PROPOSAL 1: ELECTION OF DIRECTORS
In 2014, U. S. Steel’s Board of Directors and stockholders
approved the elimination of the classified board structure. The process to declassify the Board was phased out over a three-year
period and will be complete as of the 2017 Annual Meeting of Stockholders. At the 2017 Annual Meeting, all twelve directors are
up for election. Of the current directors nominated for election, three were previously Class I directors and nine were elected
last year for a one-year term. Each nominee will be elected to serve until our next annual meeting of stockholders. All of the
nominees are presently members of the Board of Directors. The Board is recommending that all twelve nominees be elected.
Except in the case of contested elections, each director nominee
is elected if a majority of the votes are cast for 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, with abstentions and broker non-votes not counted as votes cast either “for” or “against”
the director’s election. A “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 that the director would continue to serve on the Board until the director’s successor is duly elected
and qualified or until the director’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 the
director fails to receive a majority of the votes cast in an election
that is not a contested election. If an incumbent director fails to receive a majority of the votes cast in an election that is
not a contested election, the Corporate Governance & Public Policy Committee, or such other 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’s recommendation, within 90 days following certification of the election
results. Each of the Corporate Governance & Public Policy 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.
A brief statement about the background and qualifications of each
nominee is provided on the following pages. No director has a familial relationship to any other director, nominee for director
or executive officer. The independence of Board members and other information related to the Board of Directors is described under
the heading, “Corporate Governance – Independence” in this proxy statement.
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.
Selection of Director Nominees
The Corporate Governance & Public Policy Committee is responsible
for identifying nominees for election to the Board. The Corporate Governance & Public Policy 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
Policy 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, 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 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 term “diversity”
to include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that
contribute to board heterogeneity.
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United States Steel Corporation
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Proposal 1: Election of Directors
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 Policy Committee each time a new candidate is considered for Board membership. The Corporate Governance
& Public Policy 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, 2017, the Corporate Governance & Public Policy Committee determined that
each Board member satisfied the director qualification standards and advised the Board that each of the director nominees listed
under “Proposal 1: Election of Directors” was qualified to serve on the Board.
Stockholder Recommendations
The Corporate Governance & Public Policy Committee will
consider director nominees recommended by stockholders. Notice of such recommendation should be sent in writing to the Chair
of the Corporate Governance & Public Policy Committee, c/o the Corporate Secretary of United States Steel Corporation,
600 Grant Street, Suite 1500, Pittsburgh, PA 15219. The recommendation must include: (i) the candidate’s name, address,
occupation and share ownership; (ii) any other biographical information that will enable the Corporate Governance &
Public Policy 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 Corporation and provide sufficient detail
for the Corporate Governance & Public Policy Committee to consider the recommended individual’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 Board candidates.
Under the collective bargaining agreement with the United Steelworkers
(the “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.
Director Nominees
For purposes of the upcoming annual meeting, the Corporate Governance
& Public Policy Committee has recommended 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.
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 brief description of the age, principal occupation,
position and business experience, including other public company directorships, for at least the past five years, and major affiliations
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 serve on the Board.
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Steel Corporation | 2017 Proxy Statement
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Proposal 1: Election of Directors
SNAPSHOT
OF 2017 DIRECTOR NOMINEES
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Our Director nominees possess skills and
experience aligned to our current and future strategy and business needs. Annual Board evaluations also include an assessment
of whether the Board has an appropriate mix of skills, experience and other characteristics.
All
Director Nominees Have:
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A reputation of high integrity
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A proven record of success
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An ability to exercise sound judgement
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A demonstrated knowledge of business strategy and board operations
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An understanding of corporate governance best practices and processess
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A commitment to contribute the time necessary to be actively involved
in all decision-making activities
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Our
Director nominees exhibit an effective mix of diversity, experience and fresh perspective
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United
States Steel Corporation | 2017 Proxy Statement | 3
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Proposal 1: Election of Directors
The
Board of Directors recommends a vote
“FOR” the election
of each of the following 2017 Director Nominees for a one-year term:
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PATRICIA
DIAZ DENNIS
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AGE:
70
OCCUPATION:
Retired Senior Vice President and Assistant
General Counsel, AT&T
DIRECTOR SINCE:
2015
BOARD COMMITTEES:
Corporate Governance & Public Policy
and Compensation & Organization
OTHER BOARDS:
Massachusetts Mutual Life Insurance Company,
Entravision Communication Corporation
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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 boards of Massachusetts Mutual
Life Insurance Company and Entravision Communication Corporation. 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.
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DAN
O. DINGES
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AGE:
63
OCCUPATION:
Chairman, President and Chief Executive Officer,
Cabot Oil & Gas Corporation
DIRECTOR SINCE:
2010
BOARD COMMITTEES:
Audit and Compensation & Organization
OTHER BOARDS:
Spitzer Industries, Inc., Cabot Oil &
Gas Corporation
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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. In May
2015, Mr. Dinges was appointed chairman of the American Exploration & Production Council, a national trade
association representing 31 of America’s premier independent natural gas and oil exploration and production companies.
He also serves on the board of directors of API (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.
4 | United
States Steel Corporation | 2017 Proxy Statement
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Proposal 1: Election of Directors
2017
Director Nominees - continued
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JOHN
G. DROSDICK
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AGE:
73
OCCUPATION:
Retired Chairman, Chief Executive Officer
and President, Sunoco, Inc.
DIRECTOR SINCE:
2003
BOARD COMMITTEES:
Compensation & Organization (Chair)
OTHER BOARDS:
Triumph Group, Inc.
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John G. Drosdick
graduated
from Villanova University with a Bachelor of Science degree in chemical engineering and received a Master’s degree in chemical
engineering from the University of Massachusetts. From 1968 to 1983, Mr. Drosdick worked in a wide variety of management
positions with Exxon Corporation. He was named President of Tosco Corporation in 1987 and President of Ultramar Corporation in
1992. In 1996, Mr. Drosdick became President and Chief Operating Officer of Sunoco and was elected Chairman and Chief Executive
Officer in May 2000. He retired from his positions as Chief Executive Officer, President and Chairman of Sunoco in 2008. Mr. Drosdick
is Chairman of the board of trustees of the PNC Funds and PNC Advantage Funds and a director of Triumph Group, Inc. Mr. Drosdick
previously served on the boards of directors of H.J. Heinz Co., Lincoln National Corporation and Sunoco Logistic, Inc.
Particular experience,
attributes or skills that qualify candidate for Board membership:
Mr. Drosdick has valuable experience in managing
the many complex issues large public companies face. In addition, he provides the Board with knowledge and insight regarding the
energy industry, an important supplier to, and customer of, the Corporation. He also has experience in the chemicals and coke
industries. Mr. Drosdick has valuable experience in managing critical operational, financial and strategic matters as a result
of his service as Chairman and Chief Executive Officer of Sunoco, Inc.
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JOHN
J. ENGEL
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AGE:
55
OCCUPATION:
Chairman, President and Chief Executive Officer,
WESCO International, Inc.
DIRECTOR SINCE:
2011
BOARD COMMITTEES:
Audit (Chair)
OTHER BOARDS:
WESCO International, Inc.
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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.
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States Steel Corporation | 2017 Proxy Statement | 5
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Proposal 1: Election of Directors
2017
Director Nominees - continued
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MURRY
S. GERBER
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AGE:
64
OCCUPATION:
Retired Chairman and Chief Executive Officer,
EQT Corporation
DIRECTOR SINCE:
2012
BOARD COMMITTEES:
Compensation & Organization and
Audit
OTHER BOARDS:
BlackRock, Inc., Halliburton Company
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Murry S. Gerber
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:
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.
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STEPHEN
J. GIRSKY
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AGE:
54
OCCUPATION:
President, S. J. Girsky & Company
DIRECTOR SINCE:
2016
BOARD COMMITTEES:
Audit and Corporate Governance &
Public Policy
OTHER BOARDS:
Valens Semiconductor Ltd.
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Stephen J. Girsky
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 2008-2009.
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.
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:
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.
6 | United
States Steel Corporation | 2017 Proxy Statement
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Proposal 1: Election of Directors
2017
Director Nominees - continued
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Mario Longhi
received
a Bachelor’s degree in metallurgical engineering from the Institute Mauá de Tecnologica in São Paulo,
Brazil in 1977. Mr. Longhi was elected: Executive Vice President and Chief Operating Officer of United States Steel Corporation
in July 2012; President and Chief Operating Officer in June 2013; President & Chief Executive Officer and a Director
in September 2013; and Chief Executive Officer and a Director on February 28, 2017.
Prior to joining U. S. Steel, Mr. Longhi spent six
years at Gerdau Ameristeel Corporation, serving first as president from 2005 through 2006 and then additionally in the role
of chief executive officer from 2006 until 2011. Before his arrival at Gerdau Ameristeel, Mr. Longhi spent 23 years at Alcoa,
Inc., which he joined in 1982 as a construction superintendent for the company’s Alumar Refinery in his native Brazil.
During his time with Alcoa, he advanced through increasingly responsible positions in Brazil, the United States and
Switzerland, including tenures as president – Alcoa Wheels International, president – Alcoa Forgings
Division, president and chief executive officer – Howmet Castings, and Alcoa vice president and group president –
Global Extrusions.
Mr. Longhi was named 2015 Steelmaker of the Year by the Association
for Iron and Steel Technology and CEO of the Year at the 2015 Platts Global Metals Awards. He was also honored by American Metal
Market in 2011 with an Award for Steel Excellence as Industry Ambassador/Advocate of the Year.
In January 2017, Mr. Longhi was invited to participate in U.S.
President Donald Trump’s Manufacturing Jobs Initiative. Mr. Longhi also currently serves on the Executive Committee and
Board of Directors of the World Steel Association. He is also vice chairman of the American Iron and Steel Institute (AISI), serves
as a member of AISI’s Board of Directors and is chairman of the association’s Policy and Planning Committee. Mr. Longhi
serves on the Board of Directors and Executive Committee of the National Association of Manufacturers.
Particular experience,
attributes or skills that qualify candidate for Board membership:
As the Chief Executive Officer, Mr. Longhi
is responsible for all of the business and corporate affairs of U. S. Steel. His diverse experience and deep knowledge of
the steel industry is crucial to the Corporation’s strategic planning and operational success. As the only employee-director
on the Board, Mr. Longhi 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.
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PAUL
A. MASCARENAS
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AGE:
55
OCCUPATION:
Retired Chief Technical Officer and Vice President,
Ford Motor Company
DIRECTOR SINCE:
2016
BOARD COMMITTEES:
Compensation & Organization and
Corporate Governance & Public Policy
OTHER BOARDS:
ON Semiconductor Corp., Mentor Graphics,
Inc.
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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 Mentor Graphics,
Inc. 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.
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States Steel Corporation | 2017 Proxy Statement | 7
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Proposal 1: Election of Directors
2017
Director Nominees - continued
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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.
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GLENDA
G. McNEAL
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AGE:
56
OCCUPATION:
Executive Vice President and General Manager
- Global Client Group & Strategic Partnerships, American Express Company
DIRECTOR SINCE:
2007
BOARD COMMITTEES:
Corporate Governance & Public Policy
and Audit
OTHER BOARDS:
RLJ Lodging Trust
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Glenda G. McNeal
received
a Bachelor of Arts degree in Accounting from Dillard University and a Master of Business Administration in Finance from the Wharton
School of the University of Pennsylvania. Ms. McNeal began her career with Arthur Andersen, LLP in 1982, and was employed by Salomon
Brothers, Inc. from 1987 to 1989. In 1989, Ms. McNeal joined American Express Company and since that time has served in a series
of increasingly responsible positions for that company. She assumed her current position in 2011. Ms. McNeal is a director of
RLJ Lodging Trust, American Hotel and Lodging Association, and the UNCF.
Particular experience,
attributes or skills that qualify candidate for Board membership:
Ms. McNeal has significant and valuable experience
in business development, customer relationship management, and financial matters as a result of her current position as a senior
executive at American Express Company, along with her prior positions with Arthur Andersen, LLP and Salomon Brothers, Inc. In
addition, she provides the Board with knowledge and insight regarding customer management and the financial services industry.
Ms. McNeal’s considerable senior executive level experience in business and management provides her with an insightful perspective
on strategic planning, risk oversight and operational matters that is valuable to our Board.
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ROBERT
J. STEVENS
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AGE:
65
OCCUPATION:
Retired Chairman of the Board, President and
CEO, Lockheed Martin Corporation
DIRECTOR SINCE:
2015
BOARD COMMITTEES:
Corporate Governance & Public Policy
and Compensation & Organization
OTHER BOARDS:
Monsanto Company
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Robert J. Stevens
is a summa cum laude graduate of Slippery Rock University, from which he received the Distinguished Alumni Award. He earned
a Master’s degree in engineering and management from the Polytechnic University of New York and, with a Fairchild Fellowship,
earned a Master’s degree in business from Columbia University. He is a graduate of the Department of Defense Systems Management
College Program Management course and also served in the United States Marine Corps. Mr. Stevens is the former Chairman,
President and Chief Executive Officer of Lockheed Martin Corporation. He was elected Chairman in April 2005 and served as Executive
Chairman from January through December 2013. He also served as Lockheed Martin’s Chief Executive Officer from August 2004
through December 2012. Previously, he held a variety of increasingly responsible executive positions with Lockheed Martin, including
President and Chief Operating Officer, Chief Financial Officer, and head of Strategic Planning. Mr. Stevens is a member of
the board of directors of the Congressional Medal of Honor Foundation, the Marine Corps Scholarship Foundation and the Atlantic
Council, and is a member of the Council on Foreign Relations. He is a Fellow of the American Astronautical Society, the American
Institute of Aeronautics and Astronautics (AIAA), the Royal Aeronautical Society, and the International Academy of Astronautics.
He served on President Obama’s Advisory Committee for Trade Policy Negotiations and is Chairman of the Director of National
Intelligence Senior Advisory Group.
8 | United
States Steel
Corporation
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Statement
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Proposal 1: Election of Directors
2017
Director Nominees - continued
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Particular experience,
attributes or skills that qualify candidate for Board membership:
Mr. Stevens has valuable experience in managing
the issues that face a publicly held company as a result of his service as Chairman, President and Chief Executive Officer of
Lockheed Martin. Mr. Stevens has significant experience in program management, finance, manufacturing, and operations. Mr. Stevens’
experience as Chief Executive Officer of a Fortune 100 company demonstrates his leadership capability, general business acumen
and knowledge of complex financial and operational issues that large public companies face.
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DAVID
S. SUTHERLAND (CHAIRMAN)
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AGE:
67
OCCUPATION:
Retired President and Chief Executive Officer,
IPSCO, Inc.
DIRECTOR SINCE:
2008
BOARD COMMITTEES:
Corporate Governance & Public Policy
and Audit
OTHER BOARDS:
GATX Corporation, Imperial Oil, Ltd
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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.,
ZCL Composites 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.
|
PATRICIA A. TRACEY
|
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AGE:
66
OCCUPATION:
Ret. Vice President, Homeland Security and
Defense Services, HP Enterprise Services
DIRECTOR SINCE:
2007
BOARD COMMITTEES:
Corporate Governance & Public Policy
(Chair) and Compensation & Organization
|
|
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 retired from her position as Vice President, Homeland Security and Defense Services
with HP Enterprise Services in October 2016.
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.
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United
States Steel Corporation | 2017 Proxy Statement | 9
|
Corporate Governance
CORPORATE GOVERNANCE
Corporate governance is a continuing focus at U. S. Steel,
embraced by the Board of Directors, management, and all employees. The Corporation has a long and rich tradition relating to corporate
governance and public company disclosure. For example, U. S. Steel was 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.
GOVERNANCE PRACTICES
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;
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•
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overseeing the processes for maintaining our integrity with regard to
our financial statements and other public disclosures, and compliance with laws and ethical principles;
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•
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reviewing and approving our major financial objectives and strategic and
operating plans;
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•
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overseeing our talent management and succession planning for the CEO and
other key executives; and
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•
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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’s
stockholders. During the fiscal year ended December 31, 2016, the Board held seven meetings and all of the directors attended
in excess of 75 percent of the meetings of the Board and the committees on which they served. All of the directors attended the
2016 Annual Meeting of Stockholders.
The Board has long adhered to governance principles designed
to assure excellence in the execution of its duties and regularly reviews the Corporation’s governance policies and practices.
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
10 | United
States Steel
Corporation
| 2017 Proxy
Statement
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|
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Corporate Governance
Corporate Governance
At A Glance
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Leadership
Structure
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•
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Our Chairman is independent. He interacts closely with our
Chief Executive Officer
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•
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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
|
•
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Currently, the Board has fixed the number of directors at 12
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•
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The board regularly assesses its performance through Board and committee
self-evaluations
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Board
Independence
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•
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11 out of 12 of our directors are independent
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•
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Our CEO is the only management director
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Board
Committees
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•
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We have four Board committees – Executive, Audit, Corporate Governance
& Public Policy, and Compensation & Organization
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•
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With the exception of the Executive Committee (our Chairman and CEO serve
on this committee), all other committees are composed entirely of independent directors
|
Management
Succession Planning
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•
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The Board actively monitors our succession planning and people development
and receives regular updates on employee engagement, diversity and retention matters
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•
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At least twice per year, the Board reviews senior management succession
and development plans
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Director
Stock Ownership
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•
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Our directors are required to receive at least 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
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•
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Our full Board is responsible for risk oversight, and has designated committees
to have particular oversight of certain key 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
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•
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We use majority voting in uncontested director elections
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•
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We have annual election of directors
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•
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We implemented a “3-3-20” proxy access by-law provision in
November 2016 which enables our stockholders to nominate directors and have their eligible nominees included in the proxy
statement with our nominees
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•
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We actively reach out to our stockholders through our engagement program
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•
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Stockholders can contact our Board, our Chairman or management by regular mail
|
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, the independent
directors annually elect from among themselves a
Lead Director. If the Chairman of the Board is independent,
the Chairman’s duties also include the duties of the Lead Director. The duties of the Lead Director are as follows:
•
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chair executive sessions of the non-employee directors;
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•
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serve as a liaison between the Chief Executive Officer and the independent
directors;
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•
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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;
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•
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approve the type of information to be provided to directors for Board
meetings;
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•
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be available for consultation and direct communication with the Corporation’s
stockholders;
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•
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call meetings of the independent directors when necessary and appropriate;
and
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•
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perform other duties as the Board may from time to time designate.
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United
States Steel Corporation | 2017 Proxy Statement | 11
|
Corporate Governance
BOARD’S
ROLE IN RISK OVERSIGHT
Pursuant to its charter, the Audit Committee is responsible for
reviewing and discussing the Corporation’s policies with respect to the assessment of risks and risk management, including
the following:
•
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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
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•
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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 their respective activities, including, when appropriate, those activities related to risk assessment and
risk management oversight.
The Board, as a whole, also considers risk assessment and risk
management. For example, the Board annually reviews the Corporation’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 to the Board related to legal and compliance risks and
cyber-security matters.
The Chief Risk Officer is responsible for the Corporation’s
financial and business risk management, including the assessment, analysis and monitoring of business risk and opportunities and
the identification of strategies for managing risk. The Chief Risk Officer provides regular reports to the Audit Committee and
Board of Directors on these matters.
The Corporation believes that its leadership structure, as described
above, supports the Board’s role in risk oversight.
BOARD OVERSIGHT OF SUCCESSION PLANNING
Our Board and management consider succession planning and people
development to be an integral part of the Corporation’s long-term strategy. The Compensation & Organization Committee
is responsible for monitoring our management 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, 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.
BOARD REFRESHMENT
Our Board maintains a robust process in which the members focus
on identifying, considering and evaluating potential board candidates. Our Corporate Governance & Public Policy 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. 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 adding new members to the
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.
12 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Corporate Governance
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 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, 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. Longhi, 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 2016. 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 2016 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 2016. 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.
BOARD COMMITTEES
Under our by-laws and the general corporation law of the State
of Delaware, U. S. Steel’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 scheduled executive sessions without management.
The directors spend considerable time preparing for Board and committee meetings.
The Board has three principal 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 Policy Committee.
Each of these committees has a written charter adopted by the
Board, which are available on the Corporation’s website (www.ussteel.com). The committee charters are regularly reviewed
and updated to incorporate best practices and prevailing governance trends.
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United
States Steel Corporation | 2017 Proxy Statement | 13
|
Corporate Governance
The table below shows the current committee memberships of non-employee
directors:
Director
|
|
Audit
Committee
|
|
Compensation &
Organization
Committee
|
|
Corporate
Governance
& Public Policy
Committee
|
Patricia Diaz Dennis
|
|
|
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X
|
|
X
|
Dan O. Dinges
|
|
X
|
|
X
|
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John G. Drosdick
|
|
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X
|
*
|
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John J. Engel
|
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X
|
*
|
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Murry S. Gerber
|
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X
|
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X
|
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Stephen J. Girsky
|
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X
|
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X
|
Paul A. Mascarenas
|
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X
|
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X
|
Glenda G. McNeal
|
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X
|
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X
|
David S. Sutherland**
|
|
X
|
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|
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X
|
Robert J. Stevens
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X
|
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X
|
Patricia A. Tracey
|
|
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X
|
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X*
|
*
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Committee Chair.
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**
|
Chairman of the Board.
|
Each committee may in its sole discretion, retain or obtain the
advice of outside advisers, including any consultant, independent legal counsel or other adviser, at the Corporation’s expense
to assist the committee in fulfilling its duties and
responsibilities. The Board also has an Executive Committee consisting
of Messrs. Sutherland and Longhi. The Executive Committee acts on, and reports to the Board on, matters that arise between Board
meetings.
Audit Committee
Pursuant to its charter, the Audit Committee’s duties and
responsibilities include:
•
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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;
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•
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reviewing and discussing with management and the independent registered public accounting firm
matters related to the Corporation’s internal controls over financial reporting;
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•
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reviewing the responsibilities, staffing and performance of the Corporation’s internal audit
function;
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•
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reviewing issues that arise with respect to the Corporation’s compliance with legal or regulatory
requirements and corporate policies dealing with business conduct;
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•
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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
|
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•
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discussing policies with respect to risk assessment and risk management.
|
The charter requires the Audit Committee to perform an annual
self-evaluation, review its charter each year and meet at least five times each year. During the fiscal year ended December 31,
2016, the Audit Committee held five meetings.
The Audit Committee annually requests 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 independent and 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,
Dan O. Dinges, Murry S. Gerber, Stephen J. Girsky and David S. Sutherland meet the SEC’s definition of audit committee financial
expert.
14 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Corporate Governance
Compensation & Organization
Committee
Pursuant to its charter, the Compensation & Organization
Committee’s duties and responsibilities include:
•
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determining and approving, with the Board, the CEO’s compensation level based
on the evaluation of the CEO’s performance;
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•
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approving the compensation of the “executive officers” of the Corporation as defined
under Section 16 of the Securities Exchange Act of 1934;
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•
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reviewing the Corporation’s executive management succession plans annually with the Board;
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•
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administering the plans and programs under which short-term and long-term incentives are awarded
to executive officers and approving such awards;
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•
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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;
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•
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considering the most recent stockholder advisory vote on executive compensation in connection
with determining executive compensation policies and decisions;
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•
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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
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•
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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 meetings of the Compensation & Organization Committee in 2016.
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 2016, the consultant performed the following specific
services:
•
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provided presentations on executive compensation trends, and best practices and recent
developments;
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•
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prepared competitive assessments by position for each element of compensation and for compensation
in the aggregate;
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•
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reviewed drafts and commented on the CD&A and related compensation tables for the proxy statement;
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•
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reviewed the peer group used for compensation benchmarking purposes and recommended changes, if appropriate; and
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•
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attended executive sessions of the Compensation & Organization Committee.
|
The consultant provided no services to management during 2016.
The Compensation & Organization 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 & Organization Committee.
The Compensation & Organization Committee also obtains input
from the CEO with regard to compensation for other executives.
Our CEO recommends the level of base salary increase (if any),
the annual incentive award, and the long-term incentive award value for all of our executive officers, including the other named
executive officers (other than himself). These recommendations are based upon his assessment of each executive officer’s
performance, the performance of the individual’s respective business or function, and employee retention considerations.
The Compensation & Organization Committee reviews the CEO’s recommendations and approves any compensation changes affecting
our Section 16 executive officers.
The Compensation & Organization Committee’s charter
requires the committee to perform a self-evaluation and charter review annually. The charter also requires that the committee be
comprised of at least three directors, each of whom is independent.
During the fiscal year ended December 31, 2016, the Compensation
& Organization Committee held six meetings. 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 2016, 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.
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United
States Steel Corporation | 2017 Proxy Statement | 15
|
Corporate Governance
Corporate Governance &
Public Policy Committee
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:
•
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Identifying and evaluating nominees for director and selecting, or recommending that the Board select, the director nominees
for the next annual meeting of stockholders;
|
|
|
•
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making recommendations to the Board concerning the appropriate size and composition of the Board and its committees;
|
|
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•
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making recommendations to the Board concerning the compensation of non-employee directors;
|
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•
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recommending to the Board a set of corporate governance principles applicable to the Corporation, reviewing such principles
annually and recommending appropriate changes to 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 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.
|
The 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.
Under the charter, the Corporate Governance & Public Policy
Committee must: (i) be comprised of at least three directors, each of whom is independent, and (ii) perform a self-evaluation and
charter review annually. During the fiscal year ended December 31, 2016, the Corporate Governance & Public Policy Committee
held six meetings.
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 can 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. In 2016,
Ms. Tracey retired from her position at HP Enterprise Services and submitted an offer to resign from our Board in accordance
with the provisions of our Corporate Governance Principles. The Corporate Governance & Public Policy Committee determined
that Ms. Tracey’s change in status did not impact her qualifications to serve on the Board and recommended that the Board
reject her offer of resiganation. After consideration, the Board approved that recommendation and agreed to reject her offer of
resignation.
16 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
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’s Annual Report on Form 10-K for the year-ended December
31, 2016.
John G. Drosdick, Chairman
|
Dan O. Dinges
|
Patricia Diaz Dennis
|
Paul A. Mascarenas
|
Murry S. Gerber
|
Patricia A. Tracey
|
20 | United
States Steel
Corporation
| 2017 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 “Named
Executive
Officers” (“NEOs”), including our principal
executive officer, the principal financial officer, and the next three most highly compensated executive officers of U. S.
Steel in 2016. The titles of executives used in this CD&A reflect the title of each executive during 2016.
U. S. Steel’s Named Executive Officers in 2016
Mario
Longhi
|
President & Chief Executive Officer
|
David
B. Burritt
|
Executive Vice President & Chief Financial Officer
|
Suzanne
R. Folsom
|
General Counsel, Chief Compliance Officer & Senior Vice President – Government Affairs
|
Douglas
R. Matthews
|
Senior Vice President – Industrial, Service Center and Mining Solutions
|
James
E. Bruno
|
Senior Vice President – Automotive Solutions
|
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 Carnegie Way transformation. 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
|
|
|
•
|
Fair and Competitive
|
•
|
Link Pay to Performance
|
|
|
•
|
Retain Executives
|
|
|
•
|
Equity-Focus and Tax-Efficient
|
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.
The Carnegie Way: Earning the Right to Grow and
Driving Sustainable Profitable Growth
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, in 2013 we
initiated a transformational process called the Carnegie Way. This process provides the framework for a multi-year journey to
return our company to iconic status and sustainable profitability.
The objective of the Carnegie Way is to focus our executives
and employees throughout the organization on the factors we can control. Accomplishing this objective includes creating
a lower and more flexible cost structure that will produce stronger and more consistent results across industry cycles
to mitigate the financial impact of the volatility in our industry. We are focused on the development of
differentiated, innovative products, processes and approaches to doing business – through a culture of collaboration,
accountability and demonstrating results. As part of this process, we have reorganized our company into commercial entities
to facilitate close collaboration with our customers in order to foster innovation and to be more responsive to their needs.
The
Carnegie Way is our culture and the way we run the business. 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.
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 of the steel industry, to continue to lead the Corporation through the operational, market and regulatory hurdles
facing our business.
Our executive compensation program has been structured to closely
align with the objectives of the Carnegie Way 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.
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United
States Steel Corporation | 2017 Proxy Statement | 21
|
Compensation Discussion and Analysis – Executive Summary
2016 Highlights and Accomplishments
We began 2016 facing many of the same macroeconomic headwinds as
2015, including historically low steel prices. While these financial uncertainties pointed to another challenging year in 2016,
we remained focused on using the Carnegie Way as our guide and executed on strategic priorities critical to the Corporation’s
success amid the industry downturn. The unrelenting focus of our executive team and employees on clear actions to improve our balance
sheet, enhance operating efficiency, and create fairness and competition in the marketplace were successfully achieved, as evidenced
by improvements in our stock price and earnings. While we are proud of these results, our transformation efforts are still underway.
The following are highlights and accomplishments from 2016:
•
|
Our stock price increased by more than 300%, reflecting strong execution on our strategy and improved market conditions
|
|
|
•
|
Realized $745 million of additional Carnegie Way benefits in 2016, building upon the $575 million and $815 million in Carnegie
Way benefits realized in 2014 and 2015, respectively, underscoring the success of this transformational process
|
|
|
•
|
Ended 2016 with positive operating cash flow of $727 million and adjusted EBITDA of $510 million, despite beginning the year at historically low steel prices and facing the lowest full-year average realized prices since 2004
|
|
|
•
|
Strong year-end liquidity of approximately $2.9 billion, including cash on hand of $1.5 billion, which supports our goal of maintaining a healthy balance sheet
|
|
|
•
|
Reduced long-term debt by over $100 million in 2016 which contributed to the reduction of net debt by more than 50% since 2013
|
|
|
•
|
Successfully completed a $980 million debt offering and a $500 million equity offering, which provide for future financial flexibility
|
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|
•
|
Improved working capital by nearly $600 million, and over $1 billion over the last two years.
|
•
|
Continued to aggressively address unfair trade practices through landmark legal action against producers and distributors abroad that continue to violate domestic regulations, and led industry efforts to clarify and enforce existing laws. These actions, if successful, will be instrumental in ensuring U. S. Steel is competing on a level playing field
|
|
|
•
|
Out-performed the BLS and AISI industry safety benchmarks in both OSHA Recordable Days and Days Away From Work
|
Because the challenging market conditions we have faced in recent
years are likely to continue in the near-term, we are taking actionable steps now to respond and return the Corporation to stable
profitability. We are also planning long-term initiatives that are designed to benefit our business and performance regardless
of external market factors.
•
|
Near-Term Steps to Return to Profitability.
Our management team took several critical actions in 2016, including: idling facilities; right-sizing the organization; and exiting parts of the business where it is not possible to earn an economic profit. These were tough decisions for the executive team and, despite the challenging economic circumstances, U. S. Steel ended 2016 as a more streamlined organization focused on generating economic profit across all business cycles. We continue to focus on improving our product mix with more value-added solutions that differentiate U. S. Steel from our competitors. Our management team is confident that, as market conditions continue to improve, we will realize further benefits from this strategy.
|
|
|
•
|
Longer-Term Steps to Improve Our Position.
We continue to take steps to improve our position for the long-term. In May, we completed a $980 million offering of senior secured notes, which allowed us to repay near-term debt. In August we completed a $500 million equity offering. The focus on improving the balance sheet and strategically accessing the
|
22 | United
States Steel
Corporation
| 2017 Proxy
Statement
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|
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Compensation Discussion and Analysis –
Executive Summary
capital markets enables the Corporation to move forward in the Carnegie
Way process and open avenues to future growth and investment. We have identified critical assets on which we plan to deploy additional
capital investment and increased revitalization spending to continue driving improvements in our reliability and quality
while lowering our
ongoing cost basis. We plan to use our strong cash and
liquidity positions to expedite the revitalization of our facilities and to fund additional growth projects. This approach
will enhance the ongoing development of the differentiated solutions that make us a top strategic business partner for our
customers.
Maintaining Pay-for-Performance Approach through
Industry Cycles
The Committee believes it critical to align our
compensation program with the goals of the Carnegie Way as we carry out our strategic turnaround in a challenging
operating and unpredictable economic environment. Therefore, our compensation structure balances the following:
•
|
a strong pay-for-performance approach that links financial performance to the incentive opportunities realized by our executives;
|
|
|
•
|
measurable performance metrics in our incentive plans that support our strategic and financial goals;
|
|
|
•
|
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:
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’s belief that to link
pay to performance, most of an executive’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.
Variable, at-risk compensation accounted
for 73% of our CEO’s target compensation in 2016. Based on this strong pay-for-performance alignment, realizable compensation
for our CEO over the last three years is 37% above the target value granted during the period. Notable aspects of CEO compensation
include: (i) the long-term performance awards paid out twice in the last three performance periods, averaging 42% of target; and
(ii) the average three-year payout under the annual incentive compensation plan for our CEO is 139% of target, with no payout
in 2015.
|
|
United
States Steel Corporation | 2017 Proxy Statement | 23
|
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 for the entire 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
|
Annual
Incentive
Compensation
Plan (AICP)
|
Performance-Based
Cash
|
Net
sales
– funding trigger (no payout under plan if not met)
|
EBITDA
– weighted 50%
|
Cash
flow
– weighted 50%
|
Individual performance
– modifier on award amount
|
Long-Term
Incentive Program
(LTIP)
|
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
|
Performance-Based
Cash (30%)
|
ROCE
– measured over a 3-year period
|
|
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
Compensation Decisions for 2016
In early 2016, the Committee approved the following items based on
several factors, including: the Corporation’s 2015 performance; outlook for 2016 performance; continued development and execution
of the Carnegie Way transformation strategy; and responsibilities of each of our NEOs; among other criteria.
•
|
Salaries:
No change was made to the CEO’s base salary for 2016. While the Committee has generally set base salaries above median to support recruitment and retention during the period of transition, no increase was made for the CEO or any other named executive officers for 2016, other than Mr. Bruno, in recognition of the Corporation’s lower financial performance in 2015 and continued market challenges. Mr. Bruno received a base pay increase in 2016 to better align his base salary with other NEOs in the Corporation and comparable roles across our peer group.
|
|
|
•
|
Annual Incentive:
Target incentive percentages for NEOs did not increase for 2016. Our NEOs earned cash incentives under the AICP based on rigorous goals set in early 2016 that were exceeded through superior performance. These incentives were paid in early 2017.
|
|
|
•
|
Long-Term Incentive:
The grant date value of the 2016 long-term grant for each NEO decreased from 2015. In order to avoid a windfall of shares to any executive during a period of depressed stock price, the Committee adjusted the target LTIP award using an assumed share price greater than the grant date fair market value to determine the number of shares to be granted. The grant date value of Mr. Longhi’s LTIP award decreased from $7,535,000 in 2015 to $6,887,837 in 2016.
|
•
|
Total Compensation:
Mr. Longhi’s target pay decreased from 2015 to 2016. However, because payouts were made under the AICP for 2016 performance, his actual total pay for 2016, as disclosed in the Summary Compensation Table, increased from 2015 when the NEOs did not receive cash incentive payouts under the AICP.
|
The Committee believes pay decisions for 2016 demonstrate the significant
link between executive compensation and company performance, and accountability of our executives to deliver value to our stockholders.
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 alignment is clearly reflected 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 137% of target, and no payouts were made in 2015 based on actual 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 2012-2014
performance awards and no payout for the 2014-2016 ROCE performance awards.
24 | United
States Steel
Corporation
| 2017 Proxy
Statement
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|
|
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 $33.01 on December 30, 2016:
|
|
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
|
|
2016
|
|
|
201%
|
|
$
|
14.780
|
|
|
$
|
18.230
|
|
|
|
223
|
%
|
|
|
97%
|
|
2015
|
|
|
0%
|
|
$
|
24.780
|
|
|
$
|
8.230
|
|
|
|
133
|
%
|
|
|
67.5%
|
|
2014
|
|
|
227%
|
|
$
|
24.285
|
|
|
$
|
8.725
|
|
|
|
136
|
%
|
|
|
75%
|
|
(1)
|
The “Annual Incentive” column indicates the percentage of the Target Award earned under our Annual Incentive Compensation Plan.
|
|
|
(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. 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 31, 2016, 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 2014, 2015 and 2016 performance awards ended on December 31, 2016.
|
CEO Realizable Pay
Three-Year (2014 - 2016) Aggregate CEO Compensation
*
|
The long-term incentive realizable value is greater than the target
value primarily due to the dramatic stock price increase ranging between 133% - 233% above grant date values, as illustrated
in the table at the top of this page.
|
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United
States Steel Corporation | 2017 Proxy Statement | 25
|
Compensation Discussion and Analysis – Executive Summary
Changes to Compensation Program
The Committee approved the following changes to our compensation
program in 2016 to more closely align it with our current strategy, position and performance results. These changes were informed,
in part, by feedback the Committee received from stockholders during the Corporation’s regular engagement with investors.
•
|
Adopted New Performance Peer Group
–
In February 2016, the Committee created a second, more industry focused peer group consisting of 12 domestic
steel and steel-related companies against which we measure TSR for purposes of the relative TSR performance awards (described
in more detail later under “Peer Group” discussion).
|
|
|
•
|
Adopted a Negative TSR Cap
–
In February 2016, the Committee added a cap to the relative TSR performance awards to address the potential of negative
returns over a performance period (described in more detail later under “TSR Performance Awards” discussion).
|
•
|
Replaced EBIT with EBITDA
for AICP Metric
–
In February 2016, the Committee replaced EBIT with EBITDA as a performance metric under our
Annual Incentive Compensation Plan to align external and internal communication regarding financial performance.
|
|
|
•
|
Equally Weighted EBITDA and Cash Flow
–
For 2016 AICP performance, EBITDA and Cash Flow are equally weighted, in order to place a greater emphasis
on the Corporation’s strategic focus on cash flow. In prior years, EBIT accounted for 60% of the award and Cash Flow
for 40%.
|
|
|
•
|
Alignment of Safety Metric with OSHA
Guidance
– Recent OSHA guidance indicated that
incentive programs that deny or decrease compensation based on the occurrence of work-related injuries discourages injury
reporting. As such, the Committee removed the safety-based component of the AICP. However, as safety remains a core value
of the Corporation, the Committee and the Board reserve the right to impose negative discretion on incentive awards depending
on certain circumstances.
|
Commitment to Stockholder Engagement on Executive
Compensation
In 2016, the Corporation engaged with its largest
stockholders both during and outside the proxy season. In April 2016, we contacted stockholders representing more than 50% of our
outstanding stock and held telephonic meetings with stockholders holding approximately 25%. These discussions, held prior to our
annual meeting, were focused primarily on how our compensation program aligns with our strategy and company performance. In November
and December 2016, we contacted stockholders representing approximately 40% of our outstanding stock, and meetings were accepted
by those representing approximately 15%. Many of our stockholders indicated they did not believe a call was necessary and support 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 maintain 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 2016 meetings, we determined
that our stockholders are supportive of the strong link between pay
and performance embedded in our executive compensation program.
As a result of engagement with investors over the years, the Committee
has implemented changes to our compensation practices to further align pay with performance and enhanced disclosure regarding the
rationale behind certain compensation decisions. For example, in 2014 we increased the weighting of performance awards in our long-term
program to 60% and added ROCE as a second performance metric in the plan (in addition to TSR). These actions were taken in response
to feedback we consistently heard from our stockholders that a larger percentage of equity awards should be performance-based and
that the long-term program should include a capital return metric.
26 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
Compensation Discussion and Analysis –
Executive Summary
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
|
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|
|
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
|
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|
|
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
|
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|
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
|
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|
|
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 | 2017 Proxy Statement | 27
|
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 Carnegie Way 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
|
• More than
73% of target compensation opportunity is performance based for our CEO (51%-67% 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.
|
Fair
and Competitive
|
• 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
Pay to Performance
|
• 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.
|
Equity-Focus
and Tax-Efficient
|
• 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 executive officers’ compensation with the achievement of annual performance goals that support our business strategy.
Typically, the short-term incentive awards are paid in cash, but the Committee retains discretion to provide the award in cash,
stock, or a combination of both.
The AICP is designed to focus executives primarily on cash generation
and profitability. It is funded each year based on the
achievement of a pre-determined net sales performance goal, and once
funded, actual amounts earned are based on the achievement of cash flow and earnings before interest, taxes, depreciation and amortization
(EBITDA) performance measures. Final awards may be increased or decreased based on individual performance. The Committee determined
that cash flow and EBITDA were the appropriate measures to drive the transformation required to achieve our goal of sustainable
profitability.
28 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Compensation Discussion and Analysis
Performance
Measure
|
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 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 by 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 statements of cash flows of the Corporation.
|
|
|
**
|
Total EBITDA shall mean earnings before interest and taxes as reported in the consolidated statements 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 statements 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.
2016 Annual Incentive Payout
Executive
|
|
Target
Award
as % of
Base Salary
(1)
|
|
Target
Award
(2)
|
|
Total
Payout
Rate
(3)
|
|
Actual
Amount
Awarded
(4)
|
Longhi
|
|
150
%
|
|
$
|
2,250,000
|
|
175
%
|
|
$
|
4,528,125
|
Burritt
|
|
100%
|
|
$
|
800,000
|
|
175%
|
|
$
|
1,820,000
|
Folsom
|
|
80%
|
|
$
|
560,000
|
|
175%
|
|
$
|
1,274,000
|
Matthews
|
|
80%
|
|
$
|
432,800
|
|
175%
|
|
$
|
833,140
|
Bruno
|
|
55%
|
|
$
|
221,925
|
|
175%
|
|
$
|
466,043
|
(1)
|
“Base Salary” is the actual salary earned for 2016.
|
|
|
(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.
|
|
|
(3)
|
The “Total Payout Rate” is determined by the Corporation’s actual performance measured against the 2016 performance metrics and before individual performance is considered.
|
|
|
(4)
|
The “Actual Amount Awarded” is the amount awarded by the Committee after consideration of individual performance.
|
Setting Corporate Performance Goals and Determining
Results
In setting the goals under the AICP for 2016, the Committee considered
the Corporation’s performance over the past five years, the business plan for the year, 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 Carnegie Way benefits 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. The goals were considered a significant stretch given the challenging market conditions impacting the Corporation
when the goals were set in early 2016.
In addition to determining individual targets, the Committee approved
EBITDA goals for each NEO. For the CEO, CFO and general counsel, the EBITDA goal is based on the total company
|
|
United
States Steel Corporation | 2017 Proxy Statement | 29
|
Compensation Discussion and Analysis
results, which generally measures the operational results of all
business segments. For executives assigned to a specific segment, the EBITDA goal is 50% based on the EBITDA goal for that segment
and 50% based on total company EBITDA (for Messrs. Matthews and Bruno, this was the Flat-Rolled segment). This segment allocation
of the EBITDA goal is intended to create stronger corporate, business segment and individual accountability by tying an executive’s
award to the performance of the segments for which he or she is directly responsible.
We concluded 2016 with a total of $10.3 billion in net sales, therefore
the award pool was funded for 2016 because the net sales goal of $7 billion was achieved. The payout rate (prior to adjustment
for individual performance) was determined based on achievement of the performance measures described in the table below. This
payout rate demonstrates the performance alignment design of our plan. The 2016 payout under the annual incentive compensation
plan averaged 209% of target for our NEOs, and the average payout for our NEOs over the last three years is 137% of target
(in each case, including adjustments made for individual performance).
2016 AICP Corporate Performance Targets And
Results
($ are in Millions)
Performance Measure
|
|
Minimum
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
|
Payout
Rate
(1)
Prior
to Adjustment for
Individual Performance
|
|
Cash Flow
|
|
$
|
350
|
|
|
$
|
386
|
|
|
$
|
440
|
|
|
$
|
800
|
|
|
|
175%
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flat-Rolled
|
|
|
(40
|
)
|
|
|
(15
|
)
|
|
|
25
|
|
|
|
345
|
|
|
|
175%
|
|
Tubular
|
|
|
(59
|
)
|
|
|
(54
|
)
|
|
|
(48
|
)
|
|
|
(237
|
)
|
|
|
0%
|
|
Europe
|
|
|
153
|
|
|
|
158
|
|
|
|
163
|
|
|
|
265
|
|
|
|
175%
|
|
Total EBITDA
|
|
$
|
200
|
|
|
$
|
236
|
|
|
$
|
290
|
|
|
$
|
510
|
|
|
|
175%
|
|
(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.
|
Individual Performance Goals and Results
In determining the CEO’s annual incentive, the Committee considers,
among other things, the CEO’s 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. 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 summary of each NEO’s individual
performance and contribution to the Corporation in 2016:
Mario Longhi
– Mr.
Longhi provided superior 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. The Corporation exceeded
the 2016 business plan by delivering significant benefits from our strategic imperatives of working capital improvements, incremental
Carnegie Way benefits, financial flexibility and profitability priorities. Mr. Longhi also set the tone for dedicated commitment
to the Corporation’s long-standing core values, including safety, and developed and implemented a revised Corporate Safety
Steering Team to ensure safety is fully integrated into overall business decisions. In 2016 the Corporation’s OSHA Recordable Injury
and Days Away from Work rates were significantly better than the Bureau of Labor Statistics and American Iron and Steel Institute
industry
benchmarks. In addition, Mr. Longhi continued his efforts to
strengthen relationships with federal, state and local decision makers and served as a zealous advocate for the steel industry
during the negotiation and consideration of essential trade legislation and the Corporation’s trade cases in front of the
U.S. International Trade Commission. Mr. Longhi continued to provide strong strategic leadership to develop the Corporation’s
focus on the customer through disciplined concentration on quality, delivery performance and creating customer value through strategic
choices. Mr. Longhi also enhanced the overall performance of the organization by attracting, retaining, and developing top talent
through improved Carnegie Way leadership training, targeted retention programs, and a continued focus on talent differentiation
and diversity.
David Burritt
–
Mr. Burritt provided outstanding leadership in all of U. S. Steel’s strategic and financial matters, including those relating
to Finance, Strategy & Transformation, Revenue Management, North American Flat-Rolled Commercial Entities, Procurement &
Supply Chain, Information Technology, Human Resources, Investor Relations, and Corporate Communications. Mr. Burritt led the design,
development and deployment of the corporate strategic imperatives, which along with a greater cash consciousness, were prioritized
to improve the Corporation’s balance sheet. Under his leadership, the Corporation successfully mitigated its debt risk through
a $980 million debt offering, attained additional capital to invest in the Corporation’s assets through a $500 million public
equity offering, and improved the funding of the pension plan by contributing $100 million of common stock. Mr. Burritt led
efforts to increased cash-positive market share by attracting and retaining higher-value customers. Mr. Burritt set rigorous processes
and
30 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Compensation Discussion and Analysis
protocols to not only support high integrity financial reporting,
but also to drive Carnegie Way benefits and make timely and effective decisions around cost, revenue and staffing to achieve timeless
improvements on structural and operating costs. Through Mr. Burritt’s financial and strategic leadership, the Corporation
achieved positive operating cash flow of $727 million and positive adjusted EBITDA of $510 million for the year, significant
increases from 2015 despite lower average realized prices and lower revenue for the year.
Suzanne R. Folsom
–
Ms. Folsom provided exceptional leadership to Legal, Compliance, Government Affairs, International Trade and Public Policy, Environmental
Affairs, Corporate Security, Aircraft, Real Estate, Labor Relations, and U. S. Steel’s joint ventures. Ms. Folsom led several
strategic initiatives this year, including: achieving success in the steel industry’s trade cases in the United States; filing
the unprecedented Section 337 complaint with the U.S. International Trade Commission seeking an investigation into the trade practices
of the largest Chinese steel producers; leading the successful public policy efforts to address global overcapacity and the illegal
trade practices that have wreaked havoc in the American steel market, threatening our national economic health and our national
security; successfully achieving resolution and ratification for the successor collective bargaining agreements with the United
Steelworkers; guiding continuing efforts towards a resolution for the complex Companies’ Creditors Arrangement Act (CCAA)
process for U. S. Steel’s unprofitable Canadian subsidiary; and providing sage legal counsel on a number of significant strategic
corporate matters. Ms. Folsom is a crucial member of the executive management team who not only provides superior legal and compliance
advice and strategy, but also business acumen and analysis to ensure that the Corporation operates with proper protocols, practices
and controls to meet global business requirements, mitigate risk and create value for its stakeholders.
Douglas Matthews
–
Mr. Matthews led the North American Flat-Rolled Industrial, Service Center and Mining Solutions commercial entity in 2016. Through
his continued successful implementation of Carnegie Way methodology into our largest operating segment, Mr. Matthews realized a
significant per ton cost improvement in 2016. Operations led by Mr. Matthews also meaningfully improved process quality, and mining
operation production costs. By providing steel-making expertise and deep industry knowledge, Mr. Matthews also played a critical
role in the successful final determination hearings with the U.S. International Trade Commission for the three flat-roll trade
cases. In addition, Mr. Matthews led the business related aspects of the successful negotiation of three-year collective bargaining
agreements with the United Steelworkers that were ratified in early 2016. Mr. Matthews’ ability to maintain collaborative
relationships with his peers, customers and union contacts benefit the Corporation in all aspects of operations.
James Bruno
– Mr.
Bruno led the North American Flat-Rolled Automotive Solutions commercial entity in 2016, and also provided leadership over the
Corporation’s innovation program. In this role, he used the Carnegie Way to improve delivery of products to our automotive
customers to the highest level in the past five years and quality performance to the best level in two years. Under Mr. Bruno’s
leadership, Automotive Solutions exceeded its annual goal for growth of advanced high strength steel products, and saw the first
shipments of production orders of Gen3 steels. Mr. Bruno also oversaw improvements in working capital for the second consecutive
year and a five-year production high for our Great Lakes Works facility. Mr. Bruno also implemented a best in class strategic asset
management program. Mr. Bruno’s industry knowledge and detail focused leadership has strengthened the Corporation’s
long-term partnerships in the automotive industry.
Long-Term Incentive Compensation
Equity awards under the long-term incentive program (LTIP) are allocated
among:
•
|
Performance-based awards (60% of LTIP award in 2016)
|
|
|
•
|
Stock options (20%)
|
|
|
•
|
Restricted stock units (RSUs) (20%)
|
The Committee believes that these three long-term incentive vehicles
best accomplish the objectives of aligning pay with performance and retaining executives. In February and May 2016, the Committee
granted the long-term incentive awards set forth in the table below.
Long-Term Incentive Awards Granted in 2016*
Executive
|
|
Target
Equity-Based
Performance
Awards
|
|
|
Stock
Options
|
|
|
Restricted
Stock
Units
|
|
|
Grant Date
Fair Value
Of Equity
Awards
|
|
|
Target
Cash-Based
Performance
Awards
|
|
Longhi
|
|
|
140,960
|
|
|
|
228,300
|
|
|
|
96,420
|
|
|
$
|
4,262,837
|
|
|
$
|
2,625,000
|
|
Burritt
|
|
|
44,300
|
|
|
|
71,750
|
|
|
|
30,300
|
|
|
$
|
1,339,672
|
|
|
$
|
825,000
|
|
Folsom
|
|
|
22,960
|
|
|
|
37,180
|
|
|
|
15,700
|
|
|
$
|
694,229
|
|
|
$
|
427,500
|
|
Matthews
|
|
|
17,960
|
|
|
|
29,090
|
|
|
|
12,290
|
|
|
$
|
543,221
|
|
|
$
|
334,500
|
|
Bruno
|
|
|
6,690
|
|
|
|
10,820
|
|
|
|
4,570
|
**
|
|
$
|
202,130
|
|
|
$
|
124,500
|
|
*
|
In 2016, the Long-Term Incentive Award grant values were reduced.
In order to avoid the potential of a windfall to executives that could result from awarding shares during a period of depressed
stock price (which the Corporation experienced at the beginning of 2016 when the grant values were set), the Committee
used an assumed higher share price when converting the grant value into shares to be awarded. As a result, the overall LTIP
grant decreased by approximately 20% from 2015. Additionally, the performance awards were granted in February 2016, but the
time-based stock options and RSUs were not granted until May 2016. Because of the bifurcated grant and because of the method
used to reduce the grant value, the overall LTIP grants do not precisely align with the 60%, 20%, 20% structure described
above.
|
|
|
**
|
Mr. Bruno also received the second installment of his new-hire grant
and a retention grant in 2016. These awards are not reported in this table, but are described under the heading “Other
Awards” on page 33.
|
|
|
United
States Steel Corporation | 2017 Proxy Statement | 31
|
Compensation Discussion and Analysis
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 2016, the three-year performance period
began on January 1, 2016, and will end on December 31, 2018 (the “2016 Performance Period”). The value of the performance
awards granted under the 2016 Performance Period was divided equally between relative TSR performance awards and ROCE performance
awards. The three-year goals focus management on driving attractive returns on the capital we employ and on increasing stockholder
value.
TSR Performance Awards
TSR performance awards are based on relative performance, with the
payout determined based on the rank of the Corporation’s TSR compared to the TSR of peer group companies over the three-year
performance period. TSR is determined 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 performance period, respectively.
As noted in the table below, above market performance at the 60
th
percentile is required for target payout, and no payout is made for performance below the 30
th
percentile.
Level
|
2016
Relative TSR Ranking
|
Award
Payout as a %
of Target
(1)
|
|
<30
th
percentile
|
0%
|
Threshold
|
30
th
percentile
|
50%
|
Target
|
60
th
percentile
|
100%
|
Maximum
|
90
th
percentile
|
200%
|
(1)
|
Interpolation is used to determine actual awards between the threshold, target, and maximum levels.
|
Beginning with the 2016 performance period, the Committee adopted
a new peer group consisting of 12 domestic steel or steel-related companies for use in evaluating relative TSR (described in more
detail under “Peer Group” beginning on page 35). In addition, the Committee
approved a new policy beginning with 2016 grants to address any potential pay for performance disconnect should the Corporation’s
TSR be negative over the performance period (regardless of relative performance).
•
|
Payout is capped at target if the Corporation’s TSR is 0% to -5% on a compound annual growth rate (“CAGR”) basis;
|
|
|
•
|
Payout is capped at threshold if the Corporation’s TSR is lower than -5% to -10% on a CAGR basis; and
|
•
|
Payout is forfeited if the Corporation’s TSR is lower than -10% on a CAGR basis.
|
2013 Performance Awards
The performance period for the 2013 performance awards ended on May
12, 2016. The Corporation’s relative annualized TSR compared to the selected peer group was at the 31.03 percentile, and
resulted in a payout of 51.7% of the target award, as shown in the table below. Messrs. Longhi and Matthews are the only NEOs who
received a payout for the 2013 performance awards because Messrs. Burritt and Bruno and Ms. Folsom were not yet employed by the
Corporation when the grants were made.
|
Shares Granted
at Target
|
|
Shares vested as a
result of payout
|
|
Payout Rate
|
|
Delivered Value
|
|
Longhi
|
29,310
|
|
15,153
|
|
51.7%
|
|
$212,142
|
|
Matthews
|
12,110
|
|
6,261
|
|
51.7%
|
|
$87,654
|
|
32 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Compensation Discussion and Analysis
ROCE Performance Awards
The payout is determined based on our weighted average cost of
capital (noted as return on capital employed or “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.
2014 Performance Awards
The performance period for the 2014 performance awards ended
on December 31, 2016. The value of the 2014 performance awards was equally divided between relative TSR performance awards and
ROCE performance awards. While the relative TSR performance met the performance goals, the ROCE performance did not, resulting
in an overall payout of 75% of the target award. Each of the relative TSR and ROCE goals, results and payouts are described below.
2014 TSR Performance Awards
The Corporation’s relative annualized TSR compared to the
selected peer group for the performance period was at the 75
th
percentile, and resulted in a payout of 150% of the target
award. The payout for our NEOs is shown below. Mr. Bruno did not receive a payout because he was not yet employed by the Corporation
when the grant was made.
|
|
Shares Granted
at Target
|
|
Shares vested as a
result of payout
|
|
Payout Rate
|
|
Delivered
Value
|
Longhi
|
|
102,820
|
|
154,230
|
|
150
|
%
|
|
$
|
5,171,332
|
Burritt
|
|
34,110
|
|
51,165
|
|
150
|
%
|
|
$
|
1,715,562
|
Folsom
|
|
15,230
|
|
22,845
|
|
150
|
%
|
|
$
|
765,993
|
Matthews
|
|
15,230
|
|
22,845
|
|
150
|
%
|
|
$
|
765,993
|
2014 ROCE Performance Awards
The actual ROCE performance for the performance period was below
the threshold for payment, resulting in no payout.
2014-2016 Return on Capital Employed (ROCE)
Performance Targets and Results
Performance
Targets
|
Actual
Results and Weighting
|
Payout Rate
|
|
Threshold
|
|
5
|
%
|
Year
1 (20%)
|
12.6
|
%
|
|
|
Target
|
|
10
|
%
|
Year
2 (30%)
|
-4.9
|
%
|
|
|
Maximum
|
|
15
|
%
|
Year
3 (50%)
|
0.0
|
%
|
|
|
|
|
|
|
2014-2016
Period
|
1.1
|
%
|
0.0%
|
|
Restricted Stock Units (20% of LTIP Award
Value)
Restricted stock units are awards that deliver shares of common
stock and accumulated dividends upon vesting. Restricted stock units generally vest ratably on each of the first, second and third
anniversaries of the grant date, subject to the executive’s continued employment on each vesting date.
The Committee believes that restricted stock units provide the
best retention benefits among our long-term incentives, especially during times of challenging economic and industry conditions.
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
|
|
|
•
|
subject to continued employment on each vesting date.
|
On May 31, 2016, the Committee granted traditional stock options
with an exercise price based on the fair market value on the date of grant, which was $14.78.
Other Awards
In February 2016, Mr. Bruno received the second installment of
his new hire grant of equity which consisted of 27,450 restricted stock units. Additionally in 2016, Mr. Bruno received a retention
grant of equity consisting of 16,915 restricted stock units. In each case the RSUs cliff-vest on the third anniversary of the grant
date.
|
|
United
States Steel Corporation | 2017 Proxy Statement | 33
|
Compensation Discussion and Analysis
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.
Retirement Programs
We provide the retirement benefits described below in order to
attract and retain talented executive officers. We believe our retirement programs are reasonable in light of competitive pay practices
and the total compensation of our executives.
Tax-Qualified Plans
The Corporation maintains the following tax-qualified retirement
programs (together, the “Qualified Plans”):
•
|
United States Steel Corporation Plan for Employee Pension Benefits, Revision of 2003 (the “Pension Plan”), which is a defined benefit plan; and
|
|
|
•
|
United States Steel Corporation Savings Fund Plan for Salaried Employees (the “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. Mr. Matthews
was the only NEO covered by the Pension Plan and the related non-qualified plans 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 2016, 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.
Non Tax-Qualified Plans
The Corporation maintains the following non tax-qualified programs
(together, the “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
Tax-Qualified Pension Plan”);
|
•
|
United States Steel Corporation Executive Management Supplemental Pension
Program (the “Supplemental Pension Program”);
|
|
|
•
|
United States Steel Corporation Supplemental Thrift Program (the “Supplemental
Thrift Program”);
|
|
|
•
|
United States Steel Corporation Non Tax-Qualified Retirement Account Program
(the “Non Tax-Qualified Retirement Account Program”); and
|
|
|
•
|
United States Steel Corporation Supplemental Retirement Account Program
(the “Supplemental Retirement Account 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 benefits that are not permitted to be provided
under the Qualified Plans 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-term incentive compensation
plans, which is excluded under the Qualified Plans. 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 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) 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 help to support our retention objectives.
For more information on our retirement programs, see the
Pension
Benefits
table and
Non-Qualified Deferred Compensation
table later in this proxy statement.
Perquisites and Security
As part of the Carnegie Way initiative, we examined the perquisites
that historically have been offered to executives, and have eliminated or reduced many of them, and none have been extended to
any executive hired after November 2014. We continue to provide a limited number of reasonable perquisites
34 | United States
Steel Corporation | 2017 Proxy Statement
|
|
|
Compensation Discussion and Analysis
as a recruiting and retention tool and to ensure the health
and safety of our key executives. The perquisites available to our NEOs in 2016 are described in the footnotes to the Summary
Compensation Table on page 40 of this proxy statement. In general, the perquisites:
•
|
facilitate the ability of our executives to do their jobs without undue distractions or delays;
|
|
|
•
|
have clear business-related purposes;
|
|
|
•
|
ensure accurate personal tax reporting of 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 of commercial and other business relationships, provide a significant
benefit to the Corporation and its stockholders. The perquisites provided to the NEOs in 2016, other than the CEO, were limited
to tax preparation and financial planning and relocation benefits.
The perquisites we provide include residential and personal security
services to employees who are 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 2016, Mr. Longhi was the only NEO who was provided with
security services. The Board believes that providing personal security in response to threats arising because of employment by
the Corporation is business-related.
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 and (b) tax equalization and travel related
to expatriate assignments. These gross-ups are also provided to non-executive employees.
Change in Control Arrangements
The Corporation’s Change in Control Severance Plan (the
“CIC Plan”) became effective on January 1, 2016, and generally provides for the payment of severance benefits to certain
eligible executives, including each of the named executive officers, in the event their employment with the Corporation terminates
involuntarily following a change in control of the Corporation. The Corporation previously maintained individual change in control
agreements with certain executives. The CIC Plan supplanted the agreements, but provides for substantially similar terms.
The CIC Plan enables our executives to evaluate corporate transactional
opportunities that may be in the best interests of the Corporation’s stockholders, while limiting concerns about the potential
impact of such opportunities on their job security. Under the CIC Plan, payments require a “double trigger,” meaning
the named executive officer 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 named executive officers are entitled to a payment equivalent to a multiple of his or her salary and bonus. For Messrs.
Longhi and Burritt and Ms. Folsom, the severance payment multiple is 2.5x and for Messrs. Matthews and Bruno is 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
Payments Upon Termination or Change in Control” for additional information regarding the quantification of these potential
payments and benefits.
Letter Agreements
In general, the Corporation does not enter into long-term employment
agreements with its executives, but may enter into agreements for a limited period of time to attract or retain experienced professionals
for high level positions. The Corporation does not have any current agreements with its NEOs.
The Compensation
Process
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 2016.
The consultant regularly participates in Committee meetings,
including executive sessions, and advises the Committee with respect to compensation trends and best practices, plan design, 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 approved CEO goals and objectives. The CEO does not participate in the 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 Group
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.
|
|
United
States Steel Corporation | 2017 Proxy Statement | 35
|
Compensation Discussion and Analysis
How Peer
Group Is Used:
|
•
|
serve as a market reference when making compensation decisions and designing
program features
|
|
|
•
|
assess the competitiveness of each element of compensation and compensation
in total
|
|
|
•
|
serve as the standard for evaluating total shareholder return for long-term
incentive purposes
|
|
|
•
|
serve as a reference when analyzing pay-for-performance alignment
|
How
Peer Group Was Selected:
|
•
|
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)
|
The Corporation’s 2016 peer group included the following
companies:
|
AK Steel Holding Corporation
|
|
Lear Corp.
|
|
|
|
|
|
Alcoa Inc.
|
|
Masco Corporation
|
|
|
|
|
|
Allegheny Technologies Inc.
|
|
Navistar International Corporation
|
|
|
|
|
|
Cliffs Natural Resources Inc.
|
|
Nucor Corporation
|
|
|
|
|
|
Commercial Metals Company
|
|
PACCAR Inc.
|
|
|
|
|
|
Cummins Inc.
|
|
Parker-Hannifin Corporation
|
|
|
|
|
|
Deere & Company
|
|
PPG Industries Inc.
|
|
|
|
|
|
Eastman Chemical Co.
|
|
Reliance Steel & Aluminum Co.
|
|
|
|
|
|
Eaton Corporation plc
|
|
Steel Dynamics Inc.
|
|
|
|
|
|
Freeport-McMoRan Copper & Gold Inc.
|
|
Terex Corp.
|
|
|
|
|
|
Illinois Tool Works Inc.
|
|
Textron Inc.
|
|
|
|
|
|
Ingersoll-Rand Plc
|
|
The Goodyear Tire & Rubber Company
|
|
|
|
|
|
International Paper Company
|
|
Weyerhaeuser Co.
|
|
|
|
|
|
Johnson Controls Inc.
|
|
Whirlpool Corp.
|
36 | United States
Steel Corporation | 2017 Proxy Statement
|
|
|
Compensation Discussion and Analysis
For 2017, the Corporation has removed Johnson Controls Inc.,
Deere & Company, International Paper Company and PACCAR Inc. from the executive compensation benchmarking peer group. These
companies no longer meet the revenue and other guidelines the Corporation uses to select peers.
New Long-Term Incentive Plan Performance
Peer Group for 2016
In February 2016, the Committee approved the use of a second
peer group that will be used for evaluating long-term performance. Therefore, beginning with the 2016 Performance Period, the Corporation
will utilize two peer groups as described below:
•
|
Executive Compensation Peer Group.
The executive compensation peer group will continue to be 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.
|
We created the new performance peer group 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. 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.
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 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.
|
In conjunction with the adoption of the new performance peer
group for use in our relative TSR performance award plan, we adopted a negative TSR cap which is explained in further detail in
the preceding section entitled “TSR Performance Awards.”
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
(1)
(Multiple of
Salary Midpoint)
|
Longhi
|
|
6x
|
Burritt
|
|
3x
|
Folsom
|
|
3x
|
Matthews
|
|
3x
|
Bruno
|
|
3x
|
(1)
|
Unvested restricted stock units count towards the ownership
requirement.
|
Under our stock ownership guidelines, Mr. Longhi has a stock
ownership requirement of six times his salary midpoint. Messrs. Burritt, Matthews and Bruno and Ms. Folsom each have a stock ownership
requirement of three times their 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.
|
|
United
States Steel Corporation | 2017 Proxy Statement | 37
|
Compensation Discussion and Analysis
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.
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 2016 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 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 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 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, 2016 filed with the SEC on February 28, 2017.
38 | United States Steel Corporation | 2017 Proxy Statement
|
|
|
Executive Compensation Tables
EXECUTIVE
COMPENSATION TABLES
The titles of executives used in the compensation tables of this proxy statement reflect the title of each executive during 2016.
Summary Compensation Table
The following table sets forth certain compensation
information for U. S. Steel’s Chief Executive Officer (CEO), Chief Financial Officer (CFO) and the three other most
highly compensated executive officers (referred to as “Named Executive Officers” or “NEOs”) who
rendered services to U. S. Steel and its subsidiaries during 2016.
Name
|
Year
(1)
|
Salary
(2)
($)
|
|
Bonus
(3)
($)
|
|
Stock
Awards
(4)(5)
($)
|
|
Option
Awards
(4)(6)
($)
|
|
Non-Equity
Incentive
Plan
Compensation
(7)
($)
|
|
Change
in
Pension
Value &
Nonqualified
Deferred
Compensation
Earnings
(8)
($)
|
|
All
Other
Compensation
(9)
($)
|
|
Total
($)
|
|
Mario Longhi
|
2016
|
$
|
1,500,000
|
|
|
—
|
|
$
|
2,837,507
|
|
$
|
1,425,049
|
|
$
|
4,528,125
|
|
|
N/A
|
|
$
|
632,670
|
|
$
|
10,923,351
|
|
President & Chief
|
2015
|
$
|
1,428,750
|
|
|
—
|
|
$
|
4,374,953
|
|
$
|
1,749,972
|
|
|
—
|
|
|
N/A
|
|
$
|
1,054,990
|
|
$
|
8,608,665
|
|
Executive Officer
|
2014
|
$
|
1,186,250
|
|
|
—
|
|
$
|
6,028,882
|
|
$
|
1,507,036
|
|
$
|
4,007,981
|
|
|
N/A
|
|
$
|
481,364
|
|
$
|
13,211,513
|
|
David B. Burritt
|
2016
|
$
|
800,000
|
|
|
—
|
|
$
|
891,720
|
|
$
|
447,864
|
|
$
|
1,820,000
|
|
|
N/A
|
|
$
|
116,000
|
|
$
|
4,075,589
|
|
Executive Vice
|
2015
|
$
|
780,250
|
|
|
—
|
|
$
|
1,375,213
|
|
$
|
549,991
|
|
|
—
|
|
|
N/A
|
|
$
|
291,041
|
|
$
|
2,996,495
|
|
President & Chief
|
2014
|
$
|
715,750
|
|
|
—
|
|
$
|
2,000,054
|
|
$
|
499,962
|
|
$
|
1,558,261
|
|
|
N/A
|
|
$
|
137,341
|
|
$
|
4,911,368
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suzanne R. Folsom
|
2016
|
$
|
700,000
|
|
|
—
|
|
$
|
462,105
|
|
$
|
232,078
|
|
$
|
1,274,000
|
|
|
N/A
|
|
$
|
124,620
|
|
$
|
2,792,803
|
|
General Counsel, Chief
|
2015
|
$
|
668,750
|
|
|
—
|
|
$
|
712,364
|
|
$
|
285,036
|
|
|
—
|
|
|
N/A
|
|
$
|
474,546
|
|
$
|
2,140,696
|
|
Compliance Officer &
|
2014
|
$
|
506,775
|
|
$
|
255,000
|
|
$
|
1,117,794
|
|
$
|
447,985
|
|
$
|
1,046,500
|
|
|
N/A
|
|
$
|
185,167
|
|
$
|
3,559,221
|
|
Senior Vice President -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government Affairs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas R. Matthews
|
2016
|
$
|
541,000
|
|
|
—
|
|
$
|
361,605
|
|
$
|
181,580
|
|
$
|
833,140
|
|
$
|
225,984
|
|
$
|
91,565
|
|
$
|
2,234,874
|
|
Senior Vice President -
|
2015
|
$
|
537,000
|
|
|
—
|
|
$
|
557,600
|
|
$
|
222,988
|
|
|
—
|
|
$
|
399,272
|
|
$
|
45,340
|
|
$
|
1,762,200
|
|
Industrial, Service
|
2014
|
$
|
518,750
|
|
|
—
|
|
$
|
892,866
|
|
$
|
222,967
|
|
$
|
882,000
|
|
$
|
1,491,171
|
|
$
|
43,745
|
|
$
|
4,051,499
|
|
Center and Mining
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Bruno
|
2016
|
$
|
403,500
|
|
|
—
|
|
$
|
619,554
|
|
$
|
67,538
|
|
$
|
466,043
|
|
|
N/A
|
|
$
|
58,662
|
|
$
|
1,615,297
|
|
Senior Vice President -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts are not reported for 2015 and 2014 if the executive was not an NEO in those years. Mr. Bruno was not a Named Executive
Officer in 2014 and 2015.
|
|
|
(2)
|
Salaries provided reflect the actual amount earned in each year. Salary in 2014 for Ms. Folsom reflects a partial year based
on her hire date of January 27, 2014.
|
|
|
(3)
|
Bonus includes cash hiring incentive.
|
|
|
(4)
|
Stock and option award grant date values are computed in accordance with Accounting Standard Codification Topic 718 (ASC 718),
as described in footnote 14 to the financial statements included in the Corporation’s Annual Report on Form 10-K for the
year-ended December 31, 2016 which was filed with the SEC on February 28, 2017. 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 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. In 2014 the Stock Awards column includes a performance
grant based on an internal financial performance goal. In the event that these awards would be paid at maximum payouts the totals
in the stock awards column would be: $9,044,000 for Mr. Longhi, $3,000,000 for Mr. Burritt, $1,340,000 for Ms. Folsom, and $1,340,000
for Mr. Matthews. Mr. Bruno did not receive the 2014 Performance Share Grant.
|
|
|
(5)
|
The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for the NEOs is $14.78 for
our 2016 restricted stock unit grants, $24.78 per share for our 2015 restricted stock unit grants, and $24.29 for our 2014 restricted
stock unit grants. For 2016 and 2015, performance award grants were granted in two portions, one cash grant based on a 3-year
weighted average return on capital employed measure and disclosed in the Grants of Plan-Based Awards table, and the second equity
grant based on a total shareholder return measure. For 2014, performance award grants were granted in two portions, one equity
grant based on a 3-year weighted average return on capital employed measure, and the second equity grant based on a total shareholder
return measure. The grant date fair market value used to calculate the 2016 performance awards based on TSR is $10.02; $24.95
per share for our 2015 performance awards based on TSR; $23.71 per share for our performance awards based on ROCE, and $21.99
per share for our 2014 TSR shares. Ms. Folsom also received a 2014 new hire grant of equity which consisted of 8,800 restricted
stock units and 20,000 stock options. The grant date fair market value used to calculate compensation expense in accordance with
ASC 718 for Ms. Folsom’s new hire grant is $25.56 per share for the restricted stock units and $11.25 per share for the
stock options. For further detail, see our Annual Report on Form 10-K for the year-ended December 31, 2014, financial statement
footnote 14. Mr. Bruno received a second installment of his new hire grant of equity in 2016 which consisted of 27,450 restricted
stock units and a retention grant of equity which consisted of 16,915 restricted stock units. The grant date fair market value
used to calculate compensation expense in accordance with ASC 718 for Mr. Bruno’s new hire grant is $8.56 per share for
the restricted stock units and $14.78 per share for the retention grant. For further detail, see our Annual Report on Form 10-K
for the year-ended December 31, 2016, Financial Statement footnote 14.
|
|
|
(6)
|
The grant date fair market value used to calculate compensation expense in accordance with ASC 718, is $6.24 per share for
our 2015 stock option grants; $10.04 per share for our 2015 stock option grants, and $9.93 per share for our 2014 stock option
grants. For further detail, see our report on Annual Report on Form 10-K for the year-ended December 31, 2016, Financial Statement
footnote 14.
|
|
|
United
States Steel Corporation | 2017 Proxy Statement | 39
|
Executive Compensation Tables
(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’s Annual Incentive Compensation Plan (“AICP”).
|
|
|
(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 2016 under the Corporation’s retirement plans and programs, calculated using the same
assumptions used for the Corporation’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, 2016 by the executive under each plan and letter agreement, are shown under the
2016 Pension Benefits table. The values reported in the earnings column of the 2016 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.
|
|
|
(9)
|
Components of “All Other Compensation” are as follows:
|
|
ALL OTHER COMPENSATION IN 2016
|
|
U. S.
Steel
|
|
|
|
|
|
|
|
|
Savings
|
|
Non
Qualified Defined
|
|
|
|
|
|
|
Plan
|
|
Contribution
Plan
|
|
|
|
|
|
Name
|
Contributions
(a)
|
|
Accruals
(b)
|
|
Perquisites
(c)
|
|
TOTAL
|
|
Longhi
|
$ 36,750
|
|
$
|
180,750
|
|
$
|
415,170
|
|
$
|
632,670
|
|
Burritt
|
$ 34,525
|
|
$
|
81,475
|
|
|
—
|
|
$
|
116,000
|
|
Folsom
|
$ 30,916
|
|
$
|
70,583
|
|
$
|
23,120
|
|
$
|
124,620
|
|
Matthews
|
$ 32,295
|
|
$
|
46,150
|
|
$
|
13,120
|
|
$
|
91,565
|
|
Bruno
|
$ 26,654
|
|
$
|
32,008
|
|
|
—
|
|
$
|
58,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
U. S. Steel Savings Plan
Contributions include: (i) employer matching contributions that were made in the form
of the Corporation’s common stock and (ii) other non-elective employer contributions
known as Retirement Account contributions that were made to the executive’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”) during the most recently
completed fiscal year.
|
|
|
|
|
(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’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 program.
|
|
|
|
|
(c)
|
The amounts shown for Mr. Longhi include the cost of financial planning, tax preparation, company paid executive physical,
a club membership used for business purposes, $259,611 for personal security detail and $127,897 for personal aircraft use. 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 amounts
shown for Ms. Folsom include the cost of financial planning, tax preparation, and a relocation settlement allowance. Amounts shown
for Mr. Matthews include the cost of financial planning and tax preparation. 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.
|
40 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
Executive Compensation Tables
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 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Awards:
|
|
Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Number of
|
|
Number of
|
|
Exercise
|
|
Closing
|
|
Fair Value
|
|
|
|
|
Plan
Awards
(3)
|
|
Plan
Awards
(6)
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Price on
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Grant
|
|
and Option
|
|
|
Plan
|
Grant
|
Threshold
(4)
|
|
Target
|
|
Maximum
(5)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
(7)
|
|
Options
(8)
|
|
Awards
(9)
|
|
Date
|
|
Awards
(10)
|
|
Name
|
Name
(1)
|
Date
(2)
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Share)
|
|
($/Share)
|
|
($)
|
|
Longhi
|
AICP
|
1/25/2016
|
$
|
1,125,000
|
|
$
|
2,250,000
|
|
$
|
5,118,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
LTIP
|
2/22/2016
|
$
|
1,312,500
|
|
$
|
2,625,000
|
|
$
|
5,250,000
|
|
|
70,480
|
|
|
140,960
|
|
|
281,920
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
8.48
|
|
$
|
1,412,419
|
|
|
LTIP
|
5/31/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,420
|
|
|
228,300
|
|
$
|
14.78
|
|
$
|
14.47
|
|
$
|
2,850,136
|
|
Burritt
|
AICP
|
1/25/2016
|
$
|
400,000
|
|
$
|
800,000
|
|
$
|
1,820,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
LTIP
|
2/22/2016
|
$
|
412,500
|
|
$
|
825,000
|
|
$
|
1,650,000
|
|
|
22,150
|
|
|
44,300
|
|
|
88,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
8.48
|
|
$
|
443,886
|
|
|
LTIP
|
5/31/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,300
|
|
|
71,750
|
|
$
|
14.78
|
|
$
|
14.47
|
|
$
|
895,698
|
|
Folsom
|
AICP
|
1/25/2016
|
$
|
280,000
|
|
$
|
560,000
|
|
$
|
1,274,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
LTIP
|
2/22/2016
|
$
|
213,750
|
|
$
|
427,500
|
|
$
|
855,000
|
|
|
11,480
|
|
|
22,960
|
|
|
45,920
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
8.48
|
|
$
|
230,059
|
|
|
LTIP
|
5/31/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,700
|
|
|
37,180
|
|
$
|
14.78
|
|
$
|
14.47
|
|
$
|
464,124
|
|
Matthews
|
AICP
|
1/25/2016
|
$
|
216,400
|
|
$
|
432,800
|
|
$
|
984,620
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
LTIP
|
2/22/2016
|
$
|
167,250
|
|
$
|
334,500
|
|
$
|
669,000
|
|
|
8,980
|
|
|
17,960
|
|
|
35,920
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
8.48
|
|
$
|
179,959
|
|
|
LTIP
|
5/31/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,290
|
|
|
29,090
|
|
$
|
14.78
|
|
$
|
14.47
|
|
$
|
363,226
|
|
Bruno
|
AICP
|
1/25/2016
|
$
|
110,963
|
|
$
|
221,925
|
|
$
|
504,879
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
LTIP
|
2/22/2016
|
$
|
62,250
|
|
$
|
124,500
|
|
$
|
249,000
|
|
|
3,345
|
|
|
6,690
|
|
|
13,380
|
|
|
27,450
|
|
|
—
|
|
|
—
|
|
$
|
8.48
|
|
$
|
302,006
|
|
|
LTIP
|
5/31/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,485
|
|
|
10,820
|
|
$
|
14.78
|
|
$
|
14.47
|
|
$
|
385,087
|
|
|
|
(1)
|
AICP refers to the Corporation’s Annual Incentive Compensation Plan. LTIP refers to the Long-Term Incentive Compensation
Program under the United States Steel Corporation 2005 Stock Incentive Plan and the United States Steel 2016 Omnibus Incentive
Compensation Plan.
|
|
|
(2)
|
The grant date for the AICP represents the date that the Compensation & Organization Committee (the “Committee”)
established the annual incentive targets for the 2016 performance period.
|
|
|
(3)
|
Our NEOs received non-equity incentive awards under the AICP and LTIP in 2016. For a discussion of the plans, the 2016 performance
targets and the 2016 award amounts, see the Short-Term Incentive Compensation and Long-Term Incentive Compensation sections in
the “Compensation Discussion and Analysis” included in this proxy statement.
|
|
|
(4)
|
The threshold level for the AICP award is based upon the lowest possible payouts for earnings before interest, taxes, depreciation,
and amortization (EBITDA) (25% of target) and cash flow (25% of target) for a combined threshold of 50%. In addition, individual
performance is also considered and can increase an award by up to 30% or reduce or eliminate the award. The threshold level for
the LTIP grant is based on 50% of the incentive target performance for return on capital employed (ROCE).
|
|
|
(5)
|
The maximum level for the AICP award is based on 175% of the target award multiplied by the maximum personal performance adjustment
of 130%. The maximum award under the LTIP non-equity incentive is 200% of the target award.
|
|
|
(6)
|
Performance award grants were made on February
22, 2016 to all NEOs. For 2016, performance awards represent approximately 60%
of the total annual grant value, with half of the award value granted in cash long-term
incentives based on the Corporation’s three-year weighted average return on capital
employed (ROCE) as the performance measure, and the other half of the award value granted
in equity 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 period 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 our total shareholder return
compared to the total shareholder returns for the companies in the peer group for the
equity portion. Performance awards do not pay dividends or carry voting privileges. Executives
may receive grants of options and restricted stock units in addition to performance awards
under the LTIP. We have not engaged in any repricing or other material modification of
any outstanding options or other equity-based award under the plan.
|
|
|
(7)
|
Restricted stock unit grants were made on May 31, 2016 to all NEOs. 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, 2017; an additional one-third of the shares vesting
on May 31, 2018; and the remaining one-third of the shares vesting on May 31, 2019, subject in each case to continued employment
through the vesting dates. Restricted stock unit grants to Mr. Bruno included a second installment of his new hire grant of 27,450
shares on February 22, 2016 and a retention grant of 16,915 shares on May 31, 2016, both of which are time-based awards subject
to cliff vesting on the third anniversary of the date of grant.
|
|
|
(8)
|
Option grants were made on May 31, 2016 to all NEOs. 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, 2017; an additional one-third of the shares vesting on
May 31, 2018; and the remaining one-third of the shares vesting on May 31, 2019, 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 for the equity incentive awards, stock awards and option awards,
calculated in accordance with ASC 718 based on the average of the high and low stock price on the date of the grant. The restricted
stock units accrue dividends at a non-preferential rate ($0.05) per share (as of the last announced dividend) that are paid when
the underlying restricted stock units vest. The value of these dividends is reflected in the fair market value of the restricted
stock unit grant. Restricted stock units carry no voting privileges. The target number of TSR performance awards is also based
on the fair market value on the date of grant and includes a factor predicting the probable outcome of the performance goal for
the grant. The factor for the 2015 performance award grant was 117.0849%, determined by a third-party consultant using a Monte
Carlo valuation model. The maximum payout for the ROCE performance awards is 200% of target. Accordingly, if maximum share payouts
were achieved for such performance awards, the aggregate grant date fair value for such awards would be twice the target amount
disclosed in the table related to such performance awards.
|
|
|
United
States Steel Corporation | 2017 Proxy Statement | 41
|
Executive Compensation Tables
Outstanding Equity Awards at 2016 Fiscal
Year-End
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
Shares or
|
|
|
|
|
Plan Awards:
|
|
Equity Incentive
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Units of
|
|
Market Value
|
|
|
Number of
|
|
Plan Awards: Market
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Stock
|
|
of Shares or
|
|
|
Unearned Shares,
|
|
or Payout Value of
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
|
That Have
|
|
Units of
|
|
|
Units or Other
|
|
Unearned Shares,
|
|
|
|
|
|
Options
|
|
Options
(1)
|
|
Exercise
|
|
|
Option
|
|
Not
|
|
Stock That
|
|
|
Rights That
|
|
Units or Other
|
|
|
|
Grant
|
|
(#)
|
|
(#)
|
|
Price
|
|
|
Expiration
|
|
Vested
(2)
|
|
Have Not
|
|
|
Have Not
|
|
Rights That Have
|
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
|
Date
|
|
(#)
|
|
Vested
(3)
($)
|
|
|
Vested
(4)
(#)
|
|
Not Vested
(3)(4)
($)
|
|
Longhi
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
154,230
|
|
|
$
|
5,091,132
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
5/27/2014
|
|
—
|
|
50,580
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
20,684
|
|
|
$
|
682,779
|
|
|
—
|
|
|
|
—
|
|
|
|
2/24/2015
|
|
—
|
|
116,200
|
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
47,080
|
|
|
$
|
1,554,111
|
|
|
142,034
|
|
|
$
|
4,688,542
|
|
|
|
2/22/2016
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
273,462
|
|
|
$
|
9,026,981
|
|
|
|
5/31/2016
|
|
—
|
|
228,300
|
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
96,420
|
|
|
$
|
3,182,824
|
|
|
—
|
|
|
|
|
|
Burritt
|
|
9/3/2013
|
|
152,810
|
|
—
|
|
|
$
|
25.000
|
|
|
9/3/2023
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
51,165
|
|
|
$
|
1,688,957
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
5/27/2014
|
|
33,560
|
|
16,780
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
6,864
|
|
|
$
|
226,581
|
|
|
—
|
|
|
|
—
|
|
|
|
2/24/2015
|
|
18,260
|
|
36,520
|
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
14,800
|
|
|
$
|
488,548
|
|
|
44,645
|
|
|
$
|
1,473,731
|
|
|
|
2/22/2016
|
|
—
|
|
—
|
|
|
$
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
85,942
|
|
|
$
|
2,836,945
|
|
|
|
5/31/2016
|
|
—
|
|
71,750
|
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
30,300
|
|
|
$
|
1,000,203
|
|
|
|
|
|
|
|
|
Folsom
|
|
1/27/2014
|
|
—
|
|
6,667
|
|
|
$
|
25.560
|
|
|
1/27/2024
|
|
2,934
|
|
|
$
|
96,851
|
|
|
—
|
|
|
|
—
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
22,845
|
|
|
$
|
754,113
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
5/27/2014
|
|
14,966
|
|
7,484
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
3,060
|
|
|
$
|
101,011
|
|
|
—
|
|
|
|
—
|
|
|
|
2/24/2015
|
|
9,463
|
|
18,927
|
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
7,667
|
|
|
$
|
253,088
|
|
|
23,126
|
|
|
$
|
763,389
|
|
|
|
2/22/2016
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
44,542
|
|
|
$
|
1,470,331
|
|
|
|
5/31/2016
|
|
—
|
|
37,180
|
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
15,700
|
|
|
$
|
518,257
|
|
|
—
|
|
|
|
—
|
|
Matthews
|
|
5/29/2007
|
|
1,480
|
|
—
|
|
|
$
|
109.315
|
|
|
5/29/2017
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
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
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
22,845
|
|
|
$
|
754,113
|
|
|
|
2/25/2014
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
5/27/2014
|
|
14,966
|
|
7,484
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
3,060
|
|
|
$
|
101,011
|
|
|
—
|
|
|
|
—
|
|
|
|
2/24/2015
|
|
7,403
|
|
14,807
|
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
6,000
|
|
|
$
|
198,060
|
|
|
18,104
|
|
|
$
|
597,613
|
|
|
|
2/22/2016
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
34,842
|
|
|
$
|
1,150,134
|
|
|
|
5/31/2016
|
|
—
|
|
29,090
|
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
12,290
|
|
|
$
|
405,693
|
|
|
—
|
|
|
|
—
|
|
Bruno
|
|
2/24/2015
|
|
2,756
|
|
5,514
|
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
12,324
|
|
|
$
|
406,815
|
|
|
6,737
|
|
|
$
|
222,388
|
|
|
|
2/22/2016
|
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
27,450
|
|
|
$
|
906,125
|
|
|
12,979
|
|
|
$
|
428,437
|
|
|
|
5/31/2016
|
|
—
|
|
10,820
|
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
21,485
|
|
|
$
|
709,225
|
|
|
—
|
|
|
|
—
|
|
|
|
(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 to pro rata vesting for retirement during the vesting period.
|
|
|
(2)
|
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 retirement during the vesting period; except for
the two installments of restricted stock unit new hire grants awarded to Mr. Bruno in 2015 and 2016 pursuant to his offer letter,
which is conditioned on continued employment with the Corporation and subject to three-year cliff vesting on the third anniversary
of the date of grant. Mr. Bruno also received a retention grant in 2016 which is also conditioned on continued employment with
the Corporation and subject to three-year cliff vesting on the third anniversary of the date of grant.
|
|
|
(3)
|
Value is based on $33.01 per share, which was the closing price of the stock on December 30, 2016.
|
|
|
(4)
|
The 2014 LTIP award was an equity-based
award, split equally between relative TSR and ROCE performance metrics. The 2014 performance
period ended on December 31, 2016. Using stock prices and dividends reported since the
beginning of the performance period, we estimate that, through December 31, 2016, the
Corporation has performed at the 75th percentile relative to a peer group which resulted
in a final award of 150% of target for the relative TSR portion. The 2014 ROCE equity
award performance was below threshold; and is valued at zero as of December 31, 2016.
|
|
|
|
In
2015 and 2016, the performance LTIP was split between an equity award based on
TSR relative to a peer group and a long-term performance cash award based on ROCE. Based
on performance through December 31, 2016, the 2015 TSR equity award is performing at
a level that would earn a payout at 135% of plan and based on the first year of the performance
period, the 2016 TSR equity award is performing at a level that would earn a payout at
194% of target. The ROCE cash awards for 2015 and 2016 are not shown on this table and
based on performance through year one and year two these awards are indicating below
threshold results.
|
42 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Executive Compensation Tables
Option Exercises and Stock Vested in
2016
The following table illustrates for each Named Executive Officer,
on an aggregate basis, the value realized from the exercise of stock options and from the vesting of restricted stock awards and
performance awards in 2016.
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Number of
|
|
|
|
|
Acquired
|
|
Value
|
|
Shares
|
|
Value
|
|
|
on
|
|
Realized on
|
|
Acquired
|
|
Realized on
|
|
|
Exercise
|
|
Exercise
(1)
|
|
on Vesting
|
|
Vesting
(2)
|
|
Name
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Longhi
|
|
443,250
|
|
$
|
4,118,445
|
|
|
86,110
|
|
$
|
1,174,358
|
|
Burritt
|
|
—
|
|
|
—
|
|
|
64,493
|
|
$
|
1,116,811
|
|
Folsom
|
|
13,333
|
|
$
|
152,931
|
|
|
9,826
|
|
$
|
93,350
|
|
Matthews
|
|
—
|
|
|
—
|
|
|
16,121
|
|
$
|
215,969
|
|
Bruno
|
|
—
|
|
|
—
|
|
|
1,116
|
|
$
|
8,381
|
|
(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 awards and performance awards which had met the performance
criteria. Value shown is before taxes.
|
Pension Benefits
The following table illustrates the actuarial present value of
pension benefits accumulated by Named Executive Officers as of December 31, 2016. Messrs. Longhi, Burritt, and Bruno and Ms. Folsom
are not eligible to participate in the Corporation’s defined benefit pension plans.
|
|
Number
|
|
Present
|
|
|
|
of Years
|
|
Value of
|
|
|
|
Credited
|
|
Accumulated
|
|
|
|
Service
(1)
|
|
Benefit
(2)
|
|
Name
|
Plan Name
|
(#)
|
|
($)
|
|
Matthews
|
U. S. Steel Pension Plan
|
|
25
|
|
$
|
1,187,172
|
|
|
Non Tax-Qualified Pension Plan
|
|
25
|
|
$
|
976,760
|
|
|
Supplemental Pension Program
|
|
25
|
|
$
|
2,090,433
|
|
|
Total
|
|
—
|
|
$
|
4,254,365
|
|
(1)
|
Service shown represents credited service years (rounded) used to calculate accrued benefits as of December 31, 2016.
|
|
|
(2)
|
Accumulated benefit at December 31, 2016. The present value of accumulated benefits is calculated using the assumptions used
in the preparation of the Corporation’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 4.25% discount rate for the 2015 calculations (3.75% for 2014 and 4.5% for 2013);
a lump sum rate assumption of 3.0% for 2015 (3.0% for 2014 and 3.0% for 2013) 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, 2015, are age 62
for the U. S. Steel Pension Plan and age 60 for the Non Tax-Qualified Pension Plan and the Supplemental Pension Program.
|
U. S.
Steel Pension Plan
The United States Steel Corporation Plan for Employee Pension
Benefits, Revision of 2003 (“U. S. Steel Pension Plan”) provides defined benefits for substantially all non-represented,
domestic employees who were hired before July 1, 2003. Messrs. Longhi, Burritt, and Bruno who were hired in 2012, 2013, and 2014
respectively, and Ms. Folsom, who was hired in 2014, are not participants in the U. S. Steel Pension Plan and the related nonqualified
plans. Mr. Matthews is a participant under the U. S. Steel Pension Plan and the related non-qualified plans. Benefits under the
U. S. Steel Pension Plan and the related non qualified plans described below 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 Earnings Benefit”) and career earnings (the “Career Earnings Benefit”) formulas.
Benefits may be paid as an actuarially determined lump sum in lieu of monthly pension payments. The Internal Revenue Code (the
“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 which is determined from the
|
|
United
States Steel Corporation | 2017 Proxy Statement | 43
|
Executive Compensation Tables
five consecutive 12-month calculation periods in which the employee’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 to years of service and earnings while employed by the Corporation, service and earnings
for certain purposes include those accrued while working for certain affiliated companies.
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 and one
month. 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, 2016, Mr. Matthews’ annual Career Earnings Benefits
would have been reduced by 56.60%.
Benefits accrued for each executive for the purpose of calculating
both the Final Earnings and Career Earnings Benefits are limited to the executive’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 of accumulated benefit obligations represents
the actuarial value of benefits earned by the executives under the U. S. Steel Pension Plan. Assumptions used in the calculations
include an unreduced benefit age of 62, the election of a lump sum option, and estimated career earnings and final average earnings
as of December 31, 2015. Estimated final average earnings were developed based on the average of the actual monthly salaries paid
in the highest five consecutive 12 month periods during the ten years preceding December 31, 2015.
The salary amounts include base salary, excluding incentive compensation.
For these calculations, the executive’s unreduced base salary is used to the extent necessary to avoid the adverse effects
of the temporary reduction in base salary that was effective between July 1, 2009 and July 1, 2010. The number of years of credited
service in the 2016 Pension Benefits table shows the number of years earned and used to calculate the accrued benefits reported.
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 or required 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 of accumulated benefit obligations represents
the actuarial value of benefits earned by the executives under the Non Tax-Qualified Pension Plan and is based on the same provisions
and eligibility status as
determined under the U. S. Steel Pension Plan. Assumptions used
in the calculations include an unreduced benefit age of 62, the election of a lump sum option, and estimated career earnings and
final average earnings as of December 31, 2015.
Supplemental
Pension Program
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, its subsidiaries, and its joint ventures. 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,
44 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Executive Compensation Tables
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 total short-term incentive
payments were the highest out of the last ten consecutive calendar years prior to the executive’s termination. Short-term
incentive payments payable for the calendar year in which termination occurs would be considered if such payment produces average
earnings greater than that determined at termination. Benefits are paid as an actuarially determined lump sum. Such lump sum cannot
be less than the lump sum value determined using the executive’s highest monthly accrued benefit under the Supplemental Pension
Program.
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
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’s non-qualified defined contribution plans in 2016. 2016 Year-End Aggregate Balances are
as of December 31, 2016.
|
|
2016 Company
|
|
|
|
2016 Year-End
|
|
|
|
Contributions/
|
|
2016 Aggregate
|
|
Aggregate
|
|
Executive
|
Plan Name
|
Accruals
(1)
|
|
Earnings
(2)
|
|
Balance
|
|
Longhi
|
Supplemental Thrift Program
|
|
$
|
75,000
|
|
|
$
|
289,769
|
|
|
$
|
440,683
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
105,750
|
|
|
$
|
20,606
|
|
|
$
|
381,469
|
|
|
Supplemental Retirement Account Program
|
|
$
|
—
|
|
|
$
|
28,368
|
|
|
$
|
429,741
|
|
|
Total
|
|
$
|
180,750
|
|
|
$
|
338,743
|
|
|
$
|
1,251,893
|
|
Burritt
|
Supplemental Thrift Program
|
|
$
|
36,000
|
|
|
$
|
115,100
|
|
|
$
|
180,523
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
45,475
|
|
|
$
|
6,880
|
|
|
$
|
137,752
|
|
|
Supplemental Retirement Account Program
|
|
$
|
—
|
|
|
$
|
9,553
|
|
|
$
|
144,712
|
|
|
Total
|
|
$
|
81,475
|
|
|
$
|
131,533
|
|
|
$
|
462,987
|
|
Folsom
|
Supplemental Thrift Program
|
|
$
|
30,917
|
|
|
$
|
88,295
|
|
|
$
|
141,199
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
39,667
|
|
|
$
|
6,373
|
|
|
$
|
106,124
|
|
|
Supplemental Retirement Account Program
|
|
$
|
—
|
|
|
$
|
7,410
|
|
|
$
|
92,615
|
|
|
Total
|
|
$
|
70,584
|
|
|
$
|
102,078
|
|
|
$
|
339,938
|
|
Matthews
|
Supplemental Thrift Program
|
|
$
|
19,325
|
|
|
$
|
102,704
|
|
|
$
|
151,329
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
26,825
|
|
|
$
|
663
|
|
|
$
|
27,488
|
|
|
Supplemental Retirement Account Program
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total
|
|
$
|
46,150
|
|
|
$
|
103,367
|
|
|
$
|
178,817
|
|
Bruno
|
Supplemental Thrift Program
|
|
$
|
14,455
|
|
|
$
|
33,720
|
|
|
$
|
56,612
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
17,553
|
|
|
$
|
1,648
|
|
|
$
|
35,038
|
|
|
Supplemental Retirement Account Program
|
|
$
|
—
|
|
|
$
|
213
|
|
|
$
|
2,662
|
|
|
Total
|
|
$
|
32,008
|
|
|
$
|
35,581
|
|
|
$
|
94,312
|
|
(1)
|
Accruals are included in the All Other Compensation column of the Summary Compensation Table (see footnote 9 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)
|
Determined by taking the balance at the end of 2016, less 2016 accruals, less the balance at the beginning of 2016, and adding
dividend equivalents.
|
Supplemental Thrift Program
The purpose of the United States Steel Corporation Supplemental
Thrift Program (the “Supplemental Thrift Program”) is to compensate individuals for the loss of matching contributions
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 $265,000 in 2016) and combined Corporation and individual annual contributions
(which limit was $53,000 in 2016). 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 eligible base salary.
|
|
United
States Steel Corporation | 2017 Proxy Statement | 45
|
Executive Compensation Tables
An executive receives a lump sum distribution of the benefits
payable under this program upon his or her (a) termination of employment with five or more years of continuous service, (b) termination
of employment, prior to attaining five years of
continuous service, with the consent of the Corporation, or (c)
pre-retirement 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 provided
under the U. S. Steel Savings Plan due to the statutory limits on covered compensation (which was $265,000 in 2016) and combined
Corporation and individual annual contributions (which limit was $53,000 in 2016). 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 the Non Tax-Qualified Retirement Account Program.
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
eligible 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, its subsidiaries, and its joint ventures. All of the NEOs participate in the program. Mr. Matthews will
receive his first accrual in March 2017 based on his award under the Annual Incentive Compensation Plan for 2016, the first year
he participated in the program.
Accrued benefits under the Supplemental Retirement Account Program
are recorded in a hypothetical account and credited with 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 (a) terminates employment prior to age 55 or (b) terminates employment 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 under the Supplemental Retirement Account Program 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.
46 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Potential 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’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 –
(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 his 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, seven months
worked during the twelve-month vesting period from June 2016 to May 2017 would result in a vesting of seven-twelfths of the number
of shares scheduled to vest in May 2017, with no such pro rata vesting for the shares scheduled to vest after May 2017). 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 table below.
Voluntary Termination
(Without Consent) or Involuntary Termination (for Cause) –
(Column B)
This termination scenario assumes that the Corporation does not
consent to an executive’s voluntary termination of his or her employment prior to age 60, or that the Corporation terminates
the executive’s employment for cause. Under these conditions, the 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 awards for purposes of the calculations
in the tables below.
Involuntary Termination
(Not for Cause) –
(Column C)
Events that could cause the Corporation to terminate an executive’s
employment involuntarily, not for cause, include the curtailment of certain lines of business or a facility shutdown where the
executive’s services are no longer required due to business conditions or an organizational realignment. Prior to the involuntary
termination, the executive may be eligible for benefits under our Supplemental Unemployment Benefit Program for
Non-Union Employees, which may include the payment of a percentage
of base salary, basic life and health insurance. For purposes of determining the vesting of equity awards upon termination, we
have assumed the executive’s employment was terminated on December 31, 2016. Awards are prorated upon termination for purposes
of the calculations in the tables below.
Change in Control
and Termination –
(Column D)
All of the NEOs are covered by the Corporation’s Change
in Control Severance Plan (the “CIC Plan”), effective January 1, 2016, as described in the Compensation Discussion
and Analysis in 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, and benefits would be paid according to each benefit plan’s
provisions following the termination of an executive’s employment in connection with a change in control. The following discussion
describes the events and circumstances that would trigger payments under the CIC Plan.
Generally, payments are triggered upon the occurrence of both
a Change in Control of the Corporation and termination of the executive’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).
|
|
United
States Steel Corporation | 2017 Proxy Statement |
47
|
Potential Payments Upon Termination or Change in Control
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;
|
|
|
•
|
Supplemental Retirement Benefit;
|
|
|
•
|
Welfare Benefits;
|
|
|
•
|
Outplacement services;
|
|
|
•
|
Supplemental Savings 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
” 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’s current work location;
|
|
|
•
|
Failure to continue all of the Corporation’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’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
” 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 Change in 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’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’s stock,
while a Change in Control requires a person to acquire 20% of the total voting power of the Corporation’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;
|
|
|
•
|
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.
|
An “
Applicable 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” 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)
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 while actively employed, benefits under the Corporation’s
qualified and non-qualified plans are calculated as if the employee had retired on the date of his or her death.
48 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
Potential Payments Upon Termination or
Change in Control
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. 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, 2016 that NEOs would have been entitled to, following, or in connection with a termination of employment, with the triggering event occurring on December 31, 2016;
|
2.
|
The stock price used for valuation purposes for the long-term incentive awards was the closing stock price on December 30, 2016, which was $33.01;
|
|
|
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’s experience, made gender neutral on a nine to one male/female ratio; and
|
|
|
4.
|
The December 31, 2016 Pension Benefit Guaranty Corporation interest rate of 1.25% was used to determine 2016 lump sum payment amounts.
|
Potential Payments Upon Termination
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
|
E
|
|
|
F
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Consent) or
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
Termination
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
(with Consent)
|
|
Termination
|
|
(Not for
|
|
Control and
|
|
|
|
|
|
|
Executive
|
|
Component
|
|
or Retirement
(1)
|
|
(For Cause)
|
|
Cause)
(2)
|
|
Termination
|
|
|
Disability
(3)
|
|
|
Death
|
Longhi
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
—
|
|
|
—
|
|
$
|
450,000
|
|
$
|
7,291,667
|
|
|
—
|
|
|
—
|
|
|
Short-Term Incentive
|
|
$
|
4,528,125
|
|
|
—
|
|
$
|
4,528,125
|
|
|
—
|
|
$
|
4,528,125
|
|
$
|
4,528,125
|
|
|
Stock Options (Unvested)
(4)
|
|
$
|
1,465,169
|
|
|
—
|
|
$
|
1,465,169
|
|
$
|
5,559,546
|
|
$
|
5,559,546
|
|
$
|
5,559,546
|
|
|
Restricted Stock (Awards/Units)
(4)
|
|
$
|
1,664,760
|
|
|
—
|
|
$
|
1,664,760
|
|
$
|
5,419,714
|
|
$
|
5,419,714
|
|
$
|
5,419,714
|
|
|
Performance Stock Award
(5)
|
|
$
|
13,250,593
|
|
|
—
|
|
$
|
13,250,593
|
|
$
|
18,806,688
|
|
$
|
17,330,322
|
|
$
|
17,330,322
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
$
|
1,251,893
|
|
$
|
381,469
|
|
$
|
1,251,892
|
|
$
|
1,251,892
|
|
$
|
1,251,892
|
|
$
|
1,251,892
|
|
|
Welfare Benefits
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
41,492
|
|
|
—
|
|
|
—
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
1,944,923
|
|
|
—
|
|
|
—
|
|
|
TOTAL
|
|
$
|
22,160,540
|
|
$
|
381,469
|
|
$
|
22,610,599
|
|
$
|
40,315,922
|
|
$
|
34,089,599
|
|
$
|
34,089,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Component
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
—
|
|
|
—
|
|
$
|
240,000
|
|
$
|
4,000,000
|
|
|
—
|
|
|
—
|
|
|
Short-Term Incentive
|
|
$
|
1,820,000
|
|
|
—
|
|
$
|
1,820,000
|
|
|
—
|
|
$
|
1,820,000
|
|
$
|
1,820,000
|
|
|
Stock Options (Unvested)
(4)
|
|
$
|
464,990
|
|
|
—
|
|
$
|
464,990
|
|
$
|
1,754,969
|
|
$
|
1,754,969
|
|
$
|
1,754,969
|
|
|
Restricted Stock (Awards/Units)
(4)
|
|
$
|
530,273
|
|
|
—
|
|
$
|
530,273
|
|
$
|
1,715,332
|
|
$
|
1,715,332
|
|
$
|
1,715,332
|
|
|
Performance Stock Award
(5)
|
|
$
|
4,253,454
|
|
|
—
|
|
$
|
4,253,454
|
|
$
|
5,999,633
|
|
$
|
5,535,686
|
|
$
|
5,535,686
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
$
|
462,987
|
|
$
|
137,752
|
|
$
|
462,987
|
|
$
|
462,987
|
|
$
|
462,987
|
|
$
|
462,987
|
|
|
Welfare Benefits
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,912
|
|
|
—
|
|
|
—
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
782,760
|
|
|
—
|
|
|
—
|
|
|
TOTAL
|
|
$
|
7,531,704
|
|
$
|
137,752
|
|
$
|
7,771,704
|
|
$
|
14,719,593
|
|
$
|
11,288,974
|
|
$
|
11,288,974
|
|
|
United
States Steel Corporation | 2017 Proxy Statement | 49
|
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination (Cont’d.)
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
|
E
|
|
|
F
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Consent) or
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
Termination
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
(with Consent)
|
|
Termination
|
|
(Not for
|
|
Control and
|
|
|
|
|
|
|
Executive
|
|
Component
|
|
or Retirement
(1)
|
|
(For Cause)
|
|
Cause)
(2)
|
|
Termination
|
|
Disability
(3)
|
|
|
Death
|
Folsom
|
|
Severance
& Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
—
|
|
|
—
|
|
$
|
140,000
|
|
$
|
3,150,000
|
|
|
—
|
|
|
—
|
|
|
Short-Term Incentive
|
|
$
|
1,274,000
|
|
|
—
|
|
$
|
1,274,000
|
|
|
—
|
|
$
|
1,274,000
|
|
$
|
1,274,000
|
|
|
Stock Options (Unvested)
(4)
|
|
$
|
280,340
|
|
|
—
|
|
$
|
280,340
|
|
$
|
948,527
|
|
$
|
948,527
|
|
$
|
948,527
|
|
|
Restricted Stock (Awards/Units)
(4)
|
|
$
|
353,967
|
|
|
—
|
|
$
|
353,967
|
|
$
|
969,207
|
|
$
|
969,207
|
|
$
|
969,207
|
|
|
Performance Stock Award
(5)
|
|
$
|
2,082,905
|
|
|
—
|
|
$
|
2,082,905
|
|
$
|
2,987,866
|
|
$
|
2,747,319
|
|
$
|
2,747,319
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
$
|
339,938
|
|
|
—
|
|
$
|
339,938
|
|
$
|
339,938
|
|
$
|
339,938
|
|
$
|
339,938
|
|
|
Welfare Benefits
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
60,411
|
|
|
—
|
|
|
—
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
839,739
|
|
|
—
|
|
|
—
|
|
|
TOTAL
|
|
$
|
4,331,150
|
|
|
—
|
|
$
|
4,471,150
|
|
$
|
9,295,688
|
|
$
|
6,278,991
|
|
$
|
6,278,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Component
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
Severance &
Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
—
|
|
|
—
|
|
$
|
297,550
|
|
$
|
1,947,600
|
|
|
—
|
|
|
—
|
|
|
Short-Term Incentive
|
|
$
|
833,140
|
|
|
—
|
|
$
|
833,140
|
|
|
—
|
|
$
|
833,140
|
|
$
|
833,140
|
|
|
Stock Options (Unvested)
(4)
|
|
$
|
191,999
|
|
|
—
|
|
$
|
191,999
|
|
$
|
717,471
|
|
$
|
717,471
|
|
$
|
717,471
|
|
|
Restricted Stock (Awards/Units)
(4)
|
|
$
|
220,342
|
|
|
—
|
|
$
|
220,342
|
|
$
|
704,764
|
|
$
|
704,764
|
|
$
|
704,471
|
|
|
Performance Stock Award
(5)
|
|
$
|
1,793,933
|
|
|
—
|
|
$
|
1,793,933
|
|
$
|
2,501,893
|
|
$
|
2,313,843
|
|
$
|
2,313,843
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan Compensation
|
|
$
|
6,393,658
|
|
$
|
1,806,023
|
|
$
|
9,076,573
|
|
$
|
9,076,573
|
|
$
|
6,933,042
|
|
$
|
5,564,257
|
|
|
Non-Qualified Deferred Compensation
|
|
$
|
178,817
|
|
$
|
178,817
|
|
$
|
178,817
|
|
$
|
178,817
|
|
|
$ 178,817
|
|
$
|
178,817
|
|
|
Welfare Benefits
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
54,378
|
|
|
—
|
|
|
—
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
283,699
|
|
|
—
|
|
|
—
|
|
|
TOTAL
|
|
$
|
9,611,889
|
|
$
|
1,984,840
|
|
$
|
12,592,354
|
|
$
|
15,465,195
|
|
$
|
11,681,077
|
|
$
|
10,312,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Component
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruno
|
|
Severance &
Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
—
|
|
|
—
|
|
$
|
82,600
|
|
$
|
1,269,850
|
|
|
—
|
|
|
—
|
|
|
Short-Term Incentive
|
|
$
|
466,043
|
|
|
—
|
|
$
|
466,043
|
|
|
—
|
|
$
|
466,043
|
|
$
|
466,043
|
|
|
Stock Options (Unvested)
(4)
|
|
$
|
57,269
|
|
|
—
|
|
$
|
57,269
|
|
$
|
242,629
|
|
$
|
242,629
|
|
$
|
242,629
|
|
|
Restricted Stock (Awards/Units)
(4)
|
|
$
|
60,078
|
|
|
—
|
|
$
|
1,857,638
|
|
$
|
2,022,160
|
|
$
|
2,022,160
|
|
$
|
2,022,160
|
|
|
Performance Stock Award
(5)(6)
|
|
$
|
387,113
|
|
|
—
|
|
$
|
387,113
|
|
$
|
650,825
|
|
$
|
580,670
|
|
$
|
580,670
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
$
|
94,312
|
|
|
—
|
|
$
|
94,312
|
|
$
|
94,312
|
|
$
|
94,312
|
|
$
|
94,312
|
|
|
Welfare Benefits
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
53,746
|
|
|
—
|
|
|
—
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
359,002
|
|
|
—
|
|
|
—
|
|
|
TOTAL
|
|
$
|
1,064,815
|
|
|
—
|
|
$
|
2,944,975
|
|
$
|
4,692,524
|
|
$
|
3,405,814
|
|
$
|
3,405,814
|
(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. Retirement is generally not applicable to the NEOs because they have not yet attained the necessary age and service requirements for retirement and, accordingly, the amounts set forth in this column are payable to them only in the event of a voluntary termination with consent.
|
|
|
(2)
|
The value shown for cash severance benefits represents the total that would be paid over a specified period.
|
|
|
(3)
|
All benefit amounts would become payable on May 31, 2017 under a permanent incapacity or a deferred vested pension, five months following a disabling event that occurred on December 31, 2016.
|
|
|
(4)
|
The annual restricted awards and option awards include pro rata vesting on each grant date anniversary, for February grants to NEOs there are ten months (March through December) and for May grants to NEOs there are seven months (June through December) counted toward service for the unvested portion of the stock option, or restricted stock unit awards under certain termination events. For the annual awards granted in January 2014 to Ms. Folsom, there are eleven months counted toward service for the unvested portion of the stock options, restricted stock unit and restricted stock awards under certain termination events. These terms also apply in the case of the retention restricted stock units granted to Mr. Bruno, except that the retention restricted stock units would also fully vest upon an involuntary termination by the Corporation other than for cause or a voluntary termination with consent, and would be forfeited upon retirement.
|
50 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
Potential Payments Upon Termination or
Change in Control
(5)
|
Values shown for the Performance awards are calculated as follows:
|
|
•
|
The values shown for the 2014 equity awards for both TSR and ROCE are based on the actual value at the end of the Performance Period on December 31, 2016.
|
|
|
|
|
•
|
The 2014 TSR grant finished the Performance Period at the 75
th
percentile of the peer group indicating a payout of 150% of the target number of shares. The 2014 ROCE grant ended the Performance Period with below threshold results indicating that the entire award will be forfeited.
|
|
|
|
|
•
|
The values shown for the 2015 and 2016 TSR equity and 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 2016.
|
|
|
|
|
•
|
In the event of a Change in Control, the performance period is ended on the date of the Change in Control 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 disabilty or death, the awards are vested and distributed at the end of the relevant performance period, provided the relevent performance goals are achieved, based on the following rules:
|
|
|
Death or Disability prior to the end of the first year of the Performance Period - 0% vested
|
|
|
Death or Disabiilty 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 rhe second year of the Performance Period - 100% vested
|
(6)
|
Mr. Bruno did not receive Performance Awards in 2014. The vesting outcomes described in footnote 5 reflect his 2015 and 2016 grants of performance awards.
|
|
|
(7)
|
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.
|
|
|
United
States Steel Corporation | 2017 Proxy Statement | 51
|
Potential Payments Upon Termination or Change in Control
Termination
and Change-in-Control Provisions
Cash Severance
No cash severance payments are made with respect to an executive’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 2.5 times for Messrs. Longhi and Burritt and Ms. Folsom, and two times for Messrs. Bruno and Matthews the sum of (a) base salary
and (b) the current target under the short-term 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 Unemployement Benefits Program
and the Change in Control Program are contingent upon the execution of an agreement which contains a general release of claims
and confidentiality, non-disparagement and non-solicitation provisions.
Short-Term Incentive
Following a voluntary termination with the Committee’s
consent or a retirement pursuant to a retirement plan (Column A), a 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 Committee does not exercise its discretion to reduce or eliminate
the award.
If an executive’s employment terminates voluntarily without
the Committee’s consent or involuntarily (Columns B and C), 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).
Stock Options
Following a voluntary termination with the Committee’s
consent or a retirement pursuant to a retirement plan (Column A), a prorated number of an executive’s unvested stock options
would vest based on the number of complete months worked during the vesting period, subject to the Committee’s discretion.
The remaining unvested options would be forfeited. In the event of a disability (Column E) or death (Column F), all unvested options
vest immediately. All vested options granted under the current stock plan remain exercisable for three years after termination
or, if less, until the original expiration date.
If an executive’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, 2016 and that a prorated number of options vested based
on the number of complete months worked during the vesting year (May 2016 to May 2017 for the 2016 grant, February 2015 to February
2016 for the 2015 grant and May 2014 to May 2015 for the 2014 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.
Restricted Stock Units
Following a voluntary termination with the Committee’s
consent or a retirement pursuant to a retirement plan (Column A), a prorated number of an executive’s unvested restricted
stock units would vest based on the number of complete months worked during the vesting period, subject to the Committee’s
discretion. 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. As described in the footnotes to the table above, different provisions
may apply in the case of retention restricted stock units granted to Mr. Bruno.
If an executive’s employment terminates voluntarily without
the 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, 2016 and that a prorated number of restricted stock units
vested based on the number of complete months worked during the vesting year (May 2016 to May 2017 for the 2016 grant, February
2015 to February 2016 for the 2015 grant and May 2014 to May 2015 for the 2014).
52 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
Potential Payments Upon Termination or
Change in Control
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.
Performance Awards
Following a voluntary termination with the Committee’s
consent or a retirement pursuant to a retirement plan (Column A), the prorated value of the performance awards would vest based
on the number of complete months worked during the relevant performance period (each is approximately three years), provided that
the relevant performance goals are achieved. For performance awards for which the performance goals are achieved, a modified proration
is used in the event of a 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’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, 2016 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 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
plans:
U. S. Steel Pension Plan
Benefits under the U. S. Steel Pension Plan are payable on behalf
of Mr. Matthews under each of the termination of employment scenarios. Refer to the “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 by the Internal Revenue Code.
If an executive is placed on involuntary layoff status as of
December 31, 2016 (Column C), the executive would be eligible to remain on layoff for a period of up to two years. Having satisfied
certain age and service requirements, Mr. Matthews would be eligible to commence a Rule-of-70/80 early retirement option on December
31, 2017 after being on layoff for one year. 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 executive becomes eligible for a public pension.
If an executive becomes inactive on December 31, 2016 due to
a disability (Column E), which is determined to be a permanent incapacity, the executive would be eligible to commence a Permanent
Incapacity early retirement on May 31, 2017, 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 executive becomes
eligible for a public pension or, if earlier, governmental disability benefits.
If the employment of an executive is terminated due to death
(Column F), death benefits become payable to the survivor (typically his or her spouse) or, if there is no spouse, to the executive’s
estate. The present value amounts shown are equal to the higher of (i) the actuarial equivalent of the executive’s pension
benefit (excluding the survivor and surviving spouse’s benefits) that would have been payable if the executive had retired
on the date of death, or (ii) the value of the survivor and surviving spouse’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 Mr. Matthews under each of the termination of employment scenarios. Refer to the “2016
Pension Benefits - Non Tax-Qualified Pension 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.
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United
States Steel Corporation | 2017 Proxy Statement | 53
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Potential Payments Upon Termination or Change in Control
Supplemental Pension Program
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, 2016.
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 enhanced benefits
attributable to the additional age and continuous service accrued
while on layoff status and during the five-month period following
the disability event, respectively.
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.
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 Mr. Matthews,
this condition has been met and therefore, this benefit is payable under all termination scenarios.
Because Messrs. Longhi, Burritt and Bruno and Ms. Folsom have
not yet attained five years of continuous service, this benefit is only payable if employment is terminated with the consent of
the Corporation or if the executive dies prior to retirement.
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. Because Mr. Bruno and Ms. Folsom had not
yet met this condition as of December 31, 2016,
this benefit is only payable if employment is terminated with
the consent of the Corporation or if the executive dies prior to retirement.
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. Because Messrs. Longhi, Bruno and Burritt and Ms. Folsom
have not yet completed 10 years of service and all are under
age 65, this benefit is only payable if (a) termination of employment occurs prior to age 65, with the consent of the Corporation,
(b) employment is involuntarily terminated other than for cause, or (c) death prior to retirement.
Welfare Benefits
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 65
th
birthday.
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 Scenarios - Change in Control and 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’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.
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).
54 | United States
Steel Corporation | 2017 Proxy Statement
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Proposal 3: Advisory Vote on Frequency
of Stockholder Vote on Executive Compensation
PROPOSAL
3: ADVISORY VOTE ON FREQUENCY OF STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION
This year stockholders will be asked to vote on how frequently
they would like to cast an advisory vote regarding the compensation of the Corporation’s named executive officers. By voting
on this proposal, which is also an advisory vote, stockholders may indicate whether they would prefer an advisory vote on named
executive officer compensation every year, every two years or every three years.
After careful consideration of the frequency alternatives, the
Board believes that conducting an advisory vote on executive compensation every year is appropriate for U. S. Steel and its stockholders
at this time. While the Corporation’s compensation policies and procedures are developed with long term objectives in mind,
the Board believes that stockholder votes every year will permit stockholders to express their views on our compensation
practices on a regular basis and provide us with more direct
and immediate feedback.
Although this vote is advisory and not binding on the Board of
Directors or the Corporation, the Board will carefully consider the outcome of the vote when making future decisions regarding
the frequency of advisory votes on executive compensation. However, the Board may decide that it is in the best interests of the
Corporation and its stockholders to hold an advisory vote more or less frequently than the alternative that receives the most votes
of our stockholders.
The Board recommends that stockholders
vote to conduct future advisory votes on executive compensation on an ANNUAL basis.
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United
States Steel Corporation | 2017 Proxy Statement | 55
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Proposal 4: Approval of Amendment of the 2016 Omnibus Incentive Compensation Plan to Increase the Number
of Authorized Shares by 6.3 Million Shares
Proposal 4: Approval of Amendment of
the 2016 Omnibus Incentive Compensation Plan to Increase the Number of Authorized Shares by 6.3 Million Shares
Our Board of Directors upon recommendation of the Compensation & Organization Committee (the “Committee”),
has approved an amendment to the United States Steel Corporation 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”
or “Plan”), subject to approval by our stockholders at the Annual Meeting, to increase the number of shares authorized
for issuance under the Plan by 6.3 million shares (the “Share Increase Amendment”).
The purpose of the 2016 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. The availability of an adequate number of shares available for issuance under the
2016 Plan is an important factor in fulfilling these purposes.
The Plan currently authorizes the issuance of 7,200,0000 shares of common stock. The Committee expects that
if the stockholders approve the Share Increase Amendment, the number of shares available under the 2016 Plan will be sufficient
for approximately two or three years based on current expected equity grant practices. If the proposed Share Increase Amendment
is not approved by our stockholders, the 2016 Plan will continue in effect in its present form and we will continue to grant equity
awards under the terms of the 2016 Plan until the shares remaining available for issuance are exhausted, which the Committee estimates
will occur in 2018 based on current expected equity grant practices. Failure of our stockholders to approve the Share Increase
Amendment also will not affect the rights of existing award holders under the 2016 Plan or under any previously granted awards
under the 2016 Plan.
Highlights
of the 2016 Plan
•
|
No repricing of stock options or stock appreciation rights without stockholder approval;
|
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•
|
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;
|
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|
•
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Minimum vesting period of 12 months, except in the event of death, disability, retirement, termination of employment without
cause or a change in control;
|
•
|
Minimum 30% change in control trigger;
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•
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Consummation of transaction required for change in control;
|
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•
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“Double trigger” vesting of awards upon a change in control;
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•
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No liberal share recycling; and
|
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•
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Recoupment policy of incentive awards.
|
Background
The 2016 Plan adopted by the Board and approved by the stockholders in 2016 authorizes the issuance of 7,200,000
shares of common stock for equity granted after the date of the 2016 Annual Meeting. The 2016 Plan replaced the Corporation’s
2005 Stock Incentive Plan (the “2005 Plan”), and no new awards may be issued under the 2005 Plan, although outstanding
awards under the 2005 Plan granted before the approval of the 2016 Plan remain outstanding according to their terms.
In determining the number of shares of common stock to be requested by the Share Increase Amendment, the
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 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 and awards made under the 2005 Plan.
The burn rate is the total equity awards
granted by the Corporation in a fiscal year divided by the weighted average common stock outstanding in the year indicated. In
fiscal 2014, 2015 and 2016, the Corporation made equity awards representing a total of 2,808,440 shares, 2,719,532 shares and
2,771,672 shares, respectively. Under the ISS Proxy Advisor Services (“ISS”) burn rate methodology, one full value
share is equivalent to two stock options. If the performance awards that were not earned and were forfeited are excluded, then
the ISS adjusted three-year average burn rate would be 1.94% as shown in the table below. This is below the applicable ISS 2017
burn rate cap of 2.86%.
56 | United States
Steel Corporation | 2017 Proxy Statement
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Proposal 4: Approval of Amendment of the 2016 Omnibus Incentive Compensation Plan to Increase the Number
of Authorized Shares by 6.3 Million Shares
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Weighted Average
|
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Common
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Fiscal
|
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Performance
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Total Granted/
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Stock
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Year
|
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Options Granted
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RSUs Granted
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Awards Earned
(1)
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Earned
(2)
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Outstanding
|
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Burn Rate
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2014
|
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1,516,440
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746,430
|
|
0
|
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2,636,085
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145,164,000
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1.82%
|
|
2015
|
|
1,638,540
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|
807,432
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|
0
|
|
2,849,688
|
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146,094,000
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1.95%
|
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2016
|
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1,333,210
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1,120,332
|
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62,101
|
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3,106,860
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151,199,000
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2.05%
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3-Year Average
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1.94%
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(1)
|
In fiscal 2014, 2015 and 2016, the Corporation granted performance awards
representing a total of 545,570 shares, 273,560 shares, and 308,130 shares, respectively.
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(2)
|
Under the ISS burn rate methodology, the “Total Granted/Earned” is equal to the number of options granted
plus 1.5 times the number of RSUs granted and performance awards earned.
|
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:
•
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A is the number of outstanding stock options and outstanding full value awards;
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•
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B is the number of shares available for future grant under the proposed plan; and
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•
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C is the total outstanding shares of common stock.
|
As of December 31, 2016, the Corporation had 5,693,211 outstanding stock options with a weighted average
remaining term of 5.96 years, and a weighted average exercise price of $29.94. As of that date, the Corporation had 1,593,155
outstanding full value awards, and 5,524,364 shares available
for future grant under the 2016 Plan. As of that date, the Corporation had 173,810,176 outstanding shares
of Common Stock. This results in an overhang of 7.37%.
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 Committee with respect to equity awards is set forth in the “Long-Term
Incentive Compensation” section and elsewhere in the Compensation Discussion & Analysis section of this proxy statement.
Summary
of the 2016 Omnibus Incentive Compensation Plan
The following is a summary of the main features of the 2016 Plan. This summary is qualified in its entirety
by the specific terms of the 2016 Plan, which is incorporated into this proposal by reference
to Exhibit 10.1 of the Corporation’s quarterly report on Form 10-Q for the quarter ending March 31,
2016, which was filed with the U.S. Securities and Exchange Commission on April 27, 2016.
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, 2016, the Corporation had approximately 327 employees and eleven non-employee
directors eligible to receive awards under the Plan.
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 7,200,000
shares, subject to proportionate adjustment in the event of stock splits and similar events. If approved by the stockholders,
the Share Increase Amendment would increase the maximum number of shares that may be issued under the Plan to 13.5 million 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 1.73 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
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United States Steel Corporation
| 2017 Proxy Statement | 57
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Proposal 4: Approval of Amendment of the 2016 Omnibus Incentive Compensation Plan to Increase the Number
of Authorized Shares by 6.3 Million Shares
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.
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 qualify as an “outside director” as defined in Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), 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 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 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 Committee pursuant to the terms of the Plan are final, conclusive and binding
on all persons, including the Corporation, its subsidiaries and participants.
The 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 Committee may also delegate to one or more officers of the Corporation
the authority to grant awards to participants who are not directors or executive officers (as defined under Section 16 of the
Exchange Act), subject to limitations established by the 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 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 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 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, including the right to vote the shares and to receive all dividends and
other distributions paid with respect to the shares, subject only to the restrictions imposed by the Committee.
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 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 during a specified performance period of one or more performance goals established by the Committee at the time
of the award. 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 Committee at the time of grant, and may be paid in cash or shares.
58 | United States
Steel Corporation | 2017 Proxy Statement
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Proposal 4: Approval of Amendment of the 2016 Omnibus Incentive Compensation Plan to Increase the Number
of Authorized Shares by 6.3 Million Shares
The 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 based
on the achievement of the performance goals and such other terms and conditions applicable to the award as the Committee may,
in its discretion, determine. 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. 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 such performance measures may be based
either on the performance of the participant, the Corporation, a subsidiary or subsidiaries, affiliate, 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; however, the compensation awarded in connection with performance measures other than those identified
above will not satisfy the exemption for “performance based compensation” under Section 162(m) of the Code. (See “Federal
Income Tax Consequences –
Other Tax Matters
” below.)
The 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 Committee may grant
to eligible employees, in lieu of salary or cash bonus, 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 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 Committee in its discretion may determine. The 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
In order to permit awards to qualify as “performance-based compensation” under Section 162(m)
of the Code, awards may not be granted in any calendar year to any participant in excess of the following aggregate limits, subject
to the adjustments described below:
•
|
For stock options and appreciation rights, 1,000,000 shares (this limit applies separately to each
type of award).
|
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•
|
For restricted stock and restricted stock units, 1,000,000 shares (the limit applies separately to each 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 Committee.
Vesting
All awards granted under the Plan will provide for vesting based on employment or service for a period of
at least twelve (12) months from the date on which such award is granted and there is no acceleration of vesting to be more rapid
than vesting after twelve (12) months, except in connection with death,
disability, retirement, involuntary termination of employment or service without cause or a change in control.
However, 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.
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United States Steel Corporation
| 2017 Proxy Statement | 59
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Proposal 4: Approval of Amendment of the 2016 Omnibus Incentive
Compensation Plan to Increase the Number of Authorized Shares by 6.3 Million Shares
Repricing and Reload Options Prohibited
The Committee may not, without stockholder approval (1) amend or modify the terms of any outstanding option
or appreciation right to reduce the exercise price or (2) 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 Committee, if a change in control occurs and within two (2) years thereafter
a participant’s employment is terminated either (i) involuntarily for any reason other than cause or, (ii) in the case of
a member of executive management, as determined by the Committee, voluntarily by the participant for good reason, then (1) all
outstanding stock options, and other awards under which the participant may have rights the exercise of which is restricted or
limited, shall become fully exercisable and remain exercisable until the expiration date of such award and (2) all restrictions
or limitations, including
risks of forfeiture and deferrals, on awards subject to restrictions or limitations under the Plan shall
lapse. All performance goals applicable to performance awards shall be measured over the shortened performance period ending on
the date of the change in control. Unless otherwise determined by the 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.
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.
The 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.
Plan Benefits
The actual amount of awards to be received by or allocated to participants or groups under the Plan is not
determinable in advance because the selection of participants who receive awards under the Plan, and the size and type of awards,
are
generally determined by the Committee in its discretion. The following table reflects the award of stock
options under the 2016 Plan as of December 31, 2016.
Stock Option Grants Under the 2016 Plan
(executive titles below reflect titles held in 2016)
Name
and position
|
|
Number
of Shares Underlying Options
|
|
Mario Longhi, President & CEO
|
|
228,300
|
|
David Burritt, Executive Vice President & Chief Financial Officer
|
|
71,750
|
|
Suzanne Folsom, General Counsel, Chief Compliance Officer & Senior Vice President - Government Affairs
|
|
37,180
|
|
Douglas Matthews, Senior Vice President - Industrial, Service Center & Mining
|
|
29,090
|
|
James Bruno, Senior Vice President - Automotive Solutions
|
|
10,820
|
|
Executive Officers as a Group (10 Persons)
|
|
450,580
|
|
Non-Executive Director Group
|
|
0
|
|
All Employees (excluding Executive Officers) as a Group
|
|
882,630
|
|
The closing price of the Corporation’s common stock underlying
the options was $38.19 on February 27, 2017.
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.
Except as
described in “
Other Tax Matters
” below, the Corporation
generally will be entitled to a corresponding deduction in the same amount of compensation recognized as taxable income by the
participant.
60 | United States
Steel Corporation | 2017 Proxy Statement
|
|
|
Proposal 4: Approval of Amendment of the 2016 Omnibus Incentive Compensation Plan to Increase the Number
of Authorized Shares by 6.3 Million Shares
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.
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 difference (if any) between the then-fair market value
of the shares determined without regard to the restrictions and 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 difference, if any, between the then-fair market
value of the shares and the amount, if any, paid for the shares.
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. 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.
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 (i) a 20% federal excise tax (in addition to federal income tax) to the participant and (ii) the unavailability of a compensation
deduction which would otherwise be allowable to the Corporation as explained above.
Except for stock options and appreciation rights, and certain restricted stock awards, restricted stock unit
awards and performance awards that meet the requirements of the Plan and are based on the performance measures described therein,
the Corporation may not be eligible for a compensation deduction which would otherwise be allowable for compensation paid to any
employee if, as of the close of the tax year, the employee is the chief executive officer of the Corporation or is among the three
other highest compensated officers for that tax year for whom compensation is required to be reported to stockholders under the
Securities Exchange Act, as amended, to the extent the total compensation paid to such employee in such year exceeds $1,000,000.
Additional Information.
Stock options and appreciation
rights, performance awards, restricted stock and restricted stock unit awards that are based on performance measures set forth
in the Plan and otherwise meet the requirements of the Plan may qualify as “performance-based compensation” that is
exempt from the $1,000,000 annual federal income tax deduction limit imposed by Section 162(m) of the Code on compensation paid
to each of the Corporation’s chief executive officer and three other most highly compensated executive officers in each
fiscal year. Because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) of the Code and
the regulations issued thereunder, no assurance can be given, notwithstanding the Corporation’s efforts, that compensation
intended by the Corporation to satisfy the requirements for deductibility under Section 162(m) of the Code will in fact do so.
Board
Recommendation
The Board recommends a vote FOR the approval
of the Share Increase Amendment to the 2016 Plan.
|
|
United States Steel Corporation
| 2017 Proxy Statement | 61
|
Proposal 5: Approval of Amended and Restated Certificate of Incorporation
Audit Committee Report
Audit Fees
The following table shows the fees paid to PricewaterhouseCoopers LLP (“PwC”) for professional
services for 2016 and 2015:
|
|
(Dollars in millions)
|
|
|
|
2016
|
|
|
2015
|
|
Audit
(1)
|
|
$
|
5.1
|
|
|
$
|
6.4
|
|
Audit-Related
(2)
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Tax
(3)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
All Other
(4)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
Total
|
|
$
|
5.4
|
|
|
$
|
6.9
|
|
(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.
|
|
|
(3)
|
Tax fees were for services involving advice and consultation on tax matters.
|
|
|
(4)
|
All other fees were for advisory services, including risk vulnerability assessment and recommendation projects. All other
fees also include fees for training and an annual software license renewal.
|
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 2015 and 2016, 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, 2016 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 Statements on Auditing Standards No. 61, as amended
(AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
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, 2016, and PwC’s opinion on the effectiveness of U. S. Steel’s internal
control over financial reporting as of December 31, 2016. 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, 2016, for filing with the
Securities and Exchange Commission.
John J. Engel, Chairman
|
Stephen J. Girsky
|
Dan O. Dinges
|
Glenda G. McNeal
|
Murry S. Gerber
|
David S. Sutherland
|
|
|
United States Steel Corporation
| 2017 Proxy Statement | 63
|
Proposal 6: Ratification of the Appointment of Pricewaterhousecoopers LLP as Independent Registered Public
Accounting Firm
PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Pursuant to 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’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’s financial controls and reporting. If the appointment
of PwC is not ratified by the stockholders, 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’s knowledge of
U. S. Steel’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 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. 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 2016, 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’s internal control over financial reporting as of December 31, 2016,
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 and provided advice and consultation on tax matters.
The Board recommends a vote FOR the ratification of the appointment
of PwC as our independent registered public accounting firm.
64 | United States
Steel Corporation | 2017 Proxy Statement
|
|
|
Stock Ownership of Certain Beneficial Owners
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table furnishes information concerning all persons known to U. S. Steel to beneficially own
five percent or more of the voting stock of U. S. Steel:
|
|
|
|
|
|
Amount and Nature of
|
Percent
|
Class
|
Name and Address of Beneficial
Owner
|
Beneficial
Ownership
|
of Class
|
U. S. Steel Common Stock
|
The Vanguard Group
|
15,204,084
|
8.81%
(1)
|
|
100 Vanguard Blvd.
|
|
|
|
Malvern, PA 19355
|
|
|
U. S. Steel Common Stock
|
Blackrock, Inc.
|
13,155,605
|
7.6%
(2)
|
|
55 East 52
nd
street
|
|
|
|
New York, NY 10055
|
|
|
(1)
|
Based on Schedule 13G filed on February 9, 2017, which indicates that The Vanguard Group had sole voting
power over 98,566 shares, shared voting power over 17,404 shares, sole dispositive power over 15,096,602 shares and shared
dispositive power over 107,482 shares.
|
|
|
(2)
|
Based on Schedule 13G filed on January 26, 2017, which indicates that Blackrock, Inc. had sole voting power over 12,543,948
shares, shared voting power over no shares, sole dispositive power over 13,155,605 shares and shared dispositive power over
no shares.
|
|
|
United States Steel Corporation
| 2017 Proxy Statement | 65
|
Questions and Answers About the Annual Meeting and Voting
QUESTIONS AND ANSWERS ABOUT THE ANNUAL
MEETING AND VOTING
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 27, 2017.
You may vote on:
•
|
the election of the twelve nominees recommended by the Board of Directors and identified elsewhere in this proxy statement;
|
|
|
•
|
the advisory vote on executive compensation;
|
|
|
•
|
the advisory vote on the frequency of the stockholder vote on executive compensation;
|
|
|
•
|
the approval of the amendment to the 2016 Omnibus Incentive Compensation Plan to issue additional shares;
|
|
|
•
|
the approval of the amended and restated Certificate of Incorporation; and
|
|
|
•
|
the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for
2017.
|
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;
|
|
|
•
|
FOR ANNUAL
stockholder votes of executive compensation;
|
|
|
•
|
FOR
the approval of the amendment to the 2016 Omnibus Incentive Compensation Plan to issue additional shares;
|
|
|
•
|
FOR
the approval of the amended and restated Certificate of Incorporation; and
|
|
|
•
|
FOR
the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2017.
|
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 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:
FOR
each of the nominees for director;
FOR
approval of the Corporation’s executive
compensation;
FOR ANNUAL
stockholder votes on
executive compensation;
FOR
the approval of the amendment
to the 2016 Omnibus Incentive Compensation Plan to issue additional shares;
FOR
the approval of the amendment and restatement
of the Restated Certificate of Incorporation; and
FOR
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.
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;
|
|
|
•
|
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 many outstanding shares are there?
|
At the close of business on February 27, 2017, which is the record
date for the meeting, there were 174,290,761 shares of U. S. Steel common stock outstanding.
Each share is entitled to one vote.
7.
|
How many votes are required to elect a director or approve a proposal?
|
Proposal 1 – Election of Directors.
Each director
is elected by a vote of the majority 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-votes are not counted as votes cast
either “for” or “against” the director’s election.
Proposal 2 – Advisory Vote on Executive Compensation.
The advisory vote on executive compensation requires 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. 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-votes have no effect
on the proposal.
66 | United
States Steel
Corporation
| 2017 Proxy
Statement
|
|
|
Questions and Answers About the Annual
Meeting and Voting
Proposal 3 – Advisory Vote on Frequency of Stockholder
Vote on Executive Compensation.
The advisory vote regarding the frequency of the stockholder vote on executive compensation
requires 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. Because this vote is advisory, it will not be binding on the Board or the Corporation; however, the Board will
review the voting results and take them into consideration when making future decisions regarding how often to hold the advisory
vote on executive compensation. Abstentions and broker non-votes have no effect on the proposal.
Proposal 4 – Amendment to the 2016 Omnibus Incentive
Compensation Plan.
The amendment of the 2016 Omnibus Incentive Compensation Plan to issue additional shares must be approved
by a majority the votes cast by the holders of the shares present in person at the meeting or represented by proxy and entitled
to vote. Abstentions and broker non-votes have no effect on the proposal.
Proposal 5 – Amended and Restated Certificate of Incorporation.
The amendment and restatement of the Restated Certificate of Incorporation must be approved by a majority of the outstanding shares
entitled to vote. Abstentions and broker non-votes have the same effect as a vote against the proposal.
Proposal 6 – 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.
8.
|
What are broker non-votes?
|
The New York Stock Exchange permits brokers to vote their
customers’ shares on routine matters when the brokers have not received voting instructions from their customers.
Proposal 6 is a routine matter on which brokers may vote in this way. Brokers may not vote their customers’ shares on
non-routine matters, unless they have received voting instructions from their customers. Proposals 1, 2, 3, 4 and 5 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.
|
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.
|
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
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’s transfer agent have agreed to keep
voting records confidential.
11.
|
How will voting be conducted on other matters raised at the meeting?
|
If any matters are presented at the meeting other than the proposals
on the proxy card, the proxy committee will 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 26, 2016, and no later than January
25, 2017, 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 2018 annual meeting?
|
If a stockholder wants to present a proposal at the 2018 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 13, 2017.
14.
|
What is the deadline for a stockholder
to submit an item of business or other proposal for consideration at the 2018 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 2018 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 26, 2018 and no later than January 25, 2018 and must be accompanied by
certain information about the stockholders making the proposals, as specified in our by-laws.
|
|
United
States Steel Corporation | 2017 Proxy Statement | 67
|
Questions and Answers About the Annual Meeting and Voting
15.
|
What is the deadline
for a stockholder to nominate an individual for election as a director at the 2018 annual meeting?
|
Our Board of Directors recently amended our by-laws to 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 of 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 December 26, 2017 and no later than January
25, 2018, and must meet the requirements set forth in our bylaws. To nominate an individual for election as a director at the 2018
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 26, 2017 and no later than January 25, 2018. 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.
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, 15th 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.
Solicitation
Statement
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.
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,
Arden T. Phillips
Corporate Secretary
March 14, 2017
68 | United
States Steel Corporation | 2017 Proxy Statement
|
|
|
APPENDIX A
USE
OF NON-GAAP FINANCIAL MEASURES
This proxy statement contains the non-GAAP financial measure
adjusted earnings (loss) before interest, income taxes, depreciation, depletion and amortization “EBITDA”.
We believe
that adjusted EBITDA, considered along with the net earnings (loss), is a relevant indicator of trends relating to cash generating
activity and provides management and investors with additional information for comparison of our operating results to the operating
results of other companies.
Adjusted EBITDA is a non-GAAP measure that excludes the effects of restructuring charges, impairment
charges and losses associated with U. S. Steel Canada, Inc.
We present adjusted EBITDA to enhance the understanding of our ongoing
operating performance and established trends affecting our core operations, particularly cash generating activity, by excluding
the effects of restructuring charges, impairment charges, losses on debt extinguishment, certain postemployment actuarial adjustments,
charges for deferred tax asset valuation allowances and losses associated with non-core operations that can obscure underlying
trends. U. S. Steel’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, many of which use adjusted EBITDA as an alternative measure of operating performance. Additionally, the presentation
of adjusted EBITDA provides insight into management’s view and assessment of the Company’s ongoing operating performance,
because management does not consider the adjusting items when evaluating the Company’s financial performance. Adjusted EBITDA
should not be considered a substitute for net earnings (loss), or other financial measures as computed in accordance with U.S.
GAAP and are not necessarily comparable to similarly titled measures used by other companies.
RECONCILIATION
OF ADJUSTED EBITDA
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Year Ended
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(Dollars in millions)
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December 31, 2016
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Reconciliation to Adjusted EBITDA
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|
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Net loss attributable to United States Steel Corporation
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$
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(440
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)
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Income tax provision
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|
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24
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Net interest and other financial costs
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|
|
251
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Depreciation, depletion and amortization expense
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|
|
507
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|
EBITDA
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|
|
342
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|
Loss on shutdown of certain tubular pipe mill assets
(a)
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|
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126
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|
Restructuring and other charges
(a)
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|
|
(2
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)
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Granite City Works temporary idling charges
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|
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18
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|
Impairment of intangible assets
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|
|
14
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Impairment of equity investment
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|
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12
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Adjusted EBITDA
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|
$
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510
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|
(a)
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Included in restructuring and other charges in the Consolidated Statement of Operations.
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United
States Steel
Corporation
| 2017 Proxy
Statement | A-1
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APPENDIX
B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNITED STATES STEEL
CORPORATION
Pursuant to Sections 242 and 245 of
the Delaware General Corporation Law
United States Steel Corporation (the “Corporation”),
a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”) does hereby
certify as follows:
(1) The name of the Corporation is United States Steel Corporation.
The Corporation was originally formed as a Delaware limited liability company under the name “United States Steel LLC”
on May 25, 2001 and converted to a Delaware corporation, pursuant to Section 265 of the Delaware General Corporation Law and Section
18-216 of the Delaware Limited Liability Company Act, on December 31, 2001 under the name United States Steel Corporation.
(2) This Amended and Restated Certificate of Incorporation was
duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) and by the stockholders of the
Corporation in accordance with Sections 242 and 245 of the DGCL.
(3) This Amended and Restated Certificate of Incorporation restates
and integrates and further amends the certificate of incorporation of the Corporation, as heretofore amended or supplemented.
(4) The text of the Certificate of Incorporation is Amended and
Restated in its entirety as follows:
FIRST: The name of the Corporation (which
is hereinafter referred to as the “Corporation”) is UNITED STATES STEEL CORPORATION.
SECOND: The Corporation’s registered office in the State
of Delaware is located at 2711 Centerville Road, Suite 400, in the City of Wilmington, in the County of New Castle, Delaware 19808.
The name of the registered agent at such address upon whom process against the Corporation may be served is Corporation Service
Company.
THIRD: The purposes of the Corporation are to engage in any lawful
act or activity for which corporations may be organized under the General Corporation Law of Delaware, and without limiting the
foregoing to engage in integrated steel operations and to develop, mine, produce, manufacture, construct, transport, buy, hold,
sell and generally deal in products, materials, property, both tangible and intangible, and services of all kinds.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is Four Hundred Forty Million (440,000,000), of which Four Hundred Million (400,000,000)
shares shall be Common Stock having a par value of one dollar ($1.00) per share and Forty Million (40,000,000) shares shall be
shares of Preferred Stock, without par value (hereinafter called “Preferred Stock”).
A statement of the designations of the Preferred Stock or of
any series thereof, and the powers, preferences and relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, or of the authority of the Board of Directors to fix by resolution or resolutions such designations
and other terms not fixed by the Certificate of Incorporation, is as follows:
The Preferred Stock may be issued in one or more series, from
time to time, with each such series to have such designation, powers, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation, subject to the limitations
prescribed by law and in accordance with the provisions hereof, the Board of Directors being hereby expressly vested with authority
to adopt any such resolution or resolutions. The authority of the Board of Directors with respect to each such series shall include,
but not be limited to, the determination or fixing of the following:
The distinctive designation and number of shares comprising such
series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased
(but not below the number of shares then outstanding) from time to time by like action of the Board of Directors;
The dividend rate of such series, the conditions and times upon
which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class
or classes of stock or series thereof, or any other series of the same class, and whether dividends shall be cumulative or non-cumulative;
The conditions upon which the shares of such series shall be
subject to redemption by the Corporation and the times, prices and other terms and provisions upon which the shares of the series
may be redeemed;
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States Steel Corporation | 2017 Proxy Statement
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Appendix B
Whether or not the shares of the series shall be subject to the
operation of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if such retirement or
sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
Whether or not the shares of the series shall
be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series
of the same class, and, if provision is made for conversion or exchange, the times, prices, rates, adjustments, and other terms
and conditions of such conversion or exchange;
Whether or not the shares of the series shall have voting rights,
in addition to the voting rights provided by law, and, if so, subject to the limitation hereinafter set forth, the terms of such
voting rights;
The rights of the shares of the series in the event of voluntary
or involuntary liquidation, dissolution, or upon the distribution of assets of the Corporation;
Any other powers, preferences and relative,
participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of such
series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of this Certificate of
Incorporation.
The holders of shares of the Preferred Stock of each series shall
be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for the payment of dividends,
dividends at the rates fixed by the Board of Directors for such series, and no more, before any dividends, other than dividends
payable in Common Stock, shall be declared and paid, or set apart for payment, on the Common Stock with respect to the same dividend
period.
Whenever, at any time, dividends on the then outstanding Preferred
Stock as may be required with respect to any series outstanding shall have been paid or declared and set apart for payment on the
then outstanding Preferred Stock, and after complying with respect to any retirement or sinking fund or funds for any series of
Preferred Stock, the Board of Directors may, subject to the provisions of the resolution or resolutions creating any series of
Preferred Stock, declare and pay dividends on the Common Stock, and the holders of shares of the Preferred Stock shall not be entitled
to share therein.
The holders of shares of the Preferred Stock of each series shall
be entitled upon liquidation or dissolution or upon the distribution of the assets of the Corporation to such preferences as provided
in the resolution or resolutions creating such series of Preferred Stock, and no more, before any distribution of the assets of
the Corporation shall be made to the holders of shares of the Common Stock.
Except as otherwise provided by a resolution or resolutions of
the Board of Directors creating any series of Preferred Stock or by the General Corporation Law of Delaware, the holders of shares
of the Common Stock issued and outstanding shall have and possess the exclusive right to notice of stockholders’ meetings and the
exclusive power to vote. The holders of shares of the Preferred Stock issued and outstanding shall, in no event, be entitled to
more than one vote for each share of Preferred Stock held by them unless otherwise required by law.
Pursuant to the authority conferred by this Article Fourth, Series
A Junior Preferred Stock has been designated, consisting of such number of shares, with such voting powers and with such designations,
preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions as are
stated and expressed in Exhibit A attached hereto and incorporated herein by reference:
FIFTH: The existence of the Corporation is to be perpetual.
SIXTH: The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.
SEVENTH: The number of directors of the Corporation shall be
fixed from time to time by, or in the manner provided in, its by-laws and may be increased or decreased as therein provided; but
the number thereof shall not be less than three.
In the case of any vacancy in the Board of Directors from any
cause other than an increase in the number of directors, a successor to hold office for the unexpired portion of the term of the
director whose place became vacant shall be elected by a majority of the Board of Directors then in office, though less than a
quorum.
EIGHTH: The Board of Directors shall have power to adopt, amend
and repeal the by-laws at any regular or special meeting of the Board of Directors, provided that notice of intention to adopt,
amend or repeal the by-laws in whole or in part shall have been included in the notice of meeting; or, without any such notice,
by a vote of two-thirds of the directors then in office.
Stockholders may adopt, amend and repeal the by-laws at any regular
or special meeting of the stockholders by an affirmative vote of two-thirds of the shares outstanding and entitled to vote thereon,
provided that notice of intention to adopt, amend or repeal the by-laws in whole or in part shall have been included in the notice
of the meeting.
Any action required to be taken at any annual or special meeting
of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders or
otherwise, may not be taken without a meeting, prior notice and a vote, and stockholders may not act by written consent.
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States Steel Corporation | 2017 Proxy Statement | B-2
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Appendix B
NINTH: The Board of Directors from time to time shall determine
whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of
the Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred by law or authorized by the Board of Directors,
or by the stockholders.
TENTH: The directors may from time to time declare such dividends
as they shall deem advisable and proper, subject to the provisions of Article Fourth and to such restrictions as may be imposed
by law, and pay the same to the stockholders at such times as they shall fix.
The Board of Directors shall have power to issue bonds, debentures,
or other obligations, either non-convertible or convertible into the Corporation’s stock, subject to the provisions of Article
Fourth and upon such terms, in such manner and under such conditions in conformity with law, as may be fixed by the Board of Directors
prior to the issue of such bonds, debentures or other obligations.
ELEVENTH: No director shall be personally liable to the Corporation
or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director, except (i) for breach
of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, pursuant to Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article
Eleventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such amendment or repeal.
TWELFTH: The powers and authorities hereinbefore conferred upon
the Board of Directors are in furtherance and not in limitation of those conferred by the laws of the State of Delaware.
THIRTEENTH: The Corporation reserves the right at any time and
from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner
now or hereafter prescribed by law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter
amended are granted subject to the rights reserved in this Article.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been executed by its duly authorized officer this _____ day of _______________, 2017.
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UNITED STATES STEEL CORPORATION
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By:
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Name: Arden T. Phillips
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Title: Secretary
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States Steel Corporation | 2017 Proxy Statement
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EXHIBIT A
SERIES A JUNIOR PREFERRED STOCK
Section 1.
Designation and Amount.
The shares of this series shall be designated as “Series
A Junior Preferred Stock” and the number of shares constituting such series shall be 2,000,000.
Section 2.
Dividends and Distributions
.
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(a)
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Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Preferred Stock with respect to dividends, the holders of shares of Series A Junior Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $5.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares, of Common Stock (by reclassification or otherwise), to be or being declared on the Common Stock, par value $1.00 per share, of the Corporation (the “Common Stock”) with respect to the same dividend period. If the Quarterly Dividend Payment Date is a Saturday, Sunday or legal holiday then such Quarterly Dividend Payment Date shall be the first immediately preceding calendar day which is not a Saturday, Sunday or legal holiday. In the event the Corporation shall at any time after December 31, 2001 (the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
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(b)
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The Corporation shall declare a dividend or distribution on the Series A Junior Preferred Stock as provided in paragraph (a) above immediately prior to the time it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall be declared on the Common Stock with respect to a particular dividend period, a dividend of $5.00 per share on the Series A Junior Preferred Stock shall nevertheless be payable on such Quarterly Dividend Payment Date with respect to such quarterly period.
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(c)
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Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Preferred Stock entitled, to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Dividends in arrears may be declared and paid at any time, without reference to any Quarterly Dividend Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors.
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(d)
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Except as hereinafter provided, no dividends shall be declared or paid or set apart for payment on the shares of Series A Junior Preferred Stock for any period if the Corporation shall be in default in the payment of any dividends (including cumulative dividends, if applicable) on any shares of Preferred Stock ranking, as to dividends, prior to the Series A Junior Preferred Stock, unless the same shall be contemporaneously declared and paid.
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(e)
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Dividends payable on the Series A Junior Preferred Stock for the initial dividend period and, for any period less than a full quarterly period, shall be computed on the basis of a 360-day year of 30-day months.
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Section 3.
Voting Rights.
The holders of shares of Series A Junior Preferred Stock shall
have the following voting rights:
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(a)
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Each share of Series A Junior Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the stockholders of the Corporation. The holders of Series A Junior Preferred Stock shall be entitled to notice of all meetings of the stockholders of the Corporation.
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(b)
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Except as otherwise provided herein or by law, the holders of shares of Series A Junior Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
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(c)
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If, on the date used to determine stockholders of record for any meeting of stockholders for the election of directors, a default in preference dividends on the Preferred Stock shall exist, the number of directors constituting the Board of Directors of the Corporation shall be increased by two, and the holders of the Preferred Stock of all series (whether or not the holders of such series of Preferred Stock would be entitled to vote for the election of directors if such default in preference dividends did not exist), shall have the right at such meeting, voting together as a single class without regard to series, to the exclusion of the holders of Common Stock, to elect two directors of the Corporation to fill such newly created directorships. Each director elected by the holders of shares of Preferred Stock (herein called a “Preferred Director”), shall continue to serve as such director for the full term for which he shall have been elected, notwithstanding that prior to the end of such term a default in preference dividends shall cease to exist. Any Preferred Director may be removed by, and shall not be removed except by, the vote of the holders of record of the outstanding shares of Preferred Stock, voting together as a single class without regard to series, at a meeting of the stockholders, or of the holders of shares of Preferred Stock, called for the purpose. So long as a default in any preference dividends on the Preferred Stock shall exist (i) any vacancy in the office of a Preferred Director may be filled except as provided in the following clause (ii) by an instrument in writing signed by the remaining Preferred Director and filed with the Corporation and (iii) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote of the holders of the outstanding shares of Preferred Stock, voting together as a single class without regard to series, at the same meeting at which such removal shall be voted. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Whenever the term of office of the Preferred Directors shall end and no default in preference dividends shall exist, the number of directors constituting the Board of Directors of the Corporation shall be reduced by two. For the purposes of this paragraph (c), a “default in preference dividends” on the Preferred Stock shall be deemed to have occurred whenever the amount of accrued and unpaid dividends upon any series of the Preferred Stock shall be equivalent to six full quarterly dividends or more, and, having so occurred, such default shall be deemed to exist thereafter until, but only until all accrued dividends on all shares of Preferred Stock of each and every series then outstanding shall have been paid through the last Quarterly Dividend Payment Date.
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Section 4.
Certain Restrictions.
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(a)
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Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
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(i)
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declare or pay dividends on, or make any other distributions on
(other than a dividend in Common Stock or in any other stock of the Corporation ranking junior to the Series A Junior
Preferred Stock as to dividends and upon liquidation, dissolution or winding up and other than as provided in subparagraph
(ii) of this section), or redeem or purchase or otherwise acquire for consideration (except by conversion into or exchange
for stock of the Corporation ranking junior to the Series A Junior Preferred Stock as to dividends and upon dissolution,
liquidation or winding up), any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Preferred Stock;
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(ii)
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declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Preferred Stock, except dividends paid ratably on the Series A Junior Preferred Stock and all stock ranking on a parity with the Series A Junior Preferred Stock as to dividends on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
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(iii)
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redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series A Junior Preferred Stock;
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B-5 | United
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(iv)
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purchase or otherwise acquire for consideration any shares of Series A Junior Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
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(b)
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The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
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Section 5.
Reacquired Shares.
Any shares of Series A Junior Preferred Stock purchased or otherwise
acquired by the Corporation, in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6.
Liquidation, Dissolution or Winding Up.
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(a)
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In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Series A Junior Preferred Stock shall be entitled to receive
the greater of (a) $100 per share, plus accrued dividends to the date of distribution, whether or not earned or declared, or
(b) an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock (the “Series A Liquidation Preference”). In the
event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Preferred Stock
were entitled immediately prior to such event pursuant to clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior
to such event.
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(b)
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In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences.
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Section 7.
Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A Junior Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times
the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A Junior Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
Section 8.
Optional Redemption.
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(a)
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The Corporation shall have the option to redeem the whole or any part of the Series A Junior Preferred Stock at any time on at least 30 days notice in accordance with the provisions of paragraph (b) of this Section 8 at a redemption price equal to, subject to the provision for adjustment hereinafter set forth, 100 times the “current per share market price” of the Common Stock on the date of the mailing of the notice of redemption, together with unpaid accumulated dividends to the date of such redemption. In the event the Corporation shall at any time after December 31, 2001 (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Preferred Stock were otherwise entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. The “current per share market price” on any date shall be deemed to
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be the average of the closing price per share of such Common Stock for the 10 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Stock is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or such other system then in use or, if on any such date the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Corporation. If on such date no such market maker is making a market in the Common Stock, the fair value of the Common Stock on such date as determined in good faith by the Board of Directors of the Corporation shall be used. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in the State of New York are not authorized or obligated by law or executive order to close.
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(b)
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Whenever shares of Series A Junior Preferred Stock are to be redeemed, the Corporation shall mail a notice (“Notice of Redemption”) by first-class mail, postage prepaid, to each holder of record of shares of Series A Junior Preferred Stock to be redeemed and to the transfer agent for the Series A Junior Preferred Stock. The Notice of Redemption shall be addressed to the holder at the address of the holder appearing on the stock transfer books of the Corporation maintained by the transfer agent for the Series A Junior Preferred Stock. The Notice of Redemption shall include a statement of (i) the redemption date, (ii) the redemption price, (iii) the number of shares of Series A Junior Preferred Stock to be redeemed, (iv) the place or places where shares of the Series A Junior Preferred Stock are to be surrendered for payment of the redemption price, (v) that the dividends on the shares to be redeemed will cease to accrue on such redemption date, and (vi) the provision under which redemption is made. No defect in the Notice of Redemption or in the mailing thereof shall affect the validity of the redemption proceedings, except as required by law. From the date on which a Notice of Redemption shall have been given as aforesaid and the Corporation shall have deposited with the transfer agent for the Series A Junior Preferred Stock a sum sufficient to redeem the shares of Series A Junior Preferred Stock as to which Notice of Redemption has been given, with irrevocable instructions and authority to pay the redemption price to the holders thereof, or if no such deposit is made, then upon such date fixed for redemption (unless the Corporation shall default in making payment of the redemption price), all rights of the holders thereof as stockholders of the Corporation by reason of the ownership of such shares (except their right to receive the redemption price thereof, but without interest), shall terminate, including, but not limited to, their right to receive dividends, and such shares shall no longer be deemed outstanding. The Corporation shall be entitled to receive, from time to time, from the transfer agent for Series A Junior Preferred Stock the interest, if any, on such monies deposited with it and, the holders of any shares so redeemed shall have no claim to any such interest. In case the holder of any shares so called for redemption shall not claim the redemption price for his shares within one year after the date of redemption, the transfer agent for the Series A Junior Preferred Stock shall, upon demand, pay over to the Corporation such amount remaining on deposit and the transfer agent for the Series A Junior Preferred Stock shall thereupon be relieved of all responsibility to the holders of such shares and such holder of the shares of the Series A Junior Preferred Stock so called for redemption shall look only to the Corporation for the payment thereof.
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(c)
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In the event that fewer than all the outstanding shares of the Series A Junior Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be determined by lot or pro rata as may be determined by the Board of Directors or by any other method as may be determined by the Board of Directors in its sole discretion to be equitable.
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(d)
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If the Corporation shall be in default in the payment of any dividends (including cumulative dividends, if applicable) on any shares of Preferred Stock ranking, as to dividends, prior to the Series A Junior Preferred Stock, then no shares of the Series A Junior Preferred Stock shall be redeemed and the Corporation shall not purchase or otherwise acquire any shares of the Series A Junior Preferred Stock.
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Section 9.
Ranking.
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(a)
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The Series A Junior Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, unless the terms of any such series shall provide otherwise.
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(b)
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For purposes hereof, any stock of any class or classes of the Corporation shall be deemed to rank:
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B-7 | United States
Steel Corporation | 2017 Proxy Statement
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(i)
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prior to the shares of the Series A Junior Preferred Stock, either as to dividends or upon liquidation, dissolution or winding up, if the holders of such class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of the Series A Junior Preferred Stock. Each holder of any share of the Series A Junior Preferred Stock, by his acceptance thereof, expressly covenants and agrees that the rights of the holders of any shares of any other series of Preferred Stock of the Corporation to receive dividends or amounts distributable upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be and hereby are expressly prior to his rights unless in the case of any particular series of Preferred Stock the certificate or other instrument creating or evidencing the same expressly provides that the rights of the holders of such series shall not be prior to the shares of the Series A Junior Preferred Stock; and
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(ii)
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on a parity with shares of the Series A Junior Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share or sinking fund provisions, if any, be different from those of the Series A Junior Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of the Series A Junior Preferred Stock; and junior to shares of the Series A Junior Preferred Stock, either as to dividends or upon liquidation, if such class or classes shall be Common Stock or if the holders of shares of the Series A Junior Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of such class or classes.
|
Section 10.
Amendment.
Except as otherwise set forth in this Certificate of Incorporation,
Preferences and Rights with respect to the Series A Junior Preferred Stock, holders of Series A Junior Preferred Stock shall not
have any special powers and their consent shall not be required for taking any corporate action, provided, however, that:
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(1)
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Unless the vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66- 2/3% of all of the shares of the Series A Junior Preferred Stock at the time outstanding, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose at which the holders of shares of the Series A Junior Preferred Stock shall vote together as a separate class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal of any of the provisions of the Certificate of Incorporation or of any certificate amendatory thereof or supplemental thereto (including any Certificate of Designation, Preferences and Rights or any similar document relating to any series of Preferred Stock) so as to affect adversely the powers, preferences, or rights, of this Series A Junior Preferred Stock. The increase of the authorized amount of the Preferred Stock, or the creation, authorization or issuance of any shares of any other class of stock of the Corporation ranking prior to or on a parity with the shares of the Series A Junior Preferred Stock as to dividends or upon liquidation, or the reclassification of any authorized or outstanding stock of the Corporation into any such prior or parity shares, or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any such prior or parity shares shall not be deemed to affect adversely the powers, preferences or rights of the Series A Junior Preferred Stock.
|
Section 11
.
Fractional Shares.
Series A Junior Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series
A Junior Preferred Stock.
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|
United
States Steel Corporation | 2017 Proxy Statement | B-8
|
THANK
YOU FOR YOUR CONTINUED SUPPORT
OF UNITED STATES STEEL CORPORATION.
UNITED STATES STEEL CORPORATION
600 GRANT STREET
ROOM 1681
PITTSBURGH, PA 15219
ATTENTION: TUCKER J. KULP
|
SCAN TO
VIEW MATERIALS & VOTE
|
|
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:
E18920-P86198 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
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Proposal 1. Election of Directors
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For
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Against
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Abstain
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1a.
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Patricia Diaz Dennis
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o
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o
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o
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1b.
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Dan O. Dinges
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o
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o
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o
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1c.
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John G. Drosdick
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o
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o
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o
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1d.
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John J. Engel
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o
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o
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o
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1e.
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Murry S. Gerber
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o
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o
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o
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1f.
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Stephen J. Girsky
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o
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o
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o
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1g.
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Mario Longhi
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o
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o
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o
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1h.
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Paul A. Mascarenas
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o
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o
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o
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1i.
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Glenda G. McNeal
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o
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o
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o
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1j.
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Robert J. Stevens
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o
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o
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o
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1k.
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David S. Sutherland
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o
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o
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o
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1l.
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Patricia A. Tracey
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o
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o
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o
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For
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Against
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Abstain
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Proposal 2.
|
Approval, in a non-binding advisory vote, of the compensation of certain executive officers
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o
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o
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o
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1 Year
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2 Years
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3 Years
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Abstain
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Proposal 3.
|
Approval, in a non-binding advisory
vote, of the frequency of the vote on the
compensation of certain executives
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o
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o
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o
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o
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For
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Against
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Abstain
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Proposal 4.
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Approval of an amendment to the 2016 Omnibus
Incentive Compensation Plan to issue additional shares
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o
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o
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o
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Proposal 5.
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Approval of the Amended and Restated Certificate
of Incorporation
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o
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o
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o
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Proposal 6.
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Ratification of appointment of PricewaterhouseCoopers
LLP as independent registered public accounting firm
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o
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o
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o
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THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1, FOR PROPOSALS 2, 4, 5 AND 6 AND 1 YEAR ON PROPOSAL 3.
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I hereby instruct Fidelity Management Trust Company to vote
the number of shares of United States Steel Corporation stock
attributable to my account as specified above.
|
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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.
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Signature [PLEASE SIGN WITHIN BOX]
|
Date
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Signature (Joint Owners)
|
Date
|
V.1.1
UNITED STATES STEEL CORPORATION
2017 Annual Meeting of Stockholders
Attendance
Card
You are invited to attend the Annual Meeting of Stockholders on April 25, 2017. 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 2017 Proxy Card.
Arden T. Phillips
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.
E18921-P86198
UNITED STATES STEEL
CORPORATION
Annual Meeting
of Stockholders
April 25, 2017 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 shares of United States Steel Corporation common stock
attributable to your account at the Annual Meeting of Stockholders to be held on April 25, 2017. 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
V.1.1
UNITED STATES STEEL CORPORATION
600 GRANT STREET
ROOM 1681
PITTSBURGH, PA 15219
ATTENTION: TUCKER J. KULP
|
SCAN TO
VIEW MATERIALS & VOTE
|
|
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:
E18922-P86198 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
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|
Proposal 1. Election of Directors
|
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For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
1a.
|
Patricia Diaz Dennis
|
|
o
|
o
|
o
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|
|
|
|
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|
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1b.
|
Dan O. Dinges
|
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o
|
o
|
o
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|
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1c.
|
John G. Drosdick
|
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o
|
o
|
o
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1d.
|
John J. Engel
|
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o
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o
|
o
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|
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1e.
|
Murry S. Gerber
|
|
o
|
o
|
o
|
|
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|
|
|
|
|
|
|
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1f.
|
Stephen J. Girsky
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
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1g.
|
Mario Longhi
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
1h.
|
Paul A. Mascarenas
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
1i.
|
Glenda G. McNeal
|
|
o
|
o
|
o
|
|
|
|
|
|
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|
|
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1j.
|
Robert J. Stevens
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
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1k.
|
David S. Sutherland
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
1l.
|
Patricia A. Tracey
|
|
o
|
o
|
o
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For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
Proposal 2.
|
Approval, in a non-binding advisory vote, of the compensation of certain executive officers
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
2 Years
|
|
3 Years
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
Proposal 3.
|
Approval, in a non-binding advisory
vote, of the frequency of the vote on the
compensation of certain executives
|
|
o
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
Proposal 4.
|
Approval of an amendment to the 2016 Omnibus
Incentive Compensation Plan to issue additional shares
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
Proposal 5.
|
Approval of the Amended and Restated Certificate
of Incorporation
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
Proposal 6.
|
Ratification of appointment of PricewaterhouseCoopers
LLP as independent registered public accounting firm
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1, FOR PROPOSALS 2, 4, 5 AND 6 AND 1 YEAR ON PROPOSAL 3.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I hereby instruct Fidelity Management Trust Company to vote
the number of shares of United States Steel Corporation stock
attributable to my account as specified above.
|
|
|
|
|
|
|
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
|
V.1.1
UNITED STATES STEEL CORPORATION
2017 Annual Meeting of Stockholders
Attendance
Card
You are invited to attend the Annual Meeting of Stockholders on April 25, 2017. 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 2017 Proxy Card.
Arden T. Phillips
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.
E18923-P86198
UNITED STATES STEEL
CORPORATION
Annual Meeting
of Stockholders
April 25, 2017 8:00 AM
This instruction card is solicited by Fidelity
Management Trust Company
As a participant in the U. S. Steel Tubular Services Savings Plan, you have the right 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 25, 2017. 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
V.1.1
UNITED STATES STEEL CORPORATION
600 GRANT STREET
ROOM 1681
PITTSBURGH, PA 15219
ATTENTION: TUCKER J. KULP
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SCAN TO
VIEW MATERIALS & VOTE
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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:
E18924-P86198 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
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Proposal 1. Election of Directors
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For
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Against
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Abstain
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1a.
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Patricia Diaz Dennis
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o
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o
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o
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1b.
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Dan O. Dinges
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o
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o
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o
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1c.
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John G. Drosdick
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o
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o
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o
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1d.
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John J. Engel
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o
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o
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o
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1e.
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Murry S. Gerber
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o
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o
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o
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1f.
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Stephen J. Girsky
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o
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o
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o
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1g.
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Mario Longhi
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o
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o
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o
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1h.
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Paul A. Mascarenas
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o
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o
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o
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1i.
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Glenda G. McNeal
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o
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o
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o
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1j.
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Robert J. Stevens
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o
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o
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o
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1k.
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David S. Sutherland
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o
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o
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o
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1l.
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Patricia A. Tracey
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o
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o
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o
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For
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Against
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Abstain
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Proposal 2.
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Approval, in a non-binding advisory vote, of the compensation of certain executive officers
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o
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o
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o
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1 Year
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2 Years
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3 Years
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Abstain
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Proposal 3.
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Approval, in a non-binding advisory
vote, of the frequency of the vote on the
compensation of certain executives
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o
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o
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o
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o
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For
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Against
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Abstain
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Proposal 4.
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Approval of an amendment to the 2016 Omnibus
Incentive Compensation Plan to issue additional shares
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o
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o
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o
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Proposal 5.
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Approval of the Amended and Restated Certificate
of Incorporation
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o
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o
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o
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Proposal 6.
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Ratification of appointment of PricewaterhouseCoopers
LLP as independent registered public accounting firm
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o
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o
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o
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THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1, FOR PROPOSALS 2, 4, 5 AND 6 AND 1 YEAR ON PROPOSAL 3.
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I hereby instruct Fidelity Management Trust Company to vote
the number of shares of United States Steel Corporation stock
attributable to my account as specified above.
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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.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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V.1.1
UNITED STATES STEEL CORPORATION
2017 Annual Meeting of Stockholders
Attendance
Card
You are invited to attend the Annual Meeting of Stockholders on April 25, 2017. 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 2017 Proxy Card.
Arden T. Phillips
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.
E18925-P86198
UNITED STATES STEEL
CORPORATION
Annual Meeting
of Stockholders
April 25, 2017 8:00 AM
This instruction card is solicited by Fidelity
Management Trust Company
As a participant in the USS 401(k) Plan for USW-Represented Employees, you have the right 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 25, 2017. 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
V.1.1
UNITED STATES STEEL CORPORATION
600 GRANT STREET
SUITE 1500
PITTSBURGH, PA 15219
|
SCAN TO
VIEW MATERIALS & VOTE
|
|
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:
E18926-P86198 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
|
|
|
|
|
|
|
|
Proposal 1. Election of Directors
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
1a.
|
Patricia Diaz Dennis
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
1b.
|
Dan O. Dinges
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|
o
|
o
|
o
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1c.
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John G. Drosdick
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|
o
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o
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o
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1d.
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John J. Engel
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o
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o
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o
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1e.
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Murry S. Gerber
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o
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o
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o
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1f.
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Stephen J. Girsky
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o
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o
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o
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1g.
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Mario Longhi
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o
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o
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o
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1h.
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Paul A. Mascarenas
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o
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o
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o
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1i.
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Glenda G. McNeal
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o
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o
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o
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1j.
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Robert J. Stevens
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o
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o
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o
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1k.
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David S. Sutherland
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o
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o
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o
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1l.
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Patricia A. Tracey
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o
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o
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o
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For
|
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Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
Proposal 2.
|
Approval, in a non-binding advisory vote, of the compensation of certain executive officers
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
2 Years
|
|
3 Years
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
Proposal 3.
|
Approval, in a non-binding advisory
vote, of the frequency of the vote on the
compensation of certain executives
|
|
o
|
|
o
|
|
o
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|
o
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|
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For
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Against
|
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Abstain
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|
Proposal 4.
|
Approval of an amendment to the 2016 Omnibus
Incentive Compensation Plan to issue additional shares
|
|
o
|
|
o
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|
o
|
|
|
|
|
|
|
|
|
Proposal 5.
|
Approval of the Amended and Restated Certificate
of Incorporation
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|
o
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|
o
|
|
o
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|
|
|
|
|
|
|
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Proposal 6.
|
Ratification of appointment of PricewaterhouseCoopers
LLP as independent registered public accounting firm
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN PROPOSAL 1, FOR PROPOSALS 2, 4, 5 AND 6 AND 1 YEAR ON PROPOSAL 3.
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The shares represented
by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s).
If
no direction is made, this proxy will be voted: “FOR” the nominees in proposal 1, “FOR” proposals
2, 4, 5 and 6 and “1 YEAR” on proposal 3.
If any other matters properly come before the meeting, the persons
named in this proxy will vote in their discretion.
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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
|
V.1.1
UNITED STATES STEEL CORPORATION
2017 Annual Meeting of Stockholders
Attendance
Card
You are invited to attend the Annual Meeting of Stockholders on April 25, 2017. 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 2017 Proxy Card.
Arden T. Phillips
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.
E18927-P86198
UNITED STATES STEEL
CORPORATION
Annual Meeting
of Stockholders
April 25, 2017 8:00 AM
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoint(s) Mario Longhi 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 25, 2017, and
at any meeting resulting from an adjournment or postponement thereof and upon all other matters properly coming before
the meeting, including the proposals set forth in the proxy statement for such Meeting with respect to which the proxies are
instructed to vote as indicated on the reverse side.
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
V.1.1