PROPOSAL 1: ELECTION OF DIRECTORS
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At
the 2018 Annual Meeting, ten directors are up for election 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 ten nominees be elected. John G. Drosdick will retire from the Board as of the expiration of his term at the 2018
Annual Meeting in accordance with our Director Retirement Policy, described on page 13. Additionally Mr. Stevens and Ms. McNeal decided not to stand for re-election.
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. Mr. Sperling is the only nominee who has not been previously elected to the Board by our stockholders. His nomination was recommended by the Chairman of the Board after
consultation with certain stakeholders.
If
any nominee for whom you have voted becomes unable to serve, your proxy may be voted for another person designated by the Board.
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The Board recommends a vote "FOR" the election of each nominee.
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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
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Proposal 1: Election of Directors
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"diversity" to include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to board heterogeneity.
Experience.
Directors should be or have been in leadership positions in their field of endeavor and have a record of excellence in that field.
Integrity.
Directors should have a reputation of integrity and be of the highest ethical character.
Judgment.
Directors should have the ability to exercise sound business judgment on a large number of matters.
Knowledge.
Directors should have a firm understanding of business strategy, corporate governance and board operations and other relevant business
matters.
Skills.
Directors should be selected so that the Board has an appropriate mix of skills in critical core areas, including, but not limited to:
accounting, compensation, finance,
government
relations, legal, management, risk oversight and strategic planning.
These
director qualification standards are evaluated by the Corporate Governance & Public 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, 2018, 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
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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.
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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The Board of Directors recommends a vote
"FOR" the election of each of the following 2018 Director Nominees for a one-year term:
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David B. Burritt
earned a bachelor's degree in accounting from Bradley
University and received a master's degree in business administration from the University of Illinois in Champaign. Mr. Burritt joined the Corporation in September 2013 to serve as executive
vice president and chief financial officer with responsibility for all aspects of the Corporation's strategic and financial matters. In January 2015, he added executive leadership of
U. S. Steel's North American Flat-Rolled commercial entities and corporate support services to his responsibilities. In February 2017, he was elected president and chief operating
officer with executive responsibility for all aspects of the Corporation's day-to-day business in the United States and Central Europe, and was named President & Chief Executive Officer in May
2017. Prior to joining U. S. Steel, Mr. Burritt, served as chief financial officer at Caterpillar Inc., retiring from that position in 2010. During more than
32 years with Caterpillar, Mr. Burritt helped lead several important transformations and employee development initiatives at the company, including his role as business measurements
manager to support Caterpillar's reorganization into accountable business units, his role as corporate champion for the company-wide 6 Sigma deployment, and his leadership role that helped Caterpillar
effectively navigate the financial crisis and related recovery.
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Particular experience, attributes or skills that qualify candidate for Board
membership:
As the Chief Executive Officer, Mr. Burritt is responsible for all of the business and corporate affairs of U. S. Steel. His
understanding of complex financial and operational issues is crucial to the Corporation's strategic planning and operational success. As the only employee-director on the Board, Mr. Burritt is
able to provide the Board with an "insider's view" of what is happening in all facets of the Corporation. He shares not only his vision for the Corporation, but also his hands-on experience as a
result of his daily management of the Corporation and constant communication with employees at all levels. His insider's perspective provides the Board with invaluable information necessary to direct
the business and affairs of the Corporation.
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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 board of Entravision
Communication Corporation, and previously served on the board of Massachusetts Mutual Life Insurance Company. She also is a trustee of the NHP Foundation and a member of the Advisory Board for LBJ
Family Wealth Advisors.
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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
graduated from The University of Texas with a Bachelor of
Business Administration degree in Petroleum Land Management. Mr. Dinges began his career with Mobil Oil Corporation in 1978. From 1981 to 2001, Mr. Dinges worked in a variety of
management positions with Samedan Oil Corporation, a subsidiary of Noble Affiliates, Inc. (now Noble Energy Inc.). In September 2001, Mr. Dinges joined Cabot Oil & Gas
Corporation as its President and Chief Operating Officer, and assumed his current position as Chairman, President and Chief Executive Officer in May 2002. Mr. Dinges serves on the board of
directors of the American Petroleum Institute, Spitzer Industries, Inc., the American Exploration & Production Council, the Foundation for Energy Education, Houston Methodist Hospital
Research Institute, Boy Scouts of America, and Palmer Drug Abuse Program. Mr. Dinges previously served on the board of directors of Lone Star Technologies, Inc. Mr. Dinges is also
a member of the All-American Wildcatters Association and serves on the executive committee of the Kay Bailey Hutchinson Center for Energy, Law and Business at The University of Texas at Austin.
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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.
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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.
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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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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.
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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
received a Bachelor of Science degree in mathematics
from the University of California at Los Angeles and a Master of Business Administration from the Harvard Business School. Mr. Girsky is Managing Partner of VectoIQ, an independent advisory
firm based in New York, where he applied more than 30 years of experience working with senior corporate and board executives, labor leaders, OEM leaders, suppliers and dealers, and national and
local policy makers. Mr. Girsky served in a number of capacities at General Motors from November 2009 until July 2014, including GM Vice Chairman, having responsibility for global corporate
strategy, new business development, global product planning and program management, global connected consumer/OnStar, and GM Ventures LLC, Global Research & Development and Global
Purchasing and Supply Chain. Mr. Girsky served as Chairman of the Adam Opel AG Supervisory Board and was President of GM Europe for a period of time. Mr. Girsky is a director at
Brookfield Business Partners, Drive.ai, and Valens Semiconductor Ltd. He served on the General Motors Board of Directors following its emergence from bankruptcy in June 2009 until June 2016. He
also served as the lead director of Dana Holdings Corp. from 2008 to 2009. Mr. Girsky has also served as president of Centerbridge Industrial Partners, an affiliate of Centerbridge
Partners, LP, and a multibillion dollar investment fund. Prior to Centerbridge, he was a special advisor to the CEO and CFO of General Motors Corporation from August 2005 to June 2006.
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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.
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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.
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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 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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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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Eugene B. Sperling
graduated from the University of Minnesota and Yale
Law School and attended Wharton Business School at the University of Pennsylvania. He currently heads Sperling Economic Strategies, which advises financial companies, start-ups, Fortune 500 companies
and philanthropies, and is a contributing editor for The Atlantic.
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Mr. Sperling
served as Director of the National Economic Council (NEC) and Assistant to the President for Economic Policy in the White House under
President Clinton from 1997 to 2001 and under President Obama from 2011 to 2014, the first individual to hold both positions under two presidents. As NEC Director, he coordinated economic policy
development among the economic cabinet members. While serving in this role, he was influential in fiscal negotiations, passage of the payroll and low-income tax cuts, the Small Business Jobs Act and
formation of the American Jobs Act. He spearheaded the Manufacturing Innovation Hubs initiative and the renewal of the Advanced Manufacturing Partnership. Mr. Sperling was co-chair of the first
White House Manufacturing Council and helped launch the Select USA initiative.
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Mr. Sperling
also served as counselor to Treasury Secretary Timothy Geithner at the U.S. Department of the Treasury and as a member of the
President's Auto Task Force. He was the founder and director, from 2002 to 2008, of the Center for Universal Education, which specializes in education for girls and boys in developing and
conflict-impacted nations. Mr. Sperling currently serves on the board of directors of Ripple Labs.
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Particular experience, attributes or skills that qualify candidate for Board
membership:
Stemming from his vast experience in government, Mr. Sperling brings to the Board valuable experience in public policy, economic policy,
governmental affairs, and governance. He also provides the Board with knowledge and insight regarding market and risk analysis, manufacturing and innovation, the automotive industry, and labor
relations, which add valuable insight and perspective to Board deliberations.
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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., the Steel Manufacturers
Association, the International Iron and Steel Institute, the Canadian Steel Producers Association and the National Association of Manufacturers.
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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.
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Vice Admiral Tracey
holds a Bachelor of Arts degree in Mathematics from
the College of New Rochelle and a Master of Science in Operations Research and Systems Analysis from the Naval Postgraduate School. From 1970 to 2004, Vice Admiral Tracey served in increasingly
responsible operational and staff positions with the United States Navy, including Chief of Naval Education and Training from 1996 to 1998, Deputy Assistant Secretary of Defense (Military Personnel
Policy) from 1998 to 2001, and Director, Navy Headquarters Staff from 2001 to 2004. Vice Admiral Tracey served as a consultant on decision governance processes to the United States Navy from 2004 to
2005 and to the Department of Defense from 2005 to 2006. She took a position as a Client Industry Executive for business development and performance improvement with Electronic Data System Corporation
in 2006. Hewlett Packard Co. acquired Electronic Data Systems Corporation in August 2008. Vice Admiral Tracey left her position as Vice President, Homeland Security and Defense Services with HP
Enterprise Services in October 2016. She also serves on the board of trustees of Norwich University and the Board of Armed Forces Benefits Association. She currently consults with US Public Sector, a
division of DXC Technology.
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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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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, including being one of the first publicly traded
companies
in United States history to hold an annual meeting of stockholders and to publish an annual report.
In
this section, we describe some of our key governance policies and practices.
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:
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overseeing the management of our business and the assessment of our business risks;
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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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reviewing and approving our major financial objectives and strategic and operating plans;
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overseeing our talent management and succession planning for the CEO and other key executives; and
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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, 2017, the
Board held 10 meetings and numerous interim conference calls. All of the directors attended in excess of 75% of the meetings of the Board and the committees on which they served. All of the
then-serving directors attended the 2017 Annual Meeting of Stockholders.
The
Board has long adhered to governance principles designed to assure excellence in the execution of its duties. The Board regularly reviews the Corporation's governance policies and practices, which
are responsive to stockholder feedback. These principles are outlined in our Corporate Governance Principles, which, in conjunction with our certificate of incorporation, by-laws, Board committee
charters and related policies, form the framework for the effective governance of the Corporation.
The
full text of the Corporate Governance Principles, by-laws, the charters for each of the Board committees, and the Corporation's Code of Ethical Business Conduct are available on the Corporation's
website, www.ussteel.com. These materials are also available in print to any person, without charge, upon written request to:
Corporate
Secretary
United States Steel Corporation
600 Grant Street, Suite 1500
Pittsburgh, PA 15219
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Corporate Governance At A Glance
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Leadership Structure
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Our Chairman is
independent. He interacts closely with our Chief Executive Officer
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
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Board Composition
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Currently, the Board has
fixed the number of directors at 13*
The board regularly assesses its performance through Board and committee self-evaluations
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Board Independence
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12 out of 13 of our
directors are independent*
Our CEO is the only management director
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Board Committees
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We have four Board
committees Executive, Audit, Corporate Governance & Public Policy, and Compensation & Organization
With the exception of the Executive Committee (our Chairman, Committee Chairs and CEO serve on this committee), all other committees are composed
entirely of independent directors
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Management
Succession Planning
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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
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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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
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Risk Oversight
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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
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Accountability to
Stockholders
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We use majority voting in
uncontested director elections
We have annual election of directors
We implemented a "3-3-20" proxy access by-law provision which enables our stockholders to nominate directors and have their eligible nominees included in the proxy statement with our nominees
We actively reach out to our stockholders through our
engagement program
Stockholders can contact our Board, our Chairman or management by regular mail
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*
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Following
the 2018 Annual Meeting, the Board will have 10 members, 9 of which are independent.
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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serve as a liaison between the Chief Executive Officer and the independent directors;
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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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approve the type of information to be provided to directors for Board meetings;
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be available for consultation and direct communication with the Corporation's stockholders;
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call meetings of the independent directors when necessary and appropriate; and
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perform other duties as the Board may from time to time designate.
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United
States Steel Corporation
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2018 Proxy
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Table of Contents
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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the Corporation's major risk exposures and the steps management has taken to monitor and control such exposures.
The
Corporation's Internal Audit group provides regular reports to the Audit Committee on the results of various internal audit projects and provides recommendations for the enhancement of operational
functions in order to reduce certain risks. Although the Audit Committee has primary responsibility for overseeing risk management, each of our other Board committees also considers the risks within
their specific areas of responsibility. For example, the charter of the Compensation & Organization Committee gives it responsibility for assessing whether the Corporation's compensation and
organization policies and practices for executives and non-executives are reasonably likely to create a risk that could have a material adverse effect on the Corporation. Pursuant to its charter, the
Corporate Governance & Public Policy Committee considers the risks
associated
with legislative, regulatory and public policy issues affecting the Corporation's businesses and operations. Each committee regularly reports to the full Board on its respective activities,
including, when appropriate, those activities related to risk assessment and risk management oversight.
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 STRATEGY
A primary responsibility of our Board is oversight of our business strategy. At each regular Board meeting throughout the year, our Board reviews our strategy,
operating plans, and overall financial performance, and progress on each, and provides significant guidance and feedback. In addition, at least one multi-day meeting each year is dedicated to focus on
our long-term strategic planning. The Board also devotes significant time to reviewing our capital allocation strategy. Annually, our Board reviews and approves our capital authorization and spending
budgets, which are designed to strategically deploy capital intended to facilitate investments
required
to achieve operational excellence, drive business growth and generate strong returns. Our capital allocation is aligned to support our strategic priorities, with a focus on preserving a
strong balance sheet, a strong liquidity profile and financial flexibility. To oversee management's performance in executing our strategy, the Board receives regular updates and actively engages in
dialogue with our executive management team. Members of our Board also periodically visit our facilities to monitor the execution of our strategy in our business units, and to assess areas for
improvement or potential risk.
BOARD OVERSIGHT OF SUCCESSION PLANNING
Our Board and management consider succession planning and professional development to be an integral part of the Corporation'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
United States Steel Corporation
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2018 Proxy
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11
Table of Contents
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.
BOARD SELF-ASSESSMENTS
Each year, the Board conducts annual self-evaluations to determine whether it and its committees are functioning effectively and whether its governing documents
continue to remain appropriate. Our Board's self-evaluation is facilitated by a wide range of questions related to topics including operations, composition of the board, responsibilities, governing
documents and resources. The Board evaluation also includes an assessment of whether the Board (i) has the appropriate mix of skills, experience and other
characteristics,
including those described earlier, and (ii) is made up of a sufficiently diverse group of people. The process is designed and overseen by the Corporate Governance &
Public Policy Committee, and the results of the evaluations are discussed by the full Board.
Each
standing committee, other than the Executive Committee, annually reviews its own performance and reports the results and any recommendations to the Board.
INDEPENDENCE
The following non-employee directors are independent within the definitions of independence of both the New York Stock Exchange (NYSE) listing standards and the
U.S. Securities and Exchange Commission (SEC) standards for Audit Committee members: Patricia Diaz Dennis, Dan O. Dinges, John G. Drosdick, John J. Engel, Murry S. Gerber,
Stephen J. Girsky, Paul A. Mascarenas, Glenda G. McNeal, Eugene B. Sperling, Robert J. Stevens, David S. Sutherland and Patricia A. Tracey. The
Corporation has incorporated the NYSE and SEC independence standards into its own categorical standards for independence. The Board has affirmatively determined that none of the directors or nominees
for director, other than Mr. Burritt, has a material relationship with the Corporation. The Board made such determination based on all relevant facts and circumstances.
In
making its determination of director independence, the Board of Directors considered the fact that U. S. Steel purchased certain goods and services from WESCO
International, Inc. (WESCO) in 2017. Mr. Engel is the Chairman, President and Chief Executive Officer of WESCO. The Board determined that Mr. Engel did not have a direct or
indirect material interest in these transactions and that the transactions were undertaken in the ordinary course of business. In addition, the value of materials purchased by
U. S. Steel in 2017 was less than 2% of WESCO's annual gross revenues. As a result, the Board concluded that these transactions would not affect Mr. Engel's independence.
Additionally,
the Board considered the fact that U. S. Steel indirectly sold products to Cabot Oil & Gas Corporation ("Cabot") in 2017. Mr. Dinges is the Chairman,
President and Chief Executive Officer of Cabot. The Board determined that Mr. Dinges did not have a direct or indirect material interest in these transactions and that the transactions were
undertaken in the ordinary course of business, and that the products sold by U. S. Steel were less than 2% of Cabot's annual gross revenues. Accordingly, the Board concluded that these
transactions would not affect Mr. Dinges' independence.
The
Board affirmatively determined that each member of the Audit Committee: (i) did not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Corporation or
any of its subsidiaries, (ii) was not an affiliated person of the Corporation or any of its subsidiaries, and therefore (iii) satisfied the NYSE's enhanced independence standards for
audit committee members.
The
Board also determined that: (i) no member of the Compensation & Organization Committee has a relationship to the Corporation which is material to that director's ability to be
independent from management in connection with the duties of a compensation committee member, and (ii) each member of the Compensation & Organization Committee therefore satisfies the
independence requirements of NYSE listing standards.
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States Steel Corporation
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DIRECTOR RETIREMENT POLICY
Our Corporate Governance Principles require any non-employee director to retire at the first annual meeting of stockholders after he or she reaches the age of
74. However, the Board may grant exceptions to this policy on a case-by-case basis.
Each
employee director must retire from the Board when he or she ceases to be an executive officer of the Corporation, except that the Chief Executive Officer may remain on the Board after retirement
as an employee, at the Board's request, through the last day of the month in which he or she turns 70.
Our
Corporate Governance Principles also provide that directors who undergo a significant change in their business or professional careers shall volunteer to resign from the Board.
At
the 2018 Annual Meeting of Stockholders, Mr. Drosdick's term will expire and he will retire from the Board pursuant to the mandatory director retirement policy.
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 the principal 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. The Board also has an Executive
Committee that acts on, and reports to the Board on, matters that arise between Board meetings.
Each
principal committee is required to have at least three members, each of whom is considered independent. Each of the principal committee charters require the committee to perform a self-evaluation
and review its charter annually. Each committee may in its sole discretion, retain or obtain the advice of outside advisers, 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
table below shows the current committee memberships of our directors:
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Director
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Audit
Committee
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Compensation &
Organization
Committee
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Corporate
Governance
& Public Policy
Committee
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Executive
Committee
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David B. Burritt
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X
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Patricia Diaz Dennis
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X
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X
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Dan O. Dinges
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C
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X
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John G. Drosdick
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X
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John J. Engel
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C
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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
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Paul A. Mascarenas
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X
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X
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Glenda G. McNeal
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X
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X
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Eugene B. Sperling
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X
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X
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David S. Sutherland*
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X
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Robert J. Stevens
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X
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X
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Patricia A. Tracey
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X
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C
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X
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TOTAL MEETINGS HELD:
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5
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6
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5
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C = Committee Chair.
*Chairman of the Board.
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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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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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reviewing the responsibilities, staffing and performance of the Corporation's internal audit function;
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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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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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discussing policies with respect to risk assessment and risk management.
The
Audit Committee annually requests PriceWaterhouseCoopers LLP (PwC) to prepare a self-assessment utilizing the Center for Audit Quality, External Auditor Assessment Tool. This best practice assists
the Audit Committee in its oversight role and annual evaluation of PwC to assess the quality of the audit and to recommend the retention of PwC. Based on this assessment, we believe the quality of
PwC's services, communication and interaction with the Audit Committee is of a high standard.
The
charter also requires the Audit Committee to be comprised of at least three directors, each of whom is financially literate, and at least one of whom must have accounting or related financial
management expertise. Under the charter, no director who serves on the audit committees of more than two other public companies may serve on the Audit Committee, unless the Board determines that such
simultaneous service will not impair the ability of such director to effectively serve on the Audit Committee. No member of the Audit Committee serves on the audit committees of more than two other
publicly traded companies. The Board has determined that John J. Engel, the Committee's chairman, Murry S. Gerber and Stephen J. Girsky meet the SEC's definition of audit committee
financial expert.
Compensation & Organization Committee
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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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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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reviewing the Corporation's executive management succession plans annually with the Board;
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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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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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considering the most recent stockholder advisory vote on executive compensation in connection with determining executive compensation policies
and decisions;
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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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adopting and amending certain employee benefit plans and designating participants therein.
The
Compensation & Organization Committee has retained Pay Governance, LLC as its consultant to assist it in evaluating executive compensation. The consultant reports directly to the
Compensation & Organization Committee. The Compensation & Organization Committee retains sole authority to hire the consultant, approve its compensation, determine the nature and scope
of its services, evaluate its performance, and terminate its engagement. A representative of the consultant attended all in-person meetings of the Compensation & Organization Committee in 2017.
The
consultant provides various executive compensation services to the Compensation & Organization Committee, which generally include advising the Compensation & Organization Committee
on the principal aspects of our executive compensation program and changing industry practices and providing market information and analysis regarding the competitiveness of our program design and our
award values in relationship to their performance.
During
2017, the consultant performed the following specific services:
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provided presentations on executive compensation trends, and best practices and recent developments;
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2018 Proxy
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Table of Contents
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prepared competitive assessments by position for each element of compensation and for compensation in the aggregate;
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reviewed drafts and commented on the CD&A and related compensation tables for the proxy statement;
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reviewed the peer group used for compensation benchmarking purposes and recommended changes, if appropriate; and
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attended executive sessions of the Compensation & Organization Committee.
The
consultant provided no services to management during 2017.
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.
Committee
agendas are established in consultation among management, the Committee chair and the Compensation & Organization Committee's independent compensation consultant. The
Compensation & Organization Committee
meets in executive session without management for at least a portion of each regular meeting.
In
2017, the Compensation & Organization Committee considered reports and analysis that it had requested of management and its independent consultant concerning risks associated with the
Corporation's compensation and organization policies and practices.
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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making recommendations to the Board concerning the compensation of non-employee directors;
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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;
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reviewing relationships with, and communications to and from, the investment community, including the Corporation's stockholders;
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reviewing matters and discussing risk relating to legislative, regulatory and public policy issues affecting the Corporation's businesses and
operations;
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reviewing public policy issues likely to be of interest to various stakeholders of the Corporation, including employee health and safety,
environmental, energy and trade matters;
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reviewing and approving codes of conduct applicable to employees and principal operating units; and
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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.
United States Steel Corporation
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2018 Proxy
Statement
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15
Table of Contents
COMPENSATION & ORGANIZATION COMMITTEE REPORT
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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, 2017.
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Dan O. Dinges, Chairman
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John G. Drosdick
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Patricia Diaz Dennis
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Murry S. Gerber
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Robert J. Stevens
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Patricia A. Tracey
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United
States Steel Corporation
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2018 Proxy
Statement
Table of Contents
Compensation Discussion and Analysis
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COMPENSATION DISCUSSION AND ANALYSIS
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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 2017, as well as individuals who served as our principal
executive officer and interim principal financial officer during a portion of 2017.
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U. S. Steel's Named Executive Officers in 2017*
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David B. Burritt
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President & Chief Executive Officer
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Kevin P. Bradley
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Executive Vice President & Chief Financial Officer
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Douglas R. Matthews
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Senior Vice President Industrial, Service Center and Mining Solutions
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Scott D. Buckiso
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Senior Vice President European Solutions & President, U. S. Steel Kosice
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David J. Rintoul
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Senior Vice President Tubular Business
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Mario Longhi
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Former President & Chief Executive Officer
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Suzanne R. Folsom
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Former General Counsel, Chief Compliance Officer & Senior Vice President Government Affairs
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Pipasu H. Soni
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Former Interim Chief Financial Officer; Vice President Finance
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*
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As
a result of the following changes, there are eight named executive officers for 2017: Mario Longhi stepped down as Chief Executive Officer on May 8, 2017.
As of that date, David B. Burritt was promoted from Executive Vice President, Chief Operating Officer & Acting Chief Financial Officer to President & Chief Executive Officer.
Pipasu Soni, the Corporation's Vice President Finance, served as Interim Chief Financial Officer from May to July 2017 while a permanent search was conducted to fill the vacancy
created by Mr. Burritt's promotion. Ms. Folsom resigned from her position as General Counsel, Chief Compliance Officer & Senior Vice President as of December 29, 2017.
Mr. Rintoul retired from the Corporation on February 28, 2018.
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Executive Summary
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Our executive compensation program is designed to attract, reward and retain executives who make significant contributions through operational and financial achievements aligned with the goals and philosophy of our long-term strategy. The
Compensation & Organization Committee (the "Committee") is guided by five compensation principles highlighted below and discussed in more detail on page 28.
Align Pay with Stockholder Interests
Pay Fair and Competitive Compensation
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Link Compensation to
Company Performance and Strategy
Retain Executives
Provide Equity-Focused and Tax-Efficient Rewards
These principles reflect a strong pay-for-performance culture. Furthermore, the structure of our
compensation program and the pay outcomes for executives demonstrate our commitment to linking compensation to company performance and strategy.
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Earning the Right to Grow and Driving Sustainable Profitable Growth
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Over the past few years, U. S. Steel, like the American steel industry in general, has faced difficult market conditions as a result of macroeconomic challenges, including significant reductions in the market price of steel, global
overcapacity and record levels of unfairly traded imports, slow growth globally, a strong U.S. dollar, and markedly low energy prices. In the face of these challenging conditions, we initiated a process that provides the framework for a multi-year
transformation to return our company to top quartile performance and sustainable profitability through the business cycle.
We are on a mission to become
an industry leader by striving to create a sustainable competitive advantage with a customer-centric focus on: delivering high-quality, value-added products on time every time; collaborating with our customers to develop innovative solutions that
address their most challenging needs, including new advanced high-strength steels to meet fuel efficiency and safety requirements for automotive customers and new premium connections that provide strong, durable connections between pipes used by
energy customers in oil and gas drilling; generating
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economic profit through active participation in relevant markets; and creating and maintaining a competitive cost structure centered around operational flexibility. As part of this process, we have aligned our company with commercial entities to
drive customer intimacy in order to foster innovation and be more responsive to their needs. We focus on our strengths, how we can create the most value for our stockholders and best serve our customers, with committed and engaged executives and
employees.
We have launched a series of initiatives that we believe will enable us to achieve true operational excellence by improving our performance
across our core business processes, including commercial, supply chain, manufacturing, procurement, innovation, and operational and functional support. Our highly talented, capable and collaborative employees are the driving force behind many of
these continuous improvement projects, and their efforts are creating a culture where accountability and high performance are valued and celebrated.
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United States Steel Corporation
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2018 Proxy
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Table of Contents
Compensation Discussion and Analysis Executive Summary
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Foundational
to all our efforts is our belief that we must operate as a principled company committed to a code of conduct that is rooted in our Gary Principles and our core values, the most important
of which is safety of our employees, our environment, and our facilities and equipment. These core beliefs have served us well for much
of our history, and our commitment to them remains as strong as the products we make every day.
Our
success in this transformation is predicated on having the right leaders to guide the Corporation and successfully execute on our strategy, so it is critical to attract and retain the highest
level of executive talent. We believe we have the right leadership team, which includes highly experienced executives from both inside and outside 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 transformation: attract, reward and retain talented executives; focus our executives on the goals
that are within their control and support our strategy; and clearly and closely align with company performance, and the long-term interests of stockholders, using measurable financial metrics. We
believe both the structure of our compensation programs and the pay outcomes for executives demonstrate our strong commitment to linking compensation to company performance and strategy.
Executive Leadership Transition
In
May 2017, Mario Longhi announced his retirement from the Corporation after serving as the Corporation's Chief Executive Officer since 2013. David B. Burritt, who has been with the
Corporation since 2013 and served most recently as President and Chief Operating Officer, was promoted to President & Chief Executive Officer and appointed as a member of the Board of
Directors. The promotion of Mr. Burritt reinforces the Board's confidence in the Corporation's leadership team and commitment to the long-term transformational strategy initiated by
Mr. Longhi. The Corporation's 2017 highlights and accomplishments, described on the next page, are a testament to the
successful transition of executive leadership, and Mr. Burritt's intense focus on continuous improvement in the areas of safety, quality, delivery and
cost.
In
connection with his retirement, Mr. Longhi entered into a separation agreement with the Corporation, which provided for, among other things, pro rata vesting of certain 2015 and 2016
long-term incentive awards, a pro rata portion of any award under the annual incentive compensation plan, and certain retirement benefits. Under the agreement, Mr. Longhi forfeited all of his
2017 long-term incentive awards. This agreement is described in more detail on page 36.
22
|
United
States Steel Corporation
|
2018 Proxy
Statement
Compensation Discussion and Analysis Executive Summary
|
2017 Highlights and Accomplishments
Our successful navigation through the industry downturn in 2015 and 2016 better positioned us to benefit from improved industry conditions in
2017, although we continued to face challenges driven by uncertain geopolitical factors. We delivered significant improvement in our Tubular segment, and had continued success from our European
operations. We recognized the need to accelerate our plans to revitalize our assets in our North American Flat-Rolled operations through a strategic investment program. The continued focus of our
executive team and employees on our long-term strategic goals of improving our balance sheet, enhancing operating efficiency and reliability, and seeking robust enforcement of our trade laws, again
led to a successful year and helped move us another step closer to achieving sustainable profitability. We made good progress in 2017, and strive for greater achievement in the year ahead.
The
following are highlights and accomplishments from 2017:
-
-
Implemented comprehensive safety program enhancements for employees and contractors, to help achieve our goal of a safe return home every day
-
-
Out-performed the Bureau of Labor Statistics and AISI industry safety benchmarks in both OSHA Recordable Days and Days Away From Work
-
-
Finished 2017 with adjusted EBITDA of $1.087 billion, more than double 2016 adjusted EBITDA; and with positive operating cash flow of
$802 million
-
-
Strong year-end liquidity of $3.350 billion, highest since 2001, including $1.553 billion of cash on hand, which supports our goal
of maintaining a healthy balance sheet
-
-
Reduced total debt by over $300 million, contributing to net debt reduction by 50% over the last three years and achieving our lowest net
debt since 2007
-
-
Successfully completed a $750 million debt offering, providing for future financial flexibility
-
-
Continued improvement in working capital by achieving cash conversion cycle time at industry leading performance, a 50% reduction over the last
four years
-
-
Made a $75 million voluntary contribution to our defined benefit pension plan, strengthening our pension plan as part of our liability
management strategy, and adding to the over $400 million improvement in the funded status of our pension and other post-employment benefit plans from 2016 to 2017
-
-
Improved customer experience by reducing quality claims 9% in 2017, and implemented delivery improvement projects to achieve the highest service
level in past four years
-
-
Conducted first-ever company-wide employee inclusion survey
-
-
Continue to lead the steel industry's efforts to strengthen and enforce trade laws against unfairly traded imports
Asset revitalization and Innovation
In 2017 we announced a $2 billion strategic initiative to revitalize the assets in our North
American Flat-Rolled segment. The program is focused on improving company critical assets to deliver 15-20% EBITDA returns over three to four years, through a consistent focus on improving safety,
quality, delivery and cost. The Corporation views this program as essential to improving predictability and our ability to compete effectively in the industry. As we revitalize our assets, we expect
to increase profitability, productivity and operational consistency, and reduce volatility.
In addition to investing in improvements of our leaders and current assets, we're also focused on the future by investing in our global workforce and the
innovation that will create tomorrow's steel solutions today. We've continued our aggressive efforts around the development of the next generation of advanced high-strength steels (AHSS) for the
automotive industry to solve its most pressing challenges. Years of work on AHSS technology culminated with the announcement in September 2017 of the commencement of construction of a new continuous
galvanizing line at our PRO-TEC Coating Company joint venture that will feature proprietary technology developed in part by our company. We also launched a new proprietary semi-premium tubular
connection EAGLE SFH
TM
and sold our first orders of USS-LIBERTY LD
TM
connections to meet the needs of our customers in the oil and gas industry and to
position U. S. Steel as a stronger company by 2020.
United States Steel Corporation
|
2018 Proxy
Statement
|
23
Compensation Discussion and Analysis Executive Summary
|
Maintaining Pay-for-Performance Approach through Industry
Cycles
The
Committee believes it is critical to align our compensation program with the goals of our strategic turnaround initiatives 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 74% of our CEO's target compensation in 2017. Based on this strong pay-for-performance alignment, realizable
compensation for our CEO over the last three years is 42% above the target value granted during the period.
-
*
-
Amounts
shown reflect annual target compensation for the Corporation's current President and CEO and do not reflect actual amounts paid to Mr. Burritt in 2017
because his compensation was increased in connection with his promotion in May 2017.
24
|
United
States Steel Corporation
|
2018 Proxy
Statement
Compensation Discussion and Analysis Executive Summary
|
Compensation Elements
The following table highlights the key elements of our performance-based compensation structure. Goals for each incentive component are set at
the beginning of the performance period and above market performance is required for the target payout to be made under the relative TSR metric.
|
|
|
|
|
Element
|
|
Form
|
|
Description and Performance Metrics
|
|
|
|
|
|
Base Salary
|
|
Fixed Cash
|
|
Market competitive levels that take into account scope and complexity of role and individual qualifications, experiences and internal value to the Corporation
|
|
|
|
|
|
|
|
|
|
Net sales
funding trigger (no payout under plan if not met)
|
|
|
|
|
|
Annual Incentive
|
|
Performance-Based Cash
|
|
EBITDA
weighted 50%
|
|
|
|
|
|
Compensation Plan (AICP)
|
|
|
|
Cash flow
weighted 50%
|
|
|
|
|
|
|
|
|
|
Individual performance
modifier on award amount
|
|
|
|
|
|
|
|
Performance-Based Awards (60%)*
Performance-Based Equity (30%)
|
|
Relative TSR
measured over a 3-year period; requires above market performance for target payout to be made
|
|
|
|
|
|
Long-Term Incentive Program
|
|
Performance-Based Cash (30%)
|
|
ROCE
measured over a 3-year period
|
|
|
|
|
|
(LTIP)
|
|
Time-Based RSUs (20%)*
|
|
Supports retention and linked to stock price performance
|
|
|
|
|
|
|
|
Stock Options (20%)*
|
|
Measured relative to appreciation in stock price
|
-
*
-
Percentage
of award at target grant
Compensation Decisions and Outcomes Demonstrate Alignment with Performance
The
Committee approved the following items based on several factors, including: the Corporation's 2016 performance; outlook for 2017 performance; continued development and execution of the long-term
strategy; assumption of additional duties in connection with executive leadership changes and responsibilities of each of our NEOs; among other criteria.
CEO Compensation Decisions for 2017
-
-
Salary:
In connection with his promotion to CEO, the Committee set the base salary of
Mr. Burritt below the median for the CEO position, which is lower than that of the former CEO. Following the leadership change, the Committee determined to set a greater percentage of the CEO's
target compensation as incentive-based compensation.
-
-
Annual Incentive:
Mr. Burritt's target incentive percentage under our AICP was
increased to 140% of base salary in connection with his promotion to CEO (down from the 150% target of our prior CEO). Mr. Burritt did not receive an annual cash incentive award for 2017.
-
-
Long-Term Incentive:
The target value of Mr. Burritt's LTIP award increased
from $2,750,000 to $6,100,000 in connection with his promotion to CEO (below the 2016 target of $8,750,000 for our prior CEO).
-
-
Total Compensation:
Mr. Burritt's target pay increased in connection with his
elevation to the role of President & CEO, though it remains lower than the total target compensation of our former CEO by $4 million. The amounts shown for Mr. Burritt in the
Summary Compensation Table reflect his service for a portion of the year as Executive Vice President & Chief Financial Officer and Chief Operating Officer.
The
Committee believes pay decisions for 2017 demonstrate the significant link between executive compensation and company performance, and accountability of our executives to deliver value to our
stockholders.
Other Compensation Decisions
Generally base salaries and target AICP and LTIP grants did not increase for our NEOs in 2017. The Committee did approve an increase in base
salary, AICP target and LTIP target for Mr. Buckiso to better align his compensation with other NEOs and comparable roles across our organization and the peer group. Additionally, in February
2017, Mr. Soni was promoted to Vice President Finance and received a corresponding increase in all compensation elements, consistent with other executives at the Vice
President level.
Compensation Outcomes: Payouts Reflect Corporate Performance
The Committee considers a mix of cash and equity awards over both the short-term and long-term as a critical balance in reinforcing
U. S. Steel's commitment to performance alignment. This strong pay-for-performance 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 94% of target, and no payouts were made in 2015 based on the Corporation's financial performance.
Below target performance award payouts have been made under our long-term incentive plan during this same time period, with no payouts for the 2014 performance awards, 2014-2016 or 2015-2017 ROCE
performance awards and below target payout for the 2015-2017 TSR performance awards.
United States Steel Corporation
|
2018 Proxy
Statement
|
25
Compensation Discussion and Analysis Executive Summary
|
The
following table illustrates how our performance has affected the payout of our short-term incentives and how the performance of our common stock affects the value of the long-term incentives that
would be received by our Chief Executive Officer based on our closing stock price of $35.19 on December 29, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
(1)
|
|
Stock Options
|
|
|
Restricted Stock
(3)
|
|
|
Performance Awards
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
% of Target Award Paid
|
|
Exercise
Price
|
|
Intrinsic
Value
(2)
|
|
|
Value as a % of
Grant Value
|
|
|
Award Payout as a %
of Target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
0%
|
|
$39.265
|
|
$0
|
|
|
90%
|
|
|
87%
|
|
2016
|
|
|
201%
|
|
$14.780
|
|
$20.41
|
|
|
238%
|
|
|
200%
|
|
2015
|
|
|
0%
|
|
$24.780
|
|
$10.41
|
|
|
142%
|
|
|
74%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
"Annual Incentive" column indicates the percentage of the Target Award earned under our Annual Incentive Compensation Plan. See page 30 for an explanation
of Mr. Burritt's award.
-
(2)
-
The
"Intrinsic Value" column shows the amount (if any) by which the market value of our shares underlying an option exceeds the exercise price at December 29,
2017. If the exercise price exceeds the market price, the stock options have no intrinsic value.
-
(3)
-
The
"Restricted Stock" column shows the market value on December 29, 2017, of the shares underlying the restricted stock units as a percentage of the market
value on the grant date. To the extent that the market value has declined, the dollar amount of the value of the restricted stock units reflected in the Summary Compensation Table will also decline.
-
(4)
-
The
"Performance Awards" column indicates the percentage of the performance awards that would be paid out based on our TSR as compared to the TSR of the peer group
companies and ROCE. The information in the table reflects the assumption that the performance periods for the 2015, 2016 and 2017 performance awards ended on December 29, 2017.
CEO Realizable Pay
Changes to 2017 Compensation Program
No
changes were made to the design of the AICP or the LTIP for 2017. The following modification was made in recognition of the experienced executive hires that have been made over recent years, in
order to ensure they receive full and fair benefits under the Corporation's retirement programs.
-
-
Vesting Upon Retirement
For LTIP awards granted in 2017 and later, the
Committee revised the vesting requirements, so that awards shall be prorated upon
retirement: (i) after 30 years of service and (ii) at age 55 with 10 years of service; and fully vested upon retirement, provided the
executive remains employed with the Corporation for at least six months following the grant date: (i) at age 60 with 5 years of service, and (ii) at age 65. The revision is not
applicable to participants in the Supplemental Pension Program, which includes Mr. Matthews.
26
|
United
States Steel Corporation
|
2018 Proxy
Statement
Compensation Discussion and Analysis Executive Summary
|
Commitment to Stockholder Engagement on Executive Compensation
In 2017, we continued our long-standing engagement efforts with our stockholders both during and outside of the proxy season. In each of the last two years,
we've met with or held telephonic meetings with stockholders representing over 20% of our outstanding stock. These discussions focused primarily on our business strategy and the alignment of our
compensation program to our strategy and company performance. In addition, some stockholders indicated they did not believe a call was necessary and indicated their support for our compensation and
governance practices.
The
Board, as well as management, prioritizes constructive communication with our investors to learn about their views of the Corporation and our governance and compensation practices. In addition to
the frequent communication our CEO and Investor Relations team has with our stockholders, we have maintained ongoing dialogue with our largest stockholders regarding our corporate governance and
executive compensation program since 2012. The feedback we receive from these discussions is carefully considered by the Board and the Committee, and we believe the strong support for our say-on-pay
proposal over the last few years is evidence of the careful attention we pay to the feedback
given to us by our stockholders, and our ability to decisively take action and incorporate their perspectives in our programs.
Based
on our 2017 meetings, we determined that our stockholders are supportive of the strong link between pay and performance embedded in our executive compensation program. Over the years, we have
implemented changes to our compensation practices to further align pay with performance and enhanced disclosure regarding the rationale behind certain compensation decisions.
Compensation Governance Practices
Our compensation program is designed to promote exceptional performance and align the interests of our executives with the interests of our
stockholders while discouraging executives from excessive risk-taking. Our executive compensation is directly aligned with company performance and measurable financial metrics.
Compensation & Organization Committee Practices
|
-
✓
-
Considers the results of the most recent say-on-pay
advisory vote by stockholders and has implemented proactive communications with stockholders to gain input and feedback when making executive compensation decisions
-
✓
-
Undertakes a goal setting process that is used to
arrive at rigorous short-term and long-term performance goals under our incentive plans that are aligned to key corporate strategic and financial goals
-
✓
-
Engages in and leads a robust CEO performance
evaluation process
-
✓
-
Engages and consults with its own independent
compensation consultant
-
✓
-
Has established formal selection criteria for the
executive compensation and relative TSR peer groups and annually reviews peer group composition
-
✓
-
Annually reviews tally sheets analyzing executive
compensation levels and structures, including amounts payable in various termination scenarios
-
✓
-
Annually reviews the risks associated with our
compensation programs and has implemented various risk mitigating practices and policies, such as:
-
-
Targeting the majority of our executives' compensation in long-term performance based awards using multiple equity and cash vehicles
-
-
Implementing rigorous executive stock ownership and holding requirements
-
-
Utilizing multiple performance measures that focus on company-wide metrics and placing a cap on potential incentive payments
-
✓
-
Our Change in Control Severance Plan establishes a
"double trigger," requiring participants to be terminated without "cause," or voluntarily "for good reason" following a change in control prior to receipt of any payment of severance benefits
-
✓
-
Maintains a "clawback" policy that applies to executive
officers and provides for the recoupment of incentive awards under certain conditions in the event the Corporation's financial statements are restated
-
✓
-
Maintains Anti-Hedging and Pledging Policies that
prohibit all employees and directors from engaging in any transaction that is designed to hedge or offset any decrease in our stock price and prohibits executive officers and directors from pledging
our stock as collateral for a loan or holding shares in a margin account
-
✓
-
No payment of tax gross-ups to any executives for any
payments relating to a change in control
United States Steel Corporation
|
2018 Proxy
Statement
|
27
Table of Contents
Compensation Discussion and Analysis
|
Executive Compensation in Detail
|
Compensation Principles
Our
executive compensation program is designed to attract, reward and retain executives who make significant contributions through operational and financial achievement aligned with the goals and
philosophy of our transformation
and
the long-term interests of stockholders. The following five principles support these objectives and guide the design of our compensation program:
|
|
|
Compensation Principle
|
|
Compensation Design
|
|
|
|
Align Pay with Stockholder Interests
|
|
Approximately 60% of target
compensation opportunity is performance based for our CEO (average of 44% for other NEOs).
Equity incentives comprise a significant portion of an executive's compensation.
Executives are subject to rigorous stock ownership and holding
requirements.
Performance
metrics, applied to 60% of our long-term program, align with our annual and long-term strategic objectives.
|
|
|
|
Pay Fair and Competitive Compensation
|
|
Executive compensation is
targeted to be competitive with our peer group.
Our compensation programs are focused on objective corporate performance measures and individual performance.
|
|
|
|
Link Compensation to Company Performance and Strategy
|
|
Balance of compensation
elements that focus on both short-term and long-term performance and goals.
Short-term incentives are based on annual financial performance (i.e., EBITDA and cash flow), and individual performance.
Long-term incentives are tied to the Corporation's relative TSR and
return on capital employed (ROCE).
|
|
|
|
Retain Executives
|
|
Our long-term incentive
grants include restricted stock units and performance awards that may retain some value in a period of stock market decline.
|
|
|
|
Provide Equity-Focused and Tax-Efficient Rewards
|
|
The largest portion of an
executive's compensation is in the form of long-term equity incentives, which preserves cash.
Our compensation programs are designed to preserve corporate tax deductions.
|
Compensation Program Elements
Short-Term Incentive Compensation
|
The
purpose of our Annual Incentive Compensation Plan (AICP) is to align our 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
|
2018 Proxy
Statement
Table of Contents
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 the organization on the generation of the cash required to reduce debt and fund investments that will yield profitable returns in the future
|
|
|
|
|
|
EBITDA**
|
|
Determines 50% of award payout
|
|
Financial performance measure intended to focus the organization on operating at sustainable, profitable levels
|
|
|
|
|
|
Individual Performance
|
|
Modifier; Committee may increase award up to 30% or reduce or eliminate based on individual performance
|
|
Based on an assessment of the executive's individual performance, including the contribution to overall corporation results and attainment of operational and strategic goals, and the priorities of profitability, customer focus, operational
excellence and building a high performing organization, as well as internal equity fairness, and the impact of significant research, development and innovation
|
-
*
-
Cash
flow is defined as earnings before interest, taxes, depreciation, depletion, and amortization (EBITDA) for consolidated worldwide operations, plus or minus
changes in current receivables, inventories, and current accounts payable and accrued expenses, less consolidated worldwide capital expenditures. EBITDA for consolidated worldwide operations means
earnings (loss) before interest and income taxes as reported in the consolidated statements of operations of the Corporation, plus or minus the effect of items not allocated to segments (excluding
post-retirement benefit expenses) as disclosed in the notes to the consolidated financial statements, plus depreciation, depletion and amortization as reported in the consolidated statement of cash
flows of the Corporation.
-
**
-
Total
EBITDA shall mean earnings before interest and taxes as reported in the consolidated statement of operations of United States Steel Corporation, plus or minus
the effect of items not allocated to segments (excluding postretirement benefit expenses) as disclosed in the notes to the consolidated financial statements of United States Steel Corporation, plus
depreciation, depletion and amortization as reported in the consolidated statement of cash flows of United States Steel Corporation. Segment EBITDA shall mean, for the Performance Period, EBITDA for
each business unit. Unless contemplated in the approved performance target, EBITDA excludes charges or credits for business dispositions, acquisitions, asset sales, asset impairments, workforce
reductions, shutdowns, and amounts not allocated to business segments.
The
target award under the AICP for each NEO is equal to the target percentage applied to the executive's base salary. The following table shows the actual amount awarded by the Committee after
consideration of the executive's individual performance.
2017 Annual Incentive Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Target Award
as % of
Base Salary
(1)
|
|
Target
Award
(2)
|
|
Total
Payout
Rate
(3)
|
|
Actual
Amount
Awarded
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
|
140%
|
|
$
|
1,189,130
|
|
|
91%
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
|
|
|
100%
|
|
$
|
300,003
|
|
|
91%
|
|
$
|
273,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
|
80%
|
|
$
|
432,800
|
|
|
86%
|
|
$
|
409,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
|
60%
|
|
$
|
247,500
|
|
|
101%
|
|
$
|
324,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
|
70%
|
|
$
|
349,300
|
|
|
98%
|
|
$
|
393,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi
|
|
|
150%
|
|
$
|
1,125,000
|
|
|
91%
|
|
$
|
1,023,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom
|
|
|
80%
|
|
$
|
560,000
|
|
|
91%
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soni
(5)
|
|
|
60%
|
|
$
|
206,250
|
|
|
91%
|
|
$
|
206,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
"Base
Salary" for purposes of determining the AICP award is the actual salary earned for 2017. Messrs. Longhi and Bradley served for a portion of the year,
and the table above reflects the prorated target AICP award.
-
(2)
-
The
"Target Award" is the amount that would be paid to the executive assuming the Corporation achieves its target performance objectives and before consideration of
individual performance. The target amount for Mr. Burritt was calculated by prorating the applicable target for his service as Chief Financial Officer (100% earned base salary) and Chief
Executive Officer (140% earned based salary).
-
(3)
-
The
"Total Payout Rate" is determined by the Corporation's actual performance measured against the 2017 performance metrics and before individual performance is
considered. Differences in the payout rate are the result of variances in EBITDA weighting for the business segments, as described on page 30.
-
(4)
-
The
"Actual Amount Awarded" is the amount awarded by the Committee after consideration of individual performance. In accordance with her separation agreement,
Ms. Folsom was not entitled to receive an AICP award for 2017.
-
(5)
-
Mr. Soni
was appointed as an executive officer on February 1, 2017 and only eligible for AICP payments as of that date. He is eligible to receive
payment under the Corporation's non-executive short-term incentive payment program for the portion of the year he was a non-executive.
United States Steel Corporation
|
2018 Proxy
Statement
|
29
Table of Contents
Compensation Discussion and Analysis
|
Setting Corporate Performance Goals and Determining Results
In setting the goals under the AICP for 2017, the Committee considered the Corporation's performance over the past five years, the annual operating plan for
2017, industry performance, and the Corporation's business transformation efforts. In general, the maximum performance goals were set at an amount that would require the Corporation to achieve a
substantial level of operational improvements through asset revitalization and at a level that would generate sufficient earnings to pay the incremental cost of the incentive payments while
maintaining an equivalent amount of cash on the Corporation's balance sheet. The goals were considered a significant stretch over the goals established in 2016.
In
addition to determining individual targets, the Committee approved EBITDA goals for each NEO. For the CEO and CFO, the EBITDA goal is based on the total company 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 Mr. Matthews, this was the Flat-Rolled segment; for Mr. Rintoul, this was the Tubular segment; and for Mr. Buckiso, this was the European segment). This segment
allocation of the EBITDA goal is intended to create stronger corporate, business segment and individual accountability by tying an executive's award to the performance of the segments for which he or
she is directly responsible.
We
concluded 2017 with a total of $12.25 billion in net sales, therefore the award pool was funded for 2017 because the net sales goal of $8.5 billion was achieved. The payout rate
(prior to adjustment for individual performance) was determined based on achievement of the performance measures described in the table below. This payout rate demonstrates the performance alignment
design of our plan. The 2017 payout under the annual incentive compensation plan averaged 104% of target for our NEOs who received a payout, and the average payout for our NEOs over the last three
years is 94% of target (in each case, including adjustments made for individual performance).
2017 AICP Corporate Performance Targets And Results
($ are in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Measure
|
|
Minimum
|
|
Target
|
|
Maximum
|
|
Actual
|
|
Payout Rate
(1)
Prior
to Adjustment for
Individual Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow
|
|
$
|
393
|
|
$
|
492
|
|
$
|
772
|
|
$
|
528
|
|
|
110%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flat-Rolled
|
|
|
724
|
|
|
954
|
|
|
1,204
|
|
|
732
|
|
|
52%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tubular
|
|
|
(116
|
)
|
|
(46
|
)
|
|
4
|
|
|
(48
|
)
|
|
99%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
301
|
|
|
396
|
|
|
441
|
|
|
403
|
|
|
112%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
|
|
$
|
924
|
|
$
|
1,319
|
|
$
|
1,674
|
|
$
|
1,087
|
|
|
71%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(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
2017
considered by the Committee in determining each individual's performance modifier:
David Burritt
Mr. Burritt was named President & Chief Executive Officer on
May 8, 2017, following his promotion to President & Chief Operating Officer on February 28, 2017. Since Mr. Burritt became CEO, U. S. Steel has delivered
three consecutive quarters of reliable and consistent operational and financial results. As a result of these efforts, the Corporation's stock price at the end of the year was 165% of the stock price
on the date that Mr. Burritt was promoted.
Mr. Burritt's
intense focus on improvements to achieve operational excellence, not only improved financial flexibility and strengthened the balance sheet to reduce risk, but also enabled the
Corporation to make strategic investments for our customers in Generation 3 Advanced High Strength Steels, Premium Connections, and facilitate future growth. The rewards of these strategies began to
be realized in 2017 with a return to profitability for the first time since 2014, the best net debt since 2007, and the best liquidity since 2001.
30
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Compensation Discussion and Analysis
|
Upon
assuming leadership of the Corporation, Mr. Burritt quickly focused on realigning and assigning a new CHRO, CFO, and SVP with responsibility for Asset Revitalization, and established a
focused execution strategy for safety, quality, delivery and cost to stabilize operations and enable continuous improvement for the Corporation's long-term success. Recognizing the need to develop a
high performing organization, he launched the talent development theme of "Pivot to the People," the safety initiative "Culture of Caring," and conducted the first ever comprehensive "Inclusion
Survey," while making difficult choices to streamline the organization and upgrade the talent.
In
keeping with the intent to improve all aspects of the business, the Board and Mr. Burritt determined that further improvement in the Corporation's culture is needed to ensure the exceptional
operational and financial progress made in 2017 endures. In spite of returning to profitability with the best balance sheet in recent years, Mr. Burritt, after discussions with the Board, did
not receive his annual cash incentive award for 2017, reflecting Mr. Burritt's personal responsibility for and commitment to creating a workplace climate meeting the highest standards of
accountability, fairness, and respect. In 2018, Mr. Burritt will focus on continuing to drive strong operational and financial excellence while building a highly engaged workforce and high
performance culture.
Kevin Bradley
Mr. Bradley joined the Corporation in July 2017, assuming responsibility for
all of U. S. Steel's financial enterprise, including Financial Planning & Analysis; Accounting & External Reporting; Credit, Tax and Treasury Services; Investor Relations;
and Corporate Strategy. Upon his arrival, Mr. Bradley assessed the global finance enterprise and launched the Talent to Value capability targeting best practice procedures to ensure high
integrity financial reporting and to foster excellence in the financial function of the Corporation. Mr. Bradley has intensified the enterprise focus on strengthening the balance sheet. Putting
the Corporation on a path to de-risk and improve the overall efficiency of its capital structure. He is working closely with his team, bringing new thinking and perspective across the organization to
accelerate the transformation of U. S. Steel to a stronger and more profitable company. Mr. Bradley has meaningfully contributed to the stability and consistency of
the financial performance across the Corporation. He quickly established himself as a key member of the leadership team.
Douglas Matthews
Mr. Matthews led the North American Flat-Rolled Industrial, Service
Center and Mining Solutions (ISC&M) commercial entity in 2017. Through his continued successful implementation of our transformational strategy, the ISC&M team contributed to noteworthy North American
Flat-Rolled EBITDA improvement in 2017. Operations led by Mr. Matthews also meaningfully improved service to our customers, including a 22% improvement in customer claims for industrial
customers and significant delivery improvements for all end users. Mr. Matthews also oversaw the successful restart of Keetac mining operations and the Granite City hot strip mill. He also
implemented meaningful employee engagement to achieve strong safety performance, particularly in the second half of the year. Mr. Matthews'
ability
to maintain collaborative relationships with his peers, customers and union contacts benefit the Corporation in all aspects of operations. Mr. Matthews assumed interim leadership over
the Tubular segment, as well, following Mr. Rintoul's retirement in February 2018.
Scott Buckiso
Mr. Buckiso led the European Solutions commercial entity, which is comprised
of our Slovakian operations, supplying Automotive, Appliance, Electrical, Packaging and Construction products throughout Europe. Through his superior leadership, the European segment delivered over
$400 million EBITDA in 2017, a 52% improvement from 2016. After several unfortunate contractor safety incidents, he prioritized contractor safety performance, implemented dramatic changes to
the safety program (including contractor safety procedures), and saw new safety records achieved for both OSHA recordable rate and consecutives days without an OSHA recordable case for both USSK
personnel and contractors. Mr. Buckiso's team also achieved production records across nearly every line, and delivered exceptional quality performance for their customers. Mr. Buckiso
provided superior leadership regarding environmental sustainability, reducing CO2 emissions and increasing recycling projects and commercial activity across our European operations.
Mr. Buckiso's industry knowledge and focused leadership continues to solidify the segment as a strong performer for the Corporation.
David Rintoul
Mr. Rintoul provided leadership of the Tubular segment in 2017, as the
business segment began to recover from an oil & gas industry downturn and realized substantial EBITDA improvement over 2016. Under Mr. Rintoul's leadership, the Tubular group achieved a
25% improvement in OSHA recordable performance and had strong environmental performance. Mr. Rintoul also oversaw improvements in production quality and cost. He led the group's international
expansion, as customers were serviced in the Middle East and South Pacific. Mr. Rintoul also further supported his customers by overseeing the development of innovative products for complex
drilling. Mr. Rintoul's strong leadership, particularly during challenging times, positioned the segment for recovery and strengthened long-term partnerships in the industry. Mr. Rintoul
retired from the Corporation as of February 28, 2018.
Mario Longhi
Mr. Longhi provided leadership of the Corporation's transformation efforts
through ongoing implementation and application of the Carnegie Way method as the disciplined and structured approach for improving business performance. He also served as a zealous advocate for the
Corporation and the industry in Washington D.C. Mr. Longhi retired in June 2017.
Pipasu Soni
Mr. Soni was promoted to Vice President Finance in
February 2017 where he was accountable for the Financial Planning & Analysis, Controllership, Treasury, Strategy and M&A functions. He served as Interim Chief Financial Officer and Principal
Financial Officer for a brief time in 2017 following the promotion of Mr. Burritt to CEO and prior to Mr. Bradley's hiring. Mr. Soni worked to establish criteria for a "best in
class" finance function
United States Steel Corporation
|
2018 Proxy
Statement
|
31
Table of Contents
Compensation Discussion and Analysis
|
including
reallocating resources, implementing processes and enhancing systems to support the long-term strategy of the Corporation. Following Mr. Bradley's hiring, Mr. Soni transitioned
to the interim CFO for the ISC&M commercial entity, working closely with operations to create an
accountable
culture that immediately resulted in incremental profit for the Flat-Rolled business.
Ms. Folsom
was not eligible to receive an award under the 2017 AICP.
Long-Term Incentive Compensation
|
Equity
awards under the long-term incentive program (LTIP) are allocated among:
-
-
Performance-based awards (60% of LTIP award in 2017)
-
-
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. On February 28, 2017, the
Committee granted the long-term incentive awards set forth in the table below.
Long-Term Incentive Awards Granted in 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Target
Equity-Based
Performance
Awards
|
|
Stock
Options
|
|
Restricted
Stock
Units
|
|
Grant Date
Fair Value
Of Equity
Awards
|
|
Target
Cash-Based
Performance
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
(1)
|
|
|
52,190
|
|
|
73,550
|
|
|
34,990
|
|
$
|
3,443,947
|
|
$
|
1,476,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
(2)
|
|
|
13,080
|
|
|
15,730
|
|
|
7,580
|
|
$
|
612,624
|
|
$
|
262,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
|
6,750
|
|
|
12,170
|
|
|
5,680
|
|
$
|
780,240
|
|
$
|
334,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
|
3,030
|
|
|
5,460
|
|
|
2,550
|
|
$
|
350,199
|
|
$
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
|
4,940
|
|
|
8,900
|
|
|
4,150
|
|
$
|
570,627
|
|
$
|
244,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi
(3)
|
|
|
53,010
|
|
|
95,520
|
|
|
44,560
|
|
$
|
6,124,630
|
|
$
|
2,625,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom
(4)
|
|
|
8,630
|
|
|
15,560
|
|
|
17,260
|
|
$
|
1,597,331
|
|
$
|
427,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soni
|
|
|
2,510
|
|
|
4,530
|
|
|
2,110
|
|
$
|
290,134
|
|
$
|
124,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts shown for Mr. Burritt include his annual grant made on February 28, 2017 as part of his compensation as Chief Financial Officer, and an
additional grant made on May 31, 2017 in connection with his promotion to President & CEO.
-
(2)
-
Mr. Bradley's
awards were granted on August 1, 2017 shortly following his date of hire.
-
(3)
-
In
connection with his retirement, Mr. Longhi forfeited 100% of the long-term incentive awards granted in 2017 because he was not employed for at least six
months after the date of grant.
-
(4)
-
Amounts
include a special grant of 10,000 RSUs made in January 2017, vesting of which was accelerated as part of her separation agreement. The grant date fair value
of equity awards amount shown for Ms. Folsom includes the incremental value attributed to the acceleration of the special grant of 10,000 RSUs. Pursuant to her separation agreement,
Ms. Folsom is entitled to pro rata vesting of the performance awards, stock options and RSUs granted as part of her annual LTIP award in February 2017. As a result of her separation,
Ms. Folsom forfeited 7,636 options, 3,563 RSUs, 5,993 TSR-based performance awards and $296,875 of cash-based performance awards at termination of her employment.
Performance-Based Awards (60% of LTIP Award Value)
Performance awards provide an incentive for executives to earn shares and cash based on our performance over a three-year performance period,
with goals set at the beginning of each performance period. The performance awards do not pay dividends or carry voting privileges prior to vesting. In 2017, the three-year performance period began on
January 1, 2017, and will end on December 31, 2019 (the "2017 Performance Period"). The value of the performance awards granted under the 2017 Performance Period was divided equally
between relative TSR performance awards (which are equity-based) and ROCE performance awards (which are cash-based). 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 (see the "Long-Term Incentive Plan Performance Peer Group" on page 38). TSR is determined based on the following formula:
final price plus dividends per 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.
32
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Compensation Discussion and Analysis
|
As
noted in the table below, above market performance at the 60th percentile is required for target payout, and no payout is made for performance below the 30th percentile.
|
|
|
|
|
|
|
Level
|
|
2017
Relative TSR Ranking
|
|
Award Payout as a %
of Target
(1)
|
|
|
|
|
|
|
|
|
|
|
<30th percentile
|
|
|
0%
|
|
|
|
|
|
|
|
|
Threshold
|
|
30th percentile
|
|
|
50%
|
|
|
|
|
|
|
|
|
Target
|
|
60th percentile
|
|
|
100%
|
|
|
|
|
|
|
|
|
Maximum
|
|
90th percentile
|
|
|
200%
|
|
|
|
|
|
|
|
|
-
(1)
-
Interpolation
is used to determine actual awards between the threshold, target, and maximum levels.
In
order to address any potential pay for performance disconnect should the Corporation's TSR be negative over the performance period (regardless of relative performance) payouts may be capped as
follows:
-
-
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 between -5% to -10% on a CAGR basis; and
-
-
Payout is forfeited if the Corporation's TSR is lower than -10% on a CAGR basis.
The
negative cap policy is effective for grants made in 2016 and later.
ROCE Performance Awards
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.
2015 Performance Awards
The performance period for the 2015 performance awards ended on December 31, 2017. The value of the 2015 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 37% of the target award. Each of the relative TSR and ROCE goals, results and payouts are described below.
2015 TSR Performance Awards
The Corporation's relative annualized TSR compared to the selected peer group for the performance period was at the 44th percentile, and
resulted in a payout of 74% of the target award. The payout for our NEOs is shown below. Messrs. Bradley and Soni did not receive a payout because they were not employed by the Corporation when
the grant was made. Mr. Buckiso did not receive a payout because he was not eligible for TSR shares when the 2015 grant was made.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Granted
at Target
|
|
Shares vested as a
result of payout
|
|
Payout Rate
|
|
Delivered Value*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
|
33,070
|
|
|
24,495
|
|
|
74.07%
|
|
|
$1,077,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
|
13,410
|
|
|
9,933
|
|
|
74.07%
|
|
|
$436,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
|
9,800
|
|
|
7,259
|
|
|
74.07%
|
|
|
$319,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi**
|
|
|
105,210
|
|
|
60,611
|
|
|
74.07%
|
|
|
$2,666,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom**
|
|
|
17,130
|
|
|
12,336
|
|
|
74.07%
|
|
|
$542,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Delivered
value is based on the fair market value of the shares on February 27, 2018, the date of vesting.
-
**
-
Pursuant
to their respective separation agreements, the vesting for Mr. Longhi and Ms. Folsom is pro rated based on the last date of employment.
2015 ROCE Performance Awards
The actual ROCE performance for the performance period was below the threshold for payment, resulting in no payout.
2015-2017 Return on Capital Employed (ROCE) Performance Targets and Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Targets
|
|
|
|
|
|
Actual Results and Weighting
|
|
Payout Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
5%
|
|
|
|
Year 1 (20%)
|
|
|
4.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
10%
|
|
|
|
Year 2 (30%)
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
15%
|
|
|
|
Year 3 (50%)
|
|
|
10.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015-2017 Period
|
|
|
4.2%
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
33
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Compensation Discussion and Analysis
|
Restricted Stock Units (20% of LTIP Award Value)
Restricted stock units (RSUs) are awards that deliver shares of common stock and accumulated dividends upon vesting. RSUs generally vest
ratably on each of the first, second and third anniversaries of the grant date, subject to the executive's continued employment on each vesting date.
The
Committee believes that RSUs 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
-
-
generally subject to continued employment on each vesting date.
On
February 28, 2017, the Committee granted traditional stock options with an exercise price based on the fair market value on the date of grant, which was $39.265.
Other Awards
Mr. Bradley received a one-time cash award of $125,000 as part of his new-hire incentive. In January 2017, Ms. Folsom was granted
10,000 RSUs with a three-year cliff vesting schedule. As part of her separation agreement, the Committee accelerated the vesting of that award. In 2017, Mr. Soni received a cash award of
$30,000, which was the second-installment of a new hire incentive.
Changes to the 2018 Compensation Program
-
-
Added Cash Conversion Cycle as an AICP Metric :
In recognition of the Corporation's intense focus
on cash efficiency, the Committee decided to replace the AICP Cash Flow metric with Cash Conversion Cycle (CCC). This metric is measured in days. EBITDA remains the second AICP metric.
-
-
Changed Weighting of AICP Metrics:
The Committee rebalanced the weighting of the two metrics under
the AICP to 70% EBITDA and 30% CCC. Previously EBITDA and Cash Flow were equally weighted.
-
-
Elimination of Stock Options from LTIP:
The Committee eliminated stock options from the types of
awards granted as part of the 2018 annual long-term awards. The annual awards for 2018 are composed of 40% RSUs and 60% performance awards (30% based on TSR, and 30% based on ROCE). Stock options
previously made up 20% of the long-term grant.
-
-
Long-Term ROCE Performance Awards to be Granted in Stock:
Half of the long-term performance awards
are based on our ROCE metric. Since 2015 these awards have been granted in and pay out in cash. For 2018, the Committee granted these awards in equity to further align executive compensation with
stockholder interests.
-
-
Revised Long-Term TSR Goals:
The Committee revised the goals for the long-term TSR metric. The
Committee believes the goals remain rigorous, as they still require above-market performance to achieve target payout. The revisions better align with the Committee's objective of providing long-term
compensation that is both rigorous but achievable.
|
|
|
|
|
|
|
2017 Grant
|
|
2018 Grant
|
|
|
|
|
|
Threshold:
|
|
30
th
%
|
|
30
th
%
|
Target:
|
|
60
th
%
|
|
55
th
%
|
Maximum:
|
|
90
th
%
|
|
80
th
%
|
|
|
|
|
|
Fixed Compensation and Benefits
|
Base Salary
Base salary is designed to compensate for the required day-to-day activities and responsibilities of each position. Base salary is set at a
market competitive level to enable the Corporation to attract and retain talent. Actual salary levels take into account such factors as the contribution of the incumbent, individual qualifications and
experiences, and internal value to the Corporation. Base salary is paid in cash.
Benefits
NEOs participate in many of the benefits provided to non-represented employees generally, including vacation and holiday benefits, insurance
benefits, disability benefits, and medical and prescription drug programs. We believe these benefits support our overall retention objectives.
34
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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.
Messrs. Matthews and Buckiso were the only NEOs covered by the Pension Plan and the Non Tax-Qualified Pension Plan described below. Mr. Matthews is the only NEO covered by the
Supplemental Pension Program described below. Beginning in 2016, for all non-represented employees, the Corporation makes a contribution to a "Retirement Account" under the Savings Plan, which is in
addition to any matching contributions made under the Savings Plan. Prior to 2016, non-represented employees who were covered by the Pension Plan were not eligible to receive Retirement Account
contributions.
In
2017, 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
In 2014, we examined the perquisites that historically have been offered to executives, and eliminated or reduced many of them, and none have
been extended to any executive hired after November 2014. We continue to provide a limited number of reasonable perquisites as a recruiting and retention tool and to ensure the health and safety of
our key executives. The perquisites available to our NEOs in 2017 are described in the footnotes to the Summary Compensation Table on page 40 of this proxy statement. In general, the
perquisites:
-
-
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
United States Steel Corporation
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2018 Proxy
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35
Table of Contents
Compensation Discussion and Analysis
|
of commercial and other business relationships, provide a significant benefit to the Corporation and its stockholders.
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 2017, Messrs. Longhi, Burritt and Buckiso were 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, (b) tax equalization and
(c) expenses 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") 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
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 NEOs are entitled to a payment equivalent to a multiple of his or her salary and .annual incentive award For Messrs. Burritt and Bradley, the severance payment multiple is 2.5x and
for Messrs. Matthews, Rintoul, Buckiso is 2x and for Mr. Soni is 1x. Neither Mr. Longhi nor Ms. Folsom are entitled to a change in control severance payment following
termination of employment with the Corporation. 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. Under the terms of his offer of employment, Mr. Bradley is entitled to a severance payment of two
times his annual base salary and target bonus if he is terminated without cause prior to July 27, 2019. Under the terms of a letter agreement with Mr. Buckiso which expires on
November 20, 2018, Mr. Buckiso may become entitled to a payment of up to three and a half times his salary and target annual incentive award upon the occurrence of certain events.
Separation Agreements
In connection with his retirement, Mr. Longhi entered into a separation agreement with the Corporation, providing for, among other
things, pro rata vesting of certain equity grants made in 2015 and 2016. Under his agreement and because Mr. Longhi was not employed for at least six months after the 2017 annual award grant
date, Mr. Longhi forfeited the entirety of his 2017 long-term incentive awards. Under the agreement, Mr. Longhi agreed to a general release of claims, and non-solicitation,
non-competition and non-disparagement provisions. In connection with her resignation from the Corporation, Ms. Folsom entered into a separation agreement providing for, among other things,
(i) pro-rata vesting of various outstanding annually-granted performance awards, restricted stock unit grants and stock option awards; (ii) accelerated vesting of 10,000 restricted stock
units that otherwise would not be vested as of her resignation; and (iii) cash payment of $1,260,000 in 12 installments and $50,000 in lieu of outplacement services. Under the agreement,
Ms. Folsom agreed to a general release of claims, and non-solicitation, non-competition and non-disparagement provisions.
Independent Consultant and Management Input
The Committee retained Pay Governance, LLC as its independent consultant to assist in the evaluation of executive compensation programs and in setting
executive officers' compensation. The use of an independent consultant provides additional assurance that the Corporation's executive compensation programs are reasonable and consistent with the
Corporation's objectives. The consultant reports directly to the Committee and does not perform services for management without the express approval of the Committee. There were no services performed
by the consultant for management in 2017.
The
consultant regularly participates in Committee meetings, including executive sessions, and advises the Committee with respect to compensation trends and best practices, plan design, and the
reasonableness of individual compensation awards.
With
respect to the CEO's compensation, the Committee makes its determinations based upon its evaluation of the CEO's performance and with input from its consultant. Each year, the Committee reviews
with the Board of Directors the CEO's goals and objectives, and the evaluation of the CEO's performance with respect to the prior year's goals and objectives. The CEO does not participate in the
36
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Table of Contents
Compensation Discussion and Analysis
|
presentations to, or discussions with, the Committee in connection with the setting of his compensation.
Tally Sheets
The Committee uses tally sheets to evaluate the total compensation and projected payments to the named executive officers under various
termination scenarios. This analysis is undertaken annually to assist the Committee in determining whether the compensation package of each named executive officer is appropriately aligned with our
compensation philosophy and the compensation practices of our peers.
Peer Groups
The Committee also considers relevant market pay practices in its decision making process. The Committee uses the peer group data below as a
frame of reference to guide executive compensation decisions. The Corporation utilizes two peer groups as described below:
-
-
Executive Compensation Peer Group.
The peer group below is used to benchmark and assess the
competitiveness of the compensation of our named executive officers.
-
-
Performance Peer Group.
The performance peer group, which is more industry focused, is used to
evaluate the long-term performance of our company for purposes of the relative TSR performance award. The performance peer group is being utilized to evaluate our performance against a targeted group
of companies in our industry that we believe we need to outperform to be successful over the long term.
Long-Term Incentive Plan Executive Compensation Peer Group
The Executive Compensation peer group is used to serve as a market reference when making compensation decisions
and designing program features and assess the competitiveness of each element of compensation and compensation in total. We also use this peer group as a
reference when analyzing pay-for-performance alignment.
The
Executive Compensation Peer Group was selected based on the following criteria:
-
-
large companies primarily from the Materials sector or Industrials sector within the Global Industry Classification Standard (GICS)
classification codes
-
-
companies similar in complexity specifically, companies that have:
-
-
revenues that range from half to double that of the Corporation;
-
-
capital intensive businesses as indicated by lower asset turnover ratios;
-
-
market capitalization reasonably aligned with the Corporation; and
-
-
similar employee levels
-
-
acceptable levels of financial and stockholder performance and a higher company stock price volatility (referred to as "beta") to align with
that of the Corporation
-
-
elimination of companies with unusual compensation practices (e.g., company founders who receive little or no compensation and companies
that are subsidiaries of other companies)
In
setting the executive compensation peer group, the Committee considered a set of broader, industrial peers who might compete with the Corporation for talent as well as companies outside of the
material/industrial industry who might attract our executives that have skills transferable outside of the metals industry.
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2018 Proxy
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Table of Contents
Compensation Discussion and Analysis
|
For
2018, Alcoa Corp. was added to the executive compensation peer group.
Long-Term Incentive Plan Performance Peer Group
The Committee believes the use of a performance peer group is appropriate because executive compensation arrangements and practices are
influenced by business complexity and company size, and many of our industry competitors are much smaller than U. S. Steel.
The
performance peer group consists of twelve domestic companies in the steel industry. The use of a second peer group or index for evaluating TSR is a common practice among our peers. Because steel
industry companies have traded differently from many of our large industrial peers since 2012, the use of a second peer group is more appropriate when evaluating relative TSR performance. Peers were
selected based on criteria that included:
-
-
specific domestic steel or steel-related industry;
-
-
five-year stock price correlation greater than 0.50; and
-
-
stock price beta greater than 1.0.
The
2017 Performance Peer Group consists of the following companies:
AK
Steel Holding Corporation
Allegheny
Technologies Inc.
Carpenter
Technology Corporation
Cliffs
Natural Resources Inc.
Commercial
Metals Company
Nucor
Corporation
Olympic
Steel Inc.
Reliance
Steel & Aluminum Co.
Schnitzer
Steel Industries, Inc.
Steel
Dynamics Inc.
TimkenSteel
Corporation
Worthington
Industries, Inc.
No
changes were made to the Performance Peer Group for 2018.
Compensation Policies and Other Considerations
|
Stock Ownership and Holding Guidelines
We have comprehensive stock ownership and holding guidelines designed to align the interests of our executive officers with those of the
Corporation's stockholders. As shown in the table below, our executives are required to accumulate and retain a minimum level of ownership in the Corporation's common stock based upon the salary
midpoint for their position:
|
|
|
Executive**
|
|
Ownership Requirement*
(Multiple of Salary Midpoint)
|
|
|
|
Burritt
|
|
6x
|
|
|
|
Bradley
|
|
3x
|
|
|
|
Matthews
|
|
3x
|
|
|
|
Buckiso
|
|
3x
|
|
|
|
Soni
|
|
1x
|
|
|
|
-
*
-
Unvested
restricted stock units count towards the ownership requirement.
-
**
-
The
table below does not include Messrs. Longhi and Rintoul or Ms. Folsom, who were not employed with the Corporation as of the date of filing.
Under
our stock ownership guidelines, Mr. Burritt has a stock ownership requirement of 6x his salary midpoint. Messrs. Bradley, Matthews, and Buckiso each have a stock ownership
requirement of 3x their salary midpoint; and Mr. Soni has an ownership requirement of 1x his salary midpoint. The stock ownership guidelines require that an executive must retain 100% of the
after-tax value of stock acquired upon the vesting of restricted stock units and performance awards and 100% of the after-tax value of shares issued upon the exercise of stock options until the
ownership requirement is satisfied. All of the NEOs are in compliance with the terms of the policy.
Anti-Hedging and Pledging
We have a policy that prohibits all directors and employees, including the named executive officers, from engaging in any transaction that is
designed to hedge or offset any decrease
in our stock price. Our anti-pledging policy prohibits directors and executive officers, including the named executive officers, from pledging our stock as
collateral for a loan or holding shares in a margin account.
Clawback Policy
The Board has adopted a policy setting forth procedures to recover payment if an executive engaged in any fraud or misconduct, including gross
negligence that caused or partially caused the need for a material restatement of the Corporation's publicly filed financial results. For any periods as to which a performance-based award was paid or
credited to the executive, such award shall be subject to reduction, cancellation or reimbursement to the Corporation at the Board's discretion. This policy is set forth in our Corporate Governance
Principles which are available on our website www.ussteel.com.
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Compensation Discussion and Analysis
|
Compensation and Risk Management
The Committee's compensation consultant annually performs a risk assessment of our executive compensation program and, based on its most recent
review, the consultant has determined that our compensation program contains a variety of features that mitigate unnecessary risk taking, including the following:
-
-
Compensation Mix: Executive officers receive a mixture of short-term and long-term incentives in addition to base salary. Long-term incentives,
which are paid mostly in equity, make up the majority of our executives' compensation;
-
-
Capped Awards: Payments under our short-term incentive plan are capped at 227% of target and our performance awards are capped at 200% of
target;
-
-
Performance Metrics: Different metrics are used in the short-term and long-term incentive programs; and
-
-
Stock Ownership: Executive officers are required to own a significant amount of common stock determined as a multiple of their salary midpoint.
For
these reasons, the Committee concluded that our 2017 compensation and organization policies and practices are
not reasonably likely to create a risk that could have a material adverse effect on the Corporation.
Accounting and Tax Considerations
In determining executive compensation, the 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, 2017 filed with the SEC on February 21, 2018.
United States Steel Corporation
|
2018 Proxy
Statement
|
39
Table of Contents
Executive Compensation Tables
|
EXECUTIVE COMPENSATION TABLES
|
The
titles of executives used in the compensation tables of this proxy statement reflect the current titles of each executive.
Summary Compensation Table
The following table sets forth certain compensation information for 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 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
(1)
|
|
Salary
(2)
($)
|
|
Bonus
(3)
($)
|
|
Stock
Awards
(4)(5)
($)
|
|
Option
Awards
(4)(6)
($)
|
|
Non-Equity
Incentive
Compensation
(7)
($)
|
|
Change in
Pension
Value &
Nonqualified
Deferred
Compensation
Earnings
(8)
($)
|
|
All Other Compensation
(9)
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Burritt
|
|
|
2017
|
|
$
|
929,710
|
|
|
|
|
$
|
2,459,987
|
|
$
|
983,960
|
|
|
|
|
|
|
$
|
320,543
|
|
$
|
4,694,200
|
|
President & Chief
|
|
|
2016
|
|
$
|
800,000
|
|
|
|
|
$
|
891,720
|
|
$
|
447,864
|
|
$
|
1,820,000
|
|
|
|
$
|
116,000
|
|
$
|
4,075,584
|
|
Executive Officer
|
|
|
2015
|
|
$
|
780,250
|
|
|
|
|
$
|
1,375,213
|
|
$
|
549,991
|
|
|
|
|
|
|
$
|
291,041
|
|
$
|
2,996,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin P. Bradley
Executive Vice
President & Chief
Financial Officer
|
|
|
2017
|
|
$
|
300,003
|
|
$
|
125,000
|
|
$
|
437,707
|
|
$
|
174,918
|
|
$
|
273,003
|
|
|
|
$
|
56,382
|
|
$
|
1,367,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas R. Matthews
|
|
|
2017
|
|
$
|
541,000
|
|
|
|
|
$
|
557,285
|
|
$
|
222,954
|
|
$
|
409,429
|
|
$162,208
|
|
$
|
162,752
|
|
$
|
2,055,628
|
|
Senior Vice President -
|
|
|
2016
|
|
$
|
541,000
|
|
|
|
|
$
|
361,605
|
|
$
|
181,580
|
|
$
|
833,140
|
|
$225,984
|
|
$
|
91,565
|
|
$
|
2,234,874
|
|
Industrial, Service Center and Mining Solutions
|
|
|
2015
|
|
$
|
537,000
|
|
|
|
|
$
|
557,600
|
|
$
|
222,988
|
|
|
|
|
$399,272
|
|
$
|
45,340
|
|
$
|
1,762,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott D. Buckiso
Senior Vice President -
European Solutions &
President USSK
|
|
|
2017
|
|
$
|
412,500
|
|
|
|
|
$
|
250,171
|
|
$
|
100,027
|
|
$
|
324,968
|
|
$48,226
|
|
$
|
539,827
|
|
$
|
1,675,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Rintoul
Senior Vice President -
Tubular Business
|
|
|
2017
|
|
$
|
499,000
|
|
|
|
|
$
|
407,579
|
|
$
|
163,048
|
|
$
|
393,661
|
|
|
|
$
|
145,012
|
|
$
|
1,608,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mario Longhi
|
|
|
2017
|
|
$
|
750,000
|
|
|
|
|
$
|
4,374,704
|
|
$
|
1,749,926
|
|
$
|
1,023,750
|
|
|
|
$
|
796,752
|
|
$
|
8,695,132
|
|
Former President &
|
|
|
2016
|
|
$
|
1,500,000
|
|
|
|
|
$
|
2,837,507
|
|
$
|
1,425,049
|
|
$
|
4,528,125
|
|
|
|
$
|
632,670
|
|
$
|
10,923,351
|
|
Chief Executive Officer
|
|
|
2015
|
|
$
|
1,428,750
|
|
|
|
|
$
|
4,374,953
|
|
$
|
1,749,972
|
|
|
|
|
|
|
$
|
1,054,990
|
|
$
|
8,608,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suzanne R. Folsom
|
|
|
2017
|
|
$
|
700,000
|
|
|
|
|
$
|
1,036,022
|
|
$
|
285,059
|
|
|
|
|
|
|
$
|
1,923,374
|
|
$
|
3,944,455
|
|
Former General Counsel,
|
|
|
2016
|
|
$
|
700,000
|
|
|
|
|
$
|
462,105
|
|
$
|
232,078
|
|
$
|
1,274,000
|
|
|
|
$
|
124,620
|
|
$
|
2,792,803
|
|
Chief Compliance Officer
& Senior Vice President -
Government Affairs
|
|
|
2015
|
|
$
|
668,750
|
|
|
|
|
$
|
712,364
|
|
$
|
285,036
|
|
|
|
|
|
|
$
|
474,546
|
|
$
|
2,140,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipasu H. Soni
Vice President - Finance,
Former Interim CFO
|
|
|
2017
|
|
$
|
367,917
|
|
$
|
30,000
|
|
$
|
207,144
|
|
$
|
82,990
|
|
$
|
215,853
|
|
|
|
$
|
61,193
|
|
$
|
965,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Amounts
are not reported for 2015 and 2016 if the executive was not an NEO in those years. Mr. Bradley was hired in 2017 and Messrs. Buckiso, Rintoul
and Soni were not Named Executive Officers in 2015 and 2016.
-
(2)
-
Salaries
provided reflect the actual amount earned in each year. Salary in 2017 for Mr. Bradley reflects a partial year based on his hire date of
July 27, 2017.
-
(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, 2017 which was filed with the SEC on February 21, 2018. 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 the event
that these awards would be paid at maximum payouts, the maximum payments for the portion of the stock awards column that is allocated to performance awards would be in 2015: $1,673,342 for
Mr. Burritt, $678,546 for Mr. Matthews, $495,880 for Mr. Rintoul, $5,323,626 for Mr. Longhi, and $866,778 for Ms. Folsom. Messrs. Bradley, Buckiso, and Soni
did not receive the 2015 Performance Share Grant. The potential maximum payouts in 2016 would be: $879,798 for Mr. Burritt, $356,686 for Mr. Matthews, $132,864 for Mr. Buckiso,
$260,762 for Mr. Rintoul, $2,799,466 for Mr. Longhi and $455,986 for Ms. Folsom. Messrs. Bradley and Soni did not receive the 2016 Performance Share Grant. The potential
maximum payouts in 2017 would be: $2,951,826 for Mr. Burritt, $525,292 for Mr. Bradley, $668,520 for Mr. Matthews, $300,092 for Mr. Buckiso, $489,258 for
Mr. Rintoul, $5,250,110 for Mr. Longhi, $854,716 for Ms. Folsom and $248,590 for Mr. Soni. These amounts do not include the value of restricted stock units included in the
stock awards column.
-
(5)
-
The
grant date fair market value used to calculate compensation expense in accordance with ASC 718 for the NEOs is $39.27 for our 2017 restricted stock unit grants,
$14.78 per share for our 2016 restricted stock unit grants, and $24.78 for our 2015 restricted stock unit grants. 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
40
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Executive Compensation Tables
|
shareholder
return (TSR) measure. The grant date fair market value used to calculate the 2017 performance awards based on TSR is $49.52; $10.02 per share for our 2016 performance awards based on TSR;
and $24.95 per share for our 2015 TSR shares. Mr. Burritt received a 2017 annual grant of equity in conjunction with his promotion to President and Chief Executive Officer which consisted of
20,980 restricted stock units and 35,530 performance shares based on TSR. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Burritt's
grant is $20.69 per share for the restricted stock units and $18.32 per share for the performance award based on TSR. Mr. Bradley received a 2017 new hire grant of equity which consisted of
7,580 restricted stock units and 13,080 performance shares based on TSR. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Bradley's
grant is $23.10 per share for the restricted stock units and $20.08 per share for the performance award based on TSR. Ms. Folsom received a 2017 retention grant of equity which consisted of
10,000 restricted stock units. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Ms. Folsom's grant is $32.36 per share for the restricted
stock units. For further detail, see our Annual Report on Form 10-K for the year-ended December 31, 2017, financial statement footnote 14.
-
(6)
-
The
grant date fair market value used to calculate compensation expense in accordance with ASC 718, is $18.32 per share for our 2017 stock option grants; $6.24 per
share for our 2016 stock option grants, and $10.04 per share for our 2015 stock option grants. For further detail, see our report on Annual Report on Form 10-K for the year-ended
December 31, 2017, Financial Statement footnote 14. Mr. Burritt received a 2017 annual grant of equity in conjunction with his promotion to President and Chief Executive Officer which
consisted of 43,530 stock options. The grant date fair market value used to calculate compensation expense in accordance with ASC 718 for Mr. Burritt's grant is $9.97 per share for the stock
options. Mr. Bradley received a 2017 new hire grant of equity which consisted of 15,730 stock options. The grant date fair market value used to calculate compensation expense in accordance with
ASC 718 for Mr. Bradley's grant is $11.12 per share for the stock options. For further detail, see our Annual Report on Form 10-K for the year-ended December 31, 2017, financial
statement footnote 14.
-
(7)
-
The
Non-Equity Incentive Plan Compensation benefits are short-term incentive awards and represent the aggregate amount of incentive awards earned pursuant to the
Corporation's Annual Incentive Compensation Plan ("AICP"). The amount shown for Mr. Soni also includes $9,396 awarded pursuant to the Corporation's short-term incentive plan.
-
(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
2017 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, 2017 by
the executive under each plan are shown under the 2017 Pension Benefits table. The values reported in the earnings column of the 2017 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 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
U. S. Steel
Savings
Plan
Contributions
(a)
|
|
|
Non Qualified
Defined
Contribution Plan
Accruals
(b)
|
|
|
International Tax
Gross Ups &
Reimbursements
(c)
|
|
|
Separation
Payments
(d)
|
|
|
Perquisites
(e)
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
$
|
35,333
|
|
$
|
254,175
|
|
|
|
|
|
|
|
$
|
31,035
|
|
$
|
320,543
|
|
Bradley
|
|
$
|
39,396
|
|
$
|
2,896
|
|
|
|
|
|
|
|
$
|
14,090
|
|
$
|
56,382
|
|
Matthews
|
|
$
|
26,148
|
|
$
|
123,114
|
|
|
|
|
|
|
|
$
|
13,490
|
|
$
|
162,752
|
|
Buckiso
|
|
$
|
31,750
|
|
$
|
64,265
|
|
$
|
423,885
|
|
|
|
|
$
|
19,927
|
|
$
|
539,827
|
|
Rintoul
|
|
$
|
37,920
|
|
$
|
73,404
|
|
$
|
7,322
|
|
|
|
|
$
|
26,366
|
|
$
|
145,012
|
|
Longhi
|
|
$
|
36,500
|
|
$
|
457,140
|
|
|
|
|
$
|
112,198
|
|
$
|
190,914
|
|
$
|
796,752
|
|
Folsom
|
|
$
|
31,417
|
|
$
|
178,373
|
|
|
|
|
$
|
1,699,023
|
|
$
|
14,561
|
|
$
|
1,923,374
|
|
Soni
|
|
$
|
35,192
|
|
$
|
26,001
|
|
|
|
|
|
|
|
|
|
|
$
|
61,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(a)
-
U. S. Steel
Savings Plan Contributions include: (i) employer matching contributions that were made in the form of the Corporation'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 programs.
-
(c)
-
Payments
related to international assignments. For Mr. Buckiso this includes taxes paid on his behalf to his host country tax jurisdiction of $263,713,
housing benefits of $49,990, U. S. tax gross-ups of $68,886, an international assignment premium and home leave benefits.
-
(d)
-
Payments
to Mr. Longhi include $112,198 for unused vacation. Payments to Ms. Folsom include $112,773 for unused vacation, $276,250 in incremental value
relating to a change in the vesting terms of her January 31, 2017 stock award, and $1,310,000 in other payments related to her separation agreement.
-
(e)
-
The
amount shown for Mr. Burritt includes personal aircraft use and dues and initial fees for a club membership used for business purposes. The aggregate
incremental cost of the personal use of corporate aircraft is calculated using the rate per flight hour for the type of corporate aircraft used. The rates are published twice per year by a nationally
recognized and independent service. The calculated incremental costs for personal flights include the costs related to all flight hours flown in connection with the personal use. The Corporation
consistently applies allocation methods for flights that are not entirely either business or personal. The amount shown for Mr. Bradley includes relocation expenses. The amount shown for
Mr. Matthews includes financial planning services. The amount shown for Mr. Buckiso includes the cost of a company provided automobile. Amounts shown for Mr. Rintoul include a
company paid executive physical. The amount shown for Mr. Longhi includes $133,429 for personal aircraft use, $38,540 for personal security, and the cost of financial planning services. The
amount shown for Ms. Folsom includes the cost of financial planning services. Not included in All Other Compensation are the values of dividends paid on restricted stock awards because these
amounts are considered in determining the grant date fair market value shown under the "Stock Awards" column of the Summary Compensation Table.
United States Steel Corporation
|
2018 Proxy
Statement
|
41
Table of Contents
Executive Compensation Tables
|
Grants of Plan-Based Awards
The following table summarizes the grant of non-equity incentive compensation and equity-based incentive compensation to each Named Executive
Officer in 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(7)
(#)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(8)
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
(3)
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
(6)
|
|
|
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
(10)
($)
|
|
|
|
|
|
|
|
Exercise
Price of
Option
Awards
(9)
($/Share)
|
|
Closing
Price on
Grant
Date
($/Share)
|
|
Name
|
|
Plan
Name
(1)
|
|
Grant
Date
(2)
|
|
Threshold
(4)
($)
|
|
Target
($)
|
|
Maximum
(5)
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
594,565
|
|
$
|
1,189,130
|
|
$
|
2,705,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
412,500
|
|
$
|
825,000
|
|
$
|
1,072,500
|
|
|
8,330
|
|
|
16,660
|
|
|
33,320
|
|
|
14,010
|
|
|
30,020
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
1,925,072
|
|
|
|
LTIP
|
|
|
5/31/2017
|
|
$
|
325,500
|
|
$
|
651,000
|
|
$
|
846,300
|
|
|
17,765
|
|
|
35,530
|
|
|
71,060
|
|
|
20,980
|
|
|
43,530
|
|
$
|
20.685
|
|
$
|
20.85
|
|
$
|
1,518,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
150,002
|
|
$
|
300,003
|
|
$
|
682,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
8/1/2017
|
|
$
|
131,250
|
|
$
|
262,500
|
|
$
|
341,250
|
|
|
6,540
|
|
|
13,080
|
|
|
26,160
|
|
|
7,580
|
|
|
15,730
|
|
$
|
23.095
|
|
$
|
22.72
|
|
$
|
612,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
216,400
|
|
$
|
432,800
|
|
$
|
984,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
167,250
|
|
$
|
334,500
|
|
$
|
434,850
|
|
|
3,375
|
|
|
6,750
|
|
|
13,500
|
|
|
5,680
|
|
|
12,170
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
780,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
123,750
|
|
$
|
247,500
|
|
$
|
563,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
75,000
|
|
$
|
150,000
|
|
$
|
195,000
|
|
|
1,515
|
|
|
3,030
|
|
|
6,060
|
|
|
2,550
|
|
|
5,460
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
350,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
174,650
|
|
$
|
349,300
|
|
$
|
794,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
122,250
|
|
$
|
244,500
|
|
$
|
317,850
|
|
|
2,470
|
|
|
4,940
|
|
|
9,880
|
|
|
4,150
|
|
|
8,900
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
570,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
562,500
|
|
$
|
1,125,000
|
|
$
|
2,559,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
1,312,500
|
|
$
|
2,625,000
|
|
$
|
3,412,500
|
|
|
26,505
|
|
|
53,010
|
|
|
106,020
|
|
|
44,560
|
|
|
95,520
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
6,124,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
280,000
|
|
$
|
560,000
|
|
$
|
1,274,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
1/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
$
|
32.71
|
|
$
|
599,850
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
213,750
|
|
$
|
427,500
|
|
$
|
555,750
|
|
|
4,315
|
|
|
8,630
|
|
|
17,260
|
|
|
7,260
|
|
|
15,560
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
997,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soni
|
|
AICP
|
|
|
3/27/2017
|
|
$
|
103,125
|
|
$
|
206,250
|
|
$
|
469,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
2/28/2017
|
|
$
|
62,250
|
|
$
|
124,500
|
|
$
|
161,850
|
|
|
1,255
|
|
|
2,510
|
|
|
5,020
|
|
|
2,110
|
|
|
4,530
|
|
$
|
39.265
|
|
$
|
38.72
|
|
$
|
290,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
AICP
refers to the Corporation'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 2017 performance period.
-
(3)
-
Our
NEOs received non-equity incentive awards under the AICP and LTIP in 2017. For a discussion of the plans, the 2017 performance targets and the 2017 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. Amounts shown reflect
the amount that would be paid to each executive at each performance level, before consideration of individual performance.
-
(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) performance award described in footnote 6.
-
(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 ROCE performance awards is 200% of the target award.
-
(6)
-
Performance
award grants were made on February 28, 2017 to all NEOs except for Mr. Bradley, whose award was granted on August 1, 2017, shortly
following his date of hire. For 2017, 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 TSR
compared to the TSR of 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 February 28, 2017 to all NEOs except Mr. Bradley. The units are time-based awards subject to ratable vesting
over a three-year period with one-third of the granted shares vesting on February 28, 2018; an additional one-third of the shares vesting on February 28, 2019; and the remaining
one-third of the shares vesting on February 28, 2020, subject in each case to continued employment through the vesting dates. Additional RSU grants were made on May 31, 2017 to
Mr. Burritt. The units are time-based awards subject to ratable vesting over a three-year period with one-third of the granted shares vesting on May 31, 2018; an additional one-third of
the shares vesting on May 31, 2019; and the remaining one-third of the shares vesting on May 31, 2020, subject in each case to continued employment through the vesting dates. Restricted
stock unit grants were made on August 1, 2017 to Mr. Bradley. The units are time-based awards subject to ratable vesting over a three-year period with one-third of the granted shares
vesting on August 1, 2018; an additional one-third of the shares vesting on August 1, 2019; and the remaining one-third of the shares vesting on August 1, 2020, subject in each
case to continued employment through the vesting dates.
-
(8)
-
Option
grants were made on February 28, 2017 to all NEOs except Mr. Bradley. The option grants are time-based, with a ten-year term and vest over a
three-year period with one-third of the granted shares vesting on February 28, 2018; an additional one-third of the shares vesting on February 28, 2019; and the remaining one-third of
the shares vesting on February 28, 2020, subject in each case to continued employment on the vesting dates. Additional option grants were made on May 31, 2017 to Mr. Burritt. The
option grants are time-based, with a ten-year term and vest over a three-year period with one-third of the granted shares vesting on May 31, 2018; an additional one-third of the shares vesting
on May 31, 2019; and the remaining one-third of the shares vesting on May 31, 2020, subject in each case to continued employment on the vesting dates. Option grants were made on
August 1, 2017 to Mr. Bradley. The option grants are time-based, with a ten-year term and vest over a three-year period with one-third of the granted shares vesting on August 1,
2018; an additional one-third of the shares vesting on August 1, 2019; and the remaining one-third of the shares vesting on August 1, 2020, subject in each case to continued employment
on the vesting dates.
-
(9)
-
Exercise
Price of Option Awards represents the fair market value on the date of grant.
-
(10)
-
This
column represents the full grant date fair market value 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 ($0.05) per share (as of the last announced
dividend) that are paid when the underlying restricted stock units vest. The value of these dividends is reflected in the fair market value of the restricted stock unit grant. Restricted stock units
carry no voting privileges. The target number of TSR performance awards is also based on the fair market value on the date of grant and includes a factor predicting the probable outcome of the
performance goal for the grant. The factor for the February 28, 2017 performance award grant was 126.0185%, the factor for the May 31, 2017 performance award grant was 88.5801%, and the
factor for the August 1, 2017 performance award grant was 86.9257% as determined by a third-party consultant using a Monte Carlo valuation model. The maximum payout for the ROCE performance
awards is 200% of target. Accordingly, if maximum share payouts were achieved for such performance awards, the aggregate grant date fair value for such awards would be twice the target amount
disclosed in the table related to such performance awards. The value shown for Ms. Folsom includes the incremental value attributed to the change in vesting terms of her January 2017 grant.
42
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Executive Compensation Tables
|
Outstanding Equity Awards at 2017 Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(1)
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
(2)
|
|
|
Number of
Shares or
Units of
Stock
That Have
Not
Vested
(3)
(#)
|
|
|
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
(4)
($)
|
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That
Have Not
Vested
(5)
(#)
|
|
|
Equity Incentive
Plan Awards: Market
or Payout Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(4)(5)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
|
5/27/2014
|
|
|
16,780
|
|
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
18,260
|
|
|
18,260
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
|
7,400
|
|
$
|
260,406
|
|
|
33,070
|
|
$
|
861,977
|
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,300
|
|
$
|
3,117,834
|
|
|
|
|
5/31/2016
|
|
|
23,916
|
|
|
47,834
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
|
20,200
|
|
$
|
710,838
|
|
|
|
|
|
|
|
|
|
|
2/28/2017
|
|
|
|
|
|
30,020
|
|
$
|
39.265
|
|
|
2/28/2027
|
|
|
14,010
|
|
$
|
493,012
|
|
|
16,660
|
|
$
|
512,572
|
|
|
|
|
5/31/2017
|
|
|
|
|
|
43,530
|
|
$
|
20.690
|
|
|
5/31/2027
|
|
|
20,980
|
|
$
|
738,286
|
|
|
35,530
|
|
$
|
1,093,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
|
|
|
8/1/2017
|
|
|
|
|
|
15,730
|
|
$
|
23.095
|
|
|
8/1/2027
|
|
|
7,580
|
|
$
|
266,740
|
|
|
13,080
|
|
$
|
402,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
|
5/27/2008
|
|
|
1,600
|
|
|
|
|
$
|
169.225
|
|
|
5/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2009
|
|
|
11,660
|
|
|
|
|
$
|
29.805
|
|
|
5/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/25/2010
|
|
|
7,680
|
|
|
|
|
$
|
45.650
|
|
|
5/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2011
|
|
|
10,730
|
|
|
|
|
$
|
45.805
|
|
|
5/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2012
|
|
|
19,960
|
|
|
|
|
$
|
22.305
|
|
|
5/29/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/28/2013
|
|
|
22,080
|
|
|
|
|
$
|
25.000
|
|
|
5/28/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/27/2014
|
|
|
22,450
|
|
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
14,806
|
|
|
7,404
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
|
3,000
|
|
$
|
105,570
|
|
|
13,410
|
|
$
|
349,535
|
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,960
|
|
$
|
1,264,025
|
|
|
|
|
5/31/2016
|
|
|
9,696
|
|
|
19,394
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
|
8,194
|
|
$
|
288,347
|
|
|
|
|
|
|
|
|
|
|
2/28/2017
|
|
|
|
|
|
12,170
|
|
$
|
39.265
|
|
|
2/28/2027
|
|
|
5,680
|
|
$
|
199,879
|
|
|
6,750
|
|
$
|
207,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
|
5/27/2008
|
|
|
450
|
|
|
|
|
$
|
169.225
|
|
|
5/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2009
|
|
|
3,960
|
|
|
|
|
$
|
29.805
|
|
|
5/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/25/2010
|
|
|
1,890
|
|
|
|
|
$
|
45.650
|
|
|
5/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2011
|
|
|
3,250
|
|
|
|
|
$
|
45.805
|
|
|
5/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2012
|
|
|
7,410
|
|
|
|
|
$
|
22.305
|
|
|
5/29/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/28/2013
|
|
|
7,240
|
|
|
|
|
$
|
18.640
|
|
|
5/28/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/27/2014
|
|
|
8,970
|
|
|
|
|
$
|
24.285
|
|
|
5/27/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
5,920
|
|
|
2,960
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
|
1,200
|
|
$
|
42,228
|
|
|
|
|
|
|
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,690
|
|
$
|
470,842
|
|
|
|
|
5/31/2016
|
|
|
3,606
|
|
|
7,214
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
|
3,047
|
|
$
|
107,224
|
|
|
|
|
|
|
|
|
|
|
2/28/2017
|
|
|
|
|
|
5,460
|
|
$
|
39.265
|
|
|
2/28/2027
|
|
|
2,550
|
|
$
|
89,735
|
|
|
3,030
|
|
$
|
93,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
|
5/27/2008
|
|
|
1,400
|
|
|
|
|
$
|
169.225
|
|
|
5/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2009
|
|
|
7,640
|
|
|
|
|
$
|
29.805
|
|
|
5/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/25/2010
|
|
|
2,880
|
|
|
|
|
$
|
45.650
|
|
|
5/25/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2011
|
|
|
8,950
|
|
|
|
|
$
|
45.805
|
|
|
5/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
|
|
|
5,414
|
|
$
|
24.780
|
|
|
2/24/2025
|
|
|
2,194
|
|
$
|
77,207
|
|
|
9,800
|
|
$
|
255,439
|
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,130
|
|
$
|
924,089
|
|
|
|
|
5/31/2016
|
|
|
|
|
|
14,180
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
|
5,994
|
|
$
|
210,929
|
|
|
|
|
|
|
|
|
|
|
2/28/2017
|
|
|
|
|
|
8,900
|
|
$
|
39.265
|
|
|
2/28/2027
|
|
|
4,150
|
|
$
|
146,039
|
|
|
4,940
|
|
$
|
151,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi
|
|
|
5/27/2014
|
|
|
50,580
|
|
|
|
|
$
|
24.285
|
|
|
6/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
58,100
|
|
|
19,367
|
|
$
|
24.780
|
|
|
6/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2016
|
|
|
76,100
|
|
|
6,341
|
|
$
|
14.780
|
|
|
6/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom
|
|
|
1/27/2014
|
|
|
6,667
|
|
|
|
|
$
|
25.560
|
|
|
12/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/27/2014
|
|
|
7,484
|
|
|
|
|
$
|
24.285
|
|
|
12/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
9,463
|
|
|
8,938
|
|
$
|
24.780
|
|
|
12/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2016
|
|
|
12,393
|
|
|
16,352
|
|
$
|
14.780
|
|
|
12/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2017
|
|
|
|
|
|
7,924
|
|
$
|
39.265
|
|
|
12/29/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soni
|
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
$
|
439,875
|
|
|
|
|
|
|
|
|
|
|
5/31/2016
|
|
|
3,670
|
|
|
7,340
|
|
$
|
14.780
|
|
|
5/31/2026
|
|
|
3,100
|
|
$
|
109,089
|
|
|
|
|
|
|
|
|
|
|
2/28/2017
|
|
|
|
|
|
4,530
|
|
$
|
39.265
|
|
|
2/28/2027
|
|
|
2,110
|
|
$
|
74,251
|
|
|
2,510
|
|
$
|
77,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States Steel Corporation
|
2018 Proxy
Statement
|
43
Table of Contents
Executive Compensation Tables
|
-
(1)
-
All
options vest in equal increments on the first three anniversaries of the date of grant, subject in each case to employment on the respective vesting dates or,
for the 2015 and 2016 grants, to pro rata vesting for retirement during the vesting period. For the options granted in 2017, the options fully vest upon attainment of age 60 with 5 years of
service, or age 65, provided that the executive is employed for at least six months following the date of grant. Such options partially vest after 30 years of service or attainment of age 55
with 10 years of service.
-
(2)
-
Options
generally expire 10 years after the date of grant. Upon a retirement or a "termination with consent," options granted prior to 2017 expire three years after
the date of termination of employment, and options granted in 2017, expire five years after the date of termination of employment.
-
(3)
-
All
restricted stock units vest in equal increments on the first three anniversaries of the date of grant, subject in each case to employment on the respective
vesting dates or to pro rata vesting for retirement during the vesting period; For the RSUs granted in 2017, the RSUs fully vest upon attainment of age 60 with 5 years of service, or age 65,
provided that the executive is employed for at least six months following the date of grant. Such RSUs partially vest after 30 years of service or attainment of age 55 with 10 years of
service. Notwithstanding the foregoing, the restricted stock unit retention grant awarded to Ms. Folsom in 2017 and the restricted stock unit new hire grant issued to Mr. Soni in 2016,
are conditioned on continued employment with the Corporation and subject to three-year cliff vesting on the third anniversary of the date of grant. The vesting of Ms. Folsom's grant was
accelerated pursuant to her separation agreement.
-
(4)
-
Value
is based on $35.19 per share, which was the closing price of the stock on December 29, 2017.
-
(5)
-
The
performance LTIP was split between an equity award based on TSR relative to a peer group and a long-term performance cash award based on ROCE. The 2015
performance period ended on December 31, 2017. Using stock prices and dividends reported since the beginning of the performance period, we estimate that, through December 31, 2017, the
Corporation has performed at the 44th percentile relative to a peer group which resulted in a final award of 74.07% of target for the relative TSR portion. The 2015 ROCE equity award
performance was below threshold and is valued at zero as of December 31, 2017. Based on performance through December 31, 2017, the 2016 TSR equity award is performing at a level that
would earn a payout at 200% of plan and based on the first year of the performance period, the 2017 TSR equity award is performing at a level that would earn a payout at 87.43% of target. The ROCE
cash awards for 2015, 2016 and 2017 are not shown on this table. Based on performance through December 31, 2017 these awards are indicating below threshold results for 2015 and above target
results for 2016 and 2017.
Option Exercises and Stock Vested in 2017
The following table illustrates for each Named Executive Officer, on an aggregate basis, the value realized from the exercise of stock options
and from the vesting of restricted stock awards and performance awards in 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value
Realized on
Exercise
(1)
($)
|
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
|
Value
Realized on
Vesting
(2)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
|
204,630
|
|
$
|
3,275,641
|
|
|
75,529
|
|
$
|
2,629,825
|
|
Bradley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
|
|
|
|
|
|
|
33,001
|
|
$
|
1,154,341
|
|
Buckiso
|
|
|
|
|
|
|
|
|
3,947
|
|
$
|
100,501
|
|
Rintoul
|
|
|
32,263
|
|
$
|
362,569
|
|
|
22,396
|
|
$
|
775,939
|
|
Longhi
|
|
|
|
|
|
|
|
|
230,594
|
|
$
|
8,007,682
|
|
Folsom
|
|
|
24,429
|
|
$
|
365,150
|
|
|
37,905
|
|
$
|
1,306,726
|
|
Soni
|
|
|
|
|
|
|
|
|
1,550
|
|
$
|
32,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
the difference between the market value on the date of exercise and the exercise price for the number of shares exercised.
-
(2)
-
Represents
the market value on the vesting date of time-vested restricted 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, 2017. Messrs. Matthews and Buckiso were the only NEOs covered by the Corporation's defined benefit pension plans which was closed to new entrants in 2013, and for which
benefit accruals were frozen for all non-represented participants on December 31, 2015.
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number
of Years
Credited
Service
(1)
(#)
|
|
Present
Value of
Accumulated
Benefit
(2)
($)
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
U. S. Steel Pension Plan
|
|
|
25
|
|
$
|
1,233,622
|
|
|
|
Non Tax-Qualified Pension Plan
|
|
|
25
|
|
$
|
1,008,900
|
|
|
|
Supplemental Pension Program
|
|
|
25
|
|
$
|
2,174,051
|
|
|
|
Total
|
|
|
|
|
$
|
4,416,573
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
U. S. Steel Pension Plan
|
|
|
25
|
|
$
|
1,111,560
|
|
|
|
Non Tax-Qualified Pension Plan
|
|
|
25
|
|
$
|
124,588
|
|
|
|
Total
|
|
|
|
|
$
|
1,236,148
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Service
shown represents credited service years (rounded) used to calculate accrued benefits as of December 31, 2017. Credited service was frozen on
December 31, 2015.
-
(2)
-
Accumulated
benefit at December 31, 2017. The present value of accumulated benefits is calculated using the assumptions used in the preparation of the
Corporation's financial statements contained in the Annual Report on Form 10-K, except that retirement age is assumed to be the normal retirement age for the respective plans. Key assumptions
used for the calculations in this table and in the Summary Compensation Table include a 4.00% discount rate for the 2017 calculations (4.00% for 2016 and 4.25% for 2015); a lump sum rate assumption of
3.0% for 2017 (3.0% for 2016 and 3.0% for 2015) assuming the Section 417(e) minimum was not applicable; a 100% lump sum benefit election for all plans; and unreduced benefit ages, which at
December 31, 2017, 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.
44
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Executive Compensation Tables
|
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. Burritt, Bradley, Rintoul, Longhi, and Soni who were hired in 2013, 2017, 2007, 2012 and
2016 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 and
Mr. Buckiso are participants under the U. S. Steel Pension Plan and the related non-qualified plans as noted under "Pension Plan Compensation" on page 55. 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 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. Career Earnings Benefits
commenced prior to attaining age 58 are based on 1.0% of total career earnings and subject to a larger early commencement reduction. If he had retired on December 31, 2017, Mr. Matthews'
annual Career Earnings Benefits would have been reduced by 53.33%, and if Mr. Buckiso had retired on December 31, 2017, his annual Career Earnings Benefits would have been reduced by
58.88%.
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 credited service, and career earnings and final average earnings as of
December 31, 2015. Final average earnings is based on the average of the monthly salaries paid in the highest five
consecutive
12 month period during the ten years preceding December 31, 2015.
The
salary amounts include base salary, excluding incentive compensation. The number of years of credited service in the 2017 Pension Benefits table shows the number of years earned and used to
calculate the accrued benefits reported.
Non Tax-Qualified Pension Plan
|
The purpose of the United States Steel Corporation Non Tax-Qualified Pension Plan ("Non Tax-Qualified Pension Plan") is to compensate individuals for the loss of
benefits under the U. S. Steel Pension Plan that occur due to certain limits established under the Code. The amount payable under the Non Tax-Qualified Pension Plan is equal to the
difference between the benefits the executive actually receives under the U. S. Steel Pension Plan and the benefits that the executive would have received under the
U. S. Steel
Pension
Plan except for the limitations imposed by the Code. Benefits under the Non Tax-Qualified Pension Plan were frozen on December 31, 2015.
Benefits
paid under the Non Tax-Qualified Pension Plan are in the form of an actuarially determined lump sum payable to the executive upon termination of employment, subject to the six-month waiting
period under Section 409A of the Code for specified employees.
Non Tax-Qualified Pension Plan Calculation Assumptions
The present value 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 as 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 credited service, and estimated career earnings and final average earnings as
of December 31, 2015.
United States Steel Corporation
|
2018 Proxy
Statement
|
45
Table of Contents
Executive Compensation Tables
|
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. Benefits under the Supplemental Pension Program were frozen on December 31, 2015.
Executives
with at least 15 years of continuous service become eligible to receive a benefit under the Supplemental Pension Program at retirement or termination of employment. Benefits will not
be payable under the program with respect to an executive who (a) terminates employment prior to age 60 or (b) terminates employment within 36 months of the date coverage under
the Supplemental Pension Program begins, unless, in either case, the Corporation consents to
the
termination; provided, however, such consent is not required for terminations because of death or involuntary termination, other than for cause. Distributions are subject to the six-month waiting
period under Section 409A of the Code for specified employees.
An
executive's average earnings are used to calculate the benefit under the Supplemental Pension Program and are defined as the average monthly earnings derived from the total short-term incentive
(described as Non-Equity Incentive Plan Compensation in the Summary Compensation Table in
this proxy statement) paid or credited to the executive under the Annual Incentive Compensation Plan with respect to the three calendar years for which short-term incentive payments were the highest
out of the last ten consecutive calendar years prior to the executive's termination. Benefits are paid as an actuarially determined lump sum.
Supplemental Pension Program Calculation Assumptions
The present value of accumulated benefit obligations represents the actuarial value of benefits earned through December 31, 2015 by an executive under the
Supplemental Pension Program. Assumptions used in the calculations include a normal retirement age of 60, a lump sum payment,
and
credited service and average earnings as of December 31, 2015. Credited service under the Supplemental Pension Program is the same as under the U. S. Steel Pension Plan.
Non-Qualified Deferred Compensation
|
The
following table provides information with respect to accruals for each NEO under the Corporation's non-qualified defined contribution plans in 2017. 2017 Year-End Aggregate
Balances are as of December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Plan Name
|
|
2017 Company
Contributions/
Accruals
(1)
|
|
2017 Aggregate
Earnings
(2)
|
|
2017 Year-End
Aggregate
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
Supplemental Thrift Program
|
|
$
|
43,116
|
|
$
|
30,079
|
|
$
|
253,717
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
56,359
|
|
$
|
21,258
|
|
$
|
215,368
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
154,700
|
|
$
|
36,211
|
|
$
|
335,623
|
|
|
|
Total
|
|
$
|
254,175
|
|
$
|
87,548
|
|
$
|
804,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
|
|
Supplemental Thrift Program
|
|
$
|
2,896
|
|
$
|
14
|
|
$
|
2,910
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Total
|
|
$
|
2,896
|
|
$
|
14
|
|
$
|
2,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
Supplemental Thrift Program
|
|
$
|
21,640
|
|
$
|
19,413
|
|
$
|
192,381
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
30,657
|
|
$
|
6,480
|
|
$
|
64,624
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
70,817
|
|
$
|
9,255
|
|
$
|
80,072
|
|
|
|
Total
|
|
$
|
123,114
|
|
$
|
35,148
|
|
$
|
337,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
Supplemental Thrift Program
|
|
$
|
12,750
|
|
$
|
6,229
|
|
$
|
54,362
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
15,313
|
|
$
|
2,928
|
|
$
|
31,703
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
36,202
|
|
$
|
27,353
|
|
$
|
189,020
|
|
|
|
Total
|
|
$
|
64,265
|
|
$
|
36,510
|
|
$
|
275,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Executive Compensation Tables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Plan Name
|
|
2017 Company
Contributions/
Accruals
(1)
|
|
2017 Aggregate
Earnings
(2)
|
|
2017 Year-End
Aggregate
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
Supplemental Thrift Program
|
|
$
|
14,970
|
|
$
|
14,800
|
|
$
|
173,024
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
19,465
|
|
$
|
22,619
|
|
$
|
200,413
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
38,969
|
|
$
|
30,412
|
|
$
|
258,453
|
|
|
|
Total
|
|
$
|
73,404
|
|
$
|
67,831
|
|
$
|
631,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi
|
|
Supplemental Thrift Program
|
|
$
|
30,000
|
|
$
|
(145,860
|
)
|
$
|
326,109
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
42,250
|
|
$
|
56,507
|
|
$
|
480,225
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
384,890
|
|
$
|
99,815
|
|
$
|
914,446
|
|
|
|
Total
|
|
$
|
457,140
|
|
$
|
10,462
|
|
$
|
1,720,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom
|
|
Supplemental Thrift Program
|
|
$
|
30,417
|
|
$
|
25,469
|
|
$
|
194,052
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
39,667
|
|
$
|
21,106
|
|
$
|
166,896
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
108,290
|
|
$
|
30,851
|
|
$
|
231,756
|
|
|
|
Total
|
|
$
|
178,374
|
|
$
|
77,426
|
|
$
|
592,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soni
|
|
Supplemental Thrift Program
|
|
$
|
7,500
|
|
$
|
1,754
|
|
$
|
9,254
|
|
|
|
Non Tax-Qualified Retirement Account Program
|
|
$
|
8,401
|
|
$
|
152
|
|
$
|
8,553
|
|
|
|
Supplemental Retirement Account Program
|
|
$
|
10,100
|
|
$
|
1,496
|
|
$
|
11,596
|
|
|
|
Total
|
|
$
|
26,001
|
|
$
|
3,402
|
|
$
|
29,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Accruals
are included in the All Other Compensation column of the Summary Compensation Table (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 2017, less 2017 accruals, less the balance at the beginning of 2017, 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 $270,000 in
2017) and combined Corporation and individual
annual
contributions (which limit was $54,000 in 2017). 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.
Executive Compensation Tables
An executive receives a lump sum distribution of the benefits payable under this program upon his or her termination of employment with five or more years of
continuous service, prior to attaining five years of continuous service, with the
consent
of the Corporation, or because of death, subject to the six-month waiting period under Section 409A of the Code for specified employees.
Non Tax-Qualified Retirement Account Program
The purpose of the United States Steel Corporation Non Tax-Qualified Retirement Account Program is to compensate individuals for the loss of Retirement Account
contributions that cannot be provided under the U. S. Steel Savings Plan due to the statutory limits on covered compensation (which was $270,000 in 2017) and combined Corporation and
individual annual contributions (which limit was $54,000 in 2017). Retirement Account contributions are non-elective employer contributions that are in addition to the matching contributions made by
the Corporation under the U. S. Steel Savings Plan. All of the NEOs participate in the Non Tax-Qualified Retirement Account Program.
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. Accrued benefits under the Supplemental Retirement Account Program are recorded in a hypothetical account and credited with
United States Steel Corporation
|
2018 Proxy
Statement
|
47
Table of Contents
earnings
as if the account had been invested in the U. S. Steel Savings Plan. Executives who complete at least 10 years of continuous service (or, if earlier, attain age
65) become eligible to receive a benefit under the Supplemental Retirement Account Program at retirement or termination of employment. Benefits will not be payable under the program with
respect to an executive who terminates employment (a) prior to age 55 or (b) within
36 months
of the date coverage under the program begins, unless the Corporation consents to the termination; provided, however, such consent is not required for terminations because of death or
involuntary termination, other than for cause. Benefits are payable in the form of a lump sum distribution following termination of employment, subject to the six-month waiting period under
Section 409A of the Code for specified employees.
Potential Payments Upon Termination or Change in 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, ten months worked during the twelve-month vesting period
from March 2017 to February 2018 would result in a vesting of ten-twelfths of the number of shares scheduled to vest in February 2018, with no such
pro rata vesting for the shares scheduled to vest after February 2018). Given our assumption under this scenario that the Committee has consented to the executive's retirement, the pro rata vesting
discussed above has been applied to the calculations in the tables below with the following exception. For the 2017 long-term incentive awards, the awards are fully vested if the executive attained
age 60 with 5 years of service or age 65 prior to retirement, provided the executive is employed for at least six months following the date of grant and is not a participant in the Supplemental
Pension Program.
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, 2017. Awards are prorated upon termination for purposes of the calculations in the tables below with the
following exception. For the 2017 long-term incentive awards, the awards are fully vested if the executive attained age 60 with 5 years of service or age 65 prior to the involuntary
termination, provided the executive is employed for at least six months following the date of grant and is not a participant in the Supplemental Pension Program.
48
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Potential Payments Upon Termination or Change in Control
|
Change in Control and Termination
(Column D)
|
All of the NEOs are covered by the Corporation's Change in Control Severance Plan (the "CIC Plan"), effective January 1, 2016, as described in the
Compensation Discussion and Analysis section of the proxy statement. In addition to the severance benefits paid pursuant to the CIC Plan, all long-term incentive awards would vest upon a change in
control and a termination, 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).
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 Plan Benefit equal to the unvested portion of the Corporation's contributions on behalf of the
executive under the tax-qualified and non tax-qualified savings plans; and
-
-
Legal fees reimbursement for legal fees incurred as a result of termination of employment and incurred in contesting or
disputing such termination or seeking to enforce any right or benefit under the CIC Plan or in connection with any tax audit relating to Sections 4999 (excise taxes) or 409A (deferred
compensation) of the Code.
A
"Good Reason"
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;
United States Steel Corporation
|
2018 Proxy
Statement
|
49
Table of Contents
Potential Payments Upon Termination or Change in Control
|
-
-
the executive reasonably demonstrates that an Applicable Event (defined below) has occurred; and
-
-
a 409A Change in Control occurs within twenty-four months following the termination.
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.
Potential Payments Upon Termination Tables
The
following tables were developed using the above termination scenarios, and an estimation of the amounts that would be payable to each NEO under the relevant scenario. A discussion of each of the
types of compensation follows the tables. Amounts shown for Mr. Longhi and Ms. Folsom reflect actual amounts that they became entitled to at their termination of employment.
Non-qualified retirement benefits and equity awards will be distributed six months after their termination dates. The estimated present values of the benefits provided to the NEOs under each of these
termination scenarios were determined using the following assumptions:
-
1.
-
Unless
otherwise noted, the tables reflect values as of December 31, 2017 that NEOs would have been entitled to, following, or in connection with a termination
of
employment, with the triggering event occurring on December 31, 2017;
-
2.
-
The
stock price used for valuation purposes for the long-term incentive awards was the closing stock price on December 29, 2017, which was $35.19;
-
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, 2017 Pension Benefit Guaranty Corporation interest rate of 0.75% was used to determine 2017 lump sum payment amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon Termination
|
|
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
F
|
|
Executive
|
|
Component
|
|
Voluntary
Termination
(with Consent)
or Retirement
(1)
|
|
Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause)
|
|
Involuntary
Termination
(Not for
Cause)
(2)
|
|
Change in
Control and
Termination
|
|
Disability
(3)
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burritt
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
$
|
300,000
|
|
|
$
|
4,408,666
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
1,082,109
|
|
|
|
|
|
$
|
1,082,109
|
|
|
|
|
|
$
|
1,082,109
|
|
|
$
|
1,082,109
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
688,676
|
|
|
|
|
|
$
|
688,676
|
|
|
$
|
2,428,749
|
|
|
$
|
2,428,749
|
|
|
$
|
2,428,749
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
704,890
|
|
|
|
|
|
$
|
704,890
|
|
|
$
|
2,202,542
|
|
|
$
|
2,202,542
|
|
|
$
|
2,202,542
|
|
|
|
Performance Stock Award
(5)
|
|
|
$
|
5,037,322
|
|
|
|
|
|
$
|
5,037,322
|
|
|
$
|
9,403,783
|
|
|
$
|
7,124,923
|
|
|
$
|
7,124,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
804,708
|
|
|
$
|
215,368
|
|
|
$
|
804,708
|
|
|
$
|
804,708
|
|
|
$
|
804,708
|
|
|
$
|
804,708
|
|
|
|
Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,884
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
579,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
8,317,705
|
|
|
$
|
215,368
|
|
|
$
|
8,617,705
|
|
|
$
|
19,832,541
|
|
|
$
|
13,643,031
|
|
|
$
|
13,643,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Potential Payments Upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon Termination (Cont'd.)
|
|
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
F
|
|
Executive
|
|
Component
|
|
Voluntary
Termination
(with Consent)
or Retirement
(1)
|
|
Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause)
|
|
Involuntary
Termination
(Not for
Cause)
(2)
|
|
Change in
Control and
Termination
|
|
Disability
(3)
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
$
|
1,400,000
|
|
|
$
|
2,500,008
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
273,003
|
|
|
|
|
|
$
|
273,003
|
|
|
|
|
|
$
|
273,003
|
|
|
$
|
273,003
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
26,428
|
|
|
|
|
|
$
|
26,428
|
|
|
$
|
190,254
|
|
|
$
|
190,254
|
|
|
$
|
190,254
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
37,055
|
|
|
|
|
|
$
|
37,055
|
|
|
$
|
266,740
|
|
|
$
|
266,740
|
|
|
$
|
266,740
|
|
|
|
Performance Stock Award
(5)(6)
|
|
|
$
|
309,144
|
|
|
|
|
|
$
|
309,144
|
|
|
$
|
927,433
|
|
|
$
|
463,716
|
|
|
$
|
463,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
2,910
|
|
|
|
|
|
$
|
2,910
|
|
|
$
|
2,910
|
|
|
$
|
2,910
|
|
|
$
|
2,910
|
|
|
|
Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
$
|
59,421
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
424,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
648,540
|
|
|
|
|
|
$
|
2,048,540
|
|
|
$
|
4,370,795
|
|
|
$
|
1,196,623
|
|
|
$
|
1,196,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthews
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
$
|
297,550
|
|
|
$
|
2,225,427
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
409,429
|
|
|
|
|
|
$
|
409,429
|
|
|
|
|
|
$
|
409,429
|
|
|
$
|
409,429
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
179,720
|
|
|
|
|
|
$
|
179,720
|
|
|
$
|
472,908
|
|
|
$
|
472,908
|
|
|
$
|
472,908
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
227,644
|
|
|
|
|
|
$
|
227,644
|
|
|
$
|
593,796
|
|
|
$
|
593,796
|
|
|
$
|
593,796
|
|
|
|
Performance Stock Award
(5)
|
|
|
$
|
1,718,641
|
|
|
|
|
|
$
|
1,718,641
|
|
|
$
|
2,841,483
|
|
|
$
|
2,403,138
|
|
|
$
|
2,403,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan Compensation
|
|
|
$
|
6,855,416
|
|
|
$
|
1,994,691
|
|
|
$
|
9,607,690
|
|
|
$
|
9,607,690
|
|
|
$
|
7,313,755
|
|
|
$
|
5,840,218
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
337,077
|
|
|
$
|
257,005
|
|
|
$
|
337,077
|
|
|
$
|
337,077
|
|
|
$
|
337,077
|
|
|
$
|
337,077
|
|
|
|
Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
$
|
58,878
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
288,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
9,727,927
|
|
|
$
|
2,251,696
|
|
|
$
|
12,777,751
|
|
|
$
|
16,426,075
|
|
|
$
|
11,530,103
|
|
|
$
|
10,056,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buckiso
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
$
|
233,750
|
|
|
$
|
693,750
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
324,968
|
|
|
|
|
|
$
|
324,968
|
|
|
|
|
|
$
|
324,968
|
|
|
$
|
324,968
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
68,644
|
|
|
|
|
|
$
|
68,644
|
|
|
$
|
178,052
|
|
|
$
|
178,052
|
|
|
$
|
178,052
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
91,424
|
|
|
|
|
|
$
|
91,424
|
|
|
$
|
239,187
|
|
|
$
|
239,187
|
|
|
$
|
239,187
|
|
|
|
Performance Stock Award
(5)(6)
|
|
|
$
|
532,153
|
|
|
|
|
|
$
|
532,153
|
|
|
$
|
994,821
|
|
|
$
|
798,194
|
|
|
$
|
798,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan Compensation
|
|
|
$
|
1,140,213
|
|
|
$
|
1,140,213
|
|
|
$
|
2,946,953
|
|
|
$
|
2,946,953
|
|
|
$
|
2,214,217
|
|
|
$
|
1,123,611
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
275,085
|
|
|
$
|
86,065
|
|
|
$
|
275,085
|
|
|
$
|
275,085
|
|
|
$
|
275,085
|
|
|
$
|
275,085
|
|
|
|
Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
$
|
63,611
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
226,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
2,432,487
|
|
|
$
|
1,226,278
|
|
|
$
|
4,472,977
|
|
|
$
|
5,618,348
|
|
|
$
|
4,029,703
|
|
|
$
|
2,939,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rintoul
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
$
|
212,075
|
|
|
$
|
1,807,929
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
393,661
|
|
|
|
|
|
$
|
393,661
|
|
|
|
|
|
$
|
393,661
|
|
|
$
|
393,661
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
131,386
|
|
|
|
|
|
$
|
131,386
|
|
|
$
|
345,774
|
|
|
$
|
345,774
|
|
|
$
|
345,774
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
271,949
|
|
|
|
|
|
$
|
271,949
|
|
|
$
|
434,175
|
|
|
$
|
434,175
|
|
|
$
|
434,175
|
|
|
|
Performance Stock Award
(5)
|
|
|
$
|
1,683,651
|
|
|
|
|
|
$
|
1,683,651
|
|
|
$
|
2,077,279
|
|
|
$
|
1,756,768
|
|
|
$
|
1,756,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
631,890
|
|
|
$
|
631,890
|
|
|
$
|
631,890
|
|
|
$
|
631,890
|
|
|
$
|
631,890
|
|
|
$
|
631,890
|
|
|
|
Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
$
|
44,889
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
223,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
3,112,537
|
|
|
$
|
631,890
|
|
|
$
|
3,324,612
|
|
|
$
|
5,565,199
|
|
|
$
|
3,562,268
|
|
|
$
|
3,562,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States Steel Corporation
|
2018 Proxy
Statement
|
51
Table of Contents
Potential Payments Upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon Termination (Cont'd.)
|
|
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
F
|
|
Executive
|
|
Component
|
|
Voluntary
Termination
(with Consent)
or Retirement
(1)
|
|
Voluntary
Termination
(Without
Consent) or
Involuntary
Termination
(For Cause)
|
|
Involuntary
Termination
(Not for
Cause)
(2)
|
|
Change in
Control and
Termination
|
|
Disability
(3)
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longhi
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
$
|
112,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
1,023,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
331,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
370,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Stock Award
(5)
|
|
|
$
|
7,767,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
1,720,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefits
|
|
|
$
|
19,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
11,344,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Folsom
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
$
|
1,422,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
426,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
852,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Stock Award
(5)
|
|
|
$
|
2,095,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
592,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefits
|
|
|
$
|
31,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
5,421,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soni
|
|
Severance & Compensation Elements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
$
|
75,000
|
|
|
$
|
589,950
|
|
|
|
|
|
|
|
|
|
Short-Term Incentive
|
|
|
$
|
215,853
|
|
|
|
|
|
$
|
215,853
|
|
|
|
|
|
$
|
215,853
|
|
|
$
|
215,853
|
|
|
|
Stock Options (Unvested)
(4)
|
|
|
$
|
43,698
|
|
|
|
|
|
$
|
43,698
|
|
|
$
|
149,809
|
|
|
$
|
149,809
|
|
|
$
|
149,809
|
|
|
|
Restricted Stock (Units)
(4)
|
|
|
$
|
52,504
|
|
|
|
|
|
$
|
492,379
|
|
|
$
|
623,215
|
|
|
$
|
623,215
|
|
|
$
|
623,215
|
|
|
|
Performance Stock Award
(5)(6)
|
|
|
$
|
108,759
|
|
|
|
|
|
$
|
108,759
|
|
|
$
|
326,242
|
|
|
$
|
163,139
|
|
|
$
|
163,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
$
|
29,403
|
|
|
|
|
|
$
|
29,403
|
|
|
$
|
29,403
|
|
|
$
|
29,403
|
|
|
$
|
29,403
|
|
|
|
Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
$
|
63,344
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement Benefit
(7)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
253,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
450,217
|
|
|
|
|
|
$
|
965,092
|
|
|
$
|
2,035,589
|
|
|
$
|
1,181,419
|
|
|
$
|
1,181,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
term "with Consent" means consent with respect to each component of pay. This termination scenario typically involves retirement pursuant to a retirement plan
or, if an NEO has not yet attained the necessary age and service requirements for retirement, a voluntary termination with consent.
-
(2)
-
The
value shown for cash severance benefits represents the total that would be paid over a specified period. Cash severance amounts shown for Mr. Longhi and
Ms. Folsom also include payments for accrued and unused vacation.
-
(3)
-
All
benefit amounts would become payable on May 31, 2018 under a permanent incapacity pension, five months following a disabling event that occurred on
December 31, 2017.
-
(4)
-
The
annual restricted awards and option awards include pro rata vesting on each grant date anniversary. The retention award granted to Mr. Soni will vest 100%
on the third anniversary of the date of the grant. The vesting of the restricted stock award granted in January 2017 to Ms. Folsom was accelerated upon her termination of employment.
-
(5)
-
Values
shown for the Performance awards are calculated as
follows:
-
-
The values shown for the 2015 equity award for TSR
and the cash award for ROCE are based on the actual value at the end of the Performance Period on December 31, 2017.
-
-
The 2015 TSR grant finished the Performance Period
at the 44th percentile of the peer group indicating a payout of 74.07% of the target number of shares. The 2015 ROCE grant ended the Performance Period with below threshold results indicating
that the entire award will be forfeited.
-
-
The values shown for the 2016 and 2017 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 2017.
52
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Potential Payments Upon Termination or Change in Control
|
-
-
In the event of a Change in Control, the performance
period is ended on the date of the CIC and the actual performance is calculated based on the abbreviated Performance Period to determine the "Achieved Performance Award." The balance of the award if
any is forfeited and the "Achieved Performance Award" remains subject to employment restrictions through the third anniversary date of the grant unless the Grantee's employment is terminated without
cause after a Change in Control before the third anniversary date of the grant, in which the award will be immediately vested and released.
-
-
In the event of disability or death, the awards are
immediately vested and distributed based on the following rules:
Death or Disability prior to the end of the first year of the Performance Period 0% vested
Death or Disability at or after the end of the first year of the Performance Period but prior to the end of the second year of the Performance
Period 50% vested
Death or Disability at or after the end of the second year of the Performance Period 100% vested
-
(6)
-
Mr. Buckiso
did not receive Performance Awards in 2015. The vesting outcomes described in footnote 5 reflect his 2016 and 2017 grants of performance awards.
Messrs. Bradley and Soni did not receive Performance Awards in 2015 or 2016. The vesting outcomes described in footnote 5 reflect their 2017 performance awards.
-
(7)
-
For
all NEOs, the Supplemental Retirement Benefit is equal to the sum of (i) the Retirement Account contributions that would have been received under the
U. S. Steel Savings Plan and the Corporation's related non tax-qualified plans if his employment would have continued for an additional 36 months plus earnings, and
(ii) the amount they would have received under the U. S. Steel Savings Plan and the related non tax-qualified plans if they were fully vested on December 31st.
Termination and Change-in-Control Provisions
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 2.5x for Messrs. Burritt and Bradley, 2x for Messrs. Buckiso, Matthews and Rintoul, and 1x for Mr. Soni 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 Unemployment 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.
Following
a voluntary termination with the Committee's consent or a retirement (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. For purposes of the short-term incentive program, retirement means a termination of employment after having completed
30 years of service, attainment of age 60 with 5 years of service, or attainment of age 65.
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).
Following
a voluntary termination with the Committee's consent or a retirement (Column A), and subject to the Committee's discretion, (i) a prorated number of an executive's unvested
stock options granted in 2015 and 2016 would vest based on the number of complete months worked during the vesting period and (ii) the stock options granted in 2017 would fully vest if the
executive attained age 60 with 5 years of service or age 65 prior to termination, provided the executive is employed for at least six months following the date of grant and is not a participant
in the
Supplemental Pension Program and partially vest after 30 years of service or after attainment of age 55 with 10 years of service. The remaining
unvested 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 (five years for options granted in 2017) after termination or, if less, until the original expiration date.
United States Steel Corporation
|
2018 Proxy
Statement
|
53
Table of Contents
Potential Payments Upon Termination or Change in Control
|
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, 2017 and that a prorated number of options vested
based on the number of complete months worked during the vesting year (February 2017 to February 2018 for the 2017 grant, May 2017 to May 2018 for the 2016 grant, and February 2017 to February 2018
for the 2015 grant).
Stock
options include a "double-trigger" and require a termination in connection with a Change in Control (Column D) in order for the vesting to be accelerated. Unvested stock options would not
be forfeited if (i) employment is terminated during a potential change in control period by the Corporation for other than cause or disability or by the executive for good reason and
(ii) a 409A Change in Control occurs within twenty-four months following the commencement of the potential change in control period.
Following
a voluntary termination with the Committee's consent or a retirement (Column A), and subject to the Committee's discretion, (i) a prorated number of an executive's unvested
restricted stock units granted in 2015 and 2016 would vest based on the number of complete months worked during the vesting period and (ii) the restricted stock units granted in 2017 would
fully vest if the executive attained age 60 with 5 years of service or age 65 prior to termination, provided the executive is employed for at least six months following the date of grant and is
not a participant in the Supplemental Pension Program and partially vest after 30 years of service or after attainment of age 55 with 10 years of service. The remaining unvested
restricted stock units would be forfeited. In the event of a disability (Column E) or death (Column F), all unvested restricted stock units vest immediately.
If
an executive's employment terminates voluntarily without the Committee's consent or involuntarily for cause (Column B), all remaining unvested restricted stock units are forfeited.
For
involuntary terminations that are not for cause (Column C) we have assumed that the executive terminated employment on December 31, 2017 and that a prorated number of restricted
stock units vested based on the number of complete months worked during the vesting year (February 2017 to February 2018 for the 2017 grant, May 2017 to May 2018 for the 2016 grant, February 2017 to
February 2018 for the 2015 grant).
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.
Following
a voluntary termination with the Committee's consent or a retirement (Column A), and provided that the relevant performance goals are achieved, (i) the prorated value of the
performance awards granted in 2015 and 2016 would vest based on the number of complete months worked during the relevant performance period (each is approximately three years) and (ii) the
performance awards granted in 2017 would fully vest if the executive attained age 60 with 5 years of service or age 65 prior to termination, provided the executive is employed for at least six
months following the date of grant and is not a participant in the Supplemental Pension Program and partially vest after 30 years of service or after attainment of age 55 with 10 years
of service. 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, 2017 and that a prorated number of performance
awards vested based on the number of complete months worked during the relevant performance period.
Performance
awards require a termination in connection with a Change in Control (Column D) in order for the vesting to be accelerated. For these awards, the performance period would end upon
the change in control; however, the awards would not vest until the earlier to occur of a termination
54
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
Potential Payments Upon Termination or Change in Control
|
within 24 months of the change in control or the normal vesting date. Unvested performance awards would not be forfeited if (i) employment is
terminated during a potential change in control period by the Corporation for other than
cause or disability or by the executive for good reason and (ii) a 409A Change in Control occurs within twenty-four months following the commencement of
the potential change in control period.
Pension Plan Compensation
|
Pension
Plan Compensation includes benefits under the following:
U. S. Steel Pension Plan
Benefits
under the U. S. Steel Pension Plan are payable on behalf of Messrs. Matthews and Buckiso 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 under the Internal Revenue Code.
If
an executive is placed on involuntary layoff status as of December 31, 2017 (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, Messrs. Matthews and Buckiso would each be eligible to commence a Rule-of-70/80 early retirement option on December 31, 2018 after being
on layoff for one year. The present value amounts shown for an involuntary termination not for cause (Column 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, 2017 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, 2018, 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 Messrs. Matthews and Buckiso under each of the termination of employment scenarios. Refer to the "2017 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.
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, 2017.
Mr. Buckiso is a participant in the U. S. Steel Pension Plan; however, participation in the Supplemental Pension Program was frozen in March 2011 before Mr. Buckiso became
eligible for the plan.
The
present value amounts shown for an involuntary termination not for cause (Column C), a change in control
and termination (Column D), and a disability (Column E) reflect benefits attributable to later commencement due to layoff because of an involuntary
termination or the five-month period following the disability event.
If
the employment of an executive is terminated due to death (Column F), death benefits become payable to the surviving spouse or, if there is no spouse, to the executive's estate. The present
value amounts shown are equal to the actuarial equivalent of the executive's pension benefit (excluding the surviving spouse's benefits) that would have been payable with the Corporation's consent if
the executive had retired on the date of death.
United States Steel Corporation
|
2018 Proxy
Statement
|
55
Table of Contents
Potential Payments Upon Termination or Change in Control
|
Non-Qualified Deferred Compensation
|
Non-Qualified
Deferred Compensation includes benefits under the following plans:
Supplemental Thrift Program
The
conditions for a payment of benefits under the Supplemental Thrift Program include the attainment of five years of continuous service. For Messrs. Matthews, Rintoul and Buckiso, this
condition has been met and therefore, this benefit is payable under all termination scenarios. Because Messrs. Burritt, Bradley and Soni 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. For Mr. Longhi and Ms. Folsom, the Corporation consented to the payment of this benefit.
Non Tax-Qualified Retirement Account Program
The
conditions for a payment of benefits under the Non Tax-Qualified Retirement Account Program include the attainment of three years of continuous service. For Messrs. Burritt, Matthews,
Rintoul and Buckiso, this condition has been met and therefore, this benefit is payable under all termination scenarios. Because Messrs. Bradley
and Soni have not yet attained three years of continuous service, this benefit is only payable if their employment is terminated with the consent of the
Corporation or if the executive dies prior to retirement. Mr. Longhi and Ms. Folsom met the conditions for payment of this benefit.
Supplemental Retirement Account Program
The
conditions for a payment of benefits under the Supplemental Retirement Account Program include the termination of employment after completing at least 10 years of continuous service or, if
earlier, on or after the attainment of age 65. In addition, benefits are not payable if the participant terminates employment prior to age 55 or within 36 months of becoming a participant in
the Plan. Because Mr. Rintoul meets these conditions, this benefit is payable
under all termination scenarios. For Messrs. Burritt, Bradley, Matthews, Buckiso and Soni, who have not yet met these conditions, 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. For Mr. Longhi and Ms. Folsom, the Corporation consented to the payment of this benefit.
The
amount shown for a change in control and termination (Column D) represents the estimated cost of providing active
employee insurance coverage to the executive for a period of 36 months or, if earlier, until the executive's 65th birthday.
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).
56
|
United
States Steel Corporation
|
2018 Proxy
Statement
Table of Contents
CEO Pay Ratio
We
are committed to a compensation program that is internally equitable to motivate our employees to advance the strategy of the Corporation and enhance stockholder value. The disclosure below
presents the ratio of annual total compensation of our CEO to the annual total compensation of our Median Employee (defined below), excluding our CEO.
Because
Mr. Burritt did not serve as our CEO for the entirety of 2017, for purposes of this disclosure, the annual total compensation for the CEO was determined by annualizing the compensation
of Mr. Burritt based on his compensation as of October 1, 2017. This amount differs from Mr. Burritt's "Total Compensation" reported in the Summary Compensation Table on
page 40 of this proxy statement because he served as CEO for only for a portion of the year, and, consequently, actually earned a lower salary and lower compensation under the AICP and LTIP
while he served as our Chief Financial Officer and Chief Operating Officer.
We
calculated each employee's annual total cash compensation to identify our Median Employee. The calculation of annual total cash compensation of each employee was determined by calculating the total
cash compensation over the twelve-months ended October 1, 2017 (the "Determination Date"). Pay elements that were included in the annual total cash compensation for each employee are:
Salary,
base wages and/or overtime received (as applicable);
-
-
annual incentive payment received for performance in fiscal year 2016 (for non-represented employees);
-
-
cash incentive payments, based on production (for represented employees only);
-
-
Quarterly profit sharing payments (for represented employees only); and
-
-
Other cash payments (including payments related to shift differential, holidays and vacations) (for represented employees only).
Our
calculation includes all full-time, part-time, temporary and seasonal employees of the Corporation and its consolidated subsidiaries employed as of October 1, 2017 (other than the CEO).
Also, included in the data were 129 leased employees employed by third parties for whom we determined the compensation. All of our thirteen employees located in the Czech Republic, France, Germany,
United Arab Emirates, Canada and Italy, representing less than 5% of our total employee population, were excluded due to administrative challenges related to collecting the necessary data for these
employees. We excluded 3, 3, 3, 1, 2 and 1 employees from the Czech Republic, France, Germany, United Arab Emirates, Canada and Italy, respectively. Our total U.S. employee and non-U.S. employee
population (including leased employees), during the twelve-month period ended October 1, 2017, was 27,637, which is the number of employees used to determine that the excluded employees
represent less than 5% of our total employee population.
We
applied a foreign currency exchange rate to all compensation elements paid in currencies other than U.S. dollars.
We
determined the Median Employee by: (i) calculating the annual total cash compensation described above for each employee; (ii) ranking the annual total cash compensation of all
employees except for the CEO, from lowest to highest; and (iii) identifying the employee with the median total cash compensation (who we refer to as the "Median Employee"). Once the Median
Employee was determined, that employee's annual total compensation was calculated in the same manner as the "Total Compensation" shown for our CEO in the "Summary Compensation Table."
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Median Employee 2017 Total
Compensation
$72,635
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CEO 2017 Total Compensation
(Annualized)
$5,618,557
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2017 CEO Pay Ratio = 77:1
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The
annual total compensation for fiscal year 2017 for our CEO was $5,618,557 (on an annualized basis) and for the Median Employee was $72,635. The resulting ratio of our CEO's annual total
compensation, calculated as described above, to the annual total compensation of our Median Employee for fiscal year 2017 is 77 to 1.
United States Steel Corporation
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2018 Proxy
Statement
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57
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