality, External Auditor Assessment Tool.Committee discussed and evaluated PricewaterhouseCoopers’ performance, which included an evaluation by the Corporation’s management of PricewaterhouseCoopers’ performance. This best practice assists the Audit Committee in its oversight role and annual evaluation of PwC to assess the quality of the audit and to recommend the retention of PwC. Based on this assessment, we believe the quality of PwC'sPwC’s services, communication and interaction with the Audit Committee is of a high standard. We expect representatives of PwC to be present at the annual meeting with an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions. For fiscal year 2017,2020, PwC performed professional services for U. S. Steel in connection with audits of the financial statements of U. S. Steel, and of U. S. Steel'sSteel’s internal control over financial reporting as of December 31, 2017,2020, and audits of certain subsidiaries and certain pension and other employee benefit plans. PwC has also reviewed quarterly reports and other filings with the Securities and Exchange Commission and other agencies. | 78 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
AUDIT FEES The following table shows the fees paid to PricewaterhouseCoopers LLP (“PwC”) for professional services for 2019 and 2020: | | | | (Dollars in millions) | | | | | | 2019 | | | 2020 | | | Audit(1) | | | $5.7 | | | $4.8 | | | Audit-Related(2) | | | $0.3 | | | $0.3 | | | Tax | | | $— | | | $0.2 | | | All Other | | | $0.1 | | | $0.0 | | | Total | | | $6.1 | | | $5.3 | |
(1)
Audit fees were for: the audit of U. S. Steel’s annual financial statements; the audit of U. S. Steel’s internal control over financial reporting required under the Sarbanes-Oxley Act; audits of certain subsidiaries, statutory and regulatory audits; the issuance of comfort letters, and consents; and the review of SEC regulatory filings. (2)
Audit-related fees were for employee benefit plan audits and procedures required by agreement or government agencies as well as audit and provided adviceinternal control review procedures associated with the implementation of new accounting standards. Pre-Approval Policy The Audit Committee has the sole authority to pre-approve all audit engagement fees and consultationterms as well as all non-audit engagements with PwC. The Audit Committee has delegated to its chairman the authority to approve non-audit engagements of less than $500,000 between Audit Committee meetings. In 2019 and 2020, all of the above services were pre-approved by the Audit Committee in accordance with this pre-approval policy. AUDIT COMMITTEE REPORT Our committee has reviewed and discussed U. S. Steel’s audited financial statements for the year ended December 31, 2020 with U. S. Steel’s management. We have discussed with the independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), the matters required to be discussed by Auditing Standards No. 1301 “Communication with Audit Committees,” as adopted by the Public Company Accounting Oversight Board. We also discussed with U. S. Steel’s management their assessment of the effectiveness of U. S. Steel’s internal control over financial reporting as of December 31, 2020, and PwC’s opinion on tax matters.the effectiveness of U. S. Steel’s internal control over financial reporting as of December 31, 2020. We have received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and we have discussed with PwC its independence. Based on the aforementioned review and discussions, we recommended to the Board that the audited financial statements for U. S. Steel be included in U. S. Steel’s Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the Securities and Exchange Commission. Murry S. Gerber, Chairman
Tracy A. Atkinson
John V. Faraci Jeh C. Johnson
Paul A. Mascarenas
Michael H. McGarry
Eugene B. Sperling Patricia A. Tracey | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 79 |
Proposal 4:
Approval of Amended and Restated 2016 Omnibus Incentive Compensation Plan | | INFORMATION ABOUT THIS PROPOSAL Stockholders are being asked to approve the amended and restated 2016 Omnibus Incentive Compensation Plan to, among other things, approve the issuance of additional shares under the Plan. | |
| | | | The Board of Directors recommends a
vote FOR “FOR”the ratification of the appointment of PwC as our independent registered public accounting firm.amended and restated 2016 Omnibus Incentive Compensation Plan. | |
WHY YOU SHOULD VOTE TO APPROVE THIS PLAN The purpose of the Plan is to attract, retain and motivate employees and non-employee directors of outstanding ability and to align their interests with those of the Corporation’s stockholders. Having an adequate number of shares available for issuance under the Plan is an important factor in fulfilling these purposes.The Plan currently authorizes the issuance of 18,200,000 shares of common stock and, as of March 1, 2021, had approximately 1,774,681 shares available for issuance. The Compensation Committee expects that if the stockholders approve the amended and restated Plan, then the number of shares available under the Plan will be sufficient for approximately three years based on current expected equity grant practices. What happens if the Plan is not approved by our stockholders? If the amended and restated Plan is not approved by our stockholders, then the Plan will continue in effect in its present form and we will continue to grant equity awards under the current terms of the Plan until the shares remaining available for issuance are exhausted, which the Compensation Committee estimates will occur in 2022 based on current expected equity grant practices. Failure of our stockholders to approve the amended and restated Plan also will not affect the rights of existing award holders under the Plan or under any previously granted awards under the Plan. No material changes to the Plan have been made since the Plan was last approved by stockholders.
80 | Questions and Answers About the Annual Meeting and VotingUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Proposal 4:HIGHLIGHTS OF THE PLAN –
No repricing of stock options or stock appreciation rights without stockholder approval; –
Dividends and dividend equivalents may not be paid on options, appreciation rights, unvested full-value shares and, with respect to performance awards, before the performance goals are achieved and the performance awards are earned; –
Minimum vesting period of 12 months, except in the event of acceleration due to death, disability, retirement, termination of employment without cause or a change in control; –
Minimum 30% change in control trigger; –
Consummation of transaction required for change in control; –
“Double trigger” vesting of awards upon a change in control; –
No liberal share recycling; and –
Recoupment policy of incentive awards. BACKGROUND Prior to adoption of the Plan in 2016, the Corporation issued awards under the 2005 Stock Incentive Plan (the “2005 Plan”). The 2016 Plan replaced the 2005 Plan, and no new awards may be issued under the 2005 Plan. Any outstanding awards under the 2005 Plan granted before the approval of the 2016 Plan remain outstanding according to their terms. The 2016 Plan, as adopted by the Board and approved by the stockholders, initially authorized the issuance of 7,200,000 shares of common stock for equity awards granted after the date of the 2016 Annual Meeting. In 2017, the stockholders approved an amendment to the Plan to increase the number of shares available for issuance by 6,300,000 shares, and in 2020 stockholders approved an amendment to the Plan to increase the number of shares available for issuance by 4,700,000 for a total of 18,200,000 shares. In determining the number of additional shares of common stock to be requested under the amended and restated Plan, the Compensation Committee considered the needs of the Corporation’s long-term incentive program and the potential dilution that awarding the requested shares may have on the existing stockholders. An independent compensation advisor assisted the Compensation Committee in determining the appropriate number of shares to be requested. The advisor examined a number of factors, including the Corporation’s burn rate and an overhang analysis, taking into account equity awards made under the 2016 Plan. Burn Rate The burn rate is the total equity awards granted under the Plan in a fiscal year divided by the weighted average common stock outstanding in the year indicated. The three-year average burn rate is 1.12% as shown in the table below, which is generally in-line with many institutional expectations and certain proxy advisory firms. | Fiscal Year | | | Options
Granted | | | RSUs
Granted | | | Performance
Awards
Granted(1) | | | Total
Granted | | | Weighted Average
Common Stock
Outstanding | | | Burn Rate | | | 2018 | | | 0 | | | 824,195 | | | 326,700 | | | 1,150,895 | | | 176,633,000 | | | .65% | | | 2019 | | | 0 | | | 1,005,500 | | | 737,990 | | | 1,743,490 | | | 171,418,000 | | | 1.02% | | | 2020 | | | 0 | | | 2,640,690 | | | 671,390 | | | 3,312,080 | | | 196,721,035 | | | 1.68% | | | | | | | | | | | | | | | | | | 3-Year Average | | | 1.12% | |
(1)
In fiscal 2018, 2019 and 2020, the performance awards earned total 150,133 shares, 384,664 shares and 0 shares, respectively. Overhang An additional metric used to measure the cumulative dilutive impact of an equity program is overhang. The calculation of overhang can be described as (A+B) / (A+B+C) where: –
A is the number of outstanding stock options and outstanding full-value awards; –
B is the number of shares available for future grant under the plan; and –
C is the total outstanding shares of common stock. QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTINGUNITED STATES STEEL CORPORATION
2021 PROXY STATEMENT | 81 |
Proposal 4:SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED
As of December 31, 2020, the Corporation had 2,046,236 outstanding stock options with a weighted average remaining term of 3.72 years, and a weighted average exercise price of $25.98. As of that date, the Corporation had 5,101,025 outstanding full-value awards, 6,092,033 shares available for future grant under the 2016 Plan, and 220,432,458 outstanding shares of common stock. This results in an overhang of 5.67%. Taking into account the proposed shares to be authorized under the Plan and the outstanding shares of common stock as of March 1, 2021, the overhang increases to 9.35%. Because this proposal does not contemplate the amount or timing of specific equity awards in the future, and because historic rates of awards may not be indicative of future rates of awards, it is not possible to calculate with certainty the number of years of awards that will be available and the amount of subsequent dilution that may ultimately result from such awards. However, the current rationale and practices of the Compensation Committee with respect to equity awards is set forth in the “Long-Term Incentive Program” section and elsewhere in the Compensation Discussion and Analysis section of this proxy statement. SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED The following is a summary of the main features of the Plan, as amended and restated. This summary is qualified in its entirety by the specific terms of the amended Plan, which is attached as Appendix C. Purpose The purpose of the Plan is to attract, retain and motivate employees and non-employee directors of outstanding ability and to align their interests with those of the Corporation’s stockholders. Eligibility All employees, non-employee directors and other service providers of the Corporation or any subsidiary or affiliate are eligible to receive various stock and cash-based awards under the Plan. As of December 31, 2020, the Corporation had approximately 325 employees and 13 non-employee directors eligible to receive awards under the Plan. The Compensation Committee generally does not consider other service providers to be eligible to receive awards under the Plan and has not granted awards to any other service providers in the past and does not presently intend to do so. Shares Subject to the 2016 Plan The maximum number of shares of U. S. Steel common stock which may be issued under the 2016 Plan is 18,200,000 shares, subject to proportionate adjustment in the event of stock splits and similar events. If approved by the stockholders, the amended and restated Plan would increase the maximum number of shares that may be issued under the Plan to 32,700,000 shares, subject to proportionate adjustment in the event of stock splits and similar events. For purposes of measuring the number of shares issued under the Plan, each stock option or appreciation right, will reduce the number of shares available under the Plan by one share, except to the extent the award is settled in cash. All other awards, unless settled in cash, reduce the number of shares available under the Plan by 1.78 shares for each such share to which the award relates. Shares delivered in payment of the exercise price of an award or to satisfy withholding obligations, or which are repurchased through the use of option proceeds are counted against the number of shares granted, and are not again available for awards under the Plan. All shares covered by an appreciation right that is exercised and settled in shares are also counted against the number of shares granted. The number of shares to which an award under the 2016 Plan relates is counted against the number of shares available for issuance at the time of grant unless such number of shares cannot be determined at that time, in which case the number of shares actually distributed pursuant to the award is counted against the number of available shares at the time of distribution. If, and to the extent, any award granted under the 2016 Plan or the 2005 Plan is forfeited or otherwise terminates without the issuance of shares or if payment is made to the participant in the form of cash, cash equivalents or other property other than shares, any shares that are not issued with respect to such award, to the extent of any such forfeiture or termination or alternative payment, are again available for issuance under the 2016 Plan at the rate for which the award was originally subtracted from the number of shares under the 2005 Plan or 2016 Plan, as applicable. If the exercise price of an award is paid by a participant by delivery of shares or by withholding shares issuable upon exercise or if shares are delivered or withheld for the satisfaction of tax withholding obligation, or if shares are repurchased by the Corporation with option proceeds, the number of shares covered by the award equal to the number of shares so delivered, withheld or repurchased are counted against the number of shares granted and are not again available for awards under the 2016 Plan. | 82 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Proposal 4:SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED
Shares distributed pursuant to an award may be, in whole or part, authorized and unissued shares or treasury shares. No awards may be granted under the 2016 Plan after April 26, 2026. Administration Except in the case of awards to non-employee directors, the 2016 Plan is administered by a committee of the Board consisting of at least three members of the Board who each qualify as a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and an “independent” director under the rules of the New York Stock Exchange. The Compensation Committee administers awards made to employees of the Corporation. In the case of awards to non-employee directors, the 2016 Plan is administered by the Board. The Compensation Committee has full and final authority to interpret and administer the Plan and to determine the persons who receive awards, type or types of awards, the number of shares covered by each award and to what extent and what circumstances an award may be settled in cash, shares, other awards or property or accelerated, vested, canceled, forfeited, exchanged or surrendered. All decisions made by the Compensation Committee pursuant to the terms of the Plan are final, conclusive and binding on all persons, including the Corporation, its subsidiaries and participants. The Compensation Committee may delegate to one or more officers, managers and/or agents of the Corporation the authority to perform administrative and other functions under the Plan. The Compensation Committee may also delegate to one or more officers of the Corporation the authority to grant awards to participants who are not directors or officers (as defined under Section 16 of the Exchange Act), subject to limitations established by the Compensation Committee and applicable law. Types of Awards The types of awards that may be granted include but are not limited to: (1) stock options, (2) restricted stock, (3) restricted stock units, (4) performance awards and (5) other stock-based awards, including appreciation rights. Each of these types of awards is described below. Stock Options. The Plan provides for the grant of nonstatutory stock options. The option price for each stock option may not be less than 100% of the fair market value of the Corporation’s common stock on the date of grant. Fair market value, for purposes of the Plan, is generally the average of the publicly reported high and low sale prices per share of the Corporation’s common stock on the date of grant. A stock option may be subject to such restrictions and other terms and conditions, if any, as shall be determined, in its discretion, by the Compensation Committee. All options have a term of ten years from the date of grant. The option price for each stock option will be payable upon exercise in cash, or by such other method authorized by the Compensation Committee, including by delivery or withholding of U. S. Steel common stock issued pursuant to such option price for the shares being purchased. Restricted Stock. Shares of the Corporation’s common stock may be issued subject to such restrictions and conditions as the Compensation Committee may specify, including but not limited to service requirements and performance goals (see “Performance Awards” below). From the date a restricted stock award is effective, the awardee will be a stockholder with respect to the restricted stock award and will have all the rights of a stockholder with respect to such shares, subject only to the restrictions imposed by the Compensation Committee, including limitations on the right to vote restricted stock. Dividends and dividend equivalents may accrue on restricted stock, but may not be paid before satisfaction of the restrictions. Restricted Stock Units. Restricted stock units provide for the issuance of the Corporation’s common stock subject to such restrictions and conditions, including but not limited to service requirements and performance goals (see “Performance Awards” below), as the Compensation Committee may impose. The awardee will not be a stockholder with respect to the restricted stock units and will not have the rights of a stockholder with respect to such units until the shares are issued upon the vesting of the award. The Committee may determine to pay dividend equivalents relative to the shares that ultimately vest. Performance Awards. Performance awards are based on the achievement of one or more performance goals established by the Compensation Committee at the time of the award during a specified performance period. These awards may be designated as performance shares or performance cash awards. –
Performance shares are denominated in shares of common stock and may be paid in shares or cash. –
Performance cash awards are denominated in dollars, have an initial value that is established by the Compensation Committee at the time of grant, and may be paid in cash or shares. The Compensation Committee will set forth in writing the performance goals applicable to the award, the performance period during which the achievement of the performance goals shall be measured, the amount that may be earned by the participant | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 83 |
Proposal 4:SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED
based on the achievement of the performance goals and such other terms and conditions applicable to the award as the Compensation Committee may, in its discretion, determine. The Compensation Committee may retain the discretion to reduce (but not to increase) the amount of a performance share award which will be earned based on the achievement of performance goals. Dividends and dividend equivalents may accrue, but may not be paid with respect to performance awards before the performance goals are achieved and the performance awards are earned. Performance goals may be based on one or more of the following objective performance measures and expressed in either, or a combination of, absolute or relative values or rates of change and on a gross or net basis: safety performance, stock price, capital expenditures, earnings per share, earnings per share growth, return on capital employed, return on invested capital, return on capital, costs, net income, net income growth, operating margin, revenues, revenue growth, revenue from operations, net sales, expenses, income from operations as a percent of capital employed, income from operations, income from operations per ton shipped, tons shipped, cash flow, market share, return on equity, return on assets, earnings (including EBITDA and EBIT), operating cash flow, operating cash flow as a percent of capital employed, economic value added, gross margin, total stockholder return, stockholder equity, debt, debt to stockholder equity, debt to earnings (including EBITDA and EBIT), interest expense and/or other fixed charges, earnings (including EBITDA and EBIT) to interest expense and/or other fixed charges, environmental emissions improvement, workforce diversity, number of accounts, workers’ compensation claims, budgeted amounts, cost per hire, turnover rate, and/or training costs and expenses. Performance goals based on these performance measures may be based either on the performance of: –
the participant, the Corporation, a subsidiary or subsidiaries, affiliate or affiliates, any branch, department, business unit or other portion thereof under such measure for the performance period; and/or –
upon a comparison of such performance with the performance of a peer group of corporations, prior performance periods or other measure selected or defined by the Compensation Committee at the time of making a performance award. The Compensation Committee may in its discretion also determine to use other objective performance measures as performance goals. The Compensation Committee determines and certifies in writing whether the applicable performance goal or goals were achieved, or the level of such achievement, and the amount, if any, earned by the participant based upon such performance. Other Stock-Based Awards. The Compensation Committee may grant to eligible employees, in lieu of salary or cash bonus, other awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of the Corporation’s common stock, including, without limitation, purchase rights, appreciation rights, shares of common stock awarded without restrictions or conditions, subject to the limitations of the Plan, convertible securities, exchangeable securities or other rights convertible or exchangeable into shares of common stock, as the Compensation Committee in its discretion may determine. The Compensation Committee may, in its discretion, also use other stock-based awards in connection with, or to satisfy obligations of the Corporation or a subsidiary or an affiliate under, other compensation or incentive plans, programs or arrangements of the Corporation or any subsidiary or affiliate for eligible participants, including the Deferred Compensation Program for Non-Employee Directors and the Non-Employee Director Stock Program. The Compensation Committee will determine the terms and conditions of other stock-based awards. Appreciation rights may not be granted at a price less than the fair market value of the underlying shares on the date of grant. Award Limits Awards may not be granted in any calendar year to any participant in excess of the following aggregate limits, subject to these adjustments described below: –
For stock options and appreciation rights, 1,000,000 shares (this limit applies separately to each type of award). –
For restricted stock and restricted stock units subject to performance goals, 1,000,000 shares (this limit applies separately to each type of award). –
For performance shares, 1,000,000 shares (or the cash value thereof). –
For performance cash awards, $20,000,000 in value. The aggregate grant date fair value of awards that may be granted to any individual non-employee director in any single calendar year shall not exceed $500,000. This limit does not apply to any awards made at the election of a non-employee director in lieu of all or a portion of any annual committee cash retainers or other similar cash based payments. In the event a dividend or other distribution is declared on the Corporation’s stock, or if the outstanding stock is changed into or exchangeable for a different number or kind of stock or securities of the Corporation or another corporation, the award limitations above, and any shares remaining in the Plan that are not subject to outstanding awards, shall be adjusted in an equitable manner as determined by the Compensation Committee. | 84 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Proposal 4:SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED
Vesting All awards granted under the Plan will vest based upon employment or service for a period of at least twelve (12) months from the date on which the award is granted and there is no acceleration of vesting to be more rapid than vesting after twelve (12) months. However, the Compensation Committee has discretion to provide for accelerated vesting or exercisability in the terms of an award or otherwise in connection with death, disability, retirement, involuntary termination of employment or service without cause or a change in control. Up to five percent of the aggregate number of shares authorized for issuance under the 2016 Plan may be issued pursuant to awards that do not satisfy these vesting restrictions. Repricing and Reload Options Prohibited The Compensation Committee may not, without stockholder approval –
amend or modify the terms of any outstanding option or appreciation right to reduce the exercise price or –
cancel, exchange or permit or accept the surrender of any outstanding option or appreciation right in exchange for an option or appreciation right with an exercise price that is less than the exercise price of the original option or appreciation right, or an award, cash or other securities for purposes of repricing the option or appreciation right. No option may be granted to any individual on account of the use of shares to exercise a prior option. Change in Control Unless otherwise determined by the Compensation Committee, if a change in control occurs and within two years thereafter a participant’s employment is terminated either: –
involuntarily for any reason other than cause; or –
voluntarily for good reason in the case of a member of executive management); then all outstanding stock options, and other awards will become fully exercisable and remain exercisable until the expiration date of the award. Also, all restrictions or limitations, including risks of forfeiture and deferrals, on awards subject to restrictions or limitations under the Plan will lapse. All performance goals applicable to performance awards will be measured over the shortened performance period ending on the date of the change in control. Unless otherwise determined by the Compensation Committee at the time of grant, scheduled vesting dates for performance-based awards are not affected by a change in control, and all awards remain payable on the dates provided in the underlying award agreements and the Plan. Recoupment Policy The Compensation Committee may determine that an award shall be forfeited and/or any value received from the award is subject to recovery under any law, government regulation, stock exchange listing requirement or any policy adopted by the Corporation. The Board has adopted a policy setting forth procedures to recover payment if an executive engaged in any fraud or misconduct, including gross negligence that caused or partially caused the need for a material restatement of the Corporation’s publicly filed financial results. Miscellaneous The Board may amend, alter, suspend, discontinue or terminate the Plan at any time without stockholder approval except to the extent that stockholder approval is required by law or stock exchange rules or if the amendment, alteration or other change materially increases the benefits accruing to participants, increases the number of shares available under the Plan or modifies the requirements for participation under the Plan or if the Board determines that stockholder approval is advisable. Without the consent of the participant, no amendment, suspension or termination of the Plan or any award may materially and adversely affect the rights of such participant under any previously granted award. No Material Changes to Plan Without Stockholder Approval The Board may amend, alter, suspend, discontinue or terminate the Plan at any time without stockholder approval except to the extent that stockholder approval is required by law or stock exchange rules or if the amendment, alteration or other change materially increases the benefits accruing to participants, increases the number of shares available under the Plan or modifies the requirements for participation under the Plan or if the Board determines that stockholder approval is advisable. Without | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 85 |
Proposal 4:SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED
the consent of the participant, no amendment, suspension or termination of the Plan or any award may materially and adversely affect the rights of such participant under any previously granted award. Plan Benefits The following table sets forth information on stock options, restricted stock units, and performance awards granted under the 2016 Plan and includes awards subsequently forfeited, if any, as of February 23, 2021. The closing price of the Corporation’s common stock on February 23, 2021 was $18.14 per share. Stock Awards Granted Under the 2016 Plan | Name and Position | | | Stock Options
Granted | | | Restricted
Stock Units
Granted(1) | | | Performance
Awards
Granted(2) | | | Total of all
Columns
Granted | | David B. Burritt
President & Chief Executive Officer | | | 145,300 | | | 806,940 | | | 1,497,060 | | | 2,449,300 | | Christine S. Breves
Senior Vice President & Chief Financial Officer | | | 15,350 | | | 177,260 | | | 338,460 | | | 531,070 | | James E. Bruno
Senior Vice President — European Solutions & President, USSK | | | 16,280 | | | 143,485 | | | 248,640 | | | 408,405 | | Scott D. Buckiso
Senior Vice President & Chief Manufacturing Officer, NAFR | | | 16,280 | | | 126,570 | | | 248,640 | | | 391,490 | | Duane D. Holloway
Senior Vice President, General Counsel, and Chief Ethics & Compliance Officer | | | 0 | | | 128,360 | | | 248,640 | | | 377,000 | | Executive Officers (excluding named above) as a Group (4 People) | | | 32,940 | | | 232,930 | | | 469,420 | | | 735,290 | | | Non-Employee Director Group | | | 0 | | | 568,200 | | | 0 | | | 568,200 | | | All Employees (excluding Executive Officers) as a Group | | | 1,754,840 | | | 5,621,962 | | | 1,353,560 | | | 8,730,362 | |
(1)
Includes all restricted stock units and deferred stock units granted under the 2016 Plan (2)
Includes all earned performance awards and the maximum number of shares that are potentially issuable under unearned performance awards, in each case, granted under the 2016 Plan Federal Income Tax Consequences The following is a brief summary of the federal income tax consequences of the grant and exercise of awards under present law. It should not be taken as tax advice by Plan participants, who are urged to consult their individual tax advisors. Subject to the limitations of Section 162(m) of the Code, the Corporation will be entitled to a deduction in the same amount and generally at the same time as the participant recognizes ordinary income. Nonqualified Stock Options. A participant who is awarded a nonqualified stock option will not recognize any taxable income for federal income tax purposes upon receipt of the award. Upon exercise of the option, the amount by which the fair market value of the shares received, determined as of the date of exercise, exceeds the option price generally will be taxable to the participant as ordinary income. If the option price of a nonstatutory stock option is paid in whole or in part with shares of the Corporation’s common stock, no income, gain or loss will be recognized by the participant on the receipt of shares delivered in payment of the option price. The fair market value of the remainder of the shares received upon exercise of the option, less the amount of cash, if any, paid upon exercise generally will be taxable as ordinary income. Subject to the limitations of Section 162(m) of the Code, the Corporation will be entitled to a deduction in the same amount and generally at the same time as the participant recognizes ordinary income. Restricted Stock. A participant who is awarded restricted stock will not recognize any taxable income for federal income tax purposes in the year of the award, provided the shares are subject to restrictions on transfer and a substantial risk of forfeiture. However, a participant may elect under Section 83(b) of the Code to recognize ordinary income on the date of grant equal to the excess (if any) of the then-fair market value of the shares determined without regard to the restrictions over the amount, if any, paid for the shares. If the participant does not make a Section 83(b) election, in the year in which the shares first become transferable or are no longer subject to a substantial risk of forfeiture, the participant will recognize ordinary income equal to the excess, if any, of the then-fair market value of the shares over the amount, if any, paid for the shares. Subject to the limitations of Section 162(m) of the Code, the Corporation will be entitled to a deduction in the same amount and generally at the same time as the participant recognizes ordinary income. Restricted Stock Units and Performance Awards. A participant who is awarded restricted stock units, performance shares or performance cash awards will not recognize any taxable income for federal income tax purposes upon receipt of the award. | 86 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Proposal 4:SUMMARY OF THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED
Any shares of common stock or cash received pursuant to the award generally will be taxable as ordinary income in the year in which the participant receives such shares of common stock or cash. Appreciation Rights. A participant will not recognize any taxable income for federal income tax purposes upon receipt of appreciation rights. The value of any common stock or cash received in payment of appreciation rights generally will be taxed as ordinary income in the year in which the participant receives the common stock or cash. Subject to the limitations of Section 162(m) of the Code, the Corporation will be entitled to a deduction in the same amount and generally at the same time as the participant recognizes ordinary income. Other Tax Matters. The lapse of vesting or other restrictions on a stock option or appreciation right, restricted stock and restricted stock units, or the deemed achievement or fulfillment of performance goals for awards, in connection with the occurrence of a change in control, in certain circumstances, may result in a 20% federal excise tax (in addition to federal income tax) to the participant. Equity Compensation Plan Information | Plan Category | | | (1) Number of
securities to be
issued upon exercise
of outstanding options,
warrants and rights | | | (2) Weighted-average
exercise price of
outstanding options,
warrants and rights | | | (3) Number of securities
remaining available
for future issuance under
equity compensation
plans [excluding
securities reflected
in Column (1)](b) | | Equity compensation plans approved by security holders(a) | | | 9,380,548 | | | $25.98 | | | 6,092,033 | | Equity compensation plans not approved by security holders(c) | | | — | | | (one for one) | | | — | | | Total | | | 9,380,548 | | | — | | | 6,092,033 | |
a)
The numbers in columns (1) and (2) of this row contemplate all shares that could potentially be issued as a result of outstanding grants under the 2005 Stock Incentive Plan and the 2016 Omnibus Incentive Compensation Plan as of December 31, 2020. For more information, see our Annual Report on Form 10-K for the year ended December 31, 2020, Note 15 to the Consolidated Financial Statements. Column (1) includes (i) 647,987 shares of common stock that could be issued for the Common Stock Units outstanding under the Deferred Compensation Program for Non-Employee Directors and (ii) 3,170,600 shares that could be issued for the 1,585,300 performance awards outstanding under the Long-Term Incentive Compensation Program (a program under the 2016 Omnibus Incentive Compensation Plan). The calculation in column (2) does not include the Common Stock Units since the weighted average exercise price for Common Stock Units is one for one; that is, one share of common stock will be given in exchange for each unit of such phantom stock accumulated through the date of the director’s retirement. Also, the calculation in column (2) does not include the performance awards since the shares issued for performance awards can range from zero for one to two for one; that is, performance awards may result in up to 3,170,600 of common stock being issued (two for one), or some lesser number of shares (including zero shares of common stock issued), depending upon the Corporation’s common stock performance versus that of a peer group of companies or the Corporation’s return on capital employed performance over a performance period. b)
Represents shares available under the 2016 Omnibus Incentive Compensation Plan. c)
At December 31, 2020, U. S. Steel had no securities remaining for future issuance under equity compensation plans that had not been approved by security holders. Column (1) represents Common Stock Units that were issued pursuant to the Deferred Compensation Plan for Non-Employee Directors prior to its being amended to make it a program under the 2005 Stock Incentive Plan and 2016 Omnibus Incentive Compensation Plan. The weighted average exercise price for Common Stock Units in column (2) is one for one; that is, one share of common stock will be given in exchange for each unit of phantom stock upon the director’s retirement from the Board of Directors. All future grants under this amended plan/program will count as shares issued under to the 2016 Omnibus Incentive Compensation Plan, a stockholder approved plan. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 87 |
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the number of shares of U. S. Steel common stock beneficially owned as of March 1, 2021 by each director and director nominee, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. | Name | | | Shares
Beneficially
Owned* | | | Notes | | | Tracy A. Atkinson | | | 18,176 | | | Includes 15,708 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Christine S. Breves | | | 252,336 | | | Includes 22,231 shares that may be acquired upon exercise of outstanding options that are or will become exercisable within 60 days of March 1, 2021 | | | James E. Bruno | | | 201,506 | | | Includes 24,550 shares that may be acquired upon exercise of outstanding options that are or will become exercisable within 60 days of March 1, 2021 | | | Scott D. Buckiso | | | 218,764 | | | Includes 52,030 shares that may be acquired upon exercise of outstanding options that are or will become exercisable within 60 days of March 1, 2021 | | | David B. Burritt | | | 1,151,489 | | | Includes 139,644 shares that may be acquired upon exercise of outstanding options that are or will become exercisable within 60 days of March 1, 2021 | | | Patricia Diaz Dennis | | | 48,729 | | | Includes 47,719 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Dan O. Dinges | | | 91,170 | | | Includes 89,170 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | John J. Engel | | | 72,518 | | | Includes 70,518 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | John V. Faraci | | | 29,026 | | | Includes 27,026 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Murry S. Gerber | | | 204,091 | | | Includes 65,891 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Stephen J. Girsky | | | 80,740 | | | Includes 72,359 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Duane D. Holloway | | | 141,410 | | | | | | Jeh C. Johnson | | | 37,164 | | | Includes 37,164 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Paul A. Mascarenas | | | 56,380 | | | Includes 56,380 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Michael H. McGarry | | | 27,263 | | | Includes 24,763 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Eugene B. Sperling | | | 37,989 | | | Includes 35,989 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | David S. Sutherland | | | 184,049 | | | Includes 171,954 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | Patricia A. Tracey | | | 78,369 | | | Includes 76,711 Common Stock Units granted under the Deferred Compensation Program for Non-Employee Directors that are convertible into shares of common stock upon departure from the Board | | | All Director Nominees and Executive Officers as a group (22 persons) | | | 3,222,081 | | | Includes 268,622 shares that may be acquired upon exercise of outstanding options that are or will become exercisable within 60 days of March 1, 2021. The total number of shares beneficially owned by all directors and executive officers as a group constitutes approximately 1.2% of the outstanding shares of common stock of U. S. Steel. | |
*
does not include fractional shares. | 88 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
DELINQUENT SECTION 16(A) REPORTS
DELINQUENT SECTION 16(A) REPORTS Under Section 16(a) of the Securities Exchange Act of 1934, our directors and executive officers and persons holding more than 10% of any class of our equity securities, are required to file with the SEC initial reports of their ownership of our common stock and reports of changes in such ownership. To our knowledge, based on our review of reports filed with the SEC and other information furnished to us, there were no late filings or failures to file by any U. S. Steel directors, executive officers or other persons subject to Section 16(a) of the Securities Exchange Act of 1934 required to be disclosed in this proxy statement. CERTAIN LEGAL MATTERS On October 2, 2017, an Amended Shareholder Class Action Complaint was filed in the United States District Court for the Western District of Pennsylvania consolidating previously-filed actions. Separately, five related shareholder derivative lawsuits were filed in State and Federal courts in Pittsburgh, Pennsylvania and the Delaware Court of Chancery. The underlying consolidated class action lawsuit alleges that U. S. Steel, certain current and former officers, an upper level manager of the Corporation and the financial underwriters who participated in the August 2016 secondary public offering of the Corporation’s common stock (collectively, Defendants) violated federal securities laws in making false statements and/or failing to discover and disclose material information regarding the financial condition of the Corporation. The lawsuit claims that this conduct caused a prospective class of plaintiffs to sustain damages during the period from January 27, 2016 to April 25, 2017 as a result of the prospective class purchasing the Corporation’s common stock at artificially inflated prices and/or suffering losses when the price of the common stock dropped. The derivative lawsuits generally make the same allegations against the same officers and also allege that certain current and former members of the Board of Directors failed to exercise appropriate control and oversight over the Corporation and were unjustly compensated. The plaintiffs seek to recover losses that were allegedly sustained. The class action Defendants moved to dismiss plaintiffs’ claims. On September 29, 2018 the Court ruled on those motions granting them in part and denying them in part. On March 18, 2019, the plaintiffs withdrew the claims against the Defendants related to the 2016 secondary offering. As a result, the underwriters are no longer parties to the case. The Corporation and the individual defendants are vigorously defending the remaining claims. On December 31, 2019, the Court granted Plaintiffs’ motion to certify the proceeding as a class action. The Corporation’s appeal of that decision has been denied by the Third Circuit Court of Appeals and the class has been notified. Discovery is proceeding. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table furnishes information concerning all persons known to U. S. Steel who beneficially own five percent or more of the voting stock of U. S. Steel: | Class | | | Name and Address of Beneficial Owner | | | Amount and Nature of
Beneficial Ownership | | | Percent
of Class | | | U. S. Steel Common Stock | | | Blackrock, Inc.(1)
55 East 52nd Street
New York, NY 10055 | | | 26,954,496 | | | 12.2% | | | U. S. Steel Common Stock | | | The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355 | | | 18,527,087 | | | 8.41% | |
(1)
Based on Schedule 13G filed on February 5, 2021, which indicates that Blackrock Inc. had sole voting power over 26,538,232 shares, shared voting power over 0 shares, sole dispositive power over 26,954,496 shares and shared dispositive power over 0 shares. (2)
Based on Schedule 13G filed on February 10, 2021, which indicates that the Vanguard group had sole voting power over 0 shares, shared voting power over 217,166 shares, sole dispositive power over 18,130,354 shares and shared dispositive power over 396,733 shares. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 89 |
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
AND VOTING 1.
You may vote if you were a holder of United States Steel Corporation ("U. S. Steel" or the "Corporation") common stock at the close of business on February 26, 2018.March 1, 2021, the record date. 2.
–
the election of the teneleven nominees recommended by the Board of Directors and identified elsewhere in this proxy statement; –
•the advisory vote on executive compensation; and –
•the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018.2021; and 3. How does –
the Board recommend I vote?The Board recommends that you vote:
•FOR each of the nominees for director;
•FOR approval of the Corporation's executive compensation;Amended and Restated 2016 Omnibus Incentive Compensation Plan which is being amended to issue additional shares.
3.
•FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018.4. How do I vote?
You may vote by telephone or over the Internet by following the instructions on the enclosed proxy card (or, if you own your shares through a broker or other intermediary, on the voting instruction card). You may also vote by marking, signing and dating the enclosed proxy card or voting instruction card and returning it in the prepaid envelope. If you receive a Notice
Shares held of Internet Availability of Proxy Materials ("Notice"), you may vote by following the instructions contained in the Notice.The proxy committee will vote your shares in accordance with your instructions. If you sign, date and return a proxy card but do not mark the boxes showing how you wish to vote, the proxy committee will vote your shares:FORRecord: each of the nominees for director;FOR approval of the Corporation's executive compensation; andFOR ratification of the appointment of PricewaterhouseCoopers LLP. Unsigned proxy cards will not be voted at all. If you are a stockholder of record (that is, if you are registered on our books), you may also vote in person by attending the meeting. If you are not a stockholder of record (for example, if you hold your shares in "street name"), you will need to obtain a legal proxy from your broker, bank or other holder of record in order to vote in person at the meeting.
5. May I change my vote?
If you are a stockholder of record, you may change your vote or revokeby any one of the following methods: –
Online. You may vote online at proxyvote.com. Follow the instructions on your proxy card or notice. If you received these materials electronically, follow the instructions in the email message that notified you of their availability. –
By telephone. Call 1-800-690-6903 using a touch-tone phone and follow the instructions provided. –
By mail. If you received or requested paper copies of your proxy materials, sign, date, and return each proxy card you receive in the prepaid envelope. Sign your name exactly as it appears. If you are signing in a representative capacity (for example, as an attorney-in-fact, executor, administrator, guardian, trustee, or the officer or agent of a corporation or partnership), please indicate your name and your title or capacity. If the stock is held in custody for a minor (for example, under the Uniform Transfers to Minors Act), the custodian should sign, not the minor. If the stock is held in joint ownership, one owner may sign on behalf of all owners. If you return your signed proxy but do not indicate your voting preferences, the proxy holder will vote on your behalf based upon the Board’s recommendations. –
At the Meeting Stockholders of record may also opt to vote at any time beforethe Annual Meeting using the 16-digit control number found on the proxy card, which will be held online via live webcast at www.virtualshareholdermeeting.com/X2021. You may vote your shares prior to the Annual Meeting until 11:59 p.m. ET on April 26, 2021 online or by telephone. If you are voting by mail, your marked, signed, and dated proxy card must be received by April 26, 2021. Shares held by Broker: If your shares are voted atheld by a broker, the meetingbroker will ask you how you want your shares to be voted. You may instruct your broker or other nominee to vote your shares by doing any offollowing instructions that the following:•- broker or nominee provides to you. Most brokers offer voting
againby mail, by telephone, and online. You may submit new voting instructions by contacting your broker or over the Internet;
•sending us a proxy card dated later than your last vote;
•notifying the Corporate Secretary of U. S. Steel in writing;other nominee or
•- by voting at the
meeting.
Annual Meeting. If you holdgive the broker instructions, your shares will be voted as you direct. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under NYSE rules. If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the ratification of PwC as the independent registered public accounting firm for 2021, even if the broker does not receive voting instructions from you. However, your broker does not | 90 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
have discretionary authority to vote on the election of directors, the advisory approval of executive compensation, or approve the Amended and Restated 2016 Omnibus Incentive Compensation Plan without instructions from you, in which case a broker non-vote will occur, and your shares will not be voted on these matters. Voting Shares Held in the Corporation 401(k) Plan: You may instruct the plan trustee on how to vote your shares in "street name," please refer to the information forwarded401(k) plan online, by your bank, brokermail, or other holderby telephone as described above for shares held of record, except that if you vote by mail, the card you use will be a voting instruction form rather than a proxy card. In addition, your vote will apply to a proportionate number of other shares held by participants in the 401(k) plan for procedures on revoking or changing yourwhich voting instructions.6. How many outstanding sharesdirections are there?
Atnot received.
All participants are fiduciaries under the closeterms of business on February 26, 2018, which is the record date401(k) plan and under the Employee Retirement Income Security Act (ERISA) for the meeting, there were 176,184,431limited purpose of voting shares of U. S. Steel common stock outstanding. Each share is entitledcredited to one vote.7. How many votestheir accounts. Under ERISA, fiduciaries are required to elect a directoract prudently in making voting decisions.
If you do not vote online or by telephone by 11:59 p.m. ET on April 22, 2021, or if your mailed ballot is not received by April 22, 2021, your shares and the other undirected shares will be voted in the same proportion for or against such item as those participants for which voting directions are received. You will not be able to vote your shares personally at the Annual Meeting. 4.
What is the voting requirement to approve a proposal?Proposal 1 – Election of Directors. Each director is elected by a voteeach of the majorityproposals?
| Proposal | | | Voting Options and Board
Recommendation | | | Voting Standard | | | Effect of
Abstentions(1) | | | Effect of Broker
non-Votes(2) | | | Item 1: Election of Directors | | | FOR, AGAINST or ABSTAIN (for each nominee for director) The Board recommends a vote FOR each of the nominees for director | | | Majority of votes cast | | | No effect — not counted as a vote | | | No effect — broker non-votes are not permitted | | | Item 2: Advisory Vote on Executive Compensation | | | FOR, AGAINST, or ABSTAIN The Board recommends a vote FOR the advisory vote on executive compensation | | | Majority of votes cast | | | No effect — not counted as a vote | | | No effect — broker non-votes are not permitted | | | Item 3: Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm | | | FOR, AGAINST, or ABSTAIN The Board recommends a vote FOR the ratification | | | Majority of votes cast | | | No effect — not counted as a vote | | | The organization that holds shares of beneficial owners may vote in their discretion | | | Item 4: Approval of the Amended and Restated 2016 Omnibus Incentive Compensation Plan, being amended to Issue Additional Shares | | | FOR, AGAINST, or ABSTAIN The Board recommends a vote FOR the approval of the amended and restated 2016 Omnibus Incentive Compensation Plan | | | Majority of votes cast | | | Counts as a vote AGAINST the proposal | | | No effect — broker non-votes are not permitted | |
(1)
For election of the votes cast with respect to that director's election. The term "a majority of the votes cast" means that the number of votes cast "for" a director's election exceeds the number of votes cast "against" the director's election. Abstentions and broker non-votesdirectors, abstentions are not counted as votes cast either "for"“for” or "against"“against” the director'sdirector’s election. Proposal 2 – Advisory Vote on Executive Compensation. The advisory vote on executive compensation requires a majority For the approval of the Amendment to the 2016 Omnibus Incentive Plan, New York Stock Exchange rules treat abstentions as votes cast, bymeaning that abstentions would count as a vote against the holders of the shares present in person at the meeting or represented by proxy and entitled to vote. Because this vote is advisory, it will not be binding on the Board or the Corporation; however, the Board and its Compensation & Organization Committee will review the voting results and take them into consideration when making future executive compensation decisions. Abstentions and broker non-votesproposal. For all other proposals, abstentions have no effect on the proposal.
Proposal 3 – Ratification of Appointment of Independent Registered Public Accounting Firm. The ratification of the appointment of the independent registered public accounting firm must be approved by a majority of the votes cast by the holders of the shares present in person at the meeting or represented by proxy and entitled to vote. Abstentions have no effect on the proposal.
60 |United States Steel Corporation | 2018 Proxy Statement
Table of Contents
Questions and Answers About the Annual Meeting and Voting |
(2)8. What are broker non-votes?
The New York Stock Exchange permits brokers to vote their customers'customers’ shares on routine matters when the brokers have not received voting instructions from their customers. Proposal 3 is a routine matter on which brokers may vote in this way. Brokers may not vote their customers'customers’ shares on non-routine matters, unless they have received voting instructions from their customers. Proposals 1, 2 and 24 are non-routine matters. Shares that are not voted by brokers on non-routine matters because their customers have not provided instructions are called broker non-votes. 9. 5.
May I change my vote? If you are a stockholder of record, you may change your vote or revoke your proxy at any time before your shares are voted at the meeting by doing any of the following: –
voting again by telephone or over the Internet; | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | 91 |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
–
sending us a proxy card dated later than your last vote; –
notifying the Corporate Secretary of U. S. Steel in writing; or –
voting at the meeting. If you hold your shares in “street name,” please refer to the information forwarded by your bank, broker or other holder of record for procedures on revoking or changing your voting instructions. | | 6. How do I attend and participate at the virtual meeting? | | | | Due to ongoing pandemic concerns, and to ensure the health and safety of our employees, board of directors, stockholders and other meeting participants, our Annual Meeting will be held virtually. | | | | Although you will not be able to attend the Annual Meeting at a physical location, we have designed the Annual Meeting live webcast to provide stockholders the opportunity to participate virtually to facilitate stockholder attendance and provide a consistent experience to all stockholders, regardless of location. | | | | The live webcast of the Annual Meeting can be accessed by stockholders on the day of the meeting at www.virtualshareholdermeeting.com/X2021 and will begin promptly at 8:00 a.m. ET. | | | | To attend the Annual Meeting: You will need to log in to www.virtualshareholdermeeting.com/X2021 using the 16-digit control number found on the proxy card, voting instruction form, or notice you previously received. This website can be accessed on a computer, tablet, or phone with internet connection. Online access to the webcast will open 15 minutes prior to the start of the Annual Meeting to allow time to log in and test your device’s audio system. We encourage you to access the meeting in advance of the designated start time. | | | | To submit questions in advance of the Annual Meeting: Visit www.proxyvote.com before April 26, 2021 and enter your 16-digit control number. | | | | To submit a question during the Annual Meeting: Log into the virtual meeting website at www.virtualshareholdermeeting.com/X2021, type your question into the “Ask a Question” field, and click “Submit.” | | | | The Annual Meeting is scheduled to begin at 8:00 a.m. ET and end at 8:30 a.m. ET, and time remaining after agenda items are addressed will be available for stockholder questions. We will endeavor to answer as many questions submitted by stockholders as time permits. Responses to questions relevant to meeting matters that we do not have time to respond to during the meeting will be posted to our website following the meeting. | | | | We reserve the right to edit profanity or other inappropriate language and to exclude questions irrelevant to the business of the Corporation or to the business of the Annual Meeting relating to or that may take into account material, nonpublic information, or relating to pending or threatened litigation, derogatory in nature or related to a personal grievance. Also, if we receive substantially similar questions, then we may group such questions together and provide a single response to avoid repetition. Questions regarding topics that are not pertinent to meeting matters or company business will not be answered. | | | | Technology Support: Support staff will be available should you experience any technical difficulties in accessing the virtual meeting. Instructions for requesting technical assistance will be available at www.virtualshareholdermeeting.com/X2021. | |
7.
How many outstanding shares are there? At the close of business on March 1, 2021, which is the record date for the meeting, there were 268,782,343 shares of U. S. Steel common stock outstanding. Each share is entitled to one vote. 8.
What constitutes a quorum? Under our by-laws, the holders of one-third of the voting power of the outstanding shares of stock entitled to vote, present in person or represented by proxy, constitute a quorum. A holder will be included in determining the presence of a quorum even if the holder casts abstentions on all matters or was subject to broker non-votes on some matters. 10. 9.
Will my vote be confidential? All voting records which identify stockholders are kept permanently confidential except; (i) as necessary to meet legal requirements; (ii) in the case of proxy contests; (iii) if the stockholder makes a written comment on the proxy card or otherwise | 92 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
communicates his or her vote to management; or (iv) to allow the vote tabulator and inspector of election to tabulate and certify the results of the vote. The vote tabulator, inspector of election and the Corporation'sCorporation’s transfer agent have agreed to keep voting records confidential. 10.
Who can attend the virtual annual meeting? Only stockholders, or individuals that those stockholders have duly appointed as their proxies, may attend the annual meeting of stockholders. If your shares are held in street name (that is through a bank, broker, nominee or other intermediary), you need your 16-digit control number to attend the meeting. 11.
How will voting be conducted on other matters raised at the meeting?If
We do not expect any matters are presenteditems of business to be submitted to stockholders at the meetingAnnual Meeting other than the proposals on thereferred to in this proxy card,statement. Nonetheless, if necessary, the proxy committee willhas discretionary authority to vote on them using its best judgment. Your signed proxy card, or your telephone or Internet vote, gives it the authority to do this. Under our by-laws, notice of any matter to be presented by a stockholder for a vote at the meeting must have been received by our Corporate Secretary on or after December 25, 2017,January 1, 2021, and no later than January 24, 2018,31, 2021, and it must have been accompanied by certain information about the stockholder presenting it. We have not received notice of any matter to be presented other than those on the proxy card. 12. Who can attend the annual meeting?Only stockholders, or individuals that those stockholders have duly appointed as their proxies, may attend the annual meeting of stockholders. Every stockholder must present a form of government-issued photo identification in order to be admitted to the annual meeting. If your shares are held in street name (that is through a bank, broker, nominee or other intermediary), you must also bring proof of ownership with you to the meeting. A recent account statement, letter or
proxy from your broker, nominee or other intermediary will suffice. Although not required for admission to the meeting, if you received an attendance card, please bring it with you.
13. When must stockholder proposals be submitted for inclusion in the proxy statement for the 2019 annual meeting?2022 Annual Meeting?
If a stockholder wants to present a proposal at the 2019 annual meeting2022 Annual Meeting and have it included in our proxy statement for that meeting, the proposal must be received in writing by our Corporate Secretary no later than 5:00 p.m. Eastern Time on November 9, 2018.12, 2021. 14. 13.
What is the deadline for a stockholder to submit an item of business or other proposal for consideration at the 2019 annual meeting?2022 Annual Meeting? Our by-laws describe the procedures that must be followed in order for a stockholder of record to present an item of business at an annual meeting of stockholders. Stockholder proposals or other items of business for the 2019 annual meeting2022 Annual Meeting that are not intended to be included in the proxy statement must be received by the Secretary of the Corporation on or after December 25, 201828, 2021 and no later than January 24, 201927, 2022 and must be accompanied by certain information about the stockholders making the proposals, as specified in our by-laws. 15. 14.
What is the deadline for a stockholder to nominate an individual for election as a director at the 2019 annual meeting?2022 Annual Meeting? Our by-laws allow a stockholder (or a group of stockholders) who has maintained continuous qualifying ownership of at least 3% of our outstanding common stock for at least three years, to submit nominees for our board of directors, for inclusion in our proxy statement, subject to satisfaction ofsatisfying the requirements and conditions set forth in our bylaws. Our by-laws describe the procedures that must be followed in order for someone nominated by a stockholder of record to be eligible for election as a director. To include a nominee for our board in our proxy statement, notice must be received by the Secretary of the Corporation on or after October 10, 201813, 2021 and no later than November 9, 2018,12, 2021, and must meet the requirements set forth in our bylaws. To nominate an individual for election as a director at the 2019 annual meeting2021 Annual Meeting that is not intended to be included in our proxy statement, notice must be received by the Secretary of the Corporation on or after December 25, 201828, 2021 and no later than January 24, 2019.27, 2022. The notice must contain certain information about the nominee, including his or her age, address, occupation and share ownership, as well as certain information about the stockholder giving the notice, as specified in our by-laws. United States Steel Corporation | 2018 Proxy Statement |61
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Questions and Answers About the Annual Meeting and VotingUNITED STATES STEEL CORPORATION
2021 PROXY STATEMENT | 93 |
Statement Regarding the Delivery of a Single Set of Proxy Materials to Households With Multiple U. S. Steel Stockholders
|
Important Additional
Information STATEMENT REGARDING THE DELIVERY OF A SINGLE SET OF PROXY MATERIALS TO HOUSEHOLDS WITH MULTIPLE U. S. STEEL STOCKHOLDERS If you have consented to the delivery of only one set of proxy materials to multiple U. S. Steel stockholders who share your address, then only one proxy statement and only one annual report are being delivered to your household unless we have received contrary instructions from one or more of the stockholders sharing your address. We will deliver promptly upon oral or written request a separate copy of the proxy statement or the annual report to any stockholder at your address. If you wish to receive a separate copy of the proxy statement or the annual report, you may write to: Corporate Secretary, U. S. Steel Corporation, 15th18th Floor, 600 Grant Street, Pittsburgh, PA 15219-2800, send an email to shareholderservices@uss.com or call 412-433-4804. Stockholders sharing an address who now receive multiple copies of the proxy statement or the annual report may request delivery of a single copy by writing to us at the above address or by sending an email to shareholderservices@uss.com. We will bear the cost of this solicitation of proxies. In addition to soliciting proxies by mail, our directors, officers and employees may solicit proxies by telephone, in person or by other means. They will not receive any extra compensation for this work. In addition, we may hire third parties to assist in the solicitation process at an estimated cost not to exceed $100,000. We have engaged the services of Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902, with respect to proxy soliciting matters at an expected cost of approximately $15,000, not including incidental expenses. We will also make arrangements with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of our common stock, and we will reimburse them for reasonable out-of-pocket expenses that they incur in connection with forwarding the material. MATERIALS AVAILABLE ON OUR WEBSITE Our Corporate Governance Principles, Code of Ethical Business Conduct (which is applicable to all directors and employees, including the CEO and senior financial officers), Board committee charters, and annual and quarterly reports on Forms 10-K and 10-Q are available on our website, www.ussteel.com. By referring to these documents we do not incorporate the contents of the website into this proxy statement. By order of the Board of Directors, Megan A. Bombick
Robert T. Garretson
ActingAssociate General Counsel and Corporate Secretary
March 9, 2018
12, 2021 62 |United States Steel Corporation | 2018 Proxy Statement
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APPENDIX A
| 94 | USE OF NON-GAAP FINANCIAL MEASURESUNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
Appendix A USE OF NON-GAAP FINANCIAL MEASURES This proxy statement contains thethese non-GAAP financial measuresmeasures: earnings (loss) before interest, income taxes, depreciation, depletion and amortization "EBITDA"“EBITDA,” and adjusted EBITDA. This report contains certain non-GAAP financial measures such as earnings (loss) before interest, income taxes, depreciation, depletion and amortization (EBITDA), adjusted EBITDA, adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, free cash flow, net debt and net debt.cash conversion cycle. We believe that EBITDA, considered along with the net earnings (loss), is a relevant indicator of trends relating to our operating performancecash generating activity and provides management and investors with additional information for comparison of our operating results to the operating results of other companies. Net Adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share are non-GAAP measures that exclude the effects of items that include: the asset impairment charge, restructuring and other charges, the Fairless property sale, the Big River Steel options and forward adjustments, the December 24, 2018 Clairton coke making facility fire, the tax valuation allowance, loss on extinguishment of debt is a non-GAAP measure calculated as total debt less cash and cash equivalents. We believe net debt is a useful measure in calculating enterprise value. Both EBITDAother related costs, the USW labor agreement signing bonus and net debtrelated costs, Granite City Works restart and related costs and gain on equity investee transactions that are used by analysts to refine and improvenot part of the accuracy of their financial models that utilize enterprise value.Corporation’s core operations (Adjustment Items). Adjusted EBITDA is also a non-GAAP measure that excludes the effects of gains (losses) associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, impairment charges and significant temporary idling charges.certain Adjustment Items. We present adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA to enhance the understanding of our ongoing operating performance and established trends affecting our core operations, by excluding the effects of gains (losses) associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, impairment charges, and significant temporary idling charges,events that can obscure underlying trends. U. S. Steel'sSteel’s management considers adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA as an alternative measuremeasures of operating performance and not an alternative measuremeasures of the Company'sCorporation’s liquidity. U. S. Steel'sSteel’s management considers adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA useful to investors by facilitating a comparison of our operating performance to the operating performance of our competitors. Additionally, the presentation of adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA provides insight into management'smanagement’s view and assessment of the Company'sCorporation’s ongoing operating performance, because management does not consider the adjusting items when evaluating the Company'sCorporation’s financial performance. Adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA should not be considered a substitute for net earnings (loss), earnings (loss) per diluted share or other financial measures as computed in accordance with U.S. GAAP and is not necessarily comparable to similarly titled measures used by other companies.RECONCILIATION OF ADJUSTED EBITDA
companies | | | | | | | | | | | (Dollars in millions)
| | Year Ended
December 31, 2017
| |
|---|
| | | | | | Reconciliation to Adjusted EBITDA | | | | | | | | | | | Net earnings attributable to United States Steel Corporation | | $ | 387 | | | | | | | | Income tax benefit | | | (86 | ) | | | | | | | Net interest and other financial costs | | | 307 | | | | | | | | Depreciation, depletion and amortization expense | | | 501 | | | | | | | | EBITDA | | | 1,109 | | | | | | | | Gain associated with retained interest in U. S. Steel Canada Inc. | | | (72 | ) | | | | | | | Gain on equity investee transactions | | | (2 | ) | | | | | | | Loss on shutdown of certain tubular pipe mill assets(a) | | | 35 | | | | | | | | Granite City Works temporary idling charges | | | 17 | | | | | | | | Adjusted EBITDA | | $ | 1,087 | | | | | | | |
(a)Included in restructuringRECONCILIATION OF ADJUSTED EBITDA
(Dollars in millions) | | | Year Ended
December 31, 2020 | | | Reconciliation to Adjusted EBITDA | | | | | | Net loss attributable to United States Steel Corporation | | | (1,165) | | | Income tax provision | | | (142) | | | Net interest and other financial costs | | | 232 | | | Depreciation, depletion and amortization expense | | | 643 | | | EBITDA | | | (432) | | | Asset impairment charge | | | 263 | | | Restructuring and other charges | | | 138 | | | Tubular inventory impairment | | | 24 | | | Big River Steel debt extinguishment charges | | | 18 | | | Big River Steel transaction and other related costs | | | 3 | | | Fairless property sale | | | (145) | | | Gain on previously held investment in UPI | | | (25) | | | December 24, 2018 Clairton Coke making facility fire | | | (6) | | | Adjusted EBITDA | | | (162) | |
| UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | A-1 |
Appendix B DEFINITIONS OF COMPENSATION METRICS EBITDA means earnings before interest and income taxes as reported in the Consolidated Statementconsolidated statement of Operations. RECONCILIATION OF NET DEBT
| | | | | | | | | | | (Dollars in millions)
| | December 31, 2017
| |
|---|
| | | | | | Reconciliation of net debt | | | | | | | | | | | Short-term debt and current maturities of long-term debt | | $ | 3 | | | | | | | | Long-term debt, less unamortized discount and debt issuance costs | | | 2,700 | | | | | | | | Total debt | | $ | 2,703 | | | | | | | | Less: Cash and cash equivalents | | | 1,553 | | | | | | | | Net debt | | $ | 1,150 | | | | | | | |
United States Steel Corporation | 2018 Proxy Statement |A-1
Table of Contents
VIEW MATERIALS & VOTE w SCAN TO UNITED STATES STEEL CORPORATION 600 GRANT STREET ROOM 1681 PITTSBURGH, PA 15219 ATTENTION: TUCKER J. KULP VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E36770-P03052-Z71840 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. UNITED STATES STEEL CORPORATION For Against Abstain Proposal 1. Election of Directors ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. David B. Burritt 1b. Patricia Diaz Dennis For Against Abstain ! ! ! ! ! ! Proposal 2. Approval, in a non-binding advisory vote, of the compensation of certain executive officers 1c. Dan O. Dinges 1d. John J. Engel Proposal 3. Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm 1e. Murry S. Gerber THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. I hereby instruct Fidelity Management Trust Company to vote the number of sharesoperations of United States Steel Corporation, stock attributableplus or minus the effect of items not allocated to my accountsegments as specified above. 1f. Stephen J. Girsky 1g. Paul A. Mascarenas 1h. Eugene B. Sperling 1i. David S. Sutherland 1j. Patricia A. Tracey Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please signdisclosed in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
UNITED STATES STEEL CORPORATION 2018 Annual Meeting of Stockholders Attendance Card You are invited to attend the Annual Meeting of Stockholders on April 24, 2018. The meeting will be held at the U.S. Steel Tower, 33rd Floor, 600 Grant Street, Pittsburgh, PA 15219 at 8:00 AM Eastern Time. Use of this attendance card is for our mutual convenience, and you have the right to attend the Meeting without this attendance card if you present personal photo identification. Attached is your 2018 Proxy Card. Robert T. Garretson Acting Secretary For personal use of the named stockholder(s) - not transferable. Please present this card at the registration desk upon arrival. Please bring a government-issued photo identification for admissionnotes to the meeting. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E36771-P03052-Z71840 UNITED STATES STEEL CORPORATION Annual Meeting of Stockholders April 24, 2018 8:00 AM This instruction card is solicited by Fidelity Management Trust Company As a participant in the United States Steel Corporation Savings Fund Plan for Salaried Employees, you have the right to direct Fidelity Management Trust Company regarding how to vote the sharesconsolidated financial statements of United States Steel Corporation, common stock attributable to your account at the Annual Meeting of Stockholders to be held on April 24, 2018. Your voting directions will be tabulated confidentially. Only Fidelity will have access to your individual voting directions. Unless otherwise required by law, the shares attributable to your account will be votedplus depreciation, depletion and amortization as directed; if no direction is made or if the card is not signed, the shares attributable to your account will be votedreported in the same proportionconsolidated statement of cash flows of United States Steel Corporation. Segment EBITDA shall mean, for the Performance Period, EBITDA for each business unit. Unless contemplated in the approved performance target, EBITDA excludes charges or credits for business dispositions, acquisitions, asset sales, asset impairments, workforce reductions, shutdowns, and amounts not allocated to business segments.
CCC means “cash conversion cycle” and is calculated as directions received from participants. ContinuedDays Sales Outstanding plus Days Inventory Outstanding minus Days Payable Outstanding, which are defined as follows: (i) Days Sales Outstanding = ((September 30, 2020 Accounts Receivable, net + December 31, 2020 Accounts Receivable, net) / 2) / (4th Quarter 2020 Net Sales / 92); (ii) Days Inventory Outstanding = ((September 30, 2020 Inventory + December 31, 2020 Inventory) / 2) / (4th Quarter 2020 Cost of Goods Sold / 92); (iii) Days Payable Outstanding = ((September 30, 2020 Accounts Payable + December 31, 2020 Accounts Payable / 2) / (4th Quarter 2020 Cost of Goods Sold / 92); and (iv) Accounts Receivable, net, Net Sales, Inventory, Accounts Payable and Cost of Goods Sold shall be determined in accordance with generally accepted accounting principles in the United States. | | | | 2020 | | | Cash Conversion Cycle | | | $ millions | | | Days | | | Days Sales Outstanding | | | 994 | | | 38 | | | + Days Inventory Outstanding | | | 1,402 | | | 54 | | | − Days Payable Outstanding | | | 1,861 | | | 68 | | | = Cash Conversion Cycle | | | | | | 24 | |
For the 2018-2020 Performance Period: TSR means “total stockholder return” and is calculated for purposes of our long-term incentive plan based on the following formula: final price plus dividends per share for the performance period, divided by the initial price, raised to be signed1/3, minus 1. The initial price and final price used are the average closing price for the 20 business days prior to the first and last day of the performance period, respectively. ROCE means “return on reverse sidecapital employed” and is measured based on our consolidated worldwide EBIT, as adjusted, divided by our consolidated worldwide capital employed, as adjusted, over the three-year performance period. For purposes of our long-term incentive plan, the weighted average ROCE is a three-year performance metric calculated based on the ROCE achieved in the first, second, and third years of the performance period, weighted at 20%, 30%, and 50% respectively.  TSR for purposes of our long-term incentive plan is measured for each year in the performance period (“Annual TSR”) and for the three year performance period (“Annualized TSR”). Annual TSR is calculated based on the following formula: final price plus dividends per share for the applicable year, divided by the initial price. Annualized TSR is calculated based on the following formula: final price plus dividends per share for the performance period, divided by the initial price, raised to 1/3, minus 1. The initial price and final price used are the average closing price for the 20 business days prior to the first and last day of the applicable measurement period, respectively. ROCE is measured based on our consolidated worldwide EBIT, as adjusted, divided by our consolidated worldwide capital employed, as adjusted, over the three-year performance period. For purposes of our long-term incentive plan, the weighted average ROCE is a three-year performance metric calculated based on the ROCE achieved in the first, second, and third years of the performance period, weighted at 20%, 30%, and 50% respectively. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | B-1 |
APPENDIX C UNITED STATES STEEL CORPORATION 600 GRANT STREET ROOM 1681 PITTSBURGH, PA 15219 ATTENTION: TUCKER J. KULP VOTE BY INTERNET - www.proxyvote.com or scan
2016 OMNIBUS INCENTIVE COMPENSATION PLAN As Amended and Restated Effective April 27, 2021 SECTION 1. ADOPTION AND PURPOSE 1.01
Adoption. The United States Steel Corporation 2016 Omnibus Incentive Compensation Plan (the “Plan”) was initially adopted by the QR Barcode above Use the Internet to transmit your voting instructions and for electronic deliveryBoard of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E36772-P03052-Z71840 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. UNITED STATES STEEL CORPORATION For Against Abstain Proposal 1. Election of Directors ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. David B. Burritt 1b. Patricia Diaz Dennis For Against Abstain ! ! ! ! ! ! Proposal 2. Approval, in a non-binding advisory vote, of the compensation of certain executive officers 1c. Dan O. Dinges 1d. John J. Engel Proposal 3. Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm 1e. Murry S. Gerber THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. I hereby instruct Fidelity Management Trust Company to vote the number of shares of United States Steel Corporation stock attributable(the “Corporation”) on February 22, 2016 and approved by the stockholders on April 26, 2016. The Plan was amended with the approval of the stockholders effective April 25, 2017, and April 28, 2020, to my accountincrease the number of shares authorized for issuance under the Plan. The Plan has been further amended and restated as specified above. 1f. Stephen J. Girsky 1g. Paul A. Mascarenas 1h. Eugene B. Sperling 1i. David S. Sutherland 1j. Patricia A. Tracey Please sign exactlyset forth herein by the Board of Directors, subject to approval by the stockholders on April 27, 2021. 1.02
Purpose. The purpose of the Plan is to assist the Corporation in attracting, retaining, and motivating employees and non-employee directors of outstanding ability and to align their interests with those of the stockholders of the Corporation. SECTION 2. DEFINITIONS; CONSTRUCTION 2.01
Definitions. In addition to the terms defined elsewhere in the Plan, the following terms as your name(s) appear(s) hereon. When signingused in the Plan shall have the following meanings when used with initial capital letters: (a)
“Affiliate” means any person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation. For purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities, by contract, or otherwise. (b)
“Appreciation Right” means an Award representing, for each Share subject to such Appreciation Right, a right granted to a Participant to receive payment in Shares or cash of an amount equal to the excess, if any, of the Fair Market Value of a Share on the date of exercise of the Appreciation Right over the exercise price which shall be at least the Fair Market Value of a Share as attorney, executor, administrator,of the grant date. (c)
“Available Shares” shall have the meaning provided in Section 4.01 hereof. (d)
“Award” means any Option, Restricted Stock, Restricted Stock Unit, Performance Award or Other Stock-Based Award. (e)
“Award Agreement” means any agreement, contract or other instrument or document evidencing an Award. (f)
“Board” means the Corporation’s Board of Directors. (g)
“Business Combination” shall have the meaning provided in Section 2.01(j)(3) hereof. (h)
“Cause,” when used with respect to the termination of employment or service of a Participant, means: (1)
the willful and continued failure by the Participant to substantially perform his duties with the Corporation or a Subsidiary or Affiliate (other than any such failure resulting from the Participant’s disability), after reasonable notice of such failure and an opportunity to correct it; or (2)
the willful and continued engaging by the Participant in conduct which is demonstrably and materially injurious to the Corporation or a Subsidiary or Affiliate, monetarily or otherwise, or (3)
the breach by the Participant of the Corporation’s Code of Ethical Business Conduct as determined by the Corporation in its sole discretion. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-1 |
For purposes of this Plan, no act, or failure to act, on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that such action or omission was in the best interest of the Corporation. (i)
“Code” means the Internal Revenue Code of 1986, as amended from time to time, together with rules, regulations and interpretations promulgated thereunder. References to particular sections of the Code shall include any successor provisions. (j)
“Change in Control” shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Corporation is then subject to such reporting requirement; provided, that, without limitation, such a change in control shall be deemed to have occurred if: (1)
any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (a “Person”) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation (not including in the amount of the securities beneficially owned by such person any such securities acquired directly from the Corporation or its Affiliates) representing thirty percent (30%) or more of the combined voting power of the Corporation’s then outstanding voting securities; provided, however, that for purposes of this Plan the term “Person” shall not include (A) the Corporation or any of its subsidiaries, (B) a trustee or other fiduciary please give full title as such. Joint owners should each sign personally. All holders must sign. Ifholding securities under an employee benefit plan of the Corporation or any of its subsidiaries, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, (D) a corporation owned, directly or partnership, please signindirectly, by the stockholders of the Corporation in full corporatesubstantially the same proportions as their ownership of stock of the Corporation, or partnership name(E) any individual, entity or group involved in the acquisition of the Corporation’s voting securities in connection with which, pursuant to Rule 13d-1 promulgated pursuant to the Exchange Act, such individual, entity or group is permitted to, and actually does, report its beneficial ownership on Schedule 13G (or any successor Schedule); provided that, if any such individual, entity or group subsequently becomes required to or does report its beneficial ownership on Schedule 13D (or any successor Schedule), then, for purposes of this paragraph, such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so report, beneficial ownership of all of the Corporation’s then outstanding voting securities beneficially owned by authorized officer. Signature [PLEASE SIGN WITHIN BOX]it on such date; and provided, further, however, that for purposes of this paragraph (1), there shall be excluded any Person who becomes such a beneficial owner in connection with an Excluded Transaction (as defined in paragraph (3) below); or (2)
the following individuals (the “Incumbent Board”) cease for any reason to constitute a majority of the number of directors then serving: individuals who, as of the Effective Date, Signature (Joint Owners)constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest including, but not limited to, a consent solicitation, relating to the election of directors of the Corporation) whose appointment or election by the Board or nomination for election by the Corporation’s stockholders was approved or recommended by a vote of at least two-thirds (2∕3) of the directors then still in office who either were directors on the Effective Date 
or whose appointment, election or nomination for election was previously so approved or recommended; or (3)
UNITED STATES STEEL CORPORATION 2018 Annual Meetingthere is consummated a merger or consolidation of Stockholders Attendance Card You are invitedthe Corporation or any direct or indirect subsidiary thereof with any other corporation (a “Business Combination”), other than a merger or consolidation (an “Excluded Transaction”) which would result in:
(A)
at least a majority of the members of the board of directors of the resulting or surviving entity (or any ultimate parent thereof) in such Business Combination (the “New Board”) consisting of individuals (“Continuing Directors”) who were members of the Incumbent Board (as defined in subparagraph (2) above) immediately prior to attendconsummation of such Business Combination or were appointed, elected or recommended for appointment or election by members of the Annual MeetingIncumbent Board prior to consummation of Stockholders on April 24, 2018. The meeting will be heldsuch Business Combination (excluding from Continuing Directors, any individual whose election or appointment, or recommendation for election or appointment, to the New Board was at the U.S. Steel Tower, 33rd Floor, 600 Grant Street, Pittsburgh, PA 15219 at 8:00 AM Eastern Time. Use of this attendance card is for our mutual convenience, and you have the right to attend the Meeting without this attendance card if you present personal photo identification. Attached is your 2018 Proxy Card. Robert T. Garretson Acting Secretary For personal userequest, directly or indirectly, of the named stockholder(s) -entity which entered into the definitive agreement providing for such Business Combination with the Corporation or any direct or indirect subsidiary thereof), unless | C-2 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
the Board determines, prior to such consummation, that there does not transferable. Please present this cardexist a reasonable assurance that, for at least a two-year period following consummation of such Business Combination, at least a majority of the registration desk upon arrival. Please bringmembers of the New Board will continue to consist of Continuing Directors and individuals whose election, or nomination for election by stockholders of the resulting or surviving entity (or any ultimate parent thereof) in such Business Combination, would be approved by a government-issued photo identificationvote of at least a majority of the Continuing Directors and individuals whose election or nomination for admissionelection has previously been so approved; or (B)
a Business Combination that in substance constitutes a disposition or separation of a division, business unit, or subsidiary; or (4)
the stockholders of the Corporation approve a plan of a complete liquidation or dissolution of the Corporation or there is consummation of a sale or other disposition of all or substantially all of the assets of the Corporation, other than to a corporation with respect to which, following such sale or other disposition, more than 50% of the meeting. Important Notice Regardingcombined voting power of the Availabilitythen outstanding voting securities of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E36773-P03052-Z71840 UNITED STATES STEEL CORPORATION Annual Meeting of Stockholders April 24, 2018 8:00 AM This instruction card is solicited by Fidelity Management Trust Company As a participantsuch corporation entitled to vote generally in the U.S. Steel Tubular Services Savings Plan, you haveelection of directors is then beneficially owned, directly or indirectly, by all or substantially all of the rightindividuals and entities who were the beneficial owners of the Corporation’s then outstanding voting securities immediately prior to direct Fidelity Management Trust Company regarding how to vote the shares of United States Steel Corporation common stock attributable to your account at the Annual Meeting of Stockholders to be held on April 24, 2018. Your voting directions will be tabulated confidentially. Only Fidelity will have access to your individual voting directions. Unless otherwise required by law, the shares attributable to your account will be voted as directed; if no direction is madesuch sale or if the card is not signed, the shares attributable to your account will be votedother disposition in substantially the same proportion as directions received from participants. Continuedtheir ownership, immediately prior to such sale or other disposition, of the Corporation’s then outstanding voting securities. (k)
“Committee” means (1) with respect to Participants who are employees and other service providers, the Compensation & Organization Committee or such other committee of the Board as may be designated by the Board to be signed on reverse side
VIEW MATERIALS & VOTE w SCAN TO UNITED STATES STEEL CORPORATION 600 GRANT STREET ROOM 1681 PITTSBURGH, PA 15219 ATTENTION: TUCKER J. KULP VOTE BY INTERNET - www.proxyvote.com or scanadminister the QR Barcode above UsePlan, consisting of at least three members of the Internet to transmit your voting instructions and for electronic deliveryBoard; provided however, that any member of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return itCommittee participating in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E36774-P03052-Z71840 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. UNITED STATES STEEL CORPORATION For Against Abstain Proposal 1. Electiontaking of Directors ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. David B. Burritt 1b. Patricia Diaz Dennis For Against Abstain ! ! ! ! ! ! 1c. Dan O. Dinges Proposal 2. Approval, inany action under the Plan shall qualify as (A) a non-binding advisory vote,“non-employee director” as then defined under Rule 16b-3 and (B) an “independent” director under the rules of the compensationNew York Stock Exchange, or (2) with respect to Participants who are non-employee directors, the Board.
(l)
“Common Stock” means shares of certain executive officers Proposal 3. Ratificationthe common stock, par value $1.00 per share, and such other securities of appointmentthe Corporation or other corporation or entity as may be substituted for Shares pursuant to Section 8.01 hereof. (m)
“Continuing Directors” shall have the meaning provided in Section 2.01(j)(3) hereof. (n)
“Disabled” shall mean the Participant is unable to engage in any substantial gainful activity by reason of PricewaterhouseCoopers LLPany medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. (o)
“Effective Date” means April 26, 2016, the date the Plan was initially effective. (p)
“Exchange Act” means the Securities Exchange Act of 1934, as independent registered public accounting firm 1d. John J. Engel 1e. Murry S. Gerber THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. I hereby instruct Fidelity Management Trust Company to voteamended. (q)
“Excluded Transaction” shall have the numbermeaning provided in Section 2.01(j)(3) hereof. (r)
“Fair Market Value” of shares of United States Steel Corporationany stock, attributableincluding but not limited to my account as specified above. 1f. Stephen J. Girsky 1g. Paul A. Mascarenas 1h. Eugene B. Sperling 1i. David S. Sutherland 1j. Patricia A. Tracey Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator,Common Stock, or units of any other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
UNITED STATES STEEL CORPORATION 2018 Annual Meeting of Stockholders Attendance Card You are invited to attendsecurities (herein “shares”), shall be the Annual Meeting of Stockholders on April 24, 2018. The meeting will be held at the U.S. Steel Tower, 33rd Floor, 600 Grant Street, Pittsburgh, PA 15219 at 8:00 AM Eastern Time. Use of this attendance card is for our mutual convenience, and you have the right to attend the Meeting without this attendance card if you present personal photo identification. Attached is your 2018 Proxy Card. Robert T. Garretson Acting Secretary For personal useaverage of the named stockholder(s) - not transferable. Please present this card at the registration desk upon arrival. Please bring a government-issued photo identification for admission to the meeting. Important Notice Regarding the Availability of Proxy Materialshighest and lowest sales prices per share for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E36775-P03052-Z71840 UNITED STATES STEEL CORPORATION Annual Meetingdate as of Stockholders April 24, 2018 8:00 AM This instruction cardwhich Fair Market Value is solicited by Fidelity Management Trust Company As a participantto be determined in the USS 401(k) Plan for USW-Represented Employees, you haveprincipal market in which such shares are traded, as quoted in The Wall Street Journal (or in such other reliable publication as the rightCommittee, in its discretion, may determine to direct Fidelity Management Trust Company regarding how to vote the shares of United States Steel Corporation common stock attributable to your account at the Annual Meeting of Stockholders to be held on April 24, 2018. Your voting directions will be tabulated confidentially. Only Fidelity will have access to your individual voting directions. Unless otherwise required by law, the shares attributable to your account will be voted as directed; if no direction is made or if the card is not signed, the shares attributable to your account will be voted in the same proportion as directions received from participants. Continued and to be signed on reverse side
VIEW MATERIALS & VOTE w SCAN TO UNITED STATES STEEL CORPORATION 600 GRANT STREET SUITE 1500 PITTSBURGH, PA 15219 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E36776-P03052-Z71840 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. UNITED STATES STEEL CORPORATION For Against Abstain Proposal 1. Election of Directors ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. David B. Burritt 1b. Patricia Diaz Dennis For Against Abstain ! ! ! ! ! ! 1c. Dan O. Dinges Proposal 2. Approval, in a non-binding advisory vote, of the compensation of certain executive officers Proposal 3. Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm 1d. John J. Engel 1e. Murry S. Gerber THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s)rely upon). If no direction is made, this proxy willthe Fair Market Value of shares on any date cannot be voted: "FOR"determined on the nominees in proposal 1 and "FOR" proposals 2 and 3. If any other matters properly come before the meeting, the persons named in this proxy will vote in their discretion. 1f. Stephen J. Girsky 1g. Paul A. Mascarenas 1h. Eugene B. Sperling 1i. David S. Sutherland 1j. Patricia A. Tracey Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
UNITED STATES STEEL CORPORATION 2018 Annual Meeting of Stockholders Attendance Card You are invited to attend the Annual Meeting of Stockholders on April 24, 2018. The meeting will be held at the U.S. Steel Tower, 33rd Floor, 600 Grant Street, Pittsburgh, PA 15219 at 8:00 AM Eastern Time. Use of this attendance card is for our mutual convenience, and you have the right to attend the Meeting without this attendance card if you present personal photo identification. Attached is your 2018 Proxy Card. Robert T. Garretson Acting Secretary For personal use of the named stockholder(s) - not transferable. Please present this card at the registration desk upon arrival. Please bring a government-issued photo identification for admission to the meeting. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E36777-P03052-Z71840 UNITED STATES STEEL CORPORATION Annual Meeting of Stockholders April 24, 2018 8:00 AM This proxy is solicited on behalf of the Board of Directors The undersigned hereby appoint(s) David B. Burritt and David S. Sutherland, or either of them, proxies to vote as herein directed on behalf of the undersigned at the Annual Meeting of Stockholders of United States Steel Corporation on April 24, 2018, and at any meeting resulting from an adjournment or postponement thereof and upon all other matters properly coming before the meeting, including the proposalsbasis set forth in the proxy statementpreceding sentence, or if a determination is required as to the Fair Market Value on any date of property other than shares, the Committee shall in good faith determine the Fair Market Value of such shares or other property on such date. Fair Market Value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse.
(s)
“Full-Value Shares” shall have the meaning provided in Section 4.01 hereof. (t)
“Good Reason” shall mean, without the Participant’s express written consent, the occurrence after a Change in Control, of any one or more of the following: (1)
the assignment to the Participant of duties inconsistent with the Participant’s position immediately prior to the Change in Control or a reduction or adverse alteration in the nature of | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-3 |
the Participant’s position, duties, status or responsibilities from those in effect immediately prior to the Change in Control; (2)
a reduction by the Corporation in the Participant’s annualized and monthly or semi-monthly rate of base salary (as increased to incorporate the Participant’s foreign assignment premium, if any, while on foreign assignment) as in effect on the Change in Control or as the same shall be increased from time to time; (3)
the Corporation’s requiring the Participant to be based at a location in excess of fifty (50) miles from the location where the Participant is based immediately prior to the Change in Control; (4)
the failure by the Corporation to continue, substantially as in effect immediately prior to the Change in Control, all of the Corporation’s employee benefit, incentive compensation, bonus, stock option and stock award plans, programs, policies, practices or arrangements in which the Participant participates (or substantially equivalent successor plans, programs, policies, practices or arrangements) or the failure by the Corporation to continue the Participant’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of the Participant’s participation relative to other participants, as existed immediately prior to the Change in Control; and (5)
any purported termination by the Corporation of the Participant’s employment that is not effected pursuant to a written notice indicating, in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment for Cause, which in the absence of such Meetingnotice shall be ineffective. (u)
“Incumbent Board” shall have the meaning provided in Section 2.01(j)(2) hereof. (v)
“New Board” shall have the meaning provided in Section 2.01(j)(3) hereof. (w)
“Option” means a right, granted under Section 6.02 hereof, to purchase Shares at a specified price during specified time periods. (x)
“Other Stock-Based Award” means an Award, granted under Section 6.06 hereof, that is denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares. (y)
“Participant” means an employee, other service provider or a non-employee director of the Corporation or any Subsidiary or Affiliate who is granted an Award under the Plan. (z)
“Performance Award” means an award granted under Section 6.05 hereof that is subject to certain restrictions. (aa)
“Performance Share,” “Performance Cash Award,” “Performance Goal” and “Performance Period” shall have the meanings provided in Section 6.05. (bb)
“Person” shall have the meaning provided in Section 2.01(j)(1) hereof. (cc)
“Restricted Stock” means Shares, granted under Section 6.03 hereof, that are subject to certain restrictions. (dd)
“Restricted Stock Unit” means a unit, granted under Section 6.04 hereof, that is subject to certain restrictions. (ee)
“Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor to such Rule promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act. (ff)
“Shares” means shares of Common Stock. (gg)
“Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Corporation, if each of the corporations other than the last corporation in the chain owns stock possessing at least 50% of the total combined voting power of all classes of stock in one of the other corporations in the chain. (hh)
“Termination of Employment” shall have the meaning provided in Section 9.02 hereof. | C-4 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
2.02
Construction. For purposes of the Plan, the following rules of construction shall apply: (a)
The word “or” is disjunctive but not necessarily exclusive. (b)
Words in the singular include the plural; words in the plural include the singular; words in the neuter gender include the masculine and feminine genders, and words in the masculine or feminine gender include the other and neuter genders. SECTION 3. PLAN ADMINISTRATION 3.01
Board Committee Administration. The Plan shall be administered by the Committee. The Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan: (a)
to designate Participants; (b)
to determine the type or types of Awards to be granted to each Participant; (c)
to determine the number of Awards to be granted, the number of Shares or amount of cash or other property to which an Award will relate, the terms and conditions of any Award (including, but not limited to, any exercise price, grant price or purchase price, any limitation or restriction, any schedule for lapse of limitations, forfeiture restrictions or restrictions on exercisability or transferability, and accelerations or waivers thereof, and any Performance Goal, based in each case on such considerations as the Committee shall determine subject to the terms of the Plan), and all other matters to be determined in connection with an Award; (d)
to determine whether, to what extent and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards or other property, or an Award may be accelerated, vested, canceled, forfeited, exchanged or surrendered; (e)
to interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (f)
to prescribe the form of each Award Agreement, which need not be identical for each Participant; (g)
to adopt, amend, suspend, waive and rescind such rules and procedures as the Committee may deem necessary or advisable to administer the Plan; (h)
to correct any defect or supply any omission or reconcile any inconsistency, and to construe and interpret the Plan, the rules and procedures, any Award Agreement or other instrument entered into or Award made under the Plan; (i)
to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan; and (j)
to make such filings and take such actions as may be required from time to time by appropriate state, regulatory and governmental agencies. Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all persons, including the Corporation, Subsidiaries, Affiliates, Participants, any person claiming any rights under the Plan from or through any Participants, employees, directors and stockholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by an officer, manager or other employee of the Corporation or a Subsidiary, the Corporation’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Corporation and/or Committee to assist in the administration of the Plan. 3.02
Committee Delegation. The Committee may delegate to officers, managers and/or agents of the Corporation or any Subsidiary or Affiliate the authority, subject to such terms as the Committee shall determine and applicable law, to perform administrative and other functions under the Plan. Specifically, the Committee may delegate to one or more officers of the Corporation the authority to grant Awards to Participants who are not directors or officers (as defined under Section 16 of the Exchange Act) of the Corporation, provided the Committee shall have determined the number of Shares available for such grants and the grants are subject to the terms and conditions of the underlying Award Agreements and the Plan. Any such delegation shall be subject to the limitation under Section 157(c) of the Delaware General Corporation Law. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-5 |
SECTION 4. SHARES SUBJECT TO THE PLAN 4.01
The maximum number of Shares which may be issued and in respect of which Awards may be granted under the Plan shall be limited to 32,700,000 Shares, subject to adjustment as provided in Section 8.01, which may be used for all forms of Awards (such Shares may be referred to as “Available Shares”). Each Option or Appreciation Right shall reduce the number of Available Shares by one Share for each Share represented by such Option or Appreciation Right, except to the extent the Award is settled in cash. All other Shares to which an Award other than an Option or Appreciation Right relates shall be referred to as “Full-Value Shares” and, unless such Award is settled in cash, shall reduce the number of Available Shares by 1.78 Shares. For purposes of this Section 4.01, the number of Shares to which an Award relates shall be counted against the number of Available Shares under the Plan at the time of grant of the Award, unless such number of Shares cannot be determined at that time, in which case the number of Shares actually distributed pursuant to the Award shall be counted against the number of Available Shares under the Plan at the time of distribution; provided, however, that Awards related to or retroactively added to, or granted in tandem with, substituted for or converted into, other Awards shall be counted or not counted against the number of Shares reserved and available under the Plan in accordance with procedures adopted by the Committee so as to ensure appropriate counting but avoid double counting. If and to the extent any Award granted under this Plan or any award granted under the 2005 Stock Incentive Plan (“2005 Plan”) and outstanding on the Effective Date (a “2005 Plan Award”) is forfeited or otherwise terminates without payment being made to the Participant in the form of Shares or if payment is made to the Participant in the form of cash, cash equivalents or other property other than Shares, any Shares that are not issued with respect to such Award or 2005 Plan Award shall, to the extent of any such forfeiture or termination or alternative payment, again be available for Awards under the Plan. Subject to the provisions of Section 8.01, such Shares shall be added to the number of Available Shares at the rate for which the proxiesaward was originally subtracted from the number of Available Shares under this Plan or from the number of Shares that were available under the 2005 Plan, as applicable. If the exercise price of an Award is paid by delivering to the Corporation Shares previously owned by the Participant or by withholding Shares issuable upon exercise or if Shares are instructeddelivered or withheld for purposes of satisfying a tax withholding obligation or if Shares are repurchased by the Company with Option proceeds, the number of Shares covered by the Award equal to the number of Shares so delivered, withheld or repurchased shall be counted, however, against the number of Shares granted and shall not again be available for Awards under the Plan. In addition, all Shares covered by an Appreciation Right, to the extent that it is exercised and settled in Shares, shall be counted against the number of Shares granted and shall not again be available for Awards under the Plan. Any Shares distributed pursuant to an Award may consist, in whole or part, of authorized and unissued Shares or of treasury Shares, including Shares repurchased by the Corporation for purposes of the Plan. SECTION 5. ELIGIBILITY, VESTING REQUIREMENTS AND PROHIBITION ON REPRICING AND RELOAD OPTIONS 5.01
Eligibility. Awards may be granted only to individuals who are employees, other service providers and/or non-employee directors of the Corporation or any Subsidiary or Affiliate. 5.02
Vesting of Awards. All Awards shall provide for vesting based on employment or service which is at least twelve (12) months from the date on which such Award is granted, and there shall be no acceleration of vesting of an Award to be more rapid than vesting after twelve (12) months, except for the Committee’s discretion to provide for accelerated vesting or exercisability in the terms of an Award or otherwise in connection with death, disability, retirement, involuntary termination of employment or service without Cause or a Change in Control. Notwithstanding any contrary provision of the Plan, up to five percent (5%) of the aggregate number of Shares authorized for issuance under the Plan may be issued pursuant to Awards without regard to the limitations of this Section 5.02. 5.03
Repricing and Reload Options Prohibited. Except as provided in Section 8 (Adjustment Provisions), the Corporation may not, without obtaining stockholder approval: (a) amend or modify the terms of any outstanding Option or Appreciation Right to reduce the exercise price of such outstanding Option or Appreciation Right; (b) cancel, exchange or permit or accept the surrender of any outstanding Option or Appreciation Right in exchange for an Option or Appreciation Right with an exercise price that is less than the exercise price of the original Option or Appreciation Right; or (c) cancel, exchange or permit or accept the surrender of any outstanding Option or Appreciation Right in exchange for any other Award, cash or other securities for purposes of repricing such Option or Appreciation Right. No Option may be granted to any individual on account of the use of Shares by such individual to exercise a prior Option. | C-6 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
SECTION 6. SPECIFIC TERMS OF AWARDS 6.01
General. Subject to the terms of the Plan and any applicable Award Agreement, Awards may be granted as set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to the terms of Section 10.01), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including separate escrow provisions and terms requiring forfeiture of Awards in the event of termination of employment or service by the Participant. Except as required by applicable law, Awards may be granted for no consideration other than prior and/or future services. Dividends and dividend equivalents shall not be paid on Options, Appreciation Rights and unvested Full-Value Shares. Dividends and dividend equivalents may not be paid with respect to Performance Awards before the Performance Goals are achieved and the Performance Awards are earned. 6.02
Options. The Committee is authorized to grant Options to Participants, subject to the following terms and conditions: (a)
Exercise Price. The exercise price per Share of an Option shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. (b)
Option Term. The term of each Option shall be determined by the Committee, except that, consistent with the provisions of Section 7.04, no Option shall be exercisable after the expiration of ten years from the date of grant. The Option shall be evidenced by a form of written Award Agreement, and subject to the terms thereof. (c)
Times and Methods of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, the methods by which the exercise price may be paid or deemed to be paid, and the form of such payment, including, without limitation, cash, Shares, or other property or any combination thereof, having a Fair Market Value on the date of exercise equal to the exercise price, provided, however, that in the case of a Participant who is at the time of exercise subject to Section 16 of the Exchange Act, any portion of the exercise price representing a fraction of a Share shall in any event be paid in cash or in property other than any equity security (as defined by the Exchange Act) of the Corporation. Delivery of Shares in payment of the exercise price of an Option, if authorized by the Committee, may be accomplished through the effective transfer to the Corporation of Shares held by a broker or other agent. Unless otherwise determined by the Committee, the Corporation will also cooperate with any person exercising an Option who participates in a cashless exercise program of a broker or other agent under which all or part of the Shares received upon exercise of the Option are sold through the broker or other agent, for the purpose of paying the exercise price of an Option. Additionally, if authorized by the Committee, a Participant may elect the withholding of shares to be acquired upon exercise, valued at the Fair Market Value on the date of exercise, for the purpose of paying the exercise price of an Option. Notwithstanding any of the preceding, unless the Committee, in its discretion, shall otherwise determine, the exercise of the Option shall not be deemed to occur, and no Shares will be issued by the Corporation upon exercise of an Option, until the Corporation has received payment in full of the exercise price. Notwithstanding language in any grant form to the contrary, if the optionee is subject to taxation on the benefit received from the Option in a jurisdiction outside the United States the optionee (i) shall not be permitted to pay the exercise price by surrendering shares of Common Stock that he or she already owns or attesting to the ownership of shares of Common Stock and (ii) shall not be permitted to elect the withholding of shares to be acquired upon exercise to satisfy either the exercise price or the tax withholding obligation if, in the opinion of the Committee, such election could cause the participant, or the Corporation, to receive unfavorable tax treatment. (d)
Termination of Employment. In the case of Participants who are employees or other service providers, unless otherwise determined by the Committee and reflected in the Award Agreement or award program: (1)
if a Participant shall die while employed or engaged by the Corporation or a Subsidiary or Affiliate or during a period following termination of employment or engagement during which an Option otherwise remains exercisable under this Section 6.02(d), Options granted to the Participant, to the extent exercisable at the time of the Participant’s death, may be exercised within three years after the date of the Participant’s death, but not later than the expiration date of the Option, by the executor or administrator of the Participant’s estate or by the Person or Persons to whom the Participant shall have transferred such right by will or by the laws of descent and distribution; | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-7 |
(2)
if the employment or engagement of a Participant with the Corporation and its Subsidiaries and Affiliates shall be involuntarily terminated under circumstances which would qualify the Participant for benefits under a severance plan of the Corporation, or if a Participant shall retire under the terms of any retirement plan of the Corporation or a Subsidiary, or shall terminate his or her employment or engagement with the written consent of the Corporation or a Subsidiary specifically permitting such exercise, or shall become Disabled, Options granted to the Participant, to the extent exercisable at the date of the Participant’s termination of employment or engagement, may be exercised within three years after the date of termination of employment or engagement, but not later than the expiration date of the Option; and (3)
except to the extent an Option remains exercisable under paragraph (1) or (2) above or under Section 9.01, any Option granted to a Participant shall terminate immediately upon the termination of all employment or engagement of the Participant with the Corporation or a Subsidiary or Affiliate. (e)
Termination of Service. In the case of Participants who are non-employee directors, unless otherwise determined by the Board and reflected in the Award Agreement or award program: (1)
if a Participant shall die while in service with the Corporation or a Subsidiary or during a period following termination of service during which an Option otherwise remains exercisable under this Section 6.02(e), Options granted to the Participant, to the extent exercisable at the time of the Participant’s death, may be exercised within three years after the date of the Participant’s death, but not later than the expiration date of the Option, by the executor or administrator of the Participant’s estate or by the Person or Persons to whom the Participant shall have transferred such right by will or by the laws of descent and distribution; (2)
if the service of a Participant with the Corporation and its Subsidiaries shall be terminated for reasons other than removal for Cause, Options granted to the Participant, to the extent exercisable at the date of the Participant’s termination of service, may be exercised within three years after the date of termination of service, but not later than the expiration date of the Option; and (3)
except to the extent an Option remains exercisable under paragraph (1) or (2) above or under Section 9.01, any Option granted to a Participant shall terminate immediately upon the termination of all service of the Participant with the Corporation or a Subsidiary. (f)
Individual Limit. The aggregate number of Shares for which Options may be granted under the Plan to any single Participant in any calendar year shall not exceed 1,000,000 Shares. 6.03
Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants, subject to the following terms and conditions: (a)
Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends thereon), which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments or otherwise, as indicatedthe Committee shall determine at the time of grant or thereafter. (b)
Forfeiture. Except as otherwise determined by the Committee at the time of grant or thereafter subject to the limitations of the Plan, upon termination of employment, engagement or other service (as determined under criteria established by the Committee) during the applicable restriction period, Restricted Stock that is at such time subject to restrictions shall be forfeited and reacquired by the Corporation. (c)
Certificates for Shares. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine, including, without limitation, issuance of certificates representing Shares, which may be held in escrow. Certificates representing Shares of Restricted Stock shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock. (d)
Maximum Individual Performance-Based Restricted Stock Limit. Restricted Stock may be subject to Performance Goals. No Participant shall be granted within any calendar year one or more Restricted Stock Awards under the Plan subject to Performance Goals for more than 1,000,000 Shares. 6.04
Restricted Stock Units. The Committee is authorized to grant Restricted Stock Units to Participants, subject to the following terms and conditions: | C-8 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
(a)
Issuance and Restrictions. Restricted Stock Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the reverse side.right to vote Restricted Stock Units or the right to receive dividends thereon), which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments or otherwise, as the Committee shall determine at the time of grant or thereafter. (b)
Forfeiture. Except as otherwise determined by the Committee at the time of grant or thereafter subject to the limitations of the Plan, upon termination of employment, engagement or other service (as determined under criteria established by the Committee) during the applicable restriction period, Restricted Stock Units that are at such time subject to restrictions shall be forfeited. (c)
Maximum Individual Performance-Based Restricted Stock Unit Limit. Restricted Stock may be subject to Performance Goals. No Participant shall be granted within any calendar year one or more Restricted Stock Unit Awards under the Plan subject to Performance Goals for more than 1,000,000 Shares. 6.05
Performance Awards. The Committee is authorized to grant Performance Awards to Participants, subject to the following terms and conditions: (a)
Types of Performance Awards. Performance Awards may be granted in the form of Performance Shares or Performance Cash Awards. Performance Shares shall be denominated in Shares and may be payable in Shares or in cash. Performance Cash Awards shall be denominated in dollars, have an initial value that is established by the Committee at the time of grant, and may be payable in cash or in Shares. (b)
Right to Payment. A Performance Award shall represent the right to receive Shares or a dollar amount based on the achievement, or the level of achievement, during a specified Performance Period of one or more Performance Goals established by the Committee at the time of the Award. Performance Goals may include threshold Corporation performance goals and Participant performance goals. (c)
Terms of Performance Awards. At or prior to the time a Performance Award is granted, the Committee shall cause to be set forth in the Award Agreement or otherwise in writing (i) the Performance Goals applicable to the Award and the period during which achievement of the Performance Goals shall be measured (the “Performance Period”), (ii) the amount which may be earned by the Participant based on the achievement, or the level of achievement, of the Performance Goals or the formula by which such amount shall be determined and (iii) such other terms and conditions applicable to the Award as the Committee may, in its discretion, determine to include therein; provided, however, dividends and dividend equivalents may accrue, but shall not be paid with respect to Performance Awards before the Performance Goals are achieved and the Performance Awards are earned. The terms so established by the Committee shall be objective such that a third party having knowledge of the relevant facts could determine whether or not any Performance Goal has been achieved, or the extent of such achievement, and the amount, if any, which has been earned by the Participant based on such performance. The Committee may retain the discretion to reduce (but not to increase) the amount of a Performance Award which will be earned based on the achievement of Performance Goals; provided, however, that the exercise of such negative discretion shall not be permitted to result in any increase in the amount of any Performance Award payable to any other Participant. When the Performance Goals are established, the Committee shall also specify the manner in which the level of achievement of such Performance Goals shall be calculated and the weighting assigned to such Performance Goals. The Committee may determine that certain specified events or occurrences, including changes in accounting standards or tax laws and the effects of non-operational items or unusual or infrequently occurring items as defined by generally accepted accounting principles, shall be excluded from the calculation. (d)
Performance Goals. The outcome of the Performance Goals must be substantially uncertain at the time the goals are established. “Performance Goals” shall mean one or more preestablished, objective measures of performance during a specified Performance Period, selected by the Committee in its discretion. Performance Goals may be based upon one or more of the following objective performance measures and expressed in either, or a combination of, absolute or relative values or rates of change and on a gross or net basis: safety performance, stock price, capital expenditures, earnings per share, earnings per share growth, return on capital employed, return on invested capital, return on capital, costs, net income, net income growth, operating margin, revenues, revenue growth, revenue from operations, net sales, expenses, income from operations as a percent of capital employed, income from operations, income from operations per ton shipped, tons shipped, cash flow, market share, return on equity, return on assets, earnings (including EBITDA and EBIT), operating cash flow, operating cash flow as a percent of capital employed, economic value added, gross margin, total shareholder return, shareholder equity, debt, debt | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-9 |
to shareholder equity, debt to earnings (including EBITDA and EBIT), interest expense and/or other fixed charges, earnings (including EBITDA and EBIT) to interest expense and/or other fixed charges, environmental emissions improvement, workforce diversity, number of accounts, workers’ compensation claims, budgeted amounts, cost per hire, turnover rate, and/or training costs and expenses. Performance Goals based on such performance measures may be based either on the performance of the Participant, Corporation, a Subsidiary or Subsidiaries, an Affiliate or Affiliates, any branch, department, business unit or other portion thereof under such measure for the Performance Period and/or upon a comparison of such performance with the performance of a peer group of corporations, prior Performance Periods or other measure selected or defined by the Committee at the time of making a Performance Award. The Committee may in its discretion also determine to use other objective performance measures as Performance Goals. (e)
Committee Certification. Following completion of the applicable Performance Period, and prior to any payment of a Performance Award to the Participant, the Committee shall determine in accordance with the terms of the Performance Award and shall certify in writing whether the applicable Performance Goal or Goals were achieved, or the level of such achievement, and the amount, if any, earned by the Participant based upon such performance. For this purpose, approved minutes of the meeting of the Committee at which certification is made shall be sufficient to satisfy the requirement of a written certification. Performance Awards are not intended to provide for the deferral of compensation, such that Performance Awards shall be paid upon vesting and in no event later than the day which is two and one-half months following the end of the calendar year in which the Performance Period ends, or such other time period as may be required under Section 409A of the Code to avoid characterization of such Awards as deferred compensation. (f)
Maximum Individual Performance Award Limit. No Participant shall be granted within any calendar year (i) Performance Shares which could result in such Participant receiving pursuant to such Performance Shares more than 1,000,000 Shares or the Fair Market Value thereof if paid in cash, or (ii) Performance Cash Awards which could result in such Participant receiving more than $20,000,000 in value. (g)
Performance Award Pool. The Committee may establish a Performance Award pool, which shall be an unfunded pool, based upon the achievement of one or more Performance Goals during the Performance Period, as specified by the Committee. The amount of the Award Pool at the threshold, target and maximum performance levels may be a stated percentage of the Award Pool at the applicable level for the specified Performance Goals. The maximum amount payable to any Participant shall be stated in terms of a percentage of the award pool and the sum of such percentages shall not exceed 100%. (h)
Performance Cash Awards. Notwithstanding any contrary provision of the Plan or applicable Award Agreement, with respect to Performance Cash Awards, the Committee has full authority and discretion to: (i) establish Performance Goals that are based on objective or subjective factors as the Committee deems relevant, (ii) modify, amend, discontinue or terminate, and establish new Performance Goals at any time, (iii) establish a Performance Period that is less than twelve (12) months, and (iv) exercise positive or negative discretion in determining the amount of any Performance Cash Award payable under the Plan. 6.06
Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, including, without limitation, purchase rights, Appreciation Rights, Shares awarded which are not subject to any restrictions or conditions, subject to the limitations of the Plan, convertible securities, exchangeable securities or other rights convertible or exchangeable into Shares, as the Committee in its discretion may determine. In the discretion of the Committee, such Other Stock-Based Awards, including Shares, or other types of Awards authorized under the Plan, may be used in connection with, or to satisfy obligations of the Corporation or a Subsidiary or an Affiliate under, other compensation or incentive plans, programs or arrangements of the Corporation or any Subsidiary or Affiliate for eligible Participants, including without limitation the Deferred Compensation Program for Non-Employee Directors, the Non-Employee Director Stock Program, other or successor programs and executive contracts. The Committee shall determine the terms and conditions of Other Stock-Based Awards. Shares or securities delivered pursuant to a purchase right or Appreciation Right granted under this Section 6.06 shall be purchased for such consideration, paid for by such methods and in such forms, including, without limitation, cash, Shares, or other property or any combination thereof, as the Committee shall determine. The aggregate number of Shares for which Appreciation Rights may be granted under the Plan to any single Participant in any calendar year shall not exceed 1,000,000 Shares. | C-10 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
6.07
Limitation on Awards to Non-Employee Directors. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any non-employee director for any single calendar year shall not exceed $500,000; provided, however, that such limit shall not apply to any Awards made at the election of a non-employee director to receive Awards in lieu of all or a portion of any annual committee cash retainers or other similar cash based payments. SECTION 7. GENERAL TERMS OF AWARDS 7.01
Stand-Alone, Tandem and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, or in tandem with, any other Award granted under the Plan or any award granted under any other plan, program or arrangement of the Corporation or any Subsidiary or any business entity acquired or to be acquired by the Corporation or a Subsidiary. Awards granted in addition to or in tandem with other Awards or awards may be granted either at the same time as or at a different time from the grant of such other Awards or awards. 7.02
Term of Awards. The term of each Award shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term of any Option, other purchase right or Appreciation Right exceed a period of ten (10) years from the date of its grant. 7.03
Form of Payment of Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments or substitutions to be made by the Corporation upon the grant, exercise or other payment or distribution of an Award may be made in such forms as the Committee shall determine at the time of grant or thereafter, including, without limitation, cash, Shares, or other property or any combination thereof, in each case in accordance with rules and procedures established, or as otherwise determined, by the Committee. 7.04
Limits on Transfer of Awards; Beneficiaries. No right or interest of a Participant in any Award shall be pledged, encumbered or hypothecated to or in favor of any person other than the Corporation, or shall be subject to any lien, obligation or liability of such Participant to any person other than the Corporation or a Subsidiary. No Award and no rights or interests therein shall be assignable or transferable by a Participant otherwise than by will or the laws of descent and distribution, and any Option or other right to purchase or acquire Shares granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant. A beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Participant shall be subject to all the terms and conditions of the Plan and any Award Agreement applicable to such Participant as well as any additional restrictions or limitations deemed necessary or appropriate by the Committee. 7.05
Registration and Listing Compliance. No Award shall be paid and no Shares or other securities shall be distributed with respect to any Award in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any state securities law or subject to a listing requirement under any listing agreement between the Corporation and any national securities exchange, and no Award shall confer upon any Participant rights to such payment or distribution until such laws and contractual obligations of the Corporation have been complied with in all material respects. Except to the extent required by the terms of an Award Agreement or another contract between the Corporation and the Participant, neither the grant of any Award nor anything else contained herein shall obligate the Corporation to take any action to comply with any requirements of any such securities laws or contractual obligations relating to the registration (or exemption therefrom) or listing of any Shares or other securities, whether or not necessary in order to permit any such payment or distribution. 7.06
Stock Certificates. Awards representing Shares under the Plan may be recorded in book entry form until the lapse of restrictions or limitations thereon, or issued in the form of certificates. All certificates for Shares delivered under the terms of the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of any national securities exchange or automated quotation system on which Shares are listed or quoted. The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions or any other restrictions or limitations that may be applicable to Shares. In addition, during any period in which Awards or Shares are subject to restrictions or limitations under the terms of the Plan or any Award Agreement, the Committee may require any Participant to enter into an agreement providing that certificates representing Shares issuable or issued pursuant to an Award shall remain in the physical custody of the Corporation or such other person as the Committee may designate. 7.07.
Forfeiture and Repayment. Notwithstanding any other provisions of the Plan, any Award which is subject to recovery under any law, government regulation, stock exchange listing requirement or recoupment policy adopted by the Corporation, will be subject to such deduction, clawback or cancellation as may be made pursuant to such law, government regulation, stock exchange listing requirement or recoupment policy, as may be in effect from time to time. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-11 |
SECTION 8. ADJUSTMENT PROVISIONS 8.01
If a dividend or other distribution shall be declared upon the Common Stock payable in shares of the Common Stock, then equitable adjustment shall be made to outstanding Awards, the maximum number of Shares specified in Section 4.01 that may be issued under the Plan but are not then subject to outstanding Awards and the maximum number of Shares specified under Sections 6.02(f), 6.03(d), 6.04(d), 6.05(f). Any shares of Common Stock distributed with respect to any Restricted Stock held in escrow shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the Restricted Stock on which they were distributed. If the outstanding shares of Common Stock shall be changed into or exchangeable for a different number or kind of shares of stock or other securities of the Corporation or another corporation, or cash or other property, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then equitable adjustments shall be made to the Awards, the Shares specified in Section 4.01 that may be issued under the Plan but which is not then subject to any outstanding Award, and the maximum number of Shares under Sections 6.02(f), 6.03(d), 6.04(d), 6.05(f). Unless otherwise determined by the Committee in its discretion, any such stock or securities, as well as any cash or other property, into or for which any Restricted Stock held in escrow shall be changed or exchangeable in any such transaction shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the Restricted Stock in respect of which such stock, securities, cash or other property was issued or distributed. In case of any adjustment or substitution as provided for in this Section 8.01, the aggregate option price for all Shares subject to each then outstanding Option, Restricted Stock Unit, Performance Award or Other Stock Based Award, prior to such adjustment or substitution shall be the aggregate option price for all shares of stock or other securities (including any fraction), cash or other property to which such Shares shall have been adjusted or which shall have been substituted for such Shares. Any new option price per share or other unit shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number. If the outstanding shares of the Common Stock shall be changed in value by reason of any spin-off, split-off or split-up, or dividend in partial liquidation, dividend in property other than cash, or extraordinary distribution to stockholders of the Common Stock, (i) the Committee shall make any adjustments to any then outstanding Option, Restricted Stock Unit, Performance Award or Other Stock Based Award, which it determines are equitably required to prevent dilution or enlargement of the rights of optionees and awardees which would otherwise result from any such transaction, and (ii) unless otherwise determined by the Committee in its discretion, any stock, securities, cash or other property distributed with respect to any Restricted Stock held in escrow or for which any Restricted Stock held in escrow shall be exchanged in any such transaction shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the Restricted Stock in respect of which such stock, securities, cash or other property was distributed or exchanged. No adjustment or substitution provided for in this Section 8.01 shall require the Corporation to issue or sell a fraction of a Share or other security. Accordingly, all fractional Shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution. Owners of Restricted Stock held in escrow shall be treated in the same manner as owners of Common Stock not held in escrow with respect to fractional Shares created by an adjustment or substitution of Shares, except that, unless otherwise determined by the Committee in its discretion, any cash or other property paid in lieu of a fractional Share shall be subject to restrictions similar to those applicable to the Restricted Stock exchanged therefore. In the event of any other change in or conversion of the Common Stock, the Committee may in its discretion adjust the outstanding Awards and other amounts provided in the Plan in order to prevent the dilution or enlargement of rights of Participants. SECTION 9. CHANGE IN CONTROL PROVISIONS 9.01
Acceleration of Exercisability and Lapse of Restrictions. Unless otherwise determined by the Committee at the time of grant of an Award or unless otherwise provided in the applicable Award Agreement, if (i) a Change in Control shall occur, and (ii) a Termination of Employment occurs, then, in addition to any other rights of post-termination exercise which the Participant (or other holder of the Award) may have under the Plan or the applicable Award Agreement: (i) all outstanding Awards pursuant to which the Participant may have exercise rights, which are restricted or limited, shall become fully exercisable and shall remain exercisable until the expiration date of the award; and (ii) all restrictions or limitations, including risks of forfeiture, on outstanding Awards subject to restrictions or limitations under the Plan shall lapse. In addition, upon the occurrence of a Change in Control, all performance criteria and other conditions to payment of Awards under which payments of Shares or other property are subject to conditions shall be determined using the abbreviated performance period ending upon the date of the Change in Control. Notwithstanding the foregoing, | C-12 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
unless otherwise determined by the Committee at the time of grant of an Award or unless otherwise provided in the applicable Award Agreement, if a Change in Control shall occur, (i) scheduled vesting dates for performance-based Awards will not be affected by a Change in Control and (ii) all Awards shall remain payable on the dates provided in the underlying Award Agreements and the Plan. 9.02
Termination of Employment or Service in connection with a Change in Control. If within the two-year period beginning on the date of a Change in Control the employment or service of a Participant shall be terminated (i) involuntarily for any reason other than for Cause or (ii) in the case of Participants who have been determined by the Committee to be executive management prior to the time of the Change in Control, voluntarily for Good Reason, such termination shall be a “Termination of Employment” for purposes of this Plan. The Participant’s right to terminate his or her employment pursuant to this Section shall not be affected by the Participant’s incapacity due to physical or mental illness or eligibility for retirement. The Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. SECTION 10. AMENDMENTS TO AND TERMINATION OF THE PLAN 10.01
The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of stockholders or Participants, except that, without the approval of the stockholders of the Corporation, no amendment, alteration, suspension, discontinuation or termination shall be made if stockholder approval is required by any federal or state law or regulation or by the shares attributable to your account willrules of any stock exchange on which the Shares may then be voted as directed; if no direction is madelisted, or if the cardBoard in its discretion determines that obtaining such stockholder approval is for any reason advisable; provided, however, that without the written consent of the Participant, no amendment, alteration, suspension, discontinuation or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him. The Committee may, consistent with the terms of the Plan, waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively; provided, however, that without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such Participant under any Award theretofore granted to him. SECTION 11. GENERAL PROVISIONS 11.01
No Right to Awards; No Stockholder Rights. No Participant, employee or director shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants, employees and directors, except as provided in any other compensation, fee or other arrangement. No Award shall confer on any Participant any of the rights of a stockholder of the Corporation unless and until Shares are in fact issued to such Participant in connection with such Award. 11.02
Withholding. To the extent required by applicable Federal, state, local or foreign law, the Participant or his successor shall make arrangements satisfactory to the Corporation, in its discretion, for the satisfaction of any withholding tax obligations that arise in connection with an Award. The Corporation shall not signed,be required to issue any Shares or make any other payment under the shares attributablePlan until such obligations are satisfied. The Corporation is authorized to your accountwithhold from any Award granted or any payment due under the Plan, including from a distribution of Shares, amounts of withholding taxes due with respect to an Award, its exercise or any payment thereunder, or to any other payment of compensation by the Corporation to a Participant outside of the Plan, and to take such other action as the Committee may deem necessary or advisable to enable the Corporation and Participants to satisfy obligations for the payment of such taxes. This authority shall include authority to withhold or receive Shares, Awards or other property and to make cash payments in respect thereof in satisfaction of such tax obligations. The Fair Market Value of any Shares withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates or such other limitations as will be votednot cause adverse accounting consequences or cost, except as otherwise specifically provided in any Award Agreement with respect to a Participant subject to tax withholding in any foreign jurisdiction in which there is no minimum statutory withholding rates. 11.03
No Right to Employment or Continuation of Service. Nothing contained in the same proportionPlan or any Award Agreement shall confer, and no grant of an Award shall be construed as directions receivedconferring, upon any Participant any right to continue in the employ or service of the Corporation, any Subsidiary or any Affiliate or to interfere in any way with the right of the Corporation, any Subsidiary or any Affiliate or stockholders to terminate his employment or service at any time or increase or decrease his compensation, fees, or other payments from participants. Continuedthe rate in existence at the time of granting of an Award, except as provided in any Award Agreement or other compensation, fee or other arrangement. | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT | C-13 |
11.04
Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Corporation; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Corporation’s obligations under the Plan to deliver Shares or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines. 11.05
No Limit on Other Compensatory Arrangements. Nothing contained in the Plan shall prevent the Corporation from adopting other or additional compensation, fee or other arrangements (which may include, without limitation, employment agreements with executives and arrangements which relate to Awards under the Plan), and such arrangements may be either generally applicable or applicable only in specific cases. Notwithstanding anything in the Plan to the contrary, the terms of each Award shall be construed so as to be signedconsistent with such other arrangements in effect at the time of the Award. 11.06
No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated. 11.07
Governing Law. The validity, interpretation, construction and effect of the Plan and any rules and procedures relating to the Plan shall be governed by the laws of the Commonwealth of Pennsylvania (without regard to the conflicts of laws thereof), and applicable Federal law. 11.08
Severability. If any provision of the Plan or any Award is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or Award, it shall be deleted and the remainder of the Plan or Award shall remain in full force and effect; provided, however, that, unless otherwise determined by the Committee, the provision shall not be construed or deemed amended or deleted with respect to any Participant whose rights and obligations under the Plan are not subject to the law of such jurisdiction or the law deemed applicable by the Committee. SECTION 12. TERM OF THE PLAN 12.01
The Plan shall continue in effect until the earlier of its termination by the Board or the date on reverse side
which all of the Shares available for issuance under the Plan have been issued and all restrictions on such Shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed. However, Awards shall not be granted later than the tenth anniversary of the Effective Date. | C-14 | UNITED STATES STEEL CORPORATION2021 PROXY STATEMENT |
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