| | | | | | | | | | | |
VOTING MATTERS | BOARD VOTE RECOMMENDATION | PAGE REFERENCE (for more detail) |
|
| | |
Proposal 1 | Election of Directors | FOR ALL Director Nominees | |
Proposal 2 | Approval, on an Advisory Basis, of Our Named Executive Officers' Compensation ("Say-on-Pay") | FOR | |
Proposal 3 | Ratification of Independent Registered Public Accounting Firm | FOR | |
| | | | | | | | | | | | | | | | | |
DIRECTOR NOMINEES RECOMMENDED BY THE BOARD | |
|
| NAME | AGE | DIRECTOR SINCE | POSITION | COMMITTEE MEMBERSHIPS (1) |
| Lourenco Goncalves | 64 | 2014 | Chairman of the Board, Chief Executive Officer and President | Strategy and Sustainability* |
| Douglas C. Taylor | 57 | 2014 | Lead Director | Compensation*
Strategy and Sustainability |
| John T. Baldwin | 65 | 2014 | Director | Audit*
Compensation |
| Robert P. Fisher, Jr. | 67 | 2014 | Director | Audit
Governance |
| William K. Gerber | 68 | 2020 | Director | Audit |
| Susan M. Green | 62 | 2007 | Director | Governance |
| Ralph S. Michael, III | 67 | 2020 | Director | Compensation
Governance* |
| Janet L. Miller | 68 | 2019 | Director | Governance |
| Gabriel Stoliar | 67 | 2014 | Director | Strategy and Sustainability |
| Arlene M. Yocum | 64 | 2020 | Director | Audit
Strategy and Sustainability |
* Denotes committee chair (1)Full committee names are: Audit – Audit Committee; Compensation – Compensation and Organization Committee; Governance – Governance and Nominating Committee; and Strategy and Sustainability – Strategy and Sustainability Committee.
|
| | | | | |
SHAREHOLDER ENGAGEMENT (summary) | |
| |
| We maintain open and proactive communications with the investment community. During 2021 and early 2022, we reached out to our top 25 shareholders, representing approximately 45% of our outstanding common shares (approximately 73% of the votes cast at our 2021 annual meeting), to solicit their perspectives on our compensation program, company strategy and performance, corporate governance, sustainability and other topics. These discussions included our independent Lead Director when requested by major shareholders. The feedback received from our shareholder outreach efforts is shared with and considered by our Board of Directors ("Board"), and our engagement activities have generated valuable input that helps inform our decisions and strategy, when appropriate. See the section entitled "Shareholder Engagement" in the Compensation Discussion and Analysis ("CD&A") section for more details as to what we heard from our shareholders and how we responded to their feedback. |
| | | | | |
EXECUTIVE COMPENSATION PHILOSOPHY AND CORE PRINCIPLES | |
| |
Our guiding executive compensation principles, as established by the Compensation Committee for 2021, were as follows: 1.Align short-term and long-term incentives with results delivered to shareholders; 2.Be transparent, ensure that executives and shareholders understand our executive compensation programs, including the objectives, mechanics, and compensation levels and opportunities provided; 3.Design an incentive plan that focuses on performance objectives tied to our business plan (including profitability-related and cost control objectives), relative performance objectives tied to market conditions (including relative total shareholder return, measured by share price appreciation plus dividends, if any) and performance against other key objectives tied to our business strategy (including safety); 4.Provide competitive fixed compensation elements over the short-term (base salary) and long-term (equity and retirement benefits) to encourage long-term retention of our key executives; and 5.Continue to structure programs as in prior years to align with corporate governance best practices (such as not providing "gross-ups" related to change in control payments, using "double-trigger" vesting in connection with a change in control for equity awards, using Share Ownership Guidelines and maintaining a clawback policy related to incentive compensation for our executive officers). |
| | | | | |
2021 EXECUTIVE COMPENSATION SUMMARY | |
| |
The numbers in the following table showing the 2021 compensation of our named executive officers (the "NEOs") were determined in the same manner as the numbers in the corresponding columns in the 2021 Summary Compensation Table (the "SCT") (provided later in this proxy statement); however, they do not include information regarding changes in pension value and non-qualified deferred compensation earnings and information regarding all other compensation, each as required to be presented in the SCT under the rules of the U.S. Securities and Exchange Commission (the "SEC"). As such, this table should not be viewed as a substitute for the SCT. |
| | | | | | | | | | | | | | | | | | | | | | | |
| NAME | PRINCIPAL POSITION (AS OF 12/31/2021) | SALARY
($) | BONUS
($) | STOCK AWARDS
($) | OPTION AWARDS ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION
($) | TOTAL
($) |
| Lourenco Goncalves | Chairman, President and Chief Executive Officer | 1,938,000 | | 3,876,000 | | 7,060,185 | | — | | 10,760,320 | | 23,634,505 | |
| Celso L. Goncalves Jr. | Executive Vice President, Chief Financial Officer | 404,667 | | 550,000 | | 453,563 | | — | | 862,493 | | 2,270,723 | |
| Keith A. Koci | Executive Vice President, President, Cleveland-Cliffs Services | 590,667 | | 780,000 | | 1,021,860 | | — | | 1,645,636 | | 4,038,163 | |
| Clifford T. Smith | Executive Vice President, President, Cleveland-Cliffs Steel | 765,000 | | 918,000 | | 1,741,806 | | — | | 2,521,100 | | 5,945,906 | |
| Terry G. Fedor | Executive Vice President, Operations, East | 600,000 | | 600,000 | | 1,092,923 | | — | | 1,602,410 | | 3,895,333 | |
| Maurice D. Harapiak | Executive Vice President, Human Resources & Chief Administration Officer | 561,000 | | 561,000 | | 1,021,860 | | — | | 1,532,210 | | 3,676,070 | |
| | | | | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
| |
As a matter of good corporate governance, we are asking our shareholders to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022. |
| | | | | |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | |
| |
This proxy statement contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Forward-looking statements are subject to risks and uncertainties relating to Cliffs’ operations and business environment that are difficult to predict and may be beyond our control. Such risks and uncertainties may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Part I., Item 1A., "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2021, and those described from time to time in our future reports filed with the SEC. Except to the extent required by law, Cliffs does not undertake to update the forward-looking statements included in this proxy statement to reflect the impact of circumstances or events that may arise after the date the forward-looking statements were made. |
| | |
| QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING |
|
|
1. What proposals are to be presented at the 2022 Annual Meeting?
The purpose of the 2022 Annual Meeting is to: (1) elect the ten directors nominated by the Board in this proxy statement; (2) approve, on an advisory basis, our NEOs' compensation; (3) ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the 2022 fiscal year; and (4) conduct such other business as may properly come before the 2022 Annual Meeting.
2. What is the difference between a “shareholder of record” and a “beneficial owner"?
These terms describe the manner in which your shares are held. If your shares are registered directly in your name through Broadridge, our transfer agent, you are the registered holder, or “shareholder of record." If your shares are held through a bank, broker, nominee or other registered holder, you are considered the “beneficial owner” of those shares.
3. How does the Board recommend that I vote?
The Board unanimously recommends that you vote:
•FOR ALL of the ten individuals nominated by the Board for election as directors;
•FOR the approval, on an advisory basis, of our NEOs' compensation; and
•FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the 2022 fiscal year.
4. Who is entitled to vote at the 2022 Annual Meeting?
The record date for the 2022 Annual Meeting is February 28, 2022 (the "Record Date"). On the Record Date, we had outstanding 524,409,717 common shares, $0.125 par value per share. All common shareholders of record as of the Record Date are entitled to vote at the 2022 Annual Meeting. In this proxy statement, we refer to our common shares as our "shares" and the holders of such shares as our "shareholders."
5. How do I vote?
You may vote using any of the following methods:
Shareholders of Record. If your shares are registered in your name, you may vote online during the virtual 2022 Annual Meeting at www.virtualshareholdermeeting.com/CLF2022 or you may vote by proxy. If you decide to vote by proxy, you may do so over the Internet, by telephone or by mail.
•Over the Internet. After reading the proxy materials and with your proxy card in front of you, you may use a computer to access the website www.proxyvote.com. You will be prompted to enter your control number from your proxy card. This number will identify you as a shareholder of record. Follow the simple instructions that will be given to you to record your vote.
•By telephone. After reading the proxy materials and with your proxy card in front of you, you may call the toll-free number appearing on the proxy card, using a touch-tone telephone. You will be prompted to enter your control number from your proxy card. This number will identify you as a shareholder of record. Follow the simple instructions that will be given to you to record your vote.
•By mail. If you received a paper copy of the proxy card by mail, after reading the proxy materials, you may mark, sign and date your proxy card and return it in the prepaid and addressed envelope provided.
The Internet and telephone voting procedures have been set up for your convenience and have been designed to authenticate your identity, allow you to submit voting instructions and confirm that those instructions have been recorded properly.
Shares Held by Bank or Broker. If your shares are held by a bank, broker, nominee or other shareholder of record, that entity will provide you with separate voting instructions. All nominee share interests may view the proxy materials using the link www.proxyvote.com.
If your shares are held in the name of a brokerage firm, your shares may be voted even if you do not provide the brokerage firm with voting instructions. Brokerage firms have the authority under applicable rules to vote shares for which their customers do not provide voting instructions on certain “routine” matters. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is
referred to as a “broker non-vote.” The ratification of Deloitte & Touche LLP as our registered independent public accounting firm is considered a routine matter for which a brokerage firm that holds your shares may vote your shares without your instructions. The election of directors and the approval, on an advisory basis, of our NEOs' compensation are not considered routine matters, and, therefore, a brokerage firm that holds your shares may not vote your shares for such proposals without your instructions.
6. What can I do if I change my mind after I vote?
You may revoke your proxy at any time before the polls are closed for voting at the 2022 Annual Meeting by (i) executing and submitting a revised proxy bearing a later date; (ii) providing a written revocation to the Secretary of Cliffs; or (iii) voting online during the virtual 2022 Annual Meeting at www.virtualshareholdermeeting.com/CLF2022. If you do not hold your shares directly, you should follow the instructions provided by your bank, broker, nominee or other shareholder of record to revoke your previously voted proxy.
7. What vote is required to approve each proposal?
With respect to Proposal 1, the nominees receiving a plurality vote of the shares will be elected. However, under our majority voting policy (adopted by the Board), in an uncontested election, any director-nominee that is elected by a plurality vote but fails to receive a majority of votes cast (which excludes abstentions and broker non-votes) is expected to tender his or her resignation, which resignation will be considered by the Governance Committee and the Board.
With respect to Proposal 2, approval, on an advisory basis, of our NEOs' compensation requires the affirmative vote of a majority of the shares present, in person or represented by proxy, at the 2022 Annual Meeting and entitled to vote on the proposal.
With respect to Proposal 3, the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the 2022 fiscal year will pass with the affirmative vote of a majority of the shares present, in person or represented by proxy, at the 2022 Annual Meeting and entitled to vote on the proposal.
8. Can I attend the 2022 Annual Meeting in person?
The 2022 Annual Meeting will be held exclusively online, with no option to attend in person. If you plan to attend the 2022 Annual Meeting virtually, you will need to visit www.virtualshareholdermeeting.com/CLF2022 and use your 16-digit control number to log into the meeting. If you do not have a 16-digit control number, you may still attend the virtual 2022 Annual Meeting as a guest in listen-only mode. We encourage shareholders to log in to the website and access the webcast early, beginning approximately 30 minutes before the 11:30 a.m. start time. If you experience technical difficulties, please contact the technical support telephone number posted on www.virtualshareholdermeeting.com/CLF2022.
The accompanying proxy is solicited by the Board for use at the 2022 Annual Meeting and any adjournments or postponements thereof. This proxy statement, the accompanying proxy card, and our 2021 Annual Report will be made available on or about March 14, 2022 to our shareholders of record as of the Record Date.
PROXY MATERIALS
Notice of Internet Availability of Proxy Materials
In accordance with rules adopted by the SEC, we are using the Internet as our primary means of furnishing proxy materials to our shareholders. Accordingly, most shareholders will not receive paper copies of our proxy materials.
We will instead send our shareholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials and voting electronically over the Internet or by telephone, also known as Notice and Access. The notice also provides information on how shareholders may request paper copies of our proxy materials. We believe electronic delivery of our proxy materials will help us reduce the environmental impact and costs of printing and distributing paper copies and improve the speed and efficiency by which our shareholders can access these materials.
On or about March 14, 2022, we will mail to each shareholder of record as of the Record Date (other than those shareholders who previously had requested paper delivery of proxy materials) a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review the proxy materials, including this proxy statement and the 2021 Annual Report, on the Internet and how to access a proxy card to vote via the Internet or by telephone.
The close of business on February 28, 2022 has been fixed as the Record Date for the 2022 Annual Meeting, and only shareholders of record at that time will be entitled to vote.
The Notice of Internet Availability of Proxy Materials will contain a 16-digit control number that shareholders will need to access the proxy materials, to request paper or electronic copies of the proxy materials, and to vote their shares via the Internet or by telephone.
Householding
We are permitted to send a single copy of the Notice of Internet Availability of Proxy Materials or set of proxy materials (if paper delivery was previously requested) to shareholders who share the same last name and address. This procedure is called “householding” and is designed to reduce our printing and postage costs and reduce our environmental impact by printing fewer paper copies. If you are the beneficial owner, but not the record holder, of Cliffs shares, your bank, broker, nominee or other shareholder of record may only deliver one copy of the Notice of Internet Availability of Proxy Materials or set of proxy materials and, as applicable, any other proxy materials that are made available until such time as you or other shareholders sharing your address notify your nominee that you want to receive separate copies. Beneficial owners sharing an address who are receiving multiple copies of the Notice of Internet Availability of Proxy Materials or sets of proxy materials and who wish to receive a single copy or set in the future will need to contact their bank, broker, nominee or other shareholder of record. A shareholder of record who wishes to receive a separate copy of the Notice of Internet Availability of Proxy Materials or set of proxy materials, or shareholders who share the same address that are currently receiving multiple copies of the Notice of Internet Availability of Proxy Materials or sets of proxy materials and who wish to receive a single copy or set, either now or in the future, may submit this request by writing to our Secretary at Cleveland-Cliffs Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114, or by calling our Investor Relations department at (800) 214-0739, and it will be delivered promptly.
Proxy Solicitation
We will bear the cost of solicitation of proxies. We have engaged Okapi Partners LLC to assist in the solicitation of proxies for fees and disbursements not expected to exceed approximately $50,000 in the aggregate. In addition, employees and representatives of the Company may solicit proxies, and we will request that banks and brokers or other similar agents or fiduciaries transmit the proxy materials to beneficial owners for their voting instructions, and we will reimburse them for their expenses in so doing.
Voting Rights
Shareholders of record on the Record Date are entitled to vote at the 2022 Annual Meeting. On the Record Date, there were outstanding 524,409,717 common shares entitled to vote at the 2022 Annual Meeting. A majority of the common shares entitled to vote must be represented at the 2022 Annual Meeting, in person or by proxy, to constitute a quorum and to transact business. Each outstanding share is
entitled to one vote in connection with each item to be acted upon at the 2022 Annual Meeting. You may submit a proxy by electronic transmission via the Internet, by telephone or by mail, as explained on your proxy card.
Voting of Proxies
The common shares represented by properly authorized proxies will be voted as specified. It is intended that the shares represented by properly authorized proxies on which no specification has been made will be voted: (1) FOR ALL of the ten nominees for director named herein or such substitute nominees as the Board may designate; (2) FOR the approval, on an advisory basis, of our NEOs' compensation; (3) FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the 2022 fiscal year; and (4) at the discretion of the persons named as proxies on all other matters that may properly come before the 2022 Annual Meeting.
Cumulative Voting for Election of Directors
If notice in writing shall be given by any shareholder to the President, an Executive Vice President or the Secretary of the Company, not less than 48 hours before the time fixed for the holding of the 2022 Annual Meeting, that such shareholder desires that the voting for the election of directors shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the 2022 Annual Meeting by the Chairman or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as such shareholder possesses at such election. Under cumulative voting, a shareholder may cast for any one nominee as many votes as shall equal the number of directors to be elected, multiplied by the number of such shareholder's shares. All such votes may be cast for a single nominee or may be distributed among any two or more nominees as such shareholder may desire. If cumulative voting is invoked, and unless contrary instructions are given by a shareholder who signs a proxy, all votes represented by such proxy will be cast in such manner and in accordance with the discretion of the person acting as proxy as will result in the election of as many of our Board’s nominees as is possible.
Counting Votes
The results of shareholder voting will be tabulated by the inspector of elections appointed for the 2022 Annual Meeting. We intend to treat properly authorized proxies as “present” for purposes of determining whether a quorum has been achieved at the 2022 Annual Meeting. Abstentions and broker non-votes will also be counted for purposes of determining whether a quorum is present.
Abstentions and broker non-votes will have no effect with respect to the election of directors. Abstentions will have the effect of votes against, and broker non-votes will have no effect with respect to, the advisory vote regarding the compensation of our NEOs. Abstentions will have the effect of votes against the ratification of Deloitte & Touche LLP as our independent registered public accounting firm. The ratification of Deloitte & Touche LLP as our independent registered public accounting firm is considered a routine matter and, as a result, we do not expect to have broker non-votes with respect to this proposal (but if there were any such broker non-votes, then they would have the effect of votes against such ratification).
| | |
| ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY |
|
|
OUR COMMITMENT TO SUSTAINABILITY
As the largest flat-rolled steel and iron ore pellet producer in North America, we make a vital contribution to modern society. We recognize that all aspects of steelmaking, from the extraction and processing of the earth's mineral resources to the manufacture and finishing of steel, must be accomplished in a responsible manner that minimizes impacts on the environment and creates value for our stakeholders and society. Environmental stewardship is an essential element of our sustainable business strategy and is at the heart of our efforts to earn and maintain our social license to operate in the communities where we do business.
We seek to create shareholder value by implementing environmental, social and governance ("ESG") strategies that enhance this license to operate, improve safety and environmental performance and reduce operating costs. Embedding these fundamentals into our business not only helps achieve environmental and social sustainability goals, but also helps ensure that we remain economically viable in a highly competitive industry. Through this approach, we look forward to generating economic opportunities for future generations.
Sustainable Steel
As a vertically integrated iron and steel producing company, we differentiate ourself from others in the steel industry since we internally produce in the United States the majority of the raw materials that we use in the steelmaking process. Our production of high-quality ferrous raw materials, including iron ore pellets, hot briquetted iron ("HBI") and prime scrap metal, enables us to supply a wide portfolio of high-quality grades and specialty steel products sustainably and consistently. We have the unique advantage as a steel producer of being fully self-
ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY
sufficient in iron ore pellets, including standard pellets, fluxed pellets, and low-silica direct reduction-grade pellets. Our pellets are mined in Michigan and Minnesota and are used for HBI production in Ohio and for cleaner pellet-based blast furnace steel production throughout the Great Lakes region.
During 2021, we successfully ramped up our Toledo, Ohio direct reduction facility to full run-rate nameplate annual capacity for HBI. HBI is a high-quality, low-cost and low-carbon intensive alternative to imported pig iron. HBI can be used in blast furnaces to improve furnace energy efficiency and reduce the amount of coke required when producing iron and steel. HBI used in our basic oxygen furnaces ("BOFs") and electric arc furnaces ("EAFs") can enhance productivity and quality of the finished product while reducing prime scrap demand (as a scrap alternative). We consumed more than 1.2 million metric tons of HBI in our operations during the course of 2021.
With the acquisition of Ferrous Processing and Trading Company and its affiliates ("FPT"), we are well positioned to be the domestic leader in closed-loop steel recycling. At Cliffs, 100% of our steel contains recycled steel scrap. Our prime scrap processing capabilities allow us to:
•optimize productivity at our EAFs and BOFs;
•further our commitment to environmentally-friendly, low-carbon intensity steelmaking with a cleaner materials mix; and
•create a platform to leverage our long-standing, flat-rolled automotive and other customer relationships into closed-loop recycling partnerships to grow our prime scrap presence and help our customers meet their own sustainability goals.
Finally, steel is integral to the greening of the U.S. power grid. We are an active supplier to the onshore wind energy market, focused on the domestic supply of steel plate products. We are also collaborating with domestic manufacturers to develop new advanced high strength steel products for use in large-scale solar farms. As the sole producer of grain oriented electrical steels in North America, we are strategically prepared to supply necessary materials to update the U.S. electrical grid.
Environmental and Sustainability Management
Being a good steward of the environment starts with sound management practices and leadership oversight. Our Strategy and Sustainability Committee of the Board of Directors – chaired by our Chairman, President and Chief Executive Officer ("CEO") – oversees our strategic plan and annual management objectives, as well as the implementation of our sustainability strategy, which includes review of major ESG-related risks and opportunities. Our Executive Vice President, Environmental & Sustainability is responsible for the environmental and sustainability functions of our business and leads cross-functional collaboration efforts to ensure that all relevant departments within our Company are engaged in supporting our sustainability initiatives, including those concerning climate-related risks and opportunities. It is imperative that we maintain compliance across our operations, including engaging with applicable regulatory agencies, obtaining necessary permits and reporting on our performance. Additionally, our corporate environmental and sustainability teams work with their local counterparts at each of our facilities to ensure best practices are implemented across our footprint with the necessary support and resources.
Climate and Greenhouse Gas Emissions
Our commitment to operating our business in a more environmentally responsible manner remains constant. One of the most important issues impacting our industry, our stakeholders and our planet is climate change. In early 2021, we announced our commitment to reduce our greenhouse gas ("GHG") emissions 25% from 2017 levels by 2030. This goal represents combined Scope 1 (direct) and Scope 2 (indirect) GHG emission reductions across all of our operations. Our progress toward achieving this goal is monitored by our Strategy and Sustainability Committee.
Prior to setting this goal with our newly acquired steel assets, we exceeded our previous GHG reduction target at our legacy facilities six years ahead of our 2025 goal. In 2019, we reduced our combined Scope 1 and Scope 2 GHG emissions by 42% on a mass basis from 2005 baseline levels. Our goal is to further reduce those emissions in coming years.
Our pathway to achieving this goal is driven by our execution of five strategic priorities:
•Developing domestically sourced, high-quality iron ore feedstock and utilizing natural gas in the production of HBI;
•Implementing energy efficiency and clean energy projects;
•Investing in the development of carbon capture technology;
•Enhancing our GHG emissions transparency and sustainability focus; and
•Supporting public policies that facilitate GHG reduction in the domestic steel industry.
ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY
Additionally, in 2021, we began participating in the Expert Advisory Group of the Science Based Targets initiative ("SBTi"), contributing to the development of science-based target methodologies for the steel sector. The Expert Advisory Group has an advisory role, and decisions on final methodologies will be made by CDP (formerly known as the Carbon Disclosure Project), the United Nations Global Compact, World Resources Institute and World Wide Fund for Nature, as founders of SBTi. The methodologies developed in this project will be available at no cost to all stakeholders with the aim of supporting alignment with the Paris Agreement goals.
We determine and disclose our GHG emissions in our annual sustainability reports in alignment with the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI) to government regulatory agencies and to third-party platforms, such as the additional GHG and climate-related information submitted to initiatives like CDP, a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. We are pleased to report that we received a ‘B’ score from CDP for our 2021 Climate Change response, the best score amongst domestic U.S. steel producers.
Energy
We purchase electricity for all of our operations in either regulated or deregulated markets. Some of our operations also use self-generated coke oven gas and/or blast furnace gas to produce electricity, which is an environmentally-friendly practice that reduces our need to purchase electricity from external sources and helps reduce our Scope 2 emissions. We closely monitor developments at the state and federal levels that could impact electricity availability or cost and incorporate such changes into our electricity supply strategy. While our products enable additional wind and solar capacity and include the electrical steel grades necessary for an expanding modern grid, we also drive improvements to the grid through participation in renewable power offerings from regulated utilities that supply our operations. For example, in 2021, we committed to participate in a supplier's large customer voluntary green pricing program, which is expected to fulfill 35% of our Dearborn, Michigan integrated mill's power needs with solar-generated electricity. We understand that this supplier's new solar power generating facility is anticipated to begin operation in late 2023. We are targeting to purchase a total of 2 million megawatt hours ("MWh") of renewable energy annually (approximately 20% of our total purchased electricity for 2021), which will be additive to the power grid, complement our existing supply and accomplish further reductions in our Scope 2 footprint.
Key Partnerships
To further demonstrate our commitment to reducing our carbon footprint, we joined the U.S. Department of Energy’s ("DOE") Better Climate Challenge, a government-sponsored effort to set ambitious GHG emission reduction goals for energy-intensive organizations such as ours. We are proud to be the first and only steel company to join the challenge. Additionally, many of our steel assets have improved plant and energy efficiency through participation in programs like the DOE’s Better Plants program and the U.S. Environmental Protection Agency’s Energy Star program. With our longstanding focus on plant and energy efficiency, we aim to build on our previous successes across our newly integrated enterprise.
Human Capital Management
Our people are our most valuable asset. With a growing workforce – currently more than 26,000 employees strong – investing in our people’s safety and success is a top priority. We are focused on attracting and retaining a highly-skilled workforce to help us achieve our business and sustainability goals and objectives. Working closely with our labor partners, our employees receive competitive compensation and benefits, along with wide-ranging opportunities for training, development and growth. We are proud to report that our median employee compensation is well above industry average.
Health and Safety
Safe production is our primary core value and continues to serve as the foundation of our health and safety program, as we strive toward achieving a zero injury culture across our operations. We are committed to maintaining a safe and healthy environment for everyone that sets foot on our sites. We regularly monitor our safety performance and make continuous improvements to effect change. Best practices and incident learnings are shared across our footprint to ensure each facility can administer the most effective policies and procedures for enhanced workplace safety. Progress toward achieving our objectives is accomplished through a focus on proactive sustainable safety initiatives, and results are measured against established industry and internal benchmarks, including our Company-wide Total Recordable Incident Rate ("TRIR"). In 2021, we refreshed our corporate safety policy, which was implemented at every site with the full support of our executive leadership.
In July 2021, we launched a Company-wide COVID-19 vaccine incentive program (the "Vaccine Program") that we developed in partnership with our labor unions – United Steelworkers ("USW"), United Autoworkers ("UAW") and International Association of Machinists ("IAM"). The intent of the Vaccine Program was to protect our valued workforce during the pandemic by providing our employees with a positive incentive for vaccination. Throughout the 45 days the Vaccine Program was in place, the vaccination rate more than doubled, and we achieved a total vaccination rate of over 75% throughout our workforce. This initiative resulted in a payout of $45 million in total cash incentives to our vaccinated workforce. The successful Vaccine Program allowed us to operate efficiently and safely throughout the remainder of 2021 and
ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY
into 2022 and demonstrated our leadership’s investment in the well-being of our workforce. Further discussion of the Vaccine Program is included in the CD&A on page 27. Community Engagement
We take very seriously our responsibility to be a good neighbor to our local communities. We work with local organizations to achieve common goals; we listen and respond to the concerns of community members; and we give generously to local and regional non-profit and community-focused organizations with shared values. In 2021, we expanded our efforts around proactive stakeholder engagement. These efforts have enabled us to better understand where our business intersects with the needs and expectations of our stakeholders and to prioritize activities that create shared value. It also helps us build relationships and work collaboratively to address issues when they arise. We enhanced our Community Inquiry Program to better understand the perspectives and questions of community members by expanding our community relations team with representatives in our major hubs of operation and by creating accessible and open lines of communication.
Charitable Giving
Both as a corporate partner and through The Cleveland-Cliffs Foundation (the "Foundation"), we invest in local organizations and programs that uplift and improve our communities. Our charitable giving is primarily focused on supporting education, preserving the environment, and fostering healthy and vibrant communities. In 2021, Cliffs and the Foundation donated $6.5 million to local communities.
On Giving Tuesday in November 2021, we launched an employee giving and matching gift program available to all our employees. Through this program, the Foundation supports causes most important to our employees. The program is designed to encourage our employees to give back to nonprofit organizations about which they care. In return, the Foundation is able to increase its community impact by matching their donations. Every employee is eligible to request that up to $1,500 of their personal charitable giving be matched each year, per the program guidelines.
Value Chain Management
We demonstrate our core value of ethical behavior by responsibly sourcing and procuring our raw materials with minimal environmental impact. We perform extensive due diligence on raw materials we source outside of the United States to ensure our suppliers adhere to our Code of Business Conduct and Ethics and our Code of Conduct for Cliffs Suppliers. We expect our suppliers to comply with our Human Rights Policy, Conflict Minerals Policy and Environmental Policy. We also assess whether our suppliers are employing good practices within their own supply chain.
We remain committed to supplier diversity and inclusivity. We believe these sourcing practices foster healthy competition and innovation in an industry that has the potential to contribute significantly to the clean energy transition. We welcome ideas and collaboration from our suppliers to deliver the most value for our customers. We have diverse supplier targets—particularly with our automotive customers—that we continue to achieve. We participate in numerous supplier diversity events throughout the year that provide us opportunities to meet this supplier base and potentially do business with them. Oftentimes, these suppliers are in the energy, transportation, maintenance, repair and operations sectors. In 2021, we combined budgets from our legacy companies into a total diverse supplier spend amount. We are proud to report that we spent more than $390 million with diverse suppliers in 2021, and we aim to increase this spend year over year.
As a critical supplier ourselves, we respond to regular requests from customers to provide sustainability information and data related to our business. These requests take many forms, the most common of which are online surveys. For example, we responded to the EcoVadis supplier sustainability survey for the first time in 2021, earning a Silver medal for our sustainability achievement. We welcome these opportunities to engage with our customers, and we will continue to respond accordingly.
References to our sustainability reports and the contents thereof do not constitute incorporation by reference of the information contained in our sustainability reports, and such information is not part of this proxy statement.
ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ESG Highlights |
| | | | | | | | |
| | | | | | | | |
Reduce GHG emissions by 25% by 2030 from 2017 levels | | 70% Union membership | | B score for CDP Climate Change |
| |
| | | | | | | |
Target 2M MWh of purchased renewable energy annually | | Cleveland-Cliffs' Core Values are at the heart of everything we do. | |
| |
| | | | | | | |
| 100% of our steel contains recycled steel scrap | | $6.5 million donated to communities by Cleveland-Cliffs and our charitable foundation |
| | | | | | | | |
| | | | | | | | |
BOARD LEADERSHIP STRUCTURE
The Chairman of the Board is Lourenco Goncalves, who is also our President and CEO. Pursuant to our Corporate Governance Guidelines, when the positions of Chairman and CEO are held by one individual or if the Chairman is a Cliffs executive, then the Governance Committee recommends to the Board a Lead Director. Douglas C. Taylor currently serves as our Lead Director. The Board believes that this leadership structure is the optimal structure to guide our Company and to maintain the focus to achieve our business goals and represents our shareholders' best interests.
Under this leadership structure, Mr. Goncalves, as Chairman, is responsible for overseeing and facilitating communications between our management and the Board, for setting the meeting schedules and agendas, and leading Board discussions during Board meetings. In his combined role, Mr. Goncalves has the benefit of Cliffs personnel to help with extensive meeting preparation, responsibility for the process of recordkeeping of all Board deliberations, and the benefit of direct daily contact with management and the internal audit department. The Chairman works closely with the Lead Director in setting meeting agendas and in ensuring that essential information is communicated effectively to the Board.
The Lead Director’s responsibilities include: chairing executive session meetings of the independent directors; leading the Board’s processes for evaluating the CEO; presiding at all meetings of the Board at which the Chairman is not present; serving as a liaison between the Chairman and the independent directors; and meeting separately at least annually with each director.
This leadership structure provides our Chairman with the readily available resources to manage the affairs of the Board while allowing our Lead Director to provide effective and timely advice and guidance. Our governance process is based on our Corporate Governance Guidelines, which are available on our website at www.clevelandcliffs.com under "Investors" then "Governance".
In accordance with the corporate governance listing standards of the New York Stock Exchange (the "NYSE"), our non-management directors meet at regularly scheduled executive sessions without management present. These meetings take place at least quarterly.
BOARD'S ROLE IN RISK OVERSIGHT
The Board as a whole oversees our enterprise risk management ("ERM") process. The Board executes its risk oversight role in a variety of ways. The full Board regularly discusses the key strategic risks facing Cliffs.
The Board delegates oversight responsibility for certain areas of risk to its committees. Generally, each committee oversees risks that are associated with the purpose of and responsibilities delegated to that committee. For example, the Audit Committee oversees risks related to accounting and financial reporting, as well as information security risks. In addition, pursuant to its charter, the Audit Committee periodically
reviews our ERM process. The Compensation Committee monitors risks related to development and succession planning for the CEO and other executive officers, as well as compensation and related policies and programs for executive and non-executive officers and management. The Governance Committee handles risks with respect to board composition, membership and structure, and corporate governance matters. The Strategy and Sustainability Committee oversees our strategic plan and annual management objectives and oversees, advises on and monitors opportunities and risks relating to our strategic plan and climate change, as well as our sustainability goals and initiatives. As appropriate, the respective committees’ Chairpersons provide reports to the full Board.
Management is responsible for the day-to-day management of our risks. The ERM process includes the involvement of management in the identification, assessment, mitigation and monitoring of a wide array of potential risks, from strategic to operational to compliance-related risks throughout the Company. Executive management regularly reports to the Board or relevant committees regarding Cliffs’ key risks and the actions being taken to manage these risks.
The Company believes that its leadership structure supports the risk oversight function of the Board. Each committee is involved in carrying out the Board's risk oversight function and, except for the Strategy and Sustainability Committee, independent directors chair each of our committees.
BOARD MEETINGS AND COMMITTEES
Our directors discharge their responsibilities in a variety of ways, including reviewing reports to directors, visiting our facilities, corresponding with the CEO, and conducting telephone conferences with the CEO and other directors regarding matters of interest and concern to Cliffs. In addition, our directors have regular access to our senior management. All committees regularly report their activities, actions and recommendations to the full Board.
During 2021, our Board held ten meetings. Each director attended, either in person or by telephone conference, at least 95% of the Board and committee meetings held while serving as a director or committee member in 2021. Pursuant to Board policy, all serving directors are expected to attend all Board and committee meetings, as well as our annual meeting of shareholders. All of our then-serving directors who were standing for re-election attended the 2021 Annual Meeting.
The Board currently has four standing committees: the Audit Committee, the Compensation Committee, the Governance Committee and the Strategy and Sustainability Committee. Each of these four committees has a charter that can be found on our website at www.clevelandcliffs.com under "Investors" then "Governance". A biographical overview of the members of our committees can be found beginning on page 20.
Board Committees
| | | | | | | | |
| AUDIT COMMITTEE |
| |
MEMBERS: 4 | INDEPENDENT: 4 | 2021 MEETINGS: 8 |
AUDIT COMMITTEE FINANCIAL EXPERTS: The Board has determined that each of John T. Baldwin, Robert P. Fisher, Jr., William K. Gerber and Arlene M. Yocum is an "audit committee financial expert" within the meaning of Item 407 of Regulation S-K under the federal securities laws. |
RESPONSIBILITIES: |
▪Reviews with our management, the internal auditors and the independent registered public accounting firm, the adequacy and effectiveness of our system of internal control over financial reporting ▪Reviews significant accounting matters ▪Reviews quarterly unaudited financial information prior to public release ▪Approves the audited financial statements prior to public distribution ▪Oversees and monitors risks related to accounting, financial reporting and information security ▪Approves our assertions related to internal controls prior to public distribution ▪Reviews any significant changes in our accounting principles or financial reporting practices ▪Evaluates our independent registered public accounting firm; discusses with the independent registered public accounting firm its independence and considers the compatibility of non-audit services with such independence ▪Annually selects and retains our independent registered public accounting firm to examine our financial statements and reviews, approves and retains the services performed by our independent registered public accounting firm ▪Establishes and maintains, with the Governance and Nominating Committee, procedures to review related party transactions ▪Approves management’s appointment, termination or replacement of the head of Internal Audit ▪Conducts a legal compliance review at least annually |
| CHAIR: John T. Baldwin | MEMBERS: Robert P. Fisher, Jr., William K. Gerber and Arlene M. Yocum |
| | | | | | | | |
| COMPENSATION COMMITTEE |
| |
| MEMBERS: 3 | INDEPENDENT: 3 | 2021 MEETINGS: 8 |
RESPONSIBILITIES: |
▪Oversees development and implementation of Cliffs' compensation policies and programs for officers ▪Develops criteria for awards under incentive plans that appropriately relate to Cliffs' strategic plan and operating performance objectives, and approves equity-based awards ▪Reviews and evaluates CEO and other executive officer performance and approves compensation (with the CEO's compensation being subject to ratification by the independent members of the Board) ▪Recommends to the Board the election of officers ▪Assists with management development and succession planning ▪Reviews and approves employment and severance arrangements with officers and oversees regulatory compliance regarding compensation matters and related party transactions ▪Reviews and recommends the CD&A and the Compensation Committee report for inclusion in appropriate Cliffs securities filings ▪Obtains the advice of outside experts with regard to compensation matters ▪May, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee and may delegate certain equity award grant authority to officers of Cliffs, subject to applicable law For more information about the role of executives and outside advisers in our executive compensation process, see the CD&A section of this proxy statement. |
CHAIR: Douglas C. Taylor | MEMBERS: John T. Baldwin and Ralph S. Michael, III |
| | | | | | | | |
| GOVERNANCE COMMITTEE |
| |
| MEMBERS: 4 | INDEPENDENT: 4 | 2021 MEETINGS: 6 |
| RESPONSIBILITIES: |
▪Oversees annual review of our Corporate Governance Guidelines and periodically reviews external developments in corporate governance matters generally ▪Periodically reviews and makes recommendations regarding our officers' authorized levels for corporate expenditures ▪Establishes and maintains, with the Audit Committee, procedures for review of related party transactions that relate to Board members ▪Reviews the qualifications of incumbent directors and proposed Board candidates, and recommends to the Board as director-nominees those candidates possessing the experience, skills and qualifications consistent with Board-approved criteria, our Corporate Governance Guidelines and other criteria deemed important by the Governance Committee ▪Monitors the Board governance process and provides counsel to the CEO on Board governance and other matters ▪Recommends changes in membership and responsibility of Board committees and reviews and makes recommendations regarding any resignations tendered by directors ▪Reviews and administers our director compensation plans and benefits, and makes recommendations to the Board with respect to compensation plans, equity-based plans and share ownership guidelines for directors ▪Other responsibilities include oversight of annual evaluation of the Board and CEO and monitoring risks associated with Board organization, membership, structure and succession planning |
CHAIR: Ralph S. Michael, III | MEMBERS: Robert P. Fisher, Jr., Susan M. Green and Janet L. Miller |
| | | | | | | | |
| STRATEGY AND SUSTAINABILITY COMMITTEE |
| |
| MEMBERS: 4 | INDEPENDENT: 3 | 2021 MEETINGS: 5 |
| RESPONSIBILITIES: |
▪Oversees Cliffs’ strategic plan and annual management objectives ▪Acts in an advisory capacity with respect to Cliffs' sustainability strategies, its commitment to environmental stewardship, its focus on health and safety of employees and other stakeholders, and its corporate social responsibility initiatives ▪Monitors risks relevant to Cliffs' strategy, including operational, safety, environmental, social and governance risks, including climate-related risks and opportunities ▪Provides advice and assistance with developing our current and future strategy ▪Provides follow up oversight with respect to the comparison of actual results with estimates for major projects and post-acquisition integration efforts ▪Assesses Cliffs’ overall capital structure and its capital allocation priorities ▪Assists management in determining the resources necessary to implement Cliffs’ strategic and financial plans ▪Considers the merits and risks of potential acquisitions, joint ventures, emerging growth opportunities and strategic alliances ▪Reviews and approves any sustainability reports that may be published by Cliffs from time to time |
CHAIR: Lourenco Goncalves | MEMBERS: Gabriel Stoliar, Douglas C. Taylor and Arlene M. Yocum |
IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES
Shareholder Nominees
The policy of the Governance Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating nominations, the Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth below under “Board Diversity and Director Qualifications.” Any shareholder nominations proposed for consideration by the Governance Committee should include: (i) complete information as to the identity and qualifications of the proposed nominee, including name, address, present and prior business and/or professional affiliations, education and experience, and particular fields of expertise; (ii) an indication of the nominee’s consent to serve as a director if elected; and (iii) the reasons why, in the opinion of the recommending shareholder, the proposed nominee is qualified and suited to be a director. Shareholder nominations should be addressed to Cleveland-Cliffs Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114, Attention: Secretary. Our Regulations provide that at any meeting of shareholders at which directors are to be elected, only persons nominated as candidates will be eligible for election.
Board Diversity and Director Qualifications
The Governance Committee considers board diversity as it deems appropriate and consistent with our Corporate Governance Guidelines, the charter of the Governance Committee and other criteria established by the Board. The Governance Committee’s goal in selecting directors for nomination to the Board generally is to seek to create a well-balanced team that combines diverse experience, skill and intellect of seasoned directors in order to enable us to pursue our strategic objectives. The Governance Committee has not reduced the qualifications for service on the Board to a checklist of specific standards or minimum qualifications, skills or qualities. Rather, the Governance Committee seeks, consistent with the vacancies existing on the Board at any particular time and the interplay of a particular candidate’s experience with the experience of other directors, to select individuals whose business experience, knowledge, skills, diversity and integrity would be considered a desirable addition to the Board and any committees thereof. In addition, the Governance Committee annually conducts a review of incumbent directors in order to determine whether a director should be nominated for re-election to the Board.
Identifying and Evaluating Nominees for Directors
The Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Governance Committee regularly reviews the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Governance Committee considers various potential candidates for director. Applicable considerations include: whether the current composition of the Board is consistent with the criteria described in our Corporate Governance Guidelines; whether the candidate submitted possesses the qualifications that generally are the basis for selection of candidates to the Board; and whether the candidate would be considered independent under the rules of the NYSE and our standards with respect to director independence. Candidates may come to the attention of the Governance Committee through current Board members, professional search firms, shareholders or other persons. As described above, the Governance Committee considers properly submitted shareholder nominations for candidates for the Board. Following verification of the recommending shareholder’s status, recommendations are considered by the Governance Committee at its next regularly scheduled meeting. Final approval of any candidate is determined by the full Board.
COMMUNICATIONS WITH DIRECTORS
Shareholders and interested parties may communicate with the Lead Director, our non-management directors as a group or the Board by writing to the Lead Director at Cleveland-Cliffs Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114. As set forth in the Corporate Governance Guidelines, the Lead Director will report to the full Board external communications that are directed at all members of the Board. The Secretary routinely filters communications that are solicitations, complaints, unrelated to Cliffs or Cliffs' business or determined to pose a possible security risk to the addressee.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics (the "Code of Conduct Policy"), which applies to all of our directors, officers and employees. The Code of Conduct Policy is available on our website at www.clevelandcliffs.com under "Investors" then "Governance". We intend to post amendments to or waivers from the Code of Conduct Policy (to the extent applicable to our principal executive officer, principal financial officer or principal accounting officer) on our website. References to our website and the contents thereof do not constitute incorporation by reference of the information contained on our website, and such information is not part of this proxy statement.
INDEPENDENCE AND RELATED PARTY TRANSACTIONS
Of our current directors, the Board has determined that each of Messrs. Baldwin, Fisher, Gerber, Michael, Stoliar and Taylor and Mses. Green, Miller and Yocum has no material relationship with us (either directly or as a partner, shareholder or officer of an organization that has a relationship with us) and is independent within the NYSE director independence standards. Mr. Goncalves is our Chairman, President and CEO, and, as such, is not considered independent. In addition, the Board previously determined that each of M. Ann Harlan and Eric M. Rychel, who both resigned during 2021, had no material relationship with us (either directly or as a partner, shareholder or officer of any organization that has a relationship with us) and was independent within the NYSE director independence standards.
We have a written Related Party Transactions Policy (our "RPT Policy"), pursuant to which we only will enter into a related party transaction if our CEO and Chief Legal Officer determine that the transaction is comparable to those that could be obtained in arm’s-length dealings with an unrelated third party. If the transaction is approved by our CEO and Chief Legal Officer, then the transaction also must be approved by the disinterested members of our Audit Committee. Under our RPT Policy, any related party transactions are reviewed by the Audit Committee at each quarterly meeting. After review, the disinterested members of the Audit Committee either approve or disapprove the proposed transaction. Management is responsible for updating the Audit Committee at each quarterly meeting as to any material changes to those transactions that the Audit Committee has previously approved. For purposes of our RPT Policy, we define a related person as any person who is a director, executive officer, nominee for director or an immediate family member of a director, an executive officer or a nominee for director. We define a related party transaction as a transaction, agreement or relationship in which Cliffs was, is or will be a participant, the amount of the transaction exceeds $120,000, and a related person has or will have a direct or indirect material interest.
However, compensation paid by Cliffs for service as a director or executive officer of the Company is not deemed to be a related party transaction, even if the aggregate amount involved exceeds $120,000.
We describe below those transactions during 2021 in which Cliffs was a participant and the amount involved exceeded $120,000 and in which a related person had or will have a direct or indirect material interest. We recognize that transactions between us and any of our directors or executive officers can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our shareholders.
1. Mr. Celso Goncalves, our Executive Vice President, Chief Financial Officer ("CFO"), is the son of Mr. Lourenco Goncalves, our Chairman, President and CEO, both of whom are NEOs. The compensation arrangements between the Company and each of Mr. Celso Goncalves and Mr. Lourenco Goncalves could be considered related party transactions under our RPT Policy and have been reviewed and approved by our Audit Committee in accordance with our RPT Policy. For details on the compensation arrangements between the Company and each of Mr. Celso Goncalves and Mr. Lourenco Goncalves, please see the Executive Compensation Tables and Narratives beginning on page 53. 2. Certain of our subsidiaries, including Cleveland-Cliffs Steel Corporation (f/k/a AK Steel Corporation) and Cleveland-Cliffs Steel LLC (f/k/a ArcelorMittal USA LLC), have contracted on an arm's-length basis for work with Morgan Engineering Systems, Inc. ("Morgan Engineering"), which is a company owned by Mr. Mark Fedor. Mr. Mark Fedor is the brother of Mr. Terry Fedor, who serves as our Executive Vice President, Operations, East and is an NEO. Such subsidiaries' business relationships with Morgan Engineering existed prior to our acquisition of such subsidiaries on March 13, 2020, and December 9, 2020, respectively, and such subsidiaries and our other subsidiaries may determine to continue to engage Morgan Engineering in the ordinary course of business to provide services on an arm's-length basis in future years, and such services may exceed the $120,000 annual threshold under our RPT Policy. For example, during 2021, Morgan Engineering was paid approximately $6.3 million for work performed for our subsidiaries. Mr. Terry Fedor was not involved in the initial engagement of Morgan Engineering by any of our subsidiaries and has agreed to abstain from any future actions related to Morgan Engineering. In accordance with our RPT Policy, during 2021, the CEO and the Chief Legal Officer, as well as the Audit Committee, approved and ratified transactions with Morgan Engineering.
We have entered into indemnification agreements with each current member of the Board and each of our officers. The form and execution of the indemnification agreements were approved and adopted by the Board on April 24, 2019. The indemnification agreements essentially provide that, to the fullest extent permitted or required by Ohio law and as the law may change to increase the scope of indemnification, we will indemnify the indemnitee against all expenses, costs, liabilities and losses (including attorneys’ fees, judgments, fines or settlements) incurred or suffered by the indemnitee in connection with any suit in which the indemnitee is a party or otherwise involved as a result of his or her service as a member of the Board or as an officer of the Company. Under these agreements, to the extent that the indemnification is unavailable, we shall contribute to the payment of any and all indemnifiable claims or losses in an amount that is fair and reasonable under the circumstances. In connection with the indemnification agreements with each current member of the Board, we have a trust agreement with KeyBank National Association pursuant to which the parties to the indemnification agreements may be reimbursed with respect to enforcing their respective rights under the indemnification agreements.
In 2004, we reached an agreement with the USW pursuant to which the USW may designate a member to the Board provided that the individual is acceptable to the Chairman, is recommended by the Board Affairs Committee (now known as the Governance Committee), and is then approved by the full Board to be considered a director nominee. In 2007, Susan Green was first proposed by the USW, elected to the Board by Cliffs’ shareholders in July 2007, and re-elected in each of the years 2008 through 2013. As a result of the proxy contest in 2014, Ms. Green was not re-elected but was asked by the reconstituted Board to re-join the Board and was subsequently appointed on October 15, 2014 and re-elected each year since 2015.